|
IRVING, Texas--(November 1,2012)--FelCor
Lodging Trust Incorporated (NYSE: FCH), today reported operating
results for the third quarter ended September 30, 2012.
Summary:
- Revenue per available room
(“RevPAR”) for 66 same-store hotels (45 core and 21 non-strategic)
increased 6.2% for the quarter.
- Adjusted EBITDA was $53.2 million.
- Adjusted funds from operations
("FFO") per share was $0.08.
- Net loss was $19.6 million.
- Sold three non-strategic hotels
(one in August and two in October) for $95.5 million. Proceeds were
used to repay debt and the remaining $38 million of accrued preferred
dividends on October 31. Expect to sell one additional non-strategic
hotel for gross proceeds of $8.7 million. To date, we have sold 19 of
39 hotels.
- Closed five non-crossed 10-year
secured loans bearing an average interest rate of 4.95%, raising $160.8
million. Used a portion of the proceeds to repay a $107 million
mortgage loan (secured by seven properties) at 9.02%.
Third Quarter Operating Results:
RevPAR for 66 same-store hotels was $107.78, a 6.2% increase
compared to the same period in 2011. The increase reflects a 6.9%
increase in average daily rate (“ADR”) to $144.06 and a 50 basis point
decrease in occupancy to 74.8%. RevPAR for our core hotels increased
6.6%, while RevPAR at our non-strategic hotels increased 4.7%. RevPAR
at newly-acquired and redeveloped hotels increased 12.0% during the
quarter and 14.3% during the month of September.
Commenting on third quarter results, Richard A. Smith,
President and Chief Executive Officer of FelCor, said, “I am pleased
with our results, as our RevPAR growth exceeded the industry average.
Our efforts to remix customer segments and increase ADR have been
successful, and ADR growth exceeded our expectations. While food and
beverage profit was significantly above prior year, it was below our
expectations and impacted our margins. Nonetheless, our operating
results met the low-end of our expectations. Overall, lodging
fundamentals remain strong. Transient demand continues to be solid, and
supply growth is at historically low levels. These tailwinds will
bolster U.S. RevPAR for the next few years.”
Added Mr. Smith, “We have made great progress in repositioning
the portfolio and restructuring the balance sheet. As of today, we will
have sold 10 non-strategic hotels this year, including four since the
second quarter. Our asset sale program is ahead of plan and we are
currently in discussions with buyers for an additional six hotels. Our
strategy will result in a high-growth, diversified portfolio that will
outperform the industry for the foreseeable future. We have used the
sale proceeds to pay all the accrued preferred dividends and to support
our overall balance sheet restructuring plan to lower our leverage and
cost of capital. During the quarter, we repaid our lone 2013 debt
maturity and refinanced a 2014 debt maturity at a much higher
loan-to-value, while reducing the interest rate significantly.”
Hotel EBITDA was $59.2 million, which was 8.4% higher than the
same period in 2011. Hotel EBITDA and other same-store metrics reflect
66 same-store hotels.
Same-store Adjusted EBITDA was $51.6 million, 9.9% higher than
the $46.9 million for the same period in 2011. Adjusted EBITDA (which
includes Adjusted EBITDA for sold hotels prior to sale) was $53.2
million, 2.4% higher than the same period in 2011.
Adjusted FFO was $10.0 million, or $0.08 per share, compared
to $0.05 per share for the same period in 2011. Net loss attributable
to common stockholders was $28.7 million, or $0.23 per share for the
quarter, compared to a net loss of $32.5 million, or $0.26 per share,
for the same period in 2011.
EBITDA, Adjusted EBITDA, same-store Adjusted EBITDA, Hotel
EBITDA, Hotel EBITDA margin, FFO, Adjusted FFO and Adjusted FFO per
share are all non-GAAP financial measures. See our discussion of
“Non-GAAP Financial Measures” beginning on page 18 for a reconciliation
of each of these measures to the most comparable GAAP financial measure
and for information regarding the use, limitations and importance of
these non-GAAP financial measures.
Year to Date Operating Results:
RevPAR for 66 same-store hotels was $104.31, a 5.1% increase
compared to the same period in 2011. The increase was driven by a 5.8%
increase in ADR to $141.91. Displacement from renovations and
redevelopments adversely affected revenue by $10 million.
Hotel EBITDA was $174.8 million, 6.1% higher than the $164.8
million for the same period in 2011.
Same-store Adjusted EBITDA was $147.0 million, 8.1% higher
than the $136.0 million for the same period in 2011. Adjusted EBITDA
(which includes Adjusted EBITDA for sold hotels prior to sale) was
$160.8 million, 0.2% higher than the same period in 2011.
Adjusted FFO was $30.3 million, or $0.24 per share, which is
$0.07 per share higher than the prior year. Net loss attributable to
common stockholders was $64.7 million, or $0.52 per share for the nine
months ended September 30, 2012, compared to a net loss of $125.8
million, or $1.10 per share, for the same period in 2011.
Portfolio Repositioning:
During the quarter, we sold the 222-room Embassy Suites -
Anaheim-North for $25.5 million.
On October 25, 2012, we completed the sale of the 370-room
Embassy Suites - New Orleans-Convention Center and the 296-room Embassy
Suites - Nashville-Airport for an aggregate purchase price of $70
million. The hotels' operating performance is included in discontinued
operations during the third quarter and year-to-date.
We have agreed to sell the Sheraton Crescent Hotel in Phoenix
for $8.7 million. The buyer made a hard-money deposit toward the
purchase price, and we expect the sale to close in the immediate
future.
Through today, we will have sold 19 of 39 non-strategic hotels
as part of our portfolio repositioning plan. Twenty non-strategic
hotels remain to be sold. Of those, 10 have been brought to market or
are in the preliminary marketing stage. We are currently in discussion
with buyers to sell six of these hotels. Ten remaining hotels will be
brought to market in 2013. We will use the proceeds from dispositions
to repay debt and augment our balance sheet, which, when fully
restructured, will provide a flexible foundation for improved long-term
FFO and stockholder value.
Capital Expenditures:
We spent $26.9 million and $101.0 million on capital
improvements at our operating hotels during the three and nine months
ended September 30, 2012, respectively (including our pro rata
share of joint venture expenditures).
During 2012, we anticipate spending approximately $85 million
on improvements and renovations, a majority of which is focused on 12
hotels, including six of our largest properties. We will also spend $35
million this year on value-enhancing redevelopment projects at three
hotels: Morgans, the Embassy Suites-Myrtle Beach-Oceanfront Resort and
The Fairmont Copley Plaza. Please see page 12 of this release for more
detail on renovations.
Our redevelopment of the 4+ star Knickerbocker Hotel, located
in midtown Manhattan, is progressing as planned. We have spent $18
million in excess of the acquisition costs to date, and this project
remains on schedule and on budget, with opening scheduled at the end of
2013.
Balance Sheet:
At September 30, 2012, we had $1.6 billion of consolidated
debt, with an average interest rate of 7.5%. Our debt has a weighted
average maturity of 4.8 years and none of our debt matures before June
2014. We had $112.1 million of cash and cash equivalents and $81.6
million in restricted cash as of September 30, 2012.
During the quarter, we closed five single asset-mortgage loans
totaling $160.8 million. The 10-year loans mature in 2022, bear an
average fixed interest rate of 4.95% and are not cross-collateralized.
A portion of the proceeds from the new loans were used to repay the
9.02% mortgage loan, which had an outstanding balance of $107 million
and would have otherwise matured in 2014. The repaid loan was secured
by a pool of seven hotels, including four of the five hotels mortgaged
to support the new loans. The remaining three hotels that secured the
repaid loan (two of which are non-strategic) are now unencumbered.
We also repaid the remaining $60 million balance of a CMBS
loan using excess proceeds from the new loan and recent asset sales.
This repaid loan, which would have otherwise matured in 2013, was
secured by five properties. Of these five properties, one property now
secures a new loan and the remaining four are now unencumbered.
On October 31, we paid dividends of $2.39 per share on our
Series A Preferred Stock and $2.45 per depositary share evidencing the
Series C Preferred Stock. The dividend payment to holders of the Series
A Preferred Stock included the current quarterly dividends of $0.4875
per share and accrued preferred dividends of $1.9025 per share. The
dividend payment to holders of the Series C Preferred Stock included
the current quarterly dividends of $0.50 per depositary share and
accrued preferred dividends of $1.95 per depositary share. FelCor has
now paid all of the outstanding accrued preferred dividends.
Andrew J. Welch, FelCor's Executive Vice President and Chief
Financial Officer, said, “We continue to progress toward completely
restructuring our balance sheet, including reducing leverage, reducing
our average interest rate and extending and staggering our debt
maturity profile. We have lowered our weighted-average cost of debt by
23 basis points in the last twelve months and expect to ultimately
reduce our cost of debt to roughly 6.0%, as we repay and refinance
debt."
Outlook:
Our 2012 operating outlook reflects updated timing for asset
sales and third quarter results, which met the low-end of our
expectations. We are increasing the low-end of our Adjusted EBITDA
guidance and maintaining the low-end of our same-store Adjusted EBITDA
guidance for 57 hotels.
