FelCor Reports Fourth Quarter 2015 Earnings

Industry-leading full-year RevPAR growth of 8.1%

Implemented stock repurchase program

Increased common stock dividend by 50%

Began sale process for five hotels

IRVING, Texas--()--FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the fourth quarter ended December 31, 2015.

Fourth Quarter Highlights

  • Same-store RevPAR increased 5.4% over the same period in 2014.
  • Adjusted EBITDA was $50.0 million, and Same-store Adjusted EBITDA increased by $5.7 million, or 12.8%, to $50.4 million compared to the same period in 2014.
  • Hotel EBITDA increased 10.5% to $55.1 million over the same period in 2014.
  • Increased quarterly common dividend by 50% to $0.06 per share.
  • Repurchased 4.3 million shares of common stock for $29 million from December 2015 to date.
  • Began marketing five hotels, and entered into a letter of intent for Morgans and Royalton.
  • Adjusted FFO per share was $0.15.
  • Net loss per share was $0.07.

“We are pleased to have delivered industry-leading RevPAR growth in 2015 and for the last eight years. We have created a high-quality and diverse portfolio that we fully expect will continue to outperform the industry,” said Richard A. Smith, President and Chief Executive Officer of FelCor.

Mr. Smith added, “We are committed to maximizing long-term stockholder value, which includes eliminating the disparity between asset value and our stock price. As such, we recently began marketing five hotels for sale. The sale of these hotels will reduce leverage significantly, mitigate operational risk and provide substantial capacity to repurchase our stock at a significant discount to intrinsic value. We are making excellent progress executing our strategy, which will further benefit our long-term stockholders.”

 

Fourth Quarter Hotel Results

 
Fourth Quarter
  2015       2014     Change
Same-store hotels (39)
RevPAR $ 133.36 $ 126.57 5.4 %
Total hotel revenue, in millions $ 198.7 $ 185.0 7.4 %
Hotel EBITDA, in millions $ 55.1 $ 49.9 10.5 %
Hotel EBITDA margin 27.7 % 26.9 % 77 bps
 

RevPAR for our 39 same-store hotels increased 5.4% (to $133.36) from the same period in 2014. The change reflects a 2.0% increase in ADR (to $179.39) and a 3.3% increase in occupancy (to 74.3%). Hotel EBITDA for our 39 same-store hotels increased by 10.5% to $55.1 million and Hotel EBITDA margin was 27.7% during the quarter, a 77 basis point increase.

RevPAR for the eight Wyndham hotels (which we converted from Holiday Inn on March 1, 2013) increased 9.1% (to $119.23) from the same period in 2014. Wyndham Worldwide Corporation has guaranteed the minimum annual NOI for these hotels through 2023.

See pages 13-14 and 20-22 for more detailed hotel portfolio operating data.

 

Fourth Quarter Operating Results

 
Fourth Quarter
$ in millions, except for per share information   2015       2014   Change
Same-store Adjusted EBITDA $ 50.4 $ 44.6 12.8 %
Adjusted EBITDA $ 50.0 $ 49.4 1.2 %
Adjusted FFO per share $ 0.15 $ 0.15 $
Net income (loss) per share $ (0.07 ) $ $ (0.07 )
 

Same-store Adjusted EBITDA increased 12.8% to $50.4 million from the same period in 2014. Adjusted EBITDA was $50.0 million.

Adjusted FFO was $21.8 million ($0.15 per share), compared to $18.5 million ($0.15 per share) for the same period in 2014. Net loss attributable to common stockholders was $10.4 million ($0.07 per share) in 2015, compared to net income of $567,000 ($0.00 per share) for the same period in 2014. Net income in 2014 included $15.6 million of net gain on the sale of consolidated hotels.

Year-to-Date Operating Results

RevPAR for our 39 same-store hotels increased 8.1% (to $144.35) from the same period in 2014. The change reflects a 5.3% increase in ADR (to $185.62) and a 2.7% increase in occupancy (to 77.8%). Hotel EBITDA for our 39 same-store hotels increased 15.8% to $246.2 million, and Hotel EBITDA margin for these properties increased 188 basis points to 29.8%.

Same-store Adjusted EBITDA increased 18.0% to $228.2 million from the same period in 2014. Adjusted EBITDA (which includes Adjusted EBITDA from sold hotels) increased 6.3% to $234.7 million from the same period in 2014.

Adjusted FFO was $115.2 million ($0.83 per share), compared to $82.2 million ($0.65 per share) for the same period in 2014. Net loss attributable to common stockholders was $45.1 million ($0.33 per share) in 2015, compared to net income of $53.4 million ($0.43 per share) for the same period in 2014. Net loss in 2015 included $30.9 million in debt extinguishment charges and a $20.9 million impairment charge offset by a $20.1 million net gain on the sale of consolidated hotels (including discontinued operations) and a $7.1 million gain on sale of an unconsolidated joint venture. Net income in 2014 included $66.7 million of net gain on the sale of consolidated hotels, a $30.2 million gain on the sale of our interest in unconsolidated hotels, and a $20.7 million gain on the fair value remeasurement of previously unconsolidated hotels.

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 15 for a reconciliation of each of these measures to the most comparable GAAP financial measure and for information regarding the use, limitations and importance of these non-GAAP financial measures.

Capital Allocation

We continually strive to increase long-term stockholder value through prudent capital allocation. As part of this on-going pursuit, we look for opportunities to recycle capital that can be redeployed to strengthen our balance sheet and achieve higher returns.

Asset Sales

In 2015, we announced the next phase of our long-term strategic plan. As part of this plan, we are selling five of our hotels, including our three New York City properties. Given these hotels’ locations and quality, we expect to sell them for prices per key that reflect very attractive EBITDA multiples. We have agreed to sell the Holiday Inn Nashville Airport and received a letter of intent to sell two other hotels (Morgans and Royalton) at compelling prices. We are in discussions with potential buyers for the two remaining properties - The Knickerbocker and the Renaissance Esmeralda Indian Wells Resort & Spa.

Balance Sheet

As of December 31, 2015, we had $1.4 billion of consolidated debt bearing a 5.2% weighted-average interest rate and an eight-year weighted-average maturity. We had $59.8 million of cash and cash equivalents and $17.7 million of restricted cash.

“We continue creating a strong balance sheet that will enable us to thrive throughout lodging cycles. After completing planned asset sales, we expect our pro forma leverage will be below 4.0 times, down from 8.2 times in 2010. We have successfully extended our already best-in-class debt maturity profile. Excluding our line of credit, we have no significant maturities until 2022, and more than 90% of our debt is fixed, insulating us from rising rates,” said Michael C. Hughes, Executive Vice President and Chief Financial Officer of FelCor.

