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FelCor Reports Fourth Quarter 2016 Earnings

IRVING, Texas--(BUSINESS WIRE)--Feb. 23, 2017-- FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the fourth quarter ended December 31, 2016.

Fourth Quarter Highlights

  • Same-store RevPAR decreased 2.0% compared to the same period in 2015.
  • Net loss attributable to FelCor common stockholders was $6.2 million ($0.04 per share) versus $10.4 million ($0.07 per share) for the same period in 2015.
  • Adjusted FFO per share increased 13.3% to $0.17 from the same period in 2015.
  • Adjusted EBITDA increased $1.4 million to $51.4 million from the same period in 2015.

“On behalf of the entire team, we are very pleased to extend a warm welcome to Steve Goldman, who will join us next week as FelCor’s new CEO. Steve is a terrific industry leader who brings to FelCor extensive experience in all aspects of hotel operations, acquisitions and divestitures, finance and development that will add measurably to our prospects for future success. We are looking forward to working with him as we continue to build value for stockholders,” said Troy A. Pentecost, FelCor’s President, Interim Senior Executive Officer and Chief Operating Officer.

Mr. Pentecost continued, “We had a productive quarter on several fronts. Despite a decline in revenues, we beat our Adjusted FFO and Adjusted EBITDA expectations for the fourth quarter. We also successfully completed negotiations with Hilton with respect to new management agreements for 18 of our properties. The new management agreements shift a substantial portion of fees from fixed base fees to variable incentive fees, which are payable only after achieving a base return on our invested capital. This new fee structure better aligns Hilton’s interest with our economic interest. We also negotiated comprehensive, long-term renovation plans at the affected hotels that allow us to deploy our capital more efficiently. We are excited to extend our strong relationship with Hilton, and we are confident the new agreements will help us achieve meaningful returns on these assets.”

   

Fourth Quarter Hotel Results

 
Fourth Quarter
2016     2015     Change
Same-store hotels (37)
RevPAR $ 135.04 $ 137.86 (2.0 )%
Total hotel revenue, in millions $ 182.1 $ 186.5 (2.4 )%
Hotel EBITDA, in millions $ 52.2 $ 54.0 (3.3 )%
Hotel EBITDA margin 28.7 % 28.9 % (27) bps
 

RevPAR for our 37 same-store hotels decreased 2.0% (to $135.04) from the same period in 2015. The change reflects a 1.2% increase in average daily rate, or ADR, (to $184.46) and a 3.2% decline in occupancy (to 73.2%). We continued to face headwinds during the fourth quarter that negatively impacted revenues. Hurricane Matthew, which struck the East Coast in early October, resulted in the mandatory evacuation of four of our hotels and five condominium towers. In addition, we continued to experience weak supply and demand fundamentals in certain markets (mainly Miami, Houston, New York and San Francisco), which account for approximately 30% of our available room nights. Despite weakness in certain markets, we continued focusing our revenue management efforts on rate growth versus occupancy.

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 December 31, 2016 includes $2.0 million in fee reductions related to the Wyndham guaranty compared to $180,000 during the same period last year.

See pages 12-13 and 18-23 for more detailed operating data.

   

Fourth Quarter Operating Results

 
Fourth Quarter
$ in millions, except for per share information 2016     2015     Change
Net loss attributable to FelCor common stockholders $ (6.2 ) $ (10.4 ) 41.1 %
Net loss per share $ (0.04 ) $ (0.07 ) $ 0.03
Same-store Adjusted EBITDA $ 47.4 $ 49.3 (3.9 )%
Adjusted EBITDA $ 51.4 $ 50.0 2.7 %
Adjusted FFO per share $ 0.17 $ 0.15 $ 0.02
 

Full Year Operating Results

Net loss attributable to common stockholders was $21.6 million ($0.16 per share) in 2016, compared to $45.1 million ($0.33 per share) for the same period in 2015. Net loss in 2016 includes impairment charges of $26.5 million attributable to two hotels (one of which was sold in 2016) and a $6.9 million charge for severance costs. These charges are partially offset by a $3.2 million net gain on hotel sales (including a $3.1 million loss in discontinued operations). Net loss in 2015 included $30.9 million in debt extinguishment charges, a $20.9 million impairment charge for a property subsequently sold in 2016 and a $3.7 million charge for severance costs, partially offset by a $20.1 million net gain on the sale of consolidated hotels (including $658,000 in discontinued operations) and a $7.1 million gain on the sale of a hotel owned by an unconsolidated joint venture.

RevPAR for our 37 same-store hotels increased 0.9% (to $150.11) from the same period in 2015. The change reflects a 1.8% increase in ADR (to $191.14) and a 0.9% decline in occupancy (to 78.5%). Hotel EBITDA for our 37 same-store hotels increased by 0.6% to $238.8 million, and Hotel EBITDA margin was 30.6%, a 16 basis point decrease. Hotel EBITDA for the year ended December 31, 2016 includes $5.3 million in fee reductions related to the Wyndham guaranty compared to $1.4 million during the same period last year.

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 December 31, 2016, we had $1.3 billion of consolidated debt with a 5.4% weighted-average interest rate and a six-year weighted-average maturity. We had $47.3 million of cash and cash equivalents on hand and $19.5 million of restricted cash. We reduced our consolidated debt by $74 million and our leverage ratio from 6.0x at December 31, 2015 to 5.6x at December 31, 2016. In 2016, Moody’s upgraded our corporate credit rating to B2, which reflects continued progress with respect to strengthening our balance sheet and improving our credit metrics.

Asset Sales

In 2016, we sold the Renaissance Esmeralda Indian Wells Resort and the Holiday Inn Nashville Airport for $108.0 million total gross proceeds. We used proceeds from these sales to repay our line of credit. We continue to market our three New York hotels.

Stock Repurchase Program

In 2015, our Board approved a $100 million stock repurchase program, which we began implementing in December 2015. To date, we have purchased 6.6 million shares for $44.8 million (at an average price of $6.78 per share).

Common Dividend

We declared a fourth quarter $0.06 per share common stock dividend, which we paid at the end of January. Our Board of Directors will determine future quarterly common stock dividends based on funds available for distribution, reinvestment opportunities within our portfolio and taxable income, among other things.

Capital Expenditures

In 2016, we renovated two hotels (Embassy Suites - Dallas Love Field and Embassy Suites - Orlando International Drive South/Convention Center) and began redeveloping two resort properties (The Vinoy Renaissance St. Petersburg Resort & Golf Club and Embassy Suites Myrtle Beach-Oceanfront Resort), which included the construction of significant improvements to our resort amenities. We expect these renovations and redevelopments will enhance the quality of our portfolio and offer attractive returns. We spent $74.6 million on renovations and redevelopments at our hotels during 2016. We continue to underwrite and evaluate future renovations and redevelopments.

Outlook

Our outlook assumes the Morgans sale is completed during the second quarter of 2017 and Royalton and The Knickerbocker are sold during the fourth quarter of 2017 for the low-end of guidance. We are assuming no sales for the high-end of guidance. Our outlook assumes Hotel EBITDA for the Wyndham hotels equals the amount guaranteed by Wyndham for 2017, which corresponds to approximately 25% of our Adjusted EBITDA.

