Equity Inns (NYSE:ENN)
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Equity Inns, Inc.:
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************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% --
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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.
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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