EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Shereen P. Jones
Executive Vice President,
Chief Financial and
Investment Officer
Boykin Lodging Company
(216) 430-1200
Boykin Lodging Announces Second-Quarter Financial Results
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Cleveland, Ohio, August 12, 2003--Boykin Lodging Company (NYSE: BOY), a hotel
real estate investment trust (REIT), today announced financial results for the
second quarter and six months ended June 30, 2003.
For the second quarter, the Company's net loss applicable to common shareholders
totaled $1.6 million, or $0.09 per fully diluted share, compared with the same
period last year when net income totaled $2.9 million, or $0.17 per share. Funds
from operations applicable to common shareholders (FFO) for the second quarter
totaled $6.5 million, or $0.37 per fully diluted share, a decrease from
second-quarter 2002 FFO of $0.53 per share.
Second-quarter 2003 results include the hotel operating results for the
Marriott's Hunt Valley Inn, for which the Taxable REIT Subsidiary (TRS)
structure was implemented effective September 1, 2002, while comparative
second-quarter 2002 results include lease revenue for the property. The Company
sold three hotels during the first six months of 2003, and the operating results
of those properties are reflected in the financial statements as discontinued
operations for all periods presented.
Revenues for the quarter ended June 30, 2003, were $71.9 million, compared with
revenues of $66.2 million for the same period last year. Revenue per available
room (RevPAR) for the 30 hotels owned as of the end of the second quarter
decreased 2.4% to $59.71 from last year's $61.15. Occupancy fell to 63.5% from
64.7%, while the average daily room rate decreased 0.5% to $94.06 from $94.50.
During the second quarter, there were approximately 3,600 room nights out of
service related to renovations, or 0.5% of the Company's room inventory. For the
same period last year, there were approximately 19,500 room nights out of
service due to renovation activity, or approximately 2.3% of the Company's room
inventory for the quarter.
For the 26 consolidated properties operated under the TRS structure for both
years and owned as of June 30, 2003, RevPAR declined 5.2% to $57.44 for the
second quarter of 2003 versus $60.62 for the year-earlier period. The RevPAR
change resulted from a 2.6% decrease in occupancy to 63.7% in 2003 from 65.4% in
2002, combined with a 2.8% decrease in the average daily rate of $90.11 in 2003
compared with $92.75 for the same period in the prior year. Hotel profit margins
for these properties, defined as hotel operating profit (hotel revenues less
hotel operating expenses) as a percentage of hotel revenues, averaged 26.6% for
the second quarter of 2003, compared with 30.4% for the 2002 period.
Due to progress made on the White Sand Villas project, the Company began
recognizing revenue under the percentage of completion method during 2003.
Additionally, the Company closed on the sale of three Sanibel View Villas units
during the quarter. Included in second-quarter 2003 results are $7.3 million of
revenue and $1.9 million of gross profit related to condominium development and
unit sales.
As previously announced, during the second quarter the Company entered into an
agreement with Hilton Hotels Corporation to terminate the previously existing
long-term management agreement surrounding 10 Doubletree hotels. The transaction
resulted in a net gain of approximately $0.2 million, which is recorded within
property taxes, insurance and other expenses.
The Company also announced that it is currently in the architecture and design
stage of the final phase of the redevelopment of its Pink Shell Beach Resort,
which entails the construction of a new 43-unit condominium building. To make
way for the tower, the Company expects to demolish two existing low-rise
buildings. In connection with these plans, the Company recorded a $1.7 million
acceleration of depreciation related to the two buildings during the second
quarter of 2003.
The operating results of the Holiday Inn Lake Norman, which was sold during the
quarter, are reflected as discontinued operations and totaled a negligible loss
of less than $0.1 million, net of minority interest, for the quarter. Also
included within second-quarter 2003 discontinued operations is the net loss on
the sale of the hotel of $0.4 million, net of minority interest.
Included in the Company's second-quarter results is a gain on disposition of
$0.3 million related to a small portion of land at the Company's Bellevue,
Washington, hotel that was surrendered to the local county as a result of
eminent domain action. The Company stated that the surrender of the land does
not have an impact on the operations of the hotel.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the
second quarter, including the Company's share of EBITDA from unconsolidated
joint venture subsidiaries, totaled $14.1 million, a 14.3% decrease from last
year's second-quarter EBITDA of $16.5 million.
