News for the Hospitality Executive |
|
• | RevPAR to increase between 3.75% and 4.5%; | |
• | Adjusted EBITDA to be between $182 million and $185 million; | |
• | Adjusted FFO per share to be between $(0.17) and $(0.13); | |
• | Net loss attributable to FelCor to be between $163 million and $160 million; and | |
• | Interest expense to be approximately $144 million. | |
• | Capital expenditures to be approximately $42 million. | |
• | Weighted average shares and units to be 80.9 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 diversified, high-quality portfolio is flagged under leading brands such as - Hilton®, Doubletree ®, Embassy Suites Hotels®, Marriott®, Renaissance®, Sheraton®, Westin®, Fairmont® 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 third quarter earnings Conference Call on Wednesday, November 3, 2010, at 11:00 a.m. (Central Time). The conference call will be Webcast simultaneously 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 an 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 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 and nine month periods ended September 30, 2010.
TABLE OF CONTENTS
PAGE |
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Consolidated Statements of Operations(a) | 6 | |
Consolidated Balance Sheets(a) | 7 | |
Capital Expenditures | 8 | |
Supplemental Financial Data | 8 | |
Consolidated 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 |
Nine Months Ended |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: | ||||||||||||||||
Hotel operating revenue: | ||||||||||||||||
Room | $ | 193,641 | $ | 178,795 | $ | 564,086 | $ | 539,949 | ||||||||
Food and beverage | 33,076 | 29,207 | 106,796 | 99,583 | ||||||||||||
Other operating departments | 15,227 | 14,258 | 43,055 | 42,484 | ||||||||||||
Other revenue | 1,421 | 1,280 | 2,793 | 2,554 | ||||||||||||
Total revenues | 243,365 | 223,540 | 716,730 | 684,570 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel departmental expenses: | ||||||||||||||||
Room | 52,636 | 48,473 | 150,793 | 140,671 | ||||||||||||
Food and beverage | 27,830 | 25,657 | 84,623 | 80,647 | ||||||||||||
Other operating departments | 6,535 | 6,661 | 19,053 | 18,957 | ||||||||||||
Other property related costs | 69,894 | 63,778 | 201,701 | 191,961 | ||||||||||||
Management and franchise fees | 11,545 | 10,975 | 33,796 | 32,990 | ||||||||||||
Taxes, insurance and lease expense | 26,511 | 24,872 | 77,913 | 74,199 | ||||||||||||
Corporate expenses | 6,564 | 4,471 | 22,921 | 15,829 | ||||||||||||
Depreciation and amortization | 36,564 | 36,866 | 110,454 | 108,668 | ||||||||||||
Impairment loss | 65,849 | — | 79,245 | — | ||||||||||||
Other expenses | 1,331 | 1,031 | 2,693 | 3,486 | ||||||||||||
Total operating expenses | 305,259 | 222,784 | 783,192 | 667,408 | ||||||||||||
Operating income (loss) | (61,894 | ) | 756 | (66,462 | ) | 17,162 | ||||||||||
Interest expense, net | (35,147 | ) | (24,015 | ) | (107,678 | ) | (67,301 | ) | ||||||||
Extinguishment of debt | (225 | ) | — | 45,853 | (594 | ) | ||||||||||
Loss before
equity in income (loss) from unconsolidated entities |
(97,266 | ) | (23,259 | ) | (128,287 | ) | (50,733 | ) | ||||||||
Equity in income (loss) from unconsolidated entities | 302 | 488 | (886 | ) | (3,197 | ) | ||||||||||
Gain on sale of assets | — | 723 | — | 723 | ||||||||||||
Loss from continuing operations | (96,964 | ) | (22,048 | ) | (129,173 | ) | (53,207 | ) | ||||||||
Discontinued operations | 7,684 | (3,426 | ) | (1,059 | ) | (4,657 | ) | |||||||||
Net loss | (89,280 | ) | (25,474 | ) | (130,232 | ) | (57,864 | ) | ||||||||
Net loss attributable to noncontrolling interests in other partnerships |
173 | 174 | 77 | 66 | ||||||||||||
Net loss
attributable to redeemable noncontrolling interests in FelCor LP |
297 | 160 | 571 | 399 | ||||||||||||
Net loss attributable to FelCor | (88,810 | ) | (25,140 | ) | (129,584 | ) | (57,399 | ) | ||||||||
Preferred dividends | (9,678 | ) | (9,678 | ) | (29,034 | ) | (29,034 | ) | ||||||||
Net loss attributable to FelCor common stockholders | $ | (98,488 | ) | $ | (34,818 | ) | $ | (158,618 | ) | $ | (86,433 | ) | ||||
Basic and diluted per common share data: | ||||||||||||||||
Loss from continuing operations | $ | (1.12 | ) | $ | (0.50 | ) | $ | (2.10 | ) | $ | (1.30 | ) | ||||
Net loss | $ | (1.04 | ) | $ | (0.55 | ) | $ | (2.11 | ) | $ | (1.37 | ) | ||||
Basic and
diluted weighted average common shares
outstanding |
95,034 | 63,086 | 75,135 | 63,121 |
Consolidated Balance Sheets (in thousands) |
||||||||
September 30, |
December 31, |
|||||||
Assets | ||||||||
Investment in