For 2017, we expect:

  • Net income attributable to FelCor will be $33.9 - 40.4 million;
  • RevPAR for same-store hotels will increase 0.5 - 2.5%;
  • Adjusted EBITDA with asset sales will be $224.0 - 236.0 million;
  • Adjusted FFO per share will be $0.83 - 0.90; and
  • Interest expense, including our pro rata share from joint ventures, will be $76.3 - 78.5 million.
       
Low     High
2017 Adjusted EBITDA (38 hotels) $ 229.0 $ 236.0
2017 EBITDA lost from hotels to be sold(a)   (5.0 )      
2017 Adjusted EBITDA with asset sales $ 224.0       $ 236.0
(a)   Adjusted EBITDA for the three New York hotels currently being marketed from the respective sale dates to December 31, 2017.
 

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.

We invite you to listen to our fourth quarter earnings conference call on Thursday, February 23, 2017 at 11:00 a.m. (Central Time). We will simultaneously webcast the conference call on our website at www.felcor.com. Interested investors and other parties who wish to access the call can go to FelCor’s website and click on the webcast link on the “Investors” page. The conference call replay will also be archived on the Company’s website.

With the exception of historical information, the matters discussed in this news release include “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties, and the occurrence of future events, may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Current economic circumstances or an economic slowdown and the impact on the lodging industry, operating risks associated with the hotel business, relationships with our property managers, risks associated with our level of indebtedness and our ability to meet debt covenants in our debt agreements, our ability to complete acquisitions, dispositions and debt refinancing, the availability of capital, the impact on the travel industry from security precautions, our ability to continue to qualify as a Real Estate Investment Trust for federal income tax purposes and numerous other factors may affect future results, performance and achievements. Certain of these risks and uncertainties are described in greater detail in our filings with the Securities and Exchange Commission. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially. We undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

SUPPLEMENTAL INFORMATION

INTRODUCTION

The following information is presented in order to help our investors understand FelCor’s financial position as of and for the three months and year ended December 31, 2016.

         

TABLE OF CONTENTS

 
Page
Consolidated Statements of Operations(a)

7

Consolidated Balance Sheets(a) 8
Consolidated Debt Summary 9
Schedule of Encumbered Hotels 10
Capital Expenditures 10
Total Enterprise Value 11
Hotel Operating Statistics 12
Historical Quarterly Operating Statistics 14
Non-GAAP Financial Measures 14
 

(a)

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

Year Ended

December 31, December 31,
2016     2015 2016     2015
Revenues:
Hotel operating revenue:
Room $ 147,077 $ 151,526 $ 661,640 $ 673,276
Food and beverage 37,738 42,166 155,227 158,531
Other operating departments 10,613 11,871 45,951 46,564
Other revenue   495     741     4,136     7,883  
Total revenues   195,923     206,304     866,954     886,254  
Expenses:
Hotel departmental expenses:
Room 40,404 40,833 171,883 172,252
Food and beverage 27,272 31,953 119,047 123,384
Other operating departments 3,478 4,153 15,120 17,505
Other property-related costs 47,732 52,967 212,180 223,546
Management and franchise fees 7,162 8,147 32,935 35,572
Taxes, insurance and lease expense 13,729 15,274 57,317 59,207
Corporate expenses 6,346 7,508 27,037 27,283
Depreciation and amortization 27,414 28,942 114,054 114,452
Impairment 26,459 20,861
Other expenses   2,189     1,033     12,740     12,479  
Total operating expenses   175,726     190,810     788,772     806,541  
Operating income 20,197 15,494 78,182 79,713
Interest expense, net (19,127 ) (19,757 ) (78,182 ) (79,118 )
Debt extinguishment (30,909 )
Other gains, net   242         342     166  
Income (loss) before equity in income (loss) from unconsolidated entities 1,312 (4,263 ) 342 (30,148 )
Equity in income (loss) from unconsolidated entities   147     (150 )   1,533     7,833  
Income (loss) from continuing operations before income tax 1,459 (4,413 ) 1,875 (22,315 )
Income tax   (729 )   147     (873 )   (1,245 )
Income (loss) from continuing operations 730 (4,266 ) 1,002 (23,560 )
Income (loss) from discontinued operations       250     (3,131 )   669  
Income (loss) before gain (loss) on sale of hotels 730 (4,016 ) (2,129 ) (22,891 )
Gain (loss) on sale of hotels, net   (332 )   (65 )   6,322       19,426  
Net income (loss) 398 (4,081 ) 4,193 (3,465 )
Net loss (income) attributable to noncontrolling interests in other partnerships 72 248 673 (4,157 )
Net loss attributable to redeemable noncontrolling interests in FelCor LP 26 44 93 194
Preferred distributions - consolidated joint venture   (368 )   (367 )   (1,461 )   (1,437 )
Net income (loss) attributable to FelCor 128 (4,156 ) 3,498 (8,865 )
Preferred dividends (6,278 ) (6,278 ) (25,115 ) (30,138 )
Redemption of preferred stock               (6,096 )
Net loss attributable to FelCor common stockholders $ (6,150 ) $ (10,434 ) $ (21,617 ) $ (45,099 )
Basic and diluted per common share data:
Loss from continuing operations $ (0.04 ) $ (0.07 ) $ (0.13 ) $ (0.33 )
Net loss $ (0.04 ) $ (0.07 ) $ (0.16 ) $ (0.33 )
Basic and diluted weighted average common shares outstanding   137,244     142,823     138,128     137,730  
       
 
Consolidated Balance Sheets

(in thousands, except par values)

 
December 31, December 31,
2016 2015
Assets
Investment in hotels, net of accumulated depreciation of $932,886 and $899,575 at December 31, 2016 and 2015, respectively $ 1,566,823 $ 1,729,531
Investment in unconsolidated entities 8,312 9,575
Cash and cash equivalents 47,317 59,786
Restricted cash 19,491 17,702
Accounts receivable, net of allowance for doubtful accounts of $177 and $204 at December 31, 2016 and 2015, respectively 42,080 28,136
Deferred expenses, net of accumulated amortization of $2,959 and $1,086 at December 31, 2016 and 2015, respectively 4,527 6,390
Other assets   18,542     14,792  
Total assets $ 1,707,092   $ 1,865,912  
Liabilities and Equity
Debt, net of unamortized debt issuance costs of $15,967 and $18,065 at December 31, 2016 and 2015, respectively $ 1,338,326 $ 1,409,889
Distributions payable 14,858 15,140
Accrued expenses and other liabilities   116,437     125,274  
Total liabilities   1,469,621     1,550,303  
Commitments and contingencies
Redeemable noncontrolling interests in FelCor LP, 610 and 611 units issued and outstanding at December 31, 2016 and 2015, respectively   4,888     4,464  
Equity:
Preferred stock, $0.01 par value, 20,000 shares authorized:
Series A Cumulative Convertible Preferred Stock, 12,879 shares, liquidation value of $321,987, issued and outstanding at December 31, 2016 and 2015 309,337 309,337
Common stock, $0.01 par value, 200,000 shares authorized; 137,990 and 141,808 shares issued and outstanding at December 31, 2016 and 2015 respectively 1,380 1,418
Additional paid-in capital 2,576,988 2,567,515
Accumulated deficit   (2,706,408 )   (2,618,117 )
Total FelCor stockholders’ equity 181,297 260,153
Noncontrolling interests in other partnerships 7,503 7,806
Preferred equity in consolidated joint venture, liquidation value of $44,667 and $43,954 at December 31, 2016 and 2015, respectively   43,783     43,186  
Total equity   232,583     311,145  
Total liabilities and equity $ 1,707,092   $ 1,865,912  
                   
