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Innkeepers USA Trust Reports 1st Qtr
Net income of $2.1 million
Hotel Operating Statistics

.

RevPAR Increases 8.9 Percent

PALM BEACH, Fla. - May 16, 2005 - 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 first quarter 2005.
 

                                     1Q 2005(a) 1Q 2004(a) % Change(a)
----------------------------------------------------------------------
Net loss applicable to common
 shareholders                          $(828)    $(5,205)      84%
----------------------------------------------------------------------
Diluted loss per share                $(0.02)    $(0.14)       86%
----------------------------------------------------------------------
Funds from operations (FFO)           $6,164     $2,020       205%
----------------------------------------------------------------------
Adjusted FFO                          $8,916     $6,236        43%
----------------------------------------------------------------------
FFO per share                          $0.15      $0.05       200%
----------------------------------------------------------------------
Adjusted FFO per share                 $0.22      $0.16        38%
----------------------------------------------------------------------
Earnings before interest, taxes,
 depreciation and amortization
 (EBITDA)                             $17,348    $16,501       5%
----------------------------------------------------------------------
Adjusted EBITDA                       $18,610    $15,439       21%
----------------------------------------------------------------------

(a)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 on pages 7-8.

FFO and FFO per share for the first quarter 2004 include $4,249,000 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 $1,490,000 and $1,029,000 for the first quarters of 2005 and 2004, respectively.

Operating Results

Revenue per available room (RevPAR) for the company's 65 comparable hotel properties increased 8.9 percent for the first quarter 2005 to $74.20, compared to the first quarter 2004. The increase was led by average daily rate (ADR), which improved 7.2 percent to $102.58. Occupancy rose 1.5 percent to 72.3 percent.

The RevPAR improvement of 8.9 percent for the first quarter 2005 reflects a 2.9 percent increase in RevPAR at the company's eight Silicon Valley, Calif. hotel properties. Excluding Silicon Valley, the remainder of the company's portfolio achieved RevPAR improvement of 10.0 percent for the first quarter 2005.

Adjusted FFO per share and Adjusted EBITDA for the first quarter 2005 were $0.22 and $18.8 million, respectively, compared to $0.16 and $15.4 million for the first quarter 2004 (see pages 6-7 for a further discussion regarding these financial measures). The Adjusted FFO per share of $0.22 increased $0.06 compared to the first quarter 2004 due primarily to the 8.9 percent RevPAR increase. The Adjusted FFO per share of $0.22 exceeded the company's Adjusted FFO per share guidance of $0.20 for the 2005 first quarter. The company's taxable REIT subsidiaries (TRS) incurred a net loss in the first quarter 2004 of $1.7 million with a hotel gross margin of 77 percent and hotel gross operating profit of 42 percent.

The net loss applicable to common shareholders, FFO, Adjusted FFO, EBITDA and Adjusted EBITDA and all per share calculations in the first quarter 2005 include a $430,000 charge to reflect the estimated loss of misappropriation of receipts on hotel accounts receivable at one of the company's 68 hotels. An investigation is continuing with respect to this matter. The company intends to pursue a recovery of any loss under existing insurance policies, although there can be no assurance that such recovery will be obtained.

"The strength and continuing improvement in lodging industry fundamentals are reflected in our strong first quarter operating results, which exceeded our 6 percent RevPAR guidance for the period," said Jeffrey H. Fisher, Innkeepers chief executive officer and president. "Business travel demand remains buoyant and continues to positively impact our hotels, which are located primarily in major business centers. ADR was the main driver for the second quarter in a row.

"The positive momentum of 2004 carried into the first quarter, and we are confident that 2005 will be a strong recovery year," Fisher added.

Acquisitions

"In addition to strong internal growth, we continued to execute our external growth strategy through accretive acquisitions, closing on two properties during the quarter. The two hotels are in high-demand, high-barriers-to-new-competition markets in the Northeast, where we continue to expand our presence.

"The Columbia, Md. Hampton Inn, which we purchased in January, is located midway between Baltimore and Washington, D.C., close to BWI airport and proximate to a 584-acre corporate business park.

"In January we acquired a hotel in Montvale in northern New Jersey, which we are converting to a Courtyard by Marriott following a $5 million renovation. The property is closed during the refurbishment, which is under way, and we expect to reopen in early 2006."

Repositionings

Fisher noted that two other hotels remain closed while they undergo renovations, rebranding and repositioning. "Our Louisville, Ky. hotel is in the final stages of its makeover and will re-open as a Hampton Inn later this month. In Atlantic City, we have begun a major refurbishment of a hotel we bought just off the Boardwalk and are converting to a Courtyard. We anticipate the property re-opening at the end of this year.

