UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2013

OR

o	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: 001-14236	(FelCor Lodging Trust Incorporated)
Commission file number: 333-39595-01	(FelCor Lodging Limited Partnership)

FelCor Lodging Trust Incorporated

FelCor Lodging Limited Partnership

(Exact Name of Registrant as Specified in Its Charter)

Maryland	(FelCor Lodging Trust Incorporated)	75-2541756
Delaware	(FelCor Lodging Limited Partnership)	75-2544994
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

545 E. John Carpenter Freeway, Suite 1300, Irving, Texas	75062
(Address of Principal Executive Offices)	(Zip Code)

(972) 444-4900

(Registrant’s Telephone Number, Including Area Code)

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.

FelCor Lodging Trust Incorporated	þ	Yes	¨	No
FelCor Lodging Limited Partnership	¨	Yes	þ	No

Note: As a voluntary filer not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act, the registrant has filed all reports pursuant to Section 13 or 15(d) as if the registrant were subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

FelCor Lodging Trust Incorporated	þ	Yes	¨	No
FelCor Lodging Limited Partnership	þ	Yes	¨	No

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

FelCor Lodging Trust Incorporated:
Large accelerated filer  o	Accelerated filer þ
Non-accelerated filer     o (Do not check if a smaller reporting company)	Smaller reporting company o

FelCor Lodging Limited Partnership:
Large accelerated filer  o	Accelerated filer ¨
Non-accelerated filer     þ (Do not check if a smaller reporting company)	Smaller reporting company o

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

FelCor Lodging Trust Incorporated	¨	Yes	þ	No
FelCor Lodging Limited Partnership	¨	Yes	þ	No

At April 29, 2013, FelCor Lodging Trust Incorporated had issued and outstanding 124,121,786 shares of common stock.

EXPLANATORY NOTE

This quarterly report on Form 10-Q for the quarter ended March 31, 2013, combines the filings for FelCor Lodging Trust Incorporated, or FelCor, and FelCor Lodging Limited Partnership, or FelCor LP. Where it is important to distinguish between the two, we either refer specifically to FelCor or FelCor LP. Otherwise we use the terms “we” or “our” to refer to FelCor and FelCor LP, collectively (including their consolidated subsidiaries), unless the context indicates otherwise.

FelCor is a Maryland corporation operating as a real estate investment trust, or REIT, and is the sole general partner of, and the owner of a greater than 99% partnership interest in, FelCor LP. Through FelCor LP, FelCor owns hotels and conducts business. As the sole general partner of FelCor LP, FelCor has exclusive and complete control of FelCor LP’s day-to-day management.

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

• presents our 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 FelCor and FelCor LP); and

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

We operate the company as one enterprise. The employees of FelCor direct the management and operation of FelCor LP. With sole control of FelCor LP, FelCor consolidates FelCor LP for financial reporting purposes. FelCor has no assets other than its investment in FelCor LP and no liabilities separate from FelCor LP. Therefore, the reported assets and liabilities for FelCor and FelCor LP are substantially identical.

The substantive difference between FelCor and FelCor LP filings is that FelCor is a REIT with publicly-traded equity, while FelCor LP is a partnership with no publicly-traded equity. This difference is reflected in the financial statements on the equity (or partners’ capital) section of the consolidated balance sheets and in the consolidated statements of equity (or partners’ capital). Apart from the different equity treatment, the consolidated financial statements for FelCor and FelCor LP are nearly identical, except the net income (loss) attributable to redeemable noncontrolling interests in FelCor LP is deducted from FelCor’s net income (loss) in order to arrive at net income (loss) attributable to FelCor common stockholders. The noncontrolling interest is included in net income (loss) attributable to FelCor LP common unitholders. The holders of noncontrolling interests in FelCor LP are unaffiliated with FelCor, and in aggregate, hold less than 1% of the operating partnership units.

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

i

FELCOR LODGING TRUST INCORPORATED and

FELCOR LODGING LIMITED PARTNERSHIP

INDEX

			Page
		PART I − FINANCIAL INFORMATION
Item 1.	Financial Statements		1
	FelCor Lodging Trust Incorporated:
		Consolidated Balance Sheets - March 31, 2013 and December 31, 2012 (unaudited)	1
		Consolidated Statements of Operations – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	2
		Consolidated Statements of Comprehensive Loss – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	3
		Consolidated Statements of Changes in Equity – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	4
		Consolidated Statements of Cash Flows – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	5
	FelCor Lodging Limited Partnership:
		Consolidated Balance Sheets - March 31, 2013 and December 31, 2012 (unaudited)	6
		Consolidated Statements of Operations – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	7
		Consolidated Statements of Comprehensive Loss – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	8
		Consolidated Statements of Partners’ Capital – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	9
		Consolidated Statements of Cash Flows – For the Three Months Ended March 31, 2013 and 2012 (unaudited)	10
	Notes to Consolidated Financial Statements		11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
		General	29
		Results of Operations	29
		Non-GAAP Financial Measures	31
		Pro Rata Share of Rooms Owned	36
		Hotel Portfolio Composition	37
		Hotel Operating Statistics	38
		Hotel Portfolio	40
		Liquidity and Capital Resources	42
		Inflation	43
		Seasonality	43
		Disclosure Regarding Forward-Looking Statements	44
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		45
Item 4.	Controls and Procedures		45
		PART II − OTHER INFORMATION
Item 6.	Exhibits		46
SIGNATURES			48

ii

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	March 31, 2013			December 31, 2012
Assets
Investment in hotels, net of accumulated depreciation of $948,095 and $929,298 at March 31, 2013 and December 31, 2012, respectively	$	1,787,016		$	1,794,564
Hotel development	156,081			146,079
Investment in unconsolidated entities	52,867			55,082
Cash and cash equivalents	61,796			45,745
Restricted cash	77,102			77,927
Accounts receivable, net of allowance for doubtful accounts of $243 and $469 at March 31, 2013 and December 31, 2012, respectively	34,293			25,383
Deferred expenses, net of accumulated amortization of $15,438 and $13,820 at March 31, 2013 and December 31, 2012, respectively	34,035			34,262
Other assets	26,096			23,391
Total assets	$	2,229,286		$	2,202,433
Liabilities and Equity
Debt, net of discount of $8,985 and $10,318 at March 31, 2013 and December 31, 2012, respectively	$	1,683,756		$	1,630,525
Distributions payable	8,545			8,545
Accrued expenses and other liabilities	147,715			138,442
Total liabilities	1,840,016			1,777,512
Commitments and contingencies
Redeemable noncontrolling interests in FelCor LP, 621 units issued and outstanding at March 31, 2013 and December 31, 2012	3,697			2,902
Equity:
Preferred stock, $0.01 par value, 20,000 shares authorized:
Series A Cumulative Convertible Preferred Stock, 12,880 shares, liquidation value of $322,011, issued and outstanding at March 31, 2013 and December 31, 2012	309,362			309,362
Series C Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,950, issued and outstanding at March 31, 2013 and December 31, 2012	169,412			169,412
Common stock, $0.01 par value, 200,000 shares authorized; 124,122 and 124,117 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	1,241			1,241
Additional paid-in capital	2,353,275			2,353,581
Accumulated other comprehensive income	25,684			26,039
Accumulated deficit	(2,500,831		)	(2,464,968		)
Total FelCor stockholders’ equity	358,143			394,667
Noncontrolling interests in other partnerships	27,430			27,352
Total equity	385,573			422,019
Total liabilities and equity	$	2,229,286		$	2,202,433

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

1

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands, except for per share data)

	Three Months Ended March 31,
	2013			2012
Revenues:
Hotel operating revenue	$	220,291		$	207,690
Other revenue	399			275
Total revenues	220,690			207,965
Expenses:
Hotel departmental expenses	84,535			78,761
Other property-related costs	63,108			60,482
Management and franchise fees	9,654			9,778
Taxes, insurance and lease expense	22,667			21,710
Corporate expenses	7,832			8,212
Depreciation and amortization	31,570			30,068
Conversion expenses	628			—
Other expenses	821			963
Total operating expenses	220,815			209,974
Operating loss	(125		)	(2,009		)
Interest expense, net	(26,483		)	(30,814		)
Debt extinguishment	—			(7		)
Loss before equity in income (loss) from unconsolidated entities	(26,608		)	(32,830		)
Equity in income (loss) from unconsolidated entities	89			(224		)
Loss from continuing operations	(26,519		)	(33,054		)
Income (loss) from discontinued operations	(86		)	4,193
Net loss	(26,605		)	(28,861		)
Net loss attributable to noncontrolling interests in other partnerships	240			202
Net loss attributable to redeemable noncontrolling interests in FelCor LP	180			196
Net loss attributable to FelCor	(26,185		)	(28,463		)
Preferred dividends	(9,678		)	(9,678		)
Net loss attributable to FelCor common stockholders	$	(35,863	)	$	(38,141	)
Basic and diluted per common share data:
Loss from continuing operations	$	(0.29	)	$	(0.34	)
Net loss	$	(0.29	)	$	(0.31	)
Basic and diluted weighted average common shares outstanding	123,814			123,665

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

2

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands)

	Three Months Ended
	March 31,
	2013			2012
Net loss	$	(26,605	)	$	(28,861	)
Foreign currency translation adjustment	(357		)	308
Comprehensive loss	(26,962		)	(28,553		)
Comprehensive loss attributable to noncontrolling interests in other partnerships	240			202
Comprehensive loss attributable to redeemable noncontrolling interests in FelCor LP	182			194
Comprehensive loss attributable to FelCor	$	(26,540	)	$	(28,157	)

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

3

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands)

	Preferred Stock			Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Income						Noncontrolling Interests in Other Partnerships
	Number of Shares	Amount		Number of Shares		Amount									Accumulated Deficit						Comprehensive Loss			Total Equity
Balance at December 31, 2011	12,948	$	478,774	124,281		$	1,243		$	2,353,251		$	25,738		$	(2,297,468	)	$	25,357					$	586,895
Amortization of stock awards	—	—		—		—			232			—			—			—						232
Forfeiture of stock awards	—	—		(63	)	(1		)	193			—			(199		)	—						(7		)
Conversion of operating partnership units into common shares	—	—		—		—			1			—			—			—						1
Allocation to redeemable noncontrolling interests	—	—		—		—			(230		)	—			—			—						(230		)
Contribution from noncontrolling interests	—	—		—		—			—			—			—			291						291
Distribution to noncontrolling interests	—	—		—		—			—			—			—			(455		)				(455		)
Other	—	—		—		—			—			—			(4		)	—						(4		)
Preferred dividends:
$0.4875 per Series A preferred share	—	—		—		—			—			—			(6,279		)	—						(6,279		)
$0.50 per Series C depositary preferred share	—	—		—		—			—			—			(3,399		)	—						(3,399		)
Comprehensive loss:
Foreign exchange translation	—	—		—		—			—			306			—			—			$	306
Net loss	—	—		—		—			—			—			(28,463		)	(202		)	(28,665		)
Comprehensive loss																					$	(28,359	)	(28,359		)
Balance at March 31, 2012	12,948	$	478,774	124,218		$	1,242		$	2,353,447		$	26,044		$	(2,335,812	)	$	24,991					$	548,686
Balance at December 31, 2012	12,948	$	478,774	124,117		$	1,241		$	2,353,581		$	26,039		$	(2,464,968	)	$	27,352					$	422,019
Issuance of stock awards	—	—		5		—			—			—			—			—						—
Amortization of stock awards	—	—		—		—			671			—			—			—						671
Allocation to redeemable noncontrolling interests	—	—		—		—			(977		)	—			—			—						(977		)
Contribution from noncontrolling interests	—	—		—		—			—			—			—			602						602
Distribution to noncontrolling interests	—	—		—		—			—			—			—			(284		)				(284		)
Preferred dividends:
$0.4875 per Series A preferred share	—	—		—		—			—			—			(6,279		)	—						(6,279		)
$0.50 per Series C depositary preferred share	—	—		—		—			—			—			(3,399		)	—						(3,399		)
Comprehensive loss:
Foreign exchange translation	—	—		—		—			—			(355		)	—			—			$	(355	)
Net loss	—	—		—		—			—			—			(26,185		)	(240		)	(26,425		)
Comprehensive loss																					$	(26,780	)	(26,780		)
Balance at March 31, 2013	12,948	$	478,774	124,122		$	1,241		$	2,353,275		$	25,684		$	(2,500,831	)	$	27,430					$	385,573

