WXH Winston Hotels

Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust (REIT) and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced results for the first quarter ended March 31, 2006. 2006 Highlights -- Same-store RevPAR rose 11 percent; gross operating margin increased 174 basis points, excluding (1) hotels that were negatively impacted by renovation and (2) higher energy costs -- Increased EBITDA by $1.7 million to $11.9 million -- Raised annual FFO available to common shareholders per share guidance to $1.09 to $1.15, compared to $1.04 to $1.10 previously forecasted, and raised annual RevPAR expectation from 5 to 7 percent to 6 to 8 percent -- Opened 123-room Courtyard by Marriott in Kansas City -- Funded $20.3 million "B" note with Canyon Partners -- Today, expects to close a 10-year, $176 million CMBS loan at a fixed interest rate of 5.94 percent 2006 First Quarter Operating Results Net income available to common shareholders was $4.4 million for the 2006 first quarter, or $0.17 per share, compared to net income available to common shareholders of $1.1 million, or $0.04 per share, for the same period in 2005. Net income available to common shareholders for the 2006 first quarter included a net gain of $4.5 million on the sale of the Southlake, Ga. Hampton Inn, which is excluded from funds from operations (FFO) available to common shareholders. FFO available to common shareholders for the 2006 first quarter was $5.5 million, compared to $6.0 million in the 2005 first quarter, or $0.20 and $0.22 per common share, respectively. FFO declined as expected from the previous year due primarily to higher interest expense, higher general and administrative costs and higher management fees. However, FFO available to common shareholders per share exceeded the company's high-end guidance range by $0.02 per share and First Call consensus analyst expectations by $0.03 per share. The company had approximately 27.8 million and 27.6 million fully diluted weighted average common shares outstanding in the 2006 and 2005 reporting periods, respectively. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the 2006 first quarter was $11.9 million, compared to $10.2 million in the 2005 first quarter. 2006 Second Quarter Outlook and Guidance For the 2006 second quarter, the company forecasts net income per share available to common shareholders of $0.17 to $0.19. On a same store basis, the company expects 2006 second quarter RevPAR to increase 6 to 8 percent as compared to the prior year's second quarter. FFO per share available to common shareholders is expected to be between $0.33 and $0.35 for the 2006 second quarter. 2006 Yearly Outlook and Guidance Revised For the year ended December 31, 2006, the company forecasts net income per share available to common shareholders of $0.51 to $0.57. On a same store basis, the company expects 2006 RevPAR to increase 6 to 8 percent from the prior year, compared to 5 to 7 percent forecasted earlier this year. FFO per share available to common shareholders for the year ended December 31, 2006 is expected to be between $1.09 and $1.15, compared to the $1.04 to $1.10 forecasted earlier this year. This guidance assumes no hotel acquisitions, dispositions, developments or placements of hotel debt during the year ended December 31, 2006, other than those activities discussed below. Hotel Development "During 2006, we continued to upgrade our portfolio through the disposition of two older properties at attractive prices and the opening of a new hotel we developed," said Robert W. Winston III, chief executive officer. On April 20, 2006 the company opened a 123-room Courtyard by Marriott in Kansas City, Mo., which it converted from a six-story, former historic apartment building. The hotel's central location is convenient to multiple leisure and business demand generators. The company is excited about the earnings potential of this property. The company also made substantial progress on three additional properties that it has under construction. All currently are on schedule and on budget, including: -- A 121-room, $12.5 million Hilton Garden Inn in Akron, Ohio, which is scheduled to open in the 2006 fourth quarter. The property is owned by a joint venture in which the company holds a 70 percent equity interest. -- A wholly owned, 142-room, $19.6 million Homewood Suites hotel in Princeton, N.J. which