FelCor Reports Second Quarter Operating Results

IRVING, Texas--(Business Wire)--
FelCor Lodging Trust Incorporated (NYSE: FCH) today reported
operating results for the second quarter and six months ended June 30,
2008.

Highlights:

-- Met our Adjusted FFO and EBITDA guidance for the quarter.

-- RevPAR increased 8.7 percent for our 53 hotels where
renovations were completed in 2007. RevPAR increased
4.7 percent for our 85 consolidated hotels, compared to 1.2
percent for the United States average.

-- Hotel EBITDA margin increased 215 basis points compared to
prior year.

-- Market share increased approximately seven percent for our 53
hotels where renovations were completed in 2007, attaining our
targeted return on renovations. Market share increased
approximately four percent for our 85 consolidated hotels.

-- Completed renovations at three additional hotels. We now have
completed renovations at 78 hotels (comprising approximately
94 percent of our portfolio).

Second Quarter Operating Results:

Revenue per available room ("RevPAR") for our 85 consolidated
hotels increased 4.7 percent to $105.76, which was driven by increases
in both average daily rate ("ADR") of 1.6 percent and occupancy of
3.0 percent, compared to the same period in 2007. At our 53 hotels
where we completed renovations in 2007, RevPAR increased 8.7 percent
and ADR increased 2.7 percent compared to the prior year.

"Despite softening industry-wide demand, our hotels are benefiting
from our comprehensive renovation program and continue to increase
RevPAR well above the industry. More importantly, our portfolio gained
significant market share from its competitive sets, and we remain on
track to earn our targeted returns from completed renovations," said
Richard A. Smith, FelCor's President and Chief Executive Officer. "We
will continue to focus on driving market share and still anticipate
that RevPAR for our portfolio will increase significantly higher than
the industry average for the remainder of the year and into 2009."

Our Same-Store Adjusted Funds from Operations ("FFO") increased to
$49.5 million, or $0.76 per share, compared to $37.5 million, or $0.59
per share, for the same period in 2007. Our Adjusted FFO was
$49.5 million, compared to $54.7 million for the same period in 2007
(including sold hotels). Adjusted FFO per share met the low-end of our
expectations.

Our Hotel EBITDA increased to $97.4 million, compared to
$86.8 million in the same period in 2007, an increase of 12.2 percent.
Hotel EBITDA margin was 31.9 percent and represented a 215 basis point
increase compared to the same period in 2007, which was at the
high-end of our expectations.

Our Same-Store Adjusted EBITDA increased to $87.2 million,
compared to $77.6 million for the same period in 2007, an increase of
12.3 percent. Our Adjusted EBITDA was $87.2 million in the second
quarter, compared to $91.7 million for the same period in 2007
(including sold hotels).

Net income applicable to common stockholders was $13.6 million, or
$0.22 per share, compared to $45.5 million, or $0.73 per share, for
the same period in 2007. Net income for the second quarter of 2007
included $40.7 million from gains on sale of condominiums, gains on
sale of hotels, and operating income from hotels sold in 2007.

EBITDA, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO,
and Adjusted FFO are all non-GAAP financial measures. See our
discussion of "Non-GAAP Financial Measures" beginning on page 13 for a
reconciliation of each of these measures to our net income and for
information regarding the use, limitations and importance of these
non-GAAP financial measures.

Renovations and Development Projects:

During the second quarter, we completed renovations at three
hotels. Since we began our renovation program, we have completed 78
hotels, which comprise approximately 94 percent of our portfolio. For
the remainder of 2008, we expect the majority of the disruption to be
at San Francisco Union Square. The redevelopment of this hotel to a
Marriott remains on schedule to be completed in early 2009.

Overall, our renovated hotels continue to earn the expected
returns on the capital expenditures. For the 53 hotels where we
completed renovations during 2007, market share increased
approximately seven percent relative to their competitive sets. RevPAR
at these hotels increased 8.7 percent for the second quarter and Hotel
EBITDA grew 17.6 percent compared to the prior year.

We spent $34.6 million on renovations and redevelopment projects
at our hotels for the three months ended June 30, 2008, including our
pro rata share of joint venture expenditures.

Capital Structure:

At June 30, 2008, we had $1.5 billion of consolidated debt
outstanding with a weighted average life of four years and a weighted
average interest rate of 6.3 percent. Our cash and cash equivalents
totaled $70.9 million at June 30, 2008. In July, we repaid a
$15.5 million single property mortgage loan and exercised the first of
three, one-year extension options on our $250 million CMBS loan that
was initially scheduled to mature November 2008. We have no scheduled
debt maturities for the remainder of 2008.

2008 Dividend and Guidance:

We intend to reduce our quarterly common dividend, effective the
third quarter of 2008, based on our revised forecast for the second
half of the year and limited visibility for 2009. Given this limited
visibility and our focus on liquidity and leverage, we are taking a
more conservative approach by setting the new dividend to more closely
reflect our taxable net income distribution requirement, and will
adjust it accordingly to meet our targeted payout ratio. Therefore, we
intend to set the dividend at $0.15 per share. Our revised dividend
represents a yield in excess of seven percent, based on today's
closing price. The dividend reduction would equate to annual cash flow
savings of approximately $50 million.

"We are very pleased with what we accomplished during the second
quarter, including gains in market share and managing flow-through by
reducing costs across the portfolio. We expect that we will continue
to outperform the industry in both RevPAR and margin growth," said
Andrew J. Welch, FelCor's Executive Vice President and Chief Financial
Officer. "There is no denying the current economic trends and
potential for further deterioration in demand. Demand is being
impacted by reductions in airline capacity, higher fuel costs,
moderating GDP and negative sentiment towards the economy. As a
result, we have revised our outlook for the remainder of the year and
have taken a more conservative stance regarding our dividend
distribution."

RevPAR at our 85 consolidated hotels is expected to increase
between 4.0 and 5.0 percent in 2008, compared to the prior year, which
reflects our expectation that RevPAR for our markets will be between
negative one percent and flat compared to 2007. Therefore, we continue
to expect that RevPAR for our portfolio will increase significantly
more than our markets. RevPAR at our 85 consolidated hotels increased
5.0 percent in July 2008, compared to the same period in 2007. The
benefits of our renovation program, including achieving the expected
returns from our capital investment, are driving our relatively high
increase in RevPAR. The moderation in RevPAR growth is impacting our
annual net income, FFO and EBITDA guidance. The upward shift in the
forward interest-rate curve is further impacting net income and FFO.

