FCH Felcor Lodging Trust Incorporated (delisted)

FelCor Lodging Trust Incorporated (NYSE: FCH) today reported operating results for the first quarter ended March�31, 2008. Highlights: Increased Revenue per Available Room (�RevPAR�) by 7.9 percent at our 61 hotels where renovations had been completed for at least a full quarter. RevPAR increased 4.6�percent for our 85 consolidated hotels. Exceeded operating expectations for our 61 hotels where renovations had been completed for at least a full quarter. Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for these hotels exceeded budget by 2.7�percent and are exceeding our targeted 12 percent return on the guest impact portion of total capital expenditures. Completed renovations at 14 more hotels. We have now completed renovations at 75 hotels (approximately 90 percent of the hotels in our portfolio). During the first quarter, we had 19 hotels under renovation. While the first quarter performance was affected by renovation disruption, we are now on a �normal� renovation schedule. Completed three redevelopment projects: a 35,000 square-foot convention center built adjacent to our Hilton - Myrtle Beach Resort, a spa addition at our Embassy Suites Hotel - Deerfield Beach Resort & Spa, and additional meeting space at our Doubletree Guest Suites at Doheny Beach. First Quarter Operating Results: In the first quarter, RevPAR at our 85 consolidated hotels increased 4.6�percent and Average Daily Rate (�ADR�) increased 1.7�percent compared to the same period in 2007. RevPAR at our 61 hotels where renovations had been completed for at least a full quarter increased 7.9 percent compared to the same period in 2007. At our 24 remaining hotels, RevPAR decreased 2.2�percent largely from a 5.8�percent decrease in occupancy, which is attributed principally to renovation-related disruptions. �With 90 percent of our renovations complete, we are now on a normal renovation schedule. In addition, we continue to earn the returns we expected on the renovations,� said Richard A. Smith, FelCor�s President and Chief Executive Officer. �We are pleased with our first quarter results, which were in line with our expectations. We are also pleased with the performance of our recent acquisitions, which exceeded their Hotel EBITDA budgets. Despite the economic headwinds and low visibility, we have not yet seen a widespread moderation in demand. However, we are cautious with regard to the remainder of the year and have worked with our managers to develop contingency plans for each of our hotels and continue to monitor travel trends very carefully.� Our Same-Store Adjusted Funds from Operations (�FFO�) increased to $32.1�million, or $0.51�per share, compared to $28.3�million, or $0.45 per share, for the same period in 2007. Our Adjusted FFO was $32.1�million, a $635,000 increase from the same period in 2007. Adjusted FFO per share was at the high end of our expectations. Our Same-Store Adjusted EBITDA increased to $71.2�million, compared to $68.1�million for the same period in 2007, an increase of four percent. Our Adjusted EBITDA (including sold hotels) increased to $71.2�million in the first quarter, compared to $68.2�million for the same period in 2007. Our Same-Store Hotel EBITDA increased to $82.2�million, compared to $78.4�million in the same period in 2007, an increase of five percent. Same-Store Hotel EBITDA margin was 28.2 percent, which exceeded our expectations and represented an 18�basis point decrease compared to the same period in 2007. Net loss applicable to common stockholders was $22.2�million, or $0.36 per share, compared to net income applicable to common stockholders of $19.5�million, or $0.32�per share, for the same period in 2007. Our current year loss included a $17.1�million impairment charge related to two hotels that are candidates for sale. The income for the same period in 2007 included $3.3�million gains from sale of condominiums, $11.2�million gain on sale of an unconsolidated hotel, $6.0�million gains on sale of hotels in discontinued operations, and $3.6�million operating income from hotels in discontinued operations. EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Same-Store Hotel EBITDA, Same-Store Hotel EBITDA margin, FFO, Adjusted FFO and Same-Store Adjusted FFO are all non-GAAP financial measures. See our discussion of �Non-GAAP Financial Measures� beginning on page�8 for a reconciliation of each of these measures to our net income (loss) and for information regarding the use, limitations and importance of these non-GAAP financial measures. Renovation Program Update: During the first quarter, 19 hotels were under renovation. We completed renovations at 14 of those hotels. Since