Press Release: Winston Hotels, Inc.
August 8, 2001
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 second quarter and six months
ended June 30, 2001. FFO totaled $9.1 million for the second quarter of 2001 as compared to $9.3 million for the
second quarter of 2000. On a per share basis, FFO for the second quarter of 2001 totaled $0.50 on 18.2 million
weighted average shares outstanding compared to $0.51 on 18.2 million weighted average shares outstanding for the
same quarter a year ago. Lease revenue prior to the adoption of SAB 101 totaled $16.0 million the second quarter
of 2001 as compared to $17.4 million for the second quarter of 2000.
Summary of Second Quarter and YTD 2001 Unaudited Financial Highlights
($ in thousands, except per share amounts)
For the Quarter Ended June 30, For the Six Months Ended June 30,
2001 2000 Change 2001 2000 Change
Percentage
Lease Revenue
Pre-SAB 101 $16,021 $17,350 (7.7)% $30,924 $32,269 (4.2)%
Deferred
Lease
Revenue $ 5,555 $ 6,776 (18.0)% $10,763 $12,045 (10.6)%
Percentage
Lease
Revenue $10,466 $10,574 (1.0)% $20,161 $20,224 (0.3)%
Interest,
Joint
Venture
and Other
Income $ 856 $ 191 348.2 % $ 1,315 $ 349 276.8 %
FFO $9,118 $9,262 (1.6)% $16,108 $15,883 1.4 %
FFO Per
Diluted
Common Share $ 0.50 $ 0.51 (2.0)% $ 0.88 $ 0.87 1.1 %
Bob Winston, Chief Executive Officer, commented: ``Although we are not satisfied with our second quarter results,
we are pleased that our portfolio has maintained steady results in these very difficult times and that year to
date we have exceeded the prior year's comparable period FFO results. We also are pleased with the contribution
to earnings from revenue sources other than percentage lease revenue, including earnings from joint ventures, interest
from mezzanine loans and development services fee income.
``We are continuing to sell older hotels and using the proceeds to reduce debt and to invest in new, premium, upscale
properties. We recently announced the sale of the Raleigh Comfort Inn and the opening of the Hilton Garden Inn
in Evanston, Illinois, which is owned and operated under a joint venture agreement with Regent Partners, Inc.''
Winston Hotels President & Chief Operating Officer, James D. Rosenberg commented on the second quarter highlights:
* On a per share basis, FFO for the quarter totaled $0.50, which compares
to $0.51 in the prior year, and consensus analysts' and Company
expectations of $0.52.
* RevPar decreased 2.4% for the quarter, compared to a 3.7% decrease for
the industry.
* Our core brands, including Hampton Inn, Hilton Garden Inn and Homewood
Suites all experienced positive RevPar growth for the quarter and year
to date.
* Based on information provided by Smith Travel Research, the year to date
RevPar yield for our entire portfolio exceeded 105%.
* The decrease in percentage lease revenue, which resulted from the
decrease in RevPar, was partially offset by earnings from development
fees, joint ventures, and interest income on mezzanine loans. In
addition, through cost cutting efforts, the Company was able to reduce
G&A expenses, and interest expense decreased as a result of falling
interest rates.
* Sold Comfort Inn hotel in Raleigh, NC.
* We have now sold three hotels, and invested in three new, upscale,
premium branded properties.
* Closed the quarter with consolidated debt to total assets at cost at
36%, down from 37% as of March 31, 2001.
* Fixed rate debt at 7.37% totaled approximately 70% of our outstanding
debt.
* Weighted average interest rate for the quarter equaled 6.7%.
* Generated an unleveraged return on assets of 12.3%.
* Year to date return to common shareholders of 38.4% based on our stock
price at the beginning of the year through August 6, 2001 and including
our dividend payments.
Operating Statistics
For the 48 hotels that were open during the entire quarters ended June 30, 2001 and June 30, 2000, 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 June 30,
2001 2000 % Change
Lease Revenues* $16,021 $17,086 (6.2)
Average Daily Rate $ 83.50 $ 79.44 5.1
Occupancy 70.12% 75.49% (7.1)
Rev PAR $ 58.55 $ 59.97 (2.4)
(*Pre SAB 101, $ in thousands)
The Company's portfolio at June 30, 2001 included an aggregate total of 48 operating hotels with 6,574 rooms in
12 states, as well as a 49% ownership interest in 3 other operating hotels with 454 rooms. Additionally, the Company
has provided mezzanine financing to a third party for the development and construction of a Hilton Garden Inn hotel
in Atlanta, which opened in April of this year, and a Hilton Garden Inn Hotel in Tampa, which is scheduled to open
in May, 2002.