We currently anticipate:

-- Portfolio RevPAR growth to be between 4.0 and 5.0 percent for
the full year, and 4.5 and 6.0 percent for the third quarter;

-- Adjusted EBITDA to be between $283 million and $289 million
for the full year, and $64 million and $67 million for the
third quarter;

-- Adjusted FFO per share to be between $2.08 and $2.18 for the
full year, and $0.43 and $0.47 for the third quarter;

-- Net Income to be between $5 million and $11 million for the
full year, and net loss of $1 million and net income of
$2 million for the third quarter;

-- Hotel EBITDA margins to increase approximately 40 basis points
for the full year; and

-- Capital expenditures, including redevelopment projects, of
approximately $150 million for the full year.

FelCor, a real estate investment trust, is the nation's largest
owner of upper-upscale, all-suite hotels. FelCor's portfolio is
comprised of 85 consolidated hotels and resorts, located in 23 states
and Canada. FelCor's portfolio consists primarily of upper-upscale
hotels, which are flagged under global brands such as Embassy Suites
Hotels(R), Doubletree(R), Hilton(R), Renaissance(R), Sheraton(R),
Westin(R) and Holiday Inn(R). Additional information can be found on
the Company's Web site at www.felcor.com.

We invite you to listen to our second quarter earnings Conference
Call on Wednesday, August 6, 2008, at 10:00 a.m. (Central Time). The
conference call will be Web cast simultaneously via the Internet on
FelCor's Web site at www.felcor.com. Interested investors and other
parties who wish to access the call should go to FelCor's Web site and
click on the conference call microphone icon on either the "Investor
Relations" or "News" pages. The conference call replay will be
archived on the Company's Web site. A telephonic replay will be
available from 12:00 p.m. (Central Time), Wednesday, August 6, 2008
through 5:00 p.m. (Central Time), Friday, August 8, 2008, by dialing
(800) 642-1687 (conference ID #56198060).

With the exception of historical information, the matters
discussed in this news release include "forward-looking statements"
within the meaning of the federal securities laws. These
forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "project," "should"
"will," "continue" and other similar terms and phrases, including
references to assumptions and forecasts of future results.
Forward-looking statements are not guarantees of future performance.
Numerous risks and uncertainties, and the occurrence of future events,
may cause actual results to differ materially from those anticipated
at the time the forward-looking statements are made. An economic
slowdown and its impact on the lodging industry, operating risks
associated with the hotel business, relationships with our property
managers, risks associated with our level of indebtedness and our
ability to meet debt covenants in our debt agreements, our ability to
complete acquisitions and dispositions, the availability of capital,
the impact on the travel industry from increased fuel prices and
security precautions, our ability to continue to qualify as a Real
Estate Investment Trust for federal income tax purposes and numerous
other factors may affect future results, performance and achievements.
Certain of these risks and uncertainties are described in greater
detail in our filings with the Securities and Exchange Commission.
Although we believe our current expectations to be based upon
reasonable assumptions, we can give no assurance that our expectations
will be attained or that actual results will not differ materially. We
undertake no obligation to update any forward-looking statement to
conform the statement to actual results or changes in our
expectations.

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*T
SUPPLEMENTAL INFORMATION

INTRODUCTION

The following information is presented in order to help our investors
understand the financial position of the Company for the three and
six month periods ended June 30, 2008.

TABLE OF CONTENTS

Consolidated Statements of Operations
Discontinued Operations
Capital Expenditures
Selected Balance Sheet Data
Supplemental Financial Data
Debt Summary
Hotel Portfolio Composition
Detailed Operating Statistics by Brand
Detailed Operating Statistics for FelCor's Top Markets
Non-GAAP Financial Measures
*T

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*T
Consolidated Statements of Operations
(in thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Hotel operating revenue:
Room $239,689 $216,813 $469,821 $421,135
Food and beverage 49,010 35,212 95,518 66,985
Other operating
departments 16,538 13,504 31,445 25,948
Other revenue 931 715 1,259 845
-------- -------- -------- --------
Total revenues 306,168 266,244 598,043 514,913
-------- -------- -------- --------

Expenses:
Hotel departmental
expenses:
Room 56,871 53,058 111,522 101,841
Food and beverage 36,096 26,655 71,542 51,190
Other operating
departments 7,170 5,835 14,199 10,782
Other property related
costs 76,574 68,584 153,699 137,142
Management and franchise
fees 15,973 13,943 31,875 27,066
Taxes, insurance and lease
expense 28,862 31,422 58,166 60,651
Corporate expenses 4,864 5,255 11,691 12,041
Depreciation and
amortization 35,072 27,155 68,840 52,205
Impairment loss - - 17,131 -
Other expenses 900 393 1,833 415
-------- -------- -------- --------
Total operating expenses 262,382 232,300 540,498 453,333
-------- -------- -------- --------
Operating income 43,786 33,944 57,545 61,580
Interest expense, net (24,769) (23,207) (50,772) (46,079)
-------- -------- -------- --------
Income before equity in income
from unconsolidated entities,
minority
interests and gain on sale of
assets 19,017 10,737 6,773 15,501
Equity in income from
unconsolidated entities 2,331 3,710 1,709 16,480
Minority interests (1,181) 79 (775) 116
Gain on involuntary
conversion 3,095 - 3,095 -
Gain on sale of
condominiums - 14,858 - 18,139
-------- -------- -------- --------
Income from continuing
operations 23,262 29,384 10,802 50,236
Discontinued operations - 25,792 (13) 34,099
-------- -------- -------- --------
Net income 23,262 55,176 10,789 84,335
Preferred dividends (9,678) (9,678) (19,356) (19,356)
-------- -------- -------- --------
Net income (loss) applicable
to common stockholders $ 13,584 $ 45,498 $ (8,567) $ 64,979
======== ======== ======== ========

Basic per common share data:
Net income (loss) from
continuing operations $ 0.22 $ 0.32 $ (0.14) $ 0.50
======== ======== ======== ========
Net income (loss) $ 0.22 $ 0.74 $ (0.14) $ 1.06
======== ======== ======== ========
Basic weighted average
common shares outstanding 61,822 61,587 61,819 61,511
======== ======== ======== ========

