October 31, 2013 08:00 AM Eastern Daylight Time

IRVING, Texas--FelCor Lodging Trust Incorporated (NYSE: FCH), today reported operating results for the quarter ended September 30, 2013.

To view full press release and tables please visit: http://phx.corporate-ir.net/phoenix.zhtml?c=118512&p=quarterlyEarnings

Highlights

  • Adjusted FFO per share improved 75% to $0.14.
  • Total hotel revenue for 52 comparable hotels (Same-store hotels excluding eight recently rebranded Wyndham hotels) increased 7.5% to $204.6 million.
  • RevPAR for 52 comparable hotels increased 7.1%.
  • Adjusted EBITDA increased by $1.6 million to $54.8 million, and Same-store Adjusted EBITDA increased by $4.4 million to $53.9 million.
  • Net loss per share improved by $0.18 to $0.05.
  • Sold five hotels in 2013, including three hotels since our second quarter earnings release, for a total of $102.7 million. Currently have executed contracts to sell three additional hotels this year.
  • Reinstating quarterly common stock dividend; declares $0.02 per share fourth quarter dividend.

Commenting on operating results, Richard A. Smith, President and Chief Executive Officer of FelCor, said, "Our portfolio continues to produce solid results. Third quarter comparable Hotel EBITDA increased by almost 13%, led by a 53% increase for our newly acquired and recently redeveloped hotels. We are proud that RevPAR for our comparable portfolio once again outperformed the industry. Based on the outstanding condition of our portfolio and favorable industry fundamentals, our outlook for continued RevPAR growth remains optimistic."

Mr. Smith added, "We continue to make substantial progress repositioning our portfolio. We have sold five hotels this year, for a total of 24 hotels since we began the current phase of dispositions, and have three hotels under contract. Through the combination of asset sales and EBITDA growth, we continue to strengthen our balance sheet, reduce leverage and grow stockholder value. As a result, we are pleased to announce that we have reinstated our common dividend."

Common Dividend:

Our board has declared a $0.02 per share quarterly common stock dividend for the fourth quarter. The board has reinstated our common dividend recognizing the ongoing success of our portfolio repositioning and restructured balance sheet, as well as our positive funds available for distribution ("FAD") this year. The dividend will be paid in January 2014. Future quarterly dividends will be based on estimates of FAD, reinvestment opportunities within our portfolio and taxable net income, among other things.

Summary of Third Quarter Hotel Results:

RevPAR for our 37 comparable core hotels (45 core hotels that exclude the eight Wyndham hotels) increased 7.4% compared to the same period in 2012, while RevPAR for our 15 non-strategic hotels increased 5.5% compared to the same period in 2012.

RevPAR for our 52 comparable hotels (37 comparable core hotels plus 15 non-strategic hotels) was $117.18, a 7.1% increase compared to the same period in 2012. The increase reflects a 4.0% increase in ADR to $151.66 and a 3.0% increase in occupancy to 77.3%.

We believe comparable hotels (which excludes the Wyndham hotels) is the most appropriate measure to assess the ongoing operating performance of our portfolio. The eight Wyndham hotels were rebranded from Holiday Inn to Wyndham on March 1, 2013. RevPAR for those eight hotels declined 20.3% for the third quarter compared to the same period in 2012. This decline reflects the impact of transitioning brands and management companies, including related renovations. Wyndham Worldwide Corporation has guaranteed minimum annual NOI for the eight hotels. We have recorded a $5.2 million pro rata portion of the projected 2013 guaranty through September 30, 2013 (of which $2.4 million is for the third quarter 2013) as a reduction of Wyndham's contractual management and other fees, which is reflected in Hotel EBITDA and Hotel EBITDA margin. In addition, our outlook assumes EBITDA for our Wyndham hotels that equates to the annual NOI guaranty level. We expect revenues at these hotels to show meaningful improvement as the transitional disruption subsides.

For our 52 comparable hotels, total hotel revenue increased 7.5% compared to the same period in 2012. Hotel EBITDA was $52.0 million, 12.7% higher than in the same period in 2012. Hotel EBITDA margin was 25.4% during the quarter, a 119 basis point increase from the same period in 2012.

RevPAR for our 60 Same-store hotels (52 comparable hotels plus the Wyndham hotels) was $114.19, a 2.8% increase compared to the same period in 2012. The increase reflects a 2.6% increase in ADR to $150.18 and a 0.2% increase in occupancy to 76.0%.

See page 15 for hotel portfolio composition and pages 16 and 22 for more detail on hotel portfolio operating data.

Summary of Third Quarter Operating Results:

Same-store Adjusted EBITDA was $53.9 million compared to $49.5 million for the same period in 2012. Adjusted EBITDA (which includes Adjusted EBITDA for sold hotels prior to sale) was $54.8 million compared to $53.2 million for the same period in 2012.

Adjusted FFO was $17.1 million, or $0.14 per share, compared to $0.08 per share in 2012. Net loss attributable to common stockholders was $6.4 million, or $0.05 per share, for the quarter, compared to net loss of $28.7 million, or $0.23 per share, for the same period in 2012. The third quarter included $11.8 million and $9.9 million in net gains on asset sales in 2013 and 2012, respectively. The third quarter of 2012 also included $11.8 million in debt extinguishment charges.