Outlook for Remainder of 2001
We are adjusting our guidance on FFO per share to $1.64 to $1.71 for the year based upon our revised projected
changes in RevPar of -3% to 0% for the remainder of the year. We also are revising our projected FFO per share
for the third and fourth quarters of 2001 to $0.45 to $0.49 per share and $0.31 to $0.34 per share, respectively.
At the low end of this range, our FFO payout ratio would be 68%. We feel comfortable with our current annual dividend
of $1.12 per share.
Dividend Performance
During the second quarter, Winston Hotels declared a cash dividend of $0.28 per common share. The cash dividend
was paid on July 16, 2001 to shareholders of record on June 29, 2001. The regular quarterly dividend is equivalent
to $1.12 on an annualized basis. Also in the second 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 July 16, 2001 to shareholders
of record on June 29, 2001.
Winston Hotels' second quarter investor conference call was scheduled for 10 a.m. EST on August 7, 2001. This call
also will be 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 7 days, or via the telephone by dialing 800-475-6701,
access code 595456.
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 48 operating hotels with 6,574 rooms in 12 states, as well as a 49% ownership interest in
3 other operating hotels with 454 rooms. Additionally, the Company has provided mezzanine financing to a third
party for the development and construction of a Hilton Garden Inn hotel in Atlanta, which opened in April of this
year, and a Hilton Garden Inn Hotel in Tampa, which is scheduled to open in May, 2002.
Forward-Looking Statements
This 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 estimated FFO per share in 2001 for the year and by quarter, and expected RevPar decline
for 2001. You can identify these statements by use of words like ``guidance,'' ``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, and the risk of non-payment of mezzanine loans. 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, call Patti Bell, Investor Relations Manager of Winston Hotels, Inc., at (919) 510-8003.
For more information on Winston Hotels visit the Winston Hotels page at www.winstonhotels.com
WINSTON HOTELS, INC.
CALCULATION OF FFO AND EBITDA
(in thousands, except per share data)
For the Quarter Ended For the Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Funds From
Operations (FFO): (unaudited) (unaudited) (unaudited) (unaudited)
Net loss $ (612) $ (856) $ (2,309) $ (3,658)
Loss allocated to
minority interest (180) (199) (443) (547)
Preferred stock
distribution (1,734) (1,734) (3,469) (3,469)
Depreciation 5,244 5,275 10,535 10,536
Deferred revenue 5,555 6,776 10,763 12,759
Depreciation from
joint ventures 95 -- 212 --
Deferred revenue
from joint ventures 68 -- 137 --
Loss on sale of property 682 -- 682 262
Funds from operations $9,118 $ 9,262 $16,108 $15,883
Weighted average
common shares
assuming dilution 18,249 18,194 18,237 18,181
FFO per share $ 0.50 $ 0.51 $ 0.88 $ 0.87
Earnings before interest, taxes, depreciation
and amortization (EBITDA):
FFO $ 9,118 $ 9,262 $16,108 $15,883
Interest expense 3,074 3,326 6,293 6,597
Amortization 231 230 467 457
Preferred stock
distribution 1,734 1,734 3,469 3,469
EBITDA $14,157 $14,552 $26,337 $26,406
WINSTON HOTELS, INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
ASSETS
June 30, 2001 December 31, 2000
(unaudited)
Land $ 41,012 $ 41,948
Buildings and improvements 357,257 361,768
Furniture and equipment 41,824 40,539
Operating properties 440,093 444,255
Less accumulated depreciation 86,258 77,609
353,835 366,646
Properties under development 581 236
Net investment in hotel properties 354,416 366,882
Corporate FF&E, net 1,153 1,285
Cash 706 167
Lease revenue receivable 9,808 7,127
Notes receivable 3,516 1,080
Investment in joint ventures 8,396 8,700
Deferred expenses, net 2,820 3,375
Prepaid expenses and other assets 6,741 5,694
Total assets $387,556 $394,310
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt $ 68,289 $ 68,872
Due to banks 102,500 103,800
Deferred percentage lease revenue 11,262 499
Accounts payable and accrued expenses 7,955 6,220
Distributions payable 6,837 6,829
Minority interest in Partnership 8,121 9,374
Total liabilities $204,964 $195,594
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,
16,925,928 and 16,897,028 shares
issued and outstanding 169 169
Additional paid-in capital 230,088 229,796
Unearned compensation (750) (771)