Diluted per common share data:
Net income (loss) from
continuing operations $ 0.22 0.32 $ (0.14) $ 0.50
======== ======== ======== ========
Net income (loss) $ 0.22 0.73 $ (0.14) $ 1.05
======== ======== ======== ========
Diluted weighted average
common shares
outstanding 61,968 62,032 61,819 61,899
======== ======== ======== ========
Cash dividends declared on
common stock $ 0.35 $ 0.30 $ 0.70 $ 0.55
======== ======== ======== ========
*T

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Discontinued Operations
(in thousands)

Discontinued operations include the results of operations of 11 hotels
sold in 2007. Condensed financial information for the hotels included
in discontinued operations is as follows:

Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2008 2007 2008 2007
-------- --------- ------ ---------
Operating revenue $- $ 10,949 $ - $ 26,447
Operating expenses - (6,215) (13) (18,094)
------- -------- ----- --------
Operating income (loss) - 4,734 (13) 8,353
Interest income (expense), net - 6 - (19)
Gain on sale of hotels, net of
income tax - 22,457 - 28,488
Loss on early extinguishment of
debt - - - (901)
Minority interests - (1,405) - (1,822)
------- -------- ----- --------
Income (loss) from discontinued
operations - 25,792 (13) 34,099
Depreciation and amortization,
net of minority interests - 14 - 14
Minority interest in FelCor LP - 559 - 740
Interest expense, net of
minority interests - - - 27
------- -------- ----- --------
EBITDA from discontinued operations - 26,365 (13) 34,880
Gain on sale of hotels, net of
income tax and minority
interests - (21,799) - (27,830)
Charges related to early
extinguishment of debt, net of
minority interests - - - 811
------- -------- ----- --------
Adjusted EBITDA from discontinued
operations $- $ 4,566 $ (13) $ 7,861
======= ======== ===== ========
*T

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Capital Expenditures
(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
--------- -------- -------- ---------
Improvements and additions to
consolidated hotels $31,251 $68,027 $73,625 $137,129
Consolidated joint venture
partners' prorata share of
additions to hotels (962) (842) (2,218) (2,081)
Prorata share of unconsolidated
additions to hotels 4,335 5,815 11,306 9,508
-------- ------- ------- --------
Total additions to hotels(a) $34,624 $73,000 $82,713 $144,556
======== ======= ======= ========
*T

(a) Includes capitalized interest, property taxes, ground leases
and certain employee costs.

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*T
Selected Balance Sheet Data
(in thousands)

June 30, December 31,
2008 2007
------------- -------------
Investment in hotels $ 3,134,715 $ 3,094,521
Accumulated depreciation (755,654) (694,464)
------------ ------------
Investments in hotels, net of accumulated
depreciation $ 2,379,061 $ 2,400,057
============ ============

Cash and cash equivalents $ 70,862 $ 57,609
============ ============
Total assets $ 2,663,038 $ 2,683,835
============ ============
Total debt $ 1,510,535 $ 1,475,607
============ ============
Total stockholders' equity $ 955,454 $ 1,006,914
============ ============
Total stockholders' equity less preferred
equity $ 476,679 $ 528,140
============ ============
Book value per common share outstanding $ 7.55 $ 8.42
============ ============
*T

At June 30, 2008, we had an aggregate of 63,168,272 shares of
FelCor common stock and 1,353,771 limited partnership units of FelCor
Lodging Limited Partnership outstanding.

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*T
Supplemental Financial Data
(in thousands, except per share information, ratios and percentages)

June 30, December 31,
Total Enterprise Value 2008 2007
------------------------------------------- ------------ -------------
Common shares outstanding 63,168 62,707
Units outstanding 1,354 1,354
----------- ------------
Combined shares and units outstanding 64,522 64,061
Common stock price at end of period $ 10.50 $ 15.59
----------- ------------
Common equity capitalization $ 677,481 $ 998,711
Series A preferred stock 309,362 309,362
Series C preferred stock 169,412 169,412
Consolidated debt 1,510,535 1,475,607
Minority interest of consolidated debt (4,129) (7,305)
Pro rata share of unconsolidated debt 113,376 94,181
Cash and cash equivalents (70,862) (57,609)
----------- ------------
Total enterprise value (TEV) $ 2,705,175 $ 2,982,359
=========== ============

Dividends Per Share
-------------------------------------------
Dividends declared (year-to-date):
Common stock $ 0.70 $ 1.20
Series A preferred stock $ 0.975 $ 1.95
Series C preferred stock (depositary
shares) $ 1.00 $ 2.00
*T

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Debt Summary
(dollars in thousands)

Interest Rate
Encumbered at June 30, Maturity Consolidated
Hotels 2008 Date Debt
---------- ------------- ----------------- ------------
Line of
credit(a) none L + 0.80 August 2011 $ 45,000
Senior term
notes none 8.50(b) June 2011 299,288
Senior term
notes none L + 1.875 December 2011 215,000
Other none L + 0.40 July 2008(c) 4,554
---------- ------------
Total line
of credit
and senior
debt(d) 6.71 563,842
---------- ------------

Mortgage debt 12 hotels L + 0.93(e) November 2009(f) 250,000
Mortgage debt 7 hotels 6.57 June 2009-2014 88,144
Mortgage debt 7 hotels 7.32 March 2009 119,013
Mortgage debt 8 hotels 8.70 May 2010 164,157
Mortgage debt 6 hotels 8.73 May 2010 117,962
Mortgage debt 2 hotels L + 1.55(g) May 2009(h) 176,124
Mortgage debt 1 hotel L + 2.85 August 2008(c) 15,500
Mortgage debt 1 hotel 5.81 July 2016 12,326
Other 1 hotel various various 3,467
---------- ---------- ------------
Total
mortgage
debt(d) 45 hotels 5.98 946,693
========== ---------- ------------

Total 6.25% $ 1,510,535
========== ============
*T

(a) We have $250 million of borrowing capacity under our line of
credit. The interest rate can range from 80 to 150 basis points over
LIBOR, based on our leverage ratio as defined in our line of credit
agreement.

(b) If the credit rating on our senior debt is downgraded by
Moody's to B1 and Standard & Poor's rating remains below BB-, the
interest rate on these senior notes will increase to 9.0%.

