|
|
Item 1.
|
Financial Statements.
|
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par values)
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
Investment in hotels, net of accumulated depreciation of $912,561 and $899,575 at September 30, 2016 and December 31, 2015, respectively
|
$
|
1,572,082
|
|
|
$
|
1,729,531
|
|
Investment in unconsolidated entities
|
9,405
|
|
|
9,575
|
|
Cash and cash equivalents
|
50,350
|
|
|
59,786
|
|
Restricted cash
|
22,130
|
|
|
17,702
|
|
Accounts receivable, net of allowance for doubtful accounts of $182 and $204 at September 30, 2016 and December 31, 2015, respectively
|
46,745
|
|
|
28,136
|
|
Deferred expenses, net of accumulated amortization of $2,490 and $1,086 at September 30, 2016 and December 31, 2015, respectively
|
4,996
|
|
|
6,390
|
|
Other assets
|
17,003
|
|
|
14,792
|
|
Total assets
|
$
|
1,722,711
|
|
|
$
|
1,865,912
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
Debt, net of unamortized debt issuance costs of $16,540 and $18,065 at September 30, 2016 and December 31, 2015, respectively
|
$
|
1,324,425
|
|
|
$
|
1,409,889
|
|
Distributions payable
|
14,969
|
|
|
15,140
|
|
Accrued expenses and other liabilities
|
130,013
|
|
|
125,274
|
|
Total liabilities
|
1,469,407
|
|
|
1,550,303
|
|
Commitments and contingencies
|
|
|
|
|
|
Redeemable noncontrolling interests in FelCor LP, 610 and 611 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
3,923
|
|
|
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 September 30, 2016 and December 31, 2015
|
309,337
|
|
|
309,337
|
|
Common stock, $0.01 par value, 200,000 shares authorized; 137,774 and 141,808 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
1,378
|
|
|
1,418
|
|
Additional paid-in capital
|
2,576,895
|
|
|
2,567,515
|
|
Accumulated deficit
|
(2,689,753
|
)
|
|
(2,618,117
|
)
|
Total FelCor stockholders’ equity
|
197,857
|
|
|
260,153
|
|
Noncontrolling interests in other partnerships
|
7,741
|
|
|
7,806
|
|
Preferred equity in consolidated joint venture, liquidation value of $44,638 and $43,954 at September 30, 2016 and December 31, 2015, respectively
|
43,783
|
|
|
43,186
|
|
Total equity
|
249,381
|
|
|
311,145
|
|
Total liabilities and equity
|
$
|
1,722,711
|
|
|
$
|
1,865,912
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the
Three
and
Nine
Months Ended
September 30, 2016
and
2015
(unaudited, in thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Hotel operating revenue
|
$
|
221,172
|
|
|
$
|
223,474
|
|
|
$
|
667,390
|
|
|
$
|
672,808
|
|
Other revenue
|
1,809
|
|
|
1,678
|
|
|
3,641
|
|
|
7,142
|
|
Total revenues
|
222,981
|
|
|
225,152
|
|
|
671,031
|
|
|
679,950
|
|
Expenses:
|
|
|
|
|
|
|
|
Hotel departmental expenses
|
76,079
|
|
|
78,514
|
|
|
234,896
|
|
|
236,202
|
|
Other property-related costs
|
52,875
|
|
|
55,893
|
|
|
164,448
|
|
|
170,579
|
|
Management and franchise fees
|
8,047
|
|
|
9,138
|
|
|
25,773
|
|
|
27,425
|
|
Taxes, insurance and lease expense
|
15,142
|
|
|
12,716
|
|
|
43,588
|
|
|
43,933
|
|
Corporate expenses
|
6,244
|
|
|
4,672
|
|
|
20,691
|
|
|
19,775
|
|
Depreciation and amortization
|
28,280
|
|
|
28,988
|
|
|
86,640
|
|
|
85,510
|
|
Impairment
|
20,126
|
|
|
20,861
|
|
|
26,459
|
|
|
20,861
|
|
Other expenses
|
7,581
|
|
|
5,807
|
|
|
10,551
|
|
|
11,446
|
|
Total operating expenses
|
214,374
|
|
|
216,589
|
|
|
613,046
|
|
|
615,731
|
|
Operating income
|
8,607
|
|
|
8,563
|
|
|
57,985
|
|
|
64,219
|
|
Interest expense, net
|
(19,428
|
)
|
|
(19,602
|
)
|
|
(59,055
|
)
|
|
(59,361
|
)
|
Debt extinguishment
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(30,909
|
)
|
Other gains, net
|
—
|
|
|
—
|
|
|
100
|
|
|
166
|
|
Loss before equity in income from unconsolidated entities
|
(10,821
|
)
|
|
(11,052
|
)
|
|
(970
|
)
|
|
(25,885
|
)
|
Equity in income from unconsolidated entities
|
814
|
|
|
321
|
|
|
1,386
|
|
|
7,983
|
|
Income (loss) from continuing operations before income tax
|
(10,007
|
)
|
|
(10,731
|
)
|
|
416
|
|
|
(17,902
|
)
|
Income tax
|
246
|
|
|
(1,054
|
)
|
|
(144
|
)
|
|
(1,392
|
)
|
Income (loss) from continuing operations
|
(9,761
|
)
|
|
(11,785
|
)
|
|
272
|
|
|
(19,294
|
)
|
Income (loss) from discontinued operations
|
(3,131
|
)
|
|
498
|
|
|
(3,131
|
)
|
|
419
|
|
Loss before gain on sale of hotels
|
(12,892
|
)
|
|
(11,287
|
)
|
|
(2,859
|
)
|
|
(18,875
|
)
|
Gain on sale of hotels, net
|
7,998
|
|
|
3,154
|
|
|
6,654
|
|
|
19,491
|
|
Net income (loss) and comprehensive income (loss)
|
(4,894
|
)
|
|
(8,133
|
)
|
|
3,795
|
|
|
616
|
|
Net loss (income) attributable to noncontrolling interests in other partnerships
|
114
|
|
|
227
|
|
|
601
|
|
|
(4,405
|
)
|
Net loss attributable to redeemable noncontrolling interests in FelCor LP
|
50
|
|
|
61
|
|
|
67
|
|
|
150
|
|
Preferred distributions - consolidated joint venture
|
(369
|
)
|
|
(363
|
)
|
|
(1,093
|
)
|
|
(1,070
|
)
|
Net income (loss) and comprehensive income (loss) attributable to FelCor
|
(5,099
|
)
|
|
(8,208
|
)
|
|
3,370
|
|
|
(4,709
|
)
|
Preferred dividends
|
(6,279
|
)
|
|
(6,279
|
)
|
|
(18,837
|
)
|
|
(23,860
|
)
|
Redemption of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,096
|
)
|
Net loss attributable to FelCor common stockholders
|
$
|
(11,378
|
)
|
|
$
|
(14,487
|
)
|
|
$
|
(15,467
|
)
|
|
$
|
(34,665
|
)
|
Basic and diluted per common share data:
|
|
|
|
|
|
|
|
Loss from continuing operations
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.26
|
)
|
Net loss
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.26
|
)
|
Basic and diluted weighted average common shares outstanding
|
137,464
|
|
|
142,982
|
|
|
138,437
|
|
|
136,009
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the
Nine
Months Ended
September 30, 2016
and
2015
(unaudited, in thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Noncontrolling Interests in Other Partnerships
|
|
Preferred Equity in Consolidated Joint Venture
|
|
Total Equity
|
|
Number of Shares
|
|
Amount
|
|
Number of Shares
|
|
Amount
|
|
|
|
|
|
Balance at December 31, 2014
|
12,947
|
|
|
$
|
478,749
|
|
|
124,605
|
|
|
$
|
1,246
|
|
|
$
|
2,353,666
|
|
|
$
|
(2,530,671
|
)
|
|
$
|
18,435
|
|
|
$
|
41,442
|
|
|
$
|
362,867
|
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
18,400
|
|
|
184
|
|
|
198,467
|
|
|
—
|
|
|
—
|
|
|
|
|
198,651
|
|
Issuance of stock awards
|
—
|
|
|
—
|
|
|
379
|
|
|
4
|
|
|
690
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
694
|
|
Stock awards - amortization and severance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,702
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,702
|
|
Stock compensation shares withheld
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
Redemption of Series C preferred stock
|
(68
|
)
|
|
(169,412
|
)
|
|
—
|
|
|
—
|
|
|
5,522
|
|
|
(6,096
|
)
|
|
—
|
|
|
—
|
|
|
(169,986
|
)
|
Allocation to redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,076
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,076
|
|
Contribution from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,544
|
|
|
—
|
|
|
2,544
|
|
Distribution to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,294
|
)
|
|
—
|
|
|
(16,294
|
)
|
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.12 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,382
|
)
|
|
—
|
|
|
—
|
|
|
(17,382
|
)
|
$1.4625 per Series A preferred share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,837
|
)
|
|
—
|
|
|
—
|
|
|
(18,837
|
)
|
$1.00 per Series C depositary preferred share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,023
|
)
|
|
—
|
|
|
—
|
|
|
(5,023
|
)
|
Preferred distributions - consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,070
|
)
|
|
(1,070
|
)
|
Issuance of preferred equity - consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,744
|
|
|
1,744
|
|
Net income (loss) and comprehensive income (loss) (attributable to FelCor and noncontrolling interests in other partnerships)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,709
|
)
|
|
4,405
|
|
|
1,070
|
|
|
766
|
|
Balance at September 30, 2015
|
12,879
|
|
|
$
|
309,337
|
|
|
143,382
|
|
|
$
|
1,434
|
|
|
$
|
2,566,123
|
|
|
$
|
(2,582,726
|
)
|
|
$
|
9,090
|
|
|
$
|
43,186
|
|
|
$
|
346,444
|
|
Balance at December 31, 2015
|
12,879
|
|
|
$
|
309,337
|
|
|
141,808
|
|
|
$
|
1,418
|
|
|
$
|
2,567,515
|
|
|
$
|
(2,618,117
|
)
|
|
$
|
7,806
|
|
|
$
|
43,186
|
|
|
$
|
311,145
|
|
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(4,610
|
)
|
|
(45
|
)
|
|
—
|
|
|
(30,417
|
)
|
|
—
|
|
|
—
|
|
|
(30,462
|
)
|
Issuance of stock awards
|
—
|
|
|
—
|
|
|
673
|
|
|
6
|
|
|
823
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
829
|
|
Cumulative effect of change in accounting for stock compensation forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
185
|
|
|
(185
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock awards - amortization and severance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,008
|
|
Stock compensation shares withheld
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
(1
|
)
|
|
—
|
|
|
(591
|
)
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
Conversion of operating partnership units into common shares
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
Allocation to redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
355
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
355
|
|
Contribution from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
552
|
|
|
—
|
|
|
552
|
|
Distribution to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
(16
|
)
|
Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.18 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,976
|
)
|
|
—
|
|
|
—
|
|
|
(24,976
|
)
|
$1.4625 per Series A preferred share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,837
|
)
|
|
—
|
|
|
—
|
|
|
(18,837
|
)
|
Preferred distributions - consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,093
|
)
|
|
(1,093
|
)
|
Issuance of preferred equity - consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
597
|
|
|
597
|
|
Net income (loss) and comprehensive income (loss) (attributable to FelCor and noncontrolling interests in other partnerships)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,370
|
|
|
(601
|
)
|
|
1,093
|
|
|
3,862
|
|
Balance at September 30, 2016
|
12,879
|
|
|
$
|
309,337
|
|
|
137,774
|
|
|
$
|
1,378
|
|
|
$
|
2,576,895
|
|
|
$
|
(2,689,753
|
)
|
|
$
|
7,741
|
|
|
$
|
43,783
|
|
|
$
|
249,381
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING TRUST INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the
Nine
Months Ended
September 30, 2016
and
2015
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2016
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
Net income
|
$
|
3,795
|
|
|
$
|
616
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
86,640
|
|
|
85,510
|
|
Gain on sale of hotels and other assets, net
|
(3,623
|
)
|
|
(20,065
|
)
|
Amortization of deferred financing fees
|
2,932
|
|
|
4,085
|
|
Amortization of fixed stock and directors’ compensation
|
5,338
|
|
|
5,214
|
|
Equity based severance
|
2,891
|
|
|
1,352
|
|
Equity in income from unconsolidated entities
|
(1,386
|
)
|
|
(7,983
|
)
|
Distributions of income from unconsolidated entities
|
769
|
|
|
5,680
|
|
Debt extinguishment
|
—
|
|
|
30,909
|
|
Impairment
|
26,459
|
|
|
20,861
|
|
Changes in assets and liabilities:
|
|
|
|
Accounts receivable
|
(13,538
|
)
|
|
(9,688
|
)
|
Other assets
|
(2,973
|
)
|
|
1,529
|
|
Accrued expenses and other liabilities
|
6,740
|
|
|
(3,958
|
)
|
Net cash flow provided by operating activities
|
114,044
|
|
|
114,062
|
|
Cash flows from investing activities:
|
|
|
|
Acquisition of land
|
(8,209
|
)
|
|
—
|
|
Improvements and additions to hotels
|
(51,328
|
)
|
|
(35,979
|
)
|
Hotel development
|
—
|
|
|
(31,599
|
)
|
Net proceeds from asset sales
|
101,721
|
|
|
190,035
|
|
Change in restricted cash – investing
|
(4,428
|
)
|
|
(4,204
|
)
|
Insurance proceeds
|
94
|
|
|
274
|
|
Distributions from unconsolidated entities in excess of earnings
|
786
|
|
|
6,460
|
|
Net cash flow provided by investing activities
|
38,636
|
|
|
124,987
|
|
Cash flows from financing activities:
|
|
|
|
Proceeds from borrowings
|
55,000
|
|
|
979,000
|
|
Repayment of borrowings
|
(141,989
|
)
|
|
(1,166,693
|
)
|
Payment of deferred financing fees
|
(12
|
)
|
|
(14,348
|
)
|
Distributions paid to noncontrolling interests
|
(16
|
)
|
|
(16,294
|
)
|
Contributions from noncontrolling interests
|
552
|
|
|
2,544
|
|
Distributions paid to FelCor LP limited partners
|
(110
|
)
|
|
(68
|
)
|
Distributions paid to preferred stockholders
|
(18,837
|
)
|
|
(26,125
|
)
|
Redemption of preferred stock
|
—
|
|
|
(169,986
|
)
|
Repurchase of common stock
|
(30,462
|
)
|
|
—
|
|
Stock compensation withholding
|
(592
|
)
|
|
(8
|
)
|
Preferred distributions - consolidated joint venture
|
(1,097
|
)
|
|
(1,070
|
)
|
Distributions paid to common stockholders
|
(25,141
|
)
|
|
(16,498
|
)
|
Net proceeds from issuance of preferred equity - consolidated joint venture
|
597
|
|
|
1,744
|
|
Net proceeds from common stock issuance
|
—
|
|
|
198,651
|
|
Net cash flow used in financing activities
|
(162,107
|
)
|
|
(229,151
|
)
|
Effect of exchange rate changes on cash
|
(9
|
)
|
|
(134
|
)
|
Net change in cash and cash equivalents
|
(9,436
|
)
|
|
9,764
|
|
Cash and cash equivalents at beginning of periods
|
59,786
|
|
|
47,147
|
|
Cash and cash equivalents at end of periods
|
$
|
50,350
|
|
|
$
|
56,911
|
|
Supplemental cash flow information – interest paid, net of capitalized interest
|
$
|
56,853
|
|
|
$
|
55,215
|
|
Supplemental cash flow information – income taxes paid
|
$
|
575
|
|
|
$
|
1,483
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
2016
|
|
2015
|
Assets
|
|
|
|
Investment in hotels, net of accumulated depreciation of $912,561 and $899,575 at September 30, 2016 and December 31, 2015, respectively
|
$
|
1,572,082
|
|
|
$
|
1,729,531
|
|
Investment in unconsolidated entities
|
9,405
|
|
|
9,575
|
|
Cash and cash equivalents
|
50,350
|
|
|
59,786
|
|
Restricted cash
|
22,130
|
|
|
17,702
|
|
Accounts receivable, net of allowance for doubtful accounts of $182 and $204 at September 30, 2016 and December 31, 2015, respectively
|
46,745
|
|
|
28,136
|
|
Deferred expenses, net of accumulated amortization of $2,490 and $1,086 at September 30, 2016 and December 31, 2015, respectively
|
4,996
|
|
|
6,390
|
|
Other assets
|
17,003
|
|
|
14,792
|
|
Total assets
|
$
|
1,722,711
|
|
|
$
|
1,865,912
|
|
|
|
|
|
Liabilities and Partners’ Capital
|
|
|
|
Debt, net of unamortized debt issuance costs of $16,540 and $18,065 at September 30, 2016 and December 31, 2015, respectively
|
$
|
1,324,425
|
|
|
$
|
1,409,889
|
|
Distributions payable
|
14,969
|
|
|
15,140
|
|
Accrued expenses and other liabilities
|
130,013
|
|
|
125,274
|
|
Total liabilities
|
1,469,407
|
|
|
1,550,303
|
|
Commitments and contingencies
|
|
|
|
|
|
Redeemable units, 610 and 611 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
3,923
|
|
|
4,464
|
|
Capital:
|
|
|
|
Preferred units:
|
|
|
|
Series A Cumulative Convertible Preferred Units, 12,879 units issued and outstanding at September 30, 2016 and December 31, 2015
|
309,337
|
|
|
309,337
|
|
Common units, 137,774 and 141,808 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
(111,480
|
)
|
|
(49,184
|
)
|
Total FelCor LP partners’ capital
