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FelCor Lodging Trust Posts 4th Qtr 2009 Loss of $60.4 million Compared
 to a Loss of $98.1 million in the Prior Year Period

Total Revenues Drop to $219.1 million, compared to $249.0 million in the Year-ago Period

Hotel Operating Statistics


RevPAR, FFO and EBITDA exceeded expectations

IRVING, Texas - February 24, 2010 - FelCor Lodging Trust Incorporated (NYSE: FCH) today reported operating results for the fourth quarter and year ended December 31, 2009.

Summary:

  • We issued $636 million of senior notes due 2014 (with net proceeds of $558 million), which allowed us to refinance our existing senior notes that were to mature in 2011.
  • We extended the maturity on three mortgage loans, totaling $42 million, two of which matured in June 2009 and one that was to mature in May 2010.
  • RevPAR at our 83 consolidated hotels decreased 10.9 percent for the fourth quarter and 17.6 percent for the full year.
  • Market share at our 83 consolidated hotels increased approximately 1.3 percent for the fourth quarter and 1.4 percent for the full year.
  • RevPAR at the San Francisco Marriott-Union Square, where we completed redevelopment in June, increased 73 percent in the fourth quarter.
  • Our strict expense controls limited the effect of 2009 reduced revenue on flow-through to Adjusted EBITDA to 48 percent compared to the prior year. Hotel EBITDA margin decreased 530 basis points and 496 basis points for the quarter and full year, respectively, which was better than anticipated.
  • Adjusted FFO per share was a loss of $0.29 and Adjusted EBITDA was $30.4 million for the fourth quarter. We exceeded the high end of our 2009 FFO per share and EBITDA expectations by $0.05 and $3 million, respectively.
  • Net loss for the fourth quarter was $51.2 million.

Fourth Quarter Operating Results:

Revenue per available room (“RevPAR”) for our 83 consolidated hotels was $75.01, a 10.9 percent decline compared to the same period in 2008, which is better than the 11.7 percent decline for the industry (according to Smith Travel Research). Our RevPAR decline was driven mainly by lower average daily rate (“ADR”) (which fell 10.4 percent to $118.59), while average occupancy declined only 0.6 percent to 63.2 percent, compared to the same period in 2008.

“Last year presented unprecedented challenges for the industry, and I am pleased with our accomplishments under those circumstances. Our performance over the last two years has been superior to our peer group and the industry in terms of RevPAR and flow-through. We gained 1.4 percent in market share during 2009, while only 48 percent of the revenue declines flowed through to the bottom line. These successes translated into better than expected fourth quarter results, driven by higher than expected demand and better margins. At the same time, our balance sheet initiatives are enabling us to withstand the downturn and position us to benefit from the lodging recovery. In total, we refinanced or extended nearly $1 billion in debt, including all of our 2009 debt maturities and a significant portion of our 2010 and 2011 maturities,” said Richard A. Smith, FelCor’s President and Chief Executive Officer.

Adjusted funds from operations (“FFO”) for the fourth quarter was a loss of $18.7 million, or $0.29 per share, compared to $15.6 million, or $0.25 per share, in 2008.

Hotel EBITDA for the fourth quarter was $42.3 million, compared to $61.2 million in 2008. Hotel EBITDA margin was 19.3 percent, a 530 basis point decrease compared to 2008. Prior to accounting for taxes, insurance and land leases, Hotel EBITDA margins declined 373 basis points. Hotel EBITDA represents EBITDA generated by our hotels before corporate expenses and joint venture adjustments.

Adjusted EBITDA for the fourth quarter was $30.4 million, compared to $52.3 million in 2008.

Net loss attributable to common stockholders for the fourth quarter was $60.4 million, or $0.96 per share, compared to a net loss of $98.1 million, or $1.57 per share, for 2008.

Full Year Operating Results:

RevPAR for our 83 consolidated hotels decreased by 17.6 percent to $81.62, driven by decreases in both ADR (an 11.2 percent decrease to $123.23) and occupancy (a 7.2 percent decrease to 66.2 percent), compared to 2008.

Adjusted FFO for 2009 was $25.0 million, or $0.39 per share, compared to $125.9 million, or $1.99 per share, for 2008.

Hotel EBITDA for 2009 decreased to $211.7 million, compared to $311.6 million in 2008. Hotel EBITDA margin was 23.4 percent, a 496 basis point decrease compared to 2008. Hotel operating expenses decreased 11.9 percent compared to 2008. The decline in expenses reflects various factors including: decreased labor costs and improved efficiencies (including permanent hotel staffing reductions), decreased other room expenses, and decreased incentive management fees. Employee headcount at our hotels declined 14% compared to 2008. Prior to accounting for taxes, insurance and land leases, Hotel EBITDA margins declined 374 basis points.

