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CLEVELAND-Boykin Lodging Co. saw funds from operations drop 33% in the third quarter, blaming the drop on the after-effects of the terrorist attacks on the US. The hotel real estate investment trust also warns it may have to cut its fourth-quarter dividend.

For the three months that ended September 30, 2001, funds from operations were $9.5 million, or $0.51 per share, versus $14.2 million, or $0.76 per share, for the same period the year before. Total revenues for the third quarter were $19.4 million, down 19.5% from the same period in 2000. Percentage lease revenue for the third quarter was $17.4 million this year, down 20.1% from a year ago.

On a same-unit basis, third-quarter room revenue per available room (REVPAR)decreased 14.5% to $60.14. Occupancy during the third quarter of 2001 decreased to 65.5% from 73.9%, while the average daily rate decreased 3.5% to $91.80. Net income for the 2001 third quarter was $1.3 million, or $0.08 per diluted share, down 58% from the same period in 2000.

“As I said when we announced our third-quarter dividend on October 4, the reaction to the Sept. 11 terrorist attacks undermined an already weak hotel operating environment caused by the slowing economy,” says Robert W. Boykin, chairman and CEO. “Under such circumstances, our board of directors will probably suspend the fourth-quarter dividend. We have already paid out enough in dividends this year to maintain our tax status as a REIT. Even if the dividend is suspended in the fourth quarter, it will be resumed at an appropriate level when the outlook turns positive and when we can see trends of tangible improvement in revenues and cash flow.”

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