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FelCor Reports 3rd Qtr 2008 Net Loss of $51.3 million Compared to Net Loss of $1.7 million in Prior Year;
Plans to R
etool Hotel-level Cost Structures, Limit Capital Expenditures to Critical Items
  

 

 

            IRVING, Texas…November 4, 2008 - FelCor Lodging Trust Incorporated (NYSE: FCH) today reported operating results for the third quarter and nine months ended September 30, 2008.

 

Third Quarter Highlights:

 

·

Adjusted FFO per share of $0.45 and Adjusted EBITDA of $65.1 million met our third quarter guidance. 

 

 

·

RevPAR increased by 5.4 percent at our 70 hotels where renovations were completed during 2007 and 2008.  RevPAR increased 2.6 percent for our 85 consolidated hotels, compared to the United States average decline of 1.1 percent.

 

 

·

Hotel EBITDA margin increased 45 basis points compared to prior year.

 

 

·

Market share increased more than six percent for our 70 hotels where renovations were completed during 2007 and 2008, which is consistent with our expectations.  Market share increased almost four percent for our 85 consolidated hotels.

 

 

·

Net loss applicable to common stockholders was $51.3 million and included impairment charges of $40.4 million and hurricane losses of $1.7 million.

 

Third Quarter Operating Results:  

 

Revenue per available room (“RevPAR”) for our 85 consolidated hotels increased 2.6 percent to $97.80, which was driven by increases in both average daily rate (“ADR”) of 0.3 percent and occupancy of 2.3 percent, compared to the same period in 2007.  At our 70 hotels where we completed renovations during 2007 and 2008, RevPAR increased 5.4 percent.   

 

“The US economy is experiencing an accelerated downturn, leading to weaker consumer spending and tightened restrictions on corporate travel, which has affected lodging demand.  A major priority is to reduce spending to mitigate the current trends by limiting capital and development spending, and restructuring hotel-level costs and general and administrative expenses.  This, coupled with the fact that our newly renovated portfolio continues to gain market share, puts us in the best position to manage the downturn,” said Richard A. Smith, FelCor’s President and Chief Executive Officer.  “Despite the weakening economic trends, we are pleased that third quarter earnings met our expectations.”


Our Adjusted Funds from Operations (“FFO”) was $28.7 million, or $0.45 per share, compared to Same-Store Adjusted FFO of $25.9 million, or $0.41 per share, and Adjusted FFO (including sold hotels) of $29.9 million, or $0.47 per share, for the same period in 2007.  Our Adjusted FFO for the quarter was consistent with our expectations.

 

Our Hotel EBITDA increased to $75.0 million, compared to $72.4 million in the same period in 2007, a 3.6 percent increase.  Hotel EBITDA margin was 27.1 percent, a 45 basis point increase compared to the same period in 2007, which exceeded our expectations.

 

Our Adjusted EBITDA was $65.1 million compared to Same-Store Adjusted EBITDA of $65.6 million, and Adjusted EBITDA (including sold hotels) of $66.5 million, for the same period in 2007.

 

Net loss applicable to common stockholders was $51.3 million, or $0.83 per share, compared to a net loss applicable to common stockholders of $1.7 million, or $0.03 per share, for the same period in 2007.  Net loss applicable to common stockholders in the third quarter of 2008 included impairment charges of $40.4 million, hurricane losses of $1.7 million and conversion costs of $0.1 million.  Net loss in the third quarter of 2007 included $0.4 million gain on sale of condominiums.

 

EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO, Adjusted FFO and Same-Store Adjusted FFO are all non-GAAP financial measures.  See our discussion of “Non-GAAP Financial Measures” beginning on page 15 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.

 

Renovations and Development:

 

            Overall, our renovated hotels continue to perform consistent with our expectations.  For the 70 hotels where we completed renovations during 2007 and 2008, market share increased more than six percent relative to their competitive sets.  RevPAR at these hotels increased more than five percent and Hotel EBITDA increased approximately eight percent for the third quarter of 2008, compared to the same period in prior year. 

