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of $35.4 million, Reverses Profit of $35.1 million in the Year-earlier Period Hotel Performance Statistics IRVING, Texas�February 6, 2002 - FelCor Lodging Trust Incorporated (NYSE: FCH), one of the nation�s largest hotel real estate investment trusts (REITs), today reported operating results for the fourth quarter and year ended December 31, 2001. FelCor�s operating results for the fourth quarter and full year 2001 reflect the soft lodging demand resulting from the general economic recession and the aftermath of the September 11 events. Fourth Quarter Results: FelCor�s fourth quarter 2001 recurring Funds From Operations ("FFO") of $13.8 million or $0.21 per share exceeded consensus analyst estimates of $0.20 per share. FFO for the same period last year totaled $62.4 million, or $0.94 per share. Fourth quarter 2001 recurring Earnings Before Interest, Taxes, Depreciation, Amortization, and other non-cash charges ("EBITDA") totaled $60.8 million, compared to $109.1 million for fourth quarter 2000. For the quarter, the Company reported a net loss of $35.4 million, or a loss of $0.67 per share, compared to fourth quarter 2000 earnings of $35.1 million, or net income of $0.66 per share. Historically, the fourth quarter has been the weakest quarter of the year for FelCor�s operating results. FelCor�s total hotel portfolio revenue per available room ("RevPAR") for the fourth quarter decreased 23.0 percent, compared to the same period of 2000, with an October decline of 25.2 percent, a November decline of 23.6 percent and a December decline of 18.8 percent. For the quarter, occupancy declined 9.7 points to 55.2 percent, and average daily rate ("ADR") dropped 9.5 percent to $95.69, compared to the same quarter of 2000. The operating margin for FelCor�s hotels during the fourth quarter 2001 decreased 340 basis points to 29.8 percent, compared to the same period in 2000. In the fourth quarter, FelCor recorded $10 million of non-recurring expenses. These expenses consisted primarily of a loss provision of $7 million on 13 hotels held for sale, and a $2.2 million cost incurred in connection with the termination of interest rate swaps. The loss provision resulted from the recent changes in the economic climate and the impact on the estimated fair market value of the hotels held for sale. The swap termination cost was incurred in connection with the application of proceeds from FelCor�s fourth quarter $100 million private placement of senior unsecured notes. Full Year 2001 Results: "In 2001, the lodging industry experienced the worst decline in demand seen in the last three decades. It began with the recession in April and was magnified by the events of September 11. In this difficult environment, FelCor continued to generate a strong cash flow with a full year FFO of $2.75 per share, and common shareholder dividends of $1.70 per share. We also continued to invest in our hotels completing $64 million of capital expenditures, which represents 4.5 percent of total hotel revenues," said Thomas J. Corcoran, Jr., FelCor�s President and CEO. For the year ended December 31, 2001, recurring FFO totaled $183.7 million, or $2.75 per share, compared to 2000 FFO of $288.6 million, or $4.29 per share. EBITDA for 2001 totaled $369.6 million, compared to $470.9 million in 2000. For the full year 2001, FelCor reported a net loss of $63.9 million, or a loss of $1.21 per share, compared to full year 2000 net income of $37.0 million, or $0.67 per share. FelCor�s total hotel portfolio RevPAR decreased 11.4 percent for 2001, occupancy declined 6.6 points, and ADR dropped 2.4 percent compared to full year 2000. The operating margin for FelCor�s hotels decreased 260 basis points, to 33.6 percent, compared to full year 2000. During 2001, the Company recorded $78 million of non-recurring expenses. These expenses consisted primarily of the previously reported lease termination costs of $37 million incurred in the first and second quarters, and $25 million of