FelCor Declares Preferred Dividends
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FelCor Declares Preferred Dividends
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Category: Worldwide - Industry economy -
Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2008-12-16
Suspends Common Dividend Provides Update on Fourth Quarter Operations and Preliminary 2009 Forecast
FelCor Lodging Trust Incorporated (NYSE: FCH) today declared dividends on its preferred stock. FelCor will pay a dividend of $0.4875 per share on its $1.95 Series A Cumulative Convertible Preferred Stock and $0.50 per depositary share evidencing its 8% Series C Cumulative Redeemable Preferred Stock. The dividends will each be payable on January 30, 2009, to stockholders of record on January 2, 2009.
The company has elected to suspend its common dividend. This decision reflects the expectation that Revenue Per Available Room ("RevPAR") will continue to decline in 2009. Based on its preliminary 2009 budgets (final guidance will be provided in conjunction with fourth quarter results), the company expects its RevPAR will decline by approximately six to eight percent. The company expects to generate positive cash flow during 2009, but it does not anticipate that it will be required to pay a common dividend to maintain its REIT status in 2009. By suspending the common dividend, the company will preserve approximately $48 million of liquidity through 2009.
FelCor's RevPAR for the two months ended November decreased 8.7 percent compared to the prior year period. RevPAR has been below expectations due to lower travel demand associated with the deepening recession. However, its hotels continue to gain market share and perform better than the industry. In addition, its Funds From Operations ("FFO") through November are in line with expectations, due to aggressive cost cutting at its hotels. As a result, the company is maintaining its existing 2008 FFO guidance.
"We continue to take the appropriate actions to maintain liquidity and reduce debt with our cost cutting measures and the suspension of our common dividend. Notwithstanding weakening industry trends, we are pleased with better than expected EBITDA margins in October and November and continued strong market share growth for our renovated hotels. However, given that current industry trends are expected to continue into 2009, we feel that it is prudent to suspend our common dividend," said Richard A. Smith, FelCor's President and Chief Executive Officer.
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