IRVING, Texas--(BUSINESS WIRE)--FelCor Lodging Trust Incorporated (NYSE: FCH), today reported operating results for the second quarter ended June 30, 2012.
Second Quarter Summary:
- Revenue per available room (“RevPAR”) for 69 same-store hotels (45 core plus 24 non-strategic) increased 5.9% for the quarter and 9.9% in June. RevPAR at newly-acquired and redeveloped hotels increased 16.4% during June.
- Hotel EBITDA margin increased 62 basis points to 28.8% for the quarter.
- Adjusted EBITDA was $66.2 million, which was at the high-end of our expectations. Adjusted funds from operations (“FFO”) per share was $0.18.
- Net income was $12.0 million.
- Sold six non-strategic hotels for $103 million. Proceeds were used to repay $73 million of related debt and other costs. The remainder will be used to pay $30 million of accrued preferred dividends on July 31.
- Agreed to sell one hotel (with a hard-money deposit received in July) for gross proceeds of $25.5 million, which will be used to repay debt.
- Completed work at nine of 10 hotels undergoing renovations and redevelopments.
Second Quarter Operating Results:
RevPAR for 69 same-store hotels was $110.26, a 5.9% increase compared to the same period in 2011. The increase reflects a 6.6% increase in average daily rate (“ADR”) to $144.01 and a 60 basis point decrease in occupancy to 76.6%. The decrease in occupancy was driven by displacement from renovations at eight hotels. RevPAR growth improved sequentially throughout the quarter, as we completed most of our renovation projects. RevPAR increased 9.9% in June compared to the prior year.
Commenting on second quarter results, Richard A. Smith, President and Chief Executive Officer of FelCor, said, “I am very pleased with the progress we made on our strategic initiatives this quarter. We have completed work at nine of the 10 hotels undergoing renovations and redevelopments this year. We expect our portfolio to benefit from improvements at these hotels, as well as our newly-acquired hotels, which will generate above-market growth going forward. Lodging industry trends are encouraging; group pace is accelerating, and the portfolio is nearing prior peak occupancy, while new supply remains constrained. As a result, we are experiencing broad-based strength in almost all markets. These tailwinds allow us to further remix customer segments and increase absolute rates. ADR for our portfolio increased 8.3% in June, and we expect that trend to continue. Therefore, we have increased our annual guidance to reflect higher RevPAR growth for the second half of the year. Furthermore, our asset sale program is progressing as planned. We sold six hotels in the second quarter, have agreed to sell one more hotel with a hard-money deposit, are under contract to sell two additional hotels and are in various negotiations with regard to our other properties that are currently being marketed for sale.”
Hotel EBITDA was $73.7 million, which was 7.1% higher than the same period in 2011. Hotel EBITDA and other same-store metrics reflect 69 same-store hotels.
Same-store Adjusted EBITDA was $64.5 million, 8.4% higher than the $59.5 million for the same period in 2011. Adjusted EBITDA (which includes sold hotels during the period owned) was $66.2 million, 2.9% higher than the same period in 2011. Adjusted FFO was $22.3 million, or $0.18 per share, compared to $0.13 per share in the prior year period.
Net income attributable to common stockholders was $2.2 million, or $0.02 per share for the quarter, compared to a net loss of $51.9 million, or $0.42 per share, for the same period in 2011. Net income included a $16.7 million gain on asset sales.
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 17 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.
Year to Date Operating Results:
RevPAR for 69 same-store hotels was $102.78, a 4.8% increase compared to the same period in 2011. The increase was driven by a 5.1% increase in ADR to $140.68. Displacement from renovations and redevelopments impacted revenue by $8 million.
Hotel EBITDA was $121.9 million, 5.7% higher than $115.4 million for the same period in 2011.
Same-store Adjusted EBITDA was $101.7 million, 7.9% higher than the $94.2 million for the same period in 2011. Adjusted EBITDA (which includes sold hotels for the period owned) was $107.6 million, 0.8% lower than the same period in 2011. Adjusted FFO was $20.3 million, or $0.16 per share, which is $0.03 per share higher than the prior year.
Net loss attributable to common stockholders was $36.0 million, or $0.29 per share for the six months ended June 30, 2012, compared to a net loss of $93.3 million, or $0.85 per share, for the same period in 2011.
Portfolio Repositioning:
On May 31, we sold six non-strategic hotels for $103 million. The portfolio consists of the Holiday Inn-San Antonio-Airport, Sheraton Suites Ft. Lauderdale-Cypress Creek, Doubletree Guest Suites in Raleigh/Durham and Tampa-Rocky Point, and the Embassy Suites hotels in Boca Raton and St. Paul. The purchase price represents a 6.8% cap rate for the portfolio, based on 2011 net operating income. The proceeds were used to repay debt and a portion of the accrued preferred dividends.
In July, we agreed to sell an additional non-strategic hotel (Embassy Suites-Anaheim- North) for gross proceeds of $25.5 million. We expect the sale to close in August.
As previously announced, we will sell 39 hotels as part of our portfolio repositioning plan. To date, we have sold 15 hotels and expect to complete the sale of one more in August. We are currently marketing nine hotels for sale and expect to generate approximately $220 million in gross proceeds from selling these hotels (which is unchanged from prior expectations). We expect to bring the remaining 14 hotels to market in late 2012 or in early 2013. We will use the proceeds from selling the hotels to continue reducing debt, pay the remaining accrued preferred dividends, build a sound and flexible balance sheet, and improve long-term FFO and stockholder value.
Capital Expenditures:
During the quarter, we spent $32.5 million on capital improvements at our operating hotels (including our pro rata share of joint venture expenditures).
During 2012, we anticipate spending approximately $85 million on improvements and renovations, a majority of which is focused on 10 hotels, including four of our largest properties. We expect to spend an additional $35 million on value-enhancing redevelopment projects at three hotels: Morgans, Embassy Suites-Myrtle Beach-Oceanfront Resort, and the Fairmont Copley Plaza. Please see page 12 of this release for more detail on renovations.
As of today, we had completed work at nine of the 10 hotels that were undergoing renovation and redevelopment. In July, we completed the redevelopment at The Fairmont Copley Plaza, when the food and beverage areas were completed (guest rooms and corridors were completed in April). RevPAR at this hotel increased 11.8% in June compared to the prior year period, driven by a 15.1% increase in ADR.
The redevelopment of the 4+ star Knickerbocker hotel, located in midtown Manhattan, is progressing as planned. We have spent $12 million to date for the redevelopment in excess of the acquisition costs. The project timeline and budget remain on schedule. The core and shell work began in June 2012, and the hotel is scheduled to open in late 2013.
Balance Sheet:
At June 30, 2012, we had $1.5 billion of consolidated debt, with an average interest rate of 7.6% and weighted average maturity of five years. We had $64.1 million of cash and cash equivalents on hand and had $20 million drawn on our $225 million line of credit. During the second quarter, we used $73 million of sales proceeds to repay debt and fund related costs.
On June 29, we declared dividends on our Series A Cumulative Convertible Preferred Stock of $1.9975 per share and our Series C Cumulative Redeemable Preferred Stock of $2.05 per depositary share, which will be paid July 31. In conjunction with the current quarterly dividend, the payment includes $1.51 per share and $1.55 per depositary share, respectively, of accrued dividends in arrears, which represents $30 million of the $67.7 million outstanding. We expect to pay the remaining accrued dividends during 2012 using proceeds from future asset sales.
Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer, said, “We continue to make progress in strengthening our balance sheet by reducing leverage and refinancing existing debt to reduce our average interest rate and stagger debt maturities. For example, we are currently pursuing the refinancing of the $108 million mortgage loan that bears interest at 9.0% and is scheduled to mature in 2014. We expect the new loan will have a significantly lower interest rate and further lengthen and stagger our maturity profile. In addition, we anticipate repaying the outstanding $88 million balance remaining on the CMBS loan that matures in 2013, eliminating our lone debt maturity through 2013. We remain committed to reducing our leverage to 4.5 times by mid-2015 through asset sales and future earnings growth, as well as to significantly lowering our cost of borrowing.”
Outlook:
We are increasing our 2012 operating outlook to reflect second quarter results and higher RevPAR growth for the second half of the year. For guidance purposes, we continue to assume the sale of 12 hotels (nine currently marketed for sale, one scheduled to be sold in August, and two additional for which we have received unsolicited offers) during 2012, and our guidance reflects the updated timing of those sales. The sale of the Embassy Suites-Anaheim-North is assumed to occur in August and the sale of two hotels under contract are assumed to be sold in September. For the 9 remaining hotels, the low-end of our outlook now assumes the sales occur near the end of the third quarter. The high-end of our outlook now assumes the sales occur near the end of the fourth quarter.
The following table reconciles our 2012 Adjusted EBITDA outlook (in millions):
| Low | Mid | High | |||||||||
| Previous Adjusted EBITDA Outlook | $ | 192 | $ | 199 | $ | 206 | |||||
| Improved Operations | 3 | 2 | 1 | ||||||||
|
Updated timing of Asset Sales (12 hotels) |
4 |
3 |
2 |
||||||||
|
Current Adjusted EBITDA Outlook |
$199 |
$ 204 |
$ 209 |
||||||||
|
|
|
||||||||||
The following table reconciles to 2012 Same-store Adjusted EBITDA (in millions):
| Current Adjusted EBITDA Outlook | $ | 199 | $ | 204 | $ | 209 | ||||||
| Discontinued Operations(a) | (28 | ) | (30 | ) | (32 | ) | ||||||
| Same-store Adjusted EBITDA (57 hotels) | $ | 171 | $ | 174 | $ | 177 | ||||||
(a) EBITDA for assets sold/expected to sell from January 1, 2012, through the date of sale/expected sale.
Based on the above assumptions for 2012, we anticipate:
- Same-store RevPAR to increase between 5.5% and 7.0%;
- Adjusted EBITDA to be between $199 million and $209 million;
- Adjusted FFO per share to be between $0.21 and $0.28;
- Net loss attributable to FelCor to be between $58 million and $53 million; and
- Interest expense, including pro rata share of joint ventures, to be between $129 million and $131 million.
About FelCor:
FelCor, a real estate investment trust, is the nation’s largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 70 properties located in major markets throughout 22 states. FelCor’s diversified portfolio of hotels and resorts are flagged under global brands such as: Doubletree ®, Embassy Suites Hotels®, Hilton®, Fairmont®, Marriott®, Renaissance®, Sheraton®, Westin® and Holiday Inn®. Additional information can be found on the Company’s Web site at www.felcor.com.
We invite you to listen to our second quarter earnings Conference Call on Wednesday, July 25, 2012 at 10:00 a.m. (Central Time). The conference call will be Webcast simultaneously on FelCor’s Web site at www.felcor.com. Interested investors and other parties who wish to access the call can go to FelCor’s Web site and click on the conference call microphone icon on either the “Investor Relations” or “News Releases” page. The conference call replay also will be archived on the Company’s Web site.
With the exception of historical information, the matters discussed in this news release include “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties, and the occurrence of future events, may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Current economic circumstances or an economic slowdown and the impact on the lodging industry, operating risks associated with the hotel business, relationships with our property managers, risks associated with our level of indebtedness and our ability to meet debt covenants in our debt agreements, our ability to complete acquisitions, dispositions and debt refinancing, the availability of capital, the impact on the travel industry from security precautions, our ability to continue to qualify as a Real Estate Investment Trust for federal income tax purposes and numerous other factors may affect future results, performance and achievements. Certain of these risks and uncertainties are described in greater detail in our filings with the Securities and Exchange Commission. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially. We undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.
SUPPLEMENTAL INFORMATION
INTRODUCTION
The following information is presented in order to help our investors understand FelCor’s financial position as of and for the six month period ended June 30, 2012.
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 | 12 | |
|
Hotels Under Renovation or Redevelopment During 2012 |
12 | |
| Supplemental Financial Data | 13 | |
| Discontinued Operations | 13 | |
| Hotel Portfolio Composition | 14 | |
| Detailed Operating Statistics by Brand | 15 | |
| Comparable Hotels Operating Statistics for Our Top Markets | 16 | |
|
Historical Operating Statistics |
17 |
|
| Non-GAAP Financial Measures | 17 |
(a) Our consolidated statements of operations and balance sheets have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. The consolidated statements of operations and balance sheets should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent Quarterly Report on Form 10-Q.
| Consolidated Statements of Operations | ||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenues: | ||||||||||||||||
| Hotel operating revenue: | ||||||||||||||||
| Room | $ | 200,186 | $ | 185,016 | $ | 373,202 | $ | 345,353 | ||||||||
| Food and beverage | 40,616 | 40,291 | 77,140 | 75,108 | ||||||||||||
| Other operating departments | 15,243 | 14,085 | 26,870 | 25,955 | ||||||||||||
| Other revenue | 956 | 1,011 | 1,231 | 1,236 | ||||||||||||
| Total revenues | 257,001 | 240,403 | 478,443 | 447,652 | ||||||||||||
| Expenses: | ||||||||||||||||
| Hotel departmental expenses: | ||||||||||||||||
| Room | 51,268 | 48,495 | 99,001 | 91,847 | ||||||||||||
| Food and beverage | 31,537 | 29,719 | 61,286 | 57,099 | ||||||||||||
| Other operating departments | 6,167 | 6,425 | 11,901 | 12,083 | ||||||||||||
