Hotel Online
News for the Hospitality Executive


advertisement
 

FelCor Lodging Trust Posts 4th Qtr 2012 Net Loss of $93 million
Compared
to Net Loss of $33 million in the Year-ago Quarter;
RevPAR for its 65 Hotels Increased 4.8% for the Quarter

Hotel Operating Statistics

IRVING, Texas--(February 19, 2013)--FelCor Lodging Trust Incorporated (NYSE: FCH), today reported operating results for the fourth quarter and year ended December 31, 2012.

Summary:

  • Revenue per available room (“RevPAR”) for 65 same-store hotels (45 core and 20 non-strategic) increased 4.8% for the quarter.
  • Hotel EBITDA increased 10% and Hotel EBITDA margins increased 87 basis points for the quarter.
  • Adjusted EBITDA was $42.0 million and adjusted funds from operations (“FFO”) per share was a loss of $0.01 for the quarter, both of which exceeded guidance.
  • Sold 10 hotels during 2012 for gross proceeds of $207.2 million and, as of January, launched the marketing process for all remaining non-strategic hotels for sale (excluding nine joint venture hotels).
  • Sold, in December, $525 million of 5.625% senior notes due in March 2023 and used the proceeds to repay high-cost, short-term debt.
  • Converting and repositioning eight core Holiday Inns to Wyndham-branded and managed hotels effective March 1, 2013.
  • Net loss was $93.0 million for the quarter.

Fourth Quarter Operating Results:

RevPAR for 65 same-store hotels was $95.57, a 4.8% increase compared to the same period in 2011. The increase reflects a 5.2% increase in average daily rate (“ADR”) to $142.76 and a 30 basis point decrease in occupancy to 66.9%. RevPAR for 45 core hotels increased 5.2%, while RevPAR at 20 non-strategic hotels increased 3.7%. RevPAR at the six newly-acquired and redeveloped hotels increased 8.6% during the quarter and 11.3% during December.

Commenting on operating results, Richard A. Smith, President and Chief Executive Officer of FelCor, said, “I am very pleased with our performance, as revenue, margins, FFO and EBITDA exceeded our expectations. Lodging fundamentals remain favorable, despite slow economic growth. The favorable imbalance between demand and supply growth provides us the ability to increase average rates, creating strong EBITDA growth. With supply growth lower in our markets than the US on average, our portfolio is well-positioned to continue outperforming our peers. RevPAR growth at the newly-acquired, redeveloped and renovated hotels continues to significantly exceed the industry average, and we expect that to continue throughout 2013.”

Added Mr. Smith, “Over the past year, we have delivered on our strategic commitments to drive operational improvement, sell non-strategic assets and strengthen our balance sheet. Our asset sale program is progressing as expected, and in 2013 we expect to sell a majority of the hotels currently marketed for sale. As we sell hotels and repay debt, we will further improve our earnings and stockholder value.”

Hotel EBITDA was $50.5 million, 9.5% higher than the $46.1 million in 2011. Hotel EBITDA and other same-store metrics reflect 65 same-store hotels.

Same-store Adjusted EBITDA was $41.2 million, 10.5% higher than the $37.2 million for the same period in 2011. Adjusted EBITDA (which includes Adjusted EBITDA for sold hotels prior to sale) was $42.0 million, relatively even with the same period in 2011.

Adjusted FFO was a loss of $1.5 million, or $0.01 per share, compared to a loss of $0.03 per share for the same period in 2011. Net loss attributable to common stockholders was $102.1 million (including $62.5 million of debt extinguishment charges and $31.2 million in conversion expenses, partially offset by $27.8 million in net gains from asset sales), or $0.83 per share for the quarter, compared to a net loss of $42.8 million, or $0.35 per share, for the same period in 2011.

Full Year Operating Results:

RevPAR for 65 same-store hotels was $102.80, 5.1% higher than for 2011, driven by a 5.7% increase in ADR to $142.46. RevPAR for our 45 core hotels increased 5.6%, while RevPAR for our 20 non-strategic hotels increased 3.4%.

Hotel EBITDA was $225.5 million, 6.9% higher than the $211.0 million for the same period in 2011.

Same-store Adjusted EBITDA was $188.3 million, 8.7% higher than the $173.3 million for the same period in 2011. Adjusted EBITDA (which includes Adjusted EBITDA for sold hotels prior to sale) was $202.8 million, relatively even with the same period in 2011.

Adjusted FFO was $28.8 million, or $0.23 per share, which is $0.09 per share, or 64%, higher than 2011. Net loss attributable to common stockholders was $166.7 million (including $75.1 million of net debt extinguishment charges and $31.2 million in conversion expenses, partially offset by $54.5 million in net gains from asset sales), or $1.35 per share for the year ended December 31, 2012, compared to a net loss of $168.6 million (including $24.4 million of net debt extinguishment charges), or $1.44 per share, for 2011.

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 19 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.

Portfolio Repositioning:

During the quarter, we sold the Embassy Suites in Nashville (296 rooms) and Embassy Suites in New Orleans (370 rooms) for aggregate gross proceeds of $70.0 million and the Sheraton Crescent in Phoenix (342 rooms) for gross proceeds of $8.7 million.

During 2012, we sold 10 hotels for aggregate gross proceeds of $207.2 million. We have sold 19 of 39 non-strategic hotels to date as part of our portfolio repositioning plan, with 20 non-strategic hotels remaining to be sold. As of January 2013, we are marketing 11 of the remaining 20 hotels. The other nine non-strategic hotels are held in joint ventures, and we are working with our partners to determine when to begin marketing those properties. We will use the proceeds from dispositions to repay our remaining higher-cost debt and reduce leverage.

