EXHIBIT 99.2
Press Release
SOURCE: FelCor Lodging Trust Incorporated
FelCor Exceeds Consensus Analyst Estimates; Fourth Quarter 2001 FFO Per Share of
$0.21
IRVING, Texas, Feb. 6 /PRNewswire-FirstCall/ -- FelCor Lodging Trust
Incorporated (NYSE: FCH - news), one of the nation's largest hotel real estate
investment trusts (REITs), today reported operating results for the fourth
quarter and year ended December 31, 2001.
FelCor's operating results for the fourth quarter and full year 2001 reflect the
soft lodging demand resulting from the general economic recession and the
aftermath of the September 11 events.
Fourth Quarter Results:
FelCor's fourth quarter 2001 recurring Funds From Operations ("FFO") of $13.8
million or $0.21 per share exceeded consensus analyst estimates of $0.20 per
share. FFO for the same period last year totaled $62.4 million, or $0.94 per
share. Fourth quarter 2001 recurring Earnings Before Interest, Taxes,
Depreciation, Amortization, and other non-cash charges ("EBITDA") totaled $60.8
million, compared to $109.1 million for fourth quarter 2000. For the quarter,
the Company reported a net loss of $35.4 million, or a loss of $0.67 per share,
compared to fourth quarter 2000 earnings of $35.1 million, or net income of
$0.66 per share. Historically, the fourth quarter has been the weakest quarter
of the year for FelCor's operating results.
FelCor's total hotel portfolio revenue per available room ("RevPAR") for the
fourth quarter decreased 23.0 percent, compared to the same period of 2000, with
an October decline of 25.2 percent, a November decline of 23.6 percent and a
December decline of 18.8 percent. For the quarter, occupancy declined 9.7 points
to 55.2 percent, and average daily rate ("ADR") dropped 9.5 percent to $95.69,
compared to the same quarter of 2000. The operating margin for FelCor's hotels
during the fourth quarter 2001 decreased 340 basis points to 29.8 percent,
compared to the same period in 2000.
In the fourth quarter, FelCor recorded $10 million of non-recurring expenses.
These expenses consisted primarily of a loss provision of $7 million on 13
hotels held for sale, and a $2.2 million cost incurred in connection with the
termination of interest rate swaps. The loss provision resulted from the recent
changes in the economic climate and the impact on the estimated fair market
value of the hotels held for sale. The swap termination cost was incurred in
connection with the application of proceeds from FelCor's fourth quarter $100
million private placement of senior unsecured notes.
Full Year 2001 Results:
"In 2001, the lodging industry experienced the worst decline in demand seen in
the last three decades. It began with the recession in April and was magnified
by the events of September 11. In this difficult environment, FelCor continued
to generate a strong cash flow with a full year FFO of $2.75 per share, and
common shareholder dividends of $1.70 per share. We also continued to invest in
our hotels completing $64 million of capital expenditures, which represents 4.5
percent of total hotel revenues," said Thomas J. Corcoran, Jr., FelCor's
President and CEO.
For the year ended December 31, 2001, recurring FFO totaled $183.7 million, or
$2.75 per share, compared to 2000 FFO of $288.6 million, or $4.29 per share.
EBITDA for 2001 totaled $369.6 million, compared to $470.9 million in 2000. For
the full year 2001, FelCor reported a net loss of $63.9 million, or a loss of
$1.21 per share, compared to full year 2000 net income of $37.0 million, or
$0.67 per share.
FelCor's total hotel portfolio RevPAR decreased 11.4 percent for 2001, occupancy
declined 6.6 points, and ADR dropped 2.4 percent compared to full year 2000. The
operating margin for FelCor's hotels decreased 260 basis points, to 33.6
percent, compared to full year 2000.
During 2001, the Company recorded $78 million of non-recurring expenses. These
expenses consisted primarily of the previously reported lease termination costs
of $37 million incurred in the first and second quarters, and $25 million of
expenses associated with the MeriStar merger, which was terminated in the third
quarter.
Capital Structure:
At December 31, 2001, FelCor had $1.94 billion of debt outstanding, which
included $50 million drawn under its $615 million line of credit. The weighted
average life of the Company's debt is seven years. At December 31, 2001, FelCor
had $129 million in cash and cash equivalents.
During the fourth quarter, FelCor amended its line of credit to allow for the
relaxation of certain financial covenants through September 2002. In December,
FelCor was the first hotel REIT after September 11 to access the high yield
market, completing a $100 million senior unsecured note issuance. The Company
also entered into $175 million of fixed to floating interest rate swaps during
the quarter.
