Winston (NYSE:WXH)
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Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust (REIT)
and owner of premium limited-service, upscale extended-stay and
full-service hotels, today announced results for the three months ended
March 31, 2007.
Proposed Merger With an Affiliate of Inland American Real Estate
Trust, Inc.
On April 2, 2007, the company, along with its operating partnership,
WINN Limited Partnership, entered into a definitive agreement and plan
of merger with Inland American Real Estate Trust, Inc. (Inland American)
and its wholly owned subsidiary, Inland American Acquisition (Winston),
LLC (IAA), pursuant to which Inland American has agreed to purchase 100
percent of the outstanding shares of common stock and Series B preferred
stock of the company. IAA will survive the merger. In the merger, each
share of Winston’s common stock will be
converted into the right to receive $15.00 in cash. In addition, each
share of Winston’s Series B preferred stock
will be converted into the right to receive $25.38 per share (or $25.44
per share if the effective time of the merger occurs prior to June 30,
2007) in cash, plus any accrued and unpaid dividends as of the effective
time of the merger. Pursuant to the terms of the agreement and plan of
merger with Inland American, dividends will not be paid on the common
stock.
The company will hold a special meeting of its common shareholders on
Thursday, June 21, 2007 at 10:00 a.m., Eastern time, at the Homewood
Suites hotel located at 5400 Edwards Mill Road, Raleigh, N. C., to
consider and vote upon the proposed merger. The company’s
board of directors has fixed the close of business on May 11, 2007 as
the record date for determining the shareholders entitled to notice of
and to vote at the special meeting and at any adjournments or
postponements thereof.
The consummation of the merger is anticipated to occur in the third
quarter of 2007 and is subject to customary closing conditions
including, among other things, the approval of the merger, the merger
agreement, and the other transactions contemplated by the merger
agreement by the affirmative vote of holders of at least a majority of
the company’s outstanding common stock. The
closing of the merger is not subject to a financing condition.
As a result of its pending proposed merger with Inland American, the
company will not hold a 2007 first quarter earnings conference call.
2007 First Quarter Financial Results
Net income available to common shareholders increased to $5.0 million
for the 2007 first quarter, or $0.17 per share, compared to net income
available to common shareholders of $4.4 million, or $0.17 per share,
for the same period in 2006. Net income available to common shareholders
for the 2007 first quarter included a loss on sale of a note receivable
of $(5.3) million, or $(0.18) per share, and merger-related costs of
$(3.0) million, or $(0.10) per share, offset by a net aggregate gain on
the sale of two hotels, net of minority interest, of approximately $10.0
million, or $0.34 per share. The loss on sale of the note receivable was
incurred in connection with the previously disclosed sale of the company’s
$20.3 million “B”
note to the Lady Luck Casino in Las Vegas, Nev. for approximately $15.2
million. The merger costs were incurred in connection with the
previously disclosed merger agreement with an affiliate of Och-Ziff Real
Estate, which was terminated on April 2, 2007, and the proposed merger
with Inland American discussed above. For a discussion regarding the
gain on sale from the dispositions of the two hotels, see “Hotel
Dispositions” below.
Funds from operations (FFO) available to common shareholders for the
2007 first quarter decreased to $(1.0) million, compared to $5.5 million
in the 2006 first quarter, or $(0.03) and $0.20 per share, respectively.
FFO available to common shareholders, excluding unusual charges, for the
2007 first quarter increased to $7.6 million, compared to $5.7 million
in the 2006 first quarter, or $0.25 and $0.21 per share, respectively.
For further detail on FFO available to common shareholders and FFO
available to common shareholders, excluding unusual charges, see the
definitions under the section “FFO and FFO
Available to Common Shareholders” and the
reconciliations of net income to both FFO and FFO Available to Common
Shareholders found later in this press release. The company had
approximately 30.4 million and 27.8 million fully diluted weighted
average common shares outstanding, respectively, in the 2007 and 2006
reporting periods.
