Hotel Online  Special Report

 
FelCor's Revenues Up 16.1%, RevPAR 
Increases 7.5% for Third Quarter

IRVING, Texas�November 1, 2000 - FelCor Lodging Trust Incorporated (NYSE: FCH), one of the nation�s largest hotel real estate investment trusts (REITs), today announced that third quarter 2000 Funds From Operations (�FFO�) totaled $76.8 million, or $1.15 per share and unit, compared to the third quarter 1999 of $68.9 million, or $0.91 per share and unit. This is a 26.4% increase on a per share basis. 

FelCor�s third quarter FFO results exceeded current analyst consensus estimates by $0.03 per share and unit on top of an $0.08 per share and unit increase in estimates resulting from FelCor�s earnings pre-announcement on October 5, 2000.

Financial Highlights: 

Third Quarter 2000 (compared to third quarter 1999):

  • Revenues increased 16.1%, after adding back deferred rent, to $144.1 million from $124.1 million 
  • Total hotel portfolio RevPAR increased 7.5% (162 hotels), excluding hotels held for sale 
  • EBITDA increased 16.5% to $123.0 million from $105.6 million 
  • EBITDA per share and unit increased 32.4% to $1.84 from $1.39 
  • FFO per share and unit increased 26.4% to $1.15 from $0.91 
  • Net income per share increased to $0.51 from $0.35 (before non-recurring items and after adding back deferred rent of $3.7 million) 
  • Comparable hotels RevPAR increased 7.5% (142 hotels), excluding hotels held for sale 
  • Non-comparable hotels RevPAR increased 7.4% (20 hotels), excluding hotels held for sale 
  • Hotels held for sale RevPAR increased 2.1% (25 hotels) 
  • Nine months ended September 30, 2000 (compared to nine months of 1999):
  • Revenues increased 10.7%, after adding back deferred rent, to $427.4 million from $386.2 million 
  • Total hotel portfolio RevPAR increased 8.0% (162 hotels), excluding hotels held for sale 
  • EBITDA increased 9.9% to $361.7 million from $329.2 million 
  • EBITDA per share and unit increased 23.3% to $5.35 from $4.34 
  • FFO per share and unit increased 13.9% to $3.35 from $2.94 
  • Net income per share increased to $1.39 from $1.32 (before non-recurring items, the reserve for hotels held for sale, and after adding back deferred rent of $22.3 million) 
  • Comparable hotels RevPAR increased 6.3% (109 hotels), excluding hotels held for sale 
  • Non-comparable hotels RevPAR increased 12.2% (53 hotels), excluding hotels held for sale 
  • Hotels held for sale RevPAR remain unchanged (25 hotels). 
Other Highlights:

Completed the sale of its Embassy Suites® hotel- Los Angeles International Airport-North, CA (215 suites) for a gross price of approximately $23.3 million ($112,000 per room) which resulted in a third quarter gain on sale of approximately $2.5 million.

Completed the construction and sold 200 condominium units in the Brighton Tower, which is adjacent to the Embassy Suites hotel � Myrtle Beach at Kingston Plantation, SC. FelCor has a 50% equity interest in the development venture (with Hilton owning the remaining interest) and has recorded a $3.7 million ($0.06 per share and unit) gain in the third quarter representing its share of the gain on sale.

Sold two acres of vacant excess land adjacent to its 359-room Embassy Suites hotel �Fort Lauderdale, FL and a billboard in Dallas, TX, for an aggregate gain of approximately $0.9 million.

Completed renovations at seven hotels during the quarter, with seven additional hotels undergoing renovation at the end of the quarter.

Renovation expenditures on the Company�s hotel portfolio totaled $13.8 million during the quarter and an additional $12.6 million was spent on maintenance capital expenditures. There is expected to be an additional $14 million in renovation expenditures and $10 million in maintenance capital expenditures during the remainder of 2000.

�We continue to outperform our respective hotel competitors because of the completion of renovations and rebrandings, which is reflected in our results for the quarter,� stated Thomas J. Corcoran, Jr., FelCor�s President and Chief Executive Officer. 

Capitalization:

On September 15, 2000, FelCor completed the private placement of $400 million in Senior Unsecured Notes that mature in September, 2008 and bear interest at a rate of 9½%. The proceeds were used to retire the $375 million floating rate Term B Loan, which would have matured in 2004, and to pay down the Company�s Line of Credit. On October 30, 2000, FelCor announced a registered Exchange Offer to exchange these privately placed notes for new notes registered under the Securities Act of 1933 and having the same terms.

During the third quarter 2000, FelCor repurchased approximately 593,000 common shares for approximately $13.1 million. For the year 2000, FelCor has repurchased 3.73 million common shares for approximately $69.8 million. 

