Innkeepers USA Trust Announces Strong Second-Quarter 2006 Earnings

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PALM BEACH, Fla., Aug. 8 /PRNewswire-FirstCall/ -- Innkeepers USA Trust (NYSE:KPA), a hotel real estate investment trust (REIT) and a leading owner of upscale properties throughout the United States, today announced results for the three months and six months ended June 30, 2006. -------------------------------------------------------------------------- % YTD YTD % Q2 2006 Q2 2005 Change* 2006 2005 Change* -------------------------------------------------------------------------- Total revenue $73,190 $64,070 14 % $137,793 $119,169 16 % -------------------------------------------------------------------------- Net income applicable to common shareholders $8,473 $5,176 64 % $11,673 $4,348 168 % -------------------------------------------------------------------------- Diluted income per share $0.19 $0.12 58 % $0.27 $0.10 170 % -------------------------------------------------------------------------- Funds from operations (FFO) $18,430 $15,108 22 % $31,872 $22,340 43 % -------------------------------------------------------------------------- Adjusted FFO $18,488 $15,536 19 % $31,426 $25,520 23 % -------------------------------------------------------------------------- FFO per share $0.39 $0.32 22 % $0.67 $0.48 40 % -------------------------------------------------------------------------- Adjusted FFO per share $0.39 $0.33 18 % $0.66 $0.55 20 % -------------------------------------------------------------------------- Earnings before interest, taxes, depreciation and amortization (EBITDA) $27,907 $23,074 21 % $50,389 $40,422 25 % -------------------------------------------------------------------------- Adjusted EBITDA $27,965 $23,502 19 % $49,868 $42,112 18 % -------------------------------------------------------------------------- * In thousands, except per share and percentage change data FFO, Adjusted FFO, FFO per share, Adjusted FFO per share, EBITDA and Adjusted EBITDA are not GAAP (generally accepted accounting principles) financial measures and are discussed in further detail and reconciled to net income applicable to common shareholders later in this press release. Adjusted FFO, Adjusted FFO per share and Adjusted EBITDA exclude other charges and discontinued operations. Operating Results Revenue per available room (RevPAR) at the company's 65 comparable hotels rose 7.6 percent to $88.22 for the second quarter 2006, driven by a 7.8 percent increase in average daily rate (ADR) to $112.30 with occupancy essentially unchanged at 78.6 percent. For the six months ended June 30, 2006, the company reported an increase in RevPAR of 7.8 percent to $84.17, driven by a 7.3 percent increase in ADR to $111.00 and a 40 basis point improvement in occupancy. The comparable hotels exclude two hotels acquired in 2005, the Westin Morristown and the Boston Bullfinch hotels, and the Louisville, Ky., Montvale and Atlantic City, N.J. hotels that were acquired prior to 2005 and are either closed for renovation and conversion or were closed for a portion of 2005. "We had a very positive quarter, reporting solid operating gains across our portfolio, with our operators continuing to focus on driving rate," said Jeffrey H. Fisher, chief executive officer and president. "We have been active with our recently announced pending acquisitions of five hotels, and our conversions and developments are well under way. Industry fundamentals remain positive in the third year of recovery, with demand continuing in a strong uptrend, particularly among business travelers, and constrained new supply additions." The 2006 second quarter RevPAR improvement reflects a 21.0 percent increase in RevPAR at the company's eight Silicon Valley, Calif. hotel properties, driven by a 7.9 percentage point rise in occupancy to 84.7 percent and a 9.7 percent advance in ADR to $119.67. Year to date, the Silicon Valley properties experienced a 23.6 percent increase in RevPAR, driven by a 9.5 percentage point increase in occupancy to 81.6 percent and a 9.0 percent rise in ADR. Excluding Silicon Valley, RevPAR for the company's comparable hotels increased 5.2 percent in the 2006 second quarter and 4.9 percent year to date. Gross operating profit margins for the company's comparable hotels grew 130 basis points in the quarter to 47.0 percent and 110 basis points to 45.7 percent for the six months ended June 30, 2006, primarily due to the company's growth in RevPAR through continued ADR increases. "We are very pleased with our operating margin performance during the quarter. Overall, our operator did a great job. "Earnings are where we thought they would be at mid-year, and in line with our internal projections," Fisher said. "Adjusted FFO per share rose 18 percent to $0.39, just short of consensus estimates by $0.01, but we were negatively impacted during the quarter approximately $0.4 million, or $0.01 of FFO, due to share grants to our non-employee trustees that were not in our original guidance. Other than that, the only other item to report from an earnings perspective is that we just renewed our property insurance program for the 12-month period ending May 31, 2007, and our insurance premium is more than doubling. This is almost $0.04 dilutive to FFO on a full-year basis, and accordingly we are lowering the upper end of our original FFO guidance for 2006 to a range of $1.30 to $1.35 for the full year." Renovations/Development Update Fisher noted that the company made significant progress on renovations in the second quarter. "Our conversions in Montvale and Atlantic City and our Embassy Suites development in Valencia are well under way. We expect to open the renovated and converted Montvale, N.J. Courtyard by Marriott in early 2007. Following an extended permitting process, Atlantic City is moving along nicely toward a May 2007 opening, just in time for Memorial Day, and our Valencia Embassy Suites development is expected to open in June 2007." Total expected cost for these three hotels remains unchanged at approximately $45 million. Acquisitions Update Fisher