| Other property-related costs | 65,508 | 62,151 | 129,943 | 122,683 | ||||||||||||
| Management and franchise fees | 11,969 | 11,077 | 22,335 | 20,732 | ||||||||||||
| Taxes, insurance and lease expense | 25,192 | 22,341 | 47,505 | 42,119 | ||||||||||||
| Corporate expenses | 6,167 | 6,910 | 14,379 | 16,447 | ||||||||||||
| Depreciation and amortization | 31,789 | 30,957 | 63,362 | 61,744 | ||||||||||||
| Impairment loss | 1,335 | 7,003 | 1,335 | 7,003 | ||||||||||||
| Other expenses | 800 | 1,616 | 1,763 | 2,247 | ||||||||||||
| Total operating expenses | 231,732 | 226,694 | 452,810 | 434,004 | ||||||||||||
| Operating income | 25,269 | 13,709 | 25,633 | 13,648 | ||||||||||||
| Interest expense, net | (31,647 | ) | (34,347 | ) | (62,688 | ) | (67,116 | ) | ||||||||
| Debt extinguishment | (162 | ) | (23,660 | ) | (169 | ) | (23,905 | ) | ||||||||
| Gain on involuntary conversion, net | — | 21 | — | 171 | ||||||||||||
|
Loss before equity in income (loss) from
unconsolidated entities |
(6,540 | ) | (44,277 | ) | (37,224 | ) | (77,202 | ) | ||||||||
| Equity in income (loss) from unconsolidated entities | 1,362 | 31 | 1,138 | (1,552 | ) | |||||||||||
| Loss from continuing operations | (5,178 | ) | (44,246 | ) | (36,086 | ) | (78,754 | ) | ||||||||
| Discontinued operations | 17,206 | 1,849 | 19,253 | 4,631 | ||||||||||||
| Net income (loss) | 12,028 | (42,397 | ) | (16,833 | ) | (74,123 | ) | |||||||||
|
Net loss (income) attributable to noncontrolling
interests in other partnerships |
(148 | ) | (51 | ) | 54 | (109 | ) | |||||||||
|
Net loss (income) attributable to redeemable
noncontrolling interests in FelCor LP |
(11 | ) | 183 | 185 | 303 | |||||||||||
| Net income (loss) attributable to FelCor | 11,869 | (42,265 | ) | (16,594 | ) | (73,929 | ) | |||||||||
| Preferred dividends | (9,678 | ) | (9,678 | ) | (19,356 | ) | (19,356 | ) | ||||||||
|
Net income (loss) attributable to FelCor common
stockholders |
$ | 2,191 | $ | (51,943 | ) | $ | (35,950 | ) | $ | (93,285 | ) | |||||
| Basic and diluted per common share data: | ||||||||||||||||
| Loss from continuing operations | $ | (0.12 | ) | $ | (0.44 | ) | $ | (0.45 | ) | $ | (0.90 | ) | ||||
| Net income (loss) | $ | 0.02 | $ | (0.42 | ) | $ | (0.29 | ) | $ | (0.85 | ) | |||||
|
Basic and diluted weighted average common
shares outstanding |
123,638 | 122,992 | 123,651 | 109,249 | ||||||||||||
| Consolidated Balance Sheets | ||||||||
|
(in thousands) |
||||||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
|
Investment in hotels, net of accumulated depreciation of $948,838 and $987,895 at June 30, 2012 and December 31, 2011, respectively |
$ | 1,876,168 | $ | 1,953,795 | ||||
| Hotel development | 130,727 | 120,163 | ||||||
| Investment in unconsolidated entities | 59,939 | 70,002 | ||||||
| Cash and cash equivalents | 64,099 | 93,758 | ||||||
| Restricted cash | 83,777 | 84,240 | ||||||
|
Accounts receivable, net of allowance for doubtful accounts of $368 and $333 at June 30, 2012 and December 31, 2011, respectively |
30,987 | 27,135 | ||||||
|
Deferred expenses, net of accumulated amortization of $14,588 and $13,119 at June 30, 2012 and December 31, 2011, respectively |
26,303 | 29,772 | ||||||
| Other assets | 30,833 | 24,363 | ||||||
| Total assets | $ | 2,302,833 | $ | 2,403,228 | ||||
| Liabilities and Equity | ||||||||
|
Debt, net of discount of $27,026 and $32,069 at June 30, 2012 and December 31, 2011, respectively |
$ | 1,534,752 | $ | 1,596,466 | ||||
| Distributions payable | 76,293 | 76,293 | ||||||
| Accrued expenses and other liabilities | 135,954 | 140,548 | ||||||
| Total liabilities | 1,746,999 | 1,813,307 | ||||||
| Commitments and contingencies | ||||||||
|
Redeemable noncontrolling interests in FelCor LP, 627 and 636 units
issued and outstanding at June 30, 2012 and December 31, 2011, respectively |
3,320 | 3,026 | ||||||
| Equity: | ||||||||
| Preferred stock, $0.01 par value, 20,000 shares authorized: | ||||||||
|
Series A Cumulative Convertible Preferred Stock, 12,880 shares,
liquidation value of $322,011, issued and outstanding at June 30, 2012 and December 31, 2011 |
309,362 | 309,362 | ||||||
|
Series C Cumulative Redeemable Preferred Stock, 68 shares,
liquidation value of $169,950, issued and outstanding at June 30, 2012 and December 31, 2011 |
169,412 | 169,412 | ||||||
|
Common stock, $0.01 par value, 200,000 shares authorized and
124,227 shares issued at June 30, 2012, and 124,281 shares issued at December 31, 2011 |
1,242 | 1,243 | ||||||
| Additional paid-in capital | 2,353,397 | 2,353,251 | ||||||
| Accumulated other comprehensive income | 25,729 | 25,738 | ||||||
| Accumulated deficit | (2,333,621 | ) | (2,297,468 | ) | ||||
| Total FelCor stockholders’ equity | 525,521 | 561,538 | ||||||
| Noncontrolling interests in other partnerships | 26,993 | 25,357 | ||||||
| Total equity | 552,514 | 586,895 | ||||||
| Total liabilities and equity | $ | 2,302,833 | $ | 2,403,228 | ||||
| Consolidated Debt Summary | |||||||||||||||||
|
(dollars in thousands) |
|||||||||||||||||
| Encumbered Hotels |
Interest Rate
(%) |
Maturity Date |
June 30, 2012 |
December 31, |
|||||||||||||
| Line of credit | 10 | L + 4.50 | August 2014(a) | $ | 20,000 | $ | — | ||||||||||
| Hotel mortgage debt | |||||||||||||||||
| Mortgage debt | 7 | L + 5.10 |
(b) |
April 2015 | 186,669 | 202,982 | |||||||||||
| Mortgage debt | 7 | 9.02 | April 2014 | 107,889 | 109,044 | ||||||||||||
| Mortgage debt | 6 | L + 2.20 | May 2013(c) | 88,395 | 156,398 | ||||||||||||
| Mortgage debt | 5 | (d) | 6.66 | June - August 2014 | 66,419 | 67,375 | |||||||||||
| Mortgage debt | 1 | 5.81 | July 2016 | 10,640 | 10,876 | ||||||||||||
| Senior notes | |||||||||||||||||
| Senior secured notes | 6 | 6.75 | June 2019 | 525,000 | 525,000 | ||||||||||||
| Senior secured notes(e) | 11 | 10.00 | October 2014 | 464,880 | 459,931 | ||||||||||||
| Other(f) | — | L + 1.50 | December 2012 | 64,860 | 64,860 | ||||||||||||
| Total | 53 | $ | 1,534,752 | $ | 1,596,466 | ||||||||||||
(a) Our $225 million line of credit can be extended for one year (to 2015), subject to satisfying certain conditions.
(b) LIBOR (for this loan) is subject to a 3% floor. We purchased an interest rate cap ($203 million notional amount) that caps LIBOR at 5.4% and expires May 2013.
(c) This loan can be extended for six months, subject to satisfying certain conditions.
(d) The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.
(e) These notes have $492 million in aggregate principal outstanding ($144 million and $96,000 in aggregate principal amount was redeemed in June 2011 and January 2012, respectively) and were initially sold at a discount that provided an effective yield of 12.875% before transaction costs.
