Hotel Online  Special Report
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 FelCor Lodging Trust Reports 1st Quarter 2006 Net Income Applicable to
Common Stockholders of $0.2 million, Compared to a Net Loss of $18.1
million in the 1st Quarter of 2005; 
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RevPAR Increased by Double Digits
in Nearly All Key Markets
.
FelCor's FFO Per Share Increases 104%

May 10, 2006 - FelCor Lodging Trust Incorporated , one of the nation's largest hotel real estate investment trusts (REITs), today reported operating results for the first quarter ended March 31, 2006.

First Quarter Results: 

  • Revenue Per Available Room ("RevPAR") increased 15.0 percent, compared to the same period in 2005. Average Daily Rate ("ADR") increased 8.6 percent. 
  • Hotel Earnings Before Interest, Taxes, Depreciation and Amortization ("Hotel EBITDA") increased to $86.0 million, compared to $65.5 million in the prior year quarter, an increase of 31.2 percent. Hotel EBITDA margin was 27.6 percent, representing a 321 basis point improvement to the prior year first quarter Hotel EBITDA margin of 24.4 percent. 
  • Adjusted Funds From Operations ("FFO") was $32.0 million, a $16.3 million increase from the prior year period. Adjusted FFO per share increased to $0.51, compared to $0.25 in the prior year quarter, an increase of 104 percent. 
  • Same-Store EBITDA increased by $19.3 million to $75.8 million, or 34.2 percent to prior year. Adjusted EBITDA increased $13.9 million to $75.9 million, or 22.4 percent to prior year. 
  • Net income was $10 million, compared to a net loss of $8 million in the first quarter of 2005. Net income applicable to common stockholders was $0.2 million, compared to a net loss applicable to common stockholders of $18.1 million, or $0.30 per share, in the first quarter of 2005. 
  • Based on these strong first quarter results, we have increased our dividend to $0.20 per share, effective the second quarter 2006.
Included in the first quarter Adjusted EBITDA, Adjusted FFO and net income applicable to common stockholders for 2006 are business interruption insurance proceeds aggregating $3.2 million, related to 2005 hurricane losses, which was included in our original guidance. Excluded from first quarter Adjusted EBITDA and Adjusted FFO is $1 million loss on sale of hotels and $1 million in expense from the early retirement of debt.

First Quarter Highlights:

During the first quarter, we sold eight non-strategic hotels for gross proceeds of $163 million, and retired net indebtedness totaling $180 million using proceeds from hotel sales and excess cash. Subsequent to the end of the quarter, we sold two additional non-strategic hotels for gross proceeds of $63 million.

RevPAR growth was strong across the entire portfolio as a result of a strong increase in ADR for both the transient and group segments as well as an increase in occupancy.

RevPAR increased by double digits in nearly all of our key markets. Markets with the highest RevPAR gains for the quarter were San Francisco, Chicago, Dallas and New Orleans, all with RevPAR increases of more than 20 percent and Southern Florida had a RevPAR increase of nearly 20 percent. Our improved RevPAR performance contributed to a 321 basis point improvement in our Hotel EBITDA margin for the quarter, of which 50 basis points is attributed to business interruption proceeds from 2005 hurricanes.

Market share for our consolidated hotels increased during the first quarter compared to prior year against their respective competitive set. On average, our Hilton, InterContinental Hotels Group and Starwood managed hotels improved market share for the quarter.

"Our renewed focus on asset management, our portfolio repositioning program and capital improvements are showing up in strong operating results. We anticipate that we will continue to outperform the industry as we complete these initiatives," said Richard A. Smith, FelCor's President and Chief Executive Officer. "Based on our strong first quarter performance, we are pleased to announce an increase in our common dividend to $0.20 per share, starting with second quarter 2006."

Capital Structure:

At March 31, 2006, we had $1.5 billion of consolidated debt outstanding with a weighted average life of five years, compared to $1.8 billion outstanding at March 31, 2005. Our cash and cash equivalents totaled approximately $76 million at the end of the first quarter 2006.

