FelCor Announces Agreement to Acquire The Fairmont Copley Plaza hotel in Boston

FelCor Lodging Trust Incorporated (NYSE: FCH) today announced it has entered into a purchase and sale agreement to acquire the fee-simple interest in The Fairmont Copley Plaza hotel in Boston for $98.5 million from an affiliate of Fairmont Hotels & Resorts (“Fairmont”). Fairmont will continue to manage the property under a long-term management agreement. The purchase is expected to be completed in the third quarter and will be funded with cash on hand.

The Fairmont Copley Plaza is a 383-room world-class, historic hotel located in the heart of Boston’s Back Bay on Copley Square. The property boasts 23,000 square feet of meeting space featuring the 5,720 square-foot Grand Ballroom.

The hotel features two of the most prominent dining and entertainment establishments in the city: The Oak Room and The Oak Bar. The Oak Room is one of the leading steakhouses in Boston, and The Oak Bar features an award-winning menu and has been recognized as the Best Hotel Bar by Boston Magazine. The property last underwent a major renovation in 2004, totaling $25 million, which included all guestrooms and upgrading the fourth floor to the premium Fairmont Gold.

“This irreplaceable asset is a significant acquisition for FelCor. It fits all of our value and strategic investment criteria. This hotel will improve the overall quality of our portfolio, increase future RevPAR and EBITDA growth rates and further diversify our portfolio by location, customer mix and product mix. The Boston hotel market, particularly the Back Bay area, has extremely high barriers to entry and diverse demand generators and is one of our three stated targeted acquisition markets. This transaction represents a rare opportunity to gain entry into this submarket at an attractive price per room,” said Richard A. Smith, FelCor’s President and Chief Executive Officer.

Transaction Highlights:

Attractive Pricing

The $98.5 million purchase price represents approximately $257,000 per key, which is a significant discount to replacement cost. The hotel is being purchased for less than nine times 2007 Hotel EBITDA (stabilized cash flow). The projected IRR is above our weighted average cost of capital, creating incremental long-term shareholder value.

Increases Portfolio Quality

The 2009 RevPAR of $162 is 98 percent higher than the 2009 portfolio average of $82.

Further Diversifies Portfolio

This hotel will be our first flagged and managed Fairmont property. The 23,000 square feet of meeting space is nearly double our current portfolio average of 12,000 square feet per hotel.

Increases barrier to entry protection

Boston’s Back Bay submarket has extremely high barriers to entry and is in a prime CBD location that benefits from diverse demand generators and low supply growth. Since 2004, only two hotels have been added to the submarket and currently no new projects are in the construction pipeline.

Additional Opportunities

We will implement a capital plan in excess of $20 million, which includes an overall refreshing of the property and various value-enhancement initiatives to augment future EBITDA growth. The improvements, encompassing the public areas, guestrooms and the addition of a new fitness center, will meet the needs of today’s corporate guest. In addition, our aggressive and unique asset management approach will enhance market share and Hotel EBITDA margins.

CBRE Hotels acted as advisor to Fairmont in this transaction.

With the exception of historical information, the matters discussed in this news release include “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties, and the occurrence of future events, may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Current economic circumstances or a further economic slowdown and the impact on the lodging industry, operating risks associated with the hotel business, relationships with our property managers, risks associated with our level of indebtedness and our ability to meet debt covenants in our debt agreements, our ability to complete acquisitions, dispositions and debt refinancing, the availability of capital, the impact on the travel industry from increased fuel prices and security precautions, our ability to continue to qualify as a Real Estate Investment Trust for federal income tax purposes and numerous other factors may affect future results, performance and achievements. Certain of these risks and uncertainties are described in greater detail in our filings with the Securities and Exchange Commission. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially. We undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

FelCor, a real estate investment trust, is the nation’s largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 84 hotels and resorts, located in 23 states and Canada. FelCor’s portfolio consists primarily of upper-upscale hotels, which are flagged under global brands - Embassy Suites Hotels®, Doubletree ®, Hilton®, Marriott®, Renaissance®, Sheraton®, Westin® and Holiday Inn®. Additional information can be found on the Company’s Web site at www.felcor.com.