Equity Inns, Inc. (NYSE: ENN): -- Third Quarter 2005 Highlights --
-- Funds From Operations Increased 21% to $0.34 Per Diluted Share
-- -- RevPAR Increased 8.9%; Gross Operating Profit Increased 150
basis points -- -- Acquired Seven Premium Branded Hotels;
Acquisition Pipeline Remains Strong -- -- Balance Sheet Remains
Solid -- -- Company Increases 2005 Guidance -- Equity Inns, Inc.
(NYSE: ENN), the third largest hotel real estate investment trust
(REIT), today announced its results for the third quarter and nine
months ended September 30, 2005. Adjusted funds from operations
(AFFO), for the third quarter 2005, which is the same as funds from
operations (FFO) this quarter, increased 44% to $18.6 million
versus AFFO of $12.9 million for the third quarter 2004. AFFO per
share for the third quarter 2005 increased 21% to $0.34 from $0.28
in the third quarter 2004. Net income applicable to common
shareholders for the third quarter 2005 was $6.7 million, or $0.12
per diluted share, as compared to $2.5 million, or $0.06 per
diluted share, in the third quarter 2004. Adjusted EBITDA climbed
36% to $30.1 million in the third quarter 2005 versus $22.1 million
in the same period last year. Howard A. Silver, President and Chief
Executive Officer, stated, "We are extremely pleased to report
another quarter of solid results that exceed the analyst consensus
estimate by $0.01 and again outperform industry revenue metrics.
The 30% increase in room revenue and solid revenue per available
room (RevPAR) growth is the result of the continued performance of
our acquisition strategy coupled with the mix of our premium hotel
brands and the geographic diversity of our locations. The strategic
positioning of our hotel portfolio to maintain occupancy levels
during the economic downturn has enabled the Company to increase
average daily rate (ADR) at a rate faster than the industry during
the current recovery. Our ADR increase of 6.6% in the third quarter
2005, compared to 5.6% for the industry, accounted for nearly 75%
of our quarterly RevPAR growth of 8.9%. This ADR growth has also
translated into better bottom-line results as evidenced by our
improving gross operating profit margins." Mr. Silver continued,
"Our transaction activity in the third quarter, and for the past
twenty-one months, demonstrates our ability to execute on our
strategy of upgrading our hotel portfolio, while continuing to
maintain a strong balance sheet. Since the beginning of 2004,
through the end of October 2005, we have purchased 36 newer
Marriott and Hilton branded hotel properties in key growth markets.
We are aggressively continuing to acquire hotels that will
meaningfully contribute to our long-term growth strategy. Our
pipeline of acquisition opportunities remains solid and we continue
to pursue raising capital opportunistically to fund this
acquisition program, with attractive terms that results in the
creation of long-term shareholder value." Financial Highlights for
the Third quarter and Nine months 2005: In the third quarter of
2005, the AFFO improvement was primarily due to a $3.1 million net
accretive effect of the Company's hotel acquisitions and same-store
(96 hotels) hotel net operating income increase of $3.0 million.
For the third quarter 2005, total hotel revenue was $90.2 million,
representing an increase of approximately 30% from one year ago.
This increase was attributable to net incremental revenues of $14.4
million from hotel acquisitions and an increase of $6.0 million in
same-store hotel revenue, which was driven by a 9.5% increase in
RevPAR to $65.91. Approximately 68% of the Company's same-store
RevPAR improvement was attributable to ADR, which improved 6.5% to
$87.03. The Company's RevPAR growth of 8.9% for the 122 comparable
hotels for the third quarter 2005 was driven by the increase in ADR
of 6.6% to $87.99 and a 160 basis points gain in occupancy to
75.6%. RevPAR growth was strong throughout the third quarter of
2005. RevPAR increased 8.1% in July, 10.6% in August and 8.4% in
September, as compared to the same periods in the prior year.
