FCH Felcor Lodging Trust Incorporated (delisted)

As filed with the Securities and Exchange Commission on December 3, 2009

Registration No. 333-      

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FelCor Lodging Limited Partnership

(Exact name of Registrant as Specified in Its Charter)

Delaware		7011		75-2544994
(State or Other Jurisdiction of		(Primary Standard Industrial		(I.R.S. Employer Identification
Incorporation or Organization)		Classification Code Number)		Number)

Additional Guarantor Registrants Listed on Following Page
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
(972) 444-4900
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)

Jonathan H. Yellen
Executive Vice President and General Counsel
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
(972) 444-4900
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)

With a copy to:
Robert W. Dockery
Akin Gump Strauss Hauer & Feld LLP
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
(214) 969-4316

Approximate date of commencement of proposed sale to the public: As soon as practicable on or after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Proposed

Proposed

Title of Each Class

Maximum

Maximum

of Securities to be

Amount to be

Offering Price

Aggregate

Amount of

Registered

Registered

Per Unit

Offering Price

Registration Fee (1)

10% Senior Secured Notes due 2014

$636,000,000

89.636%

$570,084,960 (2)

$31,810.74

Guarantees of Senior Secured Notes (3)

—

—

—

None (4)

           The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section  8(a) , may determine.

 

 

ADDITIONAL GUARANTOR REGISTRANTS

		State of Incorporation or		I.R.S. Employer Identification
Exact Name of Guarantor 1		Organization		Number
FelCor Lodging Trust Incorporated		Maryland		72-2541756
FelCor/CSS Holdings, L.P.		Delaware		75-2620463
FelCor/St. Paul Holdings, L.P.		Delaware		75-2624292
FelCor Canada Co.		Nova Scotia		75-2773637
FelCor Hotel Asset Company, L.L.C.		Delaware		75-2770156
FelCor Lodging Holding Company, L.L.C.		Delaware		75-2773621
FelCor TRS Borrower 1, L.P.		Delaware		20-3526128
FelCor TRS Borrower 4, L.L.C.		Delaware		20-3900525
FelCor TRS Holdings, L.L.C.		Delaware		75-2916176

 

 

SUBJECT TO COMPLETION, DATED DECEMBER 3, 2009

 

	FelCor Lodging Limited Partnership

Offer To Exchange
All Outstanding 10% Senior Secured Notes Due 2014
($636,000,000 Aggregate Principal Amount Outstanding)
For
10% Senior Secured Notes Due 2014, Which Have Been Registered
Under The Securities Act of 1933, as amended

           The exchange offer will expire at 11:59 p.m., New York City time, on                      , 2009, unless we extend the exchange offer. We do not currently intend to extend the exchange offer.

	§		We are offering to exchange up to $636,000,000 aggregate principal amount of new 10% Senior Secured Notes due 2014, or Exchange Notes, which have been registered under the Securities Act of 1933, as amended, or the Securities Act, for an equal principal amount of our outstanding 10% Senior Secured Notes due 2014, or Initial Notes, issued in a private offering on October 1, 2009. We refer to the Exchange Notes and the Initial Notes collectively as Notes.
	§		We will exchange all Initial Notes that are validly tendered and not validly withdrawn prior to the closing of the exchange offer for an equal principal amount of Exchange Notes that have been registered.
	§		You may withdraw tenders of Initial Notes at any time prior to the expiration of the exchange offer.
	§		The terms of the Exchange Notes to be issued are identical in all material respects to the Initial Notes, except for transfer restrictions and registration rights that do not apply to the Exchange Notes, and different administrative terms.
	§		The Exchange Notes, together with any Initial Notes not exchanged in the exchange offer, will constitute a single class of debt securities under the indenture governing the Notes.
	§		The exchange of Notes will not be a taxable exchange for United States federal income tax purposes.
	§		We will not receive any proceeds from the exchange offer.
	§		No public market exists for the Initial Notes. We do not intend to list the Exchange Notes on any securities exchange and, therefore, no active public market is anticipated for the Exchange Notes.

           See “Risk Factors” beginning on page 13 for a discussion of factors that you should consider before tendering your Initial Notes.

          Each broker-dealer that receives Exchange Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The related letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Initial Notes where such Initial Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the consummation of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

           Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                      , 2009.

TABLE OF CONTENTS

			Page
PROSPECTUS SUMMARY			1
RISK FACTORS			13
USE OF PROCEEDS			30
THE EXCHANGE OFFER			31
CAPITALIZATION			39
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA			40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			42
BUSINESS AND PROPERTIES			59
COLLATERAL HOTELS			73
MANAGEMENT			77
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			102
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			105
DESCRIPTION OF MATERIAL INDEBTEDNESS			106
DESCRIPTION OF THE NOTES AND GUARANTEES			107
MATERIAL U.S. INCOME TAX CONSEQUENCES			151
PLAN OF DISTRIBUTION			153
LEGAL MATTERS			154
EXPERTS			154
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1
EX-5.1
EX-12.1
EX-23.2
EX-23.3
EX-25.1

MARKET AND INDUSTRY DATA

          We obtained market data and certain other industry data and forecasts used throughout this prospectus from internal analysis and market research, publicly available information, and industry publications. Industry publications generally state that they obtain their information from sources they believe to be reliable, but they do not guarantee the accuracy and completeness of such information. Similarly, while we believe that the internal analysis and market research, industry data, and forecasts are reliable, we have not independently verified such data, and neither we nor the initial purchaser make any representation as to the accuracy of such information.

TRADEMARKS

          This prospectus contains registered trademarks, service marks and brand names owned or licensed by companies other than us, and which are the exclusive property of their respective owners, including, but not limited to, Doubletree ^® , Doubletree Guest Suites ^® , Embassy Suites Hotels ^® , Hilton ^® , Hilton Suites ^® , Holiday Inn ^® , Holiday Inn Express ^® , Marriott ^® , Renaissance ^® , Sheraton ^® , Sheraton Suites ^® , Walt Disney World ^® , and Westin ^® . None of the owners of these trademarks, service marks or brand names, their affiliates or any of their respective officers, directors, agents or employees, is an issuer or underwriter of the Exchange Notes being offered hereby. In addition, none of such persons has or will have any responsibility or liability for any information contained in this prospectus.

WHERE YOU CAN FIND MORE INFORMATION

          Both FelCor Lodging Trust Incorporated, or FelCor, and FelCor Lodging Limited Partnership, or FelCor LP, file annual, quarterly, and current reports with the Securities and Exchange Commission, or the SEC, and FelCor files proxy statements and other information with the SEC. Our SEC filings are available to the public from the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

          You should rely only upon the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to exchange these securities in any jurisdiction where the offer or sale is not permitted. You should assume the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

          This prospectus contains summaries of certain agreements that we have entered into such as the indenture, the registration rights agreement, and the agreements described under “Prospectus Summary—Recent Transactions,” “Description of the Notes and Guarantees,” and “Certain Relationships and Related Party Transactions.” The descriptions contained in this prospectus of these agreements do not purport to be complete and are subject to, or qualified in their entirety by reference to, the definitive agreements. Copies of the definitive agreements will be made available without charge to you by making a written or oral request to us.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

          This prospectus includes 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. Among these factors are:

	§		general economic conditions, including, among others, the current recession, rising unemployment, major bank failures and unsettled capital markets, the impact of the United States’ military involvement in the Middle East and elsewhere, future acts of terrorism, the threat or outbreak of a pandemic disease affecting the travel industry, rising fuel costs and increased transportation security precautions;
	§		our overall debt levels and our ability to refinance or obtain new financing and service debt, including our near term maturities;
	§		our inability to sell hotels at acceptable prices;
	§		our inability to retain earnings;
	§		our liquidity and capital expenditures;
	§		our growth strategy and acquisition activities; and
	§		competitive conditions in the lodging industry.

          Certain of these risks and uncertainties are described in greater detail under “Risk Factors” beginning on page 13.

          In addition, 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 these plans, intentions or expectations will be achieved. The forward-looking statements included in this prospectus, 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 under the Securities Act of 1933 and the Securities Exchange Act of 1934. We undertake no obligation to update any forward-looking statements to reflect future events or circumstances.

(1)		Included in net income (loss) from continuing operations are the following amounts (in thousands):

RISK FACTORS

           An investment in the Exchange Notes involves a significant degree of risk. You should carefully consider the following risk factors, together with all of the other information included in this prospectus, in evaluating the exchange offer.

Risks Relating to the Exchange Notes and this Exchange Offer

           If you do not properly tender your Initial Notes, you will continue to hold unregistered Initial Notes and your ability to transfer Initial Notes will be limited.

          We will only issue Exchange Notes in exchange for Initial Notes that are timely received by the exchange agent. Therefore, you should allow sufficient time to ensure timely delivery of the Initial Notes and you should carefully follow the instructions on how to tender your Initial Notes. Neither we nor the exchange agent are required to tell you of any defects or irregularities with respect to your tender of the Initial Notes. If you do not tender your Initial Notes properly or if we do not accept your Initial Notes because you did not tender your Initial Notes properly, then, after we consummate the exchange offer, you may continue to hold Initial Notes that are subject to the existing transfer restrictions. In addition, if you tender your Initial Notes for the purpose of participating in a distribution of the Exchange Notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes. If you are a broker-dealer that receives Exchange Notes for your own account in exchange for Initial Notes that you acquired as a result of market-making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of such Exchange Notes. After the exchange offer is consummated, if you continue to hold any Initial Notes, you may have difficulty selling them because there may be only a small amount of Initial Notes outstanding.

           With respect to our hotels mortgaged as security for the Notes, we do not expect that mortgages or title insurance policies will be in place, or that land surveys will be completed, when the Exchange Notes are first issued. Our inability to obtain any necessary third party consents may prohibit us from granting mortgages on some of these hotels. Any issues that we are unable to resolve in connection with the issuance of such mortgages and title policies may impact the value of the collateral. There will be no independent assurance prior to issuance of the Exchange Notes, therefore, that all hotels contemplated to be mortgaged as security for the Notes will be mortgaged, that we hold the real property interests we represent we hold, or that we may mortgage such interests, that there will be no lien encumbering such real property interests other than those permitted by the indenture or of the current market value of the hotels. We have not obtained an independent appraisal of the current market value of the hotels.

          We do not expect that mortgages on the hotels intended to secure the Notes and the guarantees of the Notes granted by us and certain of our subsidiaries that own or lease the real property underlying those hotels will be in place when the Exchange Notes are first issued. Those mortgages constitute a significant portion of the value of the collateral intended to secure the Notes and the guarantees. Mortgagee title insurance policies will not be in place at the time of the issuance of the Exchange Notes to insure, among other things, (i) loss resulting from the entity represented by us to be the fee or leasehold estate owner thereof not holding valid fee title to, or leasehold estate in, the properties or such fee or leasehold interest being encumbered by unpermitted liens and (ii) the validity and first lien priority of the mortgage granted to the collateral agent or trustee for the benefit of the holders of the Notes.

          We are required to use commercially reasonable efforts to put such mortgages in place and to obtain title insurance on the properties as soon as reasonably practicable, but in any event, within 180 days following the issuance date of the Initial Notes. As discussed further in the risk factors addressing ground leases, management agreements and franchise agreements, the “Description of the Notes and Guarantees” and the “Business and Properties” sections of this prospectus, certain third party contracts (including ground leases, sub-leases and management, and franchise agreements) contain conditions, restrictions, prohibitions, and consent rights in the event we elect to mortgage our real property interests. If we are unable to obtain the requisite consents and agreements from such parties, we will be unable to grant mortgages on those properties or leasehold interests. The failure to grant such mortgages after using commercially reasonable efforts to do so will not constitute a default under the indenture governing the Notes.

          The mortgages and title insurance policies will be issued based upon, among other things, land surveys that are currently being completed. The surveys could reflect certain issues that we may not be able to resolve. If we are unable to resolve any issues raised by the surveys or that are otherwise raised in connection with obtaining the

mortgages or title policies, the mortgages and title policies will be issued subject to those issues, which could have a significant impact on the value of the collateral or any recovery under the title insurance policies.

           The collateral securing the Notes may be inadequate to satisfy payments on the Notes.

          The Initial Notes are, and the Exchange Notes will be, secured by a pledge of all of the limited partner interests in FelCor LP owned by FelCor, and pledged equity interests in the owners of certain owned and/or leased real property, and the Notes are also expected to be secured by mortgaged interests in owned and leased real property, as further described in detail in “Description of the Notes and Guarantees—Security.” The value of the collateral will depend on market and economic conditions at the time, the availability of buyers and other factors beyond our control. There is currently no established trading market for the equity interests of FelCor LP or any of the other pledged subsidiaries. The proceeds of any sale of the collateral following a default by us may not be sufficient to satisfy the amounts due on the Exchange Notes. No appraisal of the fair market value of the collateral has been prepared in connection with this exchange offer and we therefore cannot assure you that the value of the noteholders’ interest in the collateral equals or exceeds the principal amount of the Notes. If the value of the collateral is less than the principal amount of the Notes, then in the event of a bankruptcy, you will have only an unsecured claim against FelCor LP, FelCor and the subsidiary guarantors to the extent of such shortfall. See “—The value of the collateral securing the Notes may not be sufficient to secure post-petition interest.”

           It may be difficult to realize the value of the collateral pledged to secure the Notes.

          The Initial Notes are, and the Exchange Notes will be, secured by a pledge of all of the limited partner interests in FelCor LP owned by FelCor, and pledged equity interests in the owners of certain owned and/or leased real property, and the Notes are also expected to be secured by mortgaged interests in owned and leased real property, as further described in detail in “Description of the Notes and Guarantees—Security.” The trustee’s ability to foreclose on the collateral on your behalf may be subject to perfection, the consent of third parties, priority issues, state law requirements and practical problems associated with the realization of the trustee’s security interest or lien in the collateral, including cure rights, foreclosing on the collateral within the time periods permitted by third parties or prescribed by laws, statutory rights of redemption, and the effect of the order of foreclosure. We cannot assure you that the consents of any third parties and approvals by governmental entities will be given when required to facilitate a foreclosure on such assets. Moreover, certain permits and licenses that are required to operate the hotels, like liquor licenses, may not be transferable under local law. Accordingly, the trustee may not have the ability to foreclose upon the hotels or assume or transfer the right to operate the hotels. We cannot assure you that foreclosure on the collateral will be sufficient to acquire all hotel assets necessary for operations or to make all payments on the Notes.

           Delivery of mortgages or security interests in other collateral after the issue date increases the risk that the mortgages or other security interests could be avoidable in bankruptcy.

