FelCor’s
First Quarter Results Exceed Expectations
- Resolves Remaining
2010 Debt Maturities
- Increases 2010
Guidance
IRVING,
Texas-- May 3, 2010 --FelCor Lodging Trust Incorporated (NYSE: FCH)
today reported operating results for the first quarter ended
March 31, 2010.
Summary:
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• |
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Today, we closed a $212 million
mortgage loan secured by nine hotels. Proceeds were used to repay six
mortgage loans totaling $210 million that were secured by 11 hotels (we
unencumbered two hotels) and were scheduled to mature in May.
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• |
|
Adjusted EBITDA was $38.5
million for the quarter, which was significantly better than internal
expectations. Adjusted FFO per share was $(0.17) for the quarter. These
were $5 million and $0.08 better than analysts’ original estimates.
|
|
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|
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• |
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RevPAR
at our 83 consolidated hotels decreased only 0.5% for the quarter,
compared to a 2.1% decline nationally. Our portfolio continues to gain
market share. |
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|
|
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• |
|
Hotel
EBITDA margin decreased only 177 basis points for the quarter. Positive
flow-through on the improvement to budgeted revenue was 63%,
notwithstanding the improvement in revenue was from increased occupancy. |
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|
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• |
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Net
loss for the quarter was $62.9 million. |
First
Quarter Operating Results:
Revenue per
available room (“RevPAR”) for our 83 consolidated hotels was $82.87, a
0.5% decline compared to the same period in 2009, which was better than
the 2.1% decline for the industry (according to Smith Travel Research)
and better than our hotels’ competitive sets. Our slight RevPAR decline
was driven by a 7.9% increase in occupancy to 67.9%, but offset by a
7.8% decline in average daily rate (“ADR”) to $122.06, compared to the
same period in 2009. Occupancy increased at 65 of our hotels during the
quarter. Market share in the quarter for our portfolio continued to
improve. RevPAR for our 83 consolidated hotels increased 4.9% during
March, compared to prior year, as occupancy increased 11.3%.
Additionally, the rate decline improved in March relative to the
quarter.
“The pace of
the recovery in the lodging industry has been more robust than
anticipated, leading to much stronger than expected RevPAR. The
corporate transient, leisure and group segments are improving.
Importantly, occupancy gains were strong throughout the week, led by
Tuesday and Wednesday, and corporate transient room nights increased 7%
during the quarter. Although corporate transient and group occupancies
have begun to grow, our visibility into future trends remains somewhat
limited, and booking windows are exceptionally short. Therefore, we
remain intently focused on gaining market share and optimizing the mix
of business to maximize rates,” said Richard A. Smith, FelCor’s
President and Chief Executive Officer.
“As the
recovery takes hold, we will continue to benefit from our diversified,
high-quality portfolio which should continue to outperform the
industry. We now have completed our near-term balance sheet initiatives
and are well-positioned to benefit from a broad economic recovery. We
are ready to take advantage of opportunities to augment growth and
continue to seek ways to increase shareholder value,” added Mr. Smith.
Hotel EBITDA
for the quarter was $51.0 million, compared to $55.5 million
for the same period in 2009. Hotel EBITDA margin was 22.6%, a 177 basis
point decrease compared to 2009. Positive flow-through on the
improvement to budgeted revenue was 63%, notwithstanding the
improvement in revenue was from increased occupancy. Hotel EBITDA
represents EBITDA generated by our 83 consolidated hotels prior to
corporate expenses and joint venture adjustments.
Adjusted
EBITDA for the quarter was $38.5 million, compared to
$47.4 million in 2009. Adjusted EBITDA in the prior year period
includes EBITDA from hotels sold in 2009.
Adjusted funds
from operations (“FFO”) for the quarter was $(10.6) million, or
$(0.17) per share, compared to $13.8 million, or $0.22 per share,
in 2009. The change in Adjusted FFO is largely attributed to a
$14.9 million increase in interest expense, compared to 2009.
Net loss
attributable to common stockholders for the quarter was
$72.1 million, or $1.14 per share, compared to a net loss of
$30.7 million, or $0.49 per share, for 2009. Net loss in the
current year included a $21.1 million impairment charge related to
two hotels that we expect to transfer to the lenders in satisfaction of
the related debt.
EBITDA,
Adjusted EBITDA, Same Store Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA
margin, FFO, Adjusted FFO and Same-Store Adjusted FFO 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:
At
March 31, 2010, we had $1.77 billion of consolidated debt
outstanding, with a weighted average interest rate of 7.28%, and
$276 million of cash and cash equivalents.
Today, we
entered into a new $212 million loan, secured by nine hotels, that
matures in 2015. The new loan bears interest at LIBOR (subject to a
3.0% floor) plus 5.1%. The proceeds were used to repay
$210 million in loans that were secured by 11 hotels and were
scheduled to mature in May. With this financing, we resolved all of our
remaining 2010 debt maturities on terms that are significantly more
favorable than the debt it refinanced, and we were able to unencumber
two previously mortgaged hotels. Two remaining loans (totaling
$32 million) mature in May 2010. The cash flows for the hotels
that secure those loans do not cover debt service, and we stopped
funding the shortfalls in December 2009. We have been unable to
negotiate an acceptable debt modification or reduction that made sense
for our stockholders with regard to these loans. Therefore, these two
hotels will be transferred to the lenders in full satisfaction of the
debt.
“We are very
pleased with the successful refinancing of our near-term debt
maturities. Our efforts are complete, as we have now resolved all of
our remaining 2010 maturities. The most recent refinancing improves our
balance sheet by lowering our average interest rate and providing us
with two additional unencumbered hotels. We will continue to look for
additional opportunities to strengthen our balance sheet as the capital
markets improve,” said Andrew J. Welch, FelCor’s Executive Vice
President and Chief Financial Officer.
Portfolio
Management:
For the
quarter ended March 31, 2010, we spent $8.6 million on
capital expenditures at our hotels (including our pro rata share of
joint venture expenditures).
During the
quarter, we sold the Holiday Inn Express in Salina, Kansas for
$3.7 million. This hotel was part of an unconsolidated joint
venture that involved three other hotels located in Kansas, all of
which have been sold.
Outlook:
The pace of
the recovery in the lodging industry has increased, reflecting improved
corporate transient and group demand. Recent economic data indicates
that demand will continue to improve as the capital markets, business
activity and consumer confidence improve. Although occupancy is
recovering, our hotels still have not achieved sufficient compression
to begin widespread changes in the customer mix, which are necessary to
boost rates. Therefore, ADR remains below prior year levels. Although
we continue to implement strict cost controls, higher occupancy and
lower rates will impact operating margins.
We expect our
portfolio RevPAR to outperform the industry as a result of our
high-quality, renovated portfolio. Additionally, our hotels are
relatively less affected by new supply growth because the average
number of rooms under construction in our markets is 28% lower than the
industry.
