• Morgans and Royalton to be sold in
third quarter
• In April 2017, entered into a
definitive merger agreement with RLJ Lodging Trust (RLJ)
FelCor Lodging Trust Incorporated (NYSE: FCH) today reported
results for the first quarter ended March 31, 2017.
First Quarter Highlights
- Same-store RevPAR was $142.15 compared
to $143.97 for the same period in 2016.
- Net loss attributable to FelCor common
stockholders was $42.2 million ($0.31 per share) versus
$11.2 million ($0.08 per share) for the same period in
2016.
- Adjusted FFO per share was $0.09 versus
$0.14 for the same period in 2016.
- Same-store Adjusted EBITDA was
$40.1 million versus $43.1 million for the same period in
2016.
“Since our last earnings release, we have continued on our path
to recognize and realize the value of our portfolio for all our
stockholders,” said Steven R. Goldman, FelCor’s Chief Executive
Officer. “Adjusted FFO per share and Adjusted EBITDA for the
quarter were in line with our expectations and speak to the quality
of our portfolio and its ability to withstand some challenging
market conditions.”
“Following the end of the quarter, in addition to the recent
merger announcement with RLJ, we finalized agreements to sell
Morgans and Royalton in New York City,” continued Mr. Goldman. “For
the remainder of the year, we remain focused on operating the
business and working to complete our merger with RLJ.”
First Quarter Hotel Results
First Quarter 2017
2016 Change
Same-store hotels (38) RevPAR $ 142.15 $ 143.97 (1.3 )%
Total hotel revenue, in millions $ 187.4 $ 190.4 (1.6 )% Hotel
EBITDA, in millions $ 45.2 $ 48.1 (6.1 )% Hotel EBITDA margin 24.1
% 25.3 % (116) bps
RevPAR for our 38 same-store hotels decreased 1.3% (to $142.15)
from the same period in 2016. The change reflects reductions of
0.1% in average daily rate, or ADR, (to $189.63) and 1.2% in
occupancy (to 75.0%). Hotel EBITDA for our 38 same-store hotels
decreased 6.1% to $45.2 million, and Hotel EBITDA margin was
24.1%, a 116 basis point decrease. Our RevPAR performance during
the quarter was particularly impacted by certain underperforming
markets, mainly New York, Boston, San Francisco and Miami. We were
able to offset much of the RevPAR weakness through effective cost
controls and the Wyndham guaranty.
Wyndham Worldwide Corporation has guaranteed minimum annual NOI
for eight of our hotels over the 10-year term of their management
agreements. Hotel EBITDA for the three months ended March 31, 2017
includes $1.0 million in fee reductions related to the Wyndham
guaranty compared to $48,000 during the same period last year.
See pages 13-14 and 17-20 for more detailed operating data.
First Quarter Operating Results
First Quarter $ in millions, except for per
share information
2017
2016 Change Net loss attributable to
FelCor common stockholders $ (42.2 ) $ (11.2 ) (276.7 )% Net loss
per share $ (0.31 ) $ (0.08 ) $ (0.23 ) Same-store Adjusted EBITDA
$ 40.1 $ 43.1 (7.0 )% Adjusted EBITDA $ 40.2 $ 49.0 (17.9 )%
Adjusted FFO per share $ 0.09 $ 0.14 $ (0.05 )
Net loss attributable to common stockholders was
$42.2 million ($0.31 per share) in 2017, compared to
$11.2 million ($0.08 per share) for the same period in 2016.
Net loss in 2017 includes an impairment charge of
$24.8 million attributable to one hotel.
EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel
EBITDA, Hotel EBITDA margin, FFO, Adjusted FFO and Adjusted FFO per
share are all non-GAAP financial measures. See our discussion of
“Non-GAAP Financial Measures” beginning on page 14 for a
reconciliation of each of these measures to the most comparable
GAAP financial measure and for information regarding the use,
limitations and importance of these non-GAAP financial
measures.
Balance Sheet
As of March 31, 2017, we had $1.4 billion of
consolidated debt with a 5.4% weighted-average interest rate and a
six-year weighted-average maturity. We had $50.2 million of
cash and cash equivalents on hand and $22.3 million of
restricted cash.
Asset Sales
In April and May 2017, we entered into binding agreements for
the sale of Morgans and Royalton for a combined price of
$92 million. We continue to market The Knickerbocker.
Common Dividend
We paid our first quarter common stock dividend of
$0.06 per share at the end of April.
Capital Expenditures
In 2016, we began redeveloping two resort properties (The Vinoy
Renaissance St. Petersburg Resort & Golf Club and Embassy
Suites Myrtle Beach-Oceanfront Resort). We expect to complete our
Myrtle Beach project this month, as scheduled and under budget.
These redevelopments are intended to enhance our portfolio quality
and offer attractive returns. We spent $19.6 million on
renovations and redevelopments at our hotels during the first
quarter of 2017.
Outlook
In the first quarter of 2017, our Adjusted FFO per share and
Adjusted EBITDA met the expectations on which we based our
full-year guidance. We are reaffirming the guidance we provided in
our February 23, 2017 earnings release. We do not plan to
provide any further updates to our guidance for the remainder of
the year, given our pending merger.