(c) This loan was repaid in full in July 2008.

(d) Interest rates are calculated based on the weighted average
debt outstanding at June 30, 2008.

(e) We have purchased an interest rate cap at 7.8% for this
notional amount that expires in November 2009.

(f) This loan provides us three one-year extension options that
permit, in our sole discretion, the maturity to be extended to 2011.
In July 2008, we exercised our first one-year option to extend the
maturity to November 2009.

(g) We have purchased interest rate caps of 6.25% for $177 million
aggregate notional amounts, which expire in May 2009.

(h) These loans provide us three one-year extension options that
permit, in our sole discretion, the maturity to be extended to 2012.

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Weighted average interest 6.25%
Fixed interest rate debt to total debt 53.2%
Weighted average maturity of debt 4 years
Mortgage debt to total assets 35.5%
*T

Hotel Portfolio Composition

The following tables set forth, as of June 30, 2008, for 85
Consolidated Hotels distribution by brand, by our top markets, by type
of location, and by market segment.

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% of 2007
% of Hotel
Brand Hotels Rooms Total Rooms EBITDA(a)
----------------------------- ------- -------- ----------- -----------
Embassy Suites Hotels 47 12,129 49 58
Holiday Inn 17 6,306 25 19
Sheraton and Westin 9 3,217 13 14
Doubletree 7 1,472 6 7
Renaissance and Hotel 480 3 1,324 5 -(b)
Hilton 2 559 2 2

Top Markets
-----------------------------
South Florida 5 1,436 6 7
Atlanta 5 1,462 6 7
Los Angeles area 4 899 4 6
San Francisco area 6 2,141 8 6
Orlando 5 1,690 7 5
Dallas 4 1,333 5 4
Minneapolis 3 736 3 4
Phoenix 3 798 3 4
Northern New Jersey 3 756 3 4
San Diego 1 600 2 3
Washington, D.C. 1 443 2 3
Chicago 3 795 3 3
San Antonio 3 874 4 3
Philadelphia 2 729 3 3
Boston 2 532 2 2

Location
-----------------------------
Suburban 33 8,360 33 36
Airport 20 6,206 26 26
Urban 20 6,362 25 25
Resort 12 4,079 16 13

Segment
-----------------------------
Upper-upscale 68 18,701 75 81
Full service 17 6,306 25 19
*T

(a) Hotel EBITDA is more fully described on page 20.

(b) We acquired the Renaissance Esmeralda Resort & Spa and the
Renaissance Vinoy Resort & Golf Club in December 2007. They did not
make a significant contribution to our 2007 Hotel EBITDA.

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Detailed Operating Statistics by Brand
(85 consolidated hotels)

Occupancy (%)
-----------------------------------------------
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 %Variance 2008 2007 %Variance
------ ------ --------- ------ ------ ---------
Embassy Suites Hotels 78.2 75.3 3.8 75.6 73.9 2.3
Holiday Inn 78.0 73.6 6.0 74.0 68.5 8.0
Sheraton and Westin 70.1 71.6 (2.1) 68.1 70.2 (3.0)
Doubletree 79.9 71.2 12.1 77.7 71.4 8.8
Renaissance and Hotel
480(a) 68.2 78.0 (12.7) 69.4 75.8 (8.4)
Hilton 70.4 74.0 (4.9) 61.3 56.5 8.5

Total hotels 76.5 74.3 3.0 73.7 71.6 2.9

ADR ($)
-----------------------------------------------
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 %Variance 2008 2007 %Variance
------ ------ --------- ------ ------ ---------
Embassy Suites Hotels 142.90 140.99 1.4 147.40 144.62 1.9
Holiday Inn 123.67 117.03 5.7 120.94 115.10 5.1
Sheraton and Westin 128.04 127.65 0.3 129.06 129.62 (0.4)
Doubletree 145.53 146.22 (0.5) 149.64 147.88 1.2
Renaissance and Hotel
480(a) 187.26 186.65 0.3 199.33 197.09 1.1
Hilton 139.77 139.10 0.5 125.53 127.86 (1.8)

Total hotels 138.22 136.00 1.6 140.62 138.28 1.7

RevPAR ($)
-----------------------------------------------
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 %Variance 2008 2007 %Variance
------ ------ --------- ------ ------ ---------
Embassy Suites Hotels 111.71 106.18 5.2 111.40 106.86 4.2
Holiday Inn 96.44 86.11 12.0 89.47 78.87 13.4
Sheraton and Westin 89.76 91.38 (1.8) 87.91 90.97 (3.4)
Doubletree 116.21 104.15 11.6 116.32 105.65 10.1
Renaissance and Hotel
480(a) 127.64 145.67 (12.4) 138.36 149.36 (7.4)
Hilton 98.38 102.93 (4.4) 77.00 72.28 6.5

Total hotels 105.76 100.99 4.7 103.66 99.04 4.7
*T

(a) Decreases in occupancy and RevPAR are principally related to
renovation-related disruption at Hotel 480 Union Square. We have
included historical room statistics for the two Renaissance hotels
acquired in December 2007 for periods prior to our ownership of these
hotels for comparison purposes.

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Detailed Operating Statistics for FelCor's Top Markets
(85 consolidated hotels)