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

4

FELCOR LODGING TRUST INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net loss	$	(26,605	)	$	(28,861	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	31,570			32,992
Amortization of deferred financing fees and debt discount	2,694			4,487
Amortization of fixed stock and directors’ compensation	1,578			1,296
Equity in loss (income) from unconsolidated entities	(89		)	224
Distributions of income from unconsolidated entities	619			475
Debt extinguishment, net	—			7
Changes in assets and liabilities:
Accounts receivable	(8,903		)	(9,572		)
Other assets	(3,162		)	960
Accrued expenses and other liabilities	7,177			31,638
Net cash flow provided by operating activities	4,879			33,646
Cash flows from investing activities:
Improvements and additions to hotels	(23,342		)	(41,385		)
Hotel development	(8,260		)	(4,560		)
Payment of selling costs	(232		)	(413		)
Change in restricted cash – investing	825			885
Distributions from unconsolidated entities	1,685			403
Net cash used in investing activities	(29,324		)	(45,070		)
Cash flows from financing activities:
Proceeds from borrowings	84,245			36,000
Repayment of borrowings	(32,346		)	(9,372		)
Payment of deferred financing fees	(2,022		)	(996		)
Distributions paid to noncontrolling interests	(284		)	(455		)
Contributions from noncontrolling interests	602			291
Distributions paid to preferred stockholders	(9,678		)	(9,678		)
Net cash flow provided by financing activities	40,517			15,790
Effect of exchange rate changes on cash	(21		)	51
Net change in cash and cash equivalents	16,051			4,417
Cash and cash equivalents at beginning of periods	45,745			93,758
Cash and cash equivalents at end of periods	$	61,796		$	98,175
Supplemental cash flow information – interest paid, net of capitalized interest	$	7,013		$	5,665

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

5

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	March 31,			December 31,
	2013			2012
Assets
Investment in hotels, net of accumulated depreciation of $948,095 and $929,298 at March 31, 2013 and December 31, 2012, respectively	$	1,787,016		$	1,794,564
Hotel development	156,081			146,079
Investment in unconsolidated entities	52,867			55,082
Cash and cash equivalents	61,796			45,745
Restricted cash	77,102			77,927
Accounts receivable, net of allowance for doubtful accounts of $243 and $469 at March 31, 2013 and December 31, 2012, respectively	34,293			25,383
Deferred expenses, net of accumulated amortization of $15,438 and $13,820 at March 31, 2013 and December 31, 2012, respectively	34,035			34,262
Other assets	26,096			23,391
Total assets	$	2,229,286		$	2,202,433
Liabilities and Partners’ Capital
Debt, net of discount of $8,985 and $10,318 at March 31, 2013 and December 31, 2012, respectively	$	1,683,756		$	1,630,525
Distributions payable	8,545			8,545
Accrued expenses and other liabilities	147,715			138,442
Total liabilities	1,840,016			1,777,512
Commitments and contingencies
Redeemable units, 621 units issued and outstanding at March 31, 2013 and December 31, 2012	3,697			2,902
Capital:
Preferred units:
Series A Cumulative Convertible Preferred Units, 12,880 units issued and outstanding at March 31, 2013 and December 31, 2012	309,362			309,362
Series C Cumulative Redeemable Preferred Units, 68 units issued and outstanding at March 31, 2013 and December 31, 2012	169,412			169,412
Common units, 124,122 and 124,117 units issued and outstanding at March 31, 2013 and December 31, 2012, respectively	(146,425		)	(110,258		)
Accumulated other comprehensive income	25,794			26,151
Total FelCor LP partners’ capital	358,143			394,667
Noncontrolling interests	27,430			27,352
Total partners’ capital	385,573			422,019
Total liabilities and partners’ capital	$	2,229,286		$	2,202,433

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

6

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands, except for per unit data)

	Three Months Ended
	March 31,
	2013			2012
Revenues:
Hotel operating revenue	$	220,291		$	207,690
Other revenue	399			275
Total revenues	220,690			207,965
Expenses:
Hotel departmental expenses	84,535			78,761
Other property-related costs	63,108			60,482
Management and franchise fees	9,654			9,778
Taxes, insurance and lease expense	22,667			21,710
Corporate expenses	7,832			8,212
Depreciation and amortization	31,570			30,068
Conversion expenses	628			—
Other expenses	821			963
Total operating expenses	220,815			209,974
Operating loss	(125		)	(2,009		)
Interest expense, net	(26,483		)	(30,814		)
Debt extinguishment	—			(7		)
Loss before equity in income (loss) from unconsolidated entities	(26,608		)	(32,830		)
Equity in income (loss) from unconsolidated entities	89			(224		)
Loss from continuing operations	(26,519		)	(33,054		)
Income (loss) from discontinued operations	(86		)	4,193
Net loss	(26,605		)	(28,861		)
Net loss attributable to noncontrolling interests	240			202
Net loss attributable to FelCor LP	(26,365		)	(28,659		)
Preferred distributions	(9,678		)	(9,678		)
Net loss attributable to FelCor LP common unitholders	$	(36,043	)	$	(38,337	)
Basic and diluted per common unit data:
Loss from continuing operations	$	(0.29	)	$	(0.34	)
Net loss	$	(0.29	)	$	(0.31	)
Basic and diluted weighted average common units outstanding	124,435			124,301

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

7

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands)

	Three Months Ended
	March 31,
	2013			2012
Net loss	$	(26,605	)	$	(28,861	)
Foreign currency translation adjustment	(357		)	308
Comprehensive loss	(26,962		)	(28,553		)
Comprehensive loss attributable to noncontrolling interests	240			202
Comprehensive loss attributable to FelCor LP	$	(26,722	)	$	(28,351	)

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

8

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands)

	Preferred Units		Common Units			Accumulated Other Comprehensive Income			Noncontrolling Interests			Comprehensive Loss			Total Partners’ Capital
Balance at December 31, 2011	$	478,774	$	56,916		$	25,848		$	25,357					$	586,895
FelCor restricted stock compensation	—		225			—			—						225
Contributions	—		—			—			291						291
Distributions	—		(9,678		)	—			(455		)				(10,133		)
Allocation to redeemable units	—		(35		)	—			—						(35		)
Other	—		(4		)	—			—						(4		)
Comprehensive loss:
Foreign exchange translation						308						$	308
Net loss			(28,659		)				(202		)	(28,861		)
Comprehensive loss												$	(28,553	)	(28,553		)
Balance at March 31, 2012	$	478,774	$	18,765		$	26,156		$	24,991					$	548,686
Balance at December 31, 2012	$	478,774	$	(110,258	)	$	26,151		$	27,352					$	422,019
FelCor restricted stock compensation	—		671			—			—						671
Contributions	—		—			—			602						602
Distributions	—		(9,678		)	—			(284		)				(9,962		)
Allocation to redeemable units	—		(795		)	—			—						(795		)
Comprehensive loss:
Foreign exchange translation						(357		)				$	(357	)
Net loss			(26,365		)				(240		)	(26,605		)
Comprehensive loss												$	(26,962	)	(26,962		)
Balance at March 31, 2013	$	478,774	$	(146,425	)	$	25,794		$	27,430					$	385,573

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

9

FELCOR LODGING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2013 and 2012

(unaudited, in thousands)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net loss	$	(26,605	)	$	(28,861	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	31,570			32,992
Amortization of deferred financing fees and debt discount	2,694			4,487
Amortization of fixed stock and directors’ compensation	1,578			1,296
Equity in loss (income) from unconsolidated entities	(89		)	224
Distributions of income from unconsolidated entities	619			475
Debt extinguishment, net	—			7
Changes in assets and liabilities:
Accounts receivable	(8,903		)	(9,572		)
Other assets	(3,162		)	960
Accrued expenses and other liabilities	7,177			31,638
Net cash flow provided by operating activities	4,879			33,646
Cash flows from investing activities:
Improvements and additions to hotels	(23,342		)	(41,385		)
Hotel development	(8,260		)	(4,560		)
Payment of selling costs	(232		)	(413		)
Change in restricted cash – investing	825			885
Distributions from unconsolidated entities	1,685			403
Net cash used in investing activities	(29,324		)	(45,070		)
Cash flows from financing activities:
Proceeds from borrowings	84,245			36,000
Repayment of borrowings	(32,346		)	(9,372		)
Payment of deferred financing fees	(2,022		)	(996		)
Distributions paid to noncontrolling interests	(284		)	(455		)
Contributions from noncontrolling interests	602			291
Distributions paid to preferred unitholders	(9,678		)	(9,678		)
Net cash flow provided by financing activities	40,517			15,790
Effect of exchange rate changes on cash	(21		)	51
Net change in cash and cash equivalents	16,051			4,417
Cash and cash equivalents at beginning of periods	45,745			93,758
Cash and cash equivalents at end of periods	$	61,796		$	98,175
Supplemental cash flow information – interest paid, net of capitalized interest	$	7,013		$	5,665

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

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

FelCor Lodging Trust Incorporated (NYSE:FCH), or FelCor, is a Maryland corporation, operating as a real estate investment trust, or REIT.  FelCor is the sole general partner of, and the owner of a greater than 99.5% partnership interest in, FelCor Lodging Limited Partnership, or FelCor LP, through which we held ownership interests in 66 hotels in continuing operations with 18,993 rooms at March 31, 2013. At March 31, 2013, we had an aggregate of 124,743,167 shares and units outstanding, consisting of 124,121,786 shares of FelCor common stock and 621,381 FelCor LP units not owned by FelCor.

Of the 66 hotels included in continuing operations, we owned a 100% interest in 48 hotels, a 90% interest in entities owning three hotels, an 82% interest in an entity owning one hotel, a 60% interest in an entity owning one hotel and a 50% interest in entities owning 13 hotels. We consolidate our real estate interests in the 53 hotels in which we held majority interests, and we record the real estate interests of the 13 hotels in which we held 50% interests using the equity method. We leased 65 of the 66 hotels in continuing operations to our taxable REIT subsidiaries, of which we own a controlling interest. One50% owned hotel was operated without a lease. Because we owned controlling interests in these lessees, we consolidated our interests in these 65 hotels (which we refer to as our Consolidated Hotels) and reflect those hotels’ operating revenues and expenses in our statements of operations.  Of our Consolidated Hotels, we owned 50% of the real estate interests in each of 12 hotels (we accounted for the ownership in our real estate interests of these hotels by the equity method) and majority real estate interests in each of the remaining 53 hotels (we consolidate our real estate interest in these hotels).