hotels, net of accumulated depreciation of $970,730 at September 30, 2010 and $916,604 at December 31, 2009 |
$ | 2,101,244 | $ | 2,180,394 | ||||
Investment in unconsolidated entities | 102,957 | 82,040 | ||||||
Cash and cash equivalents | 192,478 | 263,531 | ||||||
Restricted cash | 20,586 | 18,708 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $326 at September 30, 2010 and $406 at December 31, 2009 |
36,628 | 28,678 | ||||||
Deferred
expenses, net of accumulated amortization of $15,811 at September 30, 2010 and $14,502 at December 31, 2009 |
21,701 | 19,977 | ||||||
Other assets | 37,599 | 32,666 | ||||||
Total assets | $ | 2,513,193 | $ | 2,625,994 | ||||
Liabilities and Equity | ||||||||
Debt, net of
discount of $55,972 at September 30, 2010 and $64,267 at December 31, 2009 |
$ | 1,573,402 | $ | 1,773,314 | ||||
Distributions payable | 66,615 | 37,580 | ||||||
Accrued expenses and other liabilities | 180,560 | 131,339 | ||||||
Total liabilities | 1,820,577 | 1,942,233 | ||||||
Commitments and contingencies | ||||||||
Redeemable
noncontrolling interests in FelCor LP at redemption value, 295 units issued and outstanding at September 30, 2010 and December 31, 2009 |
1,357 | 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 September 30, 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 September 30, 2010 and December 31, 2009 |
169,412 | 169,412 | ||||||
Common stock, $0.01 par value,
200,000 shares authorized and 101,038 and |
1,010 | 694 | ||||||
Additional paid-in capital | 2,189,418 | 2,021,837 | ||||||
Accumulated other comprehensive income | 24,800 | 23,528 | ||||||
Accumulated deficit | (1,951,451 | ) | (1,792,822 | ) | ||||
Less:
Common stock in treasury, at cost, of 3,988 shares at September 30, 2010 and 3,845 shares at December 31, 2009 |
(72,245 | ) | (71,895 | ) | ||||
Total FelCor stockholders’ equity | 670,306 | 660,116 | ||||||
Noncontrolling interests in other partnerships | 20,953 | 22,583 | ||||||
Total equity | 691,259 | 682,699 | ||||||
Total liabilities and equity | $ | 2,513,193 | $ | 2,625,994 |
Capital Expenditures (in thousands) |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Improvements and additions to majority-owned hotels | $ | 9,448 | 16,926 | 27,841 | 62,465 | |||||||||||
Partners' pro
rata share of additions to consolidated
joint venture hotels |
(81 | ) | (381 | ) | (203 | ) | (758 | ) | ||||||||
Pro rata share of additions to unconsolidated hotels | 250 | 693 | 1,220 | 3,646 | ||||||||||||
Total additions to hotels(a) | $ | 9,617 | $ | 17,238 | $ | 28,858 | $ | 65,353 |
(a) Includes capitalized interest, property taxes, ground leases and certain employee costs.
Supplemental Financial Data (in thousands, except per share information) |
||||
Total Enterprise Value |
September 30, |
December 31, |
||
Common shares outstanding | 97,050 | 65,568 | ||
Units outstanding | 295 | 295 | ||
Combined shares and units outstanding | 97,345 | 65,863 | ||
Common stock price | $4.60 | $3.60 | ||
Market capitalization | $447,787 | $237,107 | ||
Series A preferred stock | 309,362 | 309,362 | ||
Series C preferred stock | 169,412 | 169,412 | ||
Consolidated debt | 1,573,402 | 1,773,314 | ||
Noncontrolling interests of consolidated debt | (3,809) | (3,971) | ||
Pro rata share of unconsolidated debt | 78,199 | 107,481 | ||
Cash and cash equivalents | (192,478) | (263,531) | ||
Total enterprise value (TEV) | $2,381,875 | $2,329,174 |
Consolidated Debt Summary (dollars in thousands) |
|||||||||||
Interest Rate (%) | Maturity Date |
September 30, |
December 31, |
||||||||
Mortgage debt | |||||||||||
Mortgage debt | L + 0.93 | (a) | November 2011 | $ | 250,000 | $ | 250,000 | ||||
Mortgage debt | L + 5.10 | (b) | April 2015 | 212,000 | — | ||||||
Mortgage debt | L + 3.50 | (c) | August 2011(d) | 198,800 | 200,425 | ||||||
Mortgage debt | 9.02 | April 2014 | 114,306 | 117,422 | |||||||
Mortgage debt(e) | 6.66 | June - August 2014 | 69,606 | 70,917 | |||||||
Mortgage debt | 8.77 | May 2013 | 27,770 | 27,829 | |||||||
Mortgage debt(f) | 8.62 | May 2010 | 14,103 | 14,103 | |||||||
Mortgage debt | 5.81 | July 2016 | 11,429 | 11,741 | |||||||
Mortgage debt | 6.15 | June 2011 | 8,157 | 9,228 | |||||||
Other | 4.25 | May 2011 | 502 | 354 | |||||||
Senior notes | |||||||||||
Senior secured notes(g) | 10.00 | October 2014 | 580,070 | 572,500 | |||||||
Senior notes | 8.50 | (h) | June 2011 | 86,659 | 86,604 | ||||||
Retired debt | — | — | — | 412,191 | |||||||
Total | $ | 1,573,402 | $ | 1,773,314 |
(a) We purchased an interest rate cap that caps LIBOR at 7.8% and expires November 2011 for a $250 million notional amount.