(f) This loan is related to our Knickerbocker development project and is fully secured by restricted cash and a mortgage. Because we were able to assume an existing loan when we purchased this hotel, we were not required to pay any local mortgage recording tax. When that loan is transferred to a new lender and made part of our construction loan, we expect to only pay such tax to the extent of the incremental principal amount of the construction loan.
| Schedule of Encumbered Hotels | ||||||||
|
(dollars in millions) |
||||||||
|
June 30, 2012 |
||||||||
|
Consolidated Debt |
Balance | Encumbered Hotels | ||||||
| Line of credit | $ | 20 | Charlotte SouthPark - DT, Dana Point - DTGS, Houston Medical Center - HI, Myrtle Beach - HLT, Mandalay Beach - ES, Nashville Airport - ES, Philadelphia Independence Mall - HI, Pittsburgh University Center - HI, Santa Barbara Goleta - HI and Santa Monica at the Pier - HI | |||||
| Mortgage debt | $ | 187 |
Atlanta Buckhead - ES, Atlanta Galleria - SS, Boston Marlboro - ES, Burlington - SH, Orlando South - ES, Philadelphia Society Hill - SH and South San Francisco - ES |
|||||
| Mortgage debt | $ | 108 | Baton Rouge - ES, Birmingham - ES, Ft. Lauderdale - ES, Miami Airport - ES, Milpitas - ES, Minneapolis Airport - ES and Napa Valley - ES | |||||
| CMBS debt | $ | 88 |
Anaheim - ES, Bloomington - ES, Charleston Mills House - HI, Deerfield Beach - ES, Jacksonville - ES and Dallas Love Field - ES |
|||||
| CMBS debt(a) | $ | 66 | Atlanta Airport - ES, Austin - DTGS, BWI Airport - ES, Orlando Airport - HI and Phoenix Biltmore - ES | |||||
| CMBS debt | $ | 11 | Indianapolis North - ES | |||||
| Senior secured notes | $ | 525 | Boston Copley - FMT, Los Angeles International Airport - ES, Indian Wells Esmeralda Resort & Spa - REN, St. Petersburg Vinoy Resort & Golf Club - REN, Morgans and Royalton | |||||
| Senior secured notes | $ | 465 | Atlanta Airport - SH, Boston Beacon Hill - HI, Myrtle Beach Resort - ES, Nashville Opryland -Airport - HI, New Orleans French Quarter - HI, Orlando Walt Disney World® - DTGS, San Diego on the Bay - HI, San Francisco Waterfront - ES, San Francisco Fisherman’s Wharf - HI, San Francisco Union Square - MAR and Toronto Airport - HI | |||||
(a) The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.
| Capital Expenditures | ||||||||||||||||
|
(in thousands) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Improvements and additions to majority-owned hotels | $ | 31,964 | $ | 20,206 | $ | 73,349 | $ | 35,244 | ||||||||
|
Partners’ pro rata share of additions to consolidated |
||||||||||||||||
| joint venture hotels | (270 | ) | (251 | ) | (630 | ) | (440 | ) | ||||||||
| Pro rata share of additions to unconsolidated hotels | 803 | 339 | 1,365 | 1,472 | ||||||||||||
| Total additions to hotels(a) | $ | 32,497 | $ | 20,294 | $ | 74,084 | $ | 36,276 | ||||||||
(a) Includes capitalized interest, property taxes, ground leases and certain employee costs.
|
Hotels Under Renovation or Redevelopment During 2012 |
|||||||
|
Primary Areas |
Start Date |
End Date |
|||||
|
Renovations |
|||||||
| Philadelphia Society Hill-SH | guest rooms, corridors, public areas, meeting space, re-concept F&B | Nov-2011 | Apr-2012 | ||||
| Mandalay Beach-ES | guestrooms, corridors, lobby, exterior | Oct-2011 | May-2012 | ||||
| Napa Valley-ES | guestrooms, corridors, public areas | Nov-2011 | Apr-2012 | (a) | |||
| Austin-DTGS | guestrooms, corridors, public areas, entrance, F&B upgrade | Jun-2011 | Feb-2012 | ||||
| Boston Beacon Hill-HI | guestrooms, lobby, F&B | Dec-2011 | Apr-2012 | ||||
| Charlotte SouthPark-DT | guestrooms, corridors, exterior, lobby, upgrade F&B | Nov-2011 | May-2012 | ||||
| Pittsburgh University Center-HI | guestrooms, public areas, meeting space | Dec-2011 | Mar-2012 | ||||
|
Redevelopments |
|||||||
| Boston Copley Plaza-FMT | guestrooms, corridors, public areas, meeting space, fitness area, re-concept F&B | Nov-2011 | July-2012 | ||||
| Myrtle Beach Oceanfront Resort-ES | public space, lobby, re-concept F&B | Oct-2011 | Apr-2012 | ||||
| Morgans |
guestroom addition, public areas, fitness area, re-concept F&B |
Feb-2012 | Nov-2012 | ||||
(a) The public area renovation will begin in the fourth quarter 2012.
| Supplemental Financial Data | |||||||||
|
(in thousands, except per share information) |
|||||||||
| June 30, | December 31, | ||||||||
| Total Enterprise Value | 2012 | 2011 | |||||||
| Common shares outstanding | 124,227 | 124,281 | |||||||
| Units outstanding | 627 | 636 | |||||||
| Combined shares and units outstanding | 124,854 | 124,917 | |||||||
| Common stock price | $ | 4.70 | $ | 3.05 | |||||
| Market capitalization | $ | 586,814 | $ | 380,997 | |||||
| Series A preferred stock | 309,362 | 309,362 | |||||||
| Series C preferred stock | 169,412 | 169,412 | |||||||
| Consolidated debt | 1,534,752 | 1,596,466 | |||||||
| Noncontrolling interests of consolidated debt | (2,853 | ) | (2,894 | ) | |||||
| Pro rata share of unconsolidated debt | 74,698 | 75,178 | |||||||
| Cash and cash equivalents | (64,099 | ) | (93,758 | ) | |||||
| Total enterprise value (TEV) | $ | 2,608,086 | $ | 2,434,763 | |||||
Discontinued Operations
(in thousands)
Discontinued operations include the results of operations for six hotels sold in 2012 and eight hotels sold in 2011. Condensed financial information for the hotels included in discontinued operations is as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Operating revenue | $ | 7,894 | $ | 25,775 | $ | 22,255 | $ | 56,097 | ||||||||
