FCH Felcor Lodging Trust Incorporated (delisted)

• Completed Sale of Morgans and Royalton Hotels for $92 Million of Gross Proceeds

• Special Meeting to Approve Merger with RLJ Scheduled for August 15th

FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the second quarter ended June 30, 2017.

Second Quarter Highlights

• Same-store RevPAR was $161.98 compared to $163.62 for the same period in 2016.
• Net loss attributable to FelCor common stockholders was $8.0 million, or $0.06 per share, versus net income of $7.1 million, or $0.05 per share, for the same period in 2016.
• Adjusted FFO per share was $0.26 versus $0.32 for the same period in 2016.
• Same-store Adjusted EBITDA was $65.0 million versus $67.9 million for the same period in 2016.

“We are pleased to have completed the sale of Morgans New York and The Royalton,” said Steven R. Goldman, FelCor’s Chief Executive Officer. “Regarding our merger with RLJ, we are excited by the opportunity to participate in creating a leading lodging REIT with a greater reach in key markets, streamlined operating structure and improved cost of capital. Our team is working diligently with RLJ to effect a timely close and efficient transition.”

Second Quarter Hotel Results

    Second Quarter   2017         2016       Change Same-store hotels (36) RevPAR $ 161.98 $ 163.62 (1.0 )% Total hotel revenue, in millions $ 211.9 $ 212.7 (0.4 )% Hotel EBITDA, in millions $ 69.2 $ 72.3 (4.3 )% Hotel EBITDA margin 32.7 % 34.0 % (135) bps  

RevPAR for our 36 same-store hotels was $161.98 compared to $163.62 for the same period in 2016. The change reflects a 0.4% increase in occupancy (to 83.2%) offset by a 1.4% reduction in average daily rate, or ADR, (to $194.81). Hotel EBITDA for our 36 same-store hotels was $69.2 million compared to $72.3 million, and Hotel EBITDA margin was 32.7% compared to 34.0% in the prior year quarter. RevPAR was particularly affected by weakness at hotels in San Francisco, which constitute 17% of our available rooms. Excluding this market, RevPAR growth would have been 0.5% and margins would have been 34.0%.

Wyndham Worldwide Corporation has guaranteed minimum annual NOI for eight of our hotels over the 10-year terms of the management agreements. Hotel EBITDA for the three months ended June 30, 2017 includes $1.4 million of fee reductions related to that guaranty compared to $1.5 million during the same period last year.

See pages 12-14 and 18-23 for more detailed operating data.

Second Quarter Operating Results

    Second Quarter $ in millions, except for per share information 2017     2016     Change Net income (loss) attributable to FelCor common stockholders $ (8.0 ) $ 7.1 $ (15.1 ) Net income (loss) per share $ (0.06 ) $ 0.05 $ (0.11 ) Same-store Adjusted EBITDA $ 65.0 $ 67.9 (4.2 )% Adjusted EBITDA $ 64.7 $ 72.4 (10.6 )% Adjusted FFO per share $ 0.26 $ 0.32 $ (0.06 )  

Net loss attributable to common stockholders was $8.0 million, or $0.06 per share, in 2017, compared to net income of $7.1 million, or $0.05 per share, for the same period in 2016. Net loss in 2017 includes a $10.3 million impairment charge, reflecting further basis reduction for two hotels held for sale at June 30, 2017. Net income for the same period in 2016 includes a $6.3 million impairment charge attributable to one hotel sold in the third quarter of 2016.

Year-to-Date Operating Results

Net loss attributable to common stockholders was $50.2 million, or $0.36 per share, in 2017, compared to $4.1 million, or $0.03 per share, for the same period in 2016. Net loss in 2017 includes an impairment charge of $35.1 million, reflecting a reduction in basis for two hotels held for sale at June 30, 2017. Net loss for the same period in 2016 includes an impairment charge of $6.3 million attributable to one hotel sold in the third quarter of 2016.

RevPAR for our 36 same-store hotels was $151.99 compared to $153.45 for the same period in 2016. The change reflects ADR of $192.20 compared to $193.36 and 0.4% lower occupancy (to 79.1%). Hotel EBITDA for our 36 same-store hotels was $116.2 million compared to $121.8 million, and Hotel EBITDA margin was 29.5% compared to 30.7%.

Adjusted FFO was $48.7 million ($0.35 per share) compared to $64.3 million ($0.46 per share) for the same period in 2016.

Same-store Adjusted EBITDA was $107.0 million versus $112.4 million for the same period in 2016.

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.

Balance Sheet

At June 30, 2017, we had $1.4 billion of consolidated debt with a 5.4% weighted-average interest rate and a six-year weighted-average maturity. We had $58.1 million of cash and cash equivalents on hand and $24.2 million of restricted cash.

Asset Sales

We sold two hotels, Morgans New York in July 2017 and The Royalton in August 2017, for $92 million in aggregate gross proceeds.

Common Dividend

We paid our second quarter common stock dividend of $0.06 per share at the end of July.

Capital Expenditures

In 2016, we began redeveloping two resort properties (The Vinoy Renaissance St. Petersburg Resort & Golf Club and Embassy Suites Myrtle Beach-Oceanfront Resort). We completed our Myrtle Beach project last quarter, as scheduled and under budget. Also, Phase I of our Vinoy redevelopment is substantially complete and within budget. These redevelopments are intended to enhance our portfolio quality and offer attractive returns. During the six months ended June 30, 2017, we spent $42.1 million on renovations and redevelopments at our hotels.

Outlook

As discussed in our prior earnings release, given our pending merger with RLJ, we are not providing any further updates to our guidance for the remainder of the year.

Merger with RLJ

On April 24, 2017, we announced that we had entered into a definitive merger agreement under which we will merge with and into a wholly-owned subsidiary of RLJ in an all-stock transaction. At closing, our stockholders will receive 0.362 RLJ common shares for each share of our common stock. The transaction is expected to close on August 31, 2017 and is subject to customary closing conditions, including the approval of both companies’ shareholders at their respective special meetings on August 15, 2017.