(b) LIBOR for this loan is subject to a 3% floor. We purchased an interest rate cap that caps LIBOR at 5.0% and expires May 2012 for a $212 million notional amount.
(c) LIBOR for this loan is subject to a 2% floor.
(d) This loan can be extended for as many as two years (to 2013), subject to satisfying certain conditions.
(e) The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.
(f) We are in the process of transferring this hotel to the lender in full satisfaction of the debt.
(g) These notes have $636 million in aggregate principal outstanding and were sold at a discount that provides an effective yield of 12.875% before transaction costs.
(h) As a result of a rating down-grade in February 2009, the interest rate on the 8½% senior notes increased to 9%.
Schedule of Encumbered Hotels (dollars in millions) |
||||||||
September 30, 2010 |
||||||||
Consolidated Debt | Encumbered Hotels | |||||||
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 | $ | 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 |
|||||
Mortgage debt | $ | 199 | Charlotte SouthPark - DT, Houston Medical Center - HI, Myrtle Beach - HLT, Mandalay Beach - ES, Nashville Airport - ES, Philadelphia Independence Mall - HI, Pittsburgh University Center - HI, Santa Barbara, Goleta -HI and Santa Monica at the Pier - HI | |||||
Mortgage debt | $ | 114 | Baton Rouge - ES, Birmingham - ES, Ft. Lauderdale - ES, Miami Airport - ES, Milpitas - ES, Minneapolis Airport - ES and Napa Valley - ES | |||||
CMBS debt(a) | $ | 70 | Atlanta Airport - ES, Austin - DTGS, BWI Airport - ES, Orlando Airport - HI and Phoenix Biltmore - ES | |||||
CMBS debt | $ | 28 | New Orleans Convention Center - ES | |||||
CMBS debt | $ | 14 | Chicago Deerfield - ES | |||||
CMBS debt | $ | 11 | Indianapolis North - ES | |||||
CMBS debt | $ | 8 | Wilmington - DT | |||||
Senior secured notes | $ | 580 | 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 |
(a) The hotels under this debt are subject to separate loan agreements and are not cross-collateralized.
The following table illustrates the distribution of 82 same-store consolidated hotels (excluding the Fairmont Copley Plaza acquired in August 2010) by brand, market and location at September 30, 2010.
Brand |
Hotels | Rooms |
% of Total |
% of 2009 |
|||||
Embassy Suites Hotels | 46 | 11,911 | 50 | 60 | |||||
Holiday Inn | 15 | 5,154 | 22 | 18 | |||||
Sheraton and Westin | 9 | 3,217 | 14 | 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 | |||||
Other |
39 |
10,805 |
45 |
44 |
|||||
Location |
|||||||||
Suburban | 34 | 8,560 | 36 | 32 | |||||
Urban | 20 | 6,358 | 27 | 27 | |||||
Airport | 18 | 5,788 | 25 | 24 | |||||
Resort | 10 | 2,927 | 12 | 17 |
(a) Hotel EBITDA is more fully described on page 22.
The following tables set forth occupancy, ADR and RevPAR for the three and nine months ended September 30, 2010 and 2009, and the percentage changes thereto between the periods presented, for 82 same-store consolidated hotels owned for both periods (excludes the Fairmont Copley Plaza acquired in August 2010).
