UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):March 2, 2004
Boykin Lodging Company
Ohio | 001-11975 | 34-1824586 | ||
(State or Other Jurisdiction of | (Commission File Number) | (IRS Employer Identification Number) | ||
Incorporation) |
Guildhall Building, Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio | 44115 | |
(Address of Principal Executive Offices) | (Zip Code) |
(216) 430-1200
(Registrant’s telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 2, 2004, the City of Portland, Oregon, through the Portland Development Commission (the “PDC”), acquired the Doubletree Portland Downtown Hotel (“Portland Downtown”) from Boykin Lodging Company (the “Company”) through the PDC’s power of eminent domain. | ||||
The PDC paid consideration of $19.7 million for the property. The PDC stated that their intention was to transfer the property to Portland State University for redevelopment and use as student housing as well as for other academic, retail and conference purposes. | ||||
Pursuant to the terms of the Company’s $130.0 million term loan, for which Portland Downtown served as collateral, approximately $16.9 million of the net proceeds from the condemnation proceedings was used to reduce the outstanding loan balance from approximately $122.0 million to approximately $105.2 million. The remainder of the net proceeds was available for general corporate purposes. | ||||
Additionally, the Company sold the related furniture, fixtures and equipment (“FF&E”) to Portland State University for approximately $2.3 million. Proceeds from the sale were deposited into the furniture, fixtures and equipment reserve associated with the $130.0 million term loan. The sales price of the FF&E was the result of arms-length negotiations. |
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
None. |
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial information for Boykin Lodging Company gives effect to the disposition of the Doubletree Portland Downtown Hotel in Portland, Oregon, and the related FF&E, as well as the use of proceeds from the sales, as described in this Current Report on Form 8-K. | ||||
The September 30, 2003 unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if the disposition and the related debt reductions were effective September 30, 2003. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2003, and for each of the years in the three year period ended December 31, 2002 assume the sale and the reduction of debt were effective as of the beginning of the fiscal year ended December 31, 2000. | ||||
The unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and related footnotes included in Boykin Lodging Company’s 2002 Annual Report on Form 10-K and Boykin Lodging’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. |
THE FOLLOWING UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION IS PRESENTED FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT
NECESSARILY AN INDICATION OF THE FUTURE FINANCIAL POSITION OR RESULTS
OF OPERATIONS OF BOYKIN LODGING COMPANY.
BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(unaudited, amounts in thousands, except share data)
Pro Forma | ||||||||||||||||
Adjustments | ||||||||||||||||
(a) | ||||||||||||||||
Portland | ||||||||||||||||
Historical | Downtown | Pro Forma | ||||||||||||||
ASSETS | ||||||||||||||||
Investment in hotel properties | $ | 630,127 | $ | (26,094 | ) | $ | 604,033 | |||||||||
Accumulated depreciation | (144,235 | ) | 5,376 | (138,859 | ) | |||||||||||
Investment in hotel properties, net | 485,892 | (20,718 | ) | 465,174 | ||||||||||||
Cash and cash equivalents | 15,270 | 2,748 | (b | ) | 18,018 | |||||||||||
Restricted cash | 19,720 | 2,272 | (b | ) | 21,992 | |||||||||||
Accounts receivable, net of allowance for doubtful accounts | 33,726 | (208 | ) | 33,518 | ||||||||||||
Rent receivable from lessees | 428 | — | 428 | |||||||||||||
Inventories | 1,828 | (42 | ) | 1,786 | ||||||||||||
Deferred financing costs and other, net | 1,866 | (91 | ) | 1,775 | ||||||||||||
Investment in unconsolidated joint ventures | 16,525 | — | 16,525 | |||||||||||||
Other assets | 8,920 | (187 | ) | 8,733 | ||||||||||||
$ | 584,175 | $ | (16,226 | ) | $ | 567,949 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Borrowings against credit facility | $ | 27,500 | $ | — | $ | 27,500 | ||||||||||
Term notes payable | 263,481 | (16,870 | ) | (b | ) | 246,611 | ||||||||||
