• Industry-leading full-year RevPAR growth of 8.1%
• Implemented stock repurchase program
• Increased common stock dividend by 50%
• Began sale process for five hotels
IRVING, Texas–FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the fourth quarter ended December 31, 2015.
Fourth Quarter Highlights
- Same-store RevPAR increased 5.4% over the same period in 2014.
- Adjusted EBITDA was $50.0 million, and Same-store Adjusted EBITDA increased by $5.7 million, or 12.8%, to $50.4 million compared to the same period in 2014.
- Hotel EBITDA increased 10.5% to $55.1 million over the same period in 2014.
- Increased quarterly common dividend by 50% to $0.06 per share.
- Repurchased 4.3 million shares of common stock for $29 million from December 2015 to date.
- Began marketing five hotels, and entered into a letter of intent for Morgans and Royalton.
- Adjusted FFO per share was $0.15.
- Net loss per share was $0.07.
“We are pleased to have delivered industry-leading RevPAR growth in 2015 and for the last eight years. We have created a high-quality and diverse portfolio that we fully expect will continue to outperform the industry,” said Richard A. Smith, President and Chief Executive Officer of FelCor.
Mr. Smith added, “We are committed to maximizing long-term stockholder value, which includes eliminating the disparity between asset value and our stock price. As such, we recently began marketing five hotels for sale. The sale of these hotels will reduce leverage significantly, mitigate operational risk and provide substantial capacity to repurchase our stock at a significant discount to intrinsic value. We are making excellent progress executing our strategy, which will further benefit our long-term stockholders.”
Fourth Quarter Hotel Results
Fourth Quarter 2015 2014 Change Same-store hotels (39) RevPAR $ 133.36 $ 126.57 5.4 % Total hotel revenue, in millions $ 198.7 $ 185.0 7.4 % Hotel EBITDA, in millions $ 55.1 $ 49.9 10.5 % Hotel EBITDA margin 27.7 % 26.9 % 77 bps
RevPAR for our 39 same-store hotels increased 5.4% (to $133.36) from the same period in 2014. The change reflects a 2.0% increase in ADR (to $179.39) and a 3.3% increase in occupancy (to 74.3%). Hotel EBITDA for our 39 same-store hotels increased by 10.5% to $55.1 million and Hotel EBITDA margin was 27.7% during the quarter, a 77 basis point increase.
RevPAR for the eight Wyndham hotels (which we converted from Holiday Inn on March 1, 2013) increased 9.1% (to $119.23) from the same period in 2014. Wyndham Worldwide Corporation has guaranteed the minimum annual NOI for these hotels through 2023.
See pages 13-14 and 20-22 for more detailed hotel portfolio operating data.
Fourth Quarter Operating Results
Fourth Quarter $ in millions, except for per share information 2015 2014 Change Same-store Adjusted EBITDA $ 50.4 $ 44.6 12.8 % Adjusted EBITDA $ 50.0 $ 49.4 1.2 % Adjusted FFO per share $ 0.15 $ 0.15 $ — Net income (loss) per share $ (0.07 ) $ — $ (0.07 )
Same-store Adjusted EBITDA increased 12.8% to $50.4 million from the same period in 2014. Adjusted EBITDA was $50.0 million.
Adjusted FFO was $21.8 million ($0.15 per share), compared to $18.5 million ($0.15 per share) for the same period in 2014. Net loss attributable to common stockholders was $10.4 million ($0.07 per share) in 2015, compared to net income of $567,000 ($0.00 per share) for the same period in 2014. Net income in 2014 included $15.6 million of net gain on the sale of consolidated hotels.
Year-to-Date Operating Results
RevPAR for our 39 same-store hotels increased 8.1% (to $144.35) from the same period in 2014. The change reflects a 5.3% increase in ADR (to $185.62) and a 2.7% increase in occupancy (to 77.8%). Hotel EBITDA for our 39 same-store hotels increased 15.8% to $246.2 million, and Hotel EBITDA margin for these properties increased 188 basis points to 29.8%.
Same-store Adjusted EBITDA increased 18.0% to $228.2 million from the same period in 2014. Adjusted EBITDA (which includes Adjusted EBITDA from sold hotels) increased 6.3% to $234.7 million from the same period in 2014.
Adjusted FFO was $115.2 million ($0.83 per share), compared to $82.2 million ($0.65 per share) for the same period in 2014. Net loss attributable to common stockholders was $45.1 million ($0.33 per share) in 2015, compared to net income of $53.4 million ($0.43 per share) for the same period in 2014. Net loss in 2015 included $30.9 million in debt extinguishment charges and a $20.9 million impairment charge offset by a $20.1 million net gain on the sale of consolidated hotels (including discontinued operations) and a $7.1 million gain on sale of an unconsolidated joint venture. Net income in 2014 included $66.7 million of net gain on the sale of consolidated hotels, a $30.2 million gain on the sale of our interest in unconsolidated hotels, and a $20.7 million gain on the fair value remeasurement of previously unconsolidated hotels.
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 15 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 on-going pursuit, we look for opportunities to recycle capital that can be redeployed to strengthen our balance sheet and achieve higher returns.
Asset Sales
In 2015, we announced the next phase of our long-term strategic plan. As part of this plan, we are selling five of our hotels, including our three New York City properties. Given these hotels’ locations and quality, we expect to sell them for prices per key that reflect very attractive EBITDA multiples. We have agreed to sell the Holiday Inn Nashville Airport and received a letter of intent to sell two other hotels (Morgans and Royalton) at compelling prices. We are in discussions with potential buyers for the two remaining properties – The Knickerbocker and the Renaissance Esmeralda Indian Wells Resort & Spa.
Balance Sheet
As of December 31, 2015, we had $1.4 billion of consolidated debt bearing a 5.2% weighted-average interest rate and an eight-year weighted-average maturity. We had $59.8 million of cash and cash equivalents and $17.7 million of restricted cash.
“We continue creating a strong balance sheet that will enable us to thrive throughout lodging cycles. After completing planned asset sales, we expect our pro forma leverage will be below 4.0 times, down from 8.2 times in 2010. We have successfully extended our already best-in-class debt maturity profile. Excluding our line of credit, we have no significant maturities until 2022, and more than 90% of our debt is fixed, insulating us from rising rates,” said Michael C. Hughes, Executive Vice President and Chief Financial Officer of FelCor.
Stock Repurchase Program
In 2015, our Board approved a $100 million stock repurchase program, which we implemented in December. To-date, we have purchased 4.3 million shares for $29.0 million (at an average price of $6.68 per share). We intend to continue repurchasing our common stock while it trades at a significant discount to NAV and expect the $100 million program to increase in conjunction with the contemplated asset sales.
Common Dividend
During the fourth quarter, we increased our common stock dividend by 50% to $0.06 per share. Our Board of Directors will determine future quarterly common stock dividends based on funds available for distribution, reinvestment opportunities within our portfolio and taxable income, among other things.
Capital Expenditures
During the fourth quarter, we invested $15.6 million in capital improvements at our hotels. During 2015, we invested $85.7 million at our hotels, including $33.5 million at The Knickerbocker. During 2016, we plan to invest approximately $60 million in capital improvements and renovations as part of our long-term capital plan. In addition, we expect to invest approximately $15 million in redevelopment projects this year.
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