|
197,857
|
|
|
260,153
|
|
Noncontrolling interests
|
7,741
|
|
|
7,806
|
|
Preferred capital in consolidated joint venture
|
43,783
|
|
|
43,186
|
|
Total partners’ capital
|
249,381
|
|
|
311,145
|
|
Total liabilities and partners’ capital
|
$
|
1,722,711
|
|
|
$
|
1,865,912
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the
Three
and
Nine
Months Ended
September 30, 2016
and
2015
(unaudited, in thousands, except for per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Hotel operating revenue
|
$
|
221,172
|
|
|
$
|
223,474
|
|
|
$
|
667,390
|
|
|
$
|
672,808
|
|
Other revenue
|
1,809
|
|
|
1,678
|
|
|
3,641
|
|
|
7,142
|
|
Total revenues
|
222,981
|
|
|
225,152
|
|
|
671,031
|
|
|
679,950
|
|
Expenses:
|
|
|
|
|
|
|
|
Hotel departmental expenses
|
76,079
|
|
|
78,514
|
|
|
234,896
|
|
|
236,202
|
|
Other property-related costs
|
52,875
|
|
|
55,893
|
|
|
164,448
|
|
|
170,579
|
|
Management and franchise fees
|
8,047
|
|
|
9,138
|
|
|
25,773
|
|
|
27,425
|
|
Taxes, insurance and lease expense
|
15,142
|
|
|
12,716
|
|
|
43,588
|
|
|
43,933
|
|
Corporate expenses
|
6,244
|
|
|
4,672
|
|
|
20,691
|
|
|
19,775
|
|
Depreciation and amortization
|
28,280
|
|
|
28,988
|
|
|
86,640
|
|
|
85,510
|
|
Impairment
|
20,126
|
|
|
20,861
|
|
|
26,459
|
|
|
20,861
|
|
Other expenses
|
7,581
|
|
|
5,807
|
|
|
10,551
|
|
|
11,446
|
|
Total operating expenses
|
214,374
|
|
|
216,589
|
|
|
613,046
|
|
|
615,731
|
|
Operating income
|
8,607
|
|
|
8,563
|
|
|
57,985
|
|
|
64,219
|
|
Interest expense, net
|
(19,428
|
)
|
|
(19,602
|
)
|
|
(59,055
|
)
|
|
(59,361
|
)
|
Debt extinguishment
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(30,909
|
)
|
Other gains, net
|
—
|
|
|
—
|
|
|
100
|
|
|
166
|
|
Loss before equity in income from unconsolidated entities
|
(10,821
|
)
|
|
(11,052
|
)
|
|
(970
|
)
|
|
(25,885
|
)
|
Equity in income from unconsolidated entities
|
814
|
|
|
321
|
|
|
1,386
|
|
|
7,983
|
|
Income (loss) from continuing operations before income tax
|
(10,007
|
)
|
|
(10,731
|
)
|
|
416
|
|
|
(17,902
|
)
|
Income tax
|
246
|
|
|
(1,054
|
)
|
|
(144
|
)
|
|
(1,392
|
)
|
Income (loss) from continuing operations
|
(9,761
|
)
|
|
(11,785
|
)
|
|
272
|
|
|
(19,294
|
)
|
Income (loss) from discontinued operations
|
(3,131
|
)
|
|
498
|
|
|
(3,131
|
)
|
|
419
|
|
Loss before gain on sale of hotels
|
(12,892
|
)
|
|
(11,287
|
)
|
|
(2,859
|
)
|
|
(18,875
|
)
|
Gain on sale of hotels, net
|
7,998
|
|
|
3,154
|
|
|
6,654
|
|
|
19,491
|
|
Net income (loss) and comprehensive income (loss)
|
(4,894
|
)
|
|
(8,133
|
)
|
|
3,795
|
|
|
616
|
|
Net loss (income) attributable to noncontrolling interests
|
114
|
|
|
227
|
|
|
601
|
|
|
(4,405
|
)
|
Preferred distributions - consolidated joint venture
|
(369
|
)
|
|
(363
|
)
|
|
(1,093
|
)
|
|
(1,070
|
)
|
Net income (loss) and comprehensive income (loss) attributable to FelCor LP
|
(5,149
|
)
|
|
(8,269
|
)
|
|
3,303
|
|
|
(4,859
|
)
|
Preferred distributions
|
(6,279
|
)
|
|
(6,279
|
)
|
|
(18,837
|
)
|
|
(23,860
|
)
|
Redemption of preferred units
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,096
|
)
|
Net loss attributable to FelCor LP common unitholders
|
$
|
(11,428
|
)
|
|
$
|
(14,548
|
)
|
|
$
|
(15,534
|
)
|
|
$
|
(34,815
|
)
|
Basic and diluted per common unit data:
|
|
|
|
|
|
|
|
Loss from continuing operations
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.26
|
)
|
Net loss
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.26
|
)
|
Basic and diluted weighted average common units outstanding
|
138,075
|
|
|
143,594
|
|
|
139,048
|
|
|
136,621
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the
Nine
Months Ended
September 30, 2016
and
2015
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Units
|
|
Common Units
|
|
Noncontrolling Interests
|
|
Preferred Capital in Consolidated Joint Venture
|
|
Total Partners’ Capital
|
Balance at December 31, 2014
|
$
|
478,749
|
|
|
$
|
(175,759
|
)
|
|
$
|
18,435
|
|
|
$
|
41,442
|
|
|
$
|
362,867
|
|
Issuance of common units
|
—
|
|
|
198,651
|
|
|
—
|
|
|
|
|
198,651
|
|
FelCor restricted stock compensation
|
—
|
|
|
6,388
|
|
|
—
|
|
|
—
|
|
|
6,388
|
|
Redemption of Series C preferred units
|
(169,412
|
)
|
|
(574
|
)
|
|
—
|
|
|
—
|
|
|
(169,986
|
)
|
Contributions
|
—
|
|
|
—
|
|
|
2,544
|
|
|
—
|
|
|
2,544
|
|
Distributions
|
—
|
|
|
(41,309
|
)
|
|
(16,294
|
)
|
|
(1,070
|
)
|
|
(58,673
|
)
|
Allocation to redeemable units
|
—
|
|
|
2,293
|
|
|
—
|
|
|
—
|
|
|
2,293
|
|
Issuance of preferred capital - consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
1,744
|
|
|
1,744
|
|
Net income (loss) and comprehensive income (loss)
|
—
|
|
|
(4,859
|
)
|
|
4,405
|
|
|
1,070
|
|
|
616
|
|
Balance at September 30, 2015
|
$
|
309,337
|
|
|
$
|
(15,169
|
)
|
|
$
|
9,090
|
|
|
$
|
43,186
|
|
|
$
|
346,444
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
$
|
309,337
|
|
|
$
|
(49,184
|
)
|
|
$
|
7,806
|
|
|
$
|
43,186
|
|
|
$
|
311,145
|
|
Repurchase of common units
|
—
|
|
|
(30,462
|
)
|
|
—
|
|
|
—
|
|
|
(30,462
|
)
|
FelCor restricted stock compensation
|
—
|
|
|
8,245
|
|
|
—
|
|
|
—
|
|
|
8,245
|
|
Contributions
|
—
|
|
|
—
|
|
|
552
|
|
|
—
|
|
|
552
|
|
Distributions
|
—
|
|
|
(43,923
|
)
|
|
(16
|
)
|
|
(1,093
|
)
|
|
(45,032
|
)
|
Allocation to redeemable units
|
—
|
|
|
541
|
|
|
—
|
|
|
—
|
|
|
541
|
|
Issuance of preferred capital - consolidated joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
597
|
|
|
597
|
|
Net income (loss) and comprehensive income (loss)
|
—
|
|
|
3,303
|
|
|
(601
|
)
|
|
1,093
|
|
|
3,795
|
|
Balance at September 30, 2016
|
$
|
309,337
|
|
|
$
|
(111,480
|
)
|
|
$
|
7,741
|
|
|
$
|
43,783
|
|
|
$
|
249,381
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the
Nine
Months Ended
September 30, 2016
and
2015
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2016
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
Net income
|
$
|
3,795
|
|
|
$
|
616
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
86,640
|
|
|
85,510
|
|
Gain on sale of hotels and other assets, net
|
(3,623
|
)
|
|
(20,065
|
)
|
Amortization of deferred financing fees
|
2,932
|
|
|
4,085
|
|
Amortization of fixed stock and directors’ compensation
|
5,338
|
|
|
5,214
|
|
Equity based severance
|
2,891
|
|
|
1,352
|
|
Equity in income from unconsolidated entities
|
(1,386
|
)
|
|
(7,983
|
)
|
Distributions of income from unconsolidated entities
|
769
|
|
|
5,680
|
|
Debt extinguishment
|
—
|
|
|
30,909
|
|
Impairment
|
26,459
|
|
|
20,861
|
|
Changes in assets and liabilities:
|
|
|
|
Accounts receivable
|
(13,538
|
)
|
|
(9,688
|
)
|
Other assets
|
(2,973
|
)
|
|
1,529
|
|
Accrued expenses and other liabilities
|
6,740
|
|
|
(3,958
|
)
|
Net cash flow provided by operating activities
|
114,044
|
|
|
114,062
|
|
Cash flows from investing activities:
|
|
|
|
Acquisition of land
|
(8,209
|
)
|
|
—
|
|
Improvements and additions to hotels
|
(51,328
|
)
|
|
(35,979
|
)
|
Hotel development
|
—
|
|
|
(31,599
|
)
|
Net proceeds from asset sales
|
101,721
|
|
|
190,035
|
|
Change in restricted cash – investing
|
(4,428
|
)
|
|
(4,204
|
)
|
Insurance proceeds
|
94
|
|
|
274
|
|
Distributions from unconsolidated entities in excess of earnings
|
786
|
|
|
6,460
|
|
Net cash flow provided by investing activities
|
38,636
|
|
|
124,987
|
|
Cash flows from financing activities:
|
|
|
|
Proceeds from borrowings
|
55,000
|
|
|
979,000
|
|
Repayment of borrowings
|
(141,989
|
)
|
|
(1,166,693
|
)
|
Payment of deferred financing fees
|
(12
|
)
|
|
(14,348
|
)
|
Distributions paid to noncontrolling interests
|
(16
|
)
|
|
(16,294
|
)
|
Contributions from noncontrolling interests
|
552
|
|
|
2,544
|
|
Distributions paid to FelCor LP limited partners
|
(110
|
)
|
|
(68
|
)
|
Distributions paid to preferred unitholders
|
(18,837
|
)
|
|
(26,125
|
)
|
Redemption of preferred units
|
—
|
|
|
(169,986
|
)
|
Repurchase of common units
|
(30,462
|
)
|
|
—
|
|
FelCor stock compensation withholding
|
(592
|
)
|
|
(8
|
)
|
Preferred distributions - consolidated joint venture
|
(1,097
|
)
|
|
(1,070
|
)
|
Distributions paid to common unitholders
|
(25,141
|
)
|
|
(16,498
|
)
|
Net proceeds from issuance of preferred capital - consolidated joint venture
|
597
|
|
|
1,744
|
|
Net proceeds from common unit issuance
|
—
|
|
|
198,651
|
|
Net cash flow used in financing activities
|
(162,107
|
)
|
|
(229,151
|
)
|
Effect of exchange rate changes on cash
|
(9
|
)
|
|
(134
|
)
|
Net change in cash and cash equivalents
|
(9,436
|
)
|
|
9,764
|
|
Cash and cash equivalents at beginning of periods
|
59,786
|
|
|
47,147
|
|
Cash and cash equivalents at end of periods
|
$
|
50,350
|
|
|
$
|
56,911
|
|
Supplemental cash flow information – interest paid, net of capitalized interest
|
$
|
56,853
|
|
|
$
|
55,215
|
|
Supplemental cash flow information – income taxes paid
|
$
|
575
|
|
|
$
|
1,483
|
|
The accompanying notes are an integral part of these consolidated financial statements.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FelCor Lodging Trust Incorporated (NYSE:FCH), or FelCor, is a Maryland corporation operating as a real estate investment trust, or REIT. FelCor is the sole general partner of, and the owner of a greater than
99.5%
partnership interest in, FelCor Lodging Limited Partnership, or FelCor LP, through which we held ownership interests in
39
hotels as of
September 30, 2016
. At
September 30, 2016
, we had an aggregate of
138,384,179
shares and units outstanding, consisting of
137,773,996
shares of FelCor common stock and
610,183
FelCor LP units not owned by FelCor.
Of our
39
hotels, as of
September 30, 2016
, we owned
100%
interests in
36
hotels, a
95%
interest in
one
hotel (The Knickerbocker) and
50%
interests in entities owning
two
hotels. We consolidate our real estate interests in the
37
hotels in which we hold majority interests, and we record the real estate interests of the
two
hotels in which we hold indirect
50%
interests using the equity method. We lease
38
of the
39
hotels to our taxable REIT subsidiaries, of which we own a controlling interest. We operate
one
50%
‑owned hotel without a lease. Because we own controlling interests in our operating lessees, we consolidate our interests in all
38
leased hotels (which we refer to as our Consolidated Hotels) and reflect their operating revenues and expenses in our statements of operations and comprehensive income (loss). We own
50%
of the real estate interest in
one
Consolidated Hotel (we account for our real estate interest in this hotel by the equity method) and majority real estate interests in our remaining
37
Consolidated Hotels (we consolidate our real estate interests in these hotels).
The following table illustrates the distribution by brand of our
38
Consolidated Hotels at
September 30, 2016
:
|
|
|
|
|
|
|
|
|
Brand
|
|
Hotels
|
|
Rooms
|
Embassy Suites by Hilton
®
|
|
18
|
|
|
|
4,982
|
|
Wyndham
®
and Wyndham Grand
®
|
|
8
|
|
|
|
2,528
|
|
Marriott
®
and Renaissance
®
|
|
2
|
|
|
|
761
|
|
Holiday Inn
®
|
|
1
|
|
|
|
585
|
|
DoubleTree
by Hilton
®
and Hilton
®
|
|
3
|
|
|
|
802
|
|
Sheraton
®
|
|
2
|
|
|
|
673
|
|
Fairmont
®
|
|
1
|
|
|
|
383
|
|
The Knickerbocker
®
|
|
1
|
|
|
|
330
|
|
Morgans
®
and Royalton
®
|
|
2
|
|
|
|
285
|
|
Total
|
|
38
|
|
|
|
11,329
|
|
At
September 30, 2016
, our Consolidated Hotels were located in
14
states, with concentrations in California (
10
hotels), Florida (
six
hotels) and Massachusetts (
three
hotels). We generated approximately
56%
of our revenue from hotels in these
three
states during the first
nine
months of
2016
.
At
September 30, 2016
, of our Consolidated Hotels: (i) subsidiaries of Hilton Worldwide managed
20
hotels; (ii) subsidiaries of Wyndham Worldwide managed
eight
hotels; (iii) subsidiaries of Marriott International managed
four
hotels; (iv) subsidiaries of InterContinental Hotels Group managed
one
hotel; (v) Fairmont, a subsidiary of AccorHotels Group, managed
one
hotel; (vi) a subsidiary of Highgate Hotels managed
one
hotel; (vii) a subsidiary of Morgans Hotel Group Corporation managed
two
hotels; and (viii) Aimbridge Hospitality managed
one
hotel.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization — (continued)
On January 1, 2016, we adopted accounting guidance under Accounting Standards Update (“ASU”) 2015-2, modifying the analysis performed to determine whether we should consolidate certain types of legal entities. The guidance does not amend the existing disclosure requirements for variable interest entities “VIEs” or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, FelCor LP is a variable interest entity of FelCor. As FelCor LP is already consolidated in the balance sheets of FelCor, the identification of this entity as a variable interest entity has no impact on the consolidated financial statements of FelCor. There were no other legal entities under the scope of the revised guidance that were consolidated as a result of the adoption.
The information in our consolidated financial statements for the
three
and
nine
months ended
September 30, 2016
and
2015
is unaudited. Preparing financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying financial statements for the
three
and
nine
months ended
September 30, 2016
and
2015
, include adjustments based on management’s estimates (consisting of normal and recurring accruals), which we consider necessary for a fair statement of the results for the periods. The financial information should be read in conjunction with the consolidated financial statements for the year ended
December 31, 2015
, included in our Annual Report on Form 10-K. Operating results for the
three
and
nine
months ended
September 30, 2016
are not necessarily indicative of actual operating results for the entire year.
|
|
2.
|
Investment in Unconsolidated Entities
|
At
September 30, 2016
and
December 31, 2015
, we owned
50%
interests in joint ventures that owned
two
hotels. We also own
50%
interests in entities that own real estate in Myrtle Beach, South Carolina and provide condominium management services at these locations. We account for our investments in these unconsolidated entities under the equity method. We consolidate all of our majority-owned subsidiaries in our financial statements. We make adjustments to our equity in income from unconsolidated entities related to the difference between our basis in investment in unconsolidated entities compared to the historical basis of the assets recorded by the joint ventures.
The following table summarizes combined balance sheet information for our unconsolidated entities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
2016
|
|
2015
|
Investment in hotels and other properties, net of accumulated depreciation
|
$
|
21,677
|
|
|
|
$
|
23,047
|
|
|
Total assets
|
$
|
29,574
|
|
|
|
$
|
29,033
|
|
|
Debt, net of unamortized debt issuance costs
|
$
|
22,190
|
|
|
|
$
|
22,563
|
|
|
Total liabilities
|
$
|
24,841
|
|
|
|
$
|
24,541
|
|
|
Equity
|
$
|
4,733
|
|
|
|
$
|
4,492
|
|
|
Our unconsolidated entities’ debt at
September 30, 2016
and December 31, 2015 consisted entirely of non-recourse mortgage debt.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
2.
|
Investment in Unconsolidated Entities — (continued)
|
In May 2015,
one
of our joint ventures sold a hotel, resulting in a
$7.1 million
gain that we included in our equity in income from unconsolidated entities.