is expected to open in the 2007 first quarter. -- A wholly owned, 119-room, $13.3 million Hilton Garden Inn in Wilmington, N.C., which is expected to open in the 2007 first quarter. "With acquisition values at historically high levels, we are pleased to have the ability to create value through development, where we have significant expertise," Winston said. "We are looking at a number of sites to build upscale hotels, including the new aloft brand by Starwood Hotels and Resorts, for which we are a preferred developer. We will continue to carefully balance the advantages of acquisition versus development, with a goal of upgrading and expanding our portfolio with appropriate risk-adjusted returns. Although we continue to have an active acquisition pipeline, we seek to acquire properties that we believe will provide value to our shareholders in the long term." Hotel Dispositions In March 2006, the company sold the 126-room Southlake, Ga. Hampton Inn for net sales proceeds of $8.5 million, resulting in a net gain of $4.5 million. In April 2006, Winston sold the 146-room Wilmington, N.C. Comfort Inn for net proceeds of $5.7 million, resulting in a net gain of $1.0 million. "The sale of these two hotels, the addition of the recently opened Courtyard by Marriott in Kansas City, together with three additional properties under construction that are expected to open in late 2006 and early 2007, are consistent with the company's strategy to selectively prune our older assets that no longer meet our strategic long-term growth objectives and to reinvest the proceeds in properties that we believe have long-term growth potential," said Joe Green, president and chief financial officer. Hotel Debt Financing Program During the 2006 first quarter, the company closed on a loan in its previously announced program with GE Commercial Franchise Finance (GEFF), which is designed to provide a highly streamlined, cost-effective loan program for hoteliers. Under the program, GEFF and the company provide seamless mortgage loans for up to 85 percent of a project's cost. The company has funded $0.8 million of the total $2.3 million first loss piece, or the "B" note, of a $12 million total loan amount for a 140-room Hilton Garden Inn under construction in Columbia, S.C. The underlying construction-to-five-year-permanent loan, bears interest at an all in annual yield to the company equal to 30-day LIBOR plus approximately 12 percent. The company is obligated to fund the remaining $1.5 million balance of the "B" note ratably over the projected construction period, which is expected to be completed during the fourth quarter of 2006. In May 2006, the company and GEFF closed on a $7.5 million construction-to-permanent loan amount for a 122-room Hilton Garden Inn under construction in Tuscaloosa, Tenn. with an estimated all-in cost of $9.3 million. The company is obligated to fund a $1.7 million "B" note ratably over the projected construction period, which is expected to be completed during the fourth quarter of 2006. During the construction period, the then outstanding "B" note bears interest at a variable rate equal to 90-day LIBOR plus 7.63 percent per annum; thereafter, the spread reduces to 7.43 percent. In addition, the "B" note accrues interest of 3.29 percent per annum until maturity, which is five years from the date the property opens to the general public. During the 2006 second quarter, the company also provided a $20.3 million "B" note as part of a $66 million senior note originated by Canyon Partners, to fund Downtown Resorts, LLC's $91.5 million refinance and refurbishment of the 25,500-square-foot Lady Luck casino and adjacent 627-room hotel, which is expected to be completed during the first quarter of 2007. The loan bears interest at a fixed rate of 12.63 percent for two years with two, one-year extensions. "We continue to have a very active pipeline for our loan platform", Green said. "These transactions are complex and are difficult to close on a predictable basis. However, we believe we can achieve superior returns on these financings and that this is a highly effective growth strategy for the company." Same Store Operating Statistics First quarter 2006 revenue per available room (RevPAR) for the company's 43 hotels that were open during both the first quarter of 2006 and 2005, rose 10.4 percent, led by a 6.7 percent increase in average