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 Fourth-Quarter and Full-Year 2005 Earnings

PALM BEACH, Fla., February 28, 2006—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 months and full-year ended December 31, 2005.

 

     4Q 2005*     4Q 2004*     %
Change*		     Full Yr
2005*		    Full Yr
2004*		     %
Change*		  

Total revenue

    $ 60,917     $ 50,519     21 %   $ 247,181    $ 205,029     21 %

Net income (loss) applicable to common shareholders

    $ (126 )   $ (2,340 )   95 %   $ 11,059    $ (1,138 )   1,072 %

Diluted income (loss) per share

    $ 0.00     $ (0.06 )   100 %   $ 0.26    $ (0.03 )   967 %

Funds from operations (FFO)

    $ 9,002     $ 5,796     55 %   $ 49,380    $ 31,418     57 %

Adjusted FFO

    $ 9,010     $ 5,867     54 %   $ 52,565    $ 34,631     52 %

FFO per share

    $ 0.21     $ 0.15     40 %   $ 1.05    $ 0.81     30 %

Adjusted FFO per share

    $ 0.21     $ 0.15     40 %   $ 1.12    $ 0.89     26 %

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

    $ 18,819     $ 15,353     23 %   $ 84,645    $ 74,276     14 %

Adjusted EBITDA

    $ 18,827     $ 15,428     22 %   $ 86,329    $ 72,458     19 %
* In thousands, except per share and percentage change data

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 and reconciled to net income applicable to common shareholders later in this press release.

- more -

Innkeepers USA

Page 2

FFO and FFO per share for the twelve months ended December 31, 2004 include $4,249 in issuance costs pertaining to the Series A Cumulative Convertible preferred shares that were redeemed in January 2004. The $4,249 of 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 12 months ended December 31, 2005 and 2004, respectively.

Operating Results

Revenue per available room (RevPAR) for 65 of the company’s hotel properties (excluding five hotels closed for renovation and/or conversion during part or all of the periods presented) increased 7.2 percent to $73.21 for the fourth quarter 2005, compared to the same period in 2004. Average daily rate (ADR) accounted for the entire RevPAR gain, rising 7.2 percent to $103.42, while occupancy was unchanged at 70.8 percent. The 2005 fourth quarter RevPAR improvement reflects an 11.7 percent increase in RevPAR at the company’s eight Silicon Valley, Calif. hotel properties. RevPAR for the portfolio, excluding Silicon Valley, increased 6.3 percent.

Gross operating profit margins for the company’s 61 comparable hotels improved 140 basis points to 40.4 percent. The company’s 61 comparable hotels exclude the eight hotels acquired in 2004 and 2005 and the Atlantic City hotel acquired in 2003 that is closed for renovation and conversion.

“We had a very positive fourth quarter, capping a strong 2005,” said Jeffrey H. Fisher, chief executive officer and president. “We achieved our second consecutive year of robust growth as a result of strong hotel operations and opportunistic acquisitions. We also benefited from positive industry fundamentals, including the return of the business traveler to pre-9/11

- more -

Innkeepers USA

Page 3

levels in many markets, healthy leisure travel demand, continued strength in the economy, and low levels of new hotel construction. We believe that there is still significant upside to the current industry recovery and that the positive underlying fundamentals will continue for at least the next few years.

“Operationally, our strong results were led by our Silicon Valley properties,” he noted. “We believe there is significant room for additional improvement at these properties as RevPAR would have to increase 73 percent from 2005 levels to reach their historical peak.

“Our 2005 RevPAR gain was principally the result of higher room rates, which has been a primary focus of our operators. Our ability to raise rate translated into higher gross operating profit margins, which created strong flow-through. Our adjusted EBITDA rose 19 percent to $86.3 million for the full year, and our adjusted FFO per share improved 26 percent to $1.12.

“Externally, our acquisition program continued at a strong pace as we added four hotels to our portfolio and opened one that had been closed for an extensive renovation and conversion to a Hampton Inn.

“Our substantial growth in 2005 allowed us to significantly increase our common share dividend, reflecting our continued confidence in our cash flow and the durability of the recovery,” he said. “At year end, we maintained a $0.15 dividend, which was up 150 percent from our first quarter dividend of $0.06. Based on our projections for continued sustainable growth, we expect to increase our dividend again in 2006.”