During 2012, we anticipate:
- Same-store RevPAR to increase
between 5.5% and 6.0%;
- Adjusted EBITDA to be between $200
million and $204 million;
- Adjusted FFO per share to be
between $0.21 and $0.25;
- Net loss attributable to FelCor to
be between $40 million and $36 million; and
- Interest expense, including pro
rata share of joint ventures, to be $129 million.
Our previous outlook assumed the sale of 12 hotels (three of
which have been sold and one will be sold in the immediate future). For
comparing to our previous outlook, we are providing the following data
that reconciles the current Adjusted EBITDA outlook to 2012 Same-store
Adjusted EBITDA (in millions). Same-store Adjusted EBITDA reflects
EBITDA for 57 hotels (i.e., giving pro forma effect to selling the
remaining hotels):
|
|
Low |
|
Mid |
|
High |
| Current
Adjusted EBITDA Outlook |
|
$
|
200
|
|
|
$
|
202
|
|
|
$
|
204
|
|
| Discontinued
Operations(a) |
|
(29 |
)
|
|
(30 |
)
|
|
(31 |
)
|
| Same-store
Adjusted EBITDA (57 hotels) |
|
$
|
171
|
|
|
$
|
172
|
|
|
$
|
173
|
|
(a) EBITDA from January 1, 2012 through the dates of sale of
nine hotels sold to date and one hotel expected to sell in the
immediate future, plus EBITDA for the full year for eight remaining
sale hotels.
About FelCor:
FelCor, a real estate investment trust, is the nation’s
largest owner of upper-upscale, all-suite hotels. FelCor owns interests
in 67 properties located in major markets throughout 22 states.
FelCor’s diversified portfolio of hotels and resorts are flagged under
global brands such as: Doubletree ®, Embassy Suites
Hotels®, Hilton®, Fairmont®,
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 third quarter earnings
Conference Call on Thursday, November 1, 2012 at 10:00 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 can
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 also 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 period ended September 30, 2012.
TABLE OF CONTENTS
|
|
Page
|
| Consolidated
Statements of Operations(a) |
|
8
|
| Consolidated
Balance Sheets(a) |
|
9
|
| Consolidated Debt
Summary |
|
10
|
| Schedule of
Encumbered Hotels |
|
11
|
| Capital
Expenditures |
|
12
|
| Hotels Under
Renovation or Redevelopment During 2012 |
|
12
|
| Supplemental
Financial Data |
|
13
|
| Discontinued
Operations |
|
14
|
| Hotel Portfolio
Composition |
|
15
|
| Detailed
Operating Statistics by Brand |
|
16
|
| Comparable Hotels
Operating Statistics for Our Top Markets |
|
17
|
| Historical
Operating Statistics |
|
18
|
| Non-GAAP
Financial Measures |
|
18
|
(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 |
|
|
September 30, |
|
September 30, |
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| Revenues: |
|
|
|
|
|
|
|
|
| Hotel operating
revenue: |
|
|
|
|
|
|
|
|
| Room |
|
$
|
188,886
|
|
|
$
|
177,858
|
|
|
$
|
544,664
|
|
|
$
|
507,375
|
|
| Food and beverage
|
|
33,673 |
|
|
30,288 |
|
|
109,472 |
|
|
104,102 |
|
| Other operating
departments |
|
12,237 |
|
|
13,488 |
|
|
38,177 |
|
|
38,591 |
|
| Other
revenue |
|
1,441 |
|
|
1,394 |
|
|
2,672 |
|
|
2,630 |
|
| Total
revenues |
|
236,237 |
|
|
223,028 |
|
|
694,985 |
|
|
652,698 |
|
| Expenses: |
|
|
|
|
|
|
|
|
| Hotel
departmental expenses: |
|
|
|
|
|
|
|
|
| Room |
|
49,794 |
|
|
47,805 |
|
|
144,419 |
|
|
135,514 |
|
| Food and beverage
|
|
29,176 |
|
|
26,892 |
|
|
89,354 |
|
|
82,935 |
|
| Other operating
departments |
|
5,593 |
|
|
5,979 |
|
|
16,976 |
|
|
17,555 |
|
| Other
property-related costs |
|
63,940 |
|
|
61,944 |
|
|
188,428 |
|
|
179,399 |
|
| Management and
franchise fees |
|
10,895 |
|
|
10,245 |
|
|
32,188 |
|
|
30,033 |
|
| Taxes, insurance
and lease expense |
|
25,353 |
|
|
23,015 |
|
|
71,983 |
|
|
64,231 |
|
| Corporate
expenses |
|
5,695 |
|
|
6,258 |
|
|
20,074 |
|
|
22,705 |
|
| Depreciation and
amortization |
|
31,749 |
|
|
29,891 |
|
|
92,544 |
|
|
88,960 |
|
| Impairment loss |
|
— |
|
|
— |
|
|
1,335 |
|
|
7,003 |
|
| Other
expenses |
|
2,163 |
|
|
1,208 |
|
|
3,926 |
|
|
3,455 |
|
| Total
operating expenses |
|
224,358 |
|
|
213,237 |
|
|
661,227 |
|
|
631,790 |
|
| Operating income |
|
11,879 |
|
|
9,791 |
|
|
33,758 |
|
|
20,908 |
|
| Interest expense,
net |
|
(31,359 |
)
|
|
(32,865 |
)
|
|
(93,547 |
)
|
|
(98,172 |
)
|
| Debt
extinguishment |
|
(11,661 |
)
|
|
(21 |
)
|
|
(11,808 |
)
|
|
(27,599 |
)
|
| Gain on
involuntary conversion, net |
|
— |
|
|
109 |
|
|
— |
|
|
292 |
|
| Loss before
equity in income (loss) from unconsolidated entities |
|
(31,141 |
)
|
|
(22,986 |
)
|
|
(71,597 |
)
|
|
(104,571 |
)
|
| Equity in
income (loss) from unconsolidated entities |
|
1,536 |
|
|
249 |
|
|
2,674 |
|
|
(1,303 |
)
|
| Loss from
continuing operations |
|
(29,605 |
)
|
|
(22,737 |
)
|
|
(68,923 |
)
|
|
(105,874 |
)
|
| Income
(loss) from discontinued operations |
|
10,050 |
|
|
(639 |
)
|
|
32,535 |
|
|
8,375 |
|
| Net loss |
|
(19,555 |
)
|
|
(23,376 |
)
|
|
(36,388 |
)
|
|
(97,499 |
)
|
| Net loss
attributable to noncontrolling interests in other partnerships |
|
386 |
|
|
378 |
|
|
440 |
|
|
269 |
|
| Net loss
attributable to redeemable noncontrolling interests in FelCor LP |
|
144 |
|
|
166 |
|
|
329 |
|
|
469 |
|
| Net loss
attributable to FelCor |
|
(19,025 |
)
|
|
(22,832 |
)
|
|
(35,619 |
)
|
|
(96,761 |
)
|
| Preferred
dividends |
|
(9,678 |
)
|
|
(9,678 |
)
|
|
(29,034 |
)
|
|
(29,034 |
)
|
| Net loss
attributable to FelCor common stockholders |
|
$
|
(28,703
|
)
|
|
$
|
(32,510
|
)
|
|
$
|
(64,653
|
)
|
|
$
|
(125,795
|
)
|
| Basic and diluted
per common share data: |
|
|
|
|
|
|
|
|
| Loss from
continuing operations |
|
$
|
(0.31
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(1.18
|
)
|
| Net loss |
|
$
|
(0.23
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
(1.10
|
)
|
| Basic and
diluted weighted average common shares outstanding |
|
123,640 |
|
|
123,062 |
|
|
123,648 |
|
|
113,908 |
|
|
Consolidated Balance Sheets
(in thousands)
|
|
|
September
30, |
|
December
31, |
|
|
2012 |
|
2011 |
| Assets |
|
|
|
|
| Investment in
hotels, net of accumulated depreciation of $931,508 and $987,895 at
September 30, 2012 and December 31, 2011, respectively |
|
$
|
1,813,845
|
|
|
$
|
1,953,795
|
|
| Hotel development
|
|
138,749 |
|
|
120,163 |
|
| Investment in
unconsolidated entities |
|
57,352 |
|
|
70,002 |
|
| Hotels held for
sale |
|
40,822 |
|
|
— |
|
| Cash and cash
equivalents |
|
112,119 |
|
|
93,758 |
|
| Restricted cash |
|
81,642 |
|
|
84,240 |
|
| Accounts
receivable, net of allowance for doubtful accounts of $419 and $333 at
September 30, 2012 and December 31, 2011, respectively |
|
34,722 |
|
|
27,135 |
|
| Deferred
expenses, net of accumulated amortization of $14,262 and $13,119 at
September 30, 2012 and December 31, 2011, respectively |
|
25,362 |
|
|
29,772 |
|
| Other
assets |
|
27,040 |
|
|
24,363 |
|
| Total
assets |
|
$
|
2,331,653
|
|
|
$
|
2,403,228
|
|
| Liabilities
and Equity |
|
|
|
|
| Debt, net of
discount of $24,406 and $32,069 at September 30, 2012 and December 31,
2011, respectively |
|
$
|
1,598,094
|
|
|
$
|
1,596,466
|
|
| Distributions
payable |
|
46,306 |
|
|
76,293 |
|
| Accrued
expenses and other liabilities |
|
159,817 |
|
|
140,548 |
|
| Total
liabilities |
|
1,804,217 |
|
|
1,813,307 |
|
| Commitments and
contingencies |
|
|
|
|