Accounts payable and accrued expenses | 40,689 | (872 | ) | 39,817 | ||||||||||||
Accounts payable to related party | 1,029 | (49 | ) | 980 | ||||||||||||
Dividends/distributions payable | 1,188 | — | 1,188 | |||||||||||||
Due to lessees | 127 | — | 127 | |||||||||||||
Deferred lease revenue | 427 | — | 427 | |||||||||||||
Minority interest in joint ventures | 2,438 | — | 2,438 | |||||||||||||
Minority interest in operating partnership | 12,283 | 235 | (c | ) | 12,518 | |||||||||||
SHAREHOLDERS’ EQUITY: | ||||||||||||||||
Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding | — | — | — | |||||||||||||
Common shares, without par value; 40,000,000 shares authorized; 17,344,380 shares outstanding | — | — | — | |||||||||||||
Additional paid-in capital | 357,291 | — | 357,291 | |||||||||||||
Distributions in excess of income | (120,677 | ) | 1,330 | (c | ) | (119,347 | ) | |||||||||
Unearned compensation — restricted shares | (1,601 | ) | — | (1,601 | ) | |||||||||||
Total shareholders’ equity | 235,013 | 1,330 | 236,343 | |||||||||||||
$ | 584,175 | $ | (16,226 | ) | $ | 567,949 | ||||||||||
BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(unaudited, amounts in thousands, except for per share data)
Pro Forma | ||||||||||||
Adjustments | ||||||||||||
(d) | ||||||||||||
Portland | ||||||||||||
Historical | Downtown | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Hotel revenues | ||||||||||||
Rooms | $ | 112,579 | $ | (3,269 | ) | $ | 109,310 | |||||
Food and beverage | 51,619 | (1,510 | ) | 50,109 | ||||||||
Other | 10,002 | (450 | ) | 9,552 | ||||||||
Total hotel revenues | 174,200 | (5,229 | ) | 168,971 | ||||||||
Lease revenue | 1,175 | — | 1,175 | |||||||||
Revenues from condominium development and unit sales | 29,532 | — | 29,532 | |||||||||
Total revenues | 204,907 | (5,229 | ) | 199,678 | ||||||||
Expenses: | ||||||||||||
Hotel operating expenses | ||||||||||||
Rooms | 28,099 | (868 | ) | 27,231 | ||||||||
Food and beverage | 36,978 | (1,242 | ) | 35,736 | ||||||||
Other direct | 6,283 | (229 | ) | 6,054 | ||||||||
Indirect | 55,278 | (1,778 | ) | 53,500 | ||||||||
Management fees to related party | 3,465 | (47 | ) | 3,418 | ||||||||
Management fees — other | 1,260 | (62 | ) | 1,198 | ||||||||
Total hotel operating expenses | 131,363 | (4,226 | ) | 127,137 | ||||||||
Property taxes, insurance and other | 11,484 | 193 | 11,677 | |||||||||
Cost of condominium development and unit sales | 19,820 | — | 19,820 | |||||||||
Real estate related depreciation and amortization | 23,517 | (801 | ) | 22,716 | ||||||||
Corporate general and administrative | 5,653 | (24 | ) | 5,629 | ||||||||
Total operating expenses | 191,837 | (4,858 | ) | 186,979 | ||||||||
Operating income | 13,070 | (371 | ) | 12,699 | ||||||||
Interest income | 174 | — | 174 | |||||||||
Other income | 284 | — | 284 | |||||||||
Interest expense | (12,270 | ) | 883 | (11,387 | ) | |||||||
Amortization of deferred financing costs | (1,704 | ) | 16 | (1,688 | ) | |||||||
Minority interest in earnings of joint ventures | (74 | ) | — | (74 | ) | |||||||
Minority interest in loss of operating partnership | 1,217 | (80 | ) | 1,137 | ||||||||
Equity in loss of unconsolidated joint ventures | (818 | ) | — | (818 | ) | |||||||
Income (loss) from continuing operations | (121 | ) | 448 | 327 | ||||||||
Income (loss) from continuing operations per share: | ||||||||||||
Basic | $ | (0.01 | ) | $ | 0.02 | |||||||
Diluted | $ | (0.01 | ) | $ | 0.02 | |||||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic | 17,334 | 17,334 | ||||||||||
Diluted | 17,438 | 17,438 |
BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(unaudited, amounts in thousands, except for per share data)
Pro Forma | ||||||||||||
Adjustments | ||||||||||||
(d) | ||||||||||||
Portland | ||||||||||||
Historical | Downtown | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Hotel revenues: | ||||||||||||
Rooms | $ | 148,043 | $ | (4,385 | ) | $ | 143,658 | |||||
Food and beverage | 71,114 | (1,851 | ) | 69,263 | ||||||||
Other | 12,907 | (619 | ) | 12,288 | ||||||||
Total hotel revenues | 232,064 | (6,855 | ) | 225,209 | ||||||||
Lease revenue | 4,730 | — | 4,730 | |||||||||
Revenues from condominium development and unit sales | 8,715 | — | 8,715 | |||||||||
Total revenues | 245,509 | (6,855 | ) | 238,654 | ||||||||
Expenses: | ||||||||||||
Hotel operating expenses: | ||||||||||||
Rooms | 36,350 | (1,122 | ) | 35,228 | ||||||||
