Press Release: Winston Hotels Inc.
May 7, 2002
RALEIGH, NC -- Winston Hotels, Inc., (NYSE: WXH), a real estate investment trust and owner of premium limited-service,
high-end extended-stay and full-service hotels, yesterday announced results for the first quarter ended March 31,
2002.
FFO totaled $5.0 million for the first quarter of 2002 as compared to $7.0 million for the first quarter 2001.
On a per share basis, FFO for the first quarter of 2002 totaled $0.27 on 18.5 million weighted average shares outstanding
compared to $0.38 on 18.2 million weighted average shares outstanding for the same quarter a year ago. Lease revenue
totaled $9.9 million for the first quarter of 2002 compared to $9.7 million for the first quarter of 2001.
Summary of First Quarter 2002 Unaudited Financial Highlights
($ in thousands, except per share amounts)
For the Three Months Ended March 31
---------------------------- ------------- --------------------------
2002 2001 Change
Percentage Lease Revenue
Pre-SAB 101 $ 12,548 $ 14,903 (15.8) %
Deferred Lease Revenue $ 2,685 $ 5,208 (48.4) %
Percentage Lease Revenue $ 9,863 $ 9,695 1.7 %
FFO $ 5,043 $ 6,991 (27.9) %
FFO Per Diluted Common Share $ 0.27 $ 0.38 (28.9) %
Bob Winston, Chief Executive Officer, commented: "We are pleased to have exceeded consensus analysts' expectations,
which was preceded by a total return to shareholders of 22% for 2001. The Company's common shareholders who owned
our stock from January 1, 2001 through December 31, 2001 and received all dividends paid received this total return.
The excellent total return that those shareholders enjoyed in 2001 has continued this year. Through April, the
Company's common shareholders who owned stock from the beginning of the year and received all dividends paid have
received a total return of 23% compared to a negative 5% S&P and a negative 14% NASDAQ return. We believe that
the strength of our performance, in part, allowed us to raise approximately $27 million in capital in the first
quarter. Although we used the proceeds to pay down debt, we are in negotiations to buy back the leases relating
to our hotels, and we are considering investments in certain mezzanine debt and distressed hotel opportunities.
First Quarter Highlights
Winston Hotels President & Chief Operating Officer, James D. Rosenberg commented on the first quarter highlights:
For the quarter, RevPar decreased 9.5% compared to the same period last year, versus a negative 10.4% RevPar decline
for the industry. This is also an improvement from the negative 11% RevPar decline in the fourth quarter of 2001
compared to the fourth quarter of 2000. Our portfolios' RevPar yield index was 107% for the quarter, indicating
that our portfolio as a whole achieved a RevPar greater than its fair share. These results, combined with our conservative
balance sheet, enabled us to continue to pay a consistent dividend to our shareholders.
Compared to prior periods, our RevPar decreased 12.9% in January; 9.1% in February; and, 9.2% in March. The downturn
in March from February was due in part to the timing of the Passover - Easter holiday. Based on the preliminary
operating results from April, it appears that the rate of our RevPar decline is improving.
Our newer hotels were our best performers during the first quarter, and the Company's hotels near military/government
installations performed particularly well. The Florida hotels, coastal hotels, Phoenix and Dallas hotels were the
worst performers.
Operating Statistics
For the 50 hotels that were open during the quarters ended March 31, 2002 and March 31, 2001, including two joint
venture hotels in which the Company holds a 49% interest, lease revenues and related statistics are as follows
(note that the Company does not exclude "for sale" or "under renovation" hotels when making
these comparisons):
Three Months Ended March 31,
2002 2001 % Change
----------------------------------------------------------------------
Lease Revenues/a $ 13,391 $ 15,497 (13.6)
==========================
Average Daily Rate $ 79.11 $ 83.28 (5.0)
Occupancy 62.29% 65.38% (4.7)
RevPAR $ 49.28 $ 54.44 (9.5)
/a: Pre SAB 101, $ in thousands
The Company's portfolio at March 31, 2002 included an aggregate total of 48 operating hotel properties, as well
as a 49% ownership interest in three operating hotels. Additionally, the Company has provided mezzanine financing
to a third party for the development and construction of a Hilton Garden Inn in Tampa, FL and Atlanta, GA, both
of which are open and operating.
Dividend Performance
During the first quarter, Winston Hotels declared a cash dividend of $0.15 per common share. The cash dividend
was paid on April 16, 2002 to shareholders of record on March 29, 2002. The regular quarterly dividend is equivalent
to $0.60 on an annualized basis. Also in the first quarter, the Company announced its regular quarterly cash dividend
to preferred shareholders of record of $0.578125 per share. This dividend also was paid on April 16, 2002 to shareholders
of record as of March 29, 2002.
