For the nine months ended Sept. 30, funds from operations (FFO) was $49,532,000, or $1.82 per share, compared to $43,480,000, or $1.61 per share, for the same period in 1997. This represents an increase in year-to-date FFO per share of approximately 13%. 

The Company raised its quarterly dividend to $.385 per share, which represents an increase of $.01 per share over the dividend for the previous quarter. The dividend is payable on Nov. 16, 1998 to shareholders of record on Nov. 10, 1998. 

Additionally, the Company announced a number of promotions, including the election of J. William Lovelace as president and chief operating officer and a member of the Company's Board of Directors. Lovelace was previously executive vice president of the Company. He has been involved in the hotel business for over 30 years, having previously served as controller for Holiday Inns, Inc. and president of Servico, Inc., both publicly-held companies. He also previously owned and operated a very successful hotel management company. 

Also promoted were: Mike Pascal from vice president and chief financial officer to executive vice president and chief financial officer; Angie Mock from vice president to senior vice president in charge of asset management; William Crosby from vice president to senior vice president in charge of capital projects; and Craig Hofer, from director of financial analysis to vice president. 

Robert Solmson, RFS chairman and chief executive officer, said, "We are extremely proud of our senior management team. They are a group of individuals who have demonstrated that they work well together, have a broad diversity of talent and experience, and a keen understanding of the hospitality business. Bill Lovelace has been a stabilizing influence with the Company since its inception and has participated and been an active force in every important initiative." 

Bill Lovelace stated, "We are extremely pleased with this quarter's operating results. Our FFO per share was up 12%. Pro forma revenue per available room (REVPAR) was up 5.8% over third quarter 1997 and, for the trailing 12 months, the Company earned an unencumbered return on its investment of approximately 13%. Additionally, we have managed to attain this growth almost exclusively from internal sources as opposed to acquisitions. The result is that our balance sheet remains modestly leveraged and we are optimistic regarding our future growth prospects," Lovelace explained. "Our hotels continue to generate substantial increases in cash flow, well in excess of foreseeable dividend or capital expenditure requirements. Our internal calculations indicate that it would take a decline in REVPAR of more than 10% to precipitate a reduction in our current dividend," Lovelace said. 

In May 1998, the Financial Accounting Standards Board's Emerging Issues Task Force (EITF) issued EITF 98-9, "Accounting for Contingent Rent in Interim Financial Periods" ("EITF 98-9"). EITF 98-9 provides that a lessor shall defer recognition of contingent rental income in interim periods until specified targets that trigger the contingent income are met. Using EITF standards, the Company's net income for the third quarter is $16,640,000, or $0.64 per share (diluted), and $13,565,000, or $0.50 per share (diluted), for the nine months. The EITF ruling is expected to have no impact on the Company's annual results of operations, dividend policy, cash flow, or FFO. Rather, the accounting changes required by EITF 98-9 are expected to, in general, defer recognition of certain percentage rental income from the first, second, and third quarters to the fourth quarter within a fiscal year. 

RFS Hotel Investors, Inc. is a Memphis-based real estate investment trust (REIT) that owns 60 hotels comprising approximately 8,810 rooms in 24 states.