Primarily due to the RevPAR growth, the Company's third quarter
2005 gross operating profit margin (GOP margin) increased 150 basis
points to 43.2% from 41.7% in the third quarter of 2004. Same-store
GOP margins increased 100 basis points to 42.7%. The Company's
total hotel revenue for the nine months ended September 2005 was
$250.3 million, an increase of 33% from $188.2 million in the nine
months ended September 2004. The improvement was driven by net
incremental revenue of $45.6 million from hotel acquisitions
completed in 2004 and 2005 and an increase of $16.5 million from
same-store hotel revenue. RevPAR increased 10.5% on a year-to-date
basis for all comparable hotels, driven by 7.3% growth in ADR and
210 basis points of occupancy improvement. Net income applicable to
common shareholders for the nine months ended September 30, 2005
was $11.7 million, or $0.22 per diluted share, compared to net
income applicable to common shareholders of $0.8 million, or $0.02
per diluted share in the prior year period. For the nine months
ended September 30, 2005, Equity Inns reported a 37% increase in
AFFO per diluted share to $0.92, compared to $0.67 in the same
period a year ago. Additional Third Quarter Events: -- At the end
of the quarter, Equity Inns marked its entrance into the Boston,
Massachusetts area market with the purchase of a Hampton Inn and a
Homewood Suites for total consideration of $15.2 million, or
approximately $74,000 per room, which includes estimated renovation
costs of $1.1 million. Collectively, the two hotels have an average
age of six years and added 206 rooms to the Company's hotel
portfolio. -- On September 15th, Equity Inns finalized its purchase
of four hotels in the Midwest. The Company completed the purchase
of four Hilton and Marriott branded hotels for approximately $25.9
million, or $69,000 per room. Collectively, the four hotels have an
average age of 5 years and added 376 rooms to the Company's hotel
portfolio. The average capitalization rate of the acquisition was
approximately 9.7% on a trailing 12-month net operating income
basis. -- On August 9, 2005, the Company completed the purchase of
a 127-room Hampton Inn & Suites in Nashville (Franklin),
Tennessee for $9.9 million. -- Equity Inns sold two exterior
corridor Hampton Inn hotels for approximately $5.1 million at a
combined capitalization rate of 7.7% in two separate transactions.
Collectively, the sold hotels have 235 rooms and an average age of
almost 20 years. Subsequent Event: -- On November 1, 2005, the
Company completed its $22.0 million purchase of a 145-room,
five-year old Marriott Courtyard in Carlsbad, CA from the
Huntington Hotel Group. The capitalization rate of the acquisition
was 9.2% on a trailing 12 month net operating income basis. The
deal marks the Company's initial entry into the California market.
Capital Structure: At September 30, 2005, Equity Inns had $531.6
million of long-term debt outstanding, which included $98.5 million
drawn under its $125.0 million line of credit. The weighted average
interest rate of the Company's debt was 6.9% compared to 7.3% a
year ago. The weighted average life of the Company's debt was 6.9
years. The total debt represented 42.4% of the historical cost of
the Company's hotels. Equity Inns' leverage ratio was 4.6 times at
the end of the quarter, which is near a five-year low for the
Company. Fixed rate debt, including variable rate debt hedged by
interest rate swaps, amounted to approximately 90% of total debt.
At September 30, 2005, the Company's outstanding common stock and
partnership units were a combined 55.4 million. Dividend: For the
third quarter 2005, Equity Inns paid quarterly cash dividends of
$0.17 per common share and $0.546875 per preferred share. The
common dividend represented an increase of 31% as compared to the
dividend paid in the third quarter 2004 and was the Company's
second dividend increase in 2005. The cash available for
distribution (CAD) payout ratio was approximately 63% for the
trailing twelve-month period ended September 30, 2005. The level of
Equity Inns' common dividend will continue to be determined by our
Board of Directors based on the operating results of each quarter,
economic conditions, capital requirements, and other operating
trends. Fourth Quarter Guidance: Mr. Silver commented, "Many
residents suffered extensive damage to their homes and businesses
as hurricane Wilma came ashore last week and I would like to
acknowledge the hardship of those impacted by the hurricane and the
other storms this year. For Equity Inns, ten of our properties
(hotels) were impacted by power outages, temporary closings and
cancellations of reservations, however no hotels suffered major
damage and all are open today. At this point, our best estimate is
that the storm will have a slight impact on our business, but we do
not believe it will be material to our results." Based upon
expectations for continued improvement in the upscale and mid-scale
lodging sectors, recent acquisitions and divestitures, along with