The following table illustrates the distribution of our 65 Consolidated Hotels at March 31, 2013:

Brand	Hotels	Rooms
Embassy Suites Hotels®	35	9,116
Wyndham®and Wyndham Grand®	8	2,526
Holiday Inn®	5	1,862
Sheraton® and Westin®	5	1,882
DoubleTreeby Hilton®and Hilton®	6	1,450
Marriott® and Renaissance®	3	1,321
Fairmont®	1	383
Independent (Morgans and Royalton)	2	282
Total	65	18,822

At March 31, 2013, our Consolidated Hotels were located in the United States (64 hotels in 22 states) and Canada (one hotel in Ontario), with concentrations in California (14 hotels), Florida (8 hotels) and Texas (7 hotels). Approximately 55% of our revenue was generated from hotels in these three states during the first three months of 2013.

At March 31, 2013, of our 65 Consolidated Hotels: (i) subsidiaries of Hilton Hotels Corporation, or Hilton, managed 40 hotels, (ii) subsidiaries of Wyndham Hotel Group, or Wyndham, managed eight hotels, (iii) subsidiaries of InterContinental Hotels Group, or IHG, managed five hotels, (iv) subsidiaries of Starwood Hotels & Resorts Worldwide Inc., or Starwood, managed five hotels, (v) subsidiaries of Marriott International Inc., or Marriott, managed three hotels, (vi) a subsidiary of Fairmont Hotels and Resorts, or Fairmont, managed one hotel, (vii) a subsidiary of Morgans Hotel Group Corporation managed two hotels, and (viii) an independent management company managed one hotel.

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization — (continued)

In addition to the above hotels, we own (through a 95% interest in a consolidated joint venture) the Knickerbocker, a former hotel and office building, that is being redeveloped as a 4+ star hotel in midtown Manhattan and is expected to open in early 2014.

Effective January 1, 2013, our hotels managed by Marriott are accounted for on a 12 month calendar year basis as compared to a fiscal year comprised of 52 or 53 weeks ending on the Friday closest to December 31, as done in 2012 and prior years. Our three-month period ending March 31, 2013 is reported on a three-month calendar basis for our Marriott-managed hotels, which is consistent with the reporting periods for our other managed hotels. However, our three-month period ending March 31, 2012 includes the results of operations for the Marriott-managed hotels for the 12 week period ending March 23, 2012. Prior year results have not been restated to reflect the reporting period transition as we do not believe the change in periods would result in a material difference for comparison of results year over year.

The information in our consolidated financial statements for the three months ended March 31, 2013 and 2012 is unaudited. Preparing financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements for the three months ended March 31, 2013 and 2012, include adjustments based on management’s estimates (consisting of normal and recurring accruals), which we consider necessary for a fair presentation of the results for the periods. The financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2012, included in our Annual Report on Form 10-K. Operating results for the three months ended March 31, 2013 are not necessarily indicative of actual operating results for the entire year.

2. Investment in Unconsolidated Entities

We owned 50% interests in joint ventures that owned 13 hotels at March 31, 2013 and December 31, 2012.  We also own 50% interests in entities that own real estate in Myrtle Beach, South Carolina and provide condominium management services.  We account for our investments in these unconsolidated entities under the equity method.  We do not have any majority-owned subsidiaries that are not consolidated in our financial statements.  We make adjustments to our equity in income from unconsolidated entities related to the difference between our basis in investment in unconsolidated entities compared to the historical basis of the assets recorded by the joint ventures.

The following table summarizes combined balance sheet information for our unconsolidated entities (in thousands):

	March 31,		December 31,
	2013		2012
Investment in hotels, net of accumulated depreciation	$	151,132	$	155,888
Total assets	$	164,478	$	170,477
Debt	$	147,886	$	148,395
Total liabilities	$	151,640	$	154,139
Equity	$	12,838	$	16,338

Our unconsolidated entities’ debt at March 31, 2013 and December 31, 2012 consisted entirely of non-recourse mortgage debt. In January 2012, one of our unconsolidated joint ventures refinanced $130 million of debt and extended the maturity until 2014.

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Investment in Unconsolidated Entities — (continued)

The following table sets forth summarized combined statement of operations information for our unconsolidated entities (in thousands):

	Three Months Ended March 31,
	2013			2012
Total revenues	$	13,608		$	10,989
Net income	$	1,108		$	481
Net income attributable to FelCor	$	554		$	241
Depreciation of cost in excess of book value	(465		)	(465		)
Equity in income (loss) from unconsolidated entities	$	89		$	(224	)

The following table summarizes the components of our investment in unconsolidated entities (in thousands):

	March 31,			December 31,
	2013			2012
Hotel-related investments	$	(886	)	$	246
Cost in excess of book value of hotel investments	46,448			46,913
Land and condominium investments	7,305			7,923
	$	52,867		$	55,082

The following table summarizes the components of our equity in income (loss) from unconsolidated entities (in thousands):

	Three Months Ended
	March 31,
	2013			2012
Hotel investments	$	708		$	405
Other investments	(619		)	(629		)
Equity in income (loss) from unconsolidated entities	$	89		$	(224	)

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Debt

Consolidated debt consisted of the following (dollars in thousands):

	Encumbered	Interest	Maturity	March 31,		December 31,
	Hotels	Rate (%)	Date	2013		2012
Line of credit	9	L + 3.375	June 2016(a)	$	109,000	$	56,000
Hotel mortgage debt
Mortgage debt(b)	5	6.66	June - August 2014	64,906		65,431
Mortgage debt	1	5.81	July 2016	10,280		10,405
Mortgage debt(b)	4	4.95	October 2022	127,733		128,066
Mortgage debt	1	4.94	October 2022	32,057		32,176
Senior notes
Senior secured notes	6	6.75	June 2019	525,000		525,000
Senior secured notes	10	5.625	March 2023	525,000		525,000
Senior secured notes(c)	11	10.00	October 2014	224,919		223,586
Other(d)	—	L + 1.25	May 2016	64,861		64,861
Total	47			$	1,683,756	$	1,630,525

(a) Our $225 million line of credit can be extended for one year (to 2017), subject to satisfying certain conditions.

(b) This debt is comprised of separate non-cross-collateralized loans each secured by a mortgage of a different hotel.

(c) We originally issued $636 million (face amount) of these notes. After redemptions in 2011 and 2012, $234 million (face amount) of these notes were outstanding at March 31, 2013. These notes were initially sold at a discount that provided an effective yield of 12.875% before transaction costs.

(d) This loan is related to our Knickerbocker development project and is fully secured by restricted cash and a mortgage. Because we were able to assume an existing loan when we purchased this hotel, we were not required to pay any local mortgage recording tax. This loan, which allows us to borrow up to $85 million, can be extended for one year subject to satisfying certain conditions.

We reported $26.5 million and $30.8 million of interest expense for the three months ended March 31, 2013 and 2012, respectively, which is net of: (i) interest income of $22,000 and $48,000 and (ii) capitalized interest of $2.8 million and $3.3 million, respectively.

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Hotel Operating Revenue, Departmental Expenses, and Other Property-Related Costs

Hotel operating revenue from continuing operations was comprised of the following (in thousands):

	Three Months Ended
	March 31,
	2013		2012
Room revenue	$	170,379	$	161,779
Food and beverage revenue	38,464		34,821
Other operating departments	11,448		11,090
Total hotel operating revenue	$	220,291	$	207,690

Nearly all of our revenue is comprised of hotel operating revenue.  These revenues are recorded net of any sales or occupancy taxes collected from our guests. All rebates or discounts are recorded, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us.  All revenues are recorded on an accrual basis, as earned.  Appropriate allowances are made for doubtful accounts, which are recorded as a bad debt expense.  The remainder of our revenue was derived from other sources.

Hotel departmental expenses from continuing operations were comprised of the following (in thousands):

	Three Months Ended March 31,
	2013				2012
	Amount		% of Total Hotel Operating Revenue		Amount		% of Total Hotel Operating Revenue
Room	$	47,593	21.6	%	$	44,971	21.7	%
Food and beverage	31,462		14.3		28,345		13.6
Other operating departments	5,480		2.5		5,445		2.6
Total hotel departmental expenses	$	84,535	38.4	%	$	78,761	37.9	%

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Hotel Operating Revenue, Departmental Expenses, and Other Property-Related Costs— (continued)

Other property-related costs from continuing operations were comprised of the following amounts (in thousands):

	Three Months Ended March 31,
	2013				2012
	Amount		% of Total Hotel Operating Revenue		Amount		% of Total Hotel Operating Revenue
Hotel general and administrative expense	$	21,162	9.6	%	$	20,107	9.7	%
Marketing	20,274		9.2		19,258		9.3
Repair and maintenance	12,238		5.6		11,738		5.7
Utilities	9,434		4.2		9,379		4.4
Total other property-related costs	$	63,108	28.6	%	$	60,482	29.1	%

5. Taxes, Insurance and Lease Expense

Taxes, insurance and lease expense from continuing operations were comprised of the following (in thousands):

	Three Months Ended
	March 31,
	2013		2012
Hotel lease expense(a)	$	9,558	$	9,193
Land lease expense(b)	2,394		2,387
Real estate and other taxes	7,938		7,871
Property insurance, general liability insurance and other	2,777		2,259
Total taxes, insurance and lease expense	$	22,667	$	21,710

(a) Hotel lease expense is recorded by the consolidated operating lessees of 12 hotels owned by unconsolidated entities and is partially (generally 49%) offset through noncontrolling interests in other partnerships.  Our 50% share of the corresponding lease income is recorded through equity in income from unconsolidated entities.  Hotel lease expense includes percentage rent of $4.1 million and $3.8 million for the three months ended March 31, 2013 and 2012, respectively.

(b) Land lease expense includes percentage rent of $968,000 and $915,000 for the three months ended March 31, 2013 and 2012, respectively.

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Impairment

Our hotels are comprised of operations and cash flows that can clearly be distinguished, operationally and for financial reporting purposes, from the remainder of our operations.  Accordingly, we consider our hotels to be components for purposes of determining impairment charges and reporting discontinued operations.

We may record impairment charges if operating results of individual hotels are materially different from our forecasts, if the economy and/or lodging industry weakens, or if we shorten our contemplated holding period for additional hotels. We had no impairments during the three months ended March 31, 2013 and 2012.