we started the program, we have completed renovations at 75 hotels, which comprise approximately 90 percent of our hotels. We expect to complete the remaining renovations during 2008. We had approximately 35,000 room nights (or approximately two percent of our portfolio) out of service in the first quarter of 2008, compared to 85,000 during the fourth quarter of 2007. As of the end of the first quarter, we are now on a �normal� renovation schedule with only seven hotels under renovation during May. We spent $48.4�million on renovations and redevelopment projects at our hotels during the first quarter, including our pro rata share of joint venture expenditures. Overall, our renovated hotels are exceeding targeted 12 percent returns on the guest impact portion of total capital expenditures. Similarly, during the first quarter, RevPAR, Hotel EBITDA and Hotel EBITDA margin exceeded budget for these hotels. For the 61 hotels where our renovations had been completed for at least a full quarter, RevPAR increased 7.9�percent for the first quarter, compared to the prior year period. For these same hotels, Hotel EBITDA grew ten�percent compared to prior year, which was 2.7 percent greater than budget. Development: We continue to progress on our redevelopment projects. We recently completed the new 35,000 square-foot convention center adjacent to our Hilton - Myrtle Beach Resort, the addition of a spa at our Embassy Suites Hotel - Deerfield Beach Resort & Spa and the additional meeting space at our Doubletree Guest Suites at Doheny Beach, California. The redevelopment of our hotel on San Francisco�s Union Square to a Marriott remains on schedule to be completed by early 2009. We are currently in various planning and entitlement stages at our remaining projects. Portfolio Recycling: As part of our long-term strategic plan, we continually examine each hotel in our portfolio to address issues of market supply, ongoing capital needs and concentration of risk. Consistent with this plan, we have identified six hotels as candidates for sale. We recorded an impairment charge of $17.1�million with respect to two of these hotels, but we expect an aggregate gain from the sale of the six hotels. Capital Structure: At March 31, 2008, we had $1.5�billion of consolidated debt outstanding with a weighted average life of four years and a weighted average interest rate of 6.3 percent. As a result of the recent reduction in LIBOR, our weighted average interest rate is nearly 100 basis points lower than at the end of 2007. Our cash and cash equivalents totaled $71.3�million at March�31, 2008. We have no material debt maturities in 2008. �As we continue to recycle our portfolio, we will evaluate the use of proceeds from asset sales with an eye toward managing our balance sheet, maintaining flexibility and liquidity, and maximizing our capacity as we face an uncertain economic environment. We have no major debt maturities until 2009; however, we continue to look for ways to improve our balance sheet,� said Andrew J. Welch, FelCor�s Executive Vice President and Chief Financial Officer. �From an operational perspective, we expect RevPAR and Hotel EBITDA margin growth to accelerate going forward as we earn returns from the completed renovations, recapture displaced business and complete our redevelopment projects, including Union Square. As a result, we expect our dividend coverage to improve in 2009.� 2008 Guidance: Our operating expectations for 2008 remain unchanged, as demand levels and pricing have been consistent with our expectations. Our guidance assumes that our portfolio will have an increase in RevPAR significantly higher than the industry average. RevPAR at our 85 consolidated hotels increased 6.6�percent in April 2008, compared to the same period in 2007. The benefits of our renovation program, including achieving the expected returns from our capital investment, are driving the relatively high increase in RevPAR. As a result, we currently anticipate: Portfolio RevPAR growth between 6.5 and 8.5 percent for the full year and 7.0 and 9.0 percent for the second quarter; Adjusted EBITDA to be between $293�million and $301�million for the full year and between $87�million and $89�million for the second quarter; Adjusted FFO per share to be between $2.29 and $2.42 for the full year and between $0.76 and $0.80 for the second quarter; Net Income to be between $16�million and $24�million (including the $17.1�million first quarter impairment charge) for the full year and between $22�million and $24�million for the second quarter; Hotel EBITDA margins to increase between 50 and 100 basis points for the full year; Capital expenditures, including redevelopment projects, of $150�million; and Gain of $400,000 from the sale of three condominium units during the year. Second quarter guidance for Adjusted FFO per share, assumes the conversion of our series A preferred stock because it is more dilutive when our Adjusted FFO per share exceeds $0.63 per share. This increases fully diluted shares outstanding to 73.2 million for the quarter. Without the conversion, our second quarter Adjusted FFO per share guidance would be $0.79 to $0.83. Our full year guidance does not exceed the annual conversion threshold; therefore, fully diluted shares outstanding for the full year are assumed to be 63.2 million (i.e., our series A preferred stock is not deemed converted) for purposes of computing full year Adjusted FFO per share. FelCor, a real estate investment trust, is the nation�s largest owner of upper-upscale, all-suite hotels. FelCor�s portfolio is comprised of 85 consolidated hotels and resorts, located in 23 states and Canada. FelCor�s portfolio consists primarily of upper-upscale hotels, which are flagged under global brands such as Embassy Suites Hotels, Doubletree, Hilton, Renaissance, Sheraton, Westin and Holiday Inn. Additional information can be found on the Company�s Web site at www.felcor.com. We invite you to listen to our first quarter earnings Conference Call on Thursday, May�8, 2008, at 10:00�a.m. (Central Time). The conference call will be Web cast simultaneously via the Internet on FelCor�s Web site at www.felcor.com. Interested investors and other parties who wish to access the call should go to FelCor�s Web site and click on the conference call microphone icon on either the �Investor Relations� or �News� pages. A telephonic replay will be available from Thursday, May�8, 2008, at 1:00�p.m. (Central Time), through Tuesday, May�13, at 1:00�p.m. (Central Time), by dialing 800-642-1687 (conference ID # 44705989). A recording of the call will also be archived and available at 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. 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,� �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. General economic conditions, operating risks associated with the hotel business, 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 availability of capital, the ability to execute our renovation program on budget in a timely manner, the cyclical nature of the real estate markets, 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. Consolidated Statements of Operations (in thousands, except per share data) � � Three Months Ended March 31, 2008 � 2007 Revenues: Hotel operating revenue: Room $ 230,132 $ 204,323 Food and beverage 46,508 31,773 Other operating departments 14,907 12,445 Other revenue � 328 � 131 Total revenues � 291,875 � 248,672 � Expenses: Hotel departmental expenses: Room $ 54,651 $ 48,783 Food and beverage 35,446 24,535 Other operating departments 7,029 4,947 Other property related costs 77,125 68,557 Management and franchise fees 15,902 13,123 Taxes, insurance and lease expense 29,304 29,229 Corporate expenses 6,827 6,787 Depreciation and amortization 33,768 25,051 Impairment loss 17,131 - Other expenses � 933 � 22 Total operating expenses � 278,116 � 221,034 � Operating income 13,759 27,638 Interest expense, net � (26,003 ) � (22,872 ) Income (loss) before equity in income from unconsolidated entities, minority interests and gain on sale of assets � (12,244 ) 4,766 � Equity in income (loss) from unconsolidated entities (622 ) 12,771 Gain on sale of condominiums - 3,281 Minority interests � 406 � 37 Income (loss) from continuing operations (12,460 ) 20,855 Discontinued operations � (13 ) � 8,307 Net income (loss) (12,473 ) 29,162 Preferred dividends � (9,678 ) � (9,678 ) Net income (loss) applicable to common stockholders $ (22,151 ) $ 19,484 � Basic and diluted per common share data: Net income (loss) from continuing operations $ (0.36 ) $ 0.18 Net income (loss) $ (0.36 ) $ 0.32 Basic weighted average common shares outstanding � 61,714 � 61,374 Diluted weighted average common shares outstanding � 61,714 � 61,762 Cash dividends declared on common stock $ 0.35 $ 0.25 Discontinued Operations (in thousands) � � Discontinued operations include the results of operations of 11 hotels sold in 2007. Condensed financial information for the hotels included in discontinued operations is as follows: � Three Months Ended March 31, � 2008 � � � 2007 � Operating revenue $ - $ 15,498 Operating expenses � (13 ) � (11,879 ) Operating income (loss) (13 ) 3,619 Interest expense, net - (25 ) Gain on sale of hotels - 6,031 Loss on the early extinguishment of debt - (901 ) Minority interests � - � � (417 ) Income (loss) from discontinued operations (13 ) 8,307 Minority