Press Release: Boykin Lodging Company
May 15, 2002
CLEVELAND, OH -- Boykin Lodging Company (NYSE: BOY), a hotel real estate investment trust, yesterday announced
financial results for the three-month period ended March 31, 2002.
For the first quarter, funds from operations (FFO) of $4.8 million, or $0.24 per fully-diluted share, exceeded
the consensus of analysts' estimates and was in line with the Company's guidance. Cost controls initiated at the
Company's properties after September 11th, combined with the January 1, 2002 implementation of a Taxable REIT Subsidiary
(TRS) structure, which allows the Company to participate more directly in cost reduction, contributed to these
results.
The implementation of the TRS structure at the start of this year has resulted in a significant change in the basis
of presentation of the financial statements of the Company. The revenues and expenses of the Company now reflect
the operating revenues and expenses of the consolidated properties operated by a TRS, whereas prior to 2002, the
revenues of the Company reflected only the lease income from these properties payable to the Company. Due to this
significant change in presentation, for ease of comparison the results of the first quarter 2001 are presented
in this release on a pro forma basis as if the TRS structure was implemented on January 1, 2001.
The Company's FFO per share declined to $0.24 compared to the Company's FFO per share of $0.38 for the pro forma
first quarter 2001.
Revenues for the three months ended March 31, 2002 were $60.7 million, compared to pro forma revenues of $66.5
million for the first quarter of last year. Revenue per available room (RevPAR) for all 33 hotels declined 16.0%
to $50.21 from last year's $59.78, as occupancy fell seven points to 54.9% from 62.1%. The average daily room rate
declined 5.0% to $91.44 from $96.24. Excluding the Chicago, Illinois and Meadowlands, New Jersey properties, both
of which were undergoing major renovations during the first quarter of 2002, the RevPAR decline was 13.8%. Renovation
activities at these two properties and the Buffalo Marriott resulted in 20,500 room nights out of service, or 2.5%
of the Company's room inventory for the quarter. Last year during the first quarter 10,000 room nights were out
of service.
Gross operating profit after management fees at the properties under the TRS structure averaged 25.4% for the 2002
first quarter, compared to 25.7% on a pro forma basis for the previous year. EBITDA for the quarter, including
the Company's share of EBITDA from unconsolidated joint venture subsidiaries, totaled $10.7 million, a 23.2% decrease
from last year first quarter pro forma of $13.9 million. Corporate general and administrative expenses for the
quarter included non-recurring charges of $0.5 million.
The Company posted a net loss of $1.9 million, or $0.11 per share, compared to last year's first quarter pro forma
break-even results.
"The first quarter continued to be a challenging time in the hotel sector, but our decline in RevPAR of 16.0%
was within the range of guidance we gave in February," commented Robert W. Boykin, Chairman and Chief Executive
Officer. "Compared to the overall lodging market and upper-upscale segments, when you exclude the results
of our two major renovation properties, our RevPAR decline of 13.8% was in line with the positioning of our hotels
in their respective markets. RevPAR for the quarter was significantly impacted by the results at our Berkeley property,
which posted a 32% RevPAR decline, as the Bay Area lodging market continued to suffer. Excluding Berkeley and the
two major renovation properties, our RevPAR decline would have been 12.5%."
"During the quarter, we completed the renovation and brand conversion of the Meadowlands property to a Courtyard
by Marriott, and are pleased with its recent performance. We also completed a guestroom renovation of the Buffalo
Marriott. The renovation of the Chicago Executive Plaza, to be renamed 'Hotel 71,' is proceeding on schedule for
a September completion. In addition, we sold 15 Sanibel View Villas condominium units at our Pink Shell Beach Resort
netting proceeds of over $3.0 million, which was in excess of the renovation cost of the entire 60-unit building."
Mr. Boykin continued, "For the second quarter we expect the RevPAR decline to lessen to a range of 10% to
12% lower than the same period last year, and we remain guardedly optimistic that a recovery will begin in the
second half of this year. As a result, we continue to predict that the full-year RevPAR comparisons could be flat
to off 5% compared with 2001. As a result, we now expect our FFO could range between $0.45 and $0.53 per fully-diluted
share in the second quarter and $1.45 and $1.75 per share for the full year."
During the quarter, the Company completed an amendment to the terms of its secured credit facility which included
reducing the stated commitment amount to $65 million to better align the capacity with loan-to-value limitations,
thus reducing the payment of non-use fees. The financial covenants of the facility were amended through its July
2003 maturity date and the interest rate ranges between 2.25% to 4.00% over LIBOR. Additionally, the Company renegotiated
the terms of its $45 million term-loan agreement, obtaining financial covenants consistent with its amended secured
credit facility. The term loan bears interest at 2.00% to 4.00% over LIBOR. While this loan matures in October
2002, the Company has the right to extend the maturity date to July 2003.
The Company held a conference call with financial analysts to discuss the first-quarter results at 2:00 p.m. eastern
time yesterday, May 14, 2002. A live webcast of the call can be heard on the Internet by visiting the Company's
website at www.boykinlodging.com and clicking on the investor relations
page or by visiting other websites that provide links to corporate webcasts.
Boykin Lodging Company is a real estate investment trust that focuses on the ownership of full-service, upscale
commercial and resort hotels. The Company currently owns 33 hotels containing a total of 9,257 rooms located in
nineteen states, and operating under such internationally known brands as Doubletree, Marriott, Hilton, Radisson,
Embassy Suites, and Courtyard by Marriott among others. For more information about Boykin Lodging Company, visit
the Company's web site at www.boykinlodging.com .
