Boykin Lodging Company (NYSE: BOY), a hotel real estate investment trust, today announced financial results for the second quarterthirdsecond quarter and ninesix months periods ended SeptemberJune 30, 2002.
For the 2002 thirdsecond quarter of 2002, funds from operations (FFO) of $9.2XX10.X8 million, or $0.46X0.XX54 per fully-diluted share, falls within previous guidance provided by the Company exceeded the consensus of analysts` estimates by __ cents per share.by and the Company`s guidance. The Company attributed its results to a combination of revenues at the high end of its expected range, combined with better than expected marginsWhile corporate business and personal travel continued to be soft during this period, the Company was ale to maintain its profitability because of tight cost controls and the implementation of a Taxable REIT Subsidiary (TRS) structure..Boykin`s 2002 secondthird quarter fully diluted FFO per shareand represents an increasedeclined XXXfrom the pro forma thirdsecond quarter 2001 FFO of $0.45X.XX0.69 per share. . Pro forma results for 2001 are stated as if the acquisition of the leases of 28 of the Company`s properties by a Taxable REIT Subsidiary (TRS) had occurred The implementation of the Taxable REIT Subsidiary (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 results of the consolidated properties operated through a TRS, whereas prior to 2002, the revenues of the Company reflected only the lease income from these properties. Due to this significant change in presentation, for ease of comparison, the results for the three and six month periods ended June 30, 2001 are presented in this release on a pro forma basis as if the TRS structure was implemented onon January 1, 2001.
Effective September 1, the Company implemented the TRS structure at yet another property; therefore, 32 of the Company`s 33 hotels are now operated under this structure. Third quarter and year to date 2002 results include one month of hotel operating results for the property, while comparative pro forma 2001 results include lease revenue for the property.
Revenues for the three months ended SeptemberJune 30, 2002 were $67.9 XX.X68.6 million, compared with pro forma revenues of $66.0XX.X72.4 million recorded infor the same period last year. Revenue per available room (RevPAR) for all 33 hotels declinincreaseed 0.1XX.X10.6% to $60.20XX.XX59.79 from last year`s $60.14XX.XX66.90. , as Ooccupancy fellrose fourone points, to 66.5XX.X64.6% from 65.5XX.X68.8%, while . Tthe average daily room rate declined X.X4.8%1.4%, to $XX.XX90.47 92.58 from $91.80XX.XX97.29. Excluding the Chicago, Illinois property, which continued to is undergowas in the final stages of itsing major renovation during the quarter, s that will continue until the beginning of Septemberinto the third quarter, the RevPAR increase for the quarterdecline was 2.8X.X7.3%. Renovation activities at this property and a small number of rooms at the Meadowlands property, that have been completed, During the thirdsecond quarter, there were resulted in approximately 11,300XX,XXX19,000 room nights out of service related to renovations, or 1.3X.X2.3% of the Company`s room inventory for the quarter. Last year duringFor the same period last year, there were approximately 12,400 room nights, or 1.5% of the Company`s room inventory, out of service the thirdsecond quarter X,XXX3,100 room nights were out of servicedue to renovation activity..
Gross operating profit after management fees averaged 27.8XX.X30.0% for the 2002 secondthird quarter for consolidatedat the properties operated under the TRS structure, averaged 300.0% for the 2002 second quarter, compared towith 26.60XX.X300.02% on afor the pro forma basis for the previous year2001 period. For these properties, Bbased upon the 2.4X.X6.3% increase in related hotel revenues and aan 8.9X.X9.6% deincreasecrease in EBITDA, the flow-through to EBITDA was 3.68X.XX1.52 times.
EBITDA for the Junethirdsecond quarter, including the Company`s share of EBITDA from unconsolidated joint venture subsidiaries, totaled $15.400.0XX.X16.8 million, a 2.9XX.X14.300.0% deincrease from last year`s second third quarter pro forma of $15.000.0XX.X19.6 million.
