Hotel Online  Special Report

FelCor's First Quarter Revenue Doubles
and FFO Increases 77%
Hotel Performance Statistics
 
 
Irving, Texas - April 28, 1999 – FelCor Lodging Trust Incorporated (NYSE:FCH), one of the nation’s largest hotel real estate investment trusts (REITs), today announced that first quarter 1999 Funds From Operations (FFO) totaled $73.8 million or $0.97 per share and unit as compared to $41.7 million or $0.94 achieved during the first quarter 1998. These results represent an increase in FFO of 77% and an increase in FFO per share and unit of 3.2%. 

First Quarter Highlights:  

Financial Performance: 

  • Revenues increased 121%
  • Net income available to common shareholders increased 70%
  • FFO per share increased 3.2%
  • Comparable hotel RevPAR increased 2.2% (128 hotels)
  • Holiday–branded comparable hotel RevPAR increased 3.5%
  • Recently renovated and rebranded Crowne Plaza® hotels RevPAR increased 23.3%
  • Sold four non-strategic hotels for an aggregate sales price of $10.5 million
Hotel Renovation, Redevelopment and Rebranding
  • Completed renovations at six hotels totaling $23.8 million
  • Twenty-four additional hotels undergoing renovation
  • Capital expenditures to the hotel portfolio totaled $82 million
  • Approximately 3.5% of room nights out-of-service
  • Two hotels rebranded on April 1, 1999:
 
Prior Brand
New Brand
Location
Doubletree Guest Suites® Embassy Suites® Dallas, Texas
Radisson® Doubletree® Wilmington, Delaware
 
Capitalization
  • Raised $475 million of new debt in April 1999, paid off $250 million term loan due December 31, 1999, and in process of closing an additional$75 million of new debt
  • Declared dividends of $0.55 per common share, $0.4875 per $1.95 Series A Cumulative Convertible preferred share and $0.5625 per depository share evidencing the 9% Series B Cumulative Redeemable Preferred Stock
   
A summary of the financial results for the 1999 and 1998 
periods follow:
Three Months Ended
March 31,
1999
1998
(in thousands, except per
common share and unit data)
Summary Financial Data:
Revenues
$126,917
$57,528 
Net income available to common shareholders 
$ 30,563
$17,995 
Diluted Earnings Per Common Share Information:
Income available to common shareholders before extraordinary charge
$ 0.45
$ 0.51
Extraordinary charge
(0.02)
Net income available to common shareholders
$ 0.45
$ 0.49 
Weighted average shares outstanding
68,344
36,905 
FFO Information:
FFO
$ 73,849
$41,685
FFO per common share and unit
$ 0.97
$ 0.94 
Weighted average shares and units outstanding
75,988
44,575 
 
Doubletree (12 hotels) 6.8%
Embassy Suites (48 hotels) 1.9%
Holiday branded hotels (36 hotels) 3.5%
Sheraton (4 hotels) 3.9%
 
 
Highlights from the non-comparable hotel portfolio include the recently renovated and rebranded Crowne Plaza hotels (nine in total), which produced a 23.3% average RevPAR increase for the quarter over the prior year quarter. More significantly, the average daily rate (ADR) at these nine Crowne Plaza hotels increased 15.4% for the quarter over the prior year quarter. Likewise, ADR at the Bristol non-comparable hotels (34 hotels) increased 12.6% in the quarter. 

"As we expected, RevPAR increases at our comparable hotels in the first quarter 1999 were difficult to achieve due to the absorption of new supply primarily in Texas, Georgia, Arizona and Mississippi," stated Thomas J. Corcoran, Jr., FelCor’s President and Chief Executive Officer. "Much of the new supply is either in the limited service or extended stay segments. Even though approximately 97% of FelCor’s revenue in 1999 will be derived from upscale and full-service hotels like Embassy Suites, Crowne Plaza, Holiday Inn® and Holiday Inn Select, Doubletree and Doubletree Guest Suites, and Sheraton® and Sheraton Suites® hotels, the new supply in these other segments has had a negative impact on RevPAR performance at our hotels. However, supply growth is steadily decreasing," stated Corcoran. 

