FCH Felcor Lodging Trust Incorporated (delisted)

Two Hotels Under Hard Contract

FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the second quarter ended June 30, 2016.

Second Quarter Highlights

• Same-store RevPAR increased 2.6% over the same period in 2015.
• Net income was $13.8 million, and net income per share was $0.05.
• Adjusted FFO per share increased 14% to $0.32 over the same period in 2015.
• Adjusted EBITDA increased $2.7 million to $72.4 million over the same period in 2015.
• Selling two hotels (Renaissance Esmeralda Indian Wells Resort and Holiday Inn Nashville Airport) for aggregate gross proceeds of approximately $108 million.

“During the second quarter, RevPAR growth was 2.6%. Softer corporate transient demand led to adjustments in customer mix that impacted overall ADR, primarily in New York, San Francisco, Philadelphia and Boston. The remainder of our portfolio performed well relative to expectations, and our overall portfolio continued to gain market share. We actively worked with our management companies to maximize revenue and profitability, as evidenced by our continued market share growth and Hotel EBITDA margin improvement,” said Richard A. Smith, FelCor’s President and Chief Executive Officer.

Mr. Smith added, “We continue to execute our strategy as planned to drive stockholder value. We are making progress with our planned asset sales. We have agreed to sell two hotels and have received non-refundable deposits. In addition, we purchased 1.2 million shares of common stock at prices significantly below our net asset value, and we are progressing with our high-ROI redevelopment projects.”

Second Quarter Hotel Results

    Second Quarter 2016     2015     Change Same-store hotels (39) RevPAR $ 158.48 $ 154.48 2.6 % Total hotel revenue, in millions $ 225.0 $ 219.6 2.5 % Hotel EBITDA, in millions $ 74.0 $ 71.8 3.1 % Hotel EBITDA margin 32.9 % 32.7 %

19 bps

 

RevPAR for our 39 same-store hotels increased 2.6% (to $158.48) from the same period in 2015. The change reflects a 2.0% increase in ADR (to $194.28) and a 0.6% increase in occupancy (to 81.6%). Corporate transient room nights decreased 3% from the same period in 2015 as a result of weaker demand, which ultimately led to less compression in some of our urban markets. This decrease was partially offset by a 7% increase in corporate group room nights.

See pages 12-13 and 18-22 for more detailed operating data.

Second Quarter Operating Results

    Second Quarter $ in millions, except for per share information 2016     2015     Change Net income (loss) $ 13.8 $ (3.2 ) 524.1 % Net income (loss) per share $ 0.05 $ (0.12 ) $ 0.17 Same-store Adjusted EBITDA $ 69.7 $ 67.7 3.0 % Adjusted EBITDA $ 72.4 $ 69.7 3.9 % Adjusted FFO per share $ 0.32 $ 0.28 $ 0.04  

Net income attributable to common stockholders was $7.1 million ($0.05 per share) in 2016, compared to a net loss of $17.3 million ($0.12 per share) for the same period in 2015. Net income in 2016 includes an impairment charge of $6.3 million attributable to a property to be sold in the third quarter. Net loss in 2015 included $30.8 million in debt extinguishment charges, offset by a $7.1 million gain on sale of an unconsolidated joint venture.

Same-store Adjusted EBITDA increased 3.0% to $69.7 million from the same period in 2015. Adjusted EBITDA was $72.4 million.

Adjusted FFO was $44.1 million ($0.32 per share), compared to $39.3 million ($0.28 per share) for the same period in 2015.

Year-to-Date Operating Results

Net loss attributable to common stockholders was $4.1 million ($0.03 per share) in 2016, compared to a net loss of $20.2 million ($0.15 per share) for the same period in 2015. Net loss in 2016 includes an impairment charge of $6.3 million attributable to a property to be sold in the third quarter. Net loss in 2015 included $30.9 million in debt extinguishment charges, offset by a $16.3 million net gain on the sale of consolidated hotels and a $7.1 million gain on sale of an unconsolidated joint venture.

RevPAR for our 39 same-store hotels increased 3.5% (to $150.29) from the same period in 2015. The change reflects a 2.6% increase in ADR (to $191.15) and a 0.9% increase in occupancy (to 78.6%). Hotel EBITDA for our 39 same-store hotels increased by 4% to $129.4 million, and Hotel EBITDA margin was 30.2%, a 23 basis point increase.

Same-store Adjusted EBITDA increased 4.9% to $120.0 million from the same period in 2015. Adjusted EBITDA was $121.4 million.

Adjusted FFO was $64.3 million ($0.46 per share), compared to $57.6 million ($0.43 per share) for the same period in 2015.

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 14 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 ongoing effort, we look for opportunities to redeploy capital to achieve higher returns and strengthen our balance sheet.

Asset Sales

We have agreed to sell two hotels, the 560-room Renaissance Esmeralda Indian Wells Resort and the 383-room Holiday Inn Nashville Airport for $76 million and $32 million, respectively. We have received non-refundable deposits of $4.8 million, with scheduled closing dates of August 1 and September 1, respectively. Proceeds will be used to repay our line of credit. We continue to market our three New York hotels.

Stock Repurchase Program

In 2015, our Board approved a $100 million stock repurchase program, which we began implementing in December. To date, we have purchased 6.1 million shares for $41.9 million (at an average price of $6.81 per share), including 1.2 million shares during the second quarter. We intend to continue repurchasing our common stock while it trades at a significant discount to NAV.

Common Dividend

During the second quarter, we declared a $0.06 per share common stock dividend, which will be paid at the end of July. 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 six months, we invested $32.1 million in renovations and redevelopment projects at our hotels. During 2016, we plan to invest approximately $60 million in 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. These projects are underway and remain on schedule and within budget. We are also making progress with entitlements and planning for several other high-ROI redevelopment projects. The returns from these projects will augment future EBITDA growth, and we expect the projects to generate unlevered internal rates of return of at least 15%.

Balance Sheet

As of June 30, 2016, we had $1.5 billion of gross consolidated debt with a 5.2% weighted-average interest rate and a seven-year weighted-average maturity. We had $58.2 million of cash and cash equivalents on hand and $23.7 million of restricted cash.

“Over the past several years, we have made significant improvements to our balance sheet by staggering and extending our debt maturities, locking in low fixed interest rates, lowering our aggregate preferred dividends and increasing our revolver capacity. In addition, approximately 20% of our EBITDA is protected through the guaranty with Wyndham. We are well-positioned to execute our strategic plan through any stage of the lodging cycle and achieve our goal of increasing stockholder value,” said Michael C. Hughes, FelCor’s Executive Vice President and Chief Financial Officer.

Outlook

We are updating our 2016 guidance to reflect second quarter results and ongoing softness in corporate transient demand for the remainder of the year. We continue to expect RevPAR for our portfolio will outperform that of our peers due to our high-quality, well-located portfolio in markets with relatively lower supply growth. Our outlook assumes Hotel EBITDA for the Wyndham hotels equals the amount guaranteed by Wyndham for 2016 (which equates to approximately $59 million of Hotel EBITDA).