Accumulated other comprehensive income (1,180) --
Distributions in excess of earnings (45,765) (30,508)
Total shareholders' equity 182,592 198,716
Total liabilities and
shareholders' equity $387,556 $394,310
WINSTON HOTELS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Three Months
Ended Ended
June 30, 2001 June 30, 2000
Revenue:
Percentage lease revenue $10,466 $10,574
Interest, joint venture and other income 856 191
Total revenue 11,322 10,765
Expenses:
Real estate taxes and property and
casualty insurance 1,778 1,705
General and administrative 1,105 1,284
Interest 3,074 3,326
Depreciation 5,244 5,275
Amortization 231 230
Total expenses 11,432 11,820
Loss before loss on sale of property and
allocation to minority interest (110) (1,055)
Loss on sale of property (682) --
Loss before allocation to minority interest (792) (1,055)
Loss allocation to minority interest (180) (199)
Net loss (612) (856)
Preferred stock distribution (1,734) (1,734)
Net loss applicable to common shareholders $(2,346) $(2,590)
Earnings per share:
Net loss per common share $ (0.14) $ (0.15)
Net loss per common share assuming dilution $ (0.14) $ (0.15)
Weighted average number of common shares 16,926 16,896
Weighted average number of common shares
assuming dilution 18,249 18,194
WINSTON HOTELS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Six Months Six Months
Ended Ended
June 30, 2001 June 30, 2000
Revenue:
Percentage lease revenue $20,161 $ 20,224
Interest, joint venture and other income 1,315 349
Total revenue 21,476 20,573
Expenses:
Real estate taxes and property and casualty
insurance 3,754 3,788
General and administrative 2,497 2,419
Interest 6,293 6,597
Depreciation 10,535 10,536
Amortization 467 457
Total expenses 23,546 23,797
Loss before loss on sale of property,
allocation to minority interest, and
cumulative effect of change in accounting
principle (2,070) (3,224)
Loss on sale of property (682) (262)
Loss before allocation to minority interest and
cumulative effect of change in accounting
principle (2,752) (3,486)
Loss allocation to minority interest (443) (496)
Loss before cumulative effect of change in
accounting principle (2,309) (2,990)
Cumulative effect of change in accounting
principle - gross -- (720)
Cumulative effect of change in accounting principle -
allocation to minority interest -- 52
Cumulative effect of change in accounting
principle - net -- (668)
Net loss (2,309) (3,658)
Preferred stock distribution (3,469) (3,469)
Net loss applicable to common shareholders $(5,778) $(7,127)
Earnings per share:
Loss before cumulative effect of change in
accounting principle per common share $ (0.34) $ (0.38)
Loss before cumulative effect of change in accounting
principle per common share assuming dilution $ (0.34) $ (0.38)
Net loss per common share $ (0.34) $ (0.42)
Net loss per common share assuming dilution $ (0.34) $ (0.42)
Weighted average number of common shares 16,926 16,883
Weighted average number of common shares
assuming dilution 18,237 18,181
WINSTON HOTELS, INC.
SECOND QUARTER AND YTD 2001
REVPAR STATISTICAL HIGHLIGHTS
(48 Hotels)
Second Quarter
# of Properties 2001 2000 % Change
Brand
Comfort/QualityInn/Suites 10 $45.61 $49.70 -8.2%
Hampton Inn/Suites 17 57.74 59.35 2.7
Hilton Garden 3 71.90 70.69 1.7
Holiday Inn/Express 5 67.76 68.96 -1.7
Homewood 7 69.04 66.23 4.2
Marriott Products 6 58.08 59.81 -2.9
Geographic
East N/S Central 2 $68.28 $68.82 -0.8%
Northeast/Middle Atlantic 3 45.79 47.13 -2.8
Mountain 5 90.74 86.25 5.2
South Atlantic 35 54.50 56.80 -4.0
West South Central 3 52.10 55.11 -5.5
Segment
Midscale w/f&b 3 $87.35 $88.82 -1.7%
Midscale w/out f&b 28 51.91 53.95 -3.8
Upscale 17 62.60 63.09 -0.8
Service
Extended Stay 9 $63.58 $62.50 1.7%
Full Service 11 68.79 70.48 -2.4
Limited Service 28 51.91 53.95 -3.8
Year to Date
2001 2000 % Change
Brand
Comfort/QualityInn/Suites $41.80 $44.94 -7.0%
Hampton Inn/Suites 54.69 54.23 0.8
Hilton Garden 70.34 68.90 2.1
Holiday Inn/Express 64.32 64.51 -0.3
Homewood 71.64 68.08 5.2
Marriott Products 57.93 58.87 -1.6
Geographic
East N/S Central $63.08 $63.75 -1.1%
Northeast/Middle Atlantic 58.81 58.16 1.1
Mountain 83.27 78.03 6.7
South Atlantic 51.90 52.90 -1.9
West South Central 51.82 53.41 -3.0
Segment
Midscale w/f&b $78.44 $78.81 -0.5%
Midscale w/out f&b 48.79 49.38 -1.2
Upscale 63.46 63.06 0.6
Service
Extended Stay $68.45 $66.07 3.6%
Full Service 64.56 65.55 -1.5
Limited Service 48.79 49.38 -1.2
SOURCE: Winston Hotels, Inc.