Stock Repurchase Program

In 2015, our Board approved a $100 million stock repurchase program, which we implemented in December. To-date, we have purchased 4.3 million shares for $29.0 million (at an average price of $6.68 per share). We intend to continue repurchasing our common stock while it trades at a significant discount to NAV and expect the $100 million program to increase in conjunction with the contemplated asset sales.

Common Dividend

During the fourth quarter, we increased our common stock dividend by 50% to $0.06 per share. Our Board of Directors will determine future quarterly common stock dividends based on funds available for distribution, reinvestment opportunities within our portfolio and taxable income, among other things.

Capital Expenditures

During the fourth quarter, we invested $15.6 million in capital improvements at our hotels. During 2015, we invested $85.7 million at our hotels, including $33.5 million at The Knickerbocker. During 2016, we plan to invest approximately $60 million in capital improvements and renovations as part of our long-term capital plan. In addition, we expect to invest approximately $15 million in redevelopment projects this year.

Outlook

We continue to expect that our RevPAR growth will exceed the industry average because of our high-quality and diverse portfolio, which is over-weighted to supply constrained markets with favorable demand trends.

Our outlook assumes that we sell the five hotels in 2016 that we are currently marketing. The low-end of our guidance assumes that we sell three hotels in the second quarter and the remaining two in the third quarter. The high-end of our guidance assumes that we sell all five hotels during the fourth quarter. Our outlook assumes Hotel EBITDA for the Wyndham hotels equals the amount guaranteed by Wyndham for 2016 (which corresponds to approximately $59 million of Hotel EBITDA).

For the year, we expect:

  • RevPAR for same-store hotels will increase 3.5-5.5%;
  • Adjusted EBITDA will be $238.0 million - $256.0 million;
  • Adjusted FFO per share will be $0.90 - $0.99;
  • Net income attributable to FelCor will be $35.6 million - $49.0 million; and
  • Interest expense, including our pro rata share from joint ventures, will be $77.0 million - $81.6 million.

The following table reconciles our Adjusted EBITDA outlook (in millions):

  Low   Middle   High
2015 Same-store Adjusted EBITDA (39 hotels) $ 228.2   $ 228.2   $ 228.2
Growth(a)   20.8       24.8       28.8  
Current Adjusted EBITDA (40 hotels) $ 249.0 $ 253.0 $ 257.0

2016 EBITDA lost from hotels to be sold(b)

  (11.0 )     (6.0 )     (1.0 )
2016 Adjusted EBITDA $ 238.0     $ 247.0     $ 256.0  
 
(a)   Includes The Knickerbocker.
(b) Adjusted EBITDA for the five hotels currently being marketed from their respective sale dates to December 31, 2016.
 

About FelCor

FelCor Lodging Trust Incorporated, a real estate investment trust (REIT), owns a diversified portfolio of primarily upper-upscale and luxury hotels that are located in major urban and resort markets throughout the U.S. FelCor partners with top hotel companies that operate its properties under globally renowned names and as premier independent hotels. Additional information can be found on the Company’s website at www.felcor.com.

We invite you to listen to our fourth quarter earnings Conference Call on Thursday, February 25, 2016 at 11:00 a.m. (Central Time). The conference call will be webcast simultaneously on FelCor’s website at www.felcor.com. Interested investors and other parties who wish to access the call can go to FelCor’s website and click on the conference call microphone icon on the “Investor Relations” 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, 2015.

TABLE OF CONTENTS

  Page

Consolidated Statements of Operations(a)

8

Consolidated Balance Sheets(a)

9

Consolidated Debt Summary

10

Schedule of Encumbered Hotels

11

Capital Expenditures

11

Total Enterprise Value

12

Hotel Operating Statistics

13

Historical Quarterly Operating Statistics

15

Non-GAAP Financial Measures

15

(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 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,
  2015       2014     2015       2014  
Revenues:
Hotel operating revenue:
Room $ 151,526 $ 157,177 $ 673,276 $ 713,213
Food and beverage 42,166 38,064 158,531 157,607
Other operating departments 11,871 10,990 46,564 47,161
Other revenue   741     436     7,883     3,606  
Total revenues   206,304     206,667     886,254     921,587  
Expenses:
Hotel departmental expenses:
Room 40,833 42,799 172,252 188,465
Food and beverage 31,953 28,281 123,384 121,201
Other operating departments 4,153 4,914 17,505 22,210
Other property related costs 52,967 54,239 223,546 238,170
Management and franchise fees 8,147 7,262 35,572 36,067
Taxes, insurance and lease expense 15,274 14,990 59,207 84,266
Corporate expenses 7,508 7,671 27,283 29,585
Depreciation and amortization 28,942 28,613 114,452 115,819
Impairment loss 20,861
Other expenses   1,033     4,078     12,479     17,952  
Total operating expenses   190,810     192,847     806,541     853,735  
Operating income 15,494 13,820 79,713 67,852
Interest expense, net (19,757 ) (19,051 ) (79,118 ) (90,695 )
Debt extinguishment (7 ) (30,909 ) (4,770 )
Gain on sale of investment in unconsolidated entities, net (8 ) 30,176
Gain from remeasurement of unconsolidated entities, net 4 20,737
Other gains, net           166     100  
Income (loss) before equity in income (loss) from unconsolidated entities (4,263 ) (5,242 ) (30,148 ) 23,400
Equity in income (loss) from unconsolidated entities   (150 )   254     7,833     5,010  
Income (loss) from continuing operations before income tax expense (4,413 ) (4,988 ) (22,315 ) 28,410
Income tax expense   147     (180 )   (1,245 )   (660 )
Income (loss) from continuing operations (4,266 ) (5,168 ) (23,560 ) 27,750
Income (loss) from discontinued operations   250     (492 )   669     (360 )
Income (loss) before gain on sale of property (4,016 ) (5,660 ) (22,891 ) 27,390
Gain (loss) on sale of property, net   (65 )   16,123     19,426       66,762  
Net income (loss) (4,081 ) 10,463 (3,465 ) 94,152
Net loss (income) attributable to noncontrolling interests in other partnerships 248 133 (4,157 ) (697 )
Net loss (income) attributable to redeemable noncontrolling interests in FelCor LP 44 (2 ) 194 (137 )
Preferred distributions - consolidated joint venture   (367 )   (349 )   (1,437 )   (1,219 )
Net income (loss) attributable to FelCor (4,156 ) 10,245 (8,865 ) 92,099
Preferred dividends (6,278 ) (9,678 ) (30,138 ) (38,712 )
Redemption of preferred stock           (6,096 )    
Net income (loss) attributable to FelCor common stockholders $ (10,434 ) $ 567   $ (45,099 ) $ 53,387  
Basic and diluted per common share data:
Income (loss) from continuing operations $ (0.07 ) $ 0.01   $ (0.33 ) $ 0.43  
Net income (loss) $ (0.07 ) $   $ (0.33 ) $ 0.43  
Basic weighted average common shares outstanding   142,823     124,188     137,730     124,158  
Diluted weighted average common shares outstanding   142,823     125,146     137,730     124,892  
   
