<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Winston Hotels, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[WINSTON HOTELS INC. LOGO]
Dear Holder of Series A Preferred Stock:
We are very pleased to enclose a copy of our recent press release in which we
announced record first quarter 1999 results. Please take a moment to review
the release.
Also, we have previously sent you proxy material relating to our upcoming
Annual Meeting of Shareholders to be held on Tuesday, May 18, 1999, at which we
are seeking your approval of a modest amendment on the present restriction on
our ability to utilize debt financing in our purchase of hotel properties, by
raising the debt ceiling from 45% to 60% of the company's investment in hotel
properties, at cost.
Regarding this proposal, we are pleased to report that leading independent
institutional proxy advisor Institutional Shareholder Services (ISS), which
advises hundreds of the country's largest and most sophisticated institutional
investors, recently released its analysis of our proxy to their clients, and
recommended they vote in favor of this proposal.
ISS ADVISED THEIR CLIENTS AS FOLLOWS: "WE BELIEVE THAT THIS PROPOSAL WARRANTS
SHAREHOLDER SUPPORT. BY INCREASING THE COMPANY'S ABILITY TO USE DEBT FOR
FUTURE ACQUISITIONS, THE AMENDMENT WILL IMPROVE THE COMPANY'S COMPETITIVE
POSITION AND ABILITY TO EXPLOIT VALUABLE OPPORTUNITIES. THE NEW LIMIT ON
INDEBTEDNESS WILL CONTINUE TO PROVIDE A REASONABLE RESTRICTION ON THE COMPANY'S
USE OF DEBT. WE RECOMMEND A VOTE FOR ITEM 2."*
We appreciate the fact that this leading independent proxy research and
advisory firm concurs with our view that this proposal is in the best interests
of the company and our shareholders.
To date, we have not received your proxy for this meeting. Please take a
moment to sign, date and return the enclosed duplicate form of proxy in the
postage-paid envelope provided.
Your continuing support of your company, its Board and senior management is
greatly appreciated.
/s/ Robert W. Winston
Robert W. Winston
Chief Executive Officer
*Permission to quote from the ISS analysis was neither requested nor obtained.
<PAGE> 3
NEWS RE: WINSTON HOTELS, INC.
BULLETIN 2209 CENTURY DRIVE - SUITE 300
RALEIGH, NORTH CAROLINA 27612 [LOGO]
FROM: www.winstonhotels.com
FRB NYSE: WXH
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The Financial Relations Board, Inc.
<TABLE>
<CAPTION>
AT WINSTON HOTELS: AT THE FINANCIAL RELATIONS BOARD (WWW.FRBINC.COM):
<S> <C> <C> <C> <C>
FOR FURTHER INFORMATION: Pat W. Peruso Paul Scheeler Georganne Palffy Chris Dever
Investor Relations Manager General Information Analysts/Investors Media Inquiries
[email protected] [email protected] [email protected] [email protected]
(919) 510-8003 (312) 640-6742 (312) 640-6768 (312) 274-2240
</TABLE>
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 29, 1999
WINSTON HOTELS POSTS RECORD FIRST QUARTER 1999 RESULTS
INCLUDING 8.8 PERCENT INCREASE IN FFO PER SHARE TO 37 CENTS
----------------------------
LEASE REVENUE SOARS 45.2% AS BENEFITS EMERGE FROM RAMP-UP IN OCCUPANCY AT TEN
NEWEST UPSCALE BRAND HOTELS ADDED DURING 1998 AS WELL AS INTERNAL GROWTH
FROM EXISTING HOTELS; FFO PER SHARE EXCEEDS CONSENSUS ANALYSTS'
EXPECTATIONS BY 1 CENT
RALEIGH, N.C.--APRIL 29, 1999--WINSTON HOTELS, INC., (NYSE: WXH), a real estate
investment trust and owner of premium limited-service, high-end extended-stay
and full-service hotels, today announced results for the first quarter ended
March 31, 1999. FFO for the first quarter of 1999 increased 9.8 percent to a
record $6.7 million compared with FFO of $6.1 million for the first quarter of
1998. On a per share basis, FFO increased 8.8 percent to $0.37 on 18.1 million
weighted average shares outstanding compared with $0.34 on 18.0 million weighted
average shares for the same quarter a year ago. Lease revenue increased 45.2
percent to $14.6 million for the first quarter of 1999 as compared with $10.1
million for the first quarter of 1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
SUMMARY OF FIRST QUARTER FINANCIAL HIGHLIGHTS
($ in thousands, except per share amounts)
THREE MONTHS ENDED MARCH 31,
1999 1998 CHANGE
<S> <C> <C> <C>
Lease Revenue $ 14,631 $ 10,073 +45.2%
FFO $ 6,694 $ 6,098 + 9.8%
FFO per diluted common share $ 0.37 $ 0.34 + 8.8%
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</TABLE>
-MORE-
<PAGE> 4
Winston Hotels, Inc.
