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Equity Inns Reports Year End Results: 
Occupancy Rate Lower by 2.7%, 
ADR Increase of 5.6%
 
MEMPHIS, Tenn., Jan. 22, 1999 -  Equity Inns, Inc. (NYSE: ENN) today announced results for the fourth quarter and full year ended December 31, 1998. For the year, funds from operations (FFO) per share grew by 11.8% to $1.71 from $1.53 in 1997, and $0.02 higher than consensus analyst estimates. For the quarter ended December 31, 1998, FFO per share grew by 6.1% to $0.35 from $0.33 in the corresponding period in 1997, and $0.03 higher than consensus analyst estimates.

"Equity Inns enters 1999 a stronger and more diverse enterprise by any measure," said Phillip H. McNeill, Sr., Chairman and CEO. "In 1998, we acquired 16 hotels, expanding into new regions, broadening the diversity of our portfolio of properties. Specifically, we concentrated on acquiring premium extended stay and all-suite hotels with significant barriers to entry, while reducing our exposure to the limited-service industry, selling smaller hotels in secondary and tertiary markets."

"Despite a more difficult operating environment, our financial performance was solid. Our dividend increased 9% to $1.24 for the year, while our payout ratio was reduced to 72.5%. We strengthened the management team and improved the capital structure of Equity Inns, and are committed to building on this progress going forward."

For the year ended December 31, 1998, FFO grew by 42% to $65.0 million on revenues of $106.7 million, compared with FFO of $45.8 million on revenues of $71.8 million for 1997. For the fourth quarter, FFO grew by 18.8% to $13.3 million on revenues of $24.4 million, compared with FFO of $11.2 million on revenues of $19.2 million for the corresponding period in 1997.

On a same-store sales basis (excluding hotels for sale), for the year ended December 31, 1998, revenue per available room (RevPAR) increased 2.8% to $52.36 from $50.95 for 1997. During 1998, average daily rate (ADR) increased 5.6%, rising to $73.95 from $70.01 in 1997. The occupancy rate for the year was lower by 2.7% to 70.8%.

In the fourth quarter of 1998 RevPAR decreased slightly to $45.87 from $46.01 in the same period in 1997, while ADR increased 3.4%, to $72.55 from $70.14 in the fourth quarter of 1997. The occupancy rate decreased 3.6% to 63.2% in the fourth quarter, from 65.6% during the same period in 1997.

"The hotels have been able to increase room rates over the past couple of years and expect to continue increasing rates," said Don Dempsey, Chief Financial Officer. "However, occupancy rates in certain hotels have recently decreased primarily due to major renovations and supply additions in certain areas."

A More Diverse and Enhanced Portfolio

Equity Inns purchased 16 hotels, comprising 2,123 rooms during 1998, including nine AmeriSuites, three Residence Inns and two Homewood Suites. Included in the purchase of the nine AmeriSuites is the chain's largest hotel, a 202-room facility in Las Vegas, Nev.  In addition, the Company completed and opened its first development property, a 125-room Hampton Inn and Suites in the upscale Wolfchase area near Memphis, Tenn.

"Our 1998 acquisitions, coupled with the selected pruning of our portfolio, have increased the Company's extended stay/all suite percentage of revenue to approximately 42% in 1998, from 23% in 1997," noted Howard Silver, President and Chief Operating Officer. "Conversely, revenue derived from the limited service sector decreased to approximately 53% from 69% in 1997. This reflects our strategy to position ourselves as a major player in the extended stay, all suite and premium limited service segment of the hotel industry, where we see tremendous growth opportunities and more barriers of entry for competition. This trend will continue in 1999."

Currently, Equity Inns has plans to acquire three properties in 1999, comprising 787 rooms, including two Homewood Suites and a Hawthorn Suite. Two of the properties are premium extended stay hotels in the Chicago market. The first, a 235-room Homewood Suites, is located in Downtown Chicago, and will be part of a larger entertainment and office complex. The second is a 300-room Hawthorn Suite Hotel located near O'Hare Airport. In addition, the Company expects to divest itself of up to ten hotels in 1999, primarily in limited service sector of the industry.

"Additional opportunities for quality acquisitions will be facilitated by our strategic alliances with Interstate, US Franchise Systems, Prime Hospitality and Promus," continued Mr. Silver. "These alliances have broadened our sources for acquisitions, giving us the right of first refusal on quality properties in excellent locations, making Equity Inns one of the few multi-tenant/lessee hotel REITs."

Improved Capital Structure

During the year, Equity Inns took a number of steps to improve its capital position.  In February, the Company completed the first of two $10 million sales of common stock, selling 641,556 shares of common stock at a price of $15.81 per share.  In June, the Company sold 2.75 million shares of Series A Cumulative Preferred Stock for an aggregate principal amount of approximately $69 million.

"Our goal is the prudent use of equity, preferred equity and debt to fund our development projects and acquisition activity, while seeking to minimize our exposure to variable rate debt," said Mr. Dempsey. "Capital improvements in our existing properties is critical to increasing internal growth," Mr. Dempsey concluded. "During 1998, Equity Inns invested $27 million, or 10% of revenues, in these important investments for our future."

Strengthened Management Team

The Company strengthened both its management team and its Board of Directors in 1998.  Howard Silver, who had served as Chief Financial Officer of the Company since 1994, was named President and Chief Operating Officer in June.  Donald Dempsey, who has over thirty years experience in the hotel industry, was named Chief Financial Officer in July.  Both Mr. Silver and Mr. Dempsey were named to the Board of Directors of Equity Inns in December, along with Raymond E. Schultz, retired chairman and chief executive officer of Promus Hotel Corporation.

Memphis-based Equity Inns, Inc. is a self-advised REIT that focuses on the upscale extended stay, all-suite and premium limited-service segments of the hotel industry. With the settlement of previously announced acquisitions, the Company will own 106 hotels with over 13,700 rooms located in 37 states.

Certain matters within this press release are discussed using forward-looking language as specified in the 1995 Private Securities Litigation Reform Law, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. From time to time, these risks are discussed in the Company's filings with the Securities and Exchange Commission.
 
 

EQUITY INNS, INC.
 HOTEL PERFORMANCE
      SAME STORE (EXCLUDING SALE HOTELS)
RevPAR Change -- 
1998 vs. 1997
4th Quarter
Full Year
By Segment
Limited-service and other  (1.8%)  1.1%
Extended stay  3.9%  7.9%
Total
(0.3%) 
2.8%
By Region
East North Central 1.9%  1.7%
East South Central (0.7)  2.3
Middle Atlantic (0.5)  1.8
Mountain (0.8)  6.0
New England 2.5  5.5
South Atlantic (2.4)  (0.4)
West North Central 0.3  4.7
West South Central (0.2)  6.3
Total
(0.3%) 
2.8%
SOURCE Equity Inns, Inc.
 
 
###
 
Contact:
Howard Silver, 
President and Chief Operating Officer 
of Equity Inns, Inc., 
901-754-7774
 --
 
Also See: Equity Inns Completes Acquisition of Nine AmeriSuites / June 1998
Equity Inns and RFS Hotel Investors Cancel Merger Plans / Sept 1998 

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