New Development

"We are moving forward with plans to build a 157-suite Embassy Suites on a site we purchased in Valencia, Calif. last year, 30 miles north of Los Angeles in the Santa Clarita Valley," he added. "Valencia is surrounded by 22 million square feet of office space housing 1,400 companies and 44,500 employees, and also is proximate to a number of popular leisure demand generators, including Six Flags Magic Mountain and six championship golf courses. This is our first Embassy Suites hotel, a Hilton brand, and we are on schedule to open the property in 2006.

"Last year we acquired four properties, and we expect to continue to grow in 2005 by accretively adding hotels to our portfolio. We have the flexibility and the capacity to aggressively pursue additional opportunities."

Dispositions

Fisher pointed out that the company continued to selectively prune and upgrade its portfolio, selling three hotels during the first quarter--the Lake Oswego, Ore. Residence Inn, the Vancouver, Wash. Residence Inn, and the Holiday Inn Express, Lexington, Mass. Aggregate net proceeds of approximately $21 million were used to pay down debt. "We do not anticipate any further dispositions this year."

2005 Guidance

David Bulger, executive vice president, chief financial officer and treasurer, said, "Even though our first quarter 2005 RevPAR and Adjusted FFO per share exceeded the guidance we provided in February, we believe it is prudent, considering that we are in the early stages of the lodging industry recovery, to maintain our previous 2005 forecast of 6.0 percent RevPAR improvement and previous earnings guidance until May and June operating results are in. We anticipate providing updated guidance in our second quarter earnings report in early August."

The company invested $5 million in select capital projects at its hotel properties in the first quarter (excluding acquisitions, developments and in-progress rebranding projects). "Our properties are in excellent physical condition and very competitive in their respective markets," Bulger said. "We have budgeted a total of $17 million for capital projects this year."

Capital Structure

In February, the company completed an offering of 4.4 million common shares. Net proceeds of approximately $59.6 million were used to pay down a portion of the company's outstanding balance on its unsecured line of credit.

Bulger pointed out that the company continues to maintain one of the industry's strongest capital structures and lowest-levered balance sheets. "Our capital structure is probably at the strongest point in our 10-year history. Our debt to investment in hotels at cost ratio was 25 percent at March 31, 2005, with 100 percent of our debt due in 2007 and beyond. Our weighted average interest rate on our total debt is 7.3 percent, and 83 percent of our total debt is at fixed rates. "We have $30 million outstanding on our $135 million revolving unsecured line of credit, which matures in July 2007."

Dividend

The company recently announced an increase in its quarterly common share dividend to $0.10 from $0.06, beginning in the second quarter 2005. The company's board of trustees will evaluate an increase to the $0.10 quarterly common share dividend in the third quarter 2005.
 

 

INNKEEPERS USA TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share data)

                                                 Three Months Ended
                                                      March 31,
                                                  2005        2004
                                               ----------- -----------
Revenue:
Hotel Operating
---------------                                -----------------------
  Rooms                                           $53,031     $34,447
                                               -----------------------
  Food and beverage                                   299          77
                                               -----------------------
  Telephone                                           392         414
                                               -----------------------
  Other                                             1,271         654
                                               -----------------------
Corporate
---------                                      -----------------------
  Percentage lease(1)                                   0       5,073
                                               -----------------------
  Other                                               106          89
                                               -----------------------
    Total revenue                                 $55,099     $40,754
                                               -----------------------
Expenses:
                                               -----------------------
Hotel Operating
---------------                                -----------------------
  Rooms                                           $11,200      $7,796
                                               -----------------------
  Food and beverage                                   236          77
                                               -----------------------
  Telephone                                           683         448
                                               -----------------------
  Other                                               595         297
                                               -----------------------
  General and administrative                        5,690       3,417
                                               -----------------------
  Franchise and marketing fees                      3,773       2,569
                                               -----------------------
  Amortization of deferred franchise
   conversion                                         363         226
                                               -----------------------
  Advertising and promotions                        1,688       1,160
                                               -----------------------
  Utilities                                         2,961       1,670
                                               -----------------------
  Repairs and maintenance                           2,424       1,944
                                               -----------------------
  Management fees                                   1,792       1,146
                                               -----------------------
  Amortization of deferred lease acquisition          131         120
                                               -----------------------
  Insurance                                           387         255
                                               -----------------------
Corporate
---------                                      -----------------------
  Depreciation                                      8,502       7,811
                                               -----------------------
  Amortization of franchise fees                       17          10
                                               -----------------------
  Ground rent                                         129         127
                                               -----------------------
  Interest                                          4,908       4,494
                                               -----------------------
  Amortization of loan origination fees               210         269
                                               -----------------------
  Property taxes and insurance                      2,893       2,778
                                               -----------------------
  General and administrative                        2,038       1,631
                                               -----------------------
  Amortization of unearned compensation                97         227
                                               -----------------------
  Other charges(2)                                  2,698         371
                                               -----------------------
     Total expenses                               $53,415     $38,843
                                               -----------------------

