Following the release of third quarter earnings by Felcor Lodging (FCH), FBR Capital Markets noted that the company reported funds from operations of $0.14 per share, in line with consensus and the firm's estimate. However, the firm noted that adjusted EBITDA of $45.3 million was above its estimate of $41.7 million.
Analyst Patrick Sholes noted that the company lowered its RevPAR estimate for the year to a 18%-18.5% decline compared to its earlier estimate for a 15%-17% decline, with the current estimates translating to fourth quarter RevPAR of -13% to -15%. The full year adjusted EBITDA has also been lowered to $174 million to $176 million, suggesting fourth quarter adjusted EBITDA of $25.4 million to $27.4 million.
With October RevPAR down 12.6%, Sholes noted that the implied RevPAR for November to December works out to -13.5% to -16%, which the analysts termed as weak. The company attributed the tempered outlook to the shift in customer mix pressuring rates.
FBR believes that the lower than expected EBITDA for these two months equates to about $0.25 per share, while an increase in interest expense from its recent debt issuance will equate to $0.16/share. While noting that the company has paid off $487 million of debt due 2011, the firm said it still has another $273 million debt due to mature in 2010 and another $250 million due 2011.
FCH closed Tuesday's regular trading session at $3.24 on the NYSE.
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