expenses associated with the MeriStar merger, which was terminated in the third quarter. Capital Structure: At December 31, 2001, FelCor had $1.94 billion of debt outstanding, which included $50 million drawn under its $615 million line of credit. The weighted average life of the Company�s debt is seven years. At December 31, 2001, FelCor had $129 million in cash and cash equivalents. During the fourth quarter, FelCor amended its line of credit to allow for the relaxation of certain financial covenants through September 2002. In December, FelCor was the first hotel REIT after September 11 to access the high yield market, completing a $100 million senior unsecured note issuance. The Company also entered into $175 million of fixed to floating interest rate swaps during the quarter. "We are in a strong financial position to take advantage of an economic recovery. We have moderate leverage, minimal maturities over the next two years, $129 million in cash and equivalents (compared to $50 million outstanding under our line of credit), and a debt to annual EBITDA ratio of 4.9 times. However, during the first half of 2002, we plan to conserve cash," said Richard J. O�Brien, FelCor�s Executive Vice President and Chief Financial Officer. 2002 Guidance: For the first quarter of 2002, FelCor currently anticipates its portfolio RevPAR will be 16 to 18 percent below the comparable period of the prior year. FFO per share is expected to be within the range of $0.40 to $0.45 per share for the first quarter of 2002, and EBITDA is expected to be within the range of $74 million to $78 million for the same period. The RevPAR decline for January 2002 was approximately 21 percent. FelCor currently anticipates that full year 2002 hotel portfolio RevPAR, compared to 2001, will be flat to negative three percent. RevPAR changes (negative) by quarter for 2002, compared to 2001 are currently expected to fall within the following ranges: |
First quarter | (16)% to (18)% |
Second quarter | (4)% to (7)% |
Third quarter | 6% to 9% |
Fourth quarter | 13% to 16% |
FFO per share for 2002 is anticipated to be within the range of $2.20
to $2.60 per share and EBITDA to be within the range of $340 to $360 million.
The Company is currently anticipating 2002 maintenance capital expenditures
of between $40 and $50 million.
FelCor�s decision to pay its common dividend will be determined each quarter based upon the operating results of that quarter, economic conditions, and other operating trends. We currently anticipate that FelCor should be able to pay an aggregate of $1.00 in dividends per common share during 2002, based on the low end of the Company�s current FFO guidance. "During 2002, we anticipate a gradual recovery in lodging demand and believe the industry is headed towards a recovery in the second half of the year. FelCor is well positioned for these challenging times and to take advantage of opportunities that may result from them. We will continue to work closely with our brand managers to improve the competitive positioning of our hotels," added Mr. Corcoran. Fourth Quarter 2001 Highlights
At December 31, 2001, FelCor�s financial profile was as follows:
|
Results of Operations � Full Year
(in thousands, except per share data)
|
|||||
|
2000 (a) |
2000 |
|||
Revenues: | |||||
Hotel operating revenue: | |||||
Room | $866,101 | $1,028,267 | $ - | ||
Food and beverage | 157,812 | 188,207 | - | ||
Other operating departments | 58,931 | 75,176 | - | ||
Percentage lease revenue | 115,137 | 125,864 | 536,907 | ||
Retail space rental and other revenue | 2,990 | 2,186 | 3,057 | ||
|
1,200,971 | 1,419,700 | 539,964 | ||
Expenses: | |||||
Hotel operating expenses: | |||||
Room | 212,857 | 245,407 | - | ||
Food and beverage | 122,999 | 144,227 | - | ||
Other operating departments | 26,789 | 29,682 | - | ||
Other property related costs | 309,452 | 344,761 | - | ||
Management fees | 38,534 | 49,435 | - | ||
Taxes, insurance and lease expense | 141,621 | 165,731 | 92,633 | ||
Corporate expenses | 12,678 | 13,266 | 12,256 | ||
