Innkeepers Usa (NYSE:KPA)
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Innkeepers USA Trust (NYSE: KPA), a hotel real estate
investment trust (REIT) and a leading owner of upscale extended-stay
hotel properties throughout the United States, today announced results
for the three and nine months ended September 30, 2005.
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Nine Nine
3Q 3Q % Mos. Mos. %
2005* 2004* Change* 2005* 2004* Change*
----------------------------------------------------------------------
Total revenue $67,095 $59,497 13% $186,264 $154,510 21%
----------------------------------------------------------------------
Net income applicable
to common
shareholders $6,837 $3,753 82% $11,185 $1,201 831%
----------------------------------------------------------------------
Diluted income per
share $0.16 $0.10 60% $0.27 $0.03 800%
----------------------------------------------------------------------
Funds from operations
(FFO) $16,970 $13,572 25% $39,310 $25,621 53%
----------------------------------------------------------------------
Adjusted FFO $16,967 $13,127 29% $42,487 $28,762 48%
----------------------------------------------------------------------
FFO per share $0.36 $0.32 13% $0.84 $0.66 27%
----------------------------------------------------------------------
Adjusted FFO per
share $0.36 $0.31 16% $0.91 $0.74 23%
----------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization
(EBITDA) $25,404 $21,915 16% $65,826 $58,923 12%
----------------------------------------------------------------------
Adjusted EBITDA $25,390 $21,713 17% $67,502 $57,029 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 generally accepted accounting
principles (GAAP) financial measures and are discussed in further
detail in this press release.
FFO and FFO per share for the nine months ended September 30, 2004
include $4,249 in issuance costs pertaining to the Series A
Cumulative Convertible preferred shares that were redeemed in
January 2004. The Series A preferred share issuance costs have
been excluded from Adjusted FFO, Adjusted FFO per share, EBITDA
and Adjusted EBITDA.
Adjusted FFO, Adjusted FFO per share and Adjusted EBITDA exclude
other charges and discontinued operations.
Adjusted EBITDA excludes a gain on sale of hotels of $1,501 and
$786 for the nine months ended September 30, 2005 and 2004,
respectively.
*T
Operating Results
Revenue per available room (RevPAR) for 65 of the company's hotel
properties (excluding four hotels closed for renovation and/or
conversion during part or all of the periods presented) increased 5.7
percent for the third quarter 2005 to $82.90, compared to the same
period in 2004. The increase was led by average daily rate (ADR),
which improved 5.4 percent to $104.97. Occupancy rose 0.3 percent to
78.97 percent.
The 5.7 percent RevPAR improvement for the third quarter 2005
reflects a 6.5 percent increase in RevPAR at the company's eight
Silicon Valley, Calif. hotel properties. Gross operating margins for
the company's 61 comparable hotels improved 270 basis points to 46.3
percent. The company's 61 comparable hotels exclude the seven hotels
acquired in 2004 and 2005 and the Atlantic City hotel that is closed
for renovation and conversion.
"We are very pleased with the strong 270 basis point increase in
our operating margins, which drove the 17 percent increase in Adjusted
EBITDA for the third quarter," said Jeffrey H. Fisher, Innkeepers
chief executive officer and president. "RevPAR increases were
predominantly driven by increases in average daily rate, which
accounted for 95 percent of the increase for the quarter. We were
particularly encouraged by results at our eight Silicon Valley hotels,
which outperformed the overall portfolio as RevPAR improved 6.5
percent."
Dividend
"Another major positive development in the third quarter was the
increase in our common share dividend to $0.15 per share from $0.10,"
Fisher said. "It is the second time we raised the dividend this year
and represents a 150 percent increase since the first quarter. We
remain confident that the hotel industry recovery is on solid footing
and believe that the industry will continue to do well for the next
few years. We will continue to evaluate the common share dividend with
our Board of Trustees on a quarterly basis."
Repositionings/Development Update
"Our Louisville, Ky. Hampton Inn opened in the third quarter after
completing a $4.5 million renovation and conversion from another
brand, and is attracting a strong corporate base of business, with its
location just a couple of blocks from the Convention Center," Fisher
said. "In addition to all the latest 'Make It Hampton' amenities,
we've also added some unique features, including a martini bar and a
10-foot high 'water wall,' that lend a more upscale feel to the
property and will further enhance the hotel's competitive edge in the
upscale, focused service segment in this market."
Fisher also noted that the company's properties in Montvale, N.J.,
and Atlantic City, N.J. that are both slated for conversion to the
Courtyard by Marriott brand remain on track to open in mid-2006. The
190-room hotel in Montvale, N.J, that is closed pending completion of
a $5 million renovation, is located on the New Jersey/New York border,
20 miles from New York City. The property is surrounded by more than
300 business and corporate offices, including Mercedes Benz of North
America, BMW of North America and KPMG LLP. The 203-room Atlantic City
hotel that is closed pending completion of a $7 million renovation is
located one block from Atlantic City's Boardwalk and beaches and
within walking distance of the Trump's Taj Mahal and Bally's casinos
and the Atlantic City Convention Center.