Same-Store Adjusted EBITDA for 2009 was $177.1 million, compared to $271.4 million for 2008. Adjusted EBITDA for 2009 was $178.9 million, compared to $275.8 million for 2008.

Net loss attributable to common stockholders for 2009 was $146.8 million, or $2.33 per share, compared to a net loss of $158.0 million, or $2.57 per share, for 2008.

EBITDA, Adjusted EBITDA, Same Store EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO and Adjusted FFO are all non-GAAP financial measures. See our discussion of “Non-GAAP Financial Measures” beginning on page 14 for a reconciliation of each of these measures to the most comparable GAAP financial measure and for information regarding the use, limitations and importance of these non-GAAP financial measures.

Balance Sheet:

At December 31, 2009, we had $1.8 billion of consolidated debt outstanding with a weighted average interest rate of 7.3 percent, and our cash and cash equivalents totaled $264 million.

In October, we issued $636 million in aggregate principal amount of senior notes. The new notes bear interest at 10 percent and mature in 2014. The net proceeds of the offering were approximately $558 million after original issue discount, fees and expenses. The proceeds were used to fund the redemption of all of our floating-rate notes ($215 million) and the repurchase of $213 million of our 8½ percent notes, with the remainder available for general corporate purposes. $87 million of our 8½ percent notes were not tendered and remain outstanding; they mature in June 2011.

In February 2010, we extended the maturity dates on two secured loans, totaling $14 million that matured in June 2009. The maturity dates were extended to June 2011; all other terms remain substantially unchanged. We have refinanced or extended all of our 2009 maturities.

In February 2010, we refinanced a $28 million secured loan that was to mature in May 2010. The loan now matures in May 2013. We are also in active discussions regarding our remaining secured debt that matures in 2010. We have seven remaining CMBS loans that mature in May 2010. Six have been transferred to special servicers; and we are in negotiations to refinance and/or extend their maturities. With regard to two of these loans, the mortgaged hotels’ cash flows do not cover debt service, and we stopped funding the short-falls in December 2009. We also have a $113 million mortgage loan, secured by six hotels, that matures in May 2010 and are in negotiations with that lender.

“I am pleased with our progress to extend and refinance our maturing debt and ensure we have adequate liquidity. With our 2009 maturities resolved, we are focused on 2010 maturities. We have made good progress in those negotiations, having already refinanced the first of nine loans that mature in May on favorable terms. We are continuing discussions concerning the remaining loans, and we are pursuing an appropriate solution,” said Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer. “We have also strengthened our liquidity position, to enhance our flexibility in the face of uncertain economic conditions.”

Portfolio Management:

For the quarter and year ended December 31, 2009, we spent $14.0 million and $79.3 million, respectively, on capital expenditures at our hotels (including our pro rata share of joint venture expenditures). Capital expenditures for the year include $37 million spent to complete the remaining renovation and redevelopment projects.

In December, we sold two Holiday Inn hotels (Cocoa Beach and Orlando – International Drive) for $26.0 million in aggregate gross proceeds. The hotels were previously identified for sale. None of our other hotels are currently being marketed for sale.

In June, we completed the comprehensive redevelopment of the San Francisco Marriott - Union Square (which was reflagged as a Marriott hotel in April). Fourth quarter RevPAR at that hotel increased 73 percent, compared to 2008. We are progressing with approval and entitlement processes for additional redevelopment projects in the interest of building long-term value. However, we are committed to a disciplined approach toward capital allocation and will commit capital to new projects only when prudent.

Outlook:

We have seen indications from economic data that demand should begin to recover in 2010. The credit markets are slowly beginning to improve, corporate earnings growth is improving, the unemployment rate has stabilized, consumer confidence is rising, and manufacturers are beginning to increase production. While demand appears to have stabilized in certain of our markets, it has not stabilized on a widespread basis, particularly with corporate demand. Moreover, booking windows remain short, and the economy is fragile and has not yet shown consistent, stable growth. Consequently, visibility into future demand trends is limited, and predictions about the industry’s performance are difficult and uncertain. Therefore, our RevPAR guidance range is wider than in the past. Our outlook assumes RevPAR for our 83 consolidated hotels decreases between one and five percent, compared to 2009.

We will continue to benefit from our high-quality, renovated portfolio and the success of the San Francisco Marriott-Union Square. Additionally, average supply growth is lower in our markets relative to the industry. Our RevPAR decreased 6.9 percent in January, compared to 2009 and outperformed the industry average (7.4 percent decrease, according to Smith Travel Research).

We continue to work with our operators to mix customer segments aggressively to optimize revenue and to achieve the most efficient cost structure, given demand trends. However, we expect hotel EBITDA margins to decline in 2010, which reflects declining ADR and certain hotel expense increases that did not occur in 2009. These expenses include hotel-level wage increases, higher hotel-level bonus expense and higher utility rates. In addition, the composition of food and beverage revenue has changed, which also impacts margins.

