FCH Felcor Lodging Trust Incorporated (delisted)

IRVING, Texas, Jan. 25 /PRNewswire-FirstCall/ -- FelCor Lodging Trust Incorporated (NYSE:FCH), one of the nation's largest hotel real estate investment trusts (REITs), today announced that it has executed an agreement modifying the current management agreements covering all FelCor-owned hotels managed by InterContinental Hotels Group ("IHG"). This agreement will enable the Company to complete its repositioning program and create the "New FelCor." Agreement Highlights: * FelCor will retain 17 IHG-managed Holiday Inn hotels located in highly desirable markets that are primarily in urban locations and mostly located in the Northeast, East Coast and California. * Non-strategic IHG-managed hotels identified for sale encompass all of FelCor's Holiday Inn(R) hotels that are located in secondary and tertiary markets, as well as 10 hotels in Texas. * Elimination of any potential liquidated damages and any reinvestment requirement with respect to hotels previously sold, 31 IHG-managed hotels now identified for sale, and one Crowne Plaza(R) hotel to be converted to another brand. * FelCor will complete special capital plans totaling approximately $50 million at 11 of the 17 retained hotels, designed to maximize the value of these hotels. * Management agreements on the 17 retained hotels will be extended to 2025, and include a new management performance standard and restructured incentive fees. * Hospitality Properties Trust ("HPT") purchased seven of the 31 IHG- managed hotels identified for sale for $160 million effective January 20. "We are pleased that we found a solution with IHG that meets both of our strategic objectives," said Thomas J. Corcoran, Jr., FelCor's President and CEO. "We have now accomplished our two primary strategic objectives outlined at the beginning of 2005: to amend the IHG management agreement and reinstate a common dividend." The completion of the agreement with IHG enables FelCor to sell its non- strategic hotels and use the proceeds to reduce debt and invest in high return-on-investment capital projects at FelCor's remaining core hotels. The New FelCor will become a lower-levered company with a much stronger and fully renovated portfolio. FelCor's repositioned portfolio will provide a solid platform for future growth in today's strong Revenue Per Available Room ("RevPAR") environment. The New FelCor: * New FelCor will own 90 consolidated hotels, with 81 percent of its Hotel Earnings Before Interest, Taxes, Depreciation and Amortization ("Hotel EBITDA") from hotels in the upper upscale segment, that are located primarily in Top 25 and resort markets. * The average Hotel EBITDA per room for the 90 core hotels is almost three times higher than the Company's non-strategic hotels for the Trailing Twelve Months ("TTM") ended September 30, 2005. * Hotel EBITDA growth for the TTM ended September 30, 2005, for the 90 core hotels was 15 percent, as compared to only one percent for the non-strategic hotels. * Hotel EBITDA margins were 27 percent for the 90 core hotels compared to only 15 percent for the non-strategic hotels. The pro forma TTM ended September 30, 2005, leverage ratio is reduced from 6.5 times to 5.8 times. * High return capital projects should provide a boost to FelCor's future Hotel EBITDA growth. Repositioning: FelCor has now identified 38 non-strategic hotels for sale. These 38 hotels are located primarily in secondary and tertiary markets, including Texas and Atlanta, Georgia, where the Company has an excess concentration of hotels. Certain elements of FelCor's strategy include: * The sale of 11 hotels previously identified as non-strategic, including seven IHG-managed hotels. * The sale of 24 additional IHG-managed hotels, including the seven hotels sold to HPT. * The sale of three additional hotels not managed by IHG. * Total proceeds from hotel sales are expected to be between $500 and $550 million representing an EBITDA multiple of between 13 and 14 times TTM Hotel EBITDA. * The Crowne Plaza in San Francisco at Union Square will be converted to another brand by the end of 2006. * In connection with FelCor's agreement with IHG, seven hotels were sold to HPT. These high-quality hotels, which will continue to be managed by IHG, consist of five Crowne Plaza hotels, one Holiday Inn hotel and one Staybridge Suites(R) hotel. Six of these hotels are located in markets where FelCor has an excess concentration of hotels. * In connection with this repositioning, FelCor will record an impairment charge of approximately $260 million in the fourth quarter of 2005, associated with the amendment of the IHG agreements and the decision to sell additional non-strategic hotels. Although the Company is selling 31 percent of its rooms, it is only selling 15 percent of its Hotel EBITDA. The hotels to be sold have significantly lower RevPAR and Hotel EBITDA margins than FelCor's 90 core hotels. Following the sale of the 38 hotels, New FelCor will have significantly lower