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IRVING, Texas, April 27, 1998 - FelCor
Suite Hotels, Inc. (NYSE: FCH), the largest non-paired hotel real 
estate
investment trust (REIT), today announced that first quarter 1998 funds
from operations (FFO) totaled $41.7 million or $0.94 per share and unit
as compared to the $26.7 million or $0.80 achieved during the first quarter
of 1997, representing an increase in FFO per share and unit of 18%.
| FFO of $41.7 million or $0.94 per share and unit for the quarter ended
March 31, 1998 sets a new quarterly record.
Net income increased from $0.39 per diluted share to $0.51 per diluted share, an increase of 31%, before a $0.02 extraordinary charge. FelCor's 58 comparable hotels, those owned at both March 31, 1998 and 1997, had a 6.7% RevPAR increase over the first quarter of 1997. On March 24, 1998, FelCor announced the proposed acquisition, by merger, of 109 hotels owned or leased by Bristol Hotel Company (NYSE: BH). After the merger, FelCor will have ownership interests in 193 hotels and an anticipated market capitalization of approximately $4 billion. FelCor is currently the largest owner of Embassy Suites(R) hotels. Upon the closing of the merger, FelCor also will become the world's largest owner of Holiday Hospitality branded hotels. The merger is expected to be consummated by the end of the second quarter of 1998. FelCor acquired two hotels (one in Wilmington, Delaware that is to be converted to a Doubletree(R) hotel and one Doubletree Guest Suites(R) hotel in Columbus, Ohio) during the first quarter, representing a gross investment of approximately $33.1 million. |
| completed the acquisition of a Doubletree hotel in Denver, Colorado
for $24.2 million.
announced the signing of an agreement to purchase eight upscale,full-service all-suite hotels from Starwood Hotels Resorts (NYSE: HOT) for an aggregate cash price of $245 million. The eight hotels to be acquired from Starwood have a total of 1,898 suites and are located in geographically diverse U.S. markets. The acquisition of these hotels is expected to be completed around the end of April. |
| placed $114 million of fixed rate nonrecourse secured debtassociated
with nine Embassy Suites hotels which are owned by 50/50 joint ventures
between FelCor and Promus Hotel Corporation (NYSE: PRH). The new
debt carries a coupon of 6.988 percent, matures in 10 years and amortizes
over 25 years. The proceeds were utilized to repay higher interest
rate debt related to the joint venture hotels and to repay other corporate
debt. In connection with the refinancing of this joint venture debt,
FelCor recognized an extraordinary charge of $0.02 per diluted share.
filed an "omnibus" shelf registration statement, allowing FelCor to issue up to $1 billion in securities customized to meet its capital needs and current market conditions. completed its exchange of $300 million of registered debt for previously issued private placement debt, thereby becoming the first hotel REIT to have issued public unsecured debt. |
FelCor has entered into negotiations with its lenders to increase its existing $550 million line of credit to $1 billion and to provide a $200 million unsecured term loan facility. FelCor expects this to be in place by the end of the second quarter.
FelCor declared first quarter dividends of $0.55 per share on its Common Stock and $0.4875 per share on its Series A Cumulative Convertible Preferred Stock.
FelCor announced the expansion of its management team. William
P. Stadler was promoted to Senior Vice President/Director of Corporate
Acquisitions; Larry Mundy was named Vice President/Director of Hotel Acquisitions;
Charles N. Nye was named Vice President Assistant General Counsel
and Monica L. Hildebrand was named Vice President/Director of Communications.
| Three Months Ended
March 31, 1998 |
Three Months Ended
March 31, 1997 |
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| Summary Financial Data: | ||
| Revenues | $57,528 | $36,592 |
| Net income before extraordinary charge | 21,500 | 12,957 |
| Net income available to common shareholders | 17,995 | 10,008 |
| Diluted Earnings Per Share Information: | ||
| Net income applicable to common shareholders
before extraordinary charge |
$0.51 | $0.39 |
| Extraordinary charge | (0.02) | -- |
| Net income per common share | $0.49 | $0.39 |
| Weighted average shares outstanding | 36,905 | 25,749 |
| Funds From Operations (FFO): | ||
| FFO per common share and unit | $0.94 | $0.80 |
| Weighted average shares and units outstanding | 44,575 | 33,222 |
Thomas J. Corcoran, Jr., President and CEO of FelCor stated, "The true
measure of our successful strategy is
reflected by the continued RevPAR increases above industry average
and double digit FFO growth. Over the
past ten quarters, FelCor has realized an average FFO growth per share
and unit of more than 15%."