Our interest expense will increase in 2010, reflecting the issuance of our new senior notes and continued interest expense associated with our untendered 8½ percent notes ($87 million) that remain outstanding and will accrue interest through maturity in June 2011.

For 2010, we anticipate:

  • RevPAR to decrease between one and five percent;
  • Adjusted EBITDA to be between $150 million and $162 million;
  • Adjusted FFO loss per share to be between $0.80 and $0.61;
  • Net loss to be between $169 million and $157 million; and
  • Interest expense to be approximately $155 million.

FelCor, a real estate investment trust, is the nation’s largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 85 hotels and resorts, located in 23 states and Canada. FelCor’s portfolio consists primarily of upper-upscale hotels, which are flagged under global brands - Embassy Suites Hotels®, Doubletree ®, Hilton®, Marriott®, 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 fourth quarter earnings Conference Call on Thursday, February 25, 2010, 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 Releases” page. The conference call replay will be archived on the Company’s Web site.

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, dispositions and debt refinancing, 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.

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 month and year ended December 31, 2009.

 

TABLE OF CONTENTS


 


 

 


PAGE

Consolidated Statements of Operations(a)
7
Consolidated Balance Sheets(a)
8
Capital Expenditures
9
Supplemental Financial Data
9
Debt Summary
10
Hotel Portfolio Composition
11
Detailed Operating Statistics by Brand
12
Detailed Operating Statistics for FelCor’s Top Markets
13
Non-GAAP Financial Measures
14


 

(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 Annual Report on Form 10-K.


 
 
Consolidated Statements of Operations

(in thousands, except per share data)





 


Three Months Ended
Year Ended


December 31,
December 31,
Revenues:
2009   2008
2009   2008
Hotel operating revenue:















Room
$ 166,596

$ 187,815

$ 710,530

$ 864,980
Food and beverage

38,632


46,173


139,045


173,432
Other operating departments

13,618


14,677


56,283


61,517
Other revenue
  289

  328

  2,843

  2,983
Total revenues
  219,135

  248,993

  908,701

  1,102,912
















 
Expenses:















Hotel departmental expenses:















Room

47,826


49,117


189,587


211,732
Food and beverage

30,122


34,107


111,514


132,732
Other operating departments

6,562


6,675


25,603


27,855
Other property operating costs

64,869


70,357


258,546


293,969
Management and franchise fees

9,971


11,540


43,221


55,720
Taxes, insurance and lease expense

24,476


25,576


98,751


112,374
Corporate expenses

8,387


3,619


24,216


20,698
Depreciation and amortization

37,600


35,962


147,445


137,570
Impairment loss

-


43,691


-


60,822
Hurricane loss

-


-


-


952
Other expenses
  602

  1,990

  4,089

  4,869
Total operating expenses
  230,415

  282,634

  902,972

  1,059,293
















 
Operating income (loss)

(11,280 )

(33,641 )

5,729


43,619
Interest expense, net

(37,136 )

(23,903 )

(105,637 )

(98,789 )
Charges related to debt extinguishment
  (1,127 )
  -

  (1,721 )
  -
















 
Loss before equity in income of unconsolidated















entities, noncontrolling interests and gain on















sale of assets

(49,543 )

(57,544 )

(101,629 )

(55,170 )
Equity in income (loss) from unconsolidated















entities

(1,617 )

(9,868 )

(4,814 )

(10,932 )
Gain on involuntary conversion

-


-


-


3,095
Gain on sale of assets
  -

  -

  723

  -
















 
Loss from continuing operations

(51,160 )

(67,412 )

(105,720 )

(63,007 )
Discontinued operations
  (67 )
  (22,070 )
  (3,371 )
  (57,480 )
















 
Net loss

(51,227 )

(89,482 )

(109,091 )

(120,487 )
Net loss (income) attributable to















noncontrolling interests in other















partnerships

231


(65 )

297


(1,191 )
Net loss attributable to redeemable















noncontrolling interests in FelCor LP
  273

  1,153

  672

  2,433
Net loss attributable to FelCor

(50,723 )

(88,394 )

(108,122 )

(119,245 )
Preferred dividends
  (9,679 )
  (9,679 )
  (38,713 )
  (38,713 )
















 
Net loss attributable to FelCor common















stockholders
$ (60,402 )
$ (98,073 )
$ (146,835 )
$ (157,958 )
















 
Basic and diluted per common share data:















Loss from continuing operations
$ (0.96 )
$ (1.22 )
$ (2.27 )
$ (1.65 )
Net loss
$ (0.96 )
$ (1.57 )
$ (2.33 )
$ (2.57 )
Basic and diluted weighted average common















shares outstanding
  63,087

  62,429

  63,114

  61,979

 
 
