Press Release: Boykin Lodging Company
August 3, 2000
CLEVELAND, OH -- Boykin Lodging Company (NYSE: BOY), a hotel real estate investment trust, today reported funds
from operations (FFO) of 76 cents per share for its second quarter, in line with the consensus estimate, but indicated
that it expected lower than projected results in the second half of the year. The company also announced that it
intends to revise its future quarterly cash dividend to $0.365 per share from $0.47 per share, which would mean
an annual dividend rate of $1.46 per share.
``We were pleased to meet the consensus estimates in the second quarter and with the closing of our recent $208
million refinancing,'' said Robert W. Boykin, chairman, president and chief executive officer. ``As we have mentioned
in the past, however, new hotel construction has concerned us in certain of our markets. In the second quarter,
room revenues per available room (REVPAR) in a number of our hotels in North Carolina, Colorado Springs and Portland,
representing about 14% of our portfolio, declined 12.8%, largely due to new hotel competition. The positive performance
of the company's other properties offset this decline, but not enough for us to reach our expectations. Because
of these factors, we now expect REVPAR growth for 2000 of one to two percent.
``Within the last two weeks we announced that we negotiated new credit facilities to lengthen the average maturity
of our debt, limit our variable- rate debt exposure, strengthen our balance sheet, and increase our operational
flexibility,'' Mr. Boykin said. ``We are pleased with the terms even though they had to be negotiated in a time
of higher interest rates and our interest expense going forward will be higher.''
``As a result of higher interest costs and lower percentage lease revenues resulting from lower REVPAR expectations,
we now expect FFO for the year to be within a range of $2.41 to $2.46 per share, which falls short of our original
expectations by six to eight percent,'' Mr. Boykin added.
``This naturally raises a question about our dividend,'' Mr. Boykin said. ``In the current capital-constrained
real estate environment, we believe it is critical to retain sufficient capital to keep our properties in excellent
competitive condition. While we continue to view ourselves as an income- oriented lodging company, we think it
unwise to borrow money to maintain the current dividend level. Management therefore recommended that the Board
adjust the next quarterly dividend payment downward to a level of approximately 85% of Funds Available for Distribution,
which is consistent with the payout ratios of other companies in our peer group. The Board approved this approach
and stated its intention to declare dividends at an initial annual rate of $1.46 per share. This payout level should
allow us to reinvest enough into our business to grow appropriately and maintain a consistent dividend payment
until earnings again support a higher level.''
``While we are not pleased in taking this step, we believe it is prudent,'' added Mr. Boykin. ``We need to manage
interest rate and REVPAR fluctuations while we continue our repositioning and renovation growth strategy and take
advantage of expansion and other internal growth opportunities that will create significant long-term value.''
Second-quarter highlights:
For the three months that ended June 30, 2000, FFO reached $14.1 million versus $14.0 million reported for the
same period last year. The second- quarter FFO per share was $0.76 for both years.
Percentage lease revenue for the second quarter of 2000 decreased 1.7 percent to $23.5 million from $23.9 million
for the second quarter of 1999.
On a same-unit basis, total hotel revenues increased 0.7 percent to $85.9 million from $85.3 million a year ago.
REVPAR increased 0.6 percent to $68.99 from $68.58 last year. Occupancy during the second quarter of 2000 was down
2.6 percent to 71.4 percent from 73.3 percent, while the average daily rate increased to $96.65 from $93.61.
Net income for the 2000 second quarter was $6.2 million, or $0.36 per diluted share, compared to $6.5 million,
or $0.38 per share, for the same period in 1999.
Through the first six months of 2000, FFO was up 0.6 percent to $24.3 million from $24.1 million, or $1.31 per
diluted share/unit for both years. Percentage lease revenues for the six-month period were $43.5 million for 2000
and $43.2 million for 1999.
On a same-unit basis, REVPAR for the first half of 2000 was $64.22 compared with $63.14 for the first half of last
year. Occupancy through the six-month period was 67.3 percent for 2000, compared with 67.8 percent for 1999. Average
daily rate increased to $95.49 from $93.19.
The first-half net income was $8.8 million, or $0.51 per diluted share, for 2000 and $9.4 million, or $0.55 per
share, for 1999.
Boykin Lodging Company is a real estate investment trust that currently owns interests in 32 full-service, upscale
commercial and resort hotels containing a total of 9,110 rooms located in California, Colorado, Florida, Idaho,
Illinois, Indiana, Maryland, Minnesota, Missouri, Nebraska, New York, New Jersey, North Carolina, Ohio, Oregon,
Tennessee, and Washington.