 

We spent $37.1 million on renovations and redevelopment projects at our hotels, including our pro rata share of joint venture expenditures, during the three months ended September 30, 2008.  The redevelopment of our hotel in San Francisco’s Union Square as a Marriott remains on schedule to be completed in early 2009. 

 

Portfolio Recycling:  

 

As part of our long-term strategic plan, we are focused on growing shareholder value by actively managing our portfolio of hotels.  We continually examine each hotel in our portfolio to address issues of market supply, demand patterns, ongoing capital needs and concentration of risk. 

 


We have identified the following eight hotels as candidates for sale:

 

Embassy Suites Dallas (DFW International Airport South), Texas

Embassy Suites Jacksonville (Baymeadows), Florida

Doubletree Guest Suites Raleigh/Durham, North Carolina

Holiday Inn Orlando (International Drive), Florida

Holiday Inn Cocoa Beach (Oceanfront), Florida

Three unconsolidated Holiday Inn hotels in Kansas

 

The two Holiday Inn hotels in Florida were originally designated for redevelopment with condominiums.  Market conditions in Florida no longer make condominium projects feasible.  As a result, we recorded a $40.4 million impairment charge, primarily related to those two hotels, in the third quarter 2008. 

 

Balance Sheet/Debt Maturities:  

 

At September 30, 2008, we had $1.5 billion of consolidated debt outstanding with a weighted average interest rate of 6.8 percent and our cash and cash equivalents totaled $59.1 million.  At September 30, 2008, we had $172 million available under our $250 million line of credit. We have no scheduled debt maturities for the remainder of 2008. 

 

We have only one significant debt maturity in 2009 – a $118 million non-recourse mortgage loan, secured by seven hotels.  We are in discussions with multiple lenders and expect to complete the refinancing prior to the maturity date of April 2009.  We currently anticipate that proceeds from the new loan will be higher than the current balance (the current loan is approximately 35% loan-to-value), which will provide the company with additional liquidity. 

 

Operating Focus:

 

As a result of the continued deterioration of travel demand, which is expected to continue through 2009, we are very focused on the following to ensure that we mitigate declining revenue until lodging fundamentals stabilize:

 

·

Continue to gain market share as a result of achieving the returns from our renovation program and recapture displacement;

 

 

·

Work closely with the hotels to retool hotel-level cost structures (including staffing models) to ensure that expenses are being managed as effectively as possible;

 

 

·

Limit capital expenditures to critical items and postpone new construction of any further redevelopment projects; and

 

 

·

Reduce corporate general and administrative expenses. 

 


“We have been proactive in taking steps to strengthen our liquidity and balance sheet capacity,  including reducing expenses, limiting capital expenditures beyond our current renovation program and reducing our common dividend,” said Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer.  “In addition, we are comfortable with refinancing our only near-term debt maturity.  We also continue to create shareholder value by recycling our portfolio and expect to use asset sale proceeds to reduce our debt and further enhance our liquidity.”

 

Outlook:

 

RevPAR at our 85 consolidated hotels is expected to increase approximately two percent in 2008 and to decline between 3.5 and 5.0 percent in the fourth quarter, compared to the prior year.  We continue to expect that RevPAR for our portfolio will increase significantly more than our markets and the industry.  Our successful renovation program, which has achieved our expected returns from the capital investments, is driving our comparatively high increase in RevPAR.  Our guidance assumes no asset sales.

 

For full year 2008 we currently anticipate:

 

·

Adjusted EBITDA to be between $273 million and $275 million;

 

 

·

Adjusted FFO per share to be between $1.93 and $1.96;

 

 

·

Net Loss to be between $45 million and $47 million;

 

 

·

Hotel EBITDA margins to increase approximately 20 basis points; and

 

 

·

Capital expenditures, including redevelopment projects, of approximately $150 million.

 

FelCor, a real estate investment trust, is the nation’s largest owner of upper-upscale, all-suite hotels.  FelCor’s portfolio is comprised of 85 consolidated hotels and resorts, located in 23 states and Canada.  FelCor’s portfolio consists primarily of upper-upscale hotels, which are flagged under global brands such as Embassy Suites Hotels®, Doubletree ®, Hilton®, Renaissance®, Sheraton®, Westin® and Holiday Inn®.  Additional information can be found on the Company’s Web site at www.felcor.com.