Consolidated Balance Sheets

(in thousands)





 


2009
2008
Assets







Investment in hotels, net of accumulated depreciation of $916,604 at







December 31, 2009 and $816,271 at December 31, 2008
$ 2,180,394

$ 2,279,026
Investment in unconsolidated entities

82,040


94,506
Cash and cash equivalents

263,531


50,187
Restricted cash

18,708


13,213
Accounts receivable, net of allowance for doubtful accounts of $406







at December 31, 2009 and $521 at December 31, 2008

28,678


35,240
Deferred expenses, net of accumulated amortization of $14,502 at







December 31, 2009 and $13,087 at December 31, 2008

19,977


5,556
Other assets
  32,666

  34,541
Total assets
$ 2,625,994

$ 2,512,269








 
Liabilities and Equity







Debt, net of discount of $64,266 at December 31, 2009 and $1,544 at







December 31, 2008
$ 1,773,314

$ 1,551,686
Distributions payable

37,580


8,545
Accrued expenses and other liabilities
  131,339

  132,604








 
Total liabilities
  1,942,233

  1,692,835








 
Commitments and contingencies















 
Redeemable noncontrolling interests in FelCor LP at redemption







value, 295 and 296 units issued and outstanding at December 31,







2009 and 2008, respectively
  1,062

  545








 
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







December 31, 2009 and 2008

309,362


309,362
Series C Cumulative Redeemable Preferred Stock, 68 shares,







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







December 31, 2009 and 2008

169,412


169,412
Common stock, $.01 par value, 200,000 shares authorized and 69,413







shares issued, including shares in treasury, at December 31, 2009







and 2008

694


694
Additional paid-in capital

2,021,837


2,045,482
Accumulated other comprehensive income

23,528


15,347
Accumulated deficit

(1,792,822 )

(1,645,947 )
Less: Common stock in treasury, at cost, of 3,845 and 5,189 shares







at December 31, 2009 and 2008, respectively
  (71,895 )
  (99,245 )








 
Total FelCor stockholders’ equity

660,116


795,105
Noncontrolling interests in other partnerships
  22,583

  23,784
Total equity
  682,699

  818,889








 
Total liabilities and equity
$ 2,625,994

$ 2,512,269

 
 
Capital Expenditures

(in thousands)





 


Three Months Ended
Year Ended


December 31,
December 31,


2009   2008
2009   2008
Improvements and additions to consolidated hotels
$ 13,484

$ 33,998

$ 75,949

$ 142,897

Consolidated joint venture partners’ prorata share

















of additions to hotels

(52 )

(251 )

(805 )

(3,257 )
Prorata share of unconsolidated additions to hotels
  556

  2,651

  4,201

  16,549
Total additions to hotels(a)
$ 13,988

$ 36,398

$ 79,345

$ 156,189

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


 
Supplemental Financial Data

(in thousands, except per share information)



 


December 31,
Total Enterprise Value
2009   2008
Common shares outstanding

65,568


64,224
Units outstanding
  295

  296
Combined shares and units outstanding

65,863


64,520
Common stock price
$ 3.60

$ 1.84
Equity capitalization
$ 237,107

$ 118,717
Series A preferred stock

309,362


309,362
Series C preferred stock

169,412


169,412
Consolidated debt

1,773,314


1,551,686
Noncontrolling interests of consolidated debt

(3,971 )

(4,078 )
Pro rata share of unconsolidated debt

107,481


112,220
Cash and cash equivalents
  (263,531 )
  (50,187 )
Total enterprise value (TEV)
$ 2,329,174

$ 2,207,132

 
 
 
 
Debt Summary

(dollars in thousands)









 






Maturity
Consolidated


Encumbered Hotels
Interest Rate
Date
Debt
CMBS debt(a)
7 hotels(b)
8.68%
May 2010
$ 130,379
Mortgage debt
6 hotels(c)
8.73
May 2010

112,703
Senior notes
none
8.50(d)
June 2011

86,604
CMBS debt(a)
Boca Raton-ES,

Wilmington-DT


6.15
June 2011(e)

14,150
Mortgage debt
9 hotels(f)
L +3.50(g)
August 2011(h)

200,425
CMBS debt
12 hotels(i)
L +0.93(j)
November 2011(k)

250,000
Mortgage debt(a)
Esmeralda-REN,

Vinoy-REN


L +1.55(l)
May 2012(m)

176,555
CMBS debt
New Orleans-ES
8.77
May 2013(n)