Occupancy (%)
-----------------------------------------------
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 %Variance 2008 2007 %Variance
------ ------ --------- ------ ------ ---------
South Florida 78.3 72.4 8.2 82.7 79.5 4.0
Atlanta 75.9 78.1 (2.8) 76.1 76.3 (0.3)
Los Angeles area 78.1 79.1 (1.2) 75.8 78.3 (3.2)
San Francisco area 79.7 78.9 1.0 75.3 72.9 3.4
Orlando 80.8 80.6 0.3 81.4 79.9 1.9
Dallas 68.6 65.9 4.2 69.2 68.1 1.6
Minneapolis 76.1 78.5 (3.1) 71.5 73.9 (3.2)
Phoenix 66.8 68.0 (1.7) 71.4 74.9 (4.8)
Northern New Jersey 75.6 76.7 (1.3) 71.0 68.3 4.0
San Diego 83.0 73.9 12.3 81.8 76.2 7.3
Washington, D.C. 70.6 73.8 (4.3) 57.2 68.2 (16.1)
Chicago 81.7 73.7 10.8 73.3 66.9 9.6
San Antonio 83.1 83.3 (0.2) 80.1 77.6 3.2
Philadelphia 82.0 72.4 13.3 72.3 64.2 12.6
Boston 85.3 70.2 21.6 77.2 61.1 26.3
ADR ($)
-----------------------------------------------
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 %Variance 2008 2007 %Variance
------ ------ --------- ------ ------ ---------
South Florida 137.88 136.12 1.3 170.13 169.74 0.2
Atlanta 120.70 121.00 (0.3) 123.89 123.11 0.6
Los Angeles area 158.73 158.32 0.3 157.87 154.54 2.2
San Francisco area 142.66 138.57 3.0 139.64 135.16 3.3
Orlando 104.66 103.44 1.2 114.67 112.94 1.5
Dallas 124.23 122.26 1.6 127.23 126.57 0.5
Minneapolis 141.76 142.94 (0.8) 143.28 141.12 1.5
Phoenix 134.74 136.17 (1.0) 162.11 160.24 1.2
Northern New Jersey 165.94 157.64 5.3 164.09 155.21 5.7
San Diego 169.35 156.12 8.5 161.20 154.28 4.5
Washington, D.C. 162.52 169.09 (3.9) 162.57 170.86 (4.9)
Chicago 132.15 136.50 (3.2) 127.09 130.22 (2.4)
San Antonio 115.80 111.04 4.3 114.83 110.33 4.1
Philadelphia 158.99 145.77 9.1 149.20 135.85 9.8
Boston 167.10 157.89 5.8 153.37 150.49 1.9
RevPAR ($)
-----------------------------------------------
Three Months Ended June Six Months Ended June
30, 30,
----------------------- -----------------------
2008 2007 %Variance 2008 2007 %Variance
------ ------ --------- ------ ------ ---------
South Florida 107.99 98.50 9.6 140.68 135.02 4.2
Atlanta 91.61 94.51 (3.1) 94.25 93.92 0.4
Los Angeles area 123.99 125.21 (1.0) 119.72 121.04 (1.1)
San Francisco area 113.70 109.33 4.0 105.19 98.48 6.8
Orlando 84.56 83.32 1.5 93.31 90.21 3.4
Dallas 85.22 80.52 5.8 88.09 86.23 2.2
Minneapolis 107.82 112.26 (4.0) 102.48 104.23 (1.7)
Phoenix 90.01 92.55 (2.7) 115.68 120.05 (3.6)
Northern New Jersey 125.50 120.84 3.8 116.49 105.98 9.9
San Diego 140.60 115.43 21.8 131.81 117.54 12.1
Washington, D.C. 114.67 124.72 (8.1) 93.06 116.59 (20.2)
Chicago 107.90 100.61 7.2 93.22 87.11 7.0
San Antonio 96.25 92.51 4.0 92.00 85.65 7.4
Philadelphia 130.44 105.59 23.5 107.80 87.19 23.6
Boston 142.60 110.77 28.7 118.35 91.92 28.8
*T

Non-GAAP Financial Measures

We refer in this release to certain "non-GAAP financial measures."
These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA,
Hotel EBITDA and Hotel EBITDA margin, are measures of our financial
performance that are not calculated and presented in accordance with
generally accepted accounting principles ("GAAP"). The following
tables reconcile each of these non-GAAP measures to the most
comparable GAAP financial measure. Immediately following the
reconciliations, we include a discussion of why we believe these
measures are useful supplemental measures of our performance and the
limitations of such measures.

-0-
*T
Reconciliation of Net Income to FFO, Adjusted FFO and Same-Store
Adjusted FFO
(in thousands, except per share and unit data)

Three Months Ended June 30,
------------------------------------------------
2008 2007
----------------------- ------------------------
Per Per
Share Share
Dollars Shares Amount Dollars Shares Amount
-------- ------ ------- --------- ------ -------
Net income $23,262 $ 55,176
Preferred dividends (9,678) (9,678)
------- --------
Net income applicable
to common
stockholders 13,584 61,968 $ 0.22 45,498 62,032 $ 0.73
Depreciation and
amortization 35,072 - 0.57 27,155 - 0.44
Depreciation,
unconsolidated
entities and
discontinued
operations 3,583 - 0.06 2,848 - 0.05
Gain on involuntary
conversion (3,095) - (0.05) - - -
Gain on sale of
hotels - - - (21,799) - (0.35)
Minority interest in
FelCor LP 291 1,354 (0.02) 985 1,355 (0.01)
------- ------ ------ -------- ------ ------
FFO 49,435 63,322 0.78 54,687 63,387 0.86
Conversion costs(a) 103 - - - - -
------- ------ ------ -------- ------ ------
Adjusted FFO 49,538 63,322 0.78 54,687 63,387 0.86
Preferred dividends
on Series A
Preferred Stock 6,279 9,985 (0.02) 6,279 9,985 (0.03)
------- ------ ------ -------- ------ ------
Adjusted FFO assuming
conversion of Series
A Preferred Stock
for per share
computation(b) $55,817 73,307 $ 0.76 $ 60,966 73,372 $ 0.83
======= ====== ====== ======== ====== ======

Adjusted FFO $49,538 63,322 $ 0.78 $ 54,687 63,387 $ 0.86
FFO from discontinued
operations - - - (4,566) - (0.07)
FFO from acquired
hotels(c) - - - 2,246 - 0.04
Gain on sale of
condominiums - - - (14,858) - (0.24)
------- ------ ------ -------- ------ ------
Same-Store Adjusted
FFO $49,538 63,322 $ 0.78 $ 37,509 63,387 $ 0.59
======== ====== ======
Preferred dividends
on Series A
Preferred Stock 6,279 9,985 (0.02)
------- ------ ------
Same-Store Adjusted
FFO assuming
conversion of Series
A Preferred Stock
for per share
computation(b) $55,817 73,307 $ 0.76
======= ====== ======
*T

(a) These costs relate to the conversion of our Hotel 480 Union
Square in San Francisco to a Marriott. The conversion is expected to
be completed by early 2009.

(b) For calculation of Adjusted FFO per share and Same-Store
Adjusted FFO per share it is more dilutive to assume the conversion of
our Series A Convertible Preferred Stock into common stock when our
quarterly Adjusted FFO or Same-Store Adjusted FFO per share
calculation exceeds $0.63.