For the year, we expect:

• Net income attributable to FelCor will be $23.3 million - $29.4 million;
• RevPAR for same-store hotels will increase 3.0 - 4.0%;
• Adjusted EBITDA will be $237.0 million - $243.0 million (excludes $1.5 million of EBITDA from the Renaissance Esmeralda Indian Wells Resort and Holiday Inn Nashville Airport from the time of sale to December 31, 2016);
• Adjusted FFO per share will be $0.87 - $0.92; and
• Interest expense, including our pro rata share from joint ventures, will be $80 million.

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 second quarter earnings Conference Call on Tuesday, July 26, 2016 at 10:00 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 and six months ended June 30, 2016.

TABLE OF CONTENTS

    Page

Consolidated Statements of Operations(a)

10

Consolidated Balance Sheets(a) 11 Consolidated Debt Summary 12 Schedule of Encumbered Hotels 13 Capital Expenditures 13 Total Enterprise Value 14 Hotel Operating Statistics 15 Historical Quarterly Operating Statistics 19 Non-GAAP Financial Measures 19

(a) We have prepared our consolidated statements of operations and balance sheets without an audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. Our consolidated statements of operations and balance sheets should be read in conjunction with the audited 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 Six Months Ended June 30, June 30, 2016     2015 2016     2015 Revenues: Hotel operating revenue: Room $ 181,318 $ 182,066 $ 340,394 $ 344,372 Food and beverage 43,697 42,151 83,229 81,995 Other operating departments 11,746 11,832 22,595 22,967 Other revenue   1,145     5,054     1,832     5,464   Total revenues   237,906     241,103     448,050     454,798   Expenses: Hotel departmental expenses: Room 44,748 44,423 87,447 86,934 Food and beverage 32,592 31,278 63,548 61,974 Other operating departments 4,039 4,331 7,822 8,780 Other property related costs 56,007 57,791 111,573 114,686 Management and franchise fees 8,501 9,202 17,726 18,287 Taxes, insurance and lease expense 14,864 16,410 28,446 31,217 Corporate expenses 6,047 6,530 14,447 15,103 Depreciation and amortization 29,177 28,750 58,360 56,522 Impairment loss 6,333 — 6,333 — Other expenses   2,142     1,411     2,970     5,639   Total operating expenses   204,450     200,126     398,672     399,142   Operating income 33,456 40,977 49,378 55,656 Interest expense, net (19,907 ) (20,278 ) (39,627 ) (39,759 ) Debt extinguishment — (30,823 ) — (30,896 ) Other gains, net   100     166     100     166   Income (loss) before equity in income from unconsolidated entities 13,649 (9,958 ) 9,851 (14,833 ) Equity in income from unconsolidated entities   726     7,513     572     7,662   Income (loss) from continuing operations before income tax 14,375 (2,445 ) 10,423 (7,171 ) Income tax   25     (169 )   (390 )   (338 ) Income (loss) from continuing operations 14,400 (2,614 ) 10,033 (7,509 ) Loss from discontinued operations   —     (83 )   —     (79 ) Income (loss) before gain (loss) on sale of property 14,400 (2,697 ) 10,033 (7,588 ) Gain (loss) on sale of property, net   (630 )   (550 )   (1,344 )     16,337   Net income (loss) 13,770 (3,247 ) 8,689 8,749 Net loss (income) attributable to noncontrolling interests in other partnerships 16 247 487 (4,632 ) Net loss (income) attributable to redeemable noncontrolling interests in FelCor LP (31 ) 75 17 89 Preferred distributions - consolidated joint venture   (364 )   (359 )   (724 )   (707 ) Net income (loss) attributable to FelCor 13,391 (3,284 ) 8,469 3,499 Preferred dividends (6,279 ) (7,903 ) (12,558 ) (17,581 ) Redemption of preferred stock   —     (6,096 )   —     (6,096 ) Net income (loss) attributable to FelCor common stockholders $ 7,112   $ (17,283 ) $ (4,089 ) $ (20,178 ) Basic and diluted per common share data: Income (loss) from continuing operations $ 0.05   $ (0.12 ) $ (0.03 ) $ (0.15 ) Net income (loss) $ 0.05   $ (0.12 ) $ (0.03 ) $ (0.15 ) Basic weighted average common shares outstanding   138,182     140,322     138,930     132,465   Diluted weighted average common shares outstanding   138,678     140,322     138,930     132,465             Consolidated Balance Sheets

(in thousands, except par values)

  June 30, December 31, 2016 2015 Assets Investment in hotels, net of accumulated depreciation of $936,780 and $899,575 at June 30, 2016 and December 31, 2015, respectively $ 1,692,419 $ 1,729,531 Investment in unconsolidated entities 9,422 9,575 Cash and cash equivalents 58,188 59,786 Restricted cash 23,706 17,702 Accounts receivable, net of allowance for doubtful accounts of $239 and $204 at June 30, 2016 and December 31, 2015, respectively 38,650 28,136 Deferred expenses, net of accumulated amortization of $2,022 and $1,086 at June 30, 2016 and December 31, 2015, respectively 5,464 6,390 Other assets   19,547     14,792   Total assets $ 1,847,396   $ 1,865,912   Liabilities and Equity Debt, net of unamortized debt issuance costs of $17,106 and $18,065 at June 30, 2016 and December 31, 2015, respectively $ 1,433,703 $ 1,409,889 Distributions payable 14,951 15,140 Accrued expenses and other liabilities   126,949     125,274   Total liabilities   1,575,603     1,550,303   Commitments and contingencies Redeemable noncontrolling interests in FelCor LP, 611 units issued and outstanding at June 30, 2016 and December 31, 2015   3,809     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 June 30, 2016 and December 31, 2015 309,337 309,337 Common stock, $0.01 par value, 200,000 shares authorized; 138,225 and 141,808 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively 1,382 1,418 Additional paid-in capital 2,572,668 2,567,515 Accumulated deficit   (2,667,034 )   (2,618,117 ) Total FelCor stockholders’ equity 216,353 260,153 Noncontrolling interests in other partnerships 7,848 7,806 Preferred equity in consolidated joint venture, liquidation value of $44,610 and $43,954 at June 30, 2016 and December 31, 2015, respectively   43,783     43,186   Total equity   267,984     311,145   Total liabilities and equity $ 1,847,396   $ 1,865,912                         Consolidated Debt Summary

(dollars in thousands)

 

EncumberedHotels

InterestRate (%)

Maturity Date

June 30,2016

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 121,355 122,237 Mortgage debt 1 4.94 October 2022 30,454 30,717 Line of credit(b) 7 LIBOR + 2.75 June 2019 214,000 190,000 Knickerbocker loan(c) 1 LIBOR + 3.00 November 2017   85,000     85,000   Total 22 $ 1,450,809 $ 1,427,954 Unamortized debt issuance costs   (17,106 )   (18,065 ) Debt, net of unamortized debt issuance costs $ 1,433,703   $ 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 June 30, 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 $ 34 Ft. Lauderdale - ES Mortgage debt $ 23 Birmingham - ES Mortgage debt $ 37 Minneapolis Airport - ES Mortgage debt $ 30 Deerfield Beach - ES Line of credit $ 214 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 Six Months Ended

