FelCor Reports Third Quarter Results

FelCor Lodging Trust Incorporated (NYSE: FCH), owner of 77 primarily upper-upscale hotels and resorts, today reported operating results for the third quarter ended September 30, 2011.

Third Quarter Summary:

Modified our $178 million CMBS loan to extend the maturity date two years, including extensions, beyond the original November 2011 maturity date, and is fully prepayable without penalty.
Revenue per available room ("RevPAR") for 67 comparable hotels increased 5.0%. Excluding two hotels under renovation, same-store RevPAR increased 5.8%.
Same-store Hotel EBITDA margin increased 93 basis points to 24.5% for the quarter.
Adjusted FFO per share was $0.05, and Adjusted EBITDA was $52.0 million.
Sold three hotels in the third quarter and one hotel in October for aggregate gross proceeds of $60.5 million.
Net loss was $23.4 million.

Third Quarter Operating Results:

RevPAR (for 67 comparable hotels) was $99.04, a 5.0% increase compared to the same period in 2010. The increase was driven by a 3.3% increase in average daily rate ("ADR") to $130.43 and a 1.6% increase in occupancy to 75.9%. RevPAR for these hotels increased 7.3% in September. Excluding two hotels under renovation, same-store RevPAR increased 5.8% during the quarter. Comparable hotels exclude the seven hotels marketed for sale, one hotel in discontinued operations and two hotels acquired in 2011 (see page 10 for a description of our hotel groups).

“We continue to execute our strategic plan to increase long-term stockholder value, and our accretive portfolio repositioning continues to progress steadily. In the past year, we sold eight non-strategic hotels at roughly 12 times EBITDA, which is above the trading multiple for our common stock. We used substantially all of the asset sale proceeds to pay down debt and we remain committed to reducing leverage and strengthening our balance sheet,” said Richard A. Smith, FelCor's President and Chief Executive Officer.

“Our third quarter results reflect strong lodging fundamentals; corporate transient demand increased 5%, while new hotel supply has been at historic lows. We forecast accelerating RevPAR growth during the fourth quarter, reflecting continued improvement in demand and accelerating rate growth, as demonstrated in September. Our aggressive asset management and portfolio repositioning strategy continue to provide positive results as we remain the best performing hotel REIT, based on RevPAR change, since we completed our renovation program and first phase of asset sales,” added Mr. Smith.

Hotel EBITDA was $57.9 million, 8.0% higher than $53.6 million for the same period in 2010. Hotel EBITDA and other same-store metrics reflect 74 consolidated hotels (67 comparable hotels plus seven hotels marketed for sale). The same-store metrics include the Fairmont Copley Plaza, which was acquired in August 2010, and exclude three hotels owned at September 30, 2011 (one Embassy Suites hotel sold in October, which was classified as discontinued operations, and Royalton and Morgans, which were acquired in May 2011). Hotel EBITDA margin was 24.5%, 93 basis points higher than the same period in 2010.

Adjusted funds from operations (“FFO”) was $5.6 million, or $0.05 per share, which is $0.05 per share more than the same period in 2010.

Adjusted EBITDA (which includes our pro rata share of joint ventures) was $52.0 million, 8% higher than $48.2 million for the same period in 2010. Same-store Adjusted EBITDA was $50.2 million, 10.5% higher than $45.4 million for the same period in 2010.

Net loss attributable to common stockholders was $32.5 million, or $0.26 per share for the quarter, compared to net loss of $98.5 million, or $1.04 per share, for the same period in 2010. Our 2011 net loss included a $946,000 impairment charge, which was partially offset by a $701,000 net gain on sale of hotels. Our 2010 net loss included a $65.8 million impairment charge, which was partially offset by an $8.0 million gain from debt extinguishment.

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:

At September 30, 2011, we had $1.6 billion of consolidated debt, with an average interest rate of 7.5% and weighted average maturity of five years. We had $117.2 million of cash and cash equivalents and full availability under our $225 million line of credit.

In the third quarter, we repaid a $24.0 million CMBS loan secured by our Embassy Suites in New Orleans, which was scheduled to mature in 2012. We also repaid two loans aggregating $35.2 million, secured by two Embassy Suites hotels that were sold in July (in Dallas and Corpus Christi), using proceeds from the sale of those hotels.

In October, we modified our $178 million CMBS mortgage loan scheduled to mature in November 2011 and extended the maturity date for up to two years. The loan now bears interest at LIBOR plus 2.20% and is prepayable at any time, in whole or in part, with no penalty. We repaid $20 million of the principal with cash on hand reducing the outstanding balance to $158 million. The loan is secured by nine hotels. This extension provides us with additional flexibility for our asset sale program, as we anticipate selling six of the nine hotels at a future date.

