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 [email protected]
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.
(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
|
|
|
|
|
|
|
|
|
Investment
in hotels, net of accumulated depreciation of $786,171 at
September 30, 2008 and
$694,464 at December 31, 2007............
|
|
|
|
|
|
|
|
Investment
in unconsolidated entities..............................................
|
|
|
|
|
|
|
|
Cash
and cash equivalents.............................................................
|
|
|
|
|
|
|
|
Restricted
cash............................................................................
|
|
|
|
|
|
|
|
Accounts
receivable, net of allowance for doubtful accounts of $665
at September 30, 2008
and $307 at December 31, 2007..............
|
|
|
|
|
|
|
|
Deferred
expenses, net of accumulated amortization of $12,488 at
September 30, 2008 and
$10,820 at December 31, 2007.............
|
|
|
|
|
|
|
|
Other
assets................................................................................
|
|
|
|
|
|
|
|
Total
assets.......................................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders� Equity
|
|
|
|
|
|
|
|
Debt,
net of discount of $1,678 at September 30, 2008 and $2,082 at
December 31, 2007.................................................................
|
|
|
|
|
|
|
|
Distributions
payable....................................................................
|
|
|
|
|
|
|
|
Accrued
expenses and other liabilities.............................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities....................................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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............................................................................
|
|
|
|
|
|
|
|
Minority interest in other partnerships.............................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.............................
|
|
|
|
|
|
|
|
Series C Cumulative Redeemable Preferred
Stock, 68 shares,
liquidation value of
$169,950, issued and outstanding at
September 30, 2008 and
December 31, 2007.............................
|
|
|
|
|
|
|
|
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.............................
|
|
|
|
|
|
|
|
Additional
paid-in capital...............................................................
|
|
|
|
|
|
|
|
Accumulated
other comprehensive income......................................
|
|
|
|
|
|
|
|
Accumulated
deficit......................................................................
|
|
|
|
|
|
|
|
Less: Common stock in treasury, at cost, of
6,117 and 6,705 shares
at
September 30, 2008 and December 31, 2007, respectively.......
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders� equity...................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders� equity................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue.................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses...............................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)......................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net...............................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of hotels, net of income tax.................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on early extinguishment of debt......................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests..................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations........
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization, net of
minority
interests.............................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest in FelCor LP................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of minority
interests...............
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from discontinued operations................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of hotels, net of income