7. Discontinued Operations

Discontinued operations include results of operations for ten hotels sold in 2012. The following table summarizes the condensed financial information for those hotels (in thousands):

	Three Months Ended
	March 31,
	2013			2012
Hotel operating revenue	$	—		$	27,840
Operating expenses	(86		)	(22,699		)
Operating income (loss) from discontinued operations	(86		)	5,141
Interest expense, net	—			(948		)
Income (loss) from discontinued operations	$	(86	)	$	4,193

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Loss Per Share/Unit

The following tables set forth the computation of basic and diluted income loss per share/unit (in thousands, except per share/unit data):

FelCor Loss Per Share

	Three Months Ended
	March 31,
	2013			2012
Numerator:
Net loss attributable to FelCor	$	(26,185	)	$	(28,463	)
Discontinued operations attributable to FelCor	86			(4,172		)
Loss from continuing operations attributable to FelCor	(26,099		)	(32,635		)
Less: Preferred dividends	(9,678		)	(9,678		)
Numerator for continuing operations attributable to FelCor common stockholders	(35,777		)	(42,313		)
Discontinued operations attributable to FelCor	(86		)	4,172
Numerator for basic and diluted loss attributable to FelCor common stockholders	$	(35,863	)	$	(38,141	)
Denominator:
Denominator for basic and diluted loss per share	123,814			123,665
Basic and diluted loss per share data:
Loss from continuing operations	$	(0.29	)	$	(0.34	)
Discontinued operations	$	—		$	0.03
Net loss	$	(0.29	)	$	(0.31	)

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Loss Per Share/Unit — (continued)

FelCor LP Loss Per Unit

	Three Months Ended
	March 31,
	2013			2012
Numerator:
Net loss attributable to FelCor LP	$	(26,365	)	$	(28,659	)
Discontinued operations attributable to FelCor LP	86			(4,193		)
Loss from continuing operations attributable to FelCor LP	(26,279		)	(32,852		)
Less: Preferred distributions	(9,678		)	(9,678		)
Numerator for continuing operations attributable to FelCor LP common unitholders	(35,957		)	(42,530		)
Discontinued operations attributable to FelCor LP	(86		)	4,193
Numerator for basic and diluted loss attributable to FelCor common unitholders	$	(36,043	)	$	(38,337	)
Denominator:
Denominator for basic and diluted loss per unit	124,435			124,301
Basic and diluted loss per unit data:
Loss from continuing operations	$	(0.29	)	$	(0.34	)
Discontinued operations	$	—		$	0.03
Net loss	$	(0.29	)	$	(0.31	)

Securities that could potentially dilute earnings per share/unit in the future that were not included in the computation of diluted loss per share/unit, because they would have been antidilutive for the periods presented, are as follows (in thousands):

	Three Months Ended
	March 31,
	2013	2012
Series A convertible preferred shares/units	9,985	9,985
FelCor restricted stock units	167	—

Series A preferred dividends (distributions) that would be excluded from net loss attributable to FelCor common stockholders (or FelCor LP common unitholders), if these Series A preferred shares/units were dilutive, were $6.3 million for the three months ended March 31, 2013 and 2012.

In February 2013, our executive officers were granted restricted stock units providing them with the potential to earn up to 1,250,000 common shares vesting in three increments over four years based on total stockholder return, relative to a group of 10 lodging REIT peers. The fixed cost of these grants are being amortized over the vesting period, and the potential impact of these restricted stock units on our earnings per share, had they been dilutive, was calculated using the treasury stock method.

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Fair Value of Financial Instruments

Disclosures about fair value of our financial instruments are based on pertinent information available to management as of March 31, 2013.  Considerable judgment is necessary to interpret market data and develop estimated fair value.  Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize on disposition of the financial instruments.  The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

Our estimates of the fair value of (i) cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximate carrying value due to the relatively short maturity of these instruments; (ii) our publicly-traded debt is based on observable market data (a Level 2 input) and has an estimated fair value of $1.4 billion at March 31, 2013 and $1.3 billion at December 31, 2012; and (iii) our debt that is not publicly-traded is based on a discounted cash flow model using effective borrowing rates for debt with similar terms, loan to estimated fair value of collateral and remaining maturities (a Level 3 input) and has an estimated fair value of $423.3 million and $369.6 million at March 31, 2013 and December 31, 2012, respectively. The estimated fair value of all our debt was $1.8 billion and $1.7 billion at March 31, 2013 and December 31, 2012, respectively. The carrying value of our debt was $1.7 billion and $1.6 billion at March 31, 2013 and December 31, 2012, respectively.

10. Redeemable Noncontrolling Interests in FelCor LP / Redeemable Units

We record redeemable noncontrolling interests in FelCor LP, in the case of FelCor, and redeemable units, in the case of FelCor LP, in the mezzanine section (between liabilities and equity or partners’ capital) of our consolidated balance sheets because of the redemption feature of these units. Additionally, FelCor’s consolidated statements of operations separately present earnings attributable to redeemable noncontrolling interests.  We adjust redeemable noncontrolling interests in FelCor LP (or redeemable units) each period to reflect the greater of its carrying value based on the accumulation of historical cost or its redemption value.  The historical cost is based on the proportionate relationship between the carrying value of equity associated with FelCor’s common stockholders relative to that of FelCor LP’s unitholders.  Redemption value is based on the closing price of FelCor’s common stock at period end. FelCor allocates net income (loss) to FelCor LP’s noncontrolling partners based on their weighted average ownership percentage during the period.  

At March 31, 2013, we had 621,381 limited partnership units outstanding. We carried 367,647 outstanding limited partner units (which were issued in May 2011) at $2.2 million, and the remaining 253,734 outstanding units of limited partner interest were carried at $1.5 million. The current value of the outstanding units is based on the closing price of FelCor’s common stock at March 31, 2013 ($5.95 per share).

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FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Redeemable Noncontrolling Interests in FelCor LP / Redeemable Units - (continued)

Changes in redeemable noncontrolling interests (or redeemable units) for the three months ended March 31, 2013 and 2012 are shown below (in thousands):

	Three Months Ended
	March 31,
	2013			2012
Balance at beginning of period	$	2,902		$	3,026
Conversion of units	—			(1		)
Redemption value allocation	977			230
Comprehensive loss:
Foreign exchange translation	(2		)	2
Net loss	(180		)	(196		)
Balance at end of period	$	3,697		$	3,061

11. FelCor LP’s Consolidating Financial Information

Certain of FelCor LP’s 100% owned subsidiaries (FCH/PSH, L.P.; FelCor Baton Rouge Owner, L.L.C.; 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 Lodging Holding Company, L.L.C.; FelCor Milpitas Owner, L.L.C.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Holdings, L.L.C.; FelCor Canada Co.; FelCor Hotel Asset Company, L.L.C.; FelCor Copley Plaza, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; FelCor S-4 Hotels (SPE), L.L.C.; Los Angeles International Airport Hotel Associates, a Texas L.P.; Madison 237 Hotel, L.L.C.; Myrtle Beach Owner, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guarantee, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, our senior debt.

The guarantees by the Subsidiary Guarantors may be automatically and unconditionally released upon (1) 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, (2) 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 FelCor LP, (3) a legal defeasance or covenant defeasance of the indenture, (4) the unconditional and complete release of such Subsidiary Guarantor in accordance with the modification and waiver provisions of the indenture, or (5) the designation of a restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary under and in compliance with the indenture.

The following tables present consolidating information for the Subsidiary Guarantors.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING BALANCE SHEET

March 31, 2013

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net investment in hotels	$	66,695		$	1,078,564		$	641,757	$	—		$	1,787,016
Hotel development	—			—			156,081		—			156,081
Equity investment in consolidated entities	1,529,937			—			—		(1,529,937		)	—
Investment in unconsolidated entities	40,758			10,719			1,390		—			52,867
Cash and cash equivalents	13,758			41,335			6,703		—			61,796
Restricted cash	—			8,123			68,979		—			77,102
Accounts receivable, net	73			33,473			747		—			34,293
Deferred expenses, net	23,048			—			10,987		—			34,035
Other assets	8,214			12,278			5,604		—			26,096
Total assets	$	1,682,483		$	1,184,492		$	892,248	$	(1,529,937	)	$	2,229,286
Debt, net	$	1,274,919		$	—		$	408,837	$	—		$	1,683,756
Distributions payable	8,545			—			—		—			8,545
Accrued expenses and other liabilities	37,179			102,571			7,965		—			147,715
Total liabilities	1,320,643			102,571			416,802		—			1,840,016
Redeemable units	3,697			—			—		—			3,697
Preferred units	478,774			—			—		—			478,774
Common units	(120,631		)	1,056,633			447,510		(1,529,937		)	(146,425		)
Accumulated other comprehensive income	—			25,794			—		—			25,794
Total FelCor LP partners’ capital	358,143			1,082,427			447,510		(1,529,937		)	358,143
Noncontrolling interests	—			(506		)	27,936		—			27,430
Total partners’ capital	358,143			1,081,921			475,446		(1,529,937		)	385,573
Total liabilities and partners’ capital	$	1,682,483		$	1,184,492		$	892,248	$	(1,529,937	)	$	2,229,286

22

FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries		Eliminations			Total Consolidated
Net investment in hotels	$	66,945		$	1,102,262		$	625,357	$	—		$	1,794,564
Hotel development	—			—			146,079		—			146,079
Equity investment in consolidated entities	1,551,377			—			—		(1,551,377		)	—
Investment in unconsolidated entities	42,508			11,173			1,401		—			55,082
Cash and cash equivalents	8,312			30,425			7,008		—			45,745
Restricted cash	—			9,186			68,741		—			77,927
Accounts receivable, net	96			24,432			855		—			25,383
Deferred expenses, net	22,657			—			11,605		—			34,262
Other assets	8,122			10,322			4,947		—			23,391
Total assets	$	1,700,017		$	1,187,800		$	865,993	$	(1,551,377	)	$	2,202,433
Debt, net	$	1,273,587		$	—		$	356,938	$	—		$	1,630,525
Distributions payable	8,545			—			—		—			8,545
Accrued expenses and other liabilities	20,316			95,986			22,140		—			138,442
Total liabilities	1,302,448			95,986			379,078		—			1,777,512
Redeemable units	2,902			—			—		—			2,902
Preferred units	478,774			—			—		—			478,774
Common units	(84,107		)	1,065,938			459,288		(1,551,377		)	(110,258		)
Accumulated other comprehensive income	—			26,151			—		—			26,151
Total FelCor LP partners’ capital	394,667			1,092,089			459,288		(1,551,377		)	394,667
Noncontrolling interests	—			(275		)	27,627		—			27,352
Total partners’ capital	394,667			1,091,814			486,915		(1,551,377		)	422,019
Total liabilities and partners’ capital	$	1,700,017		$	1,187,800		$	865,993	$	(1,551,377	)	$	2,202,433

23

FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.    FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSEDCONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2013

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	220,291		$	—		$	—		$	220,291
Percentage lease revenue	1,262			—			26,438			(27,700		)	—
Other revenue	3			333			63			—			399
Total revenues	1,265			220,624			26,501			(27,700		)	220,690
Expenses:
Hotel operating expenses	—			157,297			—			—			157,297
Taxes, insurance and lease expense	304			46,421			3,642			(27,700		)	22,667
Corporate expenses	109			5,543			2,180			—			7,832
Depreciation and amortization	1,250			17,949			12,371			—			31,570
Conversion expenses	20			391			217			—			628
Other expenses	23			517			281			—			821
Total operating expenses	1,706			228,118			18,691			(27,700		)	220,815
Operating loss	(441		)	(7,494		)	7,810			—			(125		)
Interest expense, net	(21,604		)	(303		)	(4,576		)	—			(26,483		)
Loss before equity in income from unconsolidated entities	(22,045		)	(7,797		)	3,234			—			(26,608		)
Equity in income from consolidated entities	(4,625		)	—			—			4,625			—
Equity in income from unconsolidated entities	305			(205		)	(11		)	—			89
Loss from continuing operations	(26,365		)	(8,002		)	3,223			4,625			(26,519		)
Loss from discontinued operations	—			(86		)	—			—			(86		)
Net loss	(26,365		)	(8,088		)	3,223			4,625			(26,605		)
Loss attributable to noncontrolling interests	—			256			(16		)	—			240
Net loss attributable to FelCor LP	(26,365		)	(7,832		)	3,207			4,625			(26,365		)
Preferred distributions	(9,678		)	—			—			—			(9,678		)
Net loss attributable to FelCor LP common unitholders	$	(36,043	)	$	(7,832	)	$	3,207		$	4,625		$	(36,043	)