For 2010 we
anticipate:
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• |
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RevPAR to increase between 0%
and 3%; |
|
|
|
|
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• |
|
Adjusted
EBITDA to be
between $166 million and $177 million; |
|
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|
|
|
• |
|
Adjusted
FFO per share to be
between $(0.47) and $(0.30); |
|
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|
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|
• |
|
Net
loss to be between
$157 million and $146 million; and |
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• |
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Interest
expense to be
approximately $151 million. |
FelCor, a real
estate investment trust, is the nation’s largest owner of
upper-upscale, all-suite hotels. FelCor owns interests in 84 hotels and
resorts, located in 23 states and Canada. FelCor’s portfolio consists
primarily of upper-upscale hotels, which are flagged under global
brands - Embassy Suites Hotels®, Doubletree ®, Hilton®, Marriott®, Renaissance®, Sheraton®, Westin® and Holiday Inn®. Additional
information can be found on the Company’s Web site at www.felcor.com.
We invite you
to listen to our first quarter earnings Conference Call on Tuesday, May
4, 2010, at 11:00 a.m. (Central Time). The conference call will be
Web cast simultaneously via the Internet on FelCor’s Web site at www.felcor.com.
Interested investors and other parties who wish to access the call
should go to FelCor’s Web site and click on the conference call
microphone icon on either the “Investor Relations” or “News Releases”
page. The conference call replay will be archived on the Company’s Web
site.
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. These forward-looking statements are
identified by their use of terms and phrases such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“predict,” “project,” “should,” “will,” “continue” and other similar
terms and phrases, including references to assumptions and forecasts of
future results. Forward-looking
statements are not guarantees of future performance. Numerous risks and
uncertainties, and the occurrence of future events, may cause actual
results to differ materially from those anticipated at the time the
forward-looking statements are made. Current economic
circumstances or a further economic slowdown and the impact on the
lodging industry, operating risks associated with the hotel business,
relationships with our property managers, risks associated with our
level of indebtedness and our ability to meet debt covenants in our
debt agreements, our ability to complete acquisitions, dispositions and
debt refinancing, the availability of capital, the impact on the travel
industry from increased fuel prices and security precautions, our
ability to continue to qualify as a Real Estate Investment Trust for
federal income tax purposes and numerous other factors may affect
future results, performance and achievements. Certain of these risks
and uncertainties are described in greater detail in our filings with
the Securities and Exchange Commission. Although we believe our current
expectations to be based upon reasonable assumptions, we can give no
assurance that our expectations will be attained or that actual results
will not differ materially. We
undertake no obligation to update any forward-looking statement to
conform the statement to actual results or changes in our expectations.
SUPPLEMENTAL
INFORMATION
INTRODUCTION
The following
information is presented in order to help our investors understand
FelCor’s financial position as of and for the three months ended
March 31, 2010.
TABLE
OF CONTENTS
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|
PAGE
|
Consolidated
Statements of Operations(a) |
|
6 |
Consolidated
Balance Sheets(a) |
|
7 |
Capital
Expenditures |
|
8 |
Supplemental
Financial Data |
|
8 |
Debt
Summary |
|
9 |
Schedule
of Encumbered Hotels |
|
10 |
Hotel
Portfolio Composition |
|
11 |
Detailed
Operating Statistics by Brand |
|
12 |
Detailed
Operating Statistics for FelCor’s Top Markets |
|
13 |
Non-GAAP
Financial Measures |
|
14 |
(a) Our
consolidated statements of operations and balance sheets have been
prepared without audit. Certain information and footnote disclosures
normally included in financial statements presented in accordance with
GAAP have been omitted. The consolidated statements of operations and
balance sheets should be read in conjunction with the consolidated
financial statements and notes thereto included in our most recent
Quarterly Report on Form 10-Q.
|
|
|
Consolidated Statements of
Operations
(in thousands, except per share
data)
|
|
|
|
|
|
Three
Months Ended
March 31,
|
|
|
|
2010 |
|
|
|
2009 |
|
Revenues: |
|
|
|
|
Hotel
operating revenue: |
|
|
|
|
Room |
|
$ |
177,260 |
|
|
$ |
178,179 |
|
Food
and beverage |
|
|
35,496 |
|
|
|
35,851 |
|
Other
operating departments |
|
|
13,283 |
|
|
|
13,703 |
|
Other
revenue |
|
|
365 |
|
|
|
286 |
|
Total
revenues |
|
|
226,404 |
|
|
|
228,019 |
|
Expenses: |
|
|
|
|
Hotel
departmental expenses: |
|
|
|
|
Room |
|
|
47,787 |
|
|
|
45,222 |
|
Food
and beverage |
|
|
27,909 |
|
|
|
27,887 |
|
Other
operating departments |
|
|
6,086 |
|
|
|
6,136 |
|
Other
property related costs |
|
|
65,604 |
|
|
|
65,354 |
|
Management
and franchise fees |
|
|
10,535 |
|
|
|
11,141 |
|
Taxes,
insurance and lease expense |
|
|
24,680 |
|
|
|
24,662 |
|
Corporate
expenses |
|
|
9,847 |
|
|
|
6,122 |
|
Depreciation
and amortization |
|
|
37,598 |
|
|
|
36,651 |
|
Impairment
loss |
|
|
21,060 |
|
|
|
- |
|
Other
expenses |
|
|
561 |
|
|
|
696 |
|
Total
operating expenses |
|
|
251,667 |
|
|
|
223,871 |
|
|
|
|
|
|
Operating
income (loss) |
|
|
(25,263 |
) |
|
|
4,148 |
|
Interest
expense, net |
|
|
(36,240 |
) |
|
|
(21,292 |
) |
Loss
before equity in income (loss) from unconsolidated entities |
|
|
(61,503 |
) |
|
|
(17,144 |
) |
Equity
in income (loss) from unconsolidated entities |
|
|
(1,474 |
) |
|
|
(3,424 |
) |
Loss
from continuing operations |
|
|
(62,977 |
) |
|
|
(20,568 |
) |
Discontinued
operations |
|
|
35 |
|
|
|
(854 |
) |
Net
loss |
|
|
(62,942 |
) |
|
|
(21,422 |
) |
Net
loss attributable to noncontrolling interests in other partnerships |
|
|
229 |
|
|
|
