UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                  

Commission File Number 333-220497 (Rangers Sub I, LLC)

Commission File Number 333-39595-01 (FelCor Lodging Limited Partnership)

RANGERS SUB I, LLC

FELCOR LODGING LIMITED PARTNERSHIP

(Exact Name of Registrant as Specified in Its Charter)

Maryland (Rangers Sub I, LLC)	30-1001580
Delaware (FelCor Lodging Limited Partnership)	75-2544994
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

c/o RLJ Lodging Trust
3 Bethesda Metro Center, Suite 1000
Bethesda,	Maryland	20814
(Address of Principal Executive Offices)		(Zip Code)

(301) 280-7777

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Class	Trading Symbol	Name of Exchange on Which Registered
Not applicable (1)
(1) Neither Rangers Sub I, LLC nor FelCor Lodging Limited Partnership has securities registered pursuant to Section 12(b) of the Act.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Rangers Sub I, LLC (refer to the Note below)                             o Yes  ý No 

FelCor Lodging Limited Partnership (refer to the Note below)                     o Yes  ý No 

Note: As voluntary filers not subject to the filing requirements of the Securities Exchange Act of 1934, the registrants have filed all reports pursuant to Section 13 or 15(d) for the preceding 12 months as if they were subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  

Rangers Sub I, LLC                                      ý Yes  o No 

FelCor Lodging Limited Partnership                                  ý Yes  o No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Rangers Sub I, LLC:

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	ý	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

FelCor Lodging Limited Partnership:

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	ý	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   

Rangers Sub I, LLC                                     ☐ Yes ý No 

FelCor Lodging Limited Partnership                                 ☐ Yes  ý No 

As of May 6, 2021, RLJ Lodging Trust, L.P. owns 100% of the percentage interests of Rangers Sub I, LLC. As of May 6, 2021, FelCor Holdings Trust, a wholly-owned subsidiary of RLJ Lodging Trust, L.P., owns 99% of the percentage interests of FelCor Lodging Limited Partnership, and Rangers General Partner, LLC, a wholly-owned subsidiary of RLJ Lodging Trust, L.P., owns 1% of the percentage interests of FelCor Lodging Limited Partnership.

EXPLANATORY NOTE

On August 31, 2017 (the "Acquisition Date"), RLJ Lodging Trust ("RLJ"), RLJ Lodging Trust, L.P. ("RLJ LP"), Rangers Sub I, LLC, a wholly owned subsidiary of RLJ LP ("Rangers"), and Rangers Sub II, LP, a wholly owned subsidiary of RLJ LP ("Partnership Merger Sub") consummated the transactions contemplated by the Agreement and Plan of Merger (the "Merger Agreement") dated as of April 23, 2017 with FelCor Lodging Trust Incorporated ("FelCor") and FelCor Lodging Limited Partnership ("FelCor LP"), pursuant to which Partnership Merger Sub merged with and into FelCor LP, with FelCor LP surviving as a wholly owned subsidiary of RLJ LP (the "Partnership Merger"), and, immediately thereafter, FelCor merged with and into Rangers, with Rangers surviving as a wholly owned subsidiary of RLJ LP (the "REIT Merger" and, together with the Partnership Merger, the "Mergers").

Where it is important to distinguish between the entities, we either refer specifically to Rangers or to FelCor LP. Otherwise, we use the terms "we" or "our" to refer to Rangers and FelCor LP, collectively (including their consolidated subsidiaries).

This quarterly report on Form 10-Q for the quarter ended March 31, 2021 combines the filings for Rangers and FelCor LP. Rangers indirectly owns a 99% partnership interest in FelCor LP. Through FelCor LP, Rangers owns hotel properties and conducts other business.

We believe combining the periodic reports for Rangers and FelCor LP into a single combined report results in the following benefits:

•presents the business as a whole (the same way management views and operates the business);

•eliminates duplicative disclosure and provides a more streamlined presentation (a substantial portion of our disclosure applies to both Rangers and FelCor LP); and

•saves time and cost by preparing combined reports instead of separate reports.

Rangers consolidates FelCor LP for financial reporting purposes. Rangers has no assets other than its indirect investment in FelCor LP and no liabilities separate from FelCor LP. Therefore, the reported assets and liabilities for Rangers and FelCor LP are substantially identical.

RLJ LP owns 100% of Rangers. Rangers indirectly owns 99% of FelCor LP. A wholly-owned subsidiary of RLJ LP owns the remaining 1% of FelCor LP, which is a noncontrolling interest that is reflected within the equity section of the consolidated balance sheets and in the consolidated statements of equity. Apart from the different equity treatment, the consolidated financial statements for Rangers and FelCor LP are nearly identical, except that net income (loss) attributable to the 1% noncontrolling interest in FelCor LP is deducted from Rangers' net income (loss) in order to arrive at net income (loss) attributable to Rangers.

We present the sections in this report combined unless separate disclosure is required for clarity.

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TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Rangers Sub I, LLC
	Consolidated Financial Statements (unaudited)
	Balance Sheets as of March 31, 2021 and December 31, 2020	1
	Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020	2
	Statements of Changes in Equity for the three months ended March 31, 2021 and 2020	3
	Statements of Cash Flows for the three months ended March 31, 2021 and 2020	4
	FelCor Lodging Limited Partnership
	Consolidated Financial Statements (unaudited)
	Balance Sheets as of March 31, 2021 and December 31, 2020	5
	Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020	6
	Statements of Partners' Capital for the three months ended March 31, 2021 and 2020	7
	Statements of Cash Flows for the three months ended March 31, 2021 and 2020	8
	Notes to the Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signatures		27

ii

PART I. FINANCIAL INFORMATION

Item 1.         Financial Statements

Rangers Sub I, LLC

Consolidated Balance Sheets

(Amounts in thousands)

(unaudited)

	March 31, 2021		December 31, 2020
Assets
Investment in hotel properties, net	$	1,890,465	$	1,901,644
Investment in unconsolidated joint ventures	6,665		6,798
Cash and cash equivalents	58,376		61,766
Restricted cash reserves	5,623		3,882
Related party rent receivable	17,512		—
Advance to Lessee - related party	4,709		2,709
Lease right-of-use assets	75,145		76,256
Prepaid expense and other assets	8,140		8,609
Total assets	$	2,066,635	$	2,061,664
Liabilities and Equity
Debt, net	$	703,852	$	705,863
Related party debt	85,000		85,000
Accounts payable and other liabilities	29,591		29,609
Lease liabilities	46,147		46,575
Related party rent payable	—		493
Accrued interest	9,498		2,374
Related party accrued interest	125		127
Total liabilities	874,213		870,041
Commitments and Contingencies (Note 8)
Equity
Member's equity:
Member's equity	1,216,134		1,201,428
Accumulated deficit	(43,695)		(29,878)
Total member's equity	1,172,439		1,171,550
Noncontrolling interest:
Noncontrolling interest in consolidated joint ventures	8,140		8,239
Noncontrolling interest in FelCor LP	11,843		11,834
Total noncontrolling interest	19,983		20,073
Total equity	1,192,422		1,191,623
Total liabilities and equity	$	2,066,635	$	2,061,664

The accompanying notes are an integral part of these consolidated financial statements.

