FelCor Lodging Trust Inc - FORM 8-K - EX-99.1 - 2016 Q1 EXHIBIT 99.1 EARNINGS RELEASE - April 26, 2016

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8-K - 2016 Q1 FORM 8-K EARNINGS RELEASE - FelCor Lodging Trust Inca2016q1form8-kearningsrele.htm





Exhibit 99.1

 
545 E. JOHN CARPENTER FREEWAY, SUITE 1300
 IRVING, TX 75062
PH: 972-444-4900
WWW.FELCOR.COM
NYSE: FCH
For Immediate Release:
FELCOR REPORTS FIRST QUARTER 2016 EARNINGS
• Same-store RevPAR increased by 4.7%
• Same-store Adjusted EBITDA increased by 7.8%
• Affirms 2016 Outlook

IRVING, Texas, April 26, 2016 - FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the first quarter ended March 31, 2016.
First Quarter Highlights
•
Same-store RevPAR increased 4.7% over the same period in 2015, which exceeded the industry average of 2.7%.
•
Adjusted EBITDA was $49.0 million, and Same-store Adjusted EBITDA increased by $3.6 million, or 7.8%, to $50.3 million compared to the same period in 2015.
•
Net loss per share was $0.08.
•
Adjusted FFO per share was $0.14.
•
Repurchased 3.0 million shares of common stock for $19.6 million (with repurchases to date of 5.2 million shares for $36.0 million, at an average price of $6.85 per share).
“We are off to a solid start in 2016. RevPAR growth continued to outpace the industry, and we gained 1.2% in market share, reflecting both the high quality of our properties and strong operational performance. In addition, we are especially pleased that The Knickerbocker, which we opened in 2015, performed better than our expectations for the quarter,” said Richard A. Smith, President and Chief Executive Officer of FelCor.

Mr. Smith added, “In addition to our focus on operations, we are actively engaged in various stages of negotiations to sell five assets, as previously announced. We continue to believe we will reach an agreement on prices for these assets that will unlock significant real estate value for our investors. We also continue to purchase our common stock, at prices significantly below our net asset value, further demonstrating our confidence in our company and future prospects.”

Mr. Smith concluded, “Our outlook for the lodging sector remains positive, particularly in our core markets. As such, we are affirming our operational outlook for 2016.”

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 2


First Quarter Hotel Results
 
First Quarter
 
2016
 
2015
 
Change
Same-store hotels (39)
 
 
 
 
 
RevPAR
$
142.11

 
$
135.78

 
4.7
%
Total hotel revenue, in millions
$
203.5

 
$
194.7

 
4.5
%
Hotel EBITDA, in millions
$
55.4

 
$
52.4

 
5.8
%
Hotel EBITDA margin
27.2
%
 
26.9
%
 
33 bps
 
 
 
 
 
 
RevPAR for our 39 same-store hotels increased 4.7% (to $142.11) from the same period in 2015. The change reflects a 3.4% increase in ADR (to $187.78) and a 1.2% increase in occupancy (to 75.7%). Hotel EBITDA for our 39 same-store hotels increased by 5.8% to $55.4 million and Hotel EBITDA margin was 27.2% during the quarter, a 33 basis point increase.
See pages 12-13 and 17-18 for more detailed hotel portfolio operating data.
First Quarter Operating Results
 
First Quarter
$ in millions, except for per share information
2016
 
2015
 
Change
Same-store Adjusted EBITDA
$
50.3

 
$
46.7

 
7.8
 %
Adjusted EBITDA
$
49.0

 
$
49.9

 
(1.8
)%
Adjusted FFO per share
$
0.14

 
$
0.14

 
$
—

Net loss per share
$
(0.08
)
 
$
(0.02
)
 
$
(0.06
)
Same-store Adjusted EBITDA increased 7.8% to $50.3 million from the same period in 2015. Adjusted EBITDA was $49.0 million.
Adjusted FFO was $20.2 million ($0.14 per share), compared to $18.3 million ($0.14 per share) for the same period in 2015. Net loss attributable to common stockholders was $11.2 million ($0.08 per share) in 2016, compared to a net loss of $2.9 million ($0.02 per share) for the same period in 2015. Net loss in 2015 was offset by a $16.9 million net gain on the sale of consolidated hotels.
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 15 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.


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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 3


Capital Allocation
We continually strive to increase long-term stockholder value through prudent capital allocation. As part of this on-going effort, we look for opportunities to redeploy capital to achieve higher returns and strengthen our balance sheet.
Asset Sales
In 2015, we announced plans to sell five hotels: Morgans, Royalton, The Knickerbocker (minority interest), Renaissance Esmeralda and Holiday Inn Nashville Airport. Given these hotels’ locations and quality, we expect they will sell for very attractive prices. We are at various stages of negotiations for all five hotels. Upon completion of these asset sales, we expect to use the available proceeds to repay debt and repurchase stock.
Balance Sheet
As of March 31, 2016, we had $1.5 billion of gross consolidated debt with a 5.2% weighted-average interest rate and an eight-year weighted-average maturity. We had $58.0 million of cash and cash equivalents on hand and $21.1 million of restricted cash.
Stock Repurchase Program
In 2015, our Board approved a $100 million stock repurchase program, which we began to implement in December. To date, we have purchased 5.2 million shares for $36.0 million (at an average price of $6.85 per share). We intend to continue repurchasing our common stock while it trades at a significant discount to NAV and, subject to approval by our Board of Directors, expect to increase the program in conjunction with completing asset sales.
Common Dividend
During the first quarter, we declared a $0.06 per share common stock dividend, which will be paid at the end of April. Our Board of Directors will determine future quarterly common stock dividends based on funds available for distribution, reinvestment opportunities within our portfolio and taxable income, among other things.
Capital Expenditures
During the first quarter, we invested $13.9 million in capital improvements at our hotels. During 2016, we plan to invest approximately $60 million in capital improvements and renovations as part of our long-term capital plan. In addition, we expect to invest approximately $15 million in redevelopment projects this year, primarily at the Embassy Suites Myrtle Beach Oceanfront Resort and the Vinoy Renaissance St. Petersburg Resort and Golf Club.