                                               -----------------------
Income before minority interest                    $1,684      $1,911
                                               -----------------------
Minority interest, common                              20         157
                                               -----------------------
Minority interest, preferred                       (1,068)     (1,068)
                                               -----------------------
Income from continuing operations                    $636      $1,000
                                               -----------------------

                                               -----------------------
Discontinued operations(3)                          1,436         833
                                               -----------------------
Net income                                         $2,072      $1,833
                                               -----------------------

                                               -----------------------
Series A preferred share issuance costs(4)              0      (4,249)
                                               -----------------------
Preferred share dividends                          (2,900)     (2,789)
                                               -----------------------
Net loss applicable to common shareholders           $828     ($5,205)
                                               -----------------------

                                               -----------------------
Diluted loss per share                             ($0.02)     ($0.14)
                                               -----------------------
Weighted average number of common shares
                                               -----------------------
                                               39,902,804  37,430,579
                                               -----------------------

(1) Percentage lease revenue was recognized in the first quarter 2004
    prior to the completion of the transaction under which the
    company's TRS acquired the remaining hotel leases held by
    Innkeepers Hospitality Management, Inc. (IHM).

(2) Other charges for the first quarter 2005 include $2,698,000 of
    prepaid interest, loan origination fees and other costs associated
    with the extinguishment of debt relating to the partial defeasance
    of loans encumbered by three hotels that were sold during the
    first quarter 2005. Other charges for the first quarter 2004
    include $250,000 paid to IHM relating to reimbursement of expenses
    incurred for the transition of 17 Marriott International, Inc.
    managed hotels to IHM.

(3) Discontinued operations for the first quarter 2005 include three
    hotels sold in the first quarter 2005. The operations of the three
    hotels have been recognized and categorized as discontinued
    operations. Included in discontinued operations in the first
    quarter 2005 is a $1,490,000 gain on sale relating to the three
    hotels. Discontinued operations for the first quarter 2004 in
    addition to the three hotels noted above, include two additional
    hotels that were sold in January 2004 and July 2004. The
    operations of the five hotels have been recognized and categorized
    as discontinued operations. Included in discontinued operations in
    the first quarter 2004 is a $1,029,000 gain on sale relating to
    the hotel sold in January 2004.

(4) Issuance costs pertaining to Series A Cumulative Convertible
    Preferred shares that were redeemed in January 2004.
 
 

                         INNKEEPERS USA TRUST
CALCULATION OF FFO, EBITDA AND RECONCILIATION TO NET LOSS (UNAUDITED)
           (in thousands, except share and per share data)

                                                 Three Months Ended
                                                      March 31,
                                                  2005        2004
                                               -----------------------

CALCULATION OF FFO
                                               -----------------------
  Net loss applicable to common shareholders        ($828)    ($5,205)
                                               -----------------------
  Depreciation                                      8,502       7,811
                                               -----------------------
  Depreciation included in discontinued
   operations                                           0         600
                                               -----------------------
  Gain on sale of hotels included in
   discontinued operations                         (1,490)     (1,029)
                                               -----------------------
  Minority interest, common                           (20)       (157)
                                               -----------------------
FFO                                                $6,164      $2,020
                                               -----------------------
Weighted average number of common              41,033,267  38,651,749
  shares and common share equivalents          -----------------------

                                               -----------------------
FFO per share                                       $0.15       $0.05
                                               -----------------------

                                               -----------------------
FFO                                                $6,164      $2,020
                                               -----------------------
  Series A preferred share issuance costs               0       4,249
                                               -----------------------
  Other charges                                     2,698         371
                                               -----------------------
  Discontinued operations                              54        (404)
                                               -----------------------
Adjusted FFO                                       $8,916      $6,236
                                               -----------------------
Adjusted FFO per share                              $0.22       $0.16
                                               -----------------------
 
 
 

                                                 Three Months Ended
                                                      March 31,
                                                  2005        2004
                                               -----------------------

CALCULATION OF EBITDA
                                               -----------------------
   Net loss applicable to common shareholders       ($828)    ($5,205)
                                               -----------------------
   Interest                                         4,908       4,494
                                               -----------------------
   Depreciation and amortization                    9,320       8,663
                                               -----------------------
   Depreciation included in discontinued
    operations                                          0         600
                                               -----------------------
   Minority interest, common                          (20)       (157)
                                               -----------------------
   Minority interest, preferred                     1,068       1,068
                                               -----------------------
   Series A preferred share issuance costs              0       4,249
                                               -----------------------
   Preferred share dividends                        2,900       2,789
                                               -----------------------
EBITDA                                            $17,348     $16,501
                                               -----------------------
   Other charges                                    2,698         371
                                               -----------------------
   Discontinued operations                             54        (404)
                                               -----------------------
   Gain on sale of hotels included in
    discontinued operations                        (1,490)     (1,029)
                                               -----------------------
Adjusted EBITDA                                   $18,610     $15,439
                                               -----------------------
 
 

                         INNKEEPERS USA TRUST
               CONSOLIDATED BALANCE SHEETS (UNAUDITED)
           (in thousands, except share and per share data)

                                               March 31,  December 31,
                                                 2005        2004
                                               -----------------------

ASSETS
Investment in hotels:
                                               -----------------------
     Land and improvements                     $136,228      $127,392
                                               -----------------------
     Building and improvements                  705,849       687,754
                                               -----------------------
     Furniture and equipment                    104,278       101,909
                                               -----------------------
     Renovations in process                       6,597         2,794
                                               -----------------------
     Hotels under development                     4,029         3,864
                                               -----------------------
     Hotels held for sale                             0        19,299
                                               -----------------------
                                                956,981       943,012
                                               -----------------------
     Accumulated depreciation                  (216,355)     (207,853)
                                               -----------------------
          Net investment in hotels              740,626       735,159
                                               -----------------------

                                               -----------------------
Cash and cash equivalents                        28,408        22,837
                                               -----------------------
Restricted cash and cash equivalents              9,662        10,781
                                               -----------------------
Accounts receivable                               7,078         4,577
                                               -----------------------
Prepaid and other                                 2,075         2,539
                                               -----------------------
Deferred and other                               18,301        20,099
                                               -----------------------
         Total assets                          $806,150      $795,992
                                               -----------------------

                                               -----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
                                               -----------------------
Debt                                           $239,906      $286,865
                                               -----------------------
Accounts payable and accrued expenses            12,718        12,663
                                               -----------------------
Payable to manager                                  429           209
                                               -----------------------
Franchise conversion fee obligations             11,135        10,825
                                               -----------------------
Distributions payable                             5,713         5,450
                                               -----------------------
Minority interest in Partnership                 48,409        51,088
                                               -----------------------
          Total liabilities                     318,310       367,100
                                               -----------------------

                                               -----------------------
Shareholders' equity:
                                               -----------------------
     Preferred shares, $0.01 par value,         145,000       145,000
      20,000,000 shares authorized, 5,800,000  -----------------------
      shares issued and outstanding
                                               -----------------------

                                               -----------------------
     Common shares, $0.01 par value,                428           380
      100,000,000 shares authorized,           -----------------------
      42,774,412 and 37,966,756 issued and
      outstanding, respectively                -----------------------

                                               -----------------------
     Additional paid-in capital                 458,828       396,631
                                               -----------------------
     Unearned compensation                         (351)         (448)
                                               -----------------------
     Distributions in excess of earnings       (116,065)     (112,671)
                                               -----------------------
          Total shareholders' equity            487,840       428,892
                                               -----------------------
          Total liabilities and shareholders'
           equity                              $806,150      $795,992
                                               -----------------------
 
 

                         INNKEEPERS USA TRUST
                     DEBT COMPOSITION (UNAUDITED)
                         As of March 31, 2005
                  (outstanding balance in thousands)

                                      Stated
                         Outstanding Interest   Maturity    Encumbered
          DEBT             Balance     Rate       Date      Properties
------------------------------------ -------- ------------- ----------

                         ----------- -------- ------------- ----------
Unsecured Line of
 Credit(1)                  $30,000     5.27%   July 2007           -
                         ----------- -------- ------------- ----------
Industrial Revenue
 Bonds(1)                   $10,000     3.30% December 2014         -
                         ----------- -------- ------------- ----------
Term Loan #1                $24,000     8.17% October 2007          8
                         ----------- -------- ------------- ----------
Term Loan #2                $36,000     8.15%  March 2009           8
                         ----------- -------- ------------- ----------
Term Loan #3                $29,000     7.02%  April 2010           7
                         ----------- -------- ------------- ----------
Term Loan #4                $46,000     7.16% October 2009          6
                         ----------- -------- ------------- ----------
Term Loan #5                $50,000     7.75% January 2011          6
                         ----------- -------- ------------- ----------
Mortgage                    $13,000    10.35%   June 2010           1
                         ----------- -------- ------------- ----------
Adjustment(2)                $2,000        -             -          -
                         ----------- -------- ------------- ----------
TOTAL                      $240,000   7.3%(3)  5 years(4)          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) Adjustment to record $13 million mortgage at a fair market
    interest rate of 7% (the stated interest rate is 10.35%)

(3) Weighted average calculated using the stated interest rate

(4) Weighted average maturity
 
 

                         INNKEEPERS USA TRUST
           CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                            (in thousands)

                                                   Three Months Ended
                                                        March 31,
                                                     2005      2004
                                                   -------------------

Cash flows from operating activities:
                                                   -------------------
   Net income                                        $2,072    $1,833
                                                   -------------------
   Adjustments to reconcile net income to net cash
                                                   -------------------
   provided by operating activities:
                                                   -------------------
     Depreciation and amortization                    9,320     9,266
                                                   -------------------
     Interest on franchise conversion fee
      obligations                                       254         0
                                                   -------------------
     Other charges                                      274         0
                                                   -------------------
     Minority interests                               1,048       911
                                                   -------------------
     Gain on sale of hotels included in
      discontinued operations                        (1,490)   (1,029)
                                                   -------------------
     Changes in operating assets and liabilities:
                                                   -------------------
       Accounts receivable (excluding allowance)     (2,962)    2,398
                                                   -------------------
       Allowance for doubtful accounts                  461         0
                                                   -------------------
       Prepaid and other                                464       402
                                                   -------------------
       Accounts payable and accrued expenses            (55)    4,319
                                                   -------------------
       Payable to manager                               220      (452)
                                                   -------------------
     Net cash provided by operating activities       $9,716   $17,648
                                                   -------------------

                                                   -------------------
Cash flows from investing activities:
                                                   -------------------
  Investment in hotels                             ($32,544)  ($6,964)
                                                   -------------------
  Proceeds from property insurance                      782         0
                                                   -------------------
  Proceeds from sale of hotels                       20,789     4,028
                                                   -------------------
  Net withdrawals (deposits) into restricted cash
   and cash equivalents                               1,119      (323)
                                                   -------------------
  Lease acquisitions                                      0    (1,336)
                                                   -------------------
  Payment of franchise fees                             (45)        0
                                                   -------------------
  Repayment of advances                                 150         0
                                                   -------------------
    Net cash used in investing activities           ($9,749)  ($4,595)
                                                   -------------------

                                                   -------------------
Cash flows from financing activities:
                                                   -------------------
  Proceeds from debt issuance                       $46,000        $0
                                                   -------------------
  Payments on debt                                  (92,959)   (1,202)
                                                   -------------------
  Payments on franchise conversion fee obligations     (686)      (91)
                                                   -------------------
  Distributions paid to unit holders                 (1,135)   (1,103)
                                                   -------------------
  Distributions paid to shareholders                 (5,178)   (3,400)
                                                   -------------------
  Redemption of shares and units                          0  (115,730)
                                                   -------------------
  Proceeds from issuance of common and preferred
   shares                                            59,585   140,300
                                                   -------------------
  Loan origination fees and costs paid                  (23)      (34)
                                                   -------------------
       Net cash provided by financing activities     $5,604   $18,740
                                                   -------------------

                                                   -------------------
Net increase in cash and cash equivalents            $5,571   $31,793
                                                   -------------------
Cash and cash equivalents at beginning of period     22,837     9,586
                                                   -------------------
Cash and cash equivalents at end of period          $28,408   $41,379
                                                   -------------------
Supplemental cash flow information:
                                                   -------------------
     Interest paid                                   $4,818    $4,331
                                                   -------------------
 
 

                        INNKEEPERS USA TRUST
                       OTHER DATA (UNAUDITED)
                 (in thousands, except shares data)

                                               March 31,   March 31,
                                                 2005        2004
                                              -----------------------
CAPITALIZATION
                                              -----------------------
     Common share market capitalization         $552,000    $343,000
                                              -----------------------
     Market capitalization                      $996,000    $766,000
                                              -----------------------
     Common share closing price                   $12.91       $9.14
                                              -----------------------
     Common share dividend(1)                      $0.21       $0.12
                                              -----------------------
     Common share dividend yield(1)                  1.6%        1.3%
                                              -----------------------
     Preferred share closing price                $25.10      $25.50
                                              -----------------------
     Preferred share dividend(2)                   $2.00       $2.00
                                              -----------------------
     Preferred share dividend yield(2)               8.0%        7.8%
                                              -----------------------

DEBT COVERAGE
                                              -----------------------
     Debt weighted average interest rate             7.3%        7.5%
                                              -----------------------
     Debt to investment in hotel properties           25%         27%
                                              -----------------------
     Debt and preferred shares to investment
      in hotel properties                             40%         44%
                                              -----------------------
     Debt to market capitalization                    24%         30%
                                              -----------------------
     Debt and preferred shares to market
      capitalization                                  39%         49%
                                              -----------------------

LIQUIDITY/FLEXIBILITY
                                              -----------------------
     Debt due 2004                                    --      $4,000
                                              -----------------------
     Debt due 2005                                $4,000      $6,000
                                              -----------------------
     Debt due 2006                                $5,000      $5,000
                                              -----------------------
     Debt due 2007 and thereafter               $231,000    $216,000
                                              -----------------------

                                              -----------------------
     Unencumbered hotel assets(3)                     47%         41%
                                              -----------------------
     Unsecured Line of Credit outstanding
      balance                                    $30,000          $0
                                              -----------------------
     Unsecured Line of Credit available
      balance(4)                                 $95,000    $125,000
                                              -----------------------

SHARES AND UNITS OUTSTANDING
                                              -----------------------
     Common Shares                            42,774,412  37,573,076
                                              -----------------------
     Common Partnership Units                    709,400   1,167,236
                                              -----------------------
     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 March 31, 2005 and March 31, 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 a $10 million letter of credit.
 
 

INNKEEPERS USA TRUST
                  HOTEL OPERATING RESULTS (UNAUDITED)

                                               Three Months Ended
                                               March 31          %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

PORTFOLIO(1)
------------                               ---------------------------
   Average Daily Rate                      $102.58   $95.70      7.19%
                                           ---------------------------
   Occupancy                                 72.33%   71.23%     1.54%
                                           ---------------------------
   RevPAR                                   $74.20   $68.17      8.85%
                                           ---------------------------

                            --------------
   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                      $101.81   $96.17      5.86%
                                           ---------------------------
   Occupancy                                 75.14%   74.01%     1.53%
                                           ---------------------------
   RevPAR                                   $76.50   $71.18      7.47%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         49
                            --------------
   Percent of total rooms            74.7%
                            --------------
   Percent of room
    revenue(2)                       77.1%
                            --------------

Upscale(1)
                                           ---------------------------
   Average Daily Rate                      $119.35  $102.95     15.93%
                                           ---------------------------
   Occupancy                                 68.96%   77.70%   -11.25%
                                           ---------------------------
   RevPAR                                   $82.31   $79.99      2.90%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          3
                            --------------
   Percent of total rooms             5.8%
                            --------------
   Percent of room
    revenue(2)                        6.4%
                            --------------

Mid Price(1)
                                           ---------------------------
   Average Daily Rate                      $100.70   $90.60     11.15%
                                           ---------------------------
   Occupancy                                 62.54%   58.66%     6.61%
                                           ---------------------------
   RevPAR                                   $62.97   $53.15     18.48%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         13
                            --------------
   Percent of total rooms            19.5%
                            --------------
   Percent of room
    revenue(2)                       16.5%
                            --------------

BY FRANCHISE AFFILIATION
------------------------
Residence Inn
                                           ---------------------------
   Average Daily Rate                      $102.20   $96.20      6.24%
                                           ---------------------------
   Occupancy                                 74.23%   72.57%     2.29%
                                           ---------------------------
   RevPAR                                   $75.86   $69.81      8.67%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         42
                            --------------
   Percent of total rooms            63.5%
                            --------------
   Percent of room
    revenue(2)                       64.9%
                            --------------
 

                                               Three Months Ended
                                               March 31,         %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

Summerfield Suites
                                           ---------------------------
   Average Daily Rate                       $94.73   $90.56      4.60%
                                           ---------------------------
   Occupancy                                 80.43%   82.05%    -1.97%
                                           ---------------------------
   RevPAR                                   $76.19   $74.31      2.53%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          6
                            --------------
   Percent of total rooms             9.4%
                            --------------
   Percent of room
    revenue(2)                        9.6%
                            --------------

Hampton Inn(1)
                                           ---------------------------
   Average Daily Rate                      $101.57   $91.20     11.37%
                                           ---------------------------
   Occupancy                                 62.47%   58.30%     7.15%
                                           ---------------------------
   RevPAR                                   $63.45   $53.18     19.31%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         12
                            --------------
   Percent of total rooms            18.3%
                            --------------
   Percent of room
    revenue(2)                       15.6%
                            --------------

BY MANAGEMENT COMPANY
---------------------
Innkeepers Hospitality Management(1)
                                           ---------------------------
   Average Daily Rate                      $102.76   $96.11      6.92%
                                           ---------------------------
   Occupancy                                 72.83%   71.09%     2.45%
                                           ---------------------------
   RevPAR                                   $74.85   $68.33      9.54%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         64
                            --------------
   Percent of total rooms            97.3%
                            --------------
   Percent of room
    revenue(2)                       98.1%
                            --------------

Third Party Managed
                                           ---------------------------
   Average Daily Rate                       $94.08   $82.01     14.72%
                                           ---------------------------
   Occupancy                                 54.28%   76.36%   -28.92%
                                           ---------------------------
   RevPAR                                   $51.07   $62.62    -18.44%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          1
                            --------------
   Percent of total rooms             2.7%
                            --------------
   Percent of room
    revenue(2)                        1.9%
                            --------------
 
 
 

                                               Three Months Ended
                                               March 31,         %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

BY GEOGRAPHIC REGION
--------------------
New England (ME, NH, VT, MA,
 CT, RI)
                                           ---------------------------
   Average Daily Rate                       $99.18   $95.35      4.02%
                                           ---------------------------
   Occupancy                                 66.23%   59.01%    12.24%
                                           ---------------------------
   RevPAR                                   $65.68   $56.27     16.72%
                                           ---------------------------

