EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

For Immediate Release

 

Contact:

 

Bruce Riggins (Company)   Jerry Daly or Carol McCune
Chief Financial Officer   Daly Gray (Media)
(561) 227-1302   (703) 435-6293

 

Innkeepers USA Trust Announces Third-Quarter Earnings

 

Increases Common Share Dividend by 50 Percent, Second Increase in 2005

 

PALM BEACH, Fla., November 9, 2005—Innkeepers USA Trust (NYSE: KPA), a hotel real estate investment trust (REIT) and a leading owner of upscale extended-stay hotel properties throughout the United States, today announced results for the three and nine months ended September 30, 2005.

 

    

3Q

2005*

   

3Q

2004*

    %
Change*
     Nine Mos.
2005*
    Nine Mos.
2004*
    %
Change*
  

Total revenue

    $ 67,095    $ 59,497    13 %   $ 186,264    $ 154,510    21 %

Net income applicable to common shareholders

    $ 6,837    $ 3,753    82 %   $ 11,185    $ 1,201    831 %

Diluted income per share

    $ 0.16    $ 0.10    60 %   $ 0.27    $ 0.03    800 %

Funds from operations (FFO)

    $ 16,970    $ 13,572    25 %   $ 39,310    $ 25,621    53 %

Adjusted FFO

    $ 16,967    $ 13,127    29 %   $ 42,487    $ 28,762    48 %

FFO per share

    $ 0.36    $ 0.32    13 %   $ 0.84    $ 0.66    27 %

Adjusted FFO per share

    $ 0.36    $ 0.31    16 %   $ 0.91    $ 0.74    23 %

Earnings before interest, taxes, depreciation and amortization (EBITDA)

    $ 25,404    $ 21,915    16 %   $ 65,826    $ 58,923    12 %

Adjusted EBITDA

    $ 25,390    $ 21,713    17 %   $ 67,502    $ 57,029    18 %
* In thousands, except per share and percentage change data

 

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   FFO, Adjusted FFO, FFO per share, Adjusted FFO per share, EBITDA and Adjusted EBITDA are not generally accepted accounting principles (GAAP) financial measures and are discussed in further detail in this press release.

 

   FFO and FFO per share for the nine months ended September 30, 2004 include $4,249 in issuance costs pertaining to the Series A Cumulative Convertible preferred shares that were redeemed in January 2004. The Series A preferred share issuance costs have been excluded from Adjusted FFO, Adjusted FFO per share, EBITDA and Adjusted EBITDA.

 

   Adjusted FFO, Adjusted FFO per share and Adjusted EBITDA exclude other charges and discontinued operations.

 

   Adjusted EBITDA excludes a gain on sale of hotels of $1,501 and $786 for the nine months ended September 30, 2005 and 2004, respectively.

 

Operating Results

 

Revenue per available room (RevPAR) for 65 of the company’s hotel properties (excluding four hotels closed for renovation and/or conversion during part or all of the periods presented) increased 5.7 percent for the third quarter 2005 to $82.90, compared to the same period in 2004. The increase was led by average daily rate (ADR), which improved 5.4 percent to $104.97. Occupancy rose 0.3 percent to 78.97 percent.

 

The 5.7 percent RevPAR improvement for the third quarter 2005 reflects a 6.5 percent increase in RevPAR at the company’s eight Silicon Valley, Calif. hotel properties. Gross operating margins for the company’s 61 comparable hotels improved 270 basis points to 46.3 percent. The company’s 61 comparable hotels exclude the seven hotels acquired in 2004 and 2005 and the Atlantic City hotel that is closed for renovation and conversion.

 

“We are very pleased with the strong 270 basis point increase in our operating margins, which drove the 17 percent increase in Adjusted EBITDA for the third quarter,” said Jeffrey H. Fisher, Innkeepers chief executive officer and president. “RevPAR increases were predominantly driven by increases in average daily rate, which accounted for 95 percent of the increase for the quarter. We were particularly encouraged by results at our eight Silicon Valley hotels, which outperformed the overall portfolio as RevPAR improved 6.5 percent.”

 

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Dividend

 

“Another major positive development in the third quarter was the increase in our common share dividend to $0.15 per share from $0.10,” Fisher said. “It is the second time we raised the dividend this year and represents a 150 percent increase since the first quarter. We remain confident that the hotel industry recovery is on solid footing and believe that the industry will continue to do well for the next few years. We will continue to evaluate the common share dividend with our Board of Trustees on a quarterly basis.”

 

Repositionings/Development Update

 

“Our Louisville, Ky. Hampton Inn opened in the third quarter after completing a $4.5 million renovation and conversion from another brand, and is attracting a strong corporate base of business, with its location just a couple of blocks from the Convention Center,” Fisher said. “In addition to all the latest ‘Make It Hampton’ amenities, we’ve also added some unique features, including a martini bar and a 10-foot high ‘water wall,’ that lend a more upscale feel to the property and will further enhance the hotel’s competitive edge in the upscale, focused service segment in this market.”

 

Fisher also noted that the company’s properties in Montvale, N.J., and Atlantic City, N.J. that are both slated for conversion to the Courtyard by Marriott brand remain on track to open in mid-2006. The 190-room hotel in Montvale, N.J, that is closed pending completion of a $5 million renovation, is located on the New Jersey/New York border, 20 miles from New York

 

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City. The property is surrounded by more than 300 business and corporate offices, including Mercedes Benz of North America, BMW of North America and KPMG LLP. The 203-room Atlantic City hotel that is closed pending completion of a $7 million renovation is located one block from Atlantic City’s Boardwalk and beaches and within walking distance of the Trump’s Taj Mahal and Bally’s casinos and the Atlantic City Convention Center.

 

“The development of our Embassy Suites in Valencia, California, north of Los Angeles, also is on track to open in late 2006, with the groundbreaking scheduled for first quarter 2006. This will be our first Embassy Suites hotel, and we look forward to a long and mutually beneficial relationship with another of Hilton’s top-rated brands,” he said.

 

Fisher pointed out that, while the company made no acquisitions in the third quarter, they remain an integral part of Innkeepers’ growth strategy. “We continue to target premium brands in the upscale extended-stay sectors, as well as select-service and full-service hotels that have the potential to be rebranded and repositioned and are located in major markets with strong demand generators and high barriers to new competition.”

