|By Sheryl Jean, The Dallas Morning
NewsMcClatchy-Tribune Regional News
Dec. 15--FelCor Lodging Trust Inc. on Monday suspended its 15-cent quarterly common dividend to preserve capital and offset declining hotel room revenue as travel demand dips amid the recession.
The move will save the Irving-based real estate investment trust about $48 million next year. Instead, FelCor declared dividends on its preferred stock payable on Jan. 30, 2009, to stockholders of record as of Jan. 2, 2009.
FelCor said its fourth-quarter hotel room revenue through November was down 8.7 percent. It estimates that room revenue will fall 6 to 8 percent in 2009. The company expects to generate positive cash flow in 2009, but doesn't think it will be required to pay a common dividend to maintain its REIT status.
Robert W. Baird & Co. analyst David Loeb said FelCor's suspension of its common dividend "is a good way to preserve capital given the highly uncertain outlook for the industry in 2009." FelCor is the second hotel REIT to suspend its dividend, he wrote Monday in a research note.
So far this year, all U.S. hotel REIT returns are down 62 percent. FelCor has been cutting costs and selling assets to increase liquidity. Chief executive Rick Smith said the company continues to gain market share and perform better than the industry average.
FelCor shares on Monday fell 33 cents or 18 percent to $1.54.
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