Year-to-Date Operating Results:

RevPAR for 52 comparable hotels was $112.94, a 6.9% increase compared to the same period in 2012. The increase reflects a 4.3% increase in ADR to $150.15 and a 2.4% increase in occupancy to 75.2%. Total hotel revenue for the 52 comparable hotels increased 7.3% from the same period in 2012. RevPAR for our 37 comparable core hotels increased 7.5%, while RevPAR for our 15 non-strategic hotels increased 4.1%.

Same-store Adjusted EBITDA was $150.5 million compared to $138.9 million, for the same period in 2012. Hotel EBITDA margin was 26.1%, a 67 basis point increase from the same period in 2012. Adjusted EBITDA was $157.1 million compared to $160.8 million for the same period in 2012.

Adjusted FFO was $42.3 million, or $0.34 per share, for the nine months ended September 30, 2013, compared to $0.24 per share for the same period in 2012. Net loss attributable to common stockholders was $70.7 million, or $0.57 per share, for the nine months ended September 30, 2013, compared to a net loss of $64.7 million, or $0.52 per share, for the same period in 2012. Net loss for the nine months ended September 30, 2013 included a $19.1 million net gain on asset sales and a $27.7 million impairment charge. Net loss for the same period in 2012 included a $26.6 million net gain on asset sales, a $1.3 million impairment charge and $12.6 million in debt extinguishment charges.

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 18 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:

To date, we have sold 24 (five during 2013) of 39 non-strategic hotels as part of our portfolio repositioning plan. During the third quarter, we sold the 278-room Sheraton Suites Galleria - Atlanta for $21.0 million, the 223-room Embassy Suites - Baton Rouge for $20.0 million and the 244-room DoubleTree - Wilmington for $27.7 million. On October 10, we sold the 277-room Embassy Suites - Jacksonville for $10.0 million. These hotels' operating performance is included in discontinued operations for the third quarter and year-to-date.

We are currently marketing six non-strategic hotels, of which we have agreed to sell three. We will continue using the sale proceeds to repay debt and reduce leverage. The remaining nine non-strategic hotels are owned by joint ventures, and we continue to advance toward agreements with our partners, and expect to begin marketing those properties in early 2014.

Capital Expenditures:

Capital expenditures at our operating hotels were $27.6 million during the quarter, including approximately $13.1 million for redevelopment projects and repositioning our Wyndham hotels.

During 2013, we are investing approximately $65 million on capital improvements and renovations, concentrated mostly at seven hotels, as part of our long-term capital plan. In addition, we are investing approximately $40 million on redevelopment projects (excluding the Knickerbocker) and repositioning our Wyndham hotels. Please see page 12 of this release for more detail on renovations.

In addition to the initial acquisition cost, we have spent $55.1 million (excluding capitalized interest) through September 30, 2013, to redevelop the 4+ star Knickerbocker Hotel. The project remains on budget, and all contracts for hard cost construction have been secured. We now expect the opening of the hotel to be summer of 2014. The hotel's executive team is now in place and fully engaged in the sales and marketing efforts to ensure a successful and strong opening.

Balance Sheet:

As of September 30, 2013, we had $1.6 billion of consolidated debt bearing a 6.3% weighted-average interest rate (113 basis points below last year) and a seven-year weighted-average maturity. We had $68.6 million of cash and cash equivalents as of September 30, 2013. In addition, we had $78.1 million of restricted cash, of which $64.9 million secures our Knickerbocker construction loan.

Outlook:

We have tightened our 2013 outlook to reflect third quarter operating results and updated timing of asset sales. Our previous outlook assumed selling nine hotels during 2013. As of today, we have sold three of those hotels. Our revised outlook assumes the sale of the six remaining hotels (three currently under contract to close during the fourth quarter and three to close at the end of the year). Our outlook continues to assume EBITDA for the Wyndham hotels equates to Wyndham's annual NOI guaranty.

During 2013, we project:

• Comparable RevPAR will increase between 6.5%-7.0%;

• Adjusted EBITDA will be between $199.0 million and $200.5 million;

• Adjusted FFO per share will be between $0.37 and $0.38;

• Net loss attributable to FelCor will be between $63.5 million and $62.0 million; and

• Interest expense, including pro rata share from joint ventures, will be $107.5 million.

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

a) The increase of the low-end reflects the additional EBITDA generated for six hotels that are now assumed to be sold in the fourth quarter.

b) EBITDA from five hotels sold to-date in 2013 from January 1, 2013 through the dates of sale and EBITDA that is forecasted to be generated by six additional hotels assumed to be sold 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 and luxury hotels that are located in major and resort markets. FelCor partners with leading hotel companies to operate its hotels, which are flagged under globally renowned brands and premier independent hotels. Additional information can be found on the Company's website at www.felcor.com.

We invite you to listen to our third quarter earnings Conference Call on Thursday, October 31, 2013 at 11:00 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 the "Investor Relations" page. The conference call replay will also be archived on the Company's website.

Contact: Stephen A. Schafer

sschafer@felcor.com / 972-444-4912

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