About FelCor

FelCor Lodging Trust Incorporated, a real estate investment trust, owns a diversified portfolio of primarily upper-upscale and luxury hotels that are located in major markets and resort locations 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.

Disclosure Regarding Forward-Looking Statements

The information presented herein may contain forward-looking statements. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which FelCor and RLJ operate and beliefs of and assumptions made by FelCor management and RLJ management, involve significant risks and uncertainties, which are difficult to predict and are not guarantees of future performances, that could significantly affect the financial results of FelCor or RLJ or the combined company. Words such as “projects,” “will,” “could,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecast,” “guidance,” “outlook,” “may,” and “might” and variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. Such forward-looking statements may include, but are not limited to, statements about the anticipated benefits of the proposed merger between FelCor and RLJ, including future financial and operating results, the attractiveness of the value to be received by FelCor stockholders, the attractiveness of the value to be received by RLJ, the combined company’s plans, objectives, expectations and intentions, the timing of future events, anticipated administrative and operating synergies, the anticipated impact of the merger on net debt ratios, cost of capital, future dividend payment rates, forecasts of FFO accretion, projected capital improvements, expected sources of financing, and descriptions relating to these expectations. All statements that address operating performance, events or developments that FelCor expects or anticipates will occur in the future - including statements relating to expected synergies, improved liquidity and balance sheet strength - are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. FelCor’s ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although FelCor believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, FelCor can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may materially and adversely affect FelCor’s or the combined company’s business, financial condition, liquidity, results of operations and prospects, as well as the ability to make distributions to shareholders, include, but are not limited to: (i) national, regional and local economic climates, (ii) changes in the real estate industry, financial markets and interest rates, or to the business or financial condition of either company or business, (iii) increased or unanticipated competition for the companies’ properties, (iv) risks associated with acquisitions, including the integration of the combined companies’ businesses, (v) the potential liability for the failure to meet regulatory requirements, including the maintenance of REIT status, (vi) availability of financing and capital, (vii) risks associated with achieving expected revenue synergies or cost savings, (viii) risks associated with the companies’ ability to consummate the merger and the timing of the closing of the merger, (ix) the outcome of any claims and litigation involving or affecting either company, (x) applicable regulatory changes, and (xi) those additional risks and factors discussed in reports filed with the SEC by FelCor and RLJ from time to time, including those discussed under the heading “Risk Factors” in our and RLJ’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and our and RLJ’s other filings with the SEC. Neither FelCor nor RLJ, except as required by law, undertakes any duty to update any forward-looking statements appearing in this document or any other document, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Important Information for Investors and Stockholders

In connection with the proposed merger described elsewhere in this release, RLJ has filed with the SEC a registration statement on Form S-4 (File No. 333-218439), and RLJ and FelCor have filed with the SEC a definitive joint proxy statement/prospectus, which was first mailed to security holders of RLJ and FelCor on July 18, 2017. RLJ and FelCor filed a supplement to the joint proxy statement/prospectus on August 7, 2017 and plan to file other relevant documents with the SEC regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ALL RELATED SUPPLEMENTS AND AMENDMENTS THERETO AND ALL OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the joint proxy statement/prospectus and all related supplements and amendments and all other relevant documents (if and when they become available) filed by RLJ and FelCor with the SEC at the SEC’s website at www.sec.gov. Copies of the documents filed by RLJ with the SEC will be available free of charge on RLJ’s website at www.rljlodgingtrust.com or by contacting RLJ Investor Relations at ir@rljlodgingtrust.com or at 301-280-7774. Copies of the documents filed by FelCor with the SEC will be available free of charge on FelCor’s website at www.felcor.com or by contacting FelCor Investor Relations at asalami@felcor.com or at 972-444-4967.

This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Participants in the Solicitation

RLJ and FelCor and their respective trustees, directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. You can find information about RLJ’s executive officers and trustees in RLJ’s definitive proxy statement filed with the SEC on March 28, 2017 in connection with its 2017 annual meeting of shareholders and in Form 4s of RLJ’s trustees and executive officers filed with the SEC. You can find information about FelCor’s executive officers and directors in Amendment No. 1 to FelCor’s Annual Report on Form 10-K for the year ended December 31, 2016 on Form 10-K/A filed with the SEC on April 28, 2017 and in Form 4s of FelCor’s directors and executive officers filed with the SEC. Additional information regarding the interests of such potential participants is included in the joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed merger. You may obtain free copies of these documents from RLJ or FelCor using the sources indicated above.

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, 2017.

   

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 13 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.     Consolidated Statements of Operations

(in thousands, except per share data)

