MeriStar Hospitality Corporation Corrects Misunderstandings in Dow Jones Article

WASHINGTON–(BUSINESS WIRE)–March 12, 2002–MeriStar Hospitality Corporation (NYSE:MHX), the nation's third largest hotel real estate investment trust (REIT), today released a statement to correct misunderstandings in a Dow Jones report released late Monday evening based on the company's annual report filing with the Securities and Exchange Commission.
The Dow Jones article indicated that MeriStar expected to pay a $0.01 dividend for the 2002 third quarter. We said in our 2002 guidance on January 30, 2002 that we expect to pay a $0.01 dividend for the first and second quarters and increase the dividend to $0.25 for the 2002 third quarter. These dividends are paid in cash in the month following the end of a quarter. For example, we expect to pay the first quarter dividend in April, the second quarter dividend in July, and so forth, said Paul W. Whetsell, MeriStar chairman and chief executive officer. The hotel industry is continuing to recover from the effects of a sluggish economy and the aftereffects of the September 11 terrorist attacks, and we are standing firm on that guidance. We expect to pay our dividends out of free cash flow.
Whetsell said that the report also noted that the company had reduced its revolving credit line from $310 million to $150 million. We announced in early February the completion of the sale of $200 million in senior unsecured notes to pay down our credit facility as part of our strategy to replace bank debt that matures in 2003 with longer term debt. Our total borrowing capacity remains the same.
The Dow Jones article also noted that MeriStar disclosed in the filing that as a result of the economic slowdown and September 11 terrorist attacks, it had filed a number of appeals for lower property tax assessments. Whetsell noted that it is standard industry practice to regularly file appeals to lower property tax assessments on hotels when local market conditions warrant. We already have won some appeals since year-end and do not expect the outcome of the remaining appeals to have any impact on our current guidance. We also have factored in higher insurance costs in our guidance.
Washington, D.C.-based MeriStar Hospitality Corporation owns 112 principally upscale, full-service hotels in major markets and resort locations with 28,597 rooms in 27 states, the District of Columbia and Canada. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree. For more information about MeriStar Hospitality Corporation, visit the company's Web site: