Boykin Lodging (BOY) 8-K Acquisition or disposition of assets

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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):July 30, 2004

Boykin Lodging Company
(Exact Name of Registrant as Specified in its Charter)

Ohio	001-11975	34-1824586
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)
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 July 30, 2004, Shawan Road Hotel L.P., a joint venture between Boykin Lodging Company (“Boykin”) and Davidson Hotel Company, sold its Marriott’s Hunt Valley Inn (“Hunt Valley”) in Hunt Valley, Maryland, for a price of $31.0 million to HEI Hospitality Fund, L.P., an unrelated third party. Boykin’s share of the net proceeds from the sale was approximately $29.2 million and was applied to the outstanding balance of Boykin’s secured revolving credit facility.

On August 2, 2004, BoyStar Ventures, L.P., a joint venture between Boykin and Interstate Hotels and Resorts, sold its Holiday Inn Minneapolis West (“Minneapolis”) in Minneapolis, Minnesota, for a price of $9.325 million to GSH Lodging, L.L.C., an unrelated third party. Boykin’s share of the net proceeds from the sale was approximately $9.0 million and was applied to the outstanding balance of Boykin’s secured revolving credit facility.

Each of the properties sold had, prior to such sale, served as collateral for Boykin’s secured revolving credit facility.

For each of the above sales, sales prices were 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 Marriott’s Hunt Valley Inn in Hunt Valley, Maryland, and Holiday Inn Minneapolis West in Minneapolis, Minnesota, as well as the use of proceeds from the sales, as described in this Current Report on Form 8-K.

The June 30, 2004 unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if the dispositions and the related debt reductions were effective June 30, 2004. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 2004 and each of the years in the three year period ended December 31, 2003 assume the sales and the reductions of debt were effective as of the beginning of the fiscal year ended December 31, 2001.

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 2003 Annual Report on Form 10-K.

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 JUNE 30, 2004
(unaudited, amounts in thousands, except share data)

				Pro Forma Adjustments
				(a)			(a)
	Historical			Hunt Valley			Minneapolis			Pro Forma
Investment in hotel properties	$	628,904			(32,403	)		(12,839	)	$	583,662
Accumulated depreciation		(155,516	)		9,402			4,251			(141,863	)
Investment in hotel properties, net		473,388			(23,001	)		(8,588	)		441,799
Cash and cash equivalents		18,121			(1,468	)(b)		47	(b)		16,700
Restricted cash		13,171			—			—			13,171
Accounts receivable, net of allowance for doubtful accounts		5,819			(576	)		(157	)		5,086
Rent receivable from lessee		17			—			—			17
Inventories		1,896			(81	)		(17	)		1,798
Deferred financing costs and other, net		2,667			—			(61	)		2,606
Investment in unconsolidated joint ventures		15,898			—			—			15,898
Other assets		9,219			(146	)		(28	)		9,045
	$	540,196			(25,272	)		(8,804	)	$	506,120
LIABILITIES AND SHAREHOLDERS’ EQUITY
Borrowings against credit facility	$	64,946			(29,177	)(b)		(9,000	)(b)	$	26,769
Term notes payable		195,373			—			—			195,373
Accounts payable and accrued expenses		38,914			(1,253	)		135			37,796
Accounts payable to related party		945			—			(21	)		924
Dividends/distributions payable		1,188			—			—			1,188
Deferred lease revenue		318			—			—			318
Minority interest in joint ventures		1,115			11			—			1,126
Minority interest in operating partnership		10,350			772	(c)		12	(c)		11,134
SHAREHOLDERS’ EQUITY:
Preferred shares, without par value; 10,000,000 shares authorized; 181,000 shares issued and outstanding as of June 30, 2004 (liquidation preference of $45,250)		—			—			—			—
Common shares, without par value; 40,000,000 shares authorized; 17,441,658 outstanding as of June 30, 2004		—			—			—			—
Additional paid-in capital		358,723			—			—			358,723
Distributions and losses in excess of income		(129,198	)		4,375	(c)		70	(c)		(124,753	)
Unearned compensation – restricted shares		(2,478	)		—			—			(2,478	)
Total shareholders’ equity		227,047			4,375			70			231,492
	$	540,196			(25,272	)		(8,804	)	$	506,120