interest in FelCor LP - 182 Interest expense, net of minority interests � - � � 27 � EBITDA from discontinued operations (13 ) 8,516 Gain on sale of hotels - (6,031 ) Charges related to early extinguishment of debt, net of minority interests � - � � 811 � Adjusted EBITDA from discontinued operations $ (13 ) $ 3,296 � Selected Balance Sheet Data (in thousands) � � � March 31, December 31, 2008 2007 Investment in hotels $ 3,107,107 $ 3,094,521 Accumulated depreciation � (722,591 ) � (694,464 ) Investments in hotels, net of accumulated depreciation $ 2,384,516 $ 2,400,057 � Cash and cash equivalents $ 71,325 $ 57,609 Total assets $ 2,672,453 $ 2,683,835 Total debt $ 1,498,800 $ 1,475,607 Total stockholders� equity $ 962,672 $ 1,006,914 At March�31, 2008, we had an aggregate of 63,195,149 shares of FelCor common stock and 1,353,771 limited partnership units of FelCor Lodging Limited Partnership outstanding. Debt Summary (dollars in thousands) � � � EncumberedHotels Interest Rate atMarch 31, 2008 MaturityDate ConsolidatdDebt Line of credit(a) none L + 0.80 August 2011 $30,000 Senior term notes none 8.50(b) June 2011 299,225 Senior term notes none L + 1.875 December 2011 215,000 Other none L + 0.40 June 2008 4,799 Total line of credit and senior debt(c) 6.62 549,024 � Mortgage debt 12 hotels L + 0.93(d) November 2008(e) 250,000 Mortgage debt 7 hotels 6.57 June 2009-2014 88,617 Mortgage debt 7 hotels 7.32 March 2009 119,928 Mortgage debt 8 hotels 8.70 May 2010 165,060 Mortgage debt 6 hotels 8.73 May 2010 118,774 Mortgage debt 2 hotels L + 1.55(f) May 2009(g) 176,052 Mortgage debt 1 hotel L + 2.85 August 2008 15,500 Mortgage debt 1 hotel 5.81 July 2016 12,417 Other 1 hotel 9.17 August 2011 3,428 Total mortgage debt(c) 45 hotels 6.09 949,776 � Total 6.28% $1,498,800 (a) We have a borrowing capacity of $250�million on our line of credit. The interest rate on this line can range from 80 to 150 basis points over LIBOR, based on our leverage ratio as defined in our line of credit agreement. (b) The interest rate on these senior notes will increase to 9.0 percent if the credit rating on our senior debt is downgraded by Moody�s to B1 and Standard & Poor�s rating remains below BB-. (c) Interest rates are calculated based on the weighted average debt outstanding at March�31, 2008. (d) We have purchased an interest rate cap for this notional amount with a cap rate of 7.8 percent that expires in November�2008. (e) This loan provides us, at our sole discretion, three one-year extension options that permit the maturity to be extended to 2011. (f) We have purchased interest rate caps for $177�million aggregate notional amounts with cap rates of 6.25 percent, which expire in May 2009. (g) These loans provide us, at our sole discretion, three one-year extension options that permit the maturity to be extended to 2012. Debt Statistics at March 31, 2008 � Weighted average interest 6.28 % Fixed interest rate debt to total debt 53.9 % Weighted average maturity of debt 4 years Mortgage debt to total assets 35.5 % Non-GAAP Financial Measures We refer in this release to certain �non-GAAP financial measures.� These measures, including FFO, Adjusted FFO, Adjusted FFO per share, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Same-Store Hotel EBITDA and Same-Store 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. Reconciliation of Net Income (Loss) to FFO, Adjusted FFO and Same-Store Adjusted FFO (in thousands, except per share and unit data) � Three Months Ended March 31, 2008 � 2007 Dollars � Shares � Per Share Amount Dollars � Shares � Per Share Amount Net income (loss) $ (12,473 ) $ 29,162 Preferred dividends � (9,678 ) � (9,678 ) Net income (loss) applicable to common stockholders (22,151 ) 61,714 $ (0.36 ) 19,484 61,762 $ 0.32 Depreciation and amortization 33,768 - 0.55 25,051 - 0.41 Depreciation, unconsolidated entities and �� discontinued operations 3,549 - 0.06 2,863 - 0.05 Gain on sale of hotels - - - (6,031 ) - (0.10 ) Gain on sale of hotels in unconsolidated entities - - - (11,182 ) - (0.18 ) Minority interest in FelCor LP (477 ) 1,354 (0.02 ) 426 1,355 (0.02 ) Conversion of options and unvested restricted �� stock � - 126 � - � - - � - FFO 14,689 63,194 0.23 30,611 63,117 0.48 Abandoned projects - - - 22 - - Charges related to early extinguishment of debt, �� net of minority interests - - - 811 - 0.02 Impairment loss 17,131 - 0.27 - - - Conversion costs(a) � 259 - � 0.01 � - - � - Adjusted FFO 32,079 63,194 0.51 31,444 63,117 0.50 FFO from discontinued operations 13 - - (3,269 ) - (0.05 ) FFO from acquired hotels(b) - - - 3,385 - 0.05 Gain on sale of condominiums � - - � - � (3,281 ) - � (0.05 ) Same-Store Adjusted FFO $ 32,092 63,194 $ 0.51 $ 