- more -

Innkeepers USA

Page 4

Acquisitions/Development/Renovations Update

In 2005, the company acquired four hotels in key MSAs for a total of $83 million: the 83-room Hampton Inn Columbia, Md.; the 190-room hotel in Montvale, N.J., which currently is closed for renovation and conversion to the Courtyard brand; the newly renovated 224-room Westin Governor Morris hotel in Morristown, N.J.; and the 80-room Bulfinch hotel in Boston, Mass. The company also re-opened a hotel acquired in downtown Louisville in 2004, following a complete renovation and conversion to the Hampton Inn brand.

Fisher noted that three properties (two that are closed for renovation and conversion and one being developed) represent a significant source of embedded growth for 2007 as all three hotels are located in strong markets with high barriers to new competition. “The permitting process for our Atlantic City and Montvale properties has taken longer than initially expected and we now are projecting a third-quarter 2006 opening for the Montvale hotel and late 2006 opening for the Atlantic City hotel. We expect to spend approximately $21 million in 2006 on these two brand conversion projects, and both hotels will open under the Courtyard by Marriott brand. In California, we expect to break ground in March on our first Embassy Suites hotel, a 150-room property in Valencia, and we are projecting a late 2006 or early 2007 opening. We expect to spend approximately $17 million in 2006 on the development of this hotel.”

Fisher said that acquisitions remain a principal focus of the company’s growth. “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, located in major

- more -

Innkeepers USA

Page 5

urban markets with multiple demand generators and high barriers to new competition. We also will selectively consider development opportunities where it makes economic sense or in markets where the cost of building a new hotel is comparable to or lower than prices for existing hotels.

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 $17 million of debt during the year and reduced our debt to investment in hotels at cost ratio to 26 percent at year-end 2005, compared to 30 percent at year-end 2004. Our weighted average interest rate on our total debt is 7.2 percent, and 73 percent of our total debt is at fixed rates. Our low leverage gives us significant flexibility to fund future acquisition and development projects.”

Earnings Guidance

The company provides the following range of estimates for the first quarter and full-year 2006, based on assumed RevPAR growth of 6.0 percent to 8.0 percent for the first quarter and 6.0 percent to 8.0 percent for the full year (forecasted financial results do not include any assumptions for future acquisitions, developments, dispositions or capital markets transactions):

 

  •   Net income applicable to common shareholders of $1.3 million to $2.8 million for the first quarter and $20.5 million to $24.5 million for the full year;

 

  •   Diluted income per share of $0.03 to $0.07 for the first quarter and $0.48 to $0.57 for the full year;

 

  •   FFO and Adjusted FFO per share of $0.24 to $0.27 for the first quarter and $1.30 to $1.38 for the full year;

 

  •   Adjusted EBITDA of $20.5 million to $22.0 million for the first quarter and $98.0 million to $102.0 million for the full year;

- more -

Innkeepers USA

Page 6

 

  •   Gross operating profit margin increase of approximately 100 basis points for the first quarter and 60 basis points for full-year 2006 (includes effect of a 70 basis point increase in 2006 (no impact in first quarter) for incentive management fees which have not historically been paid); and

 

  •   Capital expenditures of $25 million (excludes $38 million of capital expenditures related to the two hotels closed for renovation and conversion and one hotel under development).

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.

The company will hold a web cast of its fourth quarter 2005 conference call today, February 28, 2006, at 10 a.m. Eastern time. Interested parties may go to the company’s Web site and click on Conference Calls. They also may listen to an archived web cast of the conference call on the Web site, or may dial (800) 405-2236, pass code 11051602, to hear a telephone replay. The archived web cast and telephone replay will be available through March 7, 2006.

Innkeepers USA Trust owns 70 hotels with a total of 8,825 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.

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) (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.

- more -

Innkeepers USA

Page 7

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 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.

- more -

Innkeepers USA

Page 8

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, Northern NJ, 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 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

- more -

Innkeepers USA

Page 9

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 wages, taxes or dividends, compliance with building codes, compliance with the Americans with Disabilities Act, workers compensation law changes, the Sarbanes-Oxley law, etc.). The Company undertakes no obligation to update any forward looking statement to reflect actual results, changes in the Company’s expectation, or for any other reason.