daily room rate (ADR) and a 3.5 percent increase in occupancy. First quarter 2006 operating margins increased to 39.9 percent from 39.5 percent in the same period a year earlier, despite significant pressure from hotels that were negatively impacted by renovation, rising fuel prices, franchise fees and higher guest frequency program costs. However, these costs were partially offset by improvements in labor costs, general repairs and maintenance, room operating supplies/expenses and a number of recently implemented energy-saving measures. The following table details the same store operating statistics, which include 43 consolidated hotels that were open throughout both the three months ended March 31, 2006 and 2005 (includes 41 wholly owned hotels and two hotels owned through joint ventures, the Chapel Hill, N.C. Courtyard by Marriott and the Ponte Vedra, Fla. Hampton Inn). -0- *T Same Store Operating Statistics ---------------------------------------------------------------------- Three Months Ended March 31, ------------------------------------- 2006 2005 Change -------------- -------- ----------- Hotel room revenues $34,223 $31,279 9.4% RevPAR $ 62.88 $ 56.94 10.4% Occupancy 68.0% 65.7% 3.5% Average Daily rate $ 92.48 $ 86.64 6.7% Gross Operating Profit margin 39.9% 39.5% 0.4%pts. ---------------------------------------------------------------------- *T Excluding the operating results for the three months ended March 31, 2006 and 2005 of five hotels that were negatively impacted by renovations (i) RevPAR increased 11.0 percent to $64.14 from $57.80; and (ii) operating margins increased 130 basis points to 40.5 percent from 39.2 percent. In addition, but for higher energy costs, operating margins would have improved by 174 basis points. Strengthened Balance Sheet Today, the company expects to closed a 10-year $176 million commercial mortgage backed security (CMBS) loan with General Electric Capital Corporation, which will be collateralized by 16 of its hotels. The $176 million facility will bear interest only for four years at a fixed rate of 5.94 percent and thereafter will amortize over a 30-year period. Under the terms of the facility, the properties will not be cross-collateralized and the loans will be assumable, should any of the individual properties be sold. The net proceeds will be used to defease and payoff the $61.3 million outstanding balance of the company's 7.38 percent fixed rate mortgage loan and to pay down the outstanding balance under the company's existing revolving corporate line of credit, which at March 31, 2006 bore interest at 30-day LIBOR (5.08 percent at May 5, 2006) plus 2.50 percent. "With interest rates continuing to rise, we believe it was critical to lock in attractive long-term rates," Green said. "Because the properties are not cross-collateralized, the structure gives us flexibility to manage our portfolio more effectively." Also in April 2006, the company modified its $50 million master repurchase agreement with Marathon Structured Finance Fund (Marathon). The modified agreement reduced the interest rates from LIBOR plus 4.5 percent for loans funding the acquisition of existing hotels to LIBOR plus 2.75 percent, and from LIBOR plus 5.5 percent for loans funding the development or redevelopment of hotels to LIBOR plus 3.0 percent, respectively. "We continue to seek every opportunity to reduce our interest costs," Green said. "By using the net proceeds from the new CMBS loan facility to pay off outstanding debt balances under our existing CMBS loan facility and our corporate line of credit, and by reducing the interest rates under our master repurchase agreement with Marathon, we expect to save approximately $1.1 million in interest expense during the remainder of 2006." Dividends During the 2006 first quarter, the company declared a regular cash dividend of $0.15 per common share and a cash dividend of $0.50 per share of Series B Preferred Stock. "We continue to evaluate our policy on a quarterly basis and currently are comfortable with the payout level of our stock dividends," Winston said. Winston Hotels' 2006 first quarter investor conference call is scheduled for 10 a.m. EST today, May 9, 2006. The call also will be simulcast over the Internet via the company's Web site, www.winstonhotels.com. The replay will be available on the company's Web site for 30 days and via telephone for