FelCor Reports Second Quarter 2016 Earnings

By: FelCor Lodging Trust Incorporated via Business Wire News Releases

July 26, 2016 at 08:37 AM EDT

FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the second quarter ended June 30, 2016.

Second Quarter Highlights

Same-store RevPAR increased 2.6% over the same period in 2015.
Net income was $13.8 million, and net income per share was $0.05.
Adjusted FFO per share increased 14% to $0.32 over the same period in 2015.
Adjusted EBITDA increased $2.7 million to $72.4 million over the same period in 2015.
Selling two hotels (Renaissance Esmeralda Indian Wells Resort and Holiday Inn Nashville Airport) for aggregate gross proceeds of approximately $108 million.

“During the second quarter, RevPAR growth was 2.6%. Softer corporate transient demand led to adjustments in customer mix that impacted overall ADR, primarily in New York, San Francisco, Philadelphia and Boston. The remainder of our portfolio performed well relative to expectations, and our overall portfolio continued to gain market share. We actively worked with our management companies to maximize revenue and profitability, as evidenced by our continued market share growth and Hotel EBITDA margin improvement,” said Richard A. Smith, FelCor’s President and Chief Executive Officer.

Mr. Smith added, “We continue to execute our strategy as planned to drive stockholder value. We are making progress with our planned asset sales. We have agreed to sell two hotels and have received non-refundable deposits. In addition, we purchased 1.2 million shares of common stock at prices significantly below our net asset value, and we are progressing with our high-ROI redevelopment projects.”

Second Quarter Hotel Results

	Second Quarter
	2016			2015			Change
Same-store hotels (39)
RevPAR	$	158.48		$	154.48		2.6	%
Total hotel revenue, in millions	$	225.0		$	219.6		2.5	%
Hotel EBITDA, in millions	$	74.0		$	71.8		3.1	%
Hotel EBITDA margin		32.9	%		32.7	%	19 bps

RevPAR for our 39 same-store hotels increased 2.6% (to $158.48) from the same period in 2015. The change reflects a 2.0% increase in ADR (to $194.28) and a 0.6% increase in occupancy (to 81.6%). Corporate transient room nights decreased 3% from the same period in 2015 as a result of weaker demand, which ultimately led to less compression in some of our urban markets. This decrease was partially offset by a 7% increase in corporate group room nights.

See pages 12-13 and 18-22 for more detailed operating data.

Second Quarter Operating Results

	Second Quarter
$ in millions, except for per share information	2016		2015			Change
Net income (loss)	$	13.8	$	(3.2	)		524.1	%
Net income (loss) per share	$	0.05	$	(0.12	)	$	0.17
Same-store Adjusted EBITDA	$	69.7	$	67.7			3.0	%
Adjusted EBITDA	$	72.4	$	69.7			3.9	%
Adjusted FFO per share	$	0.32	$	0.28		$	0.04

Net income attributable to common stockholders was $7.1 million ($0.05 per share) in 2016, compared to a net loss of $17.3 million ($0.12 per share) for the same period in 2015. Net income in 2016 includes an impairment charge of $6.3 million attributable to a property to be sold in the third quarter. Net loss in 2015 included $30.8 million in debt extinguishment charges, offset by a $7.1 million gain on sale of an unconsolidated joint venture.

Same-store Adjusted EBITDA increased 3.0% to $69.7 million from the same period in 2015. Adjusted EBITDA was $72.4 million.

Adjusted FFO was $44.1 million ($0.32 per share), compared to $39.3 million ($0.28 per share) for the same period in 2015.

Year-to-Date Operating Results

Net loss attributable to common stockholders was $4.1 million ($0.03 per share) in 2016, compared to a net loss of $20.2 million ($0.15 per share) for the same period in 2015. Net loss in 2016 includes an impairment charge of $6.3 million attributable to a property to be sold in the third quarter. Net loss in 2015 included $30.9 million in debt extinguishment charges, offset by a $16.3 million net gain on the sale of consolidated hotels and a $7.1 million gain on sale of an unconsolidated joint venture.

RevPAR for our 39 same-store hotels increased 3.5% (to $150.29) from the same period in 2015. The change reflects a 2.6% increase in ADR (to $191.15) and a 0.9% increase in occupancy (to 78.6%). Hotel EBITDA for our 39 same-store hotels increased by 4% to $129.4 million, and Hotel EBITDA margin was 30.2%, a 23 basis point increase.

Same-store Adjusted EBITDA increased 4.9% to $120.0 million from the same period in 2015. Adjusted EBITDA was $121.4 million.

Adjusted FFO was $64.3 million ($0.46 per share), compared to $57.6 million ($0.43 per share) for the same period in 2015.

EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO, Adjusted FFO and Adjusted FFO per share are all non-GAAP financial measures. See our discussion of “Non-GAAP Financial Measures” beginning on page 14 for a reconciliation of each of these measures to the most comparable GAAP financial measure and for information regarding the use, limitations and importance of these non-GAAP financial measures.

Capital Allocation

We continually strive to increase long-term stockholder value through prudent capital allocation. As part of this ongoing effort, we look for opportunities to redeploy capital to achieve higher returns and strengthen our balance sheet.

Asset Sales

We have agreed to sell two hotels, the 560-room Renaissance Esmeralda Indian Wells Resort and the 383-room Holiday Inn Nashville Airport for $76 million and $32 million, respectively. We have received non-refundable deposits of $4.8 million, with scheduled closing dates of August 1 and September 1, respectively. Proceeds will be used to repay our line of credit. We continue to market our three New York hotels.

Stock Repurchase Program

In 2015, our Board approved a $100 million stock repurchase program, which we began implementing in December. To date, we have purchased 6.1 million shares for $41.9 million (at an average price of $6.81 per share), including 1.2 million shares during the second quarter. We intend to continue repurchasing our common stock while it trades at a significant discount to NAV.

Common Dividend

During the second quarter, we declared a $0.06 per share common stock dividend, which will be paid at the end of July. 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 first six months, we invested $32.1 million in renovations and redevelopment projects at our hotels. During 2016, we plan to invest approximately $60 million in renovations as part of our long-term capital plan.

In addition, we expect to invest approximately $15 million in redevelopment projects this year, primarily at the Embassy Suites Myrtle Beach Oceanfront Resort and The Vinoy Renaissance St. Petersburg Resort and Golf Club. These projects are underway and remain on schedule and within budget. We are also making progress with entitlements and planning for several other high-ROI redevelopment projects. The returns from these projects will augment future EBITDA growth, and we expect the projects to generate unlevered internal rates of return of at least 15%.

Balance Sheet

As of June 30, 2016, we had $1.5 billion of gross consolidated debt with a 5.2% weighted-average interest rate and a seven-year weighted-average maturity. We had $58.2 million of cash and cash equivalents on hand and $23.7 million of restricted cash.

“Over the past several years, we have made significant improvements to our balance sheet by staggering and extending our debt maturities, locking in low fixed interest rates, lowering our aggregate preferred dividends and increasing our revolver capacity. In addition, approximately 20% of our EBITDA is protected through the guaranty with Wyndham. We are well-positioned to execute our strategic plan through any stage of the lodging cycle and achieve our goal of increasing stockholder value,” said Michael C. Hughes, FelCor’s Executive Vice President and Chief Financial Officer.