 

 

We invite you to listen to our third quarter earnings Conference Call on Wednesday, November 5, 2008, at 11:00 a.m. (Central Time).  The conference call will be Web cast simultaneously via the Internet on FelCor’s Web site at 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 “News” pages.  The conference call replay will be archived on the Company’s Web site.  A telephonic replay will be available from 1:00 p.m. (Central Time), Wednesday, November 5, 2008 through 5:00 p.m. (Central Time), Friday, November 7, 2008, by dialing (800) 642-1687 (conference ID #70128101). 


 

 

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. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results.  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 anticipated at the time the forward-looking statements are made.  Current economic circumstances or a further economic slowdown and the impact on the lodging industry, operating risks associated with the hotel business, relationships with our property managers, risks associated with our level of indebtedness and our ability to meet debt covenants in our debt agreements, our ability to complete acquisitions and dispositions, the availability of capital, the impact on the travel industry from increased fuel prices and security precautions, our ability to continue to qualify as a Real Estate Investment Trust for federal income tax purposes 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.  We undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

 

Contact:

Stephen A. Schafer, Vice President Strategic Planning & Investor Relations,

(972) 444-4912        sschafer@felcor.com


SUPPLEMENTAL INFORMATION
 
 
 
INTRODUCTION
 

The following information is presented in order to help our investors understand the financial position of the Company as of and for the three and nine month periods ended September 30, 2008.

 
 

 

(a)       Our consolidated statements of operations and balance sheets have been prepared without audit.  Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted.  The consolidated statements of operations and balance sheets should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K.


 

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2008

 

2007

 

2008

 

2007

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Hotel operating revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Room.......................................................................................

$

223,968

 

 

$

212,347

 

 

$

693,789

 

 

$

633,483

 

     Food and beverage...............................................................

 

36,357

 

 

 

32,161

 

 

 

131,875

 

 

 

99,146

 

     Other operating departments..............................................

 

16,008

 

 

 

12,188

 

 

 

47,453

 

 

 

38,137

 

   Other revenue..........................................................................

 

1,396

 

 

 

1,766

 

 

 

2,655

 

 

 

2,612

 

Total revenues...........................................................................

 

277,729

 

 

 

258,462

 

 

 

875,772

 

 

 

773,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Hotel departmental expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Room.......................................................................................

 

55,563

 

 

 

52,553

 

 

 

167,085

 

 

 

154,394

 

     Food and beverage...............................................................

 

30,747

 

 

 

25,023

 

 

 

102,289

 

 

 

76,213

 

     Other operating departments..............................................

 

7,192

 

 

 

4,745

 

 

 

21,391

 

 

 

15,527

 

   Other property related costs.................................................

 

76,947

 

 

 

70,119

 

 

 

230,646

 

 

 

207,260

 

   Management and franchise fees..........................................

 

13,573

 

 

 

13,652

 

 

 

45,448

 

 

 

40,718

 

   Taxes, insurance and lease expense....................................

 

29,718

 

 

 

31,736

 

 

 

87,884

 

 

 

92,387

 

   Corporate expenses................................................................

 

5,388

 

 

 

3,690

 

 

 

17,079

 

 

 

15,732

 

   Depreciation and amortization..............................................

 

36,069

 

 

 

28,523

 

 

 

104,909

 

 

 

80,729

 

   Impairment loss.......................................................................

 

36,692

 

 

 

-   

 

 

 

53,823

 

 

 

-   

 

   Hurricane loss.........................................................................

 

1,669

 

 

 

-   

 

 

 

1,669

 

 

 

-   

 

   Other expenses........................................................................

 

1,046

 

 

 

1,298

 

 

 

2,879

 

 

 

1,713

 

Total operating expenses.........................................................

 

294,604

 

 

 

231,339

 

 

 

835,102

 

 

 

684,673

 

Operating income (loss)............................................................

 

(16,875

)

 

 

27,123

 

 

 

40,670

 

 

 

88,705

 

   Interest expense, net..............................................................