April 29, 1999
Add 1
Bob Winston, Chief Executive Officer, commented: "We're pleased to have posted
yet another strong quarter, just ahead of consensus analysts' expectations. The
REIT sector is still in the midst of a constrained capital market which does not
favor traditional growth by acquisition. However, Winston has a
multi-dimensional growth strategy which allows us to apply our management team's
dual expertise in both new hotel development and the acquisition of established
or newly constructed hotels as market conditions change. In fact, we are
currently exploring a number of attractive opportunities which effectively
utilize our internal resources, the details of which we look forward to
highlighting as transactions are consummated. The flexibility of this approach,
coupled with anticipated greater operational efficiencies leveraged across our
carefully assembled portfolio of newly developed and like-new hotel assets,
means that we should remain well-positioned, especially as occupancy levels ramp
up further at the ten new hotels we added in 1998."
Jim Rosenberg, President, added: "The most notable development in the first
quarter of 1999 is the significant occupancy and average daily rate increases at
our ten newest hotels opened last year, which complements the steady performance
of our other 41 hotels. These are all leading Upscale brands -- Hilton Garden
Inn, Courtyard by Marriott, Residence Inn by Marriott, and Homewood Suites -- in
prime markets with strong demand. We are seeing a meaningfully positive effect
from these ten properties, which comprise about one-fifth of our total portfolio
that is now weighted about 35 percent toward the top-performing Upscale segment.
While striving to maintain all our 51 hotels in like-new condition, we also have
one of the youngest median property ages among our peers. Both these elements
contribute to the creation of added shareholder value. Industry data shows that
newer hotels consistently experience higher-than-average occupancy. These
factors, together with our stringent operating criteria and maintenance
standards, plus our conservative financial structure, make us confident that our
proven strategy of high quality investment, development and management should be
increasingly acknowledged by the market."
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<PAGE> 5
Winston Hotels, Inc.
April 29, 1999
Add 2
PRO FORMA ROOM REVENUE
For the 43 hotels that were open during both quarters ended March 31, 1999 and
March 31, 1998, room revenues and related statistics were as follows (note that
the Company does not exclude `for sale' or `under renovation' hotels when making
these comparisons):
<TABLE>
<CAPTION>
Quarter Ended March 31,
-------------------------------------------------
1999 1998 % Change
---- ---- --------
<S> <C> <C> <C>
Room Revenues* $ 27.2 $ 25.4 7.1
Average Daily Rate $72.30 $69.99 3.3
Occupancy 70.86% 70.96% (0.1)
REVPAR $51.23 $49.67 3.1
</TABLE>
(* $ in millions)
Note: The above pro forma statistics include the Raleigh, NC Homewood
Suites and the Alpharetta, GA Hilton Garden Inn hotels which were
opened on March 9, 1998 and March 17, 1998, respectively. Excluding
these two hotels, pro forma REVPAR would have increased 0.7%
The Company's portfolio at March 31, 1999 includes an aggregate total of 51
operating hotel properties with 6,904 rooms in 13 states.
DIVIDEND PERFORMANCE
During the first quarter, Winston Hotels announced its regular quarterly cash
dividend of $0.28 per common share. The dividend was paid on April 16, 1999 to
common shareholders of record as of March 31, 1999. The regular quarterly
dividend is equivalent to $1.12 on an annualized basis. Also in the first
quarter, the Company announced its regular quarterly cash dividend to preferred
shareholders of record of $0.578125 per share. This dividend was also paid on
April 16, 1999 to shareholders of record as of March 31, 1999.
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<PAGE> 6
Winston Hotels, Inc.
April 29, 1999
Add 3
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. You can identify these statements
by use of words like "may," "will," "expect," "anticipate," "estimate," or
"continue" or similar expressions. These statements represent the Company's
judgment and are subject to risks and uncertainties that could cause actual
operating results to differ materially from those expressed or implied in the
forward-looking statements. From time to time, these risks are discussed in the
Company's filings with the Securities and Exchange Commission, including but not
limited to its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
its other periodic reports.
