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FelCor Lodging Trust Posts 2nd Qtr 2012 Net Income of $12 million
Compared
to Net Loss of $42 million in the Year-ago Quarter;
RevPAR for its 69 Hotels Increased 5.9% for the Quarter

Hotel Operating Statistics

IRVING, Texas--FelCor Lodging Trust Incorporated (NYSE: FCH), today reported operating results for the second quarter ended June 30, 2012.

Second Quarter Summary:

  • Revenue per available room (“RevPAR”) for 69 same-store hotels (45 core plus 24 non-strategic) increased 5.9% for the quarter and 9.9% in June. RevPAR at newly-acquired and redeveloped hotels increased 16.4% during June.
  • Hotel EBITDA margin increased 62 basis points to 28.8% for the quarter.
  • Adjusted EBITDA was $66.2 million, which was at the high-end of our expectations. Adjusted funds from operations (“FFO”) per share was $0.18.
  • Net income was $12.0 million.
  • Sold six non-strategic hotels for $103 million. Proceeds were used to repay $73 million of related debt and other costs. The remainder will be used to pay $30 million of accrued preferred dividends on July 31.
  • Agreed to sell one hotel (with a hard-money deposit received in July) for gross proceeds of $25.5 million, which will be used to repay debt.
  • Completed work at nine of 10 hotels undergoing renovations and redevelopments.

Second Quarter Operating Results:

RevPAR for 69 same-store hotels was $110.26, a 5.9% increase compared to the same period in 2011. The increase reflects a 6.6% increase in average daily rate (“ADR”) to $144.01 and a 60 basis point decrease in occupancy to 76.6%. The decrease in occupancy was driven by displacement from renovations at eight hotels. RevPAR growth improved sequentially throughout the quarter, as we completed most of our renovation projects. RevPAR increased 9.9% in June compared to the prior year.

Commenting on second quarter results, Richard A. Smith, President and Chief Executive Officer of FelCor, said, “I am very pleased with the progress we made on our strategic initiatives this quarter. We have completed work at nine of the 10 hotels undergoing renovations and redevelopments this year. We expect our portfolio to benefit from improvements at these hotels, as well as our newly-acquired hotels, which will generate above-market growth going forward. Lodging industry trends are encouraging; group pace is accelerating, and the portfolio is nearing prior peak occupancy, while new supply remains constrained. As a result, we are experiencing broad-based strength in almost all markets. These tailwinds allow us to further remix customer segments and increase absolute rates. ADR for our portfolio increased 8.3% in June, and we expect that trend to continue. Therefore, we have increased our annual guidance to reflect higher RevPAR growth for the second half of the year. Furthermore, our asset sale program is progressing as planned. We sold six hotels in the second quarter, have agreed to sell one more hotel with a hard-money deposit, are under contract to sell two additional hotels and are in various negotiations with regard to our other properties that are currently being marketed for sale.”

Hotel EBITDA was $73.7 million, which was 7.1% higher than the same period in 2011. Hotel EBITDA and other same-store metrics reflect 69 same-store hotels.

Same-store Adjusted EBITDA was $64.5 million, 8.4% higher than the $59.5 million for the same period in 2011. Adjusted EBITDA (which includes sold hotels during the period owned) was $66.2 million, 2.9% higher than the same period in 2011. Adjusted FFO was $22.3 million, or $0.18 per share, compared to $0.13 per share in the prior year period.

Net income attributable to common stockholders was $2.2 million, or $0.02 per share for the quarter, compared to a net loss of $51.9 million, or $0.42 per share, for the same period in 2011. Net income included a $16.7 million gain on asset sales.

EBITDA, Adjusted EBITDA, same-store Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO, Adjusted FFO and Adjusted FFO per share are all non-GAAP financial measures. See our discussion of “Non-GAAP Financial Measures” beginning on page 17 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.

Year to Date Operating Results:

RevPAR for 69 same-store hotels was $102.78, a 4.8% increase compared to the same period in 2011. The increase was driven by a 5.1% increase in ADR to $140.68. Displacement from renovations and redevelopments impacted revenue by $8 million.

Hotel EBITDA was $121.9 million, 5.7% higher than $115.4 million for the same period in 2011.

Same-store Adjusted EBITDA was $101.7 million, 7.9% higher than the $94.2 million for the same period in 2011. Adjusted EBITDA (which includes sold hotels for the period owned) was $107.6 million, 0.8% lower than the same period in 2011. Adjusted FFO was $20.3 million, or $0.16 per share, which is $0.03 per share higher than the prior year.

Net loss attributable to common stockholders was $36.0 million, or $0.29 per share for the six months ended June 30, 2012, compared to a net loss of $93.3 million, or $0.85 per share, for the same period in 2011.

Portfolio Repositioning:

On May 31, we sold six non-strategic hotels for $103 million. The portfolio consists of the Holiday Inn-San Antonio-Airport, Sheraton Suites Ft. Lauderdale-Cypress Creek, Doubletree Guest Suites in Raleigh/Durham and Tampa-Rocky Point, and the Embassy Suites hotels in Boca Raton and St. Paul. The purchase price represents a 6.8% cap rate for the portfolio, based on 2011 net operating income. The proceeds were used to repay debt and a portion of the accrued preferred dividends.

In July, we agreed to sell an additional non-strategic hotel (Embassy Suites-Anaheim- North) for gross proceeds of $25.5 million. We expect the sale to close in August.

As previously announced, we will sell 39 hotels as part of our portfolio repositioning plan. To date, we have sold 15 hotels and expect to complete the sale of one more in August. We are currently marketing nine hotels for sale and expect to generate approximately $220 million in gross proceeds from selling these hotels (which is unchanged from prior expectations). We expect to bring the remaining 14 hotels to market in late 2012 or in early 2013. We will use the proceeds from selling the hotels to continue reducing debt, pay the remaining accrued preferred dividends, build a sound and flexible balance sheet, and improve long-term FFO and stockholder value.