“Modifying our $178 million CMBS loan allows us to retain the flexibility to sell assets with a pre-payable facility, preserve the very attractive interest rate and maintain the efficiency of the loan. We have a strong debt maturity profile today, with no debt maturing until late 2013. We will continue to identify opportunities to refinance our existing debt to extend maturities further and lower our overall cost of capital,” stated Andrew J. Welch, FelCor's Executive Vice President and Chief Financial Officer.

Portfolio Management:

In the quarter, we spent $22.7 million on capital improvements at our hotels (including our pro rata share of joint venture expenditures). For all of 2011, we intend to spend approximately $95 million, in the aggregate, on capital improvement and ROI projects. Approximately $60 million, or 6% of our annual revenue, will be focused on renovating seven hotels, as part of our long-term capital program to maintain our portfolio quality and competitive positioning. The 2011 capital expenditures also include ROI projects, such as the redevelopment at the Fairmont Copley Plaza beginning this month. All 383 guest rooms, including 12 rooms that will be upgraded to Fairmont Gold (for a total of 71 Fairmont Gold rooms), will be renovated by mid-2012. In addition, the hotel will have a new 3,000 square-foot state-of-the-art rooftop fitness facility and day spa overlooking Boston's Back Bay neighborhood. We will also be completing an extensive redevelopment of the public areas and food and beverage facilities in 2012.

Since the end of the second quarter, we sold four non-strategic hotels for combined gross proceeds of $60.5 million as part of our previously announced portfolio repositioning plan, which contemplates selling up to 40 non-strategic hotels. We sold three hotels (in Orlando, Dallas and Corpus Christi) in July and one hotel (in Dallas) in October. We expect to sell another hotel (in Toronto) in early December. We intend to begin marketing an additional 15 non-strategic hotels in the near-term.

Outlook:

We are updating our 2011 guidance to reflect third quarter actual results and asset sales. The updated guidance includes the impact from the sale of a hotel in October and a hotel to be sold in December (representing approximately $300,000 of EBITDA for the two hotels from the time of sale to the end of the year). Our prior guidance did not assume the sale of these two hotels, and our updated guidance assumes no further dispositions. We anticipate that our portfolio RevPAR will increase between 6.0 and 7.0% for the fourth quarter.

For 2011, we anticipate:

Adjusted EBITDA: between $207 million and $210 million;
Adjusted FFO per share: between $0.17 and $0.19;
Net loss attributable to FelCor: between $124 million and $121 million;
Interest expense: approximately $141 million;
Capital expenditures: approximately $95 million; and
Weighted average shares and units outstanding: 117.3 million.

FelCor, a real estate investment trust, is the nation's largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 77 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®. Additional information can be found on the Company's Web site at www.felcor.com.

We invite you to listen to our third quarter earnings Conference Call on Tuesday, November 1, 2011, at 11:00 a.m. (Central Time). The conference call will be Webcast simultaneously on FelCor's Web site at www.felcor.com. Interested investors and other parties who wish to access the call can go to FelCor's Web site and click on the conference call microphone icon on either the “Investor Relations” or “News Releases” page. The conference call replay also will be archived on the Company's Web site.

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. Current economic circumstances or an economic slowdown and the 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, dispositions and debt refinancing, the availability of capital, the impact on the travel industry from 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.

SUPPLEMENTAL INFORMATION

INTRODUCTION

The following information is presented in order to help our investors understand FelCor's financial position as of and for the three and nine month periods ended September 30, 2011.

TABLE OF CONTENTS

Page Consolidated Statements of Operations(a) 6 Consolidated Balance Sheets(a) 7 Consolidated Debt Summary 8 Schedule of Encumbered Hotels 9 Capital Expenditures 10 Supplemental Financial Data 10 Hotel Groups 10 Hotel Portfolio Composition 11 Detailed Operating Statistics by Brand 12 Comparable Hotels Operating Statistics for FelCor's Top Markets 13 Non-GAAP Financial Measures 14

(a) Our consolidated statements of operations and balance sheets have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. The consolidated statements of operations and balance sheets should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent Quarterly Report on Form 10-Q.

Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 Revenues: Hotel operating revenue: Room $ 196,776 $ 177,724 $ 568,148 $ 516,227 Food and beverage 32,972 30,244 112,683 97,655 Other operating departments 14,376 14,538 41,276 40,975 Other revenue 1,394 1,421 2,630 2,793 Total revenues 245,518 223,927 724,737 657,650 Expenses: Hotel departmental expenses: Room 53,333 47,887 151,860 136,563 Food and beverage 29,106 25,472 89,798 77,485 Other operating departments 6,470 6,262 18,975 18,209 Other property-related costs 69,393 63,828 202,165 183,561 Management and franchise fees 11,320 10,703 33,434 31,208 Taxes, insurance and lease expense 24,625 23,199 68,085 68,263 Corporate expenses 6,258 6,564 22,705 22,921 Depreciation and amortization 33,892 33,725 101,138 101,556 Impairment loss — 24,127 11,706 24,127 Other expenses 1,208 1,331 3,455 2,693 Total operating expenses 235,605 243,098 703,321 666,586 Operating income 9,913 (19,171 ) 21,416 (8,936 ) Interest expense, net (33,556 ) (34,453 ) (101,904 ) (105,035 ) Debt extinguishment (213 ) (214 ) (24,118 ) 45,972 Gain on involuntary conversion, net 109 — 280 —

Loss before equity in income (loss) from unconsolidated entities

(23,747 ) (53,838 ) (104,326 ) (67,999 ) Equity in income (loss) from unconsolidated entities 249 302 (1,303 ) (886 ) Loss from continuing operations (23,498 ) (53,536 ) (105,629 ) (68,885 ) Discontinued operations 122 (35,744 ) 8,130 (61,347 ) Net loss (23,376 ) (89,280 ) (97,499 ) (130,232 )

Net loss attributable to noncontrolling interests in other partnerships

378 173 269 77

Net loss attributable to redeemable noncontrolling interests in FelCor LP

166 297 469 571 Net loss attributable to FelCor (22,832 ) (88,810 ) (96,761 ) (129,584 ) Preferred dividends (9,678 ) (9,678 ) (29,034 ) (29,034 )

Net loss attributable to FelCor common stockholders

$ (32,510 ) $ (98,488 ) $ (125,795 ) $ (158,618 )

Basic and diluted per common share data:

Loss from continuing operations $ (0.27 ) $ (0.66 ) $ (1.18 ) $ (1.30 ) Net loss $ (0.26 ) $ (1.04 ) $ (1.10 ) $ (2.11 )

Basic and diluted weighted average common shares outstanding

123,062 95,034 113,908 75,135 Consolidated Balance Sheets

(in thousands)

September 30, December 31, 2011 2010 Assets

Investment in hotels, net of accumulated depreciation of $977,401 and $982,564 at September 30, 2011 and December 31, 2010, respectively

$ 1,967,657 $ 1,985,779

Investment in unconsolidated entities

71,697 75,920 Hotel held for sale 14,065 — Cash and cash equivalents 117,183 200,972 Restricted cash 132,797 16,702

Accounts receivable, net of allowance for doubtful accounts of $422 and $696 at September 30, 2011 and December 31, 2010, respectively

35,058 27,851

Deferred expenses, net of accumulated amortization of $13,366 and $17,892 at September 30, 2011 and December 31, 2010, respectively

30,116 19,940 Other assets 28,732 32,271 Total assets $ 2,397,305 $ 2,359,435 Liabilities and Equity

Debt, net of discount of $34,444 and $53,193 at September 30, 2011 and December 31, 2010, respectively

$ 1,552,575 $ 1,548,309 Distributions payable 76,293 76,293 Accrued expenses and other liabilities 137,085 144,451 Total liabilities 1,765,953 1,769,053 Commitments and contingencies

Redeemable noncontrolling interests in FelCor LP, 636 and 285 units issued and outstanding at September 30, 2011 and December 31, 2010, respectively

2,954 2,004 Equity: Preferred stock, $0.01 par value, 20,000 shares authorized:

Series A Cumulative Convertible Preferred Stock, 12,880 shares, liquidation value of $322,011, issued and outstanding at

September 30, 2011 and December 31, 2010

309,362 309,362

Series C Cumulative Redeemable Preferred Stock, 68 shares, liquidation value of $169,950, issued and outstanding at

September 30, 2011 and December 31, 2010

169,412 169,412

Common stock, $0.01 par value, 200,000 shares authorized and 124,580 shares issued at September 30, 2011, and 101,038 shares issued, including shares in treasury, at December 31, 2010

1,246 1,010 Additional paid-in capital 2,352,468 2,190,308 Accumulated other comprehensive income 24,414 26,457 Accumulated deficit (2,253,808 ) (2,054,625 )

Less: Common stock in treasury, at cost, of 4,156 shares at December 31, 2010

— (73,341 ) Total FelCor stockholders’ equity 603,094 568,583 Noncontrolling interests in other partnerships 25,304 19,795 Total equity 628,398 588,378 Total liabilities and equity $ 2,397,305 $ 2,359,435

Consolidated Debt Summary

(dollars in thousands)

Encumbered Hotels Interest Rate

(%)

Maturity Date September 30, 2011 December 31, 2010 Line of credit(a) 11 hotels L + 4.50 August 2014(b) $ — $ — Mortgage debt Mortgage debt 9 hotels

L + 0.93(c)

November 2011(d) 178,178 250,000 Mortgage debt 8 hotels

L + 5.10(e)

April 2015 203,192 212,000 Mortgage debt 7 hotels 9.02 April 2014 109,811 113,220 Mortgage debt

5 hotels(f)

6.66 June - August 2014 67,848 69,206 Mortgage debt 1 hotel 5.81 July 2016 10,990 11,321 Senior notes Senior secured notes 6 hotels 6.75 June 2019 525,000 — Senior secured notes(g)

13 hotels(h)

10.00 October 2014 457,556 582,821 Retired debt — — — — 309,741 Total 60 hotels $ 1,552,575 $ 1,548,309

(a) We currently have full availability under our $225 million line of credit.