In January 2013, we agreed to re-brand, renovate and reposition eight core Holiday Inn hotels located in strategic markets from Holiday Inn to Wyndham hotels. Effective March 1, 2013, our Holiday Inn hotels in Boston, Houston, New Orleans, Philadelphia, Pittsburgh, San Diego and Santa Monica will be rebranded as Wyndham Hotels & Resorts properties, and The Mills House in Charleston will become a Wyndham Grand hotel. Wyndham Worldwide Corporation is providing a $100 million guaranty over the initial 10-year term of the agreement, with an annual guaranty of up to $21.5 million, that ensures a minimum annual NOI for the eight hotels. In addition, the management fee structure is more consistent with prevailing industry practices, and we expect to save approximately $50 million in management fees over the initial term. The guaranty protects approximately 20% of our core hotel-level EBITDA from future lodging cycle fluctuations, in addition to ensuring a return on investment that is superior to the hotels’ historical performance.

Capital Expenditures:

Including our pro rata share of joint ventures, capital expenditures at our operating hotels were $21.9 million during the three months ended December 31, 2012 and $122.9 million (including approximately $39.9 million for redevelopment projects) during the year ended December 31, 2012.

During 2012, we completed renovations at seven hotels and started renovations (which will be completed in 2013) at four additional hotels. We also completed redevelopment work at two hotels (the Fairmont Copley Plaza and the Embassy Suites-Myrtle Beach-Oceanfront Resort) and started redevelopment at Morgans.

During 2013, we anticipate spending approximately $65 million on improvements and renovations, concentrated mostly at seven hotels, as part of our 20-year capital plan. In addition, in connection with converting eight hotels to Wyndham (four of which will be renovated and repositioned during 2013) and completing redevelopment projects, we will spend approximately $40 million. Please see page 12 of this release for more detail on renovations.

Through December 31, 2012, we have spent $27 million on the redevelopment of the 4+ star Knickerbocker Hotel, located in midtown Manhattan. The project remains on budget and is scheduled to open in early 2014.

Balance Sheet:

At December 31, 2012, we had $1.6 billion of consolidated debt, bearing a weighted-average interest rate of 6.4% (approximately 120 basis points below last year). Our debt has a weighted average maturity of eight years, and none of our debt matures before June 2014. We had $123.7 million of cash, cash equivalents and restricted cash at December 31, 2012.

In December, we amended and restated our $225 million secured line of credit facility. Pricing and other terms of the amended facility were improved significantly relative to the existing facility. The facility now matures in June 2017, assuming exercise of a one-year extension that is subject to certain conditions. Borrowings under the facility bear interest at LIBOR (no floor) plus 3.375%. The facility is secured by mortgages on eight hotels and related security interests and allows for partial release and substitution of properties, subject to certain conditions.

In December, we sold $525 million aggregate principal amount of our 5.625% senior secured notes due 2023. We used the proceeds to redeem $258 million in aggregate face amount of our 10% senior secured notes due 2014 and repay a $187 million 8.1% mortgage loan otherwise due in 2015. The remaining proceeds were used to repay a portion of the balance on our outstanding line of credit and to pay prepayment costs and other expenses.

In November, we obtained an $85 million construction loan secured by the Knickerbocker Hotel. The construction loan will mature in 2017, assuming exercise of a one-year extension option. The remaining redevelopment costs are expected to be funded with five-year financing that is currently being raised through the EB-5 visa program.

Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer, said, “We have taken prudent steps to create a strong and flexible balance sheet with historically low and mostly fixed cost of debt. By selling hotels and taking advantage of favorable capital markets, we repaid higher-cost debt, extended our average debt maturity to eight years, lowered our average cost of borrowing by 120 basis points and increased FFO per share. We will continue to strengthen our balance sheet and further reduce our cost of borrowing as we use proceeds from asset sales to repay higher-cost debt.”

Outlook:

Our 2013 outlook reflects continued strength in lodging fundamentals, including continued demand growth and historically low supply growth in our markets. During 2013, our portfolio will experience disruption from renovations and redevelopment at 12 hotels and from transitioning the eight hotels to Wyndham. We expect that this will adversely impact 2013 RevPAR by roughly 1.5%, but will be more than recaptured in 2014. Therefore, we expect our RevPAR to grow 5-6% in 2013, primarily from ADR growth, with stronger flow-through to same-store Adjusted EBITDA compared to 2012.

Our outlook also reflects selling 11 hotels during 2013. The low-end of our outlook assumes all sales occur in April, and the high-end of our outlook assumes all the sales occur at the beginning of the fourth quarter.

During 2013, we anticipate:

  • Same-store RevPAR to increase between 5-6%;
  • Adjusted EBITDA to be between $186 million and $205 million;
  • Adjusted FFO per share to be between $0.31 and $0.43;
  • Net loss attributable to FelCor to be between $70 million and $63 million; and
  • Interest expense, including pro rata share of joint ventures, to be between $102 million and $106 million.

