Winston Hotels, Inc., (NYSE: WXH), a real estate investment trust and owner of premium limited-service, high-end extended-stay and full-service hotels, this week 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.
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:
—Executed a Common Stock offering, selling 3,162,500 shares for cash proceeds of $26.9 million.—Total debt to EBITDA multiple was 3.3 on a trailing 12-month basis.—Our annual interest coverage ratio multiple was 3.6 on a trailing 12-month basis.—Closed the quarter with consolidated debt to total assets at cost with 33%.—Generated an unleveraged return on assets of 11.4%. This return is derived by dividing lease revenue less property taxes and insurance by gross book value.—Lowest consolidated debt levels for the Company in four years.—Based on information provided by Smith Travel Research, the first quarter 2002 RevPar yield for our entire portfolio was 107%.—Opened a 152-room Hilton Garden Inn in Tampa, FL, which we developed for and for which we provided $2.2 million in mezzanine debt to a third party.

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.

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.
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.

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 is scheduled for 10 a.m. EST on May 6, 2002. 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 30 days, or via the telephone by dialing 800-475-6701, access code 636176.

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.

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