(c) We have included amounts for two Renaissance hotels acquired
in December 2007, prior to our ownership of these hotels, for
comparison purposes.

-0-
*T
Reconciliation of Net Income to FFO, Adjusted FFO and Same-Store
Adjusted FFO
(in thousands, except per share and unit data)

Six Months Ended June 30,
-------------------------------------------------
2008 2007
------------------------ ------------------------
Per Per
Share Share
Dollars Shares Amount Dollars Shares Amount
--------- ------ ------- --------- ------ -------
Net income $ 10,789 $ 84,335
Preferred dividends (19,356) (19,356)
-------- --------
Net income (loss)
applicable to
common stockholders (8,567) 61,819 $(0.14) 64,979 61,899 $ 1.05
Depreciation and
amortization 68,840 - 1.11 52,205 - 0.85
Depreciation,
unconsolidated
entities and
discontinued
operations 7,133 - 0.12 5,711 - 0.09
Gain on
involuntary
conversion (3,095) - (0.05) - - -
Gain on sale of
hotels - - - (27,830) - (0.45)
Gain on sale of
hotels in
unconsolidated
entities - - - (11,182) - (0.18)
Minority interest
in FelCor LP (186) 1,354 (0.03) 1,412 1,355 (0.01)
Conversion of
options and
unvested
restricted stock - 120 - - - -
-------- ------ ------ -------- ------ ------
FFO 64,125 63,293 1.01 85,295 63,254 1.35
Abandoned projects - - - 22 - -
Charges related to
early
extinguishment of
debt, net of
minority
interests - - - 811 - 0.01
Impairment loss 17,131 - 0.27 - - -
Conversion
costs(a) 362 - 0.01 - - -
-------- ------ ------ -------- ------ ------
Adjusted FFO 81,618 63,293 1.29 86,128 63,254 1.36
Preferred
dividends on
Series A
Preferred Stock 12,558 9,985 - 12,558 9,985 (0.01)
-------- ------ ------ -------- ------ ------
Adjusted FFO
assuming conversion
of Series A
Preferred Stock for
per share
computation(b) $ 94,176 73,278 $ 1.29 $ 98,686 73,239 $ 1.35
======== ====== ====== ======== ====== ======

Adjusted FFO $ 81,618 63,293 $ 1.29 $ 86,128 63,254 $ 1.36
FFO from
discontinued
operations 13 - - (7,835) - (0.12)
FFO from acquired
hotels(c) - - - 5,630 - 0.09
Gain on sale of
condominiums - - - (18,139) - (0.29)
-------- ------ ------ -------- ------ ------
Same-Store Adjusted
FFO $ 81,631 63,293 $ 1.29 $ 65,784 63,254 $ 1.04
======== ====== ======
Preferred
dividends on
Series A
Preferred Stock 12,558 9,985 -
-------- ------- ------
Same-Store Adjusted
FFO assuming
conversion of
Series A Preferred
Stock for per share
computation(b) $ 94,189 73,278 $ 1.29
======== ====== ======
*T

(a) These costs relate to the conversion of our Hotel 480 Union
Square in San Francisco to a Marriott. The conversion is expected to
be completed by early 2009.

(b) For calculation of Adjusted FFO per share and Same-Store
Adjusted FFO per share it is more dilutive to assume the conversion of
our Series A Convertible Preferred Stock into common stock when our
Adjusted FFO per share or Same-Store Adjusted FFO per share for six
months exceeds $1.26.

(c) We have included amounts for two Renaissance hotels acquired
in December 2007, prior to our ownership of these hotels, for
comparison purposes.

-0-
*T
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Same-Store
Adjusted EBITDA
(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2008 2007 2008 2007
-------- --------- --------- ---------
Net income $23,262 $ 55,176 $ 10,789 $ 84,335
Depreciation and amortization 35,072 27,155 68,840 52,205
Depreciation, unconsolidated
entities and discontinued
operations 3,583 2,848 7,133 5,711
Interest expense 25,196 24,627 51,745 48,746
Interest expense,
unconsolidated entities and
discontinued operations 1,327 1,489 2,923 3,063
Amortization of stock
compensation 1,457 1,207 2,722 2,614
Minority interest in FelCor
Lodging LP 291 985 (186) 1,412
------- -------- -------- --------
EBITDA 90,188 113,487 143,966 198,086
Gain on sale of hotels - (21,799) - (27,830)
Gain on sale of hotels in
unconsolidated entities - - - (11,182)
Gain on involuntary conversion (3,095) - (3,095) -
Abandoned projects - - - 22
Charges related to early
extinguishment of debt, net
of minority interests - - - 811
Impairment loss - - 17,131 -
Conversion costs (a) 103 - 362 -
------- -------- -------- --------
Adjusted EBITDA 87,196 91,688 158,364 159,907
Adjusted EBITDA from
discontinued operations - (4,566) 13 (7,861)
EBITDA from acquired hotels(b) - 5,366 - 11,871
Gain on sale of condominiums - (14,858) - (18,139)
------- -------- -------- --------
Same-Store Adjusted EBITDA $87,196 $ 77,630 $158,377 $145,778
======= ======== ======== ========
*T

(a) These costs relate to the conversion of our Hotel 480 Union
Square in San Francisco to a Marriott. The conversion is expected to
be completed by early 2009.

(b) We have included amounts for two Renaissance hotels acquired
in December 2007, prior to our ownership of these hotels, for
comparison purposes.