Outlook

We are updating our 2016 guidance to reflect second quarter results and ongoing softness in corporate transient demand for the remainder of the year. We continue to expect RevPAR for our portfolio will outperform that of our peers due to our high-quality, well-located portfolio in markets with relatively lower supply growth. Our outlook assumes Hotel EBITDA for the Wyndham hotels equals the amount guaranteed by Wyndham for 2016 (which equates to approximately $59 million of Hotel EBITDA).

For the year, we expect:

Net income attributable to FelCor will be $23.3 million - $29.4 million;
RevPAR for same-store hotels will increase 3.0 - 4.0%;
Adjusted EBITDA will be $237.0 million - $243.0 million (excludes $1.5 million of EBITDA from the Renaissance Esmeralda Indian Wells Resort and Holiday Inn Nashville Airport from the time of sale to December 31, 2016);
Adjusted FFO per share will be $0.87 - $0.92; and
Interest expense, including our pro rata share from joint ventures, will be $80 million.

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 second quarter earnings Conference Call on Tuesday, July 26, 2016 at 10:00 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 webcast link on the “Investors” page. The conference call replay will also be archived on the Company’s website.

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

SUPPLEMENTAL INFORMATION

INTRODUCTION

The following information is presented in order to help our investors understand FelCor’s financial position as of and for the three and six months ended June 30, 2016.

TABLE OF CONTENTS

			Page
Consolidated Statements of Operations(a)			10
Consolidated Balance Sheets(a)			11
Consolidated Debt Summary			12
Schedule of Encumbered Hotels			13
Capital Expenditures			13
Total Enterprise Value			14
Hotel Operating Statistics			15
Historical Quarterly Operating Statistics			19
Non-GAAP Financial Measures			19

(a) We have prepared our consolidated statements of operations and balance sheets without an audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. Our consolidated statements of operations and balance sheets should be read in conjunction with the audited consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K.



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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Revenues:
Hotel operating revenue:
Room	$	181,318		$	182,066		$	340,394		$	344,372
Food and beverage		43,697			42,151			83,229			81,995
Other operating departments		11,746			11,832			22,595			22,967
Other revenue		1,145			5,054			1,832			5,464
Total revenues		237,906			241,103			448,050			454,798
Expenses:
Hotel departmental expenses:
Room		44,748			44,423			87,447			86,934
Food and beverage		32,592			31,278			63,548			61,974
Other operating departments		4,039			4,331			7,822			8,780
Other property related costs		56,007			57,791			111,573			114,686
Management and franchise fees		8,501			9,202			17,726			18,287
Taxes, insurance and lease expense		14,864			16,410			28,446			31,217
Corporate expenses		6,047			6,530			14,447			15,103
Depreciation and amortization		29,177			28,750			58,360			56,522
Impairment loss		6,333			—			6,333			—
Other expenses		2,142			1,411			2,970			5,639
Total operating expenses		204,450			200,126			398,672			399,142
Operating income		33,456			40,977			49,378			55,656
Interest expense, net		(19,907	)		(20,278	)		(39,627	)		(39,759	)
Debt extinguishment		—			(30,823	)		—			(30,896	)
Other gains, net		100			166			100			166
Income (loss) before equity in income from unconsolidated entities		13,649			(9,958	)		9,851			(14,833	)
Equity in income from unconsolidated entities		726			7,513			572			7,662
Income (loss) from continuing operations before income tax		14,375			(2,445	)		10,423			(7,171	)
Income tax		25			(169	)		(390	)		(338	)
Income (loss) from continuing operations		14,400			(2,614	)		10,033			(7,509	)
Loss from discontinued operations		—			(83	)		—			(79	)
Income (loss) before gain (loss) on sale of property		14,400			(2,697	)		10,033			(7,588	)
Gain (loss) on sale of property, net		(630	)		(550	)		(1,344	)		16,337
Net income (loss)		13,770			(3,247	)		8,689			8,749
Net loss (income) attributable to noncontrolling interests in other partnerships		16			247			487			(4,632	)
Net loss (income) attributable to redeemable noncontrolling interests in FelCor LP		(31	)		75			17			89
Preferred distributions - consolidated joint venture		(364	)		(359	)		(724	)		(707	)
Net income (loss) attributable to FelCor		13,391			(3,284	)		8,469			3,499
Preferred dividends		(6,279	)		(7,903	)		(12,558	)		(17,581	)
Redemption of preferred stock		—			(6,096	)		—			(6,096	)
Net income (loss) attributable to FelCor common stockholders	$	7,112		$	(17,283	)	$	(4,089	)	$	(20,178	)
Basic and diluted per common share data:
Income (loss) from continuing operations	$	0.05		$	(0.12	)	$	(0.03	)	$	(0.15	)
Net income (loss)	$	0.05		$	(0.12	)	$	(0.03	)	$	(0.15	)
Basic weighted average common shares outstanding		138,182			140,322			138,930			132,465
Diluted weighted average common shares outstanding		138,678			140,322			138,930			132,465


Consolidated Balance Sheets
(in thousands, except par values)

	June 30,			December 31,
	2016			2015
Assets
Investment in hotels, net of accumulated depreciation of $936,780 and $899,575 at June 30, 2016 and December 31, 2015, respectively	$	1,692,419		$	1,729,531
Investment in unconsolidated entities		9,422			9,575
Cash and cash equivalents		58,188			59,786
Restricted cash		23,706			17,702
Accounts receivable, net of allowance for doubtful accounts of $239 and $204 at June 30, 2016 and December 31, 2015, respectively		38,650			28,136
Deferred expenses, net of accumulated amortization of $2,022 and $1,086 at June 30, 2016 and December 31, 2015, respectively		5,464			6,390
Other assets		19,547			14,792
Total assets	$	1,847,396		$	1,865,912
Liabilities and Equity
Debt, net of unamortized debt issuance costs of $17,106 and $18,065 at June 30, 2016 and December 31, 2015, respectively	$	1,433,703		$	1,409,889
Distributions payable		14,951			15,140
Accrued expenses and other liabilities		126,949			125,274
Total liabilities		1,575,603			1,550,303
Commitments and contingencies
Redeemable noncontrolling interests in FelCor LP, 611 units issued and outstanding at June 30, 2016 and December 31, 2015		3,809			4,464
Equity:
Preferred stock, $0.01 par value, 20,000 shares authorized:
Series A Cumulative Convertible Preferred Stock, 12,879 shares, liquidation value of $321,987, issued and outstanding at June 30, 2016 and December 31, 2015		309,337			309,337
Common stock, $0.01 par value, 200,000 shares authorized; 138,225 and 141,808 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively		1,382			1,418
Additional paid-in capital		2,572,668			2,567,515
Accumulated deficit		(2,667,034	)		(2,618,117	)
Total FelCor stockholders’ equity		216,353			260,153
Noncontrolling interests in other partnerships		7,848			7,806
Preferred equity in consolidated joint venture, liquidation value of $44,610 and $43,954 at June 30, 2016 and December 31, 2015, respectively		43,783			43,186
Total equity		267,984			311,145
Total liabilities and equity	$	1,847,396		$	1,865,912


Consolidated Debt Summary
(dollars in thousands)

	Encumbered Hotels	Interest Rate (%)	Maturity Date	June 30, 2016			December 31, 2015
Senior unsecured notes	—	6.00	June 2025	$	475,000		$	475,000
Senior secured notes	9	5.625	March 2023		525,000			525,000
Mortgage debt(a)	4	4.95	October 2022		121,355			122,237
Mortgage debt	1	4.94	October 2022		30,454			30,717
Line of credit(b)	7	LIBOR + 2.75	June 2019		214,000			190,000
Knickerbocker loan(c)	1	LIBOR + 3.00	November 2017		85,000			85,000
Total	22			$	1,450,809		$	1,427,954
Unamortized debt issuance costs					(17,106	)		(18,065	)
Debt, net of unamortized debt issuance costs				$	1,433,703		$	1,409,889

(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.