FelCor declared third quarter dividends of $0.55 per share on its Common Stock (an annualized dividend yield of approximately 10.0% as of October 31, 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, our level of fixed rate debt, and our financial flexibility. The issuance of $400 million in long-term fixed rate notes during the quarter increased our average fixed rate debt from six to seven years, and increased our ratio of fixed rate debt from 69% to 90% of total debt. In addition by paying off the Term B Loan, the pledge of stock was released with respect to all of our unsecured debt,� stated 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:

Three Months Ended
Nine Months Ended
September 30,
September 30,
2000
1999
2000
1999
(in thousands, except per common share and unit data)
Revenues $140,476 $124,082  $405,146 $386,186
Net income applicable to common shareholders before

Non-recurring items, reserve for hotels held for 

sale and after adding back deferred rent

 $ 28,093

$ 23,837

$ 77,971

$ 90,105
Net income applicable to common shareholders  $ 24,211  $ 23,837 $ 1,880 $ 89,039
Diluted Earnings Per Common Share Information:
Net income before nonrecurring items, reserve for 

hotels held for sale and after adding back deferred rent

 $ 0.51 $ 0.35 $ 1.39 $ 1.32
Net income applicable to common shareholders $ 0.44 $ 0.35 $ 0.03 $ 1.30
Weighted average shares outstanding 54,579 68,221 56,290 68,262
Funds From Operations:
FFO $ 76,848 $ 68,880 $226,228 $223,112
Diluted FFO per common share and unit $ 1.15 $ 0.91 $ 3.35 $ 2.94
Weighted average shares and units outstanding 66,851 75,898 67,601 75,928
Earnings Before Interest, Taxes, Depreciation and Amortization:
EBITDA $122,982 $105,632 $361,735 $329,223
EBITDA per common share and unit $ 1.84 $ 1.39 $ 5.35 $ 4.34

 
Operating Performance:

The Company recorded net income applicable to common shareholders of $28.1 million in the third quarter of 2000, before non-recurring items, and after adding back deferred rent as compared to $23.8 million in 1999.

The Company recorded deferred income, under SAB 101 of $3.7 million for the quarter ended September 30, 2000, and $22.3 million, for the year-to-date period. This deferred rent will be fully earned and recognized as Percentage Lease Revenue in the fourth quarter of 2000.

Equity in income from unconsolidated entities included a $3.7 million gain representing its share of the sale of condominiums in the Brighton Tower.

Interest expense increased, as a percentage of total revenue, after adding back deferred rent, from 25% to 28% for the quarter over the prior year period. FelCor�s total borrowings have increased by approximately $146 million since September 30, 1999, primarily to fund its stock repurchase program and its renovation, redevelopment and rebranding program. In addition, the average interest rate on the Company�s floating rate debt has increased approximately 86 basis points since the third quarter 1999, as a result of corresponding increases in short term interest rates.
RevPAR Comparison:
Comparable hotel RevPAR changes (excluding hotels held for sale) 
for the third quarter 2000 versus 1999 are as follows:
 
RevPAR
Change
Percentage of Total
Room Revenue
Embassy Suites (56 hotels)
9.3%
44.2%
  
Holiday®-branded hotels (43 hotels)
5.5%
26.8%
  
Crowne Plaza® (16 hotels)
9.0%
12.3%
  
Sheraton®-branded (9 hotels)
3.4%
7.6%
  
Doubletree®-branded hotels (9 hotels)
10.2%
4.7%
  
Other (9 hotels)
3.2%
4.4%
  
Total (142 hotels)
7.5%
100.0%
  

 
Excluding hotels held for sale, comparable hotels in Texas, California, Florida and Georgia accounted for approximately 57.9% of comparable hotel room revenues in the quarter. The RevPAR changes during the third quarter 2000 versus 1999 from our comparable hotels in these states are as follows: 
RevPAR
Change
Percentage of Comparable
Room Revenue
California (18 hotels) 
16.3 %
23.2%
  
Texas (35 hotels) 
5.5 %
18.7%
  
Florida (13 hotels) 
5.8 %
8.5%
  
Georgia (12 hotels) 
6.4 %
7.6%
  

 
Financial Profile:

FelCor�s conservative financial profile is evidenced by the following at September 30, 2000:

    • Annual interest coverage ratio of 2.9x 
    • Total debt to annual EBITDA of 4.2x
    • Consolidated debt equal to 40% of its investment in hotels at cost
    • Annual FFO payout ratio of approximately 52%
    • Borrowing capacity of $226 million under its Line of Credit 
    • Fixed interest rate debt equal to 90% 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 $4 million maturing during the remainder of 2000