June 30,

June 30, 2016     2015 2016     2015 Improvements and additions to majority-owned hotels $ 17,901 $ 12,274 $ 31,909 $ 25,757 Partners’ pro rata share of additions to consolidated joint venture hotels (127 ) (1 ) (225 ) (25 ) Pro rata share of additions to unconsolidated hotels   159     969     417     1,273   Total additions to hotels(a) $ 17,933   $ 13,242   $ 32,101   $ 27,005    

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

          Total Enterprise Value

(in thousands, except per share data)

  June 30, December 31 2016 2015 Common shares outstanding 138,225 141,808 Units outstanding   611     611   Combined shares and units outstanding 138,836 142,419 Common stock price $ 6.23   $ 7.30   Market capitalization $ 864,948 $ 1,039,659 Series A preferred stock(a) 321,987 321,987 Preferred equity - Knickerbocker joint venture, net 41,594 41,027 Consolidated debt (b) 1,450,809 1,427,954 Noncontrolling interests of consolidated debt (4,250 ) (4,250 ) Pro rata share of unconsolidated debt 11,300 11,433 Cash, cash equivalents and restricted cash   (81,894 )   (77,488 ) Total enterprise value (TEV) $ 2,604,494   $ 2,760,322    

(a) Based on liquidation value.

(b) Excludes unamortized debt issuance costs.

             

Hotel Operating Statistics

  Occupancy (%) ADR ($) RevPAR ($) Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Same-store Hotels 2016   2015   %Change 2016   2015   %Change 2016   2015   %Change Embassy Suites Atlanta-Buckhead 80.7 81.5 (1.0 ) 154.42 147.38 4.8 124.66 120.14 3.8 DoubleTree Suites by Hilton Austin 88.6 81.2 9.1 217.74 221.84 (1.9 ) 193.01 180.22 7.1 Embassy Suites Birmingham 80.3 79.1 1.5 143.14 138.58 3.3 114.88 109.59 4.8 The Fairmont Copley Plaza, Boston 83.2 84.3 (1.3 ) 366.02 361.24 1.3 304.57 304.48 — Wyndham Boston Beacon Hill 86.9 85.4 1.8 258.35 262.02 (1.4 ) 224.62 223.83 0.4 Embassy Suites Boston-Marlborough 77.2 78.8 (2.1 ) 175.60 172.34 1.9 135.52 135.78 (0.2 ) Sheraton Burlington Hotel & Conference Center 72.0 73.3 (1.8 ) 123.44 123.39 — 88.86 90.48 (1.8 ) The Mills House Wyndham Grand Hotel, Charleston 91.7 90.9 0.9 262.48 257.83 1.8 240.67 234.31 2.7 Embassy Suites Dallas-Love Field(1) 78.5 91.0 (13.7 ) 141.99 131.01 8.4 111.52 119.25 (6.5 ) Embassy Suites Deerfield Beach-Resort & Spa 81.3 82.6 (1.6 ) 174.71 182.66 (4.4 ) 142.02 150.93 (5.9 ) Embassy Suites Fort Lauderdale 17th Street 79.9 81.6 (2.0 ) 157.06 152.46 3.0 125.52 124.34 0.9 Wyndham Houston-Medical Center Hotel & Suites 80.3 79.7 0.8 152.72 154.07 (0.9 ) 122.70 122.77 (0.1 ) Renaissance Esmeralda Indian Wells Resort & Spa 57.7 53.4 7.9 215.15 205.28 4.8 124.08 109.72 13.1 Embassy Suites Los Angeles-International Airport/South 85.5 82.8 3.3 173.74 160.79 8.1 148.63 133.18 11.6 Embassy Suites Mandalay Beach-Hotel & Resort 86.4 84.4 2.3 233.46 210.74 10.8 201.60 177.96 13.3 Embassy Suites Miami-International Airport 84.5 87.4 (3.3 ) 130.21 134.11 (2.9 ) 110.04 117.19 (6.1 ) Embassy Suites Milpitas-Silicon Valley 84.8 86.5 (2.0 ) 203.16 196.09 3.6 172.20 169.64 1.5 Embassy Suites Minneapolis-Airport 78.6 77.0 2.2 157.60 153.00 3.0 123.91 117.75 5.2 Embassy Suites Myrtle Beach-Oceanfront Resort 79.0 80.0 (1.2 ) 196.75 198.44 (0.8 ) 155.45 158.67 (2.0 ) Hilton Myrtle Beach Resort 74.3 76.2 (2.5 ) 158.89 153.36 3.6 118.12 116.87 1.1 Embassy Suites Napa Valley 83.6 84.7 (1.3 ) 257.77 239.75 7.5 215.39 203.06 6.1 Holiday Inn Nashville Airport 82.6 68.7 20.3 129.53 118.37 9.4 107.00 81.29 31.6 Wyndham New Orleans-French Quarter 81.2 74.0 9.7 151.61 161.25 (6.0 ) 123.14 119.34 3.2 Morgans New York 89.2 86.4 3.3 282.60 301.09 (6.1 ) 252.11 260.12 (3.1 ) Royalton New York 87.5 89.0 (1.7 ) 309.77 317.23 (2.4 ) 270.90 282.37 (4.1 ) Embassy Suites Orlando-International Drive South/Convention Center(1) 73.3 85.8 (14.6 ) 138.31 146.04 (5.3 ) 101.34 125.36 (19.2 ) DoubleTree Suites by Hilton Orlando-Lake Buena Vista 91.7 93.8 (2.3 ) 138.99 137.68 1.0 127.39 129.16 (1.4 ) Wyndham Philadelphia Historic District 85.3 74.5 14.5 163.19 179.96 (9.3 ) 139.25 134.14 3.8 Sheraton Philadelphia Society Hill Hotel 81.4 81.0 0.5 193.05 188.62 2.3 157.15 152.74 2.9 Embassy Suites Phoenix-Biltmore 70.5 70.1 0.6 159.69 153.52 4.0 112.58 107.64 4.6 Wyndham Pittsburgh University Center 77.7 78.8 (1.4 ) 153.69 152.91 0.5 119.43 120.57 (0.9 ) Wyndham San Diego Bayside 77.9 84.5 (7.7 ) 161.97 151.98 6.6 126.25 128.37 (1.7 ) Embassy Suites San Francisco Airport-South San Francisco 89.4 90.3 (1.1 ) 208.42 197.38 5.6 186.23 178.31 4.4 Embassy Suites San Francisco Airport-Waterfront 92.0 87.0 5.7 207.43 208.92 (0.7 ) 190.75 181.82 4.9 Holiday Inn San Francisco-Fisherman’s Wharf 89.8 90.7 (1.0 ) 207.18 204.91 1.1 186.12 185.85 0.1 San Francisco Marriott Union Square 90.8 86.5 4.9 291.00 279.42 4.1 264.08 241.82 9.2 Wyndham Santa Monica At the Pier 87.1 85.9 1.3 273.84 255.68 7.1 238.44 219.75 8.5 Embassy Suites Secaucus-Meadowlands 79.5 81.4 (2.4 ) 188.41 192.12 (1.9 ) 149.73 156.48 (4.3 ) The Vinoy Renaissance St. Petersburg Resort & Golf Club 83.9 84.3 (0.4 ) 220.88 210.15 5.1   185.39 177.09 4.7   Same-store Hotels 81.6

81.1

0.6   194.28 190.42 2.0   158.48 154.48 2.6    

(1) Hotel under renovation in 2016.

