Equity Inns, Inc.: -0- *T ************Highlights************ --
AFFO and RevPAR Exceeds Previous Guidance -- -- RevPAR Increases
6.9%, with ADR Growing 7.7% -- -- Record Quarterly Hotel Revenue
Rises 21% to $100 Million -- -- Gross Operating Profit Margin
Improves to a Company Record 45.2% -- -- Adjusted EBITDA Grows
Nearly 19% -- *T Equity Inns, Inc. (NYSE: ENN), the third largest
hotel real estate investment trust (REIT), today announced its
results for the three and the six months ended June 30, 2006.
Adjusted funds from operations (AFFO) per diluted share for the
second quarter ended June 30, 2006 increased 8.8% to $0.37 as
compared to $0.34 per diluted share in the same period last year.
Adjusted EBITDA rose 18.7% to $33.7 million in the second quarter
2006 as compared to $28.4 million in second quarter 2005. Net
income applicable to common shareholders for the second quarter
2006 was $8.6 million, or $0.16 per diluted share, as compared to
net income of $3.2 million, or $0.06 per diluted share in the prior
year period. The Company recorded an impairment loss during the
second quarter 2006 of approximately $3.0 million, or $0.05 per
diluted share, related to the write-down of a 19 year-old Hampton
Inn, located in Nashville, Tennessee, to its estimated net
realizable value. The impairment loss was the only difference
between funds from operations (FFO) and AFFO for the second quarter
2006. For the six months ended June 30, 2006, Equity Inns reported
an 18.6% increase in AFFO per diluted share to $0.70, as compared
to $0.59 per diluted share in the same period a year ago. Adjusted
EBITDA increased 26.1% to $64.7 million for the six months ended
2006. Net income applicable to common shareholders for the six
months ended June 30, 2006 was $5.3 million, or $0.10 per diluted
share, as compared to net income of $5.0 million, or $0.09 per
diluted share in the prior year period. Financial Highlights for
the Second Quarter and Six Months of 2006: Total hotel revenue
increased 21.3% to $100.1 million for the second quarter 2006 as
compared to $82.5 million for the second quarter 2005. The
Company's all comparable RevPAR growth of 6.9% was driven by a 7.7%
increase in average daily rate (ADR) to $96.38, offset slightly by
a 60 basis point decline in occupancy to 75.6%. The slight decline
in occupancy was due to nine hotels that were under planned
renovations during the second quarter 2006. RevPAR increased 4.9%
in April, 9.0% in May and 6.3% in June, as compared to the same
periods in 2005. Of the Company's total hotel revenue increase of
$17.6 million, $12.6 million was due to net incremental revenue
from hotel acquisitions completed during 2005 and 2006 and $5.0
million was due to same-store operations. The Company's total hotel
revenue for the six months ended June 2006 was $192.6 million, an
increase of 25.3% from $153.7 million for the six months ended June
2005. RevPAR increased 8.3% on a year-to-date basis for all
comparable hotels, driven by 7.9% growth in ADR and a 30 basis
point improvement in occupancy. Howard A. Silver, President and
Chief Executive Officer, stated, "Our strategy continues to be to
drive RevPAR growth through increasing our ADR, as our hotels
continue to sustain historically strong occupancy levels. We
executed well on this strategy during the quarter, as over 100% of
our RevPAR growth came through rate. Our RevPAR performance
exceeded our previous RevPAR guidance of 5% to 6%, while our AFFO
exceeded our expectation of $0.34 to $0.36 per diluted share. We
realized solid RevPAR growth, despite having nine hotels under
significant planned renovations. Excluding the nine hotels under
renovation, our RevPAR would have increased 8.2%." The Company's
gross operating profit margin (GOP margin) increased 50 basis
points to 45.2% in the second quarter 2006 as compared to the
second quarter 2005, primarily due to the Company's growth in
RevPAR through increased ADR. Same-store GOP margin for the second
quarter 2006 increased 20 basis points to 44.8% on a year-over-year
basis. GOP margin for the six months ended June 30, 2006 improved
150 basis points to 45.2% as compared to the same period last year.