RLJ Transaction
On April 24, 2017, we announced that we had entered into a
definitive merger agreement under which we will merge with and into
a wholly-owned subsidiary of RLJ in an all-stock transaction. At
closing, our stockholders are expected to receive 0.362 RLJ common
shares for each share of our common stock. The transaction is
expected to close by the end of 2017 and is subject to customary
closing conditions, including the approval of both companies’
shareholders.
“We believe our recently-announced merger with RLJ will create
long-term value for FelCor stockholders,” said Mr. Goldman. “The
combined company’s growth profile will make it a formidable
competitor among lodging REITs. It will have approximately
$7 billion in assets, strong and efficient cash flow margins,
and the financial strength and long-term flexibility to grow
through accretive acquisitions and continually prune its portfolio
to improve the quality of its earnings.”
Mr. Goldman continued, “The RLJ team is committed, experienced,
and a proven leader in the lodging industry. I am very pleased for
our stockholders - and for RLJ’s shareholders, as this transaction
provides meaningful value for all.”
About FelCor
FelCor Lodging Trust Incorporated, a real estate investment
trust, owns a diversified portfolio of primarily upper-upscale and
luxury hotels that are located in major markets and resort
locations throughout the U.S. FelCor partners with top hotel
companies that operate its properties under globally renowned names
and as premier independent hotels. Additional information can be
found on the Company’s website at www.felcor.com.
Disclosure Regarding Forward-Looking Statements
The information presented herein may contain forward-looking
statements. These forward-looking statements, which are based on
current expectations, estimates and projections about the industry
and markets in which RLJ and FelCor operate and beliefs of and
assumptions made by RLJ management and FelCor management, involve
significant risks and uncertainties, which are difficult to predict
and are not guarantees of future performances, that could
significantly affect the financial results of RLJ or FelCor or the
combined company. Words such as “projects,” “will,” “could,”
“continue,” “expects,” “anticipates,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “forecast,” “guidance,”
“outlook,” “may,” and “might” and variations of such words and
similar expressions are intended to identify such forward-looking
statements, which generally are not historical in nature. Such
forward-looking statements may include, but are not limited to,
statements about the anticipated benefits of the proposed merger
between FelCor and RLJ, including future financial and operating
results, the attractiveness of the value to be received by FelCor
stockholders, the attractiveness of the value to be received by
RLJ, the combined company’s plans, objectives, expectations and
intentions, the timing of future events, anticipated administrative
and operating synergies, the anticipated impact of the merger on
net debt ratios, cost of capital, future dividend payment rates,
forecasts of FFO accretion, projected capital improvements,
expected sources of financing, and descriptions relating to these
expectations. All statements that address operating performance,
events or developments that FelCor expects or anticipates will
occur in the future - including statements relating to expected
synergies, improved liquidity and balance sheet strength - are
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. FelCor’s ability to
predict results or the actual effect of future events, actions,
plans or strategies is inherently uncertain. Although FelCor
believes the expectations reflected in any forward-looking
statements are based on reasonable assumptions, FelCor can give no
assurance that our expectations will be attained and therefore,
actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements. Some of
the factors that may materially and adversely affect FelCor’s or
the combined company’s business, financial condition, liquidity,
results of operations and prospects, as well as the ability to make
distributions to shareholders, include, but are not limited to:
(i) national, regional and local economic climates,
(ii) changes in the real estate industry, financial markets
and interest rates, or to the business or financial condition of
either company or business, (iii) increased or unanticipated
competition for the companies’ properties, (iv) risks
associated with acquisitions, including the integration of the
combined companies’ businesses, (v) the potential liability
for the failure to meet regulatory requirements, including the
maintenance of REIT status, (vi) availability of financing and
capital, (vii) risks associated with achieving expected
revenue synergies or cost savings, (viii) risks associated
with the companies’ ability to consummate the merger and the timing
of the closing of the merger, (ix) the outcome of claims and
litigation involving or affecting either company,
(x) applicable regulatory changes, and (xi) those
additional risks and factors discussed in reports filed with the
Securities and Exchange Commission (“SEC”) by RLJ and FelCor from
time to time, including those discussed under the heading “Risk
Factors” in their respective most recently filed reports on Forms
10-K and 10-Q. Neither RLJ nor FelCor, except as required by law,
undertakes any duty to update any forward-looking statements
appearing in this document, whether as a result of new information,
future events or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof.
Important Information for Investors and Stockholders
In connection with the proposed merger, RLJ expects to file with
the SEC a registration statement on Form S-4 that will include
a joint proxy statement of RLJ and FelCor that also constitutes a
prospectus of RLJ, which joint proxy statement/prospectus will be
mailed or otherwise disseminated to RLJ shareholders and FelCor
stockholders when it becomes available. RLJ and FelCor also plan to
file other relevant documents with the SEC regarding the proposed
transaction. INVESTORS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. You may obtain a free copy of the joint
proxy statement/prospectus and other relevant documents (if and
when they become available) filed by RLJ and FelCor with the SEC at
the SEC’s website at www.sec.gov. Copies of the documents filed by
RLJ with the SEC will be available free of charge on RLJ’s website
at www.rljlodgingtrust.com or by emailing RLJ Investor Relations at
ir@rljlodgingtrust.com or calling 301-280-7774. Copies of the
documents filed by FelCor with the SEC will be available free of
charge on FelCor’s website at www.felcor.com or by contacting
FelCor Investor Relations at asalami@felcor.com or calling
972-444-4967.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Participants in the Solicitation
RLJ and FelCor and their respective trustees, directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed merger. You can find information about
RLJ’s executive officers and trustees in RLJ’s definitive proxy
statement filed with the SEC on March 28, 2017 in connection
with its 2017 annual meeting of shareholders and in Form 4s of
RLJ’s trustees and executive officers filed with the SEC. You can
find information about FelCor’s executive officers and directors in
FelCor’s Form 10-K/A filed with the SEC on April 28, 2017.