1

Rangers Sub I, LLC

Consolidated Statements of Operations and Comprehensive Loss

(Amounts in thousands)

(unaudited)

	For the three months ended March 31,
	2021		2020
Revenues
Operating revenues
Related party lease revenue	$	17,939	$	25,619
Total revenues	17,939		25,619
Expenses
Operating expenses
Depreciation and amortization	19,127		18,528
Property tax, insurance and other	4,117		10,371
General and administrative	141		367
Transaction costs	—		11
Total operating expenses	23,385		29,277
Other expense	(27)		—
Interest income	24		95
Interest expense	(7,645)		(8,033)
Related party interest expense	(664)		(967)
Loss before equity in (loss) income from unconsolidated joint ventures	(13,758)		(12,563)
Equity in (loss) income from unconsolidated joint ventures	(298)		549
Net loss and comprehensive loss	(14,056)		(12,014)
Net loss attributable to noncontrolling interests:
Noncontrolling interest in consolidated joint ventures	99		50
Noncontrolling interest in FelCor LP	140		120
Net loss and comprehensive loss attributable to Rangers	$	(13,817)	$	(11,844)

The accompanying notes are an integral part of these consolidated financial statements.

2

Rangers Sub I, LLC

Consolidated Statements of Changes in Equity

(Amounts in thousands)

(unaudited)

	Member's Equity				Noncontrolling Interest
	Equity		Accumulated Deficit		FelCor LP		Consolidated Joint  Ventures		Total  Equity
Balance at December 31, 2020	$	1,201,428	$	(29,878)	$	11,834	$	8,239	$	1,191,623
Net loss and comprehensive loss	—		(13,817)		(140)		(99)		(14,056)
Contributions	15,890		—		161		—		16,051
Distributions	(1,184)		—		(12)		—		(1,196)
Balance at March 31, 2021	$	1,216,134	$	(43,695)	$	11,843	$	8,140	$	1,192,422

	Member's Equity				Noncontrolling Interest
	Equity		Retained Earnings		FelCor LP		Consolidated Joint  Ventures		Total  Equity
Balance at December 31, 2019	$	1,119,913	$	99,996	$	12,322	$	8,588	$	1,240,819
Net loss and comprehensive loss	—		(11,844)		(120)		(50)		(12,014)
Contributions	24,394		—		247		—		24,641
Distributions	(69,268)		—		(700)		—		(69,968)
Balance at March 31, 2020	$	1,075,039	$	88,152	$	11,749	$	8,538	$	1,183,478

The accompanying notes are an integral part of these consolidated financial statements.

3

Rangers Sub I, LLC

Consolidated Statements of Cash Flows

(Amounts in thousands)

(unaudited)

	For the three months ended March 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(14,056)	$	(12,014)
Adjustments to reconcile net loss to cash flow (used in) provided by operating activities:
Depreciation and amortization	19,127		18,528
Amortization of deferred financing costs	49		49
Other amortization	(694)		(687)
Equity in loss (income) from unconsolidated joint ventures	298		(549)
Changes in assets and liabilities:
Related party rent receivable	(17,512)		42,473
Prepaid expense and other assets	348		(104)
Related party rent payable	(493)		—
Accounts payable and other liabilities	(3,481)		1,830
Accrued interest	7,124		7,698
Related party accrued interest	(2)		(42)
Net cash flow (used in) provided by operating activities	(9,292)		57,182
Cash flows from investing activities
Improvements and additions to hotel properties	(4,332)		(12,621)
Advance to Lessee - related party	(2,000)		—
Contributions to unconsolidated joint ventures	(165)		(100)
Net cash flow used in investing activities	(6,497)		(12,721)
Cash flows from financing activities
Repayments of borrowings	(715)		(516)
Contributions from members	16,051		24,641
Distributions to members	(1,196)		(69,968)
Net cash flow provided by (used in) financing activities	14,140		(45,843)
Net change in cash, cash equivalents, and restricted cash reserves	(1,649)		(1,382)
Cash, cash equivalents, and restricted cash reserves, beginning of year	65,648		23,719
Cash, cash equivalents, and restricted cash reserves, end of period	$	63,999	$	22,337

The accompanying notes are an integral part of these consolidated financial statements.

4

FelCor Lodging Limited Partnership

Consolidated Balance Sheets

(Amounts in thousands)

(unaudited)

	March 31, 2021		December 31, 2020
Assets
Investment in hotel properties, net	$	1,890,465	$	1,901,644
Investment in unconsolidated joint ventures	6,665		6,798
Cash and cash equivalents	58,376		61,766
Restricted cash reserves	5,623		3,882
Related party rent receivable	17,512		—
Advance to Lessee - related party	4,709		2,709
Lease right-of-use assets	75,145		76,256
Prepaid expense and other assets	8,140		8,609
Total assets	$	2,066,635	$	2,061,664
Liabilities and Partners' Capital
Debt, net	$	703,852	$	705,863
Related party debt	85,000		85,000
Accounts payable and other liabilities	29,591		29,609
Lease liabilities	46,147		46,575
Related party rent payable	—		493
Accrued interest	9,498		2,374
Related party accrued interest	125		127
Total liabilities	874,213		870,041
Commitments and Contingencies (Note 8)
Partners' Capital
Partners’ capital:
Partners’ capital	1,228,419		1,213,564
Accumulated deficit	(44,137)		(30,180)
Total partners’ capital, excluding noncontrolling interest	1,184,282		1,183,384
Noncontrolling interest in consolidated joint ventures	8,140		8,239
Total partners' capital	1,192,422		1,191,623
Total liabilities and partners' capital	$	2,066,635	$	2,061,664

The accompanying notes are an integral part of these consolidated financial statements.

5

FelCor Lodging Limited Partnership

Consolidated Statements of Operations and Comprehensive Loss

(Amounts in thousands)

(unaudited)

	For the three months ended March 31,
	2021		2020
Revenues
Operating revenues
Related party lease revenue	$	17,939	$	25,619
Total revenues	17,939		25,619
Expenses
Operating expenses
Depreciation and amortization	19,127		18,528
Property tax, insurance and other	4,117		10,371
General and administrative	141		367
Transaction costs	—		11
Total operating expenses	23,385		29,277
Other expense	(27)		—
Interest income	24		95
Interest expense	(7,645)		(8,033)
Related party interest expense	(664)		(967)
Loss before equity in (loss) income from unconsolidated joint ventures	(13,758)		(12,563)
Equity in (loss) income from unconsolidated joint ventures	(298)		549
Net loss and comprehensive loss	(14,056)		(12,014)
Net loss attributable to noncontrolling interests:
Noncontrolling interest in consolidated joint ventures	99		50
Net loss and comprehensive loss attributable to FelCor LP	$	(13,957)	$	(11,964)

The accompanying notes are an integral part of these consolidated financial statements.

6

FelCor Lodging Limited Partnership

Consolidated Statements of Partners' Capital

(Amounts in thousands)

(unaudited)

	Partners' Capital				Noncontrolling Interest
	Capital		Accumulated Deficit		Consolidated Joint  Ventures		Total  Partners' Capital
Balance at December 31, 2020	$	1,213,564	$	(30,180)	$	8,239	$	1,191,623
Net loss and comprehensive loss	—		(13,957)		(99)		(14,056)
Contributions	16,051		—		—		16,051
Distributions	(1,196)		—		—		(1,196)
Balance at March 31, 2021	$	1,228,419	$	(44,137)	$	8,140	$	1,192,422

	Partners' Capital				Noncontrolling Interest
	Capital		Retained Earnings		Consolidated Joint  Ventures		Total  Partners' Capital
Balance at December 31, 2019	$	1,131,226	$	101,005	$	8,588	$	1,240,819
Net loss and comprehensive loss	—		(11,964)		(50)		(12,014)
Contributions	24,641		—		—		24,641
Distributions	(69,968)		—		—		(69,968)
Balance at March 31, 2020	$	1,085,899	$	89,041	$	8,538	$	1,183,478

The accompanying notes are an integral part of these consolidated financial statements.