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 4


Outlook
We are affirming our 2016 operational outlook. Our outlook assumes that we will continue to outperform the industry because our high-quality and diverse portfolio is weighted toward high-barrier-to-entry markets with relatively lower supply growth.

Our outlook further assumes that, in 2016, we will sell the five hotels that we are currently marketing. The low end of our guidance assumes that we sell one hotel in the second quarter and the remaining four in the third quarter. The high end of our guidance assumes that we sell all five hotels during the fourth quarter. Our outlook assumes Hotel EBITDA for the Wyndham hotels equals the amount guaranteed by Wyndham for 2016 (which corresponds to approximately $59 million of Hotel EBITDA).

For the year, we expect:
•
RevPAR for same-store hotels will increase 3.5-5.5%;
•
Adjusted EBITDA will be $242.0 million - $256.0 million;
•
Adjusted FFO per share will be $0.93 - $0.99;
•
Net income attributable to FelCor will be $44.0 million - $48.8 million; and
•
Interest expense, including our pro rata share from joint ventures, will be $76.6 million - $81.1 million.

The following table reconciles our Adjusted EBITDA outlook (in millions):
 
Low
 
Middle
 
High
2016 Adjusted EBITDA (before asset sales)
$
249.0

 
$
253.0

 
$
257.0

2016 EBITDA lost from hotels to be sold(a)
(7.0
)
 
(4.0
)
 
(1.0
)
2016 Adjusted EBITDA
$
242.0

 
$
249.0

 
$
256.0

(a)
Adjusted EBITDA for the five hotels currently being marketed from their respective sale dates to December 31, 2016.

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 5


About FelCor
FelCor Lodging Trust Incorporated, a real estate investment trust (REIT), owns a diversified portfolio of primarily upper-upscale and luxury hotels that are located in major urban and resort markets throughout the U.S.  FelCor partners with top hotel companies that operate its properties under globally renowned names and as premier independent hotels. Additional information can be found on the Company’s website at www.felcor.com.
We invite you to listen to our first quarter earnings Conference Call on Tuesday, April 26, 2016 at 11:00 a.m. (Central Time). The conference call will be webcast simultaneously on FelCor’s website at www.felcor.com. Interested investors and other parties who wish to access the call can go to FelCor’s website and click on the webcast link on the “Investors” page. The conference call replay will also be archived on the Company’s website.

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.
Contact:
Stephen A. Schafer, Senior Vice President
(972) 444-4912     sschafer@felcor.com

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 6

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 months ended March 31, 2016.



TABLE OF CONTENTS
 
 
Page
Consolidated Statements of Operations(a)
 
Consolidated Balance Sheets(a)
 
Consolidated Debt Summary
 
Schedule of Encumbered Hotels
 
Capital Expenditures
 
Total Enterprise Value
 
Hotel Operating Statistics
 
Historical Quarterly Operating Statistics
 
Non-GAAP Financial Measures
 
(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 Annual Report on Form 10-K.


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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 7

Consolidated Statements of Operations
(in thousands, except per share data)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Revenues:
 
 
 
Hotel operating revenue:
 
 
 
Room
$
159,076

 
$
162,306

Food and beverage
39,532

 
39,844

Other operating departments
10,849

 
11,135

Other revenue
687

 
410

Total revenues
210,144

 
213,695

Expenses:
 
 
 
Hotel departmental expenses:
 
 
 
Room
42,699

 
42,511

Food and beverage
30,956

 
30,696

Other operating departments
3,783

 
4,449

Other property related costs
55,566

 
56,895

Management and franchise fees
9,225

 
9,085

Taxes, insurance and lease expense
13,582

 
14,807

Corporate expenses
8,400

 
8,573

Depreciation and amortization
29,183

 
27,772

Other expenses
828

 
4,228

Total operating expenses
194,222

 
199,016

Operating income
15,922

 
14,679

Interest expense, net
(19,720
)
 
(19,481
)
Debt extinguishment
—

 
(73
)
Loss before equity in income (loss) from unconsolidated entities
(3,798
)
 
(4,875
)
Equity in income (loss) from unconsolidated entities
(154
)
 
149

Loss from continuing operations before income tax expense
(3,952
)
 
(4,726
)
Income tax expense
(415
)
 
(169
)
Loss from continuing operations
(4,367
)
 
(4,895
)
Income from discontinued operations
—

 
4

Loss before gain on sale of property
(4,367
)
 
(4,891
)
Gain (loss) on sale of property, net
(714
)
 
16,887

Net income (loss)
(5,081
)
 
11,996

Net loss (income) attributable to noncontrolling interests in other partnerships
471

 
(4,879
)
Net loss attributable to redeemable noncontrolling interests in FelCor LP
48

 
14

Preferred distributions - consolidated joint venture
(360
)
 
(348
)
Net income (loss) attributable to FelCor
(4,922
)
 
6,783

Preferred dividends
(6,279
)
 
(9,678
)
Net loss attributable to FelCor common stockholders
$
(11,201
)
 
$
(2,895
)
Basic and diluted per common share data:
 
 
 
Loss from continuing operations
$
(0.08
)
 
$
(0.02
)
Net loss
$
(0.08
)
 
$
(0.02
)
Basic and diluted weighted average common shares outstanding
139,678

 
124,519


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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 8

Consolidated Balance Sheets
(in thousands, except par values)
 
March 31,
 
December 31,
 
2016
 
2015
Assets
 
 
 
Investment in hotels, net of accumulated depreciation of $919,071 and $899,575 at March 31, 2016 and December 31, 2015, respectively
$
1,711,523

 
$
1,729,531

Investment in unconsolidated entities
9,171

 
9,575

Cash and cash equivalents
57,958

 
59,786

Restricted cash
21,097

 
17,702

Accounts receivable, net of allowance for doubtful accounts of $303 and $204 at March 31, 2016 and December 31, 2015, respectively
34,819