(b) The line of credit can be extended for one year (to 2015), subject to satisfying certain conditions.

(d) In October 2011, we modified this loan and extended maturity up to two years. In conjunction with the modification, we repaid $20 million of the principal balance, reducing the outstanding balance to $158 million. The new interest rate is L + 2.20%.

(e) LIBOR (for this loan) is subject to a 3% floor. We purchased an interest rate cap ($212 million notional amount) that caps LIBOR at 5.0% and expires May 2012.

(f) The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.

(g) These notes have $492 million in aggregate principal outstanding ($144 million in aggregate principal amount was redeemed in June 2011) and were initially sold at a discount that provided an effective yield of 12.875% before transaction costs.

(h) One hotel was sold after September 30, 2011.

Schedule of Encumbered Hotels

(dollars in millions)

September 30, 2011

Consolidated Debt

Balance Encumbered Hotels Line of credit $ — Boca Raton - ES, Charlotte SouthPark - DT, Dana Point - DTGS, Houston Medical Center - HI, Myrtle Beach - HLT, Mandalay Beach - ES, Nashville Airport - ES, Philadelphia Independence Mall - HI, Pittsburgh University Center - HI, Santa Barbara Goleta - HI and Santa Monica at the Pier - HI CMBS debt $ 178

Anaheim - ES, Bloomington - ES, Charleston Mills House - HI, Deerfield Beach - ES, Jacksonville - ES, Dallas Love Field - ES, Raleigh/Durham - DTGS, San Antonio Airport - HI and Tampa Rocky Point - DTGS

Mortgage debt $ 203

Atlanta Buckhead - ES, Atlanta Galleria - SS, Boston Marlboro - ES, Burlington - SH, Ft. Lauderdale Cypress Creek - SS, Orlando South - ES, Philadelphia Society Hill - SH and South San Francisco - ES

Mortgage debt $ 110 Baton Rouge - ES, Birmingham - ES, Ft. Lauderdale - ES, Miami Airport - ES, Milpitas - ES, Minneapolis Airport - ES and Napa Valley - ES CMBS debt(a) $ 68 Atlanta Airport - ES, Austin - DTGS, BWI Airport - ES, Orlando Airport - HI and Phoenix Biltmore - ES CMBS debt $ 11 Indianapolis North - ES

Senior secured notes

$ 525 Boston Copley - FMT, Los Angeles International Airport - ES, Indian Wells Esmeralda Resort & Spa - REN, St. Petersburg Vinoy Resort & Golf Club - REN, Morgans and Royalton Senior secured notes $ 458

Atlanta Airport - SH, Boston Beacon Hill - HI, Dallas Market Center - ES, Myrtle Beach Resort - ES, Nashville Opryland - Airport - HI, New Orleans French Quarter - HI, Orlando Walt Disney World® - DTGS, San Diego on the Bay - HI, San Francisco Waterfront - ES, San Francisco Fisherman's Wharf - HI, San Francisco Union Square - MAR, Toronto Airport - HI and Toronto

Yorkdale - HI

(a) The hotels under this debt are subject to separate loan agreements and are not cross-collateralized.

Capital Expenditures

(in thousands)

Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 Improvements and additions to majority-owned hotels $ 22,226 $ 9,448 $ 57,470 $ 27,841

Partners' pro rata share of additions to consolidated joint venture hotels

(286 ) (81 ) (726 ) (203 ) Pro rata share of additions to unconsolidated hotels 778 250 2,250 1,220 Total additions to hotels(a) $ 22,718 $ 9,617 $ 58,994 $ 28,858

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

Supplemental Financial Data

(in thousands, except per share information)

September 30, December 31,

Total Enterprise Value

2011 2010 Common shares outstanding 124,580 96,882 Units outstanding 636 285 Combined shares and units outstanding 125,216 97,167 Common stock price $ 2.33 $ 7.04 Market capitalization $ 291,753 $ 684,056 Series A preferred stock 309,362 309,362 Series C preferred stock 169,412 169,412 Consolidated debt 1,552,575 1,548,309 Noncontrolling interests of consolidated debt (2,915 ) (3,754 ) Pro rata share of unconsolidated debt 75,282 77,295 Cash and cash equivalents (117,183 ) (200,972 ) Total enterprise value $ 2,278,286 $ 2,583,708