216 |
|
Net
loss attributable to redeemable noncontrolling interests in FelCor LP |
|
|
325 |
|
|
|
142 |
|
Net
loss attributable to FelCor |
|
|
(62,388 |
) |
|
|
(21,064 |
) |
Preferred
dividends |
|
|
(9,678 |
) |
|
|
(9,678 |
) |
Net
loss attributable to FelCor common stockholders |
|
$ |
(72,066 |
) |
|
$ |
(30,742 |
) |
Basic
and diluted per common share data: |
|
|
|
|
Loss
from continuing operations |
|
$ |
(1.14 |
) |
|
$ |
(0.47 |
) |
Net
loss |
|
$ |
(1.14 |
) |
|
$ |
(0.49 |
) |
Basic
and diluted weighted average common shares outstanding |
|
|
63,475 |
|
|
|
62,989 |
|
|
|
|
|
|
Consolidated Balance Sheets
(in thousands)
|
|
|
|
|
|
|
|
March 31,
2010
|
|
December 31,
2009
|
Assets |
|
|
|
|
Investment in hotels, net of
accumulated depreciation of $936,120 at March 31, 2010 and $916,604 at
December 31, 2009
|
|
$
|
2,131,646
|
|
|
$
|
2,180,394
|
|
Investment
in unconsolidated entities |
|
|
80,230 |
|
|
|
82,040 |
|
Cash
and cash equivalents |
|
|
276,008 |
|
|
|
263,531 |
|
Restricted
cash |
|
|
18,943 |
|
|
|
18,708 |
|
Accounts receivable, net of
allowance for doubtful accounts of $317 at March 31, 2010 and $406 at
December 31, 2009
|
|
|
35,285 |
|
|
|
28,678 |
|
Deferred expenses, net of
accumulated amortization of $16,130 at March 31, 2010 and $14,502 at
December 31, 2009
|
|
|
19,825 |
|
|
|
19,977 |
|
Other
assets |
|
|
32,902 |
|
|
|
32,666 |
|
Total
assets |
|
$ |
2,594,839 |
|
|
$ |
2,625,994 |
|
|
|
|
|
|
Liabilities
and Equity |
|
|
|
|
Debt, net of discount of $61,764
at March 31, 2010 and $64,267 at December 31, 2009
|
|
$
|
1,771,115
|
|
|
$
|
1,773,314
|
|
Distributions
payable |
|
|
47,258 |
|
|
|
37,580 |
|
Accrued
expenses and other liabilities |
|
|
162,859 |
|
|
|
131,339 |
|
|
|
|
|
|
Total
liabilities |
|
|
1,981,232 |
|
|
|
1,942,233 |
|
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interests in FelCor LP at redemption value, 295 units issued and
outstanding at March 31, 2010 and December 31, 2009
|
|
|
1,681 |
|
|
|
1,062 |
|
|
|
|
|
|
Equity: |
|
|
|
|
Preferred
stock, $0.01 par value, 20,000 shares authorized: |
|
|
|
|
Series A Cumulative Convertible
Preferred Stock, 12,880 shares, liquidation value of $322,011, issued
and outstanding at March 31, 2010 and December 31, 2009
|
|
|
309,362 |
|
|
|
309,362 |
|
Series C Cumulative Redeemable
Preferred Stock, 68 shares, liquidation value of $169,950, issued and
outstanding at March 31, 2010 and December 31, 2009
|
|
|
169,412 |
|
|
|
169,412 |
|
Common stock, $.01 par value,
200,000 shares authorized and 69,413 shares issued, including shares in
treasury, at March 31, 2010 and December 31, 2009
|
|
|
694 |
|
|
|
694 |
|
Additional
paid-in capital |
|
|
2,022,235 |
|
|
|
2,021,837 |
|
Accumulated
other comprehensive income |
|
|
25,598 |
|
|
|
23,528 |
|
Accumulated
deficit |
|
|
(1,864,898 |
) |
|
|
(1,792,822 |
) |
Less: Common stock in treasury,
at cost, of 3,985 shares at March 31, 2010 and 3,845 shares at December
31, 2009
|
|
|
(72,229 |
) |
|
|
(71,895
|
)
|
|
|
|
|
|
Total
FelCor stockholders’ equity |
|
|
590,174 |
|
|
|
660,116 |
|
Noncontrolling
interests in other partnerships |
|
|
21,752 |
|
|
|
22,583 |
|
Total
equity |
|
|
611,926 |
|
|
|
682,699 |
|
|
|
|
|
|
Total
liabilities and equity |
|
$ |
2,594,839 |
|
|
$ |
2,625,994 |
|
|
|
Capital Expenditures
(in thousands)
|
|
|
|
Three
Months Ended
March 31,
|
|
|
2010 |
|
|
|
2009 |
|
Improvements
and additions to majority-owned hotels |
$ |
8,200 |
|
|
$ |
25,274 |
|
Consolidated
joint venture partners’ pro rata share of additions to hotels |
|
(36 |
) |
|
|
(254 |
) |
Pro
rata share of unconsolidated additions to hotels |
|
426 |
|
|
|
1,462 |
|
Total
additions to hotels(a) |
$ |
8,590 |
|
|
$ |
26,482 |
|
(a) Includes
capitalized interest, property taxes, ground leases and certain
employee costs.
|
|
|
|
Supplemental Financial Data
(in thousands, except per share
information)
|
|
|
|
|
|
March
31, |
|
December
31, |
Total
Enterprise Value |
|
2010 |
|
|
|
2009 |
|
Common
shares outstanding |
|
65,428 |
|
|
|
65,568 |
|
Units
outstanding |
|
295 |
|
|
|
295 |
|
Combined
shares and units outstanding |
|
65,723 |
|
|
|
65,863 |
|
Common
stock price |
$ |
5.70 |
|
|
$ |
3.60 |
|
Market
capitalization |
$ |
374,621 |
|
|
$ |
237,107 |
|
Series
A preferred stock |
|
309,362 |
|
|
|
309,362 |
|
Series
C preferred stock |
|
169,412 |
|
|
|
169,412 |
|
Consolidated
debt |
|
1,771,115 |
|
|
|
1,773,314 |
|
Noncontrolling
interests of consolidated debt |
|
(3,904 |
) |
|
|
(3,971 |
) |
Pro
rata share of unconsolidated debt |
|
105,635 |
|
|
|
107,481 |
|
Cash
and cash equivalents |
|
(276,008 |
) |
|
|
(263,531 |
) |
Total
enterprise value (TEV) |
$ |
2,450,233 |
|
|
$ |
2,329,174 |
|
|
|
|
|
|
|
|
|
|
Consolidated Debt Summary
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate |
|
Maturity
Date |
|
March
31, 2010 |
|
Pro
Forma(a) |
Mortgage
debt(b) |
|
|
8.73 |
% |
|
May
2010 |
|
$ |
111,758 |
|
|
$ |
- |
CMBS
debt(c) |
|
|
8.70 |
|
|
May
2010 |
|
|
97,933 |
|
|
|
- |
CMBS
debt(d) |
|
|
8.62 |
|
|
May
2010 |
|
|
31,740 |
|
|
|
31,740 |
Senior
notes |
|
|
8.50 |
(e) |
|
June
2011 |
|
|
86,622 |
|
|
|
86,622 |
CMBS
debt |
|
|
6.15 |
|
|
June
2011 |
|
|
13,631 |
|
|
|
13,631 |
Mortgage
debt |
|
L
+ |
3.50 |
(f) |
|
August
2011(g) |
|
|
199,675 |
|
|
|
199,675 |
CMBS
debt |
|
L
+ |
0.93 |
(h) |
|
November
2011(i) |
|
|
250,000 |
|
|
|
250,000 |
Mortgage
debt |
|
L
+ |
1.55 |
(j) |
|
May
2012(k) |
|
|
176,627 |
|
|
|
176,627 |
CMBS
debt |
|
|
8.77 |
|
|
May
2013 |
|
|
27,770 |
|
|
|
27,770 |
Mortgage
debt |
|
|
9.02 |
|
|
April
2014 |
|
|
116,407 |
|
|
|
116,407 |
CMBS
debt |
|
|
6.66 |
|
|
June-August
2014 |
|
|
70,484 |
|
|
|
70,484 |
Senior
secured notes(l) |
|
|
10.00 |
|
|
October
2014 |
|
|
574,913 |
|
|
|
574,913 |
Mortgage
debt |
|
L
+ |
5.10 |
(m)
|
|
April
2015 |
|
|
- |
|
|
|
212,000 |
CMBS
debt |
|
|
5.81 |
|
|
July
2016 |
|
|
11,636 |
|
|
|
11,636 |
Capital
lease and other |
|
|
9.09 |
|
|
Various |
|
|
1,919 |
|
|
|
1,919 |
Total |
|
|
|
|
|
|
|
$ |
1,771,115 |
|
|
$ |
1,773,424 |
(a) |
|
Pro
forma reflects the new $212 million mortgage loan and repayment of
loans aggregating $210 million as if they occurred on March 31, 2010. |
(b) |
|
This loan was refinanced in May
2010. As the result of this refinancing, two previously encumbered
hotels were unencumbered.