Same Store Operating Statistics
First quarter 2007 revenue per available room (RevPAR) rose 10.5 percent
for the company’s 43 consolidated hotels that
were open throughout the three-month periods ended March 31, 2007 and
2006. The 2007 first quarter same store improvement was led by a 14.2
percent increase in average daily room rate (ADR), offset by a 3.3
percent decrease in occupancy. The increase in ADR contributed to a 220
basis point increase in first quarter 2007 operating margins to 43.9
percent from 41.7 percent in the same period a year earlier.
The following table details the company’s
same store operating statistics for the 43 consolidated hotels that were
open throughout each of the three-month periods ended March 31, 2007 and
2006 (includes 40 wholly owned hotels and three hotels--the Chapel Hill,
N.C. Courtyard by Marriott, the Ponte Vedra, Fla. Hampton Inn and the
Stanley Hotel in Estes Park, Colo.--, that are owned through
consolidated joint ventures).
Same Store Operating Statistics (Hotel Room Revenues $ in
thousands)
2007
2006
Change
Hotel Room Revenues
$ 38,435
$ 34,798
10.5%
RevPAR
$72.99
$66.07
10.5%
Occupancy
67.9%
70.2%
-3.3%
ADR
$107.44
$94.10
14.2%
Operating Margin
43.9%
41.7%
220
bps
Hotel Development
During the 2007 first quarter, the company completed construction of and
opened a wholly owned 119-room Hilton Garden Inn in Wilmington, N.C. In
April 2007, the company purchased a 0.73-acre vacant site in downtown
Raleigh, N.C. on which it plans to build a high-rise, mixed-use
development that will include a 120-room Hampton Inn and Suites, an
80-room aloft hotel and approximately 5,000 square feet of retail
and restaurant space. The high-rise also may include up to 250
residential condominiums. Pending city planning, permitting and other
required government approvals, construction is expected to begin in the
2008 first quarter. The company remains on schedule with its previously
announced development projects.
Hotel Acquisitions
In August 2006, the company announced that it had entered into
definitive agreements to acquire two hotels under construction in New
York City (one each in the Tribeca and Chelsea sections of Manhattan)
for a purchase price of $55 million each. Acquisition of each of these
hotels is subject to customary closing conditions, and in the case of
the Tribeca hotel, subject to the resolution of the company’s
dispute with the seller. As previously disclosed, the Tribeca hotel has
experienced construction delays and the company is continuing to pursue
legal action against the seller. As of the date of this press release,
construction on the Tribeca hotel has ceased. As a result, the company
does not expect the Tribeca hotel to open prior to the close of the 2007
fiscal year.
The company has been approved by Hilton Hotels Corporation for a Hilton
Garden Inn franchise for both hotels. The Chelsea hotel is expected to
open in the third quarter of 2007.
Hotel Dispositions
The company sold two wholly owned hotels and one joint-venture hotel in
the 2007 first quarter, and another wholly owned hotel in April,
bringing to four the number of hotel dispositions for the year. The
company’s 2007 hotel dispositions include the
following wholly owned properties: the 81-room Holiday Inn Express in
Abingdon, Va. (February), the 174-room Holiday Inn in Tinton Falls, N.J.
(March) and the 129-room Hampton Inn in Brunswick, Ga. (April). The
aggregate net proceeds for the three wholly owned dispositions during
2007 totaled approximately $25.7 million, resulting in an aggregate net
gain on sale of approximately $12.7 million. In March, one of the company’s
unconsolidated joint ventures, in which the company holds a 13.05
percent ownership interest, sold the 158-room Courtyard by Marriott in
Shelton, Conn.
Hotel Debt Financing Program
As previously announced, during the 2007 first quarter the company
closed on a $1.2 million “B”
note secured by a 104-room Holiday Inn Express under construction in
Webster, NY.
The following loans were repaid in full during the 2007 first quarter:
1) a $2.5 million mezzanine loan, collateralized by a senior
participation interest in a loan to Walton Street Capital relating to
the Los Angeles, Calif. Airport Renaissance hotel and 2) a $1.1 million
mezzanine loan collateralized by the borrower’s
ownership interest in the entity that owns the Hilton Garden Inn in
Atlanta, Ga. In April 2007, the two remaining mezzanine loans, totaling
$8.5 million in the aggregate, collateralized by senior participation
interests in the loans to Walton Street Capital, were repaid in full. In
May 2007, the $1.4 million first mortgage loan collateralized by the
Comfort Inn in Greenville, S.C., was repaid in full.
