FelCor Lodging Trust (FCH) 8-K FELCOR EXCEEDS SECOND QUARTER ESTIMATES Reports Adjusted FFO per share of $0.67

	Exhibit 99.1
For Immediate Release:

FELCOR EXCEEDS SECOND QUARTER ESTIMATES
Reports Adjusted FFO per share of $0.67

     IRVING, Texas...August 8, 2006- FelCor Lodging Trust Incorporated (NYSE: FCH), one of the nation’s largest hotel real estate investment trusts (REITs), today reported operating results for the second quarter and six months ended June 30, 2006.

Second Quarter Results:

• Revenue Per Available Room (“RevPAR”) increased 8.4 percent, compared to the same period in 2005. Average Daily Rate (“ADR”) increased 8.2 percent.

• Hotel Earnings Before Interest, Taxes, Depreciation and Amortization (“Hotel EBITDA”) increased to $92.6 million, compared to $80.7 million in the prior year quarter, an increase of 14.7 percent. Hotel EBITDA margin was 30.0 percent, representing a 178 basis point improvement to the prior year.

• Displacement from major renovations caused reductions to RevPAR (approximately 1 percent) and EBITDA (approximately $1.6 million), which negatively affected Hotel EBITDA margin by approximately 35 basis points.

• Adjusted Funds From Operations (“FFO”) was $42.1 million, an $8.1 million increase from the prior year period. Adjusted FFO per share increased to $0.67, compared to $0.54 in the prior year quarter, an increase of 24 percent.

• Same-Store EBITDA increased by $10.5 million, to $82.2 million, or 14.7 percent to prior year. Adjusted EBITDA (including sold hotels) increased $3.3 million, to $83.8 million, or 4.1 percent to prior year.

• Net income was $10 million for both second quarter 2006 and 2005. Net income applicable to common stockholders was $0.5 million, or $0.01 per share, compared to a net loss applicable to common stockholders of $4.7 million, or $0.08 per share, in the second quarter of 2005.

Six Month Results:

• RevPAR increased 11.5 percent, compared to the same period in 2005. ADR increased 8.2 percent.

• Hotel EBITDA increased to $176.6 million, compared to $145.0 million in the prior year period, an increase of 21.8 percent. Hotel EBITDA margin was 29.2 percent, representing a 241 basis point improvement to the prior year.

• Displacement from major renovations caused reductions to RevPAR (approximately 1 percent) and EBITDA (approximately $2.9 million), which negatively affected Hotel EBITDA margin by approximately 30 basis points.

• Adjusted FFO was $74.1 million, a $24.5 million increase from the prior year period. Adjusted FFO per share increased to $1.18, compared to $0.79 in the prior year period, an increase of 49 percent.

• Same-Store EBITDA increased by $29.1 million, to $156.1 million, or 22.9 percent to prior year. Adjusted EBITDA (including sold hotels) increased $17.2 million, to $159.7 million, or 12.1 percent to prior year.

• Net income was $20.0 million compared to $2.3 million for the six month period in 2005. Net income applicable to common stockholders was $0.6 million, or $0.01 per share, compared to a net loss applicable to common stockholders of $22.8 million, or $0.38 per share, in 2005.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 2

     Expenses, net of minority interest, related to the early retirement of $0.8 million and $1.5 million of debt, respectively, were excluded from Adjusted EBITDA and Adjusted FFO for the quarter and six months ended June 30, 2006. Similarly, we recorded an impairment charge, net of minority interest, or $8.3 million related to a hotel that was designated as non-strategic in the second quarter of 2006 and was excluded from Adjusted EBITDA and Adjusted FFO for that quarter.

Second Quarter Highlights:

     RevPAR growth continues to be strong across the entire portfolio and is attributable to a significant increase in ADR. Our ADR growth was very strong in a majority of our key markets as we are focused on managing our customer mix and taking advantage of the strong industry trends.

     RevPAR increased by double digits in a number of our key markets. Markets with the highest RevPAR gains for the quarter were Atlanta, Boston, Chicago, Dallas, Orlando, San Antonio, the San Francisco Bay area and Ventura, California.

     Many factors contributed to the 178 basis point improvement in our Hotel EBITDA margin for the quarter, including our improved RevPAR performance, changes in our asset management approach and our repositioning plan. The displacement from renovations in the quarter contributed to a reduction in revenue of approximately $2.4 million and erosion of Hotel EBITDA margins of approximately 35 basis points.