|
(c) |
|
These loans were refinanced in
May 2010.
|
(d) |
|
We have been unable to negotiate
an acceptable debt modification or reduction that made sense for our
stockholders with regard to these loans. Therefore, these two hotels
will be transferred to the lenders in full satisfaction of the debt.
|
(e) |
|
As
a result of a rating down-grade in February 2009, the interest rate on
our 8½% senior notes due 2011 increased to 9%. |
(f) |
|
LIBOR
for this loan is subject to a 2% floor. |
(g) |
|
This
loan can be extended for as many as two years, subject to satisfying
certain conditions. |
(h) |
|
We
have purchased an interest rate cap that caps LIBOR at 7.8% and expires
in November 2010 for this notional amount. |
(i) |
|
The
maturity date assumes that we will exercise the remaining one-year
extension option that is exercisable, at our sole discretion, and would
extend the current November 2010 maturity to 2011. |
(j) |
|
We
have purchased interest rate caps that cap LIBOR at 6.5% and expire in
May 2010 for aggregate notional amounts of $177 million. |
(k) |
|
We
have exercised the first of three successive one-year extension options
that permit, at our sole discretion, the original May 2009 maturity to
be extended to 2012. |
(l) |
|
These
notes have $636 million in aggregate principal and were sold at a
discount for an effective yield of 12.875% before transaction costs. |
(m)
|
|
LIBOR for this loan is subject
to a 3% floor. We have purchased interest rate caps that cap LIBOR at
5% and expire in May 2012 for notional amounts aggregating $212 million.
|
|
|
|
|
|
Pro Forma Schedule of
Encumbered Hotels(a)
(dollars in millions)
|
|
|
|
|
|
Consolidated Debt
|
|
March
31, 2010 Balance |
|
Encumbered Hotels
|
CMBS
debt(b) |
|
$ |
32 |
|
|
Chicago
Deerfield – ES and Piscataway – ES |
|
|
|
|
|
|
CMBS
debt(b) |
|
$ |
14 |
|
|
Boca
Raton – ES and Wilmington – DT |
|
|
|
|
|
|
Mortgage
debt |
|
$ |
200 |
|
|
Charlotte SouthPark – DT,
Houston Medical Center – HI, Myrtle Beach – HLT, Mandalay Beach – ES,
Nashville Airport – ES, Philadelphia Independence Mall – HI, Pittsburgh
University Center – HI and Santa Monica at the Pier – HI
|
|
|
|
|
|
|
CMBS
debt |
|
$ |
250 |
|
|
Anaheim – ES, Bloomington – ES,
Charleston Mills House – HI, Dallas DFW South – ES, Deerfield Beach –
ES, Jacksonville – ES, Lexington – HS, Dallas Love Field – ES,
Raleigh/Durham – DTGS, San Antonio Airport – HI, Tampa Rocky Point –
DTGS and Phoenix Tempe – ES
|
|
|
|
|
|
|
Mortgage
debt(b) |
|
$ |
177 |
|
|
Esmeralda Resort & Spa – REN
and Vinoy Resort & Golf Club – REN
|
|
|
|
|
|
|
CMBS
debt |
|
$ |
28 |
|
|
New
Orleans Convention Center – ES |
|
|
|
|
|
|
Mortgage
debt |
|
$ |
116 |
|
|
Baton Rouge – ES, Birmingham –
ES, Ft. Lauderdale – ES, Miami Airport – ES, Milpitas – ES, Minneapolis
Airport – ES and Napa Valley – ES
|
|
|
|
|
|
|
CMBS
debt(b) |
|
$ |
70 |
|
|
Atlanta Airport – ES, Austin –
DTGS, BWI Airport – ES, Orlando Airport – HI and Phoenix Biltmore – ES
|
|
|
|
|
|
|
Senior
secured notes |
|
$ |
575 |
|
|
Atlanta Airport – SH, Boston
Beacon Hill – HI, Dallas Market Center – ES, Myrtle Beach Resort – ES,
Nashville Opryland – Airport – HI, New Orleans French Quarter – HI,
Orlando North – ES, Orlando Walt Disney World® - DTGS, San Diego on the
Bay – HI, San Francisco Burlingame – ES, San Francisco Fisherman’s
Wharf – HI, San Francisco Union Square – MAR, Toronto Airport – HI and
Toronto Yorkdale – HI
|
|
|
|
|
|
|
Mortgage
debt |
|
$ |
212 |
|
|
Atlanta Buckhead – ES, Atlanta
Galleria – SS, Boston Marlboro – ES, Burlington – SH, Corpus Christi –
ES, Ft. Lauderdale Cypress Creek – SS, Orlando South – ES, Philadelphia
Society Hill – SH and South San Francisco – ES
|
|
|
|
|
|
|
CMBS
debt |
|
$ |
12 |
|
|
Indianapolis
North – ES |
|
|
|
|
|
|
Capital
lease and other |
|
$ |
2 |
|
|
St.
Paul – ES |
(a) Pro forma
reflects the new $212 million mortgage loan and repayment of loans
aggregating $210 million as if they occurred on March 31,
2010.
(b) The hotels
under this debt are subject to separate loan agreements and are not
cross collateralized.
Hotel
Portfolio Composition
The following
table illustrates the distribution of our 83 Consolidated Hotels by
brand, market and location at March 31, 2010.
Brand
|
|
Hotels
|
|
Rooms
|
|
%
of
Total Rooms
|
|
%
of 2009
Hotel EBITDA(a)
|
Embassy
Suites Hotels |
|
47 |
|
12,132 |
|
51 |
|
60 |
Holiday
Inn |
|
15 |
|
5,154 |
|
22 |
|
18 |
Sheraton
and Westin |
|
9 |
|
3,217 |
|
13 |
|
9 |
Doubletree |
|
7 |
|
1,471 |
|
6 |
|
7 |
Renaissance
and Marriott |
|
3 |
|
1,321 |
|
6 |
|
3 |
Hilton |
|
2 |
|
559 |
|
2 |
|
3 |
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
South
Florida |
|
5 |
|
1,439 |
|
6 |
|
8 |
Los
Angeles area |
|
4 |
|
899 |
|
4 |
|
6 |
Atlanta |
|
5 |
|
1,462 |
|
6 |
|
6 |
Orlando |
|
4 |
|
1,038 |
|
4 |
|
4 |
Philadelphia |
|
2 |
|
729 |
|
3 |
|
4 |
Minneapolis |
|
3 |
|
736 |
|
3 |
|
4 |
San
Francisco area |
|
6 |
|
2,138 |
|
9 |
|
4 |
Dallas |
|
4 |
|
1,333 |
|
6 |
|
4 |
Central
California Coast |
|
2 |
|
408 |
|
2 |
|
4 |
San
Antonio |
|
3 |
|
874 |
|
4 |
|
3 |
Myrtle
Beach |
|
2 |
|
640 |
|
3 |
|
3 |
Boston |
|
2 |
|
532 |
|
2 |
|
3 |
San
Diego |
|
1 |
|
600 |
|
3 |
|
3 |
Northern
New Jersey |
|
3 |
|
756 |
|
3 |
|
3 |
Other |
|
37 |
|
10,270 |
|
42 |
|
41 |
|
|
|
|
|
|
|
|
|
Location
|
|
|
|
|
|
|
|
|
Suburban |
|
35 |
|
8,781 |
|
37 |
|
32 |
Urban |
|
20 |
|
6,358 |
|
27 |
|
27 |
Airport |
|
18 |
|
5,788 |
|
24 |
|
24 |
Resort |
|
10 |
|
2,927 |
|
12 |
|
17 |
(a) Hotel
EBITDA is more fully described on page 19.