 

(24,114

)

 

 

(22,655

)

 

 

(74,886

)

 

 

(68,734

)

Income (loss) before equity in income from

     unconsolidated entities, minority interests

     and gain on sale of assets...................................................

 

 

 

(40,989

 

 

)

 

 

 

 

4,468

 

 

 

 

 

(34,216

 

 

)

 

 

 

 

19,971

 

   Equity in income (loss) from unconsolidated entities.......

 

(2,773

)

 

 

3,030

 

 

 

(1,064

)

 

 

19,511

 

   Minority interests...................................................................

 

955

 

 

 

347

 

 

 

180

 

 

 

463

 

   Gain on involuntary conversion...........................................

 

-   

 

 

 

-   

 

 

 

3,095

 

 

 

-   

 

   Gain on sale of condominiums..............................................

 

-   

 

 

 

354

 

 

 

-   

 

 

 

18,493

 

Income (loss) from continuing operations.............................

 

(42,807

)

 

 

8,199

 

 

 

(32,005

)

 

 

58,438

 

   Discontinued operations.......................................................

 

1,167

 

 

 

(206

)

 

 

1,154

 

 

 

33,893

 

Net income (loss).......................................................................

 

(41,640

)

 

 

7,993

 

 

 

(30,851

)

 

 

92,331

 

   Preferred dividends................................................................

 

(9,678

)

 

 

(9,678

)

 

 

(29,034

)

 

 

(29,034

)

Net income (loss) applicable to common stockholders.......

$

(51,318

)

 

$

(1,685

)

 

$

(59,885

)

 

$

63,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic per common share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net income (loss) from continuing operations...................

$

(0.85

)

 

$

(0.02

)

 

$

(0.99

)

 

$

0.48

 

   Net income (loss)....................................................................

$

(0.83

)

 

$

(0.03

)

 

$

(0.97

)

 

$

1.03

 

   Basic weighted average common shares outstanding......

 

61,828

 

 

 

61,652

 

 

 

61,827

 

 

 

61,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted per common share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net income (loss) from continuing operations...................

$

(0.85

)

 

 

(0.02

)

 

$

(0.99

)

 

$

0.47

 

   Net income (loss)....................................................................

$

(0.83

)

 

 

(0.03

)

 

$

(0.97

)

 

$

1.02

 

   Diluted weighted average common shares outstanding..

 

61,828

 

 

 

61,652

 

 

 

61,827

 

 

 

61,908

 

Cash dividends declared on common stock..........................

$

0.15

 

 

$

0.30

 

 

$

0.85

 

 

$

0.85

 

 

Consolidated Balance Sheets

(unaudited, in thousands)

 

 

September 30,

2008

 

December 31,

2007

Assets

 

 

 

 

 

 

 

Investment in hotels, net of accumulated depreciation of $786,171 at

     September 30, 2008 and $694,464 at December 31, 2007............

 

$

 

2,341,471

 

 

 

$

 

2,400,057

 

Investment in unconsolidated entities..............................................

 

108,052

 

 

 

127,273

 

Cash and cash equivalents.............................................................

 

59,053

 

 

 

57,609

 

Restricted cash............................................................................

 

15,112

 

 

 

14,846

 

Accounts receivable, net of allowance for doubtful accounts of $665

     at September 30, 2008 and $307 at December 31, 2007..............

 

 

42,215

 

 

 

 

37,871

 

Deferred expenses, net of accumulated amortization of $12,488 at

     September 30, 2008 and $10,820 at December 31, 2007.............

 

 

6,154

 

 

 

 

8,149

 

Other assets................................................................................

 

37,623

 

 

 

38,030

 

          Total assets.......................................................................

$

2,609,680

 

 

$

2,683,835

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Debt, net of discount of $1,678 at September 30, 2008 and $2,082 at

     December 31, 2007.................................................................

 

$

 

1,520,068

 

 

 

$

 

1,475,607

 

Distributions payable....................................................................

 

18,040

 

 

 

30,493

 

Accrued expenses and other liabilities.............................................

 

145,776

 

 

 

134,159

 

 

 

 

 

 

 

 

 

          Total liabilities....................................................................

 

1,683,884

 

 

 

1,640,259

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest in FelCor LP, 1,224 and 1,354 units issued and

     outstanding at September 30, 2008 and December 31, 2007,

     respectively............................................................................