24

FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.    FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSEDCONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2012

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Revenues:
Hotel operating revenue	$	—		$	207,690		$	—		$	—		$	207,690
Percentage lease revenue	1,248			—			30,534			(31,782		)	—
Other revenue	1			219			55			—			275
Total revenues	1,249			207,909			30,589			(31,782		)	207,965
Expenses:
Hotel operating expenses	—			149,021			—			—			149,021
Taxes, insurance and lease expense	303			48,997			4,192			(31,782		)	21,710
Corporate expenses	1,844			3,958			2,410			—			8,212
Depreciation and amortization	1,131			15,464			13,473			—			30,068
Other expenses	418			508			37			—			963
Total operating expenses	3,696			217,948			20,112			(31,782		)	209,974
Operating loss	(2,447		)	(10,039		)	10,477			—			(2,009		)
Interest expense, net	(21,077		)	(4,464		)	(5,273		)	—			(30,814		)
Debt extinguishment	(7		)	—			—			—			(7		)
Loss before equity in loss from unconsolidated entities	(23,531		)	(14,503		)	5,204			—			(32,830		)
Equity in income from consolidated entities	(5,138		)	—			—			5,138			—
Equity in loss from unconsolidated entities	32			(245		)	(11		)	—			(224		)
Loss from continuing operations	(28,637		)	(14,748		)	5,193			5,138			(33,054		)
Income from discontinued operations	(22		)	(108		)	4,323			—			4,193
Net loss	(28,659		)	(14,856		)	9,516			5,138			(28,861		)
Loss attributable to noncontrolling interests	—			265			(63		)	—			202
Net loss attributable to FelCor LP	(28,659		)	(14,591		)	9,453			5,138			(28,659		)
Preferred distributions	(9,678		)	—			—			—			(9,678		)
Net loss attributable to FelCor LP common unitholders	$	(38,337	)	$	(14,591	)	$	9,453		$	5,138		$	(38,337	)

25

FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.    FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSS

For the Three Months Ended March 31, 2013

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations		Total Consolidated
Net loss	$	(26,365	)	$	(8,088	)	$	3,223		$	4,625	$	(26,605	)
Foreign currency translation adjustment	—			(357		)	—			—		(357		)
Comprehensive loss	(26,365		)	(8,445		)	3,223			4,625		(26,962		)
Comprehensive loss attributable to noncontrolling interests	—			256			(16		)	—		240
Comprehensive loss attributable to FelCor LP	$	(26,365	)	$	(8,189	)	$	3,207		$	4,625	$	(26,722	)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSS

For the Three Months Ended March 31, 2012

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations		Total Consolidated
Net loss	$	(28,659	)	$	(14,856	)	$	9,516		$	5,138	$	(28,861	)
Foreign currency translation adjustment	—			308			—			—		308
Comprehensive loss	(28,659		)	(14,548		)	9,516			5,138		(28,553		)
Comprehensive loss attributable to noncontrolling interests	—			265			(63		)	—		202
Comprehensive loss attributable to FelCor LP	$	(28,659	)	$	(14,283	)	$	9,453		$	5,138	$	(28,351	)

26

FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.    FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2013

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating activities:
Cash flows from operating activities	$	(3,904	)	$	6,447		$	2,336		$	—		$	4,879
Investing activities:
Improvements and additions to hotels	(142		)	(14,312		)	(8,888		)	—			(23,342		)
Hotel development	—			—			(8,260		)	—			(8,260		)
Payment of selling costs	—			(17		)	(215		)	—			(232		)
Distributions from unconsolidated entities	1,435			250			—			—			1,685
Intercompany financing	19,554			—			—			(19,554		)	—
Other	—			1,746			(921		)	—			825
Cash flows from investing activities	20,847			(12,333		)	(18,284		)	(19,554		)	(29,324		)
Financing activities:
Proceeds from borrowings	—			—			84,245			—			84,245
Repayment of borrowings	—			—			(32,346		)	—			(32,346		)
Distributions paid to preferred unitholders	(9,678		)	—			—			—			(9,678		)
Intercompany financing	—			16,792			(36,346		)	19,554			—
Other	(1,819		)	25			90			—			(1,704		)
Cash flows from financing activities	(11,497		)	16,817			15,643			19,554			40,517
Effect of exchange rate changes on cash	—			(21		)	—			—			(21		)
Change in cash and cash equivalents	5,446			10,910			(305		)	—			16,051
Cash and cash equivalents at beginning of period	8,312			30,425			7,008			—			45,745
Cash and cash equivalents at end of period	$	13,758		$	41,335		$	6,703		$	—		$	61,796

27

FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.    FelCor LP’s Consolidating Financial Information – (continued)

FELCOR LODGING LIMITED PARTNERSHIP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2012

(in thousands)

	FelCor LP			Subsidiary Guarantors			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated
Operating activities:
Cash flows from operating activities	$	828		$	6,489		$	26,329		$	—		$	33,646
Investing activities:
Improvements and additions to hotels	(5,181		)	(22,731		)	(13,473		)	—			(41,385		)
Hotel development	—			—			(4,560		)	—			(4,560		)
Distributions from unconsolidated entities	403			—			—			—			403
Intercompany financing	27,514			—			—			(27,514		)	—
Other	(15		)	1,879			(1,392		)	—			472
Cash flows from investing activities	22,721			(20,852		)	(19,425		)	(27,514		)	(45,070		)
Financing activities:
Proceeds from borrowings	—			—			36,000			—			36,000
Repayment of borrowings	(96		)	(215		)	(9,061		)	—			(9,372		)
Distributions paid to preferred unitholders	(9,678		)	—			—			—			(9,678		)
Intercompany financing	—			5,277			(32,791		)	27,514			—
Other	—			—			(1,160		)	—			(1,160		)
Cash flows from financing activities	(9,774		)	5,062			(7,012		)	27,514			15,790
Effect of exchange rate changes on cash	—			51			—			—			51
Change in cash and cash equivalents	13,775			(9,250		)	(108		)	—			4,417
Cash and cash equivalents at beginning of period	23,503			67,001			3,254			—			93,758
Cash and cash equivalents at end of period	$	37,278		$	57,751		$	3,146		$	—		$	98,175

28

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

General

Our revenue per available room (“RevPar”) grew 5.5% in the first three months of 2013 compared to the same period in 2012, driven primarily by a 5.0% increase in average daily rate (“ADR”) over the prior year period, coupled with a slight improvement in occupancy, which improved 30 basis points from the prior year. Demand growth remains strong and supply growth remains historically low, which will provide for sustainable RevPAR growth throughout 2013.

In the first quarter of 2013, we made progress on our strategic plan:

• In March, we re-branded and transitioned management at eight core Holiday Inn hotels located in strategic markets to Wyndham brands. Wyndham Worldwide Corporation is providing a $100 million performance guaranty over the initial 10-year term of the agreement, with an annual guaranty of up to $21.5 million, that ensures a minimum annual NOI for the eight hotels. In addition, the management fee structure is more consistent with prevailing industry practices, and we expect to save approximately $50 million in management fees over the initial term. The guaranty protects approximately 20% of our core hotel-level EBITDA from future lodging cycle fluctuations, in addition to ensuring a return on investment that is superior to the hotels’ historical performance.

• To date, we have sold 19 of 39 non-strategic hotels as part of our portfolio repositioning plan. We are currently marketing 11 non-strategic hotels and are evaluating offers or have agreed to sell six of those 11, including one under contract. The other nine non-strategic hotels are owned by joint ventures, and we are progressing on discussions with our partners to facilitate marketing those properties.

Results of Operations

Comparison of the Three Months ended March 31, 2013 and 2012

For the three months ended March 31, 2013, we recorded a$26.6 million net loss compared to a $28.9 million loss for the same period in 2012.

• Total revenue was $220.7 million, 6.1% more than 2012. The increase was driven by a 5.5%increase in same-store RevPAR (6.7% for our core hotels and 1.2% for our non-strategic hotels), reflecting a 5.0%increase in ADR and a 30 basis point increase in occupancy.

• Hotel departmental expenses increased $5.8 million. As a percentage of total revenue, hotel departmental expenses increased from 37.9% to 38.3% in the current period. This increase was primarily driven by the re-opening of our food and beverage outlets at the Fairmont Copley Plaza. Food and beverage operations generally have much higher expenses as a percent of revenue than the rooms department.

• Other property-related costs increased $2.6 million due to a combination of higher costs associated with our sales efforts and marketing programs, in addition to higher credit card commissions resulting from a shift in customer mix at our hotels. As a percentage of total revenue, other property-related costs decreased from 29.1% to 28.6%. This improvement primarily reflects revenue increases driven by ADR as opposed to occupancy.

• Management and franchise fees decreased $124,000. While revenue increased in 2013, fees declined as a result of fewer properties paying incentive fees and converting eight hotels to

29

Wyndham brands and management on March 1, 2013. Wyndham charges lower management fees than the prior management company. As a percentage of total revenue, these costs decreased from 4.7% to 4.4% from the same period in 2012.

• Taxes, insurance and lease expense increased $1.0 million and remained relatively flat as a percentage of total revenue. The increase in expense reflects a combination of increased percentage lease expense (computed as a percentage of hotel revenues in excess of base rent; as revenue increases, percentage rent increases at a faster rate), higher property taxes (due to reductions received last year after appeals), and an increase in general liability insurance (due to a more favorable claims experience last year).

• Corporate expenses decreased $380,000 (decreasing as a percentage of total revenue from 3.9% to 3.5%). This decrease primarily reflects lower income tax withholding and payroll taxes with respect to restricted cash awards, which were lower in 2013 than in 2012. (In 2012, our executive officers received restricted cash awards for 2011 performance. These officers did not receive restricted cash awards in 2013 as they no longer participate in the restricted cash program.) We recognize tax withholding and payroll taxes on these awards as an expense when awarded rather than as an expense over the three-year vesting period as we do with the after-tax remainder of the awards. The reduction in withholding with respect to restricted cash awards is partially offset by increased fixed and variable stock compensation expense associated with our incentive compensation awards granted to executive officers.

• Depreciation and amortization expense increased $1.5 million, primarily reflecting depreciation on the $121.5 million of hotel capital expenditures made in 2012.

• Conversion expenses. The expenses incurred related to converting eight hotels to Wyndham brands and management have been classified as conversion expense in our statements of operations in 2013.

• Net interest expense decreased $4.3 million primarily reflecting our lower average interest rate. This lower rate in 2013 is partially offset by an increase in average debt for the period and less capitalized interest associated with certain renovation and redevelopment projects.

• Discontinued operations for the three months ended March 31, 2013 and 2012 include the results of operations for ten hotels sold in 2012.