27,829
Mortgage debt
7 hotels(o)
9.02
April 2014

117,422
CMBS debt(a)
5 hotels(p)
6.66
June-August 2014

70,917
Senior secured notes(q)
14 hotels
10.00
October 2014

572,500
CMBS debt
Indianapolis North-ES
5.81
July 2016

11,741
Capital lease and other
St. Paul-ES and other
9.44
Various
  2,089
Total






$ 1,773,314
(a)   The hotels under this debt are subject to separate loan agreements and are not cross collateralized.
(b)
The hotels that secure this debt are: South San Francisco-ES, Orlando South-ES, Atlanta Buckhead-ES, Chicago Deerfield-ES, Boston Marlboro-ES, Piscataway-ES, and Corpus Christi-ES.
(c)
The hotels that secure this debt are: Phoenix Crescent-SH, Ft. Lauderdale Cypress Creek-SS, Atlanta Galleria-SS, Chicago O’Hare-SS, Philadelphia Society Hill-SH, and Burlington-SH.
(d)
As a result of a rating down-grade in February 2009, the interest rate on our 8½% senior notes due 2011 increased to 9%.
(e)
In February 2010, the maturity dates on these loans were extended from June 2009 to June 2011.
(f)
The hotels that secure this debt are: Charlotte SouthPark-DT, Houston Medical Center-HI, Myrtle Beach-HLT, Mandalay Beach-ES, Nashville Airport-ES, Philadelphia Independence Mall-HI, Pittsburgh University Center-HI, Santa Barbara-HI, and Santa Monica-HI.
(g)
LIBOR for this loan is subject to a 2% floor.
(h)
This loan can be extended for as many as two years, subject to satisfying certain conditions.
(i)
The hotels that secure this debt are: Anaheim-ES, Bloomington-ES, Charleston Mills House-HI, Dallas DFW South-ES, Deerfield Beach-ES, Jacksonville-ES, Lexington-HS, Dallas Love Field-ES, Raleigh/Durham-DTGS, San Antonio Airport-HI, Tampa Rocky Point-DTGS, and Phoenix Tempe-ES.
(j)
We have purchased an interest rate cap that caps LIBOR at 7.8% and expires in November 2010 for this notional amount.
(k)
The maturity date assumes that we will exercise the remaining one-year extension option that is exercisable, at our sole discretion, and would extend the current November 2010 maturity to 2011.
(l)
We have purchased interest rate caps that cap LIBOR at 6.5% and expire in May 2010 for aggregate notional amounts of $177 million.
(m)
We have exercised the first of three successive one-year extension options that permit, at our sole discretion, the original May 2009 maturity to be extended to 2012.
(n)
In February 2010, the maturity date on this loan was extended from May 2010 to May 2013.
(o)
The hotels that secure this debt are: Milpitas-ES, Napa Valley-ES, Minneapolis Airport-ES, Birmingham-ES, Baton Rouge-ES, Miami Airport-ES, and Ft. Lauderdale-ES.
(p)
The hotels that secure this debt are: Atlanta Airport-ES, Austin-DTGS, BWI Airport-ES, Orlando Airport-HI, and Phoenix Biltmore-ES.
(q)

These senior notes have $636 million in aggregate principal and were sold at a discount for an effective yield of 12.875% before transaction costs. The hotels that secure this debt are: Atlanta Airport-SH, Boston Beacon Hill-HI, Dallas Market Center-ES, Myrtle Beach-ES, Nashville Opryland – Airport-HI, New Orleans French Quarter-HI, Orlando North-ES, Orlando Walt Disney World®-DGS, San Diego on the Bay-HI, San Francisco Burlingame-ES, San Francisco Fisherman’s Wharf-HI, San Francisco Union Square-MAR, Toronto Airport-HI and Toronto Yorkdale-HI.



 

Hotel Portfolio Composition

The following tables set forth, as of December 31, 2009, for 83 Consolidated Hotels distribution by top markets and location type.


 
 
 
 






% of
% of 2009

Top Markets


Hotels
Rooms
Total Rooms
Hotel EBITDA((a))
South Florida
5
1,439
6
8
Los Angeles area
4
899
4
6
Atlanta
5
1,462
6
6
Orlando
4
1,038
4
5
Philadelphia
2
729
3
4
Minneapolis
3
736
3
4
San Francisco area
6
2,138
9
4
Dallas
4
1,333
6
4
Central California Coast
2
408
2
4
San Antonio
3
874
4
3
Myrtle Beach
2
640
3
3
Boston
2
532
2
3
San Diego
1
600
2
3
Northern New Jersey
3
756
3
3








 

Location









Suburban
35
8,781
37
32
Urban
20
6,358
27
27
Airport
18
5,788
24
24
Resort
10
2,927
12
17

(a) Hotel EBITDA is more fully described on page 21.