Schedule of Encumbered Hotels
(dollars in millions)

Consolidated	June 30, 2016
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		$	34	Ft. Lauderdale - ES
Mortgage debt		$	23	Birmingham - ES
Mortgage debt		$	37	Minneapolis Airport - ES
Mortgage debt		$	30	Deerfield Beach - ES
Line of credit		$	214	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
(dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Improvements and additions to majority-owned hotels	$	17,901		$	12,274		$	31,909		$	25,757
Partners’ pro rata share of additions to consolidated joint venture hotels		(127	)		(1	)		(225	)		(25	)
Pro rata share of additions to unconsolidated hotels		159			969			417			1,273
Total additions to hotels(a)	$	17,933		$	13,242		$	32,101		$	27,005

(a) Includes capitalized interest, property taxes, property insurance, ground leases and certain employee costs.



Total Enterprise Value
(in thousands, except per share data)

	June 30,			December 31
	2016			2015
Common shares outstanding		138,225			141,808
Units outstanding		611			611
Combined shares and units outstanding		138,836			142,419
Common stock price	$	6.23		$	7.30
Market capitalization	$	864,948		$	1,039,659
Series A preferred stock(a)		321,987			321,987
Preferred equity - Knickerbocker joint venture, net		41,594			41,027
Consolidated debt (b)		1,450,809			1,427,954
Noncontrolling interests of consolidated debt		(4,250	)		(4,250	)
Pro rata share of unconsolidated debt		11,300			11,433
Cash, cash equivalents and restricted cash		(81,894	)		(77,488	)
Total enterprise value (TEV)	$	2,604,494		$	2,760,322

(a) Based on liquidation value.

(b) Excludes unamortized debt issuance costs.



Hotel Operating Statistics

	Occupancy (%)				ADR ($)				RevPAR ($)
	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
Same-store Hotels	2016	2015	%Change		2016	2015	%Change		2016	2015	%Change
Embassy Suites Atlanta-Buckhead	80.7	81.5	(1.0	)	154.42	147.38	4.8		124.66	120.14	3.8
DoubleTree Suites by Hilton Austin	88.6	81.2	9.1		217.74	221.84	(1.9	)	193.01	180.22	7.1
Embassy Suites Birmingham	80.3	79.1	1.5		143.14	138.58	3.3		114.88	109.59	4.8
The Fairmont Copley Plaza, Boston	83.2	84.3	(1.3	)	366.02	361.24	1.3		304.57	304.48	—
Wyndham Boston Beacon Hill	86.9	85.4	1.8		258.35	262.02	(1.4	)	224.62	223.83	0.4
Embassy Suites Boston-Marlborough	77.2	78.8	(2.1	)	175.60	172.34	1.9		135.52	135.78	(0.2	)
Sheraton Burlington Hotel & Conference Center	72.0	73.3	(1.8	)	123.44	123.39	—		88.86	90.48	(1.8	)
The Mills House Wyndham Grand Hotel, Charleston	91.7	90.9	0.9		262.48	257.83	1.8		240.67	234.31	2.7
Embassy Suites Dallas-Love Field(1)	78.5	91.0	(13.7	)	141.99	131.01	8.4		111.52	119.25	(6.5	)
Embassy Suites Deerfield Beach-Resort & Spa	81.3	82.6	(1.6	)	174.71	182.66	(4.4	)	142.02	150.93	(5.9	)
Embassy Suites Fort Lauderdale 17th Street	79.9	81.6	(2.0	)	157.06	152.46	3.0		125.52	124.34	0.9
Wyndham Houston-Medical Center Hotel & Suites	80.3	79.7	0.8		152.72	154.07	(0.9	)	122.70	122.77	(0.1	)
Renaissance Esmeralda Indian Wells Resort & Spa	57.7	53.4	7.9		215.15	205.28	4.8		124.08	109.72	13.1
Embassy Suites Los Angeles-International Airport/South	85.5	82.8	3.3		173.74	160.79	8.1		148.63	133.18	11.6
Embassy Suites Mandalay Beach-Hotel & Resort	86.4	84.4	2.3		233.46	210.74	10.8		201.60	177.96	13.3
Embassy Suites Miami-International Airport	84.5	87.4	(3.3	)	130.21	134.11	(2.9	)	110.04	117.19	(6.1	)
Embassy Suites Milpitas-Silicon Valley	84.8	86.5	(2.0	)	203.16	196.09	3.6		172.20	169.64	1.5
Embassy Suites Minneapolis-Airport	78.6	77.0	2.2		157.60	153.00	3.0		123.91	117.75	5.2
Embassy Suites Myrtle Beach-Oceanfront Resort	79.0	80.0	(1.2	)	196.75	198.44	(0.8	)	155.45	158.67	(2.0	)
Hilton Myrtle Beach Resort	74.3	76.2	(2.5	)	158.89	153.36	3.6		118.12	116.87	1.1
Embassy Suites Napa Valley	83.6	84.7	(1.3	)	257.77	239.75	7.5		215.39	203.06	6.1
Holiday Inn Nashville Airport	82.6	68.7	20.3		129.53	118.37	9.4		107.00	81.29	31.6
Wyndham New Orleans-French Quarter	81.2	74.0	9.7		151.61	161.25	(6.0	)	123.14	119.34	3.2
Morgans New York	89.2	86.4	3.3		282.60	301.09	(6.1	)	252.11	260.12	(3.1	)
Royalton New York	87.5	89.0	(1.7	)	309.77	317.23	(2.4	)	270.90	282.37	(4.1	)
Embassy Suites Orlando-International Drive South/Convention Center(1)	73.3	85.8	(14.6	)	138.31	146.04	(5.3	)	101.34	125.36	(19.2	)
DoubleTree Suites by Hilton Orlando-Lake Buena Vista	91.7	93.8	(2.3	)	138.99	137.68	1.0		127.39	129.16	(1.4	)
Wyndham Philadelphia Historic District	85.3	74.5	14.5		163.19	179.96	(9.3	)	139.25	134.14	3.8
Sheraton Philadelphia Society Hill Hotel	81.4	81.0	0.5		193.05	188.62	2.3		157.15	152.74	2.9
Embassy Suites Phoenix-Biltmore	70.5	70.1	0.6		159.69	153.52	4.0		112.58	107.64	4.6
Wyndham Pittsburgh University Center	77.7	78.8	(1.4	)	153.69	152.91	0.5		119.43	120.57	(0.9	)
Wyndham San Diego Bayside	77.9	84.5	(7.7	)	161.97	151.98	6.6		126.25	128.37	(1.7	)
Embassy Suites San Francisco Airport-South San Francisco	89.4	90.3	(1.1	)	208.42	197.38	5.6		186.23	178.31	4.4
Embassy Suites San Francisco Airport-Waterfront	92.0	87.0	5.7		207.43	208.92	(0.7	)	190.75	181.82	4.9
Holiday Inn San Francisco-Fisherman’s Wharf	89.8	90.7	(1.0	)	207.18	204.91	1.1		186.12	185.85	0.1
San Francisco Marriott Union Square	90.8	86.5	4.9		291.00	279.42	4.1		264.08	241.82	9.2
Wyndham Santa Monica At the Pier	87.1	85.9	1.3		273.84	255.68	7.1		238.44	219.75	8.5
Embassy Suites Secaucus-Meadowlands	79.5	81.4	(2.4	)	188.41	192.12	(1.9	)	149.73	156.48	(4.3	)
The Vinoy Renaissance St. Petersburg Resort & Golf Club	83.9	84.3	(0.4	)	220.88	210.15	5.1		185.39	177.09	4.7
Same-store Hotels	81.6	81.1	0.6		194.28	190.42	2.0		158.48	154.48	2.6

(1) Hotel under renovation in 2016.