          In addition to the mortgages described above, we intend to secure certain other collateral after the issue date. If we or any guarantor were to become subject to a bankruptcy proceeding after the issue date of the Exchange Notes, any mortgage or security interest in other collateral delivered after the issue date of the Exchange Notes would face a greater risk than security interests in place on the issue date of being avoided by the pledgor (as debtor in possession) or by its trustee in bankruptcy as a preference under bankruptcy law if certain events or circumstances exist or occur, including if the pledgor is insolvent at the time of the pledge, if the pledge permits the holders of the Exchange Notes to receive a greater recovery than if the pledge had not been given, and if a bankruptcy proceeding in respect of the pledgor is commenced within 90 days following the pledge, or, in certain circumstances, a longer period. To the extent that the grant of any such mortgage or other security interest is avoided as a preference, you would lose the benefit of the mortgage or security interest.

           The underlying real estate for seven of our collateral hotels is owned by unaffiliated third parties, and we occupy the property pursuant to ground leases with the property owners. Termination of these ground leases by the lessor could cause us to lose the ability to operate these hotels and incur substantial related costs. Although we expect to grant a mortgage on three of these ground leased hotels, the underlying land owners’ interests are not being pledged, and any mortgages we grant remains subject to their interests.

          Our interest in the land underlying seven of our collateral hotels is subject to ground leases with unaffiliated third parties. In addition, we lease land owned by an unaffiliated third party at an eighth hotel that we believe is non-essential to the core operations of this hotel; nonetheless, a loss of this ground lease would be disruptive to the operations of the hotel. While we believe that we have the ability to grant mortgages on three of the

seven ground leased collateral hotels, and we have agreed to use commercially reasonable efforts to obtain consents within 180 days of the issuance date of the Initial Notes from our ground lessors where we believe such consent is required, we may be prohibited from pledging or mortgaging our interests in any of the ground leases if we are unable to obtain the lessor’s consent. Without such consent, we may be unable to grant a lien on our leasehold interest. We may also be restricted in our ability in the future to sell or otherwise transfer our leasehold interests or to cure lessee defaults or to obligate the lessor to allow the trustee or collateral agent to cure defaults or enter into a new lease with the trustee or collateral agent in the event of a foreclosure or a rejection of the lease in bankruptcy. The failure to grant such mortgages after using commercially reasonable efforts to do so will not constitute a default under the indenture governing the Notes.

           Under certain of our hotel management agreements, hotel managers may have the right to acquire the managed property in the event of a sale of such hotels.

          Certain of our hotel management agreements grant the hotel manager the option to purchase the hotel under certain circumstances including the transfer of the hotel to an unaffiliated third-party. A default under an applicable ground lease or mortgage securing the Notes may be a material default which triggers such purchase option. Upon foreclosure of our interests in the hotel, such hotel manager would have an option to purchase the property in the event of any attempted sale to an unaffiliated third-party.

           Transferability of franchise license and management agreements and termination of such agreements may be prohibited or restricted.

          Hotel managers and franchise licensors may have the right to terminate their agreements or suspend their services in the event of default under such agreements or other third party agreements such as ground leases and mortgages, upon the loss of liquor licenses, or in the event of the sale or transfer of the hotel. Franchise license agreements may expire by their terms prior to the maturity of the Notes, and we may not be able to obtain replacement franchise license agreements. A franchise licensor’s consent may be required for the continued use of the brand license following foreclosure and, conversely, the collateral agent may be restricted from replacing the franchise licensor following foreclosure. In the event of foreclosure, if the succeeding owner is unable to assume or obtain certain operating, liquor or other licenses, such failure can constitute a material default under the management or franchise license agreements.

          The sale of a hotel, replacement of the brand, or material default under a management or franchise license agreement may give rise to payment of liquidated damages or termination fees that may be guaranteed by us or certain of our subsidiaries. The loss of a manager or franchise license could have a material impact on the operations and value of a hotel because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchise licensor or operations management provided by the manager. Most of our management agreements restrict our ability to encumber our interests in the applicable hotels under certain circumstances, which include the mortgages contemplated by the indenture governing the Notes, without the managers’ consent. If we are unable to obtain such consent, which we may not know prior to the issue of the Exchange Notes, we will be unable to secure the Notes with liens against the hotel for which the consent is not obtained.

           The Notes will not have the benefit of a first priority pledge on the equity interests in the owner of five collateral hotels, the Holiday Inn Boston at Beacon Hill, Holiday Inn Nashville — Opryland Airport/Briley Parkway, Holiday Inn San Diego — on the Bay, Holiday Inn San Francisco — Fisherman’s Wharf and San Francisco Marriott Union Square, unless and until we receive approval from the San Diego Unified Port District.

          We have agreed to use commercially reasonable efforts to secure the Notes with a first priority pledge on the equity interests in the owner of the following hotels: Holiday Inn Boston Beacon Hill, Holiday Inn Nashville — Opryland Airport/Briley Parkway, Holiday Inn San Diego — on the Bay, Holiday Inn San Francisco — Fisherman’s Wharf and San Francisco Marriott Union Square as soon as reasonably practicable following the issuance of the Initial Notes, but in any event, within 180 days. However, the pledge of such equity interests cannot be effective without prior approval from the San Diego Unified Port District, the ground lessor under our ground lease at the Holiday Inn San Diego — on the Bay. This pledge will not be effective unless and until we receive such approval. While we have agreed to use commercially reasonable efforts to seek such approval, we cannot give any assurance that such approval will be granted within any particular time period or at all.

          Any delay between our issuance of the Exchange Notes and granting of a pledge of equity interests in these hotels may render the equity pledge avoidable by a bankruptcy trustee if certain conditions are met. In the event that such pledge is avoided by the bankruptcy trustee, the guarantees of the restricted subsidiaries pledging the collateral would rank equally in right of payment to existing or future senior indebtedness of such restricted subsidiaries and would not be effectively senior to such other senior indebtedness to the extent of the value of the collateral, which could adversely affect any recovery on the Exchange Notes in a bankruptcy proceeding.

           State law and foreign law may limit the ability of the collateral agent, trustee and the holders of the Notes to foreclose on the real property and improvements and leasehold interests included in the collateral.

          The Notes will be secured by, among other things, liens on real property or leasehold interests in real property and improvements located in the states of California, Florida, Georgia, Louisiana, Massachusetts, Tennessee and Texas and the province of Ontario, Canada in which the collateral hotels are located. The laws of those states and province may limit the ability of the trustee and the holders of the Notes to foreclose on the improved real property collateral located in those states and province. Laws of those states and province govern the perfection, enforceability and foreclosure of mortgage liens against real property interests which secure debt obligations such as the Notes. These laws may impose procedural requirements for foreclosure different from and necessitating a longer time period for completion than the requirements for foreclosure of security interests in personal property. Debtors may have the right to reinstate defaulted debt (even it is has been accelerated) before the foreclosure date by paying the past due amounts and a right of redemption after foreclosure. Governing laws may also impose security first and one form of action rules (such as California), which rules can affect the ability to foreclose or the timing of foreclosure on real and personal property collateral regardless of the location of the collateral and may limit the right to recover a deficiency following a foreclosure.

          The holders of the Notes and the trustee also may be limited in their ability to enforce a breach of the “no liens” and “no transfers or assignments” covenants. Some decisions of state courts, including California, have placed limits on a lender’s ability to prohibit and to accelerate debt secured by real property upon breach of covenants prohibiting sales or assignments or the creation of certain junior liens or leasehold estates, and the lender may need to demonstrate that enforcement of such covenants is reasonably necessary to protect against impairment of the lender’s security or to protect against an increased risk of default. Although the foregoing court decisions may have been preempted, at least in part, by certain federal laws, the scope of such preemption, if any, is uncertain. Accordingly, a court could prevent the trustee and the holders of the Notes from declaring a default and accelerating the Notes by reason of a breach of this covenant, which could have a material adverse effect on the ability of holders to enforce the covenant.

           Your interest in the collateral may be adversely affected by the failure to record and/or perfect security interests in certain collateral.

          The security interests in the collateral securing the Notes include a pledge of certain equity interests and a pledge or security interest in, or lien on, assets, whether now owned or acquired or arising in the future. The mortgages with respect to the hotels to be pledged as collateral securing the Notes will include a grant of a security interest in certain assets constituting personal property related to the operation and ownership of such hotels, but shall not include a security interest in any personal property that requires perfection other than by the filing of a financing statement. In addition, applicable law requires that certain property and rights acquired after the grant of a general security interest can only be perfected at the time such property and rights are acquired and identified. As a result and even though it may constitute an event of default under the indenture governing the Notes, a third party creditor of us or our subsidiaries could gain priority over the lien of one or more of the mortgages or deeds of trust secured by the hotels through the recordation of an intervening lien or liens. Although the indenture governing the Notes contains customary further assurance covenants, the trustee under the indenture governing the Notes will not monitor the future acquisition of property and rights that constitute collateral, or take any action to perfect the security interest in such acquired collateral.

           As of September 30, 2009, our non-guarantor subsidiaries had $273 million, $250 million and $176 million of consolidated non-recourse secured indebtedness outstanding that matures in 2010, 2011, and 2012, respectively. We may be unable to refinance all or a significant portion of this indebtedness on acceptable terms, or at all, which could have a material adverse effect on our business, financial condition or results of operations.

          The underlying cash flow of the hotels securing our various consolidated non-recourse secured loans may be insufficient to enable us to refinance those loans as they mature on satisfactory terms under current market conditions. While we are actively pursuing various alternatives for refinancing that indebtedness, the process is complex and involves individual negotiations with multiple lenders, servicers and other potential financing sources. We believe that extending maturity dates to align with an economic recovery, stabilized cash flows and an improved hotel transaction market is in our best interests and those of our lenders. As a consequence, we intend to seek such extensions. In addition, we intend to discuss other loan modification options, as well as explore other refinancing opportunities and potential asset sales as a means of satisfying our obligations as they mature. We can provide no assurances that we will be successful in such negotiations or be able to obtain extensions or other modifications on acceptable terms. If we are unable to repay a substantial portion of this indebtedness as it matures, or obtain satisfactory extensions or modifications of such indebtedness, the lenders would be able to foreclose on the mortgaged hotels securing the unpaid indebtedness and those other hotels securing loans that, unlike the Notes offered hereby, cross default or are cross collateralized with such indebtedness, which could have a material adverse effect on our business, financial condition or results of operations.

           The Notes are effectively junior to certain of our and our subsidiaries’ existing debt.

          The Exchange Notes will be secured by a pledge of the limited partner interests in FelCor LP owned by FelCor, mortgaged interests in owned and leased real property and pledged equity interests in the owners of certain owned and/or leased real property described in the detail in “Description of the Notes and Guarantees—Security,” and will rank equally, as to right to payment, with our future senior debt. The Exchange Notes will be effectively subordinated to all of our and our consolidated subsidiaries’ debt secured by any assets or property other than the collateral and to all other debt of our non-guarantor subsidiaries. As of September 30, 2009, after giving effect to the offering and the application of the net proceeds to purchase or redeem $215 million in aggregate principal amount of our Floating Rate Notes and to purchase $213 million in aggregate principal amount of our 8 ¹ / 2 % Notes, we and our consolidated subsidiaries would have had approximately $1.8 billion of indebtedness, $1.1 billion of which was mortgage debt of non-guarantor subsidiaries and effectively senior to the Exchange Notes to the extent of the value of the underlying assets. Following the consummation of the offering of the Initial Notes and the application of the proceeds, we have no other outstanding senior debt.

          At September 30, 2009, we had no other unsecured debt other than the then existing senior notes, trade payables and intercompany loans.

           The trustee under the indenture may be unable to foreclose on the collateral, or exercise associated rights, and pay you any amount due on the Exchange Notes.

          Under the indenture governing the Notes, if an event of default occurs, including defaults in payment of interest or principal on the Exchange Notes when due at maturity or otherwise, the trustee may accelerate the Notes and, among other things, the collateral agent appointed under the indenture may initiate proceedings to foreclose on the collateral securing the Notes and exercise associated rights. The right of the collateral agent to repossess and dispose of the collateral after the occurrence of an event of default is likely to be significantly impaired or, at a minimum, delayed by applicable U.S. bankruptcy laws if a bankruptcy proceeding were to be commenced involving FelCor, FelCor LP or any subsidiary guarantor prior to the trustee’s disposition of the collateral. For example, under applicable U.S. bankruptcy laws, a secured creditor is prohibited from repossessing and selling its collateral from a debtor in a bankruptcy case without bankruptcy court approval. In addition, the option to purchase the general partner interest in FelCor LP owned by FelCor granted to the trustee or the collateral agent for an exercise price of $1.00 may be deemed a fraudulent transfer under applicable U.S. bankruptcy or similar state laws or a penalty to the extent that FelCor did not receive reasonably equivalent value or fair consideration in connection therewith, and such option may be considered a security agreement or a rejectable executory contract, in which case, the option to purchase may be avoided or may not be exercisable under its present terms, or may otherwise be impaired or delayed. For a more detailed description of fraudulent transfers, see “—The Exchange Notes or a guarantee thereof may be deemed a fraudulent transfer.” Under any of these circumstances, you may not be fully compensated for your investment in the Exchange Notes in the event of a default by FelCor LP.

           The Exchange Notes or a guarantee thereof may be deemed a fraudulent transfer.

          Under U.S. bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee of the senior Exchange Notes could be voided, or claims on a guarantee of the Exchange Notes could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee:

	1)		Received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and
	2)		Either:

	a.		was insolvent or rendered insolvent by reason of such incurrence;
	b.		was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or
	c.		intended to incur, or believed that it would incur, bets beyond its ability to pay such debts as they mature.

          If such circumstances were found to exist, of if a court were to find that the guarantee were issued with actual intent to hinder, delay or defraud creditors, the court could void the guarantees or cause any payment by that guarantor pursuant to its guarantee to be voided and returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor. In such event, the Exchange Notes would be structurally subordinated to the indebtedness and other liabilities of such subsidiary. In addition, the loss of a guarantee (other than in accordance with the terms of the indenture) will constitute a default under the indenture, which default could cause all Exchange Notes to become immediately due and payable. Sufficient funds to repay the Exchange Notes may not be available from other sources, including the remaining guarantors, if any. In addition, the court might direct you to repay any amounts that you already received from the subsidiary guarantor.

          In addition, our obligations under the Exchange Notes may be subject to review under the same laws in the event of our bankruptcy or other financial difficulty. In that event, if a court were to find that when we issued the Exchange Notes the factors in clauses 1) and 2) above applied to us, or that the Exchange Notes were issued with actual intent to hinder, delay or defraud creditors, the court could void our obligations under the Exchange Notes, or direct the return of any amounts paid thereunder to us or to a fund for the benefit of our creditors.

          In addition, a court may find that we or a guarantor did not receive reasonably equivalent value or fair consideration for the Exchange Notes or the guarantees, respectively, if we or a guarantor did not substantially benefit directly or indirectly from the issuance of the Exchange Notes. If a court were to void the issuance of the Exchange Notes or the guarantees, you may no longer have a claim against us or the guarantors.

          The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, the operating partnership or a guarantor would be considered insolvent if:

	§		the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets; or
	§		the present fair value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or
	§		it could not pay its debts as they become due.

