Golf Trust of America, Inc. Announces Receipt of
Updated Innisbrook Resort Cash Flow Forecast
CHARLESTON, SC, October 20, 2003 - Golf Trust of America, Inc. (AMEX:GTA) announced today that it has received an updated forecast of the net cash flow expected to be generated by the Innisbrook Resort in the fourth quarter 2003 and for the year 2004. The updated forecast is materially less favorable than earlier forecasts for the same periods, which were among the factors considered in the computation of Golf Trust's projected range of liquidating distributions to common stock holders. The decline in the forecast results primarily from fewer than anticipated group bookings in the fourth quarter and the assumption that this trend may continue into 2004.
The Innisbrook Resort serves as collateral under a mortgage loan funded by Golf Trust, as the lender, in 1997. The borrower has been in payment default on the loan since October 2001 and Golf Trust has been negotiating to take possession of the Resort in lieu of foreclosure. As a lender, Golf Trust currently has no legal right to manage the Innisbrook Resort. The revised projections were prepared by the Westin Hotel Company, which operates the hotel and conference facilities at the Resort under a management contract with the resort's owner, Golf Host Resorts, Inc. Westin Hotel Company is owned by Starwood Hotels & Resorts Worldwide, Inc.
Golf Trust has requested a complete 2004 Innisbrook Resort budget from Westin, which is expected to be delivered in the near term. At the present time, Golf Trust cannot predict whether the decline in expected cash flow results from short- or long-term issues, application of more conservative budget methodologies and policies, or underlying economic trends. Although Golf Trust has not yet acquired ownership of the Innisbrook Resort, as previously disclosed, Golf Trust has based its calculation of the mortgage's liquidation value on an estimate of the future going-concern value of the Resort's operations on the assumption that Golf Trust will take possession of the Resort (subject to an amended management contract with Westin) and hold the property until operating revenues realize a modest recovery.
Once Golf Trust's receives and reviews the necessary information supporting the 2004 budget and forecast, Golf Trust's board of directors will again review the strategic alternatives available to the company. It is possible that the board of directors may conclude that the revised forecast suggests a permanent impairment to the value of the Innisbrook Resort asset. Such a conclusion could lead Golf Trust to write-down the value of the Innisbrook Resort mortgage on its balance sheet and/or result in a reduction to Golf Trust's projected range of liquidating distributions to common stockholders. Golf Trust cannot currently predict which, if any, of these or other results might occur as a result of the new forecast.
Golf Trust of America, Inc. was formerly a real estate investment trust but is now engaged in the liquidation of its interests in golf courses in the United States pursuant to a plan of liquidation approved by its stockholders. In addition to the four 18-hole golf courses at the Innisbrook Resort, the Company currently owns an interest in four other properties (comprised of 5.0 eighteen-hole equivalent golf courses). Additional information regarding Golf Trust and its interest in the Innisbrook Resort is available in Golf Trust's periodic filings with the SEC and on the Company's website at www.golftrust.com.
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Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors including general economic conditions, travel and leisure spending in the southeastern U.S., competition for golf course acquisitions, the availability of equity and debt financing to potential golf course purchasers, interest rates and other risk factors outlined in the Golf Trust's SEC reports.
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