Additional information regarding the interests of such potential
participants will be included in the joint proxy
statement/prospectus and other relevant documents filed with the
SEC if and when they become available. You may obtain free copies
of these documents from RLJ or FelCor using the sources indicated
above.
SUPPLEMENTAL INFORMATION
INTRODUCTION
The following information is presented in order to help our
investors understand FelCor’s financial position as of and for the
three months ended March 31, 2017.
TABLE OF CONTENTS
Page
Consolidated Statements of Operations(a)
8
Consolidated Balance Sheets(a) 9 Consolidated Debt Summary 10
Schedule of Encumbered Hotels 11 Capital Expenditures 11 Total
Enterprise Value 12 Hotel Operating Statistics 13 Historical
Quarterly Operating Statistics 14 Non-GAAP Financial Measures 14
(a)
We have prepared our consolidated statements of operations
and balance sheets without an audit. Certain information and
footnote disclosures normally included in financial statements
presented in accordance with GAAP have been omitted. Our
consolidated statements of operations and balance sheets should be
read in conjunction with the audited consolidated financial
statements and notes thereto included in our most recent Annual
Report on Form 10-K.
Consolidated Statements of
Operations
(in thousands, except per share data)
Three Months Ended March 31,
2017 2016
Revenues: Hotel operating revenue: Room $ 144,933 $ 159,076 Food
and beverage 32,074 39,532 Other operating departments 10,689
10,849 Other revenue 408 687 Total
revenues 188,104 210,144 Expenses:
Hotel departmental expenses: Room 40,678 42,699 Food and beverage
26,222 30,956 Other operating departments 3,533 3,783 Other
property-related costs 50,855 55,566 Management and franchise fees
7,550 9,225 Taxes, insurance and lease expense 13,902 13,582
Corporate expenses 6,940 8,400 Depreciation and amortization 27,838
29,183 Impairment 24,838 — Other expenses 1,260
828 Total operating expenses 203,616
194,222 Operating income (loss) (15,512 ) 15,922
Interest expense, net (19,286 ) (19,720 ) Loss before
equity in loss from unconsolidated entities (34,798 ) (3,798 )
Equity in loss from unconsolidated entities (130 )
(154 ) Loss from continuing operations before income tax (34,928 )
(3,952 ) Income tax (547 ) (415 ) Loss from
continuing operations before loss on sale of hotels (35,475 )
(4,367 ) Loss on sale of hotels (666 ) (714 )
Net loss and comprehensive loss (36,141 ) (5,081 ) Net loss
attributable to noncontrolling interests in other partnerships 404
471 Net loss attributable to redeemable noncontrolling interests in
FelCor LP 186 48 Preferred distributions - consolidated joint
venture (360 ) (360 ) Net loss and comprehensive loss
attributable to FelCor (35,911 ) (4,922 ) Preferred dividends
(6,279 ) (6,279 ) Net loss attributable to FelCor
common stockholders $ (42,190 ) $ (11,201 ) Basic and diluted per
common share data: Net loss $ (0.31 ) $ (0.08 ) Basic and diluted
weighted average common shares outstanding 137,778
139,678
Consolidated Balance
Sheets
(in thousands, except par values)
March 31, December
31, 2017 2016
Assets Investment in hotels, net of accumulated depreciation
of $945,449 and $932,886 at March 31, 2017 and December 31, 2016,
respectively $ 1,535,718 $ 1,566,823 Investment in unconsolidated
entities 7,532 8,312 Cash and cash equivalents 50,235 47,317
Restricted cash 22,319 19,491 Accounts receivable, net of allowance
for doubtful accounts of $148 and $177 at March 31, 2017 and
December 31, 2016, respectively 40,976 42,080 Deferred expenses,
net of accumulated amortization of $3,427 and $2,959 at March 31,
2017 and December 31, 2016, respectively 4,059 4,527 Other assets
19,326 18,542 Total assets $ 1,680,165
$ 1,707,092
Liabilities and Equity Debt, net
of unamortized debt issuance costs of $15,389 and $15,967 at March
31, 2017 and December 31, 2016, respectively $ 1,354,187 $
1,338,326 Distributions payable 14,853 14,858 Accrued expenses and
other liabilities 123,505 116,437 Total
liabilities 1,492,545 1,469,621
Commitments and contingencies Redeemable noncontrolling interests
in FelCor LP, 610 units issued and outstanding at March 31, 2017
and December 31, 2016 4,583 4,888
Equity: Preferred stock, $0.01 par value, 20,000 shares authorized:
Series A Cumulative Convertible Preferred Stock, 12,879 shares,
liquidation value of $321,987, issued and outstanding at March 31,
2017 and December 31, 2016 309,337 309,337 Common stock, $0.01 par
value, 200,000 shares authorized; 138,409 and 137,990 shares issued
and outstanding at March 31, 2017 and December 31, 2016,
respectively 1,384 1,380 Additional paid-in capital 2,579,066
2,576,988 Accumulated deficit (2,757,732 ) (2,706,408
) Total FelCor stockholders’ equity 132,055 181,297 Noncontrolling
interests in other partnerships 7,199 7,503 Preferred equity in
consolidated joint venture, liquidation value of $44,694 and
$44,667 at March 31, 2017 and December 31, 2016, respectively
43,783 43,783 Total equity
183,037 232,583 Total liabilities and equity $
1,680,165 $ 1,707,092
Consolidated
Debt Summary
(dollars in thousands)
Encumbered
Interest March 31,
December 31, Hotels Rate (%)
Maturity Date 2017 2016 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 119,536 120,109 Mortgage debt 1 4.94 October 2022 30,040
30,184 Line of credit(b) 7 LIBOR + 2.75 June 2019 135,000 119,000
Mortgage debt(c) 1 LIBOR + 3.00 November 2017 85,000
85,000
Total 22 $ 1,369,576 $
1,354,293 Unamortized debt issuance costs (15,389 )
(15,967 ) Debt, net of unamortized debt issuance costs $ 1,354,187
$ 1,338,326 (a) This debt is comprised of
separate non-cross-collateralized loans, each secured by a mortgage
encumbering a separate hotel. (b) Our line of credit can be
extended for one year, subject to satisfying certain conditions. We
may borrow up to $400 million under our line of credit. (c) This
loan can be extended for one year, subject to satisfying certain
conditions.