Same-store GOP margin for the six months ended June 30, 2006
improved 80 basis points to 44.3% on a year-over-year basis. Other
Second Quarter 2006 Highlights: -- In April 2006, Equity Inns
completed the purchase of the 66-suite Residence Inn in Mobile,
Alabama from McKibbon Hotel Group. -- In April 2006, the Company
sold a 122-room exterior corridor Hampton Inn in Chapel Hill, North
Carolina for approximately $5.3 million. -- In May 2006, the
Company sold a 126-room Hampton Inn in Scottsdale, Arizona for
approximately $12.2 million, resulting in a gain of approximately
$4.5 million. -- In June 2006, Equity Inns expanded its presence in
the Orlando, Florida market with the purchase of the 246-suite
Embassy Suites/International Drive for $28.0 million. Subsequent
Events: -- In July 2006, Equity Inns signed an agreement to
purchase three hotels from LinGate Hospitality for $26.2 million.
The three hotels include two 122-suite SpringHill Suites by
Marriott located in San Antonio, Texas and Houston, Texas and a
144-room Fairfield Inn & Suites located in the Atlanta suburb
of Vinings. Capital Structure: At June 30, 2006, Equity Inns had
$564.0 million of long-term debt outstanding, which included $51.0
million drawn under its $125.0 million line of credit. The weighted
average interest rate of the Company's debt at the end of the
second quarter 2006 was 6.7% versus 6.9% for the second quarter
2005. Total debt represented 41.3% of the historical cost of the
Company's hotels and represented 35% of the Company's total
enterprise value at the end of the second quarter 2006. Equity
Inns' leverage ratio was 4.2 times at the end of the second quarter
2006, which is a five-year low for the Company. Fixed rate debt,
including variable rate debt hedged by interest rate swaps,
amounted to approximately 96.2% of total debt. At June 30, 2006,
the Company's outstanding common stock and partnership units were a
combined 55.6 million. Dividend: During the second quarter 2006,
the Company declared a common stock dividend of $0.19 per share, an
increase of 27% as compared to the second quarter 2005. The Company
has increased its common stock dividend three times for a total of
46% since the second quarter of 2004. The Company's trailing twelve
months' cash available for distribution (CAD) payout ratio was 62%,
a low payout ratio based on the Company's history. Mr. Silver
concluded, "During the quarter, we purchased a Residence Inn and an
Embassy Suites hotel, two strong brands in the upscale segment
market. Our transaction activity, during the quarter and over the
long-term, is driven by our goal of increasing our focus on premium
branded assets such as Marriott and Hilton in key markets that we
believe have significant upside. This strategy has resulted in the
acquisition of 42 hotels, at an average capitalization rate of
approximately 10%, and the disposition of 11 older hotels since
late 2003. Our portfolio management during this time has enabled us
to reduce our portfolio's age to 13 years and increase our
portfolio's average franchise life to 12 years, thus enabling the
Company to maintain the highest portfolio value possible.
Additionally, our capital structure continues to be in solid shape
and our acquisition pipeline remains strong, which we expect will
allow us to continue our strategy going forward." 2006 Guidance:
Based upon the Company's expectations for continued improvement of
the U.S. economy, moderate supply growth, further improvement in
the upscale and mid-scale lodging sectors, recent acquisitions and
divestitures, additional planned expense increases, room
renovations, and given the results of the second quarter 2006,
Equity Inns is updating the Company's RevPAR, Adjusted EBITDA, AFFO
and net income per diluted share guidance, which is as follows: --
RevPAR growth for 2006 is expected to range from 6% to 8%, with the
majority of the increase being attributed to rate. The third
quarter increase is expected to be in the range of 5.5% to 7.5%,
and the fourth quarter increase is expected to be in the range of
2% to 6.5% due to the difficult comparisons related to the positive
2005 hurricane impact. -- Adjusted EBITDA is expected to range from
$126 million to $129 million. -- AFFO should be in the range of
$1.30 to $1.35 per diluted share. -- Net income applicable to
common shareholders should be in the range of $0.20 to $0.26 per
diluted share. Equity Inns expects that its remaining 2006 results
will contribute to full year AFFO as follows: third quarter, 29%
and fourth quarter, 19%. Additionally, the Company continues to
expect 2006 capital expenditures to be approximately $40.0 million.