This news release contains "forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 regarding the Company, including those statements regarding the Company's and management's
beliefs and expectations concerning the expected benefits from the new TRS structure, Company's future performance
or anticipated financial results, among others. Except for historical information, the matters discussed in this
release are forward-looking statements that involve risks and uncertainties that may cause results to differ materially
from those set forth in those statements. Among other things, factors that could cause actual results to differ
materially from those expressed in such forward-looking statements include financial performance, real estate conditions,
execution of hotel acquisition programs, changes in local or national economic conditions, and other similar variables
and other matters disclosed in the Company's filings with the SEC, which can be found on the SEC's website at http://www.sec.gov .
BOYKIN LODGING COMPANY
STATEMENTS OF INCOME and FUNDS FROM OPERATIONS
(Unaudited, amounts in thousands)
For the Three Months
Ended March 31,
OPERATING DATA: 2002 2001(a)
Revenues:
Hotel revenues:
Rooms $37,063 $43,075
Food and beverage 16,141 18,071
Other 2,947 3,380
Total hotel revenues 56,151 64,526
Percentage lease revenue 1,283 1,287
Sales of condominium units 3,046 --
Interest and other income 247 722
Total revenues 60,727 66,535
Expenses:
Hotel departmental operating expenses:
Rooms 9,101 10,762
Food and beverage 11,735 12,969
Other 1,836 1,904
General and administrative 5,937 6,740
Marketing and franchise costs 5,859 6,473
Utilities and maintenance 5,865 6,291
Management Fees - related party 848 971
Management Fees - third party 735 867
Deferred incentive management fee -- 958
Property taxes, insurance and other 3,801 3,477
Cost of condominium units sold 2,257 --
Real estate related depreciation & amortization 7,018 7,028
Corporate general and administrative 2,015 1,438
Interest expense 4,977 5,822
Interest expense - amortization of financing costs 514 300
Total expenses 62,498 66,000
Equity loss of unconsolidated joint ventures (636) (318)
Income (loss) before gain on sale of assets,
minority interest and one-time effect of
change in accounting principle (2,407) 217
Gain on sale of assets - 240
Minority interest 462 (86)
Income (loss) before one-time effect of change
in accounting principle (1,945) 371
One-time effect of change in accounting principle,
net of minority interest of $32 (b) - (373)
Net loss $(1,945) $(2)
FUNDS FROM OPERATIONS (FFO) and EBITDA:
Net loss $(1,945) $(2)
Deferred percentage lease revenue 19 232
Real estate related depreciation and amortization 7,018 7,028
Minority interest (462) 86
Gain on sale of assets - (240)
One-time effect of change in accounting principle - 373
Equity loss of unconsolidated joint ventures 636 318
FFO adjustment related to joint ventures (438) (157)
Funds from operations $4,828 $7,638
EBITDA (c) $10,650 $13,861
(c) Includes Boykin's share of EBITDA from unconsolidated joint ventures and adds back deferred percentage lease revenue
BOYKIN LODGING COMPANY
PER SHARE/UNIT DATA
(Unaudited, shares and units outstanding in thousands)
For the Three Months
Ended March 31,
PER SHARE/UNIT DATA: 2002 2001(a)
Income (loss) before one-time effect of change
in accounting principle:
Basic $(0.11) $0.02
Diluted $(0.11) $0.02
Net loss per share:
Basic $(0.11) $0.00
Diluted $(0.11) $0.00
Weighted average common shares outstanding:
Basic 17,218 17,161
Diluted 17,294 17,191
FFO per share/unit:
Basic $0.24 $0.38
Diluted $0.24 $0.38
Weighted average common shares and units
outstanding:
Basic 19,937 19,880
Diluted 20,013 19,909
(a) For comparative purposes, the results and per share/unit data for the three months ended March 31, 2001 are
presented on a pro forma basis assuming that the acquisition of the 28 leasehold interests from Boykin Management
Company and Meristar Hotels & Resorts that were converted to management contracts on January 1, 2002 had occurred
on January 1, 2001.
BOYKIN LODGING COMPANY
SELECTED HOTEL STATISTICS and BALANCE SHEET INFORMATION
(Unaudited, amounts in thousands except statistical data)
For the Three Months
Ended March 31,
HOTEL STATISTICS: 2002 2001
All Hotels (33 hotels) (a)
Hotel revenues $62,618 $73,338
RevPAR $50.21 $59.78
Occupancy 54.9% 62.1%
Average daily rate $91.44 $96.24
Comparable Hotels (32 hotels) (b)
Hotel revenues $62,017 $71,986
RevPAR $50.78 $59.87
Occupancy 55.6% 62.2%
Average daily rate $91.27 $96.26
(a) Includes all hotels owned by Boykin at the end of the quarter, including predecessors' results.
(b) Includes hotels owned by Boykin in both periods.
SELECTED BALANCE SHEET INFORMATION: March 31, December 31,
2002 2001
Assets
Investment in hotel properties, net $506,546 $520,484
Cash and cash equivalents
including restricted cash 22,995 13,033
Accounts receivable 10,092 3,467
Investment in unconsolidated joint ventures 15,930 14,973
Other assets 19,508 7,261
Total Assets $575,071 $559,218
Liabilities and Shareholders' Equity
Outstanding debt $319,881 $318,971
Accounts payable and accrued expenses 35,533 19,250
Minority interest 17,718 18,351
Shareholders' equity 201,939 202,646
Total Liabilities and Shareholders' Equity $575,071 $559,218
SOURCE: Boykin Lodging Company