30

Non-GAAP Financial Measures

We refer in this report to certain “non-GAAP financial measures.”  These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Hotel EBITDA, and Hotel EBITDA margin, are measures of our financial performance that are not calculated and presented in accordance with GAAP.  The following tables reconcile these non-GAAP measures to the most comparable GAAP financial measure.  Immediately following the reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and the limitations of such measures.

Reconciliation of Net Loss to FFO and Adjusted FFO

(in thousands, except per share data)

	Three Months Ended March 31,
	2013							2012
	Dollars			Shares	Per Share Amount			Dollars			Shares	Per Share Amount
Net loss	$	(26,605	)					$	(28,861	)
Noncontrolling interests	420							398
Preferred dividends	(9,678		)					(9,678		)
Net loss attributable to FelCor common stockholders	(35,863		)	123,814	$	(0.29	)	(38,141		)	123,665	$	(0.31	)
Depreciation and amortization	31,570			—	0.25			30,068			—	0.24
Depreciation, discontinued operations and unconsolidated entities	2,706			—	0.02			5,761			—	0.05
Noncontrolling interests in FelCor LP	(180		)	621	0.01			(196		)	636	—
FFO	(1,767		)	124,435	(0.01		)	(2,508		)	124,301	(0.02		)
Acquisition costs	23			—	—			38			—	—
Debt extinguishment	—			—	—			7			—	—
Conversion expenses	628			—	—			—			—	—
Variable stock compensation	102			—	—			—			—	—
Severance costs	—			—	—			380			—	—
Pre-opening costs, net of noncontrolling interests	241			—	—			—			—	—
Adjusted FFO	$	(773	)	124,435	$	(0.01	)	$	(2,083	)	124,301	$	(0.02	)

31

Reconciliation of Net Loss to EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA

(in thousands)

	Three Months Ended
	March 31,
	2013			2012
Net loss	$	(26,605	)	$	(28,861	)
Depreciation and amortization	31,570			30,068
Depreciation, discontinued operations and unconsolidated entities	2,706			5,761
Interest expense	26,505			30,862
Interest expense, discontinued operations and unconsolidated entities	672			1,625
Noncontrolling interests in other partnerships	240			202
EBITDA	35,088			39,657
Debt extinguishment	—			7
Acquisition costs	23			38
Amortization of fixed stock and directors’ compensation	1,578			1,296
Variable stock compensation	102			—
Severance costs	—			380
Conversion expenses	628			—
Pre-opening costs, net of noncontrolling interests	241			—
Adjusted EBITDA	37,660			41,378
Adjusted EBITDA from discontinued operations	86			(8,065		)
Same-store Adjusted EBITDA	$	37,746		$	33,313

Reconciliation of Income (Loss) from Discontinued Operations to Adjusted EBITDA from Discontinued Operations

(in thousands)

	Three Months Ended
	March 31,
	2013			2012
Income (loss) from discontinued operations	$	(86	)	$	4,193
Depreciation and amortization	—			2,924
Interest expense	—			948
Adjusted EBITDA from discontinued operations	$	(86	)	$	8,065

32

Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)

	Three Months Ended
	March 31,
	2013			2012
Same-store operating revenue:
Room	$	170,379		$	161,779
Food and beverage	38,464			34,821
Other operating departments	11,448			11,090
Same-store operating revenue	220,291			207,690
Same-store operating expense:
Room	47,593			44,971
Food and beverage	31,462			28,345
Other operating departments	5,480			5,445
Other property related costs	63,108			60,482
Management and franchise fees	9,654			9,778
Taxes, insurance and lease expense	15,007			14,347
Same-store operating expense	172,304			163,368
Hotel EBITDA	$	47,987		$	44,322
Hotel EBITDA Margin	21.8		%	21.3		%

Hotel EBITDA and Hotel EBITDA Margin (continued)

(dollars in thousands)

	Three Months Ended
	March 31,
	2013			2012
Hotel EBITDA - Core (45)	$	36,952		$	32,822
Hotel EBITDA - Non-strategic (20)	11,035			11,500
Hotel EBITDA	$	47,987		$	44,322
Hotel EBITDA Margin - Core (45)	21.0		%	20.1		%
Hotel EBITDA Margin - Non-strategic (20)	24.9		%	26.0		%

33

Reconciliation of Same-store Operating Revenue and Same-store Operating Expense to Total Revenue, Total Operating Expense and Operating Loss

(in thousands)

	Three Months Ended
	March 31,
	2013			2012
Same-store operating revenue	$	220,291		$	207,690
Other revenue	399			275
Total revenue	220,690			207,965
Same-store operating expense	172,304			163,368
Consolidated hotel lease expense(a)	9,558			9,194
Unconsolidated taxes, insurance and lease expense	(1,898		)	(1,831		)
Corporate expenses	7,832			8,212
Depreciation and amortization	31,570			30,068
Conversion expenses	628			—
Other expenses	821			963
Total operating expense	220,815			209,974
Operating loss	$	(125	)	$	(2,009	)

(a) Consolidated hotel lease expense represents the percentage lease expense of our 51% owned operating lessees. The offsetting percentage lease revenue is included in equity in income from unconsolidated entities.

Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company’s operations. These supplemental measures are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a hotel REIT’s performance and should be considered along with, but not as an alternative to, net income (loss) attributable to FelCor as a measure of our operating performance.

FFO and EBITDA

The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income or loss attributable to parent (computed in accordance with GAAP), excluding gains or losses from sales of property, plus depreciation, amortization and impairment losses. FFO for unconsolidated partnerships and joint ventures are calculated on the same basis. We compute FFO in accordance with standards established by NAREIT. This may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

EBITDA is a commonly used measure of performance in many industries. We define EBITDA as net income or loss attributable to parent (computed in accordance with GAAP) plus interest expenses, income taxes, depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA on the same basis.

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Adjustments to FFO and EBITDA

We adjust FFO and EBITDA when evaluating our performance because management believes that the exclusion of certain additional items provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted FFO, and Adjusted EBITDA when combined with GAAP net income attributable to FelCor, EBITDA and FFO, is beneficial to an investor’s better understanding of our operating performance.

• Gains and losses related to extinguishment of debt and interest rate swaps - We exclude gains and losses related to extinguishment of debt and interest rate swaps from FFO and EBITDA because we believe that it is not indicative of ongoing operating performance of our hotel assets. This also represents an acceleration of interest expense or a reduction of interest expense, and interest expense is excluded from EBITDA.

• Cumulative effect of a change in accounting principle - Infrequently, the Financial Accounting Standards Board promulgates new accounting standards that require the consolidated statements of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments in computing Adjusted FFO and Adjusted EBITDA because they do not reflect our actual performance for that period.

• Other transaction costs - From time to time, we periodically incur costs that are not indicative of ongoing operating performance. Such costs include, but are not limited to, conversions costs, acquisition costs, pre-opening costs and severance costs. We exclude these costs from the calculation of Adjusted FFO and Adjusted EBITDA.

• Variable stock compensation - We exclude the cost associated with our variable stock compensation. This cost is subject to volatility related to the price and dividends of our common stock that does not necessarily correspond to our operating performance.

In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale of depreciable assets and impairment losses because including them in EBITDA is inconsistent with reporting the ongoing performance of our remaining assets. Additionally, the gain or loss on sale of depreciable assets and impairment losses represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA. We also exclude the amortization of our fixed stock compensation. While this amortization is included in corporate expenses and is not separately stated on our statements of operations, excluding this amortization is consistent with the EBITDA definition.

Hotel EBITDA and Hotel EBITDA Margin

Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and brand/managers have direct control. We believe that Hotel EBITDA and Hotel EBITDA margin are useful to investors by providing greater transparency with respect to two significant measures that we use in our financial and operational decision-making. Additionally, using these measures facilitates comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin in a manner consistent with Adjusted EBITDA, however, we also eliminate all revenues and expenses from continuing operations not directly associated with hotel operations, including other income and corporate-level and other expenses. We eliminate these additional items because we believe property-level results provide investors with supplemental information into the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis. We also eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by noncontrolling interests and equity in income from unconsolidated subsidiaries, and include the cost of unconsolidated taxes, insurance and lease expense, to reflect the entire operating costs

35

applicable to our Consolidated Hotels. Hotel EBITDA and Hotel EBITDA margins are presented on a same-store basis.

Use and Limitations of Non-GAAP Measures

Our management and Board of Directors use FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies.  We use Hotel EBITDA and Hotel EBITDA margin in evaluating hotel-level performance and the operating efficiency of our hotel managers.

The use of these non-GAAP financial measures has certain limitations.  These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies.  These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures.  Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP.  They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP.  These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure.  Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Pro Rata Share of Rooms Owned

The following table sets forth, at March 31, 2013, our pro rata share of hotel rooms, included in continuing operations, after giving consideration to the portion of rooms attributed to our partners in our consolidated and unconsolidated joint ventures:

	Hotels	Room Count at March 31, 2013
Consolidated Hotels	65	18,822
Unconsolidated hotel operations	1	171
Total hotels	66	18,993
50% joint ventures	13	(1,573	)
60% joint venture	1	(214	)
82% joint venture	1	(40	)
90% joint ventures	3	(68	)
Pro rata rooms attributed to joint venture partners		(1,895	)
Pro rata share of rooms owned		17,098

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Hotel Portfolio Composition

The following table illustrates the distribution of same-store hotels.

Brand	Hotels	Rooms	2012 Hotel Operating Revenue (in thousands)		2012 Hotel EBITDA (in thousands)(a)
Embassy Suites Hotels	20	5,433	$	256,200	$	78,389
Wyndham and Wyndham Grand(b)	8	2,526	120,354		37,960
Renaissance and Marriott	3	1,321	111,976		17,912
DoubleTree by Hilton and Hilton	5	1,206	56,071		16,706
Sheraton and Westin	4	1,604	68,369		14,540
Fairmont	1	383	41,255		4,286
Holiday Inn	2	968	40,512		4,218
Morgans and Royalton	2	282	32,129		3,458
Core hotels	45	13,723	726,866		177,469
Non-strategic hotels	20	5,099	179,474		48,044
Same-store hotels	65	18,822	$	906,340	$	225,513
Market
San Francisco area	4	1,637	$	99,659	$	21,036
Los Angeles area	3	677	33,287		13,760
South Florida	3	923	47,298		13,257
Boston	3	916	68,121		12,126
New York area	4	817	57,052		9,733
Myrtle Beach	2	640	36,973		9,429
Atlanta	3	952	35,410		9,230
Philadelphia	2	728	36,122		8,882
Tampa	1	361	45,152		7,957
San Diego	1	600	26,445		6,688
Other markets	19	5,472	241,347		65,371
Core hotels	45	13,723	726,866		177,469
Non-strategic hotels	20	5,099	179,474		48,044
Same-store hotels	65	18,822	$	906,340	$	225,513
Location
Urban	17	5,305	$	316,354	$	74,446
Resort	10	2,928	183,807		41,475
Airport	9	2,957	126,906		33,742
Suburban	9	2,533	99,799		27,806
Core hotels	45	13,723	726,866		177,469
Non-strategic hotels	20	5,099	179,474		48,044
Same-store hotels	65	18,822	$	906,340	$	225,513

(a) Hotel EBITDA is a non-GAAP financial measure. A detailed reconciliation and further discussion of Hotel EBITDA is contained in the “Non-GAAP Financial Measures” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Quarterly Report on Form 10-Q.