Hotel Operating Statistics

	Occupancy (%)				ADR ($)				RevPar ($)
	Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
Same-store Hotels	2016	2015	%Change		2016	2015	%Change		2016	2015	%Change
Embassy Suites Atlanta-Buckhead	80.8	80.2	0.8		156.78	149.34	5.0		126.72	119.72	5.9
DoubleTree Suites by Hilton Austin	85.7	81.7	5.0		228.52	235.74	(3.1	)	195.94	192.52	1.8
Embassy Suites Birmingham	80.5	78.1	3.0		138.46	137.15	1.0		111.40	107.08	4.0
The Fairmont Copley Plaza, Boston	73.6	73.0	0.8		316.53	314.81	0.5		232.97	229.76	1.4
Wyndham Boston Beacon Hill	75.4	76.8	(1.9	)	218.60	219.52	(0.4	)	164.74	168.69	(2.3	)
Embassy Suites Boston-Marlborough	71.0	75.7	(6.2	)	171.95	167.64	2.6		122.04	126.83	(3.8	)
Sheraton Burlington Hotel & Conference Center	70.3	69.5	1.1		108.67	113.12	(3.9	)	76.36	78.59	(2.8	)
The Mills House Wyndham Grand Hotel, Charleston	84.9	84.7	0.2		236.39	230.98	2.3		200.65	195.61	2.6
Embassy Suites Dallas-Love Field(1)	81.9	91.4	(10.4	)	142.78	132.34	7.9		116.94	120.93	(3.3	)
Embassy Suites Deerfield Beach-Resort & Spa	84.8	87.3	(2.9	)	224.15	223.40	0.3		189.99	195.01	(2.6	)
Embassy Suites Fort Lauderdale 17th Street	86.6	87.4	(0.9	)	197.07	185.41	6.3		170.75	162.13	5.3
Wyndham Houston-Medical Center Hotel & Suites	83.2	79.9	4.1		156.30	157.45	(0.7	)	130.01	125.77	3.4
Renaissance Esmeralda Indian Wells Resort & Spa	63.1	62.9	0.4		223.59	218.22	2.5		141.18	137.30	2.8
Embassy Suites Los Angeles-International Airport/South	87.8	81.8	7.3		168.08	154.52	8.8		147.52	126.38	16.7
Embassy Suites Mandalay Beach-Hotel & Resort	81.5	78.7	3.5		221.16	196.75	12.4		180.29	154.93	16.4
Embassy Suites Miami-International Airport	88.0	90.7	(3.0	)	165.04	167.91	(1.7	)	145.23	152.31	(4.7	)
Embassy Suites Milpitas-Silicon Valley	82.8	82.7	—		207.29	195.48	6.0		171.56	161.71	6.1
Embassy Suites Minneapolis-Airport	73.7	74.7	(1.3	)	151.13	147.71	2.3		111.36	110.28	1.0
Embassy Suites Myrtle Beach-Oceanfront Resort	73.8	71.0	3.9		165.49	166.47	(0.6	)	122.14	118.23	3.3
Hilton Myrtle Beach Resort	61.2	62.5	(2.0	)	138.46	133.73	3.5		84.79	83.57	1.5
Embassy Suites Napa Valley	81.8	81.0	0.9		220.76	211.48	4.4		180.47	171.27	5.4
Holiday Inn Nashville Airport	74.1	62.3	18.9		122.34	111.96	9.3		90.62	69.77	29.9
Wyndham New Orleans-French Quarter	77.5	70.1	10.5		153.40	164.26	(6.6	)	118.84	115.17	3.2
Morgans New York	81.0	76.2	6.3		251.21	264.75	(5.1	)	203.56	201.81	0.9
Royalton New York	81.8	84.1	(2.7	)	276.32	283.61	(2.6	)	226.15	238.61	(5.2	)
Embassy Suites Orlando-International Drive South/Convention Center(1)	80.7	86.7	(6.9	)	159.03	158.09	0.6		128.35	137.02	(6.3	)
DoubleTree Suites by Hilton Orlando-Lake Buena Vista	92.0	93.3	(1.5	)	152.24	144.71	5.2		140.00	135.05	3.7
Wyndham Philadelphia Historic District	70.2	60.0	16.9		148.58	159.93	(7.1	)	104.26	96.01	8.6
Sheraton Philadelphia Society Hill Hotel	68.2	67.1	1.7		176.18	173.87	1.3		120.20	116.61	3.1
Embassy Suites Phoenix-Biltmore	74.3	77.0	(3.6	)	203.61	195.56	4.1		151.23	150.67	0.4
Wyndham Pittsburgh University Center	66.6	69.0	(3.5	)	144.69	144.09	0.4		96.32	99.36	(3.1	)
Wyndham San Diego Bayside	77.7	81.1	(4.1	)	149.61	144.46	3.6		116.28	117.10	(0.7	)
Embassy Suites San Francisco Airport-South San Francisco	87.4	88.7	(1.4	)	202.90	188.07	7.9		177.31	166.76	6.3
Embassy Suites San Francisco Airport-Waterfront	88.6	85.3	3.8		205.97	204.19	0.9		182.50	174.23	4.7
Holiday Inn San Francisco-Fisherman’s Wharf	85.9	85.1	1.0		201.21	192.72	4.4		172.85	163.93	5.4
San Francisco Marriott Union Square	89.7	85.9	4.5		305.12	280.11	8.9		273.65	240.49	13.8
Wyndham Santa Monica At the Pier	87.4	84.9	3.0		266.11	241.65	10.1		232.64	205.20	13.4
Embassy Suites Secaucus-Meadowlands	67.0	74.0	(9.4	)	181.51	185.58	(2.2	)	121.68	137.28	(11.4	)
The Vinoy Renaissance St. Petersburg Resort & Golf Club	86.0	86.5	(0.5	)	239.00	231.41	3.3		205.65	200.18	2.7
Same-store Hotels	78.6	78.0	0.9		191.15	186.24	2.6		150.29	145.18	3.5

(1) Hotel under renovation in 2016



Historical Quarterly Operating Statistics

	Occupancy (%)
	Q2 2015	Q3 2015	Q4 2015	Q1 2016	Q2 2016
Same-store hotels(a)	81.1	80.8	74.3	75.7	81.6

	ADR ($)
	Q2 2015	Q3 2015	Q4 2015	Q1 2016	Q2 2016
Same-store hotels(a)	190.42	190.19	179.39	187.78	194.28

	RevPAR ($)
	Q2 2015	Q3 2015	Q4 2015	Q1 2016	Q2 2016
Same-store hotels(a)	154.48	153.70	133.36	142.11	158.48

(a) Includes 39 consolidated hotels and excludes The Knickerbocker which opened in February 2015.