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(unaudited, amounts in thousands, except for per share data)

				Pro Forma Adjustments
				(d)			(d)
	Historical			Hunt Valley			Minneapolis			Pro Forma
Revenues:
Hotel revenues
Rooms	$	77,979			(4,458	)		(1,557	)	$	71,964
Food and beverage		37,115			(3,815	)		(870	)		32,430
Other		6,381			(231	)		(47	)		6,103
Total hotel revenues		121,475			(8,504	)		(2,474	)		110,497
Lease revenue		686			—			—			686
Other operating revenue		230			—			(21	)		209
Revenues from condominium development and unit sales		4,274			—			—			4,274
Total revenues		126,665			(8,504	)		(2,495	)		115,666
Expenses:
Hotel operating expenses
Rooms		19,300			(1,213	)		(402	)		17,685
Food and beverage		25,860			(2,491	)		(626	)		22,743
Other direct		4,411			(231	)		(46	)		4,134
Indirect		38,794			(2,570	)		(889	)		35,335
Management fees to related party		3,077			—			(47	)		3,030
Management fees — other		206			(170	)		—			36
Total hotel operating expenses		91,648			(6,675	)		(2,010	)		82,963
Property taxes, insurance and other		8,465			(308	)		(176	)		7,981
Cost of condominium development and unit sales		3,481			—			—			3,481
Real estate related depreciation and amortization		13,623			(785	)		(302	)		12,536
Corporate general and administrative		4,052			(5	)		(34	)		4,013
Impairment of real estate		4,300			—			—			4,300
Total operating expenses		125,569			(7,773	)		(2,522	)		115,274
Operating income (loss)		1,096			(731	)		27			392
Interest income		176			(5	)		(2	)		169
Other income		8			—			—			8
Interest expense		(7,175	)		713			220			(6,242	)
Amortization of deferred financing costs		(668	)		—			—			(668	)
Minority interest in earnings of joint ventures		(39	)		—			—			(39	)
Minority interest in loss of operating partnership		1,298			3			(37	)		1,264
Equity in loss of unconsolidated joint ventures		(588	)		—			—			(588	)
Loss from continuing operations		(5,892	)		(20	)		208			(5,704	)
Loss from continuing operations per share:
Basic	$	(0.34	)							$	(0.33	)
Diluted	$	(0.34	)							$	(0.33	)
Weighted average number of common shares outstanding:
Basic		17,404									17,404
Diluted		17,495									17,495

BOYKIN LODGING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(unaudited, amounts in thousands, except for per share data)