The following table sets forth summarized combined statement of operations information for our unconsolidated entities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Total revenues
|
$
|
12,214
|
|
|
$
|
10,642
|
|
|
$
|
27,891
|
|
|
$
|
27,622
|
|
Net income
|
$
|
1,821
|
|
|
$
|
836
|
|
|
$
|
3,351
|
|
|
$
|
22,906
|
|
Net income attributable to FelCor
|
$
|
911
|
|
|
$
|
418
|
|
|
$
|
1,676
|
|
|
$
|
11,453
|
|
Cost in excess of joint venture book value of sold hotel
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,140
|
)
|
Depreciation of cost in excess of book value
|
(97
|
)
|
|
(97
|
)
|
|
(290
|
)
|
|
(330
|
)
|
Equity in income from unconsolidated entities
|
$
|
814
|
|
|
$
|
321
|
|
|
$
|
1,386
|
|
|
$
|
7,983
|
|
The following table summarizes the components of our investments in unconsolidated entities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
2016
|
|
2015
|
Equity basis of hotel joint venture investments
|
$
|
(4,076
|
)
|
|
|
$
|
(4,216
|
)
|
|
Cost of hotel investments in excess of joint venture book value
|
7,039
|
|
|
|
7,329
|
|
|
Equity basis of land and condominium joint venture investments
|
6,442
|
|
|
|
6,462
|
|
|
Investment in unconsolidated entities
|
$
|
9,405
|
|
|
|
$
|
9,575
|
|
|
The following table summarizes the components of our equity in income from unconsolidated entities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Hotel investments
|
$
|
378
|
|
|
$
|
(63
|
)
|
|
$
|
1,405
|
|
|
$
|
8,141
|
|
Other investments
|
436
|
|
|
384
|
|
|
(19
|
)
|
|
(158
|
)
|
Equity in income from unconsolidated entities
|
$
|
814
|
|
|
$
|
321
|
|
|
$
|
1,386
|
|
|
$
|
7,983
|
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated debt consisted of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Encumbered
|
|
Interest
|
|
Maturity
|
|
September 30,
|
|
December 31,
|
|
Hotels
|
|
Rate (%)
|
|
Date
|
|
2016
|
|
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
|
|
120,643
|
|
|
122,237
|
|
Mortgage debt
|
1
|
|
|
|
4.94
|
|
|
October 2022
|
|
30,322
|
|
|
30,717
|
|
Line of credit
(b)
|
7
|
|
|
|
LIBOR + 2.75
|
|
June 2019
|
|
105,000
|
|
|
190,000
|
|
Mortgage debt
(c)
|
1
|
|
|
|
LIBOR + 3.00
|
|
November 2017
|
|
85,000
|
|
|
85,000
|
|
Total
|
22
|
|
|
|
|
|
|
|
|
$
|
1,340,965
|
|
|
$
|
1,427,954
|
|
Unamortized debt issuance costs
|
|
|
|
|
|
|
|
|
(16,540
|
)
|
|
(18,065
|
)
|
Debt, net of unamortized debt issuance costs
|
|
|
|
|
|
|
|
|
$
|
1,324,425
|
|
|
$
|
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.
|
Since adoption of ASU 2015-03, we classify deferred financing costs of
$16.5 million
and
$18.1 million
as of
September 30, 2016
and December 31, 2015, respectively, within the debt on our consolidated balance sheets. We previously classified deferred financing costs of
$18.1 million
at December 31, 2015 as an asset on our consolidated balance sheets. In accordance with ASU 2015-15, we continue classifying deferred financing costs associated with our line of credit as an asset on our consolidated balance sheets.
We reported
$19.4 million
and
$19.6 million
of interest expense for the
three
months ended
September 30, 2016
and
2015
, respectively, which is net of: (i) interest income of
$18,000
and
$6,000
and (ii) capitalized interest of
$293,000
and
$565,000
, respectively. We reported
$59.1 million
and
$59.4 million
of interest expense for the
nine
months ended
September 30, 2016
and
2015
, respectively, which is net of: (i) interest income of
$46,000
and
$18,000
and (ii) capitalized interest of
$640,000
and
$5.6 million
, respectively.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
4.
|
FelCor Capital Stock/FelCor LP Partners’ Capital
|
FelCor repurchased and retired
4.6 million
shares of common stock for
$30.5 million
(including commissions) for an average price of
$6.58
per share during the first nine months of 2016. Since FelCor’s Board of Directors authorized the current
$100 million
repurchase program, FelCor has repurchased
6.6 million
shares of common stock for
$44.8 million
(including commissions) for an average price of
$6.78
per share.
In April 2015, FelCor issued
18.4 million
shares of its common stock at
$11.25
per share in a public offering. FelCor contributed the net proceeds from the offering (
$199 million
) to FelCor LP in exchange for
18.4 million
common units of limited partnership interests.
In April 2015, FelCor called for redemption of all of its outstanding shares of
8%
Series C Cumulative Redeemable Preferred Stock, or the Series C Preferred Stock, and all depositary shares representing the Series C Preferred Stock. FelCor redeemed those shares of Series C Preferred Stock and the depositary shares, and FelCor LP concurrently redeemed its Series C Preferred Units, on May 14, 2015 using proceeds from the equity offering. Including dividends of
$491,000
, the total redemption price was
$170.4 million
. We reduced income available to common stockholders (unitholders) by
$6.1 million
for the
nine months ended September 30, 2015
, primarily representing the original issuance costs (
$5.5 million
) and discount (
$538,000
) of the redeemed Series C Preferred Stock (Units).
|
|
5.
|
Hotel Operating Revenue, Departmental Expenses, and Other Property-Related Costs
|
Hotel operating revenue was comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Room revenue
|
$
|
174,169
|
|
|
$
|
177,378
|
|
|
$
|
514,563
|
|
|
$
|
521,750
|
|
Food and beverage revenue
|
34,260
|
|
|
34,370
|
|
|
117,489
|
|
|
116,365
|
|
Other operating departments
|
12,743
|
|
|
11,726
|
|
|
35,338
|
|
|
34,693
|
|
Total hotel operating revenue
|
$
|
221,172
|
|
|
$
|
223,474
|
|
|
$
|
667,390
|
|
|
$
|
672,808
|
|
Nearly all of our revenue is comprised of hotel operating revenue. This revenue is recorded net of any sales or occupancy taxes collected from our guests. We record all rebates or discounts, when allowed, as a reduction in revenue, and there are no material contingent obligations with respect to rebates or discounts offered by us. All revenues are recorded on an accrual basis, as earned. We make appropriate allowances for doubtful accounts, which we record as bad debt expense. We derive the remainder of our revenue from condominium management fee income and other sources.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
5.
|
Hotel Operating Revenue, Departmental Expenses, and Other Property-Related Costs — (continued)
|
Hotel departmental expenses were comprised of the following (in thousands, except for percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
2016
|
|
2015
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
Room
|
$
|
44,032
|
|
|
19.9
|
%
|
|
|
$
|
44,485
|
|
|
19.9
|
%
|
|
Food and beverage
|
28,227
|
|
|
12.8
|
|
|
|
29,457
|
|
|
13.2
|
|
|
Other operating departments
|
3,820
|
|
|
1.7
|
|
|
|
4,572
|
|
|
2.0
|
|
|
Total hotel departmental expenses
|
$
|
76,079
|
|
|
34.4
|
%
|
|
|
$
|
78,514
|
|
|
35.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2016
|
|
2015
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
Room
|
$
|
131,479
|
|
|
19.7
|
%
|
|
|
$
|
131,419
|
|
|
19.5
|
%
|
|
Food and beverage
|
91,775
|
|
|
13.8
|
|
|
|
91,431
|
|
|
13.6
|
|
|
Other operating departments
|
11,642
|
|
|
1.7
|
|
|
|
13,352
|
|
|
2.0
|
|
|
Total hotel departmental expenses
|
$
|
234,896
|
|
|
35.2
|
%
|
|
|
$
|
236,202
|
|
|
35.1
|
%
|
|
Other property-related costs were comprised of the following amounts (in thousands, except for percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
2016
|
|
2015
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
Hotel general and administrative expense
|
$
|
19,408
|
|
|
8.8
|
%
|
|
|
$
|
19,493
|
|
|
8.7
|
%
|
|
Marketing
|
17,388
|
|
|
7.9
|
|
|
|
18,595
|
|
|
8.3
|
|
|
Repair and maintenance
|
8,677
|
|
|
3.9
|
|
|
|
9,724
|
|
|
4.4
|
|
|
Utilities
|
7,402
|
|
|
3.3
|
|
|
|
8,081
|
|
|
3.6
|
|
|
Total other property-related costs
|
$
|
52,875
|
|
|
23.9
|
%
|
|
|
$
|
55,893
|
|
|
25.0
|
%
|
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
5.
|
Hotel Operating Revenue, Departmental Expenses, and Other Property-Related Costs — (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2016
|
|
2015
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
|
Amount
|
|
% of Total Hotel Operating Revenue
|
Hotel general and administrative expense
|
$
|
60,908
|
|
|
9.1
|
%
|
|
|
$
|
59,388
|
|
|
8.8
|
%
|
|
Marketing
|
55,418
|
|
|
8.3
|
|
|
|
58,295
|
|
|
8.7
|
|
|
Repair and maintenance
|
27,773
|
|
|
4.2
|
|
|
|
29,816
|
|
|
4.4
|
|
|
Utilities
|
20,349
|
|
|
3.0
|
|
|
|
23,080
|
|
|
3.5
|
|
|
Total other property-related costs
|
$
|
164,448
|
|
|
24.6
|
%
|
|
|
$
|
170,579
|
|
|
25.4
|
%
|
|
Wyndham guarantees minimum levels of annual net operating income at each of the hotels it manages for us. W
e recorded
$3.3 million
and
$1.3 million
with respect to the pro rata portions of the projected aggregate full-year guaranties for the
nine
months ended
September 30, 2016
and
2015
, respectively (of which
$1.8 million
and
$258,000
is attributable to the three months ended
September 30, 2016
and
September 30, 2015
, respectively). We record these amounts as a reduction of Wyndham's contractual management and other fees.
|
|
6.
|
Taxes, Insurance and Lease Expense
|
Taxes, insurance and lease expense from continuing operations were comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Hotel lease expense
(a)
|
$
|
1,488
|
|
|
$
|
1,524
|
|
|
$
|
3,648
|
|
|
$
|
5,762
|
|
Land lease expense
(b)
|
3,871
|
|
|
3,892
|
|
|
10,890
|
|
|
10,684
|
|
Real estate and other taxes
|
7,884
|
|
|
5,691
|
|
|
23,243
|
|
|
22,048
|
|
Property insurance, general liability insurance and other
|
1,899
|
|
|
1,609
|
|
|
5,807
|
|
|
5,439
|
|
Total taxes, insurance and lease expense
|
$
|
15,142
|
|
|
$
|
12,716
|
|
|
$
|
43,588
|
|
|
$
|
43,933
|
|
In the third quarter of 2016, we acquired land previously leased for
one
of our hotels for
$8.0 million
.
|
|
(a)
|
We record hotel lease expense for the consolidated operating lessees of hotels owned by unconsolidated entities and partially offset this expense through noncontrolling interests in other partnerships (generally
49%
). We record our
50%
share of the corresponding lease income through equity in income from unconsolidated entities. We include in hotel lease expense percentage rent of
$686,000
and
$726,000
for the
three months ended September 30, 2016
and
2015
, respectively, and
$1.2 million
and
$2.8 million
for the
nine months ended September 30, 2016
and
2015
, respectively.
|
|
|
(b)
|
We include in land lease expense percentage rent of
$2.0 million
and
$1.9 million
for the
three months ended September 30, 2016
and
2015
, respectively, and
$4.6 million
for the
nine months ended September 30, 2016
and
2015
.
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our hotels are comprised of operations and cash flows that can clearly be distinguished, operationally, and for financial reporting purposes, from the remainder of our operations. Accordingly, we consider our hotels to be components for purposes of determining impairment charges.
We test for impairment whenever changes in circumstances indicate a hotel’s carrying value may not be recoverable. We conduct the test using undiscounted cash flows for the shorter of the hotel’s estimated hold period or its remaining useful life. When testing for recoverability of hotels held for investment, we use projected cash flows over its expected hold period. Those hotels held for investment that fail the impairment test are written down to their then current estimated fair value, before any selling expense, and we continue to depreciate the hotels over their remaining useful lives.
In September 2016, we recorded a
$20.1 million
impairment charge for a hotel. The impairment charge was primarily based on both third-party offers to purchase the hotel and observable market data on a price per room basis from transactions involving hotels in similar locations (a Level 2 input under authoritative guidance for fair value measurements).
In June 2016, we recorded a
$6.3 million
impairment charge for a hotel subsequently sold in the third quarter of 2016. The impairment charge was based on an accepted third-party offer to purchase the hotel (a Level 2 input under authoritative guidance for fair value measurements) at a price below our previously estimated fair market value for the property. In the third quarter of 2015, we determined that this hotel no longer met our investment criteria, and we recorded a
$20.9 million
impairment charge for this hotel at that time. The 2015 impairment charge was determined using Level 3 input under authoritative guidance for fair value measurements. For this estimate, we used a discounted cash flow analysis with an estimated stabilized growth rate of
3%
, a discounted cash flow term of
5 years
, a terminal capitalization rate of
8%
, and a discount rate of
11%
.
We may record additional impairment charges if operating results of individual hotels are materially different from our forecasts, the economy and lodging industry weakens, or we shorten our contemplated holding period for additional hotels.
During the
nine months ended September 30, 2016
, we sold
two
hotels (both of which were sold in the third quarter), and during the
nine
months ended
September 30, 2015
, we sold
eight
hotels. We included operations for the sold hotels in income (loss) from continuing operations as shown in the statements of operations and comprehensive income (loss) for the
three
and
nine
months ended
September 30, 2016
and
2015
, as disposition of these hotels did not represent a strategic shift in our business. Additionally, we included selling costs, which we expense as they are incurred, in the gain (loss) on the sale of hotels.
We designate a hotel as held for sale when the sale is probable within the next twelve months. Generally, we consider a sale to be probable when a buyer completes its due diligence review, we have an executed contract for sale and we have received a substantial non-refundable deposit. There were no hotels held for sale at September 30, 2016 or December 31, 2015.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
8.
|
Hotel Dispositions — (continued)
|
The following table includes condensed financial information primarily related to hotels sold in 2016 and 2015 included in continuing operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Hotel operating revenue
|
$
|
4,860
|
|
|
|
$
|
12,520
|
|
|
|
$
|
39,782
|
|
|
|
$
|
73,637
|
|
|
Operating expenses
|
(5,400
|
)
|
|
|
(34,971
|
)
|
|
|
(39,922
|
)
|
|
|
(85,508
|
)
|
|
Operating loss
|
(540
|
)
|
|
|
(22,451
|
)
|
|
|
(140
|
)
|
|
|
(11,871
|
)
|
|
Interest expense, net
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(1,031
|
)
|
|
Debt extinguishment
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(309
|
)
|
|
Equity in income from unconsolidated entities
|
—
|
|
|
|
14
|
|
|
|
—
|
|
|
|
7,111
|
|
|
Loss from continuing operations
|
(540
|
)
|
|
|
(22,437
|
)
|
|
|
(139
|
)
|
|
|
(6,100
|
)
|
|
Gain on sale of hotels, net
|
7,998
|
|
|
|
3,154
|
|
|
|
6,654
|
|
|
|
19,491
|
|
|
Net income (loss)
|
7,458
|
|
|
|
(19,283
|
)
|
|
|
6,515
|
|
|
|
13,391
|
|
|
Net loss (income) attributable to noncontrolling interests in other partnerships
|
—
|
|
|
|
45
|
|
|
|
—
|
|
|
|
(5,147
|
)
|
|
Net loss (income) attributable to redeemable noncontrolling interests in FelCor LP
|
(32
|
)
|
|
|
81
|
|
|
|
(28
|
)
|
|
|
(34
|
)
|
|
Net income (loss) attributable to FelCor
|
$
|
7,426
|
|
|
|
$
|
(19,157
|
)
|
|
|
$
|
6,487
|
|
|
|
$
|
8,210
|
|
|
Discontinued operations for all periods presented in the statements of operations and comprehensive income (loss) includes adjustments to gains and losses for hotels sold prior to December 31, 2013.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth the computation of basic and diluted loss per share/unit (in thousands, except per share/unit data):
FelCor Loss Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Numerator:
|
|
|
|
|
|
|
|
Net income (loss) attributable to FelCor
|
$
|
(5,099
|
)
|
|
$
|
(8,208
|
)
|
|
$
|
3,370
|
|
|
$
|
(4,709
|
)
|
Discontinued operations attributable to FelCor
|
3,118
|
|
|
(496
|
)
|
|
3,118
|
|
|
(425
|
)
|
Income (loss) from continuing operations attributable to FelCor
|
(1,981
|
)
|
|
(8,704
|
)
|
|
6,488
|
|
|
(5,134
|
)
|
Less: Preferred dividends
|
(6,279
|
)
|
|
(6,279
|
)
|
|
(18,837
|
)
|
|
(23,860
|
)
|
Less: Redemption of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,096
|
)
|
Less: Dividends declared on unvested restricted stock
|
(36
|
)
|
|
(13
|
)
|
|
(109
|
)
|
|
(40
|
)
|
Numerator for continuing operations attributable to FelCor common stockholders
|
(8,296
|
)
|
|
(14,996
|
)
|
|
(12,458
|
)
|
|
(35,130
|
)
|
Discontinued operations attributable to FelCor
|
(3,118
|
)
|
|
496
|
|
|
(3,118
|
)
|
|
425
|
|
Numerator for basic and diluted loss attributable to FelCor common stockholders
|
$
|
(11,414
|
)
|
|
$
|
(14,500
|
)
|
|
$
|
(15,576
|
)
|
|
$
|
(34,705
|
)
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic and diluted loss per share
|
137,464
|
|
|
142,982
|
|
|
138,437
|
|
|
136,009
|
|
Basic and diluted loss per share data:
|
|
|
|
|
|
|
|
Loss from continuing operations
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.26
|
)
|
Discontinued operations
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
Net loss
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.26
|
)
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
9.
|
Loss Per Share/Unit
— (continued)
|
FelCor LP Loss Per Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Numerator:
|
|
|
|
|
|
|
|
Net income (loss) attributable to FelCor LP
|
$
|
(5,149
|
)
|
|
$
|
(8,269
|
)
|
|
$
|
3,303
|
|
|
$
|
(4,859
|
)
|
Discontinued operations attributable to FelCor LP
|
3,131
|
|
|
(498
|
)
|
|
3,131
|
|
|
(427
|
)
|
Income (loss) from continuing operations attributable to FelCor LP
|
(2,018
|
)
|
|
(8,767
|
)
|
|
6,434
|
|
|
(5,286
|
)
|
Less: Preferred distributions
|
(6,279
|
)
|
|
(6,279
|
)
|
|
(18,837
|
)
|
|
(23,860
|
)
|
Less: Redemption of preferred units
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,096
|
)
|
Less: Distributions declared on FelCor unvested restricted stock
|
(36
|
)
|
|
(13
|
)
|
|
(109
|
)
|
|
(40
|
)
|
Numerator for continuing operations attributable to FelCor LP common unitholders
|
(8,333
|
)
|
|
(15,059
|
)
|
|
(12,512
|
)
|
|
(35,282
|
)
|
Discontinued operations attributable to FelCor LP
|
(3,131
|
)
|
|
498
|
|
|
(3,131
|
)
|
|
427
|
|
Numerator for basic and diluted loss attributable to FelCor common unitholders
|
$
|
(11,464
|
)
|
|
$
|
(14,561
|
)
|
|
$
|
(15,643
|
)
|
|
$
|
(34,855
|
)
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic and diluted loss per unit
|
138,075
|
|
|
143,594
|
|
|
139,048
|
|
|
136,621
|
|
Basic and diluted loss per unit data:
|
|
|
|
|
|
|
|
Loss from continuing operations
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.26
|
)
|
Discontinued operations
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
Net loss
|
$
|
(0.08
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.26
|
)
|
The income (loss) from continuing operations attributable to FelCor/FelCor LP share/unit calculations includes the net gain on sale of hotels attributable to FelCor/FelCor LP.