Conference Call: Equity Inns will hold a conference call and
webcast to discuss the Company's second quarter results after the
market close on August 3, 2006, at 4:30 p.m. (Eastern Time).
Interested investors and other parties may listen to the conference
call by dialing 800-819-9193 or 913-981-4911 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,
http://www.equityinns.com for seven days following the call. A
recording of the call will also be available by telephone August 3,
2006 through August 10, 2006 by dialing 888-203-1112 or
719-457-0820 for international participants. The pass code is
6473022. Forward Looking Statements 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 2006.
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 2005 Annual Report on Form 10-K
filed on March 15, 2006, 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, 2005 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, (ix) Total Shareholder Return and (x)
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, excluding gains
(or losses) from sales of real estate, the cumulative effect of
changes in accounting principles, real estate-related depreciation
and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not include the cost of
capital improvements or any related capitalized interest. Equity
Inns uses FFO per diluted 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. 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 diluted share may not be comparable to those measures, or
similarly titled measures, as reported by other companies.
Additionally, FFO is used by management in the annual budget
process. 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 diluted share is
also used by the Compensation Committee of the Board of Directors
as one of the criteria for performance-based executive
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. The Company believes that EBITDA helps
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. Total Shareholder Return The Company uses a measure
common in the hotel industry to discuss its return to common
shareholders. Total shareholder return is defined as reinvested
stock dividend income plus the percentage of stock price
appreciation or minus the percentage of stock price reduction over
the respective period. Total shareholder return is also used by the
Compensation Committee of the Board of Directors as one of the
criteria for performance-based executive compensation. 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 average
daily rate, or 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, Total
Shareholder Return 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
126 hotels with 15,091 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) June 30, December
31, 2006 2005 (unaudited) ASSETS Investment in hotel properties,
net $1,016.378 $ 978,233 Assets held for sale 13,153 - Cash and
cash equivalents 10,737 6,556 Accounts receivable, net of doubtful
accounts of $200 and $175, respectively 9,264 8,960 Interest rate
swaps 1,068 877 Note receivable 1,663 1,688 Deferred expenses, net
11,669 11,927 Deposits and other assets, net 20,195 17,595 Total
Assets $1,084,127 $1,025,836 LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt $ 563,994 $ 557,475 Accounts payable and accrued
expenses 44,065 39,204 Distributions payable 12,628 10,674 Minority
interests in Partnership 5,274 8,363 Total Liabilities 625,961
615,716 Commitments and Contingencies Shareholders' Equity:
Preferred Stock, $.01 par value, 10,000,000 shares authorized
Series B, 8.75%, $.01 par value, 3,450,000 and 3,450,000 shares
issued and outstanding 83,524 83,524 Series C, 8.00%, $.01 par
value, 2,400,000 and 0 shares issued and outstanding 57,861 -
Common stock, $.01 par value, 100,000,000 shares authorized,