INNKEEPERS USA TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

 

     Three Months Ended
December 31,		     Twelve Months Ended
December 31,		  
     2005     2004     2005     2004  

Revenue:

         

Hotel operating

         

Rooms

      56,297       48,513       232,489       192,260  

Food and beverage

      2,354       269       6,254       1,061  

Telephone

      390       414       1,756       1,769  

Other

      1,746       1,243       6,156       4,544  

Corporate

         

Percentage lease

      —         0       —         5,010  

Other

      130       80       526       385  
                                

Total revenue

      60,917       50,519       247,181       205,029  
                                

Expenses:

         

Hotel operating

         

Rooms

      12,714       11,681       49,382       43,253  

Food and beverage

      1,997       218       4,947       1,020  

Telephone

      794       777       2,938       2,571  

Other

      663       602       2,643       2,036  

General and administrative

      6,365       5,171       23,797       18,509  

Franchise and marketing fees

      3,947       3,322       16,210       13,305  

Amortization of deferred franchise conversion

      292       274       1,240       1,047  

Advertising and promotions

      2,371       1,759       8,323       6,618  

Utilities

      3,038       2,405       11,610       9,290  

Repairs and maintenance

      3,352       3,013       12,584       10,771  

Management fees

      1,812       1,618       7,381       6,382  

Amortization of deferred lease acquisition

      131       131       523       512  

Insurance

      405       398       1,541       1,543  

Corporate

         

Depreciation

      9,130       8,202       35,356       31,806  

Amortization of franchise fees

      17       15       68       53  

Ground rent

      144       130       535       505  

Interest

      4,981       4,744       18,817       18,553  

Amortization of loan origination fees

      219       235       870       953  

Property taxes and insurance

      2,698       2,695       11,264       11,355  

General and administrative

      1,790       1,302       7,697       5,413  

Amortization of unearned compensation

      209       194       646       948  

Other charges

      0       0       3,053       875  
                                

Total expenses

      57,069       48,886       221,425       187,318  
                                

Income before minority interest

      3,848       1,633       25,756       17,711  

Minority interest, common

      2       70       (193 )     32  

Minority interest, preferred

      (1,068 )     (1,068 )     (4,273 )     (4,272 )
                                

Income from continuing operations

      2,782       635       21,290       13,471  

Income from discontinued operations

      (8 )     (75 )     1,369       1,129  
                                

Net income

      2,774       560       22,659       14,600  

Series A Preferred Share issuance costs

      —         —         —         (4,249 )

Preferred share dividends

      (2,900 )     (2,900 )     (11,600 )     (11,489 )
                                

Net income applicable to common shareholders

    $ (126 )   $ (2,340 )   $ 11,059     $ (1,138 )
                                

Earnings per share data:

         

Basic – continuing operations

    $ 0.00     $ (0.06 )   $ 0.23     $ (0.06 )
                                

Basic

    $ 0.00     $ (0.06 )   $ 0.26     $ (0.03 )
                                

Basic – weighted average shares

      42,730,979       37,576,641       41,962,899       37,576,641  
                                

Diluted – continuing operations

    $ 0.00     $ (0.06 )   $ 0.23     $ (0.06 )
                                

Diluted

    $ 0.00     $ (0.06 )   $ 0.26     $ (0.03 )
                                

Diluted – weighted average shares

      43,125,786       37,774,527       42,266,403       37,576,641  
                                

INNKEEPERS USA TRUST

CALCULATION OF FFO, ADJUSTED FFO, EBITDA, ADJUSTED EBITDA AND RECONCILIATION TO NET INCOME APPLICABLE TO COMMON SHAREHOLDERS

(in thousands, except share and per share data)

 

     Three Months Ended
December 31,		     Twelve Months Ended
December 31,		  
     2005     2004     2005     2004  

CALCULATION OF FFO

         

Net income (loss) applicable to common shareholders

    $ (126 )   $ (2,340 )   $ 11,059     $ (1,138 )

Depreciation

      9,130       8,202       35,356       31,806  

Depreciation included in discontinued operations

      —         0       —         1,564  

Gain on sale of hotels included in discontinued operations

      0       4       (1,501 )     (782 )