 

 

 

8,035

 

 

 

 

 

11,398

 

Minority interest in other partnerships.............................................

 

24,096

 

 

 

25,264

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 20,000 shares authorized:

 

 

 

 

 

 

 

   Series A Cumulative Convertible Preferred Stock, 12,880 shares,

     liquidation value of $322,011, issued and outstanding at

     September 30, 2008 and December 31, 2007.............................

 

 

 

309,362

 

 

 

 

 

309,362

 

   Series C Cumulative Redeemable Preferred Stock, 68 shares,

     liquidation value of $169,950, issued and outstanding at

     September 30, 2008 and December 31, 2007.............................

 

 

 

169,412

 

 

 

 

 

169,412

 

Common stock, $.01 par value, 200,000 shares authorized and

     69,413 shares issued, including shares in treasury, at

     September 30, 2008 and December 31, 2007.............................

 

 

 

694

 

 

 

 

 

694

 

Additional paid-in capital...............................................................

 

2,055,774

 

 

 

2,062,893

 

Accumulated other comprehensive income......................................

 

23,281

 

 

 

27,450

 

Accumulated deficit......................................................................

 

(1,547,856

)

 

 

(1,434,393

)

Less: Common stock in treasury, at cost, of 6,117 and 6,705 shares

     at September 30, 2008 and December 31, 2007, respectively.......

 

 

(117,002

 

)

 

 

 

(128,504

 

)

 

 

 

 

 

 

 

 

          Total stockholders’ equity...................................................

 

893,665

 

 

 

1,006,914

 

 

 

 

 

 

 

 

 

          Total liabilities and stockholders’ equity................................

$

2,609,680

 

 

$

2,683,835

 










 

Discontinued Operations

(in thousands)

 

Discontinued operations include the results of operations of 11 hotels sold in 2007.  Condensed financial information for the hotels included in discontinued operations is as follows:

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2008

 

2007

 

2008

 

2007

   Operating revenue.................................................

$

-   

 

 

$

74

 

 

$

-   

 

$

26,522

 

   Operating expenses...............................................

 

-   

 

 

 

(276

)

 

 

(13

)

 

(18,371

)

      Operating income (loss)......................................

 

-   

 

 

 

(202

)

 

 

(13

)

 

8,151

 

   Interest income (expense), net...............................

 

-   

 

 

 

4

 

 

 

-   

 

 

(15

)

   Gain on sale of hotels, net of income tax.................

 

1,193

 

 

 

-   

 

 

 

1,193

 

 

28,488

 

   Loss on early extinguishment of debt......................

 

-   

 

 

 

-   

 

 

 

-   

 

 

(901

)

   Minority interests..................................................

 

(26

)

 

 

(8

)

 

 

(26

)

 

(1,830

)

Income (loss) from discontinued operations........

 

1,167

 

 

 

(206

)

 

 

1,154

 

 

33,893

 

   Depreciation and amortization, net of minority

      interests.............................................................

 

 

-   

 

 

 

 

-   

 

 

 

 

-   

 

 

 

14

 

   Minority interest in FelCor LP................................

 

26

 

 

 

(4

)

 

 

26

 

 

736

 

   Interest expense, net of minority interests...............

 

-   

 

 

 

-   

 

 

 

-   

 

 

29

 

EBITDA from discontinued operations................

 

1,193

 

 

 

(210

)

 

 

1,180

 

 

34,672

 

   Gain on sale of hotels, net of income tax and

      minority interests in other partnerships.................

 

 

(1,193

 

)

 

 

 

-   

 

 

 

 

(1,193

 

)

 

 

(27,830)

 

   Charges related to early extinguishment of debt,

      net of minority interests......................................

 

 

-   

 

 

 

 

-   

 

 

 

 

-   

 

 

 

811

 

Adjusted EBITDA from discontinued operations

$

-   

 

 

$

(210

)

 

$

(13

)

$

7,653

 

 

 

Capital Expenditures

(in thousands)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2008

 

2007

 

2008

 

2007

Improvements and additions to consolidated hotels.....

