CLEVELAND, May 14 /PRNewswire-FirstCall/ — Boykin Lodging Company (NYSE:BOY), a hotel real estate investment trust, today announced financial results for the three-month period ended March 31, 2002.
For the first quarter, funds from operations (FFO) of $4.8 million, or $0.24 per fully-diluted share, exceeded the consensus of analysts' estimates and was in line with the Company's guidance. Cost controls initiated at the Company's properties after September 11th, combined with the January 1, 2002 implementation of a Taxable REIT Subsidiary (TRS) structure, which allows the Company to participate more directly in cost reduction, contributed to these results.
The implementation of the TRS structure at the start of this year has resulted in a significant change in the basis of presentation of the financial statements of the Company. The revenues and expenses of the Company now reflect the operating revenues and expenses of the consolidated properties operated by a TRS, whereas prior to 2002, the revenues of the Company reflected only the lease income from these properties payable to the Company. Due to this significant change in presentation, for ease of comparison the results of the first quarter 2001 are presented in this release on a pro forma basis as if the TRS structure was implemented on January 1, 2001.
The Company's FFO per share declined to $0.24 compared to the Company's FFO per share of $0.38 for the pro forma first quarter 2001.
Revenues for the three months ended March 31, 2002 were $60.7 million, compared to pro forma revenues of $66.5 million for the first quarter of last year. Revenue per available room (RevPAR) for all 33 hotels declined 16.0% to $50.21 from last year's $59.78, as occupancy fell seven points to 54.9% from 62.1%. The average daily room rate declined 5.0% to $91.44 from $96.24. Excluding the Chicago, Illinois and Meadowlands, New Jersey properties, both of which were undergoing major renovations during the first quarter of 2002, the RevPAR decline was 13.8%. Renovation activities at these two properties and the Buffalo Marriott resulted in 20,500 room nights out of service, or 2.5% of the Company's room inventory for the quarter. Last year during the first quarter 10,000 room nights were out of service.
Gross operating profit after management fees at the properties under the TRS structure averaged 25.4% for the 2002 first quarter, compared to 25.7% on a pro forma basis for the previous year. EBITDA for the quarter, including the Company's share of EBITDA from unconsolidated joint venture subsidiaries, totaled $10.7 million, a 23.2% decrease from last year first quarter pro forma of $13.9 million. Corporate general and administrative expenses for the quarter included non-recurring charges of $0.5 million.
The Company posted a net loss of $1.9 million, or $0.11 per share, compared to last year's first quarter pro forma break-even results.
The first quarter continued to be a challenging time in the hotel sector, but our decline in RevPAR of 16.0% was within the range of guidance we gave in February, commented Robert W. Boykin, Chairman and Chief Executive Officer. Compared to the overall lodging market and upper-upscale segments, when you exclude the results of our two major renovation properties, our RevPAR decline of 13.8% was in line with the positioning of our hotels in their respective markets. RevPAR for the quarter was significantly impacted by the results at our Berkeley property, which posted a 32% RevPAR decline, as the Bay Area lodging market continued to suffer. Excluding Berkeley and the two major renovation properties, our RevPAR decline would have been 12.5%.
During the quarter, we completed the renovation and brand conversion of the Meadowlands property to a Courtyard by Marriott, and are pleased with its recent performance. We also completed a guestroom renovation of the Buffalo Marriott. The renovation of the Chicago Executive Plaza, to be renamed 'Hotel 71,' is proceeding on schedule for a September completion. In addition, we sold 15 Sanibel View Villas condominium units at our Pink Shell Beach Resort netting proceeds of over $3.0 million, which was in excess of the renovation cost of the entire 60-unit building.
Mr. Boykin continued, For the second quarter we expect the RevPAR decline to lessen to a range of 10% to 12% lower than the same period last year, and we remain guardedly optimistic that a recovery will begin in the second half of this year. As a result, we continue to predict that the full-year RevPAR comparisons could be flat to off 5% compared with 2001. As a result, we now expect our FFO could range between $0.45 and $0.53 per fully-diluted share in the second quarter and $1.45 and $1.75 per share for the full year.
During the quarter, the Company completed an amendment to the terms of its secured credit facility which included reducing the stated commitment amount to $65 million to better align the capacity with loan-to-value limitations, thus reducing the payment of non-use fees. The financial covenants of the facility were amended through its July 2003 maturity date and the interest rate ranges between 2.25% to 4.00% over LIBOR. Additionally, the Company renegotiated the terms of its $45 million term-loan agreement, obtaining financial covenants consistent with its amended secured credit facility. The term loan bears interest at 2.00% to 4.00% over LIBOR. While this loan matures in October 2002, the Company has the right to extend the maturity date to July 2003.