Capital Expenditures:

During the quarter, we spent $32.5 million on capital improvements at our operating hotels (including our pro rata share of joint venture expenditures).

During 2012, we anticipate spending approximately $85 million on improvements and renovations, a majority of which is focused on 10 hotels, including four of our largest properties. We expect to spend an additional $35 million on value-enhancing redevelopment projects at three hotels: Morgans, Embassy Suites-Myrtle Beach-Oceanfront Resort, and the Fairmont Copley Plaza. Please see page 12 of this release for more detail on renovations.

As of today, we had completed work at nine of the 10 hotels that were undergoing renovation and redevelopment. In July, we completed the redevelopment at The Fairmont Copley Plaza, when the food and beverage areas were completed (guest rooms and corridors were completed in April). RevPAR at this hotel increased 11.8% in June compared to the prior year period, driven by a 15.1% increase in ADR.

The redevelopment of the 4+ star Knickerbocker hotel, located in midtown Manhattan, is progressing as planned. We have spent $12 million to date for the redevelopment in excess of the acquisition costs. The project timeline and budget remain on schedule. The core and shell work began in June 2012, and the hotel is scheduled to open in late 2013.

Balance Sheet:

At June 30, 2012, we had $1.5 billion of consolidated debt, with an average interest rate of 7.6% and weighted average maturity of five years. We had $64.1 million of cash and cash equivalents on hand and had $20 million drawn on our $225 million line of credit. During the second quarter, we used $73 million of sales proceeds to repay debt and fund related costs.

On June 29, we declared dividends on our Series A Cumulative Convertible Preferred Stock of $1.9975 per share and our Series C Cumulative Redeemable Preferred Stock of $2.05 per depositary share, which will be paid July 31. In conjunction with the current quarterly dividend, the payment includes $1.51 per share and $1.55 per depositary share, respectively, of accrued dividends in arrears, which represents $30 million of the $67.7 million outstanding. We expect to pay the remaining accrued dividends during 2012 using proceeds from future asset sales.

Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer, said, “We continue to make progress in strengthening our balance sheet by reducing leverage and refinancing existing debt to reduce our average interest rate and stagger debt maturities. For example, we are currently pursuing the refinancing of the $108 million mortgage loan that bears interest at 9.0% and is scheduled to mature in 2014. We expect the new loan will have a significantly lower interest rate and further lengthen and stagger our maturity profile. In addition, we anticipate repaying the outstanding $88 million balance remaining on the CMBS loan that matures in 2013, eliminating our lone debt maturity through 2013. We remain committed to reducing our leverage to 4.5 times by mid-2015 through asset sales and future earnings growth, as well as to significantly lowering our cost of borrowing.”

Outlook:

We are increasing our 2012 operating outlook to reflect second quarter results and higher RevPAR growth for the second half of the year. For guidance purposes, we continue to assume the sale of 12 hotels (nine currently marketed for sale, one scheduled to be sold in August, and two additional for which we have received unsolicited offers) during 2012, and our guidance reflects the updated timing of those sales. The sale of the Embassy Suites-Anaheim-North is assumed to occur in August and the sale of two hotels under contract are assumed to be sold in September. For the 9 remaining hotels, the low-end of our outlook now assumes the sales occur near the end of the third quarter. The high-end of our outlook now assumes the sales occur near the end of the fourth quarter.

The following table reconciles our 2012 Adjusted EBITDA outlook (in millions):



Low
Mid
High
Previous Adjusted EBITDA Outlook
$ 192

$ 199

$ 206
Improved Operations
3

2

1

Updated timing of Asset Sales (12 hotels)


4



3



2

Current Adjusted EBITDA Outlook


$199



$ 204



$ 209




The following table reconciles to 2012 Same-store Adjusted EBITDA (in millions):

Current Adjusted EBITDA Outlook
$ 199

$ 204

$ 209
Discontinued Operations(a)

(28 )

(30 )

(32 )
Same-store Adjusted EBITDA (57 hotels)
$ 171

$ 174

$ 177













(a) EBITDA for assets sold/expected to sell from January 1, 2012, through the date of sale/expected sale.

Based on the above assumptions for 2012, we anticipate:

  • Same-store RevPAR to increase between 5.5% and 7.0%;
  • Adjusted EBITDA to be between $199 million and $209 million;
  • Adjusted FFO per share to be between $0.21 and $0.28;
  • Net loss attributable to FelCor to be between $58 million and $53 million; and
  • Interest expense, including pro rata share of joint ventures, to be between $129 million and $131 million.

About FelCor:

FelCor, a real estate investment trust, is the nation’s largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 70 properties located in major markets throughout 22 states. FelCor’s diversified portfolio of hotels and resorts are flagged under global brands such as: Doubletree ®, Embassy Suites Hotels®, Hilton®, Fairmont®, 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 second quarter earnings Conference Call on Wednesday, July 25, 2012 at 10:00 a.m. (Central Time). The conference call will be Webcast simultaneously on FelCor’s Web site at www.felcor.com. Interested investors and other parties who wish to access the call can 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 also 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 an 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 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 FelCor’s financial position as of and for the six month period ended June 30, 2012.