As previously announced, the company closed on the sale of its $20.3
million junior participation interest, or “B”
note, in the Lady Luck Hotel and Casino loan to the loan's senior
participant for approximately $15.2 million, resulting in a loss of $5.3
million, including a put fee and accrued, unpaid interest. The sale was
entered into in connection with merger agreement negotiations with an
affiliate of Och-Ziff Real Estate.
Dividends
During the 2007 first quarter, the company declared a cash dividend of
$0.50 per share of Series B Preferred Stock. Pursuant to the terms of
the merger agreement with Inland American, the company is prohibited
from paying common dividends.
About the Company
As of April 30, 2007, Winston Hotels owned or was invested in 50 hotel
properties in 18 states, having an aggregate of 6,782 rooms. This
included 42 wholly owned properties with an aggregate of 5,748 rooms, a
41.7% ownership interest in a joint venture that owned one hotel with
121 rooms, a 60% ownership interest in a joint venture that owned one
hotel with 138 rooms, a 49% ownership interest in a joint venture that
owned one hotel with 118 rooms, a 48.78% ownership interest in a joint
venture that owned one hotel with 147 rooms, a 13.05% ownership interest
in a joint venture that owned three hotels with an aggregate of 387
rooms, and a 0.21% ownership interest in a joint venture that owned one
hotel with 123 rooms for which substantially all of the profit or loss
generated by the joint venture is allocated to the company. As of March
31, 2007, the company had $29.5 million in loan receivables from owners
of several hotels. The company does not hold an ownership interest in
any of the hotels for which it has provided debt financing. For more
information about Winston Hotels, Inc., visit the company's web site at www.winstonhotels.com.
Additional Information about the Merger and Where to Find It
In connection with the proposed merger, the company has filed a
preliminary proxy statement with the Securities and Exchange Commission
(SEC). INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ
THE PRELIMINARY PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, INCLUDING THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY,
INLAND AMERICAN REAL ESTATE TRUST, INC. AND THE PROPOSED MERGER.
Investors can obtain the preliminary proxy statement and all other
relevant documents filed by the company with the SEC free of charge at
the SEC's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the
documents filed with the SEC by the company by contacting the company’s
Investor Relations at (919) 510-8003 or accessing the company’s
investor relations web site, www.winstonhotels.com.
Investors and security holders are urged to read the preliminary proxy
statement and the other relevant materials when they become available,
including the definitive proxy statement, before making any voting or
investment decision with respect to the merger.
The company and its executive officers, directors, and employees may be
deemed to be participating in the solicitation of proxies from the
security holders of the company in connection with the merger.
Information about the executive officers and directors of the company
and the number of company common shares beneficially owned by such
persons is set forth in the company’s Annual
Report on Form 10-K for the year ended December 31, 2006, which was
filed with the SEC on March 16, 2007, as amended by the company’s
Annual Report on Form 10-K/A, which was filed with the SEC on April 30,
2007. Investors and security holders may obtain additional information
regarding the direct and indirect interests of the company and its
executive officers, directors and employees in the merger by reading the
proxy statement regarding the merger when it becomes available.
Cautionary Note Regarding Forward Looking Statements
Certain statements in this release that are not historical fact may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Numerous risks, uncertainties
and other factors may cause actual results to differ materially from
those expressed in any forward-looking statements. These factors
include, but are not limited to: (i) the occurrence of any event, change
or other circumstances that could give rise to the termination of the
merger agreement; (ii) the outcome of any legal proceedings that have
been or may be instituted by or against the company; (iii) the inability
to complete the merger due to the failure to obtain shareholder approval
or the failure to satisfy other conditions to completion of the merger;
(iv) risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention as a
result of the merger; (v) the ability to recognize the benefits of the
merger; and (vi) the amount of the costs, fees, expenses and charges
related to the merger. Although the company believes the
expectations reflected in any forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations
will be attained. For a further discussion of these and other
factors that could impact the company’s
future results, performance, achievements or transactions, see the
documents filed by the company from time to time with the SEC, and in
particular the section titled, "Item 1A, Risk Factors" in our Annual
Report on Form 10-K, as amended, for the year ended December 31, 2006
filed on March 16, 2007. The Company undertakes no obligation to
revise or update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Notes About Non-GAAP Financial Measures
This press release includes certain non- generally accepted
accounting principles, or GAAP financial measures as defined under SEC
rules. As required by SEC rules, the company has provided
reconciliation in this press release of each non-GAAP financial measure
to its most directly comparable GAAP measure. We believe that
these non-GAAP measures, when combined with the company’s
primary GAAP presentations required by the SEC, help improve our equity
holders’ ability to understand our operating
performance and make it easier to compare the results of our company
with other hotel REITs. A description of each is provided below.