55,464,961 and 54,749,308 shares issued and outstanding 555 547
Additional paid-in capital 576,120 573,473 Treasury stock, at cost,
747,600 shares (5,173) (5,173) Unearned directors' and officers'
compensation - (2,815) Distributions in excess of net earnings
(255,789) (240,313) Unrealized gain (loss) on interest rate swaps
1,068 877 Total Shareholders' Equity 458,166 410,120 Total
Liabilities and Shareholders' Equity $1,084,127 $1,025,836 EQUITY
INNS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited) For the For the Three
Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005
Revenue: Room revenue $ 96,220 $79,013 $185,271 $147,196 Other
hotel revenue 3,833 3,467 7,327 6,496 Total revenue 100,053 82,480
192,598 153,692 Operating expenses: Direct hotel expenses 54,680
44,698 104,947 83,591 Other hotel expenses 2,857 2,529 5,464 4,812
Depreciation 13,048 11,182 25,810 22,005 Property taxes, rental
expense and insurance 6,469 5,113 12,203 10,230 General and
administrative expenses: Non-cash stock-based compensation 1,040
328 2,043 763 Other general and administrative expenses 2,485 1,781
5,494 3,903 Loss on impairment of hotels 3,000 - 8,895 - Total
operating expenses 83,579 65,631 164,856 125,304 Operating income
16,474 16,849 27,742 28,388 Interest expense, net 9,640 8,550
19,507 16,556 Income (loss) from continuing operations before
minority interests and income taxes 6,834 8,299 8,235 11,832
Minority interests income (expense) (168) (70) (110) (118) Deferred
income tax benefit (expense) - - - - Income (loss) from continuing
operations 6,666 8,229 8,125 11,714 Discontinued operations: Gain
(loss) on sale of hotel properties 4,552 - 4,535 - Loss on
impairment of hotels held for sale - (3,500) (3,005) (3,500) Income
(loss) from operations of discontinued operations 432 371 1,167 540
Income (loss) from discontinued operations 4,984 (3,129) 2,697
(2,960) Net income (loss) 11,650 5,100 10,822 8,754 Preferred stock
dividends (3,087) (1,887) (5,560) (3,773) Net income (loss)
applicable to common shareholders $ 8,563 $ 3,213 $ 5,262 $ 4,981
Net income (loss) per share data: Basic and diluted income (loss)
per share: Continuing operations $ 0.07 $ 0.12 $ 0.05 $ 0.15
Discontinued operations 0.09 (0.06) 0.05 (0.06) Net income (loss)
per common share $ 0.16 $ 0.06 $ 0.10 $ 0.09 Weighted average
number of common shares outstanding, basic and diluted 54,630
53,984 54,470 53,031 EQUITY INNS, INC. RECONCILIATION OF NET INCOME
(LOSS) TO FUNDS FROM OPERATIONS, 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 For the Three Months Ended Six Months Ended June 30,
June 30, 2006 2005 2006 2005 Net income (loss) applicable to common
shareholders $ 8,563 $ 3,213 $ 5,262 $ 4,981 Add (subtract): (Gain)
loss on sale of hotel properties (4,552) - (4,535) - Minority
interests (income) expense 168 70 110 118 Depreciation 13,048
11,182 25,810 22,005 Depreciation from discontinued operations 122
565 572 1,143 Funds From Operations (FFO) 17,349 15,030 27,219
28,247 Loss on impairment of hotels 3,000 3,500 11,900 3,500 Fees
incurred on indefinitely postponed unsecured offering - 245 - 245
Adjusted Funds From Operations (AFFO) 20,349 18,775 39,119 31,992
Add: Amortization of debt issuance costs 511 497 977 961
Amortization of deferred expenses and stock-based compensation
1,132 413 2,227 932 Capital reserves (4,002) (3,299) (7,412)
(5,888) Cash Available for Distribution $17,990 $16,386 $34,911
$27,997 Weighted average number of diluted common shares and
Partnership units outstanding 55,627 55,406 55,591 54,460 FFO per
Share and Unit $ 0.31 $ 0.27 $ 0.49 $ 0.52 AFFO per Share and Unit
$ 0.37 $ 0.34 $ 0.70 $ 0.59 Cash Available for Distribution per
Share and Unit $ 0.32 $ 0.30 $ 0.63 $ 0.51 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 For the Three Months Ended Six Months Ended