Hotel Operating Performance:
FelCor's 58 hotels owned at both March 31, 1998 and 1997 produced RevPAR of $89.95 in 1998 compared to $84.27 in 1997, for an increase of 6.7%. By excluding four of the 58 hotels, which experienced average RevPAR decreases of approximately 16% due to both brand changes and extensive redevelopment during the first quarter, RevPAR would have increased 7.8%.
RevPAR for FelCor's Original 13 hotels increased to $87.51 for the first quarter of 1998 from $83.72 during the first quarter of 1997, an increase of 4.5%. RevPAR for two of these hotels, the Boston-Marlborough and Orlando North Embassy Suites, decreased by 5%; however, these hotels experienced a 49% increase in revenue during the first quarter as a result of recent room additions.
The 18 CSS Hotels continued their trend of robust RevPAR increases,
achieving a RevPAR of $99.48 for the first
quarter of 1998 compared to $89.22 during the first quarter of 1997,
an increase of 11.5%.
RevPAR for the 1996 Acquisition Hotels increased to $92.66 from $85.35
during the first quarter of 1998, an
increase of 8.6%. The current quarter increase follows an 8.3% increase
in the fourth quarter of 1997 and a 7.7%
increase for the full year of 1997.
Acquisitions:
During the first quarter, FelCor acquired two hotels, representing a gross investment of approximately $33.1 million. Highlights of these acquisitions are as follows:
On February 17, 1998, FelCor announced the acquisition of the 194-suite Doubletree Guest Suites hotel, in Columbus, Ohio for approximately $14.1 million in cash and approximately 134,000 Operating Partnership units valued at $37.06 each. The Doubletree Guest Suites-Columbus, which has approximately 2,500 square feet of meeting space, is centrally located in downtown Columbus and is part of Huntington Center, a mixed-use complex with more than 1 million square feet of office space and 40,000 square feet of retail space.
On March 23, 1998, FelCor announced the acquisition, for $14.0 million, of a 154-room traditional full-service hotel in Wilmington, Delaware, which has approximately 13,000 square feet of meeting space. FelCor expects to expand this hotel by approximately 100 rooms and convert it to a Doubletree hotel in 1999. The hotel is located in the northern suburbs of Wilmington, approximately five miles from downtown and 20 miles from the Philadelphia International Airport.
Following the end of the first quarter, FelCor announced the following acquisition activity:
On April 15, 1998, FelCor announced the acquisition of the 248-room Doubletree hotel in Denver (Aurora), Colorado for approximately $24.2 million in cash. This upscale, full-service property has 11,000 square feet of meeting space and represents FelCor's first hotel in the Denver area and its second hotel in Colorado. The hotel is located 13 miles from the Denver International Airport, five miles from the Denver Tech Center office complex and five miles from the new University of Colorado medical school complex.
On March 24, 1998, FelCor and Bristol Hotel Company announced an agreement under which Bristol's hotel assets will be merged into FelCor. This transaction will solidify FelCor's position as the largest non-paired hotel REIT and will create the largest independent hotel operating company. Under the proposed merger, FelCor will acquire Bristol's real estate holdings in return for 31.1 million shares of newly issued FelCor stock. The transaction is valued at approximately $1.9 billion, including the assumption of approximately $700 million in debt. When the merger is completed, FelCor is expected to have a market capitalization of approximately $4 billion. The merger is expected to be accretive to FelCor's FFO for 1998 and 1999, despite a renovation program that will take 4% of Bristol's rooms out of service in 1998 and 3% in 1999. The merger will add 109 primarily full-service hotels with more than 28,000 rooms to the FelCor portfolio and create another significant relationship for the REIT with Bristol and Holiday Hospitality. In addition to its current standing as the largest owner of Promus-branded hotels, FelCor also will become the world's largest owner of Holiday Hospitality branded hotels as a result of this merger.
On April 20, 1998 FelCor announced the signing of an agreement to purchase
eight upscale, full-service all-suite hotels from Starwood Hotels
Resorts for an aggregate cash purchase price of approximately $245 million.
Six of the eight hotels, following acquisition, are expected to be operated
as Embassy Suites hotels and be managed by an affiliate of Promus Hotel
Corporation, which manages 66 of FelCor's 76 current hotels. As a
part of the overall transaction with Starwood, two of the eight hotels
will be managed by an affiliate of Starwood as Sheraton Suites(R) hotels.