 

Capital Structure

 

Bruce A. Riggins, chief financial officer, pointed out that the company continues to maintain one of the industry’s strongest capital structures and lowest-levered balance sheets. “We paid down $16 million of debt during the third quarter. Our debt to investment in hotels at cost ratio was 25 percent at September 30, 2005, with no maturities prior to 2007. Our weighted average interest rate on our total debt is 7.1 percent, and 84 percent of our total debt is at fixed rates. We have great flexibility for future acquisition or development growth, with $83 million available on our $135 million line of credit.”

 

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Hurricane Impact

 

During the third quarter, the company had one hotel, the Four Points by Sheraton hotel in Ft. Walton Beach, Fla., that was impacted by displacement from four tropical storms or hurricanes and resulted in lost revenue of approximately $350,000.

 

Subsequent to quarter’s end, the company sustained some property damage at three of its Florida hotels from Hurricane Wilma in October. The Courtyard Ft. Lauderdale sustained damage to the roof and water damage to some of the rooms, but is expected to re-open in November 2005. The Hampton Inn Naples and Hampton Inn West Palm Beach hotels both sustained minor property damage and have both since reopened. The properties are insured for both property damage and business interruption. The company expects uninsured losses from Hurricane Wilma to be relatively insignificant.

 

Earnings Guidance

 

The company is maintaining its full-year adjusted FFO per share guidance of $1.11 to $1.14 and provides the following range of estimates for the fourth quarter and full-year 2005, based on assumed RevPAR growth of 6.0 percent to 7.0 percent for the fourth quarter and 6.8 percent to 7.2 percent for the full year (forecasted financial results do not include any assumptions for future acquisitions, dispositions or capital markets transactions):

 

  •   Net income (loss) applicable to common shareholders of $(0.2) million to $1.3 million for the fourth quarter and $11.0 million to $12.5 million for the full year;

 

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  •   Diluted income per share of $0.00 to $0.03 for the fourth quarter and $0.26 to $0.30 for the full year;

 

  •   FFO per share of $0.20 to $0.23 for the fourth quarter and $1.04 to $1.07 for the full year;

 

  •   Adjusted FFO per share of $0.20 to $0.23 for the fourth quarter and $1.11 to $1.14 for the full year;

 

  •   Adjusted EBITDA of $18.0 million to $19.5 million for the fourth quarter and $85.5 million to $87.0 million for the full year; and

 

  •   Gross operating profit margin increase of approximately 200 basis points for the fourth quarter and for the full year for our comparable 61 hotels.

 

See reconciliations of net income applicable to common shareholders to FFO per share and Adjusted FFO per share and net income applicable to common shareholders to Adjusted EBITDA included in the tables of this press release. FFO per share, Adjusted FFO per share, and Adjusted EBITDA are not generally accepted accounting principles (GAAP) financial measures and are discussed in further detail in this press release.

 

Innkeepers USA Trust owns 69 hotels with a total of 8,745 suites or rooms in 20 states and Washington, D.C., and focuses on acquiring and/or developing premium branded upscale extended-stay, select-service, and full-service hotels and the rebranding and repositioning of other hotel properties. For more information about Innkeepers USA Trust, visit the company’s web site at www.innkeepersusa.com.

 

To listen to a web cast of the company’s third quarter 2005 conference call on November 9, 2005, at 10 a.m. Eastern time, go to the company’s web site and click on Conference Calls. Interested parties may listen to an archived web cast of the conference call on the web site, or may dial (800) 405-2236, pass code 11041292, to hear a telephone replay. The archived web cast and telephone replay will be available through December 9, 2005.

 

Included in this press release are certain “non-GAAP financial measures,” within the meaning of Securities and Exchange Commission (SEC) rules and regulations, that are different from measures calculated and presented in accordance with GAAP (generally accepted accounting principles). These non-GAAP financial measures are (i) funds from operations (FFO), (ii) FFO per share, (iii) Adjusted FFO, (iv) Adjusted FFO per share, (v) net income (loss)

 

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(computed in accordance with GAAP) before interest, taxes, depreciation and amortization, common and preferred minority interests and preferred dividends (EBITDA), and (vi) Adjusted EBITDA. The following explains why we believe these measures help provide investors with a more complete understanding of our financial and operating performance.

 

FFO As Defined by NAREIT and Adjusted FFO

 

The National Association of Real Estate Investment Trusts (NAREIT) adopted the definition of FFO in order to promote an industry standard measure of REIT financial and operating performance. Management believes that the presentation of FFO, FFO per share, and Adjusted FFO (defined below) provides useful supplemental information to investors regarding the company’s financial condition and results of operations, particularly in reference to the company’s ability to service debt, fund capital expenditures and pay cash dividends. Many other real estate companies use FFO as a measure of their financial and operating performance, which provides another basis of comparison for management. FFO, as defined, adds back historical cost depreciation. Historical cost depreciation assumes the value of real estate assets diminishes predictably over a certain period of time. In fact, real estate asset values historically have increased or decreased with market conditions. Consequently, FFO and Adjusted FFO may be useful supplemental measures in evaluating financial and operating performance by disregarding, or adding back, historical cost depreciation in the calculation of FFO and Adjusted FFO. Additionally, FFO per share and Adjusted FFO per share targets have historically been used to determine a significant portion of the incentive compensation of the company’s senior management.

 

NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (losses) from sales of property, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The company calculates FFO in compliance with the NAREIT definition. The company defines Adjusted FFO as FFO (as defined by NAREIT), adjusted for non-recurring and/or non-cash items, including discontinued operations and impairment losses. FFO, Adjusted FFO, FFO per share, Adjusted FFO per share are reconciled to net income (loss) applicable to common shareholders determined in accordance with GAAP in the accompanying schedules.

 

EBITDA and Adjusted EBITDA

 

EBITDA is defined as net income (loss) (computed in accordance with GAAP) before interest, taxes, depreciation and amortization, common and preferred minority interests and preferred dividends. The company defines Adjusted EBITDA as EBITDA adjusted for non-recurring and/or non-cash items, including gains (losses) from sales of property, discontinued operations and impairment losses. Management believes that the presentation of EBITDA and Adjusted EBITDA provides useful supplemental information to investors regarding the company’s financial condition and results of operations, particularly in reference to the company’s ability to service debt, fund capital expenditures and pay cash dividends. EBITDA

 

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and Adjusted EBITDA are also factors in management’s evaluation of the financial and operating performance of the company, hotel level performance, investment opportunities, dispositions and financing transactions.