tax and
minority interests in
other partnerships.................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to early extinguishment
of debt,
net of minority
interests......................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
(in thousands)
(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
|
|
|
|
|
June 2011
|
|
|
|
Senior
term notes
|
|
none
|
|
|
|
|
December
2011
|
|
|
|
Line of
credit(b)
|
|
none
|
|
|
|
|
August 2011
|
|
|
|
Total line of credit and senior debt(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
debt
|
|
12 hotels
|
|
|
|
|
November
2011(e)
|
|
|
|
Mortgage
debt
|
|
2 hotels
|
|
|
|
|
May 2012(g)
|
|
|
|
Mortgage
debt
|
|
8 hotels
|
|
|
|
|
May 2010
|
|
|
|
Mortgage
debt
|
|
7 hotels
|
|
|
|
|
April 2009
|
|
|
|
Mortgage
debt
|
|
6 hotels
|
|
|
|
|
May 2010
|
|
|
|
Mortgage
debt
|
|
5 hotels
|
|
|
|
|
June-August
2014
|
|
|
|
Mortgage
debt
|
|
2 hotels
|
|
|
|
|
June 2009
|
|
|
|
Mortgage
debt
|
|
1 hotel
|
|
|
|
|
July 2016
|
|
|
|
Other
|
|
1 hotel
|
|
|
|
|
various
|
|
|
|
Total mortgage debt(c)
|
|
44 hotels
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
(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
|
%
|
|
35.5
|
%
|
|
|
|
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
|
|
|
|
|
78.7
|
|
73.5
|
|
|
|
Atlanta
|
74.0
|
|
74.3
|
|
|
|
|
75.4
|
|
75.6
|
|
|
|
Los Angeles area
|
81.3
|
|
79.7
|
|
2.0
|
|
|
77.7
|
|
78.8
|
|
(1.4
|
|
San Francisco area
|
83.5
|
|
85.6
|
|
|
|
|
78.1
|
|
77.2
|
|
|
|
Orlando
|
72.6
|
|
73.2
|
|
|
|
|
78.4
|
|
77.6
|
|
|
|
Dallas
|
67.5
|
|
59.0
|
|
|
|
|
68.6
|
|
65.1
|
|
|
|
Minneapolis
|
78.6
|
|
84.0
|
|
|
|
|
73.9
|
|
77.3
|
|
(4.4
|
|
Phoenix
|
55.3
|
|
56.1
|
|
|
|
|
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
|
|
|
|
|
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
|
|
|
|
|
82.1
|
|
78.0
|
|
5.2
|
|
Philadelphia
|
79.6
|
|
77.6
|
|
2.5
|
|
|
74.7
|
|
68.7
|
|
8.7
|
|
Boston
|
85.0
|
|
79.6
|
|
|
|
|
79.8
|
|
67.3
|
|
|
|
|
ADR ($)
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
2008
|
|
2007
|
|
%Variance
|
|
2008
|
|
2007
|
|
%Variance
|
South
Florida
|
112.91
|
|
111.43
|
|
|
|
|
152.82
|
|
153.29
|
|
|
|
Atlanta
|
119.91
|
|
119.91
|
|
|
|
|
122.57
|
|
122.05
|
|
|
|
Los Angeles area
|
167.55
|
|
170.50
|
|
(1.7
|
)
|
|
161.27
|
|
159.98
|
|
|
|
San Francisco area
|
153.86
|
|
149.81
|
|
|
|
|
144.74
|
|
140.64
|
|
|
|
Orlando
|
91.33
|
|
90.58
|
|
|
|
|
107.41
|
|
105.83
|
|
|
|
Dallas
|
119.72
|
|
119.49
|
|
|
|
|
124.75
|
|
124.41
|
|
|
|
Minneapolis
|
154.63
|
|
147.92
|
|
|
|
|
147.34
|
|
143.61
|
|
|
|
Phoenix
|
114.52
|
|
109.45
|
|
|
|
|
148.71
|
|
146.23
|
|
|
|
Northern
New Jersey
|
163.52
|
|
157.09
|
|
4.1
|
|
|
163.89
|
|
155.90
|
|
5.1
|
|
San Diego
|
160.07
|
|
157.76
|
|
1.5
|
|
|
160.83
|
|
155.45
|
|
3.5
|
|
Washington, D.C.
|
141.53
|
|
156.22
|
|
|
|
|
155.11
|
|
166.00
|
|
|
|
Chicago
|
129.37
|
|
133.57
|
|
(3.1
|
)
|
|
127.88
|
|
131.51
|
|
(2.8
|
|
San Antonio
|
112.59
|
|
110.80
|
|
|
|
|
114.04
|
|
110.49
|
|
|
|
Philadelphia
|
148.20
|
|
137.41
|
|
7.9
|
|
|
148.84
|
|
136.45
|
|
9.1
|
|
Boston
|
161.05
|
|
164.62
|
|
|
|
|
156.12
|
|
156.12
|
|
|
|
|
RevPAR ($)
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
2008
|
|
2007
|
|
%Variance
|
|
2008
|
|
2007
|
|
%Variance
|
South
Florida
|
80.07
|
|
68.52
|
|
|
|
|
120.33
|
|
112.61
|
|
|
|
Atlanta
|
88.77
|
|
89.14
|
|
|
|
|
92.41
|
|
92.31
|
|
|
|
Los Angeles area
|
136.15
|
|
135.86
|
|
0.2
|
|
|
125.24
|
|
126.03
|
|
(0.6
|
|
San Francisco area
|
128.52
|
|
128.30
|
|
|
|
|
113.02
|
|
108.53
|
|
|
|
Orlando
|
66.34
|
|
66.29
|
|
|
|
|
84.25
|
|
82.15
|
|
|
|
Dallas
|
80.79
|
|
70.55
|
|
|
|
|
85.64
|
|
80.95
|
|
|
|
Minneapolis
|
121.49
|
|
124.22
|
|
|
|
|
108.87
|
|
110.95
|
|
|
|
Phoenix
|
63.31
|
|
61.45
|
|
|
|
|
98.09
|
|
100.30
|
|
|
|
Northern
New Jersey
|
123.62
|
|
122.14
|
|
1.2
|
|
|
118.88
|
|
111.43
|
|
6.7
|
|
San Diego
|
128.66
|
|
120.38
|
|
6.9
|
|
|
130.75
|
|
118.50
|
|
10.3
|
|
Washington, D.C.