We do not include the following securities because they would have been antidilutive for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Series A convertible preferred shares/units
|
9,984
|
|
9,984
|
|
9,984
|
|
|
|
9,984
|
|
FelCor restricted stock units
|
504
|
|
1,173
|
|
436
|
|
|
|
1,136
|
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
9.
|
Loss Per Share/Unit
— (continued)
|
Series A preferred dividends (distributions) that would be excluded from net income (loss) attributable to FelCor common stockholders (or FelCor LP common unitholders), if these preferred shares/units were dilutive, were
$6.3 million
for the
three months ended September 30, 2016
and
2015
, and
$18.8 million
for the
nine months ended September 30, 2016
and
2015
.
We grant our executive officers restricted stock units each year, which provides them with the potential to earn shares of our common stock in
three
increments over
three
to
four years
. A portion of the actual number of shares that vest is determined based on total stockholder return relative to a group of
ten
lodging REIT peers, and a portion is related to service. We amortize the fixed cost of these grants over the vesting periods. We calculate the potential dilutive impact of these awards on our earnings per share using the treasury stock method.
|
|
10.
|
Fair Value of Financial Instruments
|
We base disclosures about fair value of our financial instruments on pertinent information available to management as of
September 30, 2016
and
December 31, 2015
. We exercise considerable judgment when interpreting market data and developing estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize on disposition of the financial instruments. Different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.
We base our estimates of the fair value of: (i) cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses on their carrying values due to their relatively short maturity; (ii) our debt for which trading prices are publicly available on observable market data (a Level 2 input) (that debt had an estimated fair value of
$1.0 billion
at
September 30, 2016
and
December 31, 2015
); and (iii) our debt for which trading prices are not publicly available on a discounted cash flow model using effective borrowing rates for debt with similar terms, loan to estimated fair value of collateral and remaining maturities (a Level 3 input) (that debt had an estimated fair value of
$354.3 million
and
$438.8 million
at
September 30, 2016
and
December 31, 2015
, respectively). The estimated fair value of all our debt was
$1.4 billion
and
$1.5 billion
at
September 30, 2016
and
December 31, 2015
, respectively. The carrying value of our debt was
$1.3 billion
and
$1.4 billion
at
September 30, 2016
and
December 31, 2015
, respectively.
|
|
11.
|
Redeemable Noncontrolling Interests in FelCor LP/Redeemable Units
|
We record redeemable noncontrolling interests in FelCor LP, in the case of FelCor, and redeemable units, in the case of FelCor LP, in the mezzanine section (between liabilities and equity or partners’ capital) of our consolidated balance sheets because of the redemption feature of these units. Additionally, FelCor’s consolidated statements of operations and comprehensive income (loss) separately present earnings attributable to redeemable noncontrolling interests. We adjust redeemable noncontrolling interests in FelCor LP (or redeemable units) each period to reflect the greater of its carrying value based on the accumulation of historical cost or its redemption value. We base the historical cost on the proportionate relationship between the carrying value of equity associated with FelCor’s common stockholders relative to that of FelCor LP’s unitholders. We base redemption value on the closing price of FelCor’s common stock at period end. FelCor allocates net income (loss) to FelCor LP’s noncontrolling partners based on their weighted average ownership percentage during the period.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
11.
|
Redeemable Noncontrolling Interests in FelCor LP/Redeemable Units
— (continued)
|
At
September 30, 2016
, we carried
610,183
outstanding limited partnership units at
$3.9 million
. We base the value of these outstanding units on the closing price of FelCor’s common stock at
September 30, 2016
(
$6.43
per share).
Changes in redeemable noncontrolling interests (or redeemable units) for the
nine
months ended
September 30, 2016
and
2015
are shown below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
September 30,
|
|
2016
|
|
2015
|
Balance at beginning of period
|
$
|
4,464
|
|
|
|
$
|
6,616
|
|
|
Conversion of units
|
(9
|
)
|
|
|
—
|
|
|
Redemption value allocation
|
(355
|
)
|
|
|
(2,076
|
)
|
|
Distributions paid to unitholders
|
(110
|
)
|
|
|
(67
|
)
|
|
Net loss
|
(67
|
)
|
|
|
(150
|
)
|
|
Balance at end of period
|
$
|
3,923
|
|
|
|
$
|
4,323
|
|
|
12. Consolidated Joint Venture Preferred Equity/Capital
Our joint venture that redeveloped The Knickerbocker raised
$45 million
through the sale of redeemable preferred equity under the EB-5 Immigrant Investor Program. The purchasers receive a
3.25%
current annual return (which increases to
8%
if we do not redeem this equity interest before the fifth anniversary of its issuance), plus a
0.25%
non-compounding annual return payable at redemption. To date, the venture has received
$44.4 million
in gross proceeds (
$43.8 million
net of issuance costs), including
$600,000
and
$1.8 million
in gross proceeds received in the first
nine
months of 2016 and 2015, respectively. The venture will receive the remaining
$600,000
as investors’ visas are approved.
13. Commercial Dispute
One
of our consolidated subsidiaries was engaged in a commercial dispute with a third party. Under generally accepted accounting principles, we recorded
$5.9 million
in other expenses during the third quarter of 2014 to establish a provision for our estimate of our maximum exposure for this contingency. We paid the disputed amount in January 2015 but continued asserting our contractual rights. In June 2015, we settled the commercial dispute and recovered
$3.7 million
(net of legal costs), which we have recorded in other revenue for the
nine months ended September 30, 2015
.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Contingency
In April 2016, an affiliate of InterContinental Hotels Group PLC, or IHG, which had formerly operated
three
hotels on our behalf (
two
of which we sold in 2006, and
one
of which we converted to Wyndham operation and brand in 2013), notified us that the pension fund in which the employees at those hotels had participated has assessed
$8.3 million
in withdrawal liability in connection with the termination of IHG’s operation of those hotels. Under our hotel management agreements with IHG, we may be obligated to indemnify and hold IHG harmless for some or all of any amount ultimately contributed to the pension fund with respect to these hotels.
Because of the rules and regulations governing the pension trust, we have paid
$854,000
to the pension trust for the last three calendar quarters and expect to continue making such payments, on a quarterly basis, while the dispute is ongoing, subject to an overall contribution limit corresponding to the amount sought by the pension trust. While we aggressively oppose the pension trust’s position, we believe that resolution of this matter may take as long as
two
more years. Accordingly, we have recorded the payments made to date (
$854,000
, in total) and accrued for
eight
more quarterly payments that would be made if the dispute remains unresolved for another
two
years (approximately
$2.3 million
) as a loss on the sale of hotels included in discontinued operations because it primarily relates to hotels sold prior to 2013.
Despite these payments and accruals, we believe that (i) the pension trust was in error in assessing the withdrawal liability in this situation and (ii) even if the pension trust was not in error, we are not responsible for a significant portion (or perhaps any) of the withdrawal liability assessed by the pension trust for other reasons and that we are likely to recover a significant portion (if not all) of what we have paid, and may pay in the future, to the pension trust with respect to its claim. Consequently, we are vigorously disputing the underlying claims and, if appropriate, IHG’s demand for indemnification. The matter involves significant legal, actuarial and factual analysis with respect to each hotel, and we have not determined whether any loss to us is probable or that any such loss is estimable (other than the payments and accrual noted in the previous paragraph, for which we intend to seek recovery).
15
. Severance
During the three and nine months ended September 30, 2016 and 2015, we recorded severance charges of
$6.1 million
and
$3.6 million
, respectively. The charges are included in other expenses and primarily relate to FelCor’s former Chief Executive Officer for 2016 and certain other officers for 2015.
16. Recently Issued Accounting Standards
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach.
Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017, and early adoption is permitted but not before the original effective date (for annual reporting periods beginning after December 15, 2016). We are evaluating what impact (if any) ASU 2014-09 will have on our financial position or results of operations.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Recently Issued Accounting Standards
— (continued)
In February 2016, the FASB issued ASU 2016-02 - Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The ASU is expected to impact our consolidated financial statements as we have certain operating lease arrangements. ASC 842 supersedes the previous leases standard, ASC 840 Leases. The standard is effective on January 1, 2019, with early adoption permitted. We are in the process of evaluating the impact of this new guidance.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions. Under the new standard, companies can withhold shares up to the maximum individual statutory tax rate in the applicable jurisdiction as participants vest in stock and maintain equity classification of the entire award. Also under the new standard, forfeitures for stock awards may be recorded when they occur (the prior guidance required estimating forfeitures when recording stock compensation costs). Finally, the standard requires classifying cash paid when remitting cash to the tax authorities for stock compensation withholding as financing activity in the statement of cash flows. We adopted this standard effective January 1, 2016. Upon adoption, we revised our policy to account for stock compensation forfeitures as they occur, which resulted in a
$185,000
increase in our accumulated deficit for the cumulative effect of change in accounting principle. In addition, in our statement of cash flows, we will reclassify
$2.1 million
and
$3.1 million
of cash paid to taxing authorities for shares withheld from operating activities to financing activities for the years ended December 31, 2015 and 2014, respectively.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
17.
|
FelCor LP’s Consolidating Financial Information
|
Certain of FelCor LP’s
100%
owned subsidiaries (FCH/PSH, L.P.; FelCor/CMB Buckhead Hotel, L.L.C.; FelCor/CMB Marlborough Hotel, L.L.C.; FelCor/CMB Orsouth Holdings, L.P.; FelCor/CMB SSF Holdings, L.P.; FelCor/CSS Holdings, L.P.; FelCor Dallas Love Field Owner, L.L.C.; FelCor Milpitas Owner, L.L.C.; FelCor TRS Borrower 4, L.L.C.; FelCor TRS Holdings, L.L.C.; FelCor Canada Co.; FelCor Hotel Asset Company, L.L.C.; FelCor St. Pete (SPE), L.L.C.; FelCor Esmeralda (SPE), L.L.C.; FelCor S-4 Hotels (SPE), L.L.C.; Madison 237 Hotel, L.L.C.; Myrtle Beach Owner, L.L.C.; and Royalton 44 Hotel, L.L.C., collectively, “Subsidiary Guarantors”), together with FelCor, guaranty, fully and unconditionally, except where subject to customary release provisions as described below, and jointly and severally, our senior debt.
The guaranties by the Subsidiary Guarantors may be automatically and unconditionally released upon (i) the sale or other disposition of all of the capital stock of the Subsidiary Guarantor or the sale or disposition of all or substantially all of the assets of the Subsidiary Guarantor, if, in each case, as a result of such sale or disposition, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (ii) the consolidation or merger of any such Subsidiary Guarantor with any person other than FelCor LP, or a subsidiary of FelCor LP, if, as a result of such consolidation or merger, such Subsidiary Guarantor ceases to be a subsidiary of FelCor LP, (iii) a legal defeasance or covenant defeasance of the indenture, (iv) the unconditional and complete release of such Subsidiary Guarantor in accordance with the modification and waiver provisions of the indenture, or (v) the designation of a restricted subsidiary that is a Subsidiary Guarantor as an unrestricted subsidiary under and in compliance with the indenture.
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
17.
|
FelCor LP’s Consolidating Financial Information — (continued)
|
The following tables present consolidating information for the Subsidiary Guarantors.