 
Detailed Operating Statistics by Brand
(83 consolidated hotels)


 


Occupancy (%)


Three Months Ended  
  Year Ended  


December 31,


December 31,



2009   2008
%Variance
2009   2008
%Variance
Embassy Suites Hotels
64.3

65.8

(2.3 )
67.7

72.9

(7.1 )
Holiday Inn
66.6

65.9

1.1

68.7

74.0

(7.2 )
Sheraton and Westin
58.1

59.1

(1.7 )
60.2

65.8

(8.5 )
Doubletree
63.6

64.9

(2.0 )
65.5

73.5

(10.8 )
Renaissance and Marriott
60.7

53.7

13.0

61.4

62.8

(2.1 )
Hilton
45.0

48.1

(6.3 )
60.0

60.6

(0.9 )


















 
Total hotels
63.2

63.6

(0.6 )
66.2

71.3

(7.2 )


















 


















 


ADR ($)


Three Months Ended


Year Ended



December 31,


December 31,



2009
2008
%Variance
2009
2008
%Variance
Embassy Suites Hotels
122.01

136.24

(10.4 )
127.92

143.54

(10.9 )
Holiday Inn
109.12

122.73

(11.1 )
112.22

128.04

(12.4 )
Sheraton and Westin
105.57

122.64

(13.9 )
108.47

124.61

(13.0 )
Doubletree
112.46

131.92

(14.7 )
122.59

141.62

(13.4 )
Renaissance and Marriott
159.14

162.65

(2.2 )
163.16

173.97

(6.2 )
Hilton
104.01

105.22

(1.2 )
115.46

126.12

(8.5 )


















 
Total hotels
118.59

132.36

(10.4 )
123.23

138.75

(11.2 )


















 


















 


RevPAR ($)


Three Months Ended


Year Ended



December 31,


December 31,



2009
2008
%Variance
2009
2008
%Variance
Embassy Suites Hotels
78.47

89.66

(12.5 )
86.55

104.57

(17.2 )
Holiday Inn
72.71

80.85

(10.1 )
77.11

94.81

(18.7 )
Sheraton and Westin
61.32

72.43

(15.3 )
65.34

82.05

(20.4 )
Doubletree
71.56

85.64

(16.4 )
80.35

104.03

(22.8 )
Renaissance and Marriott
96.65

87.42

10.6

100.21

109.17

(8.2 )
Hilton
46.84

50.58

(7.4 )
69.32

76.38

(9.2 )


















 
Total hotels
75.01

84.20

(10.9 )
81.62

99.00

(17.6 )

 
Detailed Operating Statistics for FelCor’s Top Markets
(83 consolidated hotels)


 


Occupancy (%)


Three Months Ended December 31,
  Year Ended December 31,  


2009   2008   %Variance
2009   2008
%Variance
South Florida
72.1
71.4
1.1
73.0
76.9
(5.1 )
Los Angeles area
67.8
65.1
4.2
71.6
74.5
(3.9 )
Atlanta
66.6
63.6
4.7
69.7
72.4
(3.7 )
Orlando
75.2
75.1
0.1
74.0
79.8
(7.3 )
Philadelphia
69.0
67.6
2.0
66.4
72.9
(8.9 )
Minneapolis
61.8
60.7
1.7
66.6
70.6
(5.7 )
San Francisco area
67.7
64.7
4.6
69.1
74.6
(7.4 )
Dallas
56.0
57.6
(2.8)
58.6
65.9
(11.0 )
Central California Coast
57.0
62.8
(9.2)
72.8
73.1
(0.4 )
San Antonio
61.7
66.4
(7.1)
70.0
78.1
(10.4 )
Myrtle Beach
40.0
43.4
(7.7)
59.6
58.5
1.8
Boston
76.1
77.3
(1.6)
77.8
79.2
(1.7 )
San Diego
75.2
70.2
7.1
72.6
78.5
(7.5 )
Northern New Jersey
61.8
66.9
(7.6)
62.2
71.1
(12.5 )


 


 


ADR ($)


Three Months Ended December 31,


Year Ended December 31,



2009
2008
%Variance
2009
2008
%Variance
South Florida
118.65
135.70
(12.6)
129.18
148.82
(13.2 )
Los Angeles area
127.95
142.73
(10.4)
135.63
157.20
(13.7 )
Atlanta
99.90
115.13
(13.2)
104.71
120.93
(13.4 )
Orlando
102.12
121.01
(15.6)
110.75
125.68
(11.9 )
Philadelphia
139.07
160.70
(13.5)
135.22
151.60
(10.8 )
Minneapolis
122.63
135.72
(9.6)
127.53
144.82
(11.9 )
San Francisco area
136.41
138.69
(1.6)
129.66
143.35
(9.5 )
Dallas
108.92
123.53
(11.8)
114.92
124.48
(7.7 )
Central California Coast
140.15
149.05
(6.0)
156.45
172.03
(9.1 )
San Antonio
95.70
108.70
(12.0)
102.74
112.90
(9.0 )
Myrtle Beach
103.63
99.23
4.4
133.48
141.71
(5.8 )
Boston
131.99
148.69
(11.2)
133.97
154.30
(13.2 )
San Diego
117.34
145.89
(19.6)
124.75
157.47
(20.8 )
Northern New Jersey
134.51
157.47
(14.6)
140.38
162.37
(13.5 )