|
|
|
Detailed
Operating Statistics by Brand
(83 consolidated hotels)
|
|
|
|
|
|
Occupancy
(%) |
|
|
Three
Months Ended March 31, |
|
|
|
|
2010 |
|
2009 |
|
%Variance |
Embassy
Suites Hotels |
|
70.2 |
|
66.5 |
|
5.6 |
|
Holiday
Inn |
|
67.6 |
|
62.5 |
|
8.1 |
|
Sheraton
and Westin |
|
63.4 |
|
55.0 |
|
15.2 |
|
Doubletree |
|
70.0 |
|
63.6 |
|
10.1 |
|
Renaissance
and Marriott |
|
65.3 |
|
56.3 |
|
16.0 |
|
Hilton |
|
46.2 |
|
47.3 |
|
(2.3 |
) |
|
|
|
|
|
|
|
Total
hotels |
|
67.9 |
|
62.9 |
|
7.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADR
($) |
|
|
Three
Months Ended March 31, |
|
|
|
|
2010 |
|
2009 |
|
%Variance |
Embassy
Suites Hotels |
|
128.79 |
|
138.64 |
|
(7.1 |
) |
Holiday
Inn |
|
104.30 |
|
110.45 |
|
(5.6 |
) |
Sheraton
and Westin |
|
104.88 |
|
118.11 |
|
(11.2 |
) |
Doubletree |
|
118.75 |
|
139.17 |
|
(14.7 |
) |
Renaissance
and Marriott |
|
183.84 |
|
201.68 |
|
(8.8 |
) |
Hilton |
|
95.75 |
|
97.59 |
|
(1.9 |
) |
|
|
|
|
|
|
|
Total
hotels |
|
122.06 |
|
132.37 |
|
(7.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RevPAR
($) |
|
|
Three
Months Ended March 31, |
|
|
|
|
2010 |
|
2009 |
|
%Variance |
Embassy
Suites Hotels |
|
90.43 |
|
92.22 |
|
(1.9 |
) |
Holiday
Inn |
|
70.52 |
|
69.06 |
|
2.1 |
|
Sheraton
and Westin |
|
66.51 |
|
65.01 |
|
2.3 |
|
Doubletree |
|
83.12 |
|
88.47 |
|
(6.0 |
) |
Renaissance
and Marriott |
|
120.08 |
|
113.55 |
|
5.8 |
|
Hilton |
|
44.21 |
|
46.13 |
|
(4.2 |
) |
|
|
|
|
|
|
|
Total
hotels |
|
82.87 |
|
83.30 |
|
(0.5 |
) |
|
|
Detailed Operating Statistics
for FelCor’s Top Markets
(83 consolidated hotels)
|
|
|
|
Occupancy
(%) |
|
Three
Months Ended March 31, |
|
|
|
2010 |
|
2009 |
|
%
Variance |
South
Florida |
85.1 |
|
79.3 |
|
7.4 |
|
Los
Angeles area |
70.5 |
|
68.6 |
|
2.7 |
|
Atlanta |
75.2 |
|
65.6 |
|
14.7 |
|
Orlando |
80.9 |
|
75.1 |
|
7.7 |
|
Philadelphia |
60.4 |
|
49.4 |
|
22.3 |
|
Minneapolis |
67.0 |
|
60.9 |
|
10.1 |
|
San
Francisco area |
65.3 |
|
55.9 |
|
16.8 |
|
Dallas |
65.4 |
|
59.4 |
|
10.0 |
|
Central
California Coast |
69.7 |
|
76.6 |
|
(8.9 |
) |
San
Antonio |
74.7 |
|
69.6 |
|
7.4 |
|
Myrtle
Beach |
44.1 |
|
48.2 |
|
(8.5 |
) |
Boston |
77.1 |
|
70.6 |
|
9.2 |
|
San
Diego |
71.5 |
|
64.0 |
|
11.7 |
|
Northern
New Jersey |
59.9 |
|
59.6 |
|
0.5 |
|
|
|
|
ADR
($) |
|
Three
Months Ended March 31, |
|
|
|
2010 |
|
2009 |
|
%
Variance |
South
Florida |
163.64 |
|
170.57 |
|
(4.1 |
) |
Los
Angeles area |
132.32 |
|
138.48 |
|
(4.4 |
) |
Atlanta |
105.48 |
|
111.22 |
|
(5.2 |
) |
Orlando |
114.47 |
|
131.55 |
|
(13.0 |
) |
Philadelphia |
111.42 |
|
129.62 |
|
(14.0 |
) |
Minneapolis |
125.73 |
|
131.14 |
|
(4.1 |
) |
San
Francisco area |
122.73 |
|
120.64 |
|
1.7 |
|
Dallas |
112.99 |
|
126.94 |
|
(11.0 |
) |
Central
California Coast |
138.16 |
|
136.52 |
|
1.2 |
|
San
Antonio |
98.33 |
|
105.65 |
|
(6.9 |
) |
Myrtle
Beach |
96.37 |
|
98.43 |
|
(2.1 |
) |
Boston |
120.19 |
|
126.00 |
|
(4.6 |
) |
San
Diego |
115.09 |
|
132.31 |
|
(13.0 |
) |
Northern
New Jersey |
132.26 |
|
151.68 |
|
(12.8 |
) |
|
|
|
RevPAR
($) |
|
Three
Months Ended March 31, |
|
|
|
2010 |
|
2009 |
|
%
Variance |
South
Florida |
139.33 |
|
|
135.25 |
|
3.0 |
|
Los
Angeles area |
93.23 |
|
|
95.04 |
|
(1.9 |
) |
Atlanta |
79.36 |
|
|
72.99 |
|
8.7 |
|
Orlando |
92.65 |
|
|
98.84 |
|
(6.3 |
) |
Philadelphia |
67.34 |
|
|
64.05 |
|
5.1 |
|
Minneapolis |
84.26 |
|
|
79.80 |
|
5.6 |
|
San
Francisco area |
80.11 |
|
|
67.43 |
|
18.8 |
|
Dallas |
73.89 |
|
|
75.44 |
|
(2.1 |
) |
Central
California Coast |
96.33 |
|
|
104.53 |
|
(7.8 |
) |
San
Antonio |
73.46 |
|
|
73.48 |
|
- |
|
Myrtle
Beach |
42.53 |
|
|
47.49 |
|
(10.4 |
) |
Boston |
92.67 |
|
|
88.95 |
|
4.2 |
|
San
Diego |
82.33 |
|
|
84.72 |
|
(2.8 |
) |
Northern
New Jersey |
79.22 |
|
|
90.37 |
|
(12.3 |
) |
Non-GAAP
Financial Measures
We refer in
this release to certain “non-GAAP financial measures.” These measures,
including FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted
EBITDA, Same-Store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA
margin, are measures of our financial performance that are not
calculated and presented in accordance with generally accepted
accounting principles (“GAAP”). The following tables reconcile each of
these non-GAAP measures to the most comparable GAAP financial measure.
