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 Boykin Lodging Company Reports 2005 2nd Qtr Net Income of $6.0 million
Compared with the Same Period Last Year Net Loss of $0.4 million

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CLEVELAND, Aug. 8, 2005 - Boykin Lodging Company (NYSE: BOY), a hotel real estate investment trust, today announced financial results for the second quarter and six months ended June 30, 2005.

Financial Highlights:

Revenue per available room (RevPAR) for the second quarter for hotels owned and operating as of June 30, 2005 increased 13.5% to $73.34 from last year’s $64.62. The increase in RevPAR was the result of a 3.1% increase in average daily room rate to $101.25 and a 6.6 point increase in occupancy to 72.4%.

The Company’s net income attributable to common shareholders for the second quarter of 2005 totaled $6.0 million, or $0.34 per fully-diluted share, compared with the same period last year when the net loss totaled $0.4 million, or $0.02 per share.

Funds from operations attributable to common shareholders (FFO) for the second quarter totaled $4.1 million, or $0.23 per fully diluted share, a decrease from second-quarter 2004 FFO of $5.8 million, or $0.33 per share.  Primary contributors to the decrease in FFO included the loss of $0.6 million of contribution from condominium development and unit sales and a $1.5 million increase in corporate general and administrative expenses, both net of minority interest.  Approximately $1.2 million of the corporate general and administrative expense increase is attributable to non-recurring increases in compensation expense, resulting from pre-existing compensation agreements, and non-recurring professional fees.  These charges were partially offset by interest savings and increases in interest income.  The FFO contribution from hotel operations was virtually unchanged from the second quarter of 2004 to 2005 because, while the earnings before interest, taxes, depreciation and amortization (EBITDA) of properties owned for both periods increased 16.4%, this was offset by the loss of EBITDA from properties sold.

The Company’s EBITDA for the second quarter, including the Company’s share of EBITDA from unconsolidated joint venture subsidiaries, totaled $9.4 million, down from last year’s second quarter EBITDA of $12.2 million, primarily due to the reasons stated above; losses of contributions from condominium development and unit sales of $0.7 million combined with $1.8 million of increases in corporate general and administrative expenses, approximately $1.4 million of which is non-recurring.  The EBITDA change, however, is not impacted by minority interest.  FFO and EBITDA are non-GAAP financial measures that should not be considered as alternatives to any measures of operating results under GAAP.  A reconciliation of these non-GAAP measures to GAAP measures is included in the financial tables accompanying this release.

The operating results of the properties sold during 2004 and the French Lick Springs Resort and Spa and the Clarion Hotel & Conference Center sold during the second quarter of 2005 are reflected in the financial statements as discontinued operations for all periods presented.

Details of Second Quarter Results:

Revenues from continuing operations for the quarter ended June 30, 2005, were $54.8 million, compared with revenues of $52.5 million for the same period last year.  Hotel revenues for the three months ended June 30, 2005 were $54.5 million, a 7.1% increase from $50.9 million for the same period in 2004.  Included in other hotel revenues is $1.3 million related to business interruption insurance recoveries for the two closed Melbourne properties.  For comparative purposes, 2004 hotel revenues included approximately $3.0 million related to the two Melbourne properties, which were open during that period.  Offsetting the increases in hotel revenue is the decrease in condominium development and unit sales due to the completion of the White Sand Villas project in 2004.

For the comparable properties, consisting of the 17 consolidated properties owned and operated under a Taxable REIT Subsidiary (TRS) structure as of June 30, 2005 and excluding hotels closed due to hurricane damage, RevPAR increased 12.8% to $72.06 in 2005 from $63.90 in 2004. Contributing to the RevPAR increase was a 3.1% increase in average daily room rate to $100.70 from $97.63, combined with a 6.1 point increase in occupancy to 71.6% from 65.5%.