Detailed Operating Statistics by Brand
Occupancy (%) | |||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
2010 | 2009 | %Variance | 2010 | 2009 | %Variance | ||||||||
Embassy Suites Hotels | 73.6 | 70.0 | 5.2 | 73.2 | 69.1 | 5.9 | |||||||
Holiday Inn | 75.3 | 73.8 | 2.1 | 73.3 | 69.4 | 5.6 | |||||||
Sheraton and Westin | 66.3 | 63.6 | 4.4 | 66.3 | 61.0 | 8.7 | |||||||
Doubletree | 74.8 | 67.5 | 10.8 | 74.0 | 66.2 | 11.7 | |||||||
Renaissance and Marriott | 62.7 | 66.9 | (6.2 | ) | 65.3 | 61.7 | 5.8 | ||||||
Hilton | 80.3 | 77.1 | 4.2 | 66.6 | 65.1 | 2.3 | |||||||
Total hotels | 72.7 | 69.8 | 4.2 | 71.7 | 67.4 | 6.5 | |||||||
ADR ($) | |||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
2010 | 2009 | %Variance | 2010 | 2009 | %Variance | ||||||||
Embassy Suites Hotels | 123.56 | 123.60 | — | 125.40 | 129.86 | (3.4 | ) | ||||||
Holiday Inn | 119.41 | 113.79 | 4.9 | 113.82 | 113.22 | 0.5 | |||||||
Sheraton and Westin | 104.07 | 100.86 | 3.2 | 105.69 | 109.39 | (3.4 | ) | ||||||
Doubletree | 113.11 | 114.00 | (0.8 | ) | 116.33 | 125.87 | (7.6 | ) | |||||
Renaissance and Marriott | 142.59 | 130.99 | 8.9 | 165.27 | 164.91 | 0.2 | |||||||
Hilton | 142.27 | 128.93 | 10.4 | 124.76 | 118.12 | 5.6 | |||||||
Total hotels | 120.85 | 118.42 | 2.1 | 121.60 | 124.72 | (2.5 | ) | ||||||
RevPAR ($) | |||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
2010 | 2009 | %Variance | 2010 | 2009 | %Variance | ||||||||
Embassy Suites Hotels | 90.98 | 86.49 | 5.2 | 91.77 | 89.71 | 2.3 | |||||||
Holiday Inn | 89.98 | 83.95 | 7.2 | 83.45 | 78.60 | 6.2 | |||||||
Sheraton and Westin | 69.05 | 64.11 | 7.7 | 70.04 | 66.70 | 5.0 | |||||||
Doubletree | 84.60 | 76.95 | 9.9 | 86.02 | 83.32 | 3.2 | |||||||
Renaissance and Marriott | 89.47 | 87.58 | 2.2 | 107.90 | 101.79 | 6.0 | |||||||
Hilton | 114.20 | 99.34 | 15.0 | 83.12 | 76.89 | 8.1 | |||||||
Total hotels | 87.83 | 82.64 | 6.3 | 87.25 | 84.05 | 3.8 |
Detailed Operating Statistics for FelCor's Top Markets |
||||||||||||||
Occupancy (%) | ||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
2010 | 2009 | %Variance | 2010 | 2009 | %Variance | |||||||||
South Florida | 72.4 | 67.2 | 7.8 | 77.7 | 73.3 | 6.0 | ||||||||
Los Angeles area | 79.5 | 75.7 | 5.1 | 75.9 | 72.9 | 4.2 | ||||||||
Atlanta | 74.7 | 72.9 | 2.5 | 75.0 | 70.8 | 5.9 | ||||||||
Orlando | 66.5 | 69.8 | (4.7 | ) | 73.7 | 73.6 | 0.2 | |||||||
Philadelphia | 79.2 | 72.5 | 9.2 | 73.4 | 65.6 | 11.9 | ||||||||
Minneapolis | 82.9 | 77.8 | 6.4 | 75.5 | 68.2 | 10.8 | ||||||||
San Francisco area | 83.2 | 81.6 | 1.9 | 75.8 | 69.5 | 9.1 | ||||||||
Dallas | 64.2 | 58.2 | 10.2 | 65.3 | 59.5 | 9.8 | ||||||||
Central California Coast | 83.1 | 81.0 | 2.6 | 77.8 | 78.2 | (0.5 | ) | |||||||
San Antonio | 77.9 | 74.7 | 4.3 | 76.5 | 72.8 | 5.1 | ||||||||
Myrtle Beach | 82.7 | 80.0 | 3.4 | 66.9 | 66.1 | 1.2 | ||||||||
Boston | 84.6 | 84.4 | 0.3 | 82.3 | 78.4 | 5.0 | ||||||||
San Diego | 82.6 | 76.9 | 7.3 | 77.7 | 71.7 | 8.3 | ||||||||
ADR ($) | ||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
2010 | 2009 | %Variance | 2010 | 2009 | %Variance | |||||||||
South Florida | 100.25 | 100.94 | (0.7 | ) | 127.84 | 132.67 | (3.6 | ) | ||||||
Los Angeles area | 146.10 | 141.69 | 3.1 | 138.45 | 138.03 | 0.3 | ||||||||
Atlanta | 104.34 | 102.90 | 1.4 | 104.23 | 106.24 | (1.9 | ) | |||||||
Orlando | 95.50 | 94.42 | 1.1 | 106.27 | 113.72 | (6.6 | ) | |||||||
Philadelphia | 128.12 | 127.29 | 0.7 | 124.93 | 133.86 | (6.7 | ) | |||||||