"We are in a strong financial position to take advantage of an economic
recovery. We have moderate leverage, minimal maturities over the next two years,
$129 million in cash and equivalents (compared to $50 million outstanding under
our line of credit), and a debt to annual EBITDA ratio of 4.9 times. However,
during the first half of 2002, we plan to conserve cash," said Richard J.
O'Brien, FelCor's Executive Vice President and Chief Financial Officer.
2002 Guidance:
For the first quarter of 2002, FelCor currently anticipates its portfolio RevPAR
will be 16 to 18 percent below the comparable period of the prior year. FFO per
share is expected to be within the range of $0.40 to $0.45 per share for the
first quarter of 2002, and EBITDA is expected to be within the range of $74
million to $78 million for the same period. The RevPAR decline for January 2002
was approximately 21 percent.
FelCor currently anticipates that full year 2002 hotel portfolio RevPAR,
compared to 2001, will be flat to negative three percent. RevPAR changes
(negative) by quarter for 2002, compared to 2001 are currently expected to fall
within the following ranges:
First quarter (16)% to (18)%
Second quarter (4)% to (7)%
Third quarter 6% to 9%
Fourth quarter 13% to 16%
FFO per share for 2002 is anticipated to be within the range of $2.20 to $2.60
per share and EBITDA to be within the range of $340 to $360 million. The Company
is currently anticipating 2002 maintenance capital expenditures of between $40
and $50 million.
FelCor's decision to pay its common dividend will be determined each quarter
based upon the operating results of that quarter, economic conditions, and other
operating trends. We currently anticipate that FelCor should be able to pay an
aggregate of $1.00 in dividends per common share during 2002, based on the low
end of the Company's current FFO guidance.
"During 2002, we anticipate a gradual recovery in lodging demand and believe the
industry is headed towards a recovery in the second half of the year. FelCor is
well positioned for these challenging times and to take advantage of
opportunities that may result from them. We will continue to work closely with
our brand managers to improve the competitive positioning of our hotels," added
Mr. Corcoran.
FelCor is the only lodging REIT that owns a diversified portfolio of
nationally-branded, upscale and full-service hotels managed by strategic brand
managers such as Hilton Hotels, Six Continents Hotels, and Starwood Hotels &
Resorts. FelCor is competitively positioned to deliver superior shareholder
returns through its strong management team, strategic brand manager alliances,
diversified upscale and full-service hotels, value creation expertise, and
financial strength. FelCor is the owner of the largest number of Embassy
Suites(R), Crowne Plaza(R), Holiday Inn(R) and independently owned
Doubletree(R)-branded hotels. FelCor has a current market capitalization of
approximately $3.2 billion. Additional information can be found on the Company's
website at www.felcor.com.
FelCor invites you to listen to the Company's fourth quarter 2001 conference
call on February 7, 2002, at 9:00 a.m. (Central Standard Time). The conference
call will be webcast simultaneously via the Company's website at www.felcor.com.
Interested investors and other parties who wish to access the call should go to
the Company's website and click on the conference call microphone icon on either
the Investor Relations or FelCor News pages. In addition, a phone replay will be
available from Thursday, February 7, 2002 at 1:00 p.m. (Central Standard Time)
through Thursday, February 28, 2002, at 7:00 p.m. (Central Standard Time) by
dialing 888-280-8039 (access code is 9396). A recording of the call also will be
archived and available at www.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 timing and magnitude of
any recovery from the current recession, future acts of terrorism, the
availability of capital, and numerous other factors may affect future results,
performance and achievements. 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.
Introduction
The following financial information is presented in order to help our investors
understand the financial position of the Company for the periods ended and as of
December 31, 2001 and 2000.
Information to Follow
Fourth Quarter Highlights
Financial Profile
Results of Operations - Three Months Ended Results of Operations - Full
Year Reconciliation of FFO and EBITDA - Three Months Ended Reconciliation
of FFO and EBITDA - Full Year Debt Outstanding at December 31, 2001 Hotel
Performance Statistics RevPAR Performance for Selected States Brand
Distribution Selected State Distribution
Fourth Quarter 2001 Highlights
-- In October, $300 million in senior notes were redeemed which had been
held in escrow subject to the MeriStar merger closing. The merger was
terminated as a result of the disruption in the financial markets in
the aftermath of September 11.
-- In November, FelCor amended certain terms of its $615 million
unsecured line of credit to allow for the relaxation of certain
financial covenants through September 30, 2002.
-- In December, FelCor completed a private placement of $100 million,
which was an add-on to its existing 9.5 percent senior notes due 2008.
Proceeds were used to partially paydown the Company's line of credit.
-- In December, FelCor entered into interest rate swaps that effectively
swapped its $175 million of 7.375 percent senior notes due 2004 to a
floating rate of LIBOR plus 320 basis points. These swaps had an
initial positive carry of over 200 basis points.
-- During the fourth quarter, capital expenditures totaled $18 million.
For the year ended December 31, 2001, the Company had $64 million of
capital expenditures.
-- FelCor sold the 182-room Doubletree Guest Suites(R) located in Tampa,
Florida, realizing net sales proceeds of $3.4 million.
-- On December 20, 2001, the Company declared fourth quarter dividends of
$0.05 per share on its common stock and full preferred dividends of
$0.4875 per share and $0.5625 per share on its $1.95 Series A
cumulative convertible preferred stock and 9% Series B cumulative
redeemable preferred stock, respectively.
Financial Profile
At December 31, 2001, FelCor's financial profile was as follows:
-- Interest coverage ratio 2.3x
-- Debt (net of cash) to annual EBITDA 4.9x
-- Consolidated debt to investment in hotels, at cost 42.8%
-- Borrowing capacity under its Line of Credit $565 million
-- Fixed interest rate debt to total debt 88%
-- Weighted average maturity of debt 6.8 years
-- Mortgage debt to total assets 16.8%
-- Cash and cash equivalents $129 million
Results of Operations - Three Months Ended
(in thousands, except per share data)
Three Months Ended December 31,
Pro Forma
2001 2000 (A) 2000
Revenues:
Hotel operating revenue:
Room $229,339 $305,332 $---
Food and beverage 57,154 71,519 ---
Other operating departments 15,882 24,541 ---
Percentage lease revenue --- --- 148,332
Retail space rental and other revenue 535 564 631
Total revenue 302,910 401,956 148,963
Expenses:
Hotel operating expenses:
Room 58,621 74,904 ---
Food and beverage 43,133 54,017 ---
Other operating departments 7,519 9,005 ---
Other property related costs 90,243 109,075 ---
Management fees 12,828 18,630 ---
Taxes, insurance and lease expense 33,723 38,450 21,130
Corporate expenses 3,369 3,769 3,366
Depreciation 38,906 39,852 39,730
Total operating expenses 288,342 347,702 64,226
Operating income 14,568 54,254 84,737
Interest expense, net:
Recurring financing 40,005 40,240 40,235
Merger related financing 274 --- ---
Swap termination expense 2,225 --- ---
Provision for losses on assets held
for sale 7,000 --- ---
Income (loss) before equity in income
from unconsolidated entities, minority
interests and gain on sale of assets (34,936) 14,014 44,502
Equity in income from unconsolidated
entities 296 (1,839) 2,010
Minority interests 5,373 (1,684) (5,341)
Gain on sale of assets --- 135 135
Net income (loss) (29,267) 10,626 41,306
Preferred dividends (6,150) (6,169) (6,169)
Net income (loss) applicable to common
shareholders $(35,417) $4,457 $35,137
Diluted per common share data:
Net income (loss) applicable to
common shareholders $(0.67) $0.08 $0.66
Weighted average common shares
outstanding 52,639 53,616 53,202
See footnotes following Year Ended Reconciliation of FFO and EBITDA.
Results of Operations - Full Year
(in thousands, except per share data)
Years Ended December 31,
Pro Forma
2001 2000 (A) 2000
Revenues:
Hotel operating revenue:
Room $866,101 $1,028,267 $ ---
Food and beverage 157,812 188,207 ---
Other operating departments 58,931 75,176 ---
Percentage lease revenue 115,137 125,864 536,907
Retail space rental and other
revenue 2,990 2,186 3,057
Total revenue 1,200,971 1,419,700 539,964
Expenses:
Hotel operating expenses:
Room 212,857 245,407 ---
Food and beverage 122,999 144,227 ---
Other operating departments 26,789 29,682 ---
Other property related costs 309,452 344,761 ---
Management fees 38,534 49,435 ---
Taxes, insurance and lease expense 141,621 165,731 92,633
Corporate expenses 12,678 13,266 12,256
Depreciation 157,692 161,516 160,745
Lease termination costs 36,604 --- ---
Merger termination costs 19,919 --- ---
Total operating expenses 1,079,145 1,154,025 265,634
Operating income 121,826 265,675 274,330
Interest expense, net:
Recurring financing 158,343 156,712 156,712
Merger related financing 5,486 --- ---
Swap termination expense 7,049 --- ---
Provision for losses on assets
held for sale 7,000 63,000 63,000
Income (loss) before equity in income
from unconsolidated entities, minority
interests, gain on sale of assets and
extraordinary items (56,052) 45,963 54,618
Equity in income from unconsolidated
entities 7,346 10,958 14,820
Minority interests 7,283 (7,003) (8,262)
Gain on sale of assets 3,417 4,388 4,388
Income (loss) before extraordinary
items (38,006) 54,306 65,564
Extraordinary charge from write off
of deferred financing fees (1,270) (3,865) (3,865)
Net income (loss) (39,276) 50,441 61,699
Preferred dividends (24,600) (24,682) (24,682)
Net income (loss) applicable to
common shareholders $(63,876) $25,759 $37,017
Diluted per common share data:
Net income (loss) applicable to
common shareholders $(1.21) $0.46 $0.67
Weighted average common shares
outstanding 52,622 55,933 55,519
See footnotes following Year Ended Reconciliation of FFO and EBITDA.