|
87.95
|
|
104.12
|
|
|
|
|
91.34
|
|
112.39
|
|
|
|
Chicago
|
98.81
|
|
109.60
|
|
(9.8
|
)
|
|
95.10
|
|
94.69
|
|
0.4
|
|
San Antonio
|
96.71
|
|
87.16
|
|
|
|
|
93.58
|
|
86.16
|
|
|
|
Philadelphia
|
117.90
|
|
106.62
|
|
10.6
|
|
|
111.19
|
|
93.74
|
|
18.6
|
|
Boston
|
136.92
|
|
131.01
|
|
|
|
|
124.59
|
|
105.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
We refer in this release to
certain �non-GAAP
financial measures.� These measures,
including FFO, Adjusted FFO, EBITDA, Adjusted 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 the limitations
of such
measures.
(in thousands, except per share and unit data)
|
Three
Months Ended September 30,
|
|
2008
|
|
2007
|
|
Dollars
|
|
Shares
|
|
Per Share
Amount
|
|
Dollars
|
|
Shares
|
|
Per
Share Amount
|
Net income (loss)..........................................
|
$
|
(41,640
|
)
|
|
|
|
|
|
|
|
$
|
7,993
|
|
|
|
|
|
|
|
Preferred dividends.........................................
|
|
(9,678
|
)
|
|
|
|
|
|
|
|
|
(9,678
|
)
|
|
|
|
|
|
|
Net income (loss) applicable
to common
.... stockholders.............................................
|
|
(51,318
|
)
|
|
61,828
|
|
$
|
(0.83
|
)
|
|
|
(1,685
|
)
|
|
61,652
|
|
$
|
(0.03
|
)
|
Depreciation and amortization...........................
|
|
36,069
|
|
|
-
|
|
|
0.59
|
|
|
|
28,523
|
|
|
-
|
|
|
0.46
|
|
Depreciation, unconsolidated entities and
discontinued operations...............................
|
|
3,998
|
|
|
-
|
|
|
0.06
|
|
|
|
2,895
|
|
|
-
|
|
|
0.05
|
|
Gain on sale of hotels......................................
|
|
(1,193
|
)
|
|
-
|
|
|
(0.02
|
)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Loss on sale of hotels in unconsolidated
entities..
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
189
|
|
|
-
|
|
|
-
|
|
Minority interest in FelCor LP...........................
|
|
(1,094
|
)
|
|
1,346
|
|
|
(0.01
|
)
|
|
|
(36
|
)
|
|
1,354
|
|
|
(0.01
|
)
|
Conversion of options and unvested
restricted stock........................................................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
346
|
|
|
-
|
|
FFO..............................................................
|
|
(13,538
|
)
|
|
63,174
|
|
|
(0.21
|
)
|
|
|
29,886
|
|
|
63,352
|
|
|
0.47
|
|
Impairment loss..............................................
|
|
36,692
|
|
|
-
|
|
|
0.59
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Impairment loss, unconsolidated subsidiaries......