7

FelCor Lodging Limited Partnership

Consolidated Statements of Cash Flows

(Amounts in thousands)

(unaudited)

	For the three months ended March 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(14,056)	$	(12,014)
Adjustments to reconcile net loss to cash flow (used in) provided by operating activities:
Depreciation and amortization	19,127		18,528
Amortization of deferred financing costs	49		49
Other amortization	(694)		(687)
Equity in loss (income) from unconsolidated joint ventures	298		(549)
Changes in assets and liabilities:
Related party rent receivable	(17,512)		42,473
Prepaid expense and other assets	348		(104)
Related party rent payable	(493)		—
Accounts payable and other liabilities	(3,481)		1,830
Accrued interest	7,124		7,698
Related party accrued interest	(2)		(42)
Net cash flow (used in) provided by operating activities	(9,292)		57,182
Cash flows from investing activities
Improvements and additions to hotel properties	(4,332)		(12,621)
Advance to Lessee - related party	(2,000)		—
Contributions to unconsolidated joint ventures	(165)		(100)
Net cash flow used in investing activities	(6,497)		(12,721)
Cash flows from financing activities
Repayments of borrowings	(715)		(516)
Contributions from partners	16,051		24,641
Distributions to partners	(1,196)		(69,968)
Net cash flow provided by (used in) financing activities	14,140		(45,843)
Net change in cash, cash equivalents, and restricted cash reserves	(1,649)		(1,382)
Cash, cash equivalents, and restricted cash reserves, beginning of year	65,648		23,719
Cash, cash equivalents, and restricted cash reserves, end of period	$	63,999	$	22,337

The accompanying notes are an integral part of these consolidated financial statements.

8

Rangers Sub I, LLC and FelCor Lodging Limited Partnership

Notes to the Consolidated Financial Statements

(unaudited)

1.              General

Organization

Rangers Sub I, LLC ("Rangers") is a Maryland limited liability company and a wholly-owned subsidiary of RLJ Lodging Trust, L.P. ("RLJ LP"). Rangers owns an indirect 99% partnership interest in FelCor Lodging Limited Partnership ("FelCor LP"). Rangers General Partner, LLC, also a wholly-owned subsidiary of RLJ LP, owns the remaining 1% partnership interest and is the sole general partner of FelCor LP. Rangers and FelCor LP are collectively referred to as the "Company." Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through FelCor LP. The Company owns primarily premium-branded, compact full-service hotels located in major markets and resort locations.

As of March 31, 2021, the Company owned 28 hotel properties with approximately 8,100 rooms, located in 13 states.  The Company, through wholly-owned subsidiaries, owned a 100% interest in 25 hotel properties, a 95% controlling interest in The Knickerbocker, and 50% interests in entities owning two hotel properties. The Company consolidates its real estate interests in the 26 hotel properties in which it holds a controlling financial interest, and the Company records the real estate interests in the two hotels in which it holds an indirect 50% interest using the equity method of accounting. The Company leases 27 of its 28 hotel properties to subsidiaries of RLJ LP.

COVID-19

The Company's hotel property-owning subsidiaries (the “Lessors”) lease the hotel properties to property-operating lessees owned by TRS subsidiaries of RLJ (the “Lessees”). The Company receives related party lease revenue from these lease agreements, including percentage rent. The percentage rent amounts are calculated based on a percentage of room revenues, food and beverage revenues and other revenues at the hotel properties. As a result, the global outbreak of the novel coronavirus, or COVID-19, and the public health measures that have been undertaken in response have had, and will likely continue to have, a material adverse impact on the Company's financial results and liquidity, and such adverse impact may continue well beyond the containment of such outbreak and vaccination distribution. Since the extent to which the COVID-19 pandemic will continue to impact the Company's operations will depend on future developments that are highly uncertain, the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with reasonable certainty. As of March 31, 2021, operations at two hotels remained suspended. The remaining suspended hotel properties are located in New York City and San Francisco and RLJ will continue to evaluate reopening these hotels based on market conditions and other factors.

As a result of the COVID-19 pandemic, two of the Lessees negotiated for and were granted an abatement on base rent of $2.8 million for the three months ended March 31, 2021. None of the Lessees received rent abatements during the three months ended March 31, 2020.

2.              Summary of Significant Accounting Policies

The combined Annual Report on Form 10-K for the year ended December 31, 2020 of Rangers and FelCor LP contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, 2020.

Basis of Presentation and Principles of Consolidation

The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to financial information. The unaudited financial statements include all adjustments that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive loss, statements of changes in equity (partners' capital) and statements of cash flows.

The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2020, included in the combined Annual Report on Form 10-K of Rangers and FelCor LP filed with the SEC on February 26, 2021.

9

The consolidated financial statements include the accounts of Rangers, FelCor LP and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interests in two joint ventures in which it holds an indirect 50% interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Given the additional and unforeseen effects from the COVID-19 pandemic, these estimates have become more challenging, and actual results could differ from those estimates.

Leases

On April 10, 2020, the Financial Accounting Standards Board (the "FASB") issued a Staff Q&A to respond to frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

As a result of the impact of the COVID-19 pandemic on the Lessees, the Company made the determination to abate base rent of $2.8 million for two of its Lessees for the three months ended March 31, 2021. The Company did not abate base rent for any of the Lessees for the three months ended March 31, 2020. The Company has elected to not evaluate whether these rent abatements are lease modifications. The Company has elected to not apply the lease modification guidance to the rent abatements, and, as such, the Company has recognized the rent abatements as negative variable lease revenue of $2.8 million during the three months ended March 31, 2021. The Company will continue to evaluate the impact of lease concessions and/or abatements and the appropriate accounting.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance enhances and simplifies various aspects of the current income tax guidance and reduces complexity by removing certain exceptions to the general framework. The Company adopted this new standard on January 1, 2021. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued at the end of 2021 because of reference rate reform. The guidance was effective upon issuance and expires on December 31, 2022. Based on the Company's assessment, there was no material impact arising from this guidance and the Company did not elect to apply any of the optional expedients.

10

3.              Investment in Hotel Properties

Investment in hotel properties consisted of the following (in thousands):

	March 31, 2021		December 31, 2020
Land and improvements	$	501,502	$	501,448
Buildings and improvements	1,487,032		1,481,983
Furniture, fixtures and equipment	146,270		143,546
	2,134,804		2,126,977
Accumulated depreciation	(244,339)		(225,333)
Investment in hotel properties, net	$	1,890,465	$	1,901,644

For the three months ended March 31, 2021 and 2020, the Company recognized depreciation expense related to its investment in hotel properties of approximately $19.0 million and $18.4 million, respectively.

4.              Investment in Unconsolidated Joint Ventures

As of March 31, 2021 and December 31, 2020, the Company owned 50% interests in joint ventures that owned two hotel properties. During the year ended December 31, 2020, one of the unconsolidated joint ventures determined the property ground lease will terminate on October 31, 2021 and the property will revert to the ground lessor at that time.

The Company accounts for the investments in these unconsolidated joint ventures under the equity method of accounting. The Company makes adjustments to the equity in (loss) income from unconsolidated joint ventures related to the difference between the Company's basis in the investment in the unconsolidated joint ventures as compared to the historical basis of the assets and liabilities of the joint ventures. As of March 31, 2021 and December 31, 2020, the unconsolidated entities' debt consisted entirely of non-recourse mortgage debt.