 
FelCor Lodging Trust Incorporated
Results of Operations
(in thousands, except per share and unit data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2000 1999 2000 1999
Revenues:
Percentage lease revenue
$132,240
$120,598
$388,575
$377,480
Equity in income from unconsolidated entities
7,162
2,353
12,810
6,190
Other revenue
1,074
1,131
3,761
2,516
Total revenue
140,476
124,082
405,146
386,186
Expenses:
General and administrative
2,778
2,943
8,890
7,696
Depreciation
39,535
38,627
 121,015 112,789
Taxes, insurance and other
18,698
14,519
 54,575
46,891
Land lease expense
5,217
 5,010 16,928
13,495
Interest expense
40,168
 31,520 117,812 90,692
Reserve for hotels held for sale
�
�
 63,000
�
Minority interest in Operating Partnership
2,620
 1,094 221 3,933
Minority interest in other partnerships
607
 348 2,700 1,987
Total expenses
109,623
94,061
 385,141 277,483
Net income before nonrecurring items
30,853
30,021
 20,005 108,703
Gain on sale of land
918
 �
1,793
�
Gain on sale of hotel
2,460
 �
2,460
�
Extraordinary charge for write-off of 
deferred financing fees
(3,865)
�
(3,865)
(1,113)
Net income 
30,366
30,021
20,393
 107,590
Preferred dividends
6,155
6,184
18,513
18,551
Net income applicable to common shareholders $ 24,211 $ 23,837 $ 1,880  $ 89,039
Diluted Earnings Per Common Share Information:
Net income applicable to common shareholders $ 0.44 $ 0.35 $ 0.03 
$ 1.30
Weighted average shares outstanding
54,579
 68,221 56,290 68,262
Funds From Operations (FFO):
Net income 
30,366
 30,021 20,393 107,590
Extraordinary charge
3,865
�
 3,865
1,113
Reserve for hotels held for sale
�
�
 63,000
�
Deferred rent
3,664
�
22,268
�
Series B preferred dividends
(3,235)
(3,234)
(9,703)
(9,703)
Gain on sale of hotel
(2,460)
�
 (2,460)
�
Depreciation
39,535
 38,627 121,015 112,789
Depreciation for unconsolidated entities
3,011
 2,847 9,016 8,808
Depreciation for other partnerships
(518)
(475)
(1,387)
(1,418)
Minority interest in Operating Partnership
2,620
 1,094 221 3,933
FFO $ 76,848 $ 68,880 $226,228 $223,112
Diluted FFO per common share and unit $ 1.15
$ 0.91
 $ 3.35 $ 2.94
Weighted average shares and units outstanding
66,851
75,898
67,601
75,928
Three Months Ended

September 30,
Nine Months Ended

September 30,
2000
1999
2000
1999
Earnings Before Interest, Taxes, Depreciation

and Amortization (EBITDA):
FFO
$ 76,848
$ 68,880
$226,228
$223,112
Interest expense
40,168
31,520
117,812
90,692
Interest expense of unconsolidated subsidiaries
2,162
1,814
6,949
5,157
Amortization expense
569
184
1,043
559
Series B preferred dividends
3,235
3,234
9,703
9,703
EBITDA
$122,982
$105,632
$361,735
$329,223
Diluted EBITDA per common share and unit
$ 1.84
$ 1.39
$ 5.35
$ 4.34

 
FelCor Lodging Trust Incorporated
Debt Outstanding
September 30, 2000
Interest Rate
Balance
Maturity Date
Floating Rate Debt:      
Line of Credit LIBOR + 200bps
$ 124,000
August 2003
Mortgage debt (A) LIBOR + 200bps
62,074
February 2003
Promissory Note LIBOR + 200bps
650
June 2016
Total Floating Rate Debt  
186,724
  
Fixed Rate Debt:      
Line of Credit-swapped 7.66%
250,000
August 2003
Publicly-traded term notes 7.38%
175,000
October 2004
Publicly-traded term notes 7.63%
125,000
October 2007
Publicly-traded term notes 9.50% 
400,000
October 2008
Mortgage debt 7.24%
140,777
 November 2007
Mortgage debt 7.54%
97,982
April 2009
Mortgage debt 7.55%
73,670
June 2009
Mortgage debt 8.73%
144,453
May 2010
Mortgage debt 8.70%
185,323
May 2010
Other 6.96%-7.23%
81,233
2000-2005
Discount accretion  
(6,671)
  
Total Fixed Rate Debt   1,666,767  
Total Consolidated Debt   $1,853,491  
 (A) Subject to a LIBOR cap of 7.0%      
FelCor�s future scheduled debt principal payments at September 30, 2000, 
are as follows (in thousands):
Year  
2000 $ 4,092
2001 23,839
2002 13,825
2003 469,319
2004 189,228
2005 and thereafter 1,159,859 
  $1,860,162
Discount accretion over term (6,671)
  $1,853,491 

 
FelCor Lodging Trust Incorporated
Hotel Performance Statistics
September 30, 2000
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 September 30, 2000. This information is presented regardless of the date of acquisition.
 