June 30, June 30, 2006 2005 2006 2005 Net income (loss) applicable
to common shareholders $ 8,563 $ 3,213 $ 5,262 $ 4,981 Add
(subtract): Preferred stock dividends 3,087 1,887 5,560 3,773
(Income) loss from discontinued operations (4,984) 3,129 (2,697)
2,960 Minority interests (income) expense 168 70 110 118 Interest
expense, net 9,640 8,550 19,507 16,556 Loss on impairment of hotels
3,000 - 8,895 - Depreciation 13,048 11,182 25,810 22,005
Amortization of deferred expenses and stock-based compensation
1,132 413 2,227 932 Adjusted EBITDA $33,654 $28,444 $64,674 $51,325
EQUITY INNS, INC. 2006 GUIDANCE RECONCILIATION (unaudited) The
following is a reconciliation of the Company's 2006 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
September 30, 2006 December 31, 2006 Low End High End Low End High
End Range Range Range Range FFO AND AFFO RECONCILIATION: Net income
(loss) applicable to common shareholders $ 7,100 $ 8,100 $ 11,235 $
14,285 Add (subtract): (Gain) loss on sale of hotel properties - -
(4,535) (4,535) Minority interests (income) expense 200 300 500 550
Depreciation 13,100 13,100 53,000 53,000 Funds From Operations
(FFO) 20,400 21, 500 60,200 63,300 Loss on impairment of hotels - -
11,900 11,900 Other - - - - Adjusted Funds From Operations (AFFO)
$20,400 $ 21,500 $ 72,100 $ 75,200 Weighted average number of
diluted common shares and Partnership units outstanding 55,645
55,645 55,658 55,658 FFO per Share and Unit $ 0.37 $ 0.39 $ 1.08 $
1.14 AFFO per Share and Unit $ 0.37 $ 0.39 $ 1.30 $ 1.35 ADJUSTED
EBITDA RECONCILIATION: Net income (loss) applicable to common
shareholders $ 7,100 $ 8,100 $ 11,235 $ 14,285 Add (subtract):
Preferred stock dividends 3,100 3,100 11,850 11,850 (Income) loss
from discontinued operations (185) (235) (2,880) (2,980) Minority
interests (income) expense 200 300 500 550 Interest expense, net
9,500 9,700 39,100 39,400 Loss on impairment of hotels - - 8,895
8,895 Depreciation 13,100 13,100 53,000 53,000 Amortization of
deferred expenses and stock-based compensation 1,200 1,200 4,200
4,200 Adjusted EBITDA $34,015 $ 35,265 $125,900 $129,200 Equity
Inns, Inc. Hotel Performance For the Three Months Ended June 30,
2006 and 2005 All Comparable (1) RevPAR (2) Occupancy ADR
---------------- --------------- ------------ # of Variance
Variance Variance Hotels 2006 to 2005 2006 to 2005 2006 to 2005
------ ---- -------- ---- --------- ---- ------- Portfolio -0.6 126
$ 72.87 6.9% 75.6% pts. $ 96.38 7.7% Franchise AmeriSuites 2.2 18 $
61.22 10.2% 72.4% pts. $ 84.56 6.9% Comfort Inn -3.1 2 $ 66.61
-1.9% 64.3% pts. $103.61 2.9% Courtyard -0.6 13 $ 86.71 7.4% 82.9%
pts. $104.65 8.2% Embassy Suites 4.1 1 $ 96.53 14.1% 77.3% pts.
$124.96 8.1% Hampton Inn 0.0 48 $ 65.98 8.0% 74.7% pts. $ 88.36
7.9% Hampton Inn & -4.3 Suites 2 $ 83.81 4.7% 75.9% pts.
$110.38 10.7% Hilton Garden Inn -6.6 2 $ 79.82 -0.8% 69.4% pts.
$114.97 8.7% Holiday Inn -1.7 4 $ 52.66 11.9% 65.7% pts. $ 80.15
14.8% Homewood Suites -1.0 10 $ 96.60 7.9% 81.8% pts. $118.06 9.2%
Residence Inn -3.2 22 $ 82.28 2.0% 77.8% pts. $105.78 6.2%
SpringHill Suites -0.4 3 $ 76.96 8.6% 78.8% pts. $ 97.64 9.2%
TownePlace Suites -15.5 1 $ 46.71 -19.4% 64.9% pts. $ 71.97 -0.2%
Region East North Central -1.2 18 $ 68.60 7.3% 71.4% pts. $ 96.06
9.0% East South Central -2.5 18 $ 66.90 4.4% 75.9% pts. $ 88.13
7.9% Middle Atlantic -3.2 6 $ 76.50 -0.2% 71.7% pts. $106.69 4.2%
Mountain -1.7 9 $ 67.25 3.1% 76.2% pts. $ 88.24 5.4% New England
4.7 7 $ 65.25 8.8% 72.7% pts. $ 89.80 1.8% Pacific -0.3 3 $102.34
11.0% 83.4% pts. $122.67 11.4% South Atlantic -1.4 48 $ 77.36 6.6%
76.9% pts. $100.55 8.5% West North Central 6.2 7 $ 69.11 16.1%
75.5% pts. $ 91.58 6.5% West South Central 1.2 10 $ 69.88 11.3%
77.8% pts. $ 89.82 9.6% Type All Suite 2.4 19 $ 64.68 10.8% 72.9%
pts. $ 88.75 7.2% Extended Stay -2.7 33 $ 86.71 4.0% 79.0% pts.