Consolidated Balance Sheets

(in thousands)

 
December 31, December 31,
  2015     2014  
Assets
Investment in hotels, net of accumulated depreciation of $899,575 and $850,687 at December 31, 2015 and 2014, respectively $ 1,729,531 $ 1,599,791
Hotel development 297,466
Investment in unconsolidated entities 9,575 15,095
Hotels held for sale 47,145
Cash and cash equivalents 59,786 47,147
Restricted cash 17,702 20,496
Accounts receivable, net of allowance for doubtful accounts of $204 and $241 at December 31, 2015 and 2014, respectively 28,136 27,805
Deferred expenses, net of accumulated amortization of $8,230 and $17,111 at December 31, 2015 and 2014, respectively 24,455 25,827
Other assets   14,792     23,886  
Total assets $ 1,883,977   $ 2,104,658  
Liabilities and Equity
Debt $ 1,427,954 $ 1,585,867
Distributions payable 15,140 13,827
Accrued expenses and other liabilities   125,274     135,481  
Total liabilities   1,568,368     1,735,175  
Commitments and contingencies
Redeemable noncontrolling interests in FelCor LP, 611 units issued and outstanding at December 31, 2015 and 2014   4,464     6,616  
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, 2015 and 2014 309,337 309,337
Series C Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,950, issued and outstanding at December 31, 2014 169,412
Common stock, $0.01 par value, 200,000 shares authorized; 141,808 and 124,605 shares issued and outstanding at December 31, 2015 and 2014, respectively 1,418 1,246
Additional paid-in capital 2,567,515 2,353,666
Accumulated deficit   (2,618,117 )   (2,530,671 )
Total FelCor stockholders’ equity 260,153 302,990
Noncontrolling interests in other partnerships 7,806 18,435
Preferred equity in consolidated joint venture, liquidation value of $43,954 and $42,094 at December 31, 2015 and 2014, respectively   43,186     41,442  
Total equity   311,145     362,867  
Total liabilities and equity $ 1,883,977   $ 2,104,658  
       
Consolidated Debt Summary

(dollars in thousands)

 
      December 31,

Encumbered
Hotels

Interest
Rate (%)

Maturity Date 2015     2014
Senior unsecured notes 6.00 June 2025 $ 475,000 $
Senior secured notes 9 5.625 March 2023 525,000 525,000
Mortgage debt(a) 4 4.95 October 2022 122,237 124,278
Mortgage debt 1 4.94 October 2022 30,717 31,228
Line of credit(b) 7 LIBOR + 2.75 June 2019 190,000
Knickerbocker loan(c) 1 LIBOR + 3.00 November 2017 85,000 64,861
Retired debt       840,500
Total 22 $ 1,427,954   $ 1,585,867
 
(a)   This debt is comprised of separate non-cross-collateralized loans, each secured by a mortgage encumbering different hotels.
 
(b) Our line of credit can be extended for one year, subject to satisfying certain conditions. We may borrow up to $400 million under our line of credit.
 
(c) This loan can be extended for one year, subject to satisfying certain conditions. At December 31, 2014, $6.3 million of this loan was secured by cash collateral with an interest rate of LIBOR + 1.25%.
   
Schedule of Encumbered Hotels

(dollars in millions)

 
Consolidated December 31, 2015
Debt Balance Encumbered Hotels
Senior secured notes (5.625%)   $ 525   Atlanta Buckhead - ES, Boston Marlboro - ES, Burlington - SH, Dallas Love Field - ES, Milpitas - ES, Myrtle Beach Resort - HIL, Orlando South - ES, Philadelphia Society Hill - SH and SF South San Francisco - ES
Mortgage debt $ 27 Napa Valley - ES
Mortgage debt $ 35 Ft. Lauderdale - ES
Mortgage debt $ 23 Birmingham - ES
Mortgage debt $ 37 Minneapolis Airport - ES
Mortgage debt $ 31 Deerfield Beach - ES
Line of credit $ 190 Austin - DTG, Boston Copley - FM, Charleston Mills House - WYN, LA LAX S - ES, Santa Monica at the Pier - WYN, SF Union Square - MAR and St. Petersburg Vinoy - REN
Knickerbocker loan $ 85 The Knickerbocker
   
Capital Expenditures

(in thousands)

 
Three Months Ended Year Ended
December 31, December 31,
  2015       2014     2015       2014  
Improvements and additions to majority-owned hotels $ 12,458 $ 18,117 $ 48,436 $ 83,664
Partners’ pro rata share of additions to consolidated joint venture hotels (17 ) (27 ) (47 ) (308 )
Pro rata share of additions to unconsolidated hotels   1,231     528     3,791     2,412  
Total additions to hotels(a) $ 13,672   $ 18,618   $ 52,180   $ 85,768  
 
(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,
    2015       2014  
Common shares outstanding 141,808 124,605
Units outstanding   611     611  
Combined shares and units outstanding 142,419 125,216
Common stock price $ 7.30   $ 10.82  
Market capitalization $ 1,039,659 $ 1,354,837
Series A preferred stock(a) 309,337 309,337
Series C preferred stock(a) 169,412
Preferred equity - Knickerbocker joint venture, net 41,027 39,370
Consolidated debt 1,427,954 1,585,867
Noncontrolling interests of consolidated debt (4,250 ) (2,928 )
Pro rata share of unconsolidated debt 11,433 17,096
Hotel development(b) (297,466 )
Cash, cash equivalents and restricted cash(c)   (77,488 )   (67,643 )
Total enterprise value (TEV) $ 2,747,672   $ 3,107,882  
 
(a)   Book value based on issue price.
 
(b) The Knickerbocker investment was placed in service during 2015.
 
(c) For 2014, restricted cash included $6.3 million of cash fully securing $6.3 million of outstanding debt assumed when we purchased The Knickerbocker.
 