In January, we retired our $225 million unsecured term loan facility and established a new $125 million unsecured line of credit. In April 2006, we retired an additional $27 million of secured indebtedness and repaid our line of credit balance.

In April, Moody's Investors Service upgraded our corporate rating from B1 to Ba3. As a result, the interest rate on our $300 million of Senior Notes due 2011 was reduced by 50 basis points to 8.5 percent, resulting in an annual interest rate savings of $1.5 million.

"We are pleased with the Moody's upgrade. Not only does it reduce our cost of capital, but it is a testament to our recent performance and strategic initiatives," said Andrew J. Welch, FelCor's Executive Vice President and Chief Financial Officer.

Hotel Dispositions:

In conjunction with the agreement with InterContinental Hotels to amend our management contracts, we announced that 38 hotels are expected to be sold for proceeds of between $500 and $550 million. The proceeds from these asset sales will be used to pay down $400 million of indebtedness with the balance used to fund a portion of our renovation program. To date, we have sold 13 hotels for $241 million. Gross proceeds from the remaining 25 hotels are expected to be approximately $260 to $310 million.

Other Highlights:

Improvements and additions to consolidated hotels for the first quarter were $35 million. Capital expenditures, including our pro rata share of joint ventures, totaled $39 million.

In the first quarter of 2006, we declared a common dividend of $0.15 per share and declared first quarter dividends on our Series A and Series C preferred stock, which were paid on May 1, 2006.

2006 Guidance:

We anticipate that during 2006, RevPAR will increase between 8 and 10 percent for the consolidated hotels, with the majority of the increase attributable to gains in ADR. RevPAR during the second quarter is expected to increase between 7 and 9 percent to prior year. Based on these expectations, we currently anticipate:

  • Adjusted EBITDA to be between $287 and $292 million for the full year and between $81 and $83 million for the second quarter; 
  • Adjusted FFO per share to be between $1.90 and $1.98 for the full year, and to be between $0.63 and $0.66 for the second quarter;
  • Hotel EBITDA margin to increase at least 150 basis points for the year; 
  • Capital expenditures to remain consistent with our previous guidance of between $175 and $200 million for the full year.
Adjusted EBITDA guidance for 2006 has been reduced by $3 million for the two hotels sold in April, which was not assumed in our previous guidance.

There are no further asset sales assumed in our guidance. We will adjust our quarterly guidance as asset sales occur. Consequently, we are assuming no further debt reduction, beyond what has occurred to date.
 
 

Consolidated Statements of Operations
(in thousands, except per share data)

                                                      Three Months Ended
                                                            March 31,
                                                        2006           2005
    Revenues:
      Hotel operating revenue                       $311,876       $268,985
      Retail space rental and other revenue              134            156
    Total revenues                                   312,010        269,141

    Expenses:
      Hotel departmental expenses                    102,410         92,146
      Other property operating costs                  89,085         79,999
      Management and franchise fees                   16,569         13,321
      Taxes, insurance and lease expense              30,631         29,224
      Corporate expenses                               5,804          4,540
      Depreciation                                    27,351         26,922
    Total operating expenses                         271,850        246,152

    Operating income                                  40,160         22,989
    Interest expense, net                            (30,834)       (31,869)
    Charge-off of deferred financing costs              (667)           ---

    Income (loss) from continuing operations
     before equity in income of unconsolidated
     entities and minority interests                   8,659         (8,880)
      Equity in income from unconsolidated
       entities                                        1,948          1,131
      Minority interests                                 150            917
    Income (loss) from continuing operations          10,757         (6,832)
      Discontinued operations                           (905)        (1,182)
    Net income (loss)                                  9,852         (8,014)
      Preferred dividends                             (9,678)       (10,091)
    Net income (loss) applicable to common
     stockholders                                       $174       $(18,105)

    Basic and diluted earnings (loss) per
     common share data:
        Net earnings (loss) from continuing
         operations                                    $0.02         $(0.28)
        Net earnings (loss)                             $---         $(0.30)
        Basic weighted average common shares
         outstanding                                  59,660         59,416
        Diluted weighted average common shares
         outstanding                                  59,976         59,416
 
