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of $9.9 million Compared with a Profit of $11.6 million in the Prior Year / RevPar Falls 18% to $66.44 from $81.05 a Year Ago |
WASHINGTON May 7, 2002 --
MeriStar Hospitality Corporation (NYSE: MHX), the nation's third largest
hotel real estate investment trust (REIT), today announced results for
the first quarter ended March 31, 2002.
Results continue to reflect a cautious economy and post-September 11 declines in business and leisure travel demand nationwide. Recurring funds from operations (Recurring FFO) for the 2002 first quarter were $25.9 million, compared to $56.6 million for the 2001 first quarter. Recurring FFO represents funds from operations, as defined by the National Association of Real Estate Investment Trusts, adjusted for significant non-recurring items. Recurring FFO per diluted share was $0.49, compared to $1.06 for the 2001 first quarter. FFO results were in line with the consensus analysts' estimate. Revenues decreased 15.2 percent to $256.7 million. Recurring earnings before interest expense, income taxes, depreciation and amortization (EBITDA) declined 30.0 percent to $60.9 million. Diluted loss per share was $(0.22), compared to diluted net income per share of $0.25 in the 2001 first quarter. Operating profit margins for owned hotels decreased 300 basis points to 33.8 percent. During the first quarter, the
company recorded the following non-recurring charges:
A $1.5 million charge to write off deferred financing fees in conjunction with the sale of $200 million of senior unsecured notes and related repayment of portions of the company's senior secured credit facility. Same-store revenue per available room (RevPAR) for the 2002 first quarter declined 18.0 percent to $66.44. Average daily rate (ADR) decreased 9.2 percent to $104.93, while occupancy fell 9.7 percent to 63.3 percent. "The residual effects of September 11 continue to be felt at our properties, particularly in the form of lower demand from the business travel sector," said Paul Whetsell, chairman and chief executive officer. "Our group business improved significantly during the period, but our transient business traveler segment is lagging behind because the economy has remained sluggish and executives are opting to conduct more business by phone until air travel becomes less problematic. "Our leisure business is beginning to pick up as evidenced by results at our Florida properties, where RevPAR declines improved, particularly in March, which benefited from an earlier Easter/Passover holiday and spring break vacationers. Overall, our occupancies during the quarter were ahead of internal plan, but our average daily rate came in lower than we had projected. "We have seen steady improvement in RevPAR year-over-year comparisons each month since September," Whetsell added. "This trend has continued into the second quarter with April RevPAR down only 9.8 percent. We remain cautiously optimistic about the second half of the year when the economy is expected to gain momentum. Another positive in the equation is the continued moderation in industry room supply. "On the cost side, we are seeing the benefits of cost-cutting measures we implemented last year as our operating profit margins continued to exceed our expectations," Whetsell said. "We continue to work with MeriStar Hotels & Resorts to constrain costs at the property level and to take advantage whenever possible of the synergies and economies of scale available from their managing over 275 properties for multiple owners. We have permanently revamped our cost structure with fewer layers of management and have implemented a new emphasis on cross-training, which not only enhances our employees' skillsets and experience, it enables us to do more with fewer people." Operating Performance in
Significant Markets
Three Months Ended March 31, 2002
Southwest Florida
-16.7% $8,198
13.5%
Strong Balance Sheet "Our balance sheet is in great shape following the recent senior notes issuances and credit facility amendment, and offers the flexibility we need to respond to opportunities as they arise in a recovering economy," said John Emery, president and chief operating officer. "In February, we completed the sale of $200 million of senior unsecured notes and used the proceeds to pay down our revolving credit facility, which now stands at $43 million. We now have less than $250 million of maturities through 2006. Our average maturity is 7.3 years and our average rate is 8.5 percent." Key Financial Information
Long-term debt as of March
31, 2002 consists of the following:
Revolver
$ 43,000
LIBOR + 400bps 2003
$ 1,713,778 Dividend and Guidance "For the second quarter and full year, our guidance remains unchanged. For the 2002 second quarter, we estimate FFO per share of $0.80 to $0.84 and EBITDA of $77 million to $79 million, based on a RevPAR decline of 6 percent to 8 percent. For 2002, we project FFO per share of $2.05 and EBITDA of $245 million with RevPAR declining 2 percent to 3 percent. "When we reduced our dividend
to $0.01 in the 2001 fourth quarter, we said at the time that we expected
to remain at that level through the second quarter of 2002," Emery remarked.
"We remain on track to increase the dividend to $0.25 in the third quarter
based on current projections."
Washington, D.C.-based MeriStar Hospitality Corporation owns 112 principally upscale, full-service hotels in major markets and resort locations with 28,653 rooms in 27 states, the District of Columbia and Canada. This press release contains forward-looking statements about MeriStar Hospitality Corporation, including those statements regarding future operating results and the timing and composition of revenues, among others. |
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MeriStar Hotels & Resorts Bruce Riggins 202/295-2276 |
Also See | Meristar Reports RevPAR for the 2001 Fourth Quarter Declined 24.1%; Occupancy fell 15.6% to 55.8% / Jan 2002 |