| Redeemable
noncontrolling interests in FelCor LP, 625 and 636 units issued and
outstanding at September 30, 2012 and December 31, 2011 |
|
3,236 |
|
|
3,026 |
|
| 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, 2012 and
December 31, 2011 |
|
309,362 |
|
|
309,362 |
|
| Series C
Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of
$169,950, issued and outstanding at September 30, 2012 and December 31,
2011 |
|
169,412 |
|
|
169,412 |
|
| Common stock,
$0.01 par value, 200,000 shares authorized; 124,229 and 124,281 shares
issued and outstanding at September 30, 2012 and December 31, 2011,
respectively |
|
1,242 |
|
|
1,243 |
|
| Additional
paid-in capital |
|
2,353,538 |
|
|
2,353,251 |
|
| Accumulated other
comprehensive income |
|
26,228 |
|
|
25,738 |
|
| Accumulated
deficit |
|
(2,362,324 |
)
|
|
(2,297,468 |
)
|
| Total FelCor
stockholders’ equity |
|
497,458 |
|
|
561,538 |
|
| Noncontrolling
interests in other partnerships |
|
26,742 |
|
|
25,357 |
|
| Total
equity |
|
524,200 |
|
|
586,895 |
|
| Total
liabilities and equity |
|
$
|
2,331,653
|
|
|
$
|
2,403,228
|
|
|
Consolidated Debt
Summary
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Encumbered Hotels |
|
Interest
Rate (%)
|
|
Maturity Date
|
|
September 30,
2012 |
|
December 31,
2011 |
| Line of credit
|
|
10
|
|
|
|
L +
4.50 |
|
|
August 2014(a)
|
|
$
|
117,000
|
|
|
$
|
—
|
| Hotel mortgage
debt |
|
|
|
|
|
|
|
|
|
|
|
|
| Mortgage debt |
|
5
|
|
(b) |
|
6.66
|
|
|
|
June - August
2014 |
|
65,935 |
|
|
67,375 |
| Mortgage debt |
|
7
|
|
|
|
L +
5.10 |
(c) |
|
April 2015 |
|
186,529 |
|
|
202,982 |
| Mortgage debt |
|
1
|
|
|
|
5.81
|
|
|
|
July 2016 |
|
10,521 |
|
|
10,876 |
| Mortgage debt |
|
4
|
|
(b) |
|
4.95
|
|
|
|
October 2022 |
|
128,500 |
|
|
— |
| Mortgage debt |
|
1
|
|
|
|
4.94
|
|
|
|
October 2022 |
|
32,250 |
|
|
— |
| Senior notes
|
|
|
|
|
|
|
|
|
|
|
|
|
| Senior secured
notes |
|
6
|
|
|
|
6.75
|
|
|
|
June 2019 |
|
525,000 |
|
|
525,000 |
| Senior secured
notes(d) |
|
11
|
|
|
|
10.00
|
|
|
|
October 2014 |
|
467,499 |
|
|
459,931 |
| Other(e)
|
|
—
|
|
|
|
L +
1.50 |
|
|
December 2012 |
|
64,860 |
|
|
64,860 |
| Retired
debt |
|
—
|
|
|
|
— |
|
|
|
— |
|
— |
|
|
265,442 |
| Total
|
|
45
|
|
|
|
|
|
|
|
|
$
|
1,598,094
|
|
|
$
|
1,596,466
|
| (a) |
|
Our $225 million
line of credit can be extended for one year (to 2015), subject to
satisfying certain conditions. |
| (b) |
|
The hotels
securing this debt are subject to separate loan agreements and are not
cross-collateralized. |
| (c) |
|
LIBOR (for this loan) is subject
to a 3% floor. We purchased an interest rate cap ($202 million notional
amount) that caps LIBOR at 5.4% and expires May 2013.
|
| (d) |
|
These notes have $492 million in
aggregate principal outstanding ($144 million and $96,000 in aggregate
principal amount was redeemed in June 2011 and January 2012,
respectively) and were initially sold at a discount that provided an
effective yield of 12.875% before transaction costs.
|
| (e) |
|
This loan is related to our
Knickerbocker redevelopment project and is fully secured by restricted
cash and a mortgage. Because we were able to assume an existing loan
when we purchased this hotel, we were not required to pay any local
mortgage recording tax. When that loan is transferred to a new lender
and made part of our construction loan, we expect to only pay such tax
to the extent of the incremental principal amount of the construction
loan.
|
|
Schedule of Encumbered Hotels
(dollars in millions)
|
|
|
|
|
|
|
|
September 30, 2012 |
|
|
| Consolidated
Debt |
|
Balance |
|
Encumbered
Hotels |
| Line of credit |
|
|
$
|
117
|
|
|
|
Charlotte
SouthPark - DT, Dana Point - DTGS, 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 |
|
|
$
|
187
|
|
|
|
Atlanta Buckhead
- ES, Atlanta Galleria - SS, Boston
Marlboro - ES, Burlington - SH,
Orlando South - ES, Philadelphia Society Hill - SH and South San
Francisco - ES
|
| CMBS debt(a)
|
|
|
$
|
129
|
|
|
|
Birmingham - ES,
Ft. Lauderdale - ES, Minneapolis Airport - ES, and Napa Valley - ES |
| CMBS debt(a)
|
|
|
$
|
66
|
|
|
|
Atlanta Airport -
ES, Austin - DTGS, BWI Airport - ES, Orlando Airport - HI and Phoenix
Biltmore - ES |
| CMBS debt |
|
|
$
|
32
|
|
|
|
Deerfield Beach -
ES |
| CMBS debt |
|
|
$
|
11
|
|
|
|
Indianapolis
North - ES |
| Senior secured
notes |
|
|
$
|
525
|
|
|
|
Boston Copley -
FMT, Los Angeles International Airport - ES, Indian Wells Esmeralda
Resort & Spa - REN, St. Petersburg Vinoy Resort & Golf Club -
REN, Morgans and Royalton |
| Senior secured
notes |
|
|
$
|
467
|
|
|
|
Atlanta Airport -
SH, Boston Beacon Hill - HI, Myrtle Beach Resort - ES, Nashville
Opryland -Airport - HI, New Orleans French Quarter - HI, Orlando Walt
Disney World® - DTGS, San Diego on the Bay - HI, San
Francisco Waterfront - ES, San Francisco Fisherman’s Wharf - HI, San
Francisco Union Square - MAR and Toronto Airport - HI |
|
|
|
|
|
|
|
|
|
|
(a) The hotels securing this debt
are subject to separate loan agreements and are not
cross-collateralized.
|
|
Capital Expenditures
(in thousands)
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Nine
Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| Improvements and
additions to majority-owned hotels |
|
$
|
26,636
|
|
|
$
|
22,226
|
|
|
$
|
99,985
|
|
|
$
|
57,470
|
|
| Partners’ pro
rata share of additions to consolidated joint venture hotels |
|
(190 |
)
|
|
(286 |
)
|
|
(819 |
)
|
|
(726 |
)
|
| Pro rata
share of additions to unconsolidated hotels |
|
440 |
|
|
778 |
|
|
1,804 |
|
|
2,250 |
|
| Total
additions to hotels(a) |
|
$
|
26,886
|
|
|
$
|
22,718
|
|
|
$
|
100,970
|
|
|
$
|
58,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes capitalized interest,
property taxes, ground leases and certain employee costs.
|
|
Hotels Under Renovation or
Redevelopment During 2012
|
|
|
|
|
|
|
|
|
|
|
Primary
Areas
|
|
Start Date
|
|
End Date
|
|
|
Renovations
|
|
|
|
|
|
| Austin-DTGS |
|
guestrooms,
corridors, public areas, entrance, F&B upgrade |
|
Jun-2011 |
|
Feb-2012 |
|
| Mandalay Beach-ES
|
|
guestrooms,
corridors, lobby, exterior |
|
Oct-2011 |
|
May-2012 |
|
| Philadelphia
Society Hill-SH |
|
guest rooms,
corridors, public areas, meeting space, re-concept F&B |
|
Nov-2011 |
|
Apr-2012 |
|
| Napa Valley-ES |
|
guestrooms,
corridors, public areas |
|
Nov-2011 |
|
Apr-2012 |
(a) |
| Charlotte
SouthPark-DT |
|
guestrooms,
corridors, exterior, lobby, upgrade F&B |
|
Nov-2011 |
|
May-2012 |
|
| Pittsburgh
University Center-HI |
|
guestrooms,
public areas, meeting space |
|
Dec-2011 |
|
Mar-2012 |
|
| Boston Beacon
Hill-HI |
|
guestrooms,
lobby, F&B |
|
Dec-2011 |
|
Apr-2012 |
|
| Renaissance
Esmeralda Resort |
|
guestrooms,
corridors |
|
Jun-2012 |
|
Oct-2012 |
|
| LAX South - ES |
|
guestrooms,
corridors |
|
Sep-2012 |
|
Mar-2013 |
|
|
Redevelopments
|
|
|
|
|
|
| Myrtle Beach
Oceanfront Resort-ES |
|
public space,
lobby, re-concept F&B |
|
Oct-2011 |
|
Apr-2012 |
|
| Boston Copley
Plaza-FMT |
|
guestrooms,
corridors, public areas, meeting space, fitness area, re-concept
F&B |
|
Nov-2011 |
|
July-2012 |
|
| Morgans |
|
guestroom
additions, public areas, fitness area, re-concept F&B |
|
Feb-2012 |
|
Dec-2012 |
|
|
|
|
|
|
|
|
|
|
(a) The public area renovation
will begin in the fourth quarter 2012.