 
Consolidated Debt Summary

(dollars in thousands)

 

Encumbered
Hotels

Interest
Rate (%)

Maturity Date

December 31,
2016

December 31,
2015

Senior unsecured notes 6.00 June 2025 $ 475,000 $ 475,000
Senior secured notes 9 5.625 March 2023 525,000 525,000
Mortgage debt(a) 4 4.95 October 2022 120,109 122,237
Mortgage debt 1 4.94 October 2022 30,184 30,717
Line of credit(b) 7 LIBOR + 2.75 June 2019 119,000 190,000
Mortgage debt(c) 1 LIBOR + 3.00 November 2017   85,000     85,000  
Total 22 $ 1,354,293 $ 1,427,954
Unamortized debt issuance costs   (15,967 )   (18,065 )
Debt, net of unamortized debt issuance costs $ 1,338,326   $ 1,409,889  
 
(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 December 31, 2016 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 $ 37 Minneapolis Airport - ES
Mortgage debt $ 30 Deerfield Beach - ES
Line of credit $ 119 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 Year Ended
December 31, December 31,
2016     2015 2016     2015
Improvements and additions to majority-owned hotels $ 22,937 $ 12,458 $ 74,264 $ 48,436
Partners’ pro rata share of additions to consolidated joint venture hotels (16 ) (17 ) (349 ) (47 )
Pro rata share of additions to unconsolidated hotels   46     1,231     656     3,791  
Total additions to hotels(a) $ 22,967   $ 13,672   $ 74,571   $ 52,180  
 
(a) Includes capitalized interest, property taxes, property insurance, ground leases and certain employee costs.

       
 
Total Enterprise Value

(in thousands, except per share data)

 
December 31,

December 31,

2016 2015
Common shares outstanding 137,990 141,808
Units outstanding   610     611  
Combined shares and units outstanding 138,600 142,419
Common stock price $ 8.01   $ 7.30  
Market capitalization $ 1,110,186 $ 1,039,659
Series A preferred stock(a) 321,987 321,987
Preferred equity - Knickerbocker joint venture, net 41,594 41,027
Consolidated debt (b) 1,354,293 1,427,954
Noncontrolling interests of consolidated debt (4,250 ) (4,250 )
Pro rata share of unconsolidated debt 11,167 11,433
Cash, cash equivalents and restricted cash   (66,808 )   (77,488 )
Total enterprise value (TEV) $ 2,768,169   $ 2,760,322  
 
(a) Based on liquidation value.
(b) Excludes unamortized debt issuance costs.
           
 

Hotel Operating Statistics

 
     
Occupancy (%) ADR ($) RevPAR ($)

Three Months Ended
December 31,

Three Months Ended
December 31,

Three Months Ended
December 31,

Same-store Hotels 2016     2015     %Change 2016     2015     %Change 2016     2015     %Change
Embassy Suites Atlanta-Buckhead 70.5 77.9 (9.5 ) 154.32 141.29 9.2 108.82 110.09 (1.2 )
DoubleTree Suites by Hilton Austin 76.0 77.3 (1.8 ) 231.93 225.85 2.7 176.21 174.67 0.9
Embassy Suites Birmingham 74.5 77.6 (4.0 ) 139.01 134.05 3.7 103.51 103.96 (0.4 )
The Fairmont Copley Plaza, Boston 70.1 69.4 1.0 331.98 337.29 (1.6 ) 232.59 234.04 (0.6 )
Wyndham Boston Beacon Hill 78.6 71.3 10.1 215.02 225.58 (4.7 ) 168.94 160.94 5.0
Embassy Suites Boston-Marlborough 58.8 69.6 (15.5 ) 167.47 172.41 (2.9 ) 98.50 119.98 (17.9 )
Sheraton Burlington Hotel & Conference Center 73.6 79.1 (7.0 ) 112.93 108.59 4.0 83.07 85.91 (3.3 )
The Mills House Wyndham Grand Hotel, Charleston 72.0 74.6 (3.5 ) 224.41 214.07 4.8 161.61 159.70 1.2
Embassy Suites Dallas-Love Field(1) 64.0 79.3 (19.3 ) 144.61 136.25 6.1 92.61 108.10 (14.3 )
Embassy Suites Deerfield Beach-Resort & Spa 68.4 77.7 (12.0 ) 185.31 187.41 (1.1 ) 126.74 145.67 (13.0 )
Embassy Suites Fort Lauderdale 17th Street 81.8 84.0 (2.6 ) 169.65 164.25 3.3 138.78 137.97 0.6
Wyndham Houston-Medical Center Hotel & Suites 67.4 80.9 (16.7 ) 135.82 146.83 (7.5 ) 91.51 118.81 (23.0 )
Embassy Suites Los Angeles-International Airport/South 81.2 77.5 4.8 157.94 150.68 4.8 128.24 116.71 9.9
Embassy Suites Mandalay Beach-Hotel & Resort 74.2 70.9 4.6 191.22 186.04 2.8 141.88 131.98 7.5
Embassy Suites Miami-International Airport 79.6 85.7 (7.1 ) 138.50 151.60 (8.6 ) 110.30 129.90 (15.1 )
Embassy Suites Milpitas-Silicon Valley 76.7 79.1 (3.0 ) 193.58 191.93 0.9 148.54 151.76 (2.1 )
Embassy Suites Minneapolis-Airport 70.1 74.5 (5.9 ) 151.08 144.55 4.5 105.92 107.72 (1.7 )
Embassy Suites Myrtle Beach-Oceanfront Resort 58.3 66.1 (11.8 ) 121.03 116.71 3.7 70.57 77.16 (8.5 )
Hilton Myrtle Beach Resort 39.7 44.7 (11.2 ) 102.64 99.74 2.9 40.73 44.56 (8.6 )
Embassy Suites Napa Valley 74.8 84.6 (11.5 ) 247.93 224.13 10.6 185.50 189.52 (2.1 )
Wyndham New Orleans-French Quarter 71.3 74.0 (3.6 ) 145.30 147.77 (1.7 ) 103.65 109.34 (5.2 )
Morgans New York 89.6 86.2 4.0 290.10 318.76 (9.0 ) 259.89 274.63 (5.4 )
Royalton New York 87.3 89.7 (2.7 ) 323.35 343.46 (5.9 ) 282.22 308.22 (8.4 )
Embassy Suites Orlando-International Drive South/Convention Center(1) 61.1 81.6 (25.2 ) 149.54 141.86 5.4 91.33 115.80 (21.1 )
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 84.9 90.7 (6.3 ) 144.38 146.75 (1.6 ) 122.59 133.04 (7.9 )
Wyndham Philadelphia Historic District 73.0 63.2 15.5 144.17 162.07 (11.0 ) 105.26 102.41 2.8
Sheraton Philadelphia Society Hill Hotel 68.1 69.3 (1.7 ) 176.41 177.81 (0.8 ) 120.12 123.18 (2.5 )
Embassy Suites Phoenix-Biltmore 61.3 67.5 (9.2 ) 170.84 176.23 (3.1 ) 104.73 118.92 (11.9 )
Wyndham Pittsburgh University Center 64.5 62.8 2.7 144.88 144.02 0.6 93.39 90.40 3.3
Wyndham San Diego Bayside 71.0 70.3 1.1 151.87 141.20 7.6 107.88 99.20 8.7
Embassy Suites San Francisco Airport-South San Francisco 87.7 86.0 2.0 190.79 193.41 (1.4 ) 167.39 166.35 0.6
Embassy Suites San Francisco Airport-Waterfront 89.2 85.3 4.6 198.05 196.16 1.0 176.64 167.25 5.6
Holiday Inn San Francisco-Fisherman’s Wharf 81.5 82.0 (0.7 ) 194.51 191.05 1.8 158.52 156.72 1.1
San Francisco Marriott Union Square 85.0 83.1 2.3 278.46 282.69 (1.5 ) 236.75 234.97 0.8
Wyndham Santa Monica At the Pier 78.3 75.0 4.4 262.90 237.38 10.7 205.85 178.05 15.6
Embassy Suites Secaucus-Meadowlands 75.2 75.0 0.3 175.56 183.96 (4.6 ) 132.05 138.02 (4.3 )
The Vinoy Renaissance St. Petersburg Resort & Golf Club 74.8 77.4 (3.4 ) 210.29 201.45 4.4   157.26 155.89 0.9  
Same-store Hotels 73.2 75.7 (3.2 ) 184.46 182.20 1.2   135.04 137.86 (2.0 )
 