"The development of our Embassy Suites in Valencia, California,
north of Los Angeles, also is on track to open in late 2006, with the
groundbreaking scheduled for first quarter 2006. This will be our
first Embassy Suites hotel, and we look forward to a long and mutually
beneficial relationship with another of Hilton's top-rated brands," he
said.
Fisher pointed out that, while the company made no acquisitions in
the third quarter, they remain an integral part of Innkeepers' growth
strategy. "We continue to target premium brands in the upscale
extended-stay sectors, as well as select-service and full-service
hotels that have the potential to be rebranded and repositioned and
are located in major markets with strong demand generators and high
barriers to new competition."
Capital Structure
Bruce A. Riggins, chief financial officer, pointed out that the
company continues to maintain one of the industry's strongest capital
structures and lowest-levered balance sheets. "We paid down $16
million of debt during the third quarter. Our debt to investment in
hotels at cost ratio was 25 percent at September 30, 2005, with no
maturities prior to 2007. Our weighted average interest rate on our
total debt is 7.1 percent, and 84 percent of our total debt is at
fixed rates. We have great flexibility for future acquisition or
development growth, with $83 million available on our $135 million
line of credit."
Hurricane Impact
During the third quarter, the company had one hotel, the Four
Points by Sheraton hotel in Ft. Walton Beach, Fla., that was impacted
by displacement from four tropical storms or hurricanes and resulted
in lost revenue of approximately $350,000.
Subsequent to quarter's end, the company sustained some property
damage at three of its Florida hotels from Hurricane Wilma in October.
The Courtyard Ft. Lauderdale sustained damage to the roof and water
damage to some of the rooms, but is expected to re-open in November
2005. The Hampton Inn Naples and Hampton Inn West Palm Beach hotels
both sustained minor property damage and have both since reopened. The
properties are insured for both property damage and business
interruption. The company expects uninsured losses from Hurricane
Wilma to be relatively insignificant.
Earnings Guidance
The company is maintaining its full-year adjusted FFO per share
guidance of $1.11 to $1.14 and provides the following range of
estimates for the fourth quarter and full-year 2005, based on assumed
RevPAR growth of 6.0 percent to 7.0 percent for the fourth quarter and
6.8 percent to 7.2 percent for the full year (forecasted financial
results do not include any assumptions for future acquisitions,
dispositions or capital markets transactions):
-- Net income (loss) applicable to common shareholders of $(0.2)
million to $1.3 million for the fourth quarter and $11.0
million to $12.5 million for the full year;
-- Diluted income per share of $0.00 to $0.03 for the fourth
quarter and $0.26 to $0.30 for the full year;
-- FFO per share of $0.20 to $0.23 for the fourth quarter and
$1.04 to $1.07 for the full year;
-- Adjusted FFO per share of $0.20 to $0.23 for the fourth
quarter and $1.11 to $1.14 for the full year;
-- Adjusted EBITDA of $18.0 million to $19.5 million for the
fourth quarter and $85.5 million to $87.0 million for the full
year; and
-- Gross operating profit margin increase of approximately 200
basis points for the fourth quarter and for the full year for
our comparable 61 hotels.
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See reconciliations of net income applicable to common shareholders to
FFO per share and Adjusted FFO per share and net income applicable to
common shareholders to Adjusted EBITDA included in the tables of this
press release. FFO per share, Adjusted FFO per share, and Adjusted
EBITDA are not generally accepted accounting principles (GAAP)
financial measures and are discussed in further detail in this press
release.
*T
Innkeepers USA Trust owns 69 hotels with a total of 8,745 suites
or rooms in 20 states and Washington, D.C., and focuses on acquiring
and/or developing premium branded upscale extended-stay,
select-service, and full-service hotels and the rebranding and
repositioning of other hotel properties. For more information about
Innkeepers USA Trust, visit the company's web site at
www.innkeepersusa.com.
To listen to a web cast of the company's third quarter 2005
conference call on November 9, 2005, at 10 a.m. Eastern time, go to
the company's web site and click on Conference Calls. Interested
parties may listen to an archived web cast of the conference call on
the web site, or may dial (800) 405-2236, pass code 11041292, to hear
a telephone replay. The archived web cast and telephone replay will be
available through December 9, 2005.
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 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, and Adjusted FFO
(defined below) 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 real
estate companies use FFO as a measure of their financial and operating
performance, which 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. 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.
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. EBITDA and Adjusted EBITDA are reconciled to net income
(loss) applicable to common shareholders determined in accordance with
GAAP in the accompanying schedules.
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) under the company's
taxable REIT subsidiary structure, (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, 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 taxes or
dividends, compliance with the Americans with Disabilities Act,
workers compensation law changes, the Sarbanes-Oxley law, etc.).