noted that the company recently announced five planned hotel acquisitions. "They include four properties -- two Residence Inns, a Hilton and Hilton Suites -- in southern California that we will acquire from affiliates of RLJ Development; and a brand new prototype Sheraton in Rockville, Md., which we will acquire in an exclusively negotiated transaction with Starwood Hotels. The five properties will add 1,086 total rooms to Innkeepers' portfolio, for an increase of 12.3 percent. These hotels are in "A" locations with high barriers to new competition. Innkeepers Hospitality will manage all five hotels. "We have been noticeably absent from the acquisition arena during the first part of the year, as we continued our strategic and selective approach to hotel investments," he said. "With the acquisition of these five properties, we will accomplish a number of key long-term objectives: * We further diversify our geographic distribution both nationally and throughout the state of California; * We enter the San Diego market, one of the best and highest-barriers-to- entry hotel markets in the nation; * We are executing on our strategy of opportunistically acquiring upscale full-service hotels, increasing our product diversification with the addition of two Hiltons and a Sheraton hotel to our portfolio. Fisher said that the company has an active acquisition pipeline and continues to target premium branded upscale extended-stay and select-service hotels, the core of the company's portfolio; selected full-service hotels; and turn-around opportunities for hotels that operate under or can be converted to the industry's leading brands, with all targets located in major markets with multiple demand generators and high barriers to new competition. "We also will selectively consider development opportunities where it makes economic sense or in markets where the cost of building a new hotel is comparable to or lower than prices for existing hotels." Capital Structure Dennis Craven, chief financial officer, pointed out that the company continues to maintain one of the industry's strongest capital structures and lowest-levered balance sheets. "Our debt to investment in hotels at cost ratio is a low 26 percent as of June 30, 2006. Our weighted average interest rate on our total debt is 7.3 percent, and 72 percent of our total debt is at fixed rates. We have approximately $67 million outstanding on our line of credit after paying down approximately $10 million during the quarter. "We expect to borrow in September approximately $200 million of 10-year non-recourse, fixed-rate debt to fund our recently announced acquisitions, including the southern California portfolio and the Sheraton Rockville. We locked in rates on Friday at a very attractive weighted average rate of approximately 5.99 percent. The debt will be interest only for the first three years and carry a 30-year amortization period. "Upon completion of this financing, our weighted average interest rate on fixed rate debt will drop 100 basis points from 7.8 percent to 6.8 percent, our debt to investment in hotels at cost ratio will be approximately 40 percent and our average maturity will increase from 3.7 years to 6.8 years." Dividend The dividend for the second quarter was maintained at a rate of $0.15. The company is currently reviewing its dividend for the third quarter and based on its projections for continued sustainable growth, will announce any change in dividend rate following its board meeting in late August. Earnings Guidance The company is re-affirming the following range of estimates for 2006, based on assumed RevPAR growth of 6 percent to 8 percent for the year (forecasted financial results do not include any assumptions for future acquisitions, developments, dispositions or capital markets transactions), except for a slight reduction in the upper end of its previously announced FFO and EBITDA guidance due to the non-employee trustee share grant and higher than expected property insurance costs for earthquake and windstorm coverage: * Adjusted FFO per share of $1.30 to $1.35 for the year; * Adjusted EBITDA of $98 million to $101 million for the year; See reconciliations of net income applicable to common shareholders to FFO per share, Adjusted FFO per share and Adjusted EBITDA included in the tables of this press release. FFO per share, Adjusted FFO per share, and Adjusted EBITDA are not GAAP financial measures and are discussed in further detail in this press release. The company will hold a webcast of its second quarter 2006 conference call today, August 8, 2006, at 11 a.m. Eastern time. Interested parties may go to the company's Web site and click on Conference Calls. They also may listen to an archived web cast of the conference call on the Web site, or may dial (800) 405-2236, pass code 11065835, to hear a telephone replay. The archived web cast and telephone replay will be available through Tuesday, August 15, 2006. Innkeepers USA Trust owns 70 hotels with a total of 8,818 suites or rooms in 20 states and Washington, D.C., and focuses on acquiring or developing premium-branded upscale extended-stay and select-service hotels, the core of the company's portfolio; selected full-service hotels; and turn-around opportunities for hotels that operate under or can be converted to the industry's leading brands. For more information about Innkeepers USA Trust, visit the company's web site at http://www.innkeepersusa.com/. Included in this press release are certain "non-GAAP financial measures," within the meaning of Securities and Exchange Commission (SEC) rules and regulations, that are different from measures calculated and presented in accordance with GAAP (generally accepted accounting principles). These non- GAAP financial measures are (i) funds from operations (FFO), (ii) FFO per share, (iii) Adjusted FFO, (iv) Adjusted FFO per share, (v) net income (loss) (computed in accordance with GAAP) before interest, taxes, depreciation and amortization, common and preferred minority interests and preferred dividends (EBITDA), and (vi) Adjusted EBITDA. The following explains why we believe these