Hotel Operating Statistics

 
  Occupancy (%)   ADR ($)   RevPar ($)
Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31,
Same-store Hotels 2015   2014   %Change   2015   2014   %Change   2015   2014   %Change  
Embassy Suites Atlanta-Buckhead 77.9 74.1 5.2 141.29 137.71 2.6 110.09 102.02 7.9
DoubleTree Suites by Hilton Austin 77.3 78.2 (1.1 ) 225.85 220.76 2.3 174.67 172.72 1.1
Embassy Suites Birmingham 77.6 77.7 (0.2 ) 134.05 132.58 1.1 103.96 103.04 0.9
The Fairmont Copley Plaza, Boston 69.4 70.1 (1.0 ) 337.29 322.99 4.4 234.04 226.48 3.3
Wyndham Boston Beacon Hill 71.3 74.2 (3.8 ) 225.58 220.68 2.2 160.94 163.65 (1.7 )
Embassy Suites Boston-Marlborough 69.6 64.2 8.3 172.41 164.21 5.0 119.98 105.47 13.8
Sheraton Burlington Hotel & Conference Center 79.1 71.6 10.4 108.59 119.30 (9.0 ) 85.91 85.46 0.5
The Mills House Wyndham Grand Hotel, Charleston 74.6 80.2 (7.0 ) 214.07 200.99 6.5 159.70 161.22 (0.9 )
Embassy Suites Dallas-Love Field 79.3 83.3 (4.8 ) 136.25 125.53 8.5 108.10 104.57 3.4
Embassy Suites Deerfield Beach-Resort & Spa 77.7 74.0 5.0 187.41 181.15 3.5 145.67 134.11 8.6
Embassy Suites Fort Lauderdale 17th Street 84.0 83.5 0.6 164.25 150.61 9.1 137.97 125.70 9.8
Wyndham Houston-Medical Center Hotel & Suites 80.9 65.4 23.7 146.83 149.00 (1.5 ) 118.81 97.47 21.9
Renaissance Esmeralda Indian Wells Resort & Spa 51.6 43.3 19.2 162.46 177.59 (8.5 ) 83.80 76.82 9.1
Embassy Suites Los Angeles-International Airport/South 77.5 67.9 14.1 150.68 143.85 4.8 116.71 97.63 19.6
Embassy Suites Mandalay Beach-Hotel & Resort 70.9 67.5 5.2 186.04 182.09 2.2 131.98 122.85 7.4
Embassy Suites Miami-International Airport 85.7 84.4 1.6 151.60 148.60 2.0 129.90 125.35 3.6
Embassy Suites Milpitas-Silicon Valley 79.1 75.5 4.7 191.93 176.82 8.5 151.76 133.48 13.7
Embassy Suites Minneapolis-Airport 74.5 68.8 8.3 144.55 142.95 1.1 107.72 98.36 9.5
Embassy Suites Myrtle Beach-Oceanfront Resort 66.1 66.4 (0.4 ) 116.71 120.15 (2.9 ) 77.16 79.72 (3.2 )
Hilton Myrtle Beach Resort 44.7 45.6 (2.1 ) 99.74 99.17 0.6 44.56 45.24 (1.5 )
Embassy Suites Napa Valley 84.6 80.9 4.6 224.13 217.17 3.2 189.52 175.62 7.9
Holiday Inn Nashville Airport 69.7 66.2 5.3 110.03 96.74 13.7 76.65 64.03 19.7
Wyndham New Orleans-French Quarter 74.0 67.0 10.5 147.77 157.26 (6.0 ) 109.34 105.35 3.8
Morgans New York 86.2 91.1 (5.4 ) 318.76 315.61 1.0 274.63 287.38 (4.4 )
Royalton New York 89.7 91.3 (1.7 ) 343.46 357.58 (3.9 ) 308.22 326.33 (5.5 )
Embassy Suites Orlando-International Drive South/Convention Center 81.6 83.4 (2.1 ) 141.86 143.05 (0.8 ) 115.80 119.24 (2.9 )
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 90.7 86.6 4.7 146.75 133.89 9.6 133.04 115.97 14.7
Wyndham Philadelphia Historic District 63.2 53.6 17.8 162.07 148.86 8.9 102.41 79.83 28.3
Sheraton Philadelphia Society Hill Hotel 69.3 61.6 12.6 177.81 174.98 1.6 123.18 107.71 14.4
Embassy Suites Phoenix-Biltmore 67.5 70.8 (4.7 ) 176.23 161.23 9.3 118.92 114.13 4.2
Wyndham Pittsburgh University Center 62.8 61.2 2.5 144.02 140.10 2.8 90.40 85.81 5.3
Wyndham San Diego Bayside 70.3 71.5 (1.7 ) 141.20 119.87 17.8 99.20 85.69 15.8
Embassy Suites San Francisco Airport-South San Francisco 86.0 84.2 2.2 193.41 183.77 5.2 166.35 154.67 7.5
Embassy Suites San Francisco Airport-Waterfront 85.3 80.2 6.3 196.16 190.39 3.0 167.25 152.72 9.5
Holiday Inn San Francisco-Fisherman’s Wharf 82.0 79.4 3.4 191.05 199.63 (4.3 ) 156.72 158.42 (1.1 )
San Francisco Marriott Union Square 83.1 85.8 (3.2 ) 282.69 277.20 2.0 234.97 237.94 (1.2 )
Wyndham Santa Monica At the Pier 75.0 74.6 0.6 237.38 226.86 4.6 178.05 169.17 5.2
Embassy Suites Secaucus-Meadowlands 75.0 81.6 (8.0 ) 183.96 183.36 0.3 138.02 149.59 (7.7 )
The Vinoy Renaissance St. Petersburg Resort & Golf Club 77.4 80.0 (3.2 ) 201.45 192.17 4.8   155.89 153.64 1.5  
Same-store Hotels 74.3 72.0 3.3   179.39 175.83 2.0   133.36 126.57 5.4  
 