          Each subsidiary guarantee will contain a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its subsidiary guarantee to be a fraudulent transfer. This provision may not be effective to protect the subsidiary guarantees from being voided under fraudulent transfer law, or may reduce that guarantor’s obligation to an amount that effectively makes such guarantee worthless.

          Finally, as a court of equity, the bankruptcy court may subordinate the claims in respect of the Exchange Notes to other claims against us under the principle of equitable subordination, if the court determines that: (i) the holder of the Exchange Notes engaged in some type of inequitable conduct; (ii) such inequitable conduct resulted in

injury to our other creditors or conferred an unfair advantage upon the holder of the Exchange Notes; and (iii) equitable subordination is not inconsistent with federal bankruptcy laws.

          We can offer no assurance as to what standard a court would apply in making such determinations or that a court would agree with our conclusions in this regard.

           The value of the collateral securing the Notes may not be sufficient to secure post-petition interest.

          In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us, holders of the Notes will only be entitled to post-petition interest, fees, costs or charges under U.S. bankruptcy laws to the extent that the value of their security interest in the collateral is greater than the amount of their pre-bankruptcy claim. Holders of the Notes that have a security interest in collateral with a value equal or less than their pre-bankruptcy claim will not be entitled to post-petition interest under U.S. bankruptcy laws. No appraisal of the fair market value of the collateral has been prepared in connection with this offering and we therefore cannot assure you that the value of the noteholders’ interest in the collateral equals or exceeds the principal amount of the Notes. If the value of the collateral is less than the principal amount of the Notes, then in the event of a bankruptcy, you will have only an unsecured claim against FelCor LP, FelCor and the subsidiary guarantors to the extent of such shortfall. See “—The collateral securing the Exchange Notes may be inadequate to satisfy payments on the Exchange Notes” and “Description of the Notes and Guarantees.”

           We may be unable to raise the funds necessary to finance the change of control repurchase provision required by the indenture governing the Notes.

          Upon certain events constituting a change of control, as that term is defined in the indenture governing the Notes, we will be required to make an offer in cash to repurchase all or any part of each holder’s Exchange Notes at a price equal to 101% of the principal thereof, plus accrued and unpaid interest, if any, and liquidated damages, if any, to the date of repurchase. The source of funds for any such repurchase would be our available cash or cash generated from operations or other sources, including borrowings, sales of equity or funds provided by a controlling person or entity. Any holders of other debt securities that we may issue in the future that rank equally in right of payment with the Exchange Notes may also have this right. Our failure to offer to repurchase Exchange Notes, or to repurchase Exchange Notes tendered, following a change of control will result in a default under the indenture governing the Notes, which could lead to a cross-default under our senior debt facilities and under the terms of our other debt. It is possible that we would not have sufficient funds at the time of the change of control to make the required purchase of the Exchange Notes. Moreover, any future indebtedness that we may incur may restrict our ability to repurchase the Exchange Notes, including following a change of control event. As a result, following a change of control event, we would not be able to repurchase the Exchange Notes unless we first repaid all indebtedness outstanding under any of our other indebtedness that contains similar provisions, or obtained a waiver from the holders of such indebtedness to permit us to repurchase the Exchange Notes. We may be unable to repay all of that indebtedness or obtain a waiver of that type. Any requirement to offer to repurchase Exchange Notes may therefore require us to refinance our other outstanding debt, which we may not be able to do on commercially reasonable terms, if at all. These repurchase obligations may also delay or make it more difficult for others to obtain control of us.

          In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of other indebtedness, would not constitute a change of control under the indenture. See “Description of the Notes and Guarantees—Covenants—Repurchase of Notes upon a Change of Control.”

           No active public trading market will exist for the Exchange Notes, which could limit your ability to sell the Exchange Notes.

          The Exchange Notes will be a new issue of securities for which there is currently no market. We do not intend to list the Exchange Notes on any securities exchange. We cannot assure you that an active trading market for the Exchange Notes will exist. The initial purchasers have advised us that they intend to make a market in the Exchange Notes after this exchange offer is completed. However, they are not obligated to do so and may discontinue market-making at any time without notice.

          The liquidity of any market for the Exchange Notes will depend upon various factors, including:

	§		the number of holders of the Exchange Notes;
	§		the interest of securities dealers in making a market for the Exchange Notes;

	§		the overall market for high yield securities;
	§		our financial performance and prospects; and
	§		the prospects for companies in our industry generally.

          Accordingly, we cannot assure you that an active trading market will develop for the Exchange Notes. If the Exchange Notes are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing interest rates and other factors including those listed above.

          Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Exchange Notes. Any market for the Exchange Notes may be subject to similar disruptions. Any such disruptions may adversely affect you as a holder of the Exchange Notes.

           The capital stock securing the Notes will automatically be released from the collateral to the extent the pledge of such collateral would require the filing of separate financial statements for any of our subsidiaries with the Commission.

          The indenture governing the Notes and the collateral documents provide that, to the extent that any rule would, or is adopted, amended, or interpreted which would, require the filing with the Commission (or any other governmental agency) of separate financial statements of any of our subsidiaries due to the fact that such subsidiary’s capital stock or other securities secure the Notes, then such capital stock or other securities will automatically be deemed, for so long as such requirement would be in effect, not to be part of the collateral securing the Notes to the extent necessary to not be subject to such requirement. In such event, the collateral documents may be amended, without the consent of any holder of the Exchange Notes to the extent necessary to evidence the absence of any liens on such capital stock or other securities. As a result, holders of the Exchange Notes could lose their security interest in such portion of the collateral if and for so long as any such rule is in effect. In addition, the absence of a lien on a portion of the capital stock of a subsidiary pursuant to this provision in certain circumstances could result in less than a majority of the capital stock of a subsidiary being pledged to secure the Exchange Notes, which could impair the ability of the collateral agent, acting on behalf of the holders of the Exchange Notes, to sell a controlling interest in such subsidiary or to otherwise realize value on its security interest in such subsidiary’s stock or assets.

           The Exchange Notes will be issued with original issue discount.

          Because the Initial Notes were issued with OID, the Exchange Notes should be treated as having been issued with OID for U.S. federal income tax purposes. Thus, in addition to the stated interest on the Exchange Notes, Holders (as defined in the section entitled “Material U.S. Income Tax Consequences”) that were subject to inclusion in gross income of OID with respect to the Initial Notes will generally be required to include amounts representing the OID in gross income on a constant yield basis for U.S. federal income tax purposes in advance of the receipt of cash payments to which such income is attributable.

           If a bankruptcy petition were filed by or against us, holders of Exchange Notes may receive a lesser amount for their claim than they would have been entitled to receive under the indenture governing the Exchange Notes.

          If a bankruptcy petition were filed by or against us under the U.S. Bankruptcy Code after the issuance of the Exchange Notes, the claim by any holder of the Exchange Notes for the principal amount of the Exchange Notes may be limited to an amount equal to the sum of:

	§		the original issue price for the Initial Notes; and
	§		that portion of the original issue discount that does not constitute “unmatured interest” for purposes of the U.S. Bankruptcy Code.

          Any original issue discount that was not amortized as of the date of the bankruptcy filing would constitute unmatured interest. Under the U.S. Bankruptcy Code, the holders of Exchange Notes would only have the right to receive interest accruing after the commencement of a bankruptcy proceeding to the extent that the value of the collateral securing the Exchange Notes and the guarantees (after taking into account all prior liens on such collateral) exceeds the amount of the claim of the holders of Exchange Notes for principal and pre-petition interest on the Exchange Notes. Accordingly, holders of the Exchange Notes under these circumstances may receive a lesser

amount than they would be entitled to under the terms of the indenture governing the Exchange Notes, even if sufficient funds are available.

Risks Relating to Our Business and Industry

           The current global recession has had an adverse effect on our revenue per available room, or RevPAR, performance, Hotel EBITDA margins and results of operations. The effects of a continued or deepening recession on our financial condition could be material.

          The overall weakness in the U.S. economy, particularly the turmoil in the credit markets, weakness in the housing market, and volatile energy and commodity costs, has resulted in considerable negative pressure on both consumer and business spending (this includes increased emphasis in cost containment with focus on travel and entertainment limitations). We anticipate that lodging demand will not improve, and could weaken further, until current economic trends reverse course, particularly the weakened overall economy and illiquid credit markets. For 2009, we believe that forecasted increasing unemployment and decline in business investment and profits, when combined with turmoil in the credit markets, will continue to affect both leisure and business travel negatively and, accordingly, decrease lodging demand. Further, as hotels adjust to reduced demand by shifting their occupancy mix to lower-rated business, we expect to see average room rates decline in most markets. Decreased occupancy and declining room rates have an adverse effect on RevPAR, Hotel EBITDA margins and results of operations.

           We depend on external sources of capital and recent disruptions in the financial markets may affect our ability to obtain financing or obtain financing on reasonable and acceptable terms.

          Unlike conventionally taxed corporations, our ability to reduce our debt and finance our growth must largely be funded by external sources of capital because we are required to distribute to our stockholders at least 90% of our taxable income (other than net capital gains) in order to qualify as a REIT, including, in some cases, taxable income we recognize for federal income tax purposes but with regard to which we do not receive corresponding cash. Our ability to access the external capital we require could be hampered by a number of factors, many of which are outside our control, including declining general market conditions, unfavorable market perception of our growth potential, decreases in our current and estimated future earnings, excessive cash distributions or decreases in the market price of our common stock. Recent events in the financial markets have had an adverse impact on the credit markets and, as a result, credit has become significantly more expensive and difficult to obtain, if available at all. Some lenders are imposing more stringent credit terms, there has been and may continue to be a general reduction in the amount of credit available, and many banks are either unable or unwilling to provide new asset based lending. Tightening credit markets may have an adverse effect on our ability to refinance debt as it becomes due on favorable terms, if at all, thereby increasing financing costs and/or requiring us to accept financing with increasing restrictions. Historically, we have incurred debt for acquisitions and to fund our renovation, redevelopment and rebranding programs. Limitations upon our access to additional debt could adversely affect our ability to fund these programs or acquire hotels in the future.

          As a result of the issuance of the Initial Notes, we have only a limited number of unencumbered hotels and limited resources to raise additional capital.

           Compliance with, or failure to comply with, our financial covenants may adversely affect our financial position and results of operations.

          The indenture governing the Notes and the agreements governing our subsidiary mortgage debt each contain, and future financing agreements may contain, various restrictive covenants and incurrence tests, including, among others, provisions that can restrict our ability to:

	§		incur any additional indebtedness;
	§		make common or preferred distributions;
	§		repurchase our common or preferred stock;
	§		make investments;
	§		engage in transactions with affiliates;
	§		incur liens;
	§		merge or consolidate with another person;

	§		dispose of all or substantially all of our assets; and
	§		permit limitations on the ability of our subsidiaries to make payments to us.

          These restrictions may adversely affect our ability to finance our operations or engage in other business activities that may be in our best interest.

          Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and financial tests. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the Exchange Notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements, or that we will be able to refinance our debt on terms acceptable to us, or at all.

          Certain of our consolidated subsidiaries have been formed as special purpose entities, or SPEs. These SPEs have incurred $1.1 billion in aggregate principal amount of mortgage debt secured by the assets of those SPEs, which is non-recourse to us. However, a violation of any of the recourse carve-out provisions could cause this debt to become fully recourse to us.

           We have substantial financial leverage and our debt agreements will allow us to incur additional debt that, if incurred, could exacerbate the other risks described herein.

          At September 30, 2009, our consolidated debt of $1.6 billion represented approximately 69% of our total enterprise value. Declines in revenues and cash flow may adversely affect our public debt ratings, and may limit our access to additional debt. Our existing senior Exchange Notes, as currently rated by Moody’s Investors Service and Standard & Poor’s, are below investment grade.

          Our financial leverage could have important consequences. For example, it could:

	§		limit our ability to obtain additional financing for working capital, renovation, redevelopment and rebranding plans, acquisitions, debt service requirements and other purposes;
	§		limit our ability to refinance existing debt;
	§		require us to agree to additional restrictions and limitations on our business operations and capital structure to obtain financing;
	§		increase our vulnerability to adverse economic and industry conditions, and to interest rate fluctuations;
	§		require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for capital expenditures, future business opportunities, paying dividends or other purposes;
	§		limit our flexibility to make, or react to, changes in our business and our industry; and
	§		place us at a competitive disadvantage, compared to our competitors that have less debt.

          Although most of our hotel mortgage debt is recourse solely to the specific assets securing the debt, in certain limited cases, including fraud, misapplication of funds and other customary recourse carve-out provisions, the debt may become full recourse to us.

          We may be able to incur substantial debt in the future. Although the instruments governing our indebtedness contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions could be substantial. If new debt is added to our current debt levels, the risks described above would intensify.

           We have substantial variable rate debt.

          At September 30, 2009, approximately 52% of our consolidated outstanding debt (including our Floating Rate Notes) had variable interest rates. If variable interest rates were to increase significantly, they could have a material adverse impact on our earnings and financial condition.

           We are subject to the risks of real estate ownership, which could increase our costs of operations.

           General Risks . Our investment in hotels is subject to the numerous risks generally associated with owning real estate, including among others:

	§		adverse changes in general or local economic or real estate market conditions;
	§		the ability to refinance debt on favorable terms at maturity, if at all;
	§		changes in zoning laws;
	§		increases in lodging supply or competition;
	§		decreases in demand;
	§		changes in traffic patterns and neighborhood characteristics;
	§		increases in assessed property taxes from changes in valuation or real estate tax rates;
	§		increases in the cost of our property insurance;
	§		the potential for uninsured or underinsured property losses;
	§		costly governmental regulations and fiscal policies;
	§		changes in tax laws;
	§		our ability to acquire hotel properties at prices consistent with our investment criteria;
	§		our ability to fund capital expenditures at our hotels to maintain or enhance their competitive position; and
	§		other circumstances beyond our control.

          Moreover, real estate investments are relatively illiquid, and we may not be able to adjust our portfolio in a timely manner to respond to changes in economic and other conditions.

           Compliance with environmental laws may adversely affect our financial condition . Owners of real estate are subject to numerous federal, state, local and foreign environmental laws and regulations. Under these laws and regulations, a current or former owner of real estate may be liable for the costs of remediating hazardous substances found on its property, whether or not they were responsible for its presence. In addition, if an owner of real property arranges for the disposal of hazardous substances at another site, it may also be liable for the costs of remediating the disposal site, even if it did not own or operate the disposal site. Such liability may be imposed without regard to fault or the legality of a party’s conduct and may, in certain circumstances, be joint and several. A property owner may also be liable to third parties for personal injuries or property damage sustained as a result of its release of hazardous or toxic substances, including asbestos-containing materials, into the environment. Environmental laws and regulations may require us to incur substantial expenses and limit the use of our properties. We could have substantial liability for a failure to comply with applicable environmental laws and regulations, which may be enforced by the government or, in certain instances, by private parties. The existence of hazardous substances on a property can also adversely affect the value of, and the owner’s ability to use, sell or borrow against, the property.