 

                           Discontinued Operations
                                (in thousands)
    Included in discontinued operations are the results of operations
through the date of disposition, of eight hotels sold in the first quarter
of 2006 and 19 hotels sold or otherwise disposed of in 2005. Condensed
financial information for the hotels included in discontinued operations is
as follows:
                                                      Three Months Ended
                                                            March 31,
                                                        2006           2005

      Operating revenue                               $3,398        $34,016
      Operating expenses                               3,267         33,343
       Operating income                                  131            673
      Direct interest costs, net                           1         (1,371)
      Impairment loss                                    ---           (559)
      Gain (loss) on sale of depreciable assets       (1,077)            20
      Minority interests                                  40             55
    Loss from discontinued operations                   (905)        (1,182)
      Depreciation                                       ---          3,574
      Minority interest in FelCor LP                     (40)           (55)
      Interest expense                                    (1)         1,374
    EBITDA from discontinued operations                 (946)         3,711
      Gain (loss) on sale of assets                    1,077            (20)
      Impairment loss                                    ---            559
      Asset disposition costs                            ---          1,300
    Adjusted EBITDA from discontinued operations        $131         $5,550
 
 

                         Selected Balance Sheet Data
                                (in thousands)

                                                    March 31    December 31
                                                      2006          2005

    Investment in hotels                          $3,161,468     $3,341,881
    Accumulated depreciation                        (731,277)      (754,502)
    Investments in hotels, net of
     accumulated depreciation                     $2,430,191     $2,587,379

    Total cash and cash equivalents                  $75,796        $94,564
    Total assets                                  $2,757,537     $2,919,093
    Total debt                                    $1,500,266     $1,675,280
    Total stockholders' equity                    $1,028,462     $1,031,793

    At March 31, 2006, we had an aggregate of 60,922,271 shares of FelCor
common stock and 2,355,016 units of FelCor LP limited partnership interest
outstanding.
 
 

                                 Debt Summary
                            (dollars in thousands)

                                         Interest
                                          Rate at
                           Encumbered    March 31,    Maturity    Consolidated
                             Hotels        2006         Date          Debt

    Promissory note           none    LIBOR(L) + 2.00  June 2016         $650
    Senior unsecured
     term notes               none         7.63     October 2007      123,591
    Senior unsecured
     term notes               none         9.00        June 2011      298,723
    Line of credit (A)        none     L + 2.00     January 2009       45,000
    Senior unsecured
     term notes               none     L + 4.25        June 2011      190,000
    Senior unsecured
     term notes (B)           none         7.80        June 2011      100,000
      Total unsecured
       debt                                                           757,964

    Mortgage debt         9 hotels         6.52    July 2009 - 2014   103,629
    Mortgage debt (C)     8 hotels     L + 2.50         May 2007      116,996
    Mortgage debt         7 hotels         7.32       March 2009      126,678
    Mortgage debt         4 hotels         7.55        June 2009       41,370
    Mortgage debt         8 hotels         8.70         May 2010      171,788
    Mortgage debt         7 hotels         8.73         May 2010      132,485
    Mortgage debt          1 hotel     L + 2.85      August 2008       15,500
    Mortgage debt          1 hotel         7.91    December 2007       10,388
    Other                  1 hotel         9.17      August 2011        5,031
    Construction loan (D)      ---     L + 2.25      August 2007       18,437
      Total secured
       debt              46 hotels                                    742,302
                                                                   $1,500,266

        April 2006 debt reduction from asset sale proceeds           $(72,301)

     (A)  Our line of credit has a borrowing capacity of $125 million.  The
          $45 million outstanding at March 31, 2006 was repaid in April 2006
          from asset sale proceeds.

     (B)  We have swapped $100 million of floating rate debt, at L + 4.25
          percent, for a fixed rate of 7.80 percent.  This interest rate swap
          expires in December 2007.