The following table summarizes the components of the Company's investments in unconsolidated joint ventures (in thousands):

	March 31, 2021		December 31, 2020
Equity basis of the joint venture investments	$	(6,664)	$	(6,687)
Cost of the joint venture investments in excess of the joint venture book value	13,329		13,485
Investment in unconsolidated joint ventures	$	6,665	$	6,798

The following table summarizes the components of the Company's equity in (loss) income from unconsolidated joint ventures (in thousands):

	For the three months ended March 31,
	2021		2020
Unconsolidated joint ventures net (loss) income attributable to the Company	$	(142)	$	829
Depreciation of cost in excess of book value	(156)		(280)
Equity in (loss) income from unconsolidated joint ventures	$	(298)	$	549

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5.              Debt

The Company's debt consisted of the following (in thousands):

					Outstanding Borrowings at
	Number of Assets Encumbered	Interest Rate	Maturity Date		March 31, 2021		December 31, 2020
Senior Notes (1)(2)(3)	—	6.00%	June 2025		$	494,578	$	495,759
Mortgage loan (4)	3	4.95%	October 2022		86,110		86,775
Mortgage loan (5)	1	4.94%	October 2022		27,759		27,972
Mortgage loan (1)(6)	3	1.71%	April 2024	(7)	96,000		96,000
	7				704,447		706,506
Deferred financing costs, net					(595)		(643)
Debt, net					$	703,852	$	705,863

(1)Requires payments of interest only through maturity.

(2)The Senior Notes (as defined below) include $19.7 million and $20.9 million at March 31, 2021 and December 31, 2020, respectively, related to fair value adjustments that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(3)The Company has the option to redeem the Senior Notes at a price of 103.0% of face value.

(4)Includes $0.7 million and $0.9 million at March 31, 2021 and December 31, 2020, respectively, related to fair value adjustments on the mortgage loans that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(5)Includes $0.2 million and $0.3 million at March 31, 2021 and December 31, 2020, respectively, related to a fair value adjustment on the mortgage loan that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(6)The hotels encumbered by the mortgage loan are cross-collateralized.

(7)The mortgage loan provides two one year extension options.

The 6.000% Senior Notes due 2025 (the "Senior Notes") are subject to a maximum unsecured leverage maintenance covenant, which is based on asset value that is calculated at historical cost. In addition, the Senior Notes are subject to various incurrence covenants that limit the ability of the Company to incur additional debt if these covenants are violated. Failure to meet these incurrence covenant thresholds does not, in and of itself, constitute an event of default under the Senior Notes indenture. As of March 31, 2021, the Company was in compliance with all maintenance and incurrence covenants except the interest coverage ratio. As a result, the Company is currently prohibited from incurring additional debt until such ratio becomes compliant.

Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or debt service coverage ratio ("DSCR"). Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. During the cash trap event, the lender or servicer of the mortgage loan controls cash outflows until the loan is covenant compliant. In addition, certain mortgage loans have other requirements including continued operation and maintenance of the hotel property. At March 31, 2021, all three mortgage loans were below the DSCR threshold and were in cash trap events. At March 31, 2021, there was approximately $1.4 million held by lenders due to the cash trap events.

During the three months ended March 31, 2021 and 2020, the Company recognized $7.6 million and $8.0 million of interest expense, respectively.

6.              Related Party Debt

In November 2018, the Company's consolidated joint venture entered into an $85.0 million related party mortgage loan with RLJ LP, which is included in related party debt in the accompanying consolidated balance sheets. The related party mortgage loan has an interest rate of LIBOR + 3.00% and a maturity date of November 9, 2023. The related party mortgage loan requires payments of interest only through maturity. The hotel property owned by the Company's consolidated joint venture is encumbered by the related party mortgage loan.

During the three months ended March 31, 2021 and 2020, the Company recognized $0.7 million and $1.0 million of interest expense, respectively, related to its related party loan with RLJ LP.

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7.              Fair Value

Fair Value Measurement

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market.  The fair value hierarchy has three levels of inputs, both observable and unobservable:

•Level 1 — Inputs include quoted market prices in an active market for identical assets or liabilities.

•Level 2 — Inputs are market data, other than Level 1, that are observable either directly or indirectly.  Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.

•Level 3 — Inputs are unobservable and corroborated by little or no market data.

Fair Value of Financial Instruments

The Company used the following market assumptions and/or estimation methods:

•Cash and cash equivalents, restricted cash reserves, accounts payable and other liabilities — The carrying amounts reported in the consolidated balance sheets for these financial instruments approximate fair value because of their short term maturities.

•Debt — The Senior Notes had an estimated fair value of approximately $487.8 million and $484.2 million at March 31, 2021 and December 31, 2020, respectively. The Company estimated the fair value of the Senior Notes by using publicly available trading prices, which are Level 2 inputs in the fair value hierarchy. The mortgage loans had an estimated fair value of approximately $204.3 million and $204.7 million at March 31, 2021 and December 31, 2020, respectively. The Company estimated the fair value of the mortgage loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms and the loan to estimated fair value of the collateral, which are Level 3 inputs in the fair value hierarchy. The total estimated fair value of the Company's debt was $692.1 million and $688.9 million at March 31, 2021 and December 31, 2020, respectively. The total carrying value of the Company's debt was $703.9 million and $705.9 million at March 31, 2021 and December 31, 2020, respectively.

•Related Party Debt — The Company's related party mortgage loan with RLJ LP had an estimated fair value of approximately $84.0 million at both March 31, 2021 and December 31, 2020. The Company estimated the fair value of the mortgage loan by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms and the loan to estimated fair value of the collateral, which are Level 3 inputs in the fair value hierarchy. The total carrying value of the Company's related party debt was $85.0 million at both March 31, 2021 and December 31, 2020.

8.       Commitments and Contingencies

Operating Leases - Lessors

As a lessor, the Company will receive lease revenue from the Lessees under its lease contracts. The lease contracts contain a specific base rent amount and a percentage rent amount, which is dependent upon the hotel properties reaching certain revenue thresholds and, if earned, is calculated based on a percentage of room revenues, food and beverage revenues, and other revenues at the hotel properties. The lease contracts will expire in 2021 (one hotel), 2022 (24 hotels) and thereafter (one hotel). The Company had a receivable due from the Lessees of $17.5 million as of March 31, 2021, which is included in related party rent receivable on the consolidated balance sheet. The Company owed the Lessees $0.5 million for reimbursement of rent as of December 31, 2020, which is included in related party rent payable on the consolidated balance sheet.

As a result of the COVID-19 pandemic, two of the Lessees negotiated for and were granted an abatement on base rent of $2.8 million for the three months ended March 31, 2021. The Company has recognized the rent abatement as negative variable lease revenue during the three months ended March 31, 2021. None of the Lessees received rent abatements during the three months ended March 31, 2020.

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The lease revenue recognized during the three months ended March 31, 2021 and 2020 consisted of the following (in thousands):

	For the three months ended March 31,
	2021		2020
Lease revenue relating to lease payments (1)	$	15,240	$	17,839
Lease revenue relating to percentage rent lease payments	2,699		7,780
Total related party lease revenue	$	17,939	$	25,619

(1) Reflects the impact of base rent abatement of $2.8 million for the three months ended March 31, 2021.

The future lease payments to the Company under the noncancelable operating leases were as follows (in thousands):

	March 31, 2021
2021	$	51,446
2022	51,750
2023	—
2024	—
2025	—
Thereafter	—
Total	$	103,196

Advance to Lessee - Related Party

The Company's consolidated joint venture has provided advances to its Lessee as a result of the impact of the COVID-19 pandemic on the Lessee's operations. The total advance of $4.7 million and $2.7 million as of March 31, 2021 and December 31, 2020, respectively, is included in advance to Lessee - related party in the accompanying consolidated balance sheets.

Restricted Cash Reserves

The Company is obligated to maintain cash reserve funds for future capital expenditures at the hotels (including the periodic replacement or refurbishment of furniture, fixtures and equipment ("FF&E")) as determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents. The management agreements, franchise agreements and/or mortgage loan documents require the Company to reserve cash ranging typically from 4.0% to 5.0% of the individual hotel’s revenues and maintain the reserves in restricted cash reserve escrows. Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of March 31, 2021 and December 31, 2020, approximately $5.6 million and $3.9 million, respectively, was available in the restricted cash reserves for future capital expenditures, real estate taxes and insurance. The restricted cash reserves at March 31, 2021 of $5.6 million also includes $1.4 million held by lenders due to cash trap events.