| Operating expenses | (6,233 | ) | (29,672 | ) | (17,825 | ) | (56,128 | ) | ||||||||
| Operating income (loss) | 1,661 | (3,897 | ) | 4,430 | (31 | ) | ||||||||||
| Interest expense, net | (531 | ) | (864 | ) | (1,253 | ) | (1,941 | ) | ||||||||
| Debt extinguishment | (643 | ) | (50 | ) | (643 | ) | (57 | ) | ||||||||
|
Gain on sale, net of tax |
16,719 | 6,660 | 16,719 | 6,660 | ||||||||||||
| Income from discontinued operations | 17,206 | 1,849 | 19,253 | 4,631 | ||||||||||||
| Depreciation and amortization | — | 4,225 | 1,419 | 9,109 | ||||||||||||
| Interest expense, net | 531 | 864 | 1,253 | 1,941 | ||||||||||||
| EBITDA from discontinued operations | 17,737 | 6,938 | 21,925 | 15,681 | ||||||||||||
| Impairment loss | — | 5,301 | — | 5,301 | ||||||||||||
| Debt extinguishment | 643 | 50 | 643 | 57 | ||||||||||||
| Gain on sale, net of tax | (16,719 | ) | (6,660 | ) | (16,719 | ) | (6,660 | ) | ||||||||
| Adjusted EBITDA from discontinued operations | $ | 1,661 | $ | 5,629 | $ | 5,849 | $ | 14,379 | ||||||||
|
Hotel Portfolio Composition |
||||||||||
|
The following table illustrates the distribution of same-store hotels. |
||||||||||
|
Brand |
Hotels | Rooms |
% of Total |
2011 Hotel |
||||||
| Embassy Suites Hotels | 21 | 5,743 | 29 | $ | 79,977 | |||||
| Holiday Inn | 9 | 3,120 | 16 | 32,535 | ||||||
| Doubletree and Hilton | 5 | 1,206 | 6 | 15,347 | ||||||
| Sheraton and Westin | 4 | 1,604 | 8 | 15,198 | ||||||
| Renaissance and Marriott | 3 | 1,321 | 7 | 11,354 | ||||||
| Fairmont | 1 | 383 | 1 | 5,699 | ||||||
| Morgans/Royalton | 2 | 282 | 1 | 3,845 | ||||||
| Core hotels | 45 | 13,659 | 68 | 163,955 | ||||||
| Non-strategic hotels | 24 | 6,393 | 32 | 56,105 | ||||||
| Same-store hotels | 69 | 20,052 | 100 | $ | 220,060 | |||||
|
Market |
||||||||||
| San Francisco area | 4 | 1,637 | 8 | $ | 16,808 | |||||
| Boston | 3 | 916 | 5 | 14,027 | ||||||
| Los Angeles area | 3 | 677 | 3 | 13,727 | ||||||
| South Florida | 3 | 923 | 5 | 13,113 | ||||||
| New York area | 4 | 817 | 4 | 9,700 | ||||||
| Philadelphia | 2 | 728 | 4 | 8,805 | ||||||
| Atlanta | 3 | 952 | 5 | 8,418 | ||||||
| Myrtle Beach | 2 | 640 | 3 | 7,860 | ||||||
| Dallas | 2 | 784 | 4 | 7,151 | ||||||
| San Diego | 1 | 600 | 3 | 6,142 | ||||||
| Orlando | 2 | 473 | 2 | 5,809 | ||||||
| Other markets | 16 | 4,512 | 22 | 52,395 | ||||||
| Core hotels | 45 | 13,659 | 68 | 163,955 | ||||||
| Non-strategic hotels | 24 | 6,393 | 32 | 56,105 | ||||||
| Same-store hotels | 69 | 20,052 | 100 | $ | 220,060 | |||||
|
Location |
||||||||||
| Urban | 16 | 4,931 | 25 | $ | 64,841 | |||||
| Airport | 10 | 3,267 | 16 | 35,570 | ||||||
| Resort | 10 | 2,928 | 15 | 35,194 | ||||||
| Suburban | 9 | 2,533 | 12 | 28,350 | ||||||
| Core hotels | 45 | 13,659 | 68 | 163,955 | ||||||
| Non-strategic hotels | 24 | 6,393 | 32 | 56,105 | ||||||
| Same-store hotels | 69 | 20,052 | 100 | $ | 220,060 | |||||
(a) Hotel EBITDA is more fully described on page 25.
The following tables set forth occupancy, ADR and RevPAR for the three and six months ended June 30, 2012 and 2011, and the percentage changes therein for the periods presented, for our same-store Consolidated Hotels included in continuing operations.
|
Detailed Operating Statistics by Brand |
||||||||||||||
| Occupancy (%) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | %Variance | 2012 | 2011 | %Variance | |||||||||
| Embassy Suites Hotels | 78.6 | 80.1 | (1.9 | ) | 76.2 | 76.7 | (0.7 | ) | ||||||
| Holiday Inn | 81.1 | 80.5 | 0.8 | 74.2 | 73.5 | 1.0 | ||||||||
| Doubletree and Hilton | 74.7 | 75.7 | (1.3 | ) | 68.8 | 68.2 | 0.8 | |||||||
| Sheraton and Westin | 70.9 | 70.4 | 0.7 | 64.2 | 68.1 | (5.8 | ) | |||||||
| Renaissance and Marriott | 72.1 | 72.8 | (1.0 | ) | 72.8 | 71.9 | 1.3 | |||||||
| Fairmont | 76.3 | 84.1 | (9.2 | ) | 52.0 | 68.6 | (24.2 | ) | ||||||
| Morgans/Royalton | 88.0 | 92.0 | (4.4 | ) | 82.0 | 86.0 | (4.7 | ) | ||||||
| Core hotels (45) | 77.5 | 78.4 | (1.1 | ) | 72.8 | 73.7 | (1.3 | ) | ||||||
| Non-strategic hotels (24) | 74.6 | 74.3 | 0.5 | 73.6 | 72.4 | 1.7 | ||||||||
| Same-store hotels (69) | 76.6 | 77.1 | (0.6 | ) | 73.1 | 73.3 | (0.3 | ) | ||||||
| ADR ($) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | %Variance | 2012 | 2011 | %Variance | |||||||||
| Embassy Suites Hotels | 143.26 | 136.30 | 5.1 | 144.46 | 138.28 | 4.5 | ||||||||
| Holiday Inn | 149.16 | 132.42 | 12.6 | 137.46 | 125.33 | 9.7 | ||||||||
| Doubletree and Hilton | 140.78 | 133.96 | 5.1 | 137.27 | 133.45 | 2.9 | ||||||||
| Sheraton and Westin | 118.13 | 113.65 | 3.9 | 111.01 | 111.92 | (0.8 | ) | |||||||
| Renaissance and Marriott | 198.38 | 177.78 | 11.6 | 204.53 | 187.10 | 9.3 | ||||||||
| Fairmont | 312.75 | 268.90 | 16.3 | 286.27 | 242.34 | 18.1 | ||||||||
| Morgans/Royalton | 318.31 | 290.43 | 9.6 | 286.60 | 269.95 | 6.2 | ||||||||
| Core hotels (45) | 155.22 | 144.03 | 7.8 | 150.32 | 142.26 | 5.7 | ||||||||
| Non-strategic hotels (24) | 119.32 | 115.22 | 3.6 | 120.47 | 115.55 | 4.2 | ||||||||
| Same-store hotels (69) | 144.01 | 135.13 | 6.6 | 140.68 | 133.81 | 5.1 | ||||||||
| RevPAR ($) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | %Variance | 2012 |
2011 |
%Variance | |||||||||
| Embassy Suites Hotels | 112.63 | 109.19 | 3.1 | 110.10 | 106.10 | 3.8 | ||||||||
| Holiday Inn | 121.00 | 106.61 | 13.5 | 102.01 | 92.12 | 10.7 | ||||||||
| Doubletree and Hilton | 105.12 | 101.35 | 3.7 | 94.42 | 91.06 | 3.7 | ||||||||
| Sheraton and Westin | 83.72 | 79.99 | 4.7 | 71.29 | 76.27 | (6.5 | ) | |||||||
| Renaissance and Marriott | 142.95 | 129.46 | 10.4 | 148.88 | 134.50 | 10.7 | ||||||||