Hotel Operating Statistics

 
  Occupancy (%)   ADR ($)   RevPar ($)
Year Ended December 31, Year Ended December 31, Year Ended December 31,
Same-store Hotels 2015   2014   %Change   2015   2014   %Change   2015   2014   %Change  
Embassy Suites Atlanta-Buckhead 79.5 77.2 3.1 147.51 141.85 4.0 117.30 109.44 7.2
DoubleTree Suites by Hilton Austin 81.8 79.9 2.4 221.63 214.22 3.5 181.35 171.17 5.9
Embassy Suites Birmingham 79.0 76.6 3.1 134.07 130.37 2.8 105.86 99.82 6.1
The Fairmont Copley Plaza, Boston 75.5 74.4 1.5 326.70 307.77 6.1 246.81 229.14 7.7
Wyndham Boston Beacon Hill 79.2 80.0 (1.1 ) 234.42 211.48 10.8 185.60 169.24 9.7
Embassy Suites Boston-Marlborough 74.9 72.1 3.9 171.10 160.00 6.9 128.20 115.39 11.1
Sheraton Burlington Hotel & Conference Center 75.2 69.0 9.1 116.52 125.56 (7.2 ) 87.64 86.57 1.2
The Mills House Wyndham Grand Hotel, Charleston 81.1 82.3 (1.4 ) 222.42 195.66 13.7 180.45 161.06 12.0
Embassy Suites Dallas-Love Field 87.9 80.8 8.8 132.52 124.86 6.1 116.42 100.84 15.5
Embassy Suites Deerfield Beach-Resort & Spa 80.2 78.0 2.9 200.97 193.57 3.8 161.22 150.96 6.8
Embassy Suites Fort Lauderdale 17th Street 84.8 83.8 1.2 165.76 150.69 10.0 140.55 126.22 11.4
Wyndham Houston-Medical Center Hotel & Suites 81.5 72.1 12.9 150.80 147.18 2.5 122.87 106.19 15.7
Renaissance Esmeralda Indian Wells Resort & Spa 55.8 54.9 1.7 187.54 191.10 (1.9 ) 104.74 104.98 (0.2 )
Embassy Suites Los Angeles-International Airport/South 81.3 80.1 1.5 159.93 145.73 9.7 129.98 116.68 11.4
Embassy Suites Mandalay Beach-Hotel & Resort 78.0 78.8 (1.0 ) 212.81 195.11 9.1 165.97 153.69 8.0
Embassy Suites Miami-International Airport 88.3 87.1 1.4 151.72 147.80 2.7 133.98 128.77 4.0
Embassy Suites Milpitas-Silicon Valley 82.4 79.0 4.3 195.17 175.18 11.4 160.88 138.40 16.2
Embassy Suites Minneapolis-Airport 77.1 78.7 (2.0 ) 150.93 148.04 2.0 116.38 116.52 (0.1 )
Embassy Suites Myrtle Beach-Oceanfront Resort 74.4 72.3 2.9 172.30 173.53 (0.7 ) 128.12 125.46 2.1
Hilton Myrtle Beach Resort 64.1 62.7 2.4 140.45 136.67 2.8 90.09 85.65 5.2
Embassy Suites Napa Valley 83.8 80.1 4.6 232.95 219.99 5.9 195.12 176.22 10.7
Holiday Inn Nashville Airport 66.7 69.5 (4.1 ) 111.10 97.82 13.6 74.07 67.98 9.0
Wyndham New Orleans-French Quarter 68.9 61.6 11.7 150.70 149.39 0.9 103.77 92.06 12.7
Morgans New York 82.4 89.3 (7.8 ) 282.65 287.21 (1.6 ) 232.79 256.57 (9.3 )
Royalton New York 86.7 86.9 (0.2 ) 303.39 322.97 (6.1 ) 263.02 280.52 (6.2 )
Embassy Suites Orlando-International Drive South/Convention Center 83.9 84.3 (0.5 ) 146.67 144.13 1.8 122.99 121.48 1.2
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 89.4 86.6 3.2 139.63 132.90 5.1 124.89 115.15 8.5
Wyndham Philadelphia Historic District 64.3 63.9 0.7 160.43 129.41 24.0 103.22 82.68 24.8
Sheraton Philadelphia Society Hill Hotel 69.0 69.7 (1.0 ) 174.72 164.54 6.2 120.54 114.69 5.1
Embassy Suites Phoenix-Biltmore 71.4 71.3 0.1 175.83 157.98 11.3 125.60 112.71 11.4
Wyndham Pittsburgh University Center 71.1 68.9 3.3 145.55 138.17 5.3 103.53 95.18 8.8
Wyndham San Diego Bayside 78.1 73.4 6.4 147.63 126.05 17.1 115.33 92.55 24.6
Embassy Suites San Francisco Airport-South San Francisco 88.4 83.6 5.8 200.69 189.29 6.0 177.46 158.26 12.1
Embassy Suites San Francisco Airport-Waterfront 86.4 75.9 13.9 207.60 191.67 8.3 179.35 145.44 23.3
Holiday Inn San Francisco-Fisherman’s Wharf 86.2 82.9 4.0 208.90 200.65 4.1 180.10 166.32 8.3
San Francisco Marriott Union Square 86.8 87.6 (0.8 ) 288.45 275.03 4.9 250.49 240.80 4.0
Wyndham Santa Monica At the Pier 83.9 83.0 1.1 255.40 242.91 5.1 214.26 201.64 6.3
Embassy Suites Secaucus-Meadowlands 76.0 78.4 (3.0 ) 184.97 185.36 (0.2 ) 140.57 145.24 (3.2 )
The Vinoy Renaissance St. Petersburg Resort & Golf Club 81.9 81.2 0.8   210.49 195.98 7.4   172.39 159.21 8.3  
Same-store Hotels 77.8 75.8 2.7   185.62 176.24 5.3   144.35 133.51 8.1  
 

Historical Quarterly Operating Statistics

 
Occupancy (%)
Q4 2014   Q1 2015   Q2 2015   Q3 2015   Q4 2015
Same-store hotels(a) 72.0 74.7 81.1 80.8 74.3
 
ADR ($)
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Same-store hotels(a) 175.83 181.65 190.42 190.19 179.39
 
RevPAR ($)
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Same-store hotels(a) 126.57 135.78 154.48 153.70 133.36
 
(a)   Includes 39 consolidated hotels, excluding 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,
2015     2014  
Dollars   Shares  

Per
Share
Amount

Dollars   Shares  

Per
Share
Amount

Net income (loss) $ (4,081 ) $ 10,463
Noncontrolling interests 292 131
Preferred dividends (6,278 ) (9,678 )
Preferred distributions - consolidated joint venture   (367 )   (349 )
Net income (loss) attributable to FelCor common stockholders (10,434 ) 567
Less: Dividends declared on unvested restricted stock   (16 )   (3 )
Basic earnings per share data (10,450 ) 142,823 $ (0.07 ) 564 124,188 $
Restricted stock units             958  
Diluted earnings per share data (10,450 ) 142,823 (0.07 ) 564 125,146
Depreciation and amortization 28,942 0.20 28,613 0.23
Depreciation, unconsolidated entities and other partnerships 480 496
Gain on sale of hotel in unconsolidated entity (14 )
Gain on sale of hotels, net of noncontrolling interests in other partnerships (165 ) (15,682 ) (0.13 )
Gain on sale of investment in unconsolidated entities, net 8
Gain from remeasurement of unconsolidated entities (4 )
Noncontrolling interests in FelCor LP (44 ) 611 2 611 0.01
Dividends declared on unvested restricted stock 16 3
Conversion of unvested restricted stock and units     613         7  
FFO 18,765 144,047 0.13 14,000 125,764 0.11
Hurricane and earthquake loss 348
Debt extinguishment 7
Debt extinguishment, unconsolidated entities 13
Severance costs 43 99
Lease adjustment 1,628 0.01
Abandoned projects 320
Variable stock compensation 959 0.01 1,103 0.01
Pre-opening costs, net of noncontrolling interests   110         2,925   0.03  
Adjusted FFO $ 21,825   144,047 $ 0.15   $ 18,495   125,764 $ 0.15  
 