seven days by calling 800-475-6701, access code 826983. About the Company As of March 31, 2006 the company owned or was invested in 55 hotel properties in 17 states having an aggregate of 7,542 rooms. This included 48 wholly owned properties with an aggregate of 6,594 rooms, a 60 percent ownership interest in a joint-venture that owns one hotel with 138 rooms; a 49 percent ownership interest in a joint venture that owns one hotel with 118 rooms, a 48.78 percent ownership interest in a joint venture that owns one hotel with 147 rooms, and a 13.05 percent ownership interest in a joint venture that owns four hotels with an aggregate of 545 rooms. As of March 31, 2006 the company had hotel loans receivable totaling approximately $38.8 million. The company does not hold an ownership interest in any of the hotels for which it has provided financing. For more information about Winston Hotels, visit the company's Web site at www.winstonhotels.com. Notes About Forward-Looking Statements In addition to historical information, this press release contains forward-looking statements. The reader can identify these statements by use of words like "may," "will," "expect," "project," "anticipate," "estimate," "target," "believe," or "continue" or similar expressions, including without limitation its acquisition, disposition and development plans for hotel properties, its hotel lending plans, its dividend policy, and its estimated net income available to common shareholders, net income available to common shareholders per share, FFO available to common shareholders, FFO available to common shareholders per share and RevPAR. These statements represent the company's judgment and are subject to risks and uncertainties that could cause actual operating results to differ materially from those expressed or implied in the forward looking statements including, but not limited to, changes in general economic conditions, lower occupancy rates, lower average daily rates, acquisition risks, development risks including risk of construction delay, cost overruns, occupancy and governmental permits, zoning, the increase of development costs in connection with projects that are not pursued to completion, the risk of non-payment of subordinated loans, or the failure to make additional hotel debt investments and investments in hotels. Other risks are discussed in the company's filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2005. Notes About Non-GAAP Financial Measures This press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules. As required by SEC rules, the company has provided reconciliation in this press release of each non-GAAP financial measure to its most directly comparable GAAP measure. We believe that these non-GAAP measures, when combined with the company's primary GAAP presentations required by the SEC, help improve our equity holders' ability to understand our operating performance and make it easier to compare the results of our company with other hotel REITs. A description of each is provided below. FFO and FFO Available to Common Shareholders The company reports FFO in accordance with the definition of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as net income (loss) (determined in accordance with generally accepted accounting principles, or "GAAP"), excluding gains (losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures (which are calculated to reflect FFO on the same basis). The company further subtracts preferred stock dividends from FFO to calculate FFO available to common shareholders. FFO available to common shareholders is a performance measure used by the company in its budgeting and forecasting models, it is discussed during Board meetings, and is considered when making decisions regarding acquisitions, sales of properties and other investments, and is a metric in determining executive compensation. The calculation of FFO and FFO available to common shareholders may vary from entity to entity, and as such the presentation of FFO and FFO available to common shareholders by the company may not be comparable to other similarly titled measures of other reporting companies. FFO and FFO available to common shareholders are not intended to represent cash flows for the period. FFO and FFO available to common shareholders have not been presented as an alternative to net income, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. FFO