Immediately following the reconciliations, we include a discussion of
why we believe these measures are useful supplemental measures of our
performance and the limitations of such measures.
|
|
|
Reconciliation of Net Loss to
FFO
(in thousands, except per share
data)
|
|
|
|
|
|
Three
Months Ended March 31, |
|
|
2010 |
|
|
2009 |
|
|
|
Dollars |
|
Shares |
|
Per Share
Amount
|
|
Dollars |
|
Shares |
|
Per Share
Amount
|
Net
loss |
|
$ |
(62,942 |
) |
|
|
|
|
|
$ |
(21,422 |
) |
|
|
|
|
Noncontrolling
interests |
|
|
554 |
|
|
|
|
|
|
|
358 |
|
|
|
|
|
Preferred
dividends(a) |
|
|
(9,678 |
) |
|
|
|
|
|
|
(9,678 |
) |
|
|
|
|
Net
loss attributable to FelCor
common stockholders
|
|
|
(72,066 |
) |
|
63,475 |
|
$ |
(1.14 |
) |
|
|
(30,742 |
) |
|
62,989 |
|
$ |
(0.49 |
) |
Depreciation
and amortization |
|
|
37,598 |
|
|
- |
|
|
0.59 |
|
|
|
36,651 |
|
|
- |
|
|
0.58 |
|
Depreciation,
discontinued operations and unconsolidated entities |
|
|
3,663 |
|
|
- |
|
|
0.06 |
|
|
|
4,421 |
|
|
- |
|
|
0.07 |
|
Gain
on sale of unconsolidated subsidiary |
|
|
(559 |
) |
|
- |
|
|
(0.01 |
) |
|
|
- |
|
|
- |
|
|
- |
|
Noncontrolling
interests in FelCor LP |
|
|
(325 |
) |
|
295 |
|
|
- |
|
|
|
(142 |
) |
|
296 |
|
|
- |
|
Conversion of options and
unvested restricted stock
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
128 |
|
|
- |
|
FFO |
|
|
(31,689 |
) |
|
63,770 |
|
|
(0.50 |
) |
|
|
10,188 |
|
|
63,413 |
|
|
0.16 |
|
Impairment
loss |
|
|
21,060 |
|
|
- |
|
|
0.33 |
|
|
|
- |
|
|
- |
|
|
- |
|
Impairment
loss, discontinued operations and unconsolidated entities |
|
|
- |
|
|
- |
|
|
- |
|
|
|
3,436 |
|
|
- |
|
|
0.06 |
|
Conversion
costs(b) |
|
|
- |
|
|
- |
|
|
- |
|
|
|
38 |
|
|
- |
|
|
- |
|
Severance
costs |
|
|
- |
|
|
- |
|
|
- |
|
|
|
135 |
|
|
- |
|
|
- |
|
Adjusted
FFO |
|
|
(10,629 |
) |
|
63,770 |
|
|
(0.17 |
) |
|
|
13,797 |
|
|
63,413 |
|
|
0.22 |
|
Adjusted
FFO from discontinued operations |
|
|
(35 |
) |
|
- |
|
|
- |
|
|
|
(1,248 |
) |
|
- |
|
|
(0.02 |
) |
Same-Store
Adjusted FFO |
|
$ |
(10,664 |
) |
|
63,770 |
|
$ |
(0.17 |
) |
|
$ |
12,549 |
|
|
63,413 |
|
|
0.20 |
|
(a) We
suspended our preferred dividends in March 2009 and unpaid preferred
dividends continue to accrue until paid.
(b) Costs
related to the conversion of our San Francisco Union Square hotel to a
Marriott.
|
|
|
Reconciliation of Net Loss to
EBITDA
(in thousands)
|
|
|
|
|
|
Three
Months Ended |
|
|
March
31, |
|
|
|
2010 |
|
|
|
2009 |
|
Net
loss |
|
$ |
(62,942 |
) |
|
$ |
(21,422 |
) |
Depreciation
and amortization |
|
|
37,598 |
|
|
|
36,651 |
|
Depreciation,
discontinued operations and unconsolidated entities |
|
|
3,663 |
|
|
|
4,421 |
|
Interest
expense |
|
|
36,345 |
|
|
|
21,469 |
|
Interest
expense, unconsolidated entities |
|
|
1,500 |
|
|
|
1,020 |
|
Amortization
of stock compensation |
|
|
1,616 |
|
|
|
1,398 |
|
Noncontrolling
interests in other partnerships |
|
|
229 |
|
|
|
216 |
|
EBITDA |
|
|
18,009 |
|
|
|
43,753 |
|
Impairment
loss |
|
|
21,060 |
|
|
|
- |
|
Impairment
loss, discontinued operations and unconsolidated entities |
|
|
- |
|
|
|
3,436 |
|
Conversion
costs(a) |
|
|
- |
|
|
|
38 |
|
Severance
costs |
|
|
- |
|
|
|
135 |
|
Gain
on sale of unconsolidated subsidiary |
|
|
(559 |
) |
|
|
- |
|
Adjusted
EBITDA |
|
|
38,510 |
|
|
|
47,362 |
|
Adjusted
EBITDA from discontinued operations |
|
|
(35 |
) |
|
|
(1,248 |
) |
Same-Store
Adjusted EBITDA |
|
$ |
38,475 |
|
|
$ |
46,114 |
|
(a) Costs
related to the conversion of our San Francisco Union Square hotel to a
Marriott.