The Company's net loss applicable to common shareholders for the six months
ended June 30, 2003, totaled $4.4 million versus net income of $1.0 million for
the year-earlier period. Year-to-date revenues through June 30, 2003, totaled
$137.7 million, compared with $125.4 million for the six months ended June 30,
2002. RevPAR for the comparable 26 hotels declined 4.3% to $54.50 from last
year's $56.96, as occupancy fell less than one point to 60.7% from 61.4%, and
the average daily room rate declined 3.3% to $89.77 from $92.84. During the
first six months of 2003, the hotel profit margins of the 26 comparable hotels
averaged 24.3%, compared with 28.5% for the previous year. EBITDA, including the
Company's share of EBITDA from unconsolidated joint venture subsidiaries,
totaled $24.0 million, an 11.9% decrease from last year's EBITDA of $27.2
million. For the first six months of 2003, FFO of $9.1 million, or $0.52 per
fully diluted share, was below last year's FFO of $13.3 million, or $0.77 per
share for the same period.
Robert W. Boykin, Chairman and Chief Executive Officer, commented, "While the
overall results for the second quarter continued to reflect the difficult
hospitality market, our condominium projects at the Pink Shell continued to be a
strong part of our business mix. During the quarter, we closed on three more
Sanibel View Villas units, bringing the number of units sold to 57 of the 59
available. We are pleased to announce that, during July, we sold the remaining
two available units. The construction of the White Sand Villas condominium
project is progressing toward an anticipated completion date around year end or
shortly thereafter. To date, 89 of the 92 White Sand condominium units have been
pre-sold. We are now looking forward to the final phase of the redevelopment of
Pink Shell."
Mr. Boykin continued, "We are aggressively pursuing our strategy to upgrade our
hotel portfolio mix. We have sold four non-core assets so far this year for
total proceeds of approximately $24.3 million, including the most recent sale of
our hotel in Springfield, Oregon. We are actively identifying and pursuing
opportunities to redeploy this capital, consistent with our strategy of
investing in hotels in major metropolitan areas and destination resort markets."
Capital Structure
At June 30, 2003, Boykin had $17.3 million of cash and cash equivalents, and
total consolidated debt of $263.8 million. The Company's pro rata share of the
debt of unconsolidated joint ventures totaled $25.0 million.
Three debt facilities were due to mature during the third quarter of 2003. The
first was a term loan in the original principal amount of $108.0 million due in
July. The amount of this facility was reduced to $91.1 million as of June 30,
2003, upon application of the proceeds of the sale of the Holiday Inn. The
Company extended this loan for a period of one year, utilizing the first of two
one-year extension options. The other two debt facilities originally scheduled
to mature in July 2003 were the Company's $45.0 million term loan and the
Company's line of credit, which together had outstanding balances of $46.0
million as of June 30, 2003. The Company was granted a three-month extension for
both facilities, while it finalizes terms of the refinancings. These two
facilities are now scheduled to mature in October 2003.
Outlook
The Company stated that the outlook for the remainder of 2003 is uncertain;
however, based upon its year to date results and current booking trends, it is
anticipating that third-quarter RevPAR for the entire portfolio will be 0.5% to
2.5% below the same period last year, with the full-year 2003 RevPAR flat to
2.0% below 2002. Based upon those assumptions, the Company expects that FFO
could range between $0.37 and $0.41 per fully diluted share for the third
quarter and $1.10 and $1.20 per share for the full year with net loss ranging
between $0.06 and $0.10 for the third quarter and $0.50 and $0.60 for the full
year.
The Company also stated that it is evaluating the level of its common stock
dividend. "We continue to monitor the outlook for operating results to determine
the appropriate timing for reinstating the common dividend, and the appropriate
dividend level. We remain committed to retaining our REIT status, and will pay
out dividends necessary to retain that status," Mr. Boykin concluded.
The Company will hold a conference call with financial analysts to discuss
second-quarter 2003 results at 2:00 p.m. Eastern Time today, August 12, 2003. 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 29 hotels containing a total of 8,434 rooms located in 18 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 website at
www.boykinlodging.com.
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This news release contains "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934 regarding the Company,
including those statements regarding the Company's and management's beliefs and
expectations concerning the expected benefits from the TRS structure, and the
Company's future performance or anticipated financial results, among others.
Except for historical information, the matters discussed in this release are
forward-looking statements that involve risks and uncertainties that may cause
results to differ
materially from those set forth in those statements. Among other things, factors
that could cause actual results to differ materially from those expressed in
such forward-looking statements include financial performance, real estate
conditions, execution of hotel acquisition programs, changes in local or
national economic conditions, and other similar variables and other matters
disclosed in the Company's filings with the SEC, which can be found on the SEC's
website at http://www.sec.gov.