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2016
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Net investment in hotels
|
$
|
—
|
|
|
$
|
492,022
|
|
|
$
|
1,080,060
|
|
|
$
|
—
|
|
|
$
|
1,572,082
|
|
Equity investment in consolidated entities
|
1,204,612
|
|
|
—
|
|
|
—
|
|
|
(1,204,612
|
)
|
|
—
|
|
Investment in unconsolidated entities
|
2,962
|
|
|
5,213
|
|
|
1,230
|
|
|
—
|
|
|
9,405
|
|
Cash and cash equivalents
|
18,989
|
|
|
30,623
|
|
|
738
|
|
|
—
|
|
|
50,350
|
|
Restricted cash
|
—
|
|
|
16,897
|
|
|
5,233
|
|
|
—
|
|
|
22,130
|
|
Accounts receivable, net
|
1,741
|
|
|
38,124
|
|
|
6,880
|
|
|
—
|
|
|
46,745
|
|
Deferred expenses, net
|
—
|
|
|
—
|
|
|
4,996
|
|
|
—
|
|
|
4,996
|
|
Other assets
|
5,284
|
|
|
8,346
|
|
|
3,373
|
|
|
—
|
|
|
17,003
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
1,233,588
|
|
|
$
|
591,225
|
|
|
$
|
1,102,510
|
|
|
$
|
(1,204,612
|
)
|
|
$
|
1,722,711
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net
|
$
|
985,372
|
|
|
$
|
—
|
|
|
$
|
378,489
|
|
|
$
|
(39,436
|
)
|
|
$
|
1,324,425
|
|
Distributions payable
|
14,849
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
14,969
|
|
Accrued expenses and other liabilities
|
31,587
|
|
|
86,095
|
|
|
12,331
|
|
|
—
|
|
|
130,013
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
1,031,808
|
|
|
86,095
|
|
|
390,940
|
|
|
(39,436
|
)
|
|
1,469,407
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable units, at redemption value
|
3,923
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,923
|
|
|
|
|
|
|
|
|
|
|
|
Preferred units
|
309,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,337
|
|
Common units
|
(111,480
|
)
|
|
506,062
|
|
|
659,114
|
|
|
(1,165,176
|
)
|
|
(111,480
|
)
|
Total FelCor LP partners’ capital
|
197,857
|
|
|
506,062
|
|
|
659,114
|
|
|
(1,165,176
|
)
|
|
197,857
|
|
Noncontrolling interests
|
—
|
|
|
(932
|
)
|
|
8,673
|
|
|
—
|
|
|
7,741
|
|
Preferred capital in consolidated joint venture
|
—
|
|
|
—
|
|
|
43,783
|
|
|
—
|
|
|
43,783
|
|
Total partners’ capital
|
197,857
|
|
|
505,130
|
|
|
711,570
|
|
|
(1,165,176
|
)
|
|
249,381
|
|
Total liabilities and partners’ capital
|
$
|
1,233,588
|
|
|
$
|
591,225
|
|
|
$
|
1,102,510
|
|
|
$
|
(1,204,612
|
)
|
|
$
|
1,722,711
|
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2015
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Net investment in hotels
|
$
|
—
|
|
|
$
|
625,835
|
|
|
$
|
1,103,696
|
|
|
$
|
—
|
|
|
$
|
1,729,531
|
|
Equity investment in consolidated entities
|
1,260,779
|
|
|
—
|
|
|
—
|
|
|
(1,260,779
|
)
|
|
—
|
|
Investment in unconsolidated entities
|
4,440
|
|
|
3,871
|
|
|
1,264
|
|
|
—
|
|
|
9,575
|
|
Cash and cash equivalents
|
21,219
|
|
|
34,294
|
|
|
4,273
|
|
|
—
|
|
|
59,786
|
|
Restricted cash
|
—
|
|
|
15,442
|
|
|
2,260
|
|
|
—
|
|
|
17,702
|
|
Accounts receivable, net
|
644
|
|
|
25,575
|
|
|
1,917
|
|
|
—
|
|
|
28,136
|
|
Deferred expenses, net
|
—
|
|
|
—
|
|
|
6,390
|
|
|
—
|
|
|
6,390
|
|
Other assets
|
3,587
|
|
|
8,786
|
|
|
2,419
|
|
|
—
|
|
|
14,792
|
|
Total assets
|
$
|
1,290,669
|
|
|
$
|
713,803
|
|
|
$
|
1,122,219
|
|
|
$
|
(1,260,779
|
)
|
|
$
|
1,865,912
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net
|
$
|
984,226
|
|
|
$
|
—
|
|
|
$
|
465,099
|
|
|
$
|
(39,436
|
)
|
|
$
|
1,409,889
|
|
Distributions payable
|
15,016
|
|
|
—
|
|
|
124
|
|
|
—
|
|
|
15,140
|
|
Accrued expenses and other liabilities
|
26,810
|
|
|
83,787
|
|
|
14,677
|
|
|
—
|
|
|
125,274
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
1,026,052
|
|
|
83,787
|
|
|
479,900
|
|
|
(39,436
|
)
|
|
1,550,303
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable units, at redemption value
|
4,464
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,464
|
|
|
|
|
|
|
|
|
|
|
|
Preferred units
|
309,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,337
|
|
Common units
|
(49,184
|
)
|
|
630,833
|
|
|
590,510
|
|
|
(1,221,343
|
)
|
|
(49,184
|
)
|
Total FelCor LP partners’ capital
|
260,153
|
|
|
630,833
|
|
|
590,510
|
|
|
(1,221,343
|
)
|
|
260,153
|
|
Noncontrolling interests
|
—
|
|
|
(817
|
)
|
|
8,623
|
|
|
—
|
|
|
7,806
|
|
Preferred capital in consolidated joint venture
|
—
|
|
|
—
|
|
|
43,186
|
|
|
—
|
|
|
43,186
|
|
Total partners’ capital
|
260,153
|
|
|
630,016
|
|
|
642,319
|
|
|
(1,221,343
|
)
|
|
311,145
|
|
Total liabilities and partners’ capital
|
$
|
1,290,669
|
|
|
$
|
713,803
|
|
|
$
|
1,122,219
|
|
|
$
|
(1,260,779
|
)
|
|
$
|
1,865,912
|
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
For the Three Months Ended
September 30, 2016
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Hotel operating revenue
|
$
|
—
|
|
|
$
|
221,172
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
221,172
|
|
Percentage lease revenue
|
—
|
|
|
—
|
|
|
45,242
|
|
|
(45,242
|
)
|
|
—
|
|
Other revenue
|
15
|
|
|
1,622
|
|
|
172
|
|
|
—
|
|
|
1,809
|
|
Total revenues
|
15
|
|
|
222,794
|
|
|
45,414
|
|
|
(45,242
|
)
|
|
222,981
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
—
|
|
|
137,001
|
|
|
—
|
|
|
—
|
|
|
137,001
|
|
Taxes, insurance and lease expense
|
26
|
|
|
54,293
|
|
|
6,065
|
|
|
(45,242
|
)
|
|
15,142
|
|
Corporate expenses
|
—
|
|
|
3,517
|
|
|
2,727
|
|
|
—
|
|
|
6,244
|
|
Depreciation and amortization
|
49
|
|
|
11,285
|
|
|
16,946
|
|
|
—
|
|
|
28,280
|
|
Impairment
|
—
|
|
|
20,126
|
|
|
—
|
|
|
—
|
|
|
20,126
|
|
Other expenses
|
6,124
|
|
|
1,309
|
|
|
148
|
|
|
—
|
|
|
7,581
|
|
Total operating expenses
|
6,199
|
|
|
227,531
|
|
|
25,886
|
|
|
(45,242
|
)
|
|
214,374
|
|
Operating income
|
(6,184
|
)
|
|
(4,737
|
)
|
|
19,528
|
|
|
—
|
|
|
8,607
|
|
Interest expense, net
|
(14,513
|
)
|
|
6
|
|
|
(4,921
|
)
|
|
—
|
|
|
(19,428
|
)
|
Loss before equity in income from unconsolidated entities
|
(20,697
|
)
|
|
(4,731
|
)
|
|
14,607
|
|
|
—
|
|
|
(10,821
|
)
|
Equity in income from consolidated entities
|
17,088
|
|
|
—
|
|
|
—
|
|
|
(17,088
|
)
|
|
—
|
|
Equity in income from unconsolidated entities
|
378
|
|
|
447
|
|
|
(11
|
)
|
|
—
|
|
|
814
|
|
Loss from continuing operations before income tax
|
(3,231
|
)
|
|
(4,284
|
)
|
|
14,596
|
|
|
(17,088
|
)
|
|
(10,007
|
)
|
Income tax
|
576
|
|
|
(484
|
)
|
|
154
|
|
|
—
|
|
|
246
|
|
Loss from continuing operations
|
(2,655
|
)
|
|
(4,768
|
)
|
|
14,750
|
|
|
(17,088
|
)
|
|
(9,761
|
)
|
Loss from discontinued operations
|
(3,131
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,131
|
)
|
Loss before gain on sale of hotels
|
(5,786
|
)
|
|
(4,768
|
)
|
|
14,750
|
|
|
(17,088
|
)
|
|
(12,892
|
)
|
Gain on sale of hotels, net
|
637
|
|
|
7,445
|
|
|
(84
|
)
|
|
—
|
|
|
7,998
|
|
Net loss and comprehensive loss
|
(5,149
|
)
|
|
2,677
|
|
|
14,666
|
|
|
(17,088
|
)
|
|
(4,894
|
)
|
Loss attributable to noncontrolling interests
|
—
|
|
|
100
|
|
|
14
|
|
|
—
|
|
|
114
|
|
Preferred distributions - consolidated joint venture
|
—
|
|
|
—
|
|
|
(369
|
)
|
|
—
|
|
|
(369
|
)
|
Net loss and comprehensive loss attributable to FelCor LP
|
(5,149
|
)
|
|
2,777
|
|
|
14,311
|
|
|
(17,088
|
)
|
|
(5,149
|
)
|
Preferred distributions
|
(6,279
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,279
|
)
|
Net loss attributable to FelCor LP common unitholders
|
$
|
(11,428
|
)
|
|
$
|
2,777
|
|
|
$
|
14,311
|
|
|
$
|
(17,088
|
)
|
|
$
|
(11,428
|
)
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
For the
Three
Months Ended
September 30, 2015
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Hotel operating revenue
|
$
|
—
|
|
|
$
|
223,474
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
223,474
|
|
Percentage lease revenue
|
—
|
|
|
—
|
|
|
44,523
|
|
|
(44,523
|
)
|
|
—
|
|
Other revenue
|
3
|
|
|
1,497
|
|
|
178
|
|
|
—
|
|
|
1,678
|
|
Total revenues
|
3
|
|
|
224,971
|
|
|
44,701
|
|
|
(44,523
|
)
|
|
225,152
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
—
|
|
|
143,545
|
|
|
—
|
|
|
—
|
|
|
143,545
|
|
Taxes, insurance and lease expense
|
533
|
|
|
53,272
|
|
|
3,434
|
|
|
(44,523
|
)
|
|
12,716
|
|
Corporate expenses
|
—
|
|
|
2,718
|
|
|
1,954
|
|
|
—
|
|
|
4,672
|
|
Depreciation and amortization
|
49
|
|
|
11,876
|
|
|
17,063
|
|
|
—
|
|
|
28,988
|
|
Impairment
|
—
|
|
|
20,861
|
|
|
—
|
|
|
—
|
|
|
20,861
|
|
Other expenses
|
3,626
|
|
|
1,311
|
|
|
870
|
|
|
—
|
|
|
5,807
|
|
Total operating expenses
|
4,208
|
|
|
233,583
|
|
|
23,321
|
|
|
(44,523
|
)
|
|
216,589
|
|
Operating income
|
(4,205
|
)
|
|
(8,612
|
)
|
|
21,380
|
|
|
—
|
|
|
8,563
|
|
Interest expense, net
|
(14,302
|
)
|
|
3
|
|
|
(5,303
|
)
|
|
—
|
|
|
(19,602
|
)
|
Debt extinguishment
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
Loss before equity in income from unconsolidated entities
|
(18,520
|
)
|
|
(8,609
|
)
|
|
16,077
|
|
|
—
|
|
|
(11,052
|
)
|
Equity in income from consolidated entities
|
10,069
|
|
|
—
|
|
|
—
|
|
|
(10,069
|
)
|
|
—
|
|
Equity in income from unconsolidated entities
|
417
|
|
|
(85
|
)
|
|
(11
|
)
|
|
—
|
|
|
321
|
|
Loss from continuing operations before income tax
|
(8,034
|
)
|
|
(8,694
|
)
|
|
16,066
|
|
|
(10,069
|
)
|
|
(10,731
|
)
|
Income tax
|
(194
|
)
|
|
(860
|
)
|
|
—
|
|
|
—
|
|
|
(1,054
|
)
|
Loss from continuing operations
|
(8,228
|
)
|
|
(9,554
|
)
|
|
16,066
|
|
|
(10,069
|
)
|
|
(11,785
|
)
|
Income from discontinued operations
|
—
|
|
|
(2
|
)
|
|
500
|
|
|
—
|
|
|
498
|
|
Loss before gain on sale of hotels
|
(8,228
|
)
|
|
(9,556
|
)
|
|
16,566
|
|
|
(10,069
|
)
|
|
(11,287
|
)
|
Gain on sale of hotels, net
|
(41
|
)
|
|
(31
|
)
|
|
3,226
|
|
|
—
|
|
|
3,154
|
|
Net loss and comprehensive loss
|
(8,269
|
)
|
|
(9,587
|
)
|
|
19,792
|
|
|
(10,069
|
)
|
|
(8,133
|
)
|
Loss attributable to noncontrolling interests
|
—
|
|
|
81
|
|
|
146
|
|
|
—
|
|
|
227
|
|
Preferred distributions - consolidated joint venture
|
—
|
|
|
—
|
|
|
(363
|
)
|
|
—
|
|
|
(363
|
)
|
Net loss and comprehensive loss attributable to FelCor LP
|
(8,269
|
)
|
|
(9,506
|
)
|
|
19,575
|
|
|
(10,069
|
)
|
|
(8,269
|
)
|
Preferred distributions
|
(6,279
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,279
|
)
|
Net loss attributable to FelCor LP common unitholders
|
$
|
(14,548
|
)
|
|
$
|
(9,506
|
)
|
|
$
|
19,575
|
|
|
$
|
(10,069
|
)
|
|
$
|
(14,548
|
)
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the
Nine
Months Ended
September 30, 2016
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Hotel operating revenue
|
$
|
—
|
|
|
$
|
667,390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
667,390
|
|
Percentage lease revenue
|
—
|
|
|
—
|
|
|
135,740
|
|
|
(135,740
|
)
|
|
—
|
|
Other revenue
|
202
|
|
|
3,076
|
|
|
363
|
|
|
—
|
|
|
3,641
|
|
Total revenues
|
202
|
|
|
670,466
|
|
|
136,103
|
|
|
(135,740
|
)
|
|
671,031
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
—
|
|
|
425,117
|
|
|
—
|
|
|
—
|
|
|
425,117
|
|
Taxes, insurance and lease expense
|
79
|
|
|
161,889
|
|
|
17,360
|
|
|
(135,740
|
)
|
|
43,588
|
|
Corporate expenses
|
—
|
|
|
11,212
|
|
|
9,479
|
|
|
—
|
|
|
20,691
|
|
Depreciation and amortization
|
193
|
|
|
35,312
|
|
|
51,135
|
|
|
—
|
|
|
86,640
|
|
Impairment
|
—
|
|
|
26,459
|
|
|
—
|
|
|
—
|
|
|
26,459
|
|
Other expenses
|
6,543
|
|
|
3,522
|
|
|
486
|
|
|
—
|
|
|
10,551
|
|
Total operating expenses
|
6,815
|
|
|
663,511
|
|
|
78,460
|
|
|
(135,740
|
)
|
|
613,046
|
|
Operating income
|
(6,613
|
)
|
|
6,955
|
|
|
57,643
|
|
|
—
|
|
|
57,985
|
|
Interest expense, net
|
(43,775
|
)
|
|
24
|
|
|
(15,304
|
)
|
|
—
|
|
|
(59,055
|
)
|
Other gains, net
|
—
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
100
|
|
Loss before equity in income from unconsolidated entities
|
(50,388
|
)
|
|
6,979
|
|
|
42,439
|
|
|
—
|
|
|
(970
|
)
|
Equity in income from consolidated entities
|
54,930
|
|
|
—
|
|
|
—
|
|
|
(54,930
|
)
|
|
—
|
|
Equity in income from unconsolidated entities
|
1,094
|
|
|
326
|
|
|
(34
|
)
|
|
—
|
|
|
1,386
|
|
Income from continuing operations before income tax
|
5,636
|
|
|
7,305
|
|
|
42,405
|
|
|
(54,930
|
)
|
|
416
|
|
Income tax
|
411
|
|
|
(709
|
)
|
|
154
|
|
|
—
|
|
|
(144
|
)
|
Income from continuing operations
|
6,047
|
|
|
6,596
|
|
|
42,559
|
|
|
(54,930
|
)
|
|
272
|
|
Loss from discontinued operations
|
(3,131
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,131
|
)
|
Loss before gain on sale of hotels
|
2,916
|
|
|
6,596
|
|
|
42,559
|
|
|
(54,930
|
)
|
|
(2,859
|
)
|
Gain on sale of hotels, net
|
387
|
|
|
6,688
|
|
|
(421
|
)
|
|
—
|
|
|
6,654
|
|
Net income and comprehensive income
|
3,303
|
|
|
13,284
|
|
|
42,138
|
|
|
(54,930
|
)
|
|
3,795
|
|
Loss attributable to noncontrolling interests
|
—
|
|
|
413
|
|
|
188
|
|
|
—
|
|
|
601
|
|
Preferred distributions - consolidated joint venture
|
—
|
|
|
—
|
|
|
(1,093
|
)
|
|
—
|
|
|
(1,093
|
)
|
Net income and comprehensive income attributable to FelCor LP
|
3,303
|
|
|
13,697
|
|
|
41,233
|
|
|
(54,930
|
)
|
|
3,303
|
|
Preferred distributions
|
(18,837
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,837
|
)
|
Net loss attributable to FelCor LP common unitholders
|
$
|
(15,534
|
)
|
|
$
|
13,697
|
|
|
$
|
41,233
|
|
|
$
|
(54,930
|
)
|
|
$
|
(15,534
|
)
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the
Nine
Months Ended
September 30, 2015
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Hotel operating revenue
|
$
|
—
|
|
|
$
|
672,808
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
672,808
|
|
Percentage lease revenue
|
—
|
|
|
—
|
|
|
130,397
|
|
|
(130,397
|
)
|
|
—
|
|
Other revenue
|
111
|
|
|
6,645
|
|
|
386
|
|
|
—
|
|
|
7,142
|
|
Total revenues
|
111
|
|
|
679,453
|
|
|
130,783
|
|
|
(130,397
|
)
|
|
679,950
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
—
|
|
|
434,206
|
|
|
—
|
|
|
—
|
|
|
434,206
|
|
Taxes, insurance and lease expense
|
422
|
|
|
159,103
|
|
|
14,805
|
|
|
(130,397
|
)
|
|
43,933
|
|
Corporate expenses
|
—
|
|
|
11,010
|
|
|
8,765
|
|
|
—
|
|
|
19,775
|
|
Depreciation and amortization
|
138
|
|
|
37,770
|
|
|
47,602
|
|
|
—
|
|
|
85,510
|
|
Impairment
|
—
|
|
|
20,861
|
|
|
—
|
|
|
—
|
|
|
20,861
|
|
Other expenses
|
3,629
|
|
|
6,820
|
|
|
997
|
|
|
—
|
|
|
11,446
|
|
Total operating expenses
|
4,189
|
|
|
669,770
|
|
|
72,169
|
|
|
(130,397
|
)
|
|
615,731
|
|
Operating income
|
(4,078
|
)
|
|
9,683
|
|
|
58,614
|
|
|
—
|
|
|
64,219
|
|
Interest expense, net
|
(42,613
|
)
|
|
8
|
|
|
(16,756
|
)
|
|
—
|
|
|
(59,361
|
)
|
Debt extinguishment
|
(28,459
|
)
|
|
—
|
|
|
(2,450
|
)
|
|
—
|
|
|
(30,909
|
)
|
Other gains, net
|
—
|
|
|
—
|
|
|
166
|
|
|
—
|
|
|
166
|
|
Loss before equity in income from unconsolidated entities
|
(75,150
|
)
|
|
9,691
|
|
|
39,574
|
|
|
—
|
|
|
(25,885
|
)
|
Equity in income from consolidated entities
|
62,807
|
|
|
—
|
|
|
—
|
|
|
(62,807
|
)
|
|
—
|
|
Equity in income from unconsolidated entities
|
8,060
|
|
|
(43
|
)
|
|
(34
|
)
|
|
—
|
|
|
7,983
|
|
Loss from continuing operations before income tax
|
(4,283
|
)
|
|
9,648
|
|
|
39,540
|
|
|
(62,807
|
)
|
|
(17,902
|
)
|
Income tax
|
(256
|
)
|
|
(1,136
|
)
|
|
—
|
|
|
—
|
|
|
(1,392
|
)
|
Loss from continuing operations
|
(4,539
|
)
|
|
8,512
|
|
|
39,540
|
|
|
(62,807
|
)
|
|
(19,294
|
)
|
Income from discontinued operations
|
—
|
|
|
2
|
|
|
417
|
|
|
—
|
|
|
419
|
|
Loss before gain on sale of hotels
|
(4,539
|
)
|
|
8,514
|
|
|
39,957
|
|
|
(62,807
|
)
|
|
(18,875
|
)
|
Gain on sale of hotels, net
|
(320
|
)
|
|
(44
|
)
|
|
19,855
|
|
|
—
|
|
|
19,491
|
|
Net income and comprehensive income
|
(4,859
|
)
|
|
8,470
|
|
|
59,812
|
|
|
(62,807
|
)
|
|
616
|
|
Income attributable to noncontrolling interests
|
—
|
|
|
591
|
|
|
(4,996
|
)
|
|
—
|
|
|
(4,405
|
)
|
Preferred distributions - consolidated joint venture
|
—
|
|
|
—
|
|
|
(1,070
|
)
|
|
—
|
|
|
(1,070
|
)
|
Net loss and comprehensive loss attributable to FelCor LP
|
(4,859
|
)
|
|
9,061
|
|
|
53,746
|
|
|
(62,807
|
)
|
|
(4,859
|
)
|
Preferred distributions
|
(23,860
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,860
|
)
|
Redemption of preferred units
|
(6,096
|
)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
(6,096
|
)
|
Net loss attributable to FelCor LP common unitholders
|
$
|
(34,815
|
)
|
|
$
|
9,061
|
|
|
$
|
53,746
|
|
|
$
|
(62,807
|
)
|
|
$
|
(34,815
|
)