The following table reconciles our 2012 Same-store Adjusted EBITDA to our 2013 Adjusted EBITDA and Same-store EBITDA outlook (in millions):




Low

Mid

High
2012 Same-store Adjusted EBITDA (65 hotels)

$

188.3




$

188.3




$

188.3


2013 Growth


15.2



17.7



20.2
2013 Adjusted EBITDA Outlook (65 hotels)

$ 203.5


$ 206.0


$ 208.5










EBITDA lost from Asset Sales (11 hotels)(a)


(17.5 )


(10.5 )


(3.5 )
2013 Adjusted EBITDA Outlook (54 hotels)

$ 186.0


$ 195.5


$ 205.0
Discontinued Operations(b)


(8.5 )


(15.5 )


(22.5 )
Same-store Adjusted EBITDA (54 hotels)

$ 177.5


$ 180.0


$ 182.5
(a)
EBITDA of 11 hotels assumed to be sold during 2013 that would have been recognized from the dates of sale through December 31, 2013.
(b)
EBITDA of 11 hotels assumed to be sold during 2013 that is forecasted to be generated from January 1, 2013 through the dates of sale.



About FelCor:

FelCor, a real estate investment trust, owns a diversified portfolio of primarily upper-upscale, full-service hotels that are located in major and resort markets. FelCor partners with leading hotel companies to operate its 66 hotels, which are flagged under globally recognized names such as Fairmont®, Hilton®, Doubletree®, Embassy Suites®, Renaissance®, Marriott®, Sheraton®, Westin® and Holiday Inn®, and premier independent hotels in New York. Additional information can be found on the Company’s website at www.felcor.com.

We invite you to listen to our fourth quarter earnings Conference Call on Tuesday, February 19, 2013 at 10:00 a.m. (Central Time). The conference call will be webcast simultaneously on FelCor’s website at www.felcor.com. Interested investors and other parties who wish to access the call can go to FelCor’s website 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 website.

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 three months and year ended December 31, 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 2013

12
Supplemental Financial Data

13
Discontinued Operations

14
Hotel Portfolio Composition

15
Detailed Operating Statistics by Brand

16
Comparable Hotels Operating Statistics for Our Top Markets

17
Historical Operating Statistics

18
Non-GAAP Financial Measures

19
(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,




2012



2011



2012



2011
Revenues:











Hotel operating revenue:











Room

$ 168,020


$ 160,245


$ 707,908


$ 662,557
Food and beverage


41,908



38,033



148,736



139,151
Other operating departments


11,733



12,131



49,696



50,494
Other revenue


513



319



3,185



2,949
Total revenues


222,174



210,728



909,525



855,151
Expenses:











Hotel departmental expenses:











Room


47,379



45,023



190,293



178,963
Food and beverage


32,511



30,496



119,560



110,923
Other operating departments


5,517



5,839



22,434



23,325
Other property-related costs


61,407



59,751



246,518



235,643
Management and franchise fees


9,773



9,485



41,815



39,359
Taxes, insurance and lease expense


22,816



21,250



94,294



84,954
Corporate expenses


6,054



6,375



26,128



29,080
Depreciation and amortization


31,944



29,983



123,879



118,232
Impairment loss














4,315
Conversion expenses


31,197







31,197




Other expenses


929



562



4,855



4,017
Total operating expenses


249,527



208,764



900,973



828,811
Operating income (loss)


(27,353 )


1,964



8,552



26,340
Interest expense, net


(31,799 )


(32,251 )


(125,346 )


(130,423 )
Debt extinguishment


(62,519 )


(64 )


(74,327 )


(27,663 )
Gain on involuntary conversion, net














292
Loss before equity in income (loss) from unconsolidated entities


(121,671 )


(30,351 )


(191,121 )


(131,454 )
Equity in income (loss) from unconsolidated entities


105



(765 )


2,779



(2,068 )
Loss from continuing operations


(121,566 )


(31,116 )


(188,342 )


(133,522 )
Income (loss) from discontinued operations


28,540



(2,280 )


58,928



2,627
Net loss


(93,026 )


(33,396 )


(129,414 )


(130,895 )
Net loss attributable to noncontrolling interests in other partnerships


125



83



565



352
Net loss attributable to redeemable noncontrolling interests in FelCor LP


513



220



842



689
Net loss attributable to FelCor


(92,388 )


(33,093 )


(128,007 )


(129,854 )
Preferred dividends


(9,679 )


(9,679 )


(38,713 )


(38,713 )
Net loss attributable to FelCor common stockholders

$ (102,067 )

$ (42,772 )

$ (166,720 )

$ (168,567 )
Basic and diluted per common share data:











Loss from continuing operations

$ (1.06 )

$ (0.33 )

$ (1.82 )

$ (1.46 )
Net loss

$ (0.83 )

$ (0.35 )

$ (1.35 )

$ (1.44 )
Basic and diluted weighted average common shares outstanding


123,635



123,906



123,634



117,068


Consolidated Balance Sheets

(in thousands)





December 31,

December 31,




2012



2011
Assets





Investment in hotels, net of accumulated depreciation of $929,298 and $987,895 at December 31, 2012 and 2011, respectively

$ 1,794,564


$ 1,953,795
Hotel development


146,079



120,163
Investment in unconsolidated entities


55,082



70,002
Cash and cash equivalents


45,745



93,758
Restricted cash


77,927



84,240
Accounts receivable, net of allowance for doubtful accounts of $469 and $333 at December 31, 2012 and 2011, respectively


25,383



27,135
Deferred expenses, net of accumulated amortization of $13,820 and $13,119 at December 31, 2012 and 2011, respectively