|
|
Supplemental Financial Data
(in thousands, except per share
information)
|
|
|
|
|
|
September
30, |
|
December
31, |
|
Total
Enterprise Value
|
2012 |
|
2011 |
| Common shares
outstanding |
124,229 |
|
|
124,281 |
|
| Units
outstanding |
625 |
|
|
636 |
|
| Combined shares
and units outstanding |
124,854 |
|
|
124,917 |
|
| Common
stock price |
$
|
4.74
|
|
|
$
|
3.05
|
|
| Market
capitalization |
$
|
591,808
|
|
|
$
|
380,997
|
|
| Series A
preferred stock(a) |
309,362 |
|
|
309,362 |
|
| Series C
preferred stock(a) |
169,412 |
|
|
169,412 |
|
| Consolidated debt
|
1,598,094 |
|
|
1,596,466 |
|
| Noncontrolling
interests of consolidated debt |
(2,831 |
)
|
|
(2,894 |
)
|
| Pro rata share of
unconsolidated debt |
74,449 |
|
|
75,178 |
|
| Hotel development
|
(138,749 |
)
|
|
(120,163 |
)
|
| Cash and
cash equivalents |
(112,119 |
)
|
|
(93,758 |
)
|
| Total
enterprise value (TEV) |
$
|
2,489,426
|
|
|
$
|
2,314,600
|
|
|
|
|
|
|
|
|
|
|
(a) Book value based on issue
price.
|
|
Discontinued Operations
(in thousands)
|
|
|
|
|
|
|
|
Discontinued operations include
the results of operations for two hotels designated as held for sale,
for seven hotels sold in 2012, and eight hotels sold in 2011. Condensed
financial information for the hotels included in discontinued
operations is as follows:
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Nine
Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
| Operating revenue
|
|
$
|
7,558
|
|
|
$
|
25,477
|
|
|
$
|
49,506
|
|
|
$
|
99,556
|
|
|
| Operating
expenses |
|
(7,065 |
)
|
|
(25,684 |
)
|
(a)
|
(40,831 |
)
|
|
(97,265 |
)
|
(a)
|
| Operating income
(loss) |
|
493 |
|
|
(207 |
)
|
|
8,675 |
|
|
2,291 |
|
|
| Interest expense,
net |
|
(239 |
)
|
|
(799 |
)
|
|
(1,991 |
)
|
|
(4,548 |
)
|
|
| Debt
extinguishment |
|
(126 |
)
|
|
(334 |
)
|
|
(790 |
)
|
|
3,282 |
|
|
| Loss on
involuntary conversion, net of tax |
|
— |
|
|
— |
|
|
— |
|
|
(12 |
)
|
|
| Gain on
sale, net of tax |
|
9,922 |
|
|
701 |
|
|
26,641 |
|
|
7,362 |
|
|
| Income (loss)
from discontinued operations |
|
10,050 |
|
|
(639 |
)
|
|
32,535 |
|
|
8,375 |
|
|
| Depreciation and
amortization |
|
946 |
|
|
4,313 |
|
|
4,933 |
|
|
16,099 |
|
|
| Interest expense |
|
239 |
|
|
800 |
|
|
1,991 |
|
|
4,551 |
|
|
| Noncontrolling
interest in other partnerships |
|
— |
|
|
13 |
|
|
— |
|
|
13 |
|
|
| EBITDA from
discontinued operations |
|
11,235 |
|
|
4,487 |
|
|
39,459 |
|
|
29,038 |
|
|
| Impairment loss |
|
— |
|
|
946 |
|
|
— |
|
|
6,247 |
|
|
| Hurricane loss |
|
228 |
|
|
— |
|
|
228 |
|
|
— |
|
|
| Debt
extinguishment |
|
126 |
|
|
334 |
|
|
790 |
|
|
(3,282 |
)
|
|
| Loss on
involuntary conversion, net of tax |
|
— |
|
|
— |
|
|
— |
|
|
12 |
|
|
| Gain on
sale, net of tax |
|
(9,922 |
)
|
|
(701 |
)
|
|
(26,641 |
)
|
|
(7,362 |
)
|
|
| Adjusted
EBITDA from discontinued operations |
|
$
|
1,667
|
|
|
$
|
5,066
|
|
|
$
|
13,836
|
|
|
$
|
24,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes a $946,000 impairment
charge for the three months ended September 30, 2011 and a $6.2 million
impairment charge for the nine months ended September 30, 2011.
|
|
Hotel Portfolio Composition
|
|
|
|
|
|
|
|
|
|
The following table illustrates
the distribution of same-store hotels.
|
|
|
|
|
|
|
|
|
|
Brand
|
Hotels |
|
Rooms |
|
% of Total Rooms |
|
2011 Hotel EBITDA
(in thousands)(a)
|
| Embassy
Suites Hotels |
21
|
|
|
|
5,743
|
|
|
|
30
|
|
|
|
$
|
79,999
|
| Holiday
Inn |
9
|
|
|
|
3,120
|
|
|
|
16
|
|
|
|
32,543 |
| Doubletree
and Hilton |
5
|
|
|
|
1,206
|
|
|
|
6
|
|
|
|
15,352 |
| Sheraton
and Westin |
4
|
|
|
|
1,604
|
|
|
|
8
|
|
|
|
15,203 |
| Renaissance
and Marriott |
3
|
|
|
|
1,321
|
|
|
|
7
|
|
|
|
11,357 |
| Fairmont
|
1
|
|
|
|
383
|
|
|
|
3
|
|
|
|
5,700 |
| Morgans and Royalton |
2
|
|
|
|
282
|
|
|
|
1
|
|
|
|
3,845 |
| Core
hotels |
45
|
|
|
|
13,659
|
|
|
|
71
|
|
|
|
163,999 |
| Non-strategic hotels |
21
|
|
|
|
5,505
|
|
|
|
29
|
|
|
|
46,989 |
| Same-store hotels |
66
|
|
|
|
19,164
|
|
|
|
100
|
|
|
|
$
|
210,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
| San
Francisco area |
4
|
|
|
|
1,637
|
|
|
|
9
|
|
|
|
$
|
16,813
|
| Boston
|
3
|
|
|
|
916
|
|
|
|
5
|
|
|
|
14,031 |
| Los
Angeles area |
3
|
|
|
|
677
|
|
|
|
4
|
|
|
|
13,731 |
| South
Florida |
3
|
|
|
|
923
|
|
|
|
5
|
|
|
|
13,116 |
| New
York area |
4
|
|
|
|
817
|
|
|
|
4
|
|
|
|
9,703 |
| Philadelphia
|
2
|
|
|
|
728
|
|
|
|
4
|
|
|
|
8,808 |
| Atlanta
|
3
|
|
|
|
952
|
|
|
|
5
|
|
|
|
8,420 |
| Myrtle
Beach |
2
|
|
|
|
640
|
|
|
|
3
|
|
|
|
7,862 |
| Dallas
|
2
|
|
|
|
784
|
|
|
|
4
|
|
|
|
7,153 |
| San
Diego |
1
|
|
|
|
600
|
|
|
|
3
|
|
|
|
6,144 |
| Other markets |
18
|
|
|
|
4,985
|
|
|
|
25
|
|
|
|
58,218 |
| Core
hotels |
45
|
|
|
|
13,659
|
|
|
|
71
|
|
|
|
163,999 |
| Non-strategic hotels |
21
|
|
|
|
5,505
|
|
|
|
29
|
|
|
|
46,989 |
| Same-store hotels |
66
|
|
|
|
19,164
|
|
|
|
100
|
|
|
|
$
|
210,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location
|
|
|
|
|
|
|
|
|
|
|
| Urban
|
16
|
|
|
|
4,931
|
|
|
|
26
|
|
|
|
$
|
64,858
|
| Airport
|
10
|
|
|
|
3,267
|
|
|
|
17
|
|
|
|
35,579 |
| Resort
|
10
|
|
|
|
2,928
|
|
|
|
16
|
|
|
|
35,204 |
| Suburban |
9
|
|
|
|
2,533
|
|
|
|
12
|
|
|
|
28,358 |
| Core
hotels |
45
|
|
|
|
13,659
|
|
|
|
71
|
|
|
|
163,999 |
| Non-strategic hotels |
21
|
|
|
|
5,505
|
|
|
|
29
|
|
|
|
46,989 |
| Same-store hotels |
66
|
|
|
|
19,164
|
|
|
|
100
|
|
|
|
$
|
210,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Hotel EBITDA is more fully
described on page 26.
|
The following tables set forth occupancy, ADR and RevPAR for
the three and nine months ended September 30, 2012 and 2011, and the
percentage changes therein for the periods presented, for our
same-store Consolidated Hotels included in continuing operations.