     (C)  This debt has a one-year extension option, subject to certain
          contingencies.  In April 2006, we repaid $27.3 million of this debt
          from asset sale proceeds.  The interest rate on the remaining $89.7
          million is L + 1.25 percent.

     (D)  We have a $69.8 million recourse construction loan facility for the
          development of a 184-unit condominium project in Myrtle Beach, South
          Carolina.  The interest on this facility is currently based on L +
          225 basis points and is being capitalized as part of the cost of the
          project.  The interest rate may be reduced to L + 200 basis points
          when the project is 55 percent complete and upon satisfaction of
          certain other requirements.

                 Weighted average interest rate at March 31, 2006      8.12%
                 Fixed interest rate debt to total debt                77.7%
                 Weighted average maturity of debt                   5 years
                 Secured debt to total assets                          26.9%
 
 

                               Preferred Stock
                            (dollars in thousands)

                                                         Liquidation Value at
                                                             March 31, 2006
    Series A Cumulative Convertible Preferred Stock             $322,011
    Series C Cumulative Redeemable Preferred Stock              $169,950
 
 

                         Non-GAAP Financial Measures
    We refer in this release to certain "non-GAAP financial measures."
These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA,
Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin, are measures of
our financial performance that are not calculated and presented in
accordance with generally accepted accounting principles ("GAAP"). The
following tables reconcile each of 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 of the limitations
upon such measures.
         Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
                (in thousands, except per share and unit data)

                                   Three Months Ended March 31,
                                     2006                      2005
                                           Per Share                 Per Share
                           Dollars   Shares  Amount   Dollars  Shares   Amount
    Net income (loss)      $9,852                     $(8,014)
      Preferred dividends  (9,678)                    (10,091)
    Net income (loss)
     applicable to common
     stockholders             174    59,976   $---    (18,105) 59,416  $(0.30)
      Depreciation from
       continuing
       operations          27,351      ---    0.46     26,922     ---    0.45
      Depreciation from
       unconsolidated
       entities and
       discontinued
       operations           2,723      ---    0.05      5,839     ---    0.10
      Loss (gain) on sale
       of depreciable
       assets               1,077      ---    0.02        (20)    ---     ---
      Minority interest
       in FelCor LP             8    2,663   (0.03)      (843)  2,788   (0.03)
      Conversion of options
       and unvested
       restricted stock       ---      ---     ---        ---     421     ---
    FFO                    31,333   62,639    0.50     13,793  62,625   $0.22
      Charge-off of
       deferred financing
       costs                  667      ---    0.01        ---     ---     ---
      Abandoned projects      ---      ---     ---      1,300     ---    0.02
      Impairment loss on
       discontinued
       operations             ---      ---     ---        559     ---    0.01
    Adjusted FFO          $32,000   62,639   $0.51    $15,652  62,625   $0.25
    Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and
Same-Store
                                    EBITDA
                                (in thousands)

                                                        Three Months Ended
                                                             March 31,
                                                        2006           2005
    Net income (loss)                                 $9,852        $(8,014)
      Depreciation from continuing operations         27,351         26,922
      Depreciation from unconsolidated entities
       and discontinued operations                     2,723          5,839
      Minority interest in FelCor Lodging LP               8           (843)
      Interest expense                                31,629         32,510
      Interest expense from unconsolidated
       entities and discontinued operations            1,596          3,152
      Amortization expense                               990            597
    EBITDA                                            74,149         60,163
      Charge-off of deferred financing costs             667             --
      Impairment loss on discontinued operations         ---            559
      Asset disposition costs                            ---          1,300
      Gain (loss) on sale of depreciable assets        1,077            (20)
    Adjusted EBITDA                                   75,893         62,002
      Adjusted EBITDA from discontinued operations      (131)        (5,550)
    Same-Store EBITDA                                $75,762        $56,452
 
 

              Reconciliation of Adjusted EBITDA to Hotel EBITDA
                                (in thousands)

