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 (NYSE: FCH) 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 (NYSE: BH), 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 (NYSE: HOT) 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 (Nasdaq: KTEL) rose $8.
Also rising were shares of Pentair (NYSE: PNR). 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 (NYSE: APW) to acquire U.K.-based Vero Group.
Finally, Cisco Systems (Nasdaq: CSCO) 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.
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