Four of the hotels acquired in the Bristol merger were sold in the quarter - two in Colorado Springs, Colorado, and one each in Columbia, South Carolina and Flagstaff, Arizona - for an aggregate sales price of $10.5 million. FelCor also has pending sales contracts on two additional hotels acquired from Bristol, which are expected to close within the next couple of months, for an aggregate sales price of approximately $5 million. Three additional hotels acquired from Bristol are being actively offered for sale. 

Hotel Renovation, Redevelopment, and Rebranding: 

Thirty hotels (19 of which are Bristol operated hotels) were undergoing renovation, redevelopment, or rebranding during the quarter, resulting in approximately 157,000 room nights out-of-service, or approximately 3.5% of available room nights. Additionally, many of these projects include renovations to the hotels’ exterior, public areas, meeting spaces and restaurants, which typically has a negative impact on hotel operations. This included 18 Holiday Inn or Holiday Inn Select hotels, six Embassy Suites, three Doubletree, two Sheraton, and one independent hotel. Included are two hotels, which were closed during the quarter for redevelopment, the Allerton Hotel-Chicago, expected to re-open in May 1999 (to be rebranded as a Crowne Plaza) and the Holiday Inn-Tampa Busch Gardens, re-opened in late February, 1999. 

Included in the thirty hotels undergoing renovation are six hotels where renovations, totaling $23.8 million were completed and containing approximately 1,900 rooms, during the quarter as follows: 

 
266-room Embassy Suites ($1.8 million) Kansas City, Missouri
140-room Hampton Inn® ($1.9 million) Marietta, Georgia
167-room Holiday Inn ($2.4 million) Kansas City, Missouri
565-room Holiday Inn ($2.5 million) San Francisco, California
408-room Holiday Inn ($12.0 million) Tampa (Busch Gardens), Florida
395-room Sheraton Gateway ($3.2 million) Atlanta (Airport), Georgia
 
 
"We are enthusiastic about the strong double digit ADR performance of the nine recently renovated Crowne Plaza hotels and of the 34 Bristol non-comparable hotels. The ADR increases from these hotels are similar to the results achieved from the renovation, redevelopment, and rebranding of the Crown Sterling Suites to Embassy Suites hotels in 1997," stated Corcoran. 

FelCor spent $73 million of a planned $160 million on 1999 renovations, redevelopment, and rebranding at 30 hotels and $9 million of additional capital expenditures to maintain the remaining hotels in a competitive condition. Approximately $20 million of the first quarter 1999 renovation expenditures related to the Allerton Hotel-Chicago. 
 
Capitalization: 

On April 1, 1999, FelCor completed a five-year, $375 million Senior Term Loan and a 10-year, $100 million First Mortgage Term Loan. The proceeds from these loans were used to immediately pay off FelCor’s $250 million unsecured term loan, which was to mature on December 31, 1999, and to reduce outstanding borrowings under its existing $850 million Line of Credit. FelCor is also in the process of completing an additional 10-year, $75 million First Mortgage Term Loan expected to be completed by mid-May 1999. The proceeds of this loan also will be used to reduce outstanding borrowings under FelCor’s Line of Credit. 

"We have spent the last few months working to pay off short term debt and to increase the availability under our Line of Credit," stated Randy L. Churchey, FelCor’s Senior Vice President and Chief Financial Officer. "FelCor continues to have one of the more conservative capital structures in the hotel industry. The availability under our Line of Credit and our favorable debt maturity profile will allow FelCor the financial flexibility to complete its renovation, redevelopment, and rebranding strategy and pursue other investment alternatives to increase shareholders value," stated Churchey. 

FelCor’s conservative financial profile is evidenced by the following: 

  • Interest coverage ratio of 3.5x
  • Total debt to annualized EBITDA of 4.2x
  • Borrowing capacity of $345 million under the Line of Credit
  • Consolidated debt equal to 38% of investment in hotels at cost
  • Fixed interest rate debt equal to 62% of total debt
  • Weighted average maturity of fixed interest rate debt of approximately 6 years
  • Mortgage debt to total assets of 11%
  • Debt of less than $11 million and $32 million maturing in the remainder of 1999 and 2000, respectively. 
In addition, FelCor’s FFO payout ratio is approximately 54% and based on the April 27, 1999 closing price for FelCor common stock on the New York Stock Exchange, the annualized dividend yield was 8.7%. 