Hotel profit margins, defined as hotel operating profit (hotel revenues less hotel operating expenses) as a percentage of hotel revenues, of the consolidated hotels operated under the TRS structure for the second quarter were 30.3%, an increase from the 27.7% hotel operating profit margin for the second quarter of 2004.  A portion of the increased margin is the result of the recognition of the business interruption insurance recoveries during the second quarter of 2005 within hotel revenues. Excluding the business interruption amounts from 2005 and the two Melbourne properties from the 2004 results, hotel operating profit margins for the portfolio increased 220 basis points to 29.4% from 27.2% in 2004.

As a result of the property sales in 2005, the Company has been able to reduce its outstanding debt from $200.0 million at December 31, 2004 to $140.5 million as of June 30, 2005.

Year-to-date Results:

The Company’s net income attributable to common shareholders for the six months ended June 30, 2005 totaled $20.7 million versus a net loss of $4.9 million for the year-earlier period.  Year-to-date revenues through June 30, 2005 totaled $108.5 million, compared with $104.6 for the six months ended June 30, 2004.  Hotel revenues for the first six months totaled $107.7 million compared to $99.4 million during the first six months of 2004.  Included in year to date 2005 other hotel revenues is approximately $5.4 million of business interruption insurance recoveries related to the two closed Melbourne properties and a property which had rooms out of service as a result of a remediation project during 2003 and the first half of 2004. Included in hotel revenues for the first six months of 2004 are approximately $6.2 million related to the two Melbourne properties which were open during that period.  Offsetting the increases in hotel revenue is the decrease in condominium development and unit sales due to the completion of the White Sand Villas project in 2004.

Hotel portfolio RevPAR increased 11.6% to $71.18 from last year’s $63.79.  Occupancy increased to 68.4% from 63.8% and the average daily room rate increased 4.2% to $104.14 from $99.91.

RevPAR for the comparable 17 hotels increased 11.3% to $70.45 from last year’s $63.30, as occupancy rose to 67.8% from 63.7% and the average daily rate increased 4.6% to $103.97 from $99.43.  During the first six months of 2005, hotel profit margins of the consolidated properties owned and operated under the TRS structure averaged 31.4%, compared with 27.1% for the previous year.  A portion of the increased margin is the result of the recognition of the business interruption insurance recoveries during the first six months of 2005 within hotel revenues.  Excluding the business interruption amounts from 2005 and the two Melbourne properties from the 2004 results, hotel operating profit margins for the portfolio showed an increase to 28.7% from 26.2% in 2004.

As previously announced, during the first six months of 2005, the unconsolidated joint venture between the Company and AEW Partners III, L.P., sold Hotel 71 in Chicago, Illinois. The Company’s share of the gain on the sale approximated $10.1 million, net of minority interest, and is reflected as equity in income of unconsolidated joint ventures within the financial statements.

During the first six months of 2005, the Company recorded gains on the sale/disposal of assets of approximately $6.9 million related to property casualty insurance recoveries in excess of the net book value of assets disposed for properties which were damaged by hurricanes or were involved in water infiltration remediation activity.  The gain recorded related to property insurance recoveries received in excess of the net book value of assets disposed for the first six months of 2004 totaled $2.5 million.

For the first six months of 2005, FFO of $8.3 million, or $0.47 per fully-diluted share, was above last year’s FFO of $4.1 million, or $0.23 per share for the same period.  EBITDA, including the Company’s share of EBITDA from unconsolidated joint venture subsidiaries, totaled $19.5 million, up from last year’s EBITDA of $15.9 million.

Included in the year-to-date 2004 net loss, EBITDA and FFO is a $4.3 million impairment charge related to one of the Company’s properties. Net of minority interest, the impairment charge approximated $3.7 million, or $0.21 per share.

Capital Structure:

At June 30, 2005, Boykin had $30.1 million of cash and cash equivalents including restricted cash and total consolidated debt of $140.5 million. The Company’s pro rata share of the debt of unconsolidated joint ventures totaled $9.1 million at June 30, 2005.
The Company’s $108.0 million term loan was scheduled to mature in July 2005.  During the second quarter the Company repaid the outstanding balance, $91.1 million, in full.