Schedule of Encumbered Hotels
(dollars in millions)
Consolidated Debt
March 31, 2017 Encumbered Hotels Senior secured notes
$ 525 Atlanta Buckhead - ES, Boston Marlboro - ES,
Burlington - SH, Dallas Love Field - ES, Milpitas - ES, Myrtle
Beach Resort - HIL, Orlando South - ES, Philadelphia Society Hill -
SH and SF South San Francisco - ES Mortgage debt $ 27 Napa Valley -
ES Mortgage debt $ 34 Ft. Lauderdale - ES Mortgage debt $ 23
Birmingham - ES Mortgage debt $ 36 Minneapolis Airport - ES
Mortgage debt $ 30 Deerfield Beach - ES Line of credit $ 135 Austin
- DTG, Boston Copley - FM, Charleston Mills House - WYN, LA LAX S -
ES, Santa Monica at the Pier - WYN, SF Union Square - MAR and St.
Petersburg Vinoy - REN Mortgage debt $ 85 The Knickerbocker
Capital Expenditures
(dollars in thousands)
Three Months Ended March 31,
2017 2016
Improvements and additions to majority-owned hotels $ 19,462 $
14,008 Partners’ pro rata share of additions to consolidated joint
venture hotels (34 ) (27 ) Pro rata share of additions to
unconsolidated hotels 189 257 Total
additions to hotels(a) $ 19,617 $ 14,238 (a)
Includes capitalized interest, property taxes, property insurance,
ground leases and certain employee costs.
Total
Enterprise Value
(in thousands, except per share data)
March 31, December
31, 2017 2016 Common
shares outstanding 138,409 137,990 Units outstanding 610
610 Combined shares and units outstanding
139,019 138,600 Common stock price $ 7.51 $ 8.01
Market capitalization $ 1,044,033 $ 1,110,186 Series A
preferred stock(a) 321,987 321,987 Preferred equity - Knickerbocker
joint venture, net 41,594 41,594 Consolidated debt (b) 1,369,576
1,354,293 Noncontrolling interests of consolidated debt (4,250 )
(4,250 ) Pro rata share of unconsolidated debt 11,096 11,167 Cash,
cash equivalents and restricted cash (72,554 )
(66,808 )
Total enterprise value (TEV) $ 2,711,482 $
2,768,169 (a) Based on liquidation value. (b)
Excludes unamortized debt issuance costs.