      Three Months Ended     Six Months Ended June 30, June 30,   2017         2016     2017         2016   Revenues: Hotel operating revenue: Room $ 168,772 $ 181,318 $ 313,705 $ 340,394 Food and beverage 37,921 43,697 69,995 83,229 Other operating departments 12,423 11,746 23,112 22,595 Other revenue   1,324     1,145     1,732     1,832   Total revenues   220,440     237,906     408,544     448,050   Expenses: Hotel departmental expenses: Room 43,483 44,748 84,161 87,447 Food and beverage 28,281 32,592 54,503 63,548 Other operating departments 3,947 4,039 7,480 7,822 Other property-related costs 52,220 56,007 103,075 111,573 Management and franchise fees 7,726 8,501 15,276 17,726 Taxes, insurance and lease expense 15,454 14,864 29,356 28,446 Corporate expenses 6,281 6,047 13,221 14,447 Depreciation and amortization 27,528 29,177 55,366 58,360 Impairment 10,271 6,333 35,109 6,333 Other expenses   7,331     2,142     8,591     2,970   Total operating expenses   202,522     204,450     406,138     398,672   Operating income 17,918 33,456 2,406 49,378 Interest expense, net (19,416 ) (19,907 ) (38,702 ) (39,627 ) Other gains, net   100     100     100     100   Income (loss) before equity in income from unconsolidated entities (1,398 ) 13,649 (36,196 ) 9,851 Equity in income from unconsolidated entities   648     726     518     572   Income (loss) from continuing operations before income tax (750 ) 14,375 (35,678 ) 10,423 Income tax   (503 )   25     (1,050 )   (390 ) Income (loss) from continuing operations before loss on sale of hotels (1,253 ) 14,400 (36,728 ) 10,033 Loss on sale of hotels   (207 )   (630 )   (873 )     (1,344 ) Net income (loss) and comprehensive income (loss) (1,460 ) 13,770 (37,601 ) 8,689 Net loss attributable to noncontrolling interests in other partnerships 33 16 437 487 Net loss (income) attributable to redeemable noncontrolling interests in FelCor LP 35 (31 ) 221 17 Preferred distributions - consolidated joint venture   (367 )   (364 )   (727 )   (724 ) Net income (loss) and comprehensive income (loss) attributable to FelCor (1,759 ) 13,391 (37,670 ) 8,469 Preferred dividends   (6,279 )   (6,279 )   (12,558 )   (12,558 ) Net income (loss) attributable to FelCor common stockholders $ (8,038 ) $ 7,112   $ (50,228 ) $ (4,089 ) Basic and diluted per common share data: Net income (loss) $ (0.06 ) $ 0.05   $ (0.36 ) $ (0.03 ) Basic weighted average common shares outstanding   137,866     138,182     137,820     138,930   Diluted weighted average common shares outstanding   137,866     138,678     137,820     138,930     Dividends declared per common share $ 0.06   $ 0.06   $ 0.12   $ 0.12       Consolidated Balance Sheets

(in thousands, except par values)

      June 30,     December 31,   2017     2016   Assets Investment in hotels, net of accumulated depreciation of $932,184 and $932,886 at June 30, 2017 and December 31, 2016, respectively $ 1,448,346 $ 1,566,823 Investment in unconsolidated entities 7,657 8,312 Hotels held for sale 77,937 — Cash and cash equivalents 58,135 47,317 Restricted cash 24,199 19,491 Accounts receivable, net of allowance for doubtful accounts of $184 and $177 at June 30, 2017 and December 31, 2016, respectively 43,923 42,080 Deferred expenses, net of accumulated amortization of $3,895 and $2,959 at June 30, 2017 and December 31, 2016, respectively 3,591 4,527 Other assets   20,240     18,542   Total assets $ 1,684,028   $ 1,707,092   Liabilities and Equity Debt, net of unamortized debt issuance costs of $14,803 and $15,967 at June 30, 2017 and December 31, 2016, respectively $ 1,360,071 $ 1,338,326 Distributions payable 14,887 14,858 Accrued expenses and other liabilities   135,792     116,437   Total liabilities   1,510,750     1,469,621   Commitments and contingencies Redeemable noncontrolling interests in FelCor LP, 610 units issued and outstanding at June 30, 2017 and December 31, 2016   4,400     4,888   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, 2017 and December 31, 2016 309,337 309,337 Common stock, $0.01 par value, 200,000 shares authorized; 138,412 and 137,990 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively 1,384 1,380 Additional paid-in capital 2,580,539 2,576,988 Accumulated deficit   (2,774,178 )   (2,706,408 ) Total FelCor stockholders’ equity 117,082 181,297 Noncontrolling interests in other partnerships 7,365 7,503 Preferred equity in consolidated joint venture, liquidation value of $45,373 and $44,667 at June 30, 2017 and December 31, 2016, respectively   44,431     43,783   Total equity   168,878     232,583   Total liabilities and equity $ 1,684,028   $ 1,707,092       Consolidated Debt Summary

(dollars in thousands)

      Encumbered Hotels     Interest

Rate (%)

    Maturity Date     June 30, 2017     December 31, 2016 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 118,971 120,109 Mortgage debt 1 4.94 October 2022 29,903 30,184 Line of credit(b) 7 LIBOR + 2.75 June 2019 141,000 119,000 Mortgage debt(c) 1   LIBOR + 3.00 November 2017   85,000     85,000   Total 22   $ 1,374,874 $ 1,354,293 Unamortized debt issuance costs   (14,803 )   (15,967 ) Debt, net of unamortized debt issuance costs $ 1,360,071   $ 1,338,326   (a)   This debt is comprised of separate non-cross-collateralized loans, each secured by a mortgage encumbering a separate hotel. (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.     Schedule of Encumbered Hotels (dollars in millions)   Consolidated     Debt June 30, 2017 Encumbered Hotels Senior secured notes   $ 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 $ 26 Napa Valley - ES Mortgage debt $ 34 Ft. Lauderdale - ES Mortgage debt $ 23 Birmingham - ES Mortgage debt $ 36 Minneapolis Airport - ES Mortgage debt $ 30 Deerfield Beach - ES Line of credit $ 141 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 Mortgage debt $ 85 The Knickerbocker     Capital Expenditures

(dollars in thousands)

      Three Months Ended     Six Months Ended June 30, June 30,   2017         2016     2017         2016   Improvements and additions to majority-owned hotels $ 22,459 $ 17,901 $ 41,921 $ 31,909 Partners’ pro rata share of additions to consolidated joint venture hotels (29 ) (127 ) (63 ) (225 ) Pro rata share of additions to unconsolidated hotels   88     159     277     417   Total additions to hotels(a) $ 22,518   $ 17,933   $ 42,135   $ 32,101   (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,   2017     2016   Common shares outstanding 138,412 137,990 Units outstanding   610     610   Combined shares and units outstanding 139,022 138,600 Common stock price $ 7.21   $ 8.01   Market capitalization $ 1,002,349 $ 1,110,186 Series A preferred stock(a) 321,987 321,987 Preferred equity - Knickerbocker joint venture, net 42,209 41,594 Consolidated debt (b) 1,374,874 1,354,293 Noncontrolling interests of consolidated debt (4,250 ) (4,250 ) Pro rata share of unconsolidated debt 11,026 11,167 Cash, cash equivalents and restricted cash   (82,334 )   (66,808 ) Total enterprise value (TEV) $ 2,665,861   $ 2,768,169   (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