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)

 
Year Ended December 31,
2015   2014  
Dollars   Shares  

Per
Share
Amount

Dollars   Shares  

Per
Share
Amount

Net income (loss) $ (3,465 ) $ 94,152
Noncontrolling interests (3,963 ) (834 )
Preferred distributions - consolidated joint venture (1,437 ) (1,219 )
Redemption of preferred stock (6,096 )
Preferred dividends   (30,138 )   (38,712 )
Net income (loss) attributable to FelCor common stockholders (45,099 ) 53,387
Less: Dividends declared on unvested restricted stock (56 ) (8 )
Less: Undistributed earnings allocated to unvested restricted stock       (20 )
Basic earnings per share data (45,155 ) 137,730 $ (0.33 ) 53,359 124,158 $ 0.43
Restricted stock units           734    
Diluted earnings per share data (45,155 ) 137,730 (0.33 ) 53,359 124,892 0.43
Depreciation and amortization 114,452 0.83 115,819 0.93
Depreciation, unconsolidated entities and other partnerships 2,211 0.02 6,891 0.06
Gain on sale of investment in unconsolidated entities, net (30,176 ) (0.24 )
Gain from remeasurement of unconsolidated entities (20,737 ) (0.17 )
Other gains, net (100 ) (100 )
Impairment loss 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 (15,096 ) (0.12 ) (65,453 ) (0.52 )
Noncontrolling interests in FelCor LP (194 ) 611 137 614 (0.01 )
Dividends declared on unvested restricted stock 56 8
Conversion of unvested restricted stock and units     492     20   5    
FFO 69,909 138,833 0.50 59,768 125,511 0.48
Hurricane and earthquake loss 348
Debt extinguishment, including discontinued operations, net of noncontrolling interests 30,909 0.22 4,850 0.03
Debt extinguishment, unconsolidated entities 330 168
Severance costs 3,667 0.03 928 0.01
Abandoned projects 320
Variable stock compensation 798 0.01 2,723 0.02
Redemption of preferred stock 6,096 0.05
Contract dispute contingency 5,850 0.05
Contract dispute recovery (3,717 ) (0.03 )
Pre-opening costs, net of noncontrolling interests 5,235 0.04 7,530 0.06
Lease adjustment   1,628     0.01        
Adjusted FFO $ 115,175   138,833 $ 0.83 $ 82,165   125,511 $ 0.65  
   
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,
  2015       2014     2015       2014  
Net income (loss) $ (4,081 ) $ 10,463 $ (3,465 ) $ 94,152
Depreciation and amortization 28,942 28,613 114,452 115,819
Depreciation, unconsolidated entities and other partnerships 480 496 2,211 6,891
Interest expense 19,764 19,058 79,142 90,743
Interest expense, discontinued operations and unconsolidated entities 82 216 521 1,896
Income taxes (147 ) 1,245
Noncontrolling interests in preferred distributions, consolidated joint venture (71 ) (71 )
Noncontrolling interests in other partnerships   248     133     (4,157 )   (697 )
EBITDA 45,217 58,979 189,878 308,804
Impairment loss 20,861
Hurricane and earthquake loss 348 348
Debt extinguishment, including discontinued operations, net of noncontrolling interests 7 30,909 4,850
Debt extinguishment, unconsolidated entities 13 330 168
Gain on sale of hotel in unconsolidated entity (14 ) (7,126 )
Gain on sale of hotels, net of noncontrolling interests in other partnerships (165 ) (15,682 ) (15,096 ) (65,453 )
Gain on sale of investment in unconsolidated entities, net 8 (30,176 )
Gain from remeasurement of unconsolidated entities (4 ) (20,737 )
Other gains, net (100 ) (100 )
Amortization of fixed stock and directors’ compensation 1,907 1,631 7,121 6,122
Severance costs 43 99 3,667 928
Lease adjustment 1,628 1,628
Abandoned projects 320 320
Variable stock compensation 959 1,103 798 2,723
Contract dispute contingency 5,850
Contract dispute recovery (3,717 )
Pre-opening costs, net of noncontrolling interests   110     2,925     5,235     7,530  
Adjusted EBITDA 50,005 49,427 234,708 220,857
Adjusted EBITDA from hotels disposed, held for sale and recently opened   359     (4,778 )   (6,488 )   (27,509 )
Same-store Adjusted EBITDA $ 50,364   $ 44,649   $ 228,220   $ 193,348  
   
Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)

 
Three Months Ended Year Ended
December 31, December 31,
  2015       2014     2015       2014  
Same-store operating revenue:
Room $ 146,516 $ 139,061 $ 629,186 $ 581,932
Food and beverage 40,415 35,622 150,950 136,588
Other operating departments   11,808     10,357     45,655     42,352  
Same-store operating revenue(a) 198,739 185,040 825,791 760,872
Same-store operating expense:
Room 39,064 37,863 159,095 152,782
Food and beverage 29,598 26,562 114,673 105,565
Other operating departments 4,135 4,558 17,140 19,678
Other property related costs 50,478 47,726 205,846 191,107
Management and franchise fees 8,003 6,233 33,341 28,726
Taxes, insurance and lease expense   12,383     12,242     49,539     50,474  
Same-store operating expense(a)   143,661     135,184     579,634     548,332  
Hotel EBITDA $ 55,078   $ 49,856   $ 246,157   $ 212,540  
Hotel EBITDA Margin 27.7 % 26.9 % 29.8 % 27.9 %
 
(a)   Excludes The Knickerbocker, which opened in February 2015.
   