Non-GAAP Financial Measures

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



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

	Three Months Ended June 30,
	2016							2015
	Dollars			Shares	Per Share Amount			Dollars			Shares	Per Share Amount
Net income (loss)	$	13,770						$	(3,247	)
Noncontrolling interests		(15	)						322
Preferred dividends		(6,279	)						(7,903	)
Redemption of preferred stock		—							(6,096	)
Preferred distributions - consolidated joint venture		(364	)						(359	)
Net income (loss) attributable to FelCor common stockholders		7,112							(17,283	)
Less: Dividends declared on unvested restricted stock		(35	)						(13	)
Basic and diluted earnings per share data		7,077		138,182	$	0.05			(17,296	)	140,322	$	(0.12	)
Restricted stock units		—		496		—			—		—		—
Diluted earnings per share data		7,077		138,678		0.05			(17,296	)	140,322		(0.12	)
Depreciation and amortization		29,177		—		0.21			28,750		—		0.21
Depreciation, unconsolidated entities and other partnerships		469		—		—			546		—		—
Gain on sale of hotel in unconsolidated entity		—		—		—			(7,113	)	—		(0.05	)
Loss on sale of hotels, net of noncontrolling interests in other partnerships		630		—		—			631		—		—
Other gains		(100	)	—		—			(100	)	—		—
Impairment loss		6,333		—		0.05			—		—		—
Noncontrolling interests in FelCor LP		31		611		—			(75	)	611		—
Dividends declared on unvested restricted stock		35		66		—			13		57		—
Conversion of unvested restricted stock units		—		—		—			—		1,478		—
FFO*		43,652		139,355		0.31			5,356		142,468		0.04
Debt extinguishment		—		—		—			30,823		—		0.22
Debt extinguishment, unconsolidated entities		—		—		—			330		—		—
Severance costs		27		—		—			—		—		—
Abandoned projects		383		—		0.01			—		—		—
Variable stock compensation		(789	)	—		(0.01	)		(72	)	—		—
Redemption of preferred stock		—		—		—			6,096		—		0.04
Contract dispute recovery		—		—		—			(3,717	)	—		(0.03	)
Litigation settlement		650		—		0.01			—		—		—
Pre-opening costs, net of noncontrolling interests		191		—		—			523		—		0.01
Adjusted FFO*	$	44,114		139,355	$	0.32		$	39,339		142,468	$	0.28

* FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.



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

	Six Months Ended June 30,
	2016							2015
	Dollars			Shares	Per Share Amount			Dollars			Shares	Per Share Amount
Net income	$	8,689						$	8,749
Noncontrolling interests		504							(4,543	)
Preferred distributions - consolidated joint venture		(724	)						(707	)
Redemption of preferred stock		—							(6,096	)
Preferred dividends		(12,558	)						(17,581	)
Net loss attributable to FelCor common stockholders		(4,089	)						(20,178	)
Less: Dividends declared on unvested restricted stock		(73	)						(26	)
Basic and diluted earnings per share data		(4,162	)	138,930	$	(0.03	)		(20,204	)	132,465	$	(0.15	)
Depreciation and amortization		58,360		—		0.42			56,522		—		0.42
Depreciation, unconsolidated entities and other partnerships		936		—		0.01			1,258		—		0.01
Other gains		(100	)	—		—			(100	)	—		—
Impairment loss		6,333		—		0.05			—		—		—
Gain on sale of hotel in unconsolidated entity		—		—		—			(7,113	)	—		(0.05	)
Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships		1,344		—		—			(11,249	)	—		(0.09	)
Noncontrolling interests in FelCor LP		(17	)	611		—			(89	)	611		—
Dividends declared on unvested restricted stock		73		22		—			26		34		—
Conversion of unvested restricted stock units		—		451		—			—		1,332		—
FFO*		62,767		140,014		0.45			19,051		134,442		0.14
Debt extinguishment		—		—		—			30,895		—		0.23
Debt extinguishment, unconsolidated entities		—		—		—			330		—		—
Severance costs		27		—		—			—		—		—
Abandoned projects		615		—		—			—		—		—
Variable stock compensation		(27	)	—		—			925		—		0.01
Redemption of preferred stock		—		—		—			6,096		—		0.05
Contract dispute recovery		—		—		—			(3,717	)	—		(0.03	)
Litigation settlement		650		—		0.01			—		—		—
Pre-opening costs, net of noncontrolling interests		245		—		—			4,047		—		0.03
Adjusted FFO*	$	64,277		140,014	$	0.46		$	57,627		134,442	$	0.43

* FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.



Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA
(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income (loss)	$	13,770		$	(3,247	)	$	8,689		$	8,749
Depreciation and amortization		29,177			28,750			58,360			56,522
Depreciation, unconsolidated entities and other partnerships		469			546			936			1,258
Interest expense		19,923			20,284			39,655			39,770
Interest expense, unconsolidated entities and other partnerships		90			141			190			343
Income taxes		(25	)		—			390			—
Noncontrolling interests in preferred distributions, consolidated joint venture		(18	)		—			(36	)		—
Noncontrolling interests in other partnerships		16			247			487			(4,632	)
EBITDA*		63,402			46,721			108,671			102,010
Impairment loss		6,333			—			6,333			—
Debt extinguishment		—			30,823			—			30,895
Debt extinguishment, unconsolidated entities		—			330			—			330
Gain on sale of hotel in unconsolidated entity		—			(7,113	)		—			(7,113	)
Loss (gain) on sale of hotels, net of noncontrolling interests in other partnerships		630			631			1,344			(11,249	)
Other gains		(100	)		(100	)		(100	)		(100	)
Amortization of fixed stock and directors’ compensation		1,693			1,701			3,627			3,563
Severance costs		27			—			27			—
Abandoned projects		383			—			615			—
Variable stock compensation		(789	)		(72	)		(27	)		925
Contract dispute recovery		—			(3,717	)		—			(3,717	)
Litigation settlement		650			—			650			—
Pre-opening costs, net of noncontrolling interests		191			523			245			4,047
Adjusted EBITDA*		72,420			69,727			121,385			119,591
Adjusted EBITDA from hotels disposed, held for sale and recently opened		(2,751	)		(2,063	)		(1,413	)		(5,264	)
Same-store Adjusted EBITDA*	$	69,669		$	67,664		$	119,972		$	114,327

*EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA are attributable to FelCor common stockholders and FelCor LP unitholders other than FelCor.


Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Same-store operating revenue:
Room	$	172,225		$	167,875		$	326,655		$	313,808
Food and beverage		41,111			40,146			79,383			78,253
Other operating departments		11,688			11,571			22,485			22,220
Same-store operating revenue		225,024			219,592			428,523			414,281

Same-store operating expense:
Room		41,694			40,251			82,102			78,210
Food and beverage		30,022			29,222			59,000			58,098
Other operating departments		4,015			4,226			7,782			8,468
Other property related costs		53,273			51,865			106,306			102,574
Management and franchise fees		8,246			8,447			17,340			16,540
Taxes, insurance and lease expense		13,808			13,821			26,619			26,251
Same-store operating expense		151,058			147,832			299,149			290,141
Hotel EBITDA	$	73,966		$	71,760		$	129,374		$	124,140
Hotel EBITDA Margin		32.9	%		32.7	%		30.2	%		30.0	%