     “FelCor has a unique opportunity to add significant value through internal growth over the next few years as a consequence of the change in our asset management approach, our renovation program and redevelopment projects. We have begun to implement these initiatives and are just beginning to see the benefits. The transition of our asset management approach is now complete, and we expect continued improvement in Hotel EBITDA margins as a result of these changes,” said Richard A. Smith, FelCor’s President and Chief Executive Officer. “We are excited about implementing our renovation and redevelopment program over the next couple of years which will increase long-term shareholder value.”

     In the second quarter of 2006, we increased our common dividend to $0.20 per share, from $0.15 per share.

Capital Structure:

     At June 30, 2006, we had $1.4 billion of consolidated debt outstanding with a weighted average life of five years, compared to $1.7 billion outstanding at June 30, 2005. Our cash and cash equivalents totaled approximately $67 million at the end of the second quarter 2006.

     During the second quarter, we retired $58 million of net indebtedness, including $27 million of secured debt and repaid our line of credit balance. At June 30, 2006, consolidated debt to trailing twelve month Adjusted EBITDA was 5.0x, compared to 6.5x at June 30, 2005.

     In April, Moody’s Investors Service upgraded our corporate rating from B1 to Ba3. As a result, the interest rate on our $300 million of Senior Notes due 2011 was reduced by 50 basis points to 8.5 percent, resulting in an annual interest rate savings of $1.5 million.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 3

     “We have paid down a total of $287 million of debt since September 30, 2005, and should reach our goal of $400 million of aggregate debt reduction by the end of this year. Our financial profile continues to improve and our leverage ratio is declining as a result of improved operating performance and debt reduction,” said Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer. “We are currently evaluating opportunities to refinance additional debt.”

Hotel Disposition Update:

     During the second quarter, we sold four non-strategic hotels for gross proceeds of $78 million. We have sold 15 hotels for gross proceeds of $256 million since we began the disposition program. There are 23 remaining from the original 38 hotels that were identified as non-strategic. At June 30, 2006, we had 20 hotels under contract to sell, and we are well ahead of the expected pace of the repositioning program.

     In connection with the finalization of our three year capital improvement program, during the second quarter, we identified seven additional hotels as non-strategic. The six Embassy Suites Hotels^® and one Sheraton Suites^® are primarily located in suburban locations generally within secondary markets. We recorded an impairment charge of $9 million, in the second quarter, related to one of these hotels.

     We expect total gross proceeds for the 45 non-strategic hotels to be between $650 and $700 million. The expected proceeds are toward the high end of our original expectations for the 38 hotels set forth in January. The proceeds from the seven additional non-strategic hotels will be used primarily to fund the redevelopment projects.

Renovation Program Update:

     We finalized the long-term capital plans for every hotel late in the second quarter. We are spending in excess of $400 million of capital between 2006 and 2008. The program will be extensive and will include guest room, guest bath, meeting space, public area, exterior and major mechanical upgrades at every hotel, where needed. At the end of the program, our entire portfolio will be completely renovated. More than 75 percent of these capital expenditures will have a positive guest impact, where additional rate and occupancy can be captured. As a result, we expect returns on that capital to be between 12 and 15 percent.

     Improvements and additions to consolidated hotels for the second quarter were $36 million and were $70 million, for the six months ended June 30, 2006. Hotel capital expenditures, including our pro rata share of joint ventures, totaled $38 million for the quarter and $76 million for the six months. We expect hotel capital expenditures of approximately $175 million for the full year.

     Our Royale Palms condominium project in Myrtle Beach, South Carolina, is more than 50 percent complete and scheduled to be completed in the third quarter 2007. At June 30, the balance on the construction loan was $34 million. We have pre sold approximately 98 percent of these condominiums. We currently expect to earn net income of approximately $16 million at the completion of the project, and we expect that between 50 and 60 percent of the condominium units will enter our rental pool.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 4

     We also have identified redevelopment opportunities at a number of our hotels and are currently in the pre-development phase for three projects: building a new convention center in Myrtle Beach at our Kingston Plantation complex, adding a new spa and fitness center at the Embassy Suites Resort in Deerfield Beach, Florida and adding 5,000 square feet of meeting space at the Doubletree Guest Suites^® in Dana Point, California.