The Company believes that FFO is helpful to investors as a measure of the
performance of an equity REIT because it provides investors with another
indication of the Company's performance prior to deduction of real estate
related depreciation and amortization. The Company believes that EBITDA is
helpful to investors as a measure of the performance of the Company because it
provides an indication of the operating performance of the properties within the
portfolio and is not impacted by the capital structure of the REIT.
The Company has made revisions to the calculation of FFO and EBITDA as a result
of the new Securities and Exchange Commission rules and regulations regarding
the reporting of non-GAAP financial information. Historically, the Company has
reversed the impact of deferred lease revenue in its calculation of FFO and
EBITDA. Effective January 1, 2003 and forward, these adjustments will no longer
be made and any prior-period amounts disclosed have been recalculated using the
new method.
Neither FFO nor EBITDA represent cash generated from operating activities as
determined by GAAP and should not be considered as an alternative to GAAP net
income as an indication of the Company's financial performance or to cash flow
from operating activities as determined by GAAP as a measure of liquidity, nor
is it indicative of funds available to fund cash needs, including the ability to
make cash distributions.
BOYKIN LODGING COMPANY
STATEMENTS OF OPERATIONS, FUNDS FROM OPERATIONS APPLICABLE TO COMMON
SHAREHOLDERS, AND EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(UNAUDITED, AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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OPERATING DATA: 2003 2002 2003 2002
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Revenues:
Hotel revenues
Rooms $ 40,720 $ 41,081 $ 76,555 $ 76,770
Food and beverage 19,996 19,677 36,992 36,046
Other 3,555 3,617 6,401 6,277
--------- --------- --------- ---------
Total hotel revenues 64,271 64,375 119,948 119,093
Lease revenue 337 1,385 674 2,668
Revenues from condominium development and unit sales 7,286 445 17,096 3,675
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Total revenues 71,894 66,205 137,718 125,436
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Expenses:
Hotel operating expenses
Rooms 10,067 9,393 19,357 17,976
Food and beverage 14,106 13,376 26,967 25,348
Other direct 2,319 2,321 4,075 4,119
Indirect 18,809 17,640 37,003 34,113
Management fees to related party 1,212 1,169 2,151 2,003
Management fees to third parties 527 882 1,254 1,617
--------- --------- --------- ---------
Total hotel operating expenses 47,040 44,781 90,807 85,176
Property taxes, insurance and other 4,309 4,094 8,610 8,083
Cost of condominium development and unit sales 5,353 332 11,685 2,774
Real estate related depreciation and amortization 8,979 6,786 16,074 13,581
Corporate general and administrative 2,106 1,738 3,822 3,752
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Total operating expenses 67,787 57,731 130,998 113,366
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Operating income 4,107 8,474 6,720 12,070
--------- --------- --------- ---------
Interest income 55 87 119 161
Other income 101 237 191 425
Interest expense (4,381) (4,898) (8,697) (9,698)
Amortization of deferred financing costs (725) (506) (1,409) (1,006)
Minority interest in (earnings) loss of joint ventures (19) (11) (39) (40)
Minority interest in (earnings) loss of operating partnership 358 (337) 1,288 104
Equity in earnings (loss) of unconsolidated joint ventures 135 (353) (709) (989)
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Income (loss) before gain on disposal of assets and discontinued
operations (369) 2,693 (2,536) 1,027
Gain on disposal of assets 343 -- 376 --
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Income (loss) before discontinued operations (26) 2,693 (2,160) 1,027
Discontinued operations:
Operating income (loss) from discontinued operations, net of
minority interest income (expense) of $8 and $110 for the three and
six months ended June 30, 2003, and $(37) and $13 for the three and
six months ended June 30, 2002, respectively (43) 205 (622) (74)
Gain (loss) on sale of assets, net of minority interest income
(expense) of $66 and $(142) for the three and six months ended
June 30, 2003, respectively (373) -- 802 --
--------- --------- --------- ---------
Net income (loss) $ (442) $ 2,898 $ (1,980) $ 953
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Preferred dividends (1,188) -- (2,376) --
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Net income (loss) applicable to common shareholders $ (1,630) $ 2,898 $ (4,356) $ 953
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FUNDS FROM OPERATIONS (FFO):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net income (loss) $ (442) $ 2,898 $ (1,980) $ 953