Minority interest, preferred

      0       (32 )     4,273       (32 )

Minority interest, common

      (2 )     (38 )     193       0  
                                

Diluted FFO

    $ 9,002     $ 5,796     $ 49,380     $ 31,418  
                                

Weighted average number of common shares and common share equivalents

      43,125,786       39,196,016       46,911,391       39,013,311  
                                

FFO per share

    $ 0.21     $ 0.15     $ 1.05     $ 0.81  
                                

FFO

      9,002       5,796       49,380       31,418  

Series A preferred share issuance costs

      —         0       —         4,249  

Other charges

      0       0       3,053       875  

Discontinued operations

      8       71       132       (1,911 )
                                

Adjusted FFO

    $ 9,010     $ 5,867     $ 52,565     $ 34,631  
                                

Adjusted FFO per share

    $ 0.21     $ 0.15     $ 1.12     $ 0.89  
                                
    

Three Months Ended

December 31,

     Twelve Months Ended
December 31,		  
     2005     2004     2005     2004  

CALCULATION OF EBITDA

         

Net income applicable to common shareholders

    $ (126 )   $ (2,340 )   $ 11,059     $ (1,138 )

Interest

      4,981       4,744       18,817       18,553  

Depreciation and amortization

      9,998       9,051       38,703       35,319  

Depreciation included in discontinued operations

      —         0       —         1,564  

Minority interest, common

      (2 )     (70 )     193       (32 )

Minority interest, preferred

      1,068       1,068       4,273       4,272  

Series A preferred share issuance costs

      —         0       —         4,249  

Preferred share dividends

      2,900       2,900       11,600       11,489  
                                

EBITDA

    $ 18,819     $ 15,353     $ 84,645     $ 74,276  
                                

Other charges

      0       0       3,053       875  

Discontinued operations

      8       71       132       (1,911 )

Gain on sale of hotels included in discontinued operations

      0       4       (1,501 )     (782 )
                                

Adjusted EBITDA

    $ 18,827     $ 15,428     $ 86,329     $ 72,458  
                                

INNKEEPERS USA TRUST

2006 Forecast Reconciliation

(in thousands, except share and per share data)

 

    

Three months ended

March 31, 2006

    Twelve months ended
December 31, 2006
     Low End Range    High End Range    Low End Range    High End Range

CALCULATION OF FFO

            

Net income (loss) applicable to common shareholders

      1,282      2,782      20,548      24,548

Depreciation

      9,182      9,182      37,611      37,611

Gain on sale of hotels included in discontinued operations

      —        —        —        —  

Minority interest, preferred

      —        —        3,565      3,565

Minority interest, common

      29      29      135      135
                           

Diluted FFO

      10,493      11,993      61,859      65,859
                           

Weighted average number of common shares and common share equivalents

      43,723,265      43,723,265      47,698,469      47,698,469
                           

FFO per share

      0.24      0.27      1.30      1.38
                           

FFO

      10,493      11,993      61,859      65,859

Other charges

      —        —        —        —  

Discontinued operations

      —        —        —        —  
                           

Adjusted FFO

      10,493      11,993      61,859      65,859
                           

Adjusted FFO per share

      0.24      0.27      1.30      1.38
                           
    

Three months ended

March 31, 2006

   

Twelve months ended

December 31, 2006

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

CALCULATION OF EBITDA

            

Net income (loss) applicable to common shareholders

      1,282      2,782      20,548      24,548

Interest

      4,942      4,942      20,103      20,103

Depreciation and amortization

      10,296      10,296      42,056      42,056

Minority interest, preferred

      1,068      1,068      3,565      3,565

Minority interest, common

      29      29      135      135

Preferred share dividends

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

EBITDA

      20,517      22,017      98,007      102,007
                           

Other charges

      —        —        —        —  

Discontinued operations

      —        —        —        —  

Gain on sale of hotels included in discontinued operations

      —        —        —        —  
                           

Adjusted EBITDA

    $ 20,517    $ 22,017    $ 98,007    $ 102,007
                           

INNKEEPERS USA TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

     December 31,
2005		     December 31,
2004		  

ASSETS

     

Investment in hotels:

     

Land and improvements

    $ 150,375     $ 127,392  

Buildings and improvements

      754,131       687,754  

Furniture and equipment

      106,944       101,909  

Renovations in process

      4,534       2,794  

Hotels under development

      4,413       3,864  

Hotels held for sale

      —         19299  
                
     1,020,397       943,012  

Accumulated depreciation

      (230,139 )     (207,853 )
                

Net investment in hotels

      790,258       735,159  

Cash and cash equivalents

      11,897       22,837  

Restricted cash and cash equivalents

      6,675       10,781  

Accounts receivable, net

      6,124       4,577  

Prepaid and other

      2,478       2,539  

Deferred and other

      19,546       20,099  
                

Total assets

    $ 836,978     $ 795,992  
                

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Debt

    $ 269,426     $ 286,865  

Accounts payable and accrued expenses

      15,956       12,663  

Payable to manager

      236       209  

Franchise conversion fee obligations

      10,714       10,825  

Distributions payable

      9,645       5,450  
                

Total liabilities

      305,977       316,012  

Minority interest in Partnership

      47,982       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, 42,914,086 and 37,966,756 issued and outstanding, respectively

      429       380  

Additional paid-in capital

      460,873       396,631  

Unearned compensation

      (1,939 )     (448 )

Distributions in excess of earnings

      (121,344 )     (112,671 )
                

Total shareholders’ equity

      483,019       428,892  
                

Total liabilities and shareholders’ equity

    $ 836,978     $ 795,992  
                

INNKEEPERS USA TRUST

DEBT COMPOSITION

As of December 31, 2005

(outstanding balance in thousands)

 

DEBT

    Outstanding
Balance		    Stated
Interest
Rate		     Maturity Date   Encumbered
Properties

Unsecured Line of Credit(1)

    $ 64,074    5.59 %   July 2007   —  

Industrial Revenue Bonds(1)

    $ 10,000    3.25 %   December 2014   —  

Term Loan #1

    $ 23,163    8.17 %   October 2007   8

Term Loan #2

    $ 34,915    8.15 %   March 2009   8

Term Loan #3

    $ 28,090    7.02 %   April 2010   7

Term Loan #4

    $ 45,533    7.16 %   October 2009   6

Term Loan #5

    $ 49,422    7.75 %   January 2011   6

Mortgage

    $ 12,709    10.35 %   June 2010   1

Adjustment (4)

    $ 1,520    —       —     —  
               

TOTAL

    $ 269,426    7.2 %(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

(in thousands, except shares data)

 

     December 31,
2005		     December 31,
2004		  

CAPITALIZATION

     

Common share market capitalization

    $ 698,000     $ 539,000  

Total Market capitalization

    $ 1,097,000     $ 1,042,000  

Common share closing price

    $ 16.00     $ 14.20  

Common share dividend(1)

   $ 0.46     $ 0.18  

Common share dividend yield(1)

      2.9 %     1.3 %

Preferred share closing price

    $ 24.43     $ 25.75  

Preferred share dividend(2)

    $ 2.00     $ 2.04  

Preferred share dividend yield(2)

      8.2 %     7.9 %

DEBT COVERAGE

     

Debt weighted average interest rate

      7.2 %     6.8 %

Debt to investment in hotel properties, at cost

      26 %     30 %

Debt and preferred shares to investment in hotel properties

      41 %     46 %

Debt to market capitalization

      25 %     28 %

Debt and preferred shares to market capitalization

      38 %     41 %

LIQUIDITY/FLEXIBILITY

     

Debt due 2005

      —       $ 6,000  

Debt due 2006

    $ 6,000     $ 7,000  

Debt due 2007

    $ 91,000     $ 7,000  

Debt due 2008 and thereafter

    $ 172,426     $ 267,000  

Unencumbered hotel assets(3)

      48 %     43 %

Unsecured Line of Credit outstanding balance

    $ 64,074     $ 60,000  

Unsecured Line of Credit available balance(4)

    $ 59,426     $ 65,000  

SHARES AND UNITS OUTSTANDING

     

Common Shares

      42,939,086       37,966,756  

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 December 31, 2005 and 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)

 

     December 31, 2005     Three Months Ended
December 31,		    

%

Inc (dec)