34,262



29,772
Other assets


23,391



24,363
Total assets

$ 2,202,433


$ 2,403,228
Liabilities and Equity





Debt, net of discount of $10,318 and $32,069 at December 31, 2012 and 2011, respectively

$ 1,630,525


$ 1,596,466
Distributions payable


8,545



76,293
Accrued expenses and other liabilities


138,442



140,548
Total liabilities


1,777,512



1,813,307
Commitments and contingencies





Redeemable noncontrolling interests in FelCor LP, 621 and 636 units issued and outstanding at December 31, 2012 and 2011, respectively


2,902



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 December 31, 2012 and 2011


309,362



309,362
Series C Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,950, issued and outstanding at December 31, 2012 and 2011


169,412



169,412
Common stock, $0.01 par value, 200,000 shares authorized; 124,117 and 124,281 shares issued and outstanding at December 31, 2012 and 2011, respectively


1,241



1,243
Additional paid-in capital


2,353,581



2,353,251
Accumulated other comprehensive income


26,039



25,738
Accumulated deficit


(2,464,968 )


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


394,667



561,538
Noncontrolling interests in other partnerships


27,352



25,357
Total equity


422,019



586,895
Total liabilities and equity

$ 2,202,433


$ 2,403,228


Consolidated Debt Summary

(dollars in thousands)



Encumbered
Hotels


Interest
Rate (%)


Maturity Date


December 31,
2012

December 31,
2011
Line of credit 8


L + 3.375

June 2016(a)
$ 56,000
$
Hotel mortgage debt










Mortgage debt(b) 5


6.66


June - August 2014

65,431

67,375
Mortgage debt 1


5.81


July 2016

10,405

10,876
Mortgage debt(b) 4


4.95


October 2022

128,066

Mortgage debt 1


4.94


October 2022

32,176

Senior notes










Senior secured notes(c) 11


10.00


October 2014

223,586

459,931
Senior secured notes 6


6.75


June 2019

525,000

525,000
Senior secured notes 10


5.625


March 2023

525,000

Other(d)


L + 1.25

May 2016

64,861

Retired debt









533,284
Total 46







$ 1,630,525
$ 1,596,466

(a)


Our $225 million line of credit can be extended for one year (to 2017), subject to satisfying certain conditions.

(b)


This debt is comprised of separate non-cross-collateralized loans each secured by a mortgage of a different hotel.

(c)


We originally issued $636 million (face amount) of these notes. After redemptions in 2011 and 2012, $234 million (face amount) of these notes were outstanding at December 31, 2012.

(d)


This loan is related to our Knickerbocker redevelopment 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. This loan can be extended for one year subject to satisfying certain conditions.



Schedule of Encumbered Hotels

(dollars in millions)


Consolidated
December 31, 2012

Debt
Balance
Encumbered Hotels
Line of credit

$ 56


Charlotte SouthPark - DT, Dana Point - DTGS, Houston Medical Center - HI, Mandalay Beach - ES, Miami International Airport - ES, Philadelphia Independence Mall - HI, Pittsburgh University Center - HI and Santa Monica at the Pier - HI
CMBS debt(a)

$ 65


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

$ 10


Indianapolis North - ES
CMBS debt(a)

$ 128


Birmingham - ES, Ft. Lauderdale - ES, Minneapolis Airport - ES and Napa Valley - ES
CMBS debt

$ 32


Deerfield Beach - ES
Senior secured notes (10.00%)

$ 224


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

Senior secured notes (6.75%)

$ 525


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

Senior secured notes (5.625%)

$ 525


Atlanta Buckhead - ES, Baton Rouge - ES, Boston Marlboro - ES, Burlington - SH, Dallas Love Field - ES, Milpitas - ES, Myrtle Beach Resort - HIL, Orlando South - ES, Philadelphia Society Hill - SH, and SF South San Francisco - ES

(a)


This debt is comprised of separate non cross-collateralized loans each secured by a mortgage of a different hotel.



Capital Expenditures

(in thousands)





Three Months Ended

Year Ended



December 31,

December 31,




2012



2011



2012



2011
Improvements and additions to majority-owned hotels

$ 21,490


$ 31,572


$ 121,475


$ 89,042
Partners’ pro rata share of additions to consolidated joint venture hotels


(104 )


(156 )


(923 )


(883 )
Pro rata share of additions to unconsolidated hotels


500



801



2,304



3,051
Total additions to hotels(a)

$ 21,886


$ 32,217


$ 122,856


$ 91,210
(a)
Includes capitalized interest, property taxes, property insurance, ground leases and certain employee costs.


Hotels Under Renovation or Redevelopment During 2013


Renovations



Primary Areas



Start Date



End Date

Myrtle Beach Resort-HIL

guestrooms

Oct-2012

Mar-2013
Napa Valley-ES(a)

public areas

Nov-2012

Mar-2013
Mandalay Beach-ES(b)

public areas, meeting rooms, F&B

Jan-2013

May-2013
San Francisco Waterfront-ES

public areas

Feb-2013

May-2013
Santa Monica Beach - at the Pier-HI(c)

guestrooms, corridors, public areas

May-2013



Aug-2013

Ft. Lauderdale-ES

public areas

Aug-2013

Oct-2013
Orlando - Walt Disney World Resort-DT(d)

guestrooms, corridors

May-2013

Nov-2013
LAX South - ES(e)

public areas, corridors

Sep-2013

Dec-2013
Houston Medical Center-HI(c)

guestrooms, corridors, public areas

Jul-2013

Dec-2013
Philadelphia - Historic District-HI(c)

guestrooms, corridors, public areas

Aug-2013

Jan-2014
Charleston Mills House-HI(c)

guestrooms, corridors, public areas

Aug-2013

Jan-2014

Redevelopments










New York-Morgans

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

Feb-2012

Mar-2013
(a)
Guestroom renovations were completed in April 2012.
(b)
Guestroom renovations were completed in May 2012.
(c)
Effective March 1, 2013, this hotel will be operated by Wyndham Hotel Group under the Wyndham or Wyndham Grand brand.
(d)
Public area renovations were completed in June 2012.
(e)
Guest room renovations were completed in February 2013.