TABLE OF CONTENTS



Page
Consolidated Statements of Operations(a)
8
Consolidated Balance Sheets(a)
9
Consolidated Debt Summary
10
Schedule of Encumbered Hotels
11
Capital Expenditures
12

Hotels Under Renovation or Redevelopment During 2012


12
Supplemental Financial Data
13
Discontinued Operations
13
Hotel Portfolio Composition
14
Detailed Operating Statistics by Brand
15
Comparable Hotels Operating Statistics for Our Top Markets
16

Historical Operating Statistics


17

Non-GAAP Financial Measures
17

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






Consolidated Statements of Operations

(in thousands, except per share data)













Three Months Ended
Six Months Ended


June 30,
June 30,



2012


2011


2012


2011
Revenues:







Hotel operating revenue:







Room
$ 200,186

$ 185,016

$ 373,202

$ 345,353
Food and beverage

40,616


40,291


77,140


75,108
Other operating departments

15,243


14,085


26,870


25,955
Other revenue

956


1,011


1,231


1,236
Total revenues

257,001


240,403


478,443


447,652
Expenses:







Hotel departmental expenses:







Room

51,268


48,495


99,001


91,847
Food and beverage

31,537


29,719


61,286


57,099
Other operating departments

6,167


6,425


11,901


12,083
Other property-related costs

65,508


62,151


129,943


122,683
Management and franchise fees

11,969


11,077


22,335


20,732
Taxes, insurance and lease expense

25,192


22,341


47,505


42,119
Corporate expenses

6,167


6,910


14,379


16,447
Depreciation and amortization

31,789


30,957


63,362


61,744
Impairment loss

1,335


7,003


1,335


7,003
Other expenses

800


1,616


1,763


2,247
Total operating expenses

231,732


226,694


452,810


434,004
Operating income

25,269


13,709


25,633


13,648
Interest expense, net

(31,647 )

(34,347 )

(62,688 )

(67,116 )
Debt extinguishment

(162 )

(23,660 )

(169 )

(23,905 )
Gain on involuntary conversion, net




21





171
Loss before equity in income (loss) from

unconsolidated entities



(6,540 )

(44,277 )

(37,224 )

(77,202 )
Equity in income (loss) from unconsolidated entities

1,362


31


1,138


(1,552 )
Loss from continuing operations

(5,178 )

(44,246 )

(36,086 )

(78,754 )
Discontinued operations

17,206


1,849


19,253


4,631
Net income (loss)

12,028


(42,397 )

(16,833 )

(74,123 )
Net loss (income) attributable to noncontrolling

interests in other partnerships



(148 )

(51 )

54


(109 )
Net loss (income) attributable to redeemable

noncontrolling interests in FelCor LP



(11 )

183


185


303
Net income (loss) attributable to FelCor

11,869


(42,265 )

(16,594 )

(73,929 )
Preferred dividends

(9,678 )

(9,678 )

(19,356 )

(19,356 )
Net income (loss) attributable to FelCor common

stockholders


$ 2,191

$ (51,943 )
$ (35,950 )
$ (93,285 )
Basic and diluted per common share data:







Loss from continuing operations
$ (0.12 )
$ (0.44 )
$ (0.45 )
$ (0.90 )
Net income (loss)
$ 0.02

$ (0.42 )
$ (0.29 )
$ (0.85 )
Basic and diluted weighted average common

shares outstanding



123,638


122,992


123,651


109,249





Consolidated Balance Sheets

(in thousands)








June 30,
December 31,



2012


2011
Assets



Investment in hotels, net of accumulated depreciation of $948,838 and $987,895 at June 30, 2012 and December 31, 2011, respectively


$ 1,876,168

$ 1,953,795
Hotel development

130,727


120,163
Investment in unconsolidated entities

59,939


70,002
Cash and cash equivalents

64,099


93,758
Restricted cash

83,777


84,240

Accounts receivable, net of allowance for doubtful accounts of $368 and $333 at June 30, 2012 and December 31, 2011, respectively



30,987


27,135

Deferred expenses, net of accumulated amortization of $14,588 and $13,119 at June 30, 2012 and December 31, 2011, respectively



26,303


29,772
Other assets

30,833


24,363
Total assets
$ 2,302,833

$ 2,403,228
Liabilities and Equity



Debt, net of discount of $27,026 and $32,069 at June 30, 2012 and December 31, 2011, respectively


$ 1,534,752

$ 1,596,466
Distributions payable

76,293


76,293
Accrued expenses and other liabilities

135,954


140,548
Total liabilities

1,746,999


1,813,307
Commitments and contingencies



Redeemable noncontrolling interests in FelCor LP, 627 and 636 units

issued and outstanding at June 30, 2012 and December 31, 2011,

respectively



3,320


3,026
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

June 30, 2012 and December 31, 2011



309,362


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

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

June 30, 2012 and December 31, 2011



169,412


169,412
Common stock, $0.01 par value, 200,000 shares authorized and

124,227 shares issued at June 30, 2012, and 124,281 shares

issued at December 31, 2011



1,242


1,243
Additional paid-in capital

2,353,397


2,353,251
Accumulated other comprehensive income

25,729


25,738
Accumulated deficit

(2,333,621 )

(2,297,468 )
Total FelCor stockholders’ equity

525,521


561,538
Noncontrolling interests in other partnerships

26,993


25,357
Total equity

552,514


586,895
Total liabilities and equity
$ 2,302,833

$ 2,403,228











Consolidated Debt Summary

(dollars in thousands)














Encumbered Hotels
Interest Rate

(%)


Maturity Date


June 30, 2012

December 31,
2011

Line of credit
10


L + 4.50

August 2014(a)
$ 20,000

$
Hotel mortgage debt











Mortgage debt
7


L + 5.10

(b)


April 2015
186,669

202,982
Mortgage debt
7


9.02


April 2014
107,889

109,044
Mortgage debt
6


L + 2.20

May 2013(c)
88,395

156,398
Mortgage debt
5
(d)
6.66


June - August 2014
66,419

67,375
Mortgage debt
1


5.81


July 2016
10,640

10,876
Senior notes











Senior secured notes
6


6.75


June 2019
525,000

525,000
Senior secured notes(e)
11


10.00


October 2014
464,880

459,931
Other(f)



L + 1.50

December 2012
64,860

64,860
Total
53







$ 1,534,752

$ 1,596,466

(a) Our $225 million line of credit can be extended for one year (to 2015), subject to satisfying certain conditions.