Additionally in June, the Company expanded the principal amount on its secured credit facility from $60.0 million to $100.0 million and added four properties as security.  At quarter end, $40.0 million was drawn on the facility.

Business Update:

The Company’s two hotels located in Melbourne, Florida remain closed while repairs are underway.  Based upon current estimates of the availability of labor and materials, the Company expects the rebuilding to be completed during early 2006. The current estimated aggregate cost the Company expects to incur for the two properties is between $30 million and $40 million, while the Company is estimating that insurance recoveries for property damage will range between $13 million and $16 million.

The Company is currently marketing units in the final phase of the redevelopment of the Pink Shell Beach Resort & Spa, a new 43 beach-front unit condo-hotel tower named Captiva Villas. Buildings previously located on the site were demolished in February 2005 and construction of the new building is expected to commence during the fall of 2005.

The Company announced that it has made deposits totaling $0.6 million for the purchase of a redevelopment project in the Florida Keys.  The Company anticipates constructing 58 units on the site, and selling these units as condo-hotel units.  The Company anticipates that it will acquire the property with a joint venture partner and will fund approximately 50% of the $12.5 million purchase price.

Outlook:

Based upon the current booking trends, the Company anticipates third-quarter RevPAR for the portfolio will be 2.5% to 4.5% above the same period last year, with full-year 2005 RevPAR 6.0% to 7.0% above 2004. Based upon these assumptions, the Company expects net losses to range between $0.19 to $0.15 per share for the third quarter with net income ranging between $0.73 and $0.79 per share for the full year.  FFO is expected to range between $0.10 and $0.15 per fully-diluted share for the third quarter and $0.60 and $0.70 per share for the full year.

Robert W. Boykin, Chairman and Chief Executive Officer, commented, “We are continuing to focus on the transformation of our portfolio.  As previously announced, we have recently closed on the sale of two properties which were inconsistent with our strategy of owning upscale commercial and resort hotels in urban and beachfront markets.  We look forward to redeploying the capital from such sales to properties with greater growth prospects in markets with high barriers to entry.  We believe that the combination of the upgrading of our portfolio and the improvement within the economy and lodging industry will improve the Company’s results.”
 
 
 

BOYKIN LODGING COMPANY
STATEMENTS OF OPERATIONS, FUNDS FROM OPERATIONS ATTRIBUTABLE 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,
    OPERATING DATA:             2005         2004         2005         2004
     Revenues:
      Hotel revenues:
       Rooms                  $34,789      $33,424      $67,644      $66,115
       Food and beverage       16,006       15,173       30,165       29,033
       Other                    3,659        2,263        9,907        4,270
      Total hotel revenues     54,454       50,860      107,716       99,418
      Lease revenue               354          343          709          686
      Other operating revenue      40          118          123          195
      Revenues from
       condominium
       development
       and unit sales               -        1,181            -        4,274
          Total revenues       54,848       52,502      108,548      104,573

    Expenses:
     Hotel operating expenses:
      Rooms                     8,299        8,213       15,959       15,991
      Food and beverage        10,561       10,314       20,286       19,915
      Other direct              1,506        1,394        2,929        2,736
      Indirect                 15,922       15,626       31,342       31,105
      Management fees to
       related party            1,672        1,209        3,354        2,742
     Total hotel operating
      expenses                 37,960       36,756       73,870       72,489
     Property taxes, insurance
      and other                 4,293        3,623        8,777        7,358
     Cost of condominium
      development and unit sales    -          482            -        3,481
     Real estate related
      depreciation and
      amortization              5,774        5,588       11,556       11,038
     Corporate general and
      administrative            3,824        1,986        6,089        4,002
        Total operating
         expenses              51,851       48,435      100,292       98,368