measures, when considered along with earnings per share, calculated in accordance with GAAP, help provide investors with a more complete understanding of our financial and operating performance. FFO As Defined by NAREIT and Adjusted FFO The National Association of Real Estate Investment Trusts (NAREIT) adopted the definition of FFO in order to promote an industry standard measure of REIT financial and operating performance. Management believes that the presentation of FFO, FFO per share, Adjusted FFO (defined below) and Adjusted FFO per share provide useful supplemental information to investors regarding the company's financial condition and results of operations, particularly in reference to the company's ability to service debt, fund capital expenditures and pay cash dividends. Many other real estate investment trusts use FFO as a measure of their financial and operating performance, and therefore provides another basis of comparison for management. FFO, as defined, adds back historical cost depreciation. Historical cost depreciation assumes the value of real estate assets diminishes predictably over a certain period of time. In fact, real estate asset values historically have increased or decreased with market conditions. Consequently, FFO and Adjusted FFO may be useful supplemental measures in evaluating financial and operating performance by disregarding, or adding back, historical cost depreciation in the calculation of FFO and Adjusted FFO. Additionally, FFO per share and Adjusted FFO per share targets have historically been used to determine a significant portion of the incentive compensation of the company's senior management. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The company calculates FFO in compliance with the NAREIT definition. The company defines Adjusted FFO as FFO (as defined by NAREIT), adjusted for non-recurring and/or non-cash items, including discontinued operations and impairment losses. FFO, Adjusted FFO, FFO per share, Adjusted FFO per share are reconciled to net income (loss) applicable to common shareholders determined in accordance with GAAP in the accompanying schedules. EBITDA and Adjusted EBITDA EBITDA is defined as net income (loss) (computed in accordance with GAAP) before interest, taxes, depreciation and amortization, common and preferred minority interests and preferred dividends. The company defines Adjusted EBITDA as EBITDA adjusted for non-recurring and/or non-cash items, including gains (losses) from sales of property, discontinued operations and impairment losses. Management believes that the presentation of EBITDA and Adjusted EBITDA provides useful supplemental information to investors regarding the company's financial condition and results of operations, particularly in reference to the company's ability to service debt, fund capital expenditures and pay cash dividends. Many other businesses measure their performance, in part, by their EBITDA results, which provides another basis for comparison between companies. EBITDA and Adjusted EBITDA are also factors in management's evaluation of the financial and operating performance of the company, hotel level performance, investment opportunities, dispositions and financing transactions. EBITDA and Adjusted EBITDA are reconciled to net income (loss) applicable to common shareholders determined in accordance with GAAP in the accompanying schedules. FFO, FFO per share, Adjusted FFO, Adjusted FFO per share, EBITDA and Adjusted EBITDA, as presented, may not be comparable to FFO, FFO per share, Adjusted FFO, Adjusted FFO per share, EBITDA and Adjusted EBITDA as calculated by other real estate companies. These measures do not reflect certain expenses that the company incurred and will incur, such as depreciation and interest (although we show such expenses in the reconciliation of these measures to their most directly comparable GAAP measures). None of these measures should be considered as an alternative to net income, net cash provided by operating activities, or any other financial and operating performance measure prescribed by GAAP. These measures should only be used in conjunction with GAAP measures. Forward-Looking Statement Safe Harbor This press release, and other publicly available information on the Company, includes forward looking statements within the meaning of federal securities law. These statements include terms such as "should," "may," "believe" and "estimate," or assumptions, estimates or forecasts about future hotel and Company performance and results, and the Company's future need for capital. Such statements should not be relied on because they involve risks that could cause actual results to differ materially from the Company's expectations when such statements are made. Some of these risks are set forth in reports filed from time to time with the SEC and include, without limitation, (i) the operational risks of the hotel business (including decreasing hotel revenues and increasing hotel expenses), (ii) risks that war, terrorism or similar activities, widespread health alerts, disruption in oil imports or higher oil prices, or changes in domestic or international political environments negatively affect the travel industry and the company, (iii) risk of declines in the performance and prospects of businesses and industries (e.g., technology, automotive, aerospace, pharmaceuticals) that are important hotel demand generators in the company's key markets (e.g. the Silicon Valley, CA, Northern NJ, Washington, DC, etc.), (iv) risk that poor, declining and/or uncertain international, national, regional and/or local economic conditions will, among other things, negatively affect demand for the company's hotel rooms and the availability and terms of financing, (v) risk that the company's ability to maintain its properties in competitive condition becomes prohibitively expensive, (vi) risk that pricing in the hotel acquisition market becomes prohibitively expensive or non-financeable and that potential acquisitions or developments do not perform in accordance with expectations, (vii) risk that the Company may invest in hotels