2006 Guidance:

     We anticipate that during 2006, RevPAR will increase between 8 and 10 percent , with the majority of the increase attributable to gains in ADR. RevPAR during the third quarter is expected to increase between 6 and 8 percent compared to the same period in 2005. Based on these expectations, we currently anticipate:

• Adjusted EBITDAto be between $287 and $292 million for the full year and between $69 and $71 million for the third quarter;

• Adjusted FFO per shareto be between $1.90 and $1.98 for the full year, and to be between $0.43 and $0.47 for the third quarter; and

• Hotel EBITDA marginto increase approximately 170 basis points for the year.

     We are leaving our guidance for the year unchanged for RevPAR, EBITDA and FFO, but are raising our estimates for Hotel EBITDA margin. The 2006 estimates assume higher RevPAR and Hotel EBITDA margin for the second half of the year as a result of stronger corporate transient and group demand and continued benefit from our new asset management approach. However, we anticipate a higher level of displacement from renovations than originally expected. Our renovation schedules were finalized in the second quarter, with some changes to the timelines. As a result of these changes, we anticipate displacement for the full year to negatively impact EBITDA by $7.6 million, or FFO of $0.12 per share, which is $3.6 million, or $0.06 per share, higher than originally expected. In addition, we sold two hotels in the second quarter, which was not previously reflected in our guidance.

     There are no further asset sales assumed in our guidance. We will adjust our quarterly guidance as asset sales occur. Consequently, we are assuming no further debt reduction, beyond what has occurred to date.

     EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO and Adjusted FFO are all non-GAAP financial measures. See our discussion of “Non-GAAP Financial Measures” beginning on page 9 for a reconciliation of each of these measures to our net income and for information regarding the use, limitations and importance of these non-GAAP financial measures.

     We have published our Second Quarter and Six Months Supplemental Information, which provides additional corporate data, financial highlights and portfolio statistical data for the quarter and six months ended June 30, 2006. Investors are encouraged to access the Supplemental Information on our Web site atwww.felcor.com, on the Investor Relations page in the “Financial Reports” section. The Supplemental Information also will be furnished upon request. Requests may be made by e-mail toinformation@felcor.com or by writing to the Vice President of Investor Relations, FelCor Lodging Trust Incorporated, 545 E. John Carpenter Freeway, Suite 1300, Irving, Texas, 75062.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 5

     FelCor is one of the nation’s largest hotel REITs and the nation’s largest owner of full service, all-suite hotels. FelCor’s portfolio is comprised of 113 consolidated hotels, located in 27 states and Canada. FelCor’s portfolio includes 65 upper upscale, all-suite hotels, and FelCor is the largest owner of Embassy Suites Hotels and Doubletree Guest Suiteshotels. FelCor’s hotels are flagged under global brands such as Embassy Suites Hotels, Doubletree^®, Hilton^®, Sheraton^®, Westin^®, and Holiday Inn^®. FelCor has a current market capitalization of approximately $3.3 billion. Additional information can be found on the Company’s Web site atwww.felcor.com.

     We invite you to listen to our Second Quarter 2006 Conference Call on Wednesday, August 9, 2006, at 10:00 a.m. (Central Time). The conference call will be Web cast simultaneously via FelCor’s Web site atwww.felcor.com. Interested investors and other parties who wish to access the call should go to FelCor’s Web site and click on the conference call microphone icon on either the “Investor Relations” or “FelCor News” pages. A phone replay will be available from Wednesday, August 9, 2006, at 12:00 p.m. (Central Time), through Friday, September 1, 2006, at 7:00 p.m. (Central Time), by dialing 800-642-1687 (conference ID# 3236840). A recording of the call also will be archived and available atwww.felcor.com.

     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. 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 currently anticipated. General economic conditions, including the anticipated continuation of the current economic recovery, the impact of U.S. military involvement in the Middle East and elsewhere, future acts of terrorism, the impact on the travel industry of increased fuel prices and security precautions, the impact that the bankruptcy of additional major air carriers may have on our revenues and receivables, the availability of capital, the ability to effect sales of non-strategic hotels at anticipated prices, 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.