                                                       Three Months Ended
                                                            March 31,
                                                        2006           2005
    Adjusted EBITDA                                  $75,893        $62,002
      Retail space rental and other revenue             (134)          (156)
      Adjusted EBITDA from discontinued operations      (131)        (5,550)
      Equity in income from unconsolidated entities
       (excluding interest and depreciation expense)  (6,699)        (5,793)
      Minority interest in other partnerships
      (excluding interest and depreciation expense)      233            490
      Consolidated hotel lease expense                14,333         12,665
      Unconsolidated taxes, insurance and lease
       expense                                        (1,553)        (1,455)
      Interest income                                   (794)          (641)
      Corporate expenses (excluding amortization
       expense)                                        4,813          3,943
    Hotel EBITDA                                     $85,961        $65,505
 
 

             Reconciliation of Net Income (Loss) to Hotel EBITDA
                                (in thousands)

                                                       Three Months Ended
                                                             March 31,
                                                        2006           2005
    Net income (loss)                                 $9,852        $(8,014)
      Discontinued operations                            905          1,182
      Equity in income from unconsolidated
       entities                                       (1,948)        (1,131)
      Minority interest                                 (150)          (917)
      Consolidated hotel lease expense                14,333         12,665
      Unconsolidated taxes, insurance and lease
       expense                                        (1,553)        (1,455)
      Interest expense, net                           30,834         31,869
      Charge-off of deferred financing costs             667            ---
      Corporate expenses                               5,804          4,540
      Depreciation                                    27,351         26,922
      Retail space rental and other revenue             (134)          (156)
    Hotel EBITDA                                     $85,961        $65,505
 

                     Hotel EBITDA and Hotel EBITDA Margin
                            (dollars in thousands)

                                                       Three Months Ended
                                                             March 31,
                                                        2006           2005
    Total revenue                                   $312,010       $269,141
    Retail space rental and other revenue               (134)          (156)
    Hotel operating revenue                          311,876        268,985
    Hotel operating expenses                        (225,915)      (203,480)
    Hotel EBITDA                                     $85,961        $65,505
    Hotel EBITDA margin                                 27.6%          24.4%
 Reconciliation of Ratio of Operating Income to Total Revenue to Hotel EBITDA
                                    Margin

                                                        Three Months Ended
                                                              March 31,
                                                        2006           2005
    Ratio of operating income to total revenue          12.9%           8.5%
      Retail space rental and other revenue              ---            ---
      Unconsolidated taxes, insurance and lease
       expense                                          (0.6)          (0.5)
      Consolidated hotel lease expense                   4.6            4.7
      Corporate expenses                                 1.9            1.7
      Depreciation                                       8.8           10.0
    Hotel EBITDA margin                                 27.6%          24.4%
 

                     Hotel Operating Expense Composition
                            (dollars in thousands)

                                                       Three Months Ended
                                                            March 31,
                                                        2006           2005
    Reconciliation of total operating expense to
     hotel operating expense:
    Total operating expenses                        $271,850       $246,152
      Unconsolidated taxes, insurance and lease
       expense                                         1,553          1,455
      Consolidated hotel lease expense               (14,333)       (12,665)
      Corporate expenses                              (5,804)        (4,540)
      Depreciation                                   (27,351)       (26,922)
    Hotel operating expenses                        $225,915       $203,480

    Supplemental information:
      Compensation and benefits expense
      (included in hotel operating expenses)         $93,036        $86,955
 

   Reconciliation of Forecasted Net Income to Forecasted FFO, Adjusted FFO,
                          EBITDA and Adjusted EBITDA
                (in millions, except per share and unit data)

                    2nd Quarter 2006 Guidance      Full Year 2006 Guidance
                   Low Guidance   High Guidance   Low Guidance   High Guidance
                          Per Share      Per Share      Per Share    Per Share
                           Amount         Amount         Amount         Amount
                   Dollars   (A)  Dollars   (A)  Dollars   (A)  Dollars   (A)