Minneapolis | 126.95 | 128.35 | (1.1 | ) | 126.36 | 129.03 | (2.1 | ) | ||||||
San Francisco area | 144.56 | 132.57 | 9.0 | 133.03 | 127.32 | 4.5 | ||||||||
Dallas | 106.94 | 108.58 | (1.5 | ) | 110.27 | 116.83 | (5.6 | ) | ||||||
Central California Coast | 189.59 | 188.12 | 0.8 | 163.34 | 160.45 | 1.8 | ||||||||
San Antonio | 98.46 | 102.64 | (4.1 | ) | 98.45 | 104.75 | (6.0 | ) | ||||||
Myrtle Beach | 166.08 | 159.11 | 4.4 | 142.90 | 139.57 | 2.4 | ||||||||
Boston | 148.27 | 138.86 | 6.8 | 137.49 | 134.62 | 2.1 | ||||||||
San Diego | 123.95 | 123.11 | 0.7 | 119.28 | 127.37 | (6.4 | ) | |||||||
RevPAR ($) | ||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||
2010 | 2009 | %Variance | 2010 | 2009 | %Variance | |||||||||
South Florida | 72.61 | 67.82 | 7.1 | 99.29 | 97.21 | 2.1 | ||||||||
Los Angeles area | 116.19 | 107.26 | 8.3 | 105.10 | 100.57 | 4.5 | ||||||||
Atlanta | 77.89 | 74.98 | 3.9 | 78.12 | 75.18 | 3.9 | ||||||||
Orlando | 63.50 | 65.87 | (3.6 | ) | 78.37 | 83.67 | (6.3 | ) | ||||||
Philadelphia | 101.42 | 92.26 | 9.9 | 91.69 | 87.76 | 4.5 | ||||||||
Minneapolis | 105.20 | 99.92 | 5.3 | 95.46 | 87.96 | 8.5 | ||||||||
San Francisco area | 120.31 | 108.24 | 11.2 | 100.86 | 88.52 | 13.9 | ||||||||
Dallas | 68.67 | 63.25 | 8.6 | 71.98 | 69.48 | 3.6 | ||||||||
Central California Coast | 157.51 | 152.39 | 3.4 | 127.04 | 125.43 | 1.3 | ||||||||
San Antonio | 76.72 | 76.70 | — | 75.28 | 76.22 | (1.2 | ) | |||||||
Myrtle Beach | 137.31 | 127.24 | 7.9 | 95.58 | 92.29 | 3.6 | ||||||||
Boston | 125.51 | 117.14 | 7.1 | 113.20 | 105.51 | 7.3 | ||||||||
San Diego | 102.33 | 94.72 | 8.0 | 92.64 | 91.36 | 1.4 | ||||||||
Non-GAAP Financial Measures
We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, EBITDA, 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 and Adjusted FFO (in thousands, except per share data) |
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Three Months Ended September 30, | |||||||||||||||||||
2010 | 2009 | ||||||||||||||||||
Dollars | Shares | Per Share Amount | Dollars | Shares | Per Share Amount | ||||||||||||||
Net loss | $ | (89,280 | ) | $ | (25,474 | ) | |||||||||||||
Noncontrolling interests | 470 | 334 | |||||||||||||||||
Preferred dividends | (9,678 | ) | (9,678 | ) | |||||||||||||||
Net loss
attributable to FelCor
common stockholders |
(98,488 | ) | 95,034 | (1.04 | ) | (34,818 | ) | 63,086 | (0.55 | ) | |||||||||
Depreciation and amortization | 36,564 | — | 0.38 | 36,866 | — | 0.58 | |||||||||||||
Depreciation,
discontinued operations and unconsolidated entities |
3,966 | — | 0.04 | 4,726 | — | 0.07 | |||||||||||||
Noncontrolling interests in FelCor LP | (297 | ) | 295 | 0.01 | (160 | ) | 296 | — | |||||||||||
Conversion of options and unvested restricted stock |
— | — | — | — | 445 | — | |||||||||||||
FFO | (58,255 | ) | 95,329 | (0.61 | ) | 6,614 | 63,827 | 0.10 | |||||||||||
Impairment loss | 65,849 | — | 0.69 | — | — | — | |||||||||||||
Impairment loss,
discontinued operations
and unconsolidated entities |
— | — | — | 2,080 | — | 0.04 | |||||||||||||
Acquisition costs | 403 | — | — | — | — | — | |||||||||||||
Extinguishment of debt | (8,036 | ) | — | (0.08 | ) | — | — | — | |||||||||||
Conversion costs(a) | — | — | — | 117 | — | — | |||||||||||||
Severance costs | — | — | — | 41 | — | — | |||||||||||||
Lease termination costs | — | — | — | 117 | — | — | |||||||||||||
Adjusted FFO | $ | (39 | ) | 95,329 | — | $ | 8,969 | 63,827 | $ | 0.14 |
(a) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.
