| IRVING, Texas, Feb. 2, 1999 - FelCor Lodging Trust
Incorporated (NYSE: FCH), one of the nation's largest hotel real estate
investment trusts (REITs), today announced that fourth quarter 1998 Funds
From Operations (FFO) totaled $62.2 million or $0.82 per share and unit
as compared to $34.3 million or $0.77 achieved during the fourth quarter
1997. These results represent an increase in FFO of 81% and an increase
in FFO per share and unit of 6%. Furthermore, full year 1998 FFO totaled
$217.4 million or $3.75 per share, a 67% increase in FFO and a 13% increase
in FFO per share and unit over 1997.
Fourth Quarter and 1998 Highlights:
| Revenues increased 122% for the quarter to $106.6 million from $48.0
million. |
| Net income increased 92% for the quarter to $24.2 million from $12.6
million. |
| Net income per share and FFO per share and unit increased 6% for the
quarter to $0.36 from $0.34 and to $0.82 from $0.77, respectively. |
| The comparable hotel portfolio's RevPAR, including the comparable hotels
acquired in the Bristol merger, increased 3.8% for the quarter and 6.2%
for the year over the comparable prior year periods. The Holiday
Inn(R)and Holiday Inn Select(R) hotels not undergoing renovation in either
reporting period (45 hotels for the quarter and 37 hotels for the year),
produced RevPAR increases of 5.2% and 7.9% for the quarter and year, respectively,
and the 40 comparable Embassy Suites(R) hotels experienced RevPAR increases
of 3.5% and 5.4% for the quarter and year, respectively. |
| The recently renovated and re-branded Crowne Plaza(R) hotels (eight
in total) produced 14.3% average RevPAR increases for the quarter over
the comparable prior year quarter. More significantly, the average
daily rate (ADR) at these eight Crowne Plaza hotels increased 20.0% for
the quarter over the comparable prior year quarter. Likewise, ADR
at the Bristol noncomparable hotels (28 hotels for the quarter and 39 hotels
for the year) increased 16.0% and 10.4% in the quarter and year 1998 over
1997, respectively. |
| Fifteen hotels (10 of which are Bristol hotels) were undergoing redevelopment
and renovation during the quarter, resulting in approximately 140,000 room
nights out-of-service, or approximately 3% of available room nights.
During the quarter, three hotels were re-branded as Crowne Plaza hotels
(the Secaucus, New Jersey, Crowne Plaza hotel is expected to complete renovations
in summer 1999). Renovations at seven hotels were completed during the
quarter. For the year 1998, approximately 475,000 room nights were
out-of-service, representing approximately 3% of available room nights. |
| In 1998, FelCor and Bristol completed approximately $180 million of
renovations, redevelopment and re-branding to approximately 40 hotels and
$40 million of capital expenditures as a part of maintaining the remaining
hotels in a competitive condition. |
| Completed the merger of Bristol Hotel Company's hotel assets, including
109 hotels, into FelCor on July 28, 1998. As a result of the merger,
FelCor is the owner of the largest numbers of Crowne Plaza and Holiday
Inn-branded hotels. Additionally the merger established significant
brand owner/manager relationships for FelCor with Bass plc and its subsidiary,
Bass Hotels Resorts, which acquired approximately 14% of FelCor's
common stock in the merger. FelCor also established a strategic relationship
with Bristol Hotels Resorts (NYSE: BH), the new hotel operating company
spun-off from Bristol prior to its merger into FelCor, which leases and
operates the hotels acquired by FelCor in the merger. |
| FelCor acquired an additional 15 individual hotels during 1998, representing
a gross investment of approximately $384 million. The acquired hotels
consist of five Embassy Suites, three Doubletree(R) hotels, two Sheraton
Suites(R), and one each of Doubletree Guest Suites(R) (to be converted
to an Embassy Suites), Sheraton(R), Radisson(R) (to be converted to a Doubletree
hotel), Crowne Plaza and Holiday Inn Select. |
| Two of the acquired Bristol hotels were sold in the quarter, one in
Chattanooga, Tennessee and one in Spartanburg, Georgia, for an aggregate
sales price of $4.7 million. In January 1999, FelCor sold two Bristol
hotels in Colorado Springs, Colorado, and a Bristol hotel in Columbia,
South Carolina, for an aggregate sales price of $7.5 million. FelCor
also has pending sales contracts on three additional Bristol hotels, which
are expected to close around the end of the 1999 first quarter, for an
aggregate sales price of $9 million. |
| FelCor increased its unsecured credit facilities to $1.1 billion from
$550 million. The credit facilities consist of an $850 million revolving
line of credit that matures in July 2001 and a $250 million term loan that
matures in January 2000. The expanded $1.1 billion unsecured credit
facility allowed the company to refinance, on more favorable terms, a substantial
portion of the secured debt assumed by FelCor in the Bristol merger.
