Hotel Online Special Report 
FelCor Makes a Buck FCH Beats Consensus Estimates by $0.03 — Historical Occupancy, ADR and RevPAR IRVING, Texas…May 2, 2000 – FelCor Lodging Trust Incorporated (NYSE:FCH), one of the nation’s largest hotel real estate investment trusts (REITs), today announced that first quarter 2000 Funds From Operations (“FFO”) totaled $68.5 million, or $1.00 per share and unit, compared to the first quarter 1999 of $73.8 million, or $0.97 per share and unit. FelCor’s FFO results exceeded analyst consensus estimates by $0.03 per share and unit.
Financial Highlights:
First Quarter 2000 (as compared to first quarter 1999):
- Revenues, after adding back deferred rent of $8.9 million, increased 7% from $126.9 million to $135.7 million
- EBITDA increased 5.1% from $106.9 million to $112.4 million
- EBITDA per share and unit increased 16.3% from $1.41 to $1.64
- FFO per share and unit increased 3.1% from $0.97 to $1.00
- Net income per share, after adding back deferred rent of $8.9 million, decreased from $0.45 to $0.36
- Total hotel portfolio (188 hotels) RevPAR increased 6.0%
- Comparable hotels (149 hotels) RevPAR increased 2.8%
- Non-comparable hotels (39 hotels) RevPAR increased 20.7%
Hotel Renovation, Redevelopment and Rebranding:
- Completed renovations at five hotels during the quarter with 11 additional hotels undergoing renovation at the end of the quarter.
- Added 90 rooms to our Doubletree® hotel in Wilmington, Delaware.
- Renovation expenditures on the hotel portfolio totaled $14.7 million during the quarter and an additional $9.9 million was spent on maintenance capital expenditures.
- Room nights out-of-service, due to renovation, were less than 1% during the quarter.
“We attained positive occupancy and ADR growth for the third consecutive quarter. For the first quarter 2000, we achieved a 6% RevPAR growth over prior year for all of our hotels, and in most markets outperformed our competitive set. We believe this demonstrates the effectiveness of our renovation and rebranding strategies,” stated Thomas J. Corcoran, Jr., FelCor’s President and Chief Executive Officer.
Capitalization:
- During the first quarter 2000, FelCor repurchased a total of approximately 2.4 million common shares for approximately $42.7 million.
- On April 26, 2000, FelCor closed a 10-year, $145 million First Mortgage Term Loan, which is secured by seven Sheraton® hotels and carries an 8.73% fixed interest rate. On May 2, 2000, FelCor closed $186 million of 10-year, First Mortgage Term Loans which are secured by eight Embassy Suites® hotels and carry an 8.69% fixed interest rate. The loans are non-recourse, mature in May 2010, and amortize over 25 years. The proceeds of these loans were used to fund FelCor’s share repurchase program and reduce borrowings under its $850 million Line of Credit.
- FelCor declared first quarter dividends of $0.55 per share on its Common Stock (an annualized dividend yield of approximately 10.9% as of May 1, 2000), $0.4875 per share on its $1.95 Series A Cumulative Convertible Preferred Stock and $0.5625 per depositary share evidencing its 9% Series B Cumulative Redeemable Preferred Stock.
“We continue to improve our debt maturity profile and increase our level of fixed rate debt. The closing of the $331 million in long-term, fixed rate loans that increased our average fixed rate debt maturities from six to seven years, and reduced our floating rate debt to 33% from 50% of total debt achieves our 2000 targets in these areas,” said Andrew J. Welch, FelCor’s Vice President and Treasurer. Summary Financial Data: A summary of the financial results for the 2000 and 1999 periods follow:(in thousands, except per common share and unit data) Three Months Ended March 31, 2000 1999 Revenues $126,805 $126,917 Net income available to common shareholders $ 12,743 $ 30,563 Diluted Earnings Per Common Share Information: Net income available to common shareholders $ 0.21 $ 0.45 Weighted average shares outstanding 59,377 68,344 FFO Information: FFO $ 68,495 $ 73,849 Diluted FFO per common share and unit $ 1.00 $ 0.97 Weighted average shares and units outstanding 68,740 75,988 Operating Performance:
Net income available to common shareholders, after adding back rent deferred under Staff Accounting Bulletin No. 101 (SAB 101), declined from $30.6 million to $21.6 million in the first quarter 2000.
- Starting in 2000, 68 of FelCor’s 188 hotels’ Percentage Leases were changed to provide for the computation of rent on an annual, rather than quarterly basis, which should result in no change in annual Percentage Rent or cash flows. However, the change requires the deferral of $8.9 million of revenue during the First Quarter 2000 under SAB 101. This deferred rent is expected to be fully earned and recognized as Percentage Lease Revenue by the end of 2000.