FelCor Lodging Trust is one of the nation=s largest hotel REITs. Since its initial public offering in 1994 with six hotels and 1,479 suites, FelCor=s portfolio has grown to 189 hotels with nearly 50,000 rooms and suites. The Company=s hotel portfolio is primarily concentrated in the upscale and full-service segments. FelCor is the owner of the largest number of Embassy Suites, Crowne Plaza, Holiday Inn and independently owned Doubletree-branded hotels. Other leading hotel brands under which FelCor=s hotels are operated include Sheraton Suites, Sheraton and Westin®. FelCor has a current market capitalization of approximately $3.7 billion. Additional information on the company can be found on the Web at www.felcor.com

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 and are qualified by cautionary statements contained herein and in FelCor=s filings with the Securities and Exchange Commission. 

 
 
 
FelCor Lodging Trust Incorporated
Results of Operations
(in thousands, except per share and unit data)
 
 
Three Months Ended March 31,
1999 1998
Revenues:
Percentage lease revenue $125,448 $56,060
Equity in income from unconsolidated entities 1,246 1,293
Other revenue 223 175
Total revenue 126,917 57,528
Expenses:
General and administrative 2,244 1,199
Depreciation 36,425 15,887
Taxes, insurance and other 20,953 7,270
Interest expense 28,422 9,731
Minority interest in Operating Partnership 1,320 1,751
Minority interest in other partnerships 806 190
Total expenses 90,170 36,028
Income before extraordinary charge 36,747 21,500
Extraordinary charge - 556
Net income 36,747 20,944
Preferred dividends 6,184 2,949
Net income available to common shareholders $ 30,563 $17,995
Diluted Earnings Per Common Share Information:
Income before extraordinary charge $ 0.45 $ 0.51
Extraordinary charge - (0.02)
Net income available to common shareholders $ 0.45 $ 0.49
Weighted average shares outstanding 68,344 36,905
Funds From Operations (FFO):
Income before extraordinary charge 36,747 21,500
Series B preferred dividends (3,234) -
Depreciation 36,425 15,887
Depreciation for unconsolidated entities 2,591 2,547
Minority interest in Operating Partnership 1,320 1,751
FFO $73,849 $41,685
FFO per common share and unit $ 0.97 $ 0.94
Weighted average shares and units outstanding 75,988 44,575
 
FelCor Lodging Trust Incorporated
Historical and Pro Forma Debt Outstanding
March 31, 1999

 FelCor’s debt outstanding as of March 31, 1999, both on a historical and pro forma basis for the previously described transactions, consists of the following (in thousands):

 
 
 
 

 

  

  

Interest Rate

Historical Outstanding Balance
Pro Forma Outstanding Balance
  

  

Maturity Date
Floating Rate Debt:        
Line of Credit LIBOR + 150bps
$480,000
$305,000
June 2001
Term Loan LIBOR + 150bps
250,000
-
December 1999
Senior Term Loan LIBOR + 250bps
250,000
March 2004
Mortgage debt LIBOR + 200bps
63,000
63,000
December 2002
Other LIBOR + 45bps
25,650
25,650
Various
Total Floating Rate Debt  
818,650
643,650
 
 
 
Fixed Rate Debt:        
Line of Credit-swapped 7.24%
325,000
200,000
June 2001
Publicly-traded term notes 7.38%
174,279
174,279
October 2004
Publicly-traded term notes 7.63%
124,150
124,150
October 2007
Mortgage debt 7.24%
144,212
144,212
November 2007
Senior Term Loan-swapped 8.30%
-
125,000
March 2004
Mortgage debt 7.54%
-
100,000
April 2009
Mortgage debt 7.55%
-
75,000
April 2009
Other 6.96%-7.23%
84,900
84,900
2000-2005
Total Fixed Rate Debt  
852,541
1,027,541
 
Total Debt  
$1,671,191
$1,671,191
 
 

FelCor’s future scheduled debt principal payments at March 31, 1999, pro forma for the previously described transactions, are as follows (in thousands):
 

Year  
Remainder of 1999 $ 10,585
2000 31,240
2001 524,330
2002 9,520
2003 91,211
2004 and thereafter 1,005,877
  1,672,763 
Discount accretion over term (1,572)
  $1,671,191
 