Contact:
Stephen A. Schafer, Vice President of Investor Relations	(972) 444-4912	sschafer@felcor.com
Monica L. Hildebrand, Vice President of Communications	(972) 444-4917	mhildebrand@felcor.com

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 6

Consolidated Statements of Operations
(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Revenues:
Hotel operating revenue:
Room	$	251,114		$	231,936		$	495,839		$	439,995
Food and beverage		42,200			39,605			79,284			74,189
Other operating departments		15,179			14,234			29,657			27,081
Retail space rental and other revenue		157			120			291			276
Total revenues		308,650			285,895			605,071			541,541
Expenses:
Hotel departmental expenses:
Room		62,490			58,301			122,063			111,235
Food and beverage		31,740			30,076			61,217			57,450
Other operating departments		7,100			7,008			14,090			13,148
Other property related costs		81,257			78,349			164,794			153,253
Management and franchise fees		16,854			14,802			32,649			27,461
Taxes, insurance and lease expense		32,044			30,336			61,733			58,698
Corporate expenses		5,562			4,728			11,366			9,269
Impairment loss		9,268			—			9,268			—
Depreciation		27,604			26,579			53,802			52,256
Total operating expenses		273,919			250,179			530,982			482,770
Operating income		34,731			35,716			74,089			58,771
Interest expense, net		(28,561	)		(32,901	)		(59,325	)		(64,779	)
Charge-off of deferred financing costs		(295	)		—			(962	)		—
Early extinguishment of debt		(438	)		—			(438	)		—
Income (loss) before equity in income from unconsolidated entities, minority interests and gain on sale of assets		5,437			2,815			13,364			(6,008	)
Equity in income from unconsolidated entities		3,812			3,837			5,760			4,968
Minority interests		1,572			306			1,816			1,283
Gain on sale of assets		—			389			—			389
Income (loss) from continuing operations		10,821			7,347			20,940			632
Discontinued operations		(676	)		3,004			(943	)		1,705
Net income (loss)		10,145			10,351			19,997			2,337
Preferred dividends		(9,678	)		(9,809	)		(19,356	)		(19,900	)
Issuance costs of redeemed preferred stock		—			(5,198	)		—			(5,198	)
Net income (loss) applicable to common stockholders	$	467		$	(4,656	)	$	641		$	(22,761	)
Basic and diluted per common share data:
Net income (loss) from continuing operations	$	0.02		$	(0.13	)	$	0.03		$	(0.41	)
Net income (loss)	$	0.01		$	(0.08	)	$	0.01		$	(0.38	)
Basic weighted average common shares outstanding		60,355			59,404			60,066			59,363
Diluted weighted average common shares outstanding		60,626			59,404			60,326			59,363

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 7

Discontinued Operations
(in thousands)

     Included in discontinued operations are the results of operations of four hotels disposed of in the second quarter of 2006, eight hotels disposed of in the first quarter of 2006 and 19 hotels disposed of in 2005. Condensed financial information for the hotels included in discontinued operations is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Operating revenue	$	8,704		$	45,944		$	27,691		$	93,457
Operating expenses		7,460			41,893			25,513			89,358
Operating income		1,244			4,051			2,178			4,099
Direct interest costs, net		(64	)		(610	)		(134	)		(1,972	)
Loss on sale of depreciable assets		(1,785	)		(234	)		(2,862	)		(214	)
Minority interests		(71	)		(203	)		(125	)		(208	)
Income (loss) from discontinued operations		(676	)		3,004			(943	)		1,705
Depreciation		469			4,173			1,596			8,961
Minority interest in FelCor LP		(23	)		139			(63	)		79
Interest expense		65			607			129			1,963
EBITDA from discontinued operations		(165	)		7,923			719			12,708
Loss on sale of assets		1,785			234			2,862			214
Impairment loss		—			732			—			1,291
Asset disposition costs		—			—			—			1,300
Adjusted EBITDA from discontinued operations	$	1,620		$	8,889		$	3,581		$	15,513

Selected Balance Sheet Data
(in thousands)

	June 30,			December 31
	2006			2005
Investment in hotels	$	3,045,042		$	3,341,881
Accumulated depreciation		(717,253	)		(754,502	)
Investments in hotels, net of accumulated depreciation	$	2,327,789		$	2,587,379
Total cash and cash equivalents	$	67,490		$	94,564
Total assets	$	2,686,756		$	2,919,093
Total debt	$	1,442,073		$	1,675,280
Total stockholders’ equity	$	1,028,566		$	1,031,793

     At June 30, 2006, we had an aggregate of 61,955,094 shares of FelCor common stock and 1,355,016 units of FelCor LP limited partnership interest outstanding.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 8

Debt Summary
(dollars in thousands)