exposure to markets with low barriers to entry, such as Atlanta, Dallas, Houston and Omaha and will be more geographically diverse with no market contributing more than six percent of EBITDA. The hotels will be marketed through exclusive broker arrangements that are listed on the Company's Web site at http://www.felcor.com/ . FelCor's Consolidated Portfolio Summary Non-Strategic Existing FelCor Hotels New FelCor Hotel count 128 38 90 Room count 36,875 11,338 25,537 Brands (Hotel Count): Embassy Suites Hotels(R) 55 2 53 Doubletree(R) 10 3 7 Hilton(R) 2 0 2 Sheraton(R)/Westin(R) 11 1 10 Holiday Inn 34 17 17 Crowne Plaza (A) 12 11 0 Other (A) 4 4 1 Total 128 38 90 (A) Assumes the conversion of one Crowne Plaza to another brand Operating Statistics (TTM ended September 30, 2005): RevPAR $71 $48 $82 Hotel EBITDA (in millions) $294 $39 $255 Hotel EBITDA per room $8,000 $3,400 $10,000 Hotel EBITDA margin 24.6% 14.8% 27.4% Hotel EBITDA growth 12.6% 0.6% 14.7% "After selling the hotels and funding our capital improvement program, we will have a much stronger portfolio made up of high quality real estate that is more geographically diversified," added Mr. Corcoran. "We are focused on maximizing our internal growth and this is an important step in accomplishing this goal. We expect strong future EBITDA growth with a higher return on invested capital which should enhance shareholder value." Use of Proceeds/Capitalization: Total proceeds from the 38 non-strategic hotels identified for sale are expected to be between $500 and $550 million, which represents a TTM net operating income capitalization rate of 4.7 to 5.1 percent. The asset sales are expected to occur over the next 18 months. The proceeds from asset sales will be used primarily to invest in capital improvement projects at FelCor's core hotels and to pay down debt. FelCor will use a majority of the proceeds from hotel sales to pay down debt of approximately $400 million. FelCor's leverage, as measured by Consolidated Debt to Adjusted EBITDA, will improve on a pro forma basis for the TTM from 6.5 times to 5.8 times from the anticipated reduction of debt. Leverage will be further reduced by Hotel EBITDA growth in the Company's core portfolio going forward. The Company will use the remaining estimated sales proceeds of $100 to $150 million to fund capital improvement projects to be completed over the next 18 months. These projects are in addition to maintenance capital expenditures of approximately five percent of annual hotel revenues. These capital projects consist of adding meeting space and completing major renovations to hotels where additional rate and occupancy can be captured. For the 10 hotels where major renovations, totaling $30 million, were completed in 2004, Hotel EBITDA increased approximately 30 percent in 2005. During 2005, the Company completed major renovations at eight hotels, totaling $26 million, and expects Hotel EBITDA growth in 2006 to be significantly better than the average of the remaining hotels. Additionally, FelCor has re-established an unsecured line of credit, that will allow the Company to use the approximately $100 million of its excess cash to fund additional high-return capital projects. This credit facility, in the amount of $125 million, was placed by J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. and will become effective upon certain conditions. FelCor expects cash flow from operations to be sufficient to cover the payment of a dividend on its common stock, its full preferred stock dividends as well as the funding of maintenance capital expenditures of five percent of annual hotel revenues. Use of Proceeds (in millions): Estimated proceeds from hotel sales (A): $ 525 Less capital improvement projects (125) Total available for debt reduction $ 400 (A) Represents the midpoint of expected sales proceeds Pro Forma Capital Structure (dollars in millions): Non-Strategic New Actual Hotels FelCor Pro Forma Consolidated Debt at September 30, 2005 $1,709 $400 (A) $1,309 Adjusted EBITDA TTM ended September 30, 2005 $ 265 $ 39 $ 226 Consolidated Debt to Adjusted EBITDA 6.5x 5.8x (A) Assuming the midpoint of expected sales proceeds "With the meaningful debt reduction, our balance sheet will be much stronger," said Richard A. Smith, FelCor's Executive Vice President and Chief Financial Officer. "This will position us for future external growth where and when the opportunities fit our strategic objectives to own upscale hotels in markets with high barriers to entry that improve our return on invested capital, overall portfolio quality and long term EBITDA growth rates at returns in excess of our long-term weighted average cost of capital." FelCor's IHG-Branded Portfolio: The 17 core Holiday Inn branded hotels being retained by FelCor (including six Holiday Inn Select-branded hotels) are comprised of high quality hotels located on very desirable real estate. FelCor also will retain its unconsolidated interest in the Chateau LeMoyne hotel located in New