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INNKEEPERS USA TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------------------------------------------------------------------
Revenue:
Hotel operating
Rooms 62,819 57,151 176,192 143,747
Food and beverage 1,984 420 3,900 791
Telephone 507 468 1,366 1,356
Other 1,643 1,404 4,410 3,300
Corporate
Percentage lease -- -- -- 5,073
Other 142 54 396 243
----------------------------------------------------------------------
Total revenue 67,095 59,497 186,264 154,510
----------------------------------------------------------------------
Expenses:
Hotel operating
Rooms 12,890 12,336 36,668 31,573
Food and beverage 1,611 441 2,950 802
Telephone 739 612 2,144 1,794
Other 732 642 1,980 1,434
General and
administrative 5,740 5,069 17,432 13,338
Franchise and
marketing fees 4,313 3,866 12,263 9,982
Amortization of
deferred franchise
conversion 292 274 948 774
Advertising and
promotions 2,239 2,019 5,952 4,859
Utilities 3,001 2,912 8,572 6,885
Repairs and
maintenance 3,368 3,050 9,232 7,760
Management fees 2,007 1,891 5,569 4,764
Amortization of
deferred lease
acquisition 130 131 392 382
Insurance 356 447 1,136 1,145
Corporate
Depreciation 8,957 7,913 26,226 23,605
Amortization of
franchise fees 16 16 51 38
Ground rent 132 129 391 376
Interest 4,687 4,718 13,836 13,809
Amortization of
loan origination
fees 216 235 651 718
Property taxes and
insurance 2,561 3,090 8,566 8,659
General and
administrative 2,016 1,280 5,907 4,110
Amortization of
unearned
compensation 182 312 437 753
Other charges -- 396 3,053 874
----------------------------------------------------------------------
Total expenses 56,185 51,779 164,356 138,434
----------------------------------------------------------------------
Income before minority
interest 10,910 7,718 21,908 16,076
Minority interest,
common (119) (113) (195) (37)
Minority interest,
preferred (1,068) (1,068) (3,205) (3,204)
----------------------------------------------------------------------
Income from continuing
operations 9,723 6,537 18,508 12,835
Income from
discontinued
operations 14 116 1,377 1,204
----------------------------------------------------------------------
Net income 9,737 6,653 19,885 14,039
Series A Preferred
Share issuance costs -- -- -- (4,249)
Preferred share
dividends (2,900) (2,900) (8,700) (8,589)
----------------------------------------------------------------------
Net income applicable
to common shareholders $6,837 $3,753 $11,185 $1,201
----------------------------------------------------------------------
Earnings per share
data:
Basic - continuing
operations $0.16 $0.10 $0.24 $0.00
----------------------------------------------------------------------
Basic $0.16 $0.10 $0.27 $0.03
----------------------------------------------------------------------
Basic - weighted
average shares 42,730,549 37,603,379 41,726,975 37,501,727
----------------------------------------------------------------------
Diluted -
continuing
operations $0.16 $0.10 $0.23 $0.00
----------------------------------------------------------------------
Diluted $0.16 $0.10 $0.27 $0.03
----------------------------------------------------------------------
Diluted - weighted
average shares 43,051,919 37,784,575 41,964,476 37,501,727
----------------------------------------------------------------------
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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
----------------------- -----------------------
CALCULATION OF FFO
Net income (loss)
applicable to common
shareholders $6,837 $3,753 $11,185 $1,201
Depreciation 8,957 7,913 26,226 23,605
Depreciation included
in discontinued
operations -- 482 -- 1,564
Gain on sale of
hotels included in
discontinued
operations (11) 243 (1,501) (786)
Minority interest,
preferred 1,068 1,068 3,205 --
Minority interest,
common 119 113 195 37
----------------------- -----------------------
Diluted FFO $16,970 $13,572 $39,310 $25,621
----------------------- -----------------------
Weighted average number
of common shares and
common share
equivalents 47,629,045 42,786,100 46,640,482 38,747,277
----------------------- -----------------------
FFO per share $0.36 $0.32 $0.84 $0.66
----------------------- -----------------------
FFO 16,970 13,572 39,310 25,621
Series A preferred
share issuance costs -- -- -- 4,249
Other charges -- 396 3,053 874
Discontinued
operations (3) (841) 124 (1,982)
----------------------- -----------------------
Adjusted FFO $16,967 $13,127 $42,487 $28,762
----------------------- -----------------------
Adjusted FFO per share $0.36 $0.31 $0.91 $0.74
----------------------- -----------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
----------------------- -----------------------
CALCULATION OF EBITDA
Net income
applicable to
common shareholders $6,837 $3,753 $11,185 $1,201
Interest 4,687 4,718 13,836 13,809
Depreciation and
amortization 9,793 8,881 28,705 26,270
Depreciation
included in
discontinued
operations -- 482 -- 1,564
Minority interest,
common 119 113 195 37
Minority interest,
preferred 1,068 1,068 3,205 3,204
Series A preferred
share issuance
costs -- -- -- 4,249
Preferred share
dividends 2,900 2,900 8,700 8,589
----------------------- -----------------------