 

FFO, FFO per share, Adjusted FFO, Adjusted FFO per share, EBITDA and Adjusted EBITDA, as presented, may not be comparable to FFO, FFO per share, Adjusted FFO, Adjusted FFO per share, EBITDA and Adjusted EBITDA as calculated by other real estate companies. These measures do not reflect certain expenses that the company incurred and will incur, such as depreciation and interest (although we show such expenses in the reconciliation of these measures to their most directly comparable GAAP measures). None of these measures should be considered as an alternative to net income, net cash provided by operating activities, or any other financial and operating performance measure prescribed by GAAP. These measures should only be used in conjunction with GAAP measures. EBITDA and Adjusted EBITDA are reconciled to net income (loss) applicable to common shareholders determined in accordance with GAAP in the accompanying schedules.

 

Forward-Looking Statement Safe Harbor

 

This press release, and other publicly available information on the Company, includes forward looking statements within the meaning of federal securities law. These statements include terms such as “should”, “may”, “believe” and “estimate”, or assumptions, estimates or forecasts about future hotel and Company performance and results, and the Company’s future need for capital. Such statements should not be relied on because they involve risks that could cause actual results to differ materially from the Company’s expectations when such statements are made. Some of these risks are set forth in reports filed from time to time with the SEC and include, without limitation, (i) the operational risks of the hotel business (including decreasing hotel revenues and increasing hotel expenses) under the company’s taxable REIT subsidiary structure, (ii) risks that war, terrorism or similar activities, widespread health alerts, disruption in oil imports or higher oil prices or changes in domestic or international political environments negatively affect the travel industry and the company, (iii) risk of declines in the performance and prospects of businesses and industries (e.g., technology, automotive, aerospace, pharmaceuticals) that are important hotel demand generators in the company’s key markets (e.g. the Silicon Valley, CA, Washington, DC, etc.), (iv) risk that poor, declining and/or uncertain international, national, regional and/or local economic conditions will, among other things, negatively affect demand for the company’s hotel rooms and the availability and terms of financing, (v) risk that the company’s ability to maintain its properties in competitive condition becomes prohibitively expensive, (vi) risk that pricing in the hotel acquisition market becomes prohibitively expensive or non-financeable and that potential acquisitions or developments do not perform in accordance with expectations, (vii) risk that the Company may invest in hotels of a size or nature (e.g., upscale full service or resort) different than those it has focused on historically (e.g., upscale extended-stay, and mid-scale limited service); (viii) risks related to an

 

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increasing focus on development, including permitting risks, increasing the proportion of Company assets not producing revenue at a given time and risks that projects cost more, take longer to complete or do not perform as anticipated; (ix) changes in travel patterns or the prevailing means of commerce (i.e., e-commerce) may reduce demand for hotels in general or the Company’s hotels in particular, (x) the complex tax rules that the company must satisfy to qualify as a REIT and the potentially severe consequences of failing to satisfy such requirements, and (xi) governmental regulation that may increase the company’s cost of doing business or otherwise negatively effect its business or its attractiveness as an investment and create risk of liability for non-compliance (e.g., changes in laws affecting taxes or dividends, compliance with the Americans with Disabilities Act, workers compensation law changes, the Sarbanes-Oxley law, etc.).

INNKEEPERS USA TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except share and per share data)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
  
     2005
     2004
     2005
     2004
  

Revenue:

                                 

Hotel operating

                                 

Rooms

      62,819       57,151       176,192       143,747  

Food and beverage

      1,984       420       3,900       791  

Telephone

      507       468       1,366       1,356  

Other

      1,643       1,404       4,410       3,300  

Corporate

                                 

Percentage lease

      —         —         —         5,073  

Other

      142       54       396       243  
    
 
 
 

Total revenue

      67,095       59,497       186,264       154,510  
    
 
 
 

Expenses:

                                 

Hotel operating

                                 

Rooms

      12,890       12,336       36,668       31,573  

Food and beverage

      1,611       441       2,950       802  

Telephone

      739       612       2,144       1,794  

Other

      732       642       1,980       1,434  

General and administrative

      5,740       5,069       17,432       13,338  

Franchise and marketing fees

      4,313       3,866       12,263       9,982  

Amortization of deferred franchise conversion

      292       274       948       774  

Advertising and promotions

      2,239       2,019       5,952       4,859  

Utilities

      3,001       2,912       8,572       6,885  

Repairs and maintenance

      3,368       3,050       9,232       7,760  

Management fees

      2,007       1,891       5,569       4,764  

Amortization of deferred lease acquisition

      130       131       392       382  

Insurance

      356       447       1,136       1,145  

Corporate

                                 

Depreciation

      8,957       7,913       26,226       23,605  

Amortization of franchise fees

      16       16       51       38  

Ground rent

      132       129       391       376  

Interest

      4,687       4,718       13,836       13,809  

Amortization of loan origination fees

      216       235       651       718  

Property taxes and insurance

      2,561       3,090       8,566       8,659  

General and administrative

      2,016       1,280       5,907       4,110  

Amortization of unearned compensation

      182       312       437       753  

Other charges

      —         396       3,053       874  
    
 
 
 

Total expenses

      56,185       51,779       164,356       138,434  
    
 
 
 

Income before minority interest

      10,910       7,718       21,908       16,076  

Minority interest, common

      (119 )     (113 )     (195 )     (37 )

Minority interest, preferred

      (1,068 )     (1,068 )     (3,205 )     (3,204 )
    
 
 
 

Income from continuing operations

      9,723       6,537       18,508       12,835  

Income from discontinued operations

      14       116       1,377       1,204  
    
 
 
 

Net income

      9,737       6,653       19,885       14,039  

Series A Preferred Share issuance costs

      —         —         —         (4,249 )

Preferred share dividends

      (2,900 )     (2,900 )     (8,700 )     (8,589 )
    
 
 
 

Net income applicable to common shareholders

    $ 6,837     $ 3,753     $ 11,185     $ 1,201  
    
 
 
 

Earnings per share data:

                                 

Basic – continuing operations

    $ 0.16     $ 0.10     $ 0.24     $ 0.00  
    
 
 
 

Basic

    $ 0.16     $ 0.10     $ 0.27     $ 0.03  
    
 
 
 