|
Detailed
Operating Statistics by Brand
|
|
|
|
|
|
Occupancy (%) |
|
|
Three
Months Ended |
|
|
|
|
|
Nine
Months Ended |
|
|
|
|
|
September 30, |
|
|
|
|
|
September 30, |
|
|
|
|
|
2012 |
|
2011 |
|
%Variance |
|
2012 |
|
2011 |
|
%Variance |
| Embassy Suites
Hotels |
|
76.7
|
|
|
80.1
|
|
|
(4.3
|
)
|
|
|
76.4
|
|
|
77.9
|
|
|
(1.9
|
)
|
| Holiday Inn |
|
82.1
|
|
|
82.4
|
|
|
(0.3
|
)
|
|
|
76.9
|
|
|
76.5
|
|
|
0.5
|
|
| Doubletree and
Hilton |
|
78.1
|
|
|
76.2
|
|
|
2.5
|
|
|
|
71.9
|
|
|
70.9
|
|
|
1.4
|
|
| Sheraton and
Westin |
|
69.0
|
|
|
67.1
|
|
|
2.8
|
|
|
|
65.8
|
|
|
67.8
|
|
|
(2.9
|
)
|
| Renaissance and
Marriott |
|
68.3
|
|
|
63.0
|
|
|
8.4
|
|
|
|
71.3
|
|
|
68.9
|
|
|
3.4
|
|
| Fairmont |
|
81.7
|
|
|
83.1
|
|
|
(1.7
|
)
|
|
|
62.0
|
|
|
73.5
|
|
|
(15.7
|
)
|
| Morgans and
Royalton |
|
85.6
|
|
|
86.3
|
|
|
(0.8
|
)
|
|
|
83.2
|
|
|
86.1
|
|
|
(3.4
|
)
|
| Core hotels
(45) |
|
76.7
|
|
|
77.4
|
|
|
(0.9
|
)
|
|
|
74.1
|
|
|
75.0
|
|
|
(1.2
|
)
|
| Non-strategic
hotels (24) |
|
70.1
|
|
|
70.1
|
|
|
(0.1
|
)
|
|
|
72.0
|
|
|
71.4
|
|
|
0.8
|
|
| Same-store
hotels (66) |
|
74.8
|
|
|
75.3
|
|
|
(0.7
|
)
|
|
|
73.5
|
|
|
74.0
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADR ($) |
|
|
Three
Months Ended |
|
|
|
|
|
Nine
Months Ended |
|
|
|
|
|
September 30, |
|
|
|
|
|
September 30, |
|
|
|
|
|
2012 |
|
2011 |
|
%Variance |
|
2012 |
|
2011 |
|
%Variance |
| Embassy Suites
Hotels |
|
146.48
|
|
|
137.34
|
|
|
6.7
|
|
|
|
145.14
|
|
|
137.96
|
|
|
5.2
|
|
| Holiday Inn |
|
155.56
|
|
|
141.23
|
|
|
10.1
|
|
|
|
143.96
|
|
|
131.10
|
|
|
9.8
|
|
| Doubletree and
Hilton |
|
142.08
|
|
|
132.03
|
|
|
7.6
|
|
|
|
139.02
|
|
|
132.94
|
|
|
4.6
|
|
| Sheraton and
Westin |
|
114.61
|
|
|
111.93
|
|
|
2.4
|
|
|
|
112.28
|
|
|
111.93
|
|
|
0.3
|
|
| Renaissance and
Marriott |
|
171.56
|
|
|
155.56
|
|
|
10.3
|
|
|
|
194.01
|
|
|
177.49
|
|
|
9.3
|
|
| Fairmont |
|
275.15
|
|
|
249.60
|
|
|
10.2
|
|
|
|
281.34
|
|
|
245.10
|
|
|
14.8
|
|
| Morgans and
Royalton |
|
295.74
|
|
|
284.71
|
|
|
3.9
|
|
|
|
289.76
|
|
|
274.93
|
|
|
5.4
|
|
| Core hotels
(45) |
|
154.26
|
|
|
143.37
|
|
|
7.6
|
|
|
|
151.69
|
|
|
142.65
|
|
|
6.3
|
|
| Non-strategic
hotels (24) |
|
116.60
|
|
|
111.31
|
|
|
4.8
|
|
|
|
117.12
|
|
|
112.27
|
|
|
4.3
|
|
| Same-store
hotels (66) |
|
144.06
|
|
|
134.74
|
|
|
6.9
|
|
|
|
141.91
|
|
|
134.17
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RevPAR ($) |
|
|
Three
Months Ended |
|
|
|
|
|
Nine
Months Ended |
|
|
|
|
|
September 30, |
|
|
|
|
|
September 30, |
|
|
|
|
|
2012 |
|
2011 |
|
%Variance |
|
2012 |
|
2011 |
|
%Variance |
| Embassy Suites
Hotels |
|
112.30
|
|
|
110.00
|
|
|
2.1
|
|
|
|
110.84
|
|
|
107.41
|
|
|
3.2
|
|
| Holiday Inn |
|
127.79
|
|
|
116.39
|
|
|
9.8
|
|
|
|
110.66
|
|
|
100.30
|
|
|
10.3
|
|
| Doubletree and
Hilton |
|
111.00
|
|
|
100.61
|
|
|
10.3
|
|
|
|
99.99
|
|
|
94.28
|
|
|
6.1
|
|
| Sheraton and
Westin |
|
79.09
|
|
|
75.15
|
|
|
5.2
|
|
|
|
73.91
|
|
|
75.89
|
|
|
(2.6
|
)
|
| Renaissance and
Marriott |
|
117.18
|
|
|
97.98
|
|
|
19.6
|
|
|
|
138.32
|
|
|
122.33
|
|
|
13.1
|
|
| Fairmont |
|
224.93
|
|
|
207.53
|
|
|
8.4
|
|
|
|
174.41
|
|
|
180.20
|
|
|
(3.2
|
)
|
| Morgans and
Royalton |
|
253.11
|
|
|
245.67
|
|
|
3.0
|
|
|
|
241.05
|
|
|
236.74
|
|
|
1.8
|
|
| Core hotels
(45) |
|
118.37
|
|
|
111.02
|
|
|
6.6
|
|
|
|
112.43
|
|
|
106.96
|
|
|
5.1
|
|
| Non-strategic
hotels (24) |
|
81.73
|
|
|
78.06
|
|
|
4.7
|
|
|
|
84.30
|
|
|
80.19
|
|
|
5.1
|
|
| Same-store
hotels (66) |
|
107.78
|
|
|
101.49
|
|
|
6.2
|
|
|
|
104.31
|
|
|
99.23
|
|
|
5.1
|
|
|
Comparable Hotels Operating
Statistics for Our Top Markets
|
|
|
|
|
|
Occupancy (%) |
|
|
Three
Months Ended |
|
|
|
|
Nine
Months Ended |
|
|
|
|
|
|
September 30, |
|
|
|
|
September 30, |
|
|
|
|
|
|
2012 |
|
2011 |
|
%Variance |
|
2012 |
|
2011 |
|
%Variance |
| San Francisco
area |
|
89.7
|
|
|
|
89.5
|
|
|
|
0.2
|
|
|
|
82.4
|
|
|
|
81.0
|
|
|
|
1.7
|
|
| Boston |
|
81.4
|
|
|
|
84.5
|
|
|
|
(3.7
|
)
|
|
|
70.4
|
|
|
|
79.2
|
|
|
|
(11.1
|
)
|
| Los Angeles area |
|
80.2
|
|
|
|
86.4
|
|
|
|
(7.2
|
)
|
|
|
81.0
|
|
|
|
80.3
|
|
|
|
0.8
|
|
| South Florida |
|
72.7
|
|
|
|
74.2
|
|
|
|
(2.0
|
)
|
|
|
78.5
|
|
|
|
79.2
|
|
|
|
(0.9
|
)
|
| New York area |
|
78.5
|
|
|
|
83.7
|
|
|
|
(6.2
|
)
|
|
|
76.8
|
|
|
|
78.9
|
|
|
|
(2.6
|
)
|
| Philadelphia |
|
72.8
|
|
|
|
75.6
|
|
|
|
(3.8
|
)
|
|
|
66.6
|
|
|
|
72.0
|
|
|
|
(7.4
|
)
|
| Atlanta |
|
75.6
|
|
|
|
75.9
|
|
|
|
(0.5
|
)
|
|
|
75.0
|
|
|
|
76.7
|
|
|
|
(2.2
|
)
|
| Myrtle Beach |
|
82.1
|
|
|
|
80.4
|
|
|
|
2.0
|
|
|
|
66.5
|
|
|
|
64.8
|
|
|
|
2.6
|
|
| Dallas |
|
60.7
|
|
|
|
61.2
|
|
|
|
(0.8
|
)
|
|
|
65.2
|
|
|
|
65.1
|
|
|
|
0.2
|
|
| San Diego |
|
88.3
|
|
|
|
87.9
|
|
|
|
0.5
|
|
|
|
83.2
|
|
|
|
80.4
|
|
|
|
3.4
|
|
| Other markets |
|
72.9
|
|
|
|
72.0
|
|
|
|
1.3
|
|
|
|
72.1
|
|
|
|
72.4
|
|
|
|
(0.4
|
)
|
| Core hotels
(45) |
|
76.7
|
|
|
|
77.4
|
|
|
|
(0.9
|
)
|
|
|
74.1
|
|
|
|
75.0
|
|
|
|
(1.2
|
)
|
| Non-strategic
hotels (21) |
|
70.1
|
|
|
|
70.1
|
|
|
|
(0.1
|
)
|
|
|
72.0
|
|
|
|
71.4
|
|
|
|
0.8
|
|
| Same-store
hotels (66) |
|
74.8
|
|
|
|
75.3
|
|
|
|
(0.7
|
)
|
|
|
73.5
|
|
|
|
74.0
|
|
|
|
(0.6
|
)
|
|
|
ADR ($) |
|
|
Three
Months Ended |
|
|
|
|
Nine
Months Ended |
|
|
|
|
|
|
September 30, |
|
|
|
|
September 30, |
|
|
|
|
|
|
2012 |
|
|
2011 |
|
%Variance |
|
2012 |
|
|
2011 |
|
%Variance |
| San Francisco
area |
|
190.07
|
|
|
|
165.02
|
|
|
|
15.2
|
|
|
|
171.84
|
|
|
|
148.81
|
|
|
|
15.5
|
|
| Boston |
|
217.57
|
|
|
|
197.56
|
|
|
|
10.1
|
|
|
|
206.71
|
|
|
|
185.42
|