Outlook for the Remainder of 2002
As we stated in our February release, we expect a RevPar change of 0% to negative 4% for 2002, with negative performance
continuing through the second quarter and positive performance during both the third and fourth quarters. Due to
the impact of our common stock offering and first quarter results, we are forecasting FFO per share for the year
ranging from $1.18 to $1.33.
Winston Hotels' first quarter investor conference call was scheduled for 10 a.m. EST on May 6, 2002. This call
also was simulcast over the Internet via the Company's website at http://www.winstonhotels.com.
The replay will be available on the Winston Hotels' website for 30 days, or via the telephone by dialing 800-475-6701,
access code 636176.
About the Company
Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development,
acquisition and rehabilitation of premium limited-service, high-end extended-stay and full-service hotel properties,
with a portfolio increasingly weighted toward the leading brands in the lodging industry's upscale segment. The
Company currently owns or is invested in 53 hotels with 7,452 rooms in 14 states, which includes 48 wholly-owned
properties with 6,574 rooms, a 49 percent ownership interest in 3 joint venture hotels with 453 rooms and a mezzanine
financing interest in 2 hotels with 275 rooms.
Forward-Looking Statements
The press release contains "forward looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited
to, statements referring to total return to shareholders, estimated FFO per share in 2002 for the year and by quarter,
expected RevPar growth for 2002, estimated development fees, interest income from mezzanine loans, other fee income
and earnings from joint ventures, the anticipated benefits and development plans of the joint ventures and alliances,
the possibility of buying back the leases that relate to our hotels, and additional investments in mezzanine debt
and distressed hotel opportunities. You can identify these statements by use of words like "may," "will,"
"expect," "project," "anticipate," "estimate," or "continue"
or similar expressions. These statements represent the Company's judgment and are subject to risks and uncertainties
that could cause actual operating results to differ materially from those expressed or implied in the forward looking
statements including, but not limited to, changes in general economic conditions, lower occupancy rates, lower
average daily rates, development risks including risk of construction delay, cost overruns, occupancy and other
governmental permits, zoning, the increase of development costs in connection with projects that are not pursued
to completion, the risk of non-payment of mezzanine loans, the failure of negotiations to buy back leases or to
make additional mezzanine debt investments and investments in distressed hotel opportunities. Other risks are discussed
in the Company's filings with the Securities and Exchange Commission, including but not limited to its Form S-3
Registration Statement filed on September 2, 1999 as amended on September 29, 1999 and its Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and its other periodic reports.
For more information on Winston Hotels visit the Winston Hotels page at www.winstonhotels.com
.
WINSTON HOTELS, INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
ASSETS
March 31, 2002 December 31, 2001
--------------- -----------------
(unaudited)
Land $ 41,129 $ 41,114
Buildings and improvements 359,293 359,024
Furniture and equipment 44,769 44,376
--------------- ---------------
Operating properties 445,191 444,514
Less accumulated depreciation 101,306 96,343
--------------- ---------------
343,885 348,171
Properties under development 1,800 1,916
--------------- ---------------
Net investment in hotel
properties 345,685 350,087
Corporate FF&E, net 952 1,033
Cash 156 887
Lease revenue receivable 6,407 4,786
Notes receivable 3,266 3,516
Investment in joint ventures 8,067 8,173
Deferred expenses, net 3,277 3,405
Prepaid expenses and other assets 5,395 5,017
--------------- ---------------
Total assets $ 373,205 $ 376,904
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt $ 67,374 $ 67,684
Due to banks 81,500 102,900
Deferred percentage lease revenue 3,911 1,226
Accounts payable and accrued
expenses 5,178 8,175
Distributions payable 4,885 4,468
Minority interest in Partnership 8,260 8,246
--------------- ---------------
Total liabilities 171,108 192,699
--------------- ---------------
Shareholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized,
3,000,000 shares issued and
outstanding (liquidation preference
of $76,734) 30 30
Common stock, $.01 par value,
50,000,000 shares authorized,
19,707,534 and 16,924,533 shares
issued and outstanding 197 169
Additional paid-in capital 253,311 230,109
Unearned compensation (659) (542)
Accumulated other comprehensive
income (loss) (1,281) (1,844)
Distributions in excess of
earnings (49,501) (43,717)
--------------- ---------------
Total shareholders' equity 202,097 184,205
--------------- ---------------
Total liabilities and
shareholders'equity $ 373,205 $ 376,904
=============== ===============
WINSTON HOTELS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Three Months
Ended Ended
March 31, March 31,
2002 2001
-------------- --------------
Revenue:
Percentage lease revenue $ 9,863 $ 9,695
Interest, joint venture and
other income 359 459
-------------- --------------
Total revenue 10,222 10,154
Expenses:
Real estate taxes and property and
casualty insurance 1,886 1,977
General and administrative 1,555 1,391
Interest 2,832 3,219
Depreciation 5,048 5,291
Amortization 199 236
-------------- -------------
Total expenses 11,520 12,114
Loss before allocation to
minority interest (1,298) (1,960)
Loss allocation to minority interest (204) (263)
-------------- -------------
Net loss (1,094) (1,697)
Preferred stock distribution (1,734) (1,734)
-------------- -------------
Net loss applicable to common
shareholders $ (2,828) $ (3,431)
============== =============
Earnings per share:
Net loss per common share $ (0.16) $ (0.20)
=============== =============
Net loss per common share
assuming dilution $ (0.16) $ (0.20)
=============== =============
Weighted average number of
common shares 17,171 16,926
Weighted average number of
common shares assuming
dilution 18,470 18,225
WINSTON HOTELS, INC.
