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Morgans and Royalton to be sold in third quarter

In April 2017, entered into a definitive merger agreement with RLJ Lodging Trust (RLJ)

IRVING, Texas--FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the first quarter ended March 31, 2017. 

First Quarter Highlights

  • Same-store RevPAR was $142.15 compared to $143.97 for the same period in 2016.
  • Net loss attributable to FelCor common stockholders was $42.2 million ($0.31 per share) versus $11.2 million ($0.08 per share) for the same period in 2016.
  • Adjusted FFO per share was $0.09 versus $0.14 for the same period in 2016.
  • Same-store Adjusted EBITDA was $40.1 million versus $43.1 million for the same period in 2016.

“Since our last earnings release, we have continued on our path to recognize and realize the value of our portfolio for all our stockholders,” said Steven R. Goldman, FelCor’s Chief Executive Officer. “Adjusted FFO per share and Adjusted EBITDA for the quarter were in line with our expectations and speak to the quality of our portfolio and its ability to withstand some challenging market conditions.”

“Following the end of the quarter, in addition to the recent merger announcement with RLJ, we finalized agreements to sell Morgans and Royalton in New York City,” continued Mr. Goldman. “For the remainder of the year, we remain focused on operating the business and working to complete our merger with RLJ.”

First Quarter Hotel Results

      First Quarter
        2017         2016       Change
Same-store hotels (38)                  
RevPAR     $ 142.15       $ 143.97       (1.3 )%
Total hotel revenue, in millions     $ 187.4       $ 190.4       (1.6 )%
Hotel EBITDA, in millions     $ 45.2       $ 48.1       (6.1 )%
Hotel EBITDA margin       24.1 %       25.3 %     (116) bps
                           

RevPAR for our 38 same-store hotels decreased 1.3% (to $142.15) from the same period in 2016. The change reflects reductions of 0.1% in average daily rate, or ADR, (to $189.63) and 1.2% in occupancy (to 75.0%). Hotel EBITDA for our 38 same-store hotels decreased 6.1% to $45.2 million, and Hotel EBITDA margin was 24.1%, a 116 basis point decrease. Our RevPAR performance during the quarter was particularly impacted by certain underperforming markets, mainly New York, Boston, San Francisco and Miami. We were able to offset much of the RevPAR weakness through effective cost controls and the Wyndham guaranty.

Wyndham Worldwide Corporation has guaranteed minimum annual NOI for eight of our hotels over the 10-year term of their management agreements. Hotel EBITDA for the three months ended March 31, 2017 includes $1.0 million in fee reductions related to the Wyndham guaranty compared to $48,000 during the same period last year.

See pages 13-14 and 17-20 for more detailed operating data.

First Quarter Operating Results

      First Quarter
$ in millions, except for per share information       2017       2016     Change
Net loss attributable to FelCor common stockholders     $ (42.2 )   $ (11.2 )     (276.7 )%
Net loss per share     $ (0.31 )   $ (0.08 )   $ (0.23 )
Same-store Adjusted EBITDA     $ 40.1     $ 43.1       (7.0 )%
Adjusted EBITDA     $ 40.2     $ 49.0       (17.9 )%
Adjusted FFO per share     $ 0.09     $ 0.14     $ (0.05 )
                           

Net loss attributable to common stockholders was $42.2 million ($0.31 per share) in 2017, compared to $11.2 million ($0.08 per share) for the same period in 2016. Net loss in 2017 includes an impairment charge of $24.8 million attributable to one hotel.

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 14 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.

Balance Sheet

As of March 31, 2017, we had $1.4 billion of consolidated debt with a 5.4% weighted-average interest rate and a six-year weighted-average maturity. We had $50.2 million of cash and cash equivalents on hand and $22.3 million of restricted cash.

Asset Sales

In April and May 2017, we entered into binding agreements for the sale of Morgans and Royalton for a combined price of $92 million. We continue to market The Knickerbocker.

Common Dividend

We paid our first quarter common stock dividend of $0.06 per share at the end of April.

Capital Expenditures

In 2016, we began redeveloping two resort properties (The Vinoy Renaissance St. Petersburg Resort & Golf Club and Embassy Suites Myrtle Beach-Oceanfront Resort). We expect to complete our Myrtle Beach project this month, as scheduled and under budget. These redevelopments are intended to enhance our portfolio quality and offer attractive returns. We spent $19.6 million on renovations and redevelopments at our hotels during the first quarter of 2017.

Outlook

In the first quarter of 2017, our Adjusted FFO per share and Adjusted EBITDA met the expectations on which we based our full-year guidance. We are reaffirming the guidance we provided in our February 23, 2017 earnings release. We do not plan to provide any further updates to our guidance for the remainder of the year, given our pending merger.

RLJ Transaction

On April 24, 2017, we announced that we had entered into a definitive merger agreement under which we will merge with and into a wholly-owned subsidiary of RLJ in an all-stock transaction. At closing, our stockholders are expected to receive 0.362 RLJ common shares for each share of our common stock. The transaction is expected to close by the end of 2017 and is subject to customary closing conditions, including the approval of both companies’ shareholders.

“We believe our recently-announced merger with RLJ will create long-term value for FelCor stockholders,” said Mr. Goldman. “The combined company’s growth profile will make it a formidable competitor among lodging REITs. It will have approximately $7 billion in assets, strong and efficient cash flow margins, and the financial strength and long-term flexibility to grow through accretive acquisitions and continually prune its portfolio to improve the quality of its earnings.”

Mr. Goldman continued, “The RLJ team is committed, experienced, and a proven leader in the lodging industry. I am very pleased for our stockholders - and for RLJ’s shareholders, as this transaction provides meaningful value for all.” 

To view full financial release and corresponding tables please click the PDF icon or visit:
http://ir.felcor.com/phoenix.zhtml?c=118512&p=irol-newsArticle&ID=2271288

About Felcor

FelCor Lodging Trust Incorporated, a real estate investment trust, owns a diversified portfolio of primarily upper-upscale and luxury hotels that are located in major markets and resort locations throughout the U.S. FelCor partners with top hotel companies that operate its properties under globally renowned names and as premier independent hotels. Additional information can be found on the Company’s website at www.felcor.com

Contact: Abi Salami, Manager, Investor Relations

asalami@felcor.com / 972-444-4967

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