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FelCor Provides Portfolio and Balance Sheet Update

2011-06-02

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FelCor Completed the sale of $525 million of 6.75% senior notes and acquired Royalton and Morgans hotels in New York for $140 million.

FelCor Lodging Trust Incorporated (NYSE: FCH) today announced significant progress on several balance sheet and portfolio initiatives, including:

Completed the sale of $525 million of 6.75% senior notes and acquired Royalton and Morgans hotels in New York for $140 million;
Called $144 million of 10% senior notes due 2014 for redemption (total consideration: $158.4 million), which will be completed on June 16, 2011;
Repaid the remaining $46 million of 9% senior notes that matured on June 1, 2011;
Excess proceeds from the 6.75% senior notes offering, together with the undrawn $225 million line of credit, created in excess of $400 million of liquidity that is available for permanent debt reduction or future acquisitions; and
Sold three non-strategic hotels in May, with seven hotels under contract or under negotiation.

These measures are part of FelCor’s long-term strategic plan to improve the overall portfolio quality, increase future growth rates, lower its debt balance and average cost of debt, and stagger and extend debt maturities.

Recent Corporate Financings:

FelCor raised $671 million in net proceeds, after fees and expenses, from the sale of $525 million of 6.75% senior notes due 2019 and the recent equity offering. FelCor intends to use the remaining net proceeds (approximately $180 million after accounting for the transactions described above and repayment of borrowings under its line of credit) to repay high-cost debt or fund future acquisitions. FelCor has lowered its average cost of debt by more than 50 basis points during the second quarter.

Disposition Program Update:

FelCor’s previously announced disposition program is proceeding better than expected. Since November 2010, FelCor has sold four non-strategic hotels. In addition, it has entered into definitive agreements to sell five non-strategic hotels, and is negotiating to sell an additional two non-strategic hotels. The company expects to generate aggregate gross proceeds of $272 million from the sale of these 11 hotels, which equates to an average of 12.5 times 2011 Hotel EBITDA of $21.8 million and approximately 6% NOI capitalization rate. In connection with the sale of these hotels, FelCor will repay $135 million of secured debt. The five hotels under contract are expected to be sold by the end of July.

During May, as noted above, FelCor sold three non-strategic hotels (in Tempe, AZ, Lexington, KY and Rosemont, IL) for aggregate gross proceeds of $54 million. Revenue per Available Room (“RevPAR”) for these hotels was $74.77 for 2010, 24% less than FelCor’s core portfolio ($98.35).

FelCor, a real estate investment trust, is the nation's largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 81 properties located in major markets throughout 22 states. FelCor's diversified portfolio of hotels and resorts are flagged under global brands such as - Doubletree^®, Embassy Suites Hotels^®, Hilton^®, Fairmont^®, Marriott^®, Renaissance^®, Sheraton^®, Westin^® and Holiday Inn^®.

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