planned expense increases, the Company now expects full year 2005
RevPAR increases will be in the range of 7.5% to 8.5%, which is
expected to result in an Adjusted EBITDA range of $104.0 million to
$105.5 million, an AFFO per diluted share range of $1.09 to $1.11
and net income per diluted share range of $0.16 to $0.18. As a
result of these assumptions, management expects fourth quarter AFFO
to be between $0.17 and $0.19 per diluted share and net loss per
diluted share to be in the range of ($0.06) to ($0.04), with a
RevPAR change of between -2% and +2%. The assumptions impacting the
Company's fourth quarter 2005 RevPAR and AFFO forecast are as
follows: 1. 13 hotels based in Florida benefited heavily from 2004
hurricane related business. -- Six of these hotels realized RevPAR
growth of 36% in the fourth quarter 2004 due to hurricane related
business. These hotels are projected to produce a RevPAR decline of
19% in the fourth quarter 2005 as compared to the fourth quarter
2004, although this is still approximately 17% above fourth quarter
2003 RevPAR for these hotels. -- The remaining seven Florida based
hotels that also benefited from 2004 hurricane related business are
expected to produce a RevPAR decline of 10% in the fourth quarter
2005 as compared to the fourth quarter 2004. 2. Residence Inn "Gen
I Refresh" renovations at four hotels in the Northeast are expected
to result in a RevPAR decline of 15.0% in the fourth quarter 2005
as compared to the fourth quarter 2004, as a result of rooms at
these hotels being out of service. Conference Call: Equity Inns
will hold a conference call and webcast to discuss the Company's
third quarter 2005 results after the market close on November 1,
2005, at 4:30 p.m. (Eastern Time). Interested investors and other
parties may listen to the conference call by dialing 1-800-289-0529
or 1-913-981-5523 for international participants. A simultaneous
webcast of the conference call may be accessed by logging onto the
Company's website at http://www.equityinns.com/ and selecting the
microphone icon. A replay of the conference call will be available
on the Internet at www.streetevents.com and the Company's website,
www.equityinns.com for seven days following the call. A recording
of the call will also be available by telephone until midnight, on
November 8, 2005 by dialing 1-888-203-1112 or 1-719-457-0820 for
international participants. The pass code is 1142779. Certain
matters discussed in this press release which are not historical
facts are "forward-looking statements" within the meaning of the
federal securities laws and involve risks and uncertainties. The
words "may," "plan," "project," "anticipate," "believe,"
"estimate," "forecast, "expect," "intend," "will," and similar
terms are intended to identify forward-looking statements, which
include, without limitation, statements concerning our outlook for
the hotel industry, acquisition and disposition plans for our
hotels and assumptions and forecasts of future results for fiscal
year 2005. Forward-looking statements are not guarantees of future
performance and involve numerous risks and uncertainties which may
cause our actual financial condition, results of operations and
performance to be materially different from the results of
expectations expressed or implied by such statements. General
economic conditions, future acts of terrorism or war, risks
associated with the hotel and hospitality business, the
availability of capital, risks associated with our debt financing,
hotel operating risks and numerous other factors, may affect our
future results and performance and achievements. These risks and
uncertainties are described in greater detail in our Current Report
on Form 8-K filed on March 16, 2005 and our other periodic filings
with the United States Securities and Exchange Commission (SEC). We
undertake no obligation and do not intend to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise. Although we believe our
current expectations to be based upon reasonable assumptions, we
can give no assurance that our expectations will be attained or
that actual results will not differ materially. Notes to Financial
Information The Company operates as a self-managed and
self-administered real estate investment trust, or REIT. Readers
are encouraged to find further detail regarding Equity Inns
organizational structure in its annual report on Form 10-K for the
year ended December 31, 2004 as filed with the SEC. Non-GAAP
Financial Measures Included in this press release are certain
"non-GAAP financial measures," which are measures of the Company's
historical or future financial performance that are different from
measures calculated and presented in accordance with generally
accepted accounting principles, or GAAP, within the meaning of
applicable SEC rules. These include: (i) Gross Operating Profit
Margin, (ii) Funds From Operations, (iii) Adjusted Funds From
Operations, (iv) Adjusted EBITDA, (v) Cash Available for
Distribution (CAD), (vi) CAD Payout Ratio, (vii) Capitalization
Rate (viii) Leverage Ratio, and (ix) Hotel Operating Statistics.