(1) Hotel under renovation in 2016.

           
 

Hotel Operating Statistics

 
     
Occupancy (%) ADR ($) RevPAR ($)
Year Ended December 31, Year Ended December 31, Year Ended December 31,
Same-store Hotels 2016     2015     %Change 2016     2015     %Change 2016     2015     %Change
Embassy Suites Atlanta-Buckhead 77.3 79.5 (2.7 ) 156.50 147.51 6.1 121.04 117.30 3.2
DoubleTree Suites by Hilton Austin 81.3 81.8 (0.6 ) 221.70 221.63 180.33 181.35 (0.6 )
Embassy Suites Birmingham 77.9 79.0 (1.3 ) 137.76 134.07 2.7 107.35 105.86 1.4
The Fairmont Copley Plaza, Boston 76.0 75.5 0.5 325.88 326.70 (0.3 ) 247.52 246.81 0.3
Wyndham Boston Beacon Hill 79.0 79.2 (0.2 ) 228.49 234.42 (2.5 ) 180.61 185.60 (2.7 )
Embassy Suites Boston-Marlborough 68.6 74.9 (8.5 ) 171.81 171.10 0.4 117.81 128.20 (8.1 )
Sheraton Burlington Hotel & Conference Center 74.4 75.2 (1.1 ) 119.86 116.52 2.9 89.14 87.64 1.7
The Mills House Wyndham Grand Hotel, Charleston 81.6 81.1 0.6 228.13 222.42 2.6 186.26 180.45 3.2
Embassy Suites Dallas-Love Field(1) 73.6 87.9 (16.2 ) 142.57 132.52 7.6 104.91 116.42 (9.9 )
Embassy Suites Deerfield Beach-Resort & Spa 76.9 80.2 (4.2 ) 199.23 200.97 (0.9 ) 153.13 161.22 (5.0 )
Embassy Suites Fort Lauderdale 17th Street 83.6 84.8 (1.4 ) 174.15 165.76 5.1 145.59 140.55 3.6
Wyndham Houston-Medical Center Hotel & Suites 76.4 81.5 (6.2 ) 145.35 150.80 (3.6 ) 111.07 122.87 (9.6 )
Embassy Suites Los Angeles-International Airport/South 86.2 81.3 6.0 169.72 159.93 6.1 146.27 129.98 12.5
Embassy Suites Mandalay Beach-Hotel & Resort 80.5 78.0 3.2 227.22 212.81 6.8 182.82 165.97 10.1
Embassy Suites Miami-International Airport 85.0 88.3 (3.8 ) 146.80 151.72 (3.2 ) 124.76 133.98 (6.9 )
Embassy Suites Milpitas-Silicon Valley 81.5 82.4 (1.1 ) 201.81 195.17 3.4 164.57 160.88 2.3
Embassy Suites Minneapolis-Airport 75.4 77.1 (2.3 ) 156.54 150.93 3.7 117.95 116.38 1.4
Embassy Suites Myrtle Beach-Oceanfront Resort 74.2 74.4 (0.2 ) 176.68 172.30 2.5 131.18 128.12 2.4
Hilton Myrtle Beach Resort 61.6 64.1 (4.0 ) 146.09 140.45 4.0 89.95 90.09 (0.2 )
Embassy Suites Napa Valley 80.9 83.8 (3.4 ) 242.71 232.95 4.2 196.36 195.12 0.6
Wyndham New Orleans-French Quarter 72.2 68.9 4.9 146.18 150.70 (3.0 ) 105.60 103.77 1.8
Morgans New York 84.9 82.4 3.1 265.31 282.65 (6.1 ) 225.28 232.79 (3.2 )
Royalton New York 83.9 86.7 (3.2 ) 291.17 303.39 (4.0 ) 244.42 263.02 (7.1 )
Embassy Suites Orlando-International Drive South/Convention Center(1) 70.0 83.9 (16.5 ) 148.73 146.67 1.4 104.15 122.99 (15.3 )
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 88.2 89.4 (1.3 ) 141.13 139.63 1.1 124.54 124.89 (0.3 )
Wyndham Philadelphia Historic District 74.4 64.3 15.7 153.83 160.43 (4.1 ) 114.49 103.22 10.9
Sheraton Philadelphia Society Hill Hotel 71.0 69.0 2.8 181.94 174.72 4.1 129.09 120.54 7.1
Embassy Suites Phoenix-Biltmore 68.0 71.4 (4.8 ) 180.19 175.83 2.5 122.60 125.60 (2.4 )
Wyndham Pittsburgh University Center 69.1 71.1 (2.8 ) 145.80 145.55 0.2 100.76 103.53 (2.7 )
Wyndham San Diego Bayside 78.1 78.1 151.72 147.63 2.8 118.47 115.33 2.7
Embassy Suites San Francisco Airport-South San Francisco 88.3 88.4 (0.1 ) 203.47 200.69 1.4 179.70 177.46 1.3
Embassy Suites San Francisco Airport-Waterfront 89.7 86.4 3.8 208.23 207.60 0.3 186.75 179.35 4.1
Holiday Inn San Francisco-Fisherman’s Wharf 86.5 86.2 0.3 210.92 208.90 1.0 182.47 180.10 1.3
San Francisco Marriott Union Square 89.3 86.8 2.9 294.41 288.45 2.1 263.03 250.49 5.0
Wyndham Santa Monica At the Pier 86.1 83.9 2.7 278.40 255.40 9.0 239.83 214.26 11.9
Embassy Suites Secaucus-Meadowlands 72.7 76.0 (4.3 ) 179.80 184.97 (2.8 ) 130.75 140.57 (7.0 )
The Vinoy Renaissance St. Petersburg Resort & Golf Club 80.7 81.9 (1.4 ) 219.22 210.49 4.1   177.00 172.39 2.7  
Same-store Hotels 78.5 79.3 (0.9 ) 191.14 187.74 1.8   150.11 148.81 0.9  
 

(1) Hotel under renovation in 2016.