Occupancy
 
Third Quarter 
    
Year to Date 
 
2000
1999
Variance
2000
1999
Variance
DJONT Comparable Hotels
74.9%
73.5%
 1.4 pts
75.1%
73.0%
 2.1 pts
Bass Comparable Hotels
72.8%
71.4%
 1.4 pts
72.3%
70.7%
 1.6 pts
Total Comparable Hotels (A) 
73.9%
72.4%
 1.5 pts
73.8%
72.0%
 1.8 pts
Non-comparable Hotels (B)
71.9%
69.6%
 2.3 pts
72.4%
66.1%
 6.3 pts
Total Hotels excluding hotels held for sale 
73.6%
72.1%
 1.5 pts
73.3%
70.0%
 3.3 pts
Hotels held for sale (C)
61.6%
64.1%
 (2.5) pts
60.6% 
61.7% 
 (1.1) pts
Total Hotels
72.6%
71.5%
 1.1 pts
72.3%
69.3%
 3.0 pts
         
 
ADR
 
Third Quarter 
    
Year to Date 
 
2000
1999
Variance
2000
1999
Variance
DJONT Comparable Hotels
$123.13
$115.46
6.6%
$125.89
$121.29 
3.8%
Bass Comparable Hotels
$ 91.02
$ 87.69
3.8%
$ 93.91
$ 90.96 
3.2%
Total Comparable Hotels 
$107.31
$101.78
5.4%
$111.16
$107.27 
3.6%
Non-comparable Hotels 
$ 93.35
$ 89.77
4.0%
$ 96.75
$ 94.47
2.4%
Total Hotels excluding hotels held for sale 
$105.74
$100.47
5.3%
$106.48
$103.32
3.1%
Hotels held for sale 
$ 69.99
$ 65.86
6.3%
$ 71.33
$ 70.10
1.8%
Total Hotels
$103.23
$ 97.88
5.5%
$104.04
$100.86
3.2%
             
 
RevPAR
 
Third Quarter 
    
Year to Date 
 
2000
1999
Variance
2000
1999
Variance
DJONT Comparable Hotels
$ 92.25
$ 84.83
8.7%
$ 94.60
$ 88.58 
 6.8%
Bass Comparable Hotels
$ 66.28
$ 62.61
5.9%
$ 67.91
$ 64.34 
 5.5%
Total Comparable Hotels 
$ 79.27
$ 73.72
7.5%
$ 82.05
$ 77.18 
 6.3%
Non-comparable Hotels
$ 67.10
$ 62.47
7.4%
$ 70.01
$ 62.41
 12.2%
Total Hotels excluding hotels held for sale
$ 77.87
$ 72.45
7.5%
$ 78.09
$ 72.34
 7.9%
Hotels held for sale 
$ 43.11
$ 42.22
2.1%
$ 43.22
$ 43.24
 0.0%
Total Hotels
$ 74.99
$ 69.94
7.2%
$ 75.20
$ 69.93
 7.5%
  • A  DJONT Comparable Hotels include 77 and 63 hotels and Bass Comparable hotels include 65 and 46 hotels in the third quarter and year-to-date which were not undergoing renovation, redevelopment, or rebranding in either the 2000 or 1999 periods reported and excluding hotels held for sale. 
  • B  Non-comparable Hotels include 20 and 53 hotels in the third quarter and year-to-date undergoing redevelopment in either the 2000 or 1999 periods reported and excluding hotels held for sale. 
  • C  Hotels held for sale includes three DJONT leased hotels and 22 Bass leased hotels, consisting of two Courtyard by Marriott® hotels, five Fairfield Inn® hotels, six Hampton Inn® hotels, eight Holiday-branded hotels, three Doubletree Guest Suites® hotels, and one Four Points by Sheraton® hotel.

    • FelCor�s hotel portfolio consists of 187 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 web site at .

    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.

    Also See: FelCor's 4th Qtr FFO $0.87 vs $0.82 / Company Wide 1999 Occupancy 68.3% vs 68.8% / Feb 2000

    Contacts:

    Thomas J. Corcoran, Jr., 
    President & CEO 
    (972) 444-4901 
    [email protected]
    Monica L. Hildebrand, 
    Vice President of Communications 
    (972) 444-4917 
    [email protected]
    www.felcor.com
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