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

 

 

Year Ended December 31, 2015

Same-store Hotels

2015 Hotel
Operating
Revenue

 

Net Income
(Loss)

 

Other
Adjustments

  Depreciation  

Interest
Expense

 

2015 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 2 1,567 1,208 3,709 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 1,163 4,000 33.1 %
Sheraton Burlington Hotel & Conference Center 14,486 1,792 2,416 4,208 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 12,122 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 2 2,939 1,817 7,290 32.6 %
Wyndham Houston-Medical Center Hotel & Suites 14,401 3,941 (70 ) 2,164 214 6,249 43.4 %
Renaissance Esmeralda Indian Wells Resort & Spa 41,003 (18,554 )

20,863

(1)

3,569 5,878 14.3 %
Embassy Suites Los Angeles-International Airport/South 19,925 4,896 2,610 636 8,142 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 1,230 7,075 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 25 2,854 376 6,332 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 %
Holiday Inn Nashville Airport 12,686 321 12 2,492 2,825 22.3 %
Wyndham New Orleans-French Quarter 16,627 3,586 537 2,852 529 7,504 45.1 %
Morgans New York 10,345 (2,281 ) 2,482 201 1.9 %
Royalton New York 20,874 (1,388 ) 2,270 882 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 17 3,087 293 5,528 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 (220 )

1,644

(2)

2,119 256 3,799 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) 2,979 9,309 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

1,061

(4)

5,655 2,472 14,886 35.2 %
Wyndham Santa Monica At the Pier 11,293 3,962 24 1,137 812 5,935 52.6 %
Embassy Suites Secaucus-Meadowlands(a) 14,127 2,508 6 722 3,236 22.9 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club   54,703   4,622     2     5,790   927   11,341 20.7 %
$ 825,791 $ 100,168   $ 20,722   $ 107,407 $ 17,860 $ 246,157 29.8 %
 
*Footnotes on Page 22

 

Year Ended December 31, 2014

 

Same-store Hotels

2014 Hotel
Operating
Revenue

 

Net Income
(Loss)

 

Other
Adjustments

  Depreciation  

Interest
Expense

 

2014 Hotel
EBITDA

Hotel EBITDA
Margin

Embassy Suites Atlanta-Buckhead $ 13,898 $ 2,972 $ $ 2,727 $ $ 5,699 41.0 %
DoubleTree Suites by Hilton Austin 13,934 4,077 9 1,949 139 6,174 44.3 %
Embassy Suites Birmingham 9,493 554 1 1,682 1,227 3,464 36.5 %
The Fairmont Copley Plaza, Boston 53,447 1,431 8,577 10,008 18.7 %
Wyndham Boston Beacon Hill 21,236 4,251 4,084 8,335 39.2 %
Embassy Suites Boston-Marlborough 10,982 2,173 1,311 3,484 31.7 %
Sheraton Burlington Hotel & Conference Center 14,840 2,227 1,972 4,199 28.3 %
The Mills House Wyndham Grand Hotel, Charleston 17,252 3,739 2,247 866 6,852 39.7 %
Embassy Suites Dallas-Love Field 10,501 1,772 1,278 3,050 29.0 %
Embassy Suites Deerfield Beach-Resort & Spa 17,249 1,672 (1 ) 2,722 1,640 6,033 35.0 %
Embassy Suites Fort Lauderdale 17th Street 20,124 1,133 1 3,129 1,846 6,109 30.4 %
Wyndham Houston-Medical Center Hotel & Suites 12,394 2,849 (88 ) 2,169 540 5,470 44.1 %
Renaissance Esmeralda Indian Wells Resort & Spa 38,881 1,326 2 3,327 4,655 12.0 %
Embassy Suites Los Angeles-International Airport/South 18,091 4,429 2,507 6,936 38.3 %
Embassy Suites Mandalay Beach-Hotel & Resort 18,645 2,515 3,273 956 6,744 36.2 %
Embassy Suites Miami-International Airport 18,186 1,904 2,161 796 4,861 26.7 %
Embassy Suites Milpitas-Silicon Valley 15,825 4,181 1,513 5,694 36.0 %
Embassy Suites Minneapolis-Airport 13,864 1,305 1 1,908 1,950 5,164 37.2 %
Embassy Suites Myrtle Beach-Oceanfront Resort 21,425 2,343 (1 ) 3,095 424 5,861 27.4 %
Hilton Myrtle Beach Resort 19,721 2,852 3,503 6,355 32.2 %
Embassy Suites Napa Valley 15,434 2,255 349 2,071 1,426 6,101 39.5 %
Holiday Inn Nashville Airport 11,772 196 2,004 2,200 18.7 %
Wyndham New Orleans-French Quarter 13,795 2,965 2,092 477 5,534 40.1 %
Morgans New York 11,351 (1,716 ) 243 2,367 894 7.9 %
Royalton New York 22,542 (134 ) 371 2,182 2,419 10.7 %
Embassy Suites Orlando-International Drive South/Convention Center 10,923 2,379 1,291 3,670 33.6 %
DoubleTree Suites by Hilton Orlando-Lake Buena Vista 11,725 (367 ) 3,316 2,949 25.2 %
Wyndham Philadelphia Historic District 13,863 (606 ) 3,077 737 3,208 23.1 %
Sheraton Philadelphia Society Hill Hotel 24,846 2,171 4,249 6,420 25.8 %
Embassy Suites Phoenix-Biltmore 10,053 557 6 2,153 563 3,279 32.6 %
Wyndham Pittsburgh University Center 10,912 201 2,127 644 2,972 27.2 %
Wyndham San Diego Bayside 25,291 (403 ) 5,680 5,277 20.9 %
Embassy Suites San Francisco Airport-South San Francisco 21,661 5,996 1,726 7,722 35.6 %
Embassy Suites San Francisco Airport-Waterfront 21,936 (1,283 )

5,850

(5)

2,585 7,152 32.6 %
Holiday Inn San Francisco-Fisherman’s Wharf 39,736 5,544 1,220 6,764 17.0 %
San Francisco Marriott Union Square 40,526 5,435 (102 ) 5,739 1,054 12,126 29.9 %
Wyndham Santa Monica At the Pier 10,603 3,473 1,056 936 5,465 51.5 %
Embassy Suites Secaucus-Meadowlands(a) 14,560 3,212 (11 ) 742 3,943 27.1 %
The Vinoy Renaissance St. Petersburg Resort & Golf Club   49,355   2,790     1   6,507       9,298 18.8 %
$ 760,872 $ 82,370   $ 6,631   $ 107,318   $ 16,221 $ 212,540 27.9 %
*Footnotes on Page 22
 
 
The following are footnotes to the Hotel EBITDA tables on page 20 and 21:
 
(1) Amount primarily represents an impairment resulting from a reduced estimated hold period for this hotel.
 
(2)

Amount represents an adjustment to straight-line lease expense from prior years for a ground lease associated with this hotel.

 
(3) Amount represents net revenue attributable to a favorable settlement of a commercial contract dispute.
 