	Encumbered	Interest Rate at	Maturity	Consolidated
	Hotels	June 30, 2006(a)	Date	Debt
Promissory note	none	LIBOR (L) + 2.00	June 2016	$650
Line of credit(b)	none	L + 2.00	January 2009	—
Senior unsecured term notes	none	7.63	October 2007	123,823
Senior unsecured term notes	none	8.50	June 2011	298,786
Senior unsecured term notes	none	L + 4.25	June 2011	190,000
Senior unsecured term notes(c)	none	7.80	June 2011	100,000
Total unsecured debt				713,259
Mortgage debt	9 hotels	6.53	July 2009 — 2014	103,144
Mortgage debt(d)	8 hotels	L + 1.25	May 2007	88,984
Mortgage debt	7 hotels	7.32	March 2009	125,888
Mortgage debt	4 hotels	7.55	June 2009	40,955
Mortgage debt	8 hotels	8.70	May 2010	171,035
Mortgage debt	7 hotels	8.73	May 2010	131,801
Mortgage debt	1 hotel	L + 2.85	August 2008	15,500
Mortgage debt	1 hotel	5.81	July 2016	13,000
Other	1 hotel	9.17	August 2011	4,832
Construction loan(e)	—	L + 2.25	August 2007	33,675
Total secured debt	46 hotels			728,814
				$1,442,073

(a)	Our weighted average interest rate as of June 30, 2006 was 8.16 percent.
(b)	We have a borrowing capacity of $125 million on our line of credit. The interest on this line can range from L + 175 to L + 225 basis points, based on our leverage ratio (as defined in our line of credit agreement).
(c)	We have swapped $100 million of floating rate debt, at L + 4.25 percent, for a fixed rate of 7.80 percent. This interest rate swap expires in December 2007.
(d)	This debt has a one-year extension option, subject to certain contingencies.
(e)	We have a $69.8 million recourse construction loan facility for the development of a 184-unit condominium project in Myrtle Beach, South Carolina. The interest on this facility is being capitalized as part of the cost of the project. Effective July 1, 2006, the interest rate on this loan facility was reduced to L + 200 basis points.

Fixed interest rate debt to total debt		77.2	%
Weighted average maturity of debt	5 years
Secured debt to total assets		27.1	%

Preferred Stock
(dollars in thousands)

	Liquidation Value at
	June 30, 2006
Series A $1.95 Cumulative Convertible Preferred Stock	$	322,011
Series C 8% Cumulative Redeemable Preferred Stock	$	169,950

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 9

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 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 to FFO and Adjusted FFO
(in thousands, except per share and unit data)

	Three Months Ended June 30,
	2006								2005
						Per Share								Per Share
	Dollars			Shares		Amount			Dollars			Shares		Amount
Net income	$	10,145							$	10,351
Preferred dividends		(9,678	)							(9,809	)
Issuance costs of redeemed preferred stock.		—								(5,198	)
Net income (loss) applicable to common stockholders		467			60,626	$	0.01			(4,656	)		59,404	$	(0.08	)
Depreciation, continuing operations		27,604			—		0.46			26,579			—		0.45
Depreciation, unconsolidated entities and discontinued operations		3,102			—		0.05			6,510			—		0.11
Loss (gain) on sale of depreciable assets		1,785			—		0.03			(155	)		—		—
Minority interest in FelCor LP		16			2,102		(0.02	)		(216	)		2,788		(0.03	)
Conversion of options and unvested restricted stock		—			—		—			—			339		—
FFO		32,974			62,728		0.53			28,062			62,531		0.45
Issuance costs of redeemed preferred stock.		—			—		—			5,198			—		0.08
Charge-off of deferred financing costs		295			—		—			—			—		—
Charge-off of deferred financing costs, unconsolidated entities		20			—		—			—			—		—
Early extinguishment of debt		438			—		0.01			—			—
Early extinguishment of debt, unconsolidated entities		165			—		—			—			—		—
Minority interest share of charge-off of financing costs and early extinguishment of debt		(115	)		—		—			—			—		—
Impairment loss, continuing operations		9,268			—		0.15			—			—		—
Impairment loss, discontinued operations		—			—		—			732			—		0.01
Minority interest share of impairment loss.		(927	)		—		(0.02	)		—			—		—
Adjusted FFO(a)	$	42,118			62,728	$	0.67		$	33,992			62,531	$	0.54

(a) It is more dilutive to assume the conversion of our Series A Preferred Stock into common stock when our quarterly adjusted FFO per share calculation exceeds 63 cents per share. For the three months ended June 30, 2006, the more dilutive calculation remains at 67 cents as shown below:

					Per Share
	Dollars		Shares		Amount
Adjusted FFO	$	42,118		62,728	$	0.67
Preferred dividends		6,279		9,985
Adjusted FFO assuming conversion of Series A Preferred Stock	$	48,397		72,713	$	0.67

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 10

Reconciliation of Net Income to FFO and Adjusted FFO
(in thousands, except per share and unit data)

	Six Months Ended June 30,
	2006								2005
						Per Share								Per Share
	Dollars			Shares		Amount			Dollars			Shares		Amount
Net income	$	19,997							$	2,337
Preferred dividends		(19,356	)							(19,900	)
Issuance costs of redeemed preferred stock.		—								(5,198	)
Net income (loss) applicable to common stockholders		641			60,326	$	0.01			(22,761	)		59,363	$	(0.38	)
Depreciation, continuing operations		53,802			—		0.89			52,256			—		0.88
Depreciation, unconsolidated entities and discontinued operations		6,978			—		0.12			13,595			—		0.23
Loss (gain) on sale of depreciable assets		2,862			—		0.05			(175	)		—		—
Minority interest in FelCor LP		24			2,381		(0.04	)		(1,059	)		2,788		(0.06	)
Conversion of options and unvested restricted stock		—			—		—			—			319		—
FFO		64,307			62,707		1.03			41,856			62,470		0.67
Issuance costs of redeemed preferred stock		—			—		—			5,198			—		0.08
Charge-off of deferred financing costs		962			—		0.02			—			—		—
Charge-off of deferred financing costs, unconsolidated entities		20			—		—			—			—		—
Early extinguishment of debt		438			—		0.01			—					—
Early extinguishment of debt, unconsolidated entities		165			—		—			—			—		—
Minority interest share of charge-off of financing costs and early extinguishment of debt		(115	)		—		—			—			—		—
Impairment loss, continuing operations		9,268			—		0.15			—			—		—
Impairment loss, discontinued operations		—			—		—			1,291			—		0.02
Minority interest share of impairment loss		(927	)		—		(0.03	)		—			—		—
Asset disposition costs		—			—		—			1,300			—		0.02
Adjusted FFO	$	74,118			62,707	$	1.18		$	49,645			62,470	$	0.79

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 11

Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Same-Store EBITDA

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Net income	$	10,145		$	10,351		$	19,997		$	2,337
Depreciation, continuing operations		27,604			26,579			53,802			52,256
Depreciation, unconsolidated entities and discontinued operations		3,102			6,510			6,978			13,595
Minority interest in FelCor Lodging LP		16			(216	)		24			(1,059	)
Interest expense		29,416			33,702			60,973			66,219
Interest expense, unconsolidated entities and discontinued operations		1,667			2,259			3,335			5,400
Amortization expense		908			755			1,897			1,354
EBITDA		72,858			79,939			147,006			140,102
Charge-off of deferred financing costs		295			—			962			—
Charge-off of deferred financing costs, unconsolidated entities		20			—			20			—
Early extinguishment of debt		438			—			438			—
Early extinguishment of debt, unconsolidated entities		165			—			165			—
Minority interest share of charge-off of financing costs and early extinguishment of debt		(115	)		—			(115	)		—
Impairment loss, continuing operations		9,268			—			9,268			—
Impairment loss, discontinued operations		—			732			—			1,291
Minority interest share of impairment loss		(927	)		—			(927	)		—
Asset disposition costs		—			—			—			1,300
Loss (gain) on sale of depreciable assets		1,785			(155	)		2,862			(175	)
Adjusted EBITDA		83,787			80,516			159,679			142,518
Adjusted EBITDA from discontinued operations		(1,620	)		(8,889	)		(3,581	)		(15,513	)
Same-Store EBITDA	$	82,167		$	71,627		$	156,098		$	127,005