Basic – weighted average shares

      42,730,549       37,603,379       41,726,975       37,501,727  
    
 
 
 

Diluted – continuing operations

    $ 0.16     $ 0.10     $ 0.23     $ 0.00  
    
 
 
 

Diluted

    $ 0.16     $ 0.10     $ 0.27     $ 0.03  
    
 
 
 

Diluted – weighted average shares

      43,051,919       37,784,575       41,964,476       37,501,727  
    
 
 
 

INNKEEPERS USA TRUST

CALCULATION OF FFO, EBITDA AND RECONCILIATION TO NET INCOME APPLICABLE TO COMMON SHAREHOLDERS (UNAUDITED)

(in thousands, except share and per share data)

 

    

Three Months Ended

September 30,

    

Nine Months Ended

September 30,

  
     2005
     2004
     2005
     2004
  

CALCULATION OF FFO

                                 

Net income (loss) applicable to common shareholders

    $ 6,837     $ 3,753     $ 11,185     $ 1,201  

Depreciation

      8,957       7,913       26,226       23,605  

Depreciation included in discontinued operations

      —         482       —         1,564  

Gain on sale of hotels included in discontinued operations

      (11 )     243       (1,501 )     (786 )

Minority interest, preferred

      1,068       1,068       3,205       —    

Minority interest, common

      119       113       195       37  
    
 
 
 

Diluted FFO

    $ 16,970     $ 13,572     $ 39,310     $ 25,621  
    
 
 
 

Weighted average number of common shares and common share equivalents

      47,629,045       42,786,100       46,640,482       38,747,277  
    
 
 
 

FFO per share

    $ 0.36     $ 0.32     $ 0.84     $ 0.66  
    
 
 
 

FFO

      16,970       13,572       39,310       25,621  

Series A preferred share issuance costs

      —         —         —         4,249  

Other charges

      —         396       3,053       874  

Discontinued operations

      (3 )     (841 )     124       (1,982 )
    
 
 
 

Adjusted FFO

    $ 16,967     $ 13,127     $ 42,487     $ 28,762  
    
 
 
 

Adjusted FFO per share

    $ 0.36     $ 0.31     $ 0.91     $ 0.74  
    
 
 
 
    

Three Months Ended

September 30,

    

Nine Months Ended

September 30,

  
     2005
     2004
     2005
     2004
  

CALCULATION OF EBITDA

                                 

Net income applicable to common shareholders

    $ 6,837     $ 3,753     $ 11,185     $ 1,201  

Interest

      4,687       4,718       13,836       13,809  

Depreciation and amortization

      9,793       8,881       28,705       26,270  

Depreciation included in discontinued operations

      —         482       —         1,564  

Minority interest, common

      119       113       195       37  

Minority interest, preferred

      1,068       1,068       3,205       3,204  

Series A preferred share issuance costs

      —         —         —         4,249  

Preferred share dividends

      2,900       2,900       8,700       8,589  
    
 
 
 

EBITDA

    $ 25,404     $ 21,915     $ 65,826     $ 58,923  
    
 
 
 

Other charges

      —         396       3,053       874  

Discontinued operations

      (3 )     (841 )     124       (1,982 )

Gain on sale of hotels included in discontinued operations

      (11 )     243       (1,501 )     (786 )
    
 
 
 

Adjusted EBITDA

    $ 25,390     $ 21,713     $ 67,502     $ 57,029  
    
 
 
 

INNKEEPERS USA TRUST

2005 Forecast Reconciliation

(in thousands, except share and per share data)

 

    

Three months ended

December 31, 2005

    

Twelve months ended

December 31, 2005

  
     Low End
Range
     High End
Range
     Low End
Range
     High End
Range
  

CALCULATION OF FFO

                                 

Net income (loss) applicable to common shareholders

      (200 )     1,300       10,985       12,485  

Depreciation

      8,735       8,735       34,960       34,960  

Gain on sale of hotels included in discontinued operations

      —         —         (1,501 )     (1,501 )

Minority interest, preferred

      1,068       1,068       4,273       4,273  

Minority interest, common

      (75 )     (75 )     120       120  
    
 
 
 

Diluted FFO

      9,528       11,028       48,837       50,337  
    
 
 
 

Weighted average number of common shares and common share equivalents

      47,644,671       47,644,671       46,864,748       46,864,748  
    
 
 
 

FFO per share

      0.20       0.23       1.04       1.07  
    
 
 
 

FFO

      9,528       11,028       48,837       50,337  

Other charges

      —         —         3,053       3,053  

Discontinued operations

      —         —         124       124  
    
 
 
 

Adjusted FFO

      9,528       11,028       52,014       53,514  
    
 
 
 

Adjusted FFO per share

      0.20       0.23       1.11       1.14  
    
 
 
 
    

Three months ended

December 31, 2005

    

Twelve months ended

December 31, 2005

  
     Low End
Range
     High End
Range
     Low End
Range
     High End
Range
  

CALCULATION OF EBITDA

                                 

Net income (loss) applicable to common shareholders

      (200 )     1,300       10,985       12,485  

Interest

      4,666       4,666       18,503       18,503  

Depreciation and amortization

      9,641       9,641       38,343       38,343  

Minority interest, preferred

      1,068       1,068       4,273       4,273  

Minority interest, common

      (75 )     (75 )     120       120  

Preferred share dividends

      2,900       2,900       11,600       11,600  
    
 
 
 

EBITDA

      18,000       19,500       83,824       85,324  
    
 
 
 

Other charges

      —         —         3,053       3,053  

Discontinued operations

      —         —         124       124  

Gain on sale of hotels included in discontinued operations

      —         —         (1,501 )     (1,501 )
    
 
 
 

Adjusted EBITDA

    $ 18,000     $ 19,500     $ 85,500     $ 87,000  
    
 
 
 

INNKEEPERS USA TRUST

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share data)

 

    

September 30,

2005

    

December 31,

2004

  

ASSETS

                 

Investment in hotels:

                 

Land and improvements

    $ 146,610     $ 127,392  

Buildings and improvements

      728,149       687,754  

Furniture and equipment

      98,510       101,909  

Renovations in process

      16,148       2,794  

Hotels under development

      4,318       3,864  

Hotels held for sale

      —         19,299  
    
 
       993,735       943,012  

Accumulated depreciation

      (221,009 )     (207,853 )
    
 