Litigation

Neither the Company nor any of its subsidiaries is currently involved in any regulatory or legal proceedings that management believes will have a material and adverse effect on the Company's financial position, results of operations or cash flows.

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9.       Equity

Rangers Ownership Interests/FelCor LP Partnership Interests

As of March 31, 2021, RLJ LP owned 100% of the ownership interests and was the sole managing member of Rangers. In addition, Rangers owned, through indirect interests, 99.0% of the partnership interests in FelCor LP. Rangers consolidates FelCor LP for financial reporting purposes as a result of its controlling financial interest. Rangers General Partner, LLC's 1.0% partnership interest in FelCor LP is recognized as a noncontrolling interest in FelCor LP on the consolidated balance sheets of Rangers.

Noncontrolling Interest in Consolidated Joint Ventures

The Company consolidates the joint venture that owns The Knickerbocker, which has a third-party partner that owns a noncontrolling 5% ownership interest in the joint venture. The third-party ownership interest is included in the noncontrolling interest in consolidated joint ventures on the consolidated balance sheets.

10.       Supplemental Information to the Statements of Cash Flows

The following supplemental information to the Statements of Cash Flows is for both Rangers and FelCor LP (in thousands):

	For the three months ended March 31,
	2021		2020
Reconciliation of cash, cash equivalents, and restricted cash reserves
Cash and cash equivalents	$	58,376	$	16,995
Restricted cash reserves	5,623		5,342
Cash, cash equivalents, and restricted cash reserves	$	63,999	$	22,337
Interest paid	$	1,818	$	1,631
Interest paid to a related party	$	666	$	1,008
Income taxes refunded	$	(2)	$	(39)
Operating cash flow lease payments for operating leases	$	1,309	$	1,949
Supplemental non-cash transactions
Accrued capital expenditures	$	6,298	$	2,751

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report, as well as the information contained in the combined Annual Report on Form 10-K for the year ended December 31, 2020 of Rangers Sub I, LLC ("Rangers") and FelCor Lodging Limited Partnership ("FelCor LP"), filed with the SEC on February 26, 2021 (the "Annual Report"), which is accessible on the SEC’s website at www.sec.gov.

Statement Regarding Forward-Looking Information

The following information contains certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally are identified by the use of the words "believe," "project," "expect," "anticipate," "estimate," "plan," "may," "will," "will continue," "intend," "should," or similar expressions.  Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs

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and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. 

Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the continued adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on our financial condition, results of operations, cash flows and performance, the real estate market and the global economy and financial markets. The extent to which the COVID-19 pandemic impacts us will depend on future developments, which are highly uncertain and cannot be predicted with certainty, including the duration of the pandemic and its impact on the demand for travel and on levels of consumer confidence, the actions governments, businesses and individuals take in response to the pandemic, including limiting or banning travel, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, travel and economic activity, the speed and effectiveness of vaccine and treatment developments and their deployment, including public adoption rates of COVID-19 vaccines, and the pace of recovery when the COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic.

Additional factors that might cause such a difference include the following: increased direct competition, changes in government regulations or accounting rules, changes in local, national and global real estate conditions, declines in the lodging industry, seasonality of the lodging industry, risks related to natural disasters, such as earthquakes and hurricanes, hostilities, including future terrorist attacks or fear of hostilities that affect travel and epidemics and/or pandemics, including COVID-19, ramp up of the future economic recovery and re-opening of hotels, our ability to obtain lines of credit or permanent financing on satisfactory terms, changes in interest rates, duration and access to capital through debt offerings, our ability to identify suitable acquisitions, our ability to close on identified acquisitions and integrate those businesses and inaccuracies of our accounting estimates.  Given these uncertainties, undue reliance should not be placed on such statements.

Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We caution investors not to place undue reliance on these forward-looking statements and urge investors to carefully review the disclosures we make concerning risks and uncertainties in the sections entitled "Forward-Looking Statements," "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report, as well as the risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q and identified in other documents filed by us with the SEC.

Overview

Rangers is a Maryland limited liability company that, through FelCor LP, owns hotel properties and conducts other business. Substantially all of Rangers' assets and liabilities are held by, and all of its operations are conducted through, FelCor LP. 100% of the ownership interests of Rangers are held by RLJ LP, which is the operating partnership of RLJ, one of the largest U.S. publicly traded lodging REITs in terms of both number of hotels and number of rooms. Rangers indirectly owns a 99% partnership interest in FelCor LP. Rangers GP, a wholly-owned subsidiary of RLJ LP, owns the remaining 1% partnership interest and is the sole general partner of FelCor LP.

Our hotel properties are concentrated in markets that we believe exhibit multiple demand generators and attractive long-term growth prospects. We believe premium-branded, compact full-service hotels with these characteristics generate high levels of Revenue per Available Room ("RevPAR"), strong operating margins and attractive returns.

As of March 31, 2021, we owned 28 hotel properties with approximately 8,100 rooms, located in 13 states.  We owned, through wholly-owned subsidiaries, a 100% interest in 25 hotel properties, a 95% interest in The Knickerbocker, and 50% interests in entities owning two hotel properties. We consolidate the real estate interests in the 26 hotel properties in which we hold a controlling financial interest, and we record the real estate interests in the two hotels in which we hold an indirect 50% interest using the equity method of accounting. The Company leases 27 of its 28 hotel properties to subsidiaries of RLJ LP.

COVID-19

The Company's hotel property-owning subsidiaries (the “Lessors”) lease the hotel properties to property-operating lessees owned by TRS subsidiaries of RLJ (the “Lessees”). The Company receives related party lease revenue from these lease agreements, including percentage rent. The percentage rent amounts are calculated based on a percentage of room revenues, food and beverage revenues and other revenues at the hotel properties. As a result, the global outbreak of the novel coronavirus, or COVID-19, and the public health measures that have been undertaken in response have had, and will likely

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continue to have, a material adverse impact on the global economy and all aspects of our business. Significant events affecting travel, including the COVID-19 pandemic, typically have an impact on booking patterns, with the full extent of the impact generally determined by the duration of the event and its impact on travel decisions. The effects of the COVID-19 pandemic, including related government restrictions, border closings, quarantining, “shelter-in-place” orders and “social distancing,” have significantly limited non-essential travel and also resulted in increased national unemployment and possible lasting changes in consumer behavior that will create headwinds for our hotel properties even after government restrictions are lifted. In addition, two of the Lessees negotiated for and were granted a base rent abatement of $2.8 million for the three months ended March 31, 2021. Given the current economic environment, we are continuing to evaluate whether future lease abatements may be granted. Since we cannot estimate when the COVID-19 pandemic and the responsive measures to combat it will end, we cannot estimate the ultimate operational and financial impact of COVID-19 on our business.

The effects of the COVID-19 pandemic have significantly and negatively impacted our revenue during the three months ended March 31, 2021. Given that the majority of expenses associated with our business relate to depreciation, insurance, property taxes and interest, we are very limited in our ability to reduce our expenses. Combined with macroeconomic trends such as the current economic recession, reduced consumer spending, including on travel, and increased unemployment, we are led to believe that the ongoing effects of the COVID-19 pandemic on our operations will continue to have a material adverse impact on our financial results and liquidity. Such adverse impact may continue well beyond the containment of such outbreak and vaccination distribution.

As of March 31, 2021, operations at two hotels remained suspended. The remaining suspended hotel properties are located in New York City and San Francisco and RLJ will continue to evaluate reopening these hotels based on market conditions and other factors.

Our Customers

Our Lessors receive lease revenue from the Lessees under lease contracts. The lease contracts contain a specific base rent amount and a percentage rent amount, which is dependent upon the hotel properties reaching certain revenue thresholds and, if earned, is calculated based on a percentage of room revenues, food and beverage revenues, and other revenues at the hotel properties.