Hotel Operating Statistics
Occupancy (%) ADR
($) RevPAR ($) Three Months Ended March
31, Three Months Ended March 31, Three Months Ended
March 31, Same-store Hotels 2017
2016 %Change 2017
2016 %Change 2017
2016 %Change Embassy Suites
Atlanta-Buckhead 73.4 80.9 (9.4 ) 165.91 159.13 4.3 121.70 128.79
(5.5 ) DoubleTree Suites by Hilton Austin 85.3 82.8 3.0 251.65
240.06 4.8 214.75 198.87 8.0 Embassy Suites Birmingham 79.3 80.7
(1.6 ) 133.91 133.82 0.1 106.25 107.92 (1.6 ) The Fairmont Copley
Plaza, Boston 62.3 64.0 (2.6 ) 245.20 252.18 (2.8 ) 152.80 161.36
(5.3 ) Wyndham Boston Beacon Hill 73.1 63.8 14.7 149.02 164.42 (9.4
) 108.99 104.87 3.9 Embassy Suites Boston-Marlborough 57.0 64.8
(12.0 ) 160.42 167.60 (4.3 ) 91.49 108.56 (15.7 ) Sheraton
Burlington Hotel & Conference Center 63.6 68.5 (7.2 ) 91.82
93.17 (1.4 ) 58.43 63.86 (8.5 ) The Mills House Wyndham Grand
Hotel, Charleston 77.0 78.1 (1.3 ) 219.17 205.75 6.5 168.80 160.63
5.1 Embassy Suites Dallas-Love Field 78.9 85.3 (7.4 ) 153.71 143.51
7.1 121.35 122.36 (0.8 ) Embassy Suites Deerfield Beach-Resort
& Spa 83.5 88.2 (5.4 ) 253.56 269.69 (6.0 ) 211.69 237.96 (11.0
) Embassy Suites Fort Lauderdale 17th Street 87.3 93.4 (6.5 )
236.33 231.31 2.2 206.43 215.99 (4.4 ) Wyndham Houston-Medical
Center Hotel & Suites 77.7 86.0 (9.7 ) 163.88 159.64 2.7 127.30
137.32 (7.3 ) The Knickerbocker- New York 69.5 58.5 18.8 270.32
264.35 2.3 187.97 154.74 21.5 Embassy Suites Los
Angeles-International Airport/South 89.8 90.0 (0.2 ) 171.13 162.70
5.2 153.73 146.41 5.0 Embassy Suites Mandalay Beach-Hotel &
Resort 74.4 76.7 (3.0 ) 186.58 207.31 (10.0 ) 138.84 158.98 (12.7 )
Embassy Suites Miami-International Airport 85.7 91.5 (6.3 ) 182.81
197.22 (7.3 ) 156.74 180.41 (13.1 ) Embassy Suites Milpitas-Silicon
Valley 79.8 80.8 (1.2 ) 200.18 211.62 (5.4 ) 159.78 170.92 (6.5 )
Embassy Suites Minneapolis-Airport 66.4 68.7 (3.4 ) 135.95 143.73
(5.4 ) 90.27 98.80 (8.6 ) Embassy Suites Myrtle Beach-Oceanfront
Resort 65.6 68.6 (4.3 ) 129.18 129.48 (0.2 ) 84.79 88.83 (4.5 )
Hilton Myrtle Beach Resort 45.5 48.1 (5.4 ) 107.81 106.90 0.8 49.11
51.47 (4.6 ) Embassy Suites Napa Valley 73.2 79.9 (8.4 ) 191.45
182.08 5.1 140.15 145.56 (3.7 ) Wyndham New Orleans-French Quarter
78.1 73.7 6.0 160.31 155.37 3.2 125.23 114.53 9.3 Morgans New York
75.9 72.9 4.2 184.26 212.76 (13.4 ) 139.83 155.01 (9.8 ) Royalton
New York 74.5 76.2 (2.3 ) 216.27 237.95 (9.1 ) 161.11 181.40 (11.2
) Embassy Suites Orlando-International Drive South/Convention
Center 81.2 88.1 (7.9 ) 186.16 176.25 5.6 151.10 155.36 (2.7 )
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 89.9 92.3 (2.6
) 162.75 165.40 (1.6 ) 146.32 152.60 (4.1 ) Wyndham Philadelphia
Historic District 59.8 55.0 8.7 124.29 125.93 (1.3 ) 74.29 69.26
7.3 Sheraton Philadelphia Society Hill Hotel 56.4 55.0 2.4 151.09
151.24 (0.1 ) 85.16 83.24 2.3 Embassy Suites Phoenix-Biltmore 77.0
78.0 (1.3 ) 229.70 243.29 (5.6 ) 176.88 189.88 (6.8 ) Wyndham
Pittsburgh University Center 60.8 55.4 9.8 131.56 132.08 (0.4 )
80.05 73.21 9.4 Wyndham San Diego Bayside 79.2 77.5 2.2 157.83
137.19 15.0 124.99 106.31 17.6 Embassy Suites San Francisco
Airport-South San Francisco 85.5 85.4 0.1 200.19 197.13 1.6 171.15
168.39 1.6 Embassy Suites San Francisco Airport-Waterfront 84.7
85.3 (0.7 ) 214.24 204.40 4.8 181.36 174.25 4.1 Holiday Inn San
Francisco-Fisherman’s Wharf 84.9 82.0 3.6 185.45 194.67 (4.7 )
157.53 159.58 (1.3 ) San Francisco Marriott Union Square 83.3 88.6
(6.0 ) 321.37 319.58 0.6 267.59 283.21 (5.5 ) Wyndham Santa Monica
at the Pier 84.1 87.8 (4.2 ) 255.78 258.44 (1.0 ) 215.04 226.83
(5.2 ) Embassy Suites Secaucus-Meadowlands 60.2 54.6 10.2 167.01
171.47 (2.6 ) 100.48 93.62 7.3 The Vinoy Renaissance St. Petersburg
Resort & Golf Club 86.2 88.2 (2.2 ) 264.31 256.26 3.1
227.86 225.92 0.9
Same-store Hotels 75.0
75.9 (1.2 ) 189.63 189.76
(0.1 ) 142.15 143.97 (1.3
)
Historical Quarterly Operating
Statistics
Occupancy (%) Q1 2016
Q2 2016 Q3 2016
Q4 2016 Q1 2017 Same-store
hotels(a) 75.9 83.0 82.0 73.5 75.0
ADR ($)
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1
2017 Same-store hotels(a) 189.76 200.24 199.99
192.05 189.63
RevPAR ($) Q1 2016 Q2
2016 Q3 2016 Q4 2016 Q1 2017 Same-store
hotels(a) 143.97 166.13 163.92 141.11 142.15 (a)
Includes 38 consolidated hotels.