The following discussion defines these terms, which the Company
believes can be useful measures of its performance. Gross Operating
Profit Margin The Company uses a measure common in the hotel
industry to evaluate its operating results. Gross operating profit
margin (GOP margin) is defined as hotel revenues minus hotel
operating costs before property taxes, insurance and management
fees, divided by hotel revenues. Funds from Operations The National
Association of Real Estate Investment Trusts, or NAREIT, defines
funds from operations, or FFO, as net income (loss) applicable to
common shareholders (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from sales of
property, plus depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. FFO is
presented on a per share basis after making adjustments for the
effect of dilutive securities. Equity Inns uses FFO per share as a
measure of performance to adjust for certain non-cash expenses such
as depreciation and amortization because historical cost accounting
for real estate assets implicitly assumes that the value of real
estate assets diminishes predictably over time. FFO is also used by
management in the annual budget process. Because real estate values
have historically risen or fallen with market conditions, many
industry investors have considered presentation of operating
results for real estate companies that use historical cost
accounting to be less informative. NAREIT adopted the definition of
FFO in order to promote an industry-wide standard measure of REIT
operating performance. Accordingly, as a member of NAREIT, Equity
Inns adopted FFO as a measure to evaluate performance and
facilitate comparisons between the Company and other REITs,
although FFO and FFO per share may not be comparable to those
measures or similarly titled measures as reported by other
companies. Adjusted Funds From Operations Equity Inns further
adjusts FFO for losses on impairment of hotels, prepayment
penalties on extinguishment of debt and other non-cash or unusual
items. We refer to this as adjusted funds from operations, or AFFO.
The Company's computation of AFFO and AFFO per diluted share is not
comparable to the NAREIT definition of FFO or to similar measures
reported by other REITs, but the Company believes it is an
appropriate measure for this Company. The Company uses AFFO because
it believes that this measure provides investors a useful indicator
of the operating performance of the Company's hotels by adjusting
for the effects of certain non-cash or non-recurring items arising
from the Company's financing activities, impairment charges on
hotels held for sale and other areas. In addition to being used by
management in the annual budget process, AFFO per share is also
used by the Compensation Committee of the Board of Directors as one
of the criteria for performance-based compensation. Adjusted EBITDA
Earnings before Interest Expense, Income Taxes, Depreciation and
Amortization, or EBITDA, is a commonly used measure of performance
in many industries, which the Company believes provides useful
information to investors regarding its results of operations.
EBITDA helps Equity Inns and its investors evaluate the ongoing
operating performance of its properties and facilitates comparisons
with other lodging REITs, hotel owners who are not REITs, and other
capital-intensive companies. The Company uses EBITDA to provide a
baseline when evaluating hotel results. The Company also uses
EBITDA as one measure in determining the value of acquisitions and
dispositions and, like FFO and AFFO, it is also used by management
in the annual budget process. The Company further adjusts EBITDA to
exclude preferred stock dividends, income or losses from
discontinued operations, minority interests and losses on
impairment of hotels because it believes that including such items
in EBITDA is not consistent with reflecting the ongoing operating
performance of the remaining assets. The Company has historically
adjusted EBITDA when evaluating its performance because management
believes that the exclusion of certain non-cash and non-recurring
items described above assists the Company in measuring the
performance of its hotels and reflects the ongoing value of the
Company as a whole. Therefore, the Company modifies EBITDA and
refers to this measure as Adjusted EBITDA. Cash available for
distribution (CAD) and CAD Payout Ratio Cash available for
distribution (CAD) is defined as AFFO, adjusted for certain
non-cash amortization and an allowance for recurring capital
expenditures equal to four percent of hotel room revenue from
continuing operations. The Company computes the CAD Payout Ratio by
dividing common dividends per share and unit paid over the last
twelve months by trailing twelve-month CAD per share for the same
period. The Company believes the CAD Payout Ratio also helps
improve equity holders' ability to understand the Company's ability
to make distributions to its shareholders. Capitalization Rate The
Company uses a measure common in the hotel industry to discuss its
underwriting of acquired or disposed hotel assets. Capitalization
rate, for this discussion, is defined as the percentage derived by
dividing the net operating income of the hotel asset(s), less a
management fee and an allowance for recurring capital expenditures
by the purchase price paid or received for the hotel asset(s).
Leverage Ratio The Company uses a measure common in the hotel
industry to evaluate its financial leverage. Leverage ratio is
defined as the Company's long-term debt divided by EBITDA as
defined in the financial covenants of its line of credit. Hotel
Operating Statistics The Company uses a measure common in the hotel
industry to evaluate the operations of its hotel room revenue per
available room, or RevPAR. RevPAR is the product of the ADR charged
and the average daily occupancy achieved. RevPAR does not include
food and beverage or other ancillary revenues such as parking,
telephone, or other guest services generated by the property.