				Pro Forma Adjustments
	(g)			(e)			(d)			(d)
	Historical			Portland Downtown			Hunt Valley			Minneapolis			Pro Forma
Revenues:
Hotel revenues
Rooms	$	145,820			(4,295	)		(8,161	)		(3,328	)	$	130,036
Food and beverage		71,665			(2,168	)		(6,532	)		(1,771	)		61,194
Other		12,836			(588	)		(482	)		(108	)		11,658
Total hotel revenues		230,321			(7,051	)		(15,175	)		(5,207	)		202,888
Lease revenue		1,958			—			—			—			1,958
Other operating revenue		365			—			—			(42	)		323
Revenues from condominium development and unit sales		36,883			—			—			—			36,883
Total revenues		269,527			(7,051	)		(15,175	)		(5,249	)		242,052
Expenses:
Hotel operating expenses
Rooms		37,133			(1,118	)		(2,129	)		(854	)		33,032
Food and beverage		50,268			(1,667	)		(4,194	)		(1,293	)		43,114
Other direct		8,201			(303	)		(423	)		(98	)		7,377
Indirect		73,960			(2,368	)		(4,491	)		(1,732	)		65,369
Management fees to related party		4,746			(79	)		—			(82	)		4,585
Management fees – other		1,364			(62	)		(351	)		—			951
Total hotel operating expenses		175,672			(5,597	)		(11,588	)		(4,059	)		154,428
Property taxes, insurance and other		15,758			98			(621	)		(489	)		14,746
Cost of condominium development and unit sales		24,645			—			—			—			24,645
Real estate related depreciation and amortization		31,090			(1,068	)		(1,556	)		(704	)		27,762
Corporate general and administrative		8,163			(43	)		(5	)		(13	)		8,102
Impairment of real estate		2,800			—			—			(2,800	)		—
Total operating expenses		258,128			(6,610	)		(13,770	)		(8,065	)		229,683
Operating income		11,399			(441	)		(1,405	)		2,816			12,369
Interest income		620			—			(13	)		(4	)		603
Other income		27			—			—			—			27
Interest expense		(16,089	)		1,164			318			98			(14,509	)
Amortization of deferred financing costs		(1,927	)		21			—			—			(1,906	)
Minority interest in loss of joint ventures		1,102			—			—			(1,235	)		(133	)
Minority interest in loss of operating partnership		2,005			(112	)		166			(252	)		1,807
Equity in loss of unconsolidated joint ventures		(870	)		—			—			—			(870	)
Loss from continuing operations		(3,733	)		632			(934	)		1,423			(2,612	)
Loss from continuing operations per share:
Basic	$	(0.22	)										$	(0.15	)
Diluted	$	(0.22	)										$	(0.15	)
Weighted average number of common shares outstanding:
Basic		17,336												17,336
Diluted		17,470												17,470

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
	(g)			(d)(f)			(d)(f)
	Historical			Hunt Valley			Minneapolis			Pro Forma
Revenues:
Hotel revenues:
Rooms	$	143,658			(2,784	)		(3,260	)	$	137,614
Food and beverage		69,263			(2,436	)		(1,877	)		64,950
Other		12,288			(176	)		(114	)		11,998
Total hotel revenues		225,209			(5,396	)		(5,251	)		214,562
Lease revenue		4,730			(2,845	)		—			1,885
Other operating revenue		938			—			(42	)		896
Revenues from condominium development and unit sales		8,715			—			—			8,715
Total revenues		239,592			(8,241	)		(5,293	)		226,058
Expenses:
Hotel operating expenses:
Rooms		35,228			(749	)		(763	)		33,716
Food and beverage		48,106			(1,463	)		(1,328	)		45,315
Other direct		7,812			(132	)		(104	)		7,576
Indirect		65,147			(1,605	)		(1,719	)		61,823
Management fees to related party		3,973			—			—			3,973
Management fees — other		2,577			(131	)		(66	)		2,380
Total hotel operating expenses		162,843			(4,080	)		(3,980	)		154,783
Property taxes, insurance and other		14,526			(529	)		(487	)		13,510
Cost of condominium development and unit sales		6,474			—			—			6,474
Real estate related depreciation and amortization		27,277			(1,520	)		(724	)		25,033
Corporate general and administrative		6,447			—			(4	)		6,443
Total operating expenses		217,567			(6,129	)		(5,195	)		206,243
Operating income		22,025			(2,112	)		(98	)		19,815
Interest income		142			(13	)		(4	)		125
Other income		28			—			—			28
Interest expense		(18,132	)		1,208			354			(16,570	)
Amortization of deferred financing costs		(2,105	)		—			—			(2,105	)
Minority interest in earnings of joint ventures		(133	)		—			—			(133	)
Minority interest in loss of operating partnership		522			139			(38	)		623
Equity in loss of unconsolidated joint ventures		(2,040	)		—			—			(2,040	)
Income (loss) from continuing operations		307			(778	)		214			(257	)
Income (loss) from continuing operations per share:
Basic	$	0.02								$	(0.01	)
Diluted	$	0.02								$	(0.01	)
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
	(g)			(d)(f)			(d)(f)
	Historical			Hunt Valley			Minneapolis			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		52,559			—			—			52,559
Other lease revenue		11,747			(3,908	)		(2,115	)		5,724
Other operating revenue		869			—			(40	)		829
Total revenues		71,838			(3,908	)		(2,155	)		65,775
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		9,879			(439	)		(447	)		8,993
Real estate related depreciation and amortization		25,693			(1,492	)		(714	)		23,487
Corporate general and administrative		6,106			(4	)		(6	)		6,096
Impairment of real estate		17,898			—			—			17,898
Costs associated with termination of leases		2,006			—			(425	)		1,581
Related party costs associated with termination of leases		12,994			—			—			12,994
Total operating expenses		79,987			(1,935	)		(1,592	)		76,460
Operating loss		(8,149	)		(1,973	)		(563	)		(10,685	)
Interest income		349			(24	)		(6	)		319
Other income		—			—			—			—
Interest expense		(19,641	)		1,664			45			(17,932	)
Amortization of deferred financing costs		(1,129	)		—			—			(1,129	)
Minority interest in loss of joint ventures		193			(344	)		—			(151	)
Minority interest in loss of operating partnership		2,457			53			41			2,551
Equity in income of unconsolidated joint ventures		589			—			—			589
Loss from continuing operations		(25,331	)		(624	)		(483	)		(26,438	)
Loss from continuing operations per share:
Basic	$	(1.47	)							$	(1.54	)
Diluted	$	(1.47	)							$	(1.54	)
Weighted average number of common shares outstanding:
Basic		17,176									17,176
Diluted		17,281									17,281