Hotel Groups

Description

Hotels Rooms Comparable hotels at September 30, 2011 67 19,513 Hotels marketed for sale 7 2,153 Same-store hotels 74 21,666 Hotels acquired in 2011 (Royalton, Morgans) 2 282 Discontinued operations (sold in October) 1 244 Consolidated hotels 77 22,192 Unconsolidated hotels 1 171 Hotels owned at September 30, 2011 78 22,363 Hotels sold in October (1 ) (244 ) Hotels owned at November 1, 2011 77 22,119

Hotel Portfolio Composition

The following table illustrates the distribution of comparable hotels (excludes seven hotels in continuing operations that are currently being marketed for sale, and Royalton and Morgans, which were acquired in May 2011).

Brand

Hotels Rooms

% of TotalRooms

% of 2010Hotel EBITDA(a)

Embassy Suites Hotels 37 9,757 50 58 Holiday Inn 13 4,338 22 19 Doubletree and Hilton 8 1,856 10 10 Sheraton and Westin 5 1,858 10 8 Renaissance and Marriott 3 1,321 7 3 Fairmont 1 383 1 2 (b)

Market

South Florida 5 1,439 7 8 Los Angeles area 4 899 5 7 San Francisco area 6 2,138 11 7 Boston 3 915 5 5 Atlanta 3 952 5 5 Philadelphia 2 729 4 4 Central California Coast 2 408 2 4 Myrtle Beach 2 640 3 4 New Orleans 2 744 4 4 San Antonio 3 874 5 4 Orlando 3 761 4 4 Minneapolis 2 528 3 4 San Diego 1 600 3 3 Dallas 2 784 4 3 Other 27 7,102 35 34

Location

Urban 18 5,919 30 33 Suburban 25 6,158 32 28 Airport 14 4,509 23 22 Resort 10 2,927 15 17

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

(b) Represents Hotel EBITDA from date of acquisition (August 2010).

The following tables set forth occupancy, ADR and RevPAR for the three and nine months ended September 30, 2011 and 2010, and the percentage changes therein for the periods presented, for our same-store Consolidated Hotels (excluding Morgans and Royalton, which were acquired in May 2011) included in continuing operations.

Detailed Operating Statistics by Brand

Occupancy (%) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 %Variance 2011 2010 %Variance Embassy Suites Hotels 77.5 75.3 2.9 76.2 74.4 2.5 Holiday Inn 79.5 77.2 3.0 75.9 75.0 1.2 Doubletree and Hilton 75.2 75.9 (0.9 ) 71.5 71.6 (0.1 ) Sheraton and Westin 66.9 70.4 (5.0 ) 68.4 68.4 — Renaissance and Marriott 63.0 62.7 0.4 68.9 65.3 5.6 Fairmont 83.1 83.5 (0.4 ) 73.5 73.4 0.2 Comparable hotels 75.9 74.7 1.6 74.4 73.1 1.8 Hotels marketed for sale 64.5 62.7 2.9 65.7 64.9 1.1 Total same-store hotels 74.8 73.5 1.7 73.5 72.3 1.8 ADR ($) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 %Variance 2011 2010 %Variance Embassy Suites Hotels 128.91 126.89 1.6 130.58 128.59 1.5 Holiday Inn 128.18 121.91 5.1 120.88 114.32 5.7 Doubletree and Hilton 124.48 120.40 3.4 125.93 118.10 6.6 Sheraton and Westin 106.69 103.43 3.1 108.87 104.75 3.9 Renaissance and Marriott 155.56 142.59 9.1 177.49 165.27 7.4 Fairmont 249.60 235.78 5.9 245.10 228.28 7.4 Comparable hotels 130.43 126.21 3.3 131.00 126.24 3.8 Hotels marketed for sale 106.86 102.75 4.0 109.76 108.30 1.4 Total same-store hotels 128.40 124.21 3.4 129.10 124.63 3.6 RevPAR ($) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 %Variance 2011 2010 %Variance Embassy Suites Hotels 99.93 95.60 4.5 99.48 95.62 4.0 Holiday Inn 101.95 94.14 8.3 91.72 85.69 7.0 Doubletree and Hilton 93.62 91.42 2.4 90.09 84.62 6.5 Sheraton and Westin 71.34 72.81 (2.0 ) 74.42 71.60 3.9 Renaissance and Marriott 97.98 89.47 9.5 122.33 107.90 13.4 Fairmont 207.53 196.84 5.4 180.20 167.48 7.6 Comparable hotels 99.04 94.31 5.0 97.48 92.24 5.7 Hotels marketed for sale 68.89 64.39 7.0 72.09 70.33 2.5 Total same-store hotels 96.03 91.32 5.2 94.94 90.05 5.4