 


 


RevPAR ($)


Three Months Ended December 31,


Year Ended December 31,



2009
2008
%Variance
2009
2008
%Variance
South Florida
85.58
96.84
(11.6)
94.28
114.42
(17.6 )
Los Angeles area
86.69
92.85
(6.6)
97.07
117.10
(17.1 )
Atlanta
66.58
73.26
(9.1)
73.01
87.60
(16.7 )
Orlando
76.79
90.90
(15.5)
81.93
100.34
(18.3 )
Philadelphia
95.91
108.64
(11.7)
89.81
110.55
(18.8 )
Minneapolis
75.75
82.40
(8.1)
84.88
102.21
(17.0 )
San Francisco area
92.41
89.79
2.9
89.54
106.87
(16.2 )
Dallas
60.98
71.12
(14.3)
67.34
81.99
(17.9 )
Central California Coast
79.90
93.60
(14.6)
113.95
125.80
(9.4 )
San Antonio
59.07
72.22
(18.2)
71.89
88.21
(18.5 )
Myrtle Beach
41.50
43.04
(3.6)
79.49
82.89
(4.1 )
Boston
100.39
114.90
(12.6)
104.22
122.15
(14.7 )
San Diego
88.28
102.48
(13.9)
90.58
123.64
(26.7 )
Northern New Jersey
83.13
105.37
(21.1)
87.35
115.49
(24.4 )

Non-GAAP Financial Measures

We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store 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.


 

Reconciliation of Net Loss to FFO

(in thousands, except per share data)



 


Three Months Ended December 31,


2009   2008



 
  Per Share

 
  Per Share


Dollars
Shares
Amount
Dollars
Shares
Amount
Net loss
$ (51,227 )






$ (89,482 )





Noncontrolling interests

504








1,088






Preferred dividends(a)
  (9,679 )






  (9,679 )





Net loss attributable to FelCor



















common stockholders

(60,402 )
63,087
$ (0.96 )

(98,073 )
62,429
$ (1.57 )
Depreciation and amortization

37,600

-

0.60


35,962

-

0.58
Depreciation, discontinued operations



















and unconsolidated entities

4,128

-

0.07


3,832

-

0.06
Gain on sale of hotels

(910 )
-

(0.01 )

-

-

-
Noncontrolling interests in FelCor LP
  (273 )
295
  (0.01 )
  (1,153 )   745
  (0.01 )
FFO

(19,857 )
63,382

(0.31 )

(59,432 )
63,174

(0.94 )
Impairment loss

-

-





43,691

-

0.69
Impairment loss, discontinued operations and



















unconsolidated entities

-

-

-


19,395

-

0.31
Charges related to debt extinguishment

1,127

-

0.02


-

-

-
Conversion costs(b)

-

-

-


26

-

-
Severance costs

61

-

-


850

-

0.01
Liquidated damages, discontinued operations

-

-

-


11,060

-

0.18
Conversion of unvested restricted stock
  -

-
  -

  -

22
  -
Adjusted FFO

(18,669 )
63,382

(0.29 )

15,590

63,196

0.25
Adjusted FFO from discontinued operations
  513

-
  -

  (235 )
-
  (0.01 )
Same-Store Adjusted FFO
$ (18,156 )
63,382
$ (0.29 )
$ 15,355

63,196
$ 0.24

(a) We suspended our preferred dividends in March 2009 and unpaid preferred dividends continue to accrue until paid.

(b) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.


 
Reconciliation of Net Loss to FFO

(in thousands, except per share data)



 


Year Ended December 31,


2009   2008



 
  Per Share

 
  Per Share


Dollars
Shares
Amount
Dollars
Shares
Amount
Net loss
$ (109,091 )






$ (120,487 )





Noncontrolling interests

969








1,242






Preferred dividends(a)
  (38,713 )






  (38,713 )





Net loss attributable to FelCor



















common stockholders

(146,835 )







(157,958 )





Less: Dividends declared on unvested



















restricted stock compensation
  -







  (1,041 )





Numerator for basic and diluted loss



















attributable to common stockholders

(146,835 )
63,114
$ (2.33 )

(158,999 )
61,979
$ (2.57 )
Depreciation and amortization

147,445

-

2.34


137,570

-

2.22
Depreciation, discontinued operations



















and unconsolidated entities

17,204

-

0.27


18,261

-

0.29
Gain on involuntary conversion

-

-

-


(3,095 )
-

(0.05 )
Gain on sale of hotels

(910 )
-

(0.01 )