FFO and FFO Available to Common Shareholders
The company reports FFO in accordance with the definition of the
National Association of Real Estate Investment Trusts (NAREIT). NAREIT
defines FFO as net income (loss) (determined in accordance with GAAP),
excluding gains (losses) from sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and
joint ventures (which are calculated to reflect FFO on the same basis).
The company further subtracts preferred stock dividends from FFO to
calculate FFO available to common shareholders. FFO available to
common shareholders is a performance measure used by the company in its
budgeting and forecasting models, it is discussed during Board meetings,
and is considered when making decisions regarding acquisitions, sales of
properties and other investments, and is a metric in determining
executive compensation. The calculation of FFO and FFO available
to common shareholders may vary from entity to entity, and as such the
presentation of FFO and FFO available to common shareholders by the
company may not be comparable to other similarly titled measures of
other reporting companies. FFO and FFO available to common
shareholders are not intended to represent cash flows for the period.
FFO and FFO available to common shareholders have not been presented as
an alternative to net income, and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance
with GAAP.
FFO is a supplemental industry-wide measure of REIT operating
performance, the definition of which was first proposed by NAREIT in
1991 (and clarified in 1995, 1999 and 2002) in response to perceived
drawbacks associated with the presentation of net income under GAAP as
applied to REITs. Since the introduction of the definition by
NAREIT, the term has come to be widely used by REITs. Historical
GAAP cost accounting for real estate assets implicitly assumes that the
value of real estate assets diminishes predictably over time. Since
real estate values instead have historically risen or fallen with market
conditions, most industry investors have considered presentations of
operating results for real estate companies that use historical GAAP
cost accounting to be insufficient by themselves. Accordingly,
the company believes FFO and FFO available to common shareholders
(combined with the company’s primary GAAP
presentations required by the SEC) improve our investors’
ability to understand the company’s operating
performance.
The company also provides FFO Available to Common Shareholders
excluding unusual charges. The company describes this measure as
FFO Available to Common Shareholders, excluding unusual charges in the
attached reconciliation schedules. The following describes the
unusual charges the company incurred during 2006 and 2007 that are added
back to FFO:
On February 21, 2007, the company entered into a definitive
agreement pursuant to which the company agreed, subject to the
approval of the company’s common
stockholders and other closing conditions, to merge with and into an
affiliate of Och-Ziff Real Estate and Norge Churchill, Inc. On March
8, 2007, the company received an unsolicited offer from Inland
American, subsequently confirmed in a letter from Inland American
dated March 27, 2007. On April 2, 2007, the company entered into an
agreement and plan of merger with Inland American and IAA. The company
has incurred merger related costs of $3.0 million during the three
months ended March 31, 2007.
In February 2007, the company closed on the sale of its junior
participation interest in the Lady Luck loan to the loan's senior
participant for approximately $15.2 million, resulting in a loss of
$5.3 million, including a put fee and accrued, unpaid interest.
In October 2004, the company entered into a $50.0 million master
repurchase agreement with Marathon Structured Finance Fund, L.P. In
February 2007, the Company terminated this master repurchase
agreement. Write-off of related deferred expenses of $0.3 million is
included in extinguishment of debt in the Consolidated Statements of
Operations.