Comparable Hotels(a) Operating Statistics for Our Top Markets

Occupancy (%) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 %Variance 2011 2010 %Variance South Florida 72.0 72.4 (0.5 ) 77.2 77.7 (0.6 ) Los Angeles area 85.0 79.5 6.9 80.6 75.9 6.2 San Francisco area 85.8 83.2 3.1 78.3 75.8 3.3 Boston 84.5 84.2 0.4 79.2 78.6 0.7 Atlanta 75.9 76.6 (0.9 ) 76.7 76.4 0.5 Philadelphia 75.6 79.2 (4.5 ) 72.0 73.4 (1.9 ) Central California Coast 83.0 83.1 (0.1 ) 76.0 77.8 (2.3 ) Myrtle Beach 80.4 82.7 (2.7 ) 64.8 66.9 (3.1 ) New Orleans 64.3 62.3 3.1 71.1 68.2 4.2 San Antonio 78.1 77.9 0.2 75.9 76.5 (0.8 ) Orlando 75.7 73.4 3.1 81.3 79.6 2.1 Minneapolis 83.0 85.3 (2.7 ) 79.1 77.6 1.9 San Diego 87.9 82.6 6.5 80.4 77.7 3.5 Dallas 61.2 61.7 (0.8 ) 65.1 62.7 3.9 ADR ($) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 %Variance 2011 2010 %Variance South Florida 101.25 100.25 1.0 127.71 127.84 (0.1 ) Los Angeles area 152.18 146.10 4.2 143.69 138.45 3.8 San Francisco area 159.42 144.56 10.3 145.38 133.03 9.3 Boston 197.56 184.60 7.0 185.42 172.97 7.2 Atlanta 104.65 105.42 (0.7 ) 104.87 104.36 0.5 Philadelphia 131.40 128.12 2.6 133.01 124.93 6.5 Central California Coast 180.66 189.59 (4.7 ) 157.40 163.34 (3.6 ) Myrtle Beach 169.53 166.08 2.1 149.24 142.90 4.4 New Orleans 103.02 101.74 1.3 129.87 121.70 6.7 San Antonio 92.18 98.46 (6.4 ) 93.83 98.45 (4.7 ) Orlando 95.40 93.23 2.3 109.76 105.56 4.0 Minneapolis 139.22 129.00 7.9 130.58 125.89 3.7 San Diego 127.11 123.95 2.6 121.13 119.28 1.5 Dallas 99.74 103.70 (3.8 ) 110.01 108.86 1.1 RevPAR ($) Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 %Variance 2011 2010 %Variance South Florida 72.94 72.61 0.5 98.60 99.29 (0.7 ) Los Angeles area 129.35 116.19 11.3 115.85 105.10 10.2 San Francisco area 136.74 120.31 13.7 113.82 100.86 12.8 Boston 166.90 155.37 7.4 146.77 135.92 8.0 Atlanta 79.44 80.77 (1.6 ) 80.47 79.70 1.0 Philadelphia 99.33 101.42 (2.1 ) 95.75 91.69 4.4 Central California Coast 149.97 157.51 (4.8 ) 119.66 127.04 (5.8 ) Myrtle Beach 136.38 137.31 (0.7 ) 96.73 95.58 1.2 New Orleans 66.21 63.39 4.4 92.31 83.03 11.2 San Antonio 71.96 76.72 (6.2 ) 71.19 75.28 (5.4 ) Orlando 72.19 68.44 5.5 89.23 84.02 6.2 Minneapolis 115.49 110.04 5.0 103.24 97.67 5.7 San Diego 111.78 102.33 9.2 97.41 92.64 5.2 Dallas 61.03 63.96 (4.6 ) 71.59 68.20 5.0

(a) Excludes seven hotels in continuing operations that are currently being marketed for sale, as well as Royalton and Morgans, which were acquired in May 2011.

Non-GAAP Financial Measures

We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, same-store 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.

Reconciliation of Net Loss to FFO and Adjusted FFO

(in thousands, except per share data)

Three Months Ended September 30, 2011 2010 Dollars Shares

Per ShareAmount

Dollars Shares

Per ShareAmount

Net loss $ (23,376 ) $ (89,280 ) Noncontrolling interests 544 470 Preferred dividends (9,678 ) (9,678 )