Food and beverage | 49,476 | (1,370 | ) | 48,106 | ||||||||
Other direct | 8,120 | (308 | ) | 7,812 | ||||||||
Indirect | 67,399 | (2,252 | ) | 65,147 | ||||||||
Management fees to related party | 3,973 | — | 3,973 | |||||||||
Management fees — other | 2,770 | (193 | ) | 2,577 | ||||||||
Total hotel operating expenses | 168,088 | (5,245 | ) | 162,843 | ||||||||
Property taxes, insurance and other | 14,853 | (327 | ) | 14,526 | ||||||||
Cost of condominium development and unit sales | 6,474 | — | 6,474 | |||||||||
Real estate related depreciation and amortization | 28,318 | (1,041 | ) | 27,277 | ||||||||
Corporate general and administrative | 6,669 | (7 | ) | 6,662 | ||||||||
Total operating expenses | 224,402 | (6,620 | ) | 217,782 | ||||||||
Operating income | 21,107 | (235 | ) | 20,872 | ||||||||
Interest income | 357 | — | 357 | |||||||||
Other income | 966 | — | 966 | |||||||||
Interest expense | (19,296 | ) | 1,164 | (18,132 | ) | |||||||
Amortization of deferred financing costs | (2,125 | ) | 20 | (2,105 | ) | |||||||
Minority interest in earnings of joint ventures | (133 | ) | — | (133 | ) | |||||||
Minority interest in loss of operating partnership | 666 | (144 | ) | 522 | ||||||||
Equity in loss of unconsolidated joint ventures | (2,040 | ) | — | (2,040 | ) | |||||||
Income (loss) from continuing operations | (498 | ) | 805 | 307 | ||||||||
Income (loss) from continuing operations per share: | ||||||||||||
Basic | $ | (0.03 | ) | $ | 0.02 | |||||||
Diluted | $ | (0.03 | ) | $ | 0.02 | |||||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic | 17,248 | 17,248 | ||||||||||
Diluted | 17,383 | 17,383 |
BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(unaudited, amounts in thousands, except for per share data)
Pro Forma | ||||||||||||
Adjustments | ||||||||||||
(d) | ||||||||||||
Portland | ||||||||||||
Historical | Downtown | Pro Forma | ||||||||||
Revenues: | ||||||||||||
Hotel revenues: | ||||||||||||
Rooms | $ | 4,315 | $ | — | $ | 4,315 | ||||||
Food and beverage | 2,051 | — | 2,051 | |||||||||
Other | 297 | — | 297 | |||||||||
Total hotel revenues | 6,663 | — | 6,663 | |||||||||
Lease revenue from related parties | 54,371 | (1,812 | ) | 52,559 | ||||||||
Other lease revenue | 11,747 | — | 11,747 | |||||||||
Total revenues | 72,781 | (1,812 | ) | 70,969 | ||||||||
Expenses: | ||||||||||||
Hotel operating expenses: | ||||||||||||
Rooms | 1,121 | — | 1,121 | |||||||||
Food and beverage | 1,422 | — | 1,422 | |||||||||
Other direct | 157 | — | 157 | |||||||||
Indirect | 2,511 | — | 2,511 | |||||||||
Management fees to related party | 200 | — | 200 | |||||||||
Total hotel operating expenses | 5,411 | — | 5,411 | |||||||||
Property taxes, insurance and other | 10,137 | (258 | ) | 9,879 | ||||||||
Real estate related depreciation and amortization | 26,714 | (1,021 | ) | 25,693 | ||||||||
Corporate general and administrative | 6,183 | (17 | ) | 6,166 | ||||||||
Impairment of real estate | 17,898 | — | 17,898 | |||||||||
Costs associated with termination of leases(e) | 2,006 | — | 2,006 | |||||||||
Related party costs associated with termination of leases (e) | 12,994 | — | 12,994 | |||||||||
Total operating expenses | 81,343 | (1,296 | ) | 80,047 | ||||||||
Operating income (loss) | (8,562 | ) | (516 | ) | (9,078 | ) | ||||||
Interest income | 409 | — | 409 | |||||||||
Other income | 869 | — | 869 | |||||||||
Interest expense | (20,805 | ) | 1,164 | (19,641 | ) | |||||||
Amortization of deferred financing costs | (1,149 | ) | 20 | (1,129 | ) | |||||||
Minority interest in loss of joint ventures | 193 | — | 193 | |||||||||
Minority interest in loss of operating partnership | 2,509 | (52 | ) | 2,457 | ||||||||
Equity in income of unconsolidated joint ventures | 589 | — | 589 | |||||||||
Loss from continuing operations | (25,947 | ) | 616 | (25,331 | ) | |||||||
Loss from continuing operations per share: | ||||||||||||
Basic | $ | (1.51 | ) | $ | (1.47 | ) | ||||||
Diluted | $ | (1.51 | ) | $ | (1.47 | ) | ||||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic | 17,176 | 17,176 | ||||||||||
Diluted | 17,281 | 17,281 |
BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(unaudited, amounts in thousands, except for per share data)
Pro Forma | ||||||||||||||||
Adjustments | ||||||||||||||||
(d) | ||||||||||||||||
Portland | ||||||||||||||||
Historical | Downtown | Pro Forma | ||||||||||||||
Revenues: | ||||||||||||||||