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the
Nine
Months Ended
September 30, 2016
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
$
|
(47,665
|
)
|
|
$
|
60,960
|
|
|
$
|
100,749
|
|
|
$
|
—
|
|
|
$
|
114,044
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of land
|
—
|
|
|
—
|
|
|
(8,209
|
)
|
|
—
|
|
|
(8,209
|
)
|
Improvements and additions to hotels
|
(2
|
)
|
|
(23,936
|
)
|
|
(27,390
|
)
|
|
—
|
|
|
(51,328
|
)
|
Net proceeds from asset sales
|
(1,104
|
)
|
|
103,077
|
|
|
(252
|
)
|
|
—
|
|
|
101,721
|
|
Insurance proceeds
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
Change in restricted cash - investing
|
—
|
|
|
(1,456
|
)
|
|
(2,972
|
)
|
|
—
|
|
|
(4,428
|
)
|
Distributions from unconsolidated entities
|
786
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
786
|
|
Intercompany financing
|
120,897
|
|
|
—
|
|
|
—
|
|
|
(120,897
|
)
|
|
—
|
|
Cash flows from investing activities
|
120,577
|
|
|
77,685
|
|
|
(38,729
|
)
|
|
(120,897
|
)
|
|
38,636
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
—
|
|
|
—
|
|
|
55,000
|
|
|
—
|
|
|
55,000
|
|
Repayment of borrowings
|
—
|
|
|
—
|
|
|
(141,989
|
)
|
|
—
|
|
|
(141,989
|
)
|
Payment of deferred financing fees
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
Distributions paid to noncontrolling interests
|
—
|
|
|
(14
|
)
|
|
(2
|
)
|
|
—
|
|
|
(16
|
)
|
Contributions from noncontrolling interests
|
—
|
|
|
313
|
|
|
239
|
|
|
—
|
|
|
552
|
|
Repurchase of common units
|
(30,462
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,462
|
)
|
Distributions paid to preferred unitholders
|
(18,837
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,837
|
)
|
Distributions paid to common unitholders
|
(25,141
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,141
|
)
|
Net proceeds from issuance of preferred capital - consolidated joint venture
|
—
|
|
|
—
|
|
|
597
|
|
|
—
|
|
|
597
|
|
Intercompany financing
|
—
|
|
|
(142,606
|
)
|
|
21,709
|
|
|
120,897
|
|
|
—
|
|
Other
|
(702
|
)
|
|
—
|
|
|
(1,097
|
)
|
|
—
|
|
|
(1,799
|
)
|
Cash flows from financing activities
|
(75,142
|
)
|
|
(142,307
|
)
|
|
(65,555
|
)
|
|
120,897
|
|
|
(162,107
|
)
|
Effect of exchange rate changes on cash
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
Change in cash and cash equivalents
|
(2,230
|
)
|
|
(3,671
|
)
|
|
(3,535
|
)
|
|
—
|
|
|
(9,436
|
)
|
Cash and cash equivalents at beginning of period
|
21,219
|
|
|
34,294
|
|
|
4,273
|
|
|
—
|
|
|
59,786
|
|
Cash and cash equivalents at end of period
|
$
|
18,989
|
|
|
$
|
30,623
|
|
|
$
|
738
|
|
|
$
|
—
|
|
|
$
|
50,350
|
|
FELCOR LODGING TRUST INCORPORATED AND FELCOR LODGING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. FelCor LP’s Consolidating Financial Information — (continued)
FELCOR LODGING LIMITED PARTNERSHIP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the
Nine
Months Ended
September 30, 2015
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FelCor LP
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Consolidated
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
$
|
(40,093
|
)
|
|
$
|
59,884
|
|
|
$
|
94,271
|
|
|
$
|
—
|
|
|
$
|
114,062
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
Improvements and additions to hotels
|
(13
|
)
|
|
(21,664
|
)
|
|
(14,302
|
)
|
|
—
|
|
|
(35,979
|
)
|
Hotel development
|
—
|
|
|
—
|
|
|
(31,599
|
)
|
|
—
|
|
|
(31,599
|
)
|
Net proceeds from asset sales
|
(429
|
)
|
|
10
|
|
|
190,454
|
|
|
—
|
|
|
190,035
|
|
Insurance proceeds
|
274
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
274
|
|
Change in restricted cash - investing
|
—
|
|
|
(1,964
|
)
|
|
(2,240
|
)
|
|
—
|
|
|
(4,204
|
)
|
Distributions from unconsolidated entities
|
6,460
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,460
|
|
Intercompany financing
|
139,524
|
|
|
—
|
|
|
—
|
|
|
(139,524
|
)
|
|
—
|
|
Cash flows from investing activities
|
145,816
|
|
|
(23,618
|
)
|
|
142,313
|
|
|
(139,524
|
)
|
|
124,987
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
475,000
|
|
|
—
|
|
|
504,000
|
|
|
—
|
|
|
979,000
|
|
Repayment of borrowings
|
(545,453
|
)
|
|
—
|
|
|
(621,240
|
)
|
|
—
|
|
|
(1,166,693
|
)
|
Payment of deferred financing fees
|
(8,500
|
)
|
|
—
|
|
|
(5,848
|
)
|
|
—
|
|
|
(14,348
|
)
|
Distributions paid to preferred unitholders
|
(26,125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,125
|
)
|
Distributions paid to common unitholders
|
(16,498
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,498
|
)
|
Net proceeds from common unit issuance
|
198,651
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
198,651
|
|
Distributions paid to noncontrolling interests
|
—
|
|
|
(401
|
)
|
|
(15,893
|
)
|
|
—
|
|
|
(16,294
|
)
|
Contributions from noncontrolling interests
|
—
|
|
|
513
|
|
|
2,031
|
|
|
—
|
|
|
2,544
|
|
Redemption of preferred units
|
(169,986
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(169,986
|
)
|
Net proceeds from issuance of preferred capital- consolidated joint venture
|
—
|
|
|
—
|
|
|
1,744
|
|
|
—
|
|
|
1,744
|
|
Intercompany financing
|
—
|
|
|
(32,703
|
)
|
|
(106,821
|
)
|
|
139,524
|
|
|
—
|
|
Other
|
(76
|
)
|
|
—
|
|
|
(1,070
|
)
|
|
—
|
|
|
(1,146
|
)
|
Cash flows from financing activities
|
(92,987
|
)
|
|
(32,591
|
)
|
|
(243,097
|
)
|
|
139,524
|
|
|
(229,151
|
)
|
Effect of exchange rate changes on cash
|
—
|
|
|
(134
|
)
|
|
—
|
|
|
—
|
|
|
(134
|
)
|
Change in cash and cash equivalents
|
12,736
|
|
|
3,541
|
|
|
(6,513
|
)
|
|
—
|
|
|
9,764
|
|
Cash and cash equivalents at beginning of period
|
5,717
|
|
|
32,923
|
|
|
8,507
|
|
|
—
|
|
|
47,147
|
|
Cash and cash equivalents at end of period
|
$
|
18,453
|
|
|
$
|
36,464
|
|
|
$
|
1,994
|
|
|
$
|
—
|
|
|
$
|
56,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
2016
|
2015
|
|
Dollars
|
|
Shares
|
|
Per Share Amount
|
|
Dollars
|
|
Shares
|
|
Per Share Amount
|
Net loss
|
$
|
(4,894
|
)
|
|
|
|
|
|
$
|
(8,133
|
)
|
|
|
|
|
Noncontrolling interests
|
164
|
|
|
|
|
|
|
288
|
|
|
|
|
|
Preferred dividends
|
(6,279
|
)
|
|
|
|
|
|
(6,279
|
)
|
|
|
|
|
Preferred distributions - consolidated joint venture
|
(369
|
)
|
|
|
|
|
|
(363
|
)
|
|
|
|
|
Net loss attributable to FelCor common stockholders
|
(11,378
|
)
|
|
|
|
|
|
(14,487
|
)
|
|
|
|
|
Less: Dividends declared on unvested restricted stock
|
(36
|
)
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
Basic and diluted earnings per share data
|
(11,414
|
)
|
|
137,464
|
|
|
(0.08
|
)
|
|
(14,500
|
)
|
|
142,982
|
|
|
(0.10
|
)
|
Depreciation and amortization
|
28,280
|
|
|
—
|
|
|
0.21
|
|
|
28,988
|
|
|
—
|
|
|
0.21
|
|
Depreciation, unconsolidated entities and other partnerships
|
456
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|
—
|
|
|
—
|
|
Impairment
|
20,126
|
|
|
—
|
|
|
0.15
|
|
|
20,861
|
|
|
—
|
|
|
0.15
|
|
Gain on sale of hotels, net of noncontrolling interests in other partnerships
|
(4,867
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
(3,682
|
)
|
|
—
|
|
|
(0.03
|
)
|
Noncontrolling interests in FelCor LP
|
(50
|
)
|
|
611
|
|
|
(0.01
|
)
|
|
(61
|
)
|
|
611
|
|
|
(0.01
|
)
|
Dividends declared on unvested restricted stock
|
36
|
|
|
85
|
|
|
—
|
|
|
13
|
|
|
32
|
|
|
—
|
|
Conversion of unvested restricted stock units
|
—
|
|
|
504
|
|
|
—
|
|
|
—
|
|
|
1,173
|
|
|
—
|
|
FFO*
|
32,567
|
|
|
138,664
|
|
|
0.23
|
|
|
32,090
|
|
|
144,798
|
|
|
0.22
|
|
Hurricane loss
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
Severance costs
|
6,124
|
|
|
—
|
|
|
0.05
|
|
|
3,624
|
|
|
—
|
|
|
0.03
|
|
Variable stock compensation
|
394
|
|
|
—
|
|
|
—
|
|
|
(1,086
|
)
|
|
—
|
|
|
(0.01
|
)
|
Abandoned projects
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Litigation settlement
|
203
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Pre-opening costs, net of noncontrolling interests
|
125
|
|
|
—
|
|
|
—
|
|
|
1,079
|
|
|
—
|
|
|
0.01
|
|
Adjusted FFO*
|
$
|
39,470
|
|
|
138,664
|
|
|
$
|
0.28
|
|
|
$
|
35,721
|
|
|
144,798
|
|
|
$
|
0.25
|
|
* 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2016
|
2015
|
|
Dollars
|
|
Shares
|
|
Per Share Amount
|
|
Dollars
|
|
Shares
|
|
Per Share Amount
|
Net income
|
$
|
3,795
|
|
|
|
|
|
|
$
|
616
|
|
|
|
|
|
Noncontrolling interests
|
668
|
|
|
|
|
|
|
(4,255
|
)
|
|
|
|
|
Preferred dividends
|
(18,837
|
)
|
|
|
|
|
|
(23,860
|
)
|
|
|
|
|
Preferred distributions - consolidated joint venture
|
(1,093
|
)
|
|
|
|
|
|
(1,070
|
)
|
|
|
|
|
Redemption of preferred stock
|
—
|
|
|
|
|
|
|
(6,096
|
)
|
|
|
|
|
Net loss attributable to FelCor common stockholders
|
(15,467
|
)
|
|
|
|
|
|
(34,665
|
)
|
|
|
|
|
Less: Dividends declared on unvested restricted stock
|
(109
|
)
|
|
|
|
|
|
(40
|
)
|
|
|
|
|
Basic and diluted earnings per share data
|
(15,576
|
)
|
|
138,437
|
|
|
$
|
(0.11
|
)
|
|
(34,705
|
)
|
|
136,009
|
|
|
$
|
(0.26
|
)
|
Depreciation and amortization
|
86,640
|
|
|
—
|
|
|
0.63
|
|
|
85,510
|
|
|
—
|
|
|
0.63
|
|
Depreciation, unconsolidated entities and other partnerships
|
1,392
|
|
|
—
|
|
|
0.01
|
|
|
1,730
|
|
|
—
|
|
|
0.01
|
|
Impairment
|
26,459
|
|
|
—
|
|
|
0.19
|
|
|
20,861
|
|
|
—
|
|
|
0.15
|
|
Gain on sale of hotel in unconsolidated entity
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,113
|
)
|
|
—
|
|
|
(0.05
|
)
|
Gain on sale of hotels, net of noncontrolling interests in other partnerships
|
(3,523
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
(14,931
|
)
|
|
—
|
|
|
(0.11
|
)
|
Other gains
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
—
|
|
Noncontrolling interests in FelCor LP
|
(67
|
)
|
|
611
|
|
|
—
|
|
|
(150
|
)
|
|
611
|
|
|
—
|
|
Dividends declared on unvested restricted stock
|
109
|
|
|
35
|
|
|
—
|
|
|
40
|
|
|
37
|
|
|
—
|
|
Conversion of unvested restricted stock units
|
—
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
1,136
|
|
|
—
|
|
FFO*
|
95,334
|
|
|
139,519
|
|
|
0.68
|
|
|
51,142
|
|
|
137,793
|
|
|
0.37
|
|
Hurricane loss
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
30,909
|
|
|
—
|
|
|
0.22
|
|
Debt extinguishment, unconsolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
|
—
|
|
|
—
|
|
Severance costs
|
6,151
|
|
|
—
|
|
|
0.05
|
|
|
3,624
|
|
|
—
|
|
|
0.03
|
|
Variable stock compensation
|
366
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
Redemption of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
6,096
|
|
|
—
|
|
|
0.04
|
|
Contract dispute recovery
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,717
|
)
|
|
—
|
|
|
(0.03
|
)
|
Litigation settlement
|
853
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Abandoned projects
|
620
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Pre-opening costs, net of noncontrolling interests
|
371
|
|
|
—
|
|
|
—
|
|
|
5,125
|
|
|
—
|
|
|
0.05
|
|
Adjusted FFO*
|
$
|
103,747
|
|
|
139,519
|
|
|
$
|
0.74
|
|
|
$
|
93,348
|
|
|
137,793
|
|
|
$
|
0.68
|
|
* 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
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income (loss)
|
$
|
(4,894
|
)
|
|
$
|
(8,133
|
)
|
|
$
|
3,795
|
|
|
$
|
616
|
|
Depreciation and amortization
|
28,280
|
|
|
28,988
|
|
|
86,640
|
|
|
85,510
|
|
Depreciation, unconsolidated entities and other partnerships
|
456
|
|
|
471
|
|
|
1,392
|
|
|
1,730
|
|
Interest expense
|
19,446
|
|
|
19,608
|
|
|
59,101
|
|
|
59,379
|
|
Interest expense, unconsolidated entities and other partnerships
|
90
|
|
|
96
|
|
|
280
|
|
|
439
|
|
Income taxes
|
(246
|
)
|
|
1,392
|
|
|
144
|
|
|
1,392
|
|
Noncontrolling interests in preferred distributions, consolidated joint venture
|
(18
|
)
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
Noncontrolling interests in other partnerships
|
114
|
|
|
227
|
|
|
601
|
|
|
(4,405
|
)
|
EBITDA*
|
43,228
|
|
|
42,649
|
|
|
151,898
|
|
|
144,661
|
|
Impairment
|
20,126
|
|
|
20,861
|
|
|
26,459
|
|
|
20,861
|
|
Hurricane loss
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
Debt extinguishment
|
—
|
|
|
14
|
|
|
—
|
|
|
30,909
|
|
Debt extinguishment, unconsolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
330
|
|
Gain on sale of hotel in unconsolidated entity
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,113
|
)
|
Gain on sale of hotels, net of noncontrolling interests in other partnerships
|
(4,867
|
)
|
|
(3,682
|
)
|
|
(3,523
|
)
|
|
(14,931
|
)
|
Other gains
|
—
|
|
|
—
|
|
|
(100
|
)
|
|
(100
|
)
|
Amortization of fixed stock and directors’ compensation
|
1,711
|
|
|
1,652
|
|
|
5,338
|
|
|
5,214
|
|
Severance costs
|
6,124
|
|
|
3,624
|
|
|
6,151
|
|
|
3,624
|
|
Abandoned projects
|
5
|
|
|
—
|
|
|
620
|
|
|
—
|
|
Variable stock compensation
|
394
|
|
|
(1,086
|
)
|
|
366
|
|
|
(161
|
)
|
Contract dispute recovery
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,717
|
)
|
Litigation settlement
|
203
|
|
|
—
|
|
|
853
|
|
|
—
|
|
Pre-opening costs, net of noncontrolling interests
|
125
|
|
|
1,079
|
|
|
371
|
|
|
5,125
|
|
Adjusted EBITDA*
|
67,101
|
|
|
65,111
|
|
|
188,485
|
|
|
184,702
|
|
Adjusted EBITDA from hotels disposed or recently opened
|
(2,936
|
)
|
|
(1,153
|
)
|
|
(14,088
|
)
|
|
(14,482
|
)
|
Same-store Adjusted EBITDA*
|
$
|
64,165
|
|
|
$
|
63,958
|
|
|
$
|
174,397
|
|
|
$
|
170,220
|
|
* 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
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Same-store operating revenue:
|
|
|
|
|
|
|
|
Room
|
$
|
161,682
|
|
|
$
|
162,871
|
|
|
$
|
467,631
|
|
|
$
|
457,925
|
|
Food and beverage
|
30,727
|
|
|
29,257
|
|
|
97,526
|
|
|
95,997
|
|
Other operating departments
|
12,413
|
|
|
11,014
|
|
|
33,272
|
|
|
31,643
|
|
Same-store operating revenue
|
204,822
|
|
|
203,142
|
|
|
598,429
|
|
|
585,565
|
|
Same-store operating expense:
|
|
|
|
|
|
|
|
Room
|
40,191
|
|
|
39,975
|
|
|
117,910
|
|
|
113,902
|
|
Food and beverage
|
24,441
|
|
|
23,776
|
|
|
74,882
|
|
|
73,547
|
|
Other operating departments
|
3,678
|
|
|
4,139
|
|
|
10,853
|
|
|
11,766
|
|
Other property related costs
|
48,113
|
|
|
49,035
|
|
|
145,333
|
|
|
143,409
|
|
Management and franchise fees
|
7,748
|
|
|
8,344
|
|
|
23,608
|
|
|
23,681
|
|
Taxes, insurance and lease expense
|
13,730
|
|
|
10,483
|
|
|
39,287
|
|
|
35,796
|
|
Same-store operating expense
|
137,901
|
|
|
135,752
|
|
|
411,873
|
|
|
402,101
|
|
Hotel EBITDA
|
$
|
66,921
|
|
|
$
|
67,390
|
|
|
$
|
186,556
|
|
|
$
|
183,464
|
|
Hotel EBITDA Margin
|
32.7
|
%
|
|
33.2
|
%
|
|
31.2
|
%
|
|
31.3
|
%
|
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
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Same-store operating revenue
|
$
|
204,822
|
|
|
$
|
203,142
|
|
|
$
|
598,429
|
|
|
$
|
585,565
|
|
Other revenue
|
1,809
|
|
|
1,678
|
|
|
3,641
|
|
|
7,142
|
|
Revenue from hotels disposed and recently opened
(a)
|
16,350
|
|
|
20,332
|
|
|
68,961
|
|
|
87,243
|
|
Total revenue
|
222,981
|
|
|
225,152
|
|
|
671,031
|
|
|
679,950
|
|
Same-store operating expense
|
137,901
|
|
|
135,752
|
|
|
411,873
|
|
|
402,101
|
|
Consolidated hotel lease expense
(b)
|
1,488
|
|
|
1,524
|
|
|
3,648
|
|
|
5,762
|
|
Unconsolidated taxes, insurance and lease expense
|
(517
|
)
|
|
(168
|
)
|
|
(1,486
|
)
|
|
(1,681
|
)
|
Corporate expenses
|
6,244
|
|
|
4,672
|
|
|
20,691
|
|
|
19,775
|
|
Depreciation and amortization
|
28,280
|
|
|
28,988
|
|
|
86,640
|
|
|
85,510
|
|
Impairment
|
20,126
|
|
|
20,861
|
|
|
26,459
|
|
|
20,861
|
|
Expenses from hotels disposed and recently opened
(a)
|
13,271
|
|
|
19,153
|
|
|
54,670
|
|
|
71,957
|
|
Other expenses
|
7,581
|
|
|
5,807
|
|
|
10,551
|
|
|
11,446
|
|
Total operating expense
|
214,374
|
|
|
216,589
|
|
|
613,046
|
|
|
615,731
|
|
Operating income
|
$
|
8,607
|
|
|
$
|
8,563
|
|
|
$
|
57,985
|
|
|
$
|
64,219
|
|
|
|
(a)
|
Under GAAP, we include the operating performance for disposed, held for sale and recently-opened hotels in continuing operations in our 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 lease expense of our 51% owned operating lessees. The offsetting lease revenue is included in equity in income from 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 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, or “NAREIT,” defines 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.