Substantially all of our hotel properties consist of premium-branded, compact full-service hotels. As a result of this property profile, the majority of our hotel properties' customers are transient in nature. Transient business typically represents individual business or leisure travelers. As a result, macroeconomic factors that impact both business travel and leisure travel have an effect on our business. Group business is typically defined as a minimum of 10 guestrooms booked together as part of the same piece of business. Group business may or may not use the meeting space at any given hotel. A number of our hotels are affiliated with brands marketed toward extended-stay customers. Extended-stay customers are generally defined as those staying five nights or longer.

Our Revenues and Expenses

Our revenues are derived from lease revenue received under lease contracts with related parties. The lease contracts contain a specific base rent amount and a percentage rent amount, which is dependent upon the hotel properties reaching certain revenue thresholds and, if earned, is calculated based on a percentage of room revenues, food and beverage revenues, and other revenues at the hotel properties.

Our expenses consist of the depreciation on our investment in hotel properties and property taxes, insurance, and other property-related costs of our hotel properties.

Key Indicators of Financial Performance

We use financial information to evaluate the amount of rental income we receive from the Lessees under our lease agreements. We earn a base rent amount and a percentage rent amount, which is dependent upon the hotel properties reaching certain revenue thresholds and, if earned, is calculated based on a percentage of room revenues, food and beverage revenues, and other revenues at the hotel properties. Industry standard statistical information and comparative data, such as Average Daily Rate ("ADR"), occupancy, and RevPAR, are used to measure the operating performance of our hotel properties, including its impact on the amount of rental income recognized from base rent or percentage rent. We also use financial information to evaluate the significance of the property taxes, insurance, and other property-related costs at our hotel properties.

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We use a variety of operating, financial and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In addition, we use other information that may not be financial in nature, including industry standard statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotel properties in our portfolio to determine each hotel's contribution to cash flow and its potential to provide attractive long-term total returns. The key indicators included:

•ADR

•Occupancy

•RevPAR

ADR, Occupancy and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring the operating performance at the individual hotel property level and across our entire business. We evaluate the individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only room revenue.

Critical Accounting Policies and Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. It is possible that the actual amounts may differ significantly from these estimates and assumptions. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is available to us, our business and industry experience, and various other matters that we believe are reasonable and appropriate for consideration under the circumstances. Our Annual Report on Form 10-K for the year ended December 31, 2020 contains a discussion of our critical accounting policies and estimates. There have been no significant changes to our critical accounting policies and estimates since December 31, 2020.

Results of Operations

COVID-19

Our hotel property-owning Lessors lease the hotel properties to the property-operating Lessees. We receive related party lease revenue from these lease agreements, including percentage rent. The percentage rent amounts are calculated based on a percentage of room revenues, food and beverage revenues and other revenues at the hotel properties. Beginning in March 2020, RLJ's hotel properties experienced a significant decline in occupancy and RevPAR due to the COVID-19 pandemic. As a result, we believe the ongoing effects of the COVID-19 pandemic on our operations continue to have a material adverse impact on our financial results and liquidity, and such adverse impact may continue well beyond the containment of such outbreak and vaccination distribution. The economic downturn resulting from the COVID-19 pandemic has significantly impacted our business and the overall lodging industry. Operations at certain of the hotel properties remain suspended and, while other hotel properties are operating in a limited capacity, as a result of these operational changes, the results of operations for the three months ended March 31, 2021 will not be comparable to the same period in 2020.

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Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020

	For the three months ended March 31,
	2021		2020		$ Change		% Change
	(amounts in thousands)
Revenues
Operating revenues
Related party lease revenue	$	17,939	$	25,619	$	(7,680)	(30.0)	%
Total revenues	17,939		25,619		(7,680)		(30.0)	%
Expenses
Operating expenses
Depreciation and amortization	19,127		18,528		599		3.2	%
Property tax, insurance and other	4,117		10,371		(6,254)		(60.3)	%
General and administrative	141		367		(226)		(61.6)	%
Transaction costs	—		11		(11)		(100.0)	%
Total operating expenses	23,385		29,277		(5,892)		(20.1)	%
Other expense	(27)		—		(27)		100.0	%
Interest income	24		95		(71)		(74.7)	%
Interest expense	(7,645)		(8,033)		388		(4.8)	%
Related party interest expense	(664)		(967)		303		(31.3)	%
Loss before equity in (loss) income from unconsolidated joint ventures	(13,758)		(12,563)		(1,195)		9.5	%
Equity in (loss) income from unconsolidated joint ventures	(298)		549		(847)		—	%
Net loss and comprehensive loss	(14,056)		(12,014)		(2,042)		17.0	%
Net loss attributable to noncontrolling interests:
Noncontrolling interest in consolidated joint ventures	99		50		49		98.0	%
Noncontrolling interest in FelCor LP	140		120		20		16.7	%
Net loss and comprehensive loss attributable to Rangers	$	(13,817)	$	(11,844)	$	(1,973)	16.7	%

Revenues

Related Party Lease Revenue

Related party lease revenue for the three months ended March 31, 2021 decreased $7.7 million, or 30.0%, to $17.9 million from $25.6 million for the three months ended March 31, 2020. The decrease was partially attributable to a decrease in percentage lease revenue as a result of lower room revenues, food and beverage revenues and other revenues of the Lessees primarily due to the impact of the COVID-19 pandemic. The percentage rent amounts are calculated based on a percentage of room revenues, food and beverage revenues and other revenues at the hotel properties. Additionally, as a result of the COVID-19 pandemic, two of the Lessees negotiated for and were granted an abatement on base rent of $2.8 million for the three months ended March 31, 2021, which caused the remainder of the decrease. None of the Lessees received an abatement on base rent during the three months ended March 31, 2020.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended March 31, 2021 increased $0.6 million, or 3.2%, to $19.1 million from $18.5 million for the three months ended March 31, 2020. The increase was due to capital expenditures made during and since the three months ended March 31, 2020.

Property Tax, Insurance and Other

Property tax, insurance and other expense for the three months ended March 31, 2021 decreased $6.3 million, or 60.3%, to $4.1 million from $10.4 million for the three months ended March 31, 2020.  The decrease in property tax, insurance and other expense included a decrease in ground lease expense as a result of lower percentage rents incurred due to the impact of the

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COVID-19 pandemic and a decrease in real estate tax expense due to decreases in real estate tax assessments, including final assessments of certain of our California hotels which had assessments impacted by the Mergers. The final assessment of these California hotels resulted in a benefit of $5.2 million during the three months ended March 31, 2021 related to the reversal of accrued real estate tax liabilities in excess of the amounts owed.

General and Administrative

General and administrative expense for the three months ended March 31, 2021 decreased $0.2 million, or 61.6%, to $0.1 million from $0.4 million for the three months ended March 31, 2020. The decrease was primarily attributable to our efforts to reduce costs in response to the COVID-19 pandemic and higher corporate office sublease reimbursements in the current period. In addition, the decrease resulted from certain litigation costs outside of the normal course of operations which were incurred in the prior year but not in the current year.

Interest Expense

Interest expense for the three months ended March 31, 2021 decreased $0.4 million, or 4.8%, to $7.6 million from $8.0 million for the three months ended March 31, 2020. The decrease in interest expense was due to debt balance reductions as a result of scheduled mortgage loan principal payments, as well as a lower average interest rate on our variable rate debt due to decreases in the London Interbank Offered Rate ("LIBOR").