   
 

Historical Quarterly Operating Statistics

 
Occupancy (%)
Q4 2015     Q1 2016     Q2 2016     Q3 2016     Q4 2016
Same-store hotels(a) 75.7 76.4 82.8 81.8 73.2
 
ADR ($)
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Same-store hotels(a) 182.20 188.04 195.79 195.33 184.46
 
RevPAR ($)
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Same-store hotels(a) 137.86 143.65 162.03 159.78 135.04
 
(a) Includes 37 consolidated hotels and excludes The Knickerbocker, which opened in February 2015.
 

Non-GAAP Financial Measures

We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, are measures of our financial performance that are not calculated and presented in accordance with generally accepted accounting principles (“GAAP”). The following tables reconcile each of these non-GAAP measures to the most comparable GAAP financial measure. Immediately following the reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and the limitations of such measures.

   
 
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)

 
Three Months Ended December 31,
2016     2015
Dollars     Shares    

Per
Share
Amount

Dollars     Shares    

Per
Share
Amount

Net income (loss) $ 398 $ (4,081 )
Noncontrolling interests 98 292
Preferred dividends (6,278 ) (6,278 )
Preferred distributions - consolidated joint venture   (368 )   (367 )
Net loss attributable to FelCor common stockholders (6,150 ) (10,434 )
Less: Dividends declared on unvested restricted stock   (21 )   (16 )
Basic and diluted earnings per share data (6,171 ) 137,244 $ (0.04 ) (10,450 ) 142,823 $ (0.07 )
Depreciation and amortization 27,414 0.20 28,942 0.20
Depreciation, unconsolidated entities and other partnerships 453 480
Gain on sale of hotel in unconsolidated entity (14 )
Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships 332 (165 )
Other gains (242 )
Noncontrolling interests in FelCor LP (26 ) 610 (44 ) 611
Dividends declared on unvested restricted stock 21 27 16 10
Conversion of unvested restricted stock units     305         603    
FFO* 21,781 138,186 0.16 18,765 144,047 0.13
Hurricane loss 688
Hurricane loss, unconsolidated entities 45
Severance costs 723 0.01 43
Lease adjustment 1,628 0.01
Abandoned projects 320
Variable stock compensation 83 959 0.01
Litigation settlement 3
Pre-opening costs, net of noncontrolling interests   156         110      
Adjusted FFO* $ 23,479   138,186 $ 0.17   $ 21,825   144,047 $ 0.15  
 
* FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.
   
 
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)

 
Year Ended December 31,
2016     2015
Dollars     Shares    

Per
Share
Amount

Dollars     Shares    

Per
Share
Amount

Net income (loss) $ 4,193 $ (3,465 )
Noncontrolling interests 766 (3,963 )
Preferred distributions - consolidated joint venture (1,461 ) (1,437 )
Redemption of preferred stock (6,096 )
Preferred dividends   (25,115 )   (30,138 )
Net loss attributable to FelCor common stockholders (21,617 ) (45,099 )
Less: Dividends declared on unvested restricted stock   (129 )   (56 )
Basic and diluted earnings per share data (21,746 ) 138,128 $ (0.16 ) (45,155 ) 137,730 $ (0.33 )
Depreciation and amortization 114,054 0.83 114,452 0.83
Depreciation, unconsolidated entities and other partnerships 1,844 0.01 2,211 0.02
Other gains (342 ) (100 )
Impairment 26,459 0.19 20,861 0.15
Gain on sale of hotel in unconsolidated entity (7,126 ) (0.05 )
Gain on sale of hotels, net of noncontrolling interests in other partnerships (3,191 ) (0.03 ) (15,096 ) (0.12 )
Noncontrolling interests in FelCor LP (93 ) 611 (194 ) 611
Dividends declared on unvested restricted stock 129 56 4
Conversion of unvested restricted stock units     155         488    
FFO* 117,114 138,894 0.84 69,909 138,833 0.50
Hurricane loss 740 0.01
Hurricane loss, unconsolidated entities 45
Debt extinguishment 30,909 0.22
Debt extinguishment, unconsolidated entities 330
Severance costs 6,874 0.06 3,667 0.03
Lease adjustment 1,628 0.01
Abandoned projects 620 320
Variable stock compensation 450 798 0.01
Redemption of preferred stock 6,096 0.05
Contract dispute recovery (3,717 ) (0.03 )
Litigation settlement 856 0.01
Pre-opening costs, net of noncontrolling interests   527         5,235     0.04  
Adjusted FFO* $ 127,226   138,894 $ 0.92   $ 115,175   138,833 $ 0.83  
 
* FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.
       
 
Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA

(in thousands)

 
Three Months Ended Year Ended
December 31, December 31,
2016     2015 2016     2015
Net income (loss) $ 398 $ (4,081 ) $ 4,193 $ (3,465 )
Depreciation and amortization 27,414 28,942 114,054 114,452
Depreciation, unconsolidated entities and other partnerships 453 480 1,844 2,211
Interest expense 19,143 19,764 78,244 79,142
Interest expense, unconsolidated entities and other partnerships 86 82 366 521
Income tax 729 (147 ) 873 1,245
Noncontrolling interests in preferred distributions, consolidated joint venture (18 ) (71 ) (73 ) (71 )
Noncontrolling interests in other partnerships   72     248     673     (4,157 )
EBITDA* 48,277 45,217 200,174 189,878
Impairment 26,459 20,861
Hurricane loss 688 740
Hurricane loss, unconsolidated entities 45 45
Debt extinguishment 30,909
Debt extinguishment, unconsolidated entities 330
Gain on sale of hotel in unconsolidated entity (14 ) (7,126 )
Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships 332 (165 ) (3,191 ) (15,096 )
Other gains (242 ) (342 ) (100 )
Amortization of fixed stock and directors’ compensation 1,300 1,907 6,638 7,121
Severance costs 723 43 6,874 3,667
Lease adjustment 1,628 1,628
Abandoned projects 320 620 320
Variable stock compensation 83 959 450 798
Contract dispute recovery (3,717 )
Litigation settlement 3 856
Pre-opening costs, net of noncontrolling interests   156     110     527     5,235  
Adjusted EBITDA* 51,365 50,005 239,850 234,708
Adjusted EBITDA from hotels disposed and recently opened   (3,988 )   (729 )   (18,077 )   (15,193 )
Same-store Adjusted EBITDA* $ 47,377   $ 49,276   $ 221,773   $ 219,515  
 
