Humphrey Hospitality Trust Announces Sale of Hotel

COLUMBIA, Md.–(BUSINESS WIRE)–Feb. 26, 2002–Humphrey Hospitality Trust, Inc. (HUMP), a real estate investment trust (REIT) with 90 limited service hotel properties, today announced the sale of its Macomb, Illinois Super 8 hotel for $1,200,000.
The Company realized a net loss of approximately $7,000, and utilized the net proceeds of $1,118,000 to pay down existing debt. Buyer interest in the various properties we have for sale has increased, and further hotel sales are expected to be announced in the coming months, commented George R. Whittemore, President and Chief Executive Officer of the REIT. The continued sale of selected hotels will help strengthen the Company's balance sheet, and ultimately permit our full compliance with existing loan covenants.
In its third quarter 2001 Form 10-Q filing, the Company disclosed non-compliance with the loan covenant requirements of certain of its lenders. The Company has since negotiated extended loan covenant waivers allowing the Company to temporarily maintain higher loan to value ratios and lower debt service coverage ratios through September 2002. The loan covenant waivers are subject to specific lender conditions, including a mandatory cap on capital expenditures for fiscal year 2002, and restrictions prohibiting dividend payments to shareholders at any time during 2002.
Accordingly, the Company does not expect to declare quarterly dividends in 2002. At the end of 2002, the Company may declare an annual dividend for the year 2002, which if declared, would be paid in January 2003. The Board of Directors will review the Company's actual results of operations, economic conditions, capital expenditure requirements and any other factors that the Board of Directors deems relevant, including the Company's compliance with loan covenants, in considering any such dividend.
Mr. Whittemore stated, We appreciate the cooperation shown by our lenders as they work with us through the current, industry-wide downturn in lodging demand. As we reduce our outstanding debt through the sale of selected hotels, and hopefully see an improvement in the performance of our remaining hotels during the later part of this year, we are cautiously optimistic that we will return to full compliance under our permanent loan covenants. Nevertheless, we will work closely with our lenders to maintain their confidence and support, and take whatever steps necessary to do so.
Humphrey Hospitality Trust, Inc. is a real estate investment trust specializing in limited-service lodging. The company owns 90 hotels in 19 mid-western and eastern states.