Similar to the reporting periods for the Company's statement of
operations, hotel operating statistics (i.e., RevPAR, ADR and
average occupancy) are reported based on a quarter end. This
facilitates year-to-year comparisons of hotel results, as each
reporting period will be comprised of the same number of days of
operations as in the prior year. GOP Margin, FFO, AFFO, FFO per
Share, AFFO per Share, Adjusted EBITDA, CAD, CAD Payout Ratio,
Capitalization Rate, Leverage Ratio and Hotel Operating Statistics
presented, may not be comparable to the same or similarly titled
measures calculated by other companies and may not be helpful to
investors when comparing Equity Inns to other companies. This
information should not be considered as an alternative to net
income, income from operations, cash from operations, or any other
operating performance measure prescribed by GAAP. Cash expenditures
for various long-term assets (such as renewal and replacement
capital expenditures), interest expense (for Adjusted EBITDA
purposes) and other items have been and will be incurred and are
not reflected in the Adjusted EBITDA, FFO and AFFO per share
presentations. Equity Inns' statement of operations and cash flows
include disclosure of its interest expense, capital expenditures,
and other excluded items, all of which should be considered when
evaluating the Company's performance, as well as the usefulness of
its non-GAAP financial measures. Additionally, FFO, AFFO, FFO per
share, AFFO per share, Adjusted EBITDA and CAD should not be
considered as a measure of the Company's liquidity or indicative of
funds available to fund its cash needs, including the Company's
ability to make cash distributions. In addition, FFO per share,
AFFO per share and CAD do not measure, and should not be used as
measures of, amounts that accrue directly to shareholders' benefit.
About Equity Inns Equity Inns, Inc. is a self-advised REIT that
focuses on the upscale extended stay, all-suite and midscale
limited-service segments of the hotel industry. The Company, which
ranks as the third largest hotel REIT based on number of hotels,
currently owns 123 hotels with 14,788 rooms located in 36 states.
For more information about Equity Inns, visit the Company's Web
site at www.equityinns.com. -0- *T EQUITY INNS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
September 30, December 31, 2005 2004 ------------- ------------
(unaudited) ASSETS Investment in hotel properties, net $964,542
$852,755 Assets held for sale - 3,849 Cash and cash equivalents
8,674 6,991 Accounts receivable, net of doubtful accounts of $225
and $225, respectively 9,422 7,543 Interest rate swaps 748 - Note
receivable 1,700 - Deferred expenses, net 11,312 8,679 Deposits and
other assets, net 18,256 13,437 ------------- ------------ Total
Assets $1,014,654 $893,254 ============= ============ LIABILITIES
AND SHAREHOLDERS' EQUITY Long-term debt $531,575 $439,183 Accounts
payable and accrued expenses 40,161 30,366 Distributions payable
10,673 8,090 Interest rate swaps - 119 Minority interests in
Partnership 8,714 9,064 ------------- ------------ Total
Liabilities 591,123 486,822 ------------- ------------ Commitments
and Contingencies Shareholders' Equity: Preferred stock (Series B),
8.75%, $.01 par value, 10,000,000 shares authorized, 3,450,000
shares issued and outstanding 83,524 83,524 Common stock, $.01 par
value, 100,000,000 shares authorized, 54,746,329 and 51,872,460
shares issued and outstanding 547 519 Additional paid-in capital
572,488 542,397 Treasury stock, at cost, 747,600 shares (5,173)
(5,173) Unearned directors' and officers' compensation (2,474)
(2,211) Distributions in excess of net earnings (226,129) (212,505)
Unrealized gain (loss) on interest rate swaps 748 (119)
------------- ------------ Total Shareholders' Equity 423,531
406,432 ------------- ------------ Total Liabilities and
Shareholders' Equity $1,014,654 $893,254 ============= ============
EQUITY INNS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited) For the Three For
the Nine Months Ended Months Ended September 30, September 30,
------------- ------------- 2005 2004 2005 2004 ---- ---- ---- ----
Revenue: Room revenue $86,526 $66,534 $239,975 $179,283 Other hotel
revenue 3,668 3,249 10,316 8,873 Other revenue 370 120 595 327
