With occupancies falling at its hotels, the Chicago-based real estate investment trust(Strategic Hotels & Resorts Inc.) reported funds from operations (FFO) loss of $71.2 million, or 94 cents a share, in the quarter, including $96.7 million in charges, vs. positive FFO of $10.7 million, or 14 cents a share, in the year-earlier period. Revenue rose 1% to $238.7 million.
Hotel owners are bracing for a severe downturn as businesses and tourists cut back on travel, and analysts had predicted in recent months that Strategic would need to stop paying its dividend to weather the storm. The company said its decision to suspend the quarterly payout will save it about $90 million through the end of 2009.
Company executives “believe the suspension of our dividend is a prudent step in enhancing current financial flexibility and better positioning the company to manage through this period of economic turbulence,” CEO Laurence Geller said in a news release.
Strategic recorded $96.7 million in charges in the quarter, including $35.2 million to write off its aborted 225-room expansion of the Fairmont Chicago.
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