This release contains forward-looking statements. Although the company believes its business plans are based upon
reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause
actual results to differ materially from the company's expectations include financial performance, real estate
conditions, execution of hotel acquisition programs, changes in local or national economic conditions, and other
similar variables.
(Tables follow)
BOYKIN LODGING COMPANY
STATEMENTS OF INCOME and FUNDS FROM OPERATIONS
ALONG WITH HOTEL STATISTICS AND SELECTED BALANCE SHEET INFORMATION
(Unaudited, amounts in thousands, except per share and statistical data)
For the three months ended For the six months ended
June 30, June 30,
2000 1999 2000 1999
OPERATING DATA:
Revenues:
Percentage
lease
revenue $23,457 $23,852 $43,523 $43,246
Revenues related
to hotel
operations 2,006 - 3,264 -
Interest and
other income 183 95 346 163
Total
revenues 25,646 23,947 47,133 43,409
Expenses:
Real estate
related
depreciation &
amortization 7,423 7,107 15,208 14,247
Property taxes,
insurance &
ground rent 2,608 2,873 5,275 5,470
General &
administrative 1,339 1,575 2,894 3,002
Expenses related
to hotel
operations 1,471 - 2,497 -
Interest expense 5,816 5,005 11,401 9,983
Interest expense
- amortization of
financing costs 267 159 534 318
Gain on property
insurance recovery - - (407) -
Minority interest 610 697 847 976
Total expenses
and minority
interest 19,534 17,416 38,249 33,996
Equity income (loss)
of unconsolidated
joint venture 67 - (48) -
Net income $6,179 $6,531 $8,836 $9,413
FUNDS FROM OPERATIONS (FFO):
Net income $6,179 $6,531 $8,836 $9,413
Real estate
related
depreciation
and amortization 7,423 7,107 15,208 14,247
Gain on property
insurance recovery - - (407) -
Minority interest 610 697 847 976
Equity (income) loss
of unconsolidated
joint venture (67) - 48 -
FFO adjustment related
to joint ventures (74) (316) (258) (515)
Funds from operations $14,071 $14,019 $24,274 $24,121
PER SHARE/UNIT DATA:
Net income per share:
Basic $0.36 $0.38 $0.52 $0.55
Diluted $0.36 $0.38 $0.51 $0.55
Weighted average common shares outstanding:
Basic 17,135 17,082 17,131 17,065
Diluted 17,318 17,082 17,310 17,065
FFO per share/unit:
Basic $0.76 $0.76 $1.32 $1.31
Diluted $0.76 $0.76 $1.31 $1.31
Weighted average common shares and units outstanding:
Basic 18,426 18,374 18,422 18,356
Diluted 18,609 18,374 18,601 18,356
HOTEL STATISTICS: For the three months ended For the six months ended
June 30, June 30,
2000 1999 2000 1999
Boykin's share
of hotel revenues $80,947 $79,508 $152,040 $147,195
All Hotels (32 hotels) (a)
Hotel revenues $85,942 $85,346 $160,005 $157,494
REVPAR $68.99 $68.58 $64.22 $63.14
Occupancy 71.4% 73.3% 67.3% 67.8%
Average daily rate $96.65 $93.61 $95.49 $93.19
Initial Hotels (9 hotels)
Hotel revenues $24,752 $24,744 $47,113 $46,024
REVPAR $76.91 $77.41 $73.62 $72.45
Occupancy 74.0% 77.8% 71.8% 74.0%
Average daily rate $103.97 $99.46 $102.47 $97.87
Acquired Hotels (13 hotels) (a) (b)
Hotel revenues $32,749 $31,431 $59,087 $56,773
REVPAR $68.33 $65.04 $62.74 $60.24
Occupancy 68.0% 67.8% 62.7% 62.1%
Average daily rate $100.50 $95.93 $100.11 $97.02
DoubleTree Portfolio (10 hotels)
Hotel revenues $28,441 $29,170 $53,805 $54,697
REVPAR $63.55 $65.83 $58.58 $59.27
Occupancy 73.4% 76.1% 69.1% 69.5%
Average daily rate $86.63 $86.47 $84.82 $85.22
(a) Includes predecessors' results.
(b) Represents the operating results of hotels acquired by Boykin since
its IPO, other than the DoubleTree portfolio.
SELECTED BALANCE SHEET INFORMATION: June 30, 2000 December 31, 1999
Total assets $606,532 $606,103
Total debt $300,862 $294,000
Total shareholders' equity $266,690 $273,730
Cash and cash equivalents including
cash restricted for payment of taxes,
insurance, and capital expenditures $8,156 $7,543
SOURCE: Boykin Lodging Company