          We cannot provide assurances that future or amended laws or regulations, or more stringent interpretations or enforcement of existing environmental requirements, will not impose any material environmental liability, or that the environmental condition or liability relating to our hotels will not be affected by new information or changed circumstances, by the condition of properties in the vicinity of such hotels, such as the presence of leaking underground storage tanks, or by the actions of unrelated third parties.

          Moreover, under federal and certain state environmental laws, a holder of secured indebtedness may be liable for an issuer’s environmental matters if the debt holder or its agents or employees have actually participated in the management of the operations of the issuer, even though the environmental damage or threat was caused by a third party, a prior owner, a current owner or an operator other than that debt holder. Under federal environmental

laws, “participation in management” generally requires actual participation in, and not merely the capacity to influence, the operations of the subject facility. This would generally require that the debt holder have exercised control with respect to environmental compliance or over all or substantially all of the non-environmental operational functions. Similarly, the debt holder becomes liable in various circumstances, including when it:

	§		holds the facility or property as an investment, including leasing the facility or property to a third party;
	§		fails to sell, release or otherwise divest itself of the property at the earliest practicable, commercially reasonable time, on commercially reasonable terms; or
	§		fails to properly address environmental conditions at the facility or property.

          The collateral agent and the indenture trustee may need to evaluate the impact of these potential environmental liabilities before determining to foreclose on collateral consisting of real property, if any, because secured creditors that hold a mortgage in real property may be held liable under environmental laws for the costs of remediating or preventing the release or threatened releases of hazardous substances at such real property. Consequently, the collateral agent may decline to foreclose on such collateral or exercise remedies available in respect thereof if it does not receive indemnification to its satisfaction from the holders of the Notes.

           Compliance with the Americans with Disabilities Act may adversely affect our financial condition . Under the Americans with Disabilities Act of 1990, all public accommodations, including hotels, are required to meet certain federal requirements for access and use by disabled persons. Various state and local jurisdictions have also adopted requirements relating to the accessibility of buildings to disabled persons. We believe that our hotels substantially comply with the requirements of the Americans with Disabilities Act and other applicable laws. However, a determination that our hotels are not in compliance with these laws could result in liability for both governmental fines and payments to private parties. If we were required to make unanticipated major modifications to our hotels to comply with the requirements of the Americans with Disabilities Act and other similar laws, it could adversely affect our ability to make distributions to our stockholders and to satisfy our other obligations.

           Lodging industry-related risks may adversely affect our business.

           We are subject to the risks inherent to hotel operations . We have ownership interests in the operating lessees of our hotels; consequently, we are subject to the risk of fluctuating hotel operating expenses at our hotels, including, but not limited to:

	§		wage and benefit costs, including hotels that employ unionized labor;
	§		repair and maintenance expenses;
	§		gas and electricity costs;
	§		insurance costs, including health, general liability and workers compensation; and
	§		other operating expenses.

          In addition, we are subject to the risks of a decline in Hotel EBITDA margins, which occur when hotel operating expenses increase disproportionately to revenues or fail to shrink at least as fast as revenues decline. These operating expenses and Hotel EBITDA margins are within the control of our independent managers over whom we have limited control.

           Investing in hotel assets involves special risks . We have invested in hotel-related assets, and our hotels are subject to all of the risks common to the hotel industry. These risks could adversely affect hotel occupancy and the rates that can be charged for hotel rooms, and generally include:

	§		adverse effects of declines in general and local economic activity;
	§		competition from other hotels;
	§		construction of more hotel rooms in a particular area than needed to meet demand;
	§		any further increases in energy costs and other travel expenses;
	§		other events, such as terrorist acts or war that reduce business and leisure travel;
	§		fluctuations in our revenue caused by the seasonal nature of the hotel industry;

	§		an outbreak of a pandemic disease affecting the travel industry;
	§		a downturn in the hotel industry; and
	§		risks generally associated with the ownership of hotels and real estate, as discussed herein.

           We could face increased competition . Each of our hotels competes with other hotels in its geographic area. A number of additional hotel rooms have been, or may be, built in a number of the geographic areas in which our hotels are located, which could adversely affect both occupancy and rates in those markets. A significant increase in the supply of midprice, upscale and upper upscale hotel rooms and suites, if demand fails to increase at least proportionately, could have a material adverse effect on our business, financial condition and results of operations.

           We face reduced coverages and increased costs of insurance . Our property insurance has a $100,000 all risk deductible, a deductible of 5% of insured value for named windstorm coverage and a deductible ranging from 2% to 5% of insured value for California earthquake coverage. Substantial uninsured or not fully-insured losses would have a material adverse impact on our operating results, cash flows and financial condition. Catastrophic losses, such as the losses caused by hurricanes in 2005 and 2008, could make the cost of insuring against these types of losses prohibitively expensive or difficult to find. In an effort to limit the cost of insurance, we purchase catastrophic insurance coverage based on probable maximum losses based on 250-year events and have only purchased terrorism insurance to the extent required by our lenders. We have established a self-insured retention of $250,000 per occurrence for general liability insurance with regard to 57 of our hotels. The remainder of our hotels participate in general liability programs sponsored by our managers, with no deductible.

           We could have property losses not covered by insurance . Our property policies provide that all of the claims from each of our properties resulting from a particular insurable event must be combined together for purposes of evaluating whether the aggregate limits and sub-limits contained in our policies have been exceeded. Therefore, if an insurable event occurs that affects more than one of our hotels, the claims from each affected hotel will be added together to determine whether the aggregate limit or sub-limits, depending on the type of claim, have been reached, and each affected hotel may only receive a proportional share of the amount of insurance proceeds provided for under the policy if the total value of the loss exceeds the aggregate limits available. We may incur losses in excess of insured limits and, as a result, we may be even less likely to receive sufficient coverage for risks that affect multiple properties such as earthquakes or catastrophic terrorist acts. There are risks such as war, catastrophic terrorist acts, nuclear, biological, chemical, or radiological attacks, and some environmental hazards that may be deemed to fall completely outside the general coverage limits of our policies or may be uninsurable or may be too expensive to justify insuring against.

          We may also encounter disputes concerning whether an insurance provider will pay a particular claim that we believe is covered under our policy. Should a loss in excess of insured limits or an uninsured loss occur or should we be unsuccessful in obtaining coverage from an insurance carrier, we could lose all, or a portion of, the capital we have invested in a property, as well as the anticipated future revenue from the hotel. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property.

          We obtain terrorism insurance to the extent required by lenders as a part of our all-risk property insurance program, as well as our general liability and directors’ and officers’ coverages. However, our all-risk policies have limitations such as per occurrence limits and sub-limits which might have to be shared proportionally across participating hotels under certain loss scenarios. Also, all-risk insurers only have to provide terrorism coverage to the extent mandated by the Terrorism Risk Insurance Act, or TRIA, for “certified” acts of terrorism — namely those which are committed on behalf of non-United States persons or interests. Furthermore, we do not have full replacement coverage at all of our properties for acts of terrorism committed on behalf of United States persons or interests (“non-certified” events) as our coverage for such incidents is subject to sub-limits and/or annual aggregate limits. In addition, property damage related to war and to nuclear, biological and chemical incidents is excluded under our policies. While TRIA will reimburse insurers for losses resulting from nuclear, biological and chemical perils, TRIA does not require insurers to offer coverage for these perils and, to date, insurers are not willing to provide this coverage, even with government reinsurance. As a result of the above, there remains uncertainty regarding the extent and adequacy of terrorism coverage that will be available to protect our interests in the event of future terrorist attacks that impact our properties.

           We have geographic concentrations that may create risks from regional or local economic, seismic or weather conditions . At September 30, 2009, approximately 50% of our hotel rooms were located in, and 49% of our 2008 Hotel EBITDA was generated from, three states: California, Florida and Texas. Additionally, at September 30,

2009, we had concentrations in six major metropolitan areas, South Florida, Atlanta, the Los Angeles area, the San Francisco Bay area, Orlando and Dallas, which together represented approximately 34% of our Hotel EBITDA for the year ended December 31, 2008. Therefore, adverse economic, seismic or weather conditions in these states or metropolitan areas may have a greater adverse effect on us than on the industry as a whole.

           The termination of management agreements relating to two hotels may result in liquidated damages . In 2008, we identified two Holiday Inn hotels in Florida operating under management agreements with IHG as candidates to be sold and in the fourth quarter of 2009 we executed a contract for sale with regard to these hotels. These hotels were originally designated for redevelopment with condominiums, but market conditions in Florida no longer make these condominium projects feasible. We also determined that the major capital expenditures necessary to retain the Holiday Inn flags at these hotels were not in the best interests of our stockholders, given the shortened hold period for these hotels. We have agreed with IHG that the management agreements for these hotels will be terminated January 15, 2010 or earlier sale. Following termination (or earlier sale) of each hotel, we will be required to pay replacement management fees for up to one year and liquidated damages (net of any replacement management fees previously paid) at the end of that year; or reinvest in another hotel to be managed by IHG and carrying an IHG brand. Given the current state of the economy and the market for hotel acquisitions, substitution of a replacement hotel appears unlikely prior to the relevant dates, and we will likely have to pay IHG at least some portion of replacement management fees and/or liquidated damages. Liquidated damages are computed based on operating results of a hotel prior to termination, and we expect that the aggregate liability related to these hotels, if paid, could be approximately $11 million. We accrued the full amount of liquidated damages in 2008.

           We are subject to possible adverse effects of management, franchise and license agreement requirements . All of our hotels are operated under existing management, franchise or license agreements with nationally recognized hotel companies. Each agreement requires that the licensed hotel be maintained and operated in accordance with specific standards and restrictions in order to maintain uniformity within the brand. Compliance with these standards, and changes in these standards, could require us to incur significant expenses or capital expenditures, which could adversely affect our results of operations and ability to pay dividends to our stockholders and service on our indebtedness.

           We are subject to the risks of brand concentration . We are subject to the potential risks associated with the concentration of our hotels under a limited number of brands. A negative public image or other adverse event that becomes associated with the brand could adversely affect hotels operated under that brand.

          The following table reflects the percentage of Hotel EBITDA from our 85 Consolidated Hotels by brand:

		Hotels				% of 2008 Hotel EBITDA(1)
Embassy Suites Hotels			47				55	%
Holiday Inn			17				19
Sheraton and Westin			9				12
Doubletree			7				7
Renaissance and Marriott			3				5
Hilton			2				2

          If any of these brands suffer a significant decline in popularity with the traveling public, the revenues and profitability of our branded hotels could be adversely affected.

           The lodging business is seasonal in nature . Generally, hotel revenues for our hotel portfolio 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. We expect that seasonal variations in revenue at our hotels will cause quarterly fluctuations in our revenues.

           Future terrorist activities may adversely affect, and create uncertainty in, our business.

          Terrorism in the United States or elsewhere could have an adverse effect on our business, although the degree of impact will depend on a number of factors, including the U.S. and global economies and global financial markets. Previous terrorist attacks in the United States and subsequent terrorism alerts have adversely affected the

travel and hospitality industries over the past several years. Such attacks, or the threat of such attacks, could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties, and/or our results of operations and financial condition, as a whole.

           We face risks related to pandemic diseases, which could materially and adversely affect travel and result in reduced demand for our hotels.

          Our business could be materially and adversely affected by the effect of a pandemic disease on the travel industry. For example, the recent outbreaks of SARS and avian flu had a severe impact on the travel industry, and outbreaks of H1N1 flu threatens to have a similar impact. A prolonged recurrence of SARS, avian flu, H1N1 flu or another pandemic disease also may result in health or other government authorities imposing restrictions on travel. Any of these events could result in a significant drop in demand for our hotels and adversely affect our financial conditions and results of operations.

           If we fail to comply with applicable privacy laws and regulations, we could be subject to payment of fines, damages or face restrictions on our use of guest data.

          We collect information relating to our guests for various business purposes, including marketing and promotional purposes. The collection and use of personal data are governed by privacy laws and regulations enacted in the United States and other jurisdictions around the world. Privacy regulations continue to evolve and on occasion may be inconsistent from one jurisdiction to another. Compliance with applicable privacy regulations may increase our operating costs and/or adversely impact our ability to market our products, properties and services to our guests. In addition, non-compliance with applicable privacy regulations by us (or in some circumstances non-compliance by third parties engaged by us) or a breach of security on systems storing our data may result in fines, payment of damages or restrictions on our use or transfer of data.

           As a REIT, we are subject to specific tax laws and regulations, the violation of which could subject us to significant tax liabilities.

           The federal income tax laws governing REITs are complex . We have operated, and intend to continue to operate, in a manner that is intended to enable us to qualify as a REIT under the federal income tax laws. The REIT qualification requirements are extremely complicated, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we have been, or will continue to be, successful in operating so as to qualify as a REIT.

           The federal income tax laws governing REITs are subject to change . At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. These new laws, interpretations, or court decisions may change the federal income tax laws relating to, or the federal income tax consequences of, qualification as a REIT. Any of these new laws or interpretations may take effect retroactively and could adversely affect us.

           Failure to make required distributions would subject us to tax . Each year, a REIT must pay out to its stockholders at least 90% of its taxable income, other than any net capital gain. To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible tax if the actual amount we pay out to our stockholders in a calendar year is less than the minimum amount specified under federal tax laws. Our only source of funds to make such distributions comes from distributions from FelCor LP. Accordingly, we may be required to borrow money or sell assets to enable us to pay out enough of our taxable income to satisfy the distribution requirements and to avoid corporate income tax and the 4% tax in a particular year.

           Failure to qualify as a REIT would subject us to federal income tax . If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax at regular corporate rates on our taxable income for any such taxable year for which the statute of limitations remains open. We might need to borrow money or sell hotels in order to obtain the funds necessary to pay any such tax. Unless our failure to qualify as a REIT was excused under federal income tax laws, we could not re-elect REIT status until the fifth calendar year following the year in which we failed to qualify.

           We lack control over the management and operations of our hotels . Because federal income tax laws restrict REITs and their subsidiaries from operating hotels, we do not manage our hotels. Instead, we are dependent on the ability of independent third-party managers to operate our hotels pursuant to management agreements. As a result, we are unable to directly implement strategic business decisions for the operation and marketing of our

hotels, such as decisions with respect to the setting of room rates, the salary and benefits provided to hotel employees, the conduct of food and beverage operations and similar matters. While our taxable REIT subsidiaries, or TRSs, monitor the third-party manager’s performance, we have limited specific recourse under our management agreements if we believe the third-party managers are not performing adequately. Failure by our third-party managers to fully perform the duties agreed to in our management agreements could adversely affect our results of operations. In addition, our third-party managers or their affiliates manage hotels that compete with our hotels, which may result in conflicts of interest. As a result, our third-party managers may have in the past made, and may in the future make, decisions regarding competing lodging facilities that are not or would not be in our best interests.

