Winston Hotels` FFO Exceeds Analysts` Consensus For 2001 Fourth Quarter And Year End Results

Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust and owner of premium limited- service, high-end extended-stay and full-service hotels, today announced results for the fourth quarter and year ended December 31, 2001. FFO totaled $3.7 million for the fourth quarter of 2001 as compared to $6.5 million for the fourth quarter of 2000. On a per share basis, FFO for the fourth quarter of 2001 totaled $0.21 on 18.2 million weighted average shares outstanding compared to $0.36 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 $10.8 million for the fourth quarter of 2001 as compared to $13.5 million for the fourth quarter of 2000.
Bob Winston, Chief Executive Officer, commented: “We are pleased by the fact that we not only exceeded the upper end of our estimated FFO range, as stated in our November press release, but also we exceeded analysts` consensus estimate by three cents per share. When compared to other lodging REITs and industry data, our results were very positive. Our shareholders reaped the benefits of our stable portfolio and excellent balance sheet, as Winston posted a 22% total return to common shareholders based on stock prices at the beginning and end of the year and including dividend payments.” This total return compares favorably to the negative 8% return for the NAREIT Lodging Index, negative 12% for the S&P 500 and negative 21% for the NASDAQ.
Also, according to information compiled by Cohen & Steers Capital Advisors LLC based upon data obtained from Bloomberg L.P., Winston ranked first, second and second in total return to common shareholders over the past one, three and five years, respectively, among other traditional hotel REITs. “We believe that this information validates our strategy of owning hotels in the best performing segments, midscale without food and beverage and upscale,” Winston continued.

Winston Hotels President & Chief Operating Officer, James D. Rosenberg, commented on the fourth quarter and year end results:

“For the quarter, RevPar decreased 11% compared to an industry decrease of 16%, and for the year our RevPar decreased 4% compared to an industry decrease of 7%. We believe that these results, combined with our conservative balance sheet and well-maintained hotels, position the Company to produce positive results and to continue to pay an excellent dividend.”

Winston`s financial strength remains strong as evidenced by the following:

* Our total debt to EBITDA multiple was 3.6 for the year.
* Our consolidated debt to total assets at cost was 36% as of December
    31, 2001.
* Our annual interest coverage ratio multiple was 3.7.
* We amended and restated our line of credit effective December 19, 2001,
    despite the industry turmoil.  Our new three-year $125 million line of
    credit bears interest at rates from LIBOR plus 1.75% to LIBOR plus
    2.50%, based on the Company`s leverage ratio.
* We are now, and have been, in full compliance with all of our debt
* We have spent approximately $45 million on our hotels over the last 4
    years, which represents approximately 8.7% of room revenues and is
    significantly above industry benchmarks.
* Based on information provided by Smith Travel Research, the 2001 RevPar
    yield for our entire portfolio exceeded 106%.
* Our portfolio generated an unleveraged return on assets of 11.1% for
    the year.


Dividend Performance:
During the fourth quarter, the Company declared a cash dividend of $0.15 per common share. The dividend was paid on January 16, 2002 to shareholders of record on December 31, 2001. The Company reduced its regular quarterly dividend from $0.28 to $0.15 per common share in the fourth quarter primarily due to a weak economy, which was further negatively impacted by the events of September 11, 2001. We believe that we can continue to pay a quarterly dividend per common share throughout 2002 of $0.15 to $0.20 and $0.578125 per preferred share, barring any further economic crises or catastrophic events. Moreover, as conditions permit, the Board intends to monitor the Company`s dividend policy closely and act accordingly as earnings dictate. The Company`s FFO payout ratio should continue to be among the lowest in the industry. We anticipate that this dividend policy will provide the REIT with additional cash flow for potential investments, debt reduction and capital expenditure needs.