 
28,136

Deferred expenses, net of accumulated amortization of $1,554 and $1,086 at March 31, 2016 and December 31, 2015, respectively
5,932

 
6,390

Other assets
17,676

 
14,792

Total assets
$
1,858,176

 
$
1,865,912

Liabilities and Equity
 
 
 
Debt, net of unamortized debt issuance costs of $17,666 and $18,065 at March 31, 2016 and December 31, 2015, respectively
$
1,440,792

 
$
1,409,889

Distributions payable
15,062

 
15,140

Accrued expenses and other liabilities
123,766

 
125,274

Total liabilities
1,579,620

 
1,550,303

Commitments and contingencies
 
 
 
Redeemable noncontrolling interests in FelCor LP, 611 units issued and outstanding at March 31, 2016 and December 31, 2015
4,965

 
4,464

Equity:
 
 
 
 Preferred stock, $0.01 par value, 20,000 shares authorized:
 
 
 
Series A Cumulative Convertible Preferred Stock, 12,879 shares, liquidation value of $321,987, issued and outstanding at March 31, 2016 and December 31, 2015
309,337

 
309,337

Common stock, $0.01 par value, 200,000 shares authorized; 139,307 and 141,808 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
1,393

 
1,418

Additional paid-in capital
2,569,389

 
2,567,515

Accumulated deficit
(2,657,715
)
 
(2,618,117
)
Total FelCor stockholders’ equity
222,404

 
260,153

Noncontrolling interests in other partnerships
7,403

 
7,806

Preferred equity in consolidated joint venture, liquidation value of $44,582 and $43,954 at March 31, 2016 and December 31, 2015, respectively
43,784

 
43,186

Total equity
273,591

 
311,145

Total liabilities and equity
$
1,858,176

 
$
1,865,912


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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 9


Consolidated Debt Summary
(dollars in thousands)
 
Encumbered Hotels
 
Interest
Rate (%)
 
Maturity Date
 
March 31, 2016
 
December 31, 2015
Senior unsecured notes
—

 
 
6.00
 
June 2025
 
$
475,000

 
$
475,000

Senior secured notes
9

 
 
5.625
 
March 2023
 
525,000

 
525,000

Mortgage debt(a)
4

 
 
4.95
 
October 2022
 
121,874

 
122,237

Mortgage debt
1

 
 
4.94
 
October 2022
 
30,584

 
30,717

Line of credit(b)
7

 
 
LIBOR + 2.75
 
June 2019
 
221,000

 
190,000

Knickerbocker loan(c)
1

 
 
LIBOR + 3.00
 
November 2017
 
85,000

 
85,000

Total
22

 
 
 
 
 
 
 
$
1,458,458

 
$
1,427,954

Unamortized debt issuance costs
 
 
 
 
 
 
 
 
(17,666
)
 
(18,065
)
Debt, net of unamortized debt issuance costs
 
 
 
 
 
 
 
 
$
1,440,792

 
$
1,409,889


(a)
This debt is comprised of separate non-cross-collateralized loans, each secured by a mortgage encumbering different hotels.
(b)
Our line of credit can be extended for one year, subject to satisfying certain conditions. We may borrow up to $400 million under our line of credit.
(c)
This loan can be extended for one year, subject to satisfying certain conditions.


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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 10


Schedule of Encumbered Hotels
(dollars in millions)
Consolidated
 
March 31, 2016
 
 
Debt
 
Balance
 
Encumbered Hotels
Senior secured notes (5.625%)
 
 
$
525

 
 
Atlanta Buckhead - ES, Boston Marlboro - ES, Burlington - SH, Dallas Love Field - ES, Milpitas - ES, Myrtle Beach Resort - HIL, Orlando South - ES, Philadelphia Society Hill - SH and SF South San Francisco - ES
Mortgage debt
 
 
$
27

 
 
Napa Valley - ES
Mortgage debt
 
 
$
35

 
 
Ft. Lauderdale - ES
Mortgage debt
 
 
$
23

 
 
Birmingham - ES
Mortgage debt
 
 
$
37

 
 
Minneapolis Airport - ES
Mortgage debt
 
 
$
31

 
 
Deerfield Beach - ES
Line of credit
 
 
$
221

 
 
Austin - DTG, Boston Copley - FM, Charleston Mills House - WYN, LA LAX S - ES, Santa Monica at the Pier - WYN, SF Union Square - MAR and St. Petersburg Vinoy - REN
Knickerbocker loan
 
 
$
85

 
 
The Knickerbocker

Capital Expenditures
(dollars in thousands)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Improvements and additions to majority-owned hotels
$
13,712

 
$
13,483

Partners’ pro rata share of additions to consolidated joint venture hotels
(27
)
 
(24
)
Pro rata share of additions to unconsolidated hotels
257

 
304

Total additions to hotels(a)
$
13,942

 
$
13,763

(a)
Includes capitalized interest, property taxes, property insurance, ground leases and certain employee costs.

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 11


Total Enterprise Value
(in thousands, except per share data)
 
March 31,
 
December 31,
 
 
2016
 
2015
Common shares outstanding
139,307

 
141,808

Units outstanding
611

 
611

Combined shares and units outstanding
139,918

 
142,419

Common stock price
$
8.12

 
$
7.30

Market capitalization
$
1,136,134

 
$
1,039,659

Series A preferred stock(a)
321,987

 
321,987

Preferred equity - Knickerbocker joint venture, net
41,595

 
41,027

Consolidated debt (b)
1,458,458

 
1,427,954

Noncontrolling interests of consolidated debt
(4,250
)
 
(4,250
)
Pro rata share of unconsolidated debt
11,367

 
11,433

Cash, cash equivalents and restricted cash
(79,055
)
 
(77,488
)
Total enterprise value (TEV)
$
2,886,236

 
$
2,760,322

(a)
Based on liquidation value.
(b)
Excludes unamortized debt issuance costs.