           Complying with REIT requirements may cause us to forego attractive opportunities that could otherwise generate strong risk-adjusted returns and instead pursue less attractive opportunities, or none at all.

          To continue to qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of generating strong risk-adjusted returns on invested capital for our stockholders.

           Complying with REIT requirements may force us to liquidate otherwise attractive investments, which could result in an overall loss on our investments.

          To continue to qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% (20% for tax years beginning prior to July 31, 2008) of the value of our total securities can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences. If we fail to comply with these requirements at the end of any calendar quarter, we may be able to preserve our REIT status by benefiting from certain statutory relief provisions. Except with respect to a de minimis failure of the 5% asset test or the 10% vote or value test, we can maintain our REIT status only if the failure was due to reasonable cause and not to willful neglect. In that case, we will be required to dispose of the assets causing the failure within six months after the last day of the quarter in which we identified the failure, and we will be required to pay an additional tax of the greater of $50,000 or the product of the highest applicable tax rate (currently 35%) multiplied by the net income generated on those assets. As a result, we may be required to liquidate otherwise attractive investments.

           We own, and may acquire, interests in hotel joint ventures with third parties that expose us to some risk of additional liabilities or capital requirements.

          We own, through our subsidiaries, interests in several real estate joint ventures with third parties. Joint ventures that are not consolidated into our financial statements owned a total of 15 hotels, in which we had an aggregate investment of $87 million, at September 30, 2009. The lessee operations of 13 of these 15 hotels are included in our consolidated results of operations due to our majority ownership of those lessees. Our joint venture partners are affiliates of Hilton with respect to 11 hotels, affiliates of Starwood with respect to one hotel, and private entities or individuals (all of whom are unaffiliated with us) with respect to three hotels. The ventures and hotels were subject to non-recourse mortgage loans aggregating $216 million at September 30, 2009.

          Joint ventures that we consolidated into our financial statements owned a total of six hotels, and our ownership interests ranged from 60% to 97%. Our joint venture partners for these hotels are affiliates of Hilton with respect to three hotels, affiliates of Starwood with respect to one hotel and individuals or private entities (all of whom are unaffiliated with us) with respect to two hotels. Four of these hotels were subject to non-recourse mortgage loans aggregating $52 million at September 30, 2009.

          The personal liability of our subsidiaries under existing non-recourse loans secured by the hotels owned by our joint ventures is generally limited to the guaranty of the borrowing ventures’ personal obligations to pay for the lender’s losses caused by misconduct, fraud or misappropriation of funds by the ventures and other typical

exceptions from the non-recourse covenants in the mortgages, such as those relating to environmental liability. We may invest in other ventures in the future that own hotels and have recourse or non-recourse debt financing. If a venture defaults under its mortgage loan, the lender may accelerate the loan and demand payment in full before taking action to foreclose on the hotel. As a partner or member in any of these ventures, our subsidiary may be exposed to liability for claims asserted against the venture, and the venture may not have sufficient assets or insurance to discharge the liability.

          Our subsidiaries may be contractually or legally unable to unilaterally control decisions regarding these ventures and their hotels. In addition, the hotels in a joint venture may perform at levels below expectations, resulting in potential insolvency unless the joint venturers provide additional funds. In some ventures, the joint venturers may elect not to make additional capital contributions. We may be faced with the choice of losing our investment in a venture or investing additional capital in it with no guaranty of receiving a return on that investment.

           Our directors may have interests that may conflict with our interests.

          A director who has a conflict of interest with respect to an issue presented to our board will have no inherent legal obligation to abstain from voting upon that issue. We do not have provisions in our bylaws or charter that require an interested director to abstain from voting upon an issue, and we do not expect to add provisions in our charter and bylaws to this effect. Although each director has a duty of loyalty to us, there is a risk that, should an interested director vote upon an issue in which a director or one of his or her affiliates has an interest, his or her vote may reflect a bias that could be contrary to our best interests. In addition, even if an interested director abstains from voting, that director’s participation in the meeting and discussion of an issue in which they have, or companies with which he or she is associated have, an interest could influence the votes of other directors regarding the issue.

           Departure of key personnel would deprive us of the institutional knowledge, expertise and leadership they provide.

          Our executive management team includes our President and Chief Executive Officer and four Executive Vice Presidents. The persons in these positions generally possess institutional knowledge about our organization and the hospitality or real estate industries, have significant expertise in their fields, and possess leadership skills that are important to our operations. The loss of any of our executive officers could adversely affect our ability to execute our business strategy.

USE OF PROCEEDS

          This exchange offer is intended to satisfy certain of our obligations under the registration rights agreement between us and the initial purchasers of the Initial Notes. We will not receive any cash proceeds from the issuance of the Exchange Notes. In consideration for issuing the Exchange Notes as contemplated in this prospectus, we will receive in exchange, Initial Notes in like principal amount, the terms of which are the same in all material respects as the form and terms of the Exchange Notes except that the Exchange Notes have been registered under the Securities Act and will not contain terms restricting the transfer thereof or providing for registration rights. The Initial Notes surrendered in exchange for the Exchange Notes will be retired and cancelled and cannot be reissued. Accordingly, issuance of the Exchange Notes will not increase our indebtedness.

          We received net proceeds of approximately $558 million from the sale of the Initial Notes. We used the proceeds primarily to fund our offers to purchase approximately $213 million in aggregate principal amount of our 8 ¹ / 2 % Notes and all $215 million in aggregate principal amount of Floating Rate Notes, as well as the subsequent redemption of any Floating Rate Notes not tendered in the offer. See “Business and Properties—Recent Developments.” We intend to use the balance of the net proceeds for general corporate purposes.

THE EXCHANGE OFFER

Purpose and Effect of this Exchange Offer

          In connection with the issuance of the Initial Notes, we entered into a registration rights agreement that provides for this exchange offer. The registration statement of which this prospectus forms a part was filed in compliance with the obligations under the registration rights agreement. A copy of the registration rights agreement relating to the Initial Notes is filed as an exhibit to the registration statement of which this prospectus is a part. Under the registration rights agreement relating to the Initial Notes we agreed that we would, subject to certain exceptions:

	§		use commercially reasonable efforts to file and consummate, at our cost, within 180 days after the issue date of the Initial Notes, a registration statement with the SEC, with respect to a registered offer to exchange such Initial Notes for the Exchange Notes having terms substantially identical in all material respects to the Initial Notes, including the guarantee by FelCor and our subsidiary guarantors (except that the Exchange Notes will not contain transfer restrictions);
	§		allow the exchange offer to remain open for at least 20 business days after the date notice of the exchange offer is mailed to the holders;
	§		in the event that applicable interpretations of the SEC staff do not permit FelCor LP and FelCor to effect the exchange offer, or under certain other circumstances, at our cost, use our best efforts to cause a shelf registration statement with respect to resales of the Initial Notes to become effective and to keep such shelf registration statement effective until the one year anniversary thereof or an earlier date when all of the Initial Notes have been sold under the shelf registration statement;
	§		in the event of a shelf registration, provide each holder copies of the prospectus, notify each holder when the shelf registration statement for the notes has become effective, and take other actions that are required to permit resales of the Initial Notes;
	§		accept for exchange the Initial Notes, or portions thereof, tendered and not validly withdrawn pursuant to the exchange offer;
	§		deliver, or cause to be delivered, to the trustee for cancellation all Initial Notes, or portions thereof, so accepted for exchange by us and issue, and cause the trustee to promptly authenticate and mail to each holder, an Exchange Note equal in principal amount to the principal amount of the Initial Notes surrendered by such holder;
	§		prepare and file with the SEC such amendments and post-effective amendments to each registration statement as may be necessary to keep such registration statement effective for the applicable period and cause each prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the 1933 Act;
	§		to keep each prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with respect to the Initial Notes or Exchanges Notes; and
	§		use commercially reasonable efforts to cause the Exchange Notes to be rated by two nationally recognized statistical rating organizations (as such term is defined in Rule 436(g)(2) under the 1933 Act).

          For each Initial Note tendered to us pursuant to the exchange offer, we will issue to the holder of such Initial Note an Exchange Note having a principal amount equal to that of the surrendered Initial Note.

          Under existing SEC interpretations, the Exchange Notes will be freely transferable by holders other than our affiliates after the exchange offer without further registration under the Securities Act if the holder of the Exchange Notes represents to us in the exchange offer that it is acquiring the Exchange Notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes and that it is not an affiliate of ours, as such terms are interpreted by the SEC; provided, however, that broker-dealers receiving the Exchange Notes in the exchange offer will have a prospectus delivery requirement with respect to resales of such Exchange Notes. The SEC has taken the position that such participating broker-dealers may fulfill their prospectus delivery requirements with respect to the Exchange Notes (other than a resale of an unsold allotment from the original sale of the Initial Notes) with this prospectus contained in the registration

statement. Each broker-dealer that receives the Exchange Notes for its own account in exchange for the Initial Notes, where such Initial Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See “Plan of Distribution.”

          A holder of Initial Notes (other than certain specified holders) who wishes to exchange the Initial Notes for the Exchange Notes in the exchange offer will be required to represent that any Exchange Notes to be received by it will be acquired in the ordinary course of its business and that at the time of the commencement of the exchange offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes and that it is not an “affiliate” of ours, as defined in Rule 405 of the Securities Act, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

          If the exchange offer is not consummated and a shelf registration statement is not declared effective by the SEC on or prior to 180 days after the issue date of the Initial Notes, the annual interest rate borne by the Initial Notes will be increased by 0.5% until the exchange offer is consummated or the SEC declares the shelf registration statement effective.

Background of the Exchange Offer

          We issued $636,000,000 aggregate principal amount of the Initial Notes. The terms of the Exchange Notes and the Initial Notes will be identical in all material respects, including the guarantee by FelCor and our subsidiary guarantors, except for transfer restrictions and registration rights that will not apply to the Exchange Notes. Interest will be payable on the Exchange Notes on April 1 and October 1 of each year, beginning on April 1, 2010. The Exchange Notes will mature on October 1, 2014.

          In order to exchange your Initial Notes for the Exchange Notes containing no transfer restrictions in the exchange offer, you will be required to make the following representations:

	§		the Exchange Notes will be acquired in the ordinary course of your business;
	§		you have no arrangements with any person to participate in the distribution of the Exchange Notes; and
	§		you are not our “affiliate” as defined in Rule 405 of the Securities Act, or if you are an affiliate of ours, you will comply with the applicable registration and prospectus delivery requirements of the Securities Act.

          Upon the terms and subject to the conditions set forth in this prospectus and in the related letter of transmittal, we will accept for exchange any Initial Notes properly tendered and not validly withdrawn in the exchange offer, and the exchange agent will deliver the Exchange Notes promptly after the expiration date of the exchange offer. We expressly reserve the right to delay acceptance of any of the tendered Initial Notes or terminate the exchange offer and not accept for exchange any tendered Initial Notes not already accepted if any conditions set forth under “—Conditions to the Exchange Offer” have not been satisfied or waived by us or do not comply, in whole or in part, with any applicable law.

          If you tender your Initial Notes, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of the Initial Notes.

Expiration Date; Extensions; Termination; Amendments

          The exchange offer will expire at 11:59 p.m., New York City time, on                      , 2009, unless we extend it. We expressly reserve the right to extend the exchange offer on a daily basis or for such period or periods as we may determine in our sole discretion from time to time by giving oral, confirmed in writing, or written notice to the exchange agent and by making a public announcement by press release to Businesswire prior to 9:00 a.m., New York City time, on the first business day following the previously scheduled expiration date. During any extension of the exchange offer, all Initial Notes previously tendered, not validly withdrawn and not accepted for exchange will remain subject to the exchange offer and may be accepted for exchange by us.

          To the extent we are legally permitted to do so, we expressly reserve the absolute right, in our sole discretion, but are not required, to:

	§		waive any condition of the exchange offer; and
	§		amend any terms of the exchange offer.

          Any waiver or amendment to the exchange offer will apply to all Initial Notes tendered, regardless of when or in what order the Initial Notes were tendered. If we make a material change in the terms of the exchange offer or if we waive a material condition of the exchange offer, we will disseminate additional exchange offer materials, and we will extend the exchange offer to the extent required by law.

          We expressly reserve the right, in our sole discretion, to terminate the exchange offer if any of the conditions set forth under “—Conditions to the Exchange Offer” exist. Any such termination will be followed promptly by a public announcement. In the event we terminate the exchange offer, we will give immediate notice to the exchange agent, and all Initial Notes previously tendered and not accepted for exchange will be returned promptly to the tendering holders.

          In the event that the exchange offer is withdrawn or otherwise not completed, the Exchange Notes will not be given to holders of Initial Notes who have validly tendered their Initial Notes. We will return any Initial Notes that have been tendered for exchange but that are not exchanged for any reason to their holder without cost to the holder, or, in the case of the Initial Notes tendered by book-entry transfer into the exchange agent’s account at a book-entry transfer facility under the procedure set forth under “—Procedures for Tendering Initial Notes” and “Book-Entry Transfer,” such Initial Notes will be credited to the account maintained at such book-entry transfer facility from which such Initial Notes were delivered.

Resale of the Exchange Notes

          Based on interpretations of the SEC set forth in no-action letters issued to third parties, we believe that the Exchange Notes issued under the exchange offer in exchange for the Initial Notes may be offered for resale, resold, and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act, if:

	§		you are not an “affiliate” of ours within the meaning of Rule 405 under the Securities Act;
	§		you are acquiring the Exchange Notes in the ordinary course of business; and
	§		you do not intend to participate in the distribution of the Exchange Notes.

          If you tender Initial Notes in the exchange offer with the intention of participating in any manner in a distribution of the Exchange Notes:

	§		you cannot rely on those interpretations of the SEC; and
	§		you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction, and the secondary resale transaction must be covered.

          Unless an exemption from registration is otherwise available, any security holder intending to distribute the Exchange Notes should be covered by an effective registration statement under the Securities Act containing the selling security holder’s information required by Item 507 of Regulation S-K. This prospectus may be used for an offer to resell, a resale or other re-transfer of the Exchange Notes only as specifically set forth in the section captioned “Plan of Distribution.” Only broker-dealers that acquired the Exchange Notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives the Exchange Notes for its own account in exchange for Initial Notes, where such Initial Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the Exchange Notes. Please read the section captioned “Plan of Distribution” for more details regarding the transfer of the Exchange Notes.

Acceptance of Initial Notes for Exchange

          We will accept for exchange Initial Notes validly tendered pursuant to the exchange offer, or defectively tendered, if such defect has been waived by us, after the later of:

	§		the expiration date of the exchange offer; and
	§		the satisfaction or waiver of the conditions specified below under “—Conditions to the Exchange Offer.”

          Except as specified above, we will not accept Initial Notes for exchange subsequent to the expiration date of the exchange offer. Tenders of Initial Notes will be accepted only in aggregate principal amounts equal to $1,000 or integral multiples thereof.