is a supplemental industry-wide measure of REIT operating performance, the definition of which was first proposed by NAREIT in 1991 (and clarified in 1995, 1999 and 2002) in response to perceived drawbacks associated with the presentation of net income under GAAP as applied to REITs. Since the introduction of the definition by NAREIT, the term has come to be widely used by REITs. Historical GAAP cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors have considered presentations of operating results for real estate companies that use historical GAAP cost accounting to be insufficient by themselves. Accordingly, the company believes FFO and FFO available to common shareholders (combined with the company's primary GAAP presentations required by the SEC) improve our investors' ability to understand the company's operating performance. Operating Margin Gross operating profit margin, which is referred to herein as "operating margin," is defined as hotel revenues minus hotel operating costs before property taxes, insurance and management fees, divided by hotel revenues. RevPAR RevPAR is an acronym for Revenue Per Available Room, which is determined by multiplying average daily rate by occupancy percentage for any given period. RevPAR does not include food and beverage or other ancillary revenues, such as parking, telephone, or other guest services generated by the property. Similar to the reporting periods for the company's statement of operations, hotel operating statistics (i.e., RevPAR, average daily rate and average occupancy) are always reported on a quarter to date and/or year to date basis. EBITDA EBITDA is an acronym for Earnings before Interest, Taxes, Depreciation, and Amortization, which is defined as GAAP net income (loss) adjusted for interest expense, taxes, depreciation and amortization. The company further subtracts gains (losses) from sales of property to calculate EBITDA. EBITDA is helpful to investors and management 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. EBITDA does not 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 our financial performance or to cash flow from operating activities as determined by GAAP as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions. 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. -0- *T WINSTON HOTELS, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands) As of As of March 31, Dec. 31, 2006 2005 ---------------------------------------------------------------------- ASSETS Land $54,557 $55,758 Buildings and improvements 411,220 422,081 Furniture and equipment 62,664 63,048 ---------------------------------------------------------------------- Operating properties 528,441 540,887 Less accumulated depreciation 137,444 139,259 ---------------------------------------------------------------------- 390,997 401,628 Properties under development 30,787 25,139 ---------------------------------------------------------------------- Net investment in hotel properties 421,784 426,767 Assets held for sale 15,700 11,009 Corporate furniture fixtures and equipment, net 519 371 Cash 18,894 15,047 Accounts receivable, net 3,577 3,820 Notes receivable 38,839 38,050 Investment in joint ventures 1,746 1,795 Deferred expenses, net 6,978 6,807 Prepaid expenses and other assets 23,573 12,556 Deferred tax asset 11,823 11,471 ---------------------------------------------------------------------- Total assets $543,433 $527,693 ====================================================================== LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY Lines of credit $178,196 $157,896 Mortgage loans 102,669 99,874 Accounts payable and accrued expenses 19,471 27,915 Distributions payable 6,055 6,011 ---------------------------------------------------------------------- Total liabilities 306,391 291,696 ---------------------------------------------------------------------- Minority interest 12,548 12,786 ---------------------------------------------------------------------- Commitments and contingencies - - Shareholders' equity: Preferred stock, Series B, $.01 par value, 5,000 shares authorized, 3,680 shares issued and outstanding (liquidation preference of $93,840) 37 37 Common stock, $.01 par value, 50,000 shares authorized, 26,801 shares issued and 26,458 shares outstanding at March 31, 2006 and 26,509 shares issued and outstanding at December 31, 2005 