EBITDA $25,404 $21,915 $65,826 $58,923
----------------------- -----------------------
Other charges -- 396 3,053 874
Discontinued
operations (3) (841) 124 (1,982)
Gain on sale of
hotels included in
discontinued
operations (11) 243 (1,501) (786)
----------------------- -----------------------
Adjusted EBITDA $25,390 $21,713 $67,502 $57,029
----------------------- -----------------------
INNKEEPERS USA TRUST
2005 Forecast Reconciliation
(in thousands, except share and per share data)
Three months ended Twelve months ended
December 31, 2005 December 31, 2005
Low End High End Low End High End
Range Range Range Range
----------------------- -----------------------
CALCULATION OF FFO
Net income (loss)
applicable to common
shareholders (200) 1,300 10,985 12,485
Depreciation 8,735 8,735 34,960 34,960
Gain on sale of
hotels included in
discontinued
operations -- -- (1,501) (1,501)
Minority interest,
preferred 1,068 1,068 4,273 4,273
Minority interest,
common (75) (75) 120 120
----------------------- -----------------------
Diluted FFO 9,528 11,028 48,837 50,337
----------------------- -----------------------
Weighted average number
of common shares and
common share
equivalents 47,644,671 47,644,671 46,864,748 46,864,748
----------------------- -----------------------
FFO per share 0.20 0.23 1.04 1.07
----------------------- -----------------------
FFO 9,528 11,028 48,837 50,337
Other charges -- -- 3,053 3,053
Discontinued
operations -- -- 124 124
----------------------- -----------------------
Adjusted FFO 9,528 11,028 52,014 53,514
----------------------- -----------------------
Adjusted FFO per share 0.20 0.23 1.11 1.14
----------------------- -----------------------
Three months ended Twelve months ended
December 31, 2005 December 31, 2005
Low End High End Low End High End
Range Range Range Range
----------------------- -----------------------
CALCULATION OF EBITDA
Net income (loss)
applicable to
common shareholders (200) 1,300 10,985 12,485
Interest 4,666 4,666 18,503 18,503
Depreciation and
amortization 9,641 9,641 38,343 38,343
Minority interest,
preferred 1,068 1,068 4,273 4,273
Minority interest,
common (75) (75) 120 120
Preferred share
dividends 2,900 2,900 11,600 11,600
----------------------- -----------------------
EBITDA 18,000 19,500 83,824 85,324
----------------------- -----------------------
Other charges -- -- 3,053 3,053
Discontinued
operations -- -- 124 124
Gain on sale of
hotels included in
discontinued
operations -- -- (1,501) (1,501)
----------------------- -----------------------
Adjusted EBITDA $18,000 $19,500 $85,500 $87,000
----------------------- -----------------------
INNKEEPERS USA TRUST
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share data)
September 30, December 31,
2005 2004
----------------------------------------------------------------------
ASSETS
Investment in hotels:
Land and improvements $146,610 $127,392
Buildings and improvements 728,149 687,754
Furniture and equipment 98,510 101,909
Renovations in process 16,148 2,794
Hotels under development 4,318 3,864
Hotels held for sale -- 19,299
----------------------------------------------------------------------
993,735 943,012
Accumulated depreciation (221,009) (207,853)
----------------------------------------------------------------------
Net investment in hotels 772,726 735,159
Cash and cash equivalents 14,658 22,837
Restricted cash and cash equivalents 9,447 10,781
Accounts receivable, net 6,655 4,577
Prepaid and other 2,188 2,539
Deferred and other 17,283 20,099
----------------------------------------------------------------------
Total assets $822,957 $795,992
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt $247,299 $286,865
Accounts payable and accrued expenses 17,485 12,663
Payable to manager 245 209
Franchise conversion fee obligations 10,825 10,825
Distributions payable 9,642 5,450
----------------------------------------------------------------------
Total liabilities 285,496 316,012
Minority interest in Partnership 48,081 51,088
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,
42,874,412 and 37,966,756 issued and
outstanding, respectively 429 380
Additional paid-in capital 460,494 396,631
Unearned compensation (1,766) (448)
Distributions in excess of earnings (114,777) (112,671)
----------------------------------------------------------------------
Total shareholders' equity 489,380 428,892
----------------------------------------------------------------------
Total liabilities and shareholders' equity $822,957 $795,992
----------------------------------------------------------------------
INNKEEPERS USA TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended
September 30,
---------------------
2005 2004
----------------------------------------------------------------------
Cash flows from operating activities:
Net income 19,885 14,039
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 28,705 27,834
Write-off of deferred expenses included in
extinguishment of debt 124 --
Minority interests 3,400 3,241
Gain on sale of hotel included in
discontinued operations (1,501) (786)
Changes in operating assets and liabilities:
Accounts receivable, net (2,078) 1,050
Prepaid and other 351 1,054
Accounts payable and accrued expenses 4,821 7,992
Payable to manager 36 (466)
----------------------------------------------------------------------
Net cash provided by operating activities 53,743 53,958
----------------------------------------------------------------------
Cash flows from investing activities:
Investment in hotels, net of insurance proceeds (82,123) (82,055)
Deposits for acquisition of hotels -- (154)
Proceeds from sale of hotels 20,860 8,727
Net withdrawals (deposits) into restricted cash
and cash equivalents 1,334 (3,066)
Lease acquisitions -- (1,336)
Payment of franchise fees (50) (192)
Repayment of advances 557 175
----------------------------------------------------------------------
Net cash used in investing activities (59,422) (77,901)
----------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from debt issuance 71,000 53,074
Payments on debt (110,566) (29,618)
Payments on franchise conversion fee
obligations (948) (106)
Distributions paid to unit holders (3,385) (3,307)
Distributions paid to shareholders (17,832) (11,684)
Redemption of shares or units -- (115,730)
Proceeds from issuance of common and preferred
shares 59,585 143,081
Loan origination fees and costs paid (354) (1,091)
----------------------------------------------------------------------
Net cash provided by financing activities (2,500) 34,619
----------------------------------------------------------------------
Net increase in cash and cash equivalents (8,179) 10,676
Cash and cash equivalents at beginning of period 22,837 9,586
----------------------------------------------------------------------
Cash and cash equivalents at end of period 14,658 20,262
----------------------------------------------------------------------
Supplemental cash flow information:
Interest paid 13,836 13,643
INNKEEPERS USA TRUST
DEBT COMPOSITION (UNAUDITED)
As of September 30, 2005
(outstanding balance in thousands)
Stated
Outstanding Interest Maturity Encumbered
DEBT Balance Rate Date Properties
----------------------------------------------------------------------
-------------------------------------------
Unsecured Line of Credit(1) $40,574 4.92% July 2007 --
-------------------------------------------
Industrial Revenue Bonds(1) $10,000 2.70% December 2014 --
-------------------------------------------
Term Loan #1 $23,450 8.17% October 2007 8
-------------------------------------------
Term Loan #2 $35,257 8.15% March 2009 8
-------------------------------------------
Term Loan #3 $28,228 7.02% April 2010 7
-------------------------------------------
Term Loan #4 $45,804 7.16% October 2009 6
-------------------------------------------
Term Loan #5 $49,584 7.75% January 2011 6
-------------------------------------------
Mortgage $12,803 10.35% June 2010 1
-------------------------------------------
Adjustments (4) $1,599 -- -- --
-------------------------------------------
TOTAL $247,299 7.3%(2) 5 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 (UNAUDITED)
(in thousands, except shares data)
September 30, September 30,
2005 2004
---------------------------
CAPITALIZATION
---------------------------
Common share market capitalization $673,000 $486,000
---------------------------
Total Market capitalization $1,072,000 $949,000
---------------------------
Common share closing price $15.45 $12.44
---------------------------
Common share dividend(1) $0.37 $0.15
---------------------------
Common share dividend yield(1) 2.4% 1.2%
---------------------------
Preferred share closing price $26.15 $25.30
---------------------------
Preferred share dividend(2) $2.00 $2.00
---------------------------
Preferred share dividend yield(2) 7.6% 7.9%
---------------------------
DEBT COVERAGE
---------------------------
Debt weighted average interest rate 7.1% 6.9%
---------------------------
Debt to investment in hotel properties,
at cost 25% 28%
---------------------------
Debt and preferred shares to investment
in hotel properties 39% 44%
---------------------------
Debt to market capitalization 23% 27%
---------------------------
Debt and preferred shares to market
capitalization 37% 43%
---------------------------
LIQUIDITY/FLEXIBILITY
---------------------------
Debt due 2004 -- $1,000
---------------------------
Debt due 2005 $2,000 $6,000
---------------------------
Debt due 2006 $6,000 $7,000
---------------------------
Debt due 2007 and thereafter $239,000 $242,000
---------------------------
---------------------------
Unencumbered hotel assets(3) 48% 43%
---------------------------
Unsecured Line of Credit outstanding
balance $40,574 $27,000
---------------------------
Unsecured Line of Credit available
balance(4) $82,839 $98,000
---------------------------
SHARES AND UNITS OUTSTANDING
---------------------------
Common Shares 42,914,086 37,958,256
---------------------------
Common Partnership Units 666,891 1,117,056
---------------------------
Preferred Partnership Units 3,884,469 3,884,469
---------------------------
Preferred Shares 5,800,000 5,800,000
---------------------------
(1) Regular common share dividends declared for the trailing twelve
months ended September 30, 2005 and September 30, 2004
(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.
INNKEEPERS USA TRUST
HOTEL OPERATING RESULTS (UNAUDITED)
Three Months Nine Months
Ended Ended
September 30, September 30,
% %
September Inc Inc
30, 2005 2005 2004 (dec) 2005 2004 (dec)
--------------------------------------------------------
PORTFOLIO(1)
---------------- ---------------------------------------------
Average Daily
Rate $104.97 $99.58 5.41% $103.95 $97.72 6.38%
---------------------------------------------
Occupancy 78.97% 78.77% 0.25% 76.70% 76.15% 0.72%
---------------------------------------------
RevPAR $82.90 $78.45 5.67% $79.73 $74.41 7.15%
---------------------------------------------
---------
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 $105.87 $100.67 5.17% $103.82 $98.19 5.73%
---------------------------------------------
Occupancy 82.43% 81.71% 0.88% 79.69% 78.87% 1.04%
---------------------------------------------
RevPAR $87.27 $82.26 6.09% $82.73 $77.44 6.83%
---------------------------------------------
---------
Number of
hotel
properties 49
---------
Percent of
total rooms 74.7%
---------
Percent of
room
revenue(2) 77.5%
---------
Upscale(1)
-----------------------------------------------
Average Daily
Rate $120.56 $122.25 -1.38% $126.70 $117.79 7.56%
-----------------------------------------------
Occupancy 71.65% 70.76% 1.26% 69.88% 77.44% -9.76%
-----------------------------------------------
RevPAR $86.38 $86.50 -0.14% $88.54 $91.22 -2.94%
-----------------------------------------------
---------
Number of
hotel
properties 3
---------
Percent of
total rooms 5.8%
---------
Percent of
room
revenue(2) 6.4%
---------
Mid Priced(1)
---------------------------------------------
Average Daily
Rate $95.94 $87.98 9.05% $97.56 $88.57 10.15%
---------------------------------------------
Occupancy 67.91% 69.91% -2.86% 67.28% 65.35% 2.95%
---------------------------------------------
RevPAR $65.16 $61.51 5.93% $65.64 $57.88 13.41%
---------------------------------------------
---------
Number of
hotel
properties 13
---------
Percent of
total rooms 19.5%
---------
Percent of
room
revenue(2) 16.1%
---------
BY FRANCHISE
AFFILIATION
----------------
Residence Inn
---------------------------------------------
Average Daily
Rate $106.13 $100.71 5.38% $103.96 $98.07 6.01%
---------------------------------------------
Occupancy 82.06% 81.50% 0.69% 79.10% 78.05% 1.35%
---------------------------------------------
RevPAR $87.09 $82.08 6.10% $82.24 $76.54 7.45%
---------------------------------------------
---------
Number of
hotel
properties 42
---------
Percent of
total rooms 63.5%
---------
Percent of
room
revenue(2) 65.5%
---------
Summerfield
Suites
---------------------------------------------
Average Daily
Rate $101.12 $97.04 4.20% $98.26 $94.11 4.41%
---------------------------------------------
Occupancy 85.77% 85.13% 0.75% 83.37% 84.25% -1.04%
---------------------------------------------
RevPAR $86.73 $82.61 4.99% $81.91 $79.29 3.30%
---------------------------------------------
---------
Number of
hotel
properties 6
---------
Percent of
total rooms 9.4%
---------
Percent of
room
revenue(2) 9.7%
---------
Hampton Inn(1)
---------------------------------------------
Average Daily
Rate $96.95 $88.41 9.66% $98.32 $89.07 10.39%
---------------------------------------------
Occupancy 67.69% 69.16% -2.13% 67.10% 64.80% 3.55%
---------------------------------------------
RevPAR $65.63 $61.15 7.33% $65.97 $57.71 14.31%
---------------------------------------------
---------
Number of
hotel
properties 12
---------
Percent of
total rooms 18.3%
---------
Percent of
room
revenue(2) 15.2%
---------
BY MANAGEMENT
COMPANY
-------------------------
Innkeepers Hospitality
Management(1)(3)
---------------------------------------------
Average Daily
Rate $104.59 $98.90 5.75% $103.61 $97.35 6.43%
---------------------------------------------
Occupancy 79.32% 79.12% 0.25% 77.12% 76.09% 1.35%
---------------------------------------------
RevPAR $82.96 $78.25 6.02% $79.91 $74.07 7.88%
---------------------------------------------
---------
Number of
hotel
properties 64
---------
Percent of
total rooms 97.3%
---------
Percent of
room
revenue(2) 97.5%
---------
Third Party
Managed
-----------------------------------------------
Average Daily
Rate $121.03 $128.51 -5.82% $118.90 $110.75 7.36%
-----------------------------------------------
Occupancy 66.66% 66.38% 0.42% 61.65% 78.23% -21.19%
-----------------------------------------------
RevPAR $80.68 $85.31 -5.43% $73.30 $86.64 -15.40%
-----------------------------------------------
---------
Number of
hotel
properties 1
---------
Percent of
total rooms 2.7%
---------
Percent of
room
revenue(2) 2.5%
---------
BY GEOGRAPHIC
REGION
----------------
New England (ME,
NH, VT, MA, CT,
RI)
----------------------------------------------
Average Daily
Rate $112.92 $104.97 7.57% $106.47 $100.09 6.37%
----------------------------------------------
Occupancy 76.59% 77.62% -1.33% 72.16% 69.19% 4.29%
----------------------------------------------
RevPAR $86.48 $81.47 6.15% $76.83 $69.26 10.93%
----------------------------------------------