    Net income (B)   $17            $19            $27            $32
     Preferred
      dividends      (10)           (10)           (39)           (39)
    Net income
     (loss)
     applicable to
     common
     stockholders (B)  7    $0.12     9    $0.15   (12)  $(0.20)   (7) $(0.12)
      Loss on sale
       of assets     ---            ---              1              1
      Depreciation    33             33            131            131
      Minority
       interest
       in FelCor LP  ---            ---             (1)            (1)
      Preferred A
       dividends     ---              6            ---            ---
    FFO               40    $0.63    48    $0.66   119    $1.89   124   $1.97
      Write off
       loan costs    ---            ---              1              1
    Adjusted FFO     $40    $0.63   $48    $0.66  $120    $1.90  $125   $1.98

    Net income (B)   $17            $19            $27            $32
      Depreciation    33             33            131            131
      Minority
       interest
       in FelCor LP  ---            ---             (1)            (1)
      Interest
       expense        30             30            124            124
      Amortization
       expense         1              1              4              4
    EBITDA            81             83            285            290
      Loss on sale
       of assets     ---            ---              1              1
      Write off
       loan costs    ---            ---              1              1
    Adjusted EBITDA  $81            $83           $287           $292

     (A)  Weighted average shares are 59.7 million.  Adding minority interest
          and unvested restricted stock of 3.4 million shares to weighted
          average shares, provides the weighted average shares and units of
          63.1 million used to compute FFO per share.  We have assumed the
          conversion of our Preferred A stock to common stock on the high end
          of our second quarter 2006 guidance because it is dilutive.  This
          increases our weighted average shares from 63.1 million to 73.1
          million.