        Operating income        2,997        4,067        8,256        6,205

     Interest income              424           26          438          169
     Other income                   -            -            -            8
     Interest expense          (3,015)      (3,595)      (6,198)      (7,175)
     Amortization of deferred
      financing costs            (286)        (338)        (639)        (668)
     Minority interest in
      earnings of
      joint ventures              (23)          (6)         (45)         (39)
     Minority interest in
      (income) loss of
      operating partnership       266          256       (2,365)         538
     Equity in earnings (loss)
      of unconsolidated joint
      ventures including
      gain on sale                 93          143       11,159         (588)

    Income (loss) before gain
     on sale/disposal of assets
     and discontinued
     operations                   456          553       10,606       (1,550)

      Gain (loss) on sale/
       disposal of assets          38          (10)       6,914        2,490

    Income before
     discontinued operations      494          543       17,520          940

     Discontinued operations:
     Operating income (loss)
      from discontinued
      operations, net of
      minority interest income
      (expense) of $(14) and
      $184 for the three and
      six months ended June 30,
      2005 and $(50) and $844
      for the three and six
      months ended June 30,
      2004, respectively           78          278       (1,056)      (4,786)
     Gain on sale of assets,
      net of minority interest
      expense of $1,163 for the
      three and six months ended
      June 30,2005 and $237 for
      the six months ended
      June 30, 2004             6,655            -        6,655         1,345

    Net income (loss)          $7,227         $821      $23,119       $(2,501)

       Preferred dividends     (1,188)      (1,188)      (2,376)       (2,376)

    Net income (loss)
     attributable to
     common shareholders       $6,039        $(367)     $20,743       $(4,877)
 
 

    FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (FFO):

                               Three Months Ended      Six Months Ended
                                    June 30,                June 30,
                                 2005     2004          2005       2004

    Net income (loss)           $7,227     $821        $23,119   $(2,501)
        Minority interest          934     (200)         3,389    (1,106)
        (Gain) loss on sale/
         disposal of assets     (7,856)      10        (14,732)   (4,072)

       Gain on sale/disposal
        of assets included
        in discontinued
        operations                (366)     (18)          (366)      (32)

       Real estate related
        depreciation and
        amortization             5,774    5,588         11,556    11,038
       Real estate related
        depreciation and
        amortization included
        in discontinued
        operations                  90    1,241            390     2,762

       Equity in (income) loss
        of unconsolidated joint
        ventures including gain
        on sale                    (93)    (143)       (11,159)      588
       FFO adjustment related
        to joint ventures          204      603           (190)      406
       Preferred dividends
        declared                (1,188)  (1,188)        (2,376)   (2,376)
    Funds from operations after
     preferred dividends        $4,726   $6,714         $9,631    $4,707
    Less: Funds from operations
     related to minority interest  634      907          1,292       636
    Funds from operations
     attributable to common
     shareholders               $4,092   $5,807         $8,339    $4,071
 
 

    EARNINGS BEFORE INTEREST,
     TAXES, DEPRECIATION AND
     AMORTIZATION (EBITDA):

    Operating income            $2,997    $4,067        $8,256    $6,205
       Interest income             424        26           438       169
       Other income                  -         -             -         8
       Real estate related
        depreciation and
        amortization             5,774     5,588        11,556    11,038
       EBITDA attributable to
        discontinued operations   (184)    1,551        (1,216)   (2,616)
       Company’s share of EBITDA
        of unconsolidated
        joint ventures             423       963           500     1,141
       EBITDA attributable to
        joint venture minority
        interest                   (32)      (18)          (64)      (61)
    EBITDA                      $9,402   $12,177       $19,470   $15,884
 
 

    BOYKIN LODGING COMPANY
    PER-SHARE DATA
    (Unaudited)
                                For the Three            For the Six
                                Months Ended             Months Ended
                                  June 30,                  June 30,
    PER-SHARE DATA:          2005        2004           2005         2004