|
|
|
11.5
|
|
| Los Angeles area |
|
173.31
|
|
|
|
162.41
|
|
|
|
6.7
|
|
|
|
156.34
|
|
|
|
151.80
|
|
|
|
3.0
|
|
| South Florida |
|
115.28
|
|
|
|
113.30
|
|
|
|
1.7
|
|
|
|
147.52
|
|
|
|
142.58
|
|
|
|
3.5
|
|
| New York area |
|
205.13
|
|
|
|
195.32
|
|
|
|
5.0
|
|
|
|
202.24
|
|
|
|
193.30
|
|
|
|
4.6
|
|
| Philadelphia |
|
145.95
|
|
|
|
131.40
|
|
|
|
11.1
|
|
|
|
147.82
|
|
|
|
133.01
|
|
|
|
11.1
|
|
| Atlanta |
|
107.82
|
|
|
|
104.65
|
|
|
|
3.0
|
|
|
|
108.54
|
|
|
|
104.87
|
|
|
|
3.5
|
|
| Myrtle Beach |
|
174.37
|
|
|
|
169.53
|
|
|
|
2.9
|
|
|
|
153.84
|
|
|
|
149.24
|
|
|
|
3.1
|
|
| Dallas |
|
105.38
|
|
|
|
99.74
|
|
|
|
5.6
|
|
|
|
105.98
|
|
|
|
110.01
|
|
|
|
(3.7
|
)
|
| San Diego |
|
138.88
|
|
|
|
127.11
|
|
|
|
9.3
|
|
|
|
130.99
|
|
|
|
121.13
|
|
|
|
8.1
|
|
| Other markets |
|
138.39
|
|
|
|
129.66
|
|
|
|
6.7
|
|
|
|
143.81
|
|
|
|
137.13
|
|
|
|
4.9
|
|
| Core hotels
(45) |
|
154.26
|
|
|
|
143.37
|
|
|
|
7.6
|
|
|
|
151.69
|
|
|
|
142.65
|
|
|
|
6.3
|
|
| Non-strategic
hotels (21) |
|
116.60
|
|
|
|
111.31
|
|
|
|
4.8
|
|
|
|
117.12
|
|
|
|
112.27
|
|
|
|
4.3
|
|
| Same-store
hotels (66) |
|
144.06
|
|
|
|
134.74
|
|
|
|
6.9
|
|
|
|
141.91
|
|
|
|
134.17
|
|
|
|
5.8
|
|
|
|
RevPAR ($) |
|
|
Three
Months Ended |
|
|
|
|
Nine
Months Ended |
|
|
|
|
|
|
September 30, |
|
|
|
|
September 30, |
|
|
|
|
|
|
2012 |
|
|
2011 |
|
%Variance |
|
2012 |
|
|
2011 |
|
%Variance |
| San Francisco
area |
|
170.41
|
|
|
|
147.69
|
|
|
|
15.4
|
|
|
|
141.59
|
|
|
|
120.59
|
|
|
|
17.4
|
|
| Boston |
|
177.00
|
|
|
|
166.90
|
|
|
|
6.1
|
|
|
|
145.53
|
|
|
|
146.77
|
|
|
|
(0.8
|
)
|
| Los Angeles area |
|
139.00
|
|
|
|
140.32
|
|
|
|
(0.9
|
)
|
|
|
126.59
|
|
|
|
121.96
|
|
|
|
3.8
|
|
| South Florida |
|
83.83
|
|
|
|
84.05
|
|
|
|
(0.3
|
)
|
|
|
115.85
|
|
|
|
112.96
|
|
|
|
2.6
|
|
| New York area |
|
160.99
|
|
|
|
163.48
|
|
|
|
(1.5
|
)
|
|
|
155.35
|
|
|
|
152.47
|
|
|
|
1.9
|
|
| Philadelphia |
|
106.19
|
|
|
|
99.33
|
|
|
|
6.9
|
|
|
|
98.51
|
|
|
|
95.75
|
|
|
|
2.9
|
|
| Atlanta |
|
81.46
|
|
|
|
79.44
|
|
|
|
2.5
|
|
|
|
81.43
|
|
|
|
80.47
|
|
|
|
1.2
|
|
| Myrtle Beach |
|
143.13
|
|
|
|
136.38
|
|
|
|
4.9
|
|
|
|
102.26
|
|
|
|
96.73
|
|
|
|
5.7
|
|
| Dallas |
|
63.98
|
|
|
|
61.03
|
|
|
|
4.8
|
|
|
|
69.08
|
|
|
|
71.59
|
|
|
|
(3.5
|
)
|
| San Diego |
|
122.69
|
|
|
|
111.78
|
|
|
|
9.8
|
|
|
|
108.93
|
|
|
|
97.41
|
|
|
|
11.8
|
|
| Other markets |
|
100.89
|
|
|
|
93.35
|
|
|
|
8.1
|
|
|
|
103.75
|
|
|
|
99.28
|
|
|
|
4.5
|
|
| Core hotels
(45) |
|
118.37
|
|
|
|
111.02
|
|
|
|
6.6
|
|
|
|
112.43
|
|
|
|
106.96
|
|
|
|
5.1
|
|
| Non-strategic
hotels (21) |
|
81.73
|
|
|
|
78.06
|
|
|
|
4.7
|
|
|
|
84.30
|
|
|
|
80.19
|
|
|
|
5.1
|
|
| Same-store
hotels (66) |
|
107.78
|
|
|
|
101.49
|
|
|
|
6.2
|
|
|
|
104.31
|
|
|
|
99.23
|
|
|
|
5.1
|
|
|
Historical Operating Statistics
|
|
|
|
|
|
|
Occupancy (%)
|
|
|
Q4 2011 |
|
2011 |
|
Q1 2012 |
|
Q2 2012 |
|
Q3 2012 |
| Core hotels (45) |
|
67.2
|
|
|
73.0
|
|
|
68.1
|
|
|
77.5
|
|
|
76.7
|
|
| Non-strategic
hotels (21) |
|
66.1
|
|
|
70.1
|
|
|
72.1
|
|
|
73.8
|
|
|
70.1
|
|
| Same-store hotels
(66) |
|
66.9
|
|
|
72.1
|
|
|
69.3
|
|
|
76.4
|
|
|
74.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADR ($)
|
|
|
Q4 2011 |
|
2011 |
|
Q1 2012 |
|
Q2 2012 |
|
Q3 2012 |
| Core hotels (45) |
|
144.55
|
|
|
143.10
|
|
|
144.75
|
|
|
155.22
|
|
|
154.26
|
|
| Non-strategic
hotels (21) |
|
111.10
|
|
|
111.99
|
|
|
118.32
|
|
|
116.44
|
|
|
116.60
|
|
| Same-store hotels
(66) |
|
135.19
|
|
|
134.42
|
|
|
136.81
|
|
|
144.41
|
|
|
144.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RevPAR ($)
|
|
|
Q4 2011 |
|
2011 |
|
Q1 2012 |
|
Q2 2012 |
|
Q3 2012 |
| Core hotels (45) |
|
97.11
|
|
|
104.43
|
|
|
98.62
|
|
|
120.25
|
|
|
118.37
|
|
| Non-strategic
hotels (21) |
|
73.40
|
|
|
78.48
|
|
|
85.27
|
|
|
85.92
|
|
|
81.73
|
|
| Same-store hotels
(66) |
|
90.40
|
|
|
96.97
|
|
|
94.76
|
|
|
110.34
|
|
|
107.78
|
|
Non-GAAP Financial Measures
We refer in this release to certain “non-GAAP financial
measures.” These measures, including FFO, 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 and Adjusted FFO
(in thousands, except per share
data)
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
2012 |
|
2011 |
|
|
Dollars |
|
Shares |
|
Per Share Amount |
|
Dollars |
Shares |
|
Per Share Amount |
| Net loss |
|
$
|
(19,555
|
)
|
|
|
|
|
|
$
|
(23,376
|
)
|
|
|
|
|
| Noncontrolling
interests |
|
530 |
|
|
|
|
|
|
544 |
|
|
|
|
|
| Preferred
dividends |
|
(9,678 |
)
|
|
|
|
|
|
(9,678 |
)
|
|
|
|
|
| Net loss
attributable to FelCor common stockholders |
|
(28,703 |
)
|
|
123,640
|
|
|
$
|
(0.23
|
)
|
|
(32,510 |
)
|
|
123,062
|
|
|
$
|
(0.26
|
)
|
| Depreciation and
amortization |
|
31,749 |
|
|
—
|
|
|
0.26 |
|
|
29,891 |
|
|
—
|
|
|
0.24 |
|
| Depreciation,
discontinued operations and unconsolidated entities |
|
3,664 |
|
|
—
|
|
|
0.03 |
|
|
7,508 |
|
|
—
|
|
|
0.06 |
|
| Impairment loss,
discontinued operations |
|
— |
|
|
—
|
|
|
— |
|
|
946 |
|
|
—
|
|
|
0.01 |
|
| Gain on sale of
hotels |
|
(9,922 |
)
|
|
—
|
|
|
(0.08 |
)
|
|
(701 |
)
|
|
—
|
|
|
(0.01 |
)
|
| Gain on
involuntary conversion |
|
— |
|
|
—
|
|
|
— |
|
|
(109 |
)
|
|
—
|
|
|
— |
|
| Noncontrolling
interests in FelCor LP |
|
(144 |
)
|
|
626
|
|
|
(0.01 |
)
|
|
(166 |
)
|
|
638
|
|
|
— |
|
| Conversion
of unvested restricted stock |
|
— |
|
|
—
|
|
|
— |
|
|
— |
|
|
709
|
|
|
— |
|
| FFO |
|
(3,356 |
)
|
|
124,266
|
|
|
(0.03 |
)
|
|
4,859 |
|
|
124,409
|
|
|
0.04 |
|
| Acquisition costs
|
|
16 |
|
|
—
|
|
|
— |
|
|
413 |
|
|
—
|
|
|
0.01 |
|