(b) LIBOR (for this loan) is subject to a 3% floor. We purchased an interest rate cap ($203 million notional amount) that caps LIBOR at 5.4% and expires May 2013.

(c) This loan can be extended for six months, subject to satisfying certain conditions.

(d) The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.

(e) These notes have $492 million in aggregate principal outstanding ($144 million and $96,000 in aggregate principal amount was redeemed in June 2011 and January 2012, respectively) and were initially sold at a discount that provided an effective yield of 12.875% before transaction costs.

(f) This loan is related to our Knickerbocker development project and is fully secured by restricted cash and a mortgage. Because we were able to assume an existing loan when we purchased this hotel, we were not required to pay any local mortgage recording tax. When that loan is transferred to a new lender and made part of our construction loan, we expect to only pay such tax to the extent of the incremental principal amount of the construction loan.






Schedule of Encumbered Hotels

(dollars in millions)








June 30, 2012



Consolidated Debt


Balance
Encumbered Hotels
Line of credit

$ 20


Charlotte SouthPark - DT, Dana Point - DTGS, Houston Medical Center - HI, Myrtle Beach - HLT, Mandalay Beach - ES, Nashville Airport - ES, Philadelphia Independence Mall - HI, Pittsburgh University Center - HI, Santa Barbara Goleta - HI and Santa Monica at the Pier - HI
Mortgage debt

$ 187


Atlanta Buckhead - ES, Atlanta Galleria - SS, Boston Marlboro - ES, Burlington - SH, Orlando South - ES, Philadelphia Society Hill - SH and South San Francisco - ES

Mortgage debt

$ 108


Baton Rouge - ES, Birmingham - ES, Ft. Lauderdale - ES, Miami Airport - ES, Milpitas - ES, Minneapolis Airport - ES and Napa Valley - ES
CMBS debt

$ 88


Anaheim - ES, Bloomington - ES, Charleston Mills House - HI, Deerfield Beach - ES, Jacksonville - ES and Dallas Love Field - ES

CMBS debt(a)

$ 66


Atlanta Airport - ES, Austin - DTGS, BWI Airport - ES, Orlando Airport - HI and Phoenix Biltmore - ES
CMBS debt

$ 11


Indianapolis North - ES
Senior secured notes

$ 525


Boston Copley - FMT, Los Angeles International Airport - ES, Indian Wells Esmeralda Resort & Spa - REN, St. Petersburg Vinoy Resort & Golf Club - REN, Morgans and Royalton
Senior secured notes

$ 465


Atlanta Airport - SH, Boston Beacon Hill - HI, Myrtle Beach Resort - ES, Nashville Opryland -Airport - HI, New Orleans French Quarter - HI, Orlando Walt Disney World® - DTGS, San Diego on the Bay - HI, San Francisco Waterfront - ES, San Francisco Fisherman’s Wharf - HI, San Francisco Union Square - MAR and Toronto Airport - HI

(a) The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.






Capital Expenditures

(in thousands)








Three Months Ended
Six Months Ended


June 30,
June 30,



2012


2011


2012


2011
Improvements and additions to majority-owned hotels
$ 31,964

$ 20,206

$ 73,349

$ 35,244

Partners’ pro rata share of additions to consolidated

















joint venture hotels

(270 )

(251 )

(630 )

(440 )
Pro rata share of additions to unconsolidated hotels

803


339


1,365


1,472
Total additions to hotels(a)
$ 32,497

$ 20,294

$ 74,084

$ 36,276

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









Hotels Under Renovation or Redevelopment During 2012











Primary Areas


Start Date


End Date


Renovations






Philadelphia Society Hill-SH
guest rooms, corridors, public areas, meeting space, re-concept F&B
Nov-2011
Apr-2012
Mandalay Beach-ES
guestrooms, corridors, lobby, exterior
Oct-2011
May-2012
Napa Valley-ES
guestrooms, corridors, public areas
Nov-2011
Apr-2012 (a)
Austin-DTGS
guestrooms, corridors, public areas, entrance, F&B upgrade
Jun-2011
Feb-2012
Boston Beacon Hill-HI
guestrooms, lobby, F&B
Dec-2011
Apr-2012
Charlotte SouthPark-DT
guestrooms, corridors, exterior, lobby, upgrade F&B
Nov-2011
May-2012
Pittsburgh University Center-HI
guestrooms, public areas, meeting space
Dec-2011
Mar-2012

Redevelopments






Boston Copley Plaza-FMT
guestrooms, corridors, public areas, meeting space, fitness area, re-concept F&B
Nov-2011
July-2012
Myrtle Beach Oceanfront Resort-ES
public space, lobby, re-concept F&B
Oct-2011
Apr-2012
Morgans

guestroom addition, public areas, fitness area, re-concept F&B


Feb-2012
Nov-2012

(a) The public area renovation will begin in the fourth quarter 2012.






Supplemental Financial Data

(in thousands, except per share information)








June 30,
December 31,
Total Enterprise Value


2012


2011
Common shares outstanding

124,227


124,281
Units outstanding

627


636
Combined shares and units outstanding

124,854


124,917
Common stock price
$ 4.70

$ 3.05
Market capitalization
$ 586,814

$ 380,997
Series A preferred stock

309,362


309,362
Series C preferred stock

169,412


169,412
Consolidated debt

1,534,752


1,596,466
Noncontrolling interests of consolidated debt

(2,853 )

(2,894 )
Pro rata share of unconsolidated debt

74,698


75,178
Cash and cash equivalents

(64,099 )

(93,758 )
Total enterprise value (TEV)
$ 2,608,086

$ 2,434,763

Discontinued Operations
(in thousands)

Discontinued operations include the results of operations for six hotels sold in 2012 and eight hotels sold in 2011. Condensed financial information for the hotels included in discontinued operations is as follows:



Three Months Ended
Six Months Ended


June 30,
June 30,



2012


2011


2012


2011
Operating revenue
$ 7,894

$ 25,775

$ 22,255

$ 56,097
Operating expenses

(6,233 )