    Net income (loss)
     attributable to
     common shareholders
     before discontinued
     operations per share:
        Basic              $ (0.04)     $ (0.04)       $ 0.86      $ (0.08)
        Diluted            $ (0.04)     $ (0.04)       $ 0.85      $ (0.08)
    Discontinued operations
     per share:
        Basic               $ 0.38        $0.02        $ 0.32       $(0.20)
        Diluted             $ 0.38        $0.02        $ 0.32       $(0.20)
    Net income (loss)
     attributable to
     common shareholders
     per share:
        Basic               $ 0.34      $ (0.02)       $ 1.18      $ (0.28)
        Diluted             $ 0.34      $ (0.02)       $ 1.17      $ (0.28)
    FFO attributable to
     common shareholders
     per share:
        Basic               $ 0.23       $ 0.33        $ 0.48       $ 0.23
        Diluted             $ 0.23       $ 0.33        $ 0.47       $ 0.23

    Weighted average
     common shares
     outstanding -
       Basic            17,543,916   17,411,551    17,539,026   17,404,147
    Effect of dilutive
     securities:

       Common stock
        options            123,898        8,258        97,375       32,416
       Restricted
        share grants       121,582       26,616       100,304       58,781
    Weighted average
     common shares
     outstanding -
      Diluted           17,789,396   17,446,425    17,736,705   17,495,344
 
 

    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,
                                 2005        2004         2005          2004
    HOTEL STATISTICS:
      All Hotels
       (19 hotels)(a)(b)

        Hotel revenues         $56,979      $51,064     $110,521      $99,237
        RevPAR                  $73.34       $64.62       $71.18       $63.79
        Occupancy                72.4%        65.8%        68.4%        63.8%
        Average daily rate     $101.25       $98.25      $104.14       $99.91

      Comparable Hotels
       (17 hotels) (b) (c)
         Hotel revenues         $53,175      $47,894     $103,715      $93,236
         RevPAR                  $72.06       $63.90       $70.45       $63.30
         Occupancy                71.6%        65.5%        67.8%        63.7%
         Average daily rate     $100.70       $97.63      $103.97       $99.43

    (a) Includes all hotels owned or partially owned by Boykin as of June 30,
        2005, excluding properties not operating due to damage caused by
        hurricanes.
    (b) Results calculated including 35 lock-out rooms at the Radisson Suite
        Beach Resort on Marco Island.
    © Includes all consolidated hotels operated under the TRS structure and
        owned or partially owned by Boykin as of June 30, 2005, excluding
        properties not operating due to damage caused by hurricanes.
 
 

                                                      June 30,    December 31,
                                                        2005          2004
    SELECTED BALANCE SHEET INFORMATION:

    Assets
      Investment in hotel properties                  $521,694       $514,540
      Accumulated depreciation                        (134,861)      (123,441)
      Investment in hotel properties, net              386,833        391,099
      Cash and cash equivalents including
       restricted cash                                  30,137         26,543
      Accounts receivable, net                           9,311         11,700
      Investment in unconsolidated joint ventures        1,501         14,048
      Other assets                                      14,340         12,316
      Assets related to discontinued operations, net         -         21,674
    Total Assets                                      $442,122       $477,380

    Liabilities and Shareholders’ Equity
      Outstanding debt                                $140,496       $199,985
      Accounts payable and accrued expenses             37,405         37,550
      Deferred lease revenue                               630             --
      Minority interest in joint ventures                  853            927
      Minority interest in operating partnership        13,406         10,062
      Liabilities related to discontinued operations         -          1,408
      Shareholders’ equity                             249,332        227,448
    Total Liabilities and Shareholders’ Equity        $442,122       $477,380
 

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 interests in 21 hotels containing a total of 6,019 rooms located in 13 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 http://www.boykinlodging.com.

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 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.

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.  FFO and 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.
 

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Contact:

Boykin Lodging Company
 (216) 430-1333
http://www.boykinlodging.com

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Also See:  Boykin Lodging Company Ends Year With 31 Hotels, Occupancy at 66.6% / Feb 1999
Boykin Lodging Hires Investment Bank to Identify Alternatives for the Company / June 2005


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