|
|
3,750
|
|
|
-
|
|
|
0.06
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hurricane loss(a)..............................................
|
|
1,669
|
|
|
-
|
|
|
0.03
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hurricane loss, unconsolidated subsidiaries........
|
|
50
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Conversion costs(b)..........................................
|
|
118
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Conversion of options and unvested
restricted stock........................................................
|
|
-
|
|
|
121
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Adjusted FFO................................................
|
|
28,741
|
|
|
63,295
|
|
|
0.45
|
|
|
|
29,886
|
|
|
63,352
|
|
|
0.47
|
|
FFO from discontinued operations.....................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
210
|
|
|
-
|
|
|
-
|
|
FFO from acquired hotels(c)..............................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(3,804
|
)
|
|
-
|
|
|
(0.06
|
)
|
Gain on sale of condominiums...........................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(354
|
)
|
|
-
|
|
|
-
|
|
Same-Store Adjusted FFO.............................
|
$
|
28,741
|
|
|
63,295
|
|
$
|
0.45
|
|
|
$
|
25,938
|
|
|
63,352
|
|
$
|
0.41
|
|
(a)
This
represents
clean up costs and insurance deductible.
(b)
These
costs
relate to the conversion of our Hotel 480 Union Square in San Francisco
to a
Marriott. The conversion is expected to
be completed by early 2009.
(c)
We
have included
amounts for two hotels acquired in December 2007, prior to our
ownership of
these hotels, for comparison purposes.
(in thousands, except per share and unit data)
|
Nine
Months Ended September 30,
|
|
2008
|
|
2007
|
|
Dollars
|
|
Shares
|
|
Per Share
Amount
|
|
Dollars
|
|
Shares
|
|
Per
Share Amount
|
Net income (loss)..........................................
|
$
|
(30,851
|
)
|
|
|
|
|
|
|
|
$
|
92,331
|
|
|
|
|
|
|
|
Preferred dividends........................................
|
|
(29,034
|
)
|
|
|
|
|
|
|
|
|
(29,034
|
)
|
|
|
|
|
|
|
Net income (loss) applicable
to common stockholders...........................................
|
|
(59,885
|
)
|
|
61,827
|
|
$
|
(0.97
|
)
|
|
|
63,297
|
|
|
61,908
|
|
$
|
1.02
|
|
Depreciation and amortization........................
|
|
104,909
|
|
|
-
|
|
|
1.70
|
|
|
|
80,729
|
|
|
-
|
|
|
1.30
|
|
Depreciation, unconsolidated entities and
discontinued operations.............................
|
|
11,128
|
|
|
-
|
|
|
0.18
|
|
|
|
8,606
|
|
|
-
|
|
|
0.14
|
|
Gain on involuntary conversion......................
|
|
(3,095
|
)
|
|
-
|
|
|
(0.05
|
)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Gain on sale of hotels....................................
|
|
(1,193
|
)
|
|
-
|
|
|
(0.02
|
)
|
|
|
(27,830
|
)
|
|
-
|
|
|
(0.45
|
)
|
Gain on sale of hotels in unconsolidated
entities
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(10,993
|
)
|
|
-
|
|
|
(0.18
|
)
|
Minority interest in FelCor LP........................
|
|
(1,280
|
)
|
|
1,351
|
|
|
(0.04
|
)
|
|
|
1,375
|
|
|
1,354
|
|
|
(0.01
|
)
|
Conversion of options and unvested
restricted stock.............................................................
|
|
-
|
|
|
114
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
FFO...............................................................
|
|
50,584
|
|
|
63,292
|
|
|
0.80
|
|
|
|
115,184
|
|
|
63,262
|
|
|
1.82
|
|
Abandoned projects......................................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
22
|
|
|
-
|
|
|
-
|
|
Charges related to early extinguishment of
debt, net of minority interests.................................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
811
|
|
|
-
|
|
|
0.01
|
|
Impairment loss...........................................
