FelCor Lodging Trust Incorporated , the nation`s second largest hotel real
estate investment trust (REIT), today reported operating results for the
fourth quarter and year ended December 31, 2003.
Fourth Quarter Results:
FelCor`s fourth quarter revenues from continuing operations were $292
million in both 2003 and 2002. The Company`s fourth quarter hotel
portfolio revenue per available room (RevPAR) from continuing operations
declined 1.7 percent, compared to fourth quarter of 2002. For the quarter,
occupancy increased 0.6 percent, to 58.6 percent, and hotel average daily
rate (ADR) decreased 2.3 percent, to $94.02, compared to the same quarter
in 2002. For the two most recent consecutive quarters, FelCor`s hotel
portfolio had occupancy improvement, compared to the same periods in the
The decline in RevPAR and its effects on revenues during 2003 was offset
by the inclusion in revenues of $5 million from consolidating the
Interstate Hotels & Resorts joint venture and the operating results of its
eight hotels that were accounted for by the equity method until June 2003.
The operating margin from continuing operations of FelCor`s hotels during
the fourth quarter 2003 was 25.1 percent, which represents a 310 basis
point decrease compared to the same period of 2002. The continued
deterioration in operating margins principally resulted from the $2.22, or
2.3 percent, decline in ADR, partially offset by slightly higher
occupancies. In addition, health and workers compensation insurance put
additional pressure on FelCor`s operating margins, compared to the same
period in 2002.
FelCor`s net loss applicable to common stockholders for the fourth quarter
of 2003 was $150 million, or a net loss of $2.55 per share. This is
compared to the prior year fourth quarter net loss of $185 million, or
$3.17 per share. The fourth quarter 2003 loss included an impairment loss
of $123 million, or $1.99 per share. The fourth quarter loss in 2002
included an impairment loss of $158 million and a $3 million charge-off of
deferred debt costs, which had a combined $161 million, or $2.60 per share
In accordance with the Securities and Exchange Commission`s (SEC) guidance
on non-GAAP financial measures, Funds From Operations (FFO) and Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) have not
been adjusted to add back the impairment charges and the charge-off of
deferred debt costs. Accompanying this press release is a discussion of
the non-GAAP financial measures, FFO and EBITDA, and a reconciliation of
these measures to the Company`s net loss.
FFO for the fourth quarter of 2003 was a loss of $128 million, compared to
the fourth quarter of 2002 loss of $154 million. FFO per share for the
fourth quarter of 2003 was a loss of $2.06 (including a $1.99 per share
impairment loss), compared to a FFO per share loss of $2.49 during the
same period of 2002 (including $2.60 per share resulting from an
impairment loss and the charge-off of deferred debt costs).
EBITDA for fourth quarter 2003 reflected a loss of $76 million (including
a $123 million impairment loss), compared to a 2002 fourth quarter EBITDA
loss of $103 million (including $161 million related to an impairment loss
and the charge-off of deferred debt costs).
The fourth quarter 2003 operating results (before impairment losses) were
consistent with the low end of the Company`s previously provided guidance
of an FFO loss of $0.07 per share and EBITDA of $47 million.
Consistent with FelCor`s strategic objective to improve its portfolio
quality, the Company identified seven additional hotels for sale during
the fourth quarter of 2003. The fourth quarter 2003 impairment charge
principally resulted from FelCor`s decision to sell these non-strategic
hotels and reflects the difference between book value and the estimated
current fair market value of these hotels.
Of the Company`s 161 consolidated hotels, 35 hotels (including two in
discontinued operations) have been identified as non-strategic. FelCor
expects to sell these non-strategic hotels over the next 24 months with
sales proceeds expected to be approximately $250 million. During 2003, the
Company disposed of 16 non-strategic hotels and has designated two hotels
as held for sale. The operating results of these 18 hotels are included in
discontinued operations for 2003 and 2002. Disposition proceeds from the
16 non-strategic hotels and two parking garages sold during 2003 totaled
approximately $125 million.
“We continue to focus on our strategy to sell non-strategic hotels in our
portfolio and on future acquisitions in low supply-growth markets,” said
Thomas J. Corcoran, Jr., FelCor`s President and CEO. “We believe the worst
is over following three tough years for our industry. We are optimistic
that we are in the early stages of a recovery and that the positive signs
will continue and pricing power will return. FelCor is well positioned for