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

	Three months ended June 30, 2016
Same-store Hotels	Hotel Operating Revenue		Net Income (Loss)			Other Adjustments				Depreciation		Interest Expense		Hotel EBITDA		Hotel EBITDA Margin
Embassy Suites Atlanta-Buckhead	$	3,928	$	934		$	—			$	604	$	—	$	1,538	39.2	%
DoubleTree Suites by Hilton Austin		3,901		955			—				492		190		1,637	42.0	%
Embassy Suites Birmingham		2,688		363			—				394		297		1,054	39.2	%
The Fairmont Copley Plaza, Boston		17,788		2,386			—				2,198		485		5,069	28.5	%
Wyndham Boston Beacon Hill		7,017		2,477			—				981		—		3,458	49.3	%
Embassy Suites Boston-Marlborough		3,203		850			—				297		—		1,147	35.8	%
Sheraton Burlington Hotel & Conference Center		3,979		584			—				622		—		1,206	30.3	%
The Mills House Wyndham Grand Hotel, Charleston		6,457		2,346			—				632		249		3,227	50.0	%
Embassy Suites Dallas-Love Field		2,875		535			—				349		—		884	30.7	%
Embassy Suites Deerfield Beach-Resort & Spa		4,233		429			—				476		397		1,302	30.8	%
Embassy Suites Fort Lauderdale 17th Street		5,092		242			—				712		447		1,401	27.5	%
Wyndham Houston-Medical Center Hotel & Suites		3,630		1,294			(19	)			550		—		1,825	50.3	%
Renaissance Esmeralda Indian Wells Resort & Spa		11,422		(4,815	)		6,373		(1)		769		—		2,327	20.4	%
Embassy Suites Los Angeles-International Airport/South		5,548		1,328			—				634		284		2,246	40.5	%
Embassy Suites Mandalay Beach-Hotel & Resort		5,890		1,694			—				771		—		2,465	41.9	%
Embassy Suites Miami-International Airport		3,934		285			—				456		—		741	18.8	%
Embassy Suites Milpitas-Silicon Valley		4,706		1,551			—				301		—		1,852	39.4	%
Embassy Suites Minneapolis-Airport		3,630		477			—				433		472		1,382	38.1	%
Embassy Suites Myrtle Beach-Oceanfront Resort		6,857		1,575			227				658		—		2,460	35.9	%
Hilton Myrtle Beach Resort		6,666		1,888			—				875		—		2,763	41.4	%
Embassy Suites Napa Valley		4,518		1,095			—				518		345		1,958	43.3	%
Holiday Inn Nashville Airport		4,483		745			41				758		—		1,544	34.4	%
Wyndham New Orleans-French Quarter		4,573		1,492			—				721		—		2,213	48.4	%
Morgans New York		2,812		(628	)		132				640		—		144	5.1	%
Royalton New York		5,308		(386	)		88				582		—		284	5.4	%
Embassy Suites Orlando-International Drive South/Convention Center		2,318		304			—				269		—		573	24.7	%
DoubleTree Suites by Hilton Orlando-Lake Buena Vista		3,259		92			—				775		—		867	26.6	%
Wyndham Philadelphia Historic District		5,831		1,819			10				734		—		2,563	44.0	%
Sheraton Philadelphia Society Hill Hotel		8,026		1,887			—				974		—		2,861	35.6	%
Embassy Suites Phoenix-Biltmore		2,640		403			—				431		—		834	31.6	%
Wyndham Pittsburgh University Center		3,473		806			3				516		—		1,325	38.2	%
Wyndham San Diego Bayside		8,163		1,275			—				1,560		—		2,835	34.7	%
Embassy Suites San Francisco Airport-South San Francisco		6,302		1,935			—				415		—		2,350	37.3	%
Embassy Suites San Francisco Airport-Waterfront		7,003		1,149			650				763		—		2,562	36.6	%
Holiday Inn San Francisco-Fisherman’s Wharf		10,925		1,447			—				495		—		1,942	17.8	%
San Francisco Marriott Union Square		10,809		1,372			(102	)			1,342		583		3,195	29.6	%
Wyndham Santa Monica At the Pier		3,108		1,316			1				279		197		1,793	57.7	%
Embassy Suites Secaucus-Meadowlands		3,764		782			1				122		—		905	24.0	%
The Vinoy Renaissance St. Petersburg Resort & Golf Club		14,265		1,212			179				1,428		415		3,234	22.7	%
	$	225,024	$	35,495		$	7,584			$	26,526	$	4,361	$	73,966	32.9	%


	Three months ended June 30, 2015
Same-store Hotels	Hotel Operating Revenue		Net Income (Loss)			Other Adjustments				Depreciation		Interest Expense		Hotel EBITDA		Hotel EBITDA Margin
Embassy Suites Atlanta-Buckhead	$	3,814	$	910		$	—			$	635	$	—	$	1,545	40.5	%
DoubleTree Suites by Hilton Austin		3,673		1,013			—				491		70		1,574	42.9	%
Embassy Suites Birmingham		2,580		279			—				398		302		979	37.9	%
The Fairmont Copley Plaza, Boston		17,518		3,136			—				2,168		179		5,483	31.3	%
Wyndham Boston Beacon Hill		6,980		2,292			—				1,003		—		3,295	47.2	%
Embassy Suites Boston-Marlborough		3,187		858			—				287		—		1,145	35.9	%
Sheraton Burlington Hotel & Conference Center		3,733		543			—				613		—		1,156	31.0	%
The Mills House Wyndham Grand Hotel, Charleston		6,125		2,081			22				631		203		2,937	48.0	%
Embassy Suites Dallas-Love Field		3,065		680			—				343		—		1,023	33.4	%
Embassy Suites Deerfield Beach-Resort & Spa		4,424		571			—				516		403		1,490	33.7	%
Embassy Suites Fort Lauderdale 17th Street		5,130		290			—				738		454		1,482	28.9	%
Wyndham Houston-Medical Center Hotel & Suites		3,604		1,060			(8	)			535		70		1,657	46.0	%
Renaissance Esmeralda Indian Wells Resort & Spa		10,243		723			—				941		—		1,664	16.2	%
Embassy Suites Los Angeles-International Airport/South		5,059		1,349			—				652		105		2,106	41.6	%
Embassy Suites Mandalay Beach-Hotel & Resort		5,347		1,128			24				815		124		2,091	39.1	%
Embassy Suites Miami-International Airport		4,151		272			20				488		102		882	21.2	%
Embassy Suites Milpitas-Silicon Valley		4,700		1,562			—				306		—		1,868	39.7	%
Embassy Suites Minneapolis-Airport		3,484		384			—				458		480		1,322	37.9	%
Embassy Suites Myrtle Beach-Oceanfront Resort		6,720		1,570			25				718		110		2,423	36.1	%
Hilton Myrtle Beach Resort		6,811		2,024			—				830		—		2,854	41.9	%
Embassy Suites Napa Valley		4,320		940			6				520		351		1,817	42.1	%
Holiday Inn Nashville Airport		3,490		300			—				590		—		890	25.5	%
Wyndham New Orleans-French Quarter		4,536		792			537				711		219		2,259	49.8	%
Morgans New York		2,883		(302	)		—				619		—		317	11.0	%
Royalton New York		5,446		(10	)		—				565		—		555	10.2	%
Embassy Suites Orlando-International Drive South/Convention Center		2,842		667			—				274		—		941	33.1	%
DoubleTree Suites by Hilton Orlando-Lake Buena Vista		3,302		182			—				792		—		974	29.5	%
Wyndham Philadelphia Historic District		5,502		1,478			19				765		96		2,358	42.9	%
Sheraton Philadelphia Society Hill Hotel		7,816		1,758			—				997		—		2,755	35.2	%
Embassy Suites Phoenix-Biltmore		2,409		(228	)		276				459		116		623	25.9	%
Wyndham Pittsburgh University Center		3,476		637			16				537		84		1,274	36.7	%
Wyndham San Diego Bayside		8,717		1,094			—				1,586		—		2,680	30.7	%
Embassy Suites San Francisco Airport-South San Francisco		6,124		1,974			—				408		—		2,382	38.9	%
Embassy Suites San Francisco Airport-Waterfront		6,773		5,426			(3,717	)	(2)		731		—		2,440	36.0	%
Holiday Inn San Francisco-Fisherman’s Wharf		11,176		1,859			—				423		—		2,282	20.4	%
San Francisco Marriott Union Square		10,011		(440	)		1,063		(3)		1,414		699		2,736	27.3	%
Wyndham Santa Monica At the Pier		2,913		1,106			24				290		195		1,615	55.4	%
Embassy Suites Secaucus-Meadowlands		3,927		912			2				150		—		1,064	27.1	%
The Vinoy Renaissance St. Petersburg Resort & Golf Club		13,581		1,226			(4	)			1,446		154		2,822	20.8	%
	$	219,592	$	42,096		$	(1,695	)		$	26,843	$	4,516	$	71,760	32.7	%