-0-
*T
Reconciliation of Same-Store Adjusted EBITDA to Hotel EBITDA
(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2008 2007 2008 2007
--------- -------- --------- ---------
Same-Store Adjusted EBITDA $87,196 $77,630 $158,377 $145,778
Other revenue (931) (715) (1,259) (845)
Equity in income from
unconsolidated subsidiaries
(excluding interest and
depreciation expense) (7,831) (8,439) (12,854) (14,847)
Minority interest in other
partnerships
(excluding interest and
depreciation expense) 1,481 (98) 2,050 28
Consolidated hotel lease
expense 15,737 17,267 27,933 31,525
Unconsolidated taxes,
insurance and lease expense (2,075) (1,896) (4,197) (3,599)
Interest income (428) (1,421) (973) (2,667)
Other expenses (excluding
abandoned projects and
conversion costs) 797 393 1,471 393
Corporate expenses (excluding
amortization expense of stock
compensation) 3,407 4,048 8,969 9,427
-------- ------- -------- --------
Hotel EBITDA $97,353 $86,769 $179,517 $165,193
======== ======= ======== ========
*T

-0-
*T
Reconciliation of Net Income to Hotel EBITDA
(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2008 2007 2008 2007
-------- --------- --------- ---------
Net income $23,262 $ 55,176 $ 10,789 $ 84,335
Discontinued operations - (25,792) 13 (34,099)
EBITDA from acquired
hotels(a) - 5,366 - 11,871
Equity in income from
unconsolidated entities (2,331) (3,710) (1,709) (16,480)
Minority interests 1,181 (79) 775 (116)
Consolidated hotel lease
expense 15,737 17,267 27,933 31,525
Unconsolidated taxes,
insurance and lease expense (2,075) (1,896) (4,197) (3,599)
Interest expense, net 24,769 23,207 50,772 46,079
Corporate expenses 4,864 5,255 11,691 12,041
Depreciation 35,072 27,155 68,840 52,205
Impairment loss - - 17,131 -
Other expenses 900 393 1,833 415
Gain on involuntary
conversion (3,095) - (3,095) -
Gain on sale of condominiums - (14,858) - (18,139)
Other revenue (931) (715) (1,259) (845)
------- -------- -------- --------
Hotel EBITDA $97,353 $ 86,769 $179,517 $165,193
======= ======== ======== ========
*T

(a) We have included amounts for two Renaissance hotels acquired
in December 2007, prior to our ownership of these hotels, for
comparison purposes.

-0-
*T
Hotel EBITDA and Hotel EBITDA Margin
(dollars in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Total revenues $306,168 $266,244 $598,043 $514,913
Other revenue (931) (715) (1,259) (845)
Revenue from acquired
hotels(a) - 26,186 - 54,171
-------- -------- -------- --------
Same-Store hotel operating
revenue 305,237 291,715 596,784 568,239
Same-Store hotel operating
expenses 207,884 204,946 417,267 403,046
-------- -------- -------- --------
Hotel EBITDA $ 97,353 $ 86,769 $179,517 $165,193
======== ======== ======== ========
Hotel EBITDA margin(b) 31.9% 29.7% 30.1% 29.1%
*T

(a) We have included amounts for two Renaissance hotels acquired
in December 2007, prior to our ownership of these hotels, for
comparison purposes.

(b) Hotel EBITDA as a percentage of hotel operating revenue.

-0-
*T
Reconciliation of Ratio of Operating Income to Total Revenues to Hotel
EBITDA Margin

Three Months Six Months
Ended Ended
June 30, June 30,
------------- --------------
2008 2007 2008 2007
------ ------ -------- -----
Ratio of operating income to total
revenues 14.3% 11.6% 9.6% 10.8%
Other revenue (0.3) (0.2) (0.2) (0.1)
Revenue from acquired hotels(a) - 9.0 - 9.5
Unconsolidated taxes, insurance and
lease expense (0.7) (0.7) (0.7) (0.6)
Consolidated hotel lease expense 5.2 5.9 4.7 5.5
Other expenses 0.3 0.1 0.3 0.1
Corporate expenses 1.6 1.8 2.0 2.1
Depreciation and amortization 11.5 9.3 11.5 9.2
Impairment loss - - 2.9 -
Expenses from acquired hotels(a) - (7.1) - (7.4)
------ ------ -------- -----
Hotel EBITDA margin 31.9% 29.7% 30.1% 29.1%
====== ====== ======== =====
*T

(a) We have included amounts for two Renaissance hotels acquired
in December 2007, prior to our ownership of these hotels, for
comparison purposes.

-0-
*T
Reconciliation of Forecasted Net Income (Loss) to Forecasted FFO,
Adjusted FFO, EBITDA and Adjusted EBITDA
(in millions, except per share and unit data)

Third Quarter 2008 Guidance
-----------------------------------
Low Guidance High Guidance
----------------- -----------------
Per Share Per Share
Dollars Amount Dollars Amount
------- --------- ------- ---------
Net income (loss) $ (1) $ 2
Preferred dividends (10) (10)
------ ------
Net income (loss) applicable to
common stockholders (11) $(0.17) (8) $(0.13)
Depreciation 38 38
------ ------
FFO and Adjusted FFO $ 27 $ 0.43(a) $ 30 $ 0.47(a)
====== ======
Net income (loss) $ (1) $ 2
Depreciation 38 38
Interest expense 26 26
Amortization expense 1 1
------ ------
Adjusted EBITDA $ 64 $ 67
====== ======
*T

(a) Weighted average shares and units are 63.3 million.

-0-
*T
Full Year 2008 Guidance
-----------------------------------
Low Guidance High Guidance
----------------- -----------------
Per Share Per Share
Dollars Amount Dollars Amount
------- --------- ------- ---------
Net income $ 5 $ 11
Preferred dividends (39) (39)
------ ------
Net income (loss) applicable to
common stockholders (34) $(0.55) (28) $(0.45)
Depreciation 152 152
Impairment charge 17 17
Gain from involuntary conversion (3) (3)
------ ------
Adjusted FFO $ 132 $ 2.08(a) $ 138 $ 2.18(a)
====== ======

Net income $ 5 $ 11
Depreciation 152 152
Impairment charge 17 17
Gain from involuntary conversion (3) (3)
Interest expense 106 106
Amortization expense 6 6
------ ------
Adjusted EBITDA $ 283 $ 289
====== ======
*T

(a) Weighted average shares and units are 63.3 million.

Substantially all of our non-current assets consist of real
estate. Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably
over time. Since real estate values instead have historically risen or
fallen with market conditions, most industry investors consider
supplemental measures of performance, which are not measures of
operating performance under GAAP, to be helpful in evaluating a real
estate company's operations. These supplemental measures, including
FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel
EBITDA margin, are not measures of operating performance under GAAP.
However, we consider these non-GAAP measures to be supplemental
measures of a hotel REIT's performance and should be considered along
with, but not as an alternative to, net income as a measure of our
operating performance.