Net investment in hotels

      772,726       735,159  

Cash and cash equivalents

      14,658       22,837  

Restricted cash and cash equivalents

      9,447       10,781  

Accounts receivable, net

      6,655       4,577  

Prepaid and other

      2,188       2,539  

Deferred and other

      17,283       20,099  
    
 

Total assets

    $ 822,957     $ 795,992  
    
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

                 

Debt

    $ 247,299     $ 286,865  

Accounts payable and accrued expenses

      17,485       12,663  

Payable to manager

      245       209  

Franchise conversion fee obligations

      10,825       10,825  

Distributions payable

      9,642       5,450  
    
 

Total liabilities

      285,496       316,012  

Minority interest in Partnership

      48,081       51,088  

Shareholders’ equity:

                 

Preferred shares, $0.01 par value, 20,000,000 shares authorized, 5,800,000 shares issued and outstanding

      145,000       145,000  

Common shares, $0.01 par value, 100,000,000 shares authorized, 42,874,412 and 37,966,756 issued and outstanding, respectively

      429       380  

Additional paid-in capital

      460,494       396,631  

Unearned compensation

      (1,766 )     (448 )

Distributions in excess of earnings

      (114,777 )     (112,671 )
    
 

Total shareholders’ equity

      489,380       428,892  
    
 

Total liabilities and shareholders’ equity

    $ 822,957     $ 795,992  
    
 

INNKEEPERS USA TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

     Nine Months Ended
September 30,
  
     2005
     2004
  

Cash flows from operating activities:

             

Net income

    19,885     14,039  

Adjustments to reconcile net income to net cash provided by operating activities:

             

Depreciation and amortization

    28,705     27,834  

Write-off of deferred expenses included in extinguishment of debt

    124     —    

Minority interests

    3,400     3,241  

Gain on sale of hotel included in discontinued operations

    (1,501 )   (786 )

Changes in operating assets and liabilities:

             

Accounts receivable, net

    (2,078 )   1,050  

Prepaid and other

    351     1,054  

Accounts payable and accrued expenses

    4,821     7,992  

Payable to manager

    36     (466 )
    
 

Net cash provided by operating activities

    53,743     53,958  
    
 

Cash flows from investing activities:

             

Investment in hotels, net of insurance proceeds

    (82,123 )   (82,055 )

Deposits for acquisition of hotels

    —       (154 )

Proceeds from sale of hotels

    20,860     8,727  

Net withdrawals (deposits) into restricted cash and cash equivalents

    1,334     (3,066 )

Lease acquisitions

    —       (1,336 )

Payment of franchise fees

    (50 )   (192 )

Repayment of advances

    557     175  
    
 

Net cash used in investing activities

    (59,422 )   (77,901 )
    
 

Cash flows from financing activities:

             

Proceeds from debt issuance

    71,000     53,074  

Payments on debt

    (110,566 )   (29,618 )

Payments on franchise conversion fee obligations

    (948 )   (106 )

Distributions paid to unit holders

    (3,385 )   (3,307 )

Distributions paid to shareholders

    (17,832 )   (11,684 )

Redemption of shares or units

    —       (115,730 )

Proceeds from issuance of common and preferred shares

    59,585     143,081  

Loan origination fees and costs paid

    (354 )   (1,091 )
    
 

Net cash provided by financing activities

    (2,500 )   34,619  
    
 

Net increase in cash and cash equivalents

    (8,179 )   10,676  

Cash and cash equivalents at beginning of period

    22,837     9,586  
    
 

Cash and cash equivalents at end of period

    14,658     20,262  
    
 

Supplemental cash flow information:

             

Interest paid

    13,836     13,643  

INNKEEPERS USA TRUST

DEBT COMPOSITION (UNAUDITED)

As of September 30, 2005

(outstanding balance in thousands)

 

DEBT

    Outstanding
Balance
    Stated
Interest
Rate
     Maturity Date
   Encumbered
Properties

Unsecured Line of Credit(1)

    $ 40,574    4.92 %   July 2007   —  

Industrial Revenue Bonds(1)

    $ 10,000    2.70 %   December 2014   —  

Term Loan #1

    $ 23,450    8.17 %   October 2007   8

Term Loan #2

    $ 35,257    8.15 %   March 2009   8

Term Loan #3

    $ 28,228    7.02 %   April 2010   7

Term Loan #4

    $ 45,804    7.16 %   October 2009   6

Term Loan #5

    $ 49,584    7.75 %   January 2011   6

Mortgage

    $ 12,803    10.35 %   June 2010   1

Adjustments (4)

    $ 1,599    —       —     —  
    
  
 
 

TOTAL

    $ 247,299    7.3 %(2)   5 years(3)   36
    
  
 
 
(1) Variable rated debt. The stated interest rate of the industrial revenue bonds includes an annual letter of credit fee of 1.25%
(2) Weighted average calculated using the stated interest rate
(3) Weighted average maturity
(4) Adjustment to record $13 million mortgage at a fair market interest rate of 7% (the stated interest rate is 10.35%)

INNKEEPERS USA TRUST

OTHER DATA (UNAUDITED)

(in thousands, except shares data)

 

    

September 30,

2005

    

September 30,

2004

  

CAPITALIZATION

                 

Common share market capitalization

    $ 673,000     $ 486,000  

Total Market capitalization

    $ 1,072,000     $ 949,000  

Common share closing price

    $ 15.45     $ 12.44  

Common share dividend(1)

   $ 0.37     $ 0.15  

Common share dividend yield(1)

      2.4 %     1.2 %

Preferred share closing price

    $ 26.15     $ 25.30  

Preferred share dividend(2)

    $ 2.00     $ 2.00  

Preferred share dividend yield(2)

      7.6 %     7.9 %

DEBT COVERAGE

                 

Debt weighted average interest rate

      7.1 %     6.9 %

Debt to investment in hotel properties, at cost

      25 %     28 %

Debt and preferred shares to investment in hotel properties

      39 %     44 %

Debt to market capitalization

      23 %     27 %

Debt and preferred shares to market capitalization

      37 %     43 %

LIQUIDITY/FLEXIBILITY

                 

Debt due 2004

      —       $ 1,000  

Debt due 2005

    $ 2,000     $ 6,000  

Debt due 2006

    $ 6,000     $ 7,000  

Debt due 2007 and thereafter

    $ 239,000     $ 242,000  

Unencumbered hotel assets(3)

      48 %     43 %

Unsecured Line of Credit outstanding balance

    $ 40,574     $ 27,000  

Unsecured Line of Credit available balance(4)

    $ 82,839     $ 98,000  

SHARES AND UNITS OUTSTANDING

                 

Common Shares

      42,914,086       37,958,256  

Common Partnership Units

      666,891       1,117,056  

Preferred Partnership Units

      3,884,469       3,884,469  

Preferred Shares

      5,800,000       5,800,000  
(1) Regular common share dividends declared for the trailing twelve months ended September 30, 2005 and September 30, 2004
(2) Regular annual preferred share dividends
(3) Based upon the number of hotels
(4) The actual amount that may be borrowed is contingent upon many factors, such as compliance with unsecured line of credit covenants and the use of proceeds from borrowings. The $135 million revolving unsecured line of credit available balance has been reduced by $11.5 million in letters of credit.