|
|
53,823
|
|
|
-
|
|
|
0.85
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Impairment loss, unconsolidated subsidiaries...
|
|
3,750
|
|
|
-
|
|
|
0.06
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hurricane loss(a)...........................................
|
|
1,669
|
|
|
-
|
|
|
0.03
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Hurricane loss, unconsolidated subsidiaries.....
|
|
50
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Conversion costs(b).......................................
|
|
481
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Adjusted FFO................................................
|
|
110,357
|
|
|
63,292
|
|
|
1.74
|
|
|
|
116,017
|
|
|
63,262
|
|
|
1.83
|
|
FFO from discontinued operations.....................
|
|
13
|
|
|
-
|
|
|
-
|
|
|
|
(7,625
|
)
|
|
-
|
|
|
(0.12
|
)
|
FFO from acquired hotels(c)..............................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
1,826
|
|
|
-
|
|
|
0.03
|
|
Gain on sale of condominiums...........................
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(18,493
|
)
|
|
-
|
|
|
(0.29
|
)
|
Same-Store Adjusted FFO.............................
|
$
|
110,370
|
|
|
63,292
|
|
$
|
1.74
|
|
|
$
|
91,725
|
|
|
63,262
|
|
$
|
1.45
|
|
(a)
This
represents
clean up costs and insurance deductible.
(b)
These
costs
relate to the conversion of our Hotel 480 Union Square in San Francisco
to a
Marriott. The conversion is expected to
be completed by early 2009.
(c)
We
have included
amounts for two hotels acquired in December 2007, prior to our
ownership of
these hotels, for comparison purposes.
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss).......................................................
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization.....................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, unconsolidated entities and
discontinued operations..........................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense........................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, unconsolidated entities
and discontinued operations........................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of stock compensation............................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest in FelCor Lodging LP........................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA.....................................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of hotels................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of hotels in unconsolidated
entities............
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on involuntary conversion...................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abandoned projects...................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to early extinguishment of
debt, net of minority interests...................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss........................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss, unconsolidated entities.......................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hurricane loss(a)........................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hurricane loss, unconsolidated entities.........................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion costs (b)...................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA....................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from discontinued operations...........
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from acquired hotels(c)..................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of condominiums....................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store Adjusted EBITDA.................................
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
This
represents
clean up costs and insurance deductible.
(b)
These
costs
relate to the conversion of our Hotel 480 Union Square in San Francisco
to a
Marriott. The conversion is expected to
be completed by early 2009.
(c)
We
have included
amounts for two hotels acquired in December 2007, prior to our
ownership of
these hotels, for comparison purposes.
(in thousands)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
Same-Store Adjusted EBITDA..................................
|
$
|
65,141
|
|
|
$
|
65,626
|
|
|
$
|
223,516
|
|
|
$
|
211,403
|
|
Other revenue............................................................
|
|
(1,396
|
)
|
|
|
(1,766
|
)
|
|
|
(2,655
|
)
|
|
|
(2,612
|
)
|
Equity in income from unconsolidated
subsidiaries
(excluding interest,
depreciation, impairment and hurricane expense)...................................................
|
|
(6,926
|
)
|
|
|
(8,018
|
)
|
|
|
(19,776
|
)
|
|
|
(22,860
|
)
|
Minority interest in other partnerships
(excluding interest and
depreciation expense)............
|
|
784
|
|
|
|
80
|
|
|
|
2,834
|
|
|
|
108
|
|
Consolidated hotel lease expense.................................
|
|
14,511
|
|
|
|
16,204
|
|
|
|
42,444
|
|
|
|
47,729
|
|
Unconsolidated taxes, insurance and lease
expense.......
|
|
(2,132
|
)
|
|
|
(1,990
|
)
|
|
|
(6,328
|
)
|
|
|
(5,588
|
)
|
Interest income...........................................................