The effective interest rate during the fourth quarter was 150 basis points
over LIBOR, or less than 7%. |
| In 1998 FelCor raised approximately $140 million from the sale of its
9% Series B Cumulative Redeemable Preferred Stock. |
| FelCor declared fourth quarter dividends of $0.895 per common share,
$0.6945 per $1.95 Series A Cumulative Convertible preferred share and $0.5625
per depository share evidencing the 9% Series B Cumulative Redeemable Preferred
Stock. The common share dividend and the Series A Cumulative Convertible
preferred share dividend included $0.345 and $0.207, respectively, representing
a one-time distribution of earnings and profits arising from the Bristol
merger. Based on the February 1, 1999, closing price for FelCor common
stock on the New York Stock Exchange (NYSE), the 1998 common share dividends,
including the one-time distribution, represented an approximate yield of
11.6% for 1998. The current annual dividend on common stock of $2.20
results in a current payout ratio of approximately 60% and a dividend yield
of 10.0%, based on the February 1, 1999, closing price for FelCor common
stock. |
| FelCor added three new board members: Richard North, Financial Director
of Bass plc; Robert Lutz, Chairman and CEO of Amresco, Inc.; and Donald
J. McNamara, Chairman of The Hampstead Group, who became Chairman of FelCor
after the Bristol merger. Hervey A. Feldman became Chairman Emeritus.
Despite more than doubling the number of owned hotels in 1998, total FelCor
employees increased from 29 to 42. |
Financial Performance:
"Our comparable hotel portfolio achieved a 6.2% RevPAR increase during
1998 which is nearly double that anticipated for the industry as a whole,"
stated Thomas J. Corcoran, Jr., FelCor's President and Chief Executive
Officer. "These above average RevPAR performances are a result of our strategy
of purchasing primarily upscale and full-service hotels, renovating and
re-branding the hotels to the right product, hiring outstanding third party
professional hotel managers, and owning a geographically diversified hotel
portfolio currently containing 190 hotels in 34 states and Canada. Approximately
95% of our revenue was derived from upscale and full-service hotels in
1998," stated Corcoran.
"In 1999, we expect that approximately 97% of FelCor's revenue will
be derived from upscale and full-service hotels like Embassy Suites, Crowne
Plaza, Holiday Inn and Holiday Inn Select, Doubletree and Doubletree Guest
Suites, and Sheraton and Sheraton Suites hotels," stated Corcoran.
"We continue to believe that the common stock valuation of FelCor is
inconsistent with the performance and quality of the underlying hotel assets.
FelCor's common stock is currently trading at approximately 40% below estimated
replacement cost, approximately 18% below our investment in hotels, at
cost, and at a multiple of less than 6.0x 1998 FFO," stated Corcoran.
Renovations, Redevelopment, and Re-Brandings:
Hotels undergoing renovations, redevelopment and re-branding during
the quarter included seven Holiday Inn or Holiday Inn Select hotels, three
Embassy Suites, one Doubletree, one Crowne Plaza and one Hampton Inn.
Two additional hotels, the Allerton Hotel -- Chicago (to be re-branded
as a Crowne Plaza) and the Holiday Inn -- Tampa Busch Gardens, are closed
pending completion of redevelopment programs. The Holiday Inn-Tampa
Busch Gardens hotel is expected to re-open in February 1999 and the Allerton
Hotel is expected to re-open in the summer of 1999.
Renovations, totaling approximately $35 million at seven hotels containing
approximately 2,000 rooms, were completed during the quarter as follows:
-
350 - room Holiday Inn converted to Crowne Plaza Hartford, Connecticut
-
304 - room Holiday Inn converted to Crowne Plaza Miami, Florida
-
229 - room Doubletree Guest Suites (room upgrade) Lake Buena Vista, Florida
-
203 - room Doubletree Guest Suites (room upgrade) Tampa Rocky Point, Florida
-
213 - room Holiday Inn (complete upgrade) Montgomery, Alabama
-
285 - room Holiday Inn Suites (room upgrade) Houston, Texas
-
395 - room Sheraton - Airport (room upgrade) Atlanta, Georgia
"We are enthusiastic about the strong double digit ADR performance of the
eight recently renovated Crowne Plaza hotels (20.0% increase in ADR for
the quarter) and the Bristol noncomparable hotels (16.0% and 10.4% increases
in ADR for the quarter and year, respectively). The ADR increases from
these hotels is similar to the results achieved from the renovations, redevelopment
and re-branding of the Crown Sterling Suite hotels in 1997," stated Corcoran.