2017     2016     %Change 2017     2016     %Change 2017     2016     %Change Embassy Suites Atlanta-Buckhead 71.7 80.7 (11.2 ) 144.71 154.42 (6.3 ) 103.77 124.66 (16.8 ) DoubleTree Suites by Hilton Austin 87.1 88.6 (1.7 ) 224.51 217.74 3.1 195.64 193.01 1.4 Embassy Suites Birmingham 80.6 80.3 0.4 142.04 143.14 (0.8 ) 114.46 114.88 (0.4 ) The Fairmont Copley Plaza, Boston 87.7 83.2 5.4 359.69 366.02 (1.7 ) 315.32 304.57 3.5 Wyndham Boston Beacon Hill 89.5 86.9 3.0 264.45 258.35 2.4 236.77 224.62 5.4 Embassy Suites Boston-Marlborough 77.1 77.2 (0.1 ) 164.34 175.60 (6.4 ) 126.66 135.52 (6.5 ) Sheraton Burlington Hotel & Conference Center 73.0 72.0 1.3 125.14 123.44 1.4 91.29 88.86 2.7 The Mills House Wyndham Grand Hotel, Charleston 88.2 91.7 (3.8 ) 273.10 262.48 4.0 240.95 240.67 0.1 Embassy Suites Dallas-Love Field 81.3 78.5 3.5 147.42 141.99 3.8 119.89 111.52 7.5 Embassy Suites Deerfield Beach-Resort & Spa 83.1 81.3 2.2 172.33 174.71 (1.4 ) 143.14 142.02 0.8 Embassy Suites Fort Lauderdale 17th Street 82.0 79.9 2.7 152.60 157.06 (2.8 ) 125.20 125.52 (0.3 ) Wyndham Houston-Medical Center Hotel & Suites 74.0 80.3 (7.9 ) 140.49 152.72 (8.0 ) 103.98 122.70 (15.3 ) The Knickerbocker- New York 84.9 89.9 (5.5 ) 352.19 336.79 4.6 299.11 302.77 (1.2 ) Embassy Suites Los Angeles-International Airport/South 91.5 85.5 7.0 171.29 173.74 (1.4 ) 156.76 148.63 5.5 Embassy Suites Mandalay Beach-Hotel & Resort 87.9 86.4 1.8 219.95 233.46 (5.8 ) 193.44 201.60 (4.0 ) Embassy Suites Miami-International Airport 80.4 84.5 (4.9 ) 125.45 130.21 (3.6 ) 100.88 110.04 (8.3 ) Embassy Suites Milpitas-Silicon Valley 82.8 84.8 (2.3 ) 209.86 203.16 3.3 173.81 172.20 0.9 Embassy Suites Minneapolis-Airport 79.3 78.6 0.8 144.48 157.60 (8.3 ) 114.55 123.91 (7.6 ) Embassy Suites Myrtle Beach-Oceanfront Resort 91.5 85.5 7.0 171.29 173.74 (1.4 ) 156.76 148.63 5.5 Hilton Myrtle Beach Resort 74.5 74.3 0.2 169.01 158.89 6.4 125.91 118.12 6.6 Embassy Suites Napa Valley 83.2 83.6 (0.4 ) 264.84 257.77 2.7 220.48 215.39 2.4 Wyndham New Orleans-French Quarter 81.6 81.2 0.4 137.06 151.61 (9.6 ) 111.82 123.14 (9.2 ) Embassy Suites Orlando-International Drive South/Convention Center 83.7 73.3 14.2 164.86 138.31 19.2 137.94 101.34 36.1 DoubleTree Suites by Hilton Orlando-Lake Buena Vista 87.4 91.7 (4.6 ) 149.69 138.99 7.7 130.84 127.39 2.7 Wyndham Philadelphia Historic District 84.0 85.3 (1.5 ) 171.11 163.19 4.9 143.78 139.25 3.3 Sheraton Philadelphia Society Hill Hotel 77.9 81.4 (4.3 ) 192.03 193.05 (0.5 ) 149.65 157.15 (4.8 ) Embassy Suites Phoenix-Biltmore 74.7 70.5 6.0 160.29 159.69 0.4 119.75 112.58 6.4 Wyndham Pittsburgh University Center 79.8 77.7 2.7 146.85 153.69 (4.5 ) 117.20 119.43 (1.9 ) Wyndham San Diego Bayside 80.1 77.9 2.7 162.83 161.97 0.5 130.39 126.25 3.3 Embassy Suites San Francisco Airport-South San Francisco 91.8 89.4 2.8 190.76 208.42 (8.5 ) 175.21 186.23 (5.9 ) Embassy Suites San Francisco Airport-Waterfront 91.7 92.0 (0.3 ) 206.58 207.43 (0.4 ) 189.41 190.75 (0.7 ) Holiday Inn San Francisco-Fisherman’s Wharf 92.3 89.8 2.7 186.00 207.18 (10.2 ) 171.63 186.12 (7.8 ) San Francisco Marriott Union Square 87.2 90.8 (3.9 ) 266.56 291.00 (8.4 ) 232.40 264.08 (12.0 ) Wyndham Santa Monica At the Pier 90.2 87.1 3.5 265.81 273.84 (2.9 ) 239.63 238.44 0.5 Embassy Suites Secaucus-Meadowlands 82.2 79.5 3.5 183.10 188.41 (2.8 ) 150.56 149.73 0.5 The Vinoy Renaissance St. Petersburg Resort & Golf Club 83.3   83.9   (0.8 ) 218.24   220.88   (1.2 ) 181.79   185.39   (1.9 )

Same-store Hotels(a)

83.2   82.8   0.4   194.81   197.55   (1.4 ) 161.98   163.62   (1.0 ) (a)   Excludes two hotels held for sale at June 30, 2017.    