Reconciliation of Net Loss to FFO and Adjusted FFO (in thousands, except per share data) |
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Nine Months Ended September 30, | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||
Dollars | Shares |
Per Share |
Dollars | Shares |
Per Share |
|||||||||||||||
Net loss | $ | (130,232 | ) | $ | (57,864 | ) | ||||||||||||||
Noncontrolling interests | 648 | 465 | ||||||||||||||||||
Preferred dividends | (29,034 | ) | (29,034 | ) | ||||||||||||||||
Net loss
attributable to FelCor common stockholders |
(158,618 | ) | 75,135 | $ | (2.11 | ) | (86,433 | ) | 63,121 | $ | (1.37 | ) | ||||||||
Depreciation and amortization | 110,454 | — | 1.47 | 108,668 | — | 1.72 | ||||||||||||||
Depreciation,
discontinued operations and unconsolidated entities |
12,060 | — | 0.16 | 14,254 | — | 0.23 | ||||||||||||||
Gain on sale of unconsolidated subsidiary | (559 | ) | — | (0.01 | ) | — | — | — | ||||||||||||
Noncontrolling interests in FelCor LP | (571 | ) | 295 | — | (399 | ) | 296 | (0.01 | ) | |||||||||||
Conversion
of options and unvested restricted stock |
— | — | — | — | 284 | — | ||||||||||||||
FFO | (37,234 | ) | 75,430 | (0.49 | ) | 36,090 | 63,701 | 0.57 | ||||||||||||
Impairment loss | 79,245 | — | 1.05 | — | — | — | ||||||||||||||
Impairment loss,
discontinued operations and unconsolidated entities |
7,664 | — | 0.10 | 5,516 | — | 0.08 | ||||||||||||||
Acquisition costs | 419 | — | 0.01 | — | — | — | ||||||||||||||
Extinguishment of debt | (54,096 | ) | — | (0.72 | ) | 594 | — | 0.01 | ||||||||||||
Conversion costs(a) | — | — | — | 447 | — | 0.01 | ||||||||||||||
Severance costs | — | — | — | 550 | — | 0.01 | ||||||||||||||
Lease termination costs | — | — | — | 469 | — | 0.01 | ||||||||||||||
Adjusted FFO | $ | (4,002 | ) | 75,430 | $ | (0.05 | ) | $ | 43,666 | 63,701 | $ | 0.69 |
(a) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in thousands) |
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Three Months Ended |
Nine Months Ended |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net loss | $ | (89,280 | ) | $ | (25,474 | ) | $ | (130,232 | ) | $ | (57,864 | ) | ||||
Depreciation and amortization | 36,564 | 36,866 | 110,454 | 108,668 | ||||||||||||
Depreciation, discontinued operations and unconsolidated entities |
3,966 | 4,726 | 12,060 | 14,254 | ||||||||||||
Interest expense | 35,251 | 24,244 | 107,985 | 67,874 | ||||||||||||
Interest expense, discontinued operations and unconsolidated entities |
1,627 | 1,249 |
5,219 |
4,007 | ||||||||||||
Amortization of stock compensation | 1,644 | 1,122 | 4,901 | 3,924 | ||||||||||||
Noncontrolling interests in other partnerships | 173 | 174 | 77 | 66 | ||||||||||||
EBITDA | (10,055 | ) | 42,907 | 110,464 | 140,929 | |||||||||||
Impairment loss | 65,849 | — | 79,245 | — | ||||||||||||
Impairment loss, discontinued operations and unconsolidated entities |
— | 2,080 | 7,664 | 5,516 | ||||||||||||
Extinguishment of debt | (8,036 | ) | — | (54,096 | ) | 594 | ||||||||||
Acquisition costs | 403 | — | 419 | — | ||||||||||||
Conversion costs(a) | — | 117 | — | 447 | ||||||||||||
Severance costs | — | 41 | — | 550 | ||||||||||||
Lease termination costs | — | 117 | — | 469 | ||||||||||||
Gain on sale of unconsolidated subsidiary | — | — | (559 | ) | — | |||||||||||
Adjusted EBITDA | $ | 48,161 | $ | 45,262 | $ | 143,137 | $ | 148,505 |
(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) |
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Three Months Ended |
Nine Months Ended |
||||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||||