One of the company’s taxable REIT
subsidiaries provided development services to one of the company’s
consolidated joint ventures and recorded development fee income. This
income is taxable and therefore income tax expense related to the
development fees, totaling $0.3 million for 2006 is included in the
Consolidated Statements of Operations. Since the joint venture’s
income is consolidated into the company’s
financial statements, the development fee income is eliminated in
consolidation.
The above adjustments are not in accordance with the NAREIT
definition of FFO and are not comparable to similar adjusted FFO
measures reported by other REITs. The company presents these
adjustments to FFO because it believes that the resulting measure
provides investors a useful indicator of the operating performance of
the Company's hotels and other investments during the three months ended
March 31, 2007 as compared to prior periods by adjusting for the effects
of certain unusual or non-cash items arising during the periods. FFO
available to common shareholders, excluding unusual charges, is not
intended to represent cash flows for the period, is not presented as an
alternative to net income, and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with
GAAP. In addition to being used by management in the annual
budget process, the compensation committee of the board of directors of
the company will consider these adjustments in its criteria for
performance-based executive compensation.
Operating Margin
Gross operating profit margin, which is referred to herein as
operating margin, is defined as hotel revenues minus hotel operating
costs before property taxes, insurance and management fees, divided by
hotel revenues.
RevPAR
RevPAR is an acronym for Revenue Per Available Room, which is
determined by multiplying average daily rate by occupancy percentage for
any given period. RevPAR does not include food and beverage or
other ancillary revenues, such as parking, telephone, or other guest
services generated by the property. Similar to the reporting
periods for the company’s statement of
operations, hotel operating statistics (i.e., RevPAR, average daily rate
and average occupancy) are always reported on a quarter to date and/or
year to date basis.
EBITDA, excluding unusual charges
EBITDA is an acronym for Earnings before Interest, Taxes,
Depreciation, and Amortization, which is defined as GAAP net income
(loss) adjusted for interest expense, taxes, depreciation and
amortization. EBITDA is helpful to investors and management 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. EBITDA
does not 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 our financial performance or to cash
flow from operating activities as determined by GAAP as a measure of our
liquidity, nor is it indicative of funds available to fund our cash
needs, including our ability to make cash distributions. EBITDA
may include funds that may not be available for the company’s
discretionary use due to functional requirements to conserve funds for
capital expenditures and property acquisitions, and other commitments
and uncertainties.
The company provides EBITDA, excluding unusual charges in the
attached reconciliation schedule. EBITDA, excluding unusual
charges, excludes all operating results from discontinued operations,
minority interest, loss on sale of note receivable and merger related
costs because the company believes that exclusion of such items in
EBITDA better reflects the ongoing operating performance of the company’s
remaining assets.
The company presents these adjustments to EBITDA because it believes
that the resulting measure provides investors a more useful indicator of
the operating performance of the Company's hotels and other investments
during the three months ended March 31, 2007 as compared to prior
periods, by adjusting for the effects of certain unusual items arising
during the periods. EBITDA, excluding unusual charges, is not
intended to represent cash flows for the period, is not presented as an
alternative to net income, and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with
GAAP.