---------
Number of
hotel
properties 4
---------
Percent of
total rooms 4.6%
---------
Percent of
room
revenue(2) 4.5%
---------
Middle
Atlantic(1)
(NY, NJ, PA)
----------------------------------------------
Average Daily
Rate $112.91 $108.58 3.99% $108.95 $103.71 5.05%
----------------------------------------------
Occupancy 78.93% 81.80% -3.51% 76.15% 75.21% 1.25%
----------------------------------------------
RevPAR $89.12 $88.82 0.34% $82.97 $78.00 6.37%
----------------------------------------------
---------
Number of
hotel
properties 10
---------
Percent of
total rooms 14.2%
---------
Percent of
room
revenue(2) 14.7%
---------
South
Atlantic(1)
(DE, MD, WV,
DC, VA, NC, SC,
GA, FL)
-----------------------------------------------
Average Daily
Rate $107.05 $99.35 7.75% $109.74 $99.85 9.90%
-----------------------------------------------
Occupancy 72.96% 74.15% -1.60% 74.66% 75.82% -1.53%
-----------------------------------------------
RevPAR $78.11 $73.67 6.03% $81.94 $75.70 8.24%
-----------------------------------------------
---------
Number of
hotel
properties 15
---------
Percent of
total rooms 23.8%
---------
Percent of
room
revenue(2) 24.5%
---------
East North
Central (OH,
MI, IN, IL, WI)
---------------------------------------------
Average Daily
Rate $92.98 $90.09 3.21% $92.12 $86.98 5.91%
---------------------------------------------
Occupancy 76.77% 74.91% 2.48% 72.77% 70.23% 3.62%
---------------------------------------------
RevPAR $71.38 $67.48 5.78% $67.04 $61.09 9.74%
---------------------------------------------
---------
Number of
hotel
properties 12
---------
Percent of
total rooms 16.7%
---------
Percent of
room
revenue(2) 14.0%
---------
East South
Central(1) (KY,
TN, AL, MS)
---------------------------------------------
Average Daily
Rate $91.76 $85.46 7.37% $87.85 $81.31 8.04%
---------------------------------------------
Occupancy 85.80% 88.95% -3.54% 83.01% 88.81% -6.53%
---------------------------------------------
RevPAR $78.73 $76.01 3.58% $72.92 $72.21 0.98%
---------------------------------------------
---------
Number of
hotel
properties 2
---------
Percent of
total rooms 2.2%
---------
Percent of
room
revenue(2) 2.0%
---------
West North
Central (MN,
IA, MO, KS, NE,
SD, ND)
---------------------------------------------
Average Daily
Rate $82.58 $79.83 3.44% $81.85 $81.82 0.04%
---------------------------------------------
Occupancy 88.47% 78.94% 12.07% 86.15% 79.32% 8.61%
---------------------------------------------
RevPAR $73.06 $63.02 15.93% $70.52 $64.90 8.66%
---------------------------------------------
---------
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 $91.78 $88.86 3.29% $92.63 $89.80 3.15%
---------------------------------------------
Occupancy 84.07% 78.66% 6.88% 83.23% 79.83% 4.26%
---------------------------------------------
RevPAR $77.15 $69.89 10.39% $77.10 $71.69 7.55%
---------------------------------------------
---------
Number of
hotel
properties 5
---------
Percent of
total rooms 8.7%
---------
Percent of
room
revenue(2) 8.4%
---------
Mountain (MT,
ID, WY, CO, UT,
NM, AZ, NV)
---------------------------------------------
Average Daily
Rate $97.50 $90.42 7.83% $93.72 $87.84 6.69%
---------------------------------------------
Occupancy 83.56% 77.91% 7.25% 76.82% 72.00% 6.69%
---------------------------------------------
RevPAR $81.47 $70.44 15.66% $72.00 $63.24 13.85%
---------------------------------------------
---------
Number of
hotel
properties 2
---------
Percent of
total rooms 3.6%
---------
Percent of
room
revenue(2) 3.2%
---------
Pacific (WA, OR,
CA, AK, HI)
-----------------------------------------------
Average Daily
Rate $112.52 $106.10 6.05% $110.54 $104.53 5.75%
-----------------------------------------------
Occupancy 83.25% 83.46% -0.25% 79.22% 80.26% -1.30%
-----------------------------------------------
RevPAR $93.67 $88.55 5.78% $87.57 $83.89 4.39%
-----------------------------------------------
---------
Number of
hotel
properties 14
---------
Percent of
total rooms 25.4%
---------
Percent of
room
revenue(2) 27.9%
---------
BY SELECTED MSA
----------------
Atlanta
---------------------------------------------
Average Daily
Rate $96.82 $88.34 9.60% $97.30 $90.97 6.96%
---------------------------------------------
Occupancy 76.86% 79.55% -3.38% 74.61% 74.06% 0.74%
---------------------------------------------
RevPAR $74.41 $70.27 5.89% $72.60 $67.37 7.76%
---------------------------------------------
---------
Number of
hotel
properties 2
---------
Percent of
total rooms 3.5%
---------
Percent of
room
revenue(2) 3.2%
---------
Boston
---------------------------------------------
Average Daily
Rate $94.22 $83.48 12.87% $94.48 $85.01 11.14%
---------------------------------------------
Occupancy 68.40% 65.62% 4.24% 58.62% 54.46% 7.64%
---------------------------------------------
RevPAR $64.45 $54.78 17.65% $55.38 $46.30 19.61%
---------------------------------------------
---------
Number of
hotel
properties 1
---------
Percent of
total rooms 1.2%
---------
Percent of
room
revenue(2) 0.9%