|
|
|
Reconciliation of Adjusted
EBITDA to Hotel EBITDA
(in thousands)
|
|
|
|
|
|
Three
Months Ended
March 31, |
|
|
|
2010 |
|
|
|
2009 |
|
Adjusted
EBITDA |
|
$ |
38,510 |
|
|
$ |
47,362 |
|
Other
revenue |
|
|
(365 |
) |
|
|
(286 |
) |
Equity
in income from unconsolidated subsidiaries (excluding interest,
depreciation and impairment expense) |
|
|
(3,751 |
) |
|
|
(3,999 |
) |
Noncontrolling
interests in other partnerships (excluding interest, depreciation
and severance expense) |
|
|
392 |
|
|
|
443 |
|
Consolidated
hotel lease expense |
|
|
9,493 |
|
|
|
10,060 |
|
Unconsolidated
taxes, insurance and lease expense |
|
|
(1,888 |
) |
|
|
(1,934 |
) |
Interest
income |
|
|
(105 |
) |
|
|
(177 |
) |
Other expenses (excluding
conversion costs and severance costs)
|
|
|
561 |
|
|
|
512 |
|
Corporate
expenses (excluding amortization expense of stock compensation) |
|
|
8,231 |
|
|
|
4,724 |
|
Adjusted
EBITDA from discontinued operations |
|
|
(35 |
) |
|
|
(1,248 |
) |
Hotel
EBITDA |
|
$ |
51,043 |
|
|
$ |
55,457 |
|
|
|
|
Reconciliation of Net Loss to
Hotel EBITDA
(in thousands)
|
|
|
|
|
|
Three
Months Ended
March 31, |
|
|
|
2010 |
|
|
|
2009 |
|
Net loss |
|
$ |
(62,942 |
) |
|
$ |
(21,422 |
) |
Discontinued
operations |
|
|
(35 |
) |
|
|
854 |
|
Equity
in loss from unconsolidated entities |
|
|
1,474 |
|
|
|
3,424 |
|
Consolidated
hotel lease expense |
|
|
9,493 |
|
|
|
10,060 |
|
Unconsolidated
taxes, insurance and lease expense |
|
|
(1,888 |
) |
|
|
(1,934 |
) |
Interest
expense, net |
|
|
36,240 |
|
|
|
21,292 |
|
Corporate
expenses |
|
|
9,847 |
|
|
|
6,122 |
|
Depreciation
and amortization |
|
|
37,598 |
|
|
|
36,651 |
|
Impairment
loss |
|
|
21,060 |
|
|
|
- |
|
Other
expenses |
|
|
561 |
|
|
|
696 |
|
Other
revenue |
|
|
(365 |
) |
|
|
(286 |
) |
Hotel
EBITDA |
|
$ |
51,043 |
|
|
$ |
55,457 |
|
|
|
|
Hotel EBITDA and Hotel EBITDA
Margin
(dollars in thousands)
|
|
|
|
|
|
Three
Months Ended
March 31, |
|
|
|
2010 |
|
|
|
2009 |
|
Total
revenues |
|
$ |
226,404 |
|
|
$ |
228,019 |
|
Other
revenue |
|
|
(365 |
) |
|
|
(286 |
) |
Hotel
operating revenue |
|
|
226,039 |
|
|
|
227,733 |
|
Hotel
operating expenses |
|
|
(174,996 |
) |
|
|
(172,276 |
) |
Hotel
EBITDA |
|
$ |
51,043 |
|
|
$ |
55,457 |
|
Hotel
EBITDA margin(a) |
|
|
22.6 |
% |
|
|
24.4 |
% |
(a) Hotel
EBITDA as a percentage of hotel operating revenue.
|
|
|
Reconciliation of Total
Operating Expenses to Hotel Operating Expenses
(dollars in thousands)
|
|
|
|
|
|
Three
Months Ended
March 31,
|
|
|
|
2010 |
|
|
|
2009 |
|
Total
operating expenses |
|
$ |
251,667 |
|
|
$ |
223,871 |
|
Unconsolidated
taxes, insurance and lease expense |
|
|
1,888 |
|
|
|
1,934 |
|
Consolidated
hotel lease expense |
|
|
(9,493 |
) |
|
|
(10,060 |
) |
Corporate
expenses |
|
|
(9,847 |
) |
|
|
(6,122 |
) |
Depreciation
and amortization |
|
|
(37,598 |
) |
|
|
(36,651 |
) |
Impairment
loss |
|
|
(21,060 |
) |
|
|
- |
|
Other
expenses |
|
|
(561 |
) |
|
|
(696 |
) |
Hotel
operating expenses |
|
$ |
174,996 |
|
|
$ |
172,276 |
|
|
|
|
Reconciliation of Ratio of
Operating Income (Loss) to Total Revenues to Hotel EBITDA Margin
|
|
|
|
|
|
Three
Months Ended March 31, |
|
|
2010 |
|
|
2009 |
|
Ratio
of operating income (loss) to total revenues |
|
(11.2 |
)% |
|
1.8 |
% |
Other
revenue |
|
(0.2 |
) |
|
(0.1 |
) |
Unconsolidated
taxes, insurance and lease expense |
|
(0.8 |
) |
|
(0.8 |
) |
Consolidated
hotel lease expense |
|
4.2 |
|
|
4.4 |
|
Other
expenses |
|
0.3 |
|
|
0.3 |
|
Corporate
expenses |
|
4.4 |
|
|
2.7 |
|
Depreciation
and amortization |
|
16.6 |
|
|
16.1 |
|
Impairment
loss |
|
9.3 |
|
|
- |
|
Hotel
EBITDA margin |
|
22.6 |
% |
|
24.4 |
% |
|
|
|
Reconciliation of Forecasted
Net Loss Attributable to FelCor to Forecasted Adjusted FFO and Adjusted
EBITDA
(in millions, except per share
and unit data)
|
|
|
|
|
|
Full
Year 2010 Guidance |
|
|
Low
Guidance |
|
High
Guidance |
|
|
Dollars |
|
Per Share
Amount(a)
|
|
Dollars |
|
Per Share
Amount(a)
|
Net
loss attributable to FelCor |
|
$ |
(157 |
) |
|
|
|
$ |
(146 |
) |
|
|
Preferred
dividends |
|
|
(39 |
) |
|
|
|
|
(39 |
) |
|
|
Net
loss applicable to FelCor common stockholders |
|
|
(196 |
) |
|
$ |
(3.11 |
) |
|
|
(185 |
) |
|
$ |
(2.94 |
) |
Depreciation(b) |
|
|
159 |
|
|
|
|
|
159 |
|
|
|
Gain
on sale of assets |
|
|
(1 |
) |
|
|
|
|
(1 |
) |
|
|
Noncontrolling
interests in FelCor LP |
|
|
(1 |
) |
|
|
|
|
(1 |
) |
|
|
FFO |
|
|
(39 |
) |
|
$ |
(0.61 |
) |
|
|
(28 |
) |
|
$ |
(0.44 |
) |
Impairment |
|
|
21 |
|
|
|
|
|
21 |
|
|
|
Gain
on extinguishment of debt |
|
|
(12 |
) |
|
|
|
|
(12 |
) |
|
|
Adjusted
FFO |
|
$ |
(30 |
) |
|
$ |
(0.47 |
) |
|
$ |
(19 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
|
Net
loss attributable to FelCor |
|
$ |
(157 |
) |
|
|
|
$ |
(146 |
) |
|
|
Depreciation(b) |
|
|
159 |
|
|
|
|
|
159 |
|
|
|
Interest
expense(b) |
|
|
151 |
|
|
|
|
|
151 |
|
|
|
Amortization
expense |
|
|
6 |
|
|
|
|
|
6 |
|
|
|
Noncontrolling
interests in FelCor LP |
|
|
(1 |
) |
|
|
|
|
(1 |
) |
|
|
EBITDA |
|
|
158 |
|
|
|
|
|
169 |
|
|
|
Impairment |
|
|
21 |
|
|
|
|
|
21 |
|
|
|
Gain
on extinguishment of debt |
|
|
(12 |
) |
|
|
|
|
(12 |
) |
|
|
Gain
on sale of assets |
|
|
(1 |
) |
|
|
|
|
(1 |
) |
|
|
Adjusted
EBITDA |
|
$ |
166 |
|
|
|
|
$ |
177 |
|
|
|
(a) Weighted
average shares and units are 63.8 million.