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 (loss) 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 Adjusted FFO and Adjusted 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.
Pro Rata Share of Rooms Owned
The following table sets forth, at
September 30, 2016
, our
pro rata
share of hotel rooms after giving consideration to the portion of rooms attributed to our partners in our consolidated and unconsolidated joint ventures:
|
|
|
|
|
|
|
|
|
|
Hotels
|
|
Room Count at September 30, 2016
|
Consolidated Hotels
(a)
|
38
|
|
|
|
11,329
|
|
|
Unconsolidated hotel operations
|
1
|
|
|
|
171
|
|
|
Total hotels
|
39
|
|
|
|
11,500
|
|
|
|
|
|
|
|
|
50% joint ventures
|
2
|
|
|
|
(216
|
)
|
|
95% joint venture
|
1
|
|
|
|
(17
|
)
|
|
Pro rata rooms attributed to joint venture partners
|
|
|
|
(233
|
)
|
|
Pro rata share of rooms owned
|
|
|
|
11,267
|
|
|
(a) Includes The Knickerbocker, which opened in February 2015.
Hotel Operating Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy (%)
|
|
ADR ($)
|
|
RevPAR ($)
|
|
|
Three Months Ended September 30,
|
|
Three Months Ended September 30,
|
|
Three Months Ended September 30,
|
Same-store Hotels
|
|
2016
|
|
2015
|
|
%Change
|
|
2016
|
|
2015
|
|
%Change
|
|
2016
|
|
2015
|
|
%Change
|
Embassy Suites Atlanta-Buckhead
|
77.3
|
|
79.9
|
|
(3.3
|
)
|
|
157.93
|
|
|
149.95
|
|
|
5.3
|
|
|
122.02
|
|
|
119.77
|
|
|
1.9
|
|
DoubleTree Suites by Hilton Austin
|
78.0
|
|
86.6
|
|
(10.0
|
)
|
|
196.91
|
|
|
191.69
|
|
|
2.7
|
|
|
153.55
|
|
|
166.04
|
|
|
(7.5
|
)
|
Embassy Suites Birmingham
|
76.4
|
|
82.1
|
|
(6.9
|
)
|
|
135.07
|
|
|
128.34
|
|
|
5.2
|
|
|
103.19
|
|
|
105.36
|
|
|
(2.1
|
)
|
The Fairmont Copley Plaza, Boston
|
86.5
|
|
86.7
|
|
(0.3
|
)
|
|
336.67
|
|
|
337.92
|
|
|
(0.4
|
)
|
|
291.26
|
|
|
293.13
|
|
|
(0.6
|
)
|
Wyndham Boston Beacon Hill
|
86.8
|
|
91.6
|
|
(5.2
|
)
|
|
257.67
|
|
|
265.91
|
|
|
(3.1
|
)
|
|
223.66
|
|
|
243.54
|
|
|
(8.2
|
)
|
Embassy Suites Boston-Marlborough
|
73.6
|
|
78.8
|
|
(6.7
|
)
|
|
175.01
|
|
|
176.47
|
|
|
(0.8
|
)
|
|
128.76
|
|
|
139.11
|
|
|
(7.4
|
)
|
Sheraton Burlington Hotel & Conference Center
|
83.3
|
|
82.6
|
|
0.8
|
|
|
144.65
|
|
|
129.75
|
|
|
11.5
|
|
|
120.49
|
|
|
107.18
|
|
|
12.4
|
|
The Mills House Wyndham Grand Hotel, Charleston
|
84.9
|
|
80.7
|
|
5.2
|
|
|
214.95
|
|
|
212.46
|
|
|
1.2
|
|
|
182.45
|
|
|
171.38
|
|
|
6.5
|
|
Embassy Suites Dallas-Love Field
(1)
|
66.7
|
|
89.4
|
|
(25.4
|
)
|
|
140.10
|
|
|
129.57
|
|
|
8.1
|
|
|
93.41
|
|
|
115.88
|
|
|
(19.4
|
)
|
Embassy Suites Deerfield Beach-Resort & Spa
|
69.7
|
|
68.8
|
|
1.3
|
|
|
152.95
|
|
|
160.32
|
|
|
(4.6
|
)
|
|
106.60
|
|
|
110.29
|
|
|
(3.3
|
)
|
Embassy Suites Fort Lauderdale 17
th
Street
|
79.4
|
|
80.4
|
|
(1.3
|
)
|
|
129.31
|
|
|
125.27
|
|
|
3.2
|
|
|
102.63
|
|
|
100.69
|
|
|
1.9
|
|
Wyndham Houston-Medical Center Hotel & Suites
|
72.1
|
|
85.2
|
|
(15.4
|
)
|
|
129.25
|
|
|
142.32
|
|
|
(9.2
|
)
|
|
93.15
|
|
|
121.20
|
|
|
(23.1
|
)
|
Embassy Suites Los Angeles-International Airport/South
|
88.0
|
|
84.1
|
|
4.7
|
|
|
183.81
|
|
|
178.79
|
|
|
2.8
|
|
|
161.84
|
|
|
150.35
|
|
|
7.6
|
|
Embassy Suites Mandalay Beach-Hotel & Resort
|
84.6
|
|
83.6
|
|
1.2
|
|
|
270.37
|
|
|
265.30
|
|
|
1.9
|
|
|
228.75
|
|
|
221.70
|
|
|
3.2
|
|
Embassy Suites Miami-International Airport
|
84.4
|
|
86.2
|
|
(2.1
|
)
|
|
117.02
|
|
|
118.33
|
|
|
(1.1
|
)
|
|
98.72
|
|
|
102.00
|
|
|
(3.2
|
)
|
Embassy Suites Milpitas-Silicon Valley
|
84.0
|
|
85.2
|
|
(1.5
|
)
|
|
198.65
|
|
|
197.57
|
|
|
0.5
|
|
|
166.78
|
|
|
168.38
|
|
|
(1.0
|
)
|
Embassy Suites Minneapolis-Airport
|
83.9
|
|
84.5
|
|
(0.7
|
)
|
|
170.49
|
|
|
162.14
|
|
|
5.1
|
|
|
143.04
|
|
|
137.04
|
|
|
4.4
|
|
Embassy Suites Myrtle Beach-Oceanfront Resort
|
91.1
|
|
89.2
|
|
2.1
|
|
|
230.26
|
|
|
222.64
|
|
|
3.4
|
|
|
209.67
|
|
|
198.53
|
|
|
5.6
|
|
Hilton Myrtle Beach Resort
|
84.1
|
|
86.9
|
|
(3.2
|
)
|
|
177.60
|
|
|
170.92
|
|
|
3.9
|
|
|
149.36
|
|
|
148.47
|
|
|
0.6
|
|
Embassy Suites Napa Valley
|
85.3
|
|
88.4
|
|
(3.5
|
)
|
|
279.76
|
|
|
280.07
|
|
|
(0.1
|
)
|
|
238.66
|
|
|
247.66
|
|
|
(3.6
|
)
|
Wyndham New Orleans-French Quarter
|
62.8
|
|
61.2
|
|
2.6
|
|
|
129.55
|
|
|
123.69
|
|
|
4.7
|
|
|
81.37
|
|
|
75.75
|
|
|
7.4
|
|
Morgans New York
|
87.9
|
|
90.6
|
|
(3.0
|
)
|
|
265.77
|
|
|
277.94
|
|
|
(4.4
|
)
|
|
233.64
|
|
|
251.88
|
|
|
(7.2
|
)
|
Royalton New York
|
84.8
|
|
88.7
|
|
(4.4
|
)
|
|
286.41
|
|
|
299.78
|
|
|
(4.5
|
)
|
|
242.75
|
|
|
265.85
|
|
|
(8.7
|
)
|
Embassy Suites Orlando-International Drive South/Convention Center
(1)
|
57.8
|
|
80.5
|
|
(28.2
|
)
|
|
119.46
|
|
|
127.38
|
|
|
(6.2
|
)
|
|
69.11
|
|
|
102.58
|
|
|
(32.6
|
)
|
DoubleTree Suites by Hilton Orlando-Lake Buena Vista
|
84.2
|
|
80.6
|
|
4.5
|
|
|
113.85
|
|
|
120.06
|
|
|
(5.2
|
)
|
|
95.91
|
|
|
96.74
|
|
|
(0.9
|
)
|
Wyndham Philadelphia Historic District
|
84.3
|
|
74.0
|
|
13.9
|
|
|
170.85
|
|
|
159.84
|
|
|
6.9
|
|
|
143.97
|
|
|
118.21
|
|
|
21.8
|
|
Sheraton Philadelphia Society Hill Hotel
|
79.2
|
|
72.5
|
|
9.3
|
|
|
196.49
|
|
|
173.30
|
|
|
13.4
|
|
|
155.65
|
|
|
125.61
|
|
|
23.9
|
|
Embassy Suites Phoenix-Biltmore
|
62.5
|
|
64.4
|
|
(2.9
|
)
|
|
134.26
|
|
|
128.93
|
|
|
4.1
|
|
|
83.86
|
|
|
82.97
|
|
|
1.1
|
|
Wyndham Pittsburgh University Center
|
78.8
|
|
83.8
|
|
(6.0
|
)
|
|
148.42
|
|
|
149.07
|
|
|
(0.4
|
)
|
|
116.91
|
|
|
124.86
|
|
|
(6.4
|
)
|
Wyndham San Diego Bayside
|
85.9
|
|
80.2
|
|
7.1
|
|
|
155.35
|
|
|
159.56
|
|
|
(2.6
|
)
|
|
133.40
|
|
|
127.97
|
|
|
4.2
|
|
Embassy Suites San Francisco Airport-South San Francisco
|
90.7
|
|
90.4
|
|
0.4
|
|
|
216.84
|
|
|
232.00
|
|
|
(6.5
|
)
|
|
196.75
|
|
|
209.63
|
|
|
(6.1
|
)
|
Embassy Suites San Francisco Airport-Waterfront
|
92.3
|
|
89.6
|
|
3.0
|
|
|
222.35
|
|
|
224.85
|
|
|
(1.1
|
)
|
|
205.24
|
|
|
201.53
|
|
|
1.8
|
|
Holiday Inn San Francisco-Fisherman’s Wharf
|
92.7
|
|
92.7
|
|
0.1
|
|
|
243.12
|
|
|
253.91
|
|
|
(4.2
|
)
|
|
225.47
|
|
|
235.30
|
|
|
(4.2
|
)
|
San Francisco Marriott Union Square
|
93.0
|
|
92.5
|
|
0.5
|
|
|
288.54
|
|
|
308.87
|
|
|
(6.6
|
)
|
|
268.32
|
|
|
285.69
|
|
|
(6.1
|
)
|
Wyndham Santa Monica At the Pier
|
91.5
|
|
90.8
|
|
0.8
|
|
|
314.90
|
|
|
295.60
|
|
|
6.5
|
|
|
288.03
|
|
|
268.29
|
|
|
7.4
|
|
Embassy Suites Secaucus-Meadowlands
|
81.5
|
|
81.0
|
|
0.6
|
|
|
180.94
|
|
|
184.79
|
|
|
(2.1
|
)
|
|
147.39
|
|
|
149.60
|
|
|
(1.5
|
)
|
The Vinoy Renaissance St. Petersburg Resort & Golf Club
|
76.2
|
|
77.3
|
|
(1.5
|
)
|
|
183.78
|
|
|
173.53
|
|
|
5.9
|
|
|
140.05
|
|
|
134.20
|
|
|
4.4
|
|
Same-store Hotels
|
81.8
|
|
82.9
|
|
(1.3
|
)
|
|
195.33
|
|
|
194.22
|
|
|
0.6
|
|
|
159.78
|
|
|
160.95
|
|
|
(0.7
|
)
|
(1)
Hotel under renovation in 2016.