- Taxes, insurance and other, as a percentage of total revenues after adding back deferred rent, increased from 13% to 14% for the quarter. This increase is primarily the result of increased real estate tax assessments from the hotel acquisitions and approximately $500 million of renovations over the past several years.
- Depreciation expense, as a percentage of total revenues after adding back deferred rent, increased from 29% to 30% for the quarter. This increase resulted primarily from $235 million in capital expenditures during 1999 and first quarter 2000.
- Interest expense increased, as a percentage of total revenue after adding back deferred rent, from 22% to 28% for the quarter over the prior year period. In 1999, FelCor refinanced less expensive short term debt totaling more than $600 million to extend maturities, resulting in increased interest expense. In addition, FelCor’s total borrowings have increased by approximately $230 million since March 31, 1999, primarily to fund its renovation, redevelopment and rebranding program, and share repurchases.
RevPAR Comparison:
Comparable hotel RevPAR changes for the first quarter 2000 versus 1999 are as follows:
RevPAR
Change
Percentage of Total
Room Revenue
Embassy Suites (50 hotels) 3.4 % 42.8% Holiday®-branded hotels (43 hotels) 4.7 % 25.1% Crowne Plaza® (13 hotels) 5.6 % 11.0% Doubletree®-branded hotels (11 hotels) (2.4)% 5.8% Sheraton (5 hotels) (0.7)% 4.9% Other (27 hotels) (6.4)% 10.4% Total (149 hotels) 2.8 % 100.0% Comparable hotels in Texas, California, Florida and Georgia account for approximately 62.4% of comparable hotel room revenues in the quarter. The RevPAR changes during the first quarter 2000 versus 1999 from our hotels in these states are as follows: RevPAR
Change
Percentage of Total
Room Revenue
Texas (35 hotels) 0.7 % 20.0% California (17 hotels) 10.3 % 19.2% Florida (15 hotels) (2.3)% 15.1% Georgia (12 hotels) 4.8 % 8.1% Financial Profile:
FelCor’s conservative financial profile is evidenced by the following at March 31, 2000:
- Annual interest coverage ratio of 3.1x
- Total debt to annual EBITDA of 4.6x
- Consolidated debt equal to 42% of its investment in hotels at cost
- Annual FFO payout ratio of approximately 55%
The following statistics reflect the recently closed $331 million of debt transactions:
- Borrowing capacity of $447 million under its Line of Credit
- Fixed interest rate debt equal to 67% of total debt
- Weighted average maturity of fixed interest rate debt of approximately seven years
- Mortgage debt-to-total assets of 19%
- Debt of approximately $41 million maturing in 2000
FelCor Web site:
In April, the Company updated its website at www.felcor.com to offer a new design, improved navigation and new hotel photography along with more financial information for its shareholders. The new investor relations enhancements include a corporate overview, historical stock charts and price history tables, analyst coverage, earnings estimates and financial fundamentals such as dividend information, institutional ownership and performance ratios.
FelCor’s hotel portfolio consists of 188 hotels with nearly 50,000 rooms and suites and is concentrated primarily in the upscale and full-service segments. FelCor is the owner of the largest number of Embassy Suites, Crowne Plaza, Holiday Inn and independently owned Doubletree-branded hotels. Other leading hotel brands under which FelCor=s hotels are operated include Sheraton Suites®, Sheraton and Westin®. FelCor has a current market capitalization of approximately $3.4 billion. Additional information can be found on the Company’s website at www.felcor.com.