FelCor Lodging Trust Incorporated
Hotel Performance Statistics
March 31, 1999
Comparable Hotels (A)
 
First Quarter 1999
Occupancy
ADR
RevPAR
Original Hotels (11 hotels)……………………………………... 71.2 %
$119.10
$ 84.79
CSS Hotels (18 hotels)…………………………………………. 76.0
135.96
103.27
1996 Acquisitions (12 hotels)………………………………….. 72.0
131.38
94.62
1997 Acquisitions (22 hotels)………………………………….. 72.1
120.78
87.02
1998 Acquisitions (2 hotels)…………………………………… 80.7
111.30
89.86
Total DJONT Comparable Hotels (65 hotels) 73.3
126.75
92.92
Total Bristol Comparable Hotels (63 hotels)…………………... 65.1
81.90
53.36
Total Comparable Hotels (128 hotels)……………….. 69.2 %
$105.76
$ 73.24
First Quarter 1998
Occupancy
ADR
RevPAR
Original Hotels…………………………………………………. 72.9 %
$116.79
$ 85.12
CSS Hotels……………………………………………………... 74.8
132.94
99.48
1996 Acquisitions……………………………………………… 72.1
128.56
92.66
1997 Acquisitions……………………………………………… 71.2
118.86
84.59
1998 Acquisitions……………………………………………… 77.5
107.12
82.99
Total DJONT Comparable Hotels……………………………... 72.9
124.22
90.53
Total Bristol Comparable Hotels………………………………. 67.0
78.72
52.76
Total Comparable Hotels……………………………... 70.0 %
$102.48
$ 71.69
Change from prior period
1st Qtr. 1999 vs. 1st Qtr. 1998
Occupancy
ADR
RevPAR
Original Hotels………………………………………………….
(1.7)
pts.
2.0
%
(0.4)
%
CSS Hotels……………………………………………………... 1.1
2.3
3.8
1996 Acquisitions………………………………………………
(0.1)
2.2
2.1
1997 Acquisitions……………………………………………… 0.9
1.6
2.9
1998 Acquisitions……………………………………………… 3.3
3.9
8.3
Total DJONT Comparable Hotels……………………………... 0.4
2.0
2.6
Total Bristol Comparable Hotels……………………………….
(1.9)
4.0
1.1
Total Comparable Hotels……………………………...
(0.7)
pts.
3.2
% 2.2 %
 
    1. DJONT Comparable Hotels excludes 21 hotels undergoing redevelopment in either the first quarter of 1999 or 1998. Bristol Comparable Hotels excludes 34 hotels undergoing redevelopment in either the first quarter of 1999 or 1998, three individual hotel acquisitions and three hotels targeted for sale.
Non-comparable Hotels
 
 
First Quarter 1999
 
Occupancy
ADR
RevPAR
DJONT Non-comparable Hotels 64.3 % $111.77
$71.91
 
Bristol Non-comparable Hotels (B) 61.8   94.45 
58.32
 
           
 
First Quarter 1998
 
Occupancy
ADR
RevPAR
DJONT Non-comparable Hotels 71.3 % $107.64
$76.72
 
Bristol Non-comparable Hotels (B) 65.9   83.90
55.26
 
 
 
 
Change from prior period
 
1st Qtr. 1999 vs. 1st Qtr. 1998
 
Occupancy
ADR
RevPAR
DJONT Non-comparable Hotels
(7.0)
pts.
3.8
%
(6.3)
%
Bristol Non-comparable Hotels (B)
(4.1)
 
12.6
  5.5  
  (B) Excludes three closed hotels under renovation and three hotels targeted for sale. In aggregate, the three hotels targeted for sale had a 17.9% decline in RevPAR for the first quarter 1999.
 
Note: All hotel performance statistics reflect the hotels’ performance for the entire period noted, whether or not the hotel was owned by FelCor Lodging Trust Incorporated for the entire period.
 
Contact:
Thomas J. Corcoran, Jr.
President & CEO
Randy L. Churchey
Senior Vice President & CFO
Monica L. Hildebrand
Vice President/Director of Communications
(972) 444-4900
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