Supplemental Financial Data

(in thousands, except per share information)





December 31,

December 31,
Total Enterprise Value



2012



2011
Common shares outstanding


124,117



124,281
Units outstanding


621



636
Combined shares and units outstanding


124,738



124,917
Common stock price

$ 4.67


$ 3.05
Market capitalization

$ 582,526


$ 380,997
Series A preferred stock(a)


309,362



309,362
Series C preferred stock(a)


169,412



169,412
Consolidated debt(b)


1,630,525



1,596,466
Noncontrolling interests of consolidated debt


(2,810 )


(2,894 )
Pro rata share of unconsolidated debt


74,198



75,178
Hotel development


(146,079 )


(120,163 )
Cash, cash equivalents and restricted cash(b)


(123,672 )


(177,998 )
Total enterprise value (TEV)

$ 2,493,462


$ 2,230,360
(a)
Book value based on issue price.
(b)

Restricted cash includes $64.9 million of cash fully securing $64.9 million of debt that was assumed when we purchased the Knickerbocker.







Discontinued Operations
(in thousands)

Discontinued operations include the results of operations for ten 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

Year Ended



December 31,

December 31,




2012



2011



2012



2011
Operating revenue

$ 3,096


$ 25,156


$ 60,238


$ 132,988
Operating expenses (a)


(2,328 )


(24,041 )


(52,942 )


(133,051 )
Operating income (loss)


768



1,115



7,296



(63 )
Interest expense, net


(46 )


(747 )


(2,037 )


(5,294 )
Debt extinguishment










(790 )


3,282
Loss on involuntary conversion, net














(12 )
Gain (loss) on sale, net


27,818



(2,648 )


54,459



4,714
Income (loss) from discontinued operations


28,540



(2,280 )


58,928



2,627
Depreciation and amortization


63



3,850



5,607



20,660
Interest expense


46



750



2,037



5,301
Noncontrolling interest in other partnerships














13
EBITDA from discontinued operations


28,649



2,320



66,572



28,601
Impairment loss










1,335



8,935
Hurricane loss


22







250




Debt extinguishment










790



(3,282 )
Loss on involuntary conversion, net














12
Loss (gain) on sale, net


(27,818 )


2,648



(54,459 )


(4,714 )
Adjusted EBITDA from discontinued operations

$ 853


$ 4,968


$ 14,488


$ 29,552
(a)
Includes impairment charges of $1.3 million and $8.9 million for the years ended December 31, 2012 and December 31, 2011, respectively.






Hotel Portfolio Composition

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

Brand
Hotels
Rooms

2012 Hotel Operating
Revenue
(in thousands)


2012 Hotel
EBITDA
(in thousands)(a)

Embassy Suites Hotels 20


5,433


$ 256,200
$ 78,389
Holiday Inn 10


3,494



160,866

42,178
Renaissance and Marriott 3


1,321



111,976

17,912
Doubletree and Hilton 5


1,206



56,071

16,706
Sheraton and Westin 4


1,604



68,369

14,540
Fairmont 1


383



41,255

4,286
Morgans and Royalton 2


282



32,129

3,458
Core hotels 45


13,723



726,866

177,469
Non-strategic hotels 20


5,099



179,474

48,044
Same-store hotels 65


18,822


$ 906,340
$ 225,513











Market









San Francisco area 4


1,637


$ 99,659
$ 21,036
Los Angeles area 3


677



33,287

13,760
South Florida 3


923



47,298

13,257
Boston 3


916



68,121

12,126
New York area 4


817



57,052

9,733
Myrtle Beach 2


640



36,973

9,429
Atlanta 3


952



35,410

9,230
Philadelphia 2


728



36,122

8,882
Tampa 1


361



45,152

7,957
San Diego 1


600



26,445

6,688
Other markets 19


5,472



241,347

65,371
Core hotels 45


13,723



726,866

177,469
Non-strategic hotels 20


5,099



179,474

48,044
Same-store hotels 65


18,822


$ 906,340
$ 225,513











Location









Urban 17


5,305


$ 316,354
$ 74,446
Resort 10


2,928



183,807

41,475
Airport 9


2,957



126,906

33,742
Suburban 9


2,533



99,799

27,806
Core hotels 45


13,723



726,866

177,469
Non-strategic hotels 20


5,099



179,474

48,044
Same-store hotels 65


18,822


$ 906,340
$ 225,513
(a)
Hotel EBITDA is more fully described on page 26.