Hotel Operating Statistics

      Occupancy (%)     ADR ($)     RevPAR ($) Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30,

Same-store Hotels

2017     2016     %Change 2017     2016     %Change 2017     2016     %Change Embassy Suites Atlanta-Buckhead 72.5 80.8 (10.3 ) 155.37 156.78 (0.9 ) 112.68 126.72 (11.1 ) DoubleTree Suites by Hilton Austin 86.2 85.7 0.6 237.86 228.52 4.1 205.14 195.94 4.7 Embassy Suites Birmingham 80.0 80.5 (0.6 ) 138.03 138.46 (0.3 ) 110.37 111.40 (0.9 ) The Fairmont Copley Plaza, Boston 75.1 73.6 2.0 312.43 316.53 (1.3 ) 234.51 232.97 0.7 Wyndham Boston Beacon Hill 81.4 75.4 8.0 212.86 218.60 (2.6 ) 173.23 164.74 5.2 Embassy Suites Boston-Marlborough 67.1 71.0 (5.5 ) 162.69 171.95 (5.4 ) 109.17 122.04 (10.5 ) Sheraton Burlington Hotel & Conference Center 68.3 70.3 (2.8 ) 109.71 108.67 0.9 74.95 76.36 (1.8 ) The Mills House Wyndham Grand Hotel, Charleston 82.7 84.9 (2.6 ) 248.11 236.39 5.0 205.07 200.65 2.2 Embassy Suites Dallas-Love Field 80.1 81.9 (2.2 ) 150.50 142.78 5.4 120.62 116.94 3.1 Embassy Suites Deerfield Beach-Resort & Spa 83.3 84.8 (1.8 ) 212.82 224.15 (5.1 ) 177.22 189.99 (6.7 ) Embassy Suites Fort Lauderdale 17th Street 84.7 86.6 (2.3 ) 195.54 197.07 (0.8 ) 165.59 170.75 (3.0 ) Wyndham Houston-Medical Center Hotel & Suites 75.8 83.2 (8.8 ) 152.40 156.30 (2.5 ) 115.58 130.01 (11.1 ) The Knickerbocker- New York 77.3 74.2 4.1 315.56 308.22 2.4 243.85 228.75 6.6 Embassy Suites Los Angeles-International Airport/South 90.7 87.8 3.3 171.21 168.08 1.9 155.26 147.52 5.2 Embassy Suites Mandalay Beach-Hotel & Resort 81.2 81.5 (0.4 ) 204.75 221.16 (7.4 ) 166.29 180.29 (7.8 ) Embassy Suites Miami-International Airport 83.1 88.0 (5.6 ) 154.89 165.04 (6.1 ) 128.65 145.23 (11.4 ) Embassy Suites Milpitas-Silicon Valley 81.3 82.8 (1.7 ) 205.14 207.29 (1.0 ) 166.83 171.56 (2.8 ) Embassy Suites Minneapolis-Airport 72.9 73.7 (1.1 ) 140.61 151.13 (7.0 ) 102.48 111.36 (8.0 ) Embassy Suites Myrtle Beach-Oceanfront Resort 90.7 87.8 3.3 171.21 168.08 1.9 155.26 147.52 5.2 Hilton Myrtle Beach Resort 60.1 61.2 (1.9 ) 145.95 138.46 5.4 87.72 84.79 3.5 Embassy Suites Napa Valley 78.3 81.8 (4.3 ) 230.71 220.76 4.5 180.54 180.47 — Wyndham New Orleans-French Quarter 79.9 77.5 3.1 148.36 153.40 (3.3 ) 118.49 118.84 (0.3 ) Embassy Suites Orlando-International Drive South/Convention Center 82.4 80.7 2.1 175.29 159.03 10.2 144.48 128.35 12.6 DoubleTree Suites by Hilton Orlando-Lake Buena Vista 88.6 92.0 (3.6 ) 156.28 152.24 2.7 138.54 140.00 (1.0 ) Wyndham Philadelphia Historic District 72.0 70.2 2.6 151.78 148.58 2.1 109.23 104.26 4.8 Sheraton Philadelphia Society Hill Hotel 67.2 68.2 (1.5 ) 174.96 176.18 (0.7 ) 117.59 120.20 (2.2 ) Embassy Suites Phoenix-Biltmore 75.9 74.3 2.1 195.33 203.61 (4.1 ) 148.16 151.23 (2.0 ) Wyndham Pittsburgh University Center 70.4 66.6 5.7 140.27 144.69 (3.1 ) 98.73 96.32 2.5 Wyndham San Diego Bayside 79.6 77.7 2.5 160.36 149.61 7.2 127.71 116.28 9.8 Embassy Suites San Francisco Airport-South San Francisco 88.7 87.4 1.5 195.28 202.90 (3.8 ) 173.19 177.31 (2.3 ) Embassy Suites San Francisco Airport-Waterfront 88.2 88.6 (0.5 ) 210.24 205.97 2.1 185.40 182.50 1.6 Holiday Inn San Francisco-Fisherman’s Wharf 88.6 85.9 3.2 185.73 201.21 (7.7 ) 164.62 172.85 (4.8 ) San Francisco Marriott Union Square 85.2 89.7 (5.0 ) 293.18 305.12 (3.9 ) 249.90 273.65 (8.7 ) Wyndham Santa Monica at the Pier 87.1 87.4 (0.3 ) 261.00 266.11 (1.9 ) 227.41 232.64 (2.2 ) Embassy Suites Secaucus-Meadowlands 71.3 67.0 6.3 176.34 181.51 (2.8 ) 125.66 121.68 3.3 The Vinoy Renaissance St. Petersburg Resort & Golf Club 84.7   86.0   (1.5 ) 241.55   239.00   1.1   204.70   205.65   (0.5 )

Same-store Hotels(a)

79.1   79.4   (0.4 ) 192.20   193.36   (0.6 ) 151.99   153.45   (1.0 ) (a)   Excludes two hotels held for sale at June 30, 2017.    