Five additional hotels are expected to be re-branded as Crowne Plaza hotels.
In 1998, 224 suite additions were completed at the New Orleans, Louisiana
(90), Jacksonville, Florida (67) and Orlando, Florida (67) Embassy Suites
hotels. Furthermore, on February 1, 1999, the 219-room Doubletree Guest
Suites in Bloomington, Minnesota was re-branded as an Embassy Suites hotel
bringing the total number of Embassy Suites owned by FelCor to 59.
Capitalization:
FelCor's conservative financial profile is evidenced by the following:
-
Interest coverage ratio of 3.5x
-
Total debt to EBITDA of 3.9x
-
Borrowing capacity under existing credit facilities of $114 million
-
Consolidated debt-to-investment in hotels, at cost, of 38%
-
Fixed interest rate debt comprising 56% of total debt
-
Secured debt to total assets of 7%
-
Debt maturing in 1999 of $16 million
Felcor Lodging Trust Inc.
Hotel Performance Statistics
Comparable Hotels (A)
|
Year 1998 |
Change from prior year |
|
|
|
|
|
|
Occupancy
|
ADR
|
RevPAR
|
Occupancy
|
ADR
|
RevPAR
|
| Original Hotels |
73.6% |
$113.59 |
$83.59 |
(2.5)pts. |
3.9% |
0.5% |
| CSS Hotels |
73.2% |
$125.77 |
$92.05 |
(0.2) |
8.6 |
8.2 |
| 1996 Acquisitions |
73.7% |
$126.08 |
$92.86 |
(0.3) |
6.3 |
5.8 |
| Total FelCor Comparable Hotels |
73.4% |
$122.33 |
$89.83 |
(0.9) |
6.6 |
5.4 |
|
|
|
|
|
|
|
| Original Bristol |
71.5% |
$74.38 |
$53.15 |
(2.7) |
8.2 |
4.2 |
| Holiday Acquisition |
73.9% |
$87.31 |
$64.52 |
(0.8) |
7.7 |
6.5 |
| Omaha Acquisition |
50.5% |
$62.15 |
$31.36 |
4.4 |
5.2 |
15.3 |
| Total Bristol Comparable Hotels |
67.4% |
$77.94 |
$52.55 |
(0.3) |
7.1 |
6.7 |
|
|
|
|
|
|
|
| Total comparable Hotels |
70.0% |
$97.71 |
$68.38 |
(0.5)pts. |
6.9% |
6.2% |
(A) The Original Hotels (13 hotels), CSS Hotels (18
hotels) and 1996 Acquisitions (12 hotels) are considered FelCor Comparable
Hotels since these hotels were owned by FelCor for all of the years ended
December 31, 1997 and 1998.
"FelCor continues to have one of the more conservative capital structures
in the hotel industry. This conservative capital strategy provides us with
the financial flexibility to take advantage of opportunities as they may
arise and allows us to focus our efforts on hotel operations rather than
on capital markets," stated Randy L. Churchey, Senior Vice President and
Chief Financial Officer. "In addition, FelCor does not have any interest
rate
hedging instrument exposure or forward equity commitments that could
potentially reduce our financial flexibility," stated Churchey.
FelCor Lodging Trust is one of the nation's largest hotel REITs. Since
its initial public offering in 1994 with six hotels and 1,479 suites, FelCor's
portfolio has grown to 190 hotels with nearly 50,000 rooms and suites.
The company's hotel portfolio is primarily concentrated in the upscale,
all-suite upscale and full-service segments. FelCor is the owner of the
largest number of Embassy Suites, Crowne Plaza, Holiday Inn, and Doubletree-branded
hotels. Other leading hotel brands under which FelCor's hotels are operated
include Sheraton Suites, Sheraton and Westin(R). FelCor has a current market
capitalization of approximately $3.4 billion.
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 and are qualified by cautionary statements
contained herein and in FelCor's filings with the Securities and Exchange
Commission. |