265 265 Additional paid-in capital 324,647 325,238 Unearned compensation - (1,454) Distributions in excess of earnings (100,455) (100,875) ---------------------------------------------------------------------- Total shareholders' equity 224,494 223,211 ---------------------------------------------------------------------- Total liabilities, minority interest and shareholders' equity $543,433 $527,693 ====================================================================== WINSTON HOTELS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended March 31, 2006 2005 ---------------------------------- ------------ ----------- Operating revenue: Rooms $ 37,349 $ 29,506 Food and beverage 2,553 1,821 Other operating departments 1,123 723 - - Joint venture fee income 52 61 ---------------------------------- ------------ ----------- Total operating revenue 41,077 32,111 ---------------------------------- ------------ ----------- Hotel operating expenses: Rooms 8,020 6,536 Food and beverage 2,098 1,497 Other operating departments 861 638 Undistributed operating expenses: Property operating expenses 8,758 6,602 Real estate taxes and property and casualty insurance 1,887 1,677 Franchise costs 2,567 2,134 Maintenance and repair 2,178 1,790 Management fees 1,429 723 General and administrative 3,028 1,989 Depreciation 5,233 4,141 Amortization 493 250 ---------------------------------- ------------ ----------- Total operating expenses 36,552 27,977 ---------------------------------- ------------ ----------- Operating income 4,525 4,134 ---------------------------------- ------------ ----------- Interest and other income 1,386 1,520 Interest expense (4,412) (2,407) ---------------------------------- ------------ ----------- Income before allocation to minority interest in Partnership, allocation to minority interest in consolidated joint ventures, income taxes, and equity in income (loss) of unconsolidated joint ventures 1,499 3,247 (Income) loss allocation to minority interest in Partnership 4 (64) (Income) loss allocation to minority interest in consolidated joint ventures 134 (128) Income tax benefit 98 132 Equity in income (loss) of unconsolidated joint ventures 22 (62) ---------------------------------- ------------ ----------- Income from continuing operations 1,757 3,125 Discontinued operations: Income (loss) from discontinued operations 274 (62) Gain (loss) on sale of discontinued operations 4,249 (85) Loss on impairment of asset held for sale - - ---------------------------------- ------------ ----------- Net income 6,280 2,978 Preferred stock distribution (1,840) (1,840) ---------------------------------- ------------ ----------- Net income available to common shareholders $ 4,440 $ 1,138 ================================== ============ =========== Basic weighted average number of common shares outstanding 26,418 26,283 ---------------------------------- ------------ ----------- Diluted weighted average number of common shares outstanding 26,418 27,601 ---------------------------------- ------------ ----------- Income (loss) per common share basic and diluted: Income (loss) from continuing operations $ - $ 0.05 Income (loss) from discontinued operations 0.17 (0.01) ---------------------------------- ------------ ----------- Net income available to common shareholders 0.17 0.04 ---------------------------------- ------------ ----------- Per share dividends to common shareholders $ 0.15 $ 0.15 ---------------------------------- ------------ ---------- WINSTON HOTELS, INC. RECONCILIATION OF NET INCOME TO FFO, FFO AVAILABLE TO COMMON SHAREHOLDERS AND FFO AVAILABLE TO COMMON SHAREHOLDERS PER SHARE ($ in thousands, except per share amounts) -------------------------------------------------------------------- Three Months Ended March 31, 2006 2005 ----------------------------------------------- -------- -------- Net income $ 6,280 $ 2,978 (Gain) loss on sale (4,455) 90 Minority interest in Partnership allocation of income (loss) (4) 64 Minority interest in Partnership allocation of gain (loss) on sale of discontinued operations 206 (5) Minority interest in Partnership allocation of income (loss) from discontinued operations 13 (3) Depreciation 4,846 3,871 Depreciation from discontinued operations 172 606 Depreciation from joint ventures 258 191 -------- ------- FFO 7,316 7,792 Preferred stock dividend (1,840) (1,840) -------- ------- FFO