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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 12

Hotel Operating Statistics
 
 
 
Occupancy (%)
 
ADR ($)
 
RevPAR ($)
 
 
Three Months Ended March 31,
 
Three Months Ended March 31,
 
Three Months Ended March 31,
Same-store Hotels
 
2016
 
2015
 
%Change
 
2016
 
2015
 
%Change
 
2016
 
2015
 
%Change
Embassy Suites Atlanta-Buckhead
80.9
 
78.8
 
2.7

 
159.13

 
151.40

 
5.1

 
128.79

 
119.30

 
8.0

DoubleTree Suites by Hilton Austin
82.8
 
82.1
 
0.9

 
240.06

 
249.64

 
(3.8
)
 
198.87

 
204.95

 
(3.0
)
Embassy Suites Birmingham
80.7
 
77.1
 
4.7

 
133.82

 
135.66

 
(1.4
)
 
107.92

 
104.55

 
3.2

The Fairmont Copley Plaza, Boston
64.0
 
61.6
 
4.0

 
252.18

 
250.51

 
0.7

 
161.36

 
154.20

 
4.6

Wyndham Boston Beacon Hill
63.8
 
68.2
 
(6.4
)
 
164.42

 
165.66

 
(0.7
)
 
104.87

 
112.93

 
(7.1
)
Embassy Suites Boston-Marlborough
64.8
 
72.5
 
(10.6
)
 
167.60

 
162.49

 
3.1

 
108.56

 
117.79

 
(7.8
)
Sheraton Burlington Hotel & Conference Center
68.5
 
65.6
 
4.5

 
93.17

 
101.51

 
(8.2
)
 
63.86

 
66.58

 
(4.1
)
The Mills House Wyndham Grand Hotel, Charleston
78.1
 
78.4
 
(0.5
)
 
205.75

 
199.53

 
3.1

 
160.63

 
156.48

 
2.6

Embassy Suites Dallas-Love Field
85.3
 
91.8
 
(7.1
)
 
143.51

 
133.66

 
7.4

 
122.36

 
122.64

 
(0.2
)
Embassy Suites Deerfield Beach-Resort & Spa
88.2
 
92.0
 
(4.1
)
 
269.69

 
260.39

 
3.6

 
237.96

 
239.58

 
(0.7
)
Embassy Suites Fort Lauderdale 17th Street
93.4
 
93.4
 
—

 
231.31

 
214.51

 
7.8

 
215.99

 
200.33

 
7.8

Wyndham Houston-Medical Center Hotel & Suites
86.0
 
80.1
 
7.4

 
159.64

 
160.85

 
(0.8
)
 
137.32

 
128.81

 
6.6

Renaissance Esmeralda Indian Wells Resort & Spa
68.6
 
72.5
 
(5.3
)
 
230.67

 
227.86

 
1.2

 
158.28

 
165.18

 
(4.2
)
Embassy Suites Los Angeles-International Airport/South
90.0
 
80.7
 
11.5

 
162.70

 
148.02

 
9.9

 
146.41

 
119.50

 
22.5

Embassy Suites Mandalay Beach-Hotel & Resort
76.7
 
73.0
 
5.1

 
207.31

 
180.39

 
14.9

 
158.98

 
131.63

 
20.8

Embassy Suites Miami-International Airport
91.5
 
94.1
 
(2.8
)
 
197.22

 
199.66

 
(1.2
)
 
180.41

 
187.82

 
(3.9
)
Embassy Suites Milpitas-Silicon Valley
80.8
 
78.9
 
2.4

 
211.62

 
194.81

 
8.6

 
170.92

 
153.70

 
11.2

Embassy Suites Minneapolis-Airport
68.7
 
72.3
 
(5.0
)
 
143.73

 
142.01

 
1.2

 
98.80

 
102.72

 
(3.8
)
Embassy Suites Myrtle Beach-Oceanfront Resort
68.6
 
62.0
 
10.7

 
129.48

 
124.77

 
3.8

 
88.83

 
77.34

 
14.9

Hilton Myrtle Beach Resort
48.1
 
48.6
 
(1.0
)
 
106.90

 
102.61

 
4.2

 
51.47

 
49.89

 
3.2

Embassy Suites Napa Valley
79.9
 
77.2
 
3.5

 
182.08

 
180.14

 
1.1

 
145.56

 
139.12

 
4.6

Holiday Inn Nashville Airport
65.5
 
55.9
 
17.3

 
113.27

 
104.00

 
8.9

 
74.23

 
58.12

 
27.7

Wyndham New Orleans-French Quarter
73.7
 
66.2
 
11.4

 
155.37

 
167.67

 
(7.3
)
 
114.53

 
110.96

 
3.2

Morgans New York
72.9
 
66.0
 
10.5

 
212.76

 
216.61

 
(1.8
)
 
155.01

 
142.87

 
8.5

Royalton New York
76.2
 
79.2
 
(3.7
)
 
237.95

 
245.41

 
(3.0
)
 
181.40

 
194.36

 
(6.7
)
Embassy Suites Orlando-International Drive South/Convention Center
88.1
 
87.5
 
0.7

 
176.25

 
170.05

 
3.6

 
155.36

 
148.81

 
4.4

DoubleTree Suites by Hilton Orlando-Lake Buena Vista
92.3
 
92.8
 
(0.6
)
 
165.40

 
151.91

 
8.9

 
152.60

 
141.01

 
8.2

Wyndham Philadelphia Historic District
55.0
 
45.4
 
21.2

 
125.93

 
126.65

 
(0.6
)
 
69.26

 
57.46

 
20.5

Sheraton Philadelphia Society Hill Hotel
55.0
 
53.0
 
3.8

 
151.24

 
151.09

 
0.1

 
83.24

 
80.08

 
3.9

Embassy Suites Phoenix-Biltmore
78.0
 
84.1
 
(7.2
)
 
243.29

 
231.01

 
5.3

 
189.88

 
194.19

 
(2.2
)
Wyndham Pittsburgh University Center
55.4
 
59.0
 
(6.0
)
 