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

	Six months ended June 30, 2016
Same-store Hotels	Hotel Operating Revenue		Net Income (Loss)			Other Adjustments				Depreciation		Interest Expense		Hotel EBITDA			Hotel EBITDA Margin
Embassy Suites Atlanta-Buckhead	$	7,970	$	2,037		$	—			$	1,238	$	—	$	3,275		41.1	%
DoubleTree Suites by Hilton Austin		7,886		2,158			—				974		372		3,504		44.4	%
Embassy Suites Birmingham		5,226		594			1				784		595		1,974		37.8	%
The Fairmont Copley Plaza, Boston		27,825		(757	)		(91	)			4,377		950		4,479		16.1	%
Wyndham Boston Beacon Hill		10,486		1,983			—				1,972		—		3,955		37.7	%
Embassy Suites Boston-Marlborough		5,771		1,224			—				593		—		1,817		31.5	%
Sheraton Burlington Hotel & Conference Center		6,690		179			—				1,243		—		1,422		21.3	%
The Mills House Wyndham Grand Hotel, Charleston		11,123		3,178			—				1,269		489		4,936		44.4	%
Embassy Suites Dallas-Love Field		5,982		1,176			—				686		—		1,862		31.1	%
Embassy Suites Deerfield Beach-Resort & Spa		10,428		2,529			—				953		796		4,278		41.0	%
Embassy Suites Fort Lauderdale 17th Street		13,048		2,713			1				1,424		895		5,033		38.6	%
Wyndham Houston-Medical Center Hotel & Suites		7,644		2,560			(38	)			1,104		—		3,626		47.4	%
Renaissance Esmeralda Indian Wells Resort & Spa		27,306		(386	)		6,418		(1)		1,549		—		7,581		27.8	%
Embassy Suites Los Angeles-International Airport/South		11,221		2,558			—				1,276		558		4,392		39.1	%
Embassy Suites Mandalay Beach-Hotel & Resort		10,506		2,548			—				1,542		—		4,090		38.9	%
Embassy Suites Miami-International Airport		10,047		2,175			—				927		—		3,102		30.9	%
Embassy Suites Milpitas-Silicon Valley		9,477		3,070			—				603		—		3,673		38.8	%
Embassy Suites Minneapolis-Airport		6,556		347			1				877		945		2,170		33.1	%
Embassy Suites Myrtle Beach-Oceanfront Resort		11,051		1,343			228				1,333		—		2,904		26.3	%
Hilton Myrtle Beach Resort		9,720		930			—				1,723		—		2,653		27.3	%
Embassy Suites Napa Valley		8,072		1,246			1				1,035		691		2,973		36.8	%
Holiday Inn Nashville Airport		7,610		556			89				1,512		—		2,157		28.3	%
Wyndham New Orleans-French Quarter		8,931		2,701			—				1,437		—		4,138		46.3	%
Morgans New York		4,551		(2,046	)		291				1,266		—		(489	)	(10.7	)%
Royalton New York		9,387		(1,923	)		294				1,162		—		(467	)	(5.0	)%
Embassy Suites Orlando-International Drive South/Convention Center		5,879		1,405			—				540		—		1,945		33.1	%
DoubleTree Suites by Hilton Orlando-Lake Buena Vista		7,156		587			—				1,541		—		2,128		29.7	%
Wyndham Philadelphia Historic District		8,855		1,308			10				1,483		—		2,801		31.6	%
Sheraton Philadelphia Society Hill Hotel		12,389		1,269			—				1,953		—		3,222		26.0	%
Embassy Suites Phoenix-Biltmore		6,790		2,039			—				869		—		2,908		42.8	%
Wyndham Pittsburgh University Center		5,615		484			3				1,035		—		1,522		27.1	%
Wyndham San Diego Bayside		15,245		1,330			—				3,131		—		4,461		29.3	%
Embassy Suites San Francisco Airport-South San Francisco		12,025		3,384			—				827		—		4,211		35.0	%
Embassy Suites San Francisco Airport-Waterfront		13,534		2,513			650				1,512		—		4,675		34.5	%
Holiday Inn San Francisco-Fisherman’s Wharf		20,396		1,743			—				975		—		2,718		13.3	%
San Francisco Marriott Union Square		22,738		3,745			(104	)			2,712		1,143		7,496		33.0	%
Wyndham Santa Monica At the Pier		6,080		2,306			1				562		386		3,255		53.5	%
Embassy Suites Secaucus-Meadowlands		6,141		543			1				243		—		787		12.8	%
The Vinoy Renaissance St. Petersburg Resort & Golf Club		31,166		4,293			233				2,869		812		8,207		26.3	%
	$	428,523	$	59,642		$	7,989			$	53,111	$	8,632	$	129,374		30.2	%