(1,193 )
-

(0.02 )
Noncontrolling interests in FelCor LP

(672 )
296

(0.01 )

(2,433 )
1,199

(0.03 )
Dividend declared on unvested restricted



















stock compensation

-

-

-


1,041

-

0.02
Conversion of unvested restricted stock
  -

331
  (0.01 )
  -

-
  -
FFO

16,232

63,741

0.25


(8,848 )
63,178

(0.14 )
Impairment loss

-

-

-


60,822

-

0.96
Impairment loss, discontinued operations



















and unconsolidated entities

5,516

-

0.08


59,837

-

0.95
Charges related to debt extinguishment

1,721

-

0.03


-

-

-
Hurricane loss(b)

-

-

-


952

-

0.01
Hurricane loss, discontinued operations



















and unconsolidated entities

-

-

-


767

-

0.01
Conversion costs(c)

447

-

0.01


507

-

0.01
Severance costs

612

-

0.01


850

-

0.01
Liquidated damages, discontinued operations

-

-

-


11,060

-

0.18
Lease termination costs

469

-

0.01


-

-

-
Conversion of unvested restricted stock
  -

-
  -

  -

98
  -
Adjusted FFO

24,997

63,741

0.39


125,947

63,276

1.99
Adjusted FFO from discontinued operations
  (1,850 )
-
  (0.03 )
  (4,343 )
-
  (0.07 )
Same-Store Adjusted FFO
$ 23,147

63,741
$ 0.36

$ 121,604

63,276
$ 1.92

(a) We suspended our preferred dividends in March 2009 and unpaid preferred dividends continue to accrue until paid.

(b) Represents hurricane-related expenses.

(c) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.


 
 
Reconciliation of Net Loss to EBITDA

(in thousands)





 


Three Months Ended
Year Ended


December 31,
December 31,


2009   2008
2009   2008
Net loss
$ (51,227 )
$ (89,482 )
$ (109,091 )
$ (120,487 )
Depreciation and amortization

37,600


35,962


147,445


137,570
Depreciation, discontinued operations and















unconsolidated entities

4,128


3,832


17,204


18,261
Interest expense

37,263


24,299


106,337


100,411
Interest expense, unconsolidated entities

916


2,032


3,724


6,237
Amortization of stock compensation

1,241


656


5,165


4,451
Noncontrolling interests in other partnerships
  231

  (65 )
  297

  (1,191 )
EBITDA

30,152


(22,766 )

171,081


145,252
Gain on sale of hotels

(910 )

-


(910 )

(1,193 )
Gain on involuntary conversion

-


-


-


(3,095 )
Charges related to debt extinguishment

1,127


-


1,721


-
Impairment loss

-


43,691


-


60,822
Impairment loss, discontinued operations and















unconsolidated entities

-


19,395


5,516


59,837
Hurricane loss(a)

-


-


-


952
Hurricane loss, discontinued operations and















unconsolidated entities

-


-


-


767
Conversion costs(b)

-


26


447


507
Severance costs

61


850


612


850
Liquidated damages, discontinued operations

-


11,060


-


11,060
Lease termination costs
  -

  -

  469

  -
Adjusted EBITDA

30,430


52,256


178,936


275,759
Adjusted EBITDA from discontinued operations
  513

  (235 )
  (1,850 )
  (4,343 )
Same-Store Adjusted EBITDA
$ 30,943

$ 52,021

$ 177,086

$ 271,416

(a) Represents hurricane-related expenses.

(b) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.


 
 
Reconciliation of Adjusted EBITDA to Hotel EBITDA

(in thousands)





 


Three Months Ended
Year Ended


December 31,
December 31,


2009   2008
2009   2008
Adjusted EBITDA
$ 30,430

$ 52,256

$ 178,936

$ 275,759
Other revenue

(289 )

(328 )

(2,843 )

(2,983 )
Equity in income from unconsolidated subsidiaries















(excluding interest, depreciation and impairment















expense)

(3,586 )

(4,800 )

(18,106 )

(24,576 )
Noncontrolling interests in other partnerships















(excluding interest, depreciation and severance















expense)

406


814


2,305


3,648
Consolidated hotel lease expense

9,315


11,822


41,121


54,266
Unconsolidated taxes, insurance and lease expense

(2,038 )

(1,884 )

(8,079 )

(8,212 )
Interest income

(127 )

(395 )

(700 )

(1,622 )
Other expenses (excluding conversion costs,















severance costs and lease termination costs)

526


1,019


2,566


3,417
Corporate expenses (excluding amortization expense















of stock compensation)

7,146


2,963


19,051


16,247
Gain on sale of assets

-


-


(723 )

-
Adjusted EBITDA from discontinued operations
  514

  (236 )
  (1,850 )
  (4,343 )
Hotel EBITDA
$ 42,297

$ 61,231

$ 211,678

$ 311,601