132.08

 
132.17

 
(0.1
)
 
73.21

 
77.92

 
(6.1
)
Wyndham San Diego Bayside
77.5
 
77.6
 
(0.2
)
 
137.19

 
136.18

 
0.7

 
106.31

 
105.70

 
0.6

Embassy Suites San Francisco Airport-South San Francisco
85.4
 
87.0
 
(1.8
)
 
197.13

 
178.29

 
10.6

 
168.39

 
155.08

 
8.6

Embassy Suites San Francisco Airport-Waterfront
85.3
 
83.6
 
2.0

 
204.40

 
199.22

 
2.6

 
174.25

 
166.56

 
4.6

Holiday Inn San Francisco-Fisherman’s Wharf
82.0
 
79.4
 
3.3

 
194.67

 
178.64

 
9.0

 
159.58

 
141.77

 
12.6

San Francisco Marriott Union Square
88.6
 
85.2
 
4.1

 
319.58

 
280.82

 
13.8

 
283.21

 
239.14

 
18.4

Wyndham Santa Monica At the Pier
87.8
 
83.9
 
4.6

 
258.44

 
227.12

 
13.8

 
226.83

 
190.49

 
19.1

Embassy Suites Secaucus-Meadowlands
54.6
 
66.4
 
(17.8
)
 
171.47

 
177.47

 
(3.4
)
 
93.62

 
117.86

 
(20.6
)
The Vinoy Renaissance St. Petersburg Resort & Golf Club
88.2
 
88.8
 
(0.7
)
 
256.26

 
251.81

 
1.8

 
225.92

 
223.53

 
1.1

Same-store Hotels
75.7
 
74.7
 
1.2

 
187.78

 
181.65

 
3.4

 
142.11

 
135.78

 
4.7


-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 13


Historical Quarterly Operating Statistics
 
 
Occupancy (%)
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
Same-store hotels(a)
 
74.7

 
81.1

 
80.8

 
74.3

 
75.7

 
 
 
 
 
 
 
 
 
 
 
 
 
ADR ($)
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
Same-store hotels(a)
 
181.65

 
190.42

 
190.19

 
179.39

 
187.78

 
 
 
 
 
 
 
 
 
 
 
 
 
RevPAR ($)
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
Same-store hotels(a)
 
135.78

 
154.48

 
153.70

 
133.36

 
142.11

(a)
Includes 39 consolidated hotels, excluding The Knickerbocker which opened in February 2015.




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.

-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 14

Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
(in thousands, except per share data)
 
Three Months Ended March 31,
 
2016
 
2015
 
Dollars
 
Shares
 
Per Share Amount
 
Dollars
 
Shares
 
Per Share Amount
Net income (loss)
$
(5,081
)
 
 
 
 
 
$
11,996

 
 
 
 
Noncontrolling interests
519

 
 
 
 
 
(4,865
)
 
 
 
 
Preferred dividends
(6,279
)
 
 
 
 
 
(9,678
)
 
 
 
 
Preferred distributions - consolidated joint venture
(360
)
 
 
 
 
 
(348
)
 
 
 
 
Net loss attributable to FelCor common stockholders
(11,201
)
 
 
 
 
 
(2,895
)
 
 
 
 
Less: Dividends declared on unvested restricted stock
(38
)
 
 
 
 
 
(13
)
 
 
 
 
Basic and diluted earnings per share data
(11,239
)
 
139,678

 
$
(0.08
)
 
(2,908
)
 
124,519

 
$
(0.02
)
Depreciation and amortization
29,183

 
—

 
0.22

 
27,772

 
—

 
0.22

Depreciation, unconsolidated entities and other partnerships
467

 
—

 
—

 
712

 
—

 
0.01

Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships
714

 
—

 
—

 
(11,881
)
 
—

 
(0.10
)
Noncontrolling interests in FelCor LP
(48
)
 
611

 
—

 
(14
)
 
611

 
—

Dividends declared on unvested restricted stock
38

 
—

 
—

 
13

 
—

 
—

Conversion of unvested restricted stock and units
—

 
627

 
—

 
—

 
1,213

 
—

FFO
19,115

 
140,916

 
0.14

 
13,694

 
126,343

 
0.11

Debt extinguishment
—

 
—

 
—

 
73

 
—

 
—

Abandoned projects
232

 
—

 
—

 
—

 
—

 
—

Variable stock compensation
761

 
—

 
—

 
997

 
—

 
—

Pre-opening costs, net of noncontrolling interests
54

 
—

 
—

 
3,524

 
—

 
0.03

Adjusted FFO
$
20,162

 
140,916

 
$
0.14

 
$
18,288

 
126,343

 
$
0.14


 

-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 15


Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA
(in thousands)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Net income (loss)
$
(5,081
)
 
$
11,996

Depreciation and amortization
29,183

 
27,772

Depreciation, unconsolidated entities and other partnerships
467

 
712

Interest expense
19,732

 
19,486

Interest expense, unconsolidated entities and other partnerships
99

 
202

Income taxes
415

 
—

Noncontrolling interests in preferred distributions, consolidated joint venture
(18
)
 
—

Noncontrolling interests in other partnerships
471

 
(4,879
)
EBITDA
45,268

 
55,289

Debt extinguishment
—

 
73

Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships
714

 
(11,881
)
Amortization of fixed stock and directors’ compensation
1,935

 
1,862

Abandoned projects
232

 
—

Variable stock compensation
761

 
997

Pre-opening costs, net of noncontrolling interests
54

 
3,524

Adjusted EBITDA
48,964

 
49,864

Adjusted EBITDA from hotels disposed, held for sale and recently opened
1,341

 
(3,180
)
Same-store Adjusted EBITDA
$
50,305

 
$
46,684


-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 16


Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)
 
Three Months Ended
 
March 31,
 
2016
 
2015
Same-store operating revenue:
 
 
 
Room
$
154,430

 
$
145,933

Food and beverage
38,271

 
38,107

Other operating departments
10,798

 
10,649

Same-store operating revenue
203,499

 
194,689

Same-store operating expense:
 