Historical Quarterly Operating Statistics

      Occupancy (%) Q2 2016     Q3 2016     Q4 2016     Q1 2017     Q2 2017 Same-store hotels(a) 82.8 81.9 73.1 75.0 83.2   ADR ($) Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Same-store hotels(a) 197.55 197.88 188.39 189.28 194.81   RevPAR ($) Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Same-store hotels(a) 163.62 161.98 137.71 141.88 161.98 (a)   Includes 36 consolidated hotels.    

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, 2017     2016 Dollars     Shares     Per Share Amount Dollars     Shares     Per Share Amount Net income (loss) $ (1,460 ) $ 13,770 Noncontrolling interests 68 (15 ) Preferred dividends (6,279 ) (6,279 ) Preferred distributions - consolidated joint venture   (367 )   (364 ) Net income (loss) attributable to FelCor common stockholders (8,038 ) 7,112 Less: Dividends declared on unvested restricted stock   (36 )   (35 ) Basic and diluted earnings per share data (8,074 ) 137,866 $ (0.06 ) 7,077 138,182 $ 0.05 Restricted stock units   —   —   —     —   496   —   Diluted earnings per share data (8,074 ) 137,866 (0.06 ) 7,077 138,678 0.05 Depreciation and amortization 27,528 — 0.20 29,177 — 0.21 Depreciation, unconsolidated entities and other partnerships 464 — — 469 — — Loss on sale of hotels 207 — 0.01 630 — — Other gains (100 ) — — (100 ) — — Impairment 10,271 — 0.07 6,333 — 0.05 Noncontrolling interests in FelCor LP (35 ) 610 — 31 611 — Dividends declared on unvested restricted stock 36 65 — 35 66 — Conversion of unvested restricted stock units   —   287   —     —   —   —   FFO* 30,297 138,828 0.22 43,652 139,355 0.31 Transaction costs 5,844 — 0.04 — — — Severance costs — — — 27 — — Abandoned projects — — — 383 — 0.01 Variable stock compensation — — — (789 ) — (0.01 ) Litigation settlement — — — 650 — 0.01 Pre-opening costs   532   —   —     191   —   —   Adjusted FFO* $ 36,673   138,828 $ 0.26   $ 44,114   139,355 $ 0.32   * FFO and Adjusted FFO are attributable to FelCor common stockholders and FelCor LP common unitholders other than FelCor.     Reconciliation of Net Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)

      Six Months Ended June 30, 2017     2016 Dollars     Shares     Per Share Amount Dollars     Shares     Per Share Amount Net income (loss) $ (37,601 ) $ 8,689 Noncontrolling interests 658 504 Preferred distributions - consolidated joint venture (727 ) (724 ) Preferred dividends   (12,558 )   (12,558 ) Net loss attributable to FelCor common stockholders (50,228 ) (4,089 ) Less: Dividends declared on unvested restricted stock   (73 )   (73 ) Basic and diluted earnings per share data (50,301 ) 137,820 $ (0.36 ) (4,162 ) 138,930 $ (0.03 ) Depreciation and amortization 55,366 — 0.39 58,360 — 0.42 Depreciation, unconsolidated entities and other partnerships 918 — 0.01 936 — 0.01 Other gains (100 ) — — (100 ) — — Impairment 35,109 — 0.25 6,333 — 0.05 Loss on sale of hotels 873 — 0.01 1,344 — — Noncontrolling interests in FelCor LP (221 ) 610 — (17 ) 611 — Dividends declared on unvested restricted stock 73 47 — 73 22 — Conversion of unvested restricted stock units   —   239 —     —   451   —   FFO* 41,717 138,716 0.30 62,767 140,014 0.45 Hurricane loss 17 — — — — — Hurricane loss, unconsolidated entities 4 — — — — — Severance costs — — — 27 — — Transaction costs 6,317 — 0.05 — — — Abandoned projects — — — 615 — — Variable stock compensation — — — (27 ) — — Litigation settlement — — — 650 — 0.01 Pre-opening costs   665   — —     245   —   —   Adjusted FFO* $ 48,720   138,716 $ 0.35   $ 64,277   140,014 $ 0.46  

* 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,   2017         2016     2017         2016   Net income (loss) $ (1,460 ) $ 13,770 $ (37,601 ) $ 8,689 Depreciation and amortization 27,528 29,177 55,366 58,360 Depreciation, unconsolidated entities and other partnerships 464 469 918 936 Interest expense 19,462 19,923 38,782 39,655 Interest expense, unconsolidated entities and other partnerships 81 90 165 190 Income tax 503 (25 ) 1,050 390 Noncontrolling interests in preferred distributions, consolidated joint venture (18 ) (18 ) (36 ) (36 ) Noncontrolling interests in other partnerships   33     16     437     487   EBITDA* 46,593 63,402 59,081 108,671 Impairment 10,271 6,333 35,109 6,333 Hurricane loss — — 17 — Hurricane loss, unconsolidated entities — — 4 — Loss on sale of hotels 207 630 873 1,344 Other gains (100 ) (100 ) (100 ) (100 ) Amortization of fixed stock and directors’ compensation 1,394 1,693 2,988 3,627 Severance costs — 27 — 27 Transaction costs 5,844 — 6,317 — Abandoned projects — 383 — 615 Variable stock compensation — (789 ) — (27 ) Litigation settlement — 650 — 650 Pre-opening costs   532     191     665     245   Adjusted EBITDA* 64,741 72,420 104,954 121,385 Adjusted EBITDA from held for sale and sold hotels   293     (4,516 )   2,014     (9,011 ) Same-store Adjusted EBITDA* $ 65,034   $ 67,904   $ 106,968   $ 112,374   * 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,   2017         2016     2017         2016   Same-store operating revenue: Room $ 162,792 $ 164,439 $ 303,817 $ 308,439 Food and beverage 36,977 37,501 67,912 68,195 Other operating departments   12,150     10,795     22,310     20,725   Same-store operating revenue(a) 211,919 212,735 394,039 397,359   Same-store operating expense: Room 40,467 39,585 78,298 77,135 Food and beverage 26,948 27,395 51,790 52,372 Other operating departments 3,834 3,613 7,250 7,025 Other property-related costs 50,058 49,074 98,894 97,894 Management and franchise fees 7,727 7,786 15,151 16,245 Taxes, insurance and lease expense   13,693     12,946     26,409     24,851   Same-store operating expense(a)   142,727     140,399     277,792     275,522   Hotel EBITDA $ 69,192   $ 72,336   $ 116,247   $ 121,837   Hotel EBITDA Margin 32.7 % 34.0 % 29.5 % 30.7 % (a)   Excludes two hotels held for sale at June 30, 2017.    