Orleans that is managed by IHG. These hotels have higher average Hotel EBITDA margins than the average of FelCor's current upper upscale, full service hotels. In addition, these hotels earn more than twice the EBITDA per room generated by the non-strategic hotels to be sold. FelCor's IHG-Branded Portfolio Summary (A) Core Holiday Non-Strategic Inn Hotels Hotels Hotel count 17 31 Rooms count 6,300 9,372 Operating Statistics (TTM ended September 30, 2005): RevPAR $70 $49 Hotel EBITDA per room $7,300 $3,600 Hotel EBITDA margin 22.6% 15.1% (A) Excludes one Crowne Plaza that is to be converted to another brand The 17 core Holiday Inn hotels are as follows: Boston, MA -- Beacon Hill Holiday Inn Select Charleston, SC -- Mills House Holiday Inn Cocoa Beach, FL -- Oceanfront Holiday Inn Houston, TX -- Medical Center Holiday Inn Nashville, TN -- Opryland Holiday Inn Select New Orleans, LA -- French Quarter Holiday Inn Orlando, FL -- Airport Holiday Inn Select Orlando, FL -- International Drive Holiday Inn Philadelphia, PA -- Historic District Holiday Inn Pittsburgh, PA -- University Center Holiday Inn Select San Diego, CA -- On the Bay Holiday Inn San Francisco, CA -- Fisherman's Wharf Holiday Inn Santa Barbara, CA -- Holiday Inn Santa Monica Beach, CA -- At the Pier Holiday Inn San Antonio, TX -- Airport Holiday Inn Select Toronto, Ontario, Canada -- Airport Holiday Inn Select Toronto, Ontario, Canada -- Yorkdale Holiday Inn A PowerPoint presentation, that provides additional detail regarding the agreement with IHG and the "New FelCor," can be found on FelCor's Web site under the Presentations tab on the Investor Relations page. Fourth Quarter 2005 Operating Statistics: RevPAR at FelCor's consolidated hotels owned at December 31, 2005, increased 16.2 percent during the fourth quarter and 10.8 percent year-to- date, compared to prior year. RevPAR continues to be robust throughout the country and was especially strong in Atlanta and Texas, following last year's hurricanes. FelCor is one of the nation's largest hotel REITs and the nation's largest owner of full service, all-suite hotels. FelCor's portfolio is comprised of 117 consolidated hotels, located in 28 states and Canada. FelCor's portfolio includes 65 upper upscale, all-suite hotels, and FelCor is the largest owner of Embassy Suites Hotels and Doubletree Guest Suites(R) hotels. FelCor's hotels are flagged under global brands such as Embassy Suites Hotels, Doubletree, Hilton, Sheraton, Westin, Crowne Plaza and Holiday Inn. FelCor has a current market capitalization of approximately $3.3 billion. Additional information can be found on the Company's Web site at http://www.felcor.com/ . 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. 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 currently anticipated. General economic conditions, including the anticipated continuation of the current economic recovery, the impact of U.S. military involvement in the Middle East and elsewhere, future acts of terrorism, the impact on the travel industry of increased fuel prices and security precautions, the impact that the bankruptcy of additional major air carriers may have on our revenues and receivables, the availability of capital, the ability to effect sales of non-strategic hotels at anticipated prices, 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. Non-GAAP Financial Measures We refer in this release to certain "non-GAAP financial measures." These measures, including EBITDA, 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, based upon the TTM ended September 30, 2005 and 2004. Immediately following the reconciliations, we include a discussion of why we believe these non-GAAP measures are useful supplemental measures of our performance and of the limitations upon such measures. Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (in thousands) Nine Months Ended Three Months Ended TTM Ended September 30, 2005 December 31, 2004 September 30, 2005 Net income (loss) $13,595 $(10,770) $2,825 Depreciation expense 98,896 33,069 131,965 Minority interest in FelCor Lodging LP (1,055) (974) (2,029) Interest expense 107,661 36,095 143,756 Amortization expense 2,171 1,330 3,501 EBITDA $221,268 $58,750 $280,018 Charge-off of deferred financing costs --- 866 866 Loss (gain) on early extinguishment of debt (2,538) 4,983 2,445 Asset disposition costs 1,300 --- 1,300 Gain on sale of depreciable assets (9,624) (17,306) (26,930) Impairment loss 1,860 5,262 7,122 Adjusted EBITDA $212,266 $52,555 $264,821 Nine Months Ended Three Months Ended TTM Ended September 30, 2004 December 31, 2003 September 30, 2004 Net loss $(89,357) $(142,933) $(232,290) Depreciation expense 97,683 33,190 130,873 Minority interest in FelCor Lodging LP (5,707) (7,712) (13,419) Interest expense 121,968 44,165 166,133 Amortization expense 1,615 565 2,180 EBITDA $126,202 $(72,725) $53,477 Charge-off of deferred financing costs 6,094 --- 6,094 Loss (gain) on early extinguishment of debt 39,233 --- 39,233 Asset disposition