Available to Common Shareholders $ 5,476 $ 5,952 ======== ======= Weighted average common shares outstanding assuming dilution 27,752 27,601 ---------------- FFO Available to Common Shareholders per share $ 0.20 $ 0.22 ======== ======= -------------------------------------------------------------------- Common dividend per share $ 0.15 $ 0.15 =============================================== ======== ======== WINSTON HOTELS, INC. 2006 SECOND QUARTER AND YEARLY GUIDANCE RECONCILIATION OF NET INCOME TO FFO AVAILABLE TO COMMON SHAREHOLDERS/a ($ in thousands, except per share amounts) ---------------------------------------------------------------------- Quarter Ended Year Ended June 30, Dec. 31, 2006 2006 ---------------------------------------------------------------------- Guidance Guidance Range Range Low High Low High -------- ------- ------- ------- Net income 6,350 7,000 20,900 22,500 Gain on sale (1,000) (1,000) (5,500) (5,500) Minority interest 200 200 600 700 Depreciation 5,400 5,400 21,400 21,400 Depreciation from joint ventures 60 60 300 300 Preferred stock dividend (1,840) (1,840) (7,360) (7,360) ---------------------------------------------------------------------- FFO Available to Common Shareholders 9,170 9,820 30,340 32,040 ====================================================================== Weighted average common shares assuming dilution 27,800 27,800 27,900 27,900 ---------------------------------------------------------------------- FFO Available to Common Shareholders per share $0.33 $0.35 $1.09 $1.15 ====================================================================== /a: Assumes no hotel acquisitions, and no hotel dispositions, developments or placements of hotel debt, except for the operations and related debt of the Courtyard by Marriott hotel in Kansas City, MO. and the Hilton Garden Inn in Akron, Ohio, the new fixed-rate financing with GECC, the modified financing with Marathon and the three loans closed in 2006 under our hotel debt financing program. Winston Hotels, Inc. Reconciliation Of Net Income To EBITDA ($ in thousands) Three Months Ended March 31, 2006 2005 ------ ------ Net income $6,280 $2,978 Add back: Minority interest in Partnership allocation of income (loss) (4) 64 Minority interest in Partnership allocation of gain (loss) 206 (5) Minority interest in Partnership allocation of income (loss) from discontinued operations 13 (3) Interest expense 3,957 2,200 Interest expense from joint ventures 309 155 Depreciation 4,846 3,871 Depreciation from discontinued operations 172 606 Depreciation from joint ventures 258 191 Amortization expense 462 250 Amortization expense from joint ventures 27 6 Benefits from income tax (183) (202) (Gain) loss on sale (4,455) 90 EBITDA $11,888 $10,201 Winston Hotels, Inc. Three Months Ended March 31, Same-Store RevPAR Statistics Total for 43 Hotels Three Months Ended March 31, ---------------------- 2006 2005 % CH ------ --------------- Combined Brands ----------------------------------- Comfort Inn/Suites & Quality Suites $45.87 $43.04 6.6% Courtyard, Fairfield Inn, Residence Inn $67.99 $58.64 15.9% Hampton Inn/Suites $62.50 $55.26 13.1% Hilton Garden Inn $74.15 $67.97 9.1% Holiday Inn Express/Select $51.04 $48.90 4.4% Homewood Suites $75.46 $70.87 6.5% Region ----------------------------------- South Atlantic $61.01 $55.22 10.5% East North Central $71.26 $58.73 21.3% West South Central $46.01 $40.89 12.5% West North Central $ 0.00 $ 0.00 0.0% Mountain $89.73 $81.55 10.0% New England $60.74 $56.03 8.4% Middle Atlantic $70.81 $68.48 3.4% Segment ----------------------------------- Upscale $72.59 $65.52 10.8% Mid-scale w/ F&B $53.09 $48.58 9.3% Mid-scale w/o F&B $54.73 $49.82 9.9% Service ----------------------------------- Limited-service $55.23 $50.08 10.3% Full-service $64.73 $57.95 11.7% Extended-stay $78.40 $72.86 7.6% Total $62.88 $56.94 10.4% ----------------------------------- ------ --------------- *T The above presentation includes 41 of the company's 48 wholly owned hotels as of March 31, 2006, as well as two joint venture hotels the company held an ownership interest in throughout the periods presented. These joint venture hotels include the Chapel Hill, N.C. Courtyard by Marriott and the Ponte Vedra, Fla. Hampton Inn. The above presentation excludes wholly owned properties which were sold prior to March 31, 2006, the Hampton Inn & Suites Baltimore