---------
Chicago
---------------------------------------------
Average Daily
Rate $93.41 $89.54 4.32% $93.43 $89.02 4.95%
---------------------------------------------
Occupancy 74.71% 71.06% 5.14% 70.06% 64.47% 8.67%
---------------------------------------------
RevPAR $69.78 $63.63 9.67% $65.46 $57.39 14.06%
---------------------------------------------
---------
Number of
hotel
properties 4
---------
Percent of
total rooms 7.0%
---------
Percent of
room
revenue(2) 5.8%
---------
Dallas/Ft. Worth
---------------------------------------------
Average Daily
Rate $84.12 $81.22 3.57% $83.38 $80.57 3.49%
---------------------------------------------
Occupancy 85.66% 80.56% 6.33% 83.82% 79.89% 4.92%
---------------------------------------------
RevPAR $72.06 $65.43 10.13% $69.89 $64.37 8.58%
---------------------------------------------
---------
Number of
hotel
properties 4
---------
Percent of
total rooms 6.8%
---------
Percent of
room
revenue(2) 6.0%
---------
Denver
---------------------------------------------
Average Daily
Rate $97.50 $90.42 7.83% $93.72 $87.84 6.69%
---------------------------------------------
Occupancy 83.56% 77.91% 7.25% 76.82% 72.00% 6.69%
---------------------------------------------
RevPAR $81.47 $70.44 15.66% $72.00 $63.24 13.85%
---------------------------------------------
---------
Number of
hotel
properties 2
---------
Percent of
total rooms 3.6%
---------
Percent of
room
revenue(2) 3.2%
---------
Detroit
---------------------------------------------
Average Daily
Rate $95.59 $97.54 -2.00% $94.66 $89.58 5.67%
---------------------------------------------
Occupancy 80.92% 80.46% 0.57% 75.22% 78.09% -3.68%
---------------------------------------------
RevPAR $77.35 $78.48 -1.44% $71.20 $69.95 1.79%
---------------------------------------------
---------
Number of
hotel
properties 3
---------
Percent of
total rooms 4.5%
---------
Percent of
room
revenue(2) 4.1%
---------
Hartford
-----------------------------------------------
Average Daily
Rate $114.28 $106.75 7.05% $112.64 $105.45 6.82%
-----------------------------------------------
Occupancy 78.14% 80.23% -2.61% 74.11% 72.33% 2.46%
-----------------------------------------------
RevPAR $89.30 $85.64 4.27% $83.48 $76.27 9.45%
-----------------------------------------------
---------
Number of
hotel
properties 2
---------
Percent of
total rooms 2.4%
---------
Percent of
room
revenue(2) 2.5%
---------
Philadelphia
---------------------------------------------
Average Daily
Rate $104.00 $97.23 6.96% $101.54 $94.81 7.10%
---------------------------------------------
Occupancy 78.64% 80.45% -2.25% 79.44% 77.31% 2.76%
---------------------------------------------
RevPAR $81.79 $78.22 4.56% $80.67 $73.30 10.05%
---------------------------------------------
---------
Number of
hotel
properties 4
---------
Percent of
total rooms 5.8%
---------
Percent of
room
revenue(2) 5.8%
---------
Richmond
---------------------------------------------
Average Daily
Rate $97.72 $92.84 5.26% $95.57 $92.26 3.59%
---------------------------------------------
Occupancy 80.67% 81.14% -0.58% 82.66% 77.09% 7.23%
---------------------------------------------
RevPAR $78.83 $75.33 4.65% $79.00 $71.12 11.08%
---------------------------------------------
---------
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 $110.17 $104.33 5.60% $110.19 $103.75 6.21%
----------------------------------------------
Occupancy 80.54% 79.82% 0.90% 74.88% 76.23% -1.77%
----------------------------------------------
RevPAR $88.73 $83.28 6.54% $82.51 $79.09 4.32%
----------------------------------------------
---------
Number of
hotel
properties 8
---------
Percent of
total rooms 15.0%
---------
Percent of
room
revenue(2) 15.5%
---------
Seattle/Portland
----------------------------------------------
Average Daily
Rate $115.92 $108.64 6.70% $109.09 $105.77 3.14%
----------------------------------------------
Occupancy 87.31% 87.70% -0.44% 85.12% 82.89% 2.69%
----------------------------------------------
RevPAR $101.21 $95.28 6.22% $92.85 $87.67 5.91%
----------------------------------------------
---------
Number of
hotel
properties 4
---------
Percent of
total rooms 6.3%
---------
Percent of
room
revenue(2) 7.4%
---------
Washington,
D.C.(1)
-----------------------------------------------
Average Daily
Rate $134.42 $122.11 10.08% $133.48 $118.43 12.71%
-----------------------------------------------
Occupancy 73.37% 76.06% -3.54% 73.45% 78.22% -6.10%
-----------------------------------------------
RevPAR $98.63 $92.88 6.19% $98.04 $92.64 5.83%
-----------------------------------------------
---------
Number of
hotel
properties 4
---------
Percent of
total rooms 6.7%
---------
Percent of
room
revenue(2) 8.3%
---------
(1) Hotel operating results exclude one hotel property acquired in
Company in May 2005.
(2) Room revenue for YTD September 2005.
(3) Operating Statistics for hotels acquired in 2004 and 2005 include
room revenue for the applicable periods from the previous owner
for those periods prior to our acquisition of the hotels.
*T