WINSTON HOTELS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
March 31, 2007
December 31, 2006
ASSETS
Land
$ 59,597
$ 59,803
Buildings and improvements
427,651
430,968
Furniture and equipment
66,883
66,745
Operating properties
554,131
557,516
Less accumulated depreciation
139,835
140,826
414,296
416,690
Properties under development and land for development
5,192
11,748
Net investment in hotel properties
419,488
428,438
Assets held for sale
11,834
10,327
Corporate furniture, fixtures and equipment, net
520
551
Cash
43,363
7,822
Accounts receivable, net
3,149
2,723
Notes receivable
29,530
52,146
Investment in joint ventures
3,927
4,210
Deferred expenses, net
8,792
9,490
Prepaid expenses and other assets
16,188
14,135
Deferred tax asset
10,506
10,367
Total assets
$ 547,297
$ 540,209
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
Lines of credit
$ 5,250
$ 7,850
Mortgage loans
240,707
231,694
Accounts payable and accrued expenses
18,889
21,479
Distributions payable
1,840
6,413
Total liabilities
266,686
267,436
Minority interest
15,592
13,804
Shareholders' equity:
Preferred stock, Series B, $.01 par value, 5,000 shares authorized,
3,680 shares issued and outstanding (liquidation preference of
$93,840)
37
37
Common stock, $.01 par value, 50,000 shares authorized, 29,415 and
29,191 shares issued and outstanding at March 31, 2007 and December
31, 2006, respectively
294
292
Additional paid-in capital
352,312
351,274
Distributions in excess of earnings
(87,624)
(92,634)
Total shareholders' equity
265,019
258,969
Total liabilities, minority interest and shareholders' equity
$ 547,297
$ 540,209
WINSTON HOTELS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended March 31,
2007
2006
Operating revenue:
Rooms
$ 39,613
$ 33,268
Food and beverage
2,448
1,993
Other operating departments
1,257
1,082
Joint venture fee income
68
52
Total operating revenue
43,386
36,395
Hotel operating expenses:
Rooms
7,903
6,934
Food and beverage
1,920
1,696
Other operating departments
948
819
Undistributed operating expenses:
Property operating expenses
9,100
7,597
Real estate taxes and property and casualty insurance
2,112
1,716
Franchise costs
2,756
2,251
Maintenance and repair
2,139
1,882
Management fees
1,528
1,293
General and administrative
6,328
3,028
Depreciation
5,591
4,691
Amortization
546
489
Total operating expenses
40,871
32,396
Operating income
2,515
3,999
Extinguishment of debt
(272)
-
Loss on sale of note receivable
(5,322)
-
Interest and other income
1,720
1,386
Interest expense
(3,896)
(4,412)
Income (loss) before allocation to minority interest in Partnership,
allocation to minority interest in consolidated joint ventures,
income taxes, and equity in income of unconsolidated joint ventures
(5,255)
973
Loss allocation to minority interest in Partnership
237
34
Loss allocation to minority interest in consolidated joint ventures
213
134
Income tax expense
(11)
(27)
Equity in income of unconsolidated joint ventures
1,304
22
Income (loss) from continuing operations
(3,512)
1,136
Discontinued operations:
Income from discontinued operations
366
895
Gain on sale of discontinued operations
9,996
4,249
Net income
6,850
6,280
Preferred stock distribution
(1,840)
(1,840)
Net income available to common shareholders
$ 5,010
$ 4,440
Basic weighted average number of common shares outstanding
28,974
26,418
Diluted weighted average number of common shares outstanding
28,974
26,418
Income (loss) per common share basic and diluted:
Loss from continuing operations
$ (0.18)
$ (0.03)
Income from discontinued operations
0.35
0.20
Net income available to common shareholders
$ 0.17
$ 0.17
Per share dividends to common shareholders
$ -
$ 0.15
WINSTON HOTELS, INC.
RECONCILIATION OF NET INCOME TO FFO,
FFO AVAILABLE TO COMMON SHAREHOLDERS AND
FFO AVAILABLE TO COMMON SHAREHOLDERS, EXCLUDING UNUSUAL CHARGES
($ in thousands, except per share amounts)
Three Months Ended
March 31,
2007
2006
Net income
$ 6,850
$ 6,280
Gain on sale of discontinued operations
(10,438)
(4,456)
(Gain) loss on sale of unconsolidated joint venture hotel
(1,318)
1
Minority interest in Partnership allocation of loss
(237)
(34)
Minority interest in Partnership allocation of gain on sale of
discontinued operations
442
206
Minority interest in Partnership allocation of income from
discontinued operations
16
43
Depreciation
5,016
4,304
Depreciation from discontinued operations
183
714
Depreciation from joint ventures
349
258
FFO
863
7,316
Preferred stock dividend
(1,840)
(1,840)
FFO available to common shareholders
(977)
5,476
Unusual Charges:
Loss on sale of note receivable
5,322
-
Merger related costs
3,014
-
Write off of unamortized debt costs
272
-
Tax on joint venture development fees
-
261
FFO available to common shareholders, excluding unusual charges
$ 7,631
$ 5,737
Weighted average common shares outstanding assuming dilution
30,400
27,752
FFO available to common shareholders per share
$ (0.03)
$ 0.20
FFO available to common shareholders per share, excluding unusual
charges
$ 0.25
$ 0.21
Common dividend per share
$ -
$ 0.15
WINSTON HOTELS, INC.