             

Hotel Operating Statistics

  Occupancy (%) ADR ($) RevPar ($) Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Same-store Hotels 2016   2015   %Change 2016   2015   %Change 2016   2015   %Change Embassy Suites Atlanta-Buckhead 80.8 80.2 0.8 156.78 149.34 5.0 126.72 119.72 5.9 DoubleTree Suites by Hilton Austin 85.7 81.7 5.0 228.52 235.74 (3.1 ) 195.94 192.52 1.8 Embassy Suites Birmingham 80.5 78.1 3.0 138.46 137.15 1.0 111.40 107.08 4.0 The Fairmont Copley Plaza, Boston 73.6 73.0 0.8 316.53 314.81 0.5 232.97 229.76 1.4 Wyndham Boston Beacon Hill 75.4 76.8 (1.9 ) 218.60 219.52 (0.4 ) 164.74 168.69 (2.3 ) Embassy Suites Boston-Marlborough 71.0 75.7 (6.2 ) 171.95 167.64 2.6 122.04 126.83 (3.8 ) Sheraton Burlington Hotel & Conference Center 70.3 69.5 1.1 108.67 113.12 (3.9 ) 76.36 78.59 (2.8 ) The Mills House Wyndham Grand Hotel, Charleston 84.9 84.7 0.2 236.39 230.98 2.3 200.65 195.61 2.6 Embassy Suites Dallas-Love Field(1) 81.9 91.4 (10.4 ) 142.78 132.34 7.9 116.94 120.93 (3.3 ) Embassy Suites Deerfield Beach-Resort & Spa 84.8 87.3 (2.9 ) 224.15 223.40 0.3 189.99 195.01 (2.6 ) Embassy Suites Fort Lauderdale 17th Street 86.6 87.4 (0.9 ) 197.07 185.41 6.3 170.75 162.13 5.3 Wyndham Houston-Medical Center Hotel & Suites 83.2 79.9 4.1 156.30 157.45 (0.7 ) 130.01 125.77 3.4 Renaissance Esmeralda Indian Wells Resort & Spa 63.1 62.9 0.4 223.59 218.22 2.5 141.18 137.30 2.8 Embassy Suites Los Angeles-International Airport/South 87.8 81.8 7.3 168.08 154.52 8.8 147.52 126.38 16.7 Embassy Suites Mandalay Beach-Hotel & Resort 81.5 78.7 3.5 221.16 196.75 12.4 180.29 154.93 16.4 Embassy Suites Miami-International Airport 88.0 90.7 (3.0 ) 165.04 167.91 (1.7 ) 145.23 152.31 (4.7 ) Embassy Suites Milpitas-Silicon Valley 82.8 82.7 — 207.29 195.48 6.0 171.56 161.71 6.1 Embassy Suites Minneapolis-Airport 73.7 74.7 (1.3 ) 151.13 147.71 2.3 111.36 110.28 1.0 Embassy Suites Myrtle Beach-Oceanfront Resort 73.8 71.0 3.9 165.49 166.47 (0.6 ) 122.14 118.23 3.3 Hilton Myrtle Beach Resort 61.2 62.5 (2.0 ) 138.46 133.73 3.5 84.79 83.57 1.5 Embassy Suites Napa Valley 81.8 81.0 0.9 220.76 211.48 4.4 180.47 171.27 5.4 Holiday Inn Nashville Airport 74.1 62.3 18.9 122.34 111.96 9.3 90.62 69.77 29.9 Wyndham New Orleans-French Quarter 77.5 70.1 10.5 153.40 164.26 (6.6 ) 118.84 115.17 3.2 Morgans New York 81.0 76.2 6.3 251.21 264.75 (5.1 ) 203.56 201.81 0.9 Royalton New York 81.8 84.1 (2.7 ) 276.32 283.61 (2.6 ) 226.15 238.61 (5.2 ) Embassy Suites Orlando-International Drive South/Convention Center(1) 80.7 86.7 (6.9 ) 159.03 158.09 0.6 128.35 137.02 (6.3 ) DoubleTree Suites by Hilton Orlando-Lake Buena Vista 92.0 93.3 (1.5 ) 152.24 144.71 5.2 140.00 135.05 3.7 Wyndham Philadelphia Historic District 70.2 60.0 16.9 148.58 159.93 (7.1 ) 104.26 96.01 8.6 Sheraton Philadelphia Society Hill Hotel 68.2 67.1 1.7 176.18 173.87 1.3 120.20 116.61 3.1 Embassy Suites Phoenix-Biltmore 74.3 77.0 (3.6 ) 203.61 195.56 4.1 151.23 150.67 0.4 Wyndham Pittsburgh University Center 66.6 69.0 (3.5 ) 144.69 144.09 0.4 96.32 99.36 (3.1 ) Wyndham San Diego Bayside 77.7 81.1 (4.1 ) 149.61 144.46 3.6 116.28 117.10 (0.7 ) Embassy Suites San Francisco Airport-South San Francisco 87.4 88.7 (1.4 ) 202.90 188.07 7.9 177.31 166.76 6.3 Embassy Suites San Francisco Airport-Waterfront 88.6 85.3 3.8 205.97 204.19 0.9 182.50 174.23 4.7 Holiday Inn San Francisco-Fisherman’s Wharf 85.9 85.1 1.0 201.21 192.72 4.4 172.85 163.93 5.4 San Francisco Marriott Union Square 89.7 85.9 4.5 305.12 280.11 8.9 273.65 240.49 13.8 Wyndham Santa Monica At the Pier 87.4 84.9 3.0 266.11 241.65 10.1 232.64 205.20 13.4 Embassy Suites Secaucus-Meadowlands 67.0 74.0 (9.4 ) 181.51 185.58 (2.2 ) 121.68 137.28 (11.4 ) The Vinoy Renaissance St. Petersburg Resort & Golf Club 86.0 86.5 (0.5 ) 239.00 231.41 3.3   205.65 200.18 2.7   Same-store Hotels 78.6 78.0 0.9   191.15 186.24 2.6   150.29 145.18 3.5    

(1) Hotel under renovation in 2016

     

Historical Quarterly Operating Statistics

  Occupancy (%) Q2 2015     Q3 2015     Q4 2015     Q1 2016     Q2 2016 Same-store hotels(a) 81.1 80.8 74.3 75.7 81.6   ADR ($) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Same-store hotels(a) 190.42 190.19 179.39 187.78 194.28   RevPAR ($) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Same-store hotels(a) 154.48 153.70 133.36 142.11 158.48

(a) Includes 39 consolidated hotels and excludes 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 June 30, 2016       2015 Dollars   Shares  

PerShareAmount

Dollars   Shares  

PerShareAmount

Net income (loss) $ 13,770 $ (3,247 ) Noncontrolling interests (15 ) 322 Preferred dividends (6,279 ) (7,903 ) Redemption of preferred stock — (6,096 ) Preferred distributions - consolidated joint venture   (364 )   (359 ) Net income (loss) attributable to FelCor common stockholders 7,112 (17,283 ) Less: Dividends declared on unvested restricted stock   (35 )   (13 ) Basic and diluted earnings per share data 7,077 138,182 $ 0.05 (17,296 ) 140,322 $ (0.12 ) Restricted stock units   —   496   —     —   —   —   Diluted earnings per share data 7,077 138,678 0.05 (17,296 ) 140,322 (0.12 ) Depreciation and amortization 29,177 — 0.21 28,750 — 0.21 Depreciation, unconsolidated entities and other partnerships 469 — — 546 — — Gain on sale of hotel in unconsolidated entity — — — (7,113 ) — (0.05 ) Loss on sale of hotels, net of noncontrolling interests in other partnerships 630 — — 631 — — Other gains (100 ) — — (100 ) — — Impairment loss 6,333 — 0.05 — — — Noncontrolling interests in FelCor LP 31 611 — (75 ) 611 — Dividends declared on unvested restricted stock 35 66 — 13 57 — Conversion of unvested restricted stock units   —   —   —     —   1,478   —   FFO* 43,652 139,355 0.31 5,356 142,468 0.04 Debt extinguishment — — — 30,823 — 0.22 Debt extinguishment, unconsolidated entities — — — 330 — — Severance costs 27 — — — — — Abandoned projects 383 — 0.01 — — — Variable stock compensation (789 ) — (0.01 ) (72 ) — — Redemption of preferred stock — — — 6,096 — 0.04 Contract dispute recovery — — — (3,717 ) — (0.03 ) Litigation settlement 650 — 0.01 — — — Pre-opening costs, net of noncontrolling interests   191   —   —     523   —   0.01   Adjusted FFO* $ 44,114   139,355 $ 0.32   $ 39,339   142,468 $ 0.28  

* FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.

     

Reconciliation of Net Income to FFO and Adjusted FFO

(in thousands, except per share data)

  Six Months Ended June 30, 2016     2015 Dollars   Shares  

PerShareAmount

Dollars   Shares  

PerShareAmount

Net income $ 8,689 $ 8,749 Noncontrolling interests 504 (4,543 ) Preferred distributions - consolidated joint venture (724 ) (707 ) Redemption of preferred stock — (6,096 ) Preferred dividends   (12,558 )   (17,581 ) Net loss attributable to FelCor common stockholders (4,089 ) (20,178 ) Less: Dividends declared on unvested restricted stock   (73 )   (26 ) Basic and diluted earnings per share data (4,162 ) 138,930 $ (0.03 ) (20,204 ) 132,465 $ (0.15 ) Depreciation and amortization 58,360 — 0.42 56,522 — 0.42 Depreciation, unconsolidated entities and other partnerships 936 — 0.01 1,258 — 0.01 Other gains (100 ) — — (100 ) — — Impairment loss 6,333 — 0.05 — — — Gain on sale of hotel in unconsolidated entity — — — (7,113 ) — (0.05 ) Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships 1,344 — — (11,249 ) — (0.09 ) Noncontrolling interests in FelCor LP (17 ) 611 — (89 ) 611 — Dividends declared on unvested restricted stock 73 22 — 26 34 — Conversion of unvested restricted stock units   —   451   —     —   1,332   —  

FFO*

62,767 140,014 0.45 19,051 134,442 0.14 Debt extinguishment — — — 30,895 — 0.23 Debt extinguishment, unconsolidated entities — — — 330 — — Severance costs 27 — — — — — Abandoned projects 615 — — — — — Variable stock compensation (27 ) — — 925 — 0.01 Redemption of preferred stock — — — 6,096 — 0.05 Contract dispute recovery — — — (3,717 ) — (0.03 ) Litigation settlement 650 — 0.01 — — — Pre-opening costs, net of noncontrolling interests   245   —   —     4,047   —   0.03   Adjusted FFO* $ 64,277   140,014 $ 0.46   $ 57,627   134,442 $ 0.43  

* FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.

            Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA

(in thousands)

  Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015 Net income (loss) $ 13,770 $ (3,247 ) $ 8,689 $ 8,749 Depreciation and amortization 29,177 28,750 58,360 56,522 Depreciation, unconsolidated entities and other partnerships 469 546 936 1,258 Interest expense 19,923 20,284 39,655 39,770 Interest expense, unconsolidated entities and other partnerships 90 141 190 343 Income taxes (25 ) — 390 — Noncontrolling interests in preferred distributions, consolidated joint venture (18 ) — (36 ) — Noncontrolling interests in other partnerships   16     247     487     (4,632 )

EBITDA*

63,402 46,721 108,671 102,010 Impairment loss 6,333 — 6,333 — Debt extinguishment — 30,823 — 30,895 Debt extinguishment, unconsolidated entities — 330 — 330 Gain on sale of hotel in unconsolidated entity — (7,113 ) — (7,113 ) Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships 630 631 1,344 (11,249 ) Other gains (100 ) (100 ) (100 ) (100 ) Amortization of fixed stock and directors’ compensation 1,693 1,701 3,627 3,563 Severance costs 27 — 27 — Abandoned projects 383 — 615 — Variable stock compensation (789 ) (72 ) (27 ) 925 Contract dispute recovery — (3,717 ) — (3,717 ) Litigation settlement 650 — 650 — Pre-opening costs, net of noncontrolling interests   191     523     245     4,047  

Adjusted EBITDA*

72,420 69,727 121,385 119,591 Adjusted EBITDA from hotels disposed, held for sale and recently opened   (2,751 )   (2,063 )   (1,413 )   (5,264 )

Same-store Adjusted EBITDA*

$ 69,669   $ 67,664   $ 119,972   $ 114,327    

*EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA are attributable to FelCor common stockholders and FelCor LP unitholders other than FelCor.

          Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)

  Three Months Ended Six Months Ended June 30, June 30, 2016     2015 2016     2015 Same-store operating revenue: Room $ 172,225 $ 167,875 $ 326,655 $ 313,808 Food and beverage 41,111 40,146 79,383 78,253 Other operating departments   11,688     11,571     22,485     22,220   Same-store operating revenue 225,024 219,592 428,523 414,281   Same-store operating expense: Room 41,694 40,251 82,102 78,210 Food and beverage 30,022 29,222 59,000 58,098 Other operating departments 4,015 4,226 7,782 8,468 Other property related costs 53,273 51,865 106,306 102,574 Management and franchise fees 8,246 8,447 17,340 16,540 Taxes, insurance and lease expense   13,808     13,821     26,619     26,251   Same-store operating expense   151,058     147,832     299,149     290,141   Hotel EBITDA $ 73,966   $ 71,760   $ 129,374   $ 124,140   Hotel EBITDA Margin 32.9 % 32.7 % 30.2 % 30.0 %    

The following tables set forth the components of our Hotel EBITDA for our same-store hotels (dollars in thousands):

    Three months ended June 30, 2016 Same-store Hotels

Hotel OperatingRevenue

   

Net Income(Loss)

   

OtherAdjustments

    Depreciation    

InterestExpense

   

HotelEBITDA

   

Hotel EBITDAMargin

Embassy Suites Atlanta-Buckhead $ 3,928 $ 934 $ — $ 604 $ — $ 1,538 39.2 % DoubleTree Suites by Hilton Austin 3,901 955 — 492 190 1,637 42.0 % Embassy Suites Birmingham 2,688 363 — 394 297 1,054 39.2 % The Fairmont Copley Plaza, Boston 17,788 2,386 — 2,198 485 5,069 28.5 % Wyndham Boston Beacon Hill 7,017 2,477 — 981 — 3,458 49.3 % Embassy Suites Boston-Marlborough 3,203 850 — 297 — 1,147 35.8 % Sheraton Burlington Hotel & Conference Center 3,979 584 — 622 — 1,206 30.3 % The Mills House Wyndham Grand Hotel, Charleston 6,457 2,346 — 632 249 3,227 50.0 % Embassy Suites Dallas-Love Field 2,875 535 — 349 — 884 30.7 % Embassy Suites Deerfield Beach-Resort & Spa 4,233 429 — 476 397 1,302 30.8 % Embassy Suites Fort Lauderdale 17th Street 5,092 242 — 712 447 1,401 27.5 % Wyndham Houston-Medical Center Hotel & Suites 3,630 1,294 (19 ) 550 — 1,825 50.3 % Renaissance Esmeralda Indian Wells Resort & Spa 11,422 (4,815 ) 6,373

(1)

769 — 2,327 20.4 % Embassy Suites Los Angeles-International Airport/South 5,548 1,328 — 634 284 2,246 40.5 % Embassy Suites Mandalay Beach-Hotel & Resort 5,890 1,694 — 771 — 2,465 41.9 % Embassy Suites Miami-International Airport 3,934 285 — 456 — 741 18.8 % Embassy Suites Milpitas-Silicon Valley 4,706 1,551 — 301 — 1,852 39.4 % Embassy Suites Minneapolis-Airport 3,630 477 — 433 472 1,382 38.1 % Embassy Suites Myrtle Beach-Oceanfront Resort 6,857 1,575 227 658 — 2,460 35.9 % Hilton Myrtle Beach Resort 6,666 1,888 — 875 — 2,763 41.4 % Embassy Suites Napa Valley 4,518 1,095 — 518 345 1,958 43.3 % Holiday Inn Nashville Airport 4,483 745 41 758 — 1,544 34.4 % Wyndham New Orleans-French Quarter 4,573 1,492 — 721 — 2,213 48.4 % Morgans New York 2,812 (628 ) 132 640 — 144 5.1 % Royalton New York 5,308 (386 ) 88 582 — 284 5.4 % Embassy Suites Orlando-International Drive South/Convention Center 2,318 304 — 269 — 573 24.7 % DoubleTree Suites by Hilton Orlando-Lake Buena Vista 3,259 92 — 775 — 867 26.6 % Wyndham Philadelphia Historic District 5,831 1,819 10 734 — 2,563 44.0 % Sheraton Philadelphia Society Hill Hotel 8,026 1,887 — 974 — 2,861 35.6 % Embassy Suites Phoenix-Biltmore 2,640 403 — 431 — 834 31.6 % Wyndham Pittsburgh University Center 3,473 806 3 516 — 1,325 38.2 % Wyndham San Diego Bayside 8,163 1,275 — 1,560 — 2,835 34.7 % Embassy Suites San Francisco Airport-South San Francisco 6,302 1,935 — 415 — 2,350 37.3 % Embassy Suites San Francisco Airport-Waterfront 7,003 1,149 650 763 — 2,562 36.6 % Holiday Inn San Francisco-Fisherman’s Wharf 10,925 1,447 — 495 — 1,942 17.8 % San Francisco Marriott Union Square 10,809 1,372 (102 ) 1,342 583 3,195 29.6 % Wyndham Santa Monica At the Pier 3,108 1,316 1 279 197 1,793 57.7 % Embassy Suites Secaucus-Meadowlands 3,764 782 1 122 — 905 24.0 % The Vinoy Renaissance St. Petersburg Resort & Golf Club   14,265   1,212     179       1,428   415   3,234 22.7 % $ 225,024 $ 35,495   $ 7,584     $ 26,526 $ 4,361 $ 73,966 32.9 %       Three months ended June 30, 2015 Same-store Hotels

Hotel OperatingRevenue

   

Net Income(Loss)

   

OtherAdjustments

    Depreciation    

InterestExpense

   

HotelEBITDA

   

Hotel EBITDAMargin

Embassy Suites Atlanta-Buckhead $ 3,814 $ 910 $ — $ 635

$

—

$

1,545

40.5 % DoubleTree Suites by Hilton Austin 3,673 1,013 — 491 70 1,574 42.9 % Embassy Suites Birmingham 2,580 279 — 398 302 979 37.9 % The Fairmont Copley Plaza, Boston 17,518 3,136 — 2,168 179 5,483 31.3 % Wyndham Boston Beacon Hill 6,980 2,292 — 1,003 — 3,295 47.2 % Embassy Suites Boston-Marlborough 3,187 858 — 287 — 1,145 35.9 % Sheraton Burlington Hotel & Conference Center 3,733 543 — 613 — 1,156 31.0 % The Mills House Wyndham Grand Hotel, Charleston 6,125 2,081 22 631 203 2,937 48.0 % Embassy Suites Dallas-Love Field 3,065 680 — 343 — 1,023 33.4 % Embassy Suites Deerfield Beach-Resort & Spa 4,424 571 — 516 403 1,490 33.7 % Embassy Suites Fort Lauderdale 17th Street 5,130 290 — 738 454 1,482 28.9 % Wyndham Houston-Medical Center Hotel & Suites 3,604 1,060 (8 ) 535 70 1,657 46.0 % Renaissance Esmeralda Indian Wells Resort & Spa 10,243 723 — 941 — 1,664 16.2 % Embassy Suites Los Angeles-International Airport/South 5,059 1,349 — 652 105 2,106 41.6 % Embassy Suites Mandalay Beach-Hotel & Resort 5,347 1,128 24 815 124 2,091 39.1 % Embassy Suites Miami-International Airport 4,151 272 20 488 102 882 21.2 % Embassy Suites Milpitas-Silicon Valley 4,700 1,562 — 306 — 1,868 39.7 % Embassy Suites Minneapolis-Airport 3,484 384 — 458 480 1,322 37.9 % Embassy Suites Myrtle Beach-Oceanfront Resort 6,720 1,570 25 718 110 2,423 36.1 % Hilton Myrtle Beach Resort 6,811 2,024 — 830 — 2,854 41.9 % Embassy Suites Napa Valley 4,320 940 6 520 351 1,817 42.1 % Holiday Inn Nashville Airport 3,490 300 — 590 — 890 25.5 % Wyndham New Orleans-French Quarter 4,536 792 537 711 219 2,259 49.8 % Morgans New York 2,883 (302 ) — 619 — 317 11.0 % Royalton New York 5,446 (10 ) — 565 — 555 10.2 % Embassy Suites Orlando-International Drive South/Convention Center 2,842 667 — 274 — 941 33.1 % DoubleTree Suites by Hilton Orlando-Lake Buena Vista 3,302 182 — 792 — 974 29.5 % Wyndham Philadelphia Historic District 5,502 1,478 19 765 96 2,358 42.9 % Sheraton Philadelphia Society Hill Hotel 7,816 1,758 — 997 — 2,755 35.2 % Embassy Suites Phoenix-Biltmore 2,409 (228 ) 276 459 116 623 25.9 % Wyndham Pittsburgh University Center 3,476 637 16 537 84 1,274 36.7 % Wyndham San Diego Bayside 8,717 1,094 — 1,586 — 2,680 30.7 % Embassy Suites San Francisco Airport-South San Francisco 6,124 1,974 — 408 — 2,382 38.9 % Embassy Suites San Francisco Airport-Waterfront 6,773 5,426 (3,717 )