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

   

Three months ended June 30, 2017

Same-store Hotels

  Hotel Operating Revenue     Net Income (Loss)     Other Adjustments     Depreciation     Interest Expense     Hotel EBITDA     Hotel EBITDA Margin Embassy Suites Atlanta-Buckhead $ 3,341 $ 623 $ — $ 504 $ — $ 1,127 33.7 % DoubleTree Suites by Hilton Austin 4,035 1,177 — 455 161 1,793 44.4 % Embassy Suites Birmingham 2,701 319 — 402 292 1,013 37.5 % The Fairmont Copley Plaza, Boston 18,378 2,247 1 2,194 412 4,854 26.4 % Wyndham Boston Beacon Hill 7,318 2,504 — 951 — 3,455 47.2 % Embassy Suites Boston-Marlborough 2,995 731 — 291 — 1,022 34.1 % Sheraton Burlington Hotel & Conference Center 3,686 525 — 629 — 1,154 31.3 % The Mills House Wyndham Grand Hotel, Charleston 6,203 2,219 — 596 212 3,027 48.8 % Embassy Suites Dallas-Love Field 3,131 410 — 618 — 1,028 32.8 % Embassy Suites Deerfield Beach-Resort & Spa 4,184 474 — 457 390 1,321 31.6 % Embassy Suites Fort Lauderdale 17th Street 5,007 223 — 708 439 1,370 27.4 % Wyndham Houston-Medical Center Hotel & Suites 3,115 715 (19 ) 519 — 1,215 39.0 % The Knickerbocker- New York 12,242 (293 ) 85 2,570 981 3,343 27.3 % Embassy Suites Los Angeles-International Airport/South 6,017 1,561 — 628 241 2,430 40.4 % Embassy Suites Mandalay Beach-Hotel & Resort 5,788 1,491 — 766 — 2,257 39.0 % Embassy Suites Miami-International Airport 3,631 59 — 462 — 521 14.3 % Embassy Suites Milpitas-Silicon Valley 4,869 1,740 — 307 — 2,047 42.0 % Embassy Suites Minneapolis-Airport 3,350 418 — 362 463 1,243 37.1 % Embassy Suites Myrtle Beach-Oceanfront Resort 7,305 1,852 263 652 — 2,767 37.9 % Hilton Myrtle Beach Resort 7,376 2,416 — 898 — 3,314 44.9 % Embassy Suites Napa Valley 4,815 1,230 3 476 339 2,048 42.5 % Wyndham New Orleans-French Quarter 4,240 1,229 — 714 — 1,943 45.8 % Embassy Suites Orlando-International Drive South/Convention Center 3,236 485 — 537 — 1,022 31.6 % DoubleTree Suites by Hilton Orlando-Lake Buena Vista 3,284 110 — 758 — 868 26.4 % Wyndham Philadelphia Historic District 5,894 1,957 — 678 — 2,635 44.7 % Sheraton Philadelphia Society Hill Hotel 7,129 1,645 — 962 — 2,607 36.6 % Embassy Suites Phoenix-Biltmore 2,643 325 — 436 — 761 28.8 % Wyndham Pittsburgh University Center 3,457 840 — 501 — 1,341 38.8 % Wyndham San Diego Bayside 8,833 1,049 — 1,557 — 2,606 29.5 % Embassy Suites San Francisco Airport-South San Francisco 5,925 1,585 — 422 — 2,007 33.9 % Embassy Suites San Francisco Airport-Waterfront 7,010 1,594 — 739 — 2,333 33.3 % Holiday Inn San Francisco-Fisherman’s Wharf 10,346 458 — 614 — 1,072 10.4 % San Francisco Marriott Union Square 9,614 805 (110 ) 1,300 495 2,490 25.9 % Wyndham Santa Monica at the Pier 3,148 975 — 259 167 1,401 44.5 % Embassy Suites Secaucus-Meadowlands 3,786 740 5 118 — 863 22.8 % The Vinoy Renaissance St. Petersburg Resort & Golf Club   13,887   812     267     1,463   352   2,894 20.8 % $ 211,919 $ 37,250   $ 495     $ 26,503 $ 4,944 $ 69,192 32.7 %        

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 % The Knickerbocker- New York 11,736 (859 ) 86 2,581 860 2,668 22.7 % Embassy Suites Los Angeles-International Airport/South 5,548 1,328 — 634 285 2,247 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 % Wyndham New Orleans-French Quarter 4,573 1,492 — 721 — 2,213 48.4 % 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 93 — 775 — 868 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       1,427   415   3,233 22.7 % $ 212,735 $ 39,721   $ 1,036     $ 26,357 $ 5,222 $ 72,336 34.0 %      