(b) These hotels converted from Holiday Inn on March 1, 2013.

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Hotel Operating Statistics

The following tables set forth occupancy, ADR and RevPAR for the three months ended March 31, 2013 and 2012, and the percentage changes therein for the periods presented, for our same-store Consolidated Hotels included in continuing operations.

Operating Statistics by Brand

	Occupancy (%)
	Three Months Ended
	March 31,
	2013	2012	%Variance
Embassy Suites Hotels	73.1	74.0	(1.2	)
Wyndham and Wyndham Grand(a)	63.6	71.6	(11.3	)
Renaissance and Marriott	74.8	73.5	1.7
DoubleTree by Hilton and Hilton	61.4	62.9	(2.4	)
Sheraton and Westin	63.4	57.6	10.1
Fairmont	60.3	27.7	118.2
Holiday Inn	68.4	60.5	13.0
Morgans and Royalton	81.0	76.0	6.7
Core hotels (45)	68.8	68.4	0.6
Non-strategic hotels (20)	71.7	71.6	0.1
Same-store hotels (65)	69.6	69.3	0.5
	ADR ($)
	Three Months Ended
	March 31,
	2013	2012	%Variance
Embassy Suites Hotels	153.28	146.52	4.6
Wyndham and Wyndham Grand(a)	139.38	133.20	4.6
Renaissance and Marriott	221.01	210.58	5.0
DoubleTree by Hilton and Hilton	146.97	133.10	10.4
Sheraton and Westin	108.13	102.24	5.8
Fairmont	221.26	213.15	3.8
Holiday Inn	112.44	109.95	2.3
Morgans and Royalton	260.05	249.85	4.1
Core hotels (45)	154.23	145.45	6.0
Non-strategic hotels (20)	117.07	115.80	1.1
Same-store hotels (65)	143.90	137.10	5.0
	RevPAR ($)
	Three Months Ended
	March 31,
	2013	2012	%Variance
Embassy Suites Hotels	112.08	108.45	3.3
Wyndham and Wyndham Grand(a)	88.60	95.43	(7.2	)
Renaissance and Marriott	165.32	154.82	6.8
DoubleTree by Hilton and Hilton	90.18	83.72	7.7
Sheraton and Westin	68.51	58.86	16.4
Fairmont	133.52	58.96	126.5
Holiday Inn	76.89	66.52	15.6
Morgans and Royalton	210.76	189.78	11.1
Core hotels (45)	106.16	99.47	6.7
Non-strategic hotels (20)	83.98	82.97	1.2
Same-store hotels (65)	100.17	94.97	5.5

(a)    These hotels converted from Holiday Inn on March 1, 2013.

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Hotel Operating Statistics by Market

	Occupancy (%)
	Three Months Ended
	March 31,
	2013	2012	%Variance
San Francisco area	75.0	73.8	1.7
Los Angeles area	69.5	81.0	(14.2	)
South Florida	90.8	86.0	5.5
Boston	64.6	49.0	31.8
New York area	70.7	68.3	3.6
Myrtle Beach	37.0	42.9	(13.7	)
Atlanta	74.4	72.0	3.3
Philadelphia	50.6	48.7	3.9
Tampa	83.7	84.4	(0.8	)
San Diego	66.5	79.8	(16.7	)
Other markets	68.1	68.3	(0.3	)
Core hotels (45)	68.8	68.4	0.6
Non-strategic hotels (20)	71.7	71.6	0.1
Same-store hotels (65)	69.6	69.3	0.5
	ADR ($)
	Three Months Ended
	March 31,
	2013	2012	%Variance
San Francisco area	162.99	156.02	4.5
Los Angeles area	149.72	141.27	6.0
South Florida	190.78	184.16	3.6
Boston	167.50	151.02	10.9
New York area	194.37	186.66	4.1
Myrtle Beach	108.94	106.24	2.5
Atlanta	113.51	110.84	2.4
Philadelphia	131.03	120.14	9.1
Tampa	215.29	201.21	7.0
San Diego	121.51	121.18	0.3
Other markets	146.74	138.15	6.2
Core hotels (45)	154.23	145.45	6.0
Non-strategic hotels (20)	117.07	115.80	1.1
Same-store hotels (65)	143.90	137.10	5.0
	RevPAR (%)
	Three Months Ended
	March 31,
	2013	2012	%Variance
San Francisco area	122.28	115.14	6.2
Los Angeles area	104.03	114.41	(9.1	)
South Florida	173.22	158.44	9.3
Boston	108.19	74.02	46.1
New York area	137.42	127.41	7.9
Myrtle Beach	40.30	45.55	(11.5	)
Atlanta	84.45	79.82	5.8
Philadelphia	66.25	58.49	13.3
Tampa	180.26	169.79	6.2
San Diego	80.75	96.66	(16.5	)
Other markets	99.89	94.32	5.9
Core hotels (45)	106.16	99.47	6.7
Non-strategic hotels (20)	83.98	82.97	1.2
Same-store hotels (65)	100.17	94.97	5.5

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Hotel Portfolio

The following table sets forth certain descriptive information regarding the hotels in which we held ownership interest at March 31, 2013.

Core Hotels	Brand	State	Rooms	% Owned		(a)
Birmingham	Embassy Suites Hotel	AL	242
Phoenix – Biltmore	Embassy Suites Hotel	AZ	232
Dana Point – Doheny Beach	DoubleTree Suites by Hilton	CA	196
Indian Wells – Esmeralda Resort & Spa	Renaissance Resort	CA	560
Los Angeles – International Airport/South	Embassy Suites Hotel	CA	349
Napa Valley	Embassy Suites Hotel	CA	205
Mandalay Beach – Hotel & Resort	Embassy Suites Hotel	CA	249
San Diego Bayside	Wyndham	CA	600
San Francisco – Airport/Waterfront	Embassy Suites Hotel	CA	340
San Francisco – Airport/South San Francisco	Embassy Suites Hotel	CA	312
San Francisco – Fisherman’s Wharf	Holiday Inn	CA	585
San Francisco – Union Square	Marriott	CA	400
Santa Monica	Wyndham	CA	132
Deerfield Beach – Resort & Spa	Embassy Suites Hotel	FL	244
Ft. Lauderdale – 17th Street	Embassy Suites Hotel	FL	361
Miami – International Airport	Embassy Suites Hotel	FL	318
Orlando – International Drive South/Convention	Embassy Suites Hotel	FL	244
Orlando – Walt Disney World Resort	DoubleTree Suites by Hilton	FL	229
St. Petersburg – Vinoy Resort & Golf Club	Renaissance Resort	FL	361
Atlanta – Buckhead	Embassy Suites Hotel	GA	316
Atlanta – Gateway – Atlanta Airport	Sheraton	GA	395
Atlanta – Perimeter Center	Embassy Suites Hotel	GA	241	50	%
Chicago – Lombard/Oak Brook	Embassy Suites Hotel	IL	262	50	%
Boston – at Beacon Hill	Wyndham	MA	304
Boston – Copley Plaza	Fairmont	MA	383
Boston – Marlborough	Embassy Suites Hotel	MA	229
Baltimore – at BWI Airport	Embassy Suites Hotel	MD	251	90	%
New Orleans – French Quarter	Wyndham	LA	374
Charlotte – SouthPark	DoubleTree Suites by Hilton	NC	208
Parsippany	Embassy Suites Hotel	NJ	274	50	%
Secaucus – Meadowlands	Embassy Suites Hotel	NJ	261	50	%
New York – Morgans	Independent	NY	114
New York – Royalton	Independent	NY	168
Philadelphia – Historic District	Wyndham	PA	364
Philadelphia – Society Hill	Sheraton	PA	364
Pittsburgh – at University Center (Oakland)	Wyndham	PA	251
Charleston – The Mills House	Wyndham Grand	SC	214
Myrtle Beach – Oceanfront Resort	Embassy Suites Hotel	SC	255
Myrtle Beach Resort	Hilton	SC	385
Nashville – Opryland – Airport (Briley    Parkway)	Holiday Inn	TN	383

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Hotel Portfolio (continued)

Core Hotels	Brand	State	Rooms	% Owned		(a)
Austin	DoubleTree Suites by Hilton	TX	188	90	%
Dallas – Love Field	Embassy Suites Hotel	TX	248
Dallas – Park Central	Westin	TX	536	60	%
Houston – Medical Center	Wyndham	TX	287
Burlington Hotel & Conference Center	Sheraton	VT	309
Unconsolidated Hotel
New Orleans – French Quarter – Chateau    LeMoyne	Holiday Inn	LA	171	50	%
Hotel under Development
New York – Knickerbocker Hotel	Independent	NY	330	95	%
Non-strategic Hotels
Santa Barbara – Goleta	Holiday Inn	CA	160
Milpitas – Silicon Valley	Embassy Suites Hotel	CA	266
San Rafael – Marin County	Embassy Suites Hotel	CA	235	50	%
Wilmington	DoubleTree by Hilton	DE	244	90	%
Jacksonville – Baymeadows	Embassy Suites Hotel	FL	277
Orlando – International Airport	Holiday Inn	FL	288
Atlanta – Airport	Embassy Suites Hotel	GA	232
Atlanta – Galleria	Sheraton Suites	GA	278
Kansas City – Overland Park	Embassy Suites Hotel	KS	199	50	%
Indianapolis – North	Embassy Suites Hotel	IN	221	82	%
Baton Rouge	Embassy Suites Hotel	LA	223
Minneapolis – Airport	Embassy Suites Hotel	MN	310
Bloomington	Embassy Suites Hotel	MN	218
Kansas City – Plaza	Embassy Suites Hotel	MO	266	50	%
Charlotte	Embassy Suites Hotel	NC	274	50	%
Raleigh – Crabtree	Embassy Suites Hotel	NC	225	50	%
Toronto – Airport	Holiday Inn	Ontario	446
Austin – Central	Embassy Suites Hotel	TX	260	50	%
San Antonio – International Airport	Embassy Suites Hotel	TX	261	50	%
San Antonio – NW I-10	Embassy Suites Hotel	TX	216	50	%

(a) We own 100% of the real estate interests unless otherwise noted.

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Liquidity and Capital Resources

Operating Activities

During the first three months of 2013, our operations (primarily hotel operations) provided $4.9 million in cash (after our payment of $30.7 million of termination fees to IHG related to our conversion of eight hotels to Wyndham brands), $28.8 million less than the same period in 2012. Our consolidated statements of cash flows combines cash flow from continuing and discontinued operations. Operating cash flow from discontinued operations was $7.1 million for the three months ended March 31, 2012. We did not have operating cash flow from discontinued operations for the three months ended March 31, 2013. The absence of these cash flows should not have a material impact on our business, as these hotels would not provide an acceptable return on future required capital expenditures.

At March 31, 2013, we had $61.8 million of cash and cash equivalents, including $41.2 million held by third-party management companies.

RevPAR for the lodging industry remains strong. RevPAR at our hotels for the first quarter increased 5.5%, driven by a 5.0% increase in ADR. The industry is enjoying a supply/demand imbalance, as supply growth remains well below the long-term average. Occupancy continues to increase and is approaching prior peak levels, allowing hotels to raise rates. We expect our RevPAR to increase 5% - 6% during 2013, primarily from ADR growth. We expect to generate $78.2 million to $90.7 million of cash flow from operations in 2013.