(2)

731 — 2,440 36.0 % Holiday Inn San Francisco-Fisherman’s Wharf 11,176 1,859 — 423 — 2,282 20.4 % San Francisco Marriott Union Square 10,011 (440 ) 1,063

(3)

1,414 699 2,736 27.3 % Wyndham Santa Monica At the Pier 2,913 1,106 24 290 195 1,615 55.4 % Embassy Suites Secaucus-Meadowlands 3,927 912 2 150 — 1,064 27.1 % The Vinoy Renaissance St. Petersburg Resort & Golf Club   13,581   1,226     (4 )     1,446   154   2,822 20.8 % $ 219,592 $ 42,096   $ (1,695 )   $ 26,843

$

4,516

$

71,760

32.7 %    

The following tables set forth the components of our Hotel EBITDA for our same-store hotels (dollars in thousands):

    Six months ended June 30, 2016 Same-store Hotels

Hotel OperatingRevenue

   

Net Income(Loss)

   

OtherAdjustments

    Depreciation    

InterestExpense

   

HotelEBITDA

   

Hotel EBITDAMargin

Embassy Suites Atlanta-Buckhead $ 7,970 $ 2,037 $ — $ 1,238 $ — $ 3,275 41.1 % DoubleTree Suites by Hilton Austin 7,886 2,158 — 974 372 3,504 44.4 % Embassy Suites Birmingham 5,226 594 1 784 595 1,974 37.8 % The Fairmont Copley Plaza, Boston 27,825 (757 ) (91 ) 4,377 950 4,479 16.1 % Wyndham Boston Beacon Hill 10,486 1,983 — 1,972 — 3,955 37.7 % Embassy Suites Boston-Marlborough 5,771 1,224 — 593 — 1,817 31.5 % Sheraton Burlington Hotel & Conference Center 6,690 179 — 1,243 — 1,422 21.3 % The Mills House Wyndham Grand Hotel, Charleston 11,123 3,178 — 1,269 489 4,936 44.4 % Embassy Suites Dallas-Love Field 5,982 1,176 — 686 — 1,862 31.1 % Embassy Suites Deerfield Beach-Resort & Spa 10,428 2,529 — 953 796 4,278 41.0 % Embassy Suites Fort Lauderdale 17th Street 13,048 2,713 1 1,424 895 5,033 38.6 % Wyndham Houston-Medical Center Hotel & Suites 7,644 2,560 (38 ) 1,104 — 3,626 47.4 % Renaissance Esmeralda Indian Wells Resort & Spa 27,306 (386 ) 6,418

(1)

1,549 — 7,581 27.8 % Embassy Suites Los Angeles-International Airport/South 11,221 2,558 — 1,276 558 4,392 39.1 % Embassy Suites Mandalay Beach-Hotel & Resort 10,506 2,548 — 1,542 — 4,090 38.9 % Embassy Suites Miami-International Airport 10,047 2,175 — 927 — 3,102 30.9 % Embassy Suites Milpitas-Silicon Valley 9,477 3,070 — 603 — 3,673 38.8 % Embassy Suites Minneapolis-Airport 6,556 347 1 877 945 2,170 33.1 % Embassy Suites Myrtle Beach-Oceanfront Resort 11,051 1,343 228 1,333 — 2,904 26.3 % Hilton Myrtle Beach Resort 9,720 930 — 1,723 — 2,653 27.3 % Embassy Suites Napa Valley 8,072 1,246 1 1,035 691 2,973 36.8 % Holiday Inn Nashville Airport 7,610 556 89 1,512 — 2,157 28.3 % Wyndham New Orleans-French Quarter 8,931 2,701 — 1,437 — 4,138 46.3 % Morgans New York 4,551 (2,046 ) 291 1,266 — (489 ) (10.7 )% Royalton New York 9,387 (1,923 ) 294 1,162 — (467 ) (5.0 )% Embassy Suites Orlando-International Drive South/Convention Center 5,879 1,405 — 540 — 1,945 33.1 % DoubleTree Suites by Hilton Orlando-Lake Buena Vista 7,156 587 — 1,541 — 2,128 29.7 % Wyndham Philadelphia Historic District 8,855 1,308 10 1,483 — 2,801 31.6 % Sheraton Philadelphia Society Hill Hotel 12,389 1,269 — 1,953 — 3,222 26.0 % Embassy Suites Phoenix-Biltmore 6,790 2,039 — 869 — 2,908 42.8 % Wyndham Pittsburgh University Center 5,615 484 3 1,035 — 1,522 27.1 % Wyndham San Diego Bayside 15,245 1,330 — 3,131 — 4,461 29.3 % Embassy Suites San Francisco Airport-South San Francisco 12,025 3,384 — 827 — 4,211 35.0 % Embassy Suites San Francisco Airport-Waterfront 13,534 2,513 650 1,512 — 4,675 34.5 % Holiday Inn San Francisco-Fisherman’s Wharf 20,396 1,743 — 975 — 2,718 13.3 % San Francisco Marriott Union Square 22,738 3,745 (104 ) 2,712 1,143 7,496 33.0 % Wyndham Santa Monica At the Pier 6,080 2,306 1 562 386 3,255 53.5 % Embassy Suites Secaucus-Meadowlands 6,141 543 1 243 — 787 12.8 % The Vinoy Renaissance St. Petersburg Resort & Golf Club   31,166   4,293     233       2,869   812   8,207   26.3 % $ 428,523 $ 59,642   $ 7,989     $ 53,111 $ 8,632 $ 129,374   30.2 %           Six months ended June 30, 2015 Same-store Hotels Hotel Operating Revenue     Net Income (Loss)     Other Adjustments     Depreciation     Interest Expense     Hotel EBITDA Hotel EBITDA Margin Embassy Suites Atlanta-Buckhead $ 7,562 $ 1,856 $ — $ 1,288 $ — $ 3,144 41.6 % DoubleTree Suites by Hilton Austin 7,857 2,493 — 977 70 3,540 45.1 % Embassy Suites Birmingham 5,030 526 1 783 602 1,912 38.0 % The Fairmont Copley Plaza, Boston 27,344 446 — 4,332 179 4,957 18.1 % Wyndham Boston Beacon Hill 10,705 2,031 — 2,002 — 4,033 37.7 % Embassy Suites Boston-Marlborough 5,995 1,401 — 582 — 1,983 33.1 % Sheraton Burlington Hotel & Conference Center 6,645 246 — 1,186 — 1,432 21.6 % The Mills House Wyndham Grand Hotel, Charleston 10,457 2,733 22 1,226 428 4,409 42.2 % Embassy Suites Dallas-Love Field 6,185 1,390 — 678 — 2,068 33.4 % Embassy Suites Deerfield Beach-Resort & Spa 10,723 2,742 — 1,076 804 4,622 43.1 % Embassy Suites Fort Lauderdale 17th Street 12,536 2,367 1 1,481 905 4,754 37.9 % Wyndham Houston-Medical Center Hotel & Suites 7,336 2,234 (31 ) 1,082 210 3,495 47.6 % Renaissance Esmeralda Indian Wells Resort & Spa 25,909 5,085 — 1,804 — 6,889 26.6 % Embassy Suites Los Angeles-International Airport/South 9,683 2,466 — 1,308 105 3,879 40.1 % Embassy Suites Mandalay Beach-Hotel & Resort 9,317 1,259 24 1,626 372 3,281 35.2 % Embassy Suites Miami-International Airport 10,383 2,119 20 989 308 3,436 33.1 % Embassy Suites Milpitas-Silicon Valley 9,063 2,856 — 628 — 3,484 38.4 % Embassy Suites Minneapolis-Airport 6,503 341 1 926 956 2,224 34.2 % Embassy Suites Myrtle Beach-Oceanfront Resort 10,411 769 25 1,478 368 2,640 25.4 % Hilton Myrtle Beach Resort 9,747 1,110 — 1,685 — 2,795 28.7 % Embassy Suites Napa Valley 7,693 1,087 6 1,040 699 2,832 36.8 % Holiday Inn Nashville Airport 5,949 46 — 1,132 — 1,178 19.8 % Wyndham New Orleans-French Quarter 8,689 1,668 536 1,415 529 4,148 47.7 % Morgans New York 4,462 (1,670 ) — 1,235 — (435 ) (9.7 )% Royalton New York 9,631 (1,249 ) — 1,125 — (124 ) (1.3 )% Embassy Suites Orlando-International Drive South/Convention Center 6,145 1,580 — 556 — 2,136 34.8 % DoubleTree Suites by Hilton Orlando-Lake Buena Vista 6,820 472 — 1,604 — 2,076 30.4 % Wyndham Philadelphia Historic District 8,041 457 19 1,577 287 2,340 29.1 % Sheraton Philadelphia Society Hill Hotel 12,378 1,161 — 2,013 — 3,174 25.6 % Embassy Suites Phoenix-Biltmore 6,600 1,238 276 930 280 2,724 41.3 % Wyndham Pittsburgh University Center 5,689 270 16 1,078 251 1,615 28.4 % Wyndham San Diego Bayside 15,783 1,143 — 3,243 — 4,386 27.8 % Embassy Suites San Francisco Airport-South San Francisco 11,562 3,276 — 820 — 4,096 35.4 % Embassy Suites San Francisco Airport-Waterfront 13,036 6,684 (3,717 )