          We expressly reserve the right, in our sole discretion, to:

	§		delay acceptance for exchange of Initial Notes tendered under the exchange offer, subject to Rule 14e-1 under the Exchange Act, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of the holders promptly after the termination or withdrawal of a tender offer; or
	§		terminate the exchange offer and not accept for exchange any Initial Notes, if any of the conditions set forth below under “—Conditions to the Exchange Offer” have not been satisfied or waived by us or in order to comply in whole or in part with any applicable law.

          In all cases, the Exchange Notes will be issued only after timely receipt by the exchange agent of certificates representing Initial Notes, or confirmation of book-entry transfer, a properly completed and duly executed letter of transmittal, or a manually signed facsimile thereof, and any other required documents. For purposes of the exchange offer, we will be deemed to have accepted for exchange validly tendered Initial Notes, or defectively tendered Initial Notes with respect to which we have waived such defect, if, as and when we give oral, confirmed in writing, or written notice to the exchange agent. Promptly after the expiration date, we will deposit the Exchange Notes with the exchange agent, who will act as agent for the tendering holders for the purpose of receiving the Exchange Notes and transmitting them to the holders. The exchange agent will deliver the Exchange Notes to holders of Initial Notes accepted for exchange after the exchange agent receives the Exchange Notes.

          If, for any reason, we delay acceptance for exchange of validly tendered Initial Notes or we are unable to accept for exchange validly tendered Initial Notes, then the exchange agent may, nevertheless, on its behalf, retain tendered Initial Notes, without prejudice to our rights described in this prospectus under the captions “—Expiration Date; Extensions; Termination; Amendments,” “—Conditions to the Exchange Offer” and “—Withdrawal of Tenders,” subject to Rule 14e-1 under the Exchange Act, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of the holders thereof promptly after the termination or withdrawal of a tender offer.

          If any tendered Initial Notes are not accepted for exchange for any reason, or if certificates are submitted evidencing more Initial Notes than those that are tendered, certificates evidencing Initial Notes that are not exchanged will be returned, without expense, to the tendering holder, or, in the case of the Initial Notes tendered by book-entry transfer into the exchange agent’s account at a book-entry transfer facility under the procedure set forth under “—Procedures for Tendering Initial Notes” and “—Book-Entry Transfer,” such Initial Notes will be credited to the account maintained at such book-entry transfer facility from which such Initial Notes were delivered.

          Tendering holders of Initial Notes exchanged in the exchange offer will not be obligated to pay brokerage commissions or transfer taxes with respect to the exchange of their Initial Notes other than as described under the caption “—Transfer Taxes” or as set forth in the letter of transmittal. We will pay all other charges and expenses in connection with the exchange offer.

Procedures for Tendering Initial Notes

          The exchange agent and DTC have confirmed that the exchange offer is eligible for ATOP. Accordingly, DTC participants may electronically transmit their acceptance of the exchange offer by causing DTC to transfer their Initial Notes to the exchange agent in accordance with ATOP procedures for such a transfer.

          If you are a DTC participant that has Initial Notes credited to your DTC account also by book-entry and that are held of record by DTC’s nominee, you may tender your Initial Notes by book-entry transfer as if you were the record holder. Because of this, references herein to registered or record holders include DTC participants with Initial Notes credited to their accounts. If you are not a DTC participant, you may tender Initial Notes by book-entry transfer by contacting your broker or opening an account with a DTC participant.

          A holder who wishes to tender Initial Notes in the exchange offer must cause to be transmitted to the exchange agent an agent’s message, which agent’s message must be received by the exchange agent prior to 5:00 p.m., New York City time, on the expiration date. In addition, the exchange agent must receive a timely confirmation of book-entry transfer of the Initial Notes into the exchange agent’s account at DTC through ATOP under the procedure for book-entry transfers described herein along with a properly transmitted agent’s message, on or before the expiration date.

          The term “agent’s message” means a message, transmitted by DTC to, and received by, the exchange agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment

from the tendering participant stating that the participant has received and agrees to be bound by the terms and subject to the conditions set forth in this prospectus and that we may enforce the agreement against the participant. To receive confirmation of valid tender of Initial Notes, a holder should contact the exchange agent at the telephone number listed under “—Exchange Agent.”

          The tender by a holder that is not withdrawn before the expiration date will constitute an agreement between that holder and us in accordance with the terms and subject to the conditions set forth in this prospectus. Only a registered holder of Initial Notes may tender the Initial Notes in the exchange offer. If you wish to tender Initial Notes that are registered in the name of a broker, dealer, commercial bank, trust company, or other nominee, you should promptly instruct the registered holder to tender on your behalf.

          All questions as to the validity, form, eligibility (including time of receipt), acceptance, and withdrawal of tendered Initial Notes will be determined by us in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all Initial Notes not properly tendered or any Initial Notes our acceptance of which would, in the opinion of counsel for us, be unlawful. We also reserve the right to waive any defects, irregularities, or conditions of tender as to particular Initial Notes. However, to the extent we waive any conditions of tender with respect to one tender of Initial Notes, we will waive that condition for all tenders as well. Our interpretation of the terms and conditions of the exchange offer will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Initial Notes must be cured within the time period we determine. Neither we, the exchange agent, nor any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give you notification of defects or irregularities with respect to tenders of your Initial Notes. Tenders of Initial Notes involving any defects or irregularities will not be deemed to have been made until the defects or irregularities have been cured or waived. Any Initial Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived within the time period we determine will be returned by the exchange agent to the DTC participant who delivered such Initial Notes by crediting an account maintained at DTC designated by such DTC participant promptly after the expiration date of the exchange offer or the withdrawal or termination of the exchange offer.

          In addition, we reserve the right, in our sole discretion, to purchase or make offers to purchase any Initial Notes that remain outstanding after the expiration date or, as set forth under “—Conditions to the Exchange Offer,” to terminate the exchange offer and, to the extent permitted by applicable law, purchase Initial Notes in the open market, in privately negotiated transactions, or otherwise. The terms of any such purchases or offers could differ from the terms of the exchange offer.

          By tendering Initial Notes in the exchange offer, you represent to us that, among other things: (i) the new notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of the person or entity receiving the new notes, whether or not such person or entity is the registered holder, (ii) neither you nor any person or entity receiving the related new notes is engaging in, or intends to engage in, a distribution of the new notes, (iii) neither you nor any person receiving the related new notes has an arrangement or understanding with any person or entity to participate in the distribution of the new notes, (iv) neither you nor any person or entity receiving the related new notes is an “affiliate,” as defined under Rule 405 of the Securities Act, of FelCor, FelCor LP, or any of the subsidiary guarantors, and (v) you are not acting on behalf of any person or entity who could not truthfully make these statements.

          Each broker-dealer that receives Exchange Notes for its own account in exchange for Initial Notes, where such Initial Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the Exchange Notes. See “Plan of Distribution.”

Book-Entry Transfer

          The exchange agent will establish an account with respect to the Initial Notes at the DTC for purposes of the exchange offer within two business days after the date of this prospectus. Holders must tender their Initial Notes by book-entry transfer to the exchange agent’s account at DTC through ATOP by transmitting their acceptance to DTC in accordance with DTC’s ATOP procedures. DTC will then verify the acceptance, execute a book-entry delivery to the exchange agent’s account at DTC and send an agent’s message to the exchange agent. Delivery of the agent’s message by DTC to the exchange agent will satisfy the terms of the exchange offer in lieu of execution and

delivery of a letter of transmittal by the participant identified in the agent’s message. Accordingly, a letter of transmittal need not be completed by a holder tendering through ATOP.

          In all cases, we will issue Exchange Notes for Initial Notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:

§

timely confirmation of book-entry transfer of your Initial Notes into the exchange agent’s account at DTC; and

§

a properly transmitted agent’s message.

          If we do not accept any tendered Initial Notes for any reason set forth in the terms of the exchange offer, we will credit the non-exchanged Initial Notes to your account maintained with DTC.

Withdrawal of Tenders

          Except as otherwise provided in this prospectus, you may withdraw your tender of Initial Notes at any time prior to the expiration date of the exchange offer.

          For a withdrawal to be effective:

§

the exchange agent must receive a written notice of withdrawal at the address set forth below under “—Exchange Agent”; or

§

you must comply with the appropriate procedures of DTC’s automated tender offer program system.

          Any notice of withdrawal must:

§

specify the name of the person who tendered the Initial Notes to be withdrawn; and

§

identify the Initial Notes to be withdrawn, including the principal amount of the Initial Notes to be withdrawn.

          If certificates for the Initial Notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of those certificates, the withdrawing holder must also submit:

§

the serial numbers of the particular certificates to be withdrawn; and

§

a signed notice of withdrawal with signatures guaranteed by an eligible institution, unless the withdrawing holder is an eligible institution.

          If the Initial Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Initial Notes and otherwise comply with the procedures of DTC.

          We will determine all questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal, and our determination shall be final and binding on all parties. We will deem any Initial Notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer.

          We will return any Initial Notes that have been tendered for exchange but that are not exchanged for any reason to their holder without cost to the holder. In the case of Initial Notes tendered by book-entry transfer into the exchange agent’s account at DTC, according to the procedures described above, those Initial Notes will be credited to an account maintained with DTC for the Initial Notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. You may re-tender properly withdrawn Initial Notes by following one of the procedures described under “—Procedures for Tendering Initial Notes” at any time on or prior to the expiration date of the exchange offer.

Conditions to the Exchange Offer

          Despite any other term of the exchange offer, we will not be required to accept for exchange any Initial Notes and we may terminate or amend the exchange offer as provided in this prospectus before accepting any Initial Notes for exchange if in our reasonable judgment:

§

the Exchange Notes to be received will not be tradable by the holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States;

§

the exchange offer, or the making of any exchange by a holder of Initial Notes, would violate applicable law or any applicable interpretation of the staff of the SEC; or

§

any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that would reasonably be expected to impair our ability to proceed with the exchange offer.

          We will not be obligated to accept for exchange the Initial Notes of any holder that has not made to us:

§

the representations described under the captions “—Procedures for Tendering Initial Notes” and “Plan of Distribution”; and

§

any other representations that may be reasonably necessary under applicable SEC rules, regulations, or interpretations to make available to us an appropriate form for registration of the Exchange Notes under the Securities Act.

          We expressly reserve the right, at any time or at various times, to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any Initial Notes by giving oral or written notice of an extension to their holders. During an extension, all Initial Notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange. We will return any Initial Notes that we do not accept for exchange for any reason without expense to their tendering holder as promptly as practicable after the expiration or termination of the exchange offer.

          We expressly reserve the right to amend or terminate the exchange offer and to reject for exchange any Initial Notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. By public announcement we will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the Initial Notes as promptly as practicable. If we amend the exchange offer in a manner that we consider material, we will disclose the amendment in the manner required by applicable law.

          These conditions are solely for our benefit and we may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any time or at various times in our sole discretion. If we fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of that right. Each of these rights will be deemed an ongoing right that we may assert at any time or at various times.

          We will not accept for exchange any Initial Notes tendered, and will not issue the Exchange Notes in exchange for any Initial Notes, if at any time a stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939.

Transfer Taxes

          We will pay all transfer taxes, if any, applicable to the transfer and exchange of Initial Notes pursuant to the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the record holder or any other person, if:

§

delivery of the Exchange Notes, or certificates for Initial Notes for principal amounts not exchanged, are to be made to any person other than the record holder of the Initial Notes tendered;

§

tendered certificates for Initial Notes are recorded in the name of any person other than the person signing any letter of transmittal;

§

a transfer tax is imposed pursuant to a shelf registration statement; or

§

a transfer tax is imposed for any reason other than the transfer and exchange of Initial Notes under the exchange offer.

Consequences of Failure to Exchange

          If you do not exchange your Initial Notes for the Exchange Notes in the exchange offer, you will remain subject to restrictions on transfer of the Initial Notes:

§

as set forth in the legend printed on the Initial Notes as a consequence of the issuance of the Initial Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and

§

as otherwise set forth in the prospectus distributed in connection with the private offering of each of the Initial Notes.

          In general, you may not offer or sell the Initial Notes unless they are registered under the Securities Act, or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreements relating to the Initial Notes, we do not intend to register resales of the Initial Notes under the Securities Act. Based on interpretations of the SEC, you may offer for resale, resell or otherwise transfer the Exchange Notes issued in the exchange offer without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:

§

you are not an “affiliate” within the meaning of Rule 405 under the Securities Act;

§

you acquired the Exchange Notes in the ordinary course of your business; and

§

you have no arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired in the exchange offer.

          If you tender Initial Notes in the exchange offer for the purpose of participating in a distribution of the Exchange Notes:

§

you cannot rely on the applicable interpretations of the SEC; and

§

you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Securities Act.

Exchange Agent

          U.S. Bank National Association is the exchange agent. You should direct any questions and requests for assistance and requests for additional copies of this prospectus to the exchange agent as follows:

U.S. Bank National Association
Attention: Specialized Finance Department
60 Livingston Ave.
EP-MN-WS3C
St. Paul, Minnesota 55107-2292
Telephone: (800) 934-6802
Facsimile: (651) 495-8158

Other

          Participation in the exchange offer is voluntary, and you should carefully consider whether to exchange the Initial Notes for the Exchange Notes. We urge you to consult your financial and tax advisors in making your own decision on what action to take.

          We may in the future seek to acquire untendered Initial Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise, on terms that may differ from the terms of this exchange offer. We have no present plans to acquire any Initial Notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered Initial Notes.

CAPITALIZATION

          The following table sets forth the cash and cash equivalents and capitalization of FelCor LP at September 30, 2009, on an actual basis and on an as adjusted basis to give effect to:

§

issuance of the Initial Notes and related fees and expenses for the offering and the tender offers; and

§

retirement of $215 million of our Floating Rate Notes at par, $206 million of our 8 1 / 2 % Notes at par, $7 million of our 8 1 / 2 % Notes at 98% of par through our tender offers and redemptions, and a write-off of the associated unamortized discount ($0.1 million) and loan costs ($1.0 million).

          For additional information, see “Selected Historical Consolidated Financial and Operating Data,” “Use of Proceeds” and our consolidated financial statements appearing elsewhere in this prospectus.

		September 30, 2009
		Actual				As Adjusted
		(in thousands)
Cash and cash equivalents		$	128,063			$	248,434
Short-term debt:
Current portion of mortgage and capital lease debt			296,466				296,466
Long-term debt:
8 1 / 2 % Senior Notes due 2011 (1)			299,602				86,586
Senior Secured Floating Rate Notes due 2011 (1)			215,000				—
Notes offered hereby (2)			—				570,085
Mortgage and capital lease debt (3)			821,842				821,842
Total long-term debt			1,336,444				1,478,513
Redeemable units at redemption value			1,340				1,340
Preferred units			478,774				478,774
Capital (4)			263,160				262,034
Total capitalization		$	2,376,184			$	2,517,127

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

          The following tables set forth selected financial data for us for the years ended December 31, 2008, 2007, 2006, 2005, and 2004, that have been derived from our audited consolidated financial statements and the notes thereto. Our selected historical consolidated financial information as of and for the nine months ended September 30, 2009 and 2008 is derived from our unaudited interim condensed consolidated financial statements appearing elsewhere in this prospectus, which, in the opinion of management, reflects all adjustments of a recurring nature necessary for a fair presentation of this information. The historical financial information for the nine months ended September 30, 2009 and 2008 is not necessarily indicative of the results expected for the full year.