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 12

Reconciliation of Adjusted EBITDA to Hotel EBITDA
(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Adjusted EBITDA	$	83,787		$	80,516		$	159,679		$	142,518
Retail space rental and other revenue		(157	)		(120	)		(291	)		(276	)
Adjusted EBITDA from discontinued operations		(1,620	)		(8,889	)		(3,581	)		(15,513	)
Equity in income from unconsolidated subsidiaries (excluding interest and depreciation expense)		(8,782	)		(8,477	)		(15,481	)		(14,269	)
Minority interest in other partnerships (excluding interest and depreciation expense)		(20	)		701			87			1,086
Consolidated hotel lease expense		17,056			15,387			31,388			28,051
Unconsolidated taxes, insurance and lease expense		(1,472	)		(1,598	)		(3,025	)		(3,053	)
Interest income		(854	)		(801	)		(1,648	)		(1,441	)
Corporate expenses (excluding amortization expense)		4,654			3,973			9,469			7,915
Hotel EBITDA	$	92,592		$	80,692		$	176,597		$	145,018

Reconciliation of Net Income to Hotel EBITDA
(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Net income	$	10,145		$	10,351		$	19,997		$	2,337
Discontinued operations		676			(3,004	)		943			(1,705	)
Equity in income from unconsolidated entities		(3,812	)		(3,837	)		(5,760	)		(4,968	)
Minority interests		(1,572	)		(306	)		(1,816	)		(1,283	)
Consolidated hotel lease expense		17,056			15,387			31,388			28,051
Unconsolidated taxes, insurance and lease expense		(1,472	)		(1,598	)		(3,025	)		(3,053	)
Interest expense, net		28,561			32,901			59,325			64,779
Charge-off of deferred financing costs		295			—			962			—
Impairment loss		9,268			—			9,268			—
Early extinguishment of debt		438			—			438			—
Corporate expenses		5,562			4,728			11,366			9,269
Depreciation		27,604			26,579			53,802			52,256
Gain on sale of assets		—			(389	)		—			(389	)
Retail space rental and other revenue		(157	)		(120	)		(291	)		(276	)
Hotel EBITDA	$	92,592		$	80,692		$	176,597		$	145,018

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 13

Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Total revenue	$	308,650		$	285,895		$	605,071		$	541,541
Retail space rental and other revenue		(157	)		(120	)		(291	)		(276	)
Hotel operating revenue		308,493			285,775			604,780			541,265
Hotel operating expenses		(215,901	)		(205,083	)		(428,183	)		(396,247	)
Hotel EBITDA	$	92,592		$	80,692		$	176,597		$	145,018
Hotel EBITDA margin		30.0	%		28.2	%		29.2	%		26.8	%

Reconciliation of Ratio of Operating Income to Total Revenue to Hotel EBITDA Margin

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Ratio of operating income to total revenue		11.3	%		12.4	%		12.2	%		10.9	%
Retail space rental and other revenue		—			—			—			—
Unconsolidated taxes, insurance and lease expense		(0.5	)		(0.6	)		(0.5	)		(0.6	)
Consolidated hotel lease expense		5.5			5.4			5.2			5.2
Corporate expenses		1.8			1.7			1.9			1.7
Impairment loss		3.0			—			1.5			—
Depreciation		8.9			9.3			8.9			9.6
Hotel EBITDA margin		30.0	%		28.2	%		29.2	%		26.8	%

Hotel Operating Expense Composition
(dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Reconciliation of total operating expense to hotel operating expense:
Total operating expenses	$	273,919		$	250,179		$	530,982		$	482,770
Unconsolidated taxes, insurance and lease expense		1,472			1,598			3,025			3,053
Consolidated hotel lease expense		(17,056	)		(15,387	)		(31,388	)		(28,051	)
Corporate expenses		(5,562	)		(4,728	)		(11,366	)		(9,269	)
Impairment loss		(9,268	)		—			(9,268	)		—
Depreciation		(27,604	)		(26,579	)		(53,802	)		(52,256	)
Hotel operating expenses	$	215,901		$	205,083		$	428,183		$	396,247
Supplemental information:
Compensation and benefits expense (included in hotel operating expenses)	$	90,370		$	86,074		$	177,246		$	167,353

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 14

Reconciliation of Forecasted Net Income to Forecasted FFO, Adjusted FFO, EBITDA
and Adjusted EBITDA
(in millions, except per share and unit data)