$

35,274

 

 

$

50,665

 

 

$

108,899

 

 

$

187,794

 

Consolidated joint venture partners’ prorata share of additions to hotels...............................................

 

(787

)

 

 

(477

)

 

 

(3,005

)

 

 

(2,558

)

Prorata share of unconsolidated additions to hotels.....

 

2,592

 

 

 

9,568

 

 

 

13,898

 

 

 

19,076

 

   Total additions to hotels(a)......................................

$

37,079

 

 

$

59,756

 

 

$

119,792

 

 

$

204,312

 

 

            (a)    Includes capitalized interest, property taxes, ground leases and certain employee costs.

 

 

 


 

Supplemental Financial Data

(in thousands, except per share information)

 

 

September 30,

 

December 31,

Total Enterprise Value 

2008

 

2007

Common shares outstanding

 

63,296

 

 

 

62,707

 

Units outstanding

 

1,224

 

 

 

1,354

 

Combined shares and units outstanding

 

64,520

 

 

 

64,061

 

Common stock price at end of period

$

7.16

 

 

$

15.59

 

Equity capitalization

$

461,963

 

 

$

998,711

 

Series A preferred stock

 

309,362

 

 

 

309,362

 

Series C preferred stock

 

169,412

 

 

 

169,412

 

Consolidated debt

 

1,520,068

 

 

 

1,475,607

 

Minority interest of consolidated debt

 

(4,104

)

 

 

(7,305

)

Pro rata share of unconsolidated debt

 

112,804

 

 

 

94,181

 

Cash and cash equivalents

 

(59,053

)

 

 

(57,609

)

     Total enterprise value (TEV)

$

2,510,452

 

 

$

2,982,359

 

 

 

 

 

 

 

 

 

Dividends Per Share

 

 

 

 

 

 

 

   Dividends declared (year-to-date):

 

 

 

 

 

 

 

     Common stock

$

0.85

 

 

$

1.20

 

     Series A preferred stock

$

1.4625

 

 

$

1.95

 

     Series C preferred stock (depositary shares)

$

1.50

 

 

$

2.00

 

 


Debt Summary

(dollars in thousands)

 

 

 

 

Encumbered Hotels

 

Interest Rate at September 30, 2008

 

 

Maturity

Date

 

 

Consolidated Debt

Senior term notes

 

none

 

         8.50

%(a)

 

June 2011

 

$

299,351

Senior term notes

 

none

 

   L + 1.875

 

 

December 2011

 

 

215,000

Line of credit(b)

 

none

 

   L + 0.80

 

 

August 2011

 

 

78,000

   Total line of credit and senior debt(c)

 

 

 

         7.05

 

 

 

 

 

592,351

 

 

 

 

 

 

 

 

 

 

 

Mortgage debt

 

12 hotels

 

   L + 0.93

(d)

 

November 2011(e)

 

 

250,000

Mortgage debt

 

2 hotels

 

   L + 1.55

(f)

 

May 2012(g)

 

 

176,196

Mortgage debt

 

8 hotels

 

         8.70

 

 

May 2010

 

 

163,233

Mortgage debt

 

7 hotels

 

         7.32

 

 

April 2009

 

 

118,080

Mortgage debt

 

6 hotels

 

         8.73

 

 

May 2010

 

 

117,133

Mortgage debt

 

5 hotels

 

         6.66

 

 

June-August 2014

 

 

72,904

Mortgage debt

 

2 hotels

 

         6.15

 

 

June 2009

 

 

14,759

Mortgage debt

 

1 hotel

 

         5.81

 

 

July 2016

 

 

12,233

Other

 

1 hotel

 

various

 

 

various

 

 

3,179

   Total mortgage debt(c)

 

44 hotels

 

         6.65

 

 

 

 

 

927,717

     Total

 

 

 

         6.80

%

 

 

 

$

1,520,068

 

(a)    If the credit rating on our senior debt is downgraded by Moody’s from Ba3 to B1 and Standard & Poor’s from BB- to B+, the interest rate on these senior notes will increase to 9.0%.

(b)    We have a $250 million line of credit, of which $78 million is drawn.  The interest rate can range from 80 to 150 basis points over LIBOR, based on our leverage ratio as defined in our line of credit agreement.

