FelCor Lodging Trust Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - FelCor Lodging Trust Inc	a2016q2form8-kearningsrele.htm

Exhibit 99.1



		545 E. JOHN CARPENTER FREEWAY, SUITE 1300 IRVING, TX 75062 PH: 972-444-4900 WWW.FELCOR.COM NYSE: FCH

For Immediate Release:

FELCOR REPORTS SECOND QUARTER 2016 EARNINGS

Two Hotels Under Hard Contract

IRVING, Texas, July 26, 2016 - 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.”

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

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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.

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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.

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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.

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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.

Contact:

Stephen A. Schafer, Senior Vice President

(972) 444-4912 sschafer@felcor.com

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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)		7
Consolidated Balance Sheets^(a)		8
Consolidated Debt Summary		9
Schedule of Encumbered Hotels		10
Capital Expenditures		10
Total Enterprise Value		11
Hotel Operating Statistics		12
Historical Quarterly Operating Statistics		14
Non-GAAP Financial Measures		14

^(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.

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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

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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

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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.


(c)	This loan can be extended for one year, subject to satisfying certain conditions.

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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.

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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.

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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 17^th 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.

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 13

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 17^th 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

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 14

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.

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 15

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.

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July 26, 2016

Page 16

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.

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 17

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.

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 18

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		%

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 19

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 17^th 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	%

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Page 20



	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 17^th 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	%

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July 26, 2016

Page 21

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 17^th 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	%

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July 26, 2016

Page 22



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

(1) Amount primarily represents an impairment. (3) Amount primarily represents debt extinguishment charges.

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July 26, 2016

Page 23

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.

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July 26, 2016

Page 24

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.

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Page 25

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.

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July 26, 2016

Page 26

•

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.

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FelCor Lodging Trust Incorporated Second Quarter 2016 Operating Results

July 26, 2016

Page 27

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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FelCor Lodging Trust Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 26, 2016

Attached files

FelCor Lodging Trust Inc Reports