Hotel revenues: | ||||||||||||||||
Rooms | $ | 4,497 | $ | — | $ | 4,497 | ||||||||||
Food and beverage | 1,890 | — | 1,890 | |||||||||||||
Other | 348 | — | 348 | |||||||||||||
Total hotel revenues | 6,735 | — | 6,735 | |||||||||||||
Lease revenue from related parties | 65,412 | (2,184 | ) | 63,228 | ||||||||||||
Other lease revenue | 13,932 | — | 13,932 | |||||||||||||
Total revenues | 86,079 | (2,184 | ) | 83,895 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel operating expenses: | ||||||||||||||||
Rooms | 1,200 | — | 1,200 | |||||||||||||
Food and beverage | 1,393 | — | 1,393 | |||||||||||||
Other direct | 184 | — | 184 | |||||||||||||
Indirect | 2,435 | — | 2,435 | |||||||||||||
Management fees to related party | 209 | — | 209 | |||||||||||||
Total hotel operating expenses | 5,421 | — | 5,421 | |||||||||||||
Property taxes, insurance and other | 9,969 | (244 | ) | 9,725 | ||||||||||||
Real estate related depreciation and amortization | 27,813 | (997 | ) | 26,816 | ||||||||||||
Corporate general and administrative | 5,784 | (14 | ) | 5,770 | ||||||||||||
Gain on property insurance recovery | (407 | ) | — | (407 | ) | |||||||||||
Impairment of real estate | 3,600 | — | 3,600 | |||||||||||||
Total operating expenses | 52,180 | (1,255 | ) | 50,925 | ||||||||||||
Operating income | 33,899 | (929 | ) | 32,970 | ||||||||||||
Interest income | 531 | — | 531 | |||||||||||||
Other income | 624 | — | 624 | |||||||||||||
Interest expense | (23,546 | ) | (f | ) | 1,164 | (22,382 | ) | |||||||||
Amortization of deferred financing costs | (1,166 | ) | 20 | (1,146 | ) | |||||||||||
Minority interest in loss of joint ventures | (533 | ) | — | (533 | ) | |||||||||||
Minority interest in loss of operating partnership | (470 | ) | (20 | ) | (490 | ) | ||||||||||
Equity in income of unconsolidated joint ventures | 68 | — | 68 | |||||||||||||
Income from continuing operations | 9,407 | 235 | 9,642 | |||||||||||||
Income from continuing operations per share: | ||||||||||||||||
Basic | $ | 0.55 | $ | 0.56 | ||||||||||||
Diluted | $ | 0.54 | $ | 0.56 | ||||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 17,137 | 17,137 | ||||||||||||||
Diluted | 17,305 | 17,305 |
(a) | Represents the necessary adjustment to the Company’s historical financial statements to remove the assets and liabilities associated with the Portland Downtown property and related FF&E, as well as to reflect the receipt of condemnation and sale proceeds and related repayment of debt. | |||
(b) | Net proceeds from the condemnation of approximately $19.6 million were used to pay down a portion of the outstanding balance of the Company’s $130.0 million term loan for which the property provided security ($16.9 million) and for general corporate purposes ($2.7 million). | |||
Net proceeds from the sale of the FF&E of approximately $2.3 million were used to fund the FF&E reserve account maintained with the lender and are reflected as an increase in restricted cash. | ||||
(c) | Reflects the estimated impact of the condemnation/sale on minority interest and shareholders’ equity as if the condemnation/sale took place on September 30, 2003. The actual impact of the transactions was based upon the carrying value of the assets at the time of the condemnation/sale. | |||
(d) | Reflects the adjustment to the Company’s historical financial statements to present them as if the disposition of the Portland Downtown property and related FF&E had occurred on January 1, 2000. The gain or loss on sale is not reflected in the pro forma condensed consolidated statements of operations. The Company anticipates that actual gain on the disposition will be approximately $1.5 million. | |||
(e) | The costs associated with the lease terminations were not specifically allocated to individual properties and therefore are not included in the pro forma adjustments. | |||
(f) | Reflects the reclassification of the loss on extinguishment of debt from extraordinary item to inclusion in income from continuing operations in compliance with Statement of Financial Accounting Standards No. 145. Accordingly, the expense has been presented gross in the interest expense line item and minority interest has been adjusted. |
(c) Exhibits.
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. |
BOYKIN LODGING COMPANY
By: /s/ Shereen P. Jones
Shereen P. Jones
Executive Vice President, Chief Financial and
Investment Officer
Date: March 17, 2004