Related Party Interest Expense

Related party interest expense for the three months ended March 31, 2021 decreased $0.3 million, or 31.3%, to $0.7 million from $1.0 million for the three months ended March 31, 2020. The decrease in related party interest expense was due to decreases in LIBOR. The related party mortgage loan has an interest rate of LIBOR + 3.00%. In November 2018, our consolidated joint venture entered into an $85.0 million related party mortgage loan with RLJ LP. The hotel property owned by our consolidated joint venture is encumbered by the related party mortgage loan.

Equity in (Loss) Income from Unconsolidated Joint Ventures

Equity in (loss) income from unconsolidated joint ventures for the three months ended March 31, 2021 decreased $0.8 million to a loss of $0.3 million from income of $0.5 million for the three months ended March 31, 2020. The decrease was primarily attributable to the impact of the COVID-19 pandemic.

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Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of the funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including:

•recurring maintenance and capital expenditures necessary to maintain our hotel properties in accordance with brand standards;

•operating shortfalls for our hotel property-owning Lessors which have leased hotel properties to property-operating Lessees where operations have been suspended or whose hotels have low occupancy;

•interest expense and scheduled principal payments on outstanding indebtedness; and

•corporate and other general and administrative expenses.

Our long-term liquidity requirements consist primarily of the funds necessary to pay for redevelopments, conversions, renovations and other capital expenditures that need to be made periodically with respect to our hotel properties, and scheduled debt payments, at maturity or otherwise.

Our hotel property-owning Lessors lease our hotel properties to property-operating Lessees. We receive related party lease revenue from these lease agreements, including percentage rent. The percentage rent amounts are calculated based on a percentage of room revenues, food and beverage revenues and other revenues at the hotel properties. As a result, we believe the ongoing effects of the COVID-19 pandemic on our operations continue to have a material adverse impact on our financial results and liquidity, and such adverse impact may continue well beyond the containment of such outbreak and vaccine distribution. In addition, as a result of the COVID-19 pandemic, two of the Lessees negotiated for and were granted an abatement on base rent of $2.8 million for the three months ended March 31, 2021. Given the current economic environment, we are continuing to evaluate whether future lease abatements may be granted.

We can make no assurances that the assumptions used to estimate our liquidity requirements will remain accurate because the magnitude, duration and speed of the COVID-19 pandemic are uncertain. These uncertainties make it difficult to predict the impact on our business, financial condition or near- or longer-term financial or operational results with certainty.

During the three months ended June 30, 2020, we received a contribution of $50.0 million from RLJ LP to ensure that we can service our debt and maintain our operations. In addition, we have taken further actions to improve our liquidity position, including capital expenditure reductions and suspending ROI initiatives.

As of March 31, 2021, we had $64.0 million of cash and cash equivalents and restricted cash reserves.

Sources and Uses of Cash

Cash flows from Operating Activities

The net cash flow used in operating activities totaled $9.3 million and the net cash flow provided by operating activities totaled $57.2 million for the three months ended March 31, 2021 and 2020, respectively. Our cash flows used in or provided by operating activities generally consist of the net cash received from the hotel property lease agreements between the Lessors and the Lessees, the cash paid for corporate expenses and other working capital changes. Refer to the "Results of Operations" section for further discussion of our operating results for the three months ended March 31, 2021 and 2020.

Cash flows from Investing Activities

The net cash flow used in investing activities totaled $6.5 million for the three months ended March 31, 2021 primarily due to $4.3 million in routine capital improvements and additions to our hotel properties and a $2.0 million advance that our consolidated joint venture provided to its Lessee as a result of the impact of the COVID-19 pandemic on the Lessee's operations.

The net cash flow used in investing activities totaled $12.7 million for the three months ended March 31, 2020 primarily due to $12.6 million in routine capital improvements and additions to our hotel properties.

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Cash flows from Financing Activities

The net cash flow provided by financing activities totaled $14.1 million for the three months ended March 31, 2021 primarily due to $16.1 million in contributions from members (partners). The net cash flow provided by financing activities was partially offset by $1.2 million in distributions to members (partners) and $0.7 million in scheduled mortgage loans principal payments.

The net cash flow used in financing activities totaled $45.8 million for the three months ended March 31, 2020 primarily due to $70.0 million in distributions to members (partners) and $0.5 million in scheduled mortgage loans principal payments. The net cash flow used in financing activities was partially offset by $24.6 million in contributions from members (partners).

Capital Expenditures and Reserve Funds

We maintain each of our hotel properties in good repair and condition and in conformity with applicable laws and regulations, franchise agreements and management agreements. Generally, the cost of routine improvements and alterations are paid out of furniture, fixtures, and equipment ("FF&E") reserves, which are funded by a portion of each hotel property’s gross revenues. Routine capital expenditures are administered by us with the assistance of the property management companies. However, we have approval rights over the capital expenditures as part of the annual budget process for each of our hotel properties.

From time to time, certain of our hotel properties may undergo renovations as a result of our decision to upgrade portions of the hotels, such as guestrooms, public space, meeting space, and/or restaurants, in order to better compete with other hotels and alternative lodging options in our markets. In addition, upon acquisition of a hotel we often are required to complete a property improvement plan in order to bring the hotel up to the respective franchisor’s standards. If permitted by the terms of the management agreement, funding for a renovation will first come from the FF&E reserves. To the extent that the FF&E reserves are not available or sufficient to cover the cost of the renovation, we will fund all or the remaining portion of the renovation with cash and cash equivalents on hand and/or other sources of available liquidity.

With respect to some of our hotel properties that are operated under franchise agreements with major national hotel brands and for some of our hotel properties subject to first mortgage liens, we are obligated to maintain FF&E reserve accounts for future capital expenditures at these hotels. The amount funded into each of these reserve accounts is generally determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents for each of the respective hotels, and typically ranges between 4.0% and 5.0% of the respective hotel’s total gross revenue. As of March 31, 2021, approximately $3.3 million was held in FF&E reserve accounts for future capital expenditures. This amount also includes $1.4 million held by lenders due to cash trap events.

FelCor LP's Summarized Condensed Consolidating Financial Information

FelCor LP is the issuer of the Senior Notes. Certain of FelCor LP's 100%-owned subsidiaries (FCH/PSH, L.P.; FelCor/CMB Buckhead Hotel, L.L.C.; FelCor/CMB Marlborough Hotel, L.L.C.; FelCor/CMB Orsouth Holdings, L.P.; FelCor/CMB SSF Holdings, L.P.; FelCor/CSS Holdings, L.P.; FelCor Dallas Love Field Owner, L.L.C.; FelCor Milpitas Owner, L.L.C.; FelCor TRS Borrower 4, L.L.C.; FelCor Hotel Asset Company, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; FelCor S-4 Hotels (SPE), L.L.C.; Madison 237 Hotel, L.L.C.; Myrtle Beach Owner, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively the “Subsidiary Guarantors”), together with Rangers, guaranty, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, the Senior Notes.

The guaranties by the Subsidiary Guarantors may be automatically and unconditionally released upon (i) the sale or other disposition of all of the capital stock of the Subsidiary Guarantor or the sale or disposition of all or substantially all of the assets of the Subsidiary Guarantor, if, in each case, as a result of such sale or disposition, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (ii) the consolidation or merger of any such Subsidiary Guarantor with any person other than FelCor LP, or a subsidiary of FelCor LP, if, as a result of such consolidation or merger, such Subsidiary Guarantor ceases to be a subsidiary of the Operating Partnership, (iii) a legal defeasance or covenant defeasance of the indenture, (iv) the unconditional and complete release of such Subsidiary Guarantor in accordance with the modification and waiver provisions of the indenture, or (v) the designation of a restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary under and in compliance with the indenture.