     Twelve Months Ended
December 31,		     %
Inc (dec)		  
     2005     2004       2005     2004    

PORTFOLIO(1)

               

Average Daily Rate

      $ 103.42     $ 96.47     7.20 %   $ 103.82     $ 97.42     6.57 %

Occupancy

        70.79 %     70.79 %   0.00 %     75.21 %     74.80 %   0.55 %

RevPAR

      $ 73.21     $ 68.29     7.20 %   $ 78.08     $ 72.87     7.15 %

Number of hotel properties

    65              

Percent of total rooms

    100.0 %            

Percent of room revenue(2)

    100.0 %            

Upscale Extended Stay

               

Average Daily Rate

      $ 103.91     $ 97.89     6.15 %   $ 103.84     $ 98.12     5.83 %

Occupancy

        73.75 %     73.07 %   0.93 %     78.19 %     77.41 %   1.01 %

RevPAR

      $ 76.64     $ 71.53     7.14 %   $ 81.20     $ 75.95     6.91 %

Number of hotel properties

    49              

Percent of total rooms

    74.7 %            

Percent of room revenue(2)

    77.7 %            

Upscale(1)

               

Average Daily Rate

      $ 113.53     $ 105.14     7.98 %   $ 123.57     $ 115.07     7.39 %

Occupancy

        64.57 %     63.04 %   2.43 %     68.54 %     73.82 %   -7.15 %

RevPAR

      $ 73.31     $ 66.28     10.61 %   $ 84.70     $ 84.95     -0.29 %

Number of hotel properties

    3              

Percent of total rooms

    5.8 %            

Percent of room revenue(2)

    6.2 %            

Mid Priced(1)

               

Average Daily Rate

      $ 98.00     $ 87.82     11.59 %   $ 97.66     $ 88.38     10.50 %

Occupancy

        61.27 %     64.33 %   -4.76 %     65.77 %     65.09 %   1.04 %

RevPAR

      $ 60.05     $ 56.50     6.28 %   $ 64.23     $ 57.53     11.65 %

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

      $ 104.06     $ 97.99     6.19 %   $ 103.98     $ 98.05     6.05 %

Occupancy

        73.28 %     72.08 %   1.66 %     77.63 %     76.55 %   1.41 %

RevPAR

      $ 76.25     $ 70.63     7.96 %   $ 80.73     $ 75.06     7.55 %

Number of hotel properties

    42              

Percent of total rooms

    63.5 %            

Percent of room revenue(2)

    65.6 %            

Summerfield Suites

               

Average Daily Rate

      $ 98.66     $ 92.64     6.50 %   $ 98.35     $ 93.76     4.90 %

Occupancy

        76.38 %     79.51 %   -3.94 %     81.61 %     83.06 %   -1.75 %

RevPAR

      $ 75.35     $ 73.66     2.29 %   $ 80.26     $ 77.88     3.06 %

Number of hotel properties

    6              

Percent of total rooms

    9.4 %            

Percent of room revenue(2)

    9.7 %            

     December 31, 2005     Three Months Ended
December 31,		    

%

Inc (dec)

     Twelve Months Ended
December 31,		     %
Inc (dec)		  
     2005     2004       2005     2004    

Hampton Inn(1)

               

Average Daily Rate

      $ 99.08     $ 88.28     12.23 %   $ 98.50     $ 88.87     10.84 %

Occupancy

        60.83 %     64.18 %   -5.22 %     65.52 %     64.64 %   1.36 %

RevPAR

      $ 60.27     $ 56.66     6.37 %   $ 64.53     $ 57.45     12.32 %

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)(4)

               

Average Daily Rate

      $ 103.85     $ 96.67     7.43 %   $ 103.67     $ 97.19     6.67 %

Occupancy

        71.11 %     71.39 %   -0.39 %     75.61 %     74.91 %   0.93 %

RevPAR

      $ 73.85     $ 69.01     7.01 %   $ 78.38     $ 72.80     7.66 %

Number of hotel properties

    64              

Percent of total rooms

    97.3 %            

Percent of room revenue(2)

    97.7 %            

Third Party Managed

               