of a size or nature (e.g., upscale full service or resort) different than those it has focused on historically (e.g., upscale extended-stay, and mid-scale limited service); (viii) risks related to an increasing focus on development, including permitting risks, increasing the proportion of Company assets not producing revenue at a given time and risks that projects cost more, take longer to complete or do not perform as anticipated; (ix) changes in travel patterns or the prevailing means of commerce (i.e., e-commerce) may reduce demand for hotels in general or the Company's hotels in particular, (x) the complex tax rules that the company must satisfy to qualify as a REIT and the potentially severe consequences of failing to satisfy such requirements, and (xi) governmental regulation that may increase the company's cost of doing business or otherwise negatively effect its business or its attractiveness as an investment and create risk of liability for non-compliance (e.g., changes in laws affecting wages, taxes or dividends, compliance with building codes, compliance with the Americans with Disabilities Act, workers compensation law changes, the Sarbanes-Oxley law, etc.). The Company undertakes no obligation to update any forward looking statement to reflect actual results, changes in the Company's expectation, or for any other reason. Contact: Dennis Craven (Company) Jerry Daly or Carol McCune Chief Financial Officer Daly Gray (Media) (561) 227-1302 (703) 435-6293 INNKEEPERS USA TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, -------------------------------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenue: Hotel operating Rooms $68,361 $60,342 $128,907 $113,373 Food and beverage 2,596 1,617 4,674 1,916 Telephone 359 467 720 859 Other 1,714 1,496 3,222 2,767 Corporate Other 160 148 269 254 -------------------------------------------------------------------------- Total revenue 73,190 64,070 137,792 119,169 -------------------------------------------------------------------------- Expenses: Hotel operating Rooms 13,455 12,578 26,103 23,778 Food and beverage 1,925 1,103 3,508 1,339 Telephone 792 722 1,539 1,405 Other 738 653 1,468 1,248 General and administrative 7,025 6,002 13,426 11,692 Franchise and marketing fees 4,638 4,177 8,762 7,950 Amortization of deferred franchise conversion 292 293 584 656 Advertising and promotions 2,401 2,025 4,651 3,713 Utilities 2,924 2,610 6,374 5,571 Repairs and maintenance 3,348 3,440 6,118 5,864 Management fees 2,189 1,770 4,144 3,562 Amortization of deferred lease acquisition 131 131 261 262 Insurance 424 393 838 780 Corporate Depreciation 9,360 8,767 18,577 17,269 Amortization of franchise fees 29 18 47 35 Ground rent 139 130 278 259 Interest 5,168 4,241 10,217 9,149 Amortization of loan origination fees 213 225 431 435 Property taxes and insurance 3,159 3,112 6,185 6,005 General and administrative 2,068 1,853 4,530 3,891 Amortization of unearned compensation 744 158 1,102 255 Other charges (income) 58 355 (446) 3,053 -------------------------------------------------------------------------- Total expenses 61,220 54,756 118,697 108,171 -------------------------------------------------------------------------- Income before minority interest 11,970 9,314 19,095 10,998 Minority interest, common (95) (97) (150) (77) Minority interest, preferred (502) (1,068) (1,547) (2,136) -------------------------------------------------------------------------- Income from continuing operations 11,373 8,149 17,398 8,785 Loss from discontinued operations -- (73) -- (127) Gain on sale of assets from discontinued operations -- -- 75 1,490 -------------------------------------------------------------------------- Net income 11,373 8,076 17,473 10,148 Preferred share dividends (2,900) (2,900) (5,800) (5,800) -------------------------------------------------------------------------- Net income applicable to common shareholders $8,473 $5,176 $11,673 $4,348 -------------------------------------------------------------------------- Earnings per share data: Basic -- continuing operations $0.19 $0.12 $0.27 $0.07 -------------------------------------------------------------------------- Basic $0.19 $0.12 $0.27 $0.11 -------------------------------------------------------------------------- Basic -- weighted average shares 43,775,827 42,688,201 43,373,838 41,258,447 -------------------------------------------------------------------------- Diluted -- continuing operations $0.19 $0.12 $0.27 $0.07 -------------------------------------------------------------------------- Diluted $0.19 $0.12 $0.27 $0.10 -------------------------------------------------------------------------- Diluted -- weighted average shares 44,054,383 42,867,121 43,681,970 41,429,414 -------------------------------------------------------------------------- Per share dividends to common shareholders $0.15 $0.10 $0.30 $0.16 -------------------------------------------------------------------------- INNKEEPERS USA TRUST CALCULATION OF FFO, EBITDA AND RECONCILIATION TO NET INCOME APPLICABLE TO COMMON SHAREHOLDERS (UNAUDITED) (in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, 2006 June 30, 2006 2006 2005 2006 2005 ---------------------- ---------------------- CALCULATION OF FFO Net income applicable to common shareholders $8,473 $5,176 $11,673 $4,348 Depreciation 9,360 8,767 18,577 17,269 Gain on sale of hotels included in discontinued operations -- -- (75) (1,490) Minority interest, preferred 502 1,068 1,547 2,136 Minority interest, common 95 97 150 77 ---------------------- ---------------------- Diluted FFO $18,430 $15,108 $31,872 $22,340 ---------------------- ---------------------- Weighted average number of common shares and common share equivalents 47,834,841 47,460,990 47,810,131 46,156,166 ---------------------- ---------------------- FFO per share $0.39 $0.32 $0.67 $0.48 ---------------------- ---------------------- FFO 18,430 15,108 31,872 22,340 Other charges 58 355 (446) 3,053 Discontinued operations -- 73 -- 127 ---------------------- ---------------------- Adjusted FFO $18,488 $15,536 $31,426 $25,520 ---------------------- ---------------------- Adjusted FFO per share $0.39 $0.33 $0.66 $0.55 ---------------------- ---------------------- Three Months Ended Six Months Ended June 30, 2006 June 30, 2006 2006 2005 2006 2005 ---------------------- ---------------------- CALCULATION OF EBITDA Net income applicable to common shareholders $8,473 $5,176 $11,673 $4,348 Interest 5,168 4,241 10,217 9,149 Depreciation and amortization 10,769 9,592 21,002 18,912 Minority interest, common 95 97 150 77 Minority interest, preferred 502 1,068 1,547 2,136 Preferred share dividends 2,900 2,900 5,800 5,800 ---------------------- ---------------------- EBITDA $27,907 $23,074 $50,389 $40,422 ---------------------- ---------------------- Other charges 58 355 (446) 3,053 Discontinued operations -- 73 -- 127 Gain on sale of hotels included in discontinued operations -- -- (75) (1,490) ---------------------- ---------------------- Adjusted EBITDA $27,965 $23,502 $49,868 $42,112 ---------------------- ---------------------- INNKEEPERS USA TRUST CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) June 30, December 31, 2006 2005 ------------------------------------------------------------------------- ASSETS (unaudited) (audited) Investment in hotels: Land and improvements $150,134 $150,375 Buildings and improvements 756,090 754,131 Furniture and equipment 110,550 106,944 Renovations in process 17,147 4,534 Hotels under development 5,628 4,413 ------------------------------------------------------------------------- 1,039,549 1,020,397 Accumulated depreciation (248,656) (230,139) ------------------------------------------------------------------------- Net investment in hotels 790,893 790,258 Cash and cash equivalents 13,704 11,897 Restricted cash and cash equivalents 7,898 6,675 Accounts receivable, net 5,546 6,124 Prepaid and other 4,415 2,478 Deferred and other 19,769 19,546 ------------------------------------------------------------------------- Total assets $842,225 $836,978 ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Debt $269,071 $269,426 Accounts payable and accrued expenses 21,414 15,956 Payable to manager 157 236 Franchise conversion fee obligations 10,450 10,714 Distributions payable 9,416 9,645 ------------------------------------------------------------------------- Total liabilities 310,508 305,977 Minority interest in Partnership 5,689 47,982 Shareholders' equity: Preferred shares, $0.01 par value, 20,000,000 shares authorized, 5,800,000 shares issued and outstanding 145,000 145,000 Common shares, $0.01 par value, 100,000,000 shares authorized, 45,182,011 and 42,874,412 issued and outstanding, respectively 452 429 Additional paid-in capital 503,478 460,873 Unearned compensation -- (1,939) Distributions in excess of earnings (122,902) (121,344) ------------------------------------------------------------------------- Total shareholders' equity 526,028 483,019 ------------------------------------------------------------------------- Total liabilities and shareholders' equity $842,225 $836,978 ------------------------------------------------------------------------- INNKEEPERS USA TRUST DEBT COMPOSITION As of June 30, 2006 (outstanding balance in thousands) Encumb- Outstand- Stated ered ing Interest Maturity Proper- Debt Balance Rate Date ties -------------------------------------------------------------------------- Unsecured Line of Credit(1) $66,574 6.68% July 2007 -- ------------------------------------- Industrial Revenue Bonds(1) $10,000 3.50% December 2014 -- ------------------------------------- Term Loan #1 $22,572 8.17% October 2007 8 ------------------------------------- Term Loan #2 $34,210 8.15% March 2009 8 ------------------------------------- Term Loan #3 $27,784 7.02% April 2010 7 ------------------------------------- Term Loan #4 $44,970 7.16% October 2009 6 ------------------------------------- Term Loan #5 $49,087 7.75% January 2011 6 ------------------------------------- Mortgage $12,514 10.35% June 2010 1 ------------------------------------- Adjustments(4) $1,360 -- -- -- ------------------------------------- TOTAL $269,071 7.33%(2) 3.7 years(3) 36 ------------------------------------- (1) Variable rated debt. The stated interest rate of the industrial revenue bonds includes an annual letter of credit fee of 1.25% (2) Weighted average calculated using the stated interest rate (3) Weighted average maturity (4) Adjustment to record $13 million mortgage at a fair market interest rate of 7% (the stated interest rate is 10.35%) INNKEEPERS USA TRUST OTHER DATA (in thousands, except shares data) June 30, June 30, 2006 2005 ---------------------------- CAPITALIZATION Common share market capitalization $781,000 $641,000 ---------------------------- Total market capitalization $969,000 $1,053,000 ---------------------------- Common share closing price $17.28 $14.94 ---------------------------- Common share dividend(1) $0.60 $0.28 ---------------------------- Common share dividend yield(1) 3.5% 1.9% ---------------------------- Preferred share closing price $24.70 $25.57 ---------------------------- Preferred share dividend(2) $2.00 $2.00 ---------------------------- Preferred share dividend yield(2) 8.1% 7.8% ---------------------------- DEBT COVERAGE Debt weighted average interest rate 7.3% 7.3% ---------------------------- Debt to investment in hotel properties, at cost 26% 26% ---------------------------- Debt and preferred shares to investment in hotel properties 40% 41% ---------------------------- Debt to market capitalization 28% 25% ---------------------------- Debt and preferred shares to market capitalization 43% 39% ---------------------------- LIQUIDITY/FLEXIBILITY Debt due 2005 -- $3,175 ---------------------------- Debt due 2006 $2,908 $6,399 ---------------------------- Debt due 2007 $93,449 $83,140 ---------------------------- Debt due 2008 $5,267 $6,006 ---------------------------- Debt due 2009 and thereafter $167,447 $164,889 ----------------------------- Unencumbered hotel assets(3) 48% 48% ----------------------------- Unsecured Line of Credit outstanding balance $66,574 $55,574 ----------------------------- Unsecured Line of