28,279 63,117 $ 0.45 (a) These costs relate to the conversion of our Hotel 480 Union Square in San Francisco to a Marriott. The conversion is expected to be completed by early 2009. (b) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and Same-Store Adjusted EBITDA (in thousands) � Three Months EndedMarch 31, 2008 � 2007 Net income (loss) $ (12,473 ) $ 29,162 Depreciation and amortization 33,768 25,051 Depreciation, unconsolidated entities and discontinued operations 3,549 2,863 Minority interest in FelCor Lodging LP (477 ) 426 Interest expense 26,549 24,118 Interest expense, unconsolidated entities and discontinued operations 1,596 1,574 Amortization of stock compensation � 1,265 � 1,407 EBITDA 53,777 84,601 Gain on sale of hotels - (6,031 ) Gain on sale of hotels in unconsolidated entities - (11,182 ) Abandoned projects - 22 Charges related to debt extinguishment, net of minority interests - 811 Impairment loss 17,131 - Conversion costs(a) � 259 � - Adjusted EBITDA 71,167 68,221 Adjusted EBITDA from discontinued operations 13 (3,296 ) EBITDA from acquired hotels(b) - 6,505 Gain on sale of condominiums � - � (3,281 ) Same-Store Adjusted EBITDA $ 71,180 $ 68,149 (a) These costs relate to the conversion of our Hotel 480 Union Square in San Francisco to a Marriott. The conversion is expected to be completed by early 2009. (b) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Same-Store Hotel EBITDA and Same-Store Hotel EBITDA Margin (dollars in thousands) � Three Months EndedMarch 31, 2008 � 2007 Total revenues $ 291,875 $ 248,672 Other revenue (328 ) (131 ) Revenue from acquired hotels(a) � - � 27,985 Same-Store hotel operating revenue 291,547 276,526 Same-Store hotel operating expenses � (209,382 ) � (198,098 ) Same-Store Hotel EBITDA $ 82,165 $ 78,428 Same-Store Hotel EBITDA margin 28.2% 28.4% (a) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Reconciliation of Same-Store Adjusted EBITDA to Same-Store Hotel EBITDA (in thousands) � Three Months EndedMarch 31, 2008 � 2007 Same-Store Adjusted EBITDA $ 71,180 $ 68,149 Other revenue (328 ) (131 ) Equity in income from unconsolidated subsidiaries (excluding interest and depreciation expense) (5,022 ) (6,404 ) Minority interest in other partnerships (excluding interest and depreciation expense) 570 125 Consolidated hotel lease expense 12,197 14,259 Unconsolidated taxes, insurance and lease expense (2,122 ) (1,703 ) Interest income (545 ) (1,247 ) Other expenses 673 - Corporate expenses (excluding amortization of stock compensation) � 5,562 � 5,380 Same-Store Hotel EBITDA $ 82,165 $ 78,428 (a) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Reconciliation of Net Income (Loss) to Same-Store Hotel EBITDA (in thousands) � Three Months EndedMarch 31, 2008 � 2007 Net income (loss) $ (12,473 ) $ 29,162 Discontinued operations 13 (8,307 ) EBITDA from acquired hotels(a) - 6,505 Equity in loss (income) from unconsolidated entities 622 (12,771 ) Minority interests (406 ) (37 ) Consolidated hotel lease expense 12,197 14,259 Unconsolidated taxes, insurance and lease expense (2,122 ) (1,703 ) Interest expense, net 26,003 22,872 Corporate expenses 6,827 6,787 Depreciation and amortization 33,768 25,051 Impairment loss 17,131 - Other expenses 933 - Abandoned projects - 22 Gain on sale of condominiums - (3,281 ) Other revenue � (328 ) � (131 ) Same-Store Hotel EBITDA $ 82,165 $ 78,428 (a) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Reconciliation of Ratio of Operating Income to Total Revenues to Same-Store Hotel EBITDA Margin � Three Months Ended March 31, 2008 � 2007 Ratio of operating income to total revenues 4.7 % 10.0 % Other revenue (0.1 ) - Revenue from acquired hotels(a) - 10.1 Unconsolidated taxes, insurance and lease expense (0.7 ) (0.6 ) Consolidated hotel lease expense 4.2 5.2 Other expenses 0.3 - Corporate expenses 2.3 2.4 Depreciation and amortization 11.6 9.1 Impairment loss 5.9 - Expenses from acquired hotels(a) - � (7.8 ) Same-Store Hotel EBITDA margin 28.2 % 28.4 % (a) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Reconciliation of Total Operating Expenses to Same-Store Hotel Operating Expenses (in thousands) � Three Months EndedMarch 31, 2008 � 2007 � Total operating expenses $ 278,116 $ 221,034 Unconsolidated taxes, insurance and lease expense 2,122 1,703 Consolidated hotel lease expense (12,197 ) (14,259 ) Corporate expenses (6,827 ) (6,787 ) Other expenses (933 ) - Abandoned projects - (22 ) Depreciation and amortization (33,768 ) (25,051 ) Impairment loss (17,131 ) - Expenses from acquired hotels(a) � - � 21,480 Same-Store hotel operating expenses $ 209,382 $ 198,098 (a) We have included amounts for two Renaissance hotels acquired in December 2007, prior to