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Pursuant to amended Rule 3-10 of Regulation S-X, the following aggregate summarized financial information is provided for FelCor LP and the Subsidiary Guarantors. The aggregate summarized financial information does not include the investments in non-guarantor subsidiaries nor the earnings from non-guarantor subsidiaries and therefore is not necessarily indicative of the results of operations or financial position had FelCor LP and the Subsidiary Guarantors operated as independent entities. Intercompany transactions have been eliminated. The aggregate summarized balance sheet information as of March 31, 2021 and December 31, 2020 and aggregate summarized statement of operations and comprehensive loss information for the three months ended March 31, 2021 is as follows (in thousands):

	March 31, 2021		December 31, 2020
Investment in hotel properties, net	$	560,556	$	563,231
Related party rent receivable	5,496		—
Note receivable from non-guarantor subsidiary	32,709		32,709
Interest receivable from non-guarantor subsidiary	2,475		2,272
Deferred rent asset - related party	435		420
Other assets	126,012		128,049
Total assets	$	727,683	$	726,681
Debt, net	$	519,373	$	520,538
Related party rent payable	—		2,473
Deferred rent liability - related party	51		47
Other liabilities	55,677		48,896
Total liabilities	$	575,101	$	571,954

	For the three months ended March 31, 2021
Related party lease revenue	$	7,980
Total operating expenses	(9,097)
Other expense	(13)
Interest income	20
Interest income on note receivable from non-guarantor subsidiary	203
Interest expense	(6,067)
Loss before equity in loss from unconsolidated joint ventures	(6,974)
Equity in loss from unconsolidated joint ventures	(298)
Net loss and comprehensive loss attributable to FelCor LP	$	(7,272)

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes the risks that arise from changes in interest rates, equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in interest rates on our variable rate debt. As of March 31, 2021, we had approximately $96.0 million of total variable rate debt outstanding (or 12.5% of total indebtedness) with a weighted-average interest rate of 1.71% per annum. As of March 31, 2021, if market interest rates on our variable rate debt were to increase by 1.00%, or 100 basis points, interest expense would decrease future earnings and cash flows by approximately $1.0 million annually. As of March 31, 2021, we also had approximately $85.0 million of total variable rate related party debt outstanding (or 11.1% of total indebtedness) with a weighted-average interest rate of 3.11% per annum. As of March 31, 2021, if market interest rates on our variable rate related party debt were to increase by 1.00%, or 100 basis points, related party interest expense would decrease future earnings and cash flows by approximately $0.9 million annually.

Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable. From time to time, we may enter into derivative financial instruments such as interest rate swaps to mitigate our interest rate risk or to effectively

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lock the interest rate on a portion of our variable rate debt. We do not enter into derivative or interest rate transactions for speculative purposes.

The following table provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations outstanding as of March 31, 2021, the following table presents the principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands):

	2021			2022			2023			2024			2025			Total
Fixed rate debt (1)	$	1,889		$	110,997		$	—		$	—		$	474,888		$	587,774
Weighted-average interest rate	4.95		%	4.95		%	—		%	—		%	6.00		%	5.80		%
Variable rate debt (2)	$	—		$	—		$	—		$	96,000		$	—		$	96,000
Weighted-average interest rate	—		%	—		%	—		%	1.71		%	—		%	1.71		%
Variable rate debt - related party debt	$	—		$	—		85,000			$	—		$	—		$	85,000
Weighted-average interest rate	—		%	—		%	3.11		%	—		%	—		%	3.11		%
Total	$	1,889		$	110,997		$	85,000		$	96,000		$	474,888		$	768,774

(1)Excludes a total of $20.7 million related to fair value adjustments on the debt that RLJ pushed down to our consolidated financial statements as a result of the Mergers.

(2)Excludes $0.6 million of net deferred financing costs on the mortgage loan.

Our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during future periods, prevailing interest rates and our hedging strategies at that time.

Changes in market interest rates on our fixed rate debt impact the fair value of our debt, but such changes have no impact to our consolidated financial statements. As of March 31, 2021, the estimated fair value of our fixed rate debt was $630.7 million, which is based on having the same debt service requirements that could have been borrowed at the date presented, at prevailing current market interest rates. If interest rates were to rise by 1.00%, or 100 basis points, and our fixed rate debt balance remains constant, we expect the fair value of our debt to decrease by approximately $2.1 million.

Item 4.            Controls and Procedures.

Rangers

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Rangers' management, under the supervision and participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, Rangers' Chief Executive Officer and Chief Financial Officer concluded that Rangers' disclosure controls and procedures were effective as of March 31, 2021.

Changes in Internal Control over Financial Reporting

There have been no changes in Rangers' internal control over financial reporting (as defined in Rule 13a-15 and 15d-15 of the Exchange Act) during the period ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

FelCor LP

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Exchange Act, the management of Rangers GP, the sole general partner of FelCor LP, under the supervision and participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, Rangers GP's Chief Executive Officer and Chief Financial Officer concluded that FelCor LP's disclosure controls and procedures were effective as of March 31, 2021.

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Changes in Internal Control over Financial Reporting

There have been no changes in FelCor LP's internal control over financial reporting (as defined in Rule 13a-15 and 15d-15 of the Exchange Act) during the period ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.                     Legal Proceedings

The nature of the operations of our hotel properties exposes our hotel properties and the Company to the risk of claims and litigation in the normal course of their business. Other than routine litigation arising out of the ordinary course of business, the Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company.

Item 1A.            Risk Factors

For a discussion of our potential risks and uncertainties, please refer to the "Risk Factors" section in the Annual Report, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors previously

disclosed in the Annual Report.

Item 2.                     Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.                     Defaults Upon Senior Securities

None.

Item 4.                     Mine Safety Disclosures

Not applicable.

Item 5.                     Other Information

None.

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Item 6.                     Exhibits

The exhibits required to be filed by Item 601 of Regulation S-K are noted below:

Exhibit Index

Exhibit Number	Description of Exhibit
3.1	Third Amended and Restated Agreement of Limited Partnership of FelCor Limited Partnership, dated as of August 31, 2017 (incorporated by reference to Exhibit 3.1 to FelCor LP’s Current Report on Form 8-K filed on September 1, 2017)
3.2	Certificate of Amendment to the Certificate of Limited Partnership of FelCor Limited Partnership, dated September 1, 2017 (incorporated by reference to Exhibit 3.2 to FelCor LP’s Current Report on Form 8-K filed on September 1, 2017)
3.3	Articles of Organization of Rangers Sub I, LLC (incorporated by reference to Exhibit 3.1 to Rangers’ and FelCor LP’s Current Report on Form 8-K filed on September 7, 2017)
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Rangers.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Rangers.
31.3*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for FelCor LP.
31.4*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for FelCor LP.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Rangers.
32.2*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for FelCor LP.
101.INS	Inline XBRL Instance Document	Submitted electronically with this report
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Submitted electronically with this report
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document	Submitted electronically with this report
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically with this report
101.LAB	Inline XBRL Taxonomy Label Linkbase Document	Submitted electronically with this report
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document	Submitted electronically with this report

 *Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RANGERS SUB I, LLC
Dated: May 6, 2021	/s/ LESLIE D. HALE
	Leslie D. Hale
	President and Chief Executive Officer
Dated: May 6, 2021	/s/ SEAN M. MAHONEY
	Sean M. Mahoney
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
Dated: May 6, 2021	/s/ CHRISTOPHER A. GORMSEN
	Christopher A. Gormsen
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

	FELCOR LODGING LIMITED PARTNERSHIP
	By: Rangers General Partner, LLC, its General Partner
Dated: May 6, 2021	/s/ LESLIE D. HALE
	Leslie D. Hale
	President and Chief Executive Officer
Dated: May 6, 2021	/s/ SEAN M. MAHONEY
	Sean M. Mahoney
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
Dated: May 6, 2021	/s/ CHRISTOPHER A. GORMSEN
	Christopher A. Gormsen
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

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