RECONCILIATION OF NET INCOME
TO EBITDA AND EBITDA, EXCLUDING UNUSUAL CHARGES
($ in thousands)
Three Months Ended
March 31,
2007
2006
Net income
$ 6,850
$ 6,280
Add back:
Interest expense
3,300
3,957
Interest expense from joint ventures
370
309
Depreciation
5,016
4,304
Depreciation from discontinued operations
183
714
Depreciation from joint ventures
349
258
Amortization expense
508
453
Amortization from discontinued operations
3
9
Amortization expense from joint ventures
41
27
Expense from income tax
(125)
(183)
EBITDA
$ 16,495
$ 16,128
Unusual Charges:
Minority interest in Partnership allocation of income
$ (237)
$ (34)
Depreciation from discontinued operations
(183)
(714)
Amortization from discontinued operations
(3)
(9)
Income from discontinued operations, net of minority interest
(366)
(895)
Gain on sale, net of minority interest
(9,996)
(4,249)
Merger related costs
3,014
-
Loss on sale of note receivable
5,322
-
EBITDA, excluding unusual charges
$ 14,046
$ 10,227
Winston Hotels, Inc.
Same-Store Revenue Per Available Room Statistics
Three Months Ended March 31, 2007 and 2006
Total for 43 Hotels
Three Months Ended March 31,
2007
2006
% CH
Combined Brands
Comfort Inn/Suites & Quality Suites
$50.39
$50.14
0.5%
Courtyard, Fairfield Inn, Residence Inn
$78.08
$70.63
10.6%
Hampton Inn/Suites
$74.15
$66.53
11.5%
Hilton Garden Inn
$82.29
$74.15
11.0%
Holiday Inn Express/Select
$83.19
$70.15
18.6%
Homewood Suites
$84.61
$77.04
9.8%
Region
South Atlantic
$71.20
$64.63
10.2%
East North Central
$72.32
$71.26
1.5%
West South Central
$68.86
$60.53
13.8%
Mountain
$82.74
$70.78
16.9%
New England
$70.75
$65.11
8.7%
Middle Atlantic
$85.91
$77.55
10.8%
Segment
Upscale
$81.63
$72.85
12.1%
Mid-scale w/ F&B
$65.95
$63.73
3.5%
Mid-scale w/o F&B
$64.23
$57.67
11.4%
Service
Limited-service
$66.18
$59.90
10.5%
Full-service
$77.33
$68.76
12.5%
Extended-stay
$77.31
$71.65
7.9%
Total
$72.99
$66.07
10.5%
The above presentation includes 40 of the company’s
43 wholly owned hotels as of March 31, 2007, as well as three
joint venture hotels the company held an ownership interest in
throughout the periods presented. These joint venture hotels
include the Chapel Hill, N.C. Courtyard by Marriott, the Ponte
Vedra, Fla. Hampton Inn and the Stanley Hotel in Estes Park, Colo.
The above presentation excludes the Courtyard by Marriott in
Kansas City, Mo. which opened in April 2006 and the Courtyard by
Marriott in St. Charles, Ill. which was acquired in September
2006. The above presentation also excludes the Hilton Garden Inn
in Akron, Ohio and the Homewood Suites in Princeton, N.J., both of
which opened in November 2006. The above presentation also
excludes the Hilton Garden Inn in Wilmington, N.C. which opened in
March 2007. These properties were not open throughout each of the
periods presented and therefore are excluded from the table above.
Winston Hotels, Inc.