(c)    Interest rates are calculated based on the weighted average debt outstanding at September 30, 2008.

(d)    We have purchased an interest rate cap that expires in November 2009 at 7.8% for this notional amount.

(e)    The maturity date assumes that we will exercise three successive one-year extension options that permit, at our sole discretion, the original November 2008 maturity to be extended to 2011.  In July 2008, we exercised our first one-year option to extend the maturity to November 2009, and we expect to exercise the remaining options when timely.

(f)     We have purchased interest rate caps that expire in May 2009 of 6.25% for $177 million aggregate notional amounts.

(g)    The maturity date assumes that we will exercise three successive one-year extension options that permit, at our sole discretion, the original May 2009 maturity to be extended to 2012, and we expect to exercise the options when timely.

 

 

Weighted average interest

6.80

%

Fixed interest rate debt to total debt

52.7

%

Mortgage debt to total assets

35.5

%

 

 

 

 

 

 

 

 

Hotel Portfolio Composition

 

The following tables set forth, as of September 30, 2008, for 85 Consolidated Hotels distribution by brand, top markets and location type. 

 

Brand

 

Hotels

 

 

Rooms

 

% of

Total Rooms

 

% of 2007

Hotel EBITDA(a)

Embassy Suites Hotels

47

 

12,129

 

49

 

58

 

Holiday Inn

17

 

6,306

 

25

 

19

 

Sheraton and Westin

9

 

3,217

 

13

 

14

 

Doubletree

7

 

1,472

 

6

 

7

 

Renaissance and Hotel 480

3

 

1,324

 

5

 

(b)

Hilton

2

 

559

 

2

 

2

 

 

 

 

 

 

 

 

 

 

Top Markets

 

 

 

 

 

 

 

 

South Florida

5

 

1,436

 

6

 

7

 

Atlanta

5

 

1,462

 

6

 

7

 

Los Angeles area

4

 

899

 

4

 

6

 

San Francisco area

6

 

2,141

 

8

 

6

 

Orlando

5

 

1,690

 

7

 

5

 

Dallas

4

 

1,333

 

5

 

4

 

Minneapolis

3

 

736

 

3

 

4

 

Phoenix

3

 

798

 

3

 

4

 

Northern New Jersey

3

 

756

 

3

 

4

 

San Diego

1

 

600

 

2

 

3

 

Washington, D.C.

1

 

443

 

2

 

3

 

Chicago

3

 

795

 

3

 

3

 

San Antonio

3

 

874

 

4

 

3

 

Philadelphia

2

 

729

 

3

 

3

 

Boston

2

 

532

 

2

 

2

 

 

 

 

 

 

 

 

 

 

Location

 

 

 

 

 

 

 

 

Suburban

35

 

8,781

 

35

 

38

 

Urban

20

 

6,362

 

25

 

25

 

Airport

18

 

5,785

 

24

 

24

 

Resort

12

 

4,079

 

16

 

13

 

 

(a)    Hotel EBITDA is more fully described on page 22.

(b)   We acquired the Renaissance Esmeralda Resort & Spa and the Renaissance Vinoy Resort & Golf Club in December 2007.  They did not make a significant contribution to our 2007 Hotel EBITDA.


Detailed Operating Statistics by Brand

(85 consolidated hotels)

 

 

Occupancy (%)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2008

 

2007

 

%Variance

 

2008

 

2007

 

%Variance

Embassy Suites Hotels

74.5

 

70.9

 

5.1

 

 

75.2

 

72.9

 

3.2

 

Holiday Inn

76.3

 

73.9

 

3.3

 

 

74.8

 

70.3

 

6.3

 

Sheraton and Westin

68.1

 

68.9

 

(1.1

)

 

68.1

 

69.8

 

(2.3

)

Doubletree

73.5

 

75.5

 

(2.6

)

 

76.3

 

72.8

 

4.8

 

Renaissance and Hotel 480(a)

62.2

 

70.2

 

(11.4

)

 

67.0

 

73.9

 

(9.3

)

Hilton

71.5

 

77.5

 

(7.8

)