(2)

1,489 — 4,456 34.2 % Holiday Inn San Francisco-Fisherman’s Wharf 19,617 1,836 — 822 — 2,658 13.5 % San Francisco Marriott Union Square 20,501 495 1,063

(3)

2,834 1,383 5,775 28.2 % Wyndham Santa Monica At the Pier 5,350 1,817 24 556 437 2,834 53.0 % Embassy Suites Secaucus-Meadowlands 6,926 1,228 4 294 — 1,526 22.0 % The Vinoy Renaissance St. Petersburg Resort & Golf Club   30,018   4,746     (5 )     2,874   153   7,768   25.9 % $ 414,281 $ 62,755   $ (1,715 )   $ 53,774 $ 9,326 $ 124,140   30.0 %  

The following are footnotes to the Hotel EBITDA tables on page 19 - 22:

(1) Amount primarily represents an impairment.

(2) Amount represents net revenue attributable to a favorable settlement of a commercial dispute.

(3) Amount primarily represents debt extinguishment charges.

            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 Six Months Ended June 30, June 30, 2016     2015 2016     2015 Same-store operating revenue $ 225,024 $ 219,592 $ 428,523 $ 414,281 Other revenue 1,145 5,054 1,832 5,464 Revenue from hotels disposed, held for sale and recently opened(a)   11,737     16,457     17,695     35,053   Total revenue 237,906 241,103 448,050 454,798 Same-store operating expense 151,058 147,832 299,149 290,141 Consolidated hotel lease expense(b) 1,359 2,134 2,161 4,238 Unconsolidated taxes, insurance and lease expense (517 ) (773 ) (969 ) (1,514 ) Corporate expenses 6,047 6,530 14,447 15,103 Depreciation and amortization 29,177 28,750 58,360 56,522 Impairment loss 6,333 — 6,333 — Expenses from hotels disposed, held for sale and recently opened(a) 8,851 14,242 16,221 29,013 Other expenses   2,142     1,411     2,970     5,639   Total operating expense   204,450     200,126     398,672     399,142   Operating income $ 33,456   $ 40,977   $ 49,378   $ 55,656  

(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) $ 23.3 $ 29.4 Preferred dividends   (25.1 )   (25.1 ) Net income (loss) attributable to FelCor common stockholders (1.8 ) $ (0.01 ) 4.3 $ 0.03 Depreciation(c) 115.0 115.0 Loss on sale of assets 1.3 1.3 Impairment loss 6.3 6.3 Noncontrolling interests in FelCor LP   (0.1 )   (0.2 ) FFO $ 120.7   $ 0.86 $ 126.7   $ 0.91 Abandoned project costs 0.6 0.6 Pre-opening costs 0.2 0.2 Litigation settlement   0.7     0.7   Adjusted FFO $ 122.2   $ 0.87 $ 128.2   $ 0.92   Net income attributable to FelCor(b) $ 23.3 $ 29.4 Depreciation(c) 115.0 115.0 Noncontrolling interests in FelCor LP (0.1 ) (0.2 ) Interest expense(c) 80.0 80.0 Income taxes 1.0 1.0 Preferred distributions - consolidated joint venture   1.4     1.4   EBITDA $ 220.6 $ 226.6 Loss on sale of assets 1.3 1.3 Abandoned project costs 0.6 0.6 Impairment loss 6.3 6.3 Litigation settlement 0.7 0.7 Pre-opening costs 0.2 0.2 Amortization of fixed stock and directors’ compensation   7.3     7.3   Adjusted EBITDA $ 237.0   $ 243.0     (a) Weighted average shares are 139.7 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.

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FelCor Lodging Trust IncorporatedStephen A. Schafer, 972-444-4912Senior Vice Presidentsschafer@felcor.com