Hotel Operating Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy (%)
|
|
ADR ($)
|
|
RevPAR ($)
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
Same-store Hotels
|
|
2016
|
|
2015
|
|
%Change
|
|
2016
|
|
2015
|
|
%Change
|
|
2016
|
|
2015
|
|
%Change
|
Embassy Suites Atlanta-Buckhead
|
79.6
|
|
80.1
|
|
(0.5
|
)
|
|
157.15
|
|
|
149.55
|
|
|
5.1
|
|
|
125.14
|
|
|
119.74
|
|
|
4.5
|
|
DoubleTree Suites by Hilton Austin
|
83.1
|
|
83.3
|
|
(0.2
|
)
|
|
218.56
|
|
|
220.31
|
|
|
(0.8
|
)
|
|
181.71
|
|
|
183.60
|
|
|
(1.0
|
)
|
Embassy Suites Birmingham
|
79.1
|
|
79.4
|
|
(0.4
|
)
|
|
137.36
|
|
|
134.08
|
|
|
2.4
|
|
|
108.64
|
|
|
106.50
|
|
|
2.0
|
|
The Fairmont Copley Plaza, Boston
|
77.9
|
|
77.6
|
|
0.4
|
|
|
324.04
|
|
|
323.51
|
|
|
0.2
|
|
|
252.54
|
|
|
251.11
|
|
|
0.6
|
|
Wyndham Boston Beacon Hill
|
79.2
|
|
81.8
|
|
(3.2
|
)
|
|
232.98
|
|
|
237.02
|
|
|
(1.7
|
)
|
|
184.52
|
|
|
193.91
|
|
|
(4.8
|
)
|
Embassy Suites Boston-Marlborough
|
71.8
|
|
76.7
|
|
(6.4
|
)
|
|
173.00
|
|
|
170.70
|
|
|
1.3
|
|
|
124.30
|
|
|
130.97
|
|
|
(5.1
|
)
|
Sheraton Burlington Hotel & Conference Center
|
74.6
|
|
73.9
|
|
1.0
|
|
|
122.15
|
|
|
119.38
|
|
|
2.3
|
|
|
91.18
|
|
|
88.23
|
|
|
3.3
|
|
The Mills House Wyndham Grand Hotel, Charleston
|
84.9
|
|
83.3
|
|
1.9
|
|
|
229.19
|
|
|
224.94
|
|
|
1.9
|
|
|
194.54
|
|
|
187.45
|
|
|
3.8
|
|
Embassy Suites Dallas-Love Field
(1)
|
76.8
|
|
90.7
|
|
(15.4
|
)
|
|
142.00
|
|
|
131.42
|
|
|
8.0
|
|
|
109.04
|
|
|
119.23
|
|
|
(8.5
|
)
|
Embassy Suites Deerfield Beach-Resort & Spa
|
79.7
|
|
81.1
|
|
(1.7
|
)
|
|
203.24
|
|
|
205.36
|
|
|
(1.0
|
)
|
|
161.99
|
|
|
166.46
|
|
|
(2.7
|
)
|
Embassy Suites Fort Lauderdale 17
th
Street
|
84.2
|
|
85.1
|
|
(1.0
|
)
|
|
175.62
|
|
|
166.26
|
|
|
5.6
|
|
|
147.88
|
|
|
141.42
|
|
|
4.6
|
|
Wyndham Houston-Medical Center Hotel & Suites
|
79.4
|
|
81.7
|
|
(2.7
|
)
|
|
148.06
|
|
|
152.13
|
|
|
(2.7
|
)
|
|
117.63
|
|
|
124.23
|
|
|
(5.3
|
)
|
Embassy Suites Los Angeles-International Airport/South
|
87.9
|
|
82.6
|
|
6.4
|
|
|
173.37
|
|
|
162.85
|
|
|
6.5
|
|
|
152.33
|
|
|
134.45
|
|
|
13.3
|
|
Embassy Suites Mandalay Beach-Hotel & Resort
|
82.6
|
|
80.4
|
|
2.7
|
|
|
238.09
|
|
|
220.77
|
|
|
7.8
|
|
|
196.56
|
|
|
177.43
|
|
|
10.8
|
|
Embassy Suites Miami-International Airport
|
86.8
|
|
89.2
|
|
(2.7
|
)
|
|
149.36
|
|
|
151.76
|
|
|
(1.6
|
)
|
|
129.61
|
|
|
135.36
|
|
|
(4.2
|
)
|
Embassy Suites Milpitas-Silicon Valley
|
83.2
|
|
83.6
|
|
(0.5
|
)
|
|
204.36
|
|
|
196.20
|
|
|
4.2
|
|
|
169.96
|
|
|
163.96
|
|
|
3.7
|
|
Embassy Suites Minneapolis-Airport
|
77.1
|
|
78.0
|
|
(1.1
|
)
|
|
158.20
|
|
|
152.98
|
|
|
3.4
|
|
|
121.99
|
|
|
119.30
|
|
|
2.3
|
|
Embassy Suites Myrtle Beach-Oceanfront Resort
|
79.6
|
|
77.1
|
|
3.2
|
|
|
190.36
|
|
|
188.35
|
|
|
1.1
|
|
|
151.53
|
|
|
145.29
|
|
|
4.3
|
|
Hilton Myrtle Beach Resort
|
68.9
|
|
70.7
|
|
(2.5
|
)
|
|
154.49
|
|
|
149.12
|
|
|
3.6
|
|
|
106.47
|
|
|
105.44
|
|
|
1.0
|
|
Embassy Suites Napa Valley
|
82.9
|
|
83.5
|
|
(0.7
|
)
|
|
241.13
|
|
|
235.96
|
|
|
2.2
|
|
|
200.01
|
|
|
197.01
|
|
|
1.5
|
|
Wyndham New Orleans-French Quarter
|
72.5
|
|
67.1
|
|
8.1
|
|
|
146.47
|
|
|
151.79
|
|
|
(3.5
|
)
|
|
106.26
|
|
|
101.89
|
|
|
4.3
|
|
Morgans New York
|
83.3
|
|
81.1
|
|
2.8
|
|
|
256.36
|
|
|
269.72
|
|
|
(5.0
|
)
|
|
213.66
|
|
|
218.69
|
|
|
(2.3
|
)
|
Royalton New York
|
82.8
|
|
85.7
|
|
(3.3
|
)
|
|
279.79
|
|
|
289.25
|
|
|
(3.3
|
)
|
|
231.73
|
|
|
247.79
|
|
|
(6.5
|
)
|
Embassy Suites Orlando-International Drive South/Convention Center
(1)
|
73.0
|
|
84.6
|
|
(13.7
|
)
|
|
148.50
|
|
|
148.24
|
|
|
0.2
|
|
|
108.46
|
|
|
125.41
|
|
|
(13.5
|
)
|
DoubleTree Suites by Hilton Orlando-Lake Buena Vista
|
89.4
|
|
89.0
|
|
0.4
|
|
|
140.09
|
|
|
137.19
|
|
|
2.1
|
|
|
125.19
|
|
|
122.14
|
|
|
2.5
|
|
Wyndham Philadelphia Historic District
|
74.9
|
|
64.7
|
|
15.7
|
|
|
157.00
|
|
|
159.89
|
|
|
(1.8
|
)
|
|
117.59
|
|
|
103.49
|
|
|
13.6
|
|
Sheraton Philadelphia Society Hill Hotel
|
71.9
|
|
68.9
|
|
4.4
|
|
|
183.69
|
|
|
173.67
|
|
|
5.8
|
|
|
132.10
|
|
|
119.64
|
|
|
10.4
|
|
Embassy Suites Phoenix-Biltmore
|
70.3
|
|
72.8
|
|
(3.4
|
)
|
|
182.93
|
|
|
175.70
|
|
|
4.1
|
|
|
128.61
|
|
|
127.86
|
|
|
0.6
|
|
Wyndham Pittsburgh University Center
|
70.7
|
|
73.9
|
|
(4.4
|
)
|
|
146.09
|
|
|
145.99
|
|
|
0.1
|
|
|
103.23
|
|
|
107.95
|
|
|
(4.4
|
)
|
Wyndham San Diego Bayside
|
80.5
|
|
80.8
|
|
(0.4
|
)
|
|
151.67
|
|
|
149.51
|
|
|
1.4
|
|
|
122.03
|
|
|
120.76
|
|
|
1.0
|
|
Embassy Suites San Francisco Airport-South San Francisco
|
88.5
|
|
89.2
|
|
(0.8
|
)
|
|
207.70
|
|
|
203.06
|
|
|
2.3
|
|
|
183.84
|
|
|
181.21
|
|
|
1.5
|
|
Embassy Suites San Francisco Airport-Waterfront
|
89.8
|
|
86.8
|
|
3.5
|
|
|
211.62
|
|
|
211.38
|
|
|
0.1
|
|
|
190.14
|
|
|
183.43
|
|
|
3.7
|
|
Holiday Inn San Francisco-Fisherman’s Wharf
|
88.2
|
|
87.6
|
|
0.7
|
|
|
216.01
|
|
|
214.53
|
|
|
0.7
|
|
|
190.52
|
|
|
187.98
|
|
|
1.3
|
|
San Francisco Marriott Union Square
|
90.8
|
|
88.1
|
|
3.1
|
|
|
299.42
|
|
|
290.28
|
|
|
3.1
|
|
|
271.86
|
|
|
255.72
|
|
|
6.3
|
|
Wyndham Santa Monica At the Pier
|
88.8
|
|
86.9
|
|
2.2
|
|
|
282.99
|
|
|
260.64
|
|
|
8.6
|
|
|
251.24
|
|
|
226.46
|
|
|
10.9
|
|
Embassy Suites Secaucus-Meadowlands
|
71.9
|
|
76.3
|
|
(5.8
|
)
|
|
181.29
|
|
|
185.30
|
|
|
(2.2
|
)
|
|
130.31
|
|
|
141.43
|
|
|
(7.9
|
)
|
The Vinoy Renaissance St. Petersburg Resort & Golf Club
|
82.7
|
|
83.4
|
|
(0.8
|
)
|
|
221.93
|
|
|
213.32
|
|
|
4.0
|
|
|
183.63
|
|
|
177.95
|
|
|
3.2
|
|
Same-store Hotels
|
80.3
|
|
80.5
|
|
(0.2
|
)
|
|
193.19
|
|
|
189.49
|
|
|
2.0
|
|
|
155.17
|
|
|
152.50
|
|
|
1.7
|
|
(1)
Hotel under renovation in 2016.
Hotel Portfolio
The following table provides room counts for the hotels in which we held an ownership interest at
September 30, 2016
.
|
|
|
|
|
|
Consolidated Hotels
|
|
|
Rooms
|
Embassy Suites Atlanta-Buckhead
|
|
316
|
|
DoubleTree Suites by Hilton Austin
|
|
188
|
|
Embassy Suites Birmingham
|
|
242
|
|
The Fairmont Copley Plaza, Boston
|
|
383
|
|
Wyndham Boston Beacon Hill
|
|
304
|
|
Embassy Suites Boston-Marlborough
|
|
229
|
|
Sheraton Burlington Hotel & Conference Center
|
|
309
|
|
The Mills House Wyndham Grand Hotel, Charleston
|
|
216
|
|
Embassy Suites Dallas-Love Field
|
|
248
|
|
Embassy Suites Deerfield Beach-Resort & Spa
|
|
244
|
|
Embassy Suites Fort Lauderdale 17
th
Street
|
|
361
|
|
Wyndham Houston-Medical Center Hotel & Suites
|
|
287
|
|
Embassy Suites Los Angeles-International Airport/South
|
|
349
|
|
Embassy Suites Mandalay Beach-Hotel & Resort
|
|
250
|
|
Embassy Suites Miami-International Airport
|
|
318
|
|
Embassy Suites Milpitas-Silicon Valley
|
|
266
|
|
Embassy Suites Minneapolis-Airport
|
|
310
|
|
Embassy Suites Myrtle Beach-Oceanfront Resort
|
|
255
|
|
Hilton Myrtle Beach Resort
|
|
385
|
|
Embassy Suites Napa Valley
|
|
205
|
|
Wyndham New Orleans-French Quarter
|
|
374
|
|
The Knickerbocker New York
|
|
330
|
|
Morgans New York
|
|
117
|
|
Royalton New York
|
|
168
|
|
Embassy Suites Orlando-International Drive South/Convention Center
|
|
244
|
|
DoubleTree Suites by Hilton Orlando-Lake Buena Vista
|
|
229
|
|
Wyndham Philadelphia Historic District
|
|
364
|
|
Sheraton Philadelphia Society Hill Hotel
|
|
364
|
|
Embassy Suites Phoenix-Biltmore
|
|
232
|
|
Wyndham Pittsburgh University Center
|
|
251
|
|
Wyndham San Diego Bayside
|
|
600
|
|
Embassy Suites San Francisco Airport-South San Francisco
|
|
312
|
|
Embassy Suites San Francisco Airport-Waterfront
|
|
340
|
|
Holiday Inn San Francisco-Fisherman’s Wharf
|
|
585
|
|
San Francisco Marriott Union Square
|
|
400
|
|
Wyndham Santa Monica At the Pier
|
|
132
|
|
Embassy Suites Secaucus-Meadowlands
(a)
|
|
261
|
|
The Vinoy Renaissance St. Petersburg Resort & Golf Club
|
|
361
|
|
|
|
11,329
|
|
Unconsolidated Hotel
|
|
|
Chateau LeMoyne-French Quarter, New Orleans
(a)
|
|
171
|
|
|
(a)
|
We own a 50% interest in this property.
|
Liquidity and Capital Resources
Operating Activities
For the
nine months ended September 30, 2016
, RevPAR at our same-store hotels increased
1.7%
, as compared to the same period in 2015, driven by a
2.0%
increase in ADR and offset by a
0.2%
decline in occupancy. We expect our RevPAR will increase 1.25% to 1.5% during 2016 as compared to 2015, primarily from higher ADR, and our operations will generate $146 million to $150 million of cash flow this year.
At
September 30, 2016
, we had
$50.4 million
of cash and cash equivalents, including
$30.6 million
held by third-party management companies. During the first
nine
months of
2016
, our operations (primarily hotel operations) provided
$114.0 million
in cash, which is consistent with the same period last year.
Investing Activities
During the
nine months ended September 30, 2016
, cash provided by investing activities was
$38.6 million
as compared to cash provided by investing activities of
$125.0 million
last year. In 2016, we sold hotels for
$101.7 million
in aggregate net proceeds compared to
$190.0 million
in aggregate net proceeds received during the nine months ended
September 30, 2015
. Additionally, in 2015 we sold a hotel owned by an unconsolidated joint venture resulting in higher distributions last year.
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. Through September 30, we have spent
$15.3 million
more this year on renovation and redevelopment projects at our hotels than last year. In 2015, we completed developing The Knickerbocker. Accordingly, we spent
$31.6 million
on the development of that hotel during the first
nine
months of 2015 as we wound down that project. After winding down The Knickerbocker and other capital projects, less interest was capitalized in the current period as compared to the same period last year. In September 2016, we acquired land under one of our hotels for
$8.2 million
, including closing costs. We had previously leased the land from the prior owners.
Financing Activities
During the
nine months ended September 30, 2016
, cash used in financing activities was
$162.1 million
,
$67.0 million
less than cash used in financing activities for the same period last year. The following financing transactions took place during the first nine months of 2015:
|
|
•
|
We issued our $475 million 6% senior notes (resulting in deferred financing fees of $8.5 million) and used the proceeds, in addition to cash on hand, to repurchase and redeem our $525 million (face value) 6.75% senior notes;
|
|
|
•
|
We amended and restated our line of credit (resulting in deferred financing fees of $5.8 million) and used funds drawn on the line of credit to repay a $140 million secured loan;
|
|
|
•
|
We repaid $62.1 million of secured debt using sale proceeds;
|
|
|
•
|
We issued 18.4 million shares of our common stock for net proceeds of approximately $199 million;
|
|
|
•
|
We used proceeds from selling our common stock to redeem all of our outstanding shares of 8% Series C preferred stock for an aggregate redemption price of $170.4 million (including $491,000 of accrued dividends);
|
|
|
•
|
We received $1.7 million of additional net proceeds from selling preferred equity interests pursuant to the EB-5 Immigrant Investor Program by The Knickerbocker consolidated joint venture; and
|
|
|
•
|
We increased our distributions to noncontrolling interest holders to $16.3 million primarily due to selling a hotel in a consolidated joint venture.
|
We implemented a stock repurchase program in December 2015. During the first nine months of 2016, we repurchased
4.6 million
shares of common stock for
$30.5 million
(including commissions) at an average price of
$6.58
per share.
In 2016, we expect to make approximately $3 million of scheduled principal payments and pay $25 million of preferred dividends and $33 million in common dividends (assuming no change to our current quarterly dividend), all of which will be funded from operating cash flow and cash on hand. We also expect to use proceeds from selling hotels to repay debt, repurchase common stock and take advantage of future value-creation opportunities.
FelCor LP, which is our operating partnership, distributes funds to FelCor to pay common and preferred dividends. Our Board determines the amount of common and preferred dividends for each quarter, if any, based upon various factors including operating results, economic conditions, other operating trends, our financial condition and capital requirements, as well as the minimum REIT distribution requirements.
Except for our 5.625% senior secured notes due 2023 and our line of credit, our secured debt is generally recourse solely to the specific hotels securing the debt, except in case of fraud, misapplication of funds and certain other customary limited recourse carve-out provisions that could extend recourse to us. Much of our secured debt allows us to substitute collateral under certain conditions and is freely prepayable, subject in some instances to various prepayment, yield maintenance or defeasance obligations.
Most of our secured debt (other than our 5.625% senior secured notes) is subject to lock-box arrangements under certain circumstances. We are permitted to spend an amount required to cover our hotel operating expenses, taxes, debt service, insurance and capital expenditure reserves, even if revenues are flowing through a lock-box triggered by a specified debt service coverage ratio not being met. All of our consolidated loans subject to lock-box provisions currently exceed the applicable minimum debt service coverage ratios.
Senior Notes.
Our senior notes, which are guaranteed by FelCor, require that we satisfy total leverage, secured leverage and interest coverage tests in order to: (i) incur additional indebtedness, except to refinance maturing debt with replacement debt, as defined under our indentures; (ii) pay dividends in excess of the minimum distributions required to qualify as a REIT; (iii) repurchase capital stock; or (iv) merge. We currently exceed all minimum thresholds. In addition, our 5.625% senior secured notes are secured by a combination of first lien mortgages and related security interests on nine hotels, as well as pledges of equity interests in certain subsidiaries of FelCor LP, and our 6.0% senior unsecured notes require us to maintain a minimum amount of unencumbered assets.
Interest Rate Caps.
To fulfill requirements under one of our loans, we entered into an interest rate cap agreement with an aggregate notional amount of $140 million at
December 31, 2015
. We did not designate the interest rate cap as a hedge, and it had an insignificant fair value at
December 31, 2015
, resulting in no impact on earnings. We had no outstanding interest rate caps at
September 30, 2016
.
Inflation and Competition
Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Competitive pressures may, however, require us to reduce room rates in the near term and may limit our ability to raise room rates in the future. We are also subject to the risk that inflation will cause increases in hotel operating expenses that are disproportionate to increases in revenues. If competition requires us to reduce room rates or limits our ability to raise room rates in the future, we may not be able to adjust our room rates to reflect the effects of inflation in full, in which case our operating results and liquidity could be adversely affected.
Seasonality
The lodging business is seasonal in nature. Generally, hotel revenues are greater in the second and third calendar quarters than in the first and fourth calendar quarters, although this may not be true for hotels in major tourist destinations. Revenues for hotels in tourist areas generally are substantially greater during tourist season than other times of the year. Seasonal variations in revenue at our hotels can be expected to cause quarterly fluctuations in our revenues. Quarterly earnings also may be adversely affected by events beyond our control, such as extreme weather conditions, economic factors and other considerations affecting travel. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenues, we may utilize cash on hand or borrowings to satisfy our obligations.
Disclosure Regarding Forward-Looking Statements
This report and the documents incorporated by reference in this report include forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” or other variations of these terms (including their use in the negative), or by discussions of strategies, plans or intentions. A number of factors could cause actual results to differ materially from those anticipated by these forward-looking statements. Certain of these risks and uncertainties are described in greater detail under “Risk Factors” in our Annual Report on Form 10-K or in our other filings with the Securities and Exchange Commission, or the SEC.
These forward-looking statements are necessarily dependent upon assumptions and estimates that may prove to be incorrect. Accordingly, while we believe that the plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot assure you that deviations from these plans, intentions or expectations will not be material. The forward-looking statements included in this report, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the risk factors and cautionary statements discussed in our filings to the SEC. We undertake no obligation to publicly update any forward-looking statements to reflect future circumstances or changes in our expectations.