(29,672 )

(17,825 )

(56,128 )
Operating income (loss)

1,661


(3,897 )

4,430


(31 )
Interest expense, net

(531 )

(864 )

(1,253 )

(1,941 )
Debt extinguishment

(643 )

(50 )

(643 )

(57 )

Gain on sale, net of tax



16,719


6,660


16,719


6,660
Income from discontinued operations

17,206


1,849


19,253


4,631
Depreciation and amortization




4,225


1,419


9,109
Interest expense, net

531


864


1,253


1,941
EBITDA from discontinued operations

17,737


6,938


21,925


15,681
Impairment loss




5,301





5,301
Debt extinguishment

643


50


643


57
Gain on sale, net of tax

(16,719 )

(6,660 )

(16,719 )

(6,660 )
Adjusted EBITDA from discontinued operations
$ 1,661

$ 5,629

$ 5,849

$ 14,379










Hotel Portfolio Composition


The following table illustrates the distribution of same-store hotels.











Brand



Hotels
Rooms

% of Total
Rooms


2011 Hotel
EBITDA
(in thousands)(a)

Embassy Suites Hotels
21
5,743
29
$ 79,977
Holiday Inn
9
3,120
16

32,535
Doubletree and Hilton
5
1,206
6

15,347
Sheraton and Westin
4
1,604
8

15,198
Renaissance and Marriott
3
1,321
7

11,354
Fairmont
1
383
1

5,699
Morgans/Royalton
2
282
1

3,845
Core hotels
45
13,659
68

163,955
Non-strategic hotels
24
6,393
32

56,105
Same-store hotels
69
20,052
100
$ 220,060










Market










San Francisco area
4
1,637
8
$ 16,808
Boston
3
916
5

14,027
Los Angeles area
3
677
3

13,727
South Florida
3
923
5

13,113
New York area
4
817
4

9,700
Philadelphia
2
728
4

8,805
Atlanta
3
952
5

8,418
Myrtle Beach
2
640
3

7,860
Dallas
2
784
4

7,151
San Diego
1
600
3

6,142
Orlando
2
473
2

5,809
Other markets
16
4,512
22

52,395
Core hotels
45
13,659
68

163,955
Non-strategic hotels
24
6,393
32

56,105
Same-store hotels
69
20,052
100
$ 220,060










Location










Urban
16
4,931
25
$ 64,841
Airport
10
3,267
16

35,570
Resort
10
2,928
15

35,194
Suburban
9
2,533
12

28,350
Core hotels
45
13,659
68

163,955
Non-strategic hotels
24
6,393
32

56,105
Same-store hotels
69
20,052
100
$ 220,060

(a) Hotel EBITDA is more fully described on page 25.

The following tables set forth occupancy, ADR and RevPAR for the three and six months ended June 30, 2012 and 2011, and the percentage changes therein for the periods presented, for our same-store Consolidated Hotels included in continuing operations.




Detailed Operating Statistics by Brand






Occupancy (%)


Three Months Ended


Six Months Ended



June 30,


June 30,



2012
2011
%Variance
2012
2011
%Variance
Embassy Suites Hotels
78.6
80.1
(1.9 )
76.2
76.7
(0.7 )
Holiday Inn
81.1
80.5
0.8

74.2
73.5
1.0
Doubletree and Hilton
74.7
75.7
(1.3 )
68.8
68.2
0.8
Sheraton and Westin
70.9
70.4
0.7

64.2
68.1
(5.8 )
Renaissance and Marriott
72.1
72.8
(1.0 )
72.8
71.9
1.3
Fairmont
76.3
84.1
(9.2 )
52.0
68.6
(24.2 )
Morgans/Royalton
88.0
92.0
(4.4 )
82.0
86.0
(4.7 )
Core hotels (45)
77.5
78.4
(1.1 )
72.8
73.7
(1.3 )
Non-strategic hotels (24)
74.6
74.3
0.5

73.6
72.4
1.7
Same-store hotels (69)
76.6
77.1
(0.6 )
73.1
73.3
(0.3 )


















ADR ($)


Three Months Ended


Six Months Ended



June 30,


June 30,



2012
2011
%Variance
2012
2011
%Variance
Embassy Suites Hotels
143.26
136.30
5.1

144.46
138.28
4.5
Holiday Inn
149.16
132.42
12.6

137.46
125.33
9.7
Doubletree and Hilton
140.78
133.96
5.1

137.27
133.45
2.9
Sheraton and Westin
118.13
113.65
3.9

111.01
111.92
(0.8 )
Renaissance and Marriott
198.38
177.78
11.6

204.53
187.10
9.3
Fairmont
312.75
268.90
16.3

286.27
242.34
18.1
Morgans/Royalton
318.31
290.43
9.6

286.60
269.95
6.2
Core hotels (45)
155.22
144.03
7.8

150.32
142.26
5.7
Non-strategic hotels (24)
119.32
115.22
3.6

120.47
115.55
4.2
Same-store hotels (69)
144.01
135.13
6.6

140.68
133.81
5.1















RevPAR ($)


Three Months Ended


Six Months Ended



June 30,


June 30,



2012
2011
%Variance
2012

2011


%Variance
Embassy Suites Hotels
112.63
109.19
3.1

110.10
106.10
3.8
Holiday Inn
121.00
106.61
13.5

102.01
92.12
10.7
Doubletree and Hilton
105.12
101.35
3.7

94.42
91.06
3.7
Sheraton and Westin
83.72
79.99
4.7

71.29
76.27
(6.5 )
Renaissance and Marriott
142.95
129.46
10.4

148.88
134.50
10.7
Fairmont
238.79
226.12
5.6

148.87
166.30
(10.5 )
Morgans/Royalton
280.12
267.32
4.8

234.95
232.20
1.2
Core hotels (45)
120.25
112.86
6.5

109.43
104.91
4.3
Non-strategic hotels (24)
89.07
85.62
4.0

88.68
83.67
6.0
Same-store hotels (69)
110.26
104.13
5.9

102.78
98.11
4.8



Comparable Hotels Operating Statistics for Our Top Markets






Occupancy (%)