          You should read the summary historical consolidated financial information set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited annual consolidated financial statements and related notes and unaudited interim financial statements and related notes appearing elsewhere in this prospectus.

FelCor Limited Partnership
and
FelCor Loding Trust Incorporated

SELECTED FINANCIAL DATA
(in thousands, except per share or unit data)

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
Statement of Operations Data:(a)
Total revenues		$	707,065			$	875,772			$	1,129,776			$	1,021,884			$	991,038			$	914,655			$	842,612
Income (loss) from continuing operations(b)			(57,864	)			(32,185	)			(121,667	)			54,660				6,057				(21,226	)			(84,599	)
Diluted earnings (loss) per share or unit:
FelCor LP’s income (loss) from continuing operations applicable to common unitholders			(1.37	)			(1.00	)			(2.57	)			0.24				(0.51	)			(0.93	)			(1.92	)
FelCor’s income (loss) from continuing operations applicable to common stockholders			(1.37	)			(1.00	)			(2.58	)			0.23				(0.53	)			(0.74	)			(1.90	)
Other Data:
Cash distributions declared per common share or unit(c)		$	—			$	0.85			$	0.85			$	1.20			$	0.80			$	0.15			$	—
Hotel EBITDA(d)			171,744				254,490				315,957				308,113				305,566				266,272				233,881
Cash flows provided by operating activities			76,409				142,120				153,163				137,337				147,700				111,482				33,281
Balance Sheet Data (at end of period):
Total assets		$	2,541,022			$	2,609,680			$	2,512,269			$	2,683,835			$	2,583,249			$	2,920,263			$	3,318,191
Total debt, net of discount			1,632,910				1,520,068				1,551,686				1,475,607				1,369,153				1,675,280				1,767,122

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
Impairment loss		$	(3,448	)		$	(53,823	)		$	(107,963	)		$	—			$	—			$	—			$	—
Impairment loss on unconsolidated hotels			(2,068				(3,750	)			(12,696	)			—				—				—				—
Hurricane loss			—				(1,669	)			(1,669	)			—				—				(6,481	)			(2,125	)
Hurricane loss on unconsolidated hotels			—				(50	)			(50	)			—				—				—				—
Liquidated damages			—				—				(11,060	)			—				—				—				—
Conversion costs			(447	)			(481	)			(507	)			(491	)			—				—				—
Severance costs			(572	)			—				(944	)			—				—				—				—
Lease termination costs			(469	)			—				—				—				—				—				—
Charges related to debt extinguishment.			(594	)			—				—				—				(14,318				(5,485	)			(50,171	)
Abandoned projects			—				—				—				(22	)			(33	)			(265	)			—
Gain (loss) on sale of assets			723				—				—				—				(92	)			469				—
Gain on sale of condominiums			—				—				—				18,622				—				—				—
Gain on involuntary conversion			—				3,095				3,095				—				—				—				—

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          The following discussion and analysis presents a review of us and should be read in conjunction with “Prospectus Summary—Summary Historical Consolidated Financial Information,” “Selected Historical Consolidated Financial and Operating Data,” and the financial statements and accompanying notes included in this prospectus. This discussion contains forward-looking statements. See “Disclosure Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties and risks associated with these statements.

General

          We expect the current economic conditions will continue to negatively affect hospitality demand for the remainder of 2009. We believe hotel occupancy, currently near historical lows, will begin to improve in 2010, but we also expect continued pressure on average daily room rates, or ADR, until demand increases significantly. While we have experienced some slowing of negative trends in recent periods and an increase in transient demand, consumers are taking advantage of the historically high number of available rooms to shift pricing power and accordingly, lower ADR. Gross domestic product and capacity utilization have historically been highly correlated to travel demand. These indicators have recently started improving and we expect hotel demand to follow.

          In the first nine months of 2009, the lodging industry experienced nationwide decreases in revenue per available room, or RevPAR (U.S. upper-upscale average RevPAR decreased 19.8% in the first nine months of 2009). However, in spite of reduced RevPAR, our hotels increased portfolio market share by approximately 1.5% in the first nine months of 2009 and 1.8% for the quarter. We believe our market share gain is attributable largely to our recently completed comprehensive hotel renovation program, well-located high-quality hotels, asset management and strong brand affiliations.

          We are focused on increasing market share, protecting ADR, preserving margins and managing our balance sheet. With contracting lodging demand in 2009, we continue to work closely with our brand-managers on extensive cost containment initiatives in the face of a lower RevPAR environment. Many of our hotels have been able to reduce labor costs permanently, and all of our hotels have trimmed non-critical functions. These cost reductions have enabled us to minimize margin erosion at our hotels despite reduced hotel revenues.

          In light of the global recession, we have taken the following steps to build additional flexibility into our capital structure:

§

In October 2009, we completed the private placement of $636 million in aggregate principal amount of our 10% senior secured notes due 2014. Our net proceeds from these notes were approximately $558 million after original issue discount and other fees and expenses related to the offering. The proceeds of these notes were used to repurchase approximately $428 million in aggregate principal amount of our existing senior notes due in 2011 and for general corporate purposes.

§

In June 2009, we obtained a $201 million non-recourse term loan secured by nine hotels that matures in 2011. This loan can be extended for up to two years subject to satisfying certain conditions that we expect to satisfy.

§

In June 2009, we repaid and terminated our line of credit. By terminating our line of credit, we eliminated certain restrictive corporate debt covenants.

§

In March 2009, we refinanced our $116 million loan maturing in 2009, with a new non-recourse term loan secured by the same seven hotels that matures in 2014.

§

We are continuing our discussions with current and potential lenders to modify and/or refinance all of our remaining debt scheduled to mature in 2010.

          In June 2009, we completed the final phase of the comprehensive redevelopment of our San Francisco Marriott Union Square hotel. Third quarter RevPAR increased 53% at this hotel (which operated as Hotel 480 prior to April), compared to the prior year, and its market share increased by 98%, exceeding expectations. The market share index for this hotel was 107% in the third quarter compared to 80% for calendar year 2007 (before its renovation and rebranding).

          We suspended our common dividend in December 2008 and our preferred dividend in March 2009. Although dividends are not paid unless declared by FelCor’s Board of Directors, unpaid preferred dividends

continue to accrue, and accrued and current preferred dividends must be paid in full prior to payment of any common dividends. FelCor’s Board of Directors will determine whether to declare future dividends based upon various factors, including operating results, economic conditions, other operating trends, our financial condition and capital requirements, as well as FelCor’s minimum REIT distribution requirements.

Financial Comparison (in thousands of dollars, except RevPAR and Hotel EBITDA margin)

		Nine Months Ended												Year Ended December 31,
		September 30,								% Change												% Change								% Change
		2009				2008				2009-2008				2008				2007				2008-2007				2006				2007-2006
RevPAR		$	82.00			$	101.69				(19.4	)%		$	96.67			$	95.71				1.0	%		$	92.80				3.1	%
Hotel EBITDA (a)		$	171,744			$	254,490				(32.5	)%		$	315,957			$	308,113				2.5	%		$	305,566				0.8	%
Hotel EBITDA margin (a)			24.4	%			29.1	%			(16.2	)%			28.0	%			27.7	%			1.1	%			28.2	%			(1.8	)%
Net income (loss) attributable to FelCor LP (b)		$	(57,798	)		$	(32,131	)			(79.9	)%		$	(121,678	)		$	90,133				(235.0	)%		$	51,324				75.6	%
Net income (loss) attributable to FelCor (b)		$	(57,399	)		$	(30,851	)			(86.1	)%		$	(119,245	)		$	89,039				(233.9	)%		$	51,045				74.4	%

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006
Impairment loss		$	(3,448	)		$	(53,823	)		$	(107,963	)		$	—			$	—
Impairment loss on unconsolidated hotels			(2,068	)			(3,750	)			(12,696	)			—				—
Hurricane loss			—				(1,669	)			(1,669	)			—				—
Hurricane loss on unconsolidated hotels			—				(50	)			(50	)			—				—
Liquidated damages			—				—				(11,060	)			—				—
Conversion costs			(447	)			(481	)			(507	)			(491	)			—
Severance costs			(572	)			—				(944	)			—				—
Charges related to debt extinguishment			(594	)			—				—				—				(14,318	)
Abandoned projects			—				—				—				(22	)			(33	)
Loss on sale of assets			—				—				—				—				(92	)
Gain on sale of condominiums			—				—				—				18,622				—
Gain on involuntary conversion			—				3,095				3,095				—				—
Lease termination costs			(469	)			—				—				—				—

Results of Operations

Comparison of the Nine Months Ended September 30, 2009 and 2008

          For the nine months ended September 30, 2009, FelCor LP recorded a net loss applicable to common unitholders of $86.8 million, or $1.37 per unit, compared to a net loss applicable to common unitholders of $61.2 million, or $0.98 per unit, for the same period in 2008, and FelCor recorded an $86.4 million net loss applicable to common stockholders, or $1.37 per share, compared to a $59.9 million net loss applicable to common stockholders, or $0.99 per share, for the same period in 2008. The increase in current year loss is attributable primarily to a 19.3% decrease in revenue compared to the same period in 2008. Despite the decrease in revenue, we were able to limit our margin loss in the first nine months of 2009 compared to the first nine months of 2008, primarily by reducing hotel labor costs by $31.9 million and reducing other costs associated with non-critical functions. Hotel expenses decreased 13.9% compared to first nine months of 2008. The current year loss includes impairment charges of $5.5 million ($3.4 million related to two consolidated hotels and $2.1 million related to an unconsolidated entity), while the prior year loss included a $53.8 million impairment charge on four consolidated hotels, hurricane-related losses of $1.7 million, and a $3.1 million gain related to involuntary conversions from the final settlement of 2005 hurricane claims.

          In the first nine months of 2009:

§

Total revenue was $707.1 million, a 19.3% decrease compared to the same period in 2008. The decrease in revenue is attributed principally to a 19.4% decrease in RevPAR, which was driven by a 9.2% decrease in occupancy and an 11.2% decrease in ADR.

§

Hotel departmental expenses decreased $41.6 million (14.3%) compared to the same period in 2008. As a percentage of total revenue, hotel departmental expenses increased from 33.2% to 35.2% compared to the same period in 2008. This expense reduction reflects: (i) the 9.2% decrease in occupancy; (ii) a $21.9 million decrease in labor costs, which included permanent reductions related to a decrease in hotel employees; (iii) a decrease in non-critical room expenses, such as guest transportation, in-room amenities, bath linen quantities, and newspaper service; and (iv) menu modifications in food and beverage.

§

Other property related costs decreased $30.9 million (13.4%) compared to the same period in 2008, due to the decrease in revenues. As a percentage of total revenue, other property related costs increased from 26.3% to 28.2% compared to the same period in 2008. This expense reduction reflects: (i) a $10.0 million decrease in labor costs; (ii) a $8.5 million decrease in marketing assessments, credit card commissions and frequent guest expense (all of which reflect the decrease in revenue); (iii) a $5.2 million decrease in repairs and maintenance, partially attributable to our recently completed renovation program; and (iv) reductions in other non-critical expenses.

§

Management and franchise fees decreased $11.2 million compared to the same period in 2008. As a percent of total revenue, franchise fees and base management fees remained essentially unchanged from 2008 to 2009 (both fees are based on a percentage of revenue). Incentive management fees, which are based on the profitability of the hotels, decreased $3.6 million.

§

Taxes, insurance and lease expense decreased $12.5 million compared to the same period in 2008. This decrease relates primarily to: (i) a $10.6 million decrease in hotel lease expense, attributable to decreased revenue at our consolidated hotel lessees; (ii) a $1.8 million decrease in property and general liability insurance, attributable to improved insurance rates and liability claims experience; and (iii) a $1.8 million decrease in land leases, attributable to decreases in revenue. This was partially offset by a $1.8 million increase in real estate and other taxes, attributable to decreases in estimated accruals recorded in the first nine months of 2008. As a percentage of total revenue, taxes, insurance and lease expense increased from 10.0% to 10.7% compared to the same period in 2008.

§

Depreciation and amortization expense increased $7.1 million, compared to the same period in 2008, which is attributable to increased depreciation due to the $142.9 million of consolidated hotel capital expenditures completed in 2008.

§

Impairment charge. In 2008, we identified eight hotels as candidates to be sold. We recorded impairment charges of $3.4 million for two of these hotels in the first nine months of 2009 and $53.8 million for two of these hotels in the first nine months of 2008.

§

Hurricane loss. In the third quarter of 2008, we recorded $1.7 million in hurricane-related expenses, all of which related to remediation at 14 of our hotels affected by four hurricanes in 2008.

§

Other expenses increased $649,000, compared to the same period in 2008, primarily due to $572,000 of severance expenses (from a reduction in the number of employees at our hotels) and lease termination costs of $469,000 associated with the termination of one of our third-party restaurant lessees, this was partially offset by a decrease in condominium management fee expenses.

§

Net interest expense decreased $6.4 million compared to the same period in 2008. This decrease is primarily attributable to a 104 basis point decrease in our average interest rate for our floating-rate debt, which was partially offset by a $96 million increase in our average debt outstanding.

§

Charges related to debt extinguishment. In the second quarter of 2009, we terminated our line of credit and wrote off deferred loan costs of $594,000 associated with this facility.

§

Equity in loss of unconsolidated entities was $3.2 million compared to $1.1 million of equity in loss from unconsolidated entities for the same period in 2008. We recorded impairment charges of $2.1 million and $3.8 million on our equity method investments in the first nine months of 2009 and the first nine months of

2008, respectively. The remainder of the change is attributable to decreases in current year revenue at our unconsolidated hotels.

§

Discontinued operations in 2008 consisted of a $1.2 million adjustment to gain on sales resulting from a revision in the tax liability associated with gains of $71.2 million from hotel sales in 2006 and 2007.

Comparison of the Years Ended December 31, 2008 and 2007

          For the year ended December 31, 2008, FelCor LP recorded a net loss applicable to common unitholders of $160.3 million, compared to net income applicable to common unitholders of $51.4 million in 2007; and FelCor recorded net loss applicable to common stockholders of $158.0 million, compared to net income applicable to common stockholders of $50.3 million in 2007. Our 2008 loss included impairment charges of $120.7 million ($108.0 million related to consolidated hotels and $12.7 million related to equity method investments), accrued liquidated damages of $11.1 million and hurricane related expenses of $1.7 million. These charges were partially offset by a gain related to involuntary conversions from the final settlement of 2005 hurricane claims of $3.1 million and an adjustment to gains from prior year hotel sales of $1.2 million. Our 2007 net income included $65.7 million of: (i) gains from sale of hotels ($39 million, $28.0 million in discontinued operations and $11.0 million in income from unconsolidated entities), (ii) gain from the sale of condominiums ($18.6 million), and (iii) operating income from hotels sold in 2007 and included in discontinued operations ($8.1 million).