Real estate related depreciation and amortization 8,979 6,786 16,074 13,581
Real estate related depreciation included in
discontinued operations 29 241 183 464
Minority interest (413) 385 (1,217) (77)
(Gain) loss on disposal/sale of assets 96 -- (1,320) --
Equity in (income) loss of unconsolidated joint
ventures (135) 353 709 989
FFO adjustment related to joint ventures 584 (77) 400 (515)
-------- -------- -------- --------
Funds from operations 8,698 10,586 12,849 15,395
Preferred dividends (1,188) -- (2,376) --
-------- -------- -------- --------
Funds from operations after preferred dividends 7,510 10,586 10,473 15,395
Less: Funds from operations related to minority interest (1,018) (1,442) (1,420) (2,098)
-------- -------- -------- --------
Funds from operations applicable to common shareholders $ 6,492 $ 9,144 $ 9,053 $ 13,297
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EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA):
Operating income $ 4,107 $ 8,474 $ 6,720 $ 12,070
Interest income 55 87 119 161
Other income 101 237 191 425
Real estate related depreciation and amortization 8,979 6,786 16,074 13,581
EBITDA applicable to discontinued operations 24 676 (235) 762
Company's share of EBITDA of unconsolidated joint ventures 948 297 1,127 235
EBITDA applicable to joint venture minority interest (31) (14) (61) (61)
-------- -------- -------- --------
EBITDA $ 14,183 $ 16,543 $ 23,935 $ 27,173
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BOYKIN LODGING COMPANY
PER-SHARE DATA
(UNAUDITED)
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
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PER-SHARE DATA: 2003 2002 2003 2002
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Income (loss) applicable to common shareholders before
discontinued operations per share:
Basic $(0.07) $0.16 $(0.26) $0.06
Diluted $(0.07) $0.16 $(0.26) $0.06
Discontinued operations per share:
Basic $(0.02) $0.01 $0.01 $0.00
Diluted $(0.02) $0.01 $0.01 $0.00
Net income (loss) applicable to common shareholders per
share (a):
Basic $(0.09) $0.17 $(0.25) $0.06
Diluted $(0.09) $0.17 $(0.25) $0.05
FFO per share:
Basic $0.37 $0.53 $0.52 $0.77
Diluted $0.37 $0.53 $0.52 $0.77
Weighted average common shares outstanding - Basic 17,339,179 17,238,623 17,328,002 17,228,490
Effect of dilutive securities:
Common stock options 11,487 78,725 15,248 54,140
Restricted share grants 69,415 61,478 74,957 53,357
----------- -------------- -------------- --------------
Weighted average common shares outstanding - Diluted 17,420,081 17,378,826 17,418,207 17,335,987
(a) Per-share amounts may not add due to rounding
BOYKIN LODGING COMPANY
SELECTED HOTEL STATISTICS AND BALANCE SHEET INFORMATION
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT STATISTICAL DATA)
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2003 2002 2003 2002
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HOTEL STATISTICS:
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All Hotels (30 hotels) (a)
Hotel revenues $71,429 $74,550 $132,120 $135,737
RevPAR $59.71 $61.15 $55.65 $56.43
Occupancy 63.5% 64.7% 60.0% 60.2%
Average daily rate $94.06 $94.50 $92.75 $93.79
Comparable Hotels (26 hotels) (b)
Hotel revenues $60,312 $64,375 $112,963 $119,094
RevPAR $57.44 $60.62 $54.50 $56.96
Occupancy 63.7% 65.4% 60.7% 61.4%
Average daily rate $90.11 $92.75 $89.77 $92.84
(a) Includes all hotels owned or partially owned by Boykin at the
end of the quarter.
(b) Includes all consolidated hotels operated under the TRS
structure for both periods and owned or partially owned by
Boykin at the end of the quarter.
JUNE 30, DECEMBER 31,
2003 2002
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SELECTED BALANCE SHEET INFORMATION:
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Assets
Investment in hotel properties $613,347 $604,621
Accumulated depreciation (144,963) (129,327)
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Investment in hotel properties, net 468,384 475,294
Cash and cash equivalents including
restricted cash 33,426 38,945
Accounts receivable 22,095 9,296
Investment in unconsolidated joint ventures 16,700 17,156
Other assets 12,315 17,958
Assets of discontinued operations, net -- 16,860
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Total Assets $552,920 $575,509
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Liabilities and Shareholders' Equity
Outstanding debt $263,832 $257,952
Accounts payable and accrued expenses 38,920 42,981
Deferred lease revenue 284 --
Minority interest in joint ventures 2,403 2,419
Minority interest in operating partnership 12,457 14,202
Liabilities of discontinued operations -- 17,664
Shareholders' equity 235,024 240,291
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Total Liabilities and Shareholders' Equity $552,920 $575,509
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