     (B)  Excludes future gains or losses from asset sales and debt
          extinguishment.
    Substantially all of our non-current assets consist of real estate.
Historical cost accounting for real estate assets implicitly assumes that
the value of real estate assets diminishes predictably over time. Since
real estate values instead have historically risen or fallen with market
conditions, most industry investors consider supplemental measures of
performance, which are not measures of operating performance under GAAP, to
be helpful in evaluating a real estate company's operations. These
supplemental measures, including FFO, Adjusted FFO, EBITDA, Adjusted
EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin, are not
measures of operating performance under GAAP. However, we consider these
non-GAAP measures to be supplemental measures of a hotel REIT's performance
and should be considered along with, but not as an alternative to, net
income as a measure of our operating performance.
    FFO and EBITDA
    The White Paper on Funds From Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT"), defines FFO as net income or loss (computed in accordance with
GAAP), excluding gains or losses from sales of property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures. Adjustments for unconsolidated partnerships and joint
ventures are calculated to reflect FFO on the same basis. We compute FFO in
accordance with standards established by NAREIT. This may not be comparable
to FFO reported by other REITs that do not define the term in accordance
with the current NAREIT definition, or that interpret the current NAREIT
definition differently than we do.
    EBITDA is a commonly used measure of performance in many industries. We
define EBITDA as net income or loss (computed in accordance with GAAP) plus
interest expenses, income taxes, depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments
for unconsolidated partnerships and joint ventures are calculated to
reflect EBITDA on the same basis.
    Adjustments to FFO and EBITDA
    We adjust FFO and EBITDA when evaluating our performance because
management believes that the exclusion of certain additional recurring and
non-recurring items described below provides useful supplemental
information to investors regarding our ongoing operating performance and
that the presentation of Adjusted FFO, Adjusted EBITDA and Same-Store
EBITDA, when combined with GAAP net income, EBITDA and FFO, is beneficial
to an investor's better understanding of our operating performance.
     * Gains and losses related to early extinguishment of debt and interest
       rate swaps -- We exclude gains and losses related to early
       extinguishment of debt and interest rate swaps from FFO and EBITDA
       because we believe that it is not indicative of ongoing operating
       performance of our hotel assets.  This also represents an acceleration
       of interest expense or a reduction of interest expense, and interest
       expense is excluded from EBITDA.
     * Impairment losses -- We exclude the effect of impairment losses and
       gains or losses on disposition of assets in computing Adjusted FFO and
       Adjusted EBITDA because we believe that including these is not
       consistent with reflecting the ongoing performance of our remaining
       assets.  Additionally, we believe that impairment charges and gains or
       losses on disposition of assets represent accelerated depreciation, or
       excess depreciation, and depreciation is excluded from FFO by the
       NAREIT definition and from EBITDA.
     * Cumulative effect of a change in accounting principle -- Infrequently,
       the Financial Accounting Standards Board promulgates new accounting
       standards that require the consolidated statements of operations to
       reflect the cumulative effect of a change in accounting principle.  We
       exclude these one-time adjustments in computing Adjusted FFO and
       Adjusted EBITDA because they do not reflect our actual performance for
       that period.
    In addition, to derive Adjusted EBITDA, we exclude gains or losses on
the sale of assets because we believe that including them in EBITDA is not
consistent with reflecting the ongoing performance of our remaining assets.
Additionally, the gain or loss on sale of depreciable assets represents
either accelerated depreciation or excess depreciation in previous periods,
and depreciation is excluded from EBITDA.
    To derive Same-Store EBITDA, we make the same adjustments to EBITDA as
for Adjusted EBITDA and, additionally, exclude EBITDA from discontinued
operations and gains and losses from the disposition of non-hotel related
assets.
    Hotel EBITDA and Hotel EBITDA Margin
    Hotel EBITDA and Hotel EBITDA margin are commonly used measures of
performance in the industry and give investors a more complete
understanding of the operating results over which our individual hotels and
operating managers have direct control. We believe that Hotel EBITDA and
Hotel EBITDA margin are useful to investors by providing greater
transparency with respect to two significant measures used by us in our
financial and operational decision-making. Additionally, these measures
facilitate comparisons with other hotel REITs and hotel owners. We present
Hotel EBITDA and Hotel EBITDA margin by eliminating corporate-level
expenses, depreciation and expenses related to our capital structure. We
eliminate corporate-level costs and expenses because we believe
property-level results provide investors with supplemental information with
respect to the ongoing operating performance of our hotels and the
effectiveness of management in running our business on a property-level
basis. We eliminate depreciation and amortization, even though they are
property-level expenses, because we do not believe that these non- cash
expenses, which are based on historical cost accounting for real estate
assets and implicitly assume that the value of real estate assets diminish
predictably over time, accurately reflect an adjustment in the value of our
assets. We also eliminate consolidated percentage rent paid to
unconsolidated entities, which is effectively eliminated by minority
interest expense and equity in income from unconsolidated subsidiaries, and
include the cost of unconsolidated taxes, insurance and lease expense, to
reflect the entire operating costs applicable to our hotels.
    Use and Limitations of Non-GAAP Measures
    Our management and Board of Directors use FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the
performance of our hotels and to facilitate comparisons between us and
other lodging REITs, hotel owners who are not REITs and other capital
intensive companies. Same-Store EBITDA is used to provide investors with
supplemental information as to the ongoing operating performance of our
hotels without regard to those hotels sold or held for sale at the date of
presentation.
    The use of these non-GAAP financial measures has certain limitations.
FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA
and Hotel EBITDA margin, as presented by us, may not be comparable to FFO,
Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and
Hotel EBITDA margin as calculated by other real estate companies. These
measures do not reflect certain expenses that we incurred and will incur,
such as depreciation and interest or capital expenditures. Management
compensates for these limitations by separately considering the impact of
these excluded items to the extent they are material to operating decisions
or assessments of our operating performance. Our reconciliations to the
GAAP financial measures, and our consolidated statements of operations and
cash flows, include interest expense, capital expenditures, and other
excluded items, all of which should be considered when evaluating our
performance, as well as the usefulness of our non-GAAP financial measures.
    These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP. They should not
be considered as alternatives to operating profit, cash flow from
operations, or any other operating performance measure prescribed by GAAP.
Neither should FFO, FFO per share, Adjusted FFO, Adjusted FFO per share,
EBITDA, Adjusted EBITDA or Same-Store EBITDA be considered as measures of
our liquidity or indicative of funds available for our cash needs,
including our ability to make cash distributions. FFO per share does not
measure, and should not be used as a measure of, amounts that accrue
directly to the benefit of stockholders. FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin
reflect additional ways of viewing our operations that we believe when
viewed with our GAAP results and the reconciliations to the corresponding
GAAP financial measures provide a more complete understanding of factors
and trends affecting our business than could be obtained absent this
disclosure. Management strongly encourages investors to review our
financial information in its entirety and not to rely on any single
financial measure.

EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO and Adjusted FFO are all non-GAAP financial measures. See our discussion of "Non-GAAP Financial Measures" for a reconciliation of each of these measures to our net income and for information regarding the use, limitations and importance of these non-GAAP financial measures.

We have published our First Quarter 2006 Supplemental Information, which provides additional corporate data, financial highlights and portfolio statistical data for the quarter ended March 31, 2006. Investors are encouraged to access the Supplemental Information on our Web site at http://www.felcor.com/ , on the Investor Relations page in the "Financial Reports" section. The Supplemental Information also will be furnished upon request. Requests may be made by e-mail to information@felcor.com or by writing to the Vice President of Investor Relations, FelCor Lodging Trust Incorporated, 545 E. John Carpenter Freeway, Suite 1300, Irving, Texas, 75062.

FelCor is one of the nation's largest hotel REITs and the nation's largest owner of full service, all-suite hotels. FelCor's portfolio is comprised of 115 consolidated hotels, located in 28 states and Canada. FelCor's portfolio includes 65 upper upscale, all-suite hotels, and FelCor is the largest owner of Embassy Suites Hotels(R) and Doubletree Guest Suites(R) hotels. FelCor's hotels are flagged under global brands such as Embassy Suites Hotels, Doubletree(R), Hilton(R), Sheraton(R), Westin(R), and Holiday Inn(R). FelCor has a current market capitalization of approximately $3.3 billion. Additional information can be found on the Company's Web site at http://www.felcor.com/ .

We invite you to listen to our First Quarter 2006 Conference Call on Wednesday, May 10, 2006, at 10:00 a.m. (Central Daylight Time). The conference call will be Web cast simultaneously via FelCor's Web site at http://www.felcor.com/ . Interested investors and other parties who wish to access the call should go to FelCor's Web site and click on the conference call microphone icon on either the "Investor Relations" or "FelCor News" pages. A phone replay will be available from Wednesday, May 10, 2006, at 12:00 p.m. (Central Daylight Time), through Friday, June 2, 2006, at 7:00 p.m. (Central Daylight Time), by dialing 866-631-6911 (access code is 9385#). A recording of the call also will be archived and available at http://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. Numerous risks and uncertainties, and the occurrence of future events, may cause actual results to differ materially from those currently anticipated. General economic conditions, including the anticipated continuation of the current economic recovery, the impact of U.S. military involvement in the Middle East and elsewhere, future acts of terrorism, the impact on the travel industry of increased fuel prices and security precautions, the impact that the bankruptcy of additional major air carriers may have on our revenues and receivables, the availability of capital, the ability to effect sales of non-strategic hotels at anticipated prices, and numerous other factors may affect future results, performance and achievements. Certain of these risks and uncertainties are described in greater detail in our filings with the Securities and Exchange Commission. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially.

.

Contact:
FelCor Lodging Trust Incorporated
Monica L. Hildebrand
VicePresident of Communications
+1-972-444-4917
mhildebrand@felcor.com
Web Site: http://www.felcor.com
.
Also See: FelCor, Owner of 117 Hotels, Takes a 4th Qtr Charge of $263.1 million for Hotel Portfolio Repositioning and Amendments of it's Agreement with InterContinental Hotels Group; Net Loss For Fiscal Year 2005 $297.5 million Compared to 2004 Net Loss of $135.3 million / February 2006
FelCor Lodging Trust Appoints Chairman, CEO and CFO / February 2006

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