 
 
Room
40,407

 
37,959

Food and beverage
28,978

 
28,876

Other operating departments
3,767

 
4,242

Other property related costs
53,033

 
50,710

Management and franchise fees
9,095

 
8,093

Taxes, insurance and lease expense
12,811

 
12,430

Same-store operating expense
148,091

 
142,310

Hotel EBITDA
$
55,408

 
$
52,379

Hotel EBITDA Margin
27.2
%
 
26.9
%



-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 17

The following tables set forth the components of our Hotel EBITDA for our same-store hotels (dollars in thousands):
 
 
Three Months Ended March 31, 2016
Same-store Hotels
 
Hotel Operating Revenue
 
Net Income (Loss)
 
Other Adjustments
 
Depreciation
 
Interest Expense
 
Hotel EBITDA
 
Hotel EBITDA Margin
Embassy Suites Atlanta-Buckhead
 
$
4,042

 
$
1,105

 
$
—

 
 
$
634

 
$
—

 
$
1,739

 
43.0
 %
DoubleTree Suites by Hilton Austin
 
3,984

 
1,204

 
—

 
 
482

 
182

 
1,868

 
46.9
 %
Embassy Suites Birmingham
 
2,538

 
231

 
—

 
 
389

 
298

 
918

 
36.2
 %
The Fairmont Copley Plaza, Boston
 
10,037

 
(3,149
)
 
(91
)
 
 
2,179

 
465

 
(596
)
 
(5.9
)%
Wyndham Boston Beacon Hill
 
3,469

 
(497
)
 
—

 
 
991

 
—

 
494

 
14.2
 %
Embassy Suites Boston-Marlborough
 
2,569

 
374

 
—

 
 
297

 
—

 
671

 
26.1
 %
Sheraton Burlington Hotel & Conference Center
 
2,711

 
(406
)
 
—

 
 
621

 
—

 
215

 
7.9
 %
The Mills House Wyndham Grand Hotel, Charleston
 
4,666

 
831

 
—

 
 
637

 
239

 
1,707

 
36.6
 %
Embassy Suites Dallas-Love Field
 
3,107

 
642

 
—

 
 
338

 
—

 
980

 
31.5
 %
Embassy Suites Deerfield Beach-Resort & Spa
 
6,195

 
2,104

 
—

 
 
476

 
399

 
2,979

 
48.1
 %
Embassy Suites Fort Lauderdale 17th Street
 
7,956

 
2,475

 
—

 
 
712

 
449

 
3,636

 
45.7
 %
Wyndham Houston-Medical Center Hotel & Suites
 
4,014

 
1,267

 
(19
)
 
 
553

 
—

 
1,801

 
44.9
 %
Renaissance Esmeralda Indian Wells Resort & Spa
 
15,885

 
4,434

 
45

 
 
780

 
—

 
5,259

 
33.1
 %
Embassy Suites Los Angeles-International Airport/South
 
5,674

 
1,230

 
—

 
 
642

 
273

 
2,145

 
37.8
 %
Embassy Suites Mandalay Beach-Hotel & Resort
 
4,616

 
854

 
—

 
 
771

 
—

 
1,625

 
35.2
 %
Embassy Suites Miami-International Airport
 
6,112

 
1,893

 
—

 
 
470

 
—

 
2,363

 
38.7
 %
Embassy Suites Milpitas-Silicon Valley
 
4,771

 
1,519

 
—

 
 
302

 
—

 
1,821

 
38.2
 %
Embassy Suites Minneapolis-Airport
 
2,926

 
(130
)
 
—

 
 
444

 
474

 
788

 
26.9
 %
Embassy Suites Myrtle Beach-Oceanfront Resort
 
4,194

 
(235
)
 
1

 
 
675

 
—

 
441

 
10.5
 %
Hilton Myrtle Beach Resort
 
3,054

 
(961
)
 
—

 
 
848

 
—

 
(113
)
 
(3.7
)%
Embassy Suites Napa Valley
 
3,554

 
150

 
—

 
 
517

 
346

 
1,013

 
28.5
 %
Holiday Inn Nashville Airport
 
3,127

 
(191
)
 
47

 
 
753

 
—

 
609

 
19.5
 %
Wyndham New Orleans-French Quarter
 
4,358

 
1,210

 
—

 
 
716

 
—

 
1,926

 
44.2
 %
Morgans New York
 
1,739

 
(1,418
)
 
159

 
 
627

 
—

 
(632
)
 
(36.3
)%
Royalton New York
 
4,079

 
(1,538
)
 
205

 
 
580

 
—

 
(753
)
 
(18.5
)%
Embassy Suites Orlando-International Drive South/Convention Center
 
3,561

 
1,102

 
—

 
 
271

 
—

 
1,373

 
38.6
 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista
 
3,897

 
495

 
—

 
 
765

 
—

 
1,260

 
32.3
 %
Wyndham Philadelphia Historic District
 
3,024

 
(513
)
 
—

 
 
750

 
—

 
237

 
7.8
 %
Sheraton Philadelphia Society Hill Hotel
 
4,363

 
(621
)
 
—

 
 
979

 
—

 
358

 
8.2
 %
Embassy Suites Phoenix-Biltmore
 
4,150

 
1,637

 
—

 
 
438

 
—

 
2,075

 
50.0
 %
Wyndham Pittsburgh University Center
 
2,141

 
(323
)
 
—

 
 
520

 
—

 
197

 
9.2
 %
Wyndham San Diego Bayside
 
7,082

 
54

 
—

 
 
1,571

 
—

 
1,625

 
22.9
 %
Embassy Suites San Francisco Airport-South San Francisco
 
5,723

 
1,449

 
—

 
 
412

 
—

 
1,861

 
32.5
 %
Embassy Suites San Francisco Airport-Waterfront
 
6,531

 
1,364

 
—

 
 
749

 
—

 
2,113

 
32.4
 %
Holiday Inn San Francisco-Fisherman’s Wharf
 
9,471

 
295

 
—

 
 