Three Months Ended


Six Months Ended



June 30,


June 30,



2012
2011
%Variance
2012
2011
%Variance
San Francisco area
83.7
84.2
(0.6 )
78.7
76.8
2.6
Boston
80.7
84.2
(4.2 )
64.9
76.4
(15.2 )
Los Angeles area
81.7
82.3
(0.7 )
81.4
77.3
5.3
South Florida
76.9
78.3
(1.8 )
81.5
81.8
(0.4 )
New York area
83.7
84.1
(0.5 )
76.0
76.4
(0.6 )
Philadelphia
78.4
82.4
(4.8 )
63.6
70.2
(9.4 )
Atlanta
77.5
79.4
(2.4 )
74.7
77.1
(3.1 )
Myrtle Beach
74.3
72.8
2.1

58.6
56.9
3.0
Dallas
66.4
64.4
3.2

67.4
67.0
0.6
San Diego
81.3
79.3
2.5

80.5
76.6
5.1
Orlando
82.3
86.8
(5.2 )
83.6
85.8
(2.6 )
Other markets
74.1
74.8
(0.9 )
70.5
71.2
(1.0 )
Core hotels (45)
77.5
78.4
(1.1 )
72.8
73.7
(1.3 )
Non-strategic hotels (24)
74.6
74.3
0.5

73.6
72.4
1.7
Same-store hotels (69)
76.6
77.1
(0.6 )
73.1
73.3
(0.3 )


ADR ($)


Three Months Ended


Six Months Ended



June 30,


June 30,



2012
2011
%Variance
2012
2011
%Variance
San Francisco area
166.10
141.75
17.2

161.38
139.24
15.9
Boston
229.46
204.13
12.4

199.83
178.61
11.9
Los Angeles area
154.44
146.31
5.6

147.89
145.77
1.5
South Florida
137.36
136.74
0.4

162.07
156.08
3.8
New York area
212.20
199.20
6.5

200.73
192.17
4.5
Philadelphia
166.75
140.67
18.5

148.90
133.90
11.2
Atlanta
107.12
103.22
3.8

108.91
104.98
3.7
Myrtle Beach
158.37
154.56
2.5

139.29
134.64
3.5
Dallas
105.02
106.50
(1.4 )
106.25
114.77
(7.4 )
San Diego
131.95
113.59
16.2

126.62
117.64
7.6
Orlando
130.57
129.35
0.9

137.24
138.24
(0.7 )
Other markets
148.89
141.09
5.5

147.77
141.23
4.6
Core hotels (45)
155.22
144.03
7.8

150.32
142.26
5.7
Non-strategic hotels (24)
119.32
115.22
3.6

120.47
115.55
4.2
Same-store hotels (69)
144.01
135.13
6.6

140.68
133.81
5.1


RevPAR ($)


Three Months Ended


Six Months Ended



June 30,


June 30,



2012
2011
%Variance
2012
2011
%Variance
San Francisco area
138.97
119.28
16.5

127.05
106.86
18.9
Boston
185.16
171.97
7.7

129.62
136.54
(5.1 )
Los Angeles area
126.21
120.38
4.8

120.31
112.63
6.8
South Florida
105.64
107.12
(1.4 )
132.04
127.65
3.4
New York area
177.59
167.52
6.0

152.50
146.87
3.8
Philadelphia
130.76
115.84
12.9

94.63
93.93
0.7
Atlanta
82.99
81.95
1.3

81.41
80.99
0.5
Myrtle Beach
117.65
112.44
4.6

81.60
76.58
6.6
Dallas
69.73
68.55
1.7

71.66
76.96
(6.9 )
San Diego
107.28
90.14
19.0

101.97
90.11
13.2
Orlando
107.52
112.31
(4.3 )
114.67
118.62
(3.3 )
Other markets
110.33
105.49
4.6

104.18
100.55
3.6
Core hotels (45)
120.25
112.86
6.5

109.43
104.91
4.3
Non-strategic hotels (24)
89.07
85.62
4.0

88.68
83.67
6.0
Same-store hotels (69)
110.26
104.13
5.9

102.78
98.11
4.8



Historical Operating Statistics






Occupancy (%)


Q3 2011
Q4 2011
2011
Q1 2012
Q2 2012
Core hotels (45)
77.4
67.2
73.0
68.1
77.5
Non-strategic hotels (24)
70.5
66.6
70.5
72.6
74.6
Same-store hotels (69)
75.2
67.0
72.2
69.6
76.6
























ADR ($)


Q3 2011
Q4 2011
2011
Q1 2012
Q2 2012
Core hotels (45)
143.37
144.55
143.10
144.75
155.22
Non-strategic hotels (24)
111.41
113.72
114.07
121.64
119.32
Same-store hotels (69)
133.76
134.92
134.06
137.02
144.01
























RevPAR ($)


Q3 2011
Q4 2011
2011
Q1 2012
Q2 2012
Core hotels (45)
111.02
97.11
104.43
98.62
120.25
Non-strategic hotels (24)
78.53
75.70
80.37
88.29
89.07
Same-store hotels (69)
100.60
90.38
96.75
95.31
110.26

Non-GAAP Financial Measures

We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, same-store 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 Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)






Three Months Ended June 30,


2012

2011


Dollars
Shares

Per
Share
Amount


Dollars Shares

Per
Share
Amount

Net income (loss)
$ 12,028





$ (42,397 )



Noncontrolling interests

(159 )




132




Preferred dividends

(9,678 )




(9,678 )



Net income (loss) attributable to

FelCor common stockholders



2,191





(51,943 )



