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REIT Equity Inns Maintains Stable Dividend Since 9/11,
 May Acquire a Dozen Hotels to Existing Portfolio of 92
By David Flaum, The Commercial Appeal, Memphis, Tenn.
Knight Ridder/Tribune Business News

May 14, 2004 - Germantown-based Equity Inns owns 92 hotels, and the real estate investment trust plans to add a dozen or more to its portfolio by year-end.

Equity Inns is buying properties and looking to add others, executives told a handful of shareholders and officers at the company's annual meeting Thursday.

"We think we've turned the corner in the hotel business," said Phillip McNeill Sr., chairman and chief executive officer. "That's nice to see since we've been there (in a weak market) since 1998."

Of the nine hotels that Equity Inns announced in October would be added, five have been purchased, O'Neill said. The other four deals will be completed by the end of June.

The company sold off three older hotels -- average age 17 years -- that didn't meet company standards, McNeill said.

Equity Inns executives are looking at 18 hotels with a total of 2,000 rooms and average age of five years as purchase candidates.

"We hope to buy another 10 or 15 if conditions warrant," McNeill said.

"It doesn't surprise me," said Napoleon Overton, analyst at Morgan Keegan & Co. in Memphis. Whether that buying is a good move depends on what the company buys, where the hotels are and what the firm pays for them, he said.

The company will also maintain its dividend -- 13 cents a share this quarter -- something many of its competitors haven't been able to do during the past two years.

Equity Inns gets high marks for being one of the few hotel REITs to maintain a stable dividend since 9/11.

He also said moves to cull the older hotels with outside corridors in favor of newer Marriotts was a positive development.

"The outlook for the lodging industry over the next several years is relatively bright, barring another disastrous terrorist attack on U.S. soil," Overton said. That should help Equity Inns, he said.

Overton rates the stock as likely to perform about as well as the Standard & Poor's 500 Index during the next six months, but he would consider raising that to an overperformer if the share price sags.

Shareholders re-elected Mc|Neill, Howard Silver, president and chief operating officer, and Raymond Schultz, former chairman, president and chief executive officer of the old Promus Hotel Corp. of Memphis, to three-year terms on the board of directors.

Robert Bowen, a retired partner in Arthur Andersen LLP, a national certified public accounting firm, won a two-year board term.

-----To see more of The Commercial Appeal, or to subscribe to the newspaper, go to

(c) 2004, The Commercial Appeal, Memphis, Tenn. Distributed by Knight Ridder/Tribune Business News. ENN,

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