	Six months ended June 30, 2015
Same-store Hotels	Hotel Operating Revenue		Net Income (Loss)			Other Adjustments				Depreciation		Interest Expense		Hotel EBITDA			Hotel EBITDA Margin
Embassy Suites Atlanta-Buckhead	$	7,562	$	1,856		$	—			$	1,288	$	—	$	3,144		41.6	%
DoubleTree Suites by Hilton Austin		7,857		2,493			—				977		70		3,540		45.1	%
Embassy Suites Birmingham		5,030		526			1				783		602		1,912		38.0	%
The Fairmont Copley Plaza, Boston		27,344		446			—				4,332		179		4,957		18.1	%
Wyndham Boston Beacon Hill		10,705		2,031			—				2,002		—		4,033		37.7	%
Embassy Suites Boston-Marlborough		5,995		1,401			—				582		—		1,983		33.1	%
Sheraton Burlington Hotel & Conference Center		6,645		246			—				1,186		—		1,432		21.6	%
The Mills House Wyndham Grand Hotel, Charleston		10,457		2,733			22				1,226		428		4,409		42.2	%
Embassy Suites Dallas-Love Field		6,185		1,390			—				678		—		2,068		33.4	%
Embassy Suites Deerfield Beach-Resort & Spa		10,723		2,742			—				1,076		804		4,622		43.1	%
Embassy Suites Fort Lauderdale 17th Street		12,536		2,367			1				1,481		905		4,754		37.9	%
Wyndham Houston-Medical Center Hotel & Suites		7,336		2,234			(31	)			1,082		210		3,495		47.6	%
Renaissance Esmeralda Indian Wells Resort & Spa		25,909		5,085			—				1,804		—		6,889		26.6	%
Embassy Suites Los Angeles-International Airport/South		9,683		2,466			—				1,308		105		3,879		40.1	%
Embassy Suites Mandalay Beach-Hotel & Resort		9,317		1,259			24				1,626		372		3,281		35.2	%
Embassy Suites Miami-International Airport		10,383		2,119			20				989		308		3,436		33.1	%
Embassy Suites Milpitas-Silicon Valley		9,063		2,856			—				628		—		3,484		38.4	%
Embassy Suites Minneapolis-Airport		6,503		341			1				926		956		2,224		34.2	%
Embassy Suites Myrtle Beach-Oceanfront Resort		10,411		769			25				1,478		368		2,640		25.4	%
Hilton Myrtle Beach Resort		9,747		1,110			—				1,685		—		2,795		28.7	%
Embassy Suites Napa Valley		7,693		1,087			6				1,040		699		2,832		36.8	%
Holiday Inn Nashville Airport		5,949		46			—				1,132		—		1,178		19.8	%
Wyndham New Orleans-French Quarter		8,689		1,668			536				1,415		529		4,148		47.7	%
Morgans New York		4,462		(1,670	)		—				1,235		—		(435	)	(9.7	)%
Royalton New York		9,631		(1,249	)		—				1,125		—		(124	)	(1.3	)%
Embassy Suites Orlando-International Drive South/Convention Center		6,145		1,580			—				556		—		2,136		34.8	%
DoubleTree Suites by Hilton Orlando-Lake Buena Vista		6,820		472			—				1,604		—		2,076		30.4	%
Wyndham Philadelphia Historic District		8,041		457			19				1,577		287		2,340		29.1	%
Sheraton Philadelphia Society Hill Hotel		12,378		1,161			—				2,013		—		3,174		25.6	%
Embassy Suites Phoenix-Biltmore		6,600		1,238			276				930		280		2,724		41.3	%
Wyndham Pittsburgh University Center		5,689		270			16				1,078		251		1,615		28.4	%
Wyndham San Diego Bayside		15,783		1,143			—				3,243		—		4,386		27.8	%
Embassy Suites San Francisco Airport-South San Francisco		11,562		3,276			—				820		—		4,096		35.4	%
Embassy Suites San Francisco Airport-Waterfront		13,036		6,684			(3,717	)	(2)		1,489		—		4,456		34.2	%
Holiday Inn San Francisco-Fisherman’s Wharf		19,617		1,836			—				822		—		2,658		13.5	%
San Francisco Marriott Union Square		20,501		495			1,063		(3)		2,834		1,383		5,775		28.2	%
Wyndham Santa Monica At the Pier		5,350		1,817			24				556		437		2,834		53.0	%
Embassy Suites Secaucus-Meadowlands		6,926		1,228			4				294		—		1,526		22.0	%
The Vinoy Renaissance St. Petersburg Resort & Golf Club		30,018		4,746			(5	)			2,874		153		7,768		25.9	%
	$	414,281	$	62,755		$	(1,715	)		$	53,774	$	9,326	$	124,140		30.0	%

The following are footnotes to the Hotel EBITDA tables on page 19 - 22:

(1) Amount primarily represents an impairment.

(2) Amount represents net revenue attributable to a favorable settlement of a commercial dispute.

(3) Amount primarily represents debt extinguishment charges.



Reconciliation of Same-store Operating Revenue and Same-store Operating Expense to Total Revenue, Total Operating Expense and Operating Income
(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Same-store operating revenue	$	225,024		$	219,592		$	428,523		$	414,281
Other revenue		1,145			5,054			1,832			5,464
Revenue from hotels disposed, held for sale and recently opened(a)		11,737			16,457			17,695			35,053
Total revenue		237,906			241,103			448,050			454,798
Same-store operating expense		151,058			147,832			299,149			290,141
Consolidated hotel lease expense(b)		1,359			2,134			2,161			4,238
Unconsolidated taxes, insurance and lease expense		(517	)		(773	)		(969	)		(1,514	)
Corporate expenses		6,047			6,530			14,447			15,103
Depreciation and amortization		29,177			28,750			58,360			56,522
Impairment loss		6,333			—			6,333			—
Expenses from hotels disposed, held for sale and recently opened(a)		8,851			14,242			16,221			29,013
Other expenses		2,142			1,411			2,970			5,639
Total operating expense		204,450			200,126			398,672			399,142
Operating income	$	33,456		$	40,977		$	49,378		$	55,656

(a) We include the operating performance for hotels in continuing operations in our Consolidated Statements of Operations. However, for purposes of our non-GAAP reporting metrics, we have excluded the results of these hotels to provide a meaningful same-store comparison.

(b) Consolidated hotel lease expense represents the percentage lease expense of our 51%-owned operating lessees. The offsetting percentage lease revenue is included in equity in income from unconsolidated entities.



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

	Full Year 2016 Guidance
	Low						High
	Dollars			Per Share Amount(a)			Dollars			Per Share Amount(a)
Net income attributable to FelCor(b)	$	23.3					$	29.4
Preferred dividends		(25.1	)					(25.1	)
Net income (loss) attributable to FelCor common stockholders		(1.8	)	$	(0.01	)		4.3		$	0.03
Depreciation(c)		115.0						115.0
Loss on sale of assets		1.3						1.3
Impairment loss		6.3						6.3
Noncontrolling interests in FelCor LP		(0.1	)					(0.2	)
FFO	$	120.7		$	0.86		$	126.7		$	0.91
Abandoned project costs		0.6						0.6
Pre-opening costs		0.2						0.2
Litigation settlement		0.7						0.7
Adjusted FFO	$	122.2		$	0.87		$	128.2		$	0.92

Net income attributable to FelCor(b)	$	23.3					$	29.4
Depreciation(c)		115.0						115.0
Noncontrolling interests in FelCor LP		(0.1	)					(0.2	)
Interest expense(c)		80.0						80.0
Income taxes		1.0						1.0
Preferred distributions - consolidated joint venture		1.4						1.4
EBITDA	$	220.6					$	226.6
Loss on sale of assets		1.3						1.3
Abandoned project costs		0.6						0.6
Impairment loss		6.3						6.3
Litigation settlement		0.7						0.7
Pre-opening costs		0.2						0.2
Amortization of fixed stock and directors’ compensation		7.3						7.3
Adjusted EBITDA	$	237.0					$	243.0

(a) Weighted average shares are 139.7 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 Generally Accepted Accounting Principles (“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 regarding the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis. We also eliminate consolidated percentage rent paid to unconsolidated entities, which is effectively eliminated by noncontrolling interests and equity in income from unconsolidated subsidiaries, and include the cost of unconsolidated taxes, insurance and lease expense, to reflect the entire operating costs applicable to our consolidated hotels. Hotel EBITDA and Hotel EBITDA margins are presented on a same-store basis.

Use and Limitations of Non-GAAP Measures

We use FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other hotel REITs, hotel owners who are not REITs and other capital intensive companies. We use Hotel EBITDA and Hotel EBITDA margin in evaluating hotel-level performance and the operating efficiency of our hotel managers.

The use of these non-GAAP financial measures has certain limitations. As we present them, these non-GAAP financial measures may not be comparable to similar non-GAAP financial measures as presented by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, 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.

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Contacts:

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