INNKEEPERS USA TRUST

HOTEL OPERATING RESULTS (UNAUDITED)

 

    

September 30,

2005

     Three Months Ended
September 30,
    

%

Inc (dec)

     Nine Months Ended
September 30,
    

%

Inc (dec)

  
     2005
     2004
       2005
     2004
    

PORTFOLIO(1)

                                                   

Average Daily Rate

          $ 104.97     $ 99.58     5.41 %   $ 103.95     $ 97.72     6.38 %

Occupancy

            78.97 %     78.77 %   0.25 %     76.70 %     76.15 %   0.72 %

RevPAR

          $ 82.90     $ 78.45     5.67 %   $ 79.73     $ 74.41     7.15 %

Number of hotel properties

    65                                              

Percent of total rooms

    100.0 %                                            

Percent of room revenue(2)

    100.0 %                                            

BY SEGMENT

                                                   

Upscale Extended Stay

                                                   

Average Daily Rate

          $ 105.87     $ 100.67     5.17 %   $ 103.82     $ 98.19     5.73 %

Occupancy

            82.43 %     81.71 %   0.88 %     79.69 %     78.87 %   1.04 %

RevPAR

          $ 87.27     $ 82.26     6.09 %   $ 82.73     $ 77.44     6.83 %

Number of hotel properties

    49                                              

Percent of total rooms

    74.7 %                                            

Percent of room revenue(2)

    77.5 %                                            

Upscale(1)

                                                   

Average Daily Rate

          $ 120.56     $ 122.25     -1.38 %   $ 126.70     $ 117.79     7.56 %

Occupancy

            71.65 %     70.76 %   1.26 %     69.88 %     77.44 %   -9.76 %

RevPAR

          $ 86.38     $ 86.50     -0.14 %   $ 88.54     $ 91.22     -2.94 %

Number of hotel properties

    3                                              

Percent of total rooms

    5.8 %                                            

Percent of room revenue(2)

    6.4 %                                            

Mid Priced(1)

                                                   

Average Daily Rate

          $ 95.94     $ 87.98     9.05 %   $ 97.56     $ 88.57     10.15 %

Occupancy

            67.91 %     69.91 %   -2.86 %     67.28 %     65.35 %   2.95 %

RevPAR

          $ 65.16     $ 61.51     5.93 %   $ 65.64     $ 57.88     13.41 %

Number of hotel properties

    13                                              

Percent of total rooms

    19.5 %                                            

Percent of room revenue(2)

    16.1 %                                            

BY FRANCHISE AFFILIATION

                                                   

Residence Inn

                                                   

Average Daily Rate

          $ 106.13     $ 100.71     5.38 %   $ 103.96     $ 98.07     6.01 %

Occupancy

            82.06 %     81.50 %   0.69 %     79.10 %     78.05 %   1.35 %

RevPAR

          $ 87.09     $ 82.08     6.10 %   $ 82.24     $ 76.54     7.45 %

Number of hotel properties

    42                                              

Percent of total rooms

    63.5 %                                            

Percent of room revenue(2)

    65.5 %                                            

Summerfield Suites

                                                   

Average Daily Rate

          $ 101.12     $ 97.04     4.20 %   $ 98.26     $ 94.11     4.41 %

Occupancy

            85.77 %     85.13 %   0.75 %     83.37 %     84.25 %   -1.04 %

RevPAR

          $ 86.73     $ 82.61     4.99 %   $ 81.91     $ 79.29     3.30 %

Number of hotel properties

    6                                              

Percent of total rooms

    9.4 %                                            

Percent of room revenue(2)

    9.7 %                                            

    

September 30,

2005

     Three Months Ended
September 30,
    

%

Inc (dec)

     Nine Months Ended
September 30,
    

%

Inc (dec)

  
     2005
     2004
       2005
     2004
    

Hampton Inn(1)

                                                   

Average Daily Rate

          $ 96.95     $ 88.41     9.66 %   $ 98.32     $ 89.07     10.39 %

Occupancy

            67.69 %     69.16 %   -2.13 %     67.10 %     64.80 %   3.55 %

RevPAR

          $ 65.63     $ 61.15     7.33 %   $ 65.97     $ 57.71     14.31 %

Number of hotel properties

    12                                              

Percent of total rooms

    18.3 %                                            

Percent of room revenue(2)

    15.2 %                                            

BY MANAGEMENT COMPANY

                                                   

Innkeepers Hospitality Management(1)(3)

                                                   

Average Daily Rate

          $ 104.59     $ 98.90     5.75 %   $ 103.61     $ 97.35     6.43 %

Occupancy

            79.32 %     79.12 %   0.25 %     77.12 %     76.09 %   1.35 %

RevPAR

          $ 82.96     $ 78.25     6.02 %   $ 79.91     $ 74.07     7.88 %

Number of hotel properties

    64                                              

Percent of total rooms

    97.3 %                                            

Percent of room revenue(2)

    97.5 %                                            

Third Party Managed

                                                   

Average Daily Rate

          $ 121.03     $ 128.51     -5.82 %   $ 118.90     $ 110.75     7.36 %

Occupancy

            66.66 %     66.38 %   0.42 %     61.65 %     78.23 %   -21.19 %

RevPAR

          $ 80.68     $ 85.31     -5.43 %   $ 73.30     $ 86.64     -15.40 %

Number of hotel properties

    1                                              

Percent of total rooms

    2.7 %                                            

Percent of room revenue(2)