costs 4,900 --- 4,900 Gain on sale of depreciable assets (2,116) (3,444) (5,560) Gain on swap termination (1,005) --- (1,005) Impairment loss 33,027 124,983 158,010 Minority interest share of impairment loss --- (1,770) (1,770) Adjusted EBITDA $206,335 $47,044 $253,379 Hotel EBITDA, Hotel EBITDA Margins and Hotel Operating Expenses TTM Ended September 30, 2005 (in thousands) Nine Months Three Months TTM Ended Ended Ended September 30, December 31, September 30, 2005 2004 2005 Hotel EBITDA and Hotel EBITDA Margin: Total revenue (A) $ 924,867 $ 271,632 $ 1,196,499 Retail space rental and other revenue (1,908) (130) (2,038) Hotel operating revenue 922,959 271,502 1,194,461 Hotel operating expenses (688,830) (211,359) (900,189) Hotel EBITDA $ 234,129 $ 60,143 $ 294,272 Hotel EBITDA margin 25.4% 22.2% 24.6% Hotel Operating Expenses: Total operating expenses (A) $ 830,524 $ 256,483 $ 1,087,007 Unconsolidated taxes, insurance and lease expense 4,709 1,577 6,286 Consolidated hotel lease expense (42,761) (12,256) (55,017) Corporate expenses (14,108) (5,506) (19,614) Depreciation (89,534) (28,939) (118,473) Hotel operating expenses $ 688,830 $ 211,359 $ 900,189 Hotel EBITDA, Hotel EBITDA Margins and Hotel Operating Expenses TTM Ended September 30, 2004 (in thousands) Nine Months Three Months TTM Ended Ended Ended September 30, December 31, September 30, 2004 2003 2004 Hotel EBITDA and Hotel EBITDA Margins: Total revenue (A) $ 860,083 $ 257,129 $ 1,117,212 Retail space rental and other revenue (2,590) (184) (2,774) Hotel operating revenue 857,493 256,945 1,114,438 Hotel operating expenses (648,408) (204,694) (853,102) Hotel EBITDA $ 209,085 $ 52,251 $ 261,336 Hotel EBITDA margin 24.4% 20.3% 23.5% Hotel Operating Expenses: Total operating expenses (A) $ 778,725 $ 245,228 $ 1,023,953 Unconsolidated taxes, insurance and lease expense 4,160 2,168 6,328 Consolidated hotel lease expense (39,005) (11,527) (50,532) Corporate expenses (11,529) (3,776) (15,305) Depreciation (83,943) (27,399) (111,342) Hotel operating expenses $ 648,408 $ 204,694 $ 853,102 (A) Total revenue and total operating expenses for the three months ended December 31, 2004 and 2003 have been adjusted from previously issued financial statements to reclassify the operating activity of disposed hotels from continuing operations to discontinued operations consistent with the nine months ended September 30, 2005 and 2004 presentation. Reconciliation of Adjusted EBITDA to Hotel EBITDA (in thousands) TTM Ended September 30, 2005 2004 Adjusted EBITDA $264,821 $253,379 Retail space rental and other revenue (2,038) (2,774) Adjusted EBITDA from discontinued operations (4,623) (15,805) Equity in income from unconsolidated subsidiaries (excluding interest and depreciation expense) (28,698) (34,122) Minority interest in other partnerships (excluding interest and depreciation expense) 1,621 4,996 Consolidated hotel lease expense 55,017 50,532 Unconsolidated taxes, insurance and lease expense (6,286) (6,328) Interest income (3,547) (2,706) Hurricane loss 2,309 2,125 Corporate expenses (excluding amortization expense) 16,113 13,125 Gain on sale of land (417) (1,086) Hotel EBITDA $294,272 $261,336 Reconciliation of Net Income (Loss) to Hotel EBITDA (in thousands) TTM Ended September 30, 2005 2004 Net income (loss) $2,825 $(232,290) Discontinued operations (24,378) 112,720 Equity in income from unconsolidated entities (9,658) (15,810) Minority interests (3,946) (8,362) Consolidated hotel lease expense 55,017 50,532 Unconsolidated taxes, insurance and lease expense (6,286) (6,328) Interest expense, net 131,466 154,096 Charge-off of deferred financing costs 866 6,094 Impairment loss 5,831 37,730 Hurricane loss 2,309 2,125 Loss on early extinguishment of debt 4,983 39,233 Gain on swap termination --- (1,005) Corporate expenses 19,614 15,305 Depreciation 118,473 111,342 Retail space rental and other revenue (2,038) (2,774) Gain on sale of assets (806) (1,272) Hotel EBITDA $294,272 $261,336 Reconciliation of Ratio of Operating Income to Total Revenue to Hotel EBITDA Margin TTM Ended September 30, 2005 2004 Ratio of operating income to total revenue 9.2% 8.3% Retail space and rental and other revenue (0.2) (0.2) Unconsolidated taxes, insurance and lease expense (0.5) (0.6) Consolidated hotel lease expense 4.6 4.6 Corporate expenses 1.6 1.4 Depreciation 9.9 10.0 Hotel EBITDA margin 24.6% 23.5% Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company's operations. These supplemental measures, including EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a hotel company's performance or the performance of individual hotels and should be considered along with, but not as an alternative to, net income as a measure of our operating performance. EBITDA EBITDA is a commonly used measure of performance in many industries. We define EBITDA as net income or loss (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 EBITDA We adjust EBITDA when evaluating our performance because management believes that