Three Months Ended
March 31,
2000 1999 Revenues: Percentage lease revenue $123,049 $124,991 Equity in income from unconsolidated entities 1,879 1,246 Other revenue 1,877 680 Total revenue 126,805 126,917 Expenses: General and administrative 3,399 2,244 Depreciation 40,400 36,425 Taxes, insurance and other 18,643 16,947 Land lease expense 5,560 4,006 Interest expense 37,904 28,422 Minority interest in Operating Partnership 1,004 1,320 Minority interest in other partnerships 968 806 Total expenses 107,878 90,170 Net income 18,927 36,747 Preferred dividends 6,184 6,184 Net income available to common shareholders $ 12,743 $ 30,563 Diluted Earnings Per Common Share Information: Net income available to common shareholders $ 0.21 $ 0.45 Weighted average shares outstanding 59,377 68,344 Funds From Operations (FFO): Net income 18,927 36,747 Deferred rent 8,854 – Series B preferred dividends (3,234) (3,234) Depreciation 40,400 36,425 Depreciation for unconsolidated entities 2,544 2,591 Minority interest in Operating Partnership 1,004 1,320 FFO $ 68,495 $ 73,849 Diluted FFO per common share and unit $ 1.00 $ 0.97 Weighted average shares and units outstanding 68,740 75,988 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA): FFO $ 68,495 $ 73,849 Interest expense 37,904 28,422 Interest expense of unconsolidated subsidiaries 2,620 1,180 Amortization expense 162 190 Series B preferred dividends 3,234 3,234 EBITDA $112,415 $106,875 Diluted EBITDA per common share and unit $ 1.64 $ 1.41
Interest Rate
Historical
Outstanding
Balance
Pro Forma
Outstanding
Balance (B)
Maturity Date
Floating Rate Debt: Line of Credit LIBOR + 163bps $ 594,000 $ 278,108 June 2001 Senior Term Loan LIBOR + 250bps 250,000 250,000 March 2004 Mortgage debt (A) LIBOR + 200bps 62,403 62,403 February 2003 Other Up to LIBOR + 200bps 46,033 31,033 Various Total Floating Rate Debt 952,436 621,544 Fixed Rate Debt: Line of Credit-swapped 7.17%-7.43% 125,000 125,000 June 2001 Publicly-traded term notes 7.38% 174,409 174,409 October 2004 Publicly-traded term notes 7.63% 124,246 124,246 October 2007 Mortgage debt 7.24% 141,946 141,946 November 2022 Senior Term Loan-swapped 8.30% 125,000 125,000 March 2004 Mortgage debt 7.54% 98,718 98,718 April 2009 Mortgage debt 7.55% 74,217 74,217 June 2009 Mortgage debt 8.73% – 145,000 May 2010 Mortgage debt 8.69% – 185,892 May 2010 Other 6.96%-7.23% 83,941 83,941 2000-2005 Total Fixed Rate Debt 947,477 1,278,369 Total Consolidated Debt $1,899,913 $1,899,913
(B) Pro forma to reflect $331 million of mortgage debt closing after March 31, 2000 Year 2000 $ 40,667 2001 427,779 2002 14,082 2003 95,595 2004 564,573 2005 and thereafter 758,562 $1,901,258 Discount accretion over term (1,345) $1,899,913 The following table sets forth historical Occupancy, ADR and RevPAR and the percentage changes therein between the quarters presented for the Hotels in which the Company had an ownership interest at March 31, 2000. This information is presented regardless of the date of acquisition. First Quarter 2000 Occupancy ADR RevPAR DJONT Comparable Hotels 73.6% $ 126.20 $ 92.83 Bristol Comparable Hotels 67.4% $ 88.21 $ 59.45 Total Comparable Hotels (A) 70.2% $ 106.10 $ 74.45 DJONT Non-comparable Hotels 69.1% $ 117.73 $ 81.39 Bristol Non-comparable Hotels 66.0% $ 83.58 $ 55.12 Total Non-comparable Hotels (B) 67.3% $ 98.62 $ 66.39 Total Hotels 69.5% $ 104.46 $ 72.62 First Quarter 1999 Occupancy ADR RevPAR DJONT Comparable Hotel 72.4% $ 125.08 $ 90.57 Bristol Comparable Hotels 65.9% $ 87.48 $ 57.66 Total Comparable Hotels 68.8% $ 105.25 $ 72.44 DJONT Non-comparable Hotels 65.5% $ 113.94 $ 74.58 Bristol Non-comparable Hotels 49.2% $ 82.24 $ 40.43 Total Non-comparable Hotels 56.1% $ 98.01 $ 55.00 Total Hotels 66.0% $ 103.86 $ 68.51 Change from prior period 2000 vs. 1999 Occupancy ADR RevPAR DJONT Comparable Hotels 1.2 pts 0.9% 2.5% Bristol Comparable Hotels 1.5 pts 0.8% 3.1% Total Comparable Hotels 1.4 pts 0.8% 2.8% DJONT Non-comparable Hotels 3.6 pts 3.3% 9.1% Bristol Non-comparable Hotels 16.8 pts 1.6% 36.3% Total Non-comparable Hotels 11.2 pts 0.6% 20.7% Total Hotels 3.5 pts 0.6% 6.0% (A) DJONT Comparable Hotels include 69 hotels and Bristol Comparable Hotels include 80 hotels which were not undergoing renovation, redevelopment, or rebranding in either the first quarter 2000 or 1999.
DJONT Non-comparable Hotels include 18 hotels and Bristol Non-comparable Hotels include 21 hotels undergoing redevelopment in either the first quarter 2000 or 1999.
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 that are qualified by cautionary statements contained herein and in FelCor=s filings with the Securities and Exchange Commission. Contact:
Thomas J. Corcoran, Jr., President & CEO (972) 444-4901 [email protected]
Andrew J. Welch, Vice President & Treasurer (972) 444-4982 [email protected]
Monica L. Hildebrand, Vice President of Communications (972) 444-4917 [email protected]
Molly M. Branch, Director of Investor Relations (972) 444-4974 [email protected]