------ ------- -------- -------- Total revenue 90,564 69,903
250,886 188,483 Operating expenses: Direct hotel expenses 50,344
39,482 138,152 106,158 Other hotel expenses 2,807 2,329 7,856 6,535
Depreciation 12,298 10,061 35,232 28,991 Property taxes, rental
expense and insurance 5,398 4,344 16,072 12,913 General and
administrative expenses: Non-cash stock-based compensation 290 162
1,053 484 Other general and administrative expenses 1,951 1,662
5,866 5,346 Loss on impairment of hotels - - 2,150 - ------ -------
-------- -------- Total operating expenses 73,088 58,040 206,381
160,427 ------ ------- -------- -------- Operating income 17,476
11,863 44,505 28,056 Interest expense, net 9,294 7,315 26,041
21,057 ------ ------- -------- -------- Income (loss) from
continuing operations before minority interests and income taxes
8,182 4,548 18,464 6,999 Minority interests income (expense) (192)
(97) (311) (53) Deferred income tax benefit (expense) - - - -
------ ------- -------- -------- Income (loss) from continuing
operations 7,990 4,451 18,153 6,946 Discontinued operations: Gain
(loss) on sale of hotel properties 625 - 625 (320) Loss on
impairment of hotels held for sale - - (1,350) - Income (loss) from
operations of discontinued operations (4) (43) (63) (148) ------
------- -------- -------- Income (loss) from discontinued
operations 621 (43) (788) (468) ------ ------- -------- --------
Net income (loss) 8,611 4,408 17,365 6,478 Preferred stock
dividends (1,887) (1,887) (5,660) (5,660) ------ ------- --------
-------- Net income (loss) applicable to common shareholders $6,724
$2,521 $11,705 $818 ====== ======= ======== ======== Net income
(loss) per share data: Basic and diluted income (loss) per share:
Continuing operations $0.11 $0.06 $0.23 $0.03 Discontinued
operations 0.01 0.00 (0.01) (0.01) ------ ------- -------- --------
Net income (loss) per common share $0.12 $0.06 $0.22 $0.02 ======
======= ======== ======== Weighted average number of common shares
outstanding, basic and diluted 54,005 45,453 53,360 44,482 ======
======= ======== ======== EQUITY INNS, INC. RECONCILIATION OF NET
INCOME (LOSS) TO ADJUSTED FUNDS FROM OPERATIONS AND CASH AVAILABLE
FOR DISTRIBUTION (unaudited) The following is a reconciliation of
net income (loss) to FFO and AFFO, both applicable to common
shareholders, and cash available for distribution and illustrates
the difference in these measures of operating performance (in
thousands, except per share and unit data): For the Three For the
Nine Months Ended Months Ended September 30, September 30,
------------- ------------- 2005 2004 2005 2004 ---- ---- ---- ----
Net income (loss) applicable to common shareholders $6,724 $2,521
$11,705 $818 Add (subtract): (Gain) loss on sale of hotel
properties (625) - (625) 320 Minority interests (income) expense
192 97 311 53 Depreciation 12,298 10,061 35,232 28,991 Depreciation
from discontinued operations 37 201 250 605 ------- ------- -------
------- Funds From Operations (FFO) 18,626 12,880 46,873 30,787
Loss on impairment of hotels - - 3,500 - Fees incurred on
indefinitely postponed unsecured offering - - 245 - ------- -------
------- ------- Adjusted Funds From Operations (AFFO) 18,626 12,880
50,618 30,787 Add: Amortization of debt issuance costs 482 431
1,688 1,236 Amortization of deferred expenses and stock-based
compensation 340 201 1,139 596 Amortization from discontinued
operations 1 8 10 22 Capital reserves (3,461) (2,661) (9,599)
(7,171) ------- ------- ------- ------- Cash Available for
Distribution $15,988 $10,859 $43,856 $25,470 ======= =======
======= ======= Weighted average number of diluted common shares
and Partnership units outstanding 55,393 46,709 54,774 45,663
======= ======= ======= ======= FFO per Share and Unit $0.34 $0.28
$0.86 $0.67 ======= ======= ======= ======= AFFO per Share and Unit
$0.34 $0.28 $0.92 $0.67 ======= ======= ======= ======= Cash
Available for Distribution per Share and Unit $0.29 $0.23 $0.80
$0.56 ======= ======= ======= ======= EQUITY INNS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (unaudited)
The following is a reconciliation of net income (loss) applicable
to common shareholders to Adjusted EBITDA and illustrates the
difference in these measures of operating performance (in
thousands): For the Three For the Nine Months Ended Months Ended