The following tables set forth occupancy, ADR and RevPAR for the three months and year ended December 31, 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




Year Ended





December 31,




December 31,





2012

2011

%Variance

2012

2011

%Variance
Embassy Suites Hotels

69.3

70.0

(0.9 )

74.6

75.7

(1.5 )
Holiday Inn

69.4

70.1

(1.0 )

75.2

74.7

0.7
Renaissance and Marriott

63.8

63.6

0.3


69.0

67.3

2.5
Doubletree and Hilton

55.1

59.0

(6.6 )

67.7

67.9

(0.3 )
Sheraton and Westin

61.0

59.5

2.5


64.6

65.7

(1.7 )
Fairmont

68.1

60.5

12.6


63.5

70.2

(9.6 )
Morgans and Royalton

85.1

87.1

(2.3 )

83.7

86.4

(3.1 )
Core hotels (45)

66.8

67.2

(0.6 )

72.3

72.8

(0.7 )
Non-strategic hotels (20)

67.3

67.2

0.2


71.7

71.7


Same-store hotels (65)

66.9

67.2

(0.4 )

72.2

72.5

(0.5 )






















ADR ($)



Three Months Ended




Year Ended





December 31,




December 31,





2012

2011

%Variance

2012

2011

%Variance
Embassy Suites Hotels

142.05

136.53

4.0


144.62

137.78

5.0
Holiday Inn

140.11

130.99

7.0


142.58

129.91

9.7
Renaissance and Marriott

188.45

175.94

7.1


192.43

177.04

8.7
Doubletree and Hilton

133.89

120.42

11.2


137.97

130.20

6.0
Sheraton and Westin

112.43

111.41

0.9


112.31

111.81

0.5
Fairmont

283.77

262.93

7.9


282.00

248.97

13.3
Morgans and Royalton

361.66

346.36

4.4


308.14

293.10

5.1
Core hotels (45)

152.54

144.19

5.8


151.79

142.63

6.4
Non-strategic hotels (20)

116.10

112.18

3.5


117.19

113.36

3.4
Same-store hotels (65)

142.76

135.65

5.2


142.46

134.79

5.7






















RevPAR ($)



Three Months Ended




Year Ended





December 31,




December 31,





2012

2011

%Variance

2012

2011

%Variance
Embassy Suites Hotels

98.51

95.52

3.1


107.88

104.32

3.4
Holiday Inn

97.23

91.82

5.9


107.20

97.00

10.5
Renaissance and Marriott

120.23

111.90

7.4


132.76

119.12

11.4
Doubletree and Hilton

73.76

71.02

3.9


93.40

88.42

5.6
Sheraton and Westin

68.54

66.29

3.4


72.56

73.47

(1.2 )
Fairmont

193.12

158.98

21.5


179.11

174.85

2.4
Morgans and Royalton

307.83

301.85

2.0


257.83

253.15

1.9
Core hotels (45)

101.92

96.91

5.2


109.76

103.90

5.6
Non-strategic hotels (20)

78.13

75.35

3.7


84.08

81.31

3.4
Same-store hotels (65)

95.57

91.15

4.8


102.80

97.78

5.1


Comparable Hotels Operating Statistics for Our Top Markets





Occupancy (%)



Three Months Ended




Year Ended





December 31,




December 31,





2012

2011

%Variance

2012

2011

%Variance
San Francisco area

75.2

76.8

(2.0 )

80.5

79.9

0.7
Los Angeles area

59.5

68.2

(12.6 )

75.6

77.3

(2.2 )
South Florida

74.1

74.4

(0.4 )

77.4

78.0

(0.8 )
Boston

69.4

70.9

(2.1 )

70.2

77.1

(9.0 )
New York area

81.9

80.7

1.5


78.1

79.3

(1.6 )
Myrtle Beach

39.5

44.7

(11.7 )

59.7

59.7

(0.1 )
Atlanta

70.0

63.1

11.0


73.8

73.3

0.7
Philadelphia

61.0

61.6

(1.0 )

65.2

69.4

(6.0 )
Tampa

75.1

73.6

2.0


81.0

78.4

3.4
San Diego

69.0

72.9

(5.4 )

79.6

78.5

1.4
Other markets

63.7

63.3

0.7


68.9

68.6

0.5
Core hotels (45)

66.8

67.2

(0.6 )

72.3

72.8

(0.7 )
Non-strategic hotels (20)

67.3

67.2

0.2


71.7

71.7


Same-store hotels (65)

66.9

67.2

(0.4 )

72.2

72.5

(0.5 )







ADR ($)



Three Months Ended




Year Ended





December 31,




December 31,





2012

2011

%Variance

2012

2011

%Variance
San Francisco area

181.08

164.26

10.2


174.13

152.75

14.0
Los Angeles area

154.80

141.31

9.5


156.04

149.47

4.4
South Florida

139.84

137.20

1.9


145.67

141.29

3.1
Boston

210.73

192.84

9.3


207.71

187.14

11.0
New York area

230.92

222.03

4.0


209.80

200.66

4.6
Myrtle Beach

102.31

103.53

(1.2 )

145.27

140.62

3.3
Atlanta

108.49

104.68

3.6


108.53

104.83

3.5
Philadelphia

147.71

145.45

1.6


147.79

135.80

8.8
Tampa

165.07

158.17

4.4


174.57

164.50

6.1
San Diego

121.57

115.01

5.7


128.94

119.70

7.7
Other markets

134.09

127.16

5.5


135.57

129.39

4.8
Core hotels (45)

152.54

144.19

5.8


151.79

142.63

6.4
Non-strategic hotels (20)

116.10

112.18

3.5


117.19

113.36

3.4
Same-store hotels (65)

142.76

135.65

5.2


142.46

134.79

5.7







RevPAR ($)