Same-Store Average Daily Rate Statistics
Three Months Ended March 31, 2007 and 2006
Total for 43 Hotels
Three Months Ended March 31,
2007
2006
% CH
Combined Brands
Comfort Inn/Suites & Quality Suites
$77.88
$68.83
13.1%
Courtyard, Fairfield Inn, Residence Inn
$115.22
$104.44
10.3%
Hampton Inn/Suites
$105.30
$94.55
11.4%
Hilton Garden Inn
$126.24
$108.11
16.8%
Holiday Inn Express/Select
$121.51
$105.66
15.0%
Homewood Suites
$111.14
$97.65
13.8%
Region
South Atlantic
$101.65
$89.52
13.6%
East North Central
$110.08
$109.46
0.6%
West South Central
$105.27
$87.04
20.9%
Mountain
$122.17
$104.42
17.0%
New England
$121.62
$98.68
23.2%
Middle Atlantic
$138.33
$119.31
15.9%
Segment
Upscale
$120.14
$104.72
14.7%
Mid-scale w/ F&B
$100.03
$86.07
16.2%
Mid-scale w/o F&B
$93.24
$83.27
12.0%
Service
Limited-service
$97.16
$86.56
12.2%
Full-service
$118.86
$104.26
14.0%
Extended-stay
$108.11
$92.60
16.7%
Total
$107.44
$94.10
14.2%
The above presentation includes 40 of the company’s
43 wholly owned hotels as of March 31, 2007, as well as three
joint venture hotels the company held an ownership interest in
throughout the periods presented. These joint venture hotels
include the Chapel Hill, N.C. Courtyard by Marriott, the Ponte
Vedra, Fla. Hampton Inn and the Stanley Hotel in Estes Park, Colo.
The above presentation excludes the Courtyard by Marriott in
Kansas City, Mo. which opened in April 2006 and the Courtyard by
Marriott in St. Charles, Ill. which was acquired in September
2006. The above presentation also excludes the Hilton Garden Inn
in Akron, Ohio and the Homewood Suites in Princeton, N.J., both of
which opened in November 2006. The above presentation also
excludes the Hilton Garden Inn in Wilmington, N.C. which opened in
March 2007. These properties were not open throughout each of the
periods presented and therefore are excluded from the table above.
Winston Hotels, Inc.
Same-Store Occupancy Statistics
Three Months Ended March 31, 2007 and 2006
Total for 43 Hotels
Three Months Ended March 31,
2007
2006
% CH
Combined Brands
Comfort Inn/Suites & Quality Suites
64.7%
72.8%
-11.1%
Courtyard, Fairfield Inn, Residence Inn
67.8%
67.6%
0.3%
Hampton Inn/Suites
70.4%
70.4%
0.0%
Hilton Garden Inn
65.2%
68.6%
-5.0%
Holiday Inn Express/Select
68.5%
66.4%
3.2%
Homewood Suites
76.1%
78.9%
-3.5%
Region
South Atlantic
70.1%
72.2%
-2.9%
East North Central
65.7%
65.1%
0.9%
West South Central
65.4%
69.5%
-5.9%
Mountain
67.7%
67.8%
-0.1%
New England
58.2%
66.0%
-11.8%
Middle Atlantic
62.1%
65.0%
-4.5%
Segment
Upscale
67.9%
69.6%
-2.4%
Mid-scale w/ F&B
65.9%
74.0%
-10.9%
Mid-scale w/o F&B
68.9%
69.3%
-0.6%
Service
Limited-service
68.1%
69.2%
-1.6%
Full-service
65.1%
66.0%
-1.4%
Extended-stay
71.5%
77.4%
-7.6%
Total
67.9%
70.2%
-3.3%
The above presentation includes 40 of the company’s
43 wholly owned hotels as of March 31, 2007, as well as three
joint venture hotels the company held an ownership interest in
throughout the periods presented. These joint venture hotels
include the Chapel Hill, N.C. Courtyard by Marriott, the Ponte
Vedra, Fla. Hampton Inn and the Stanley Hotel in Estes Park, Colo.
The above presentation excludes the Courtyard by Marriott in
Kansas City, Mo. which opened in April 2006 and the Courtyard by
Marriott in St. Charles, Ill. which was acquired in September
2006. The above presentation also excludes the Hilton Garden Inn
in Akron, Ohio and the Homewood Suites in Princeton, N.J., both of
which opened in November 2006. The above presentation also
excludes the Hilton Garden Inn in Wilmington, N.C. which opened in
March 2007. These properties were not open throughout each of the
periods presented and therefore are excluded from the table above.