September 30, September 30, ------------- ------------- 2005 2004
2005 2004 ---- ---- ---- ---- Net income (loss) applicable to
common shareholders $6,724 $2,521 $11,705 $818 Add (subtract):
Preferred stock dividends 1,887 1,887 5,660 5,660 (Income) loss
from discontinued operations (621) 43 788 468 Minority interests
(income) expense 192 97 311 53 Interest expense, net 9,294 7,315
26,041 21,057 Loss on impairment of hotels - - 2,150 - Depreciation
12,298 10,061 35,232 28,991 Amortization of deferred expenses and
stock-based compensation 341 209 1,149 618 ------- ------- -------
------- Adjusted EBITDA $30,115 $22,133 $83,036 $57,665 =======
======= ======= ======= EQUITY INNS, INC. 2005 FORECAST
RECONCILIATION (unaudited) The following is a reconciliation of the
Company's 2005 forecast of net income (loss) to FFO and AFFO, both
applicable to common shareholders, and Adjusted EBITDA, and
illustrates the difference in these measures of operating
performance (in thousands, except per share and unit data): Three
Months Ended Twelve Months Ended December 31, 2005 December 31,
2005 ------------------ ------------------- Low End High End Low
End High End Range Range Range Range ------- -------- -------
-------- FFO AND AFFO RECONCILIATION: Net income (loss) applicable
to common shareholders $(3,000) $(2,000) $8,700 $9,700 Add
(subtract): (Gain) loss on sale of hotel properties - - (625) (625)
Minority interests (income) expense (160) (150) 140 150
Depreciation 12,800 12,800 48,000 48,000 ------- -------- -------
-------- Funds From Operations (FFO) 9,640 10,650 56,215 57,225
Loss on impairment of hotels - - 3,500 3,500 Fees incurred on
indefinitely postponed unsecured offering - - 245 245 -------
-------- ------- -------- Adjusted Funds From Operations (AFFO)
$9,640 $10,650 $59,960 $60,970 ======= ======== ======= ========
Weighted average number of diluted common shares and Partnership
units outstanding 55,393 55,393 54,930 54,930 ======= ========
======= ======== FFO per Share and Unit $0.17 $0.19 $1.02 $1.04
======= ======== ======= ======== AFFO per Share and Unit $0.17
$0.19 $1.09 $1.11 ======= ======== ======= ======== ADJUSTED EBITDA
RECONCILIATION: Net income (loss) applicable to common shareholders
$(3,000) $(2,000) $8,700 $9,700 Add (subtract): Preferred stock
dividends 1,850 1,850 7,550 7,550 (Income) loss from discontinued
operations - - 800 800 Minority interests (income) expense (160)
(150) 140 150 Interest expense, net 9,185 9,675 35,185 35,675 Loss
on impairment of hotels - - 2,150 2,150 Depreciation 12,800 12,800
48,000 48,000 Amortization of deferred expenses and stock-based
compensation 325 325 1,475 1,475 ------- -------- ------- --------
Adjusted EBITDA $21,000 $22,500 $104,000 $105,500 ======= ========
======= ======== Equity Inns, Inc. Hotel Performance For the Three
Months Ended September 30, 2005 and 2004 All Comparable (1) RevPAR
(2) Occupancy ADR ------------- ------------- ------------- # of
Variance Variance Variance Hotels 2005 to 2004 2005 to 2004 2005 to
2004 ------ ---- ------- ---- ------- ---- ------- Portfolio 1.6
122 $66.52 8.9% 75.6% pts. $87.99 6.6% Franchise AmeriSuites -0.6
18 $58.03 8.4% 72.9% pts. $79.55 9.3% Comfort Inn 3.3 2 $71.03
16.0% 73.4% pts. $96.77 10.7% Courtyard 2.2 11 $75.43 6.9% 79.8%
pts. $94.56 3.9% Hampton Inn 3.4 51 $59.53 12.8% 73.2% pts. $81.29
7.5% Hampton Inn & 0.0 Suites 2 $68.69 6.2% 73.7% pts. $93.22
6.3% Hilton Garden -4.9 Inn 2 $67.62 2.7% 69.5% pts. $97.29 9.9%
Holiday Inn 5.9 4 $48.54 10.9% 71.2% pts. $68.17 1.6% Homewood 2.1
Suites 10 $88.86 8.5% 83.8% pts. $106.09 5.9% Residence -2.9 Inn 20
$81.00 2.1% 80.2% pts. $101.01 5.8% SpringHill 2.2 Suites 2 $75.31
8.5% 81.5% pts. $92.43 5.6% Region East North 0.6 Central 18 $66.88
5.8% 74.1% pts. $90.28 5.0% East South 2.7 Central 16 $63.47 11.2%
77.8% pts. $81.61 7.4% Middle 0.3 Atlantic 6 $83.34 -1.5% 76.5%
pts. $108.92 -1.9% Mountain 3.7 10 $63.55 15.2% 77.6% pts. $81.89
9.7% New England 3.2 7 $66.19 9.7% 72.5% pts. $91.26 4.8% Pacific
1.6 2 $105.51 11.3% 89.9% pts. $117.43 9.3% South -0.2 Atlantic 46
$65.58 8.0% 75.3% pts. $87.09 8.3% West North -2.8 Central 7 $65.63
7.0% 74.6% pts. $87.99 11.0% West South 8.9 Central 10 $57.46 19.7%
73.0% pts. $78.69 5.2% Type All Suite -0.6 18 $58.03 8.4% 72.9%
pts. $79.55 9.3% Extended -0.9 Stay 30 $84.14 4.7% 81.6% pts.