 

64.8

 

63.6

 

1.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total hotels

73.4

 

71.8

 

2.3

 

 

73.6

 

71.7

 

2.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR ($)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2008

 

2007

 

%Variance

 

2008

 

2007

 

%Variance

Embassy Suites Hotels

142.26

 

141.35

 

0.6

 

 

145.69

 

143.55

 

1.5

 

Holiday Inn

122.98

 

120.11

 

2.4

 

 

121.64

 

116.87

 

4.1

 

Sheraton and Westin

117.54

 

120.30

 

(2.3

)

 

125.19

 

126.51

 

(1.0

)

Doubletree

133.42

 

137.62

 

(3.1

)

 

144.39

 

144.29

 

0.1

 

Renaissance and Hotel 480(a)

131.20

 

137.99

 

(4.9

)

 

178.25

 

178.31

 

-   

 

Hilton

141.20

 

139.95

 

0.9

 

 

131.33

 

132.82

 

(1.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total hotels

133.21

 

132.78

 

0.3

 

 

138.14

 

136.42

 

1.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RevPAR ($)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2008

 

2007

 

%Variance

 

2008

 

2007

 

%Variance

Embassy Suites Hotels

105.98

 

100.17

 

5.8

 

 

109.58

 

104.61

 

4.8

 

Holiday Inn

93.86

 

88.75

 

5.8

 

 

90.94

 

82.20

 

10.6

 

Sheraton and Westin

80.08

 

82.89

 

(3.4

)

 

85.28

 

88.25

 

(3.4

)

Doubletree

98.12

 

103.90

 

(5.6

)

 

110.21

 

105.06

 

4.9

 

Renaissance and Hotel 480(a)

81.60

 

96.87

 

(15.8

)

 

119.44

 

131.80

 

(9.4

)

Hilton

100.95

 

108.52

 

(7.0

)

 

85.04

 

84.50

 

0.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total hotels

97.80

 

95.29

 

2.6

 

 

101.69

 

97.77

 

4.0

 






















 

(a)   Decreases in occupancy, ADR and RevPAR are principally related to renovation-related disruption at Hotel 480 Union Square.  We have included historical room statistics for two hotels acquired in December 2007 for periods, prior to our ownership of these hotels, for comparison purposes.


Detailed Operating Statistics for FelCor’s Top Markets

(85 consolidated hotels)

 

 

Occupancy (%)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2008

 

2007

 

%Variance

 

2008

 

2007

 

%Variance

South Florida

70.9

 

61.5

 

15.3

 

 

78.7

 

73.5

 

7.2

 

Atlanta

74.0

 

74.3

 

(0.4

)

 

75.4

 

75.6

 

(0.3

)

Los Angeles area

81.3

 

79.7

 

2.0

 

 

77.7

 

78.8

 

(1.4

)

San Francisco area

83.5

 

85.6

 

(2.5

)

 

78.1

 

77.2

 

1.2

 

Orlando

72.6

 

73.2

 

(0.8

)

 

78.4

 

77.6

 

1.1

 

Dallas

67.5

 

59.0

 

14.3

 

 

68.6

 

65.1

 

5.5

 

Minneapolis

78.6

 

84.0

 

(6.4

)

 

73.9

 

77.3

 

(4.4

)

Phoenix

55.3

 

56.1

 

(1.5

)

 

66.0

 

68.6

 

(3.8

)

Northern New Jersey

75.6

 

77.8

 

(2.8

)

 

72.5

 

71.5

 

1.5

 

San Diego

80.4

 

76.3

 

5.3

 

 

81.3

 

76.2

 

6.7

 

Washington, D.C.

62.1

 

66.6

 

(6.8

)

 

58.9

 

67.7

 

(13.0

)

Chicago

76.4

 

82.1

 

(6.9

)

 

74.4

 

72.0

 

3.3

 

San Antonio

85.9

 

78.7

 

9.2

 

 

82.1

 

78.0

 

5.2

 

Philadelphia

79.6

 

77.6

 

2.5

 

 

74.7

 

68.7

 

8.7

 

Boston

85.0

 

79.6

 

6.8

 

 

79.8

 

67.3