480

 
—

 
775

 
8.2
 %
San Francisco Marriott Union Square
 
11,929

 
2,376

 
(2
)
 
 
1,370

 
560

 
4,304

 
36.1
 %
Wyndham Santa Monica At the Pier
 
2,972

 
990

 
—

 
 
283

 
189

 
1,462

 
49.2
 %
Embassy Suites Secaucus-Meadowlands
 
2,377

 
(241
)
 
1

 
 
121

 
—

 
(119
)
 
(5.0
)%
The Vinoy Renaissance St. Petersburg Resort & Golf Club
 
16,901

 
3,086

 
56

 
 
1,443

 
398

 
4,983

 
29.5
 %
 
 
$
203,499

 
$
24,148

 
$
402

 
 
$
26,586

 
$
4,272

 
$
55,408

 
27.2
 %

-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 18

 
 
Three Months Ended March 31, 2015
 
 
Same-store Hotels
 
Hotel Operating Revenue
 
Net Income (Loss)
 
Other Adjustments
 
Depreciation
 
Interest Expense
 
Hotel EBITDA
 
Hotel EBITDA Margin
Embassy Suites Atlanta-Buckhead
 
$
3,750

 
$
945

 
$
—

 
 
$
653

 
$
—

 
$
1,598

 
42.6
 %
DoubleTree Suites by Hilton Austin
 
4,184

 
1,479

 
—

 
 
486

 
—

 
1,965

 
47.0
 %
Embassy Suites Birmingham
 
2,450

 
246

 
—

 
 
386

 
300

 
932

 
38.0
 %
The Fairmont Copley Plaza, Boston
 
9,826

 
(2,691
)
 
—

 
 
2,164

 
—

 
(527
)
 
(5.4
)%
Wyndham Boston Beacon Hill
 
3,724

 
(261
)
 
—

 
 
999

 
—

 
738

 
19.8
 %
Embassy Suites Boston-Marlborough
 
2,808

 
544

 
—

 
 
295

 
—

 
839

 
29.9
 %
Sheraton Burlington Hotel & Conference Center
 
2,913

 
(297
)
 
—

 
 
573

 
—

 
276

 
9.5
 %
The Mills House Wyndham Grand Hotel, Charleston
 
4,331

 
651

 
—

 
 
595

 
225

 
1,471

 
34.0
 %
Embassy Suites Dallas-Love Field
 
3,120

 
710

 
—

 
 
335

 
—

 
1,045

 
33.5
 %
Embassy Suites Deerfield Beach-Resort & Spa
 
6,299

 
2,172

 
—

 
 
560

 
401

 
3,133

 
49.7
 %
Embassy Suites Fort Lauderdale 17th Street
 
7,406

 
2,078

 
—

 
 
743

 
451

 
3,272

 
44.2
 %
Wyndham Houston-Medical Center Hotel & Suites
 
3,732

 
1,173

 
(22
)
 
 
547

 
140

 
1,838

 
49.2
 %
Renaissance Esmeralda Indian Wells Resort & Spa
 
15,665

 
4,363

 
—

 
 
862

 
—

 
5,225

 
33.4
 %
Embassy Suites Los Angeles-International Airport/South
 
4,624

 
1,117

 
—

 
 
655

 
—

 
1,772

 
38.3
 %
Embassy Suites Mandalay Beach-Hotel & Resort
 
3,970

 
131

 
—

 
 
811

 
248

 
1,190

 
30.0
 %
Embassy Suites Miami-International Airport
 
6,232

 
1,848

 
—

 
 
501

 
206

 
2,555

 
41.0
 %
Embassy Suites Milpitas-Silicon Valley
 
4,363

 
1,293

 
—

 
 
322

 
—

 
1,615

 
37.0
 %
Embassy Suites Minneapolis-Airport
 
3,020

 
(44
)
 
—

 
 
467

 
477

 
900

 
29.8
 %
Embassy Suites Myrtle Beach-Oceanfront Resort
 
3,691

 
(801
)
 
—

 
 
759

 
258

 
216

 
5.9
 %
Hilton Myrtle Beach Resort
 
2,936

 
(914
)
 
—

 
 
855

 
—

 
(59
)
 
(2.0
)%
Embassy Suites Napa Valley
 
3,373

 
147

 
—

 
 
521

 
348

 
1,016

 
30.1
 %
Holiday Inn Nashville Airport
 
2,459

 
(254
)
 
—

 
 
542

 
—

 
288

 
11.7
 %
Wyndham New Orleans-French Quarter
 
4,153

 
875

 
—

 
 
704

 
310

 
1,889

 
45.5
 %
Morgans New York
 
1,580

 
(1,368
)
 
—

 
 
616

 
—

 
(752
)
 
(47.6
)%
Royalton New York
 
4,185

 
(1,239
)
 
—

 
 
560

 
—

 
(679
)
 
(16.2
)%
Embassy Suites Orlando-International Drive South/Convention Center
 
3,303

 
914

 
—

 
 
283

 
—

 
1,197

 
36.2
 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista
 
3,518

 
290

 
—

 
 
813

 
—

 
1,103

 
31.4
 %
Wyndham Philadelphia Historic District
 
2,539

 
(1,022
)
 
—

 
 
812

 
190

 
(20
)
 
(0.8
)%
Sheraton Philadelphia Society Hill Hotel
 
4,562

 
(596
)
 
—

 
 
1,016

 
—

 
420

 
9.2
 %
Embassy Suites Phoenix-Biltmore
 
4,191

 
1,467

 
—

 
 
471

 
164

 
2,102

 
50.2
 %
Wyndham Pittsburgh University Center
 
2,212

 
(368
)
 
—

 
 
541

 
167

 
340

 
15.4
 %
Wyndham San Diego Bayside
 
7,065

 
48

 
—

 
 
1,657

 
—

 
1,705

 
24.1
 %
Embassy Suites San Francisco Airport-South San Francisco
 
5,438

 
1,302

 
—

 
 