Non-GAAP Financial Measures
We refer in this release to certain “non-GAAP financial
measures.” These measures, including FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA and Hotel
EBITDA margin, are measures of our financial performance that are
not calculated and presented in accordance with generally accepted
accounting principles (“GAAP”). The following tables reconcile each
of these non-GAAP measures to the most comparable GAAP financial
measure. Immediately following the reconciliations, we include a
discussion of why we believe these measures are useful supplemental
measures of our performance and the limitations of such
measures.
Reconciliation of Net Loss to FFO and Adjusted
FFO
(in thousands, except per share data)
Three Months Ended March 31,
2017 2016
Per Per Share
Share Dollars Shares Amount
Dollars Shares Amount Net loss $
(36,141 ) $ (5,081 ) Noncontrolling interests 590 519 Preferred
distributions - consolidated joint venture (360 ) (360 ) Preferred
dividends (6,279 ) (6,279 )
Net loss attributable
to FelCor common stockholders (42,190 ) (11,201 ) Less:
Dividends declared on unvested restricted stock (37 )
(38 )
Basic and diluted earnings per share data (42,227 )
137,778 $ (0.31) (11,239 ) 139,678 $ (0.08) Depreciation and
amortization 27,838 — 0.20 29,183 — 0.22 Depreciation,
unconsolidated entities and other partnerships 455 — — 467 — —
Impairment 24,838 — 0.18 — — — Loss on sale of hotels 666 — 0.01
714 — — Noncontrolling interests in FelCor LP (186 ) 610 — (48 )
611 — Dividends declared on unvested restricted stock 37 55 — 38 8
— Conversion of unvested restricted stock units — 207
— — 619 —
FFO* 11,421 138,650 0.08
19,115 140,916 0.14 Hurricane loss 17 — — — — — Hurricane loss,
unconsolidated entities 4 — — — — — Cost of potential transaction
473 — 0.01 — — — Abandoned projects — — — 232 — — Variable stock
compensation — — — 761 — — Pre-opening costs 132 —
— 54 — —
Adjusted FFO* $ 12,047
138,650 $ 0.09 $ 20,162 140,916 $ 0.14 * FFO and
Adjusted FFO are attributable to FelCor common stockholders and
FelCor LP common unitholders other than FelCor.
Reconciliation of Net Loss to EBITDA, Adjusted EBITDA and
Same-store Adjusted EBITDA
(in thousands)
Three Months Ended March 31,
2017 2016
Net loss $ (36,141 ) $ (5,081 ) Depreciation and
amortization 27,838 29,183 Depreciation, unconsolidated entities
and other partnerships 455 467 Interest expense 19,319 19,732
Interest expense, unconsolidated entities and other partnerships 84
99 Income tax 547 415 Noncontrolling interests in preferred
distributions, consolidated joint venture (18 ) (18 )
Noncontrolling interests in other partnerships 404
471
EBITDA* 12,488 45,268 Impairment 24,838 —
Hurricane loss 17 — Hurricane loss, unconsolidated entities 4 —
Loss on sale of hotels 666 714 Amortization of fixed stock and
directors’ compensation 1,593 1,935 Cost of potential transaction
473 — Abandoned projects — 232 Variable stock compensation — 761
Pre-opening costs 132 54
Adjusted
EBITDA* 40,211 48,964 Adjusted EBITDA from sold hotels
(146 ) (5,881 )
Same-store Adjusted EBITDA* $ 40,065
$ 43,083 * 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 March 31,
2017 2016
Same-store operating revenue: Room $ 144,933 $ 148,423 Food
and beverage 32,074 31,990 Other operating departments
10,415 10,027
Same-store operating
revenue 187,422 190,440
Same-store operating
expense: Room 40,669 40,417 Food and beverage 26,221 26,284
Other operating departments 3,533 3,489 Other property-related
costs 50,863 51,011 Management and franchise fees 7,424 8,459
Taxes, insurance and lease expense 13,525
12,665
Same-store operating expense 142,235
142,325
Hotel EBITDA $ 45,187 $
48,115
Hotel EBITDA Margin 24.1 % 25.3 %
The following tables set forth the components of our Hotel
EBITDA for our same-store hotels (dollars in thousands):
Three months
ended March 31, 2017
Hotel Operating Net Income
Other Interest
Hotel Hotel EBITDA
Same-store
Hotels
Revenue (Loss) Adjustments Depreciation
Expense EBITDA Margin Embassy Suites
Atlanta-Buckhead $ 3,838 $ 1,027 $ — $ 519 $ — $ 1,546 40.3
% DoubleTree Suites by Hilton Austin 4,466 1,441 — 465 152 2,058
46.1 % Embassy Suites Birmingham 2,462 125 — 400 290 815 33.1 % The
Fairmont Copley Plaza, Boston 9,607 (4,020 ) — 2,233 388 (1,399 )
(14.6 )% Wyndham Boston Beacon Hill 3,594 (374 ) — 986 — 612 17.0 %