Six months ended June 30, 2017

Same-store Hotels

Hotel Operating Revenue     Net Income (Loss)     Other Adjustments     Depreciation     Interest Expense     Hotel EBITDA     Hotel EBITDA Margin Embassy Suites Atlanta-Buckhead $ 7,179 $ 1,650 $ — $ 1,023 $ — $ 2,673 37.2 % DoubleTree Suites by Hilton Austin 8,502 2,618 — 920 313 3,851 45.3 % Embassy Suites Birmingham 5,162 444 1 802 582 1,829 35.4 % The Fairmont Copley Plaza, Boston 27,985 (1,774 ) 1 4,427 799 3,453 12.3 % Wyndham Boston Beacon Hill 10,912 2,130 — 1,937 — 4,067 37.3 % Embassy Suites Boston-Marlborough 5,162 898 — 579 — 1,477 28.6 % Sheraton Burlington Hotel & Conference Center 6,240 96 — 1,249 — 1,345 21.6 % The Mills House Wyndham Grand Hotel, Charleston 10,879 3,079 — 1,213 411 4,703 43.2 % Embassy Suites Dallas-Love Field 6,263 763 — 1,225 — 1,988 31.7 % Embassy Suites Deerfield Beach-Resort & Spa 9,804 2,259 — 925 778 3,962 40.4 % Embassy Suites Fort Lauderdale 17th Street 12,672 2,563 1 1,422 875 4,861 38.4 % Wyndham Houston-Medical Center Hotel & Suites 6,825 1,871 (39 ) 1,060 — 2,892 42.4 % The Knickerbocker-New York 19,824 (4,718 ) 363 5,134 1,901 2,680 13.5 % Embassy Suites Los Angeles-International Airport/South 11,925 3,013 — 1,257 469 4,739 39.7 % Embassy Suites Mandalay Beach-Hotel & Resort 9,847 1,862 — 1,538 — 3,400 34.5 % Embassy Suites Miami-International Airport 9,054 1,560 — 922 — 2,482 27.4 % Embassy Suites Milpitas-Silicon Valley 9,465 3,095 — 615 — 3,710 39.2 % Embassy Suites Minneapolis-Airport 5,973 225 1 727 924 1,877 31.4 % Embassy Suites Myrtle Beach-Oceanfront Resort 11,103 1,410 266 1,306 — 2,982 26.9 % Hilton Myrtle Beach Resort 10,335 1,359 14 1,783 — 3,156 30.5 % Embassy Suites Napa Valley 8,168 1,296 3 959 676 2,934 35.9 % Wyndham New Orleans-French Quarter 8,877 2,738 — 1,431 — 4,169 47.0 % Embassy Suites Orlando-International Drive South/Convention Center 6,655 1,309 — 956 — 2,265 34.0 % DoubleTree Suites by Hilton Orlando-Lake Buena Vista 6,954 454 — 1,523 — 1,977 28.4 % Wyndham Philadelphia Historic District 9,075 1,702 (3 ) 1,399 — 3,098 34.1 % Sheraton Philadelphia Society Hill Hotel 11,716 1,285 — 1,929 — 3,214 27.4 % Embassy Suites Phoenix-Biltmore 6,455 1,721 — 871 — 2,592 40.2 % Wyndham Pittsburgh University Center 5,791 739 — 997 — 1,736 30.0 % Wyndham San Diego Bayside 17,344 1,802 — 3,115 — 4,917 28.3 % Embassy Suites San Francisco Airport-South San Francisco 11,600 2,887 — 865 — 3,752 32.3 % Embassy Suites San Francisco Airport-Waterfront 13,663 2,917 1 1,524 — 4,442 32.5 % Holiday Inn San Francisco-Fisherman’s Wharf 19,627 468 — 1,222 — 1,690 8.6 % San Francisco Marriott Union Square 20,889 2,787 (116 ) 2,603 961 6,235 29.8 % Wyndham Santa Monica at the Pier 5,938 1,969 — 522 324 2,815 47.4 % Embassy Suites Secaucus-Meadowlands 6,349 653 6 222 — 881 13.9 % The Vinoy Renaissance St. Petersburg Resort & Golf Club   29,827   3,385     407       2,928   683   7,403 24.8 % $ 394,039 $ 52,515   $ 906     $ 53,130 $ 9,696 $ 116,247 29.5 %        

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 % The Knickerbocker-New York 17,690 (5,814 ) 346 5,152 1,562 1,246 7.0 % 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 % Wyndham New Orleans-French Quarter 8,931 2,701 — 1,437 — 4,138 46.3 % 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   4,292     233     2,869   812   8,206 26.3 % $ 397,359 $ 57,626   $ 1,243   $ 52,774 $ 10,194 $ 121,837 30.7 %     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,   2017         2016     2017         2016   Same-store operating revenue $ 211,919 $ 212,735 $ 394,039 $ 397,359 Other revenue 1,324 1,145 1,732 1,832 Revenue from held for sale and sold hotels(a)   7,197     24,026     12,773     48,859   Total revenue 220,440 237,906 408,544 448,050 Same-store operating expense 142,727 140,399 277,792 275,522 Consolidated hotel lease expense(b) 1,430 1,359 2,245 2,161 Unconsolidated taxes, insurance and lease expense (536 ) (517 ) (973 ) (969 ) Corporate expenses 6,281 6,047 13,221 14,447 Depreciation and amortization 27,528 29,177 55,366 58,360 Impairment 10,271 6,333 35,109 6,333 Expenses from held for sale and sold hotels(a) 7,490 19,510 14,787 39,848 Other expenses   7,331     2,142     8,591     2,970   Total operating expense   202,522     204,450     406,138     398,672   Operating income $ 17,918   $ 33,456   $ 2,406   $ 49,378   (a)   We include the operating performance for held for sale and sold 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.  

Substantially all of our non-current assets consist of real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to be helpful in evaluating a real estate company’s operations. These supplemental measures 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 is 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 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 Adjusted FFO and Adjusted 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 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 brands/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, and 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 any single financial measure.

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FelCor Lodging Trust IncorporatedAbi Salami, 972-444-4967Director, Investor Relationsasalami@felcor.com