FelCor Reports
Monday, April 27, 1998
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (April 27, 1998) -- Bond yields rose and stocks fell sharply Monday on a report that some members of Federal Reserve Board were concerned that the U.S. economy, its stock market, or both were showing signs of overheating.

The yield on the 30-year Treasury bond nosed above the 6% level, while on the equities side the S&P 500 lost 1.93% and the Nasdaq tumbled 2.60%. The Boring Portfolio fell "only" 1.87% in value.

Borefolio holding FelCor Suite Hotels <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FCH)") else Response.Write("(NYSE: FCH)") end if %> reported its first-quarter results this morning. Funds from operations (FFO) for the first quarter totaled $0.94 per share, up 18% from the year-ago period and a penny ahead of analysts' consensus forecast, as provided by First Call.

With this result, FelCor has averaged greater than 15% annual FFO growth over the past ten quarters.

As noted in FelCor's press release, RevPAR (revenues per available room) increased 6.7% to an average $89.95 for the 58 hotels that the REIT owned for at least one year, and increased 7.8% if one excludes four hotels that experienced brand changes and extensive redevelopment during the quarter.

In a followup conference call, FelCor's management reviewed recent developments, most notably the proposed merger between FelCor and Bristol Hotels <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BH)") else Response.Write("(NYSE: BH)") end if %>, which will create the largest non-paired hotel REIT, as well as FelCor's April 20 announcement that it will purchase eight upscale, full-service all-suite hotels from Starwood Hotels & Resorts <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HOT)") else Response.Write("(NYSE: HOT)") end if %> at a price of approximately $245 million.

Looking forward, FelCor expected to acquire 10 to 15 hotels in the balance of 1998 and do perhaps $500 million in acquisitions next year -- but only if this can be accomplished at prices that make sense.

We'll be providing a summary of the conference call shortly. As to why the stock has failed to respond at all to four-month's of consistently upbeat news and financial results, the assessment offered by FelCor's management is that "this too shall pass."

Meantime, the REIT focuses on running its core business, upgrading its currently-owned properties, and executing sensible acquisitions and business partnerships... all on-plan or ahead of plan.

And meantime the stock sagged $3/4 to a 52-week low of $33.

But hey, K-Tel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KTEL)") else Response.Write("(Nasdaq: KTEL)") end if %> rose $8.

Also rising were shares of Pentair <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PNR)") else Response.Write("(NYSE: PNR)") end if %>. The stock rose $5/16 in the teeth of today's downdraft, recovering somewhat from a mini-selloff following news that the company might decide to enter into a bidding war with Applied Power <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APW)") else Response.Write("(NYSE: APW)") end if %> to acquire U.K.-based Vero Group.

Finally, Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> officially introduced its long-awaited line of Layer-3 Switch Routers (Swouters? Ritches?), the Catlayst 8500 series. Cisco stock fell $1 1/2 to $70 3/8 in moderate trading -- actually not a bad showing today, considering.

The Kid reports results for its April quarter on May 6, after the market closes.

FoolWatch -- It's what's going on at the Fool today.

TODAY'S NUMBERS
Stock  Change    Bid 
 ANDW  -  7/8   21.88 
 CGO   -  3/8   38.38 
 BGP   -1 1/4   30.69 
 CSL   -  5/8   49.63 
 CSCO  -1 1/2   70.38 
 FCH   -  3/4   33.00 
 PNR   +  5/16  41.75 
 
                   Day   Month    Year  History 
         BORING   -1.87%  -1.07%   0.00%  25.83% 
         S&P:     -1.93%  -1.38%  11.96%  74.79% 
         NASDAQ:  -2.60%  -0.84%  15.92%  74.87% 
  
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     30.69   172.63% 
   6/26/96  150 Cisco Syst    35.93     70.38    95.85% 
   8/13/96  200 Carlisle C    26.32     49.63    88.51% 
    3/5/97  150 Atlas Air     23.06     38.38    66.43% 
   4/14/98  100 Pentair       43.74     41.75    -4.56% 
   11/6/97  200 FelCor Sui    37.59     33.00   -12.21% 
   1/21/98  200 Andrew Cor    26.09     21.88   -16.16% 
  
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  12275.00  $7772.51 
   6/26/96  150 Cisco Syst  5389.99  10556.25  $5166.26 
   8/13/96  200 Carlisle C  5264.99   9925.00  $4660.01 
    3/5/97  150 Atlas Air   3458.74   5756.25  $2297.51 
   4/14/98  100 Pentair     4374.25   4175.00  -$199.25 
   1/21/98  200 Andrew Cor  5218.00   4375.00  -$843.00 
   11/6/97  200 FelCor Sui  7518.00   6600.00  -$918.00 
  
                              CASH   $9251.26 
                             TOTAL  $62913.76