Credit available balance(4) $56,900 $68,400 ----------------------------- SHARES AND UNITS OUTSTANDING Common Shares 45,182,011 42,874,412 ----------------------------- Common Partnership Units 666,891 709,400 ----------------------------- Preferred Partnership Units 1,825,554 3,884,469 ----------------------------- Preferred Shares 5,800,000 5,800,000 ----------------------------- (1) Regular common share dividends declared for the trailing twelve months ended June 30, 2006 and 2005. (2) Regular annual preferred share dividends. (3) Based upon the number of hotels. (4) The actual amount that may be borrowed is contingent upon many factors, such as compliance with unsecured line of credit covenants and the use of proceeds from borrowings. The $135 million revolving unsecured line of credit available balance has been reduced by $11.5 million in letters of credit at June 30, 2006. INNKEEPERS USA TRUST HOTEL OPERATING RESULTS (UNAUDITED) Three Months Ended June 30, June 30, % 2006 2006 2005 Inc (dec) ----------------------------------- PORTFOLIO(1) ------------------------------ Average Daily Rate $112.30 $104.14 7.84% ------------------------- Occupancy 78.55% 78.70% -0.19% ------------------------- RevPAR $88.22 $81.97 7.62% ------------------------- Number of hotel properties 65 ------ Percent of total rooms 100.0% ------ Percent of room revenue(2) 100.0% ------ BY SEGMENT ------------------------------ Upscale Extended Stay Average Daily Rate $112.01 $103.55 8.17% ------------------------- Occupancy 80.84% 81.39% -0.68% ------------------------- RevPAR $90.55 $84.29 7.43% ------------------------- Number of hotel properties 49 ------ Percent of total rooms 74.7% ------ Percent of room revenue(2) 77.2% ------ Upscale(1) Average Daily Rate $149.07 $140.40 6.18% ------------------------- Occupancy 80.13% 69.00% 16.13% ------------------------- RevPAR $119.45 $96.87 23.31% ------------------------- Number of hotel properties 3 ------ Percent of total rooms 5.7% ------ Percent of room revenue(2) 7.2% ------ Mid Priced(1) Average Daily Rate $101.09 $96.40 4.87% ------------------------- Occupancy 69.34% 71.28% -2.72% ------------------------- RevPAR $70.10 $68.71 2.02% ------------------------- Number of hotel properties 13 ------ Percent of total rooms 19.6% ------ Percent of room revenue(2) 15.7% ------ BY FRANCHISE AFFILIATION ------------------------------ Residence Inn Average Daily Rate $112.19 $103.34 8.56% ------------------------- Occupancy 80.64% 80.92% -0.35% ------------------------- RevPAR $90.47 $83.62 8.19% ------------------------- Number of hotel properties 42 ------ Percent of total rooms 63.5% ------ Percent of room revenue(2) 65.6% ------ Summerfield Suites Average Daily Rate $104.93 $98.63 6.39% ------------------------- Occupancy 82.46% 83.84% -1.65% ------------------------- RevPAR $86.52 $82.70 4.62% ------------------------- Number of hotel properties 6 ------ Percent of total rooms 9.4% ------ Percent of room revenue(2) 9.1% ------ Hampton Inn(1) Average Daily Rate $103.30 $97.47 5.98% ------------------------- Occupancy 70.12% 70.67% -0.78% ------------------------- RevPAR $72.44 $68.88 5.17% ------------------------- Number of hotel properties 11 ------ Percent of total rooms 16.7% ------ Percent of room revenue(2) 13.3% ------ BY MANAGEMENT COMPANY ------------------------------ Innkeepers Hospitality Management (1)(3)(4) Average Daily Rate $111.24 $103.39 7.59% ------------------------- Occupancy 78.57% 79.12% -0.70% ------------------------- RevPAR $87.40 $81.80 6.85% ------------------------- Number of hotel properties 64 ------ Percent of total rooms 97.3% ------ Percent of room revenue(2) 97.1% ------ Third Party Managed Average Daily Rate $150.36 $137.51 9.34% ------------------------- Occupancy 78.10% 63.88% 22.26% ------------------------- RevPAR $117.43 $87.84 33.69% ------------------------- Number of hotel properties 1 ------ Percent of total rooms 2.7% ------ Percent of room revenue(2) 2.9% ------ BY GEOGRAPHIC REGION ------------------------------ New England [ME, NH, VT, MA, CT, RI] Average Daily Rate $110.12 $106.17 3.72% ------------------------- Occupancy 73.74% 73.55% 0.26% ------------------------- RevPAR $81.20 $78.08 4.00% ------------------------- Number of hotel properties 4 ------ Percent of total rooms 4.6% ------ Percent of room revenue(2) 4.1% ------ Middle Atlantic(1) [NY, NJ, PA] Average Daily Rate $111.74 $110.23 1.37% ------------------------- Occupancy 76.92% 78.91% -2.52% ------------------------- RevPAR $85.95 $86.99 -1.20% ------------------------- Number of hotel properties 10 ------ Percent of total rooms 14.2% ------ Percent of room revenue(2) 13.3% ------ South Atlantic(1) [DE, MD, WV, DC, VA, NC, SC, GA, FL] Average Daily Rate $123.34 $110.54 11.58% ------------------------- Occupancy 75.46% 76.11% -0.85% ------------------------- RevPAR $93.07 $84.14 10.61% ------------------------- Number of hotel properties 15 ------ Percent of total rooms 23.8% ------ Percent of room revenue(2) 25.5% ------ East North Central [OH, MI, IN, IL, WI] Average Daily Rate $96.77 $92.94 4.12% ------------------------- Occupancy 75.57% 75.22% 0.47% ------------------------- RevPAR $73.13 $69.91 4.61% ------------------------- Number of hotel properties 12 ------ Percent of total rooms 16.7% ------ Percent of room revenue(2) 13.6% ------ East South Central(1) [KY, TN, AL, MS] Average Daily Rate $96.83 $92.06 5.18% ------------------------- Occupancy 82.72% 85.04% -2.73% ------------------------- RevPAR $80.10 $78.29 2.31% ------------------------- Number of hotel properties 2 ------ Percent of total rooms 2.2% ------ Percent of room revenue(2) 1.9% ------ West North Central [MN, IA, MO, KS, NE, SD, ND] Average Daily Rate $83.59 $83.81 -0.26% ------------------------- Occupancy 91.64% 86.21% 6.30% ------------------------- RevPAR $76.60 $72.25 6.02% ------------------------- Number of hotel properties 1 ------ Percent of total rooms 0.8% ------ Percent of room revenue(2) 0.7% ------ West South Central [AR, LA, OK, TX] Average Daily Rate $105.59 $93.94 12.40% ------------------------- Occupancy 