(4) Amount primarily represents debt extinguishment charges.
 
(5) Amount represents charges incurred for a commercial contract dispute contingency, a portion of which was recovered in 2015.
   
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,
  2015       2014     2015       2014  
Same-store operating revenue $ 198,739 $ 185,040 $ 825,791 $ 760,872
Other revenue 741 436 7,883 3,606
Revenue from hotels disposed, held for sale and recently opened(a)   6,824     21,191     52,580     157,109  
Total revenue 206,304 206,667 886,254 921,587
Same-store operating expense 143,661 135,184 579,634 548,332
Consolidated hotel lease expense(b) 1,345 2,412 7,107 31,635
Unconsolidated taxes, insurance and lease expense (512 ) (817 ) (2,194 ) (6,163 )
Lease adjustment 1,628 1,628
Corporate expenses 7,508 7,671 27,283 29,585
Depreciation and amortization 28,942 28,613 114,452 115,819
Impairment loss 20,861
Expenses from hotels disposed, held for sale and recently opened(a) 7,205 15,706 45,291 116,575
Other expenses   1,033     4,078     12,479     17,952  
Total operating expense   190,810     192,847     806,541     853,735  
Operating income $ 15,494   $ 13,820   $ 79,713   $ 67,852  
 
(a) Under GAAP accounting guidance adopted in 2014, we include the operating performance for hotels in continuing operations in our Consolidated Statements of Operations. However, for purposes of our Non-GAAP reporting metrics, we have excluded the results of these hotels to provide a meaningful same-store comparison.
(b) Consolidated hotel lease expense represents the percentage lease expense of our 51% owned operating lessees. The offsetting percentage lease revenue is included in equity in income from unconsolidated entities.
 
Reconciliation of Forecasted Net Income Attributable to FelCor to Forecasted Adjusted FFO
and Adjusted EBITDA

(in millions, except per share data)

 
Full Year 2016 Guidance
Low   High
Dollars  

Per Share
Amount(a)

Dollars  

Per Share
Amount(a)

Net income attributable to FelCor(b) $ 35.6 $ 49.0
Preferred dividends   (25.1 )   (25.1 )
Net income attributable to FelCor common stockholders 10.5 $ 0.07 23.9 $ 0.17
Depreciation(c) 115.2 115.2
Noncontrolling interests in FelCor LP   0.7     0.7  
FFO and Adjusted FFO $ 126.4   $ 0.90 $ 139.8   $ 0.99
 
Net income attributable to FelCor(b) $ 35.6 $ 49.0
Depreciation(c) 115.2 115.2
Interest expense(c) 77.0 81.6
Income taxes 1.2 1.2
Preferred distributions - consolidated joint venture 1.1 1.1
Noncontrolling interests in FelCor LP   0.7     0.7  
EBITDA $ 230.8 $ 248.8
Amortization of stock compensation   7.2     7.2  
Adjusted EBITDA $ 238.0   $ 256.0  
 
(a) Weighted average shares are 141.0 million.
(b) Excludes any gains or losses on future asset or capital transactions.
(c) Includes pro rata portion of unconsolidated entities.
 

Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company’s operations. These supplemental measures are not measures of operating performance under GAAP. However, we consider these non-GAAP measures to be supplemental measures of a hotel REIT’s performance and should be considered along with, but not as an alternative to, net income (loss) attributable to FelCor as a measure of our operating performance.

FFO and EBITDA

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations (“FFO”) as net income or loss attributable to parent (computed in accordance with GAAP), excluding gains or losses from sales of property, plus depreciation, amortization and impairment losses. FFO for unconsolidated partnerships and joint ventures are calculated on the same basis. We compute FFO in accordance with standards established by NAREIT. This may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is a commonly used measure of performance in many industries. We define EBITDA as net income or loss attributable to parent (computed in accordance with GAAP) plus interest expenses, income taxes, depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA on the same basis.

Adjustments to FFO and EBITDA

We adjust FFO and EBITDA when evaluating our performance because management believes that the exclusion of certain additional items provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted FFO, and Adjusted EBITDA when combined with GAAP net income attributable to FelCor, EBITDA and FFO, is beneficial to an investor’s better understanding of our operating performance.

  • Gains and losses related to extinguishment of debt and interest rate swaps - We exclude gains and losses related to extinguishment of debt and interest rate swaps from FFO and EBITDA because we believe that it is not indicative of ongoing operating performance of our hotel assets. This also represents an acceleration of interest expense or a reduction of interest expense, and interest expense is excluded from EBITDA.
  • Cumulative effect of a change in accounting principle - Infrequently, the Financial Accounting Standards Board promulgates new accounting standards that require the consolidated statements of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments in computing Adjusted FFO and Adjusted EBITDA because they do not reflect our actual performance for that period.
  • Other expenses and costs - From time to time, we periodically incur expenses or transaction costs that are not indicative of ongoing operating performance. Such costs include, but are not limited to, conversion costs, acquisition costs, pre-opening costs, severance costs and certain non-cash adjustments. We exclude these costs from the calculation of Adjusted FFO and Adjusted EBITDA.
  • Variable stock compensation - We exclude the cost associated with our variable stock compensation. This cost is subject to volatility related to the price and dividends of our common stock that does not necessarily correspond to our operating performance.

In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale of depreciable assets and impairment losses because including them in EBITDA is inconsistent with reporting the ongoing performance of our remaining assets. Additionally, the gain or loss on sale of depreciable assets and impairment losses represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA. We also exclude the amortization of our fixed stock and directors’ compensation, which is included in corporate expenses and is not separately stated on our statements of operations. Excluding amortization of our fixed stock and directors’ compensation maintains consistency with the EBITDA definition.

Hotel EBITDA and Hotel EBITDA Margin

Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and brand/managers have direct control. We believe that Hotel EBITDA and Hotel EBITDA margin are useful to investors by providing greater transparency with respect to two significant measures that we use in our financial and operational decision-making. Additionally, using these measures facilitates comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin in a manner consistent with Adjusted EBITDA, however, we also eliminate all revenues and expenses from continuing operations not directly associated with hotel operations, including other income and corporate-level expenses. We eliminate these additional items because we believe property-level results provide investors with supplemental information into 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 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. As we present them, these non-GAAP financial measures may not be comparable to similar non-GAAP financial measures as presented by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

Contacts

FelCor Lodging Trust Incorporated
Stephen A. Schafer, 972-444-4912
Senior Vice President
sschafer@felcor.com

Contacts

FelCor Lodging Trust Incorporated
Stephen A. Schafer, 972-444-4912
Senior Vice President
sschafer@felcor.com