For the 2002 secondthird quarter of 2002, the Company`s net incomenet income totaled $0.1 million or $.01 per share was $X.X2.9 millionX.XX, down from compared to the same period last year when pro forma net income was just totaledover $1.4X.X5.0 million, or $0.08X.XX0.29 per share and actual net income totaled $1.3 million. Included in the current year results is $1.7 million of additional depreciation related to the acceleration of the depreciable lives of cottages removed from the Pink Shell Beach Resort to make way for the White Sand Villas condominium project .
For the first sixnine months of 2002, FFO of $24.8XX.X15.7 million was below the pro forma $30.3XX.X21.4 million reported for the same period last year. On a fully-diluted basis, the first nine months ofhalf 2002 FFO declined to $1.24X.XX0.78 per share compared with last year`s pro forma FFO of $1.52 per shareX.XX1.07. Revenues for the sixnine months ended JuneSeptember 30, 2002 were $197.4XXX.X129.5 million, compared with pro forma revenues of $205.0XXX.X139.0 million recorded forin the same period last year. RevPAR for the portfolio declined to $56.77XX.XX55.03 from last year`s $62.27XX.XX63.36, as occupancy fell nearly three and a halfsixnine points to 59.8XX.X62.1% from 65.5XX.X65.5%. The average daily room rate declined 4.9X.X3.8% to $92.06XX.XX91.49 from $96.79XX.XX95.11. During the first sixnine months of 2002, the gross operating profit averaged 27.9XX.X27.9%, compared with 28.1XX.X27.6% on a pro forma basis for the previous year. EBITDA, including the Company`s share of EBITDA from unconsolidated joint venture subsidiaries, totaled $27.4XX.X42.8 million; a 17.7XX.X12.5% decrease from last year`s pro forma of $33.349.0 XX.Xmillion. For the first nine months of 2002, the Company`s net income totaled $1.0 million or $.06 per share compared to the same period last year when pro forma net income totaled $6.4 million, or $0.37 per share and actual net income totaled $2.0 million.
During the secondthird quarter, the Company completed the guestroom portion of thentinued the renovation of its Chicago property which was then renamed åHotel 71`, and expects to complete the renovation during the third quarter. As mentioned above, the Company has commenced the White Sand Villas condominium project and anticipates a completion date in the fourth quarter of 2003.The Company also announced that it is commencing construction of the White Sand Villas condominium project, located on the Gulf of Mexico in Fort Myers Beach, Florida. Over half of the units are pre-sold, and completion of the 92-unit tower is planned for the end of next yearThe Company currently has commitments from prospective buyers to purchase over half of the units upon completion of construction, which is expected to occur in late 2003. The first phase of construction, involving the removal of __ rental cottages, is currently underway.
Robert W. Boykin, Chairman and Chief Executive Officer commented, ≥While we continue to operate in a challenging environment, we are very excited with regard to the progress being made as we continue to see positive trends within RevPAR growth and our operating margins. As a result of this improvement, the Board of Directors reinstated a regular quarterly dividend effective for the third quarter at a rate of $0.18 per common share. Based upon the current outlook, we expect the continuation of a regular quarterly dividend at the same level
At JuneSeptember 30, 2002, Boykin had $___27.1XX.X23.0 million of cash and cash equivalents, and total consolidated debt of $___XXX.X318.0 318.9 million. The Company`s pro rata share of the debt inof unconsolidated joint ventures totaled $23.9_______XX.X21.8 million. The Company had $39.6XX.X40.0 million outstanding on its line of credit. During the third quarter, Tthe Company expects to exerciseexercised its option to extend the maturity date of its $45.0 million term loan to , which matures in October of 2002, to July of 2003. The extension does not require lender approval. To finance the construction of the White Sand Villas, the Company is in thehas received a commitment letter from a lender for a final stages of negotiations with lenders for a $23XX.X23.3 million construction loan to be secured by the project. Additionally, the Company is currently reviewing refinancing options for the 2003 maturity of its bank facilities.
In October, the Company successfully completed a $45.0 million preferred depositary share offering. Each depositary share represents 1/10 interest in one share of the Company`s 10 ?% cumulative preferred shares and has a liquidation preference of $25. Net proceeds from the offering were used to repay the outstanding balance on the line of credit as well as reduce the outstanding principal balance on the $45.0 million term loan to just under $42.0 million. The completion of the offering provides the Company with additional financial flexibility to take advantage of investment opportunities as they arise in today`s market.
