FelCor's Corcoran Moves to Chairman, Names Replacement Team

Corcoran, who founded the Irving-based FelCor in 1991, has named Richard A. Smith as president and CEO. In turn, eight-year employee, Andrew J. Welch, was promoted to executive vice president and CFO from senior vice president and treasurer. The executive changes mark the next step for the "new FelCor" as it juxtapositions itself into a lower-leveraged hotel company with fewer yet fully renovated properties and a strategic plan to develop residential units in select markets.

"When I hired Rick, I hired him with the intent and hope he could become CEO," Corcoran tells GlobeSt.com. "I have been an adviser to him. I have been a coach to him and a partner to him. What I've got to do now is let Rick be the guy who makes the decisions." Corcoran inked a five-year contract for the chairman's post.

Smith's new role includes a seat on the board, replacing Michael D. Rose as of today. Corcoran says Rose wanted to eliminate at least one of his six board memberships. "This permitted us to have Rick replace Mike on the board," he says.

Rose has been on FelCor's board since 1998, the same year that Donald J. McNamara, who Corcoran replaces, became chairman. McNamara, though, will remain on the company's board.

"When my partner and I started FelCor in the early '90s, our vision was to create a company that focused on, and executed, a value-added strategy for our shareholders, employees and hotels," Corcoran says in the press release announcing the changes. "I am very pleased at all that we have accomplished over the years. I will always feel a great sense of proprietorship for FelCor and have never been more optimistic about its future."

FelCor went public in 1994 as a hotel REIT and four years later became publicly traded on the NYSE. Under Corcoran's leadership, the portfolio went from six hotels to 117 nationally branded properties with a $3.2-billion market capitalization.

The executive reins were exchanged at this morning's earnings call. The gist of the call is the quarter-to-quarter comparison for Q4 showed RevPAR rose 16.2%; ADR jumped 7.1%; and the EBITDA margin went up 1.7% to end the year at 24.1%. In the quarterly calculation, FFO rose to $13.3 million or $8.3 million more than 2004 and same-store EBITDA rang up $58.7 million, up $6.2 million. In the year-to-year comparison, FelCor's stats reflected marked increases across the board that Corcoran says ultimately exceeded expectations.

FelCor took a one-time hit of $263.1 million in the fourth quarter as a result of its new pact with InterContinental Hotels Group. As a result, net loss to common stockholders was $274.9 million or $4.62 per share versus Q4 2004's net loss of $20.9 million or 35 cents per share. Still, the agreement now sets up more hotel sales for FelCor to stay the course to further reduce its $1.7 billion of debt. Cash and cash equivalents totaled $95 million at year-end 2005. Last year, FelCor sold 19 hotels for gross proceeds and forgiveness of $128 million; so far this year, eight have traded, bringing in $163 million in gross proceeds. There are 27 hotels up for sale, which are predicted to collect another $325 million to $375 million for the till.

"Our repositioning plan has set the stage for further growth," Corcoran says. "FelCor has entered a new era and the future is very bright for our company."