                            --------------
   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                      $102.96   $98.10      4.95%
                                           ---------------------------
   Occupancy                                 70.53%   67.17%     5.00%
                                           ---------------------------
   RevPAR                                   $72.61   $65.89     10.20%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         10
                            --------------
   Percent of total rooms            14.1%
                            --------------
   Percent of room
    revenue(2)                       13.9%
                            --------------

South Atlantic (DE, MD, WV,
 DC, VA, NC, SC, GA, FL)
                                           ---------------------------
   Average Daily Rate                      $111.60   $98.66     13.12%
                                           ---------------------------
   Occupancy                                 74.90%   74.73%     0.23%
                                           ---------------------------
   RevPAR                                   $83.59   $73.73     13.37%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         15
                            --------------
   Percent of total rooms            23.9%
                            --------------
   Percent of room
    revenue(2)                       26.9%
                            --------------

East North Central (OH, MI,
 IN, IL, WI)
                                           ---------------------------
   Average Daily Rate                       $90.16   $84.88      6.22%
                                           ---------------------------
   Occupancy                                 66.22%   62.08%     6.67%
                                           ---------------------------
   RevPAR                                   $59.71   $52.70     13.30%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         12
                            --------------
   Percent of total rooms            16.7%
                            --------------
   Percent of room
    revenue(2)                       13.4%
                            --------------

East South Central(1) (KY,
 TN, AL, MS)
                                           ---------------------------
   Average Daily Rate                       $78.82   $73.74      6.89%
                                           ---------------------------
   Occupancy                                 78.09%   87.33%   -10.58%
                                           ---------------------------
   RevPAR                                   $61.55   $64.39     -4.41%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          2
                            --------------
   Percent of total rooms             2.2%
                            --------------
   Percent of room
    revenue(2)                        1.8%
                            --------------
 
 
 

                                               Three Months Ended
                                               March 31,         %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

West North Central (MN, IA,
 MO, KS, NE, SD, ND)
                                           ---------------------------
   Average Daily Rate                       $79.02   $81.50     -3.04%
                                           ---------------------------
   Occupancy                                 83.73%   72.58%    15.36%
                                           ---------------------------
   RevPAR                                   $66.17   $59.15     11.87%
                                           ---------------------------

                            --------------
   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                       $92.10   $89.52      2.88%
                                           ---------------------------
   Occupancy                                 79.03%   78.07%     1.23%
                                           ---------------------------
   RevPAR                                   $72.78   $69.89      4.14%
                                           ---------------------------

                            --------------
   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                       $90.54   $86.45      4.73%
                                           ---------------------------
   Occupancy                                 65.65%   65.58%     0.11%
                                           ---------------------------
   RevPAR                                   $59.44   $56.69      4.85%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          2
                            --------------
   Percent of total rooms             3.6%
                            --------------
   Percent of room
    revenue(2)                        2.9%
                            --------------

Pacific (WA, OR, CA, AK, HI)
                                           ---------------------------
   Average Daily Rate                      $110.07  $103.62      6.22%
                                           ---------------------------
   Occupancy                                 73.83%   75.47%    -2.17%
                                           ---------------------------
   RevPAR                                   $81.26   $78.21      3.90%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                         14
                            --------------
   Percent of total rooms            25.4%
                            --------------
   Percent of room
    revenue(2)                       27.8%
                            --------------

BY SELECTED MSA
---------------
Atlanta
                                           ---------------------------
   Average Daily Rate                       $99.31   $95.76      3.71%
                                           ---------------------------
   Occupancy                                 74.09%   67.71%     9.42%
                                           ---------------------------
   RevPAR                                   $73.57   $64.84     13.46%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          2
                            --------------
   Percent of total rooms             3.5%
                            --------------
   Percent of room
    revenue(2)                        3.5%
                            --------------
 
 

                                               Three Months Ended
                                               March 31,         %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

Chicago
                                           ---------------------------
   Average Daily Rate                       $91.36   $88.36      3.40%
                                           ---------------------------
   Occupancy                                 61.78%   53.88%    14.66%
                                           ---------------------------
   RevPAR                                   $56.45   $47.60     18.59%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          4
                            --------------
   Percent of total rooms             7.0%
                            --------------
   Percent of room
    revenue(2)                        5.4%
                            --------------

Dallas/Ft. Worth
                                           ---------------------------
   Average Daily Rate                       $82.93   $79.62      4.16%
                                           ---------------------------
   Occupancy                                 78.86%   76.79%     2.70%
                                           ---------------------------
   RevPAR                                   $65.39   $61.13      6.97%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          4
                            --------------
   Percent of total rooms             6.8%
                            --------------
   Percent of room
    revenue(2)                        6.0%
                            --------------

Denver
                                           ---------------------------
   Average Daily Rate                       $90.54   $86.45      4.73%
                                           ---------------------------
   Occupancy                                 65.65%   65.58%     0.11%
                                           ---------------------------
   RevPAR                                   $59.44   $56.69      4.85%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          2
                            --------------
   Percent of total rooms             3.6%
                            --------------
   Percent of room
    revenue(2)                        2.9%
                            --------------