$103.10 5.9% Full 7.1 Service 5 $57.18 15.0% 72.3% pts. $79.10 3.7%
Limited 2.7 Service 69 $62.29 10.9% 74.1% pts. $84.08 6.9% (1) All
Comparable is defined as our system-wide gross lodging revenues for
hotels that the Company owns at period end. (2) RevPAR is
calculated by taking the Company's average daily rate (ADR) times
occupancy. Equity Inns, Inc. Hotel Performance For the Nine Months
Ended September 30, 2005 and 2004 All Comparable (1) RevPAR (2)
Occupancy ADR ------------- ------------- ------------- # of
Variance Variance Variance Hotels 2005 to 2004 2005 to 2004 2005 to
2004 ------ ---- ------- ---- ------- ---- ------- Portfolio 2.1
122 $65.04 10.5% 73.3% pts. $88.76 7.3% Franchise AmeriSuites 0.6
18 $54.80 9.1% 69.4% pts. $78.91 8.2% Comfort Inn -3.5 2 $68.41
8.1% 69.1% pts. $99.05 13.5% Courtyard 2.4 11 $76.64 7.4% 80.6%
pts. $95.11 4.2% Hampton Inn 4.0 51 $58.18 14.6% 70.8% pts. $82.19
8.2% Hampton Inn 2.3 & Suites 2 $84.32 15.4% 78.5% pts. $107.37
12.1% Hilton -0.3 Garden Inn 2 $81.36 12.2% 73.5% pts. $110.68
12.6% Holiday Inn 4.1 4 $42.99 6.9% 64.8% pts. $66.33 0.2% Homewood
1.9 Suites 10 $85.74 8.0% 80.5% pts. $106.53 5.5% Residence -1.3
Inn 20 $78.77 6.2% 78.8% pts. $99.99 7.9% SpringHill 1.6 Suites 2
$63.88 7.4% 73.8% pts. $86.53 5.1% Region East North 3.2 Central 18
$59.29 9.0% 68.0% pts. $87.15 3.9% East South 2.4 Central 16 $59.94
9.7% 74.4% pts. $80.57 6.2% Middle -1.3 Atlantic 6 $72.96 1.3%
71.4% pts. $102.19 3.1% Mountain 4.0 10 $64.96 15.1% 76.1% pts.
$85.35 9.1% New England 2.2 7 $58.85 8.6% 66.7% pts. $88.28 4.9%
Pacific 2.6 2 $88.21 9.8% 81.0% pts. $108.97 6.2% South 0.6
Atlantic 46 $70.52 10.9% 76.3% pts. $92.46 10.0% West North -0.1
Central 7 $58.87 10.6% 68.9% pts. $85.42 10.7% West South 7.2
Central 10 $57.81 16.6% 72.6% pts. $79.67 5.0% Type All Suite 0.6
18 $54.80 9.1% 69.4% pts. $78.91 8.2% Extended 0.0 Stay 30 $81.56
6.9% 79.5% pts. $102.64 6.9% Full 2.1 Service 5 $52.55 8.1% 66.8%
pts. $78.69 4.7% Limited 3.5 Service 69 $62.07 13.1% 72.3% pts.
$85.80 7.6% (1) All Comparable is defined as our system-wide gross
lodging revenues for hotels that the Company owns at period end.
(2) RevPAR is calculated by taking the Company's average daily rate
(ADR) times occupancy. *T
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