412

 
—

 
1,714

 
31.5
 %
Embassy Suites San Francisco Airport-Waterfront
 
6,263

 
1,258

 
—

 
 
757

 
—

 
2,015

 
32.2
 %
Holiday Inn San Francisco-Fisherman’s Wharf
 
8,442

 
(23
)
 
—

 
 
399

 
—

 
376

 
4.5
 %
San Francisco Marriott Union Square
 
10,490

 
935

 
(1
)
 
 
1,420

 
684

 
3,038

 
29.0
 %
Wyndham Santa Monica At the Pier
 
2,437

 
711

 
—

 
 
267

 
243

 
1,221

 
50.1
 %
Embassy Suites Secaucus-Meadowlands
 
2,999

 
316

 
3

 
 
145

 
—

 
464

 
15.5
 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club
 
16,436

 
3,522

 
—

 
 
1,426

 
—

 
4,948

 
30.1
 %
 
 
$
194,689

 
$
20,657

 
$
(20
)
 
 
$
26,930

 
$
4,812

 
$
52,379

 
26.9
 %


-more-

FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 19


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
 
March 31,
 
2016
 
2015
Same-store operating revenue
$
203,499

 
$
194,689

Other revenue
687

 
410

Revenue from hotels disposed, held for sale and recently opened(a)
5,958

 
18,596

Total revenue
210,144

 
213,695

Same-store operating expense
148,091

 
142,310

Consolidated hotel lease expense(b)
802

 
2,104

Unconsolidated taxes, insurance and lease expense
(452
)
 
(741
)
Corporate expenses
8,400

 
8,573

Depreciation and amortization
29,183

 
27,772

Expenses from hotels disposed, held for sale and recently opened(a)
7,370

 
14,770

Other expenses
828

 
4,228

Total operating expense
194,222

 
199,016

Operating income
$
15,922

 
$
14,679

(a)
We include the operating performance for hotels in continuing operations in our Consolidated Statements of Operations. However, for purposes of our non-GAAP reporting metrics, we have excluded the results of these hotels to provide a meaningful same-store comparison.
(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.


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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 20

Reconciliation of Forecasted Net Income Attributable to FelCor to Forecasted Adjusted FFO
and Adjusted EBITDA
(in millions, except per share data)
 
Full Year 2016 Guidance
 
Low
 
High
 
Dollars
 
Per Share Amount(a)
 
Dollars
 
Per Share Amount(a)
Net income attributable to FelCor(b)
$
44.0

 
 
 
$
48.8

 
 
Preferred dividends
(25.1
)
 
 
 
(25.1
)
 
 
Net income attributable to FelCor common stockholders
18.9

 
$
0.13

 
23.7

 
$
0.17

Depreciation(c)
109.8

 
 
 
114.5

 
 
Loss on sale of assets
0.7

 
 
 
0.7

 
 
FFO
$
129.4

 
$
0.92

 
$
138.9

 
$
0.99

Abandoned project costs
0.2

 
 
 
0.2

 
 
Pre-opening costs
0.1

 
 
 
0.1

 
 
Variable stock compensation
0.8

 
 
 
0.8

 
 
Adjusted FFO
$
130.5

 
$
0.93

 
$
140.0

 
$
0.99

 
 
 
 
 
 
 
 
Net income attributable to FelCor(b)
$
44.0

 
 
 
$
48.8

 
 
Depreciation(c)
109.8

 
 
 
114.5

 
 
Interest expense(c)
76.6

 
 
 
81.1

 
 
Income taxes
1.3

 
 
 
1.3

 
 
Preferred distributions - consolidated joint venture
1.3

 
 
 
1.3

 
 
EBITDA
$
233.0

 
 
 
$
247.0

 
 
Loss on sale of assets
0.7

 
 
 
0.7

 
 
Abandoned project costs
0.2

 
 
 
0.2

 
 
Pre-opening costs
0.1

 
 
 
0.1

 
 
Amortization of fixed stock and directors’ compensation
7.2

 
 
 
7.2

 
 
Variable stock compensation
0.8

 
 
 
0.8

 
 
Adjusted EBITDA
$
242.0

 
 
 
$
256.0

 
 
(a)
Weighted average shares are 140.9 million.
(b)
Excludes any gains or losses on future asset or capital transactions.
(c)
Includes pro rata portion of unconsolidated entities.

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 21


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 Generally Accepted Accounting Principles (“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 Funds From Operations (“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.
Earnings Before Interest, Taxes, Depreciation and Amortization (“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 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.

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 22


•
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.
•
Other expenses and costs - From time to time, we periodically incur expenses or transaction costs that are not indicative of ongoing operating performance. Such costs include, but are not limited to, conversion costs, acquisition costs, pre-opening costs, severance costs and certain non-cash adjustments. We exclude these costs from the calculation of Adjusted FFO and Adjusted EBITDA.

•
Variable stock compensation - We exclude the cost associated with our variable stock compensation. This cost is subject to volatility related to the price and dividends of our common stock that does not necessarily correspond to our operating performance.
In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale of depreciable assets and impairment losses because including them in EBITDA is inconsistent with reporting 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. We also exclude the amortization of our fixed stock and directors’ compensation, which is included in corporate expenses and is not separately stated on our statements of operations. Excluding amortization of our fixed stock and directors’ compensation maintains consistency with the EBITDA definition.
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 in a manner consistent with Adjusted EBITDA, however, we also eliminate all revenues and expenses from continuing operations not directly associated with hotel operations, including other income and corporate-level expenses. We eliminate these additional items because we believe property-level results provide investors with supplemental information regarding the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis. 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.

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FelCor Lodging Trust Incorporated First Quarter 2016 Operating Results
April 26, 2016
Page 23


Use and Limitations of Non-GAAP Measures
We 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 hotel 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. As we present them, these non-GAAP financial measures may not be comparable to similar non-GAAP financial measures as presented 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. We compensate 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. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

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FelCor Lodging Trust Inc Reports