CALCULATION OF FFO AND EBITDA
(in thousands, except per share data)
For the Quarter Ended
March 31,
2002 2001
-------------------------------
Funds from operations: (unaudited) (unaudited)
Net Loss $ (1,094) $ (1,697)
Minority interest allocation (204) (263)
Preferred stock dividend (1,734) (1,734)
Depreciation 5,048 5,291
Depreciation from joint ventures 184 118
Deferred revenue 2,685 5,208
Deferred revenue from joint ventures 158 68
Loss on sale of property - -
-------------------------------
Funds from operations $ 5,043 $ 6,991
===============================
Weighted average common shares
assuming dilution 18,470 18,225
-------------------------------
FFO per share $ 0.27 $ 0.38
===============================
Earnings before interest, taxes, depreciation
and amortization (EBITDA):
FFO $ 5,043 $ 6,991
Interest expense 2,832 3,219
Interest expense from joint ventures 148 157
Amortization 199 236
Dividend on preferred stock 1,734 1,734
-------------------------------
EBITDA $ 9,956 $ 12,337
===============================
Winston Hotels, Inc.
RevPAR Results for 1st Quarter
50 Hotels Reporting
# of
Hotels 2002 2001 %Change
----------------------------------------------------------------------
All Hotels 50 $49.28 $54.44 -9.5%
----------------------------------------------------------------------
Comfort Inn/Suites &
Quality Suites 10 $35.70 $37.94 -5.9%
Courtyard, Fairfield Inn &
Residence Inn 6 $51.50 $57.77 -10.9%
Hampton Inn/Suites 18 $46.83 $51.75 -9.5%
Hilton Garden Inns 4 $64.00 $66.29 -3.5%
Holiday Inn/Express/Select 5 $49.46 $60.84 -18.7%
Homewood Suites 7 $67.84 $74.24 -8.6%
----------------------------------------------------------------------
All Brands 50 $49.28 $54.44 -9.5%
----------------------------------------------------------------------
East North Central 2 $54.95 $57.82 -5.0%
Mountain 3 $54.77 $71.97 -23.9%
South Atlantic 36 $45.33 $49.39 -8.2%
West South Central 3 $46.30 $51.53 -10.1%
New England 2 $57.42 $57.71 -0.5%
Middle Atlantic 4 $71.10 $79.49 -10.6%
----------------------------------------------------------------------
All Regions 50 $49.28 $54.44 -9.5%
----------------------------------------------------------------------
Mid-scale w/ F&B 3 $65.66 $69.43 -5.4%
Mid-scale w/o F&B 29 $41.11 $45.92 -10.5%
Upscale 18 $58.03 $64.00 -9.3%
----------------------------------------------------------------------
All Segments 50 $49.28 $54.44 -9.5%
----------------------------------------------------------------------
Limited-service 29 $41.11 $45.92 -10.5%
Full-Service 12 $56.39 $60.17 -6.3%
Extended-stay 9 $64.45 $73.35 -12.1%
----------------------------------------------------------------------
All Service 50 $49.28 $54.44 -9.5%
----------------------------------------------------------------------
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Contact:
Winston Hotels Inc., Raleigh
Patti L. Bell, 919/510-8003; Pbell@winstonhotels.com