Detroit
                                           ---------------------------
   Average Daily Rate                       $95.57   $86.36     10.66%
                                           ---------------------------
   Occupancy                                 67.83%   71.63%    -5.31%
                                           ---------------------------
   RevPAR                                   $64.82   $61.86      4.78%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          3
                            --------------
   Percent of total rooms             4.5%
                            --------------
   Percent of room
    revenue(2)                        4.0%
                            --------------
 
 
 

                                               Three Months Ended
                                               March 31,         %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

Hartford
                                           ---------------------------
   Average Daily Rate                      $107.58  $103.29      4.15%
                                           ---------------------------
   Occupancy                                 69.70%   61.78%    12.82%
                                           ---------------------------
   RevPAR                                   $74.99   $63.81     17.52%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          2
                            --------------
   Percent of total rooms             2.4%
                            --------------
   Percent of room
    revenue(2)                        2.4%
                            --------------

Philadelphia
                                           ---------------------------
   Average Daily Rate                       $96.69   $92.62      4.39%
                                           ---------------------------
   Occupancy                                 77.81%   72.42%     7.44%
                                           ---------------------------
   RevPAR                                   $75.24   $67.08     12.16%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          4
                            --------------
   Percent of total rooms             5.8%
                            --------------
   Percent of room
    revenue(2)                        5.8%
                            --------------

Richmond
                                           ---------------------------
   Average Daily Rate                       $92.96   $92.10      0.93%
                                           ---------------------------
   Occupancy                                 84.00%   69.34%    21.14%
                                           ---------------------------
   RevPAR                                   $78.09   $63.86     22.28%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          2
                            --------------
   Percent of total rooms             2.3%
                            --------------
   Percent of room
    revenue(2)                        2.4%
                            --------------

San Francisco/San
 Jose/Oakland
                                           ---------------------------
   Average Daily Rate                      $111.50  $103.87      7.35%
                                           ---------------------------
   Occupancy                                 67.13%   70.02%    -4.13%
                                           ---------------------------
   RevPAR                                   $74.85   $72.74      2.90%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          8
                            --------------
   Percent of total rooms            15.0%
                            --------------
   Percent of room
    revenue(2)                       15.1%
                            --------------

Seattle/Portland
                                           ---------------------------
   Average Daily Rate                      $103.73  $103.79     -0.06%
                                           ---------------------------
   Occupancy                                 82.72%   78.07%     5.96%
                                           ---------------------------
   RevPAR                                   $85.81   $81.02      5.91%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          4
                            --------------
   Percent of total rooms             6.3%
                            --------------
   Percent of room
    revenue(2)                        7.3%
                            --------------
 
 
 

                                               Three Months Ended
                                               March 31,         %
                            March 31, 2005  2005     2004    Inc (dec)
                            ------------------------------------------

Washington, D.C.
                                           ---------------------------
   Average Daily Rate                      $131.27  $112.64     16.54%
                                           ---------------------------
   Occupancy                                 65.99%   72.99%    -9.59%
                                           ---------------------------
   RevPAR                                   $86.62   $82.22      5.35%
                                           ---------------------------

                            --------------
   Number of hotel
    properties                          4
                            --------------
   Percent of total rooms             6.7%
                            --------------
   Percent of room
    revenue(2)                        7.9%
                            --------------
 

(1) Hotel operating results exclude one hotel acquired in June 2003
    which will be converted to a Courtyard hotel, one hotel acquired
    in June 2004 which will be converted to a Hampton Inn hotel and
    one hotel acquired in January 2005 which will be converted to a
    Courtyard hotel.

(2) Room revenue for the first quarter 2005.
 

Innkeepers USA Trust is a hotel real estate investment trust (REIT) and a leading owner of upscale extended-stay hotels properties throughout the United States. The company owns 68 hotels with a total of 8,521 suites or rooms in 20 states and Washington, D.C., and focuses on acquiring and/or developing upscale and upscale extended-stay hotels with premium brands and the rebranding and repositioning of other hotel properties. 

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 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 is 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 is reconciled to net income (loss) applicable to common shareholders determined in accordance with GAAP in the accompanying schedules.

Cautionary statements set forth in reports filed by the company from time to time with the SEC discuss important factors impacting, or that could impact, the company and its results or forecasted results.

Contact:

Innkeepers USA Trust
David Bulger, 561-227-1302
www.innkeepersusa.com

Also See: The 146-suite Homewood Suites on San Antonio’s Riverwalk Acquired by Innkeepers USA Trust for $21 million / May 2004
Innkeepers Acquires Quality Inn Beach Block Hotel in Atlantic City, N.J. for $8.6 million; Will Convert to Courtyard by Marriott / June 2003


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