Adjusted EBITDA | $ | 48,161 | $ | 45,262 | $ | 143,137 | $ | 148,505 | |||||||||
Other revenue | (1,421 | ) | (1,280 | ) | (2,793 | ) | (2,554 | ) | |||||||||
Adjusted EBITDA from acquired hotels | (1,520 | ) | — | (1,520 | ) | — | |||||||||||
Equity in income
from unconsolidated subsidiaries
(excluding interest, depreciation and impairment expense) |
(5,816 | ) | (5,558 | ) | (15,425 | ) | (14,519 | ) | |||||||||
Noncontrolling interests in other partnerships (excluding interest, depreciation and severance expense) |
424 | 454 | 1,751 | 1,899 | |||||||||||||
Consolidated hotel lease expense | 11,827 | 10,893 | 33,090 | 31,805 | |||||||||||||
Unconsolidated taxes, insurance and lease expense | (1,801 | ) | (2,024 | ) | (5,555 | ) | (6,041 | ) | |||||||||
Interest income | (104 | ) | (229 | ) | (307 | ) | (573 | ) | |||||||||
Other expenses (excluding conversion costs, severance costs and lease termination costs) |
928 | 751 | 2,274 | 2,040 | |||||||||||||
Corporate expenses (excluding amortization expense of stock compensation) |
4,920 | 3,349 | 18,020 | 11,905 | |||||||||||||
Gain on sale of asset | — | (723 | ) | — | (723 | ) | |||||||||||
Adjusted EBITDA from discontinued operations | (99 | ) | (182 | ) | (599 | ) | (3,389 | ) | |||||||||
Hotel EBITDA |
$ | 55,499 | $ | 50,713 | $ | 172,073 | $ | 168,355 |
Reconciliation of Net Loss to Hotel EBITDA (in thousands) |
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Three Months Ended |
Nine Months Ended |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net loss | $ | (89,280 | ) | $ | (25,474 | ) | $ | (130,232 | ) | $ | (57,864 | ) | ||||
Discontinued operations | (7,684 | ) | 3,426 | 1,059 | 4,657 | |||||||||||
Adjusted EBITDA from acquired hotels | (1,520 | ) | — | (1,520 | ) | — | ||||||||||
Equity in loss (income) from unconsolidated entities | (302 | ) | (488 | ) | 886 | 3,197 | ||||||||||
Consolidated hotel lease expense | 11,827 | 10,893 | 33,090 | 31,805 | ||||||||||||
Unconsolidated taxes, insurance and lease expense | (1,801 | ) | (2,024 | ) | (5,555 | ) | (6,041 | ) | ||||||||
Interest expense, net | 35,147 | 24,015 | 107,678 | 67,301 | ||||||||||||
Extinguishment of debt | 225 | — | (45,853 | ) | 594 | |||||||||||
Corporate expenses | 6,564 | 4,471 | 22,921 | 15,829 | ||||||||||||
Depreciation and amortization | 36,564 | 36,866 | 110,454 | 108,668 | ||||||||||||
Impairment loss | 65,849 | — | 79,245 | — | ||||||||||||
Gain on sale of assets | — | (723 | ) | — | (723 | ) | ||||||||||
Other expenses | 1,331 | 1,031 | 2,693 | 3,486 | ||||||||||||
Other revenue | (1,421 | ) | (1,280 | ) | (2,793 | ) | (2,554 | ) | ||||||||
Hotel EBITDA | $ | 55,499 | $ | 50,713 | $ | 172,073 | $ | 168,355 |
Hotel EBITDA and Hotel EBITDA Margin (dollars in thousands) |
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Three Months Ended |
Nine Months Ended |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Total revenues | $ | 243,365 | $ | 223,540 | $ | 716,730 | $ | 684,570 | ||||||||
Other revenue | (1,421 | ) | (1,280 | ) | (2,793 | ) | (2,554 | ) | ||||||||
Hotel operating revenue | 241,944 | 222,260 | 713,937 | 682,016 | ||||||||||||
Less: revenue from acquired hotels | (5,673 | ) | — | (5,673 | ) | — | ||||||||||
Same-store hotel operating revenue | 236,271 | 222,260 | 708,264 | 682,016 | ||||||||||||
Same-store hotel operating expenses | (180,772 | ) | (171,547 | ) | (536,191 | ) | (513,661 | ) | ||||||||
Hotel EBITDA |
$ | 55,499 | $ | 50,713 | $ | 172,073 | $ | 168,355 | ||||||||
Hotel EBITDA margin(a) | 23.5 | % | 22.8 | % | 24.3 | % | 24.7 | % |
(a) Hotel EBITDA as a percentage of same-store hotel operating revenue.
