The board also announced that the company will pay a regular dividend of $0.59375 per preferred share for the fourth quarter. The preferred dividend is payable January 31, 2002, to preferred shareholders of record on December 31, 2001. 

Commenting on the company's decision to suspend the fourth quarter common stock dividend, Phillip H. McNeill, Sr., chairman and chief executive officer, said, ``In November, we said that our decision on dividends would be based on a number of factors, including our management companies' estimates of 2002 operations, which still lack clarity. One of our primary goals during these uncertain times is to preserve our cash and to maintain our long-term value for our shareholders. We have paid common share dividends in 2001 that are in excess of the limits specified by the IRS for REIT qualification purposes and that represent an attractive annualized return to our shareholders. We will review our dividend policy on March 15, 2002, at our regularly scheduled quarterly board meeting.

Based on our current outlook for 2002, we expect to pay future quarterly dividends, beginning with the 2002 first quarter. The amount of the dividend will be based on the REIT's operating results, economic conditions, capital expenditure requirements and leverage levels.'' 

Separately, the company negotiated an amendment to its $125 million line of credit, which expires in October 2003. The amendment relaxes certain of the company's financial covenants through December 31, 2002. ``Equity Inns is in full compliance with its covenants to date but sought the amendment to gain greater flexibility in these uncertain times,'' said Howard Silver, president and chief operating officer. ``The amendment allows for the relaxation of the interest coverage, fixed charge coverage and total indebtedness tests. We continue to maintain a conservative capital structure with an EBITDA-to-interest expense coverage ratio of 2.5 times, calculated on a trailing 12-month basis at September 30. 

"Pricing for the facility remains on the same floating rate basis based on the company's leverage ratio, but with an added tier, if necessary. Today's pricing is 250 basis points over LIBOR,'' he said. 

Equity Inns, Inc. is a self-advised REIT that focuses on the upscale extended stay, all-suite and midscale limited-service segments of the hotel industry. The company owns 96 hotels with approximately 12,300 rooms located in 34 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.