Three Months Ended




Year Ended





December 31,




December 31,





2012

2011

%Variance

2012

2011

%Variance
San Francisco area

136.18

126.11

8.0


140.15

122.05

14.8
Los Angeles area

92.17

96.31

(4.3 )

117.94

115.49

2.1
South Florida

103.59

102.03

1.5


112.77

110.20

2.3
Boston

146.31

136.76

7.0


145.72

144.25

1.0
New York area

189.07

179.16

5.5


163.83

159.20

2.9
Myrtle Beach

40.37

46.27

(12.8 )

86.70

84.01

3.2
Atlanta

75.99

66.03

15.1


80.06

76.83

4.2
Philadelphia

90.08

89.63

0.5


96.39

94.21

2.3
Tampa

123.89

116.40

6.4


141.44

128.91

9.7
San Diego

83.87

83.89




102.63

94.00

9.2
Other markets

85.48

80.46

6.2


93.41

88.73

5.3
Core hotels (45)

101.92

96.91

5.2


109.76

103.90

5.6
Non-strategic hotels (20)

78.13

75.35

3.7


84.08

81.31

3.4
Same-store hotels (65)

95.57

91.15

4.8


102.80

97.78

5.1


Historical Operating Statistics





Occupancy (%)



Q1 2012

Q2 2012

Q3 2012

Q4 2012
Core hotels (45)

68.4

77.7

76.5

66.8
Non-strategic hotels (20)

71.6

75.1

73.0

67.3
Same-store hotels (65)

69.3

77.0

75.5

66.9





























ADR ($)



Q1 2012

Q2 2012

Q3 2012

Q4 2012
Core hotels (45)

145.45

155.03

153.45

152.54
Non-strategic hotels (20)

115.80

117.02

119.71

116.10
Same-store hotels (65)

137.10

144.93

144.57

142.76





























RevPAR ($)



Q1 2012

Q2 2012

Q3 2012

Q4 2012
Core hotels (45)

99.47

120.49

117.40

101.92
Non-strategic hotels (20)

82.97

87.89

87.37

78.13
Same-store hotels (65)

94.97

111.61

109.22

95.57


























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 Loss to FFO and Adjusted FFO

(in thousands, except per share data)





Three Months Ended December 31,



2012

2011



Dollars

Shares

Per Share Amount

Dollars

Shares

Per Share Amount
Net loss

$ (93,026 )







$ (33,396 )





Noncontrolling interests


638









303






Preferred dividends


(9,679 )








(9,679 )





Net loss attributable to FelCor common stockholders


(102,067 )

123,635

$ (0.83 )


(42,772 )

123,906

$ (0.35 )
Depreciation and amortization


31,944





0.26



29,983





0.24
Depreciation, discontinued operations and unconsolidated entities


2,794





0.02



6,675





0.05
Loss (gain) on sale of hotels


(27,818 )




(0.23 )


2,648





0.02
Noncontrolling interests in FelCor LP


(513 )

622


0.01



(220 )

636


0.01
FFO


(95,660 )

124,257


(0.77 )


(3,686 )

124,542


(0.03 )
Acquisition costs


19









121






Hurricane loss


170
















Hurricane loss, discontinued operations and unconsolidated entities


22
















Debt extinguishment, including discontinued operations


62,519





0.51



64






Severance costs


102
















Conversion expenses


31,197





0.25










Pre-opening costs


154
















Adjusted FFO

$ (1,477 )

124,257

$ (0.01 )

$ (3,501 )

124,542

$ (0.03 )


Reconciliation of Net Loss to FFO and Adjusted FFO

(in thousands, except per share data)





Year Ended December 31,



2012

2011



Dollars

Shares

Per Share Amount

Dollars

Shares

Per Share Amount
Net loss

$ (129,414 )







$ (130,895 )





Noncontrolling interests


1,407









1,041






Preferred dividends


(38,713 )








(38,713 )





Net loss attributable to FelCor common stockholders


(166,720 )

123,634

$ (1.35 )


(168,567 )

117,068

$ (1.44 )
Depreciation and amortization


123,879





1.00



118,232





1.01
Depreciation, discontinued operations and unconsolidated entities


16,721





0.14



33,136





0.28
Gain on involuntary conversion












(292 )





Loss on involuntary conversion, discontinued operations












12






Impairment loss












4,315





0.04
Impairment loss, discontinued operations


1,335





0.01



8,935





0.08
Gain on sale of hotels, net


(54,459 )




(0.44 )


(4,714 )




(0.04 )
Noncontrolling interests in FelCor LP


(842 )

628






(689 )

499


(0.01 )
FFO


(80,086 )

124,262


(0.64 )


(9,632 )

117,567


(0.08 )
Acquisition costs


132









1,479





0.01
Hurricane loss


1,021





0.01










Hurricane loss, discontinued operations and unconsolidated entities


253
















Debt extinguishment, including discontinued operations


75,117





0.60



24,381





0.21
Severance costs


553
















Abandoned projects


219
















Conversion expenses


31,197





0.25










Pre-opening costs


398
















Unvested restricted stock





11


0.01






175



Adjusted FFO

$ 28,804


124,273

$ 0.23


$ 16,228


117,742

$ 0.14


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

(in thousands)





Three Months Ended

Year Ended



December 31,

December 31,




2012



2011



2012



2011
Net loss

$ (93,026 )

$ (33,396 )

$ (129,414 )