    2.5 %                                            

BY GEOGRAPHIC REGION

                                                   

New England [ME, NH, VT, MA, CT, RI]

                                                   

Average Daily Rate

          $ 112.92     $ 104.97     7.57 %   $ 106.47     $ 100.09     6.37 %

Occupancy

            76.59 %     77.62 %   -1.33 %     72.16 %     69.19 %   4.29 %

RevPAR

          $ 86.48     $ 81.47     6.15 %   $ 76.83     $ 69.26     10.93 %

Number of hotel properties

    4                                              

Percent of total rooms

    4.6 %                                            

Percent of room revenue(2)

    4.5 %                                            

Middle Atlantic(1) [NY, NJ, PA]

                                                   

Average Daily Rate

          $ 112.91     $ 108.58     3.99 %   $ 108.95     $ 103.71     5.05 %

Occupancy

            78.93 %     81.80 %   -3.51 %     76.15 %     75.21 %   1.25 %

RevPAR

          $ 89.12     $ 88.82     0.34 %   $ 82.97     $ 78.00     6.37 %

Number of hotel properties

    10                                              

Percent of total rooms

    14.2 %                                            

Percent of room revenue(2)

    14.7 %                                            

South Atlantic(1) [DE, MD, WV, DC, VA, NC, SC, GA, FL]

                                                   

Average Daily Rate

          $ 107.05     $ 99.35     7.75 %   $ 109.74     $ 99.85     9.90 %

Occupancy

            72.96 %     74.15 %   -1.60 %     74.66 %     75.82 %   -1.53 %

RevPAR

          $ 78.11     $ 73.67     6.03 %   $ 81.94     $ 75.70     8.24 %

Number of hotel properties

    15                                              

Percent of total rooms

    23.8 %                                            

Percent of room revenue(2)

    24.5 %                                            

    

September 30,

2005

     Three Months Ended
September 30,
    

%

Inc (dec)

    

Nine Months Ended

September 30,

    

%

Inc (dec)

  
     2005
     2004
       2005
     2004
    

East North Central [OH, MI, IN, IL, WI]

                                                   

Average Daily Rate

          $ 92.98     $ 90.09     3.21 %   $ 92.12     $ 86.98     5.91 %

Occupancy

            76.77 %     74.91 %   2.48 %     72.77 %     70.23 %   3.62 %

RevPAR

          $ 71.38     $ 67.48     5.78 %   $ 67.04     $ 61.09     9.74 %

Number of hotel properties

    12                                              

Percent of total rooms

    16.7 %                                            

Percent of room revenue(2)

    14.0 %                                            

East South Central(1) [KY, TN, AL, MS]

                                                   

Average Daily Rate

          $ 91.76     $ 85.46     7.37 %   $ 87.85     $ 81.31     8.04 %

Occupancy

            85.80 %     88.95 %   -3.54 %     83.01 %     88.81 %   -6.53 %

RevPAR

          $ 78.73     $ 76.01     3.58 %   $ 72.92     $ 72.21     0.98 %

Number of hotel properties

    2                                              

Percent of total rooms

    2.2 %                                            

Percent of room revenue(2)

    2.0 %                                            

West North Central [MN, IA, MO, KS, NE, SD, ND]

                                                   

Average Daily Rate

          $ 82.58     $ 79.83     3.44 %   $ 81.85     $ 81.82     0.04 %

Occupancy

            88.47 %     78.94 %   12.07 %     86.15 %     79.32 %   8.61 %

RevPAR

          $ 73.06     $ 63.02     15.93 %   $ 70.52     $ 64.90     8.66 %

Number of hotel properties

    1                                              

Percent of total rooms

    0.8 %                                            

Percent of room revenue(2)

    0.7 %                                            

West South Central [AR, LA, OK, TX]

                                                   

Average Daily Rate

          $ 91.78     $ 88.86     3.29 %   $ 92.63     $ 89.80     3.15 %

Occupancy

            84.07 %     78.66 %   6.88 %     83.23 %     79.83 %   4.26 %

RevPAR

          $ 77.15     $ 69.89     10.39 %   $ 77.10     $ 71.69     7.55 %

Number of hotel properties

    5                                              

Percent of total rooms

    8.7 %                                            

Percent of room revenue(2)

    8.4 %                                            

Mountain [MT, ID, WY, CO, UT, NM, AZ, NV]

                                                   

Average Daily Rate

          $ 97.50     $ 90.42     7.83 %   $ 93.72     $ 87.84     6.69 %

Occupancy

            83.56 %     77.91 %   7.25 %     76.82 %     72.00 %   6.69 %

RevPAR

          $ 81.47     $ 70.44     15.66 %   $ 72.00     $ 63.24     13.85 %

Number of hotel properties

    2                                              

Percent of total rooms

    3.6 %                                            

Percent of room revenue(2)

    3.2 %                                            

Pacific [WA, OR, CA, AK, HI]

                                                   

Average Daily Rate

          $ 112.52     $ 106.10     6.05 %   $ 110.54     $ 104.53     5.75 %

Occupancy

            83.25 %     83.46 %   -0.25 %     79.22 %     80.26 %   -1.30 %

RevPAR

          $ 93.67     $ 88.55     5.78 %   $ 87.57     $ 83.89     4.39 %

Number of hotel properties

    14                                              

Percent of total rooms

    25.4 %                                            

Percent of room revenue(2)

    27.9 %                                            

    

September 30,
2005

    

Three Months Ended

September 30,

    

%

Inc (dec)

    

Nine Months Ended

September 30,

    

%

Inc (dec)

  
     2005
     2004
       2005
     2004
    

BY SELECTED MSA

                                                   

Atlanta

                                                   

Average Daily Rate

          $ 96.82     $ 88.34     9.60 %   $ 97.30     $ 90.97     6.96 %

Occupancy

            76.86 %     79.55 %   -3.38 %     74.61 %     74.06 %   0.74 %

RevPAR

          $ 74.41     $ 70.27     5.89 %   $ 72.60     $ 67.37     7.76 %

Number of hotel properties

    2                                              

Percent of total rooms

    3.5 %                                            

Percent of room revenue(2)

    3.2 %                                            

Boston

                                                   