our ownership of these hotels, for comparison purposes. Reconciliation of Forecasted Net Income to Forecasted FFO, Adjusted FFO, EBITDA and Adjusted EBITDA (in millions, except per share and unit data) � Second Quarter 2008 Guidance Low Guidance � High Guidance Dollars � Per Share Amount Dollars � Per Share Amount Net income $ 22 $ 24 Preferred dividends � (10 ) � (10 ) Net income (loss) applicable to common stockholders 12 $ 0.19 14 $ 0.22 Depreciation � 38 � 38 FFO and Adjusted FFO 50 $ 0.79 (a) 52 $ 0.83 (a) Series A preferred dividends � 6 � 6 FFO and Adjusted FFO assuming conversion $ 56 $ 0.76 (b) $ 58 $ 0.80 (b) Net income $ 22 $ 24 Depreciation 38 38 Interest expense 26 26 Amortization expense � 1 � 1 Adjusted EBITDA $ 87 $ 89 (a) Weighted average shares and units are 63.2�million. (b) Second quarter guidance for FFO per share, assumes the conversion of our series A preferred stock because it is more dilutive when our Adjusted FFO per share exceeds $0.63 per share. This increases fully diluted shares outstanding to 73.2 million for the quarter. � Full Year 2008 Guidance Low Guidance � High Guidance Dollars � Per Share Amount Dollars � Per Share Amount Net income(b) $ 16 $ 24 Preferred dividends � (39 ) � (39 ) Net income (loss) applicable to common stockholders (23 ) $ (0.37 ) (15 ) $ (0.24 ) Depreciation 151 151 Impairment charge � 17 � 17 Adjusted FFO $ 145 $ 2.29 (a) $ 153 $ 2.42 (a) � Net income(b) $ 16 $ 24 Depreciation 151 151 Impairment charge 17 17 Interest expense 103 103 Amortization expense � 6 � 6 Adjusted EBITDA $ 293 $ 301 (a) Weighted average shares and units are 63.2�million. (b) Net income includes the $17.1 million impairment charge recorded in the first quarter 2008. 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 FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Same-Store Hotel EBITDA and Same-Store 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 REIT�s performance, which should be considered along with, but not as an alternative to, net income as a measure of our operating performance. FFO and EBITDA The White Paper on Funds From Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts (�NAREIT�), defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO 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. 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 FFO and EBITDA We adjust FFO and EBITDA when evaluating our performance because management believes that the exclusion of certain additional recurring and non-recurring items such as those described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted FFO, Same-Store Adjusted FFO, Adjusted EBITDA and Same-Store Adjusted EBITDA, when combined with GAAP net income, EBITDA and FFO, is beneficial to an investor�s better understanding of our operating performance. Gains and losses related to early extinguishment of debt � We exclude gains and losses related to early extinguishment of debt 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. Impairment losses � We exclude the effect of impairment losses and gains or losses on disposition of assets in computing Adjusted FFO and 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 FFO by the NAREIT definition and from 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 FFO and 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 are 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 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. We also 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. Same-Store Comparisons To derive same-store comparisons, we have adjusted the numbers to remove discontinued operations and gains on sales of condominium units; and have added the historical results of operations from the two Renaissance hotels acquired in December 2007. Limitations of Non-GAAP Measures The use of these non-GAAP financial measures has certain limitations. FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Same-Store Hotel EBITDA and Same-Store Hotel EBITDA margin, as presented by us, may not be comparable to FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Same-Store Hotel EBITDA and Same-Store 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 and interest or 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 FFO, Adjusted FFO, Adjusted FFO per share, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA or Same-Store 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. Adjusted FFO per share does not measure, and should not be used as a measure of, amounts that accrue directly to the benefit of stockholders. FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Same-Store Hotel EBITDA and Same-Store 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.