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FelCor Closes Senior Note Offering

FelCor Lodging Trust Incorporated (NYSE: FCH) today announced the closing of the offer and sale of $525 million aggregate principal amount of 5.625% senior secured notes due 2023. This financing enables FelCor to benefit from historically low interest rates, mitigate future market risk, create a long-term and staggered maturity profile, and significantly reduce its cost of borrowing.

After giving effect to the offering and associated debt repayment, annual interest expense will decline approximately $20 million, which equates to $0.16 of additional funds from operations (“FFO”) per share.

FelCor will use the proceeds from the offering to:
  • Redeem $258 million in aggregate face amount of 10% senior notes due 2014;
  • Repay a $187 million mortgage loan that bears interest at 8.1%;
  • Pay $55 million of prepayment costs, underwriting fees and other expenses; and
  • Repay $25 million of the outstanding amount on its line of credit.

With this offering, FelCor has effectively completed the capital markets portion of restructuring its balance sheet. The Company expects to repay the remaining $234 million of 10% notes, and other mortgage debt, using proceeds from future asset sales.

Thereafter, FelCor will have a strong and flexible balance sheet and a favorable cost of debt highlighted by:
  • Average debt maturity extended to 2021;
  • Weighted average cost of borrowing reduced to below 6%, significantly lower than FelCor’s historical levels; and
  • Run-rate consolidated interest expense reduced to approximately $75-$80 million, or more than $50 million below 2011.

FelCor continues to execute its value creation strategy by selling non-core assets, driving operational improvement, strengthening its balance sheet and repositioning its portfolio to improve its return on invested capital. The Company’s asset sales/portfolio repositioning program is progressing, with core portfolio ADR, RevPAR and FFO all showing marked improvement.

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