Depreciation | 157,692 | 161,516 | 160,745 | ||
Lease termination costs | 36,604 | - | - | ||
|
19,919 | - | - | ||
|
1,079,145 | 1,154,025 | 265,634 | ||
Operating income | 121,826 | 265,675 | 274,330 | ||
Interest expense, net: | |||||
|
158,343 | 156,712 | 156,712 | ||
|
5,486 | - | - | ||
Swap termination expense | 7,049 | - | - | ||
Provision for losses on assets held for sale | 7,000 | 63,000 | 63,000 | ||
Income (loss) before
equity in income from
sale of assets and extraordinary items |
(56,052) |
45,963 |
54,618 |
||
Equity in income from unconsolidated entities | 7,346 | 10,958 | 14,820 | ||
Minority interests | 7,283 | (7,003) | (8,262) | ||
Gain on sale of assets | 3,417 | 4,388 | 4,388 | ||
Income (loss) before extraordinary items | (38,006) | 54,306 | 65,564 | ||
Extraordinary charge from write off of deferred financing fees | (1,270) | (3,865) | (3,865) | ||
Net income (loss) | (39,276) | 50,441 | 61,699 | ||
Preferred dividends | (24,600) | (24,682) | (24,682) | ||
Net income (loss) applicable to common shareholders | $ (63,876) | $ 25,759 | $ 37,017 | ||
Diluted per common share data: | |||||
Net income (loss) applicable to common shareholders | $ (1.21) | $ 0.46 | $ 0.67 | ||
Weighted average common shares outstanding | 52,622 | 55,933 | 55,519 |
|
|||||||
|
|
||||||
|
|
Variance |
|
|
Variance |
||
Embassy Suites hotels |
|
|
|
|
|
(9.6) | |
Holiday-branded hotels |
|
|
|
|
|
(6.9) | |
Crowne Plaza hotels |
|
|
|
|
|
(15.1) | |
Doubletree-branded hotels |
|
|
|
|
|
(7.4) | |
Sheraton-branded hotels |
|
|
|
|
|
(12.9) | |
Other hotels |
|
|
|
|
|
(7.4) | |
Total hotels |
|
|
|
|
|
(9.2) | |
|
|||||||
|
|
||||||
|
|
Variance |
|
|
Variance |
||
Embassy Suites hotels | 118.53 |
|
|
127.90 | 127.96 | 0.0 | |
Holiday-branded hotels | 78.27 |
|
|
83.41 | 86.44 | (3.5) | |
Crowne Plaza hotels | 93.75 |
|
|
101.62 | 106.00 | (4.1) | |
Doubletree-branded hotels | 95.55 |
|
|
104.38 | 105.69 | (1.2) | |
Sheraton-branded hotels | 103.03 |
|
|
109.14 | 112.47 | (3.0) | |
Other hotels | 74.57 |
|
|
78.36 | 81.66 | (4.0) | |
Total hotels | 95.69 |
|
|
102.18 | 104.64 | (2.4) | |
|
|||||||
|
|
||||||
|
|
Variance |
|
|
Variance |
||
Embassy Suites hotels |
|
|
|
|
|
(9.6) | |
Holiday-branded hotels |
|
|
|
|
|
(10.1) | |
Crowne Plaza hotels |
|
|
|
|
|
(18.6) | |
Doubletree-branded hotels |
|
|
|
|
|
(8.6) | |
Sheraton-branded hotels |
|
|
|
|
|
(15.5) | |
Other hotels |
|
|
|
|
|
(11.1) | |
Total hotels |
|
|
|
|
|
(11.4) |
|
of Rooms |
Room Revenue |
||||
Embassy Suites |
59
|
14,843
|
40.1
|
|||
Holiday-branded hotels |
59
|
16,914
|
28.6
|
|||
Crowne Plaza |
18
|
5,963
|
11.5
|
|||
Doubletree-branded hotels |
13
|
2,650
|
5.7
|
|||
Sheraton-branded |
10
|
3,269
|
7.0
|
|||
Other hotels |
24
|
4,848
|
7.1
|
|||
|
183
|
8,487
|
100.0
|
FelCor is the only lodging REIT that owns a diversified portfolio of
nationally-branded, upscale and full-service hotels managed by strategic
brand managers such as Hilton Hotels, Six Continents Hotels, and Starwood
Hotels & Resorts. FelCor is competitively positioned to deliver superior
shareholder returns through its strong management team, strategic brand
manager alliances, diversified upscale and full-service hotels, value creation
expertise, and financial strength. FelCor is the owner of the largest number
of Embassy Suites®, Crowne Plaza®, Holiday Inn® and independently
owned Doubletree®-branded hotels. FelCor has a current market capitalization
of approximately $3.32 billion. Additional information can be found on
the Company�s website at www.felcor.com.
With the exception of historical information, the matters discussed in this news release include "forward looking statements" within the meaning of the federal securities laws. Forward looking statements are not guarantees of future performance. Contact: Thomas J. Corcoran, Jr.,
Richard J. O�Brien,
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Also see: FELCOR FINISHES 2000 with FFO UP 12.6% to $4.29 / Feb 2001
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