(b) Includes
pro rata portion of unconsolidated entities.
Substantially
all of our non-current assets consist of real estate. Historical cost
accounting for real estate assets implicitly assumes that the value of
real estate assets diminishes predictably over time. Since real estate
values instead have historically risen or fallen with market
conditions, most industry investors consider supplemental measures of
performance, which are not measures of operating performance under
GAAP, to be helpful in evaluating a real estate company’s operations.
These supplemental measures, including FFO, Adjusted FFO, Same-Store
Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA,
Hotel EBITDA and Hotel EBITDA margin, are not measures of operating
performance under GAAP. However, we consider these non-GAAP measures to
be supplemental measures of a hotel REIT’s performance and should be
considered along with, but not as an alternative to, net income (loss)
attributable to FelCor as a measure of our operating performance.
FFO and
EBITDA
The White
Paper on Funds From Operations approved by the Board of Governors of
the National Association of Real Estate Investment Trusts (“NAREIT”),
defines FFO as net income or loss attributable to parent (computed in
accordance with GAAP), excluding gains or losses from sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis. We compute FFO in accordance with
standards established by NAREIT. This may not be comparable to FFO
reported by other REITs that do not define the term in accordance with
the current NAREIT definition or that interpret the current NAREIT
definition differently than we do.
EBITDA is a
commonly used measure of performance in many industries. We define
EBITDA as net income or loss attributable to parent (computed in
accordance with GAAP) plus interest expenses, income taxes,
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect EBITDA on the
same basis.
Adjustments
to FFO and EBITDA
We adjust FFO
and EBITDA when evaluating our performance because management believes
that the exclusion of certain additional recurring and non-recurring
items, including but not limited to these described below, provides
useful supplemental information to investors regarding our ongoing
operating performance and that the presentation of Adjusted FFO,
Same-Store Adjusted FFO, Adjusted EBITDA and Same-Store Adjusted EBITDA
when combined with GAAP net income attributable to FelCor, EBITDA and
FFO, is beneficial to an investor’s better understanding of our
operating performance.
- Gains and losses
related to early extinguishment of debt and interest rate swaps – We exclude gains and
losses related to early extinguishment of debt and interest rate swaps
from FFO and EBITDA because we believe that it is not indicative of
ongoing operating performance of our hotel assets. This also represents
an acceleration of interest expense or a reduction of interest expense,
and interest expense is excluded from EBITDA.
- Impairment losses – We exclude the effect of
impairment losses and gains or losses on disposition of assets in
computing Adjusted FFO, Same-Store Adjusted FFO, Adjusted EBITDA and
Same-Store Adjusted EBITDA, because we believe that including these is
not consistent with reflecting the ongoing performance of our remaining
assets. Additionally, we believe that impairment charges and gains or
losses on disposition of assets represent accelerated depreciation, or
excess depreciation, and depreciation is excluded from FFO by the
NAREIT definition and from EBITDA.
- Cumulative effect
of a change in accounting principle –
Infrequently, the Financial Accounting Standards Board promulgates new
accounting standards that require the consolidated statements of
operations to reflect the cumulative effect of a change in accounting
principle. We exclude these one-time adjustments in computing Adjusted
FFO, Same-Store Adjusted FFO, Adjusted EBITDA and Same-Store Adjusted
EBITDA because they do not reflect our actual performance for that
period.
In addition,
to derive Adjusted EBITDA and Same-Store Adjusted EBITDA, we exclude
gains or losses on the sale of depreciable assets because we believe
that including them in EBITDA is not consistent with reflecting the
ongoing performance of our remaining assets. Additionally, the gain or
loss on sale of depreciable assets represents either accelerated
depreciation or excess depreciation in previous periods, and
depreciation is excluded from EBITDA.
Hotel
EBITDA and Hotel EBITDA Margin
Hotel EBITDA
and Hotel EBITDA margin are commonly used measures of performance in
the industry and give investors a more complete understanding of the
operating results over which our individual hotels and operating
managers have direct control. We believe that Hotel EBITDA and Hotel
EBITDA margin are useful to investors by providing greater transparency
with respect to two significant measures used by us in our financial
and operational decision making. Additionally, these measures
facilitate comparisons with other hotel REITs and hotel owners. We
present Hotel EBITDA and Hotel EBITDA margin by eliminating from
continuing operations all revenues and expenses not directly associated
with hotel operations including corporate-level expenses, depreciation
and expenses related to our capital structure. We eliminate
corporate-level costs and expenses because we believe property-level
results provide investors with supplemental information with respect to
the ongoing operating performance of our hotels and the effectiveness
of management on a property-level basis. We eliminate depreciation and
amortization, even though they are property-level expenses, because we
do not believe that these non-cash expenses, which are based on
historical cost accounting for real estate assets and implicitly assume
that the value of real estate assets diminish predictably over time,
accurately reflect an adjustment in the value of our assets. We also
eliminate consolidated percentage rent paid to unconsolidated entities,
which is effectively eliminated by noncontrolling interests and equity
in income from unconsolidated subsidiaries, and include the cost of
unconsolidated taxes, insurance and lease expense, to reflect the
entire operating costs applicable to our hotels. Hotel EBITDA and Hotel
EBITDA margins are presented on a same-store basis.
Limitations
of Non-GAAP Measures
Our management
and Board of Directors use FFO, Adjusted FFO, Same-Store Adjusted FFO,
EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Hotel EBITDA and
Hotel EBITDA margin to evaluate the performance of our hotels and to
facilitate comparisons between us and lodging REITs, hotel owners who
are not REITs and other capital intensive companies. We use Hotel
EBITDA and Hotel EBITDA margin in evaluating hotel-level performance
and the operating efficiency of our hotel managers.
The use of
these non-GAAP financial measures has certain limitations. FFO,
Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA,
Same-Store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, as
presented by us, may not be comparable to the same measures as
calculated by other real estate companies. These measures do not
reflect certain expenses that we incurred and will incur, such as
depreciation and interest or capital expenditures. Management
compensates for these limitations by separately considering the impact
of these excluded items to the extent they are material to operating
decisions or assessments of our operating performance. Our
reconciliations to the GAAP financial measures, and our consolidated
statements of operations and cash flows, include interest expense,
capital expenditures, and other excluded items, all of which should be
considered when evaluating our performance, as well as, the usefulness
of our non-GAAP financial measures.
These non-GAAP
financial measures are used in addition to and in conjunction with
results presented in accordance with GAAP. They should not be
considered as alternatives to operating profit, cash flow from
operations, or any other operating performance measure prescribed by
GAAP. Neither should FFO, Adjusted FFO, Same-Store Adjusted FFO,
Adjusted FFO per share, EBITDA, Adjusted EBITDA or Same-Store Adjusted
EBITDA be considered as measures of our liquidity or indicative of
funds available for our cash needs, including our ability to make cash
distributions. Adjusted FFO per share should not be used as a measure
of amounts that accrue directly to the benefit of stockholders. FFO,
Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA,
Same-Store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin
reflect additional ways of viewing our operations that we believe when
viewed with our GAAP results and the reconciliations to the
corresponding GAAP financial measures provide a more complete
understanding of factors and trends affecting our business than could
be obtained absent this disclosure. Management strongly encourages
investors to review our financial information in its entirety and not
to rely on any single financial measure.
|