(a) Represents the necessary adjustments to Boykin’s historical financial statements to remove the assets and liabilities associated with Hunt Valley and Minneapolis as well as to reflect the receipt of the sale proceeds and related repayment of debt. The adjustments also include an estimate of liabilities of $0.5 million resulting from the sales of the hotels.

(b) Boykin’s share of the net proceeds from the sales, totaling approximately $38.2 million, was used to pay down a portion of the outstanding balance of its secured revolving credit facility.

(c) Reflects the estimated impact of the sale on minority interest and shareholders’ equity as if the sale took place on June 30, 2004. The actual impact of the transactions was based upon the carrying value of the assets at the time of the sale.

(d) Reflects the adjustment to the Boykin’s historical financial statements to present them as if the disposition of Hunt Valley and Minneapolis had occurred on January 1, 2001. The gains or losses on the sales are not reflected in the pro forma condensed consolidated statements of operations. Boykin anticipates that combined actual gain on the sales, net of minority interest will approximate $4.2 million.

(e) Represents the necessary adjustments to Boykin’s historical financial statements to reflect the disposition of the Doubletree Portland Downtown Hotel (“Portland Downtown)”. On March 2, 2004, the City of Portland, Oregon, through the Portland Development Commission (the “PDC”), acquired Portland Downtown from Boykin through the PDC’s power of eminent domain. Boykin’s historical financial statements for other periods presented within this Current Report on Form 8-K already include the impact of the disposition. These amounts were previously presented in a Current Report on Form 8-K that Boykin filed with the Securities and Exchange Commission on March 17, 2004.

(f) Note that the Taxable REIT Subsidiary (TRS) structure was implemented for Minneapolis effective January 1, 2002 and for Hunt Valley effective September 1, 2002. Prior to these dates, revenues were derived from lease payments made from the net operating income of the properties. Subsequent to the implementation of the TRS structure, revenues are generated from the operations of the property with the related operating expenses also being reported.

(g) Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation.

     (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: August 11, 2004