Average Daily Rate

      $ 84.63     $ 86.10     -1.71 %   $ 110.53     $ 106.45     3.83 %

Occupancy

        59.13 %     49.24 %   20.09 %     61.02 %     70.94 %   -13.98 %

RevPAR

      $ 50.04     $ 42.40     18.02 %   $ 67.44     $ 75.52     -10.70 %

Number of hotel properties

    1              

Percent of total rooms

    2.7 %            

Percent of room revenue(2)

    2.4 %            

BY GEOGRAPHIC REGION

               

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

               

Average Daily Rate

      $ 106.92     $ 97.31     9.88 %   $ 106.57     $ 99.37     7.25 %

Occupancy

        65.15 %     71.95 %   -9.45 %     70.39 %     69.89 %   0.72 %

RevPAR

      $ 69.65     $ 70.02     -0.53 %   $ 75.02     $ 69.45     8.02 %

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

      $ 108.68     $ 101.81     6.75 %   $ 108.88     $ 103.26     5.44 %

Occupancy

        69.04 %     70.38 %   -1.90 %     74.36 %     74.00 %   0.49 %

RevPAR

      $ 75.03     $ 71.66     4.70 %   $ 80.97     $ 76.41     5.97 %

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

      $ 108.07     $ 96.06     12.50 %   $ 109.35     $ 98.94     10.52 %

Occupancy

        67.70 %     70.47 %   -3.93 %     72.91 %     74.47 %   -2.09 %

RevPAR

      $ 73.16     $ 67.69     8.08 %   $ 79.72     $ 73.68     8.20 %

Number of hotel properties

    15              

Percent of total rooms

    23.9 %            

Percent of room revenue(2)

    24.4 %            

     December 31, 2005     Three Months Ended
December 31,		    

%

Inc (dec)

     Twelve Months Ended
December 31,		     %
Inc (dec)		  
     2005     2004       2005     2004    

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

               

Average Daily Rate

      $ 90.03     $ 88.00     2.31 %   $ 91.62     $ 87.22     5.04 %

Occupancy

        68.00 %     65.09 %   4.47 %     71.57 %     68.94 %   3.81 %

RevPAR

      $ 61.22     $ 57.28     6.88 %   $ 65.57     $ 60.13     9.05 %

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

      $ 89.37     $ 81.18     10.09 %   $ 88.18     $ 81.28     8.49 %

Occupancy

        69.81 %     78.96 %   -11.59 %     79.68 %     86.33 %   -7.70 %

RevPAR

      $ 62.39     $ 64.10     -2.67 %   $ 70.26     $ 70.17     0.13 %

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

      $ 81.04     $ 79.32     2.17 %   $ 81.66     $ 81.22     0.54 %

Occupancy

        77.16 %     74.05 %   4.20 %     83.89 %     77.99 %   7.57 %

RevPAR

      $ 62.53     $ 58.74     6.45 %   $ 68.50     $ 63.35     8.13 %

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

      $ 95.41     $ 88.96     7.25 %   $ 93.30     $ 89.60     4.13 %

Occupancy

        78.02 %     76.19 %   2.40 %     81.92 %     78.91 %   3.81 %

RevPAR

      $ 74.44     $ 67.78     9.83 %   $ 76.43     $ 70.71     8.09 %

Number of hotel properties

    5              

Percent of total rooms

    8.7 %            

Percent of room revenue(2)

    8.5 %            

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

               

Average Daily Rate

      $ 89.03     $ 89.45     -0.47 %   $ 92.58     $ 88.22     4.94 %

Occupancy

        73.56 %     64.80 %   13.52 %     76.00 %     70.19 %   8.28 %

RevPAR

      $ 65.49     $ 57.97     12.97 %   $ 70.36     $ 61.92     13.63 %

Number of hotel properties

    2              

Percent of total rooms

    3.5 %            

Percent of room revenue(2)

    3.2 %            

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

               

Average Daily Rate

      $ 110.94     $ 104.32     6.35 %   $ 110.63     $ 104.48     5.89 %

Occupancy

        74.55 %     73.02 %   2.10 %     78.04 %     78.44 %   -0.51 %

RevPAR

      $ 82.70     $ 76.18     8.56 %   $ 86.34     $ 81.95     5.36 %

Number of hotel properties

    14              

Percent of total rooms

    25.4 %            

Percent of room revenue(2)