$ (130,895 )
Depreciation and amortization


31,944



29,983



123,879



118,232
Depreciation, discontinued operations and unconsolidated entities


2,794



6,675



16,721



33,136
Interest expense


31,820



32,335



125,484



130,658
Interest expense, discontinued operations and unconsolidated entities


732



1,875



4,792



9,892
Noncontrolling interests in other partnerships


125



83



565



352
EBITDA


(25,611 )


37,555



142,027



161,375
Impairment loss














4,315
Impairment loss, discontinued operations










1,335



8,935
Hurricane loss


170







1,021




Hurricane loss, discontinued operations and unconsolidated entities


22







253




Debt extinguishment, including discontinued operations


62,519



64



75,117



24,381
Acquisition costs


19



121



132



1,479
Loss (gain) on sale of hotels, net


(27,818 )


2,648



(54,459 )


(4,714 )
Gain on involuntary conversion














(292 )
Loss on involuntary conversion, discontinued operations














12
Amortization of stock compensation


1,254



1,828



5,003



7,170
Severance costs


102







553




Abandoned projects










219




Conversion expenses


31,197







31,197




Pre-opening costs


154







398




Adjusted EBITDA


42,008



42,216



202,796



202,661
Adjusted EBITDA from discontinued operations


(853 )


(4,968 )


(14,489 )


(29,551 )
Adjusted EBITDA from acquired hotels(a)














165
Same-store Adjusted EBITDA

$ 41,155


$ 37,248


$ 188,307


$ 173,275
(a)
For same-store metrics, we have included the two hotels acquired in May 2011 as if they were acquired at the beginning of 2011.


Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)





Three Months Ended

Year Ended



December 31,

December 31,




2012



2011



2012



2011
Same-store operating revenue:











Room

$ 168,020


$ 160,245


$

707,908


$

671,567
Food and beverage


41,908



38,033



148,736



141,048
Other operating departments


11,733



12,131



49,696



51,042
Same-store operating revenue


221,661



210,409



906,340



863,657
Same-store operating expense:











Room


47,379



45,023



190,293



182,780
Food and beverage


32,513



30,496



119,560



113,329
Other operating departments


5,517



5,839



22,434



23,490
Other property related costs


61,406



59,751



246,518



239,104
Management and franchise fees


9,773



9,485



41,815



39,702
Taxes, insurance and lease expense


14,575



13,710



60,207



54,280
Same-store operating expense


171,163



164,304



680,827



652,685
Hotel EBITDA

$ 50,498


$ 46,105


$ 225,513


$ 210,972
Hotel EBITDA Margin


22.8 %


21.9 %


24.9 %


24.4 %


Reconciliation of Same-store Operating Revenue and Same-store Operating Expense to Total
Revenue, Total Operating Expenses and Operating Income (Loss)

(in thousands)





Three Months Ended

Year Ended



December 31,

December 31,




2012



2011



2012



2011
Same-store operating revenue(a)

$ 221,661


$ 210,409


$ 906,340


$ 863,657
Other revenue


513



319



3,185



2,949
Revenue from acquired hotels(a)














(11,455 )
Total revenue


222,174



210,728



909,525



855,151
Same-store operating expense(a)


171,163



164,304



680,827



652,685
Consolidated hotel lease expense(b)


10,004



9,375



41,342



38,759
Unconsolidated taxes, insurance and lease expense


(1,764 )


(1,835 )


(7,255 )


(6,987 )
Corporate expenses


6,054



6,375



26,128



29,080
Depreciation and amortization


31,944



29,983



123,879



118,232
Impairment loss














4,315
Conversion expenses


31,197







31,197




Expenses from acquired hotels(a)














(11,290 )
Other expenses


929



562



4,855



4,017
Total operating expenses


249,527



208,764



900,973



828,811
Operating income (loss)

$ (27,353 )

$ 1,964


$ 8,552


$ 26,340
(a)
For same-store metrics, we have included the two hotels acquired in May 2011 as if they were acquired at the beginning of 2011.
(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 attributable to FelCor to Forecasted Adjusted FFO
and Adjusted EBITDA

(in millions, except per share data)





Full Year 2013 Guidance



Low

High



Dollars

Per Share Amount(a)

Dollars

Per Share Amount(a)
Net loss attributable to FelCor(b)

$ (70 )




$ (63 )


Preferred dividends


(39 )





(39 )


Net loss attributable to FelCor common stockholders


(109 )

$ (0.88 )


(102 )

$ (0.82 )
Depreciation(c)


148






156



Adjusted FFO

$ 39


$ 0.31


$ 54


$ 0.43













Net loss attributable to FelCor(b)

$ (70 )




$ (63 )


Depreciation(c)


148






156



Interest expense(c)


102






106



Amortization expense


6






6



Adjusted EBITDA

$ 186





$ 205



(a)

Weighted average shares are 125.1 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.



.
Contact: 

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

.
Receive Your Hospitality Industry Headlines via Email for Free! Subscribe Here  

To Learn More About Your News Being Published on Hotel-Online Inquire Here
 
Also See: FelCor Lodging Trust Posts 3rd Qtr 2012 Net Loss of $19.6 million Compared to Net Loss of $23.4 million in the Year-ago Quarter; RevPAR for its 66 Hotels Increased 6.2% for the Quarter / Hotel Operating Statistics / November 2012

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 / July 2012

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
.

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch

Home | Welcome | Hospitality News
| Industry Resources

Please contact Hotel.Online with your comments and suggestions.