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BOSTON-Despite financial performance that is expected to get worse before it gets better, Boston Properties Inc. is holding on to its three local hotels until the sector sees a turnaround. Rather than $23 million of net operating income, Boston Properties officials expect that figure to come in at $20 million this year.

First-quarter occupancy at the REIT’s three hotels—Long Wharf Marriott, Cambridge Center Marriott and Residence Inn by Marriott in Cambridge—slid more than six percentage points from a year earlier to 68.2% in the first quarter. However, RevPAR for the 1,054-room portfolio slid 13.3% over the same period in 2002 to $101.39, with the slide approaching 20% at the Residence Inn by Marriott, the smallest of the three properties.

The 420,000-sf Long Wharf Marriott has 402 rooms at its oceanside location. The 330,440-sf Cambridge Center Marriott has 431 rooms while the Residence Inn has 221 rooms.

“Had they shown a recovery in ’02, they would’ve been strong candidates for sale as part of our capital recycling program,” said president and CEO Edward H. Linde during the company’s earnings conference call. “Selling hotels in this market does not make sense.”

During 2002 and the first three months of this year, Boston Properties sold 13 assets totaling nearly 3.1 million sf for $983.1 million, booking a gain of nearly $417.3 million. However, that was more than offset by September’s mammoth acquisition of 399 Park Ave. in New York City, a 1.68-million-sf asset that cost the REIT more than $1 billion.

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