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FelCor Lodging Trust Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 4, 2011 02:21PM
FelCor Lodging Trust Inc. (FCH) filed Quarterly Report for the period ended 2011-03-31.
Highlight of Business Operations:
During the first quarter of 2011, cash provided by operating activities (primarily hotel operations) was $5.8 million, $22.7 million less than the same period in 2010. This decrease is due primarily to the 2011 payment of liquidated damages to IHG, increased hotel bonus payments and decreases in other accrued liabilities, which offset increases from hotel operations. At March 31, 2011, we had $91.0 million of cash and cash equivalents, including approximately $41.0 million held under management agreements to meet working capital needs.
During the first three months of 2011, cash used in investing activities increased $7.7 million, compared to the same period in 2010, due primarily to increased capital expenditures made in 2011. In the first quarter of 2011, we completed approximately $15.0 million of capital improvements at our hotels, and we expect to spend approximately $45 million in non-discretionary capital and $35 million to $40 million in discretionary capital in 2011 (including more than $20 million at the Fairmont Copley Plaza), which investments will be funded from operating cash flow, cash on hand or draws under our line of credit.
During the first quarter of 2011, cash used in financing activities increased by $91.8 million compared to the same period in 2010, due primarily to repayment of $227 million of secured debt using cash on hand and funds drawn under our new line of credit, and payment of preferred dividends in 2011. We expect to pay approximately $8 million in normally occurring principal payments and $39 million in preferred dividends in 2011, which payments will be funded from operating cash flow, cash on hand or draws under our line of credit. We expect to repay, refinance or extend the debt maturing in 2011.
Senior Secured Note Offering. In April 2011, our wholly-owned subsidiary sold $525.0 million in aggregate principal amount of its 6.75% senior secured notes due 2019. The transaction is expected to settle on May 10, 2011, at which time, the gross proceeds will be placed in escrow. Funds held in escrow will be released to us when we acquire Royalton and Morgans and FelCor LP assumes the initial issuer's obligations under those notes. We expect net proceeds after initial purchasers' discount and expenses to be approximately $512 million. If the proceeds are not released from escrow for any reason, the notes will be mandatorily redeemed (the redemption price would be the face amount of the notes, plus accrued interest through redemption).
/td> Line of credit. In March 2011, we closed a $225 million secured, revolving line of credit. At closing, we repaid two secured loans, totaling $198.3 million and $28.8 million, with a combination of $52.1 million of cash on hand and funds drawn under the new line of credit. The repaid loans would have matured in 2013 and 2012 (including extensions), respectively, and were secured by mortgages on 11 hotels. Those same hotels now secure repayment of amounts outstanding under the line of credit. The credit facility bears interest equal to LIBOR, plus 4.5%, with no LIBOR floor.
Secured Debt. At March 31, 2011, we had a total of $1.5 billion of consolidated secured debt (including $145 million drawn on our line of credit) with 61 encumbered consolidated hotels with a $1.5 billion aggregate net book value (including 14 hotels that are collateral for our senior secured notes).
Stocks Discussed: FCH,