the exclusion of certain additional recurring and non-recurring items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA and Hotel EBITDA when combined with GAAP net income and EBITDA, is beneficial to an investor's better understanding of our operating performance. * Gains and losses related to early extinguishment of debt and interest rate swaps -- We exclude gains and losses related to early extinguishment of debt and interest rate swaps from 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. * Impairment losses -- We exclude the effect of impairment losses and gains or losses on disposition of assets in computing Adjusted EBITDA because we believe that including these is not consistent with reflecting the ongoing performance of our remaining assets. Additionally, we believe that impairment charges and gains or losses on disposition of assets represent accelerated depreciation, or excess depreciation, and depreciation is excluded from the definition of EBITDA. * Cumulative effect of a change in accounting principle -- Infrequently, the Financial Accounting Standards Board promulgates new accounting standards that require the consolidated statements of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments in computing Adjusted EBITDA because they do not reflect our actual performance for that period. In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale of assets because we believe that including them in EBITDA is not consistent with reflecting the ongoing performance of our remaining assets. Additionally, the gain or loss on sale of depreciable assets represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA. Hotel EBITDA and Hotel EBITDA Margin Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the industry and give investors a more complete understanding of the operating results over which our individual hotels and operating managers have direct control. We believe that Hotel EBITDA and Hotel EBITDA margin is useful to investors by providing greater transparency with respect to two significant measures used by us in our financial and operational decision-making. Additionally, these measures facilitate comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin by eliminating corporate-level expenses, depreciation and expenses related to our capital structure. We eliminate corporate-level costs and expenses because we believe property-level results provide investors with supplemental information with respect to the ongoing operating performance of our hotels and the effectiveness of management in running our business on a property-level basis. We eliminate depreciation and amortization, even though they are property-level expenses, because we do not believe that these non- cash expenses, which are based on historical cost accounting for real estate assets and implicitly assume that the value of real estate assets diminish predictably over time, accurately reflect an adjustment in the value of our assets. To enhance the comparability of our hotel-level operating results with other hotel REITs and hotel owners, we are now disclosing Hotel EBITDA and Hotel EBITDA Margin rather than the Hotel Operating Profit and Hotel Operating Margin previously disclosed. The purpose of the change is to remove any distortion created by unconsolidated entities and to reflect hotel-level operations as they were fully consolidated. To reflect this, we eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by minority interest expense 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 hotels. Use and Limitations of Non-GAAP Measures Our management and Board of Directors use EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, as presented by us, may not be comparable to EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin as calculated by other real estate companies. These measures do not reflect certain expenses that we incurred and will incur, such as depreciation, interest and capital expenditures. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the 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. Neither should EBITDA or Adjusted EBITDA, be considered as measures of our liquidity or indicative of funds available for our cash needs, including our ability to make cash distributions. EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin reflect additional ways of viewing our operations that we believe when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on any single financial measure. FCMN Contact: mhildebrand@felcor.com DATASOURCE: FelCor Lodging Trust Incorporated CONTACT: Thomas J. Corcoran, Jr., President and CEO, +1-972-444-4901, or , or Richard A. Smith, Executive Vice President and CFO, +1-972-444-4932, or , or Monica L. Hildebrand, Vice President of Communications, +1-972-444-4917, or , or Stephen A. Schafer, Vice President of Investor Relations, +1-972-444-4912, or , all of FelCor Lodging Trust Incorporated Web site: http://www.felcor.com/

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