| Fairmont | 238.79 | 226.12 | 5.6 | 148.87 | 166.30 | (10.5 | ) | |||||||
| Morgans/Royalton | 280.12 | 267.32 | 4.8 | 234.95 | 232.20 | 1.2 | ||||||||
| Core hotels (45) | 120.25 | 112.86 | 6.5 | 109.43 | 104.91 | 4.3 | ||||||||
| Non-strategic hotels (24) | 89.07 | 85.62 | 4.0 | 88.68 | 83.67 | 6.0 | ||||||||
| Same-store hotels (69) | 110.26 | 104.13 | 5.9 | 102.78 | 98.11 | 4.8 | ||||||||
|
Comparable Hotels Operating Statistics for Our Top Markets |
||||||||||||||
| Occupancy (%) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | %Variance | 2012 | 2011 | %Variance | |||||||||
| San Francisco area | 83.7 | 84.2 | (0.6 | ) | 78.7 | 76.8 | 2.6 | |||||||
| Boston | 80.7 | 84.2 | (4.2 | ) | 64.9 | 76.4 | (15.2 | ) | ||||||
| Los Angeles area | 81.7 | 82.3 | (0.7 | ) | 81.4 | 77.3 | 5.3 | |||||||
| South Florida | 76.9 | 78.3 | (1.8 | ) | 81.5 | 81.8 | (0.4 | ) | ||||||
| New York area | 83.7 | 84.1 | (0.5 | ) | 76.0 | 76.4 | (0.6 | ) | ||||||
| Philadelphia | 78.4 | 82.4 | (4.8 | ) | 63.6 | 70.2 | (9.4 | ) | ||||||
| Atlanta | 77.5 | 79.4 | (2.4 | ) | 74.7 | 77.1 | (3.1 | ) | ||||||
| Myrtle Beach | 74.3 | 72.8 | 2.1 | 58.6 | 56.9 | 3.0 | ||||||||
| Dallas | 66.4 | 64.4 | 3.2 | 67.4 | 67.0 | 0.6 | ||||||||
| San Diego | 81.3 | 79.3 | 2.5 | 80.5 | 76.6 | 5.1 | ||||||||
| Orlando | 82.3 | 86.8 | (5.2 | ) | 83.6 | 85.8 | (2.6 | ) | ||||||
| Other markets | 74.1 | 74.8 | (0.9 | ) | 70.5 | 71.2 | (1.0 | ) | ||||||
| Core hotels (45) | 77.5 | 78.4 | (1.1 | ) | 72.8 | 73.7 | (1.3 | ) | ||||||
| Non-strategic hotels (24) | 74.6 | 74.3 | 0.5 | 73.6 | 72.4 | 1.7 | ||||||||
| Same-store hotels (69) | 76.6 | 77.1 | (0.6 | ) | 73.1 | 73.3 | (0.3 | ) | ||||||
| ADR ($) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | %Variance | 2012 | 2011 | %Variance | |||||||||
| San Francisco area | 166.10 | 141.75 | 17.2 | 161.38 | 139.24 | 15.9 | ||||||||
| Boston | 229.46 | 204.13 | 12.4 | 199.83 | 178.61 | 11.9 | ||||||||
| Los Angeles area | 154.44 | 146.31 | 5.6 | 147.89 | 145.77 | 1.5 | ||||||||
| South Florida | 137.36 | 136.74 | 0.4 | 162.07 | 156.08 | 3.8 | ||||||||
| New York area | 212.20 | 199.20 | 6.5 | 200.73 | 192.17 | 4.5 | ||||||||
| Philadelphia | 166.75 | 140.67 | 18.5 | 148.90 | 133.90 | 11.2 | ||||||||
| Atlanta | 107.12 | 103.22 | 3.8 | 108.91 | 104.98 | 3.7 | ||||||||
| Myrtle Beach | 158.37 | 154.56 | 2.5 | 139.29 | 134.64 | 3.5 | ||||||||
| Dallas | 105.02 | 106.50 | (1.4 | ) | 106.25 | 114.77 | (7.4 | ) | ||||||
| San Diego | 131.95 | 113.59 | 16.2 | 126.62 | 117.64 | 7.6 | ||||||||
| Orlando | 130.57 | 129.35 | 0.9 | 137.24 | 138.24 | (0.7 | ) | |||||||
| Other markets | 148.89 | 141.09 | 5.5 | 147.77 | 141.23 | 4.6 | ||||||||
| Core hotels (45) | 155.22 | 144.03 | 7.8 | 150.32 | 142.26 | 5.7 | ||||||||
| Non-strategic hotels (24) | 119.32 | 115.22 | 3.6 | 120.47 | 115.55 | 4.2 | ||||||||
| Same-store hotels (69) | 144.01 | 135.13 | 6.6 | 140.68 | 133.81 | 5.1 | ||||||||
| RevPAR ($) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | %Variance | 2012 | 2011 | %Variance | |||||||||
| San Francisco area | 138.97 | 119.28 | 16.5 | 127.05 | 106.86 | 18.9 | ||||||||
| Boston | 185.16 | 171.97 | 7.7 | 129.62 | 136.54 | (5.1 | ) | |||||||
| Los Angeles area | 126.21 | 120.38 | 4.8 | 120.31 | 112.63 | 6.8 | ||||||||
| South Florida | 105.64 | 107.12 | (1.4 | ) | 132.04 | 127.65 | 3.4 | |||||||
| New York area | 177.59 | 167.52 | 6.0 | 152.50 | 146.87 | 3.8 | ||||||||
| Philadelphia | 130.76 | 115.84 | 12.9 | 94.63 | 93.93 | 0.7 | ||||||||
| Atlanta | 82.99 | 81.95 | 1.3 | 81.41 | 80.99 | 0.5 | ||||||||
| Myrtle Beach | 117.65 | 112.44 | 4.6 | 81.60 | 76.58 | 6.6 | ||||||||
| Dallas | 69.73 | 68.55 | 1.7 | 71.66 | 76.96 | (6.9 | ) | |||||||
| San Diego | 107.28 | 90.14 | 19.0 | 101.97 | 90.11 | 13.2 | ||||||||
| Orlando | 107.52 | 112.31 | (4.3 | ) | 114.67 | 118.62 | (3.3 | ) | ||||||
| Other markets | 110.33 | 105.49 | 4.6 | 104.18 | 100.55 | 3.6 | ||||||||
| Core hotels (45) | 120.25 | 112.86 | 6.5 | 109.43 | 104.91 | 4.3 | ||||||||
| Non-strategic hotels (24) | 89.07 | 85.62 | 4.0 | 88.68 | 83.67 | 6.0 | ||||||||
| Same-store hotels (69) | 110.26 | 104.13 | 5.9 | 102.78 | 98.11 | 4.8 | ||||||||
|
Historical Operating Statistics |
||||||||||
| Occupancy (%) | ||||||||||
| Q3 2011 | Q4 2011 | 2011 | Q1 2012 | Q2 2012 | ||||||
| Core hotels (45) | 77.4 | 67.2 | 73.0 | 68.1 | 77.5 | |||||
| Non-strategic hotels (24) | 70.5 | 66.6 | 70.5 | 72.6 | 74.6 | |||||
| Same-store hotels (69) | 75.2 | 67.0 | 72.2 | 69.6 | 76.6 | |||||
| ADR ($) | ||||||||||
| Q3 2011 | Q4 2011 | 2011 | Q1 2012 | Q2 2012 | ||||||
| Core hotels (45) | 143.37 | 144.55 | 143.10 | 144.75 | 155.22 | |||||
| Non-strategic hotels (24) | 111.41 | 113.72 | 114.07 | 121.64 | 119.32 | |||||
| Same-store hotels (69) | 133.76 | 134.92 | 134.06 | 137.02 | 144.01 | |||||
| RevPAR ($) | ||||||||||
| Q3 2011 | Q4 2011 | 2011 | Q1 2012 | Q2 2012 | ||||||
| Core hotels (45) | 111.02 | 97.11 | 104.43 | 98.62 | 120.25 | |||||
| Non-strategic hotels (24) | 78.53 | 75.70 | 80.37 | 88.29 | 89.07 | |||||
| Same-store hotels (69) | 100.60 | 90.38 | 96.75 | 95.31 | 110.26 | |||||
Non-GAAP Financial Measures
We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, are measures of our financial performance that are not calculated and presented in accordance with generally accepted accounting principles (“GAAP”). The following tables reconcile each of these non-GAAP measures to the most comparable GAAP financial measure. Immediately following the reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and the limitations of such measures.