|
|
(254
|
)
|
|
|
(2,210
|
)
|
|
|
(1,227
|
)
|
|
|
(4,878
|
)
|
Other expenses (excluding abandoned projects
and conversion costs).....................................................
|
|
928
|
|
|
|
1,298
|
|
|
|
2,398
|
|
|
|
1,691
|
|
Corporate expenses (excluding amortization
expense of stock compensation).................................................
|
|
4,316
|
|
|
|
3,175
|
|
|
|
13,284
|
|
|
|
12,602
|
|
Hotel EBITDA............................................................
|
$
|
74,972
|
|
|
$
|
72,399
|
|
|
$
|
254,490
|
|
|
$
|
237,595
|
|
(in thousands)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
Net
income (loss)..........................................................
|
$
|
(41,640
|
)
|
|
$
|
7,993
|
|
|
$
|
(30,851
|
)
|
|
$
|
92,331
|
|
Discontinued
operations.................................................
|
|
(1,167
|
)
|
|
|
206
|
|
|
|
(1,154
|
)
|
|
|
(33,893
|
)
|
EBITDA
from acquired hotels(a).....................................
|
|
-
|
|
|
|
(683
|
)
|
|
|
-
|
|
|
|
11,187
|
|
Equity in
loss (income) from unconsolidated entities.........
|
|
2,773
|
|
|
|
(3,030
|
)
|
|
|
1,064
|
|
|
|
(19,511
|
)
|
Minority
interests...........................................................
|
|
(955
|
)
|
|
|
(347
|
)
|
|
|
(180
|
)
|
|
|
(463
|
)
|
Consolidated
hotel lease expense....................................
|
|
14,511
|
|
|
|
16,204
|
|
|
|
42,444
|
|
|
|
47,729
|
|
Unconsolidated
taxes, insurance and lease expense.........
|
|
(2,132
|
)
|
|
|
(1,990
|
)
|
|
|
(6,328
|
)
|
|
|
(5,588
|
)
|
Interest
expense, net......................................................
|
|
24,114
|
|
|
|
22,655
|
|
|
|
74,886
|
|
|
|
68,734
|
|
|
|
5,388
|
|
|
|
3,690
|
|
|
|
17,079
|
|
|
|
15,732
|
|
|
|
36,069
|
|
|
|
28,523
|
|
|
|
104,909
|
|
|
|
80,729
|
|
Impairment
loss.............................................................
|
|
36,692
|
|
|
|
-
|
|
|
|
53,823
|
|
|
|
-
|
|
Hurricane
loss(b)............................................................
|
|
1,669
|
|
|
|
-
|
|
|
|
1,669
|
|
|
|
-
|
|
Other
expenses.............................................................
|
|
1,046
|
|
|
|
1,298
|
|
|
|
2,879
|
|
|
|
1,713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,095
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(354
|
)
|
|
|
-
|
|
|
|
(18,493
|
)
|
|
|
(1,396
|
)
|
|
|
(1,766
|
)
|
|
|
(2,655
|
)
|
|
|
(2,612
|
)
|
|
$
|
74,972
|
|
|
$
|
72,399
|
|
|
$
|
254,490
|
|
|
$
|
237,595
|
|
(a)
We have included
amounts for two hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes.
(b)
This
represents clean up costs and
insurance deductible.
Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues.................................................
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenue..................................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from acquired hotels(a).........................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store hotel operating revenue....................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store hotel operating expenses(a).................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel EBITDA...................................................
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel EBITDA margin(b)......................................
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) We have
included amounts for two hotels acquired in December 2007,
prior to our ownership of these hotels, for comparison purposes.
Reconciliation
of Total Operating
Expenses to Same-Store Hotel Operating Expenses
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store Hotel operating expenses..........................
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
This
represents clean up costs and insurance deductible.
(b)
We have included
amounts for two hotels acquired in
December 2007, prior to our ownership of these hotels, for comparison
purposes.
Reconciliation
of Ratio of Operating Income (Loss)
to Total Revenues to Hotel EBITDA Margin
|
Three Months Ended September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
We have included amounts for two hotels
acquired in
December 2007, prior to our
ownership of
these hotels, for comparison
purposes.