Boykin`s FFO for the full year is currently anticipated to be within the range of $1.4745 to $1.6551 per fully-diluted share, based on a full-year RevPAR decline of 2approximately3% to 55.0%. The Company anticipates fourth quarter FFO between $0.23 and $0.27 as fourth quarter As a result, we are anticipating a third quarter RevPAR is expected to increase betweenfrom 1.0% to 4.0%be uflat to up 4.0% to 6.0X3% in the fourththird quarter over the same period last yearand ___% to ___%to increase from X6% to XX10% for the fourthXXXX quarter. The FFO per share projection by quarter is ___$0.44 to ___$0.53 for the third quarter and ___$0.23 to ___$0.34 for the fourth quarter.
The Company is currently anticipating RevPAR for 2003 to grow within the range of 1.0% to 4.0% over 2002 levels. Mr. Boykin stated, ≥Based upon current continue to anticipateto the Board regular quarterly of, beginning with the third quarter dividend The dividend would be paid in the fourth quarter.≥We are on schedule to complete the Chicago renovation of our Chicago property and subsequent renaming to åHotel 71` within the next several weeks so that ≥Hotel 71≤ will be opening by Labor Day. In addition, we have reached our targetedare very pleased with the pre-sales of the 92-unit White Sands Villas project, and have secured financing and began construction of the White Sands Villas project. on in the process of now beginning construction. Completion of thise 92-unit tower property is planned for the end of next year.≤
≥During the past several quarters Wwe are excited about an opportunity that we have identified to increase revenues from our existing properties. After conducting market focus groups and consulting with another company that has successfully implemented this strategy, we are moving forward with a plan to include IACC (International Association of Conference Centers) approved conference center facilities in certain of our properties. To date, we have identified at least four hotels that meet established market criteria and could benefit from the development of state-of-the art conference centers. been reviewing several ways to build and further retain our business traffic. We are moving forward with a plan in certain properties that meet our criteria to include IAC (International Association of Conference Centers) approved conference center facilities. To date we have identified at least four of our hotels that will benefit from these state-of-the-art conference facilities. The addition of the IAC approved conference center is anticipated to substantially improve hotel business traffic because of corporations and businesses needs for training and off-site conference centers. The addition of IACC approved conference centers is anticipated to serve the needs of corporations and businesses for training facilities and off-site conference centers and thus substantially improve hotel business traffic. We are currently moving forward with this concept at our Berkeley property with the anticipation that the renovations to upgrade the current facilities and IACC accreditation would be completed in the first quarter of next year.≤The first hotel that will offer this facility will be our Berkeley property. Construction there will begin next month.≤
For the first six months of 2002 the FFO of $15.7 million was below the same period last year`s pro forma FFO of $21.4 million. The FFO, on a fully diluted per share basis, for the 2002 first half was $0.78 down compared with last year`s pro FFO of $1.07. Revenues for the six months ended June 30, 2002 were $129.9 million, compared with pro forma revenues of nearly $139.0 million recorded in the same period last year. Revenue per available room (RevPAR) for all 33 hotels declined to $55.03 from last year`s $63.36, as occupancy fell to 60.0% from 65.5%. The average daily room rate declined to $92.06 from $96.79. During the first six months of 2002, the gross operating profit averaged 00.0%, compared with 00.0% on a pro forma basis for the previous year. EBITDA, including the Company`s share of EBITDA from unconsolidated joint venture subsidiaries, totaled $00.0 million, a 00.0% decrease from last year`s pro forma of $00.0 million.
Mr. Boykin continued, ≥Bookings in July were slower than we expected. If this trend continues through August, and we foresee a difficult September, the third quarter will not produce the RevPAR improvements earlier anticipated. Although the fourth may not be as soft as the third quarter, the anticipated sluggish top line will favor the low end of our FFO range of $1.45 per share for 2002. Still we project to be in a position to declare a quarterly cash dividend by the end of this month.≤
The Company will hold a conference call with financial analysts to discuss the secondthird-quarter results at 2:0010:00 pa.m. Eastern Time today, August 6November 12, 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 9,25219 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.