IRVING, Texas–FelCor Lodging Trust Incorporated (NYSE: FCH) today reported results for the fourth quarter ended December 31, 2016.
Fourth Quarter Highlights
- Same-store RevPAR decreased 2.0% compared to the same period in 2015.
- Net loss attributable to FelCor common stockholders was $6.2 million ($0.04 per share) versus $10.4 million ($0.07 per share) for the same period in 2015.
- Adjusted FFO per share increased 13.3% to $0.17 from the same period in 2015.
- Adjusted EBITDA increased $1.4 million to $51.4 million from the same period in 2015.
“On behalf of the entire team, we are very pleased to extend a warm welcome to Steve Goldman, who will join us next week as FelCor’s new CEO. Steve is a terrific industry leader who brings to FelCor extensive experience in all aspects of hotel operations, acquisitions and divestitures, finance and development that will add measurably to our prospects for future success. We are looking forward to working with him as we continue to build value for stockholders,” said Troy A. Pentecost, FelCor’s President, Interim Senior Executive Officer and Chief Operating Officer.
Mr. Pentecost continued, “We had a productive quarter on several fronts. Despite a decline in revenues, we beat our Adjusted FFO and Adjusted EBITDA expectations for the fourth quarter. We also successfully completed negotiations with Hilton with respect to new management agreements for 18 of our properties. The new management agreements shift a substantial portion of fees from fixed base fees to variable incentive fees, which are payable only after achieving a base return on our invested capital. This new fee structure better aligns Hilton’s interest with our economic interest. We also negotiated comprehensive, long-term renovation plans at the affected hotels that allow us to deploy our capital more efficiently. We are excited to extend our strong relationship with Hilton, and we are confident the new agreements will help us achieve meaningful returns on these assets.”
Fourth Quarter Hotel Results
Fourth Quarter 2016 2015 Change Same-store hotels (37) RevPAR $ 135.04 $ 137.86 (2.0 )% Total hotel revenue, in millions $ 182.1 $ 186.5 (2.4 )% Hotel EBITDA, in millions $ 52.2 $ 54.0 (3.3 )% Hotel EBITDA margin 28.7 % 28.9 % (27) bps
RevPAR for our 37 same-store hotels decreased 2.0% (to $135.04) from the same period in 2015. The change reflects a 1.2% increase in average daily rate, or ADR, (to $184.46) and a 3.2% decline in occupancy (to 73.2%). We continued to face headwinds during the fourth quarter that negatively impacted revenues. Hurricane Matthew, which struck the East Coast in early October, resulted in the mandatory evacuation of four of our hotels and five condominium towers. In addition, we continued to experience weak supply and demand fundamentals in certain markets (mainly Miami, Houston, New York and San Francisco), which account for approximately 30% of our available room nights. Despite weakness in certain markets, we continued focusing our revenue management efforts on rate growth versus occupancy.
Wyndham Worldwide Corporation has guaranteed minimum annual NOI for eight of our hotels over the 10-year term of their management agreements. Hotel EBITDA for the three months ended December 31, 2016 includes $2.0 million in fee reductions related to the Wyndham guaranty compared to $180,000 during the same period last year.
See pages 12-13 and 18-23 for more detailed operating data.
Fourth Quarter Operating Results
Fourth Quarter $ in millions, except for per share information 2016 2015 Change Net loss attributable to FelCor common stockholders $ (6.2 ) $ (10.4 ) 41.1 % Net loss per share $ (0.04 ) $ (0.07 ) $ 0.03 Same-store Adjusted EBITDA $ 47.4 $ 49.3 (3.9 )% Adjusted EBITDA $ 51.4 $ 50.0 2.7 % Adjusted FFO per share $ 0.17 $ 0.15 $ 0.02
Full Year Operating Results
Net loss attributable to common stockholders was $21.6 million ($0.16 per share) in 2016, compared to $45.1 million ($0.33 per share) for the same period in 2015. Net loss in 2016 includes impairment charges of $26.5 million attributable to two hotels (one of which was sold in 2016) and a $6.9 million charge for severance costs. These charges are partially offset by a $3.2 million net gain on hotel sales (including a $3.1 million loss in discontinued operations). Net loss in 2015 included $30.9 million in debt extinguishment charges, a $20.9 million impairment charge for a property subsequently sold in 2016 and a $3.7 million charge for severance costs, partially offset by a $20.1 million net gain on the sale of consolidated hotels (including $658,000 in discontinued operations) and a $7.1 million gain on the sale of a hotel owned by an unconsolidated joint venture.
RevPAR for our 37 same-store hotels increased 0.9% (to $150.11) from the same period in 2015. The change reflects a 1.8% increase in ADR (to $191.14) and a 0.9% decline in occupancy (to 78.5%). Hotel EBITDA for our 37 same-store hotels increased by 0.6% to $238.8 million, and Hotel EBITDA margin was 30.6%, a 16 basis point decrease. Hotel EBITDA for the year ended December 31, 2016 includes $5.3 million in fee reductions related to the Wyndham guaranty compared to $1.4 million during the same period last year.
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
As of December 31, 2016, we had $1.3 billion of consolidated debt with a 5.4% weighted-average interest rate and a six-year weighted-average maturity. We had $47.3 million of cash and cash equivalents on hand and $19.5 million of restricted cash. We reduced our consolidated debt by $74 million and our leverage ratio from 6.0x at December 31, 2015 to 5.6x at December 31, 2016. In 2016, Moody’s upgraded our corporate credit rating to B2, which reflects continued progress with respect to strengthening our balance sheet and improving our credit metrics.
Asset Sales
In 2016, we sold the Renaissance Esmeralda Indian Wells Resort and the Holiday Inn Nashville Airport for $108.0 million total gross proceeds. We used proceeds from these sales 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 2015. To date, we have purchased 6.6 million shares for $44.8 million (at an average price of $6.78 per share).
Common Dividend
We declared a fourth quarter $0.06 per share common stock dividend, which we paid at the end of January. 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
In 2016, we renovated two hotels (Embassy Suites – Dallas Love Field and Embassy Suites – Orlando International Drive South/Convention Center) and began redeveloping two resort properties (The Vinoy Renaissance St. Petersburg Resort & Golf Club and Embassy Suites Myrtle Beach-Oceanfront Resort), which included the construction of significant improvements to our resort amenities. We expect these renovations and redevelopments will enhance the quality of our portfolio and offer attractive returns. We spent $74.6 million on renovations and redevelopments at our hotels during 2016. We continue to underwrite and evaluate future renovations and redevelopments.
To view full financial release and corresponding tables please click the PDF icon or visit: http://ir.felcor.com/phoenix.zhtml?c=118512&p=irol-newsArticle&ID=2248733