(b)
This represents clean up costs and
insurance
deductible.
|
Full Year
2008 Guidance
|
|
Low Guidance
|
|
High Guidance
|
|
Dollars
|
|
Per Share Amount
|
|
Dollars
|
|
Per Share
Amount
|
Net loss..................................................................................
|
$
|
(47
|
)
|
|
|
|
|
|
$
|
(45
|
)
|
|
|
|
|
Preferred dividends.................................................................
|
|
(39
|
)
|
|
|
|
|
|
|
(39
|
)
|
|
|
|
|
Net loss applicable to common stockholders........................
|
|
(86
|
)
|
|
$
|
(1.39
|
)
|
|
|
(84
|
)
|
|
$
|
(1.36
|
)
|
Depreciation...........................................................................
|
|
154
|
|
|
|
|
|
|
|
154
|
|
|
|
|
|
Impairment charge..................................................................
|
|
58
|
|
|
|
|
|
|
|
58
|
|
|
|
|
|
Gain from asset dispositions.....................................................
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
Hurricane loss........................................................................
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Minority interest in FelCor LP..................................................
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
Adjusted FFO........................................................................
|
$
|
122
|
|
|
$
|
1.93
|
(a)
|
|
$
|
124
|
|
|
$
|
1.96
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss..................................................................................
|
$
|
(47
|
)
|
|
|
|
|
|
$
|
(45
|
)
|
|
|
|
|
Depreciation...........................................................................
|
|
154
|
|
|
|
|
|
|
|
154
|
|
|
|
|
|
Impairment charge..................................................................
|
|
58
|
|
|
|
|
|
|
|
58
|
|
|
|
|
|
Gain from asset dispositions.....................................................
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
Hurricane loss........................................................................
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Interest expense.....................................................................
|
|
106
|
|
|
|
|
|
|
|
106
|
|
|
|
|
|
Amortization expense..............................................................
|
|
6
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
Minority interest in FelCor LP..................................................
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
Adjusted EBITDA.................................................................
|
$
|
273
|
|
|
|
|
|
|
$
|
275
|
|
|
|
|
|
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, including but not limited
to
these described below, provides useful supplemental information
to investors regarding our ongoing operating performance and that the
presentation of Adjusted FFO and Adjusted 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 comparisons,
we have adjusted Adjusted FFO and Adjusted EBITDA to remove
discontinued
operations and gains on sales of condominium units; and have added the
historical
results of operations from the two hotels acquired in December 2007.
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 from continuing operations all revenues and
expenses not
directly associated with hotel operations including 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 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. Hotel EBITDA and Hotel EBITDA margins are
presented on a same-store basis including the historical results of
operations
from the two hotels acquired in December 2007.
Limitations
of Non-GAAP Measures
Our
management and Board of Directors use FFO, EBITDA, Hotel EBITDA and
Hotel
EBITDA margin to evaluate the performance of our hotels and to
facilitate
comparisons between us and lodging REITs, hotel owners who are not
REITs and
other capital intensive companies. We
use Hotel EBITDA and Hotel EBITDA margin in evaluating hotel-level
performance
and the operating efficiency of our hotel managers.
The use of
these non-GAAP financial measures has certain limitations. FFO, Adjusted FFO, EBITDA, Adjusted EBITDA,
Hotel EBITDA and Hotel EBITDA margin, as presented by us, may not be
comparable
to FFO, Adjusted FFO, EBITDA, Adjusted 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, Adjusted FFO, Adjusted FFO
per share, EBITDA or Adjusted EBITDA be considered as measures of our
liquidity
or indicative of funds available for our cash needs, including our
ability to
make cash distributions. Adjusted FFO
per share should not be used as a measure of amounts that accrue
directly to
the benefit of stockholders. FFO,
Adjusted FFO, EBITDA, Adjusted 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. |