The board of directors approved payment of the $0.25 common stock dividend on August 1, 2000 and the $0.59375 per share of preferred stock on July 31, 2000, both to shareholders of record June 30, 2000. Based on Tuesday�s closing stock price, the annualized dividend yield is approximately 15 percent per common share and 14 percent per preferred share. 

�We are not pleased to reduce our dividend but believe it is the correct, conservative step to take in today�s operating environment,� said Phillip H McNeill, Sr., Equity Inns chairman and CEO. �We will continue to evaluate our dividend every quarter, but we felt it was prudent to reduce our cash available for distribution (CAD) payout ratio from the current projected 102 percent to approximately 82 percent, which is more in line with our hotel REIT peer group. We believe this move will give us a comfortable cushion to protect
the dividend�s long-term integrity.� 

McNeill said the new dividend rate resulted from a confluence of events, which also are expected to impact 2000 FFO. They include higher LIBOR interest rate levels, current renegotiation of the company�s maturing debt, which is expected to result in higher overall interest rates, and current debt covenants that restrain the company from buying additional shares of stock on the open market during the first half of 2000. 

Debt Negotiation 
�We have not concluded negotiations but expect to convert an additional 30 percent of our current outstanding debt to long-term fixed rates,� said Howard Silver, president and chief operating officer. �This will fix for an expected average term of 10 years approximately 80 percent of our debt, compared to 50 percent currently. This increased amount of long-term debt is expected to add 50 to 75 basis points to our overall interest rates going forward, while reducing our short-term line of credit to approximately $125 million. We believe it is prudent to lock in rates, which currently are below the historical average for the hotel industry and give us considerable flexibility. Our debt-to-investment in hotels at cost ratio currently is a conservative 42.5 percent.� 

REIT Modernization Act 
�With regard to the REIT Modernization Act and its effect on the company, we are still in discussions with Interstate Hotels, our largest lessee, about acquiring all 76 of the company�s leases at no cost to Equity Inns, and forming management contracts which better align the interest of both parties. However, we signed a confidentiality agreement and cannot comment any further,� McNeill 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 12,300 rooms located in 35 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.