Inner Harbor in Maryland which was acquired in September 2005 and the six hotels acquired in October 2005. The above presentation also excludes the Stanley Hotel in Estes Park, Colo., which was acquired in August 2005, in which the company owns a 60 percent interest. These properties were not open throughout each of the periods presented; therefore they are excluded from the table above. -0- *T Winston Hotels, Inc. Three Months Ended March 31, Same-Store ADR Statistics Total for 43 Hotels Three Months Ended March 31, ----------------------------- 2006 2005 % CH ----------------------------- Combined Brands ------------------------------ Comfort Inn/Suites & Quality Suites $67.90 $66.25 2.5% Courtyard, Fairfield Inn, Residence Inn $101.70 $88.55 14.9% Hampton Inn/Suites $90.64 $83.61 8.4% Hilton Garden Inn $108.11 $106.37 1.6% Holiday Inn Express/Select $89.32 $83.62 6.8% Homewood Suites $96.70 $95.97 0.8% Region ------------------------------ South Atlantic $87.04 $81.48 6.8% East North Central $109.46 $95.32 14.8% West South Central $84.49 $77.99 8.3% West North Central $0.00 $0.00 0.0% Mountain $104.33 $99.69 4.7% New England $95.32 $95.28 0.0% Middle Atlantic $113.65 $109.12 4.2% Segment ------------------------------ Upscale $101.66 $96.31 5.6% Mid-scale w/ F&B $85.97 $86.00 0.0% Mid-scale w/o F&B $82.96 $75.65 9.7% Service ------------------------------ Limited-service $83.39 $76.11 9.6% Full-service $99.09 $93.70 5.8% Extended-stay $99.03 $97.13 2.0% Total $92.48 $86.64 6.7% ------------------------------ ----------------------------- *T The above presentation includes 41 of the company's 48 wholly owned hotels as of March 31, 2006, as well as two joint venture hotels the company held an ownership interest in throughout the periods presented. These joint venture hotels include the Chapel Hill, N.C. Courtyard by Marriott and the Ponte Vedra, Fla. Hampton Inn. The above presentation excludes wholly owned properties which were sold prior to March 31, 2006, the Hampton Inn & Suites Baltimore Inner Harbor in Maryland which was acquired in September 2005 and the six hotels acquired in October 2005. The above presentation also excludes the Stanley Hotel in Estes Park, Colo., which was acquired in August 2005, in which the company owns a 60 percent interest. These properties were not open throughout each of the periods presented; therefore they are excluded from the table above. -0- *T Winston Hotels, Inc. Three Months Ended March 31, Same-Store Occupancy Statistics Total for 43 Hotels Three Months Ended March 31, 2006 2005 %CH ------------------------ Combined Brands ------------------------------------- Comfort Inn/Suites & Quality Suites 67.6% 65.0% 4.0% Courtyard, Fairfield Inn, Residence Inn 66.9% 66.2% 1.1% Hampton Inn/Suites 69.0% 66.1% 4.4% Hilton Garden Inn 68.6% 63.9% 7.4% Holiday Inn Express/Select 57.1% 58.5% -2.4% Homewood Suites 78.0% 73.8% 5.7% Region ------------------------------------- South Atlantic 70.1% 67.8% 3.4% East North Central 65.1% 61.6% 5.7% West South Central 54.5% 52.4% 4.0% West North Central 0.0% 0.0% 0.0% Mountain 86.0% 81.8% 5.1% New England 63.7% 58.8% 8.3% Middle Atlantic 62.3% 62.8% -0.8% Segment ------------------------------------- Upscale 71.4% 68.0% 5.0% Mid-scale w/ F&B 61.8% 56.5% 9.4% Mid-scale w/o F&B 66.0% 65.9% 0.2% Service ------------------------------------- Limited-service 66.2% 65.8% 0.6% Full-service 65.3% 61.8% 5.7% Extended-stay 79.2% 75.0% 5.6% Total 68.0% 65.7% 3.5% ------------------------------------- ------------------------- *T The above presentation includes 41 of the company's 48 wholly owned hotels as of March 31, 2006, as well as two joint venture hotels the company held an ownership interest in throughout the periods presented. These joint venture hotels include the Chapel Hill, N.C. Courtyard by Marriott and the Ponte Vedra, Fla. Hampton Inn. The above presentation excludes wholly owned properties which were sold prior to March 31, 2006, the Hampton Inn & Suites Baltimore Inner Harbor in Maryland which was acquired in September 2005 and the six hotels acquired in October 2005. The above presentation also excludes the Stanley Hotel in Estes Park, Colo., which was acquired in August 2005, in which the company owns a 60 percent interest. These properties were not open throughout each of the periods presented; therefore they are excluded from the table above.