ABOUT THE COMPANY
Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment
trust specializing in the development, acquisition, and rehabilitation of
premium limited-service, high-end extended-stay and full-service hotel
properties. With a portfolio increasingly weighted toward the lodging industry's
Upscale segment, the Company currently owns 51 operating hotels in 13 states.
FOR MORE INFORMATION, CALL PAT PERUSO, INVESTOR RELATIONS MANAGER
OF WINSTON HOTELS, INC., AT (919) 510-8003.
FOR MORE INFORMATION ON WINSTON HOTELS TOLL-FREE VIA FAX, SIMPLY DIAL
1-800-PRO-INFO AND ENTER COMPANY CODE 994 OR THE TICKER SYMBOL WXH
ON ANY TOUCH TONE PHONE.
VISIT THE WINSTON HOTELS WEB SITE AT: WWW.WINSTONHOTELS.COM
FINANCIAL TABLES FOLLOW...
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<PAGE> 7
Winston Hotels, Inc.
April 29, 1999
Add 4
WINSTON HOTELS, INC.
CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
<S> <C> <C>
Investment in hotel properties:
Operating properties $ 436,889 $ 430,552
Less accumulated depreciation 42,879 37,920
--------- ---------
394,010 392,632
Properties under development 5,523 5,229
--------- ---------
Net investment in hotel properties 399,533 397,861
Corporate FF&E, net 299 294
Cash 5 33
Lease revenue receivable 8,875 7,653
Deferred expenses, net 4,486 3,376
Prepaid expenses and other assets 3,478 2,939
--------- ---------
Total Assets $ 416,676 $ 412,156
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt $ 70,751 $ 71,000
Due to banks 110,000 102,085
Accounts payable and accrued expenses 4,082 3,969
Distributions payable 6,795 6,789
Minority interest in Partnership 14,537 14,888
--------- ---------
Total liabilities 206,165 198,731
--------- ---------
Shareholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized,
3,000,000 shares issued and outstanding (liquidation preference of
$76,734) 30 30
Common stock, $.01 par value, 50,000,000 shares authorized,
16,333,980 and 16,313,980 shares issued and outstanding 163 163
Additional paid-in capital 224,961 224,757
Unearned compensation (407) (310)
Distributions in excess of earnings (14,236) (11,215)
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Total shareholders' equity 210,511 213,425
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Total liabilities and shareholders' equity $ 416,676 $ 412,156
========= =========
</TABLE>
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<PAGE> 8
Winston Hotels, Inc.
April 29, 1999
Add 5
WINSTON HOTELS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenue:
Percentage lease revenue $ 14,631 $ 10,073
Interest and other income 117 49
--------- ---------
Total revenue 14,748 10,122
--------- ---------
Expenses:
Real estate taxes and property and casualty insurance 1,688 979
General and administrative 1,377 659
Interest 3,090 531
Depreciation 4,977 3,158
Amortization 165 121
--------- ---------
Total expenses 11,297 5,448
--------- ---------
Income before allocation to minority interest 3,451 4,674
Income allocation to minority interest 165 297
--------- ---------
Net income 3,286 4,377
Preferred stock distribution 1,734 1,734
--------- ---------
Net income applicable to common shareholders $ 1,552 $ 2,643
========= =========
Earnings per share:
Net income per common share $ 0.10 $ 0.16
========= =========
Net income per common share assuming dilution $ 0.10 $ 0.16
========= =========
Weighted average number of common shares 16,331 16,224
========= =========
Weighted average number of common shares assuming dilution 18,069 18,042
========= =========
Funds from operations (1) $ 6,694 $ 6,098
========= =========
Funds from operations per common share assuming dilution $ 0.37 $ 0.34
========= =========
EBITDA $ 11,683 $ 8,484
========= =========
EBITDA per common share assuming dilution $ 0.65 $ 0.47
========= =========
Cash distributions per share:
Common $ 0.28 $ 0.27
========= =========
Preferred $0.578125 $0.578125
========= =========
</TABLE>
(1) FFO, as defined by NAREIT, is income (loss) before minority interest
(determined in accordance with generally accepted accounting principles),
excluding gains (losses) from debt restructuring and sales of properties,
plus real estate-related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures.
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