The eight hotels to be acquired have a total of 1,898 suites and attract
both business and leisure travelers. Located in geographically diverse
U.S. markets, the hotels are currently identified as:
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| Embassy Suites - Phoenix (Airport-44th St.), AZ | 229 |
| Embassy Suites - Phoenix (Tempe/ASU), AZ | 224 |
| Embassy Suites Resort - Palm Desert, CA | 198 |
| Embassy Suites - Atlanta (Airport), GA | 233 |
| Embassy Suites - St. Louis (Downtown), MO | 297 |
| Doubletree Guest Suites - Dallas-Ft. Worth (Airport), TX | 308 |
| Doubletree Guest Suites - Ft. Lauderdale (Cypress Creek), FL | 254 |
| Doubletree Guest Suites - Lexington, KY | 155 |
"The new relationships with Bristol and Starwood and the acquisition of these hotel portfolios are a natural extension of FelCor's original business plan of aligning itself with strong professional management companies with a special brand relationship and acquiring hotels below their replacement cost," said Thomas J. Corcoran, Jr., FelCor's President and CEO. "The acquisition of the eight Starwood hotels further expands our very important alliance with Promus, our first strategic partner, by increasing the number of hotels managed by Promus for FelCor by nearly 10%."
Capitalization:
At March 31, 1998 FelCor had in excess of $1 billion in shareholders' equity and its consolidated indebtedness was approximately $494.7 million, of which approximately 79% was fixed rate debt and 21% was floating rate debt. Approximately $153 million was drawn on FelCor's $550 million unsecured revolving line of credit. In addition, FelCor has reduced its consolidated secured indebtedness to approximately $17.8 million, leaving it with unencumbered assets of approximately $1.8 billion, at cost.
"We have ample financial flexibility to allow FelCor to take advantage of acquisition opportunities and the proposed increase in our line of credit will further expand our capacity" stated Randy L. Churchey Senior Vice President and Chief Financial Officer. "While our consolidated debt to total market capitalization was only 25% at March 31, 1998, if the Bristol merger had been completed at that date, our ratio would only have increased to 31%."
FelCor was formed in July of 1994 by the founding president of Embassy Suites hotels, Hervey A. Feldman, and his partner and long-time hotel and restaurant executive Thomas J. Corcoran, Jr. With the purchase of the eight Starwood hotels, FelCor's portfolio will consist of 84 hotels with 20,427 suites and rooms operated under the Embassy Suites, Doubletree Guest Suites, Sheraton(R) and Hilton Suites(R) brands. FelCor's total market capitalization is currently in excess of $2 billion.
With the exception of historical information, the matters discussed
in this news release are "forward looking
statements" as that term is defined in Section 21E of the Securities
Exchange Act of 1934 and are qualified by
cautionary statements contained herein and in FelCor's filings with
the Securities and Exchange Commission.
| First Quarter 1998 | Change from 1st Qtr. 1997 | First Quarter 1998 | Change from 1st Qtr. 1997 | First Quarter 1998 | Change from 1st Qtr. 1997 | |||
| Occupancy % |
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| Original Hotels(13) | 74.4 | -1.2% | 117.69 | 5.8% | 87.51 | 4.5% | ||
| CSS Hotels(18) | 74.8 | 2.3% | 132.95 | 8.9% | 99.48 | 11.5% | ||
| 1996 Acquisitions(12) | 72.1 | -0.1% | 128.56 | 8.8% | 92.66 | 8.6% | ||
| 1997 Acquisitions acquired by
March 31, 1997(15) |
68.5 | -6.2% | 112.57 | 6.5% | 77.06 | -0.1% | ||
| Total for hotels owned at both
March 31, 1998 and 1997(58) |
72.6 | -1.0% | 123.94 | 7.8% | 89.95 | 6.7% | ||
| Remaining 1997 Acquisitions(15) | 71.0 | 0.3% | 115.27 | 2.8% | 81.90 | 3.2% | ||
| 1998 Acquisitions(2) | 66.5 | -3.3% | 96.81 | 3.9% | 64.41 | 0.5% | ||
Note: All hotel performance statistics reflect the hotels' performance in each category for the entire period noted above, whether or not the hotel was owned by FelCor Suite Hotels, Inc. for the entire period.
The Original Hotels, CSS Hotels and 1996 Acquisitions and 15 hotels
from the 1997 Acquisitions were acquired
before March 31, 1997. The comparison of 1998 to 1997 hotel performance
statistics for hotels owned at both
March 31, 1998 and 1997 reflects the results of being under FelCor's
ownership for at least the most recent 12
months.
Also see Felcor Announces Plan to Purchase Eight All-suite Hotels From Starwood, April 20, 1998
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