Reconciliation of FFO and EBITDA
(in thousands, except per share and unit data)
Three Months Ended December 31,
Pro Forma
2001 2000 (A) 2000
Funds From Operations (FFO) (B):
Net income (loss) $ (29,267) $ 10,626 $41,306
Provision for losses on assets held
for sale 7,000 --- ---
Abandoned projects 837 --- ---
Gain on sale of hotel --- (135) (135)
Non-recurring merger financing costs 274 --- ---
Swap termination expense 2,225 --- ---
Deferred rent --- --- (22,268)
Series B preferred dividends (3,234) (3,234) (3,234)
Depreciation 38,906 39,852 39,730
Depreciation from unconsolidated
entities 3,104 2,538 2,538
Minority interest in FelCor Lodging LP (6,026) 816 4,471
FFO $13,819 $ 50,463 $62,408
Diluted FFO per common share and unit $0.21 $0.75 $0.94
Weighted average common shares and
units outstanding 66,641 66,968 66,137
Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA):
FFO $13,819 $ 50,463 $62,408
Interest expense 40,635 40,813 40,808
Interest expense from unconsolidated
entities 2,413 2,239 2,239
Amortization expense 654 437 437
Series B preferred dividends 3,234 3,234 3,234
EBITDA $ 60,755 $ 97,186 $109,126
See footnotes following Year Ended Reconciliation of FFO and EBITDA.
Reconciliation of FFO and EBITDA
(in thousands, except per share and unit data)
Years Ended December 31,
Pro Forma
2001 2000 (A) 2000
Funds From Operations (FFO) (B):
Net income (loss) $(39,276) $50,441 $61,699
Extraordinary charge 1,270 3,865 3,865
Provision for losses on assets held
for sale 7,000 63,000 63,000
Abandoned projects 837 --- ---
Gain on sale of hotel --- (2,595) (2,595)
Lease termination costs 36,604 --- ---
Merger costs:
Termination costs 19,919 --- ---
Non-recurring financing 5,486 --- ---
Swap termination expense 7,049 --- ---
Series B preferred dividends (12,937) (12,937) (12,937)
Depreciation 157,692 161,516 160,745
Depreciation from unconsolidated
entities 10,881 10,167 10,167
Minority interest in FelCor Lodging LP (10,868) 3,432 4,692
FFO $183,657 $276,889 $288,636
Diluted FFO per common share
and unit $2.75 $4.07 $4.29
Weighted average common shares
and units outstanding 66,675 68,069 67,239
Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA):
FFO $183,657 $276,889 $288,636
Interest expense 161,226 158,620 158,620
Interest expense from unconsolidated
entities 9,678 9,188 9,188
Amortization expense 2,093 1,480 1,480
Series B preferred dividends 12,937 12,937 12,937
EBITDA $369,591 $459,114 $470,861
(A) Pro forma 2000 is presented as if FelCor's acquisition of DJONT
Operations L.L.C. and the acquisition of 12 hotel leases from Six
Continents Hotels occurred January 1, 2000, and the acquisition of the
remaining 88 hotel leases from Six Continents Hotels occurred on July
1, 2000.
(B) FFO and EBITDA are adjusted for non-recurring items. With the
exception of these adjustments, FelCor follows NAREIT's White Paper on
Funds From Operations in computing FFO.
Debt Outstanding
At December 31, 2001, debt consisted of the following (in thousands):
Weighted
Average Rate Balance
Line of credit 4.48% $49,675
Senior term notes (A) 8.45 1,192,232
Mortgage debt 8.01 687,810
Other 8.77 8,691
Total debt 8.19% $1,938,408
(A) Includes fixed to floating interest rate swaps of $175 million
effectively swapping the 7.375 percent senior term notes due in 2004
to LIBOR plus 320 basis points.