| Reconciliation of Net Income (Loss) to FFO and Adjusted FFO | ||||||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||
| Dollars | Shares |
Per |
Dollars | Shares |
Per |
|||||||||||||||
| Net income (loss) | $ | 12,028 | $ | (42,397 | ) | |||||||||||||||
| Noncontrolling interests | (159 | ) | 132 | |||||||||||||||||
| Preferred dividends | (9,678 | ) | (9,678 | ) | ||||||||||||||||
|
Net income (loss) attributable to
FelCor common stockholders |
2,191 | (51,943 | ) | |||||||||||||||||
|
Less: Undistributed earnings
allocated to unvested restricted stock |
(10 | ) | — | |||||||||||||||||
|
Numerator for basic and diluted
income (loss) available to common stockholders |
2,181 | 123,638 | $ | 0.02 | (51,943 | ) | 122,992 | $ | (0.42 | ) | ||||||||||
| Depreciation and amortization | 31,789 | — | 0.26 | 30,957 | — | 0.25 | ||||||||||||||
|
Depreciation, discontinued
operations and unconsolidated entities |
2,828 | — | 0.02 | 7,456 | — | 0.06 | ||||||||||||||
| Impairment loss | 1,335 | — | 0.01 | 7,003 | — | 0.06 | ||||||||||||||
|
Impairment loss, discontinued
operations |
— | — | — | 5,301 | — | 0.04 | ||||||||||||||
| Gain on sale of hotels | (16,719 | ) | — | (0.14 | ) | (6,660 | ) | — | (0.05 | ) | ||||||||||
| Gain on involuntary conversion | — | — | — | (21 | ) | — | — | |||||||||||||
| Noncontrolling interests in FelCor LP | 11 | 628 | — | (183 | ) | 433 | (0.01 | ) | ||||||||||||
|
Undistributed earnings allocated
to unvested restricted stock |
10 | — | — | — | — | — | ||||||||||||||
| Conversion of unvested restricted stock | — | 278 | — | — | — | — | ||||||||||||||
| FFO | 21,435 | 124,544 | 0.17 | (8,090 | ) | 123,425 | (0.07 | ) | ||||||||||||
| Acquisition costs | 59 | — | — | 827 | — | 0.01 | ||||||||||||||
|
Debt extinguishment, including
discontinued operations |
805 | — | 0.01 | 23,710 | — | 0.19 | ||||||||||||||
| Pre-opening costs | 43 | — | — | — | — | — | ||||||||||||||
| Conversion of unvested restricted stock | — | — | — | — | 855 | — | ||||||||||||||
| Adjusted FFO | $ | 22,342 | 124,544 | $ | 0.18 | $ | 16,447 | 124,280 | $ | 0.13 | ||||||||||
| Reconciliation of Net Loss to FFO and Adjusted FFO | ||||||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||
| 2012 |
|
2011 | ||||||||||||||||||
| Dollars | Shares |
Per |
Dollars | Shares |
Per |
|||||||||||||||
| Net loss | $ | (16,833 | ) | $ | (74,123 | ) | ||||||||||||||
| Noncontrolling interests | 239 | 194 | ||||||||||||||||||
| Preferred dividends | (19,356 | ) | (19,356 | ) | ||||||||||||||||
|
Net loss attributable to
FelCor common stockholders |
(35,950 | ) | 123,651 | $ | (0.29 | ) | (93,285 | ) | 109,249 | $ | (0.85 | ) | ||||||||
| Depreciation and amortization | 63,362 | — | 0.51 | 61,744 | — | 0.57 | ||||||||||||||
|
Depreciation, discontinued
operations and unconsolidated entities |
7,084 | — | 0.06 | 15,565 | — | 0.14 | ||||||||||||||
|
Gain on involuntary conversion |
— | — | — | (171 | ) | — | — | |||||||||||||
| Impairment loss | 1,335 | — | 0.01 | 7,003 | — | 0.06 | ||||||||||||||
|
Impairment loss, discontinued
operations |
— | — | — | 5,301 | — | 0.05 | ||||||||||||||
| Gain on sale of hotels | (16,719 | ) | — | (0.14 | ) | (6,660 | ) | — | (0.06 | ) | ||||||||||
|
Noncontrolling interests in
FelCor LP |
(185 | ) | 632 | — | (303 | ) | 359 | (0.01 | ) | |||||||||||
| Conversion of unvested restricted stock | — | 233 | — | — | — | — | ||||||||||||||
| FFO | 18,927 | 124,516 | 0.15 | (10,806 | ) | 109,608 | (0.10 | ) | ||||||||||||
| Acquisition costs | 97 | — | — | 946 | — | 0.01 | ||||||||||||||
|
Debt extinguishment, including
discontinued operations |
812 | — | 0.01 | 23,961 | — | 0.22 | ||||||||||||||
| Severance costs | 380 | — | — | — | — | — | ||||||||||||||
| Pre-opening costs | 43 | — | — | — | — | — | ||||||||||||||
| Conversion of unvested restricted stock | — | — | — | — | 860 | — | ||||||||||||||
| Adjusted FFO | $ | 20,259 | 124,516 | $ | 0.16 | $ | 14,101 | 110,468 | $ | 0.13 | ||||||||||
| Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and | ||||||||||||||||
| Same-store Adjusted EBITDA | ||||||||||||||||
|
(in thousands) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net income (loss) | $ | 12,028 | $ | (42,397 | ) | $ | (16,833 | ) | $ | (74,123 | ) | |||||
| Depreciation and amortization | 31,789 | 30,957 | 63,362 | 61,744 | ||||||||||||
|
Depreciation, discontinued operations and
unconsolidated entities |
2,828 | 7,456 | 7,084 | 15,565 | ||||||||||||
| Interest expense | 31,682 | 34,400 | 62,771 | 67,209 | ||||||||||||
|
Interest expense, discontinued operations and
unconsolidated entities |
1,229 | 1,990 | 2,627 | 4,197 | ||||||||||||
| Amortization of stock compensation | 1,242 | 1,774 | 2,538 | 3,577 | ||||||||||||
| Noncontrolling interests in other partnerships | (148 | ) | (51 | ) | 54 | (109 | ) | |||||||||
| EBITDA | 80,650 | 34,129 | 121,603 | 78,060 | ||||||||||||
| Impairment loss | 1,335 | 7,003 | 1,335 | 7,003 | ||||||||||||
| Impairment loss, discontinued operations | — | 5,301 | — | 5,301 | ||||||||||||
|
Debt extinguishment, including discontinued
operations |
805 | 23,710 | 812 | 23,961 | ||||||||||||
| Acquisition costs | 59 | 827 | 97 | 946 | ||||||||||||
| Gain on sale of hotels | (16,719 | ) | (6,660 | ) | (16,719 | ) | (6,660 | ) | ||||||||
| Gain on involuntary conversion | — | (21 | ) | — | (171 | ) | ||||||||||
| Severance costs | — | — | 380 | — | ||||||||||||
| Pre-opening costs | 43 | — | 43 | — | ||||||||||||
| Adjusted EBITDA | 66,173 | 64,289 | 107,551 | 108,440 | ||||||||||||
| Adjusted EBITDA from discontinued operations | (1,661 | ) | (5,629 | ) | (5,849 | ) | (14,379 | ) | ||||||||
| Adjusted EBITDA from acquired hotels(a) | — | 875 | — | 165 | ||||||||||||
| Same-store Adjusted EBITDA | $ | 64,512 | $ | 59,535 | $ | 101,702 | $ | 94,226 | ||||||||
(a) For same-store metrics, we have included the two hotels acquired in May 2011 for all periods presented.