Less: Undistributed earnings

allocated to unvested restricted stock



(10 )









Numerator for basic and diluted

income (loss) available to

common stockholders



2,181

123,638
$ 0.02

(51,943 )
122,992
$ (0.42 )
Depreciation and amortization

31,789



0.26

30,957


0.25
Depreciation, discontinued

operations and unconsolidated

entities



2,828



0.02

7,456


0.06
Impairment loss

1,335



0.01

7,003


0.06
Impairment loss, discontinued

operations









5,301


0.04
Gain on sale of hotels

(16,719 )


(0.14 )
(6,660 )

(0.05 )
Gain on involuntary conversion







(21 )


Noncontrolling interests in FelCor LP

11

628



(183 )
433
(0.01 )
Undistributed earnings allocated

to unvested restricted stock



10









Conversion of unvested restricted stock



278







FFO

21,435

124,544

0.17

(8,090 )
123,425
(0.07 )
Acquisition costs

59





827


0.01
Debt extinguishment, including

discontinued operations



805



0.01

23,710


0.19
Pre-opening costs

43









Conversion of unvested restricted stock









855

Adjusted FFO
$ 22,342

124,544
$ 0.18

$ 16,447

124,280
$ 0.13




Reconciliation of Net Loss to FFO and Adjusted FFO

(in thousands, except per share data)







Six Months Ended June 30,


2012


2011


Dollars
Shares

Per
Share
Amount


Dollars
Shares

Per
Share
Amount

Net loss
$ (16,833 )




$ (74,123 )



Noncontrolling interests

239






194




Preferred dividends

(19,356 )





(19,356 )



Net loss attributable to

FelCor common stockholders



(35,950 )
123,651
$ (0.29 )

(93,285 )
109,249
$ (0.85 )
Depreciation and amortization

63,362



0.51


61,744



0.57
Depreciation, discontinued

operations and unconsolidated

entities



7,084



0.06


15,565



0.14

Gain on involuntary conversion










(171 )



Impairment loss

1,335



0.01


7,003



0.06
Impairment loss, discontinued

operations










5,301



0.05
Gain on sale of hotels

(16,719 )


(0.14 )

(6,660 )


(0.06 )
Noncontrolling interests in

FelCor LP



(185 )
632




(303 )
359

(0.01 )
Conversion of unvested restricted stock



233









FFO

18,927

124,516

0.15


(10,806 )
109,608

(0.10 )
Acquisition costs

97






946



0.01
Debt extinguishment, including

discontinued operations



812



0.01


23,961



0.22
Severance costs

380











Pre-opening costs

43











Conversion of unvested restricted stock










860


Adjusted FFO
$ 20,259

124,516
$ 0.16

$ 14,101

110,468
$ 0.13






Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and
Same-store Adjusted EBITDA

(in thousands)








Three Months Ended
Six Months Ended


June 30,
June 30,



2012


2011


2012


2011
Net income (loss)
$ 12,028

$ (42,397 )
$ (16,833 )
$ (74,123 )
Depreciation and amortization

31,789


30,957


63,362


61,744
Depreciation, discontinued operations and

unconsolidated entities



2,828


7,456


7,084


15,565
Interest expense

31,682


34,400


62,771


67,209
Interest expense, discontinued operations and

unconsolidated entities



1,229


1,990


2,627


4,197
Amortization of stock compensation

1,242


1,774


2,538


3,577
Noncontrolling interests in other partnerships

(148 )

(51 )

54


(109 )
EBITDA

80,650


34,129


121,603


78,060
Impairment loss

1,335


7,003


1,335


7,003
Impairment loss, discontinued operations




5,301





5,301
Debt extinguishment, including discontinued

operations



805


23,710


812


23,961
Acquisition costs

59


827


97


946
Gain on sale of hotels

(16,719 )

(6,660 )

(16,719 )

(6,660 )
Gain on involuntary conversion




(21 )




(171 )
Severance costs







380



Pre-opening costs

43





43



Adjusted EBITDA

66,173


64,289


107,551


108,440
Adjusted EBITDA from discontinued operations

(1,661 )

(5,629 )

(5,849 )

(14,379 )
Adjusted EBITDA from acquired hotels(a)




875





165
Same-store Adjusted EBITDA
$ 64,512

$ 59,535

$ 101,702

$ 94,226

(a) For same-store metrics, we have included the two hotels acquired in May 2011 for all periods presented.






Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)








Three Months Ended
Six Months Ended


June 30,
June 30,



2012


2011

2012

2011
Same-store operating revenue:







Room
$ 200,186

$ 189,033

373,202

354,362
Food and beverage

40,616


40,962

77,140

77,004
Other operating departments

15,243


14,280

26,870

26,504
Same-store operating revenue

256,045


244,275

477,212

457,870
Same-store operating expense:







Room

51,268


49,865

99,001

95,663
Food and beverage

31,537


30,535

61,286

59,507
Other operating departments

6,167


6,481

11,901

12,247
Other property related costs

65,508


63,372

129,943

126,142
Management and franchise fees

11,969


11,224

22,335

21,076
Taxes, insurance and lease expense

15,889


13,995

30,841

27,852
Same-store operating expense

182,338


175,472

355,307

342,487
Hotel EBITDA
$ 73,707

$ 68,803

$ 121,905

$ 115,383
Hotel EBITDA Margin

28.8 %

28.2 %
25.5 %
25.2 %















Reconciliation of Same-store Operating Revenue and Same-store Operating Expense to
Total Revenue, Total Operating Expense and Operating Income

(in thousands)








Three Months Ended
Six Months Ended


June 30,
June 30,


2012
2011
2012
2011
Same-store operating revenue(a)
$ 256,045

$ 244,275

$ 477,212

$ 457,870
Other revenue
956

1,011

1,231

1,236
Revenue from acquired hotels


(4,883 )