Net loss attributable to

FelCor common stockholders

(32,510 ) 123,062 (0.26 ) (98,488 ) 95,034 (1.04 ) Depreciation and amortization 33,892 — 0.27 33,725 — 0.36 Depreciation, discontinued operationsand unconsolidated entities 3,507 — 0.03 6,805 — 0.07 Gain on sale of hotels, net (701 ) — (0.01 ) — — — Gain on involuntary conversion, net (109 ) — — — — — Noncontrolling interests in FelCor LP (166 ) 638 — (297 ) 295 — Conversion of options and unvested

restricted stock

— 709 — — — — FFO 3,913 124,409 0.03 (58,255 ) 95,329 (0.61 ) Impairment loss — — — 24,127 — 0.25 Impairment loss, discontinued operations 946 — 0.02 41,722 — 0.44 Acquisition costs 413 — — 403 — — Debt extinguishment, including

discontinued operations

355 — — (8,036 ) — (0.08 ) Adjusted FFO $ 5,627 124,409 $ 0.05 $ (39 ) 95,329 $ —

Reconciliation of Net Loss to FFO and Adjusted FFO

(in thousands, except per share data)

Nine Months Ended September 30, 2011 2010 Dollars Shares

Per ShareAmount

Dollars Shares

Per ShareAmount

Net loss $ (97,499 ) $ (130,232 ) Noncontrolling interests 738 648 Preferred dividends (29,034 ) (29,034 ) Net loss attributable to FelCor common stockholders (125,795 ) 113,908 $ (1.10 ) (158,618 ) 75,135 $ (2.11 ) Depreciation and amortization 101,138 — 0.87 101,556 — 1.35 Depreciation, discontinued operationsand unconsolidated entities 13,572 — 0.12 20,958 — 0.28 Noncontrolling interests in FelCor LP (469 ) 453 — (571 ) 295 — Gain on sale of hotels, net (7,362 ) — (0.06 ) — — — Gain on involuntary conversion, net (280 ) — — — — — Gain on sale of unconsolidated entities — — — (559 ) — (0.01 ) FFO (19,196 ) 114,361 (0.17 ) (37,234 ) 75,430 (0.49 ) Impairment loss 11,706 — 0.10 24,127 — 0.32 Impairment loss, discontinued operations 1,544 — 0.01 62,782 — 0.83 Acquisition costs 1,359 — 0.01 419 — 0.01 Debt extinguishment, including

discontinued operations

24,316 — 0.21 (54,096 ) — (0.72 ) Conversion of options and unvested

restricted stock

— 828 0.01 — — — Adjusted FFO $ 19,729 115,189 $ 0.17 $ (4,002 ) 75,430 $ (0.05 )

Reconciliation of Net Loss to EBITDA, Adjusted EBITDA,

Same-store Adjusted EBITDA and Hotel EBITDA

(in thousands)

Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 Net loss $ (23,376 ) $ (89,280 ) $ (97,499 ) $ (130,232 ) Depreciation and amortization 33,892 33,725 101,138 101,556 Depreciation, discontinued operations and

unconsolidated entities

3,507 6,805 13,572 20,958 Interest expense 33,614 34,557 102,056 105,339 Interest expense, discontinued operations and

unconsolidated entities

1,319 2,321 4,283 7,865 Amortization of stock compensation 1,766 1,644 5,343 4,901 Noncontrolling interests in other partnerships 378 173 269 77 EBITDA 51,100 (10,055 ) 129,162 110,464 Impairment loss — 24,127 11,706 24,127 Impairment loss, discontinued operations 946 41,722 1,544 62,782 Debt extinguishment, including discontinued

operations

355 (8,036 ) 24,316 (54,096 ) Acquisition costs 413 403 1,359 419 Gain on sale of hotels, net (701 ) — (7,362 ) — Gain on involuntary conversion, net (109 ) — (280 ) — Gain on sale of unconsolidated subsidiary — — — (559 ) Adjusted EBITDA 52,004 48,161 160,445 143,137 Adjusted EBITDA from discontinued operations (943 ) (2,739 ) (7,263 ) (9,646 ) Adjusted EBITDA from acquired hotels(a) (881 ) 4 (1,449 ) 319 Same-store Adjusted EBITDA 50,180 45,426 151,733 133,810 Other revenue (1,394 ) (1,421 ) (2,630 ) (2,793 ) Equity in income from unconsolidated entities

(excluding interest and depreciation expense)

(5,206 ) (5,014 ) (13,493 ) (12,871 ) Noncontrolling interests in other partnerships

(excluding interest and depreciation expense)

187 424 1,425 1,751 Consolidated hotel lease expense 10,582 10,053 29,383 27,826 Unconsolidated taxes, insurance and lease expense (1,716 ) (1,651 ) (5,152 ) (5,015 ) Interest income (58 ) (104 ) (152 ) (304 ) Other expenses (excluding acquisition costs) 795 928 2,096 2,274 Corporate expenses (excluding amortization

expense of stock compensation)

4,492 4,920 17,362 18,020 Hotel EBITDA $ 57,862 $ 53,561 $ 180,572 $ 162,698

(a) For same-store metrics, we have included the hotel acquired in August 2010 and excluded the two hotels acquired in May 2011 for all periods presented.

Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)

Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 Total revenues $ 245,518 $ 223,927 $ 724,737 $ 657,650 Other revenue (1,394 ) (1,421 ) (2,630 ) (2,793 ) Hotel operating revenue 244,124 222,506 722,107 654,857 Revenue from acquired hotels(a) (7,517 ) 5,220 (10,861 ) 23,109 Same-store hotel operating revenue 236,607 227,726 711,246 677,966 Same-store hotel operating expenses (178,745 ) (174,165 ) (530,674 ) (515,268 ) Hotel EBITDA $ 57,862 $ 53,561 $ 180,572 $ 162,698 Hotel EBITDA margin(b) 24.5 % 23.5 % 25.4 % 24.0 %

(a) For same-store metrics, we have included the hotel acquired in August 2010 and excluded the two hotels acquired in May 2011 for all periods presented.

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

Reconciliation of Total Operating Expenses to Same-store Hotel Operating Expenses

(in thousands)

Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 Total operating expenses $ 235,605 $ 243,098 $ 703,321 $ 666,586 Unconsolidated taxes, insurance and lease expense 1,716 1,651 5,152 5,015 Consolidated hotel lease expense (10,582 ) (10,053 ) (29,383 ) (27,826 ) Corporate expenses (6,258 ) (6,564 ) (22,705 ) (22,921 ) Depreciation and amortization (33,892 ) (33,725 ) (101,138 ) (101,556 ) Impairment loss — (24,127 ) (11,706 ) (24,127 ) Other expenses (1,208 ) (1,331 ) (3,455 ) (2,693 ) Expenses from acquired hotels(a) (6,636 ) 5,216 (9,412 ) 22,790 Same-store hotel operating expenses $ 178,745 $ 174,165 $ 530,674 $ 515,268

(a) For same-store metrics, we have included the hotel acquired in August 2010 and excluded the two hotels acquired in May 2011 for all periods presented.

Reconciliation of Forecasted Net Loss to Forecasted Adjusted FFO and

Adjusted EBITDA

(in millions, except per share and unit data)

Full Year 2011 Guidance Low Guidance High Guidance Dollars

Per ShareAmount(a)

Dollars

Per ShareAmount(a)

Net loss $

(124

) $

(121

) Preferred dividends (39 ) (39 ) Net loss attributable to FelCor common stockholders

(163

) $

(1.41

)

(160

) $

(1.38

) Depreciation(b)

153

Gain on sale of hotels, net

)

) Noncontrolling interests in FelCor LP (1 ) (1 ) FFO

(19

) $

(0.17

)

(16

) $

(0.13

) Debt extinguishment

Impairment

Acquisition costs 1 1 Adjusted FFO $

0.17

0.19

Net loss $

(124

) $

(121

) Depreciation(b)

153

Interest expense(b) 141 141 Amortization expense 7 7 Noncontrolling interests in FelCor LP (1 ) (1 ) EBITDA

176

179

Debt extinguishment

Impairment

Gain on sale of hotels, net

)

) Acquisition costs 1 1 Adjusted EBITDA $

207

210

(a) Weighted average shares and units are 117.3 million.

(b) Includes pro rata portion of unconsolidated entities.

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 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 (loss) attributable to FelCor 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 attributable to parent (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 attributable to parent (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 items, including but not limited to 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 attributable to FelCor, EBITDA and FFO, is beneficial to an investor's better understanding of our operating performance.

Gains and losses related to debt extinguishment and interest rate swaps - We exclude gains and losses related to debt extinguishment 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 depreciable 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.

Hotel EBITDA and Hotel EBITDA Margin

Hotel EBITDA and Hotel EBITDA margin are commonly used measures of performance in the hotel industry and give investors a more complete understanding of the operating results over which our individual hotels and brand/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 that we use in our financial and operational decision-making. Additionally, using these measures facilitates comparisons with other hotel REITs and hotel owners. We present Hotel EBITDA and Hotel EBITDA margin by eliminating all revenues and expenses from continuing operations not directly associated with hotel operations, including corporate-level expenses, depreciation and amortization, 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 into the ongoing operational performance of our hotels and the effectiveness of management on a property-level basis. We eliminate depreciation and amortization because, even though depreciation and amortization are property-level expenses, 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 diminishes 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 noncontrolling interests 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 Consolidated Hotels. Hotel EBITDA and Hotel EBITDA margins are presented on a same-store basis.

Use and Limitations of Non-GAAP Measures

Our management and Board of Directors use FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance of our hotels and to facilitate comparisons between us and other 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. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and 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 most comparable 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. These non-GAAP financial measures 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 a single financial measure.

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