* 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 Year Ended
December 31, December 31,
2016     2015 2016     2015
Same-store operating revenue:
Room $ 136,649 $ 139,498 $ 604,280 $ 597,423
Food and beverage 34,906 35,876 132,433 131,874
Other operating departments   10,548     11,162     43,818     42,806  
Same-store operating revenue 182,103 186,536 780,531 772,103
 
Same-store operating expense:
Room 36,650 37,062 154,562 150,966
Food and beverage 25,229 25,816 100,111 99,363
Other operating departments 3,458 3,786 14,309 15,552
Other property related costs 45,258 46,459 190,591 189,869
Management and franchise fees 6,754 7,475 30,362 31,155
Taxes, insurance and lease expense   12,545     11,948     51,832     47,744  
Same-store operating expense   129,894     132,546     541,767     534,649  
Hotel EBITDA $ 52,209   $ 53,990   $ 238,764   $ 237,454  
Hotel EBITDA Margin 28.7 % 28.9 % 30.6 % 30.8 %
 
 

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

   

Three months ended December 31, 2016

Same-store Hotels

Hotel Operating
Revenue

   

Net Income
(Loss)

   

Other
Adjustments

    Depreciation    

Interest
Expense

   

Hotel
EBITDA

   

Hotel EBITDA
Margin

Embassy Suites Atlanta-Buckhead $ 3,486 $ 894 $ $ 523 $ $ 1,417 40.6 %
DoubleTree Suites by Hilton Austin 3,608 1,096 (242 ) 469 130 1,453 40.3 %
Embassy Suites Birmingham 2,476 251 400 297 948 38.3 %
The Fairmont Copley Plaza, Boston 15,602 537 2,233 332 3,102 19.9 %
Wyndham Boston Beacon Hill 5,528 1,363 989 2,352 42.5 %
Embassy Suites Boston-Marlborough 2,387 271 290 561 23.5 %
Sheraton Burlington Hotel & Conference Center 3,857 703 619 1,322 34.3 %
The Mills House Wyndham Grand Hotel, Charleston 4,571 1,083 66 634 171 1,954 42.7 %
Embassy Suites Dallas-Love Field 2,532 264 366 630 24.9 %
Embassy Suites Deerfield Beach-Resort & Spa 3,768 310 2 463 398 1,173 31.1 %
Embassy Suites Fort Lauderdale 17th Street 5,658 673 694 447 1,814 32.1 %
Wyndham Houston-Medical Center Hotel & Suites 2,772 614 (19 ) 538 1,133 40.9 %
Embassy Suites Los Angeles-International Airport/South 5,110 1,033 629 195 1,857 36.3 %
Embassy Suites Mandalay Beach-Hotel & Resort 4,546 733 774 1,507 33.2 %
Embassy Suites Miami-International Airport 3,954 428 459 887 22.4 %
Embassy Suites Milpitas-Silicon Valley 4,488 1,418 303 1,721 38.3 %
Embassy Suites Minneapolis-Airport 3,167 208 386 473 1,067 33.7 %
Embassy Suites Myrtle Beach-Oceanfront Resort 3,522 (619 ) 275 653 309 8.8 %
Hilton Myrtle Beach Resort 2,999 (1,020 ) 326 893 199 6.6 %
Embassy Suites Napa Valley 4,101 892 494 345 1,731 42.2 %
Wyndham New Orleans-French Quarter 4,005 1,325 717 2,042 51.0 %
Morgans New York 3,131 146 95 503 744 23.8 %
Royalton New York 5,980 (121 ) 128 596 603 10.1 %
Embassy Suites Orlando-International Drive South/Convention Center 2,116 190 284 474 22.4 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 3,191 136 771 907 28.4 %
Wyndham Philadelphia Historic District 4,396 1,006 721 1,727 39.3 %
Sheraton Philadelphia Society Hill Hotel 6,346 746 970 1,716 27.0 %
Embassy Suites Phoenix-Biltmore 2,338 296 431 727 31.1 %
Wyndham Pittsburgh University Center 2,853 515 501 1,016 35.6 %
Wyndham San Diego Bayside 7,426 405 1,566 1,971 26.5 %
Embassy Suites San Francisco Airport-South San Francisco 5,762 1,510 437 1,947 33.8 %
Embassy Suites San Francisco Airport-Waterfront 6,761 1,477 3 770 2,250 33.3 %
Holiday Inn San Francisco-Fisherman’s Wharf 9,598 420 572 992 10.3 %
San Francisco Marriott Union Square 10,052 815 (1 ) 1,310 399 2,523 25.1 %
Wyndham Santa Monica at the Pier 2,700 1,016 269 135 1,420 52.6 %
Embassy Suites Secaucus-Meadowlands 3,306 478 1 101 580 17.5 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club   14,010   1,518     176       1,455   284   3,433 24.5 %
$ 182,103 $ 23,010   $ 810     $ 24,783 $ 3,606 $ 52,209 28.7 %
       
 

Three months ended December 31, 2015

Same-store Hotels

Hotel Operating
Revenue

   

Net Income
(Loss)

   

Other
Adjustments

    Depreciation    

Interest
Expense

   

Hotel
EBITDA

Hotel EBITDA
Margin

Embassy Suites Atlanta-Buckhead $ 3,552 $ 743 $ $ 648 $ $ 1,391 39.2 %
DoubleTree Suites by Hilton Austin 3,516 785 484 165 1,434 40.8 %
Embassy Suites Birmingham 2,484 241 388 303 932 37.5 %
The Fairmont Copley Plaza, Boston 15,427 1,163 2,172 423 3,758 24.4 %
Wyndham Boston Beacon Hill 5,309 944 (4 ) 991 1,931 36.4 %
Embassy Suites Boston-Marlborough 2,896 608 291 899 31.0 %
Sheraton Burlington Hotel & Conference Center 3,933 778 615 1,393 35.4 %
The Mills House Wyndham Grand Hotel, Charleston 4,594 910 635 224 1,769 38.5 %
Embassy Suites Dallas-Love Field 2,917 523 336 859 29.4 %
Embassy Suites Deerfield Beach-Resort & Spa 4,396 644 480 404 1,528 34.8 %
Embassy Suites Fort Lauderdale 17th Street 5,725 720 718 455 1,893 33.1 %
Wyndham Houston-Medical Center Hotel & Suites 3,458 881 (19 ) 545 4 1,411 40.8 %
Embassy Suites Los Angeles-International Airport/South 4,591 818 645 248 1,711 37.3 %
Embassy Suites Mandalay Beach-Hotel & Resort 4,166 585 774 7 1,366 32.8 %
Embassy Suites Miami-International Airport 4,590 741 477 6 1,224 26.7 %
Embassy Suites Milpitas-Silicon Valley 4,528 1,411 303 1,714 37.9 %
Embassy Suites Minneapolis-Airport 3,243 173 447 481 1,101 34.0 %
Embassy Suites Myrtle Beach-Oceanfront Resort 4,021 (74 ) 678 8 612 15.2 %
Hilton Myrtle Beach Resort 3,161 (527 ) 845 318 10.1 %
Embassy Suites Napa Valley 4,305 855 516 352 1,723 40.0 %
Wyndham New Orleans-French Quarter 4,890 1,745 721 2,466 50.4 %
Morgans New York 3,108 (149 ) 1 624 476 15.3 %
Royalton New York 6,236 465 1 575 1,041 16.7 %
Embassy Suites Orlando-International Drive South/Convention Center 2,705 695 272 967 35.7 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 3,403 329 772 1,101 32.4 %
Wyndham Philadelphia Historic District 4,575 696 (1 ) 751 6 1,452 31.7 %
Sheraton Philadelphia Society Hill Hotel 6,640 688 981 1,669 25.1 %
Embassy Suites Phoenix-Biltmore 2,656 551 440 991 37.3 %
Wyndham Pittsburgh University Center 2,774 (1,252 ) 1,628