Embassy Suites Boston-Marlborough 2,166 167 — 288 — 455 21.0 %
Sheraton Burlington Hotel & Conference Center 2,554 (429 ) —
620 — 191 7.5 % The Mills House Wyndham Grand Hotel, Charleston
4,676 860 — 617 199 1,676 35.8 % Embassy Suites Dallas-Love Field
3,132 353 — 607 — 960 30.7 % Embassy Suites Deerfield Beach-Resort
& Spa 5,621 1,785 — 469 388 2,642 47.0 % Embassy Suites Fort
Lauderdale 17th Street 7,665 2,340 — 714 436 3,490 45.5 % Wyndham
Houston-Medical Center Hotel & Suites 3,709 1,155 (19 ) 541 —
1,677 45.2 % The Knickerbocker-New York 7,581 (4,845 ) 699 2,565
920 (661 ) (8.7 )% Embassy Suites Los Angeles-International
Airport/South 5,908 1,452 — 628 228 2,308 39.1 % Embassy Suites
Mandalay Beach-Hotel & Resort 4,059 371 — 772 — 1,143 28.2 %
Embassy Suites Miami-International Airport 5,423 1,502 — 460 —
1,962 36.2 % Embassy Suites Milpitas-Silicon Valley 4,596 1,355 —
307 — 1,662 36.2 % Embassy Suites Minneapolis-Airport 2,623 (193 )
— 364 461 632 24.1 % Embassy Suites Myrtle Beach-Oceanfront Resort
3,798 (442 ) 3 654 — 215 5.7 % Hilton Myrtle Beach Resort 2,959
(1,057 ) 14 885 — (158 ) (5.3 )% Embassy Suites Napa Valley 3,353
66 — 483 337 886 26.4 % Wyndham New Orleans-French Quarter 4,636
1,509 — 718 — 2,227 48.0 % Morgans New York 1,720 (1,445 ) 266 503
— (676 ) (39.3 )% Royalton New York 3,582 (26,887 ) 25,098
(1)
599 — (1,190 ) (33.2 )% Embassy Suites Orlando-International Drive
South/Convention Center 3,419 824 — 419 — 1,243 36.4 % DoubleTree
Suites by Hilton Orlando-Lake Buena Vista 3,670 344 — 765 — 1,109
30.2 % Wyndham Philadelphia Historic District 3,181 (256 ) (3 ) 721
— 462 14.5 % Sheraton Philadelphia Society Hill Hotel 4,587 (360 )
— 967 — 607 13.2 % Embassy Suites Phoenix-Biltmore 3,812 1,396 —
435 — 1,831 48.0 % Wyndham Pittsburgh University Center 2,334 (101
) — 496 — 395 16.9 % Wyndham San Diego Bayside 8,512 753 — 1,558 —
2,311 27.1 % Embassy Suites San Francisco Airport-South San
Francisco 5,675 1,302 — 443 — 1,745 30.7 % Embassy Suites San
Francisco Airport-Waterfront 6,653 1,324 1 784 — 2,109 31.7 %
Holiday Inn San Francisco-Fisherman’s Wharf 9,282 10 — 608 — 618
6.7 % San Francisco Marriott Union Square 11,275 1,982 (7 ) 1,302
466 3,743 33.2 % Wyndham Santa Monica at the Pier 2,790 994 — 263
157 1,414 50.7 % Embassy Suites Secaucus-Meadowlands 2,563 (87 ) —
104 — 17 0.7 % The Vinoy Renaissance St. Petersburg Resort &
Golf Club 15,941 2,573 139
1,466 332 4,510 28.3 %
$
187,422 $ (13,486 ) $
26,191 $ 27,728 $
4,754 $ 45,187 24.1 % (1)
Amount primarily represents an impairment.
Three months
ended March 31, 2016
Hotel Operating Net Income
Other
Interest
Hotel
Hotel EBITDA
Same-store
Hotels
Revenue (Loss) Adjustments Depreciation
Expense
EBITDA
Margin Embassy Suites Atlanta-Buckhead $ 4,042 $ 1,104 $ — $
634 $ — $ 1,738 43.0 % DoubleTree Suites by Hilton Austin 3,984
1,204 — 482 182 1,868 46.9 % Embassy Suites Birmingham 2,538 231 —
389 298 918 36.2 % The Fairmont Copley Plaza, Boston 10,036 (3,149
) (91 ) 2,179 465 (596 ) (5.9 )% Wyndham Boston Beacon Hill 3,469
(497 ) — 991 — 494 14.2 % Embassy Suites Boston-Marlborough 2,569
374 — 297 — 671 26.1 % Sheraton Burlington Hotel & Conference
Center 2,711 (406 ) — 621 — 215 7.9 % The Mills House Wyndham Grand
Hotel, Charleston 4,666 831 — 637 239 1,707 36.6 % Embassy Suites
Dallas-Love Field 3,107 642 — 338 — 980 31.5 % Embassy Suites
Deerfield Beach-Resort & Spa 6,195 2,104 — 476 399 2,979 48.1 %
Embassy Suites Fort Lauderdale 17th Street 7,956 2,475 — 712 448
3,635 45.7 % Wyndham Houston-Medical Center Hotel & Suites
4,015 1,267 (19 ) 553 — 1,801 44.9 % The Knickerbocker-New York
5,953 (5,401 ) 706 2,570 702 (1,423 ) (23.9 )% Embassy Suites Los
Angeles-International Airport/South 5,674 1,230 — 642 273 2,145
37.8 % Embassy Suites Mandalay Beach-Hotel & Resort 4,616 854 —
771 — 1,625 35.2 % Embassy Suites Miami-International Airport 6,112
1,893 — 470 — 2,363 38.7 % Embassy Suites Milpitas-Silicon Valley
4,771 1,519 — 302 — 1,821 38.2 % Embassy Suites Minneapolis-Airport
2,926 (130 ) — 444 474 788 26.9 % Embassy Suites Myrtle
Beach-Oceanfront Resort 4,194 (235 ) 1 675 — 441 10.5 % Hilton
Myrtle Beach Resort 3,054 (961 ) — 848 — (113 ) (3.7 )% Embassy
Suites Napa Valley 3,554 150 — 517 346 1,013 28.5 % Wyndham New
Orleans-French Quarter 4,358 1,210 — 716 — 1,926 44.2 % Morgans New
York 1,739 (1,418 ) 159 627 — (632 ) (36.3 )% Royalton New York