	3rd Quarter 2006 Guidance												Full Year 2006 Guidance
	Low Guidance						High Guidance						Low Guidance						High Guidance
				Per Share						Per Share						Per Share						Per Share
	Dollars			Amount(a)			Dollars			Amount(a)			Dollars			Amount(a)			Dollars			Amount(a)
Net income(b)	$	4					$	6					$	18					$	23
Preferred dividends		(10	)					(10	)					(39	)					(39	)
Net income (loss) applicable to common stockholders(b)		(6	)	$	(0.10	)		(4	)	$	(0.07	)		(21	)	$	(0.35	)		(16	)	$	(0.27	)
Loss on sale of assets		—						—						3						3
Depreciation		33						33						129						129
Minority interest in FelCor LP		—						—						(1	)					(1	)
FFO		27		$	0.43			29		$	0.47			110		$	1.75			115		$	1.83
Write off loan costs		—						—						1						1
Impairment		—						—						8						8
Early extinguishment of debt		—						—						—						—
Adjusted FFO	$	27		$	0.43		$	29		$	0.47		$	119		$	1.90		$	124		$	1.98
Net income(b)		3						5						18						23
Depreciation		33						33						129						129
Minority interest in FelCor LP		—						—						(1	)					(1	)
Interest expense		32						32						126						126
Amortization expense		1						1						3						3
EBITDA		69						71						275						280
Loss on sale of assets		—						—						3						3
Write off loan costs		—						—						1						1
Impairment		—						—						8						8
Adjusted EBITDA	$	69					$	71					$	287					$	292

(a)	Weighted average shares are 60.1 million. Adding minority interest and unvested restricted stock of 2.6 million shares to weighted average shares, provides the weighted average shares and units of 62.7 million used to compute FFO per share.
(b)	Excludes future gains or losses from asset sales and debt extinguishment.

     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, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin, 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 as a measure of our operating performance.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 15

FFO and EBITDA

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

     EBITDA is a commonly used measure of performance in many industries. We define EBITDA as net income or loss (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 recurring and non-recurring items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted FFO, Adjusted EBITDA and Same-Store EBITDA, when combined with GAAP net income, EBITDA and FFO, is beneficial to an investor’s better understanding of our operating performance.

• Gains and losses related to early extinguishment of debt and interest rate swaps —We exclude gains and losses related to early 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.

• Impairment losses— We exclude the effect of impairment losses and gains or losses on disposition of assets in computing Adjusted FFO and Adjusted EBITDA because we believe that including these is not consistent with reflecting the ongoing performance of our remaining assets. Additionally, we believe that impairment charges and gains or losses on disposition of assets represent accelerated depreciation, or excess depreciation, and depreciation is excluded from FFO by the NAREIT definition and 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.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 16

     In addition, to derive Adjusted EBITDA, we exclude gains or losses on the sale of assets because we believe that including them in EBITDA is not consistent with reflecting the ongoing performance of our remaining assets. Additionally, the gain or loss on sale of depreciable assets represents either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.

     To derive Same-Store EBITDA, we make the same adjustments to EBITDA as for Adjusted EBITDA and, additionally, exclude EBITDA from discontinued operations and gains and losses from the disposition of non-hotel related assets.

Hotel EBITDA and Hotel EBITDA Margin

     Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the industry and give investors a more complete understanding of the operating results over which our individual hotels and operating 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 used by us in our financial and operational decision-making. Additionally, these measures facilitate comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin by eliminating corporate-level expenses, depreciation and expenses related to our capital structure. We eliminate corporate-level costs and expenses because we believe property-level results provide investors with supplemental information with respect to the ongoing operating performance of our hotels and the effectiveness of management on a property-level basis. We eliminate depreciation and amortization, even though they are property-level expenses, because we do not believe that these non-cash expenses, which are based on historical cost accounting for real estate assets and implicitly assume that the value of real estate assets diminish predictably over time, accurately reflect an adjustment in the value of our assets. We also eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by minority interest expense 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 hotels.

Limitations of Non-GAAP Measures

     The use of these non-GAAP financial measures has certain limitations. FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin, as presented by us, may not be comparable to FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin as calculated by other real estate companies. These measures do not reflect certain expenses that we incurred and will incur, such as depreciation and interest or capital expenditures. Management compensates for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the 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.

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FelCor Lodging Trust First Quarter 2006 Operating Results
August 8, 2006
Page 17

     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. Neither should FFO, FFO per share, Adjusted FFO, Adjusted FFO per share, EBITDA, Adjusted EBITDA or Same-Store EBITDA be considered as measures of our liquidity or indicative of funds available for our cash needs, including our ability to make cash distributions. FFO per share does not measure, and should not be used as a measure of, amounts that accrue directly to the benefit of stockholders. FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store EBITDA, Hotel EBITDA and Hotel EBITDA margin reflect additional ways of viewing our operations that we believe when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on any single financial measure.

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