FelCor Lodging Trust Inc. (FCH), a real estate investment trust (:REIT), recently updated its outlook for full year 2012 to better reflect the adverse effects of Hurricane Sandy on its business. Although the company reported minimal physical damage to its properties, the hurricane had a material impact on its operations and was likely to affect its profitability.
Based on the turn of events, FelCor presently expects a same-store RevPAR (revenue per available room) growth of 5.25% – 5.75% versus an earlier projection of 5.50% – 6.00%. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) is expected to be in the range of $198.0 million – $202.0 million, compared to earlier estimates of $200.0 million – $204.0 million.
FelCor reduced its fiscal 2012 adjusted FFO (funds from operations) guidance to between from 21 cents – 25 cents to 19 cents – 23 cents. The current Zacks Consensus Estimate for 2012 is pegged at 24 cents.
Over the past 30 days, six out of nine earnings estimate revisions for the current fiscal have moved down, while the Zacks Consensus Estimate dipped 7.7%. We expect the Zacks Consensus Estimate for 2012 to reduce further in the coming days in tune with the revised earnings guidance by the company.
For 2013, the current Zacks Consensus Estimate is 28 cents. Over the past 30 days, six out of nine earnings estimate revisions have moved down, while the Zacks Consensus Estimate decreased 12.5%. This further reinforces the negative investor sentiments that have brewed in accordance with the devastation caused by the storm.
FelCor currently owns 66 upper-upscale full-service hotels and resorts in 22 states in the U.S. under globally recognized brands such as – Embassy Suites Hotels, Doubletree, Hilton, Marriott, Renaissance, Fairmont, Sheraton, Westin and Holiday Inn. Most of the properties of the company are located in major markets across the country.
We have a Neutral recommendation on FelCor, which presently has a Zacks #3 Rank that translates into a short-term Hold recommendation. We also have a Neutral recommendation and a Zacks #3 Rank for Host Hotels & Resorts Inc. (HST), one of the competitors of FelCor.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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