79.75% 86.55% -7.86% ------------------------- RevPAR $84.21 $81.31 3.57% ------------------------- Number of hotel properties 5 ------ Percent of total rooms 8.7% ------ Percent of room revenue(2) 8.5% ------ Mountain [MT, ID, WY, CO, UT, NM, AZ, NV] Average Daily Rate $97.78 $92.34 5.89% ------------------------- Occupancy 79.80% 81.05% -1.54% ------------------------- RevPAR $78.03 $74.84 4.26% ------------------------- Number of hotel properties 2 ------ Percent of total rooms 3.6% ------ Percent of room revenue(2) 3.1% ------ Pacific [WA, OR, CA, AK, HI] Average Daily Rate $119.24 $108.89 9.51% ------------------------- Occupancy 83.85% 80.45% 4.23% ------------------------- RevPAR $99.98 $87.60 14.13% ------------------------- Number of hotel properties 14 ------ Percent of total rooms 25.4% ------ Percent of room revenue(2) 29.2% ------ BY SELECTED MSA ------------------------------ Atlanta Average Daily Rate $108.91 $95.79 13.70% ------------------------- Occupancy 77.11% 72.87% 5.82% ------------------------- RevPAR $83.98 $69.80 20.32% ------------------------- Number of hotel properties 2 ------ Percent of total rooms 3.5% ------ Percent of room revenue(2) 3.5% ------ Boston Average Daily Rate $102.84 $97.70 5.26% ------------------------- Occupancy 66.91% 60.20% 11.15% ------------------------- RevPAR $68.81 $58.81 17.00% ------------------------- Number of hotel properties 1 ------ Percent of total rooms 1.2% ------ Percent of room revenue(2) 0.9% ------ Chicago Average Daily Rate $101.17 $95.16 6.32% ------------------------- Occupancy 76.03% 73.55% 3.37% ------------------------- RevPAR $76.91 $69.99 9.89% ------------------------- Number of hotel properties 4 ------ Percent of total rooms 7.0% ------ Percent of room revenue(2) 5.8% ------ Dallas/Ft. Worth Average Daily Rate $95.49 $83.05 14.98% ------------------------- Occupancy 79.76% 86.87% -8.18% ------------------------- RevPAR $76.16 $72.14 5.57% ------------------------- Number of hotel properties 4 ------ Percent of total rooms 6.8% ------ Percent of room revenue(2) 6.1% ------ Denver Average Daily Rate $97.78 $92.34 5.89% ------------------------- Occupancy 79.80% 81.05% -1.54% ------------------------- RevPAR $78.03 $74.84 4.26% ------------------------- Number of hotel properties 2 ------ Percent of total rooms 3.6% ------ Percent of room revenue(2) 3.1% ------ Detroit Average Daily Rate $97.99 $92.87 5.51% ------------------------- Occupancy 68.97% 76.77% -10.16% ------------------------- RevPAR $67.58 $71.30 -5.22% ------------------------- Number of hotel properties 3 ------ Percent of total rooms 4.5% ------ Percent of room revenue(2) 3.7% ------ Hartford Average Daily Rate $115.89 $115.57 0.28% ------------------------- Occupancy 75.95% 74.40% 2.08% ------------------------- RevPAR $88.02 $85.98 2.37% ------------------------- Number of hotel properties 2 ------ Percent of total rooms 2.4% ------ Percent of room revenue(2) 2.4% ------ Philadelphia Average Daily Rate $104.62 $103.70 0.89% ------------------------- Occupancy 81.43% 81.87% -0.54% ------------------------- RevPAR $85.19 $84.90 0.34% ------------------------- Number of hotel properties 4 ------ Percent of total rooms 5.7% ------ Percent of room revenue(2) 5.5% ------ Richmond Average Daily Rate $106.34 $96.06 10.70% ------------------------- Occupancy 82.44% 83.34% -1.08% ------------------------- RevPAR $87.67 $80.06 9.51% ------------------------- Number of hotel properties 2 ------ Percent of total rooms 2.3% ------ Percent of room revenue(2) 2.3% ------ San Francisco/San Jose/Oakland (Silicon valley) Average Daily Rate $119.67 $109.07 9.72% ------------------------- Occupancy 84.65% 76.77% 10.26% ------------------------- RevPAR $101.30 $83.73 20.98% ------------------------- Number of hotel properties 8 ------ Percent of total rooms 15.0% ------ Percent of room revenue(2) 17.5% ------ Seattle/Portland Average Daily Rate $121.00 $107.14 12.94% ------------------------- Occupancy 82.43% 85.28% -3.34% ------------------------- RevPAR $99.73 $91.37 9.15% ------------------------- Number of hotel properties 4 ------ Percent of total rooms 6.3% ------ Percent of room revenue(2) 7.2% ------ Washington, D.C.(1) Average Daily Rate $150.93 $134.40 12.30% ------------------------- Occupancy 79.71% 80.75% -1.29% ------------------------- RevPAR $120.31 $108.53 10.85% ------------------------- Number of hotel properties 4 ------ Percent of total rooms 6.7% ------ Percent of room revenue(2) 8.7% ------ Six Months Ended June 30, % 2006 2005 Inc (dec) ------------------------------ PORTFOLIO(1) ------------------------------ Average Daily Rate $111.00 $103.40 7.35% ------------------------------ Occupancy 75.83% 75.53% 0.40% ------------------------------ RevPAR $84.17 $78.10 7.77% ------------------------------ BY SEGMENT ------------------------------ Upscale Extended Stay Average Daily Rate $110.73 $102.72 7.80% ------------------------------ Occupancy 78.53% 78.28% 0.32% ------------------------------ RevPAR $86.96 $80.41 8.15% ------------------------------ Upscale(1) Average Daily Rate $139.20 $129.94 7.13% ------------------------------ Occupancy 75.17% 68.98% 8.97% ------------------------------ RevPAR $104.64 $89.63 16.75% ------------------------------ Mid Priced(1) Average Daily Rate $102.76 $98.39 4.44% ------------------------------ Occupancy 65.66% 66.92% -1.88% ------------------------------ RevPAR $67.48 $65.84 2.49% ------------------------------ BY FRANCHISE AFFILIATION ------------------------------ Residence Inn Average Daily Rate $110.91 $102.80 7.89% ------------------------------ Occupancy 78.37% 77.58% 1.02% ------------------------------ RevPAR $86.92 $79.75 8.99% ------------------------------ Summerfield Suites Average Daily Rate $103.84 $96.74 7.34% ------------------------------ Occupancy 78.87% 82.14% -3.98% ------------------------------ RevPAR $81.90 $79.46 3.07% ------------------------------ Hampton Inn(1) Average Daily Rate $103.76 $97.57 6.34% ------------------------------ Occupancy 64.66% 65.29% -0.96% ------------------------------ RevPAR $67.10 $63.71 