• Revenues, after adding back deferred rent, increased 9.2% to $147.6 million from $135.2 million
• Total hotel portfolio, excluding hotels held for sale, (163 hotels) RevPAR increased 9.9%
• EBITDA increased 8.6% to $126.3 million from $116.3 million
• EBITDA per share and unit increased 22.9% to $1.88 from $1.53
• FFO per share and unit increased 13.2% to $1.20 from $1.06
• Net income per share (before nonrecurring items, the reserve for hotels held for sale and after adding back deferred rent of $9.8 million) increased to $0.55 from $0.52
• Comparable hotels, excluding hotels held for sale, (131 hotels) RevPAR increased 8.2%
• Non-comparable hotels, excluding hotels held for sale, (32 hotels) RevPAR increased 18.8%
• Hotels held for sale (25 hotels) RevPAR decreased 2.1%

• FelCor has agreed in principle to purchase DJONT Operations, LLC, one of its two Lessees, currently leasing 86 hotels, effective January 1, 2001, for approximately 417,000 FelCor Lodging Limited Partnership units.
• FelCor has identified 25 non-strategic hotels to be sold, with estimated aggregate net sale proceeds of approximately $136 million.  It has reached an agreement in principle with Bass Hotels & Resorts regarding the termination of the leases on 11 of these hotels for approximately $9 million in FelCor Lodging Limited Partnership units.  In connection with the decision to sell these hotels, FelCor has recorded a one-time reserve, for GAAP accounting purposes, of $63 million in the second quarter of 2000.
• On July 14, FelCor entered into a binding sale contract for its Embassy Suites® hotel- Los Angeles International Airport-North, California (215 suites) for a gross price of approximately $24 million ($112,000 per room).  The Company expects that the sale will close by the end of August 2000, and FelCor will record in the third quarter of 2000 a gain on sale of approximately $3 million.
• Sold 31 acres of vacant excess land adjacent to its 179-room Whispering Woods Hotel, Conference Center and Golf Course in Olive Branch, Mississippi, for approximately $1 million.
• Completed renovations at three hotels during the quarter with 13 additional hotels undergoing renovation at the end of the quarter.
• Renovation expenditures on the Company�s hotel portfolio totaled $8.3 million during the quarter and an additional $10.4 million was spent on maintenance capital expenditures.  There is expected to be an additional $28 million in renovation expenditures and $33 million in maintenance capital expenditures during the remainder of 2000.
• Started construction on a 90-room addition, with an expected cost of $10 million, at the Holiday Inn-French Quarter hotel located on Royal Street in New Orleans, Louisiana.

Capitalization:

• During the second quarter 2000, FelCor repurchased approximately 718,000 common shares for approximately $14.0 million.  For the year 2000, FelCor has repurchased 3.14 million common shares for approximately $56.7 million.
• On August 1, 2000, FelCor renewed, reduced in size, and extended for two years its Senior Revolving Credit Facility.  The new $600 million facility matures in August 2003. The effective interest rate ranges from 87.5 basis points to 250 basis points above LIBOR depending on the Company�s leverage and corporate rating.  The initial spread is 200 basis points.
• FelCor declared second quarter dividends of $0.55 per share on its Common Stock (an annualized dividend yield of approximately 10.1% as of July 31, 2000), $0.4875 per share on its $1.95 Series A Cumulative Convertible Preferred Stock and $0.5625 per depositary share evidencing its 9% Series B Cumulative Redeemable Preferred Stock.

Operating Performance:

• The Company recorded a gain applicable to common shareholders before nonrecurring items, reserve for hotels held for sale, and after adding back deferred rent of $30.4 million in the second quarter of 2000, compared to a gain of $35.7 million in 1999. 
• In the second quarter, FelCor recorded a one-time reserve for GAAP accounting purposes of $63.0 million related to the 25 hotels the Company has identified as held for sale.  This represents the difference between the net book value of the hotels and the estimated net sale proceeds.
• The Company recorded deferred income, under SAB 101 of $9.8 million for the quarter ended June 30, 2000, and $18.6 million, June year-to-date.  The deferred rent should be fully earned and recognized as Percentage Lease Revenue by the end of 2000.
• Interest expense increased, as a percentage of total revenue after adding back deferred rent, from 23% to 27% for the quarter over the prior year period.  FelCor�s total borrowings have increased by approximately $170 million since June 30, 1999, primarily to fund its stock repurchase program and its renovation, redevelopment and rebranding program.  In addition, the average interest rate on the Company�s floating rate debt has increased approximately 130 basis points since the second quarter 1999, as a result of corresponding increases in short term interest rates.

Comparable hotel RevPAR changes (excluding hotels held for sale) for the second quarter 2000 versus 1999 are as follows: 
 

Excluding hotels held for sale, comparable hotels in Texas, California, Florida and Georgia accounted for approximately 58.3% of comparable hotel room revenues in the quarter. The RevPAR changes during the second quarter 2000 versus 1999 from our comparable hotels in these states are as follows: 
 

Acquisition of DJONT

On July 21, 2000, FelCor�s Independent Directors approved the acquisition of 100% of DJONT Operations, LLC and its subsidiaries effective January 1, 2001. The purchase price is approximately 417,000 FelCor Lodging Limited Partnership units (currently valued at $9.1 million based upon the $21.88 closing share price on July 31, 2000). The acquisition of DJONT is expected to have no impact or to be slightly accretive to FelCor�s FFO/share in 2001.

The benefits to FelCor from the purchase of DJONT include: (i) a more direct relationship with the hotel and brand managers, (ii) elimination of potential conflicts of interest and (iii) consolidated hotel level financial reporting. The Company currently expects to acquire its remaining lessee on January 1, 2001, as well.

Hotels Held for Sale

FelCor has identified 25 non-strategic hotels which it intends to sell. The Company expects gross sales proceeds from these hotels to be approximately $150 million and net proceeds to be approximately $136 million (after deducting estimated transaction costs and approximately $11 million in fees to terminate the existing leases and management rights).

The Company anticipates that the sale of these hotels will result in a book loss of approximately $63 million.  Accordingly, FelCor�s Board of Directors approved a $63 million reserve for the hotels held for sale, to reflect the lower of cost or market for these hotels. 
 

     Corcoran stated, �The 25 hotels held for sale include most of our limited service hotels, a number of our small market Holiday Inns, and all seven of our Marriott®-branded hotels, all of which were included in portfolio acquisitions.  These hotels represent 8.3% of total rooms owned by FelCor but only 4.2% of total revenues. The sale of these non-strategic hotels will allow us and our brand managers to focus our energies on our upscale and full service hotels in more strategic markets.�

Financial Profile:
FelCor�s conservative financial profile is evidenced by the following at June 30, 2000: 

• Annual interest coverage ratio of 2.9x
• Total debt to annual EBITDA of 4.2x
• Consolidated debt equal to 41% of its investment in hotels at cost
• Annual FFO payout ratio of approximately 53%
• Borrowing capacity of $440 million under its Line of Credit ($190 million pro forma for renewed Line of Credit)
• Fixed interest rate debt equal to 68% of total debt
• Weighted average maturity of fixed interest rate debt of approximately six years
• Mortgage debt-to-total assets of 19%
• Debt of approximately $17 million maturing for the remainder of 2000

FelCor�s hotel portfolio consists of 188 hotels with nearly 50,000 rooms and suites and is concentrated primarily in the upscale and full-service segments. 

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