Average Daily Rate

          $ 94.22     $ 83.48     12.87 %   $ 94.48     $ 85.01     11.14 %

Occupancy

            68.40 %     65.62 %   4.24 %     58.62 %     54.46 %   7.64 %

RevPAR

          $ 64.45     $ 54.78     17.65 %   $ 55.38     $ 46.30     19.61 %

Number of hotel properties

    1                                              

Percent of total rooms

    1.2 %                                            

Percent of room revenue(2)

    0.9 %                                            

Chicago

                                                   

Average Daily Rate

          $ 93.41     $ 89.54     4.32 %   $ 93.43     $ 89.02     4.95 %

Occupancy

            74.71 %     71.06 %   5.14 %     70.06 %     64.47 %   8.67 %

RevPAR

          $ 69.78     $ 63.63     9.67 %   $ 65.46     $ 57.39     14.06 %

Number of hotel properties

    4                                              

Percent of total rooms

    7.0 %                                            

Percent of room revenue(2)

    5.8 %                                            

Dallas/Ft. Worth

                                                   

Average Daily Rate

          $ 84.12     $ 81.22     3.57 %   $ 83.38     $ 80.57     3.49 %

Occupancy

            85.66 %     80.56 %   6.33 %     83.82 %     79.89 %   4.92 %

RevPAR

          $ 72.06     $ 65.43     10.13 %   $ 69.89     $ 64.37     8.58 %

Number of hotel properties

    4                                              

Percent of total rooms

    6.8 %                                            

Percent of room revenue(2)

    6.0 %                                            

Denver

                                                   

Average Daily Rate

          $ 97.50     $ 90.42     7.83 %   $ 93.72     $ 87.84     6.69 %

Occupancy

            83.56 %     77.91 %   7.25 %     76.82 %     72.00 %   6.69 %

RevPAR

          $ 81.47     $ 70.44     15.66 %   $ 72.00     $ 63.24     13.85 %

Number of hotel properties

    2                                              

Percent of total rooms

    3.6 %                                            

Percent of room revenue(2)

    3.2 %                                            

Detroit

                                                   

Average Daily Rate

          $ 95.59     $ 97.54     -2.00 %   $ 94.66     $ 89.58     5.67 %

Occupancy

            80.92 %     80.46 %   0.57 %     75.22 %     78.09 %   -3.68 %

RevPAR

          $ 77.35     $ 78.48     -1.44 %   $ 71.20     $ 69.95     1.79 %

Number of hotel properties

    3                                              

Percent of total rooms

    4.5 %                                            

Percent of room revenue(2)

    4.1 %                                            

    

September 30,
2005

     Three Months Ended
September 30,
    

%

Inc (dec)

     Nine Months Ended
September 30,
    

%

Inc (dec)

  
     2005
     2004
       2005
     2004
    

Hartford

                                                   

Average Daily Rate

          $ 114.28     $ 106.75     7.05 %   $ 112.64     $ 105.45     6.82 %

Occupancy

            78.14 %     80.23 %   -2.61 %     74.11 %     72.33 %   2.46 %

RevPAR

          $ 89.30     $ 85.64     4.27 %   $ 83.48     $ 76.27     9.45 %

Number of hotel properties

    2                                              

Percent of total rooms

    2.4 %                                            

Percent of room revenue(2)

    2.5 %                                            

Philadelphia

                                                   

Average Daily Rate

          $ 104.00     $ 97.23     6.96 %   $ 101.54     $ 94.81     7.10 %

Occupancy

            78.64 %     80.45 %   -2.25 %     79.44 %     77.31 %   2.76 %

RevPAR

          $ 81.79     $ 78.22     4.56 %   $ 80.67     $ 73.30     10.05 %

Number of hotel properties

    4                                              

Percent of total rooms

    5.8 %                                            

Percent of room revenue(2)

    5.8 %                                            

Richmond

                                                   

Average Daily Rate

          $ 97.72     $ 92.84     5.26 %   $ 95.57     $ 92.26     3.59 %

Occupancy

            80.67 %     81.14 %   -0.58 %     82.66 %     77.09 %   7.23 %

RevPAR

          $ 78.83     $ 75.33     4.65 %   $ 79.00     $ 71.12     11.08 %

Number of hotel properties

    2                                              

Percent of total rooms

    2.3 %                                            

Percent of room revenue(2)

    2.3 %                                            

San Francisco/San Jose/Oakland

                                                   

(Silicon valley)

                                                   

Average Daily Rate

          $ 110.17     $ 104.33     5.60 %   $ 110.19     $ 103.75     6.21 %

Occupancy

            80.54 %     79.82 %   0.90 %     74.88 %     76.23 %   -1.77 %

RevPAR

          $ 88.73     $ 83.28     6.54 %   $ 82.51     $ 79.09     4.32 %

Number of hotel properties

    8                                              

Percent of total rooms

    15.0 %                                            

Percent of room revenue(2)

    15.5 %                                            

Seattle/Portland

                                                   

Average Daily Rate

          $ 115.92     $ 108.64     6.70 %   $ 109.09     $ 105.77     3.14 %

Occupancy

            87.31 %     87.70 %   -0.44 %     85.12 %     82.89 %   2.69 %

RevPAR

          $ 101.21     $ 95.28     6.22 %   $ 92.85     $ 87.67     5.91 %

Number of hotel properties

    4                                              

Percent of total rooms

    6.3 %                                            

Percent of room revenue(2)

    7.4 %                                            

Washington, D.C.(1)

                                                   

Average Daily Rate

          $ 134.42     $ 122.11     10.08 %   $ 133.48     $ 118.43     12.71 %

Occupancy

            73.37 %     76.06 %   -3.54 %     73.45 %     78.22 %   -6.10 %

RevPAR

          $ 98.63     $ 92.88     6.19 %   $ 98.04     $ 92.64     5.83 %

Number of hotel properties

    4                                              

Percent of total rooms

    6.7 %                                            

Percent of room revenue(2)

    8.3 %                                            
(1) Hotel operating results exclude one hotel property acquired in June 2003 which will be converted to a Courtyard hotel, one hotel property acquired in June 2004 which was converted and opened as a Hampton Inn hotel in August 2005, one hotel property acquired in February 2005 which will be converted to a Courtyard hotel and one Westin hotel which opened in early 2005 and was acquired by the Company in May 2005.
(2) Room revenue for YTD September 2005.
(3) Operating Statistics for hotels acquired in 2004 and 2005 include room revenue for the applicable periods from the previous owner for those periods prior to our acquisition of the hotels.