|
Hotel EBITDA and Hotel EBITDA Margin (dollars in thousands) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Same-store operating revenue: | ||||||||||||||||
| Room | $ | 200,186 | $ | 189,033 | 373,202 | 354,362 | ||||||||||
| Food and beverage | 40,616 | 40,962 | 77,140 | 77,004 | ||||||||||||
| Other operating departments | 15,243 | 14,280 | 26,870 | 26,504 | ||||||||||||
| Same-store operating revenue | 256,045 | 244,275 | 477,212 | 457,870 | ||||||||||||
| Same-store operating expense: | ||||||||||||||||
| Room | 51,268 | 49,865 | 99,001 | 95,663 | ||||||||||||
| Food and beverage | 31,537 | 30,535 | 61,286 | 59,507 | ||||||||||||
| Other operating departments | 6,167 | 6,481 | 11,901 | 12,247 | ||||||||||||
| Other property related costs | 65,508 | 63,372 | 129,943 | 126,142 | ||||||||||||
| Management and franchise fees | 11,969 | 11,224 | 22,335 | 21,076 | ||||||||||||
| Taxes, insurance and lease expense | 15,889 | 13,995 | 30,841 | 27,852 | ||||||||||||
| Same-store operating expense | 182,338 | 175,472 | 355,307 | 342,487 | ||||||||||||
| Hotel EBITDA | $ | 73,707 | $ | 68,803 | $ | 121,905 | $ | 115,383 | ||||||||
| Hotel EBITDA Margin | 28.8 | % | 28.2 | % | 25.5 | % | 25.2 | % | ||||||||
| Reconciliation of Same-store Operating Revenue and Same-store Operating Expense to | ||||||||||||||||
| Total Revenue, Total Operating Expense and Operating Income | ||||||||||||||||
|
(in thousands) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Same-store operating revenue(a) | $ | 256,045 | $ | 244,275 | $ | 477,212 | $ | 457,870 | ||||||||
| Other revenue | 956 | 1,011 | 1,231 | 1,236 | ||||||||||||
| Revenue from acquired hotels | — | (4,883 | ) | — | (11,454 | ) | ||||||||||
| Total revenue | 257,001 | 240,403 | 478,443 | 447,652 | ||||||||||||
| Same-store operating expense(a) | 182,338 | 175,472 | 355,307 | 342,487 | ||||||||||||
| Consolidated hotel lease expense(b) | 11,236 | 10,497 | 20,429 | 18,801 | ||||||||||||
|
Unconsolidated taxes, insurance and
lease expense |
(1,933 | ) | (1,753 | ) | (3,765 | ) | (3,436 | ) | ||||||||
| Corporate expenses | 6,167 | 6,910 | 14,379 | 16,447 | ||||||||||||
| Depreciation and amortization | 31,789 | 30,957 | 63,362 | 61,744 | ||||||||||||
| Impairment loss | 1,335 | 7,003 | 1,335 | 7,003 | ||||||||||||
| Expenses from acquired hotels(a) | — | (4,008 | ) | — | (11,289 | ) | ||||||||||
| Other expenses | 800 | 1,616 | 1,763 | 2,247 | ||||||||||||
| Total operating expenses | 231,732 | 226,694 | 452,810 | 434,004 | ||||||||||||
| Operating income | $ | 25,269 | $ | 13,709 | $ | 25,633 | $ | 13,648 | ||||||||
(a) For same-store metrics, we have included the two hotels acquired in May 2011 for all periods presented.
(b) Consolidated hotel lease expense represents the percentage lease expense of our 51% owned operating lessees. The offsetting percentage lease revenue is included in equity in income from unconsolidated entities.
| Reconciliation of Forecasted Net Loss to Forecasted Adjusted FFO and | ||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||
|
(in millions, except per share and unit data) |
||||||||||||||||
| Full Year 2012 Guidance | ||||||||||||||||
| Low Guidance | High Guidance | |||||||||||||||
| Dollars |
Per Share |
Dollars |
Per Share |
|||||||||||||
| Net loss attributable to FelCor(b) | $ | (58 | ) | $ | (53 | ) | ||||||||||
| Preferred dividends | (39 | ) | (39 | ) | ||||||||||||
| Net loss attributable to FelCor common stockholders | (97 | ) | $ | (0.78 | ) | (92 | ) | $ | (0.74 | ) | ||||||
| Gain on sale of hotels | (17 | ) | (17 | ) | ||||||||||||
| Depreciation(c) | 138 |
141 |
||||||||||||||
| Impairment | 1 | 1 | ||||||||||||||
| FFO | 25 | $ | 0.20 |
33 |
$ | 0.27 | ||||||||||
| Debt extinguishment | 1 | 1 | ||||||||||||||
| Adjusted FFO | $ | 26 | $ | 0.21 | $ |
34 |
$ | 0.28 | ||||||||
| Net loss attributable to FelCor(b) | (58 | ) | (53 | ) | ||||||||||||
| Depreciation(c) | 138 | 141 | ||||||||||||||
| Interest expense(c) | 129 | 131 | ||||||||||||||
| Amortization expense | 5 | 5 | ||||||||||||||
| EBITDA | 214 | 224 | ||||||||||||||
| Gain on sale of hotels | (17 | ) | (17 | ) | ||||||||||||
| Impairment | 1 | 1 | ||||||||||||||
| Debt extinguishment | 1 | 1 | ||||||||||||||
| Adjusted EBITDA | $ | 199 | $ | 209 | ||||||||||||
(a) Weighted average shares and units are 124.7 million.
(b) For guidance, we have assumed no gains or losses on future asset sales.
(c) Includes pro rata portion of unconsolidated entities.
Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under 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 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, including but not limited to those described below, provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted FFO, and Adjusted EBITDA when combined with GAAP net income attributable to FelCor, EBITDA and FFO, is beneficial to an investor’s better understanding of our operating performance.
- Gains and losses related to extinguishment of debt and interest rate swaps - We exclude gains and losses related to extinguishment of debt and interest rate swaps from FFO and EBITDA because we believe that it is not indicative of ongoing operating performance of our hotel assets. This also represents an acceleration of interest expense or a reduction of interest expense, and interest expense is excluded from EBITDA.
- Cumulative effect of a change in accounting principle - Infrequently, the Financial Accounting Standards Board promulgates new accounting standards that require the consolidated statements of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments in computing Adjusted FFO and Adjusted EBITDA because they do not reflect our actual performance for that period.
In addition, to derive Adjusted EBITDA we exclude gains or losses on the sale of depreciable assets and impairment losses because we believe that including them in EBITDA is not consistent with reflecting the ongoing performance of our remaining assets. Additionally, the gain or loss on sale of depreciable assets and impairment losses represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.
Hotel EBITDA and Hotel EBITDA Margin
Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the 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 by eliminating all revenues and expenses from continuing operations not directly associated with hotel operations, including corporate-level expenses, depreciation and amortization, and expenses related to our capital structure. We eliminate corporate-level costs and expenses because we believe property-level results provide investors with supplemental information into the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis.
We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, we do not believe that these non-cash expenses, which are based on historical cost accounting for real estate assets, and implicitly assume that the value of real estate assets diminishes predictably over time, accurately reflect an adjustment in the value of our assets. We also eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by 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
Our management and Board of Directors 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 lodging 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. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated 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. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the 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. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.