FFO and EBITDA

The White Paper on Funds From Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT"), defines FFO as net income or loss (computed in accordance
with GAAP), excluding gains or losses from sales of property, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis. We compute FFO in accordance with
standards established by NAREIT. This may not be comparable to FFO
reported by other REITs that do not define the term in accordance with
the current NAREIT definition or that interpret the current NAREIT
definition differently than we do.

EBITDA is a commonly used measure of performance in many
industries. We define EBITDA as net income or loss (computed in
accordance with GAAP) plus interest expenses, income taxes,
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to
reflect EBITDA on the same basis.

Adjustments to FFO and EBITDA

We adjust FFO and EBITDA when evaluating our performance because
management believes that the exclusion of certain additional recurring
and non-recurring items such as those described below provides useful
supplemental information to investors regarding our ongoing operating
performance and that the presentation of Adjusted FFO and Adjusted
EBITDA, when combined with GAAP net income, EBITDA and FFO, is
beneficial to an investor's better understanding of our operating
performance.

-- Gains and losses related to early extinguishment of debt and
interest rate swaps - We exclude gains and losses related to
early extinguishment of debt and interest rate swaps from FFO
and EBITDA because we believe that it is not indicative of
ongoing operating performance of our hotel assets. This also
represents an acceleration of interest expense or a reduction
of interest expense, and interest expense is excluded from
EBITDA.

-- Impairment losses - We exclude the effect of impairment losses
and gains or losses on disposition of assets in computing
Adjusted FFO and Adjusted EBITDA because we believe that
including these is not consistent with reflecting the ongoing
performance of our remaining assets. Additionally, we believe
that impairment charges and gains or losses on disposition of
assets represent accelerated depreciation, or excess
depreciation, and depreciation is excluded from FFO by the
NAREIT definition and from EBITDA.

-- Cumulative effect of a change in accounting principle -
Infrequently, the Financial Accounting Standards Board
promulgates new accounting standards that require the
consolidated statements of operations to reflect the
cumulative effect of a change in accounting principle. We
exclude these one-time adjustments in computing Adjusted FFO
and Adjusted EBITDA because they do not reflect our actual
performance for that period.

In addition, to derive Adjusted EBITDA, we exclude gains or losses
on the sale of assets because we believe that including them in EBITDA
is not consistent with reflecting the ongoing performance of our
remaining assets. Additionally, the gain or loss on sale of
depreciable assets represents either accelerated depreciation or
excess depreciation in previous periods, and depreciation is excluded
from EBITDA.

To derive same-store comparisons, we have adjusted Adjusted FFO
and Adjusted EBITDA to remove discontinued operations and gains on
sales of condominium units; and have added the historical results of
operations from the two Renaissance hotels acquired in December 2007.

Hotel EBITDA and Hotel EBITDA Margin

Hotel EBITDA and Hotel EBITDA margin are commonly used measures of
performance in the industry and give investors a more complete
understanding of the operating results over which our individual
hotels and operating managers have direct control. We believe that
Hotel EBITDA and Hotel EBITDA margin are useful to investors by
providing greater transparency with respect to two significant
measures used by us in our financial and operational decision-making.
Additionally, these measures facilitate comparisons with other hotel
REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA
margin by eliminating from continuing operations all revenues and
expenses not directly associated with hotel operations including
corporate-level expenses, depreciation and expenses related to our
capital structure. We eliminate corporate-level costs and expenses
because we believe property-level results provide investors with
supplemental information with respect to the ongoing operating
performance of our hotels and the effectiveness of management on a
property-level basis. We eliminate depreciation and amortization, even
though they are property-level expenses, because we do not believe
that these non-cash expenses, which are based on historical cost
accounting for real estate assets and implicitly assume that the value
of real estate assets diminish predictably over time, accurately
reflect an adjustment in the value of our assets. We also eliminate
consolidated percentage rent paid to unconsolidated entities, which is
effectively eliminated by minority interest expense and equity in
income from unconsolidated subsidiaries, and include the cost of
unconsolidated taxes, insurance and lease expense, to reflect the
entire operating costs applicable to our hotels. Hotel EBITDA and
Hotel EBITDA margins are presented on a same-store basis including the
historical results of operations from the two Renaissance hotels
acquired in December 2007.

Limitations of Non-GAAP Measures

Our management and Board of Directors use FFO, EBITDA, Hotel
EBITDA and Hotel EBITDA margin to evaluate the performance of our
hotels and to facilitate comparisons between us and lodging REITs,
hotel owners who are not REITs and other capital intensive companies.
We use Hotel EBITDA and Hotel EBITDA margin in evaluating hotel-level
performance and the operating efficiency of our hotel managers.

The use of these non-GAAP financial measures has certain
limitations. FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Hotel EBITDA
and Hotel EBITDA margin, as presented by us, may not be comparable to
FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Hotel EBITDA and Hotel
EBITDA margin as calculated by other real estate companies. These
measures do not reflect certain expenses that we incurred and will
incur, such as depreciation and interest or capital expenditures.
Management compensates for these limitations by separately considering
the impact of these excluded items to the extent they are material to
operating decisions or assessments of our operating performance. Our
reconciliations to the GAAP financial measures, and our consolidated
statements of operations and cash flows, include interest expense,
capital expenditures, and other excluded items, all of which should be
considered when evaluating our performance, as well as the usefulness
of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP. They
should not be considered as alternatives to operating profit, cash
flow from operations, or any other operating performance measure
prescribed by GAAP. Neither should FFO, Adjusted FFO, Adjusted FFO per
share, EBITDA or Adjusted EBITDA be considered as measures of our
liquidity or indicative of funds available for our cash needs,
including our ability to make cash distributions. Adjusted FFO per
share should not be used as a measure of amounts that accrue directly
to the benefit of stockholders. FFO, Adjusted FFO, EBITDA, Adjusted
EBITDA, Hotel EBITDA and Hotel EBITDA margin reflect additional ways
of viewing our operations that we believe when viewed with our GAAP
results and the reconciliations to the corresponding GAAP financial
measures provide a more complete understanding of factors and trends
affecting our business than could be obtained absent this disclosure.
Management strongly encourages investors to review our financial
information in its entirety and not to rely on any single financial
measure.

FelCor Lodging Trust Incorporated
Stephen A. Schafer, 972-444-4912
Vice President Strategic Planning & Investor Relations
sschafer@felcor.com

Copyright Business Wire 2008