At December 31, 2001, future scheduled debt principal payments are as follows
(in thousands):
Year
2002 $12,922
2003 34,904
2004 238,903
2005 42,635
2006 14,217
2007 and thereafter 1,602,595
1,946,176
Discount accretion over term (7,768)
Total debt $1,938,408
Hotel Performance Statistics
The following table sets forth variances for 2001, compared to the same prior
year period:
Fourth Quarter Variance by Month
Occupancy ADR RevPAR
% Variance % Variance % Variance
October (17.3) (9.6) (25.2)
November (15.0) (10.1) (23.6)
December (11.4) (8.4) (18.8)
Fourth Quarter (14.9) (9.5) (23.0)
The RevPAR decline for the month of January 2002 was approximately 21 percent.
The following table sets forth historical occupancy, ADR, RevPAR, and the
percentage changes therein between the periods presented for the hotels in which
the Company had an ownership interest at December 31, 2001.
Occupancy (%)
Fourth Quarter Full Year
% %
2001 2000 Variance 2001 2000 Variance
Embassy Suites
hotels 60.1 68.4 (12.2) 67.0 74.1 (9.6)
Holiday-branded
hotels 53.8 62.8 (14.4) 64.3 69.0 (6.9)
Crowne Plaza hotels 52.4 65.6 (20.1) 60.1 70.9 (15.1)
Doubletree-branded
hotels 56.8 66.4 (14.5) 65.0 70.3 (7.4)
Sheraton-branded
hotels 52.0 66.8 (22.2) 62.2 71.4 (12.9)
Other hotels 50.0 57.7 (13.4) 58.7 63.3 (7.4)
Total hotels 55.2 64.9 (14.9) 63.9 70.5 (9.2)
ADR (dollars)
Fourth Quarter Full Year
% %
2001 2000 Variance 2001 2000 Variance
Embassy Suites
hotels 118.53 129.12 (8.2) 127.90 127.96 0.0
Holiday-branded
hotels 78.27 86.74 (9.8) 83.41 86.44 (3.5)
Crowne Plaza hotels 93.75 109.67 (14.5) 101.62 106.00 (4.1)
Doubletree-branded
hotels 95.55 105.96 (9.8) 104.38 105.69 (1.2)
Sheraton-branded
hotels 103.03 114.29 (9.9) 109.14 112.47 (3.0)
Other hotels 74.57 81.07 (8.0) 78.36 81.66 (4.0)
Total hotels 95.69 105.79 (9.5) 102.18 104.64 (2.4)
RevPAR (dollars)
Fourth Quarter Full Year
% %
2001 2000 Variance 2001 2000 Variance
Embassy Suites
hotels 71.21 88.38 (19.4) 85.66 94.78 (9.6)
Holiday-branded
hotels 42.09 54.51 (22.8) 53.64 59.68 (10.1)
Crowne Plaza hotels 49.16 71.98 (31.7) 61.12 75.13 (18.6)
Doubletree-branded
hotels 54.26 70.35 (22.9) 67.88 74.26 (8.6)
Sheraton-branded
hotels 53.54 76.37 (29.9) 67.92 80.35 (15.5)
Other hotels 37.30 46.80 (20.3) 45.97 51.72 (11.1)
Total hotels 52.83 68.61 (23.0) 65.34 73.73 (11.4)
RevPAR Performance for Selected States
Hotels in Texas, California, Florida and Georgia contained the largest
concentration of FelCor's hotels. The RevPAR changes during the periods ended
December 31, 2001 (versus comparable periods for 2000) from FelCor's hotels in
these states are as follows:
RevPAR (dollars)
Fourth Quarter Full Year
2001 2000 % Variance 2001 2000 % Variance
Texas 41.88 55.06 (23.9) 51.70 58.78 (12.0)
California 66.79 102.57 (34.9) 90.87 110.71 (17.9)
Florida 47.66 65.10 (26.8) 64.08 71.99 (11.0)
Georgia 50.68 60.99 (16.9) 62.80 67.93 (7.6)
Brand Distribution
Number Number Percentage of
of Hotels of Rooms Room Revenue
Embassy Suites 59 14,843 40.1
Holiday-branded hotels 59 16,914 28.6
Crowne Plaza 18 5,963 11.5
Doubletree-branded hotels 13 2,650 5.7
Sheraton-branded 10 3,269 7.0
Other hotels 24 4,848 7.1
Total 183 48,487 100.0
Selected State Distribution
Number Number Percentage of
of Hotels of Rooms Room Revenue
Texas 41 11,138 18.2
California 19 6,026 17.3
Florida 17 5,529 11.2
Georgia 14 3,868 7.7
Total for four states 91 26,561 54.4
SOURCE: FelCor Lodging Trust Incorporated