Reconciliation of Total Operating Expenses to Same-Store Hotel Operating Expenses (dollars in thousands) |
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Three Months Ended |
Nine Months Ended |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Total operating expenses | $ | 305,259 | $ | 222,784 | $ | 783,192 | $ | 667,408 | ||||||||
Unconsolidated taxes, insurance and lease expense | 1,801 | 2,024 | 5,555 | 6,041 | ||||||||||||
Consolidated hotel lease expense | (11,827 | ) | (10,893 | ) | (33,090 | ) | (31,805 | ) | ||||||||
Corporate expenses | (6,564 | ) | (4,471 | ) | (22,921 | ) | (15,829 | ) | ||||||||
Depreciation and amortization | (36,564 | ) | (36,866 | ) | (110,454 | ) | (108,668 | ) | ||||||||
Impairment loss | (65,849 | ) | — | (79,245 | ) | — | ||||||||||
Acquired hotel expenses | (4,153 | ) | — | (4,153 | ) | — | ||||||||||
Other expenses | (1,331 | ) | (1,031 | ) | (2,693 | ) | (3,486 | ) | ||||||||
Same-store hotel operating expenses | $ | 180,772 | $ | 171,547 | $ | 536,191 | $ | 513,661 |
Reconciliation of Ratio of Operating Income (Loss) to Total Revenues to Hotel EBITDA Margin |
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Three Months Ended |
Nine Months Ended |
|||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||
Ratio of operating income (loss) to total revenues | (25.4 | )% | 0.3 | % | (9.3 | )% | 2.5 | % | ||||
Other revenue | (0.6 | ) | (0.6 | ) | (0.4 | ) | (0.4 | ) | ||||
Revenue from acquired hotels | (2.9 | ) | — | (0.7 | ) | — | ||||||
Unconsolidated taxes, insurance and lease expense | (0.8 | ) | (0.9 | ) | (0.8 | ) | (0.9 | ) | ||||
Consolidated hotel lease expense | 5.0 | 4.9 | 4.7 | 4.6 | ||||||||
Other expenses | 0.6 | 0.6 | 0.4 | 0.7 | ||||||||
Corporate expenses | 2.8 | 2.0 | 3.2 | 2.3 | ||||||||
Depreciation and amortization | 15.4 | 16.5 | 15.5 | 15.9 | ||||||||
Impairment loss | 27.7 | — | 11.1 | — | ||||||||
Expenses from acquired hotels | 1.7 | — | 0.6 | — | ||||||||
Hotel EBITDA margin | 23.5 | % | 22.8 | % | 24.3 | % | 24.7 | % |
Reconciliation of Forecasted Net Loss Attributable to FelCor to Forecasted Adjusted FFO and Adjusted EBITDA (in millions, except per share and unit data) |
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Full Year 2010 Guidance | ||||||||||||||||
Low Guidance | High Guidance | |||||||||||||||
Dollars |
Per Share |
Dollars |
Per Share |
|||||||||||||
Net loss attributable to FelCor | $ | (163 | ) | $ | (160 | ) | ||||||||||
Preferred dividends | (39 | ) | (39 | ) | ||||||||||||
Net loss attributable to FelCor common stockholders | (202 | ) | $ | (2.53 | ) | (199 | ) | $ | (2.49 | ) | ||||||
Depreciation(b) | 163 | 163 | ||||||||||||||
Gain on sale of assets | (1 | ) | (1 | ) | ||||||||||||
Noncontrolling interests in FelCor LP | (1 | ) | (1 | ) | ||||||||||||
FFO | (41 | ) | $ | (0.51 | ) | (38 | ) | $ | (0.47 | ) | ||||||
Impairment | 87 | 87 | ||||||||||||||
Extinguishment of debt | (60 | ) | (60 | ) | ||||||||||||
Adjusted FFO | $ | (14 | ) | $ | (0.17 | ) | $ | (11 | ) | $ | (0.13 | ) | ||||
Net loss attributable to FelCor | $ | (163 | ) | $ | (160 | ) | ||||||||||
Depreciation(b) | 163 | 163 | ||||||||||||||
Interest expense(b) | 150 | 150 | ||||||||||||||
Amortization expense | 7 | 7 | ||||||||||||||
Noncontrolling interests in FelCor LP | (1 | ) | (1 | ) | ||||||||||||
EBITDA | 156 | 159 | ||||||||||||||
Impairment | 87 | 87 | ||||||||||||||
Extinguishment of debt | (60 | ) | (60 | ) | ||||||||||||
Gain on sale of assets | (1 | ) | (1 | ) | ||||||||||||
Adjusted EBITDA | $ | 182 | $ | 185 |
(a) Weighted average shares and units are 80.9 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, EBITDA, 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, and 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.
In addition, to derive 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 hotel 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, using these measures facilitates 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 but not limited to corporate-level expenses; impairment losses; gains or losses on disposition of assets; and gains and losses related to extinguishment of debt. We eliminate corporate-level costs and expenses because we believe property-level results provide investors with supplemental information into the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis. We exclude the effect of impairment losses, gains or losses on disposition of assets, and gains or losses related to extinguishment of debt because we believe that including these is not consistent with reflecting the ongoing performance of our remaining 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, EBITDA, 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, EBITDA, 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, Adjusted FFO per share, EBITDA or 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, EBITDA, 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.