5.32% ------------------------------ BY MANAGEMENT COMPANY ------------------------------ Innkeepers Hospitality Management (1)(3)(4) Average Daily Rate $110.53 $103.09 7.22% ------------------------------ Occupancy 76.02% 75.98% 0.05% ------------------------------ RevPAR $84.02 $78.33 7.26% ------------------------------ Third Party Managed Average Daily Rate $129.79 $117.68 10.29% ------------------------------ Occupancy 68.86% 59.11% 16.49% ------------------------------ RevPAR $89.37 $69.56 28.48% ------------------------------ BY GEOGRAPHIC REGION ------------------------------ New England [ME, NH, VT, MA, CT, RI] Average Daily Rate $107.77 $102.88 4.75% ------------------------------ Occupancy 68.78% 69.91% -1.62% ------------------------------ RevPAR $74.12 $71.92 3.06% ------------------------------ Middle Atlantic(1) [NY, NJ, PA] Average Daily Rate $110.82 $106.82 3.74% ------------------------------ Occupancy 71.50% 74.74% -4.34% ------------------------------ RevPAR $79.24 $79.84 -0.75% ------------------------------ South Atlantic(1) [DE, MD, WV, DC, VA, NC, SC, GA, FL] Average Daily Rate $121.68 $111.06 9.56% ------------------------------ Occupancy 73.84% 75.49% -2.19% ------------------------------ RevPAR $89.84 $83.84 7.16% ------------------------------ East North Central [OH, MI, IN, IL, WI] Average Daily Rate $95.48 $91.65 4.18% ------------------------------ Occupancy 72.17% 70.74% 2.02% ------------------------------ RevPAR $68.90 $64.84 6.26% ------------------------------ East South Central(1) [KY, TN, AL, MS] Average Daily Rate $92.19 $85.76 7.50% ------------------------------ Occupancy 77.32% 81.59% -5.23% ------------------------------ RevPAR $71.28 $69.97 1.87% ------------------------------ West North Central [MN, IA, MO, KS, NE, SD, ND] Average Daily Rate $83.57 $81.46 2.59% ------------------------------ Occupancy 88.18% 84.98% 3.77% ------------------------------ RevPAR $73.69 $69.23 6.44% ------------------------------ West South Central [AR, LA, OK, TX] Average Daily Rate $102.78 $93.07 10.43% ------------------------------ Occupancy 80.59% 82.81% -2.68% ------------------------------ RevPAR $82.83 $77.07 7.47% ------------------------------ Mountain [MT, ID, WY, CO, UT, NM, AZ, NV] Average Daily Rate $95.30 $91.54 4.11% ------------------------------ Occupancy 77.21% 73.39% 5.21% ------------------------------ RevPAR $73.58 $67.18 9.53% ------------------------------ Pacific [WA, OR, CA, AK, HI] Average Daily Rate $118.89 $109.45 8.62% ------------------------------ Occupancy 81.45% 77.14% 5.59% ------------------------------ RevPAR $96.83 $84.43 14.69% ------------------------------ BY SELECTED MSA ------------------------------ Atlanta Average Daily Rate $109.36 $97.55 12.11% ------------------------------ Occupancy 76.62% 73.47% 4.29% ------------------------------ RevPAR $83.79 $71.68 16.89% ------------------------------ Boston Average Daily Rate $101.42 $94.64 7.16% ------------------------------ Occupancy 56.49% 53.64% 5.31% ------------------------------ RevPAR $57.29 $50.77 12.84% ------------------------------ Chicago Average Daily Rate $98.76 $93.44 5.69% ------------------------------ Occupancy 70.65% 67.70% 4.36% ------------------------------ RevPAR $69.78 $63.26 10.31% ------------------------------ Dallas/Ft. Worth Average Daily Rate $92.88 $82.99 11.92% ------------------------------ Occupancy 80.06% 82.88% -3.40% ------------------------------ RevPAR $74.36 $68.79 8.10% ------------------------------ Denver Average Daily Rate $95.30 $91.54 4.11% ------------------------------ Occupancy 77.21% 73.39% 5.21% ------------------------------ RevPAR $73.58 $67.18 9.53% ------------------------------ Detroit Average Daily Rate $99.28 $94.13 5.47% ------------------------------ Occupancy 69.87% 72.32% -3.39% ------------------------------ RevPAR $69.37 $68.08 1.89% ------------------------------ Hartford Average Daily Rate $113.54 $111.73 1.62% ------------------------------ Occupancy 73.24% 72.06% 1.64% ------------------------------ RevPAR $83.17 $80.51 3.30% ------------------------------ Philadelphia Average Daily Rate $104.13 $100.31 3.81% ------------------------------ Occupancy 76.78% 79.85% -3.84% ------------------------------ RevPAR $79.95 $80.09 -0.17% ------------------------------ Richmond Average Daily Rate $104.54 $94.51 10.61% ------------------------------ Occupancy 78.26% 83.67% -6.47% ------------------------------ RevPAR $81.81 $79.08 3.45% ------------------------------ San Francisco/San Jose/Oakland (Silicon valley) Average Daily Rate $120.14 $110.19 9.03% ------------------------------ Occupancy 81.56% 71.95% 13.36% ------------------------------ RevPAR $97.98 $79.28 23.59% ------------------------------ Seattle/Portland Average Daily Rate $117.74 $105.47 11.63% ------------------------------ Occupancy 81.40% 84.01% -3.11% ------------------------------ RevPAR $95.84 $88.60 8.17% ------------------------------ Washington, D.C.(1) Average Daily Rate $147.84 $133.00 11.16% ------------------------------ Occupancy 73.03% 73.35% -0.44% ------------------------------ RevPAR $107.97 $97.55 10.68% ------------------------------ (1) Hotel operating results exclude one hotel property acquired in June 2003 which will be converted to a Courtyard hotel, one hotel property acquired in June 2004 which was converted and opened as a Hampton Inn hotel in August 2005, one hotel property acquired in February 2005 which will be converted to a Courtyard hotel and one Westin hotel acquired in May 2005 and the Bullfinch hotel acquired in November 2005. (2) Room revenue for January 1, 2006 to June 30, 2006. (3) Operating statistics for hotels acquired in 2005 include room revenue for the applicable periods from the previous owner for those periods prior to our acquisition of the hotels. DATASOURCE: Innkeepers USA Trust CONTACT: Company: Dennis Craven, Chief Financial Officer of Innkeepers USA Trust, +1-561-227-1302; or Media: Jerry Daly or Carol McCune of Daly Gray, +1-703-435-6293, for Innkeepers USA Trust Web site: http://www.innkeepersusa.com/

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