| Hurricane loss |
|
851 |
|
|
—
|
|
|
0.01 |
|
|
— |
|
|
—
|
|
|
— |
|
| Hurricane loss,
discontinued operations and unconsolidated entities |
|
231 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Debt
extinguishment, including discontinued operations |
|
11,786 |
|
|
—
|
|
|
0.09 |
|
|
355 |
|
|
—
|
|
|
— |
|
| Severance costs |
|
71 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Abandoned
projects |
|
219 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Pre-opening costs
|
|
202 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Conversion
of unvested restricted stock |
|
— |
|
|
358
|
|
|
0.01 |
|
|
— |
|
|
—
|
|
|
— |
|
| Adjusted
FFO |
|
$
|
10,020
|
|
|
124,624
|
|
|
$
|
0.08
|
|
|
$
|
5,627
|
|
|
124,409
|
|
|
$
|
0.05
|
|
|
Reconciliation of Net Loss to
FFO and Adjusted FFO
(in thousands, except per share
data)
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2012 |
2011 |
|
|
Dollars |
|
Shares |
|
Per Share Amount |
|
Dollars |
|
Shares |
|
Per Share Amount |
| Net loss |
|
$
|
(36,388
|
)
|
|
|
|
|
|
$
|
(97,499
|
)
|
|
|
|
|
| Noncontrolling
interests |
|
769 |
|
|
|
|
|
|
738 |
|
|
|
|
|
| Preferred
dividends |
|
(29,034 |
)
|
|
|
|
|
|
(29,034 |
)
|
|
|
|
|
| Net loss
attributable to FelCor common stockholders |
|
(64,653 |
)
|
|
123,648
|
|
|
$
|
(0.52
|
)
|
|
(125,795 |
)
|
|
113,908
|
|
|
$
|
(1.10
|
)
|
| Depreciation and
amortization |
|
92,544 |
|
|
—
|
|
|
0.75 |
|
|
88,960 |
|
|
—
|
|
|
0.78 |
|
| Depreciation,
discontinued operations and unconsolidated entities |
|
13,315 |
|
|
—
|
|
|
0.11 |
|
|
25,750 |
|
|
—
|
|
|
0.23 |
|
| Gain on
involuntary conversion |
|
— |
|
|
—
|
|
|
— |
|
|
(292 |
)
|
|
—
|
|
|
— |
|
| Loss on
involuntary conversion, discontinued operations |
|
— |
|
|
—
|
|
|
— |
|
|
12 |
|
|
—
|
|
|
— |
|
| Impairment loss |
|
1,335 |
|
|
—
|
|
|
0.01 |
|
|
7,003 |
|
|
—
|
|
|
0.06 |
|
| Impairment loss,
discontinued operations |
|
— |
|
|
—
|
|
|
— |
|
|
6,247 |
|
|
—
|
|
|
0.05 |
|
| Gain on sale of
hotels |
|
(26,641 |
)
|
|
—
|
|
|
(0.22 |
)
|
|
(7,362 |
)
|
|
—
|
|
|
(0.06 |
)
|
| Noncontrolling
interests in FelCor LP |
|
(329 |
)
|
|
630
|
|
|
— |
|
|
(469 |
)
|
|
453
|
|
|
(0.01 |
)
|
| Conversion
of unvested restricted stock |
|
— |
|
|
280
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| FFO |
|
15,571 |
|
|
124,558
|
|
|
0.13 |
|
|
(5,946 |
)
|
|
114,361
|
|
|
(0.05 |
)
|
| Acquisition costs
|
|
114 |
|
|
—
|
|
|
— |
|
|
1,359 |
|
|
—
|
|
|
0.01 |
|
| Hurricane loss |
|
851 |
|
|
—
|
|
|
0.01 |
|
|
— |
|
|
—
|
|
|
— |
|
| Hurricane loss,
discontinued operations and unconsolidated entities |
|
231 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Debt
extinguishment, including discontinued operations |
|
12,598 |
|
|
—
|
|
|
0.10 |
|
|
24,316 |
|
|
—
|
|
|
0.21 |
|
| Severance costs |
|
451 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Abandoned
projects |
|
219 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Pre-opening costs
|
|
245 |
|
|
—
|
|
|
— |
|
|
— |
|
|
—
|
|
|
— |
|
| Conversion
of unvested restricted stock |
|
— |
|
|
—
|
|
|
— |
|
|
— |
|
|
828
|
|
|
— |
|
| Adjusted
FFO |
|
$
|
30,280
|
|
|
124,558
|
|
|
$
|
0.24
|
|
|
$
|
19,729
|
|
|
115,189
|
|
|
$
|
0.17
|
|
|
Reconciliation of Net Loss to
EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA
(in thousands)
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Nine
Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| Net loss |
|
$
|
(19,555
|
)
|
|
$
|
(23,376
|
)
|
|
$
|
(36,388
|
)
|
|
$
|
(97,499
|
)
|
| Depreciation and
amortization |
|
31,749 |
|
|
29,891 |
|
|
92,544 |
|
|
88,960 |
|
| Depreciation,
discontinued operations and unconsolidated entities |
|
3,664 |
|
|
7,508 |
|
|
13,315 |
|
|
25,750 |
|
| Interest expense |
|
31,393 |
|
|
32,924 |
|
|
93,664 |
|
|
98,323 |
|
| Interest expense,
discontinued operations and unconsolidated entities |
|
934 |
|
|
2,009 |
|
|
4,060 |
|
|
8,016 |
|
| Noncontrolling
interests in other partnerships |
|
386 |
|
|
378 |
|
|
440 |
|
|
269 |
|
| EBITDA |
|
48,571 |
|
|
49,334 |
|
|
167,635 |
|
|
123,819 |
|
| Impairment loss |
|
— |
|
|
— |
|
|
1,335 |
|
|
7,003 |
|
| Impairment loss,
discontinued operations |
|
— |
|
|
946 |
|
|
— |
|
|
6,247 |
|
| Hurricane loss |
|
851 |
|
|
— |
|
|
851 |
|
|
— |
|
| Hurricane loss,
discontinued operations and unconsolidated entities |
|
231 |
|
|
— |
|
|
231 |
|
|
— |
|
| Debt
extinguishment, including discontinued operations |
|
11,786 |
|
|
355 |
|
|
12,598 |
|
|
24,316 |
|
| Acquisition costs
|
|
16 |
|
|
413 |
|
|
114 |
|
|
1,359 |
|
| Gain on sale of
hotels |
|
(9,922 |
)
|
|
(701 |
)
|
|
(26,641 |
)
|
|
(7,362 |
)
|
| Gain on
involuntary conversion |
|
— |
|
|
(109 |
)
|
|
— |
|
|
(292 |
)
|
| Loss on
involuntary conversion, discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
12 |
|
| Amortization of
stock compensation |
|
1,210 |
|
|
1,766 |
|
|
3,748 |
|
|
5,343 |
|
| Severance costs |
|
71 |
|
|
— |
|
|
451 |
|
|
— |
|
| Abandoned
projects |
|
219 |
|
|
— |
|
|
219 |
|
|
— |
|
| Pre-opening
costs |
|
202 |
|
|
— |
|
|
245 |
|
|
— |
|
| Adjusted EBITDA
|
|
53,235 |
|
|
52,004 |
|
|
160,786 |
|
|
160,445 |
|
| Adjusted EBITDA
from discontinued operations |
|
(1,667 |
)
|
|
(5,066 |
)
|
|
(13,836 |
)
|
|
(24,653 |
)
|
| Adjusted
EBITDA from acquired hotels(a) |
|
— |
|
|
— |
|
|
— |
|
|
165 |
|
| Same-store
Adjusted EBITDA |
|
$
|
51,568
|
|
|
$
|
46,938
|
|
|
$
|
146,950
|
|
|
$
|
135,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) For same-store metrics, we
have included the two hotels acquired in May 2011 for all periods
presented.