(11,454 )
Total revenue
257,001

240,403

478,443

447,652
Same-store operating expense(a)
182,338

175,472

355,307

342,487
Consolidated hotel lease expense(b)
11,236

10,497

20,429

18,801
Unconsolidated taxes, insurance and

lease expense


(1,933 )
(1,753 )
(3,765 )
(3,436 )
Corporate expenses
6,167

6,910

14,379

16,447
Depreciation and amortization
31,789

30,957

63,362

61,744
Impairment loss
1,335

7,003

1,335

7,003
Expenses from acquired hotels(a)


(4,008 )


(11,289 )
Other expenses
800

1,616

1,763

2,247
Total operating expenses
231,732

226,694

452,810

434,004
Operating income
$ 25,269

$ 13,709

$ 25,633

$ 13,648

(a) For same-store metrics, we have included the two hotels acquired in May 2011 for all periods presented.

(b) Consolidated hotel lease expense represents the percentage lease expense of our 51% owned operating lessees. The offsetting percentage lease revenue is included in equity in income from unconsolidated entities.

Reconciliation of Forecasted Net Loss to Forecasted Adjusted FFO and
Adjusted EBITDA

(in millions, except per share and unit data)






Full Year 2012 Guidance


Low Guidance
High Guidance


Dollars

Per Share
Amount(a)


Dollars

Per Share
Amount(a)

Net loss attributable to FelCor(b)
$ (58 )


$ (53 )

Preferred dividends
(39 )


(39 )

Net loss attributable to FelCor common stockholders
(97 )
$ (0.78 )
(92 )
$ (0.74 )
Gain on sale of hotels
(17 )


(17 )

Depreciation(c)
138



141




Impairment
1



1


FFO
25

$ 0.20

33



$ 0.27
Debt extinguishment
1



1


Adjusted FFO
$ 26

$ 0.21

$

34



$ 0.28









Net loss attributable to FelCor(b)
(58 )


(53 )

Depreciation(c)
138



141


Interest expense(c)
129



131


Amortization expense
5



5


EBITDA
214



224


Gain on sale of hotels
(17 )


(17 )

Impairment
1



1


Debt extinguishment
1



1


Adjusted EBITDA
$ 199



$ 209


(a) Weighted average shares and units are 124.7 million.

(b) For guidance, we have assumed no gains or losses on future asset sales.

(c) Includes pro rata portion of unconsolidated entities.

Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company’s operations. These supplemental measures are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a hotel REIT’s performance and should be considered along with, but not as an alternative to, net income (loss) attributable to FelCor as a measure of our operating performance.

FFO and EBITDA

The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income or loss attributable to parent (computed in accordance with GAAP), excluding gains or losses from sales of property, plus depreciation, amortization and impairment losses. FFO for unconsolidated partnerships and joint ventures are calculated 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 attributable to parent (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 items, including but not limited to those 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 attributable to FelCor, EBITDA and FFO, is beneficial to an investor’s better understanding of our operating performance.

  • Gains and losses related to extinguishment of debt and interest rate swaps - We exclude gains and losses related to 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.
  • 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 depreciable assets and impairment losses 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 and impairment losses represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.

Hotel EBITDA and Hotel EBITDA Margin

Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and brand/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 that we use in our financial and operational decision-making. Additionally, using these measures facilitates comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin by eliminating all revenues and expenses from continuing operations not directly associated with hotel operations, including corporate-level expenses, depreciation and amortization, 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 into the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis.

We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, 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 diminishes 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 noncontrolling interests 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 Consolidated Hotels. Hotel EBITDA and Hotel EBITDA margins are presented on a same-store basis.

Use and Limitations of Non-GAAP Measures

Our management and Board of Directors use FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. 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. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and 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 most comparable 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. These non-GAAP financial measures 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 a single financial measure.



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Contact: 

FelCor Lodging Trust Incorporated
Stephen A. Schafer, 972-444-4912
Vice President Strategic Planning & Investor Relations
sschafer@felcor.com
 

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Also See: FelCor Lodging Trust Posts 1st Qtr 2012 Net Loss of $28.9 million Compared to Net Loss of $31.7 million in the Year-ago Quarter; RevPAR for its 69 Hotels Increased 3.6% for the Quarter / Hotel Operating Statistics / May 2012

FelCor Lodging Trust Posts 4th Qtr 2011 Net Loss of $42.8 million Compared to Net Loss of $103.1 million in the Year-ago Quarter; RevPAR for its 43 Hotels Increased 4.8% for the Quarter / Hotel Operating Statistics / February 2012

FelCor Lodging Trust Posts 3rd Qtr 2011 Net Loss of $23.4 million Compared to Net Loss of $89.3 million in the Year-ago Quarter; RevPAR for its 67 Hotels Increased 5% for the Quarter / Hotel Operating Statistics / November 2011

FelCor Lodging Trust Posts 2nd Qtr 2011 Net Loss of $42.3 million Compared to to Net Income of $21.6 million in the Year-ago Quarter; RevPAR for its 67 Hotels Increased 6.2% for the Quarter / Hotel Operating Statistics / August 2011

FelCor Lodging Trust Posts 1st Qtr 2011 Loss of $41.3 million Compared to a Loss of $72 million in the Year-ago Quarter; RevPAR for its 80 Hotels Increased 6.3% for the Quarter / Hotel Operating Statistics / April 2011

FelCor Lodging Trust Posts 4th Qtr 2010 Loss of $103.1 million Compared to a Loss of $60.4 million in the Prior Year Period; Total Revenues Increase to $232 million, compared to $219 million in the Year-ago Period / Hotel Operating Statistics / February 2011

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 / February 2010

FelCor Lodging Trust Reports 4th Qtr Net Loss of $98.1 million Compared to Prior Year Net Loss of $13.0 million; Suspends Common Dividend, Postpones Any Further Redevelopment Spending / February 2009
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