$109.81 7.5% Full Service -3.9 5 $ 59.91 5.4% 65.7% pts. $ 91.13
11.6% Limited Service -0.3 69 $ 70.33 7.5% 75.8% pts. $ 92.74 8.0%
(1) All Comparable is defined as our system-wide gross lodging
revenues for hotels that the Company owned at period end. (2)
RevPAR is calculated by multiplying the Company's average daily
rate (ADR) by occupancy. Equity Inns, Inc. Hotel Performance For
the Six Months Ended June 30, 2006 and 2005 All Comparable (1)
RevPAR (2) Occupancy ADR ---------------- ---------------
------------ # of Variance Variance Variance Hotels 2006 to 2005
2006 to 2005 2006 to 2005 ------ ---- -------- ---- --------- ----
------- Portfolio 0.3 126 $ 71.30 8.3% 73.1% pts. $ 97.54 7.9%
Franchise AmeriSuites 2.8 18 $ 59.92 12.7% 70.5% pts. $ 85.00 8.2%
Comfort Inn -4.1 2 $ 63.30 -5.6% 62.7% pts. $100.89 0.6% Courtyard
1.0 13 $ 86.37 8.6% 81.9% pts. $105.52 7.3% Embassy Suites 0.3 1
$103.76 5.7% 78.3% pts. $132.58 5.4% Hampton Inn 1.3 48 $ 63.96
10.8% 71.1% pts. $ 90.02 8.8% Hampton Inn & Suites -0.5 2
$103.69 12.4% 80.5% pts. $128.90 13.1% Hilton Garden Inn -7.0 2 $
88.18 -0.2% 68.6% pts. $128.57 9.9% Holiday Inn -2.6 4 $ 44.07 9.7%
59.0% pts. $ 74.71 14.5% Homewood Suites 0.6 10 $ 91.63 8.9% 79.4%
pts. $115.35 8.0% Residence Inn -3.3 22 $ 79.77 1.9% 75.4% pts.
$105.77 6.3% SpringHill Suites 1.3 3 $ 75.51 10.2% 77.2% pts. $
97.86 8.4% TownePlace Suites -8.6 1 $ 54.02 -8.8% 76.6% pts. $
70.51 1.4% Region East North Central 1.1 18 $ 61.73 11.4% 66.1%
pts. $ 93.43 9.5% East South Central 0.2 18 $ 64.33 8.1% 74.1% pts.
$ 86.87 7.9% Middle Atlantic -5.9 6 $ 64.20 -5.1% 62.9% pts.
$102.13 3.8% Mountain -1.2 9 $ 68.70 6.0% 74.5% pts. $ 92.16 7.8%
New England 3.9 7 $ 59.47 7.9% 67.6% pts. $ 87.98 1.6% Pacific 3.7
3 $ 95.43 14.2% 80.2% pts. $118.97 8.9% South Atlantic -1.1 48 $
81.23 6.8% 76.7% pts. $105.90 8.4% West North Central 4.9 7 $ 63.63
14.8% 70.9% pts. $ 89.77 6.9% West South Central 3.9 10 $ 67.70
16.8% 76.2% pts. $ 88.79 10.8% Type All Suite 2.6 19 $ 64.19 11.6%
71.3% pts. $ 90.09 7.6% Extended Stay -2.0 33 $ 83.54 4.4% 77.0%
pts. $108.56 7.1% Full Service -3.8 5 $ 51.55 2.7% 60.1% pts. $
85.73 9.3% Limited Service 1.0 69 $ 69.75 10.0% 73.1% pts. $ 95.42
8.5% (1) All Comparable is defined as our system-wide gross lodging
revenues for hotels that the Company owned at period end. (2)
RevPAR is calculated by multiplying the Company's average daily
rate (ADR) by occupancy. *T
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