          Our 2008 results of operations include two hotels acquired in December 2007. As such, our 2008 financial statements reflect increases in revenues and expenses associated with these hotels that are not reflected in our 2007 financial statements.

          Our total revenues increased $107.9 million compared to 2007, of which $93.8 million related to the two hotels acquired in December 2007. The remainder of the increase is principally attributable to the 1% increase in RevPAR at our Consolidated Hotels from 2007 to 2008.

          Hotel departmental expenses increased $53.4 million compared to 2007, of which $47.7 million is attributable to the two hotels acquired in December 2007 and the remainder primarily reflects expenses associated with increased occupancy compared to 2007. As a percentage of total revenue, hotel departmental expenses increased from 32.2% to 33.9% compared to 2007. Rooms expense decreased as a percentage of total revenue from 20.0% to 19.2%, but food and beverage expense increased as a percent of total revenue from 10.2% to 12.1%, and other operating department expenses increased as a percent of total revenue from 2.0% to 2.5% compared to 2007. The increases in food and beverage expense and other department expenses as a percent of total revenue are primarily due to the mix and nature of the business of the two hotels acquired in December 2007, which are both resort properties. ADR at these hotels was nearly 40% higher than the remainder of the portfolio in 2008, which was the principal reason for the improvement in rooms expense as a percentage of total revenue. Food and beverage generally has significantly higher expenses as a percent of revenue than rooms, and those hotels contributed 24% of our food and beverage revenue during 2008.

          Other property-related costs increased $27.8 million, compared to 2007, of which $24.0 million related to the two hotels acquired in December 2007. As a percentage of total revenue, other property operating costs remained essentially unchanged at 26.8% in 2008 compared to 26.9% in 2007.

          Management and franchise fees increased $3.8 million, compared to 2007, of which $1.0 million resulted primarily from increases in revenue and $2.8 million related to the two hotels acquired in December 2007. There was essentially no change in management and franchise fees as a percentage of revenue in 2008 compared to 2007.

          Taxes, insurance and lease expense decreased $7.5 million compared to 2007, despite a $4.7 million increase related to the two hotels acquired in December 2007. The decrease from 2007 is primarily related to a decrease in percentage rent expense of $7.4 million, related to percentage leases reset in late 2007, a decrease in property taxes of $0.9 million, largely from reduced assessed values and successful resolution of prior year property taxes disputed, and a decrease in property insurance of $1.5 million.

          Depreciation and amortization expense increased $30.9 million compared to 2007, of which increase $8.2 million related to the two hotels acquired in December 2007. The remainder of the increase reflects increased depreciation associated with hotel capital expenditures ($142.9 million in 2008 and $227.5 million in 2007).

          In 2008, we identified eight hotels as candidates to be sold, of which five remain candidates for sale. We tested these hotels for impairment under the provisions of SFAS No. 144 using undiscounted estimated cash flows

over a shortened estimated remaining hold period. Of the hotels tested, four hotels failed the test under SFAS No. 144, as a result of which we recorded impairment charges of $53.8 million through the nine months ended September 30, 2008, to write down these hotel assets to our then current estimate of their fair market value before selling expenses. As a result of the short-term hold period and the deteriorating market conditions, we recorded additional impairment charges totaling $15.7 million on two of these hotels in the fourth quarter of 2008.

          Because of triggering events in 2008 related to changes in the capital markets, dropping travel demand and the combined effect on our stock price, we tested all of our hotel assets to determine if further assessment for potential impairment was required for any of our hotels. We had one hotel with a short-term ground lease, in addition to the sale candidates noted above, fail this test. We determined that the book value of this hotel was not fully recoverable, and as such, recorded a $38.5 million impairment charge for this hotel under SFAS No. 144.

          Other expenses increased $3.7 million compared to 2007. This increase was primarily attributable to: (i) hurricane-related clean up expenses of $1.7 million related to 14 of our hotels affected by four hurricanes in 2008, (ii) severance costs of $0.9 million related to the staffing reductions at our hotels, and (iii) amortization of intangible assets of $0.8 million related to the hotels acquired in December 2007.

          Net interest expense increased $6.3 million compared to 2007. This change is primarily attributable to: (i) a decrease in interest income of $4.8 million due to lower cash balances and interest rates earned on those balances; (ii) an increase in interest expense of $7.7 million related to the mortgage debt on the two hotels acquired in December 2007; and (iii) a reduction in capitalized interest of $3.5 million related to lower renovation-related construction in progress, all of which was partially offset by lower interest expense of $9.7 million due to lower interest rates applicable to our floating-rate debt.

          Equity in income (loss) from unconsolidated entities decreased by $31.3 million compared to 2007, which decrease primarily reflects income received from the gain of $11.0 million, on the sale of an unconsolidated hotel during the first quarter of 2007, impairment charges of $12.7 million recorded in 2008, and resetting several percentage leases in late 2007. The impairment charges were comprised of $3.3 million (of which our share was $1.7 million) taken under SFAS No. 144 and $11.0 million taken under APB 18, related to other-than-temporary declines in value of certain equity method investments. The impairment under APB 18 includes a charge of $6.6 million for one investment related to a hotel that we do not intend to sell.

          In 2008, we settled insurance claims relating to 2005 hurricane losses and realized a related $3.1 million gain from involuntary conversion.

          In 2007, we finalized the sale of 179 of the 184 units at our Royale Palms condominium project and recognized a related $18.6 million gain on sale under the completed contract method.

          Discontinued operations included a $1.2 million adjustment to increase gains on sale related to a revision in taxes associated with gains aggregating $71.2 million from hotel sales in 2006 and 2007. Discontinued operations for 2007 included operating income of $8.1 million, and charges related to early debt repayment of $0.9 million. Discontinued operations also included gains of $28.0 million related to the sale of 10 hotels during the first six months of 2007.

Comparison of the Years Ended December 31, 2007 and 2006

          For the year ended December 31, 2007, FelCor LP recorded net income applicable to common unitholders of $51.4 million, compared to $12.6 million in 2006; and FelCor recorded net income applicable to common stockholders of $50.3 million, compared to $12.3 million in 2006. We had income from continuing operations of $54.7 million compared to a prior year income from continuing operations of $6.1 million. In 2007, income from continuing operations included an $18.6 million gain from the sale of condominium units at our Royale Palms condominium project in Myrtle Beach, South Carolina. Income from continuing operations in 2006 included an aggregate of $14.3 million of charges related to early retirement of debt.

          Total revenue from continuing operations increased $30.8 million, or 3.1%, compared to the prior year. The increase in revenue is principally attributed to a 3.3% increase in RevPAR. The increase in RevPAR resulted from a 6.5% increase in ADR, net of a 3.0% drop in occupancy, and represents both industry RevPAR increases in many of our major markets and improvements in RevPAR at our recently renovated hotels.

          Renovation-related disruption had an adverse effect on our ADR, occupancy and Hotel EBITDA margin in 2007. Our Hotel EBITDA margin decreased by 68 basis points compared to 2006.

          For 2007, total operating expenses increased by $42.5 million and increased as a percentage of total revenue from 87.9% to 89.4% compared to 2006. Hotel departmental expenses, which consist of rooms expense, food and beverage expense, and other operating departments, increased $9.7 million compared to 2006, and decreased slightly as a percentage of total revenue from 32.3% to 32.2%.

          Other property operating costs, which consist of general and administrative costs, marketing costs, repairs and maintenance, utilities expense, and other costs, increased by $4.9 million compared to 2006, but decreased as a percentage of total revenue from 27.3% to 26.9%. All of the other property operating costs remained constant or decreased as a percent of total revenue compared to 2006 except for repair and maintenance cost, which increased slightly as a percent of total revenue from 5.3% to 5.4%.

          Management and franchise fees increased by $2.3 million compared to 2006 but remained constant at 5.2% of total revenue.

          Taxes, insurance and lease expense increased by $9.2 million compared to 2006 and increased slightly from 11.3% to 11.9% of total revenue. We had increases as a percentage of total revenue in property insurance. Increased property insurance premiums reflect the nationwide trend of increased rates related to catastrophic coverage, but we are currently seeing a softening of property insurance costs.

          Corporate expenses decreased by $2.6 million compared to 2006 and decreased 32 basis points as a percentage of total revenue. The decrease in corporate expenses is principally attributed to 2006 expenses related to severance costs from executives who left the company in 2006 and a reduction in corporate bonus paid in 2007.

          Depreciation and amortization expense increased by $16.2 million compared to 2006, which reflects the significant capital expenditures spent in connection with our renovation program in 2006 and 2007.

          Net interest expense decreased by $18.4 million in 2007 compared to 2006. The principal reason for the reduction in interest expense is attributed to reduction in average debt outstanding from $1.4 billion in 2006 to $1.3 billion in 2007 and a 55 basis point decrease in our weighted average interest rate. During 2006, we refinanced $415 million of our senior notes and $138.9 million of our mortgage debt at lower interest rates, and we recognized a full year benefit from this in 2007.

          The early retirement of debt in 2006 resulted in net debt extinguishment costs of $15.6 million, of which $1.3 million was recorded in discontinued operations. The early retirement of debt in 2007 resulted in debt extinguishment costs of $0.9 million, all of which was recorded in discontinued operations.

          Equity in income from unconsolidated entities was $20.4 million in 2007 compared to $11.5 million in 2006. That increase reflects improved RevPAR and a $10.8 million net gain from the sale of two unconsolidated hotels in 2007.

          In 2007, we completed construction of our 184-unit Royale Palms condominium project in Myrtle Beach, South Carolina. Through December 31, 2007, we sold 179 of the units and recognized a gain of $18.6 million.

          Discontinued operations provided net income of $35.2 million in 2007 compared to $44.2 million in 2006. Included in discontinued operations at December 31, 2007 and 2006, are the operating income or loss, direct interest costs and gains on sale related to the 11 hotels sold in 2007 and 31 hotels sold in 2006. Gains on sale aggregating $28.0 million and $43.2 million were included in 2007 and 2006 income from discontinued operations, respectively.

Non-GAAP Financial Measures

          We refer in this report to certain “non-GAAP financial measures.” These measures, including 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.

          The following tables detail our computation of Hotel EBITDA, Hotel EBITDA margin, hotel operating expenses and the reconciliation of hotel operating expenses to total operating expenses with respect to our Consolidated Hotels at the dates presented.

Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
Total revenues		$	707,065			$	875,772			$	1,129,776			$	1,021,884			$	991,038			$	914,655			$	842,612
Other revenue			(2,554	)			(2,655	)			(2,983	)			(3,089	)			(79	)			(1,506	)			(2,196	)
Revenue from acquired hotels (a)			—				—				—				94,164				94,173				88,600				78,364
Hotel operating revenue			704,511				873,117				1,126,793				1,112,959				1,085,132				1,001,749				918,780
Hotel operating expenses		$	(532,767	)			(618,627	)			(810,836	)			(804,846	)			(779,566	)			(735,477	)			(684,899	)
Hotel EBITDA		$	171,744			$	254,490			$	315,957			$	308,113			$	305,566			$	266,272			$	233,881
Hotel EBITDA margin (b)			24.4	%			29.1	%			28.0	%			27.7	%			28.2	%			26.6	%			25.5	%

Reconciliation of Total Operating Expenses to Hotel Operating Expense
(dollars in thousands)

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
Total operating expenses		$	693,360			$	835,102			$	1,144,817			$	913,714			$	871,241			$	819,366			$	758,017
Unconsolidated taxes, insurance and lease expense			6,041				6,328				8,212				7,314				6,273				5,881				5,900
Consolidated hotel lease expense			(31,805	)			(42,444	)			(54,266	)			(61,652	)			(61,054	)			(54,689	)			(49,414	)
Corporate expenses			(15,829	)			(17,079	)			(20,698	)			(20,718	)			(23,308	)			(19,025	)			(17,033	)
Depreciation and amortization			(112,024	)			(104,909	)			(141,668	)			(110,751	)			(94,579	)			(84,448	)			(78,116	)
Impairment loss			(3,448	)			(53,823	)			(107,963	)			—				—				—				—
Liquidated damages			—				—				(11,060	)			—				—				—				—
Other expenses			(3,528	)			(4,548	)			(6,538	)			(2,825	)			(33	)			(6,746	)			(2,125	)
Expenses from acquired hotels (a)			—				—				—				79,764				81,026				75,138				67,670
Hotel operating expenses		$	532,767			$	618,627			$	810,836			$	804,846			$	779,566			$	735,477			$	684,899

          The following tables reconcile net loss attributable to FelCor, to Hotel EBITDA and the ratio of operating income to total revenue to Hotel EBITDA margin.

Reconciliation of Net Loss to Hotel EBITDA
(in thousands)

		Nine Months Ended
		September 30,								Year Ended December 31,
		2009				2008				2008				2007				2006				2005				2004
Net income (loss)		$	(57,864	)		$	(31,005	)		$	(120,487	)		$	89,824			$	50,256			$	(274,910	)		$	(107,502	)
Discontinued operations			—				(1,180	)			(1,180	)			(35,164	)			(44,199	)			253,684				22,903
EBITDA from acquired hotels(a)			—				—				—				14,400				13,147				13,462				10,694
Equity in loss (income) from unconsolidated entities			3,197				1,064				10,932				(20,357	)			(11,537	)			(10,169	)			(17,121	)
Consolidated hotel lease expense			31,805				42,444				54,266				61,652				61,054				54,689				49,414
Unconsolidated taxes, insurance and lease expense			(6,041	)			(6,328	)			(8,212	)			(7,314	)			(6,273	)			(5,881	)			(5,900	)
Interest expense, net			68,501				74,886				98,789				92,489				110,867				121,668				136,144
Impairment loss			3,448				53,823				107,963				—				—				—				—
Liquidated damages			—				—				11,060				—				—				—				—
Charges related to debt extinguishment			594				—				—				—				14,318				5,485				50,171
Corporate expenses			15,829				17,079				20,698				20,718				23,308				19,025				17,033
Depreciation and amortization			112,024				104,909				141,668				110,751				94,579				84,448				78,116
Retail space and other revenue			(2,554	)			(2,655	)			(2,983	)			(3,089	)			(79	)			(1,506	)			(2,196	)
Other expenses			3,528				4,548				6,538				2,825				33				6,746				2,125
Gain on involuntary conversion			—				(3,095	)			(3,095	)			—				—				—				—
Gain on sale of condominiums			—				—				—				(18,622	)			—				—				—
Loss (gain) on sale of assets			(723	)			—				—				—				92				(469	)			—
Hotel EBITDA		$	171,744			$	254,490			$	315,957			$	308,113			$	305,566			$	266,272			$	233,881