(1)

518 5 899 32.4 %
Wyndham San Diego Bayside 7,194 (31 ) 1,576 1,545 21.5 %
Embassy Suites San Francisco Airport-South San Francisco 5,918 1,585 398 1,983 33.5 %
Embassy Suites San Francisco Airport-Waterfront 6,406 1,378 747 2,125 33.2 %
Holiday Inn San Francisco-Fisherman’s Wharf 9,426 521 430 951 10.1 %
San Francisco Marriott Union Square 10,089 703 (1 ) 1,410 509 2,621 26.0 %
Wyndham Santa Monica at the Pier 2,378 595 291 179 1,065 44.8 %
Embassy Suites Secaucus-Meadowlands 3,470 609 116 725 20.9 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club   13,856   1,124     2       1,458   362   2,946 21.3 %
$ 186,536 $ 23,174   $ 1,607     $ 25,068 $ 4,141 $ 53,990 28.9 %
 

* Footnotes on page 22

   
 

Year ended December 31, 2016

Same-store Hotels

Hotel Operating
Revenue

   

Net Income
(Loss)

   

Other
Adjustments

    Depreciation    

Interest
Expense

   

Hotel
EBITDA

   

Hotel EBITDA
Margin

Embassy Suites Atlanta-Buckhead $ 15,371 $ 4,009 $ $ 2,297 $ $ 6,306 41.0 %
DoubleTree Suites by Hilton Austin 14,759 3,890 (242 ) 1,928 657 6,233 42.2 %
Embassy Suites Birmingham 10,149 960 1 1,578 1,191 3,730 36.8 %
The Fairmont Copley Plaza, Boston 59,099 1,019 (91 ) 8,827 1,681 11,436 19.4 %
Wyndham Boston Beacon Hill 22,821 5,584 3,954 9,538 41.8 %
Embassy Suites Boston-Marlborough 11,193 2,207 1,178 3,385 30.2 %
Sheraton Burlington Hotel & Conference Center 15,020 1,972 2,478 4,450 29.6 %
The Mills House Wyndham Grand Hotel, Charleston 20,538 5,439 66 2,529 865 8,899 43.3 %
Embassy Suites Dallas-Love Field 10,948 1,715 1,423 3,138 28.7 %
Embassy Suites Deerfield Beach-Resort & Spa 17,405 2,609 2 1,887 1,593 6,091 35.0 %
Embassy Suites Fort Lauderdale 17th Street 23,081 3,074 1 2,809 1,792 7,676 33.3 %
Wyndham Houston-Medical Center Hotel & Suites 13,278 3,798 (76 ) 2,173 5,895 44.4 %
Embassy Suites Los Angeles-International Airport/South 22,483 5,402 2,535 986 8,923 39.7 %
Embassy Suites Mandalay Beach-Hotel & Resort 21,875 5,566 3,090 8,656 39.6 %
Embassy Suites Miami-International Airport 17,587 2,566 1,849 4,415 25.1 %
Embassy Suites Milpitas-Silicon Valley 18,671 6,058 1,207 7,265 38.9 %
Embassy Suites Minneapolis-Airport 13,959 1,494 1 1,687 1,893 5,075 36.4 %
Embassy Suites Myrtle Beach-Oceanfront Resort 22,754 3,249 508 2,639 6,396 28.1 %
Hilton Myrtle Beach Resort 21,562 3,364 326 3,511 7,201 33.4 %
Embassy Suites Napa Valley 17,227 3,676 1 2,038 1,384 7,099 41.2 %
Wyndham New Orleans-French Quarter 16,163 4,478 2,880 7,358 45.5 %
Morgans New York 10,411 (22,653 ) 20,612

(2)

2,415 374 3.6 %
Royalton New York 20,021 (3,074 ) 565 2,349 (160 ) (0.8 )%
Embassy Suites Orlando-International Drive South/Convention Center 9,743 1,618 1,099 2,717 27.9 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 12,894 429 3,088 3,517 27.3 %
Wyndham Philadelphia Historic District 19,117 4,219 10 2,932 7,161 37.5 %
Sheraton Philadelphia Society Hill Hotel 26,906 4,016 3,897 7,913 29.4 %
Embassy Suites Phoenix-Biltmore 11,038 2,207 1,731 3,938 35.7 %
Wyndham Pittsburgh University Center 11,770 1,823 3 2,043 3,869 32.9 %
Wyndham San Diego Bayside 31,589 3,092 6,253 9,345 29.6 %
Embassy Suites San Francisco Airport-South San Francisco 24,348 7,136 1,681 8,817 36.2 %
Embassy Suites San Francisco Airport-Waterfront 27,655 5,744 856 3,046 9,646 34.9 %
Holiday Inn San Francisco-Fisherman’s Wharf 43,483 5,062 2,090 7,152 16.4 %
San Francisco Marriott Union Square 43,662 6,072 (106 ) 5,314 2,022 13,302 30.5 %
Wyndham Santa Monica at the Pier 12,619 5,163 1 1,100 682 6,946 55.0 %
Embassy Suites Secaucus-Meadowlands 13,130 1,747 2 444 2,193 16.7 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club   56,202   5,093     590       5,749   1,437   12,869   22.9 %
$ 780,531 $ 99,823   $ 23,030     $ 99,728 $ 16,183 $ 238,764   30.6 %
 

* Footnotes on page 22

       
 

Year Ended December 31, 2015

Same-store Hotels

Hotel Operating
Revenue

   

Net Income
(Loss)

   

Other
Adjustments

    Depreciation    

Interest
Expense

   