4,079 (1,538 ) 205 580 — (753 ) (18.5 )% Embassy Suites
Orlando-International Drive South/Convention Center 3,561 1,102 —
271 — 1,373 38.6 % DoubleTree Suites by Hilton Orlando-Lake Buena
Vista 3,897 495 — 765 — 1,260 32.3 % Wyndham Philadelphia Historic
District 3,024 (513 ) — 750 — 237 7.8 % Sheraton Philadelphia
Society Hill Hotel 4,363 (621 ) — 979 — 358 8.2 % Embassy Suites
Phoenix-Biltmore 4,150 1,637 — 438 — 2,075 50.0 % Wyndham
Pittsburgh University Center 2,141 (323 ) — 520 — 197 9.2 % Wyndham
San Diego Bayside 7,082 54 — 1,571 — 1,625 22.9 % Embassy Suites
San Francisco Airport-South San Francisco 5,723 1,449 — 412 — 1,861
32.5 % Embassy Suites San Francisco Airport-Waterfront 6,531 1,364
— 749 — 2,113 32.4 % Holiday Inn San Francisco-Fisherman’s Wharf
9,471 295 — 480 — 775 8.2 % San Francisco Marriott Union Square
11,929 2,376 (2 ) 1,370 560 4,304 36.1 % Wyndham Santa Monica at
the Pier 2,972 990 — 283 189 1,462 49.2 % Embassy Suites
Secaucus-Meadowlands 2,377 (241 ) 1 121 — (119 ) (5.0 )% The Vinoy
Renaissance St. Petersburg Resort & Golf Club 16,901
3,086 56 1,443 398
4,983 29.5 %
$ 190,440 $ 14,503
$ 1,016 $ 27,623 $
4,973 $ 48,115 25.3 %
Reconciliation of Same-store Operating Revenue and
Same-store Operating Expense to Total Revenue, Total
Operating Expense and Operating Income (Loss)
(in thousands)
Three Months Ended March 31,
2017 2016
Same-store operating revenue $ 187,422 $ 190,440 Other revenue 408
687 Revenue from sold hotels(a) 274 19,017
Total revenue 188,104 210,144 Same-store operating
expense 142,235 142,325 Consolidated hotel lease expense(b) 815 802
Unconsolidated taxes, insurance and lease expense (438 ) (452 )
Corporate expenses 6,940 8,400 Depreciation and amortization 27,838
29,183 Impairment 24,838 — Expenses from sold hotels(a) 128 13,136
Other expenses 1,260 828
Total
operating expense 203,616 194,222
Operating income (loss) $ (15,512 ) $ 15,922 (a)
We include the operating performance for sold hotels in
continuing operations in our Consolidated Statements of Operations.
However, for purposes of our non-GAAP reporting metrics, we have
excluded the results of these hotels to provide a meaningful
same-store comparison. (b) Consolidated hotel lease expense
represents the percentage lease expense of our 51%-owned operating
lessees. The offsetting percentage lease revenue is included in
equity in income from unconsolidated entities.
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
(“NAREIT”) defines Funds From Operations (“FFO”) as net income or
loss attributable to parent (computed in accordance with GAAP),
excluding gains or losses from sales of property, plus
depreciation, amortization and impairment losses. FFO for
unconsolidated partnerships and joint ventures is calculated on the
same basis. We compute FFO in accordance with standards established
by NAREIT. This may not be comparable to FFO reported by other
REITs that do not define the term in accordance with the current
NAREIT definition or that interpret the current NAREIT definition
differently than we do.
Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) is a commonly used measure of performance in many
industries. We define EBITDA as net income or loss attributable to
parent (computed in accordance with GAAP) plus interest expenses,
income taxes, depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to
reflect EBITDA on the same basis.
Adjustments to FFO and EBITDA
We adjust FFO and EBITDA when evaluating our performance because
management believes that the exclusion of certain additional items
provides useful supplemental information to investors regarding our
ongoing operating performance and that the presentation of Adjusted
FFO, and Adjusted EBITDA when combined with GAAP net income
attributable to FelCor, EBITDA and FFO, is beneficial to an
investor’s 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 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 brands/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, and 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 any single financial measure.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170509005402/en/
FelCor Lodging Trust IncorporatedAbi Salami,
972-444-4967Manager, Investor Relationsasalami@felcor.com
Felcor Lodging (NYSE:FCH)
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