- Same-store RevPAR increased by
4.7%
- Same-store Adjusted EBITDA increased
by 7.8%
- Affirms 2016 Outlook
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.”
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.
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.
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.
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.
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)
7
Consolidated Balance Sheets(a) 8 Consolidated Debt Summary 9
Schedule of Encumbered Hotels 10 Capital Expenditures 10 Total
Enterprise Value 11 Hotel Operating Statistics 12 Historical
Quarterly Operating Statistics 14 Non-GAAP Financial Measures 14
(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.
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
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
Consolidated
Debt Summary
(dollars in thousands)
EncumberedHotels
InterestRate (%)
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.
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.
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.
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
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.
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
PerShareAmount
Dollars Shares
PerShareAmount
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
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
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 %
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 OperatingRevenue
Net Income(Loss)
OtherAdjustments
Depreciation
InterestExpense
HotelEBITDA
Hotel EBITDAMargin
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 %
Three Months
Ended March 31, 2015
Same-store Hotels
Hotel OperatingRevenue
Net Income(Loss)
OtherAdjustments
Depreciation
InterestExpense
HotelEBITDA
Hotel EBITDAMargin
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 % 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.
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
ShareAmount(a)
Dollars
Per
ShareAmount(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.
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.
- 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.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160426005447/en/
FelCor Lodging Trust IncorporatedStephen A. Schafer,
972-444-4912Senior Vice Presidentsschafer@felcor.com
Felcor Lodging (NYSE:FCH)
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