Hotel
EBITDA

Hotel EBITDA
Margin

Embassy Suites Atlanta-Buckhead $ 14,923 $ 3,534 $ $ 2,573 $ $ 6,107 40.9 %
DoubleTree Suites by Hilton Austin 14,739 3,855 1,953 424 6,232 42.3 %
Embassy Suites Birmingham 10,019 932 1 1,567 1,208 3,708 37.0 %
The Fairmont Copley Plaza, Boston 58,136 2,894 8,677 1,084 12,655 21.8 %
Wyndham Boston Beacon Hill 23,463 5,295 (4 ) 4,028 9,319 39.7 %
Embassy Suites Boston-Marlborough 12,086 2,837 1,162 3,999 33.1 %
Sheraton Burlington Hotel & Conference Center 14,486 1,791 2,416 4,207 29.0 %
The Mills House Wyndham Grand Hotel, Charleston 19,548 4,395 22 2,496 900 7,813 40.0 %
Embassy Suites Dallas-Love Field 12,123 2,510 1,354 3,864 31.9 %
Embassy Suites Deerfield Beach-Resort & Spa 18,377 3,047 2,055 1,615 6,717 36.6 %
Embassy Suites Fort Lauderdale 17th Street 22,332 2,532 1 2,939 1,817 7,289 32.6 %
Wyndham Houston-Medical Center Hotel & Suites 14,401 3,941 (69 ) 2,164 214 6,250 43.4 %
Embassy Suites Los Angeles-International Airport/South 19,925 4,896 2,611 636 8,143 40.9 %
Embassy Suites Mandalay Beach-Hotel & Resort 19,897 4,048 24 3,176 380 7,628 38.3 %
Embassy Suites Miami-International Airport 18,725 2,804 20 1,945 315 5,084 27.2 %
Embassy Suites Milpitas-Silicon Valley 18,295 5,845 1,231 7,076 38.7 %
Embassy Suites Minneapolis-Airport 13,809 1,316 1 1,832 1,920 5,069 36.7 %
Embassy Suites Myrtle Beach-Oceanfront Resort 22,277 3,077 24 2,854 376 6,331 28.4 %
Hilton Myrtle Beach Resort 21,434 3,940 3,373 7,313 34.1 %
Embassy Suites Napa Valley 17,145 3,608 (25 ) 2,075 1,403 7,061 41.2 %
Wyndham New Orleans-French Quarter 16,627 3,586 537 2,852 529 7,504 45.1 %
Morgans New York 10,345 (2,281 ) 1 2,482 202 2.0 %
Royalton New York 20,874 (1,388 ) 1 2,270 883 4.2 %
Embassy Suites Orlando-International Drive South/Convention Center 11,229 2,521 1,100 3,621 32.2 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 12,683 295 3,166 3,461 27.3 %
Wyndham Philadelphia Historic District 17,571 2,131 18 3,087 293 5,529 31.5 %
Sheraton Philadelphia Society Hill Hotel 25,204 2,697 3,979 6,676 26.5 %
Embassy Suites Phoenix-Biltmore 11,155 1,590 276 1,825 279 3,970 35.6 %
Wyndham Pittsburgh University Center 12,004 (221 ) 1,644

(1)

2,119 256 3,798 31.6 %
Wyndham San Diego Bayside 31,717 2,087 6,400 8,487 26.8 %
Embassy Suites San Francisco Airport-South San Francisco 24,471 7,476 1,625 9,101 37.2 %
Embassy Suites San Francisco Airport-Waterfront 26,572 10,047 (3,717 )

(3)

2,978 9,308 35.0 %
Holiday Inn San Francisco-Fisherman’s Wharf 43,067 5,972 1,678 7,650 17.8 %
San Francisco Marriott Union Square 42,321 5,698 1,062

(4)

5,655 2,472 14,887 35.2 %
Wyndham Santa Monica at the Pier 11,293 3,962 24 1,137 812 5,935 52.6 %
Embassy Suites Secaucus-Meadowlands 14,127 2,710 5 521 3,236 22.9 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club   54,703   4,622     2     5,790   927   11,341 20.7 %
$ 772,103 $ 118,601   $ (152 ) $ 101,145 $ 17,860 $ 237,454 30.8 %
 
The following are footnotes to the Hotel EBITDA tables on pages 20 - 22:
(1) Amount primarily represents an adjustment to straight-line expense from prior years for a ground lease associated with this hotel.
(2) Amount primarily represents an impairment.
(3) Amount represents net revenue attributable to a favorable settlement of a commercial dispute.
(4) Amount primarily represents debt extinguishment charges.
       
 

Reconciliation of Same-store Operating Revenue and Same-store Operating Expense to Total Revenue, Total Operating Expense and Operating Income

(in thousands)

 
Three Months Ended Year Ended
December 31, December 31,
2016     2015 2016     2015
Same-store operating revenue $ 182,103 $ 186,536 $ 780,531 $ 772,103
Other revenue 495 741 4,136 7,883
Revenue from hotels disposed and recently opened (a)   13,325     19,027     82,287     106,268  
Total revenue 195,923 206,304 866,954 886,254
Same-store operating expense 129,894 132,546 541,767 534,649
Consolidated hotel lease expense(b) 1,248 1,345 4,896 7,107
Unconsolidated taxes, insurance and lease expense (498 ) (512 ) (1,983 ) (2,194 )
Lease adjustment 1,628 1,628
Corporate expenses 6,346 7,508 27,037 27,283
Depreciation and amortization 27,414 28,942 114,054 114,452
Impairment 26,459 20,861
Expenses from hotels disposed and recently opened(a) 9,133 18,320 63,802 90,276
Other expenses   2,189     1,033     12,740     12,479  
Total operating expense   175,726     190,810     788,772     806,541  
Operating income $ 20,197   $ 15,494   $ 78,182   $ 79,713  
 
(a) We include the operating performance for hotels in continuing operations in our Consolidated Statements of Operations. However, for purposes of our non-GAAP reporting metrics, we have excluded the results of these hotels to provide a meaningful same-store comparison.
(b) Consolidated hotel lease expense represents the percentage lease expense of our 51%-owned operating lessees. The offsetting percentage lease revenue is included in equity in income from unconsolidated entities.
   
 

Reconciliation of Forecasted Net Income Attributable to FelCor to Forecasted Adjusted FFO and Adjusted EBITDA

(in millions, except per share data)

 
Full Year 2017 Guidance
Low     High
Dollars    

Per Share
Amount(a)

Dollars    

Per Share
Amount(a)

Net income attributable to FelCor(b) $ 33.9 $ 40.4
Preferred dividends   (25.1 )   (25.1 )
Net income attributable to FelCor common stockholders 8.8 $ 0.06 15.3 $ 0.11
Depreciation(c) 105.8 108.8
Noncontrolling interests in FelCor LP       0.1  
FFO and Adjusted FFO* $ 114.6   $ 0.83 $ 124.2   $ 0.90
 
Net income attributable to FelCor(b) $ 33.9 $ 40.4
Depreciation(c) 105.8 108.8
Noncontrolling interests in FelCor LP 0.1
Interest expense(c) 76.3 78.5
Income tax 0.9 0.9
Preferred distributions - consolidated joint venture   1.2     1.4  
EBITDA* $ 218.1 $ 230.1
Amortization of fixed stock and directors’ compensation   5.9     5.9  
Adjusted EBITDA* $ 224.0   $ 236.0  
 
(a) Weighted average shares are 138.6 million.
(b) Excludes any gains or losses on future asset or capital transactions.
(c) Includes pro rata portion of unconsolidated entities.
* FFO, Adjusted FFO, EBITDA and Adjusted EBITDA are attributable to FelCor common stockholders and FelCor LP unitholders other than FelCor.
 

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.

Source: FelCor Lodging Trust Incorporated

FelCor Lodging Trust Incorporated
Abi Salami, 972-444-4967
Manager, Investor Relations
asalami@felcor.com