Investing Activities

During the first three months of 2013, we used $29.3 million of cash in investing activities compared to $45.1 million during the same period in 2012; we spent less on renovation and redevelopment projects so far in 2013 compared to 2012. We expect to invest approximately $205 million on capital expenditures and development in 2013. This includes: i) approximately $105 million for renovations and redevelopments at our operating hotels which will be funded from operating cash flow, cash on hand and borrowings under our line of credit and ii) approximately $100 million on development of the Knickerbocker Hotel, which will be funded primarily by cash, draws on the $85 million construction loan and financing that is currently being raised through the EB-5 visa program.

Our strategic plan contemplates selling 39 non-strategic hotels that do not meet our investment criteria. We have sold 19 of these 39 hotels to date, and we have 20 non-strategic hotels remaining to sell. We are currently marketing 11 of these non-strategic hotels and we are evaluating offers or have agreed to sell six of those. We will use the proceeds from dispositions to repay debt and reduce leverage.

Financing Activities

During the first three months of 2013, cash from financing activities increased by $24.7 million compared to the same period in 2012 driven by a $17 million increase in net borrowings on our line of credit in 2013. In addition, we made a non-recurring $5 million principal payment in 2012. In 2013, we expect to pay approximately $5 million of normally occurring principal payments and $39 million of quarterly preferred dividends, which will be funded from operating cash flow and cash on hand. We are using proceeds from hotel sales to make additional non-recurring principal payments.

Except in the case of our senior notes and line of credit, our mortgage debt is generally recourse solely to the specific hotels securing the debt, except in case of fraud, misapplication of funds and certain other customary limited recourse carve-out provisions, which could extend recourse to us. Much of our secured debt allows us to substitute collateral under certain conditions and is prepayable, subject (in some instances) to various prepayment, yield maintenance or defeasance obligations.

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Most of our secured debt (other than our senior notes and line of credit) includes lock-box arrangements under certain circumstances. We are permitted to spend an amount required to cover our budgeted hotel operating expenses, taxes, debt service, insurance and capital expenditure reserves even if revenues are flowing through a lock-box in cases where a specified debt service coverage ratio is not met.  With the exception of loans secured by two properties, all of our consolidated loans subject to lock-box provisions currently exceed the applicable minimum debt service coverage ratios.

Senior Notes.  Our senior notes require that we satisfy total leverage, secured leverage and interest coverage tests in order to: (i) incur additional indebtedness, except to refinance maturing debt with replacement debt, as defined under our indentures; (ii) pay dividends in excess of the minimum distributions required to qualify as a REIT; (iii) repurchase capital stock; or (iv) merge. We currently exceed all minimum thresholds. These notes are guaranteed by us, and payment of our 10% notes is secured by a pledge of the limited partner interests in FelCor LP owned by FelCor. In addition, our senior notes are secured by a combination of first lien mortgages and related security interests and/or negative pledges on 27 hotels (11 hotels for our 10% senior notes, six hotels for our 6.75% senior notes and ten hotels for our 5.625% senior notes), as well as pledges of equity interests in certain subsidiaries of FelCor LP.

Interest Rate Caps.  To fulfill a requirement under one loan, we entered into interest rate cap agreements with notional amounts of $201.9 million and $202.4 million at March 31, 2013 and December 31, 2012, respectively. These interest rate caps were not designated as hedges and had insignificant fair value at both March 31, 2013 and December 31, 2012, resulting in no significant net earnings impact.

Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation.  Competitive pressures may, however, require us to reduce room rates in the near term and may limit our ability to raise room rates in the future.  We are also subject to the risk that inflation will cause increases in hotel operating expenses disproportionately to revenues.  If competition requires us to reduce room rates or limits our ability to raise room rates in the future, we may not be able to adjust our room rates to reflect the effects of inflation in full, in which case our operating results and liquidity could be adversely affected.

Seasonality

The lodging business is seasonal in nature.  Generally, hotel revenues are greater in the second and third calendar quarters than in the first and fourth calendar quarters, although this may not be true for hotels in major tourist destinations. Revenues for hotels in tourist areas generally are substantially greater during tourist season than other times of the year. Seasonal variations in revenue at our hotels can be expected to cause quarterly fluctuations in our revenues. Quarterly earnings also may be adversely affected by events beyond our control, such as extreme weather conditions, economic factors and other considerations affecting travel.  To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenues, we may utilize cash on hand or borrowings to satisfy our obligations.

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Disclosure Regarding Forward-Looking Statements

This report and the documents incorporated by reference in this report include forward-looking statements that involve a number of risks and uncertainties.  Forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” or other variations of these terms (including their use in the negative), or by discussions of strategies, plans or intentions.  A number of factors could cause actual results to differ materially from those anticipated by these forward-looking statements.  Certain of these risks and uncertainties are described in greater detail under “Risk Factors” in our Annual Report on Form 10-K or in our other filings with the Securities and Exchange Commission, or the SEC.

These forward-looking statements are necessarily dependent upon assumptions and estimates that may prove to be incorrect. Accordingly, while we believe that the plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot assure you that deviations from these plans, intentions or expectations will not be material.  The forward-looking statements included in this report, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the risk factors and cautionary statements discussed in our filings to the SEC.  We undertake no obligation to publicly update any forward-looking statements to reflect future circumstances or changes in our expectations.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

At March 31, 2013, approximately 90% of our consolidated debt bears fixed-rate interest.

The following table provides information about our financial instruments that are sensitive to changes in interest rates.  For debt obligations, the table presents scheduled maturities and weighted average interest rates, by maturity dates.  The fair value of our fixed-rate debt indicates the estimated principal amount of debt having the same debt service requirements that could have been borrowed at the date presented, at then current market interest rates.

Expected Maturity Date

at March 31, 2013

(dollars in thousands)

	Expected Maturity Date
	2013			2014			2015			2016			2017			Thereafter			Total			Fair Value
Liabilities
Fixed-rate:
Debt	$	3,652		$	300,192		$	3,107		$	11,463		$	2,810		$	1,197,656		$	1,518,880		$	1,612,133
Average   interest rate	5.77		%	9.25		%	5.11		%	5.61		%	4.95		%	6.03		%	6.66		%
Floating-rate:
Debt	—			—			—			173,861			—			—			173,861			$	174,203
Average   interest rate (a)	—			—			—			4.68		%	—			—			4.68		%
Total debt	$	3,652		$	300,192		$	3,107		$	185,324		$	2,810		$	1,197,656		$	1,692,741
Average    interest rate	5.77		%	9.25		%	5.11		%	4.74		%	4.95		%	6.03		%	6.46		%
Net discount																			(8,985		)
Total debt																			$	1,683,756

(a) The average floating interest rate considers the implied forward rates in the yield curve at March 31, 2013.

Item 4. Controls and Procedures.

(a)Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934) as of the end of the period covered by this report (the “Evaluation Date”).  Based on this evaluation, our chief executive officer and chief financial officer concluded, as of the Evaluation Date, that our disclosure controls and procedures were effective, such that the information relating to us required to be disclosed in our reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.

(b)Changes in internal control over financial reporting.

There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15 (f) promulgated under the Securities Exchange Act of 1934) during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 6. Exhibits.

The following exhibits are furnished in accordance with the provisions of Item 601 of Regulation S-K:

Exhibit Number	Description of Exhibit
10.1	FelCor’s 2005 Restricted Stock and Stock Option Plan (as amended through October 29, 2012).
10.2	Amendment No. 1 to Amended and Restated Revolving Credit Agreement dated as of March 1, 2013, among FelCor/JPM Hospitality (SPE), L.L.C., DJONT/JPM Hospitality Leasing (SPE), L.L.C., FelCor/JPM Boca Raton Hotel, L.L.C., DJONT/JPM Boca Raton Leasing, L.L.C., Miami AP Hotel, L.L.C. and Charleston Mills House Hotel, L.L.C as borrowers, and JPMorgan Chase Bank, N.A., as administrative agent, and the lenders that are parties thereto.
10.3	Form of [Fee and] Leasehold Mortgage, Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing for the benefit of U.S. Bank National Association, as collateral agent, relating to FelCor Lodging Limited Partnership’s (“FelCor LP”) 5.625% Senior Secured Notes due 2023.
10.4*	Sixth Supplemental Indenture, dated as of January 7, 2013, by and among FelCor Lodging Trust Incorporated (“FelCor”), FelCor LP, certain of their subsidiaries, as guarantors, and U.S. Bank National Association, as trustee (filed as Exhibit 4.3 to FelCor's Form 8-K, dated January 7, 2013, and incorporated herein by reference).
10.5*	Second Supplemental Indenture, dated as of January 7, 2013, by and among FelCor LP, FelCor, certain of their subsidiaries, as guarantors, and Wilmington Trust Company, as trustee, and Deutsche Bank Trust Company Americas, as collateral agent, registrar and paying agent (filed as Exhibit 4.2 to FelCor's Form 8-K, dated January 7, 2013, and incorporated herein by reference).
10.6*	First Supplemental Indenture, dated as of January 7, 2013, by and among FelCor, FelCor LP, certain of their subsidiaries, as guarantors, and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to FelCor's Form 8-K, dated January 7, 2013, and incorporated herein by reference).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for FelCor.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for FelCor.
31.3	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for FelCor LP.
31.4	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for FelCor LP.

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32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for FelCor.
32.2	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for FelCor LP.
101.INS	XBRL Instance Document. Submitted electronically with this report.
101.SCH	XBRL Taxonomy Extension Schema Document. Submitted electronically with this report.
101.CAL	XBRL Taxonomy Calculation Linkbase Document. Submitted electronically with this report.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. Submitted electronically with this report.
101.LAB	XBRL Taxonomy Label Linkbase Document. Submitted electronically with this report.
101.PRE	XBRL Taxonomy Presentation Linkbase Document. Submitted electronically with this report.

* Previously filed.

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) FelCor’s Consolidated Balance Sheets at March 31, 2013 and December 31, 2012; (ii) FelCor’s Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012; (iii) FelCor’s Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2013 and 2012; (iv) FelCor’s Consolidated Statements of Changes in Equity for the three months ended March 31, 2013 and 2012; (v) FelCor’s Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012; (vi) FelCor LP’s Consolidated Balance Sheets at March 31, 2013 and December 31, 2012; (vii) FelCor LP’s Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012; (viii) FelCor LP’s Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2013 and 2012; (ix) FelCor LP’s Consolidated Statements of Partners’ Capital for the three months ended March 31, 2013 and 2012; (x) FelCor LP’s Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012; and (xi) the Notes to Consolidated Financial Statements. Users of this data are advised pursuant to Rule 406T of Regulation S‑T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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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.

	FELCOR LODGING TRUST INCORPORATED
Date:  May 6, 2013	By:	/s/ Jeffrey D. Symes
		Name:	Jeffrey D. Symes
		Title:	Senior Vice President, Chief Accounting Officer and Controller

	FELCOR LODGING LIMITED PARTNERSHIP
	a Delaware limited partnership
	By:	FelCor Lodging Trust Incorporated
		Its General Partner
Date:  May 6, 2013	By:	/s/ Jeffrey D. Symes
		Name:	Jeffrey D. Symes
		Title:	Senior Vice President, Chief Accounting Officer and Controller

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