|
|
Hotel EBITDA and Hotel EBITDA
Margin
(dollars in thousands)
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Nine
Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| Same-store
operating revenue: |
|
|
|
|
|
|
|
|
| Room |
|
$
|
188,886
|
|
|
$
|
177,858
|
|
|
544,664 |
|
|
516,384 |
|
| Food and beverage
|
|
33,673 |
|
|
30,288 |
|
|
109,472 |
|
|
105,999 |
|
| Other
operating departments |
|
12,237 |
|
|
13,488 |
|
|
38,177 |
|
|
39,140 |
|
| Same-store
operating revenue |
|
234,796 |
|
|
221,634 |
|
|
692,313 |
|
|
661,523 |
|
| Same-store
operating expense: |
|
|
|
|
|
|
|
|
| Room |
|
49,794 |
|
|
47,805 |
|
|
144,419 |
|
|
139,330 |
|
| Food and beverage
|
|
29,176 |
|
|
26,892 |
|
|
89,354 |
|
|
85,343 |
|
| Other operating
departments |
|
5,593 |
|
|
5,979 |
|
|
16,976 |
|
|
17,719 |
|
| Other property
related costs |
|
63,940 |
|
|
61,944 |
|
|
188,428 |
|
|
182,859 |
|
| Management and
franchise fees |
|
10,895 |
|
|
10,245 |
|
|
32,188 |
|
|
30,376 |
|
| Taxes,
insurance and lease expense |
|
16,170 |
|
|
14,149 |
|
|
46,135 |
|
|
41,099 |
|
| Same-store
operating expense |
|
175,568 |
|
|
167,014 |
|
|
517,500 |
|
|
496,726 |
|
| Hotel
EBITDA |
|
$
|
59,228
|
|
|
$
|
54,620
|
|
|
$
|
174,813
|
|
|
$
|
164,797
|
|
| Hotel EBITDA
Margin |
|
25.2 |
%
|
|
24.6 |
%
|
|
25.3 |
%
|
|
24.9 |
%
|
|
Reconciliation of Same-store
Operating Revenue and Same-store Operating Expense to Total Revenue,
Total Operating Expense and Operating Income
(in thousands)
|
|
|
|
|
|
|
|
Three
Months Ended |
|
Nine
Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| Same-store
operating revenue(a) |
|
$
|
234,796
|
|
|
$
|
221,634
|
|
|
$
|
692,313
|
|
|
$
|
661,523
|
|
| Other revenue |
|
1,441 |
|
|
1,394 |
|
|
2,672 |
|
|
2,630 |
|
| Revenue
from acquired hotels |
|
— |
|
|
— |
|
|
— |
|
|
(11,455 |
)
|
| Total revenue
|
|
236,237 |
|
|
223,028 |
|
|
694,985 |
|
|
652,698 |
|
| Same-store
operating expense(a) |
|
175,568 |
|
|
167,014 |
|
|
517,500 |
|
|
496,726 |
|
| Consolidated
hotel lease expense(b) |
|
10,910 |
|
|
10,582 |
|
|
31,339 |
|
|
29,383 |
|
| Unconsolidated
taxes, insurance and lease expense |
|
(1,727 |
)
|
|
(1,716 |
)
|
|
(5,491 |
)
|
|
(5,152 |
)
|
| Corporate
expenses |
|
5,695 |
|
|
6,258 |
|
|
20,074 |
|
|
22,705 |
|
| Depreciation and
amortization |
|
31,749 |
|
|
29,891 |
|
|
92,544 |
|
|
88,960 |
|
| Impairment loss |
|
— |
|
|
— |
|
|
1,335 |
|
|
7,003 |
|
| Hurricane loss |
|
851 |
|
|
— |
|
|
851 |
|
|
— |
|
| Expenses from
acquired hotels(a) |
|
— |
|
|
— |
|
|
— |
|
|
(11,290 |
)
|
| Other
expenses |
|
1,312 |
|
|
1,208 |
|
|
3,075 |
|
|
3,455 |
|
| Total
operating expenses |
|
224,358 |
|
|
213,237 |
|
|
661,227 |
|
|
631,790 |
|
| Operating
income |
|
$
|
11,879
|
|
|
$
|
9,791
|
|
|
$
|
33,758
|
|
|
$
|
20,908
|
|
| (a) |
|
For same-store
metrics, we have included the two hotels acquired in May 2011 for all
periods presented as if they were acquired at the beginning of the
period. |
| (b) |
|
Consolidated
hotel lease expense represents the percentage lease expense of our 51%
owned operating lessees. The offsetting percentage lease revenue is
included in equity in income from unconsolidated entities. |
|
Reconciliation of Forecasted
Net Loss to Forecasted Adjusted FFO and
Adjusted EBITDA
(in millions, except per share and
unit data)
|
|
|
|
|
|
Full Year 2012 Guidance |
|
|
Low Guidance |
|
High Guidance |
|
|
Dollars |
|
|
Per Share Amount(a) |
|
Dollars |
|
Per Share Amount(a) |
| Net loss
attributable to FelCor(b) |
|
$
|
(40
|
)
|
|
|
|
|
$
|
(36
|
)
|
|
|
| Preferred
dividends |
|
(39 |
)
|
|
|
|
|
(39 |
)
|
|
|
| Net loss
attributable to FelCor common stockholders |
|
(79 |
)
|
|
|
$
|
(0.64
|
)
|
|
(75 |
)
|
|
$
|
(0.60
|
)
|
| Gain on sale of
hotels |
|
(50 |
)
|
|
|
|
|
(50 |
)
|
|
|
| Depreciation(c)
|
|
141 |
|
|
|
|
|
141 |
|
|
|
| Impairment
|
|
1 |
|
|
|
|
|
1 |
|
|
|
| FFO |
|
13 |
|
|
|
$
|
0.10
|
|
|
17 |
|
|
$
|
0.13
|
|
| Debt
extinguishment |
|
13 |
|
|
|
|
|
13 |
|
|
|
| Hurricane
loss |
|
1 |
|
|
|
|
|
1 |
|
|
|
| Adjusted
FFO |
|
$
|
27
|
|
|
|
$
|
0.21
|
|
|
$
|
31
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss
attributable to FelCor(b) |
|
$
|
(40
|
)
|
|
|
|
|
$
|
(36
|
)
|
|
|
| Depreciation(c)
|
|
141 |
|
|
|
|
|
141 |
|
|
|
| Interest expense(c)
|
|
129 |
|
|
|
|
|
129 |
|
|
|
| Amortization
expense |
|
5 |
|
|
|
|
|
5 |
|
|
|
| EBITDA |
|
235 |
|
|
|
|
|
239 |
|
|
|
| Gain on sale of
hotels |
|
(50 |
)
|
|
|
|
|
(50 |
)
|
|
|
| Impairment |
|
1 |
|
|
|
|
|
1 |
|
|
|
| Debt
extinguishment |
|
13 |
|
|
|
|
|
13 |
|
|
|
| Hurricane
loss |
|
1 |
|
|
|
|
|
1 |
|
|
|
| Adjusted
EBITDA |
|
$
|
200
|
|
|
|
|
|
$
|
204
|
|
|
|
| (a) |
|
Weighted average
shares and units are 124.6 million. |
| (b) |
|
For guidance, we
have assumed no gains or losses on future asset sales. |
| (c) |
|
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 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 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, amortization and impairment
losses. FFO for unconsolidated partnerships and joint ventures are
calculated 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
items, including but not limited to those 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.
• Gains and losses related to extinguishment of debt and
interest rate swaps - We exclude gains and losses related to
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.
- 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 and Adjusted EBITDA because they
do not reflect our actual performance for that period.
In addition, to derive Adjusted EBITDA we exclude gains or
losses on the sale of depreciable assets and impairment losses 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 and
impairment losses 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 brand/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
that we use 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 all revenues and expenses from continuing
operations not directly associated with hotel operations, including
corporate-level expenses, depreciation and amortization, 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 into the ongoing operational
performance of our hotels and the effectiveness of management on a
property-level basis.
We eliminate depreciation and amortization because, even
though depreciation and amortization are property-level expenses, 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 diminishes 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 Consolidated Hotels. Hotel
EBITDA and Hotel EBITDA margins are presented on a same-store basis.
Use and Limitations of Non-GAAP Measures
Our management and Board of Directors use FFO, 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 other 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. These non-GAAP financial measures as presented by us, may
not be comparable to non-GAAP financial measures as calculated by other
real estate companies. These measures do not reflect certain expenses
or expenditures that we incurred and will incur, such as depreciation,
interest and 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
most comparable 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. These non-GAAP financial measures 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 a single financial
measure.
|