    28.1 %            

     December 31, 2005     Three Months Ended
December 31,		    

%

Inc (dec)

     Twelve Months Ended
December 31,		     %
Inc (dec)		  
     2005     2004       2005     2004    

BY SELECTED MSA

               

Atlanta

               

Average Daily Rate

      $ 105.08     $ 86.52     21.45 %   $ 99.18     $ 89.95     10.26 %

Occupancy

        70.85 %     65.76 %   7.74 %     73.67 %     71.97 %   2.36 %

RevPAR

      $ 74.45     $ 56.89     30.87 %   $ 73.07     $ 64.74     12.87 %

Number of hotel properties

    2              

Percent of total rooms

    3.5 %            

Percent of room revenue(2)

    3.3 %            

Boston

               

Average Daily Rate

      $ 98.14     $ 86.30     13.72 %   $ 95.35     $ 85.36     11.70 %

Occupancy

        54.53 %     59.54 %   -8.41 %     57.59 %     55.74 %   3.32 %

RevPAR

      $ 53.52     $ 51.38     4.17 %   $ 54.91     $ 47.58     15.41 %

Number of hotel properties

    1              

Percent of total rooms

    1.2 %            

Percent of room revenue(2)

    0.9 %            

Chicago

               

Average Daily Rate

      $ 92.09     $ 88.12     4.51 %   $ 93.10     $ 88.79     4.85 %

Occupancy

        66.64 %     64.45 %   3.40 %     69.20 %     64.46 %   7.35 %

RevPAR

      $ 61.37     $ 56.79     8.06 %   $ 64.43     $ 57.24     12.56 %

Number of hotel properties

    4              

Percent of total rooms

    7.0 %            

Percent of room revenue(2)

    5.8 %            

Dallas/Ft. Worth

               

Average Daily Rate

      $ 87.37     $ 80.08     9.10 %   $ 84.33     $ 80.45     4.82 %

Occupancy

        78.34 %     76.67 %   2.18 %     82.44 %     79.08 %   4.25 %

RevPAR

      $ 68.45     $ 61.40     11.48 %   $ 69.53     $ 63.62     9.29 %

Number of hotel properties

    4              

Percent of total rooms

    6.8 %            

Percent of room revenue(2)

    6.1 %            

Denver

               

Average Daily Rate

      $ 89.03     $ 89.45     -0.47 %   $ 92.58     $ 88.22     4.94 %

Occupancy

        73.56 %     64.80 %   13.52 %     76.00 %     70.19 %   8.28 %

RevPAR

      $ 65.49     $ 57.97     12.97 %   $ 70.36     $ 61.92     13.63 %

Number of hotel properties

    2              

Percent of total rooms

    3.6 %            

Percent of room revenue(2)

    3.2 %            

Detroit

               

Average Daily Rate

      $ 90.23     $ 92.39     -2.34 %   $ 93.58     $ 90.19     3.76 %

Occupancy

        72.26 %     64.11 %   12.71 %     74.47 %     74.57 %   -0.13 %

RevPAR

      $ 65.20     $ 59.23     10.08 %   $ 69.69     $ 67.26     3.61 %

Number of hotel properties

    3              

Percent of total rooms

    4.5 %            

Percent of room revenue(2)

    4.0 %            

     December 31, 2005     Three Months Ended
December 31,		    

%

Inc (dec)

     Twelve Months Ended
December 31,		     %
Inc (dec)		  
     2005     2004       2005     2004    

Hartford

               

Average Daily Rate

      $ 112.40     $ 104.04     8.04 %   $ 112.58     $ 105.08     7.14 %

Occupancy

        72.83 %     75.08 %   -3.00 %     73.79 %     73.02 %   1.05 %

RevPAR

      $ 81.85     $ 78.12     4.77 %   $ 83.07     $ 76.73     8.26 %

Number of hotel properties

    2              

Percent of total rooms

    2.4 %            

Percent of room revenue(2)

    2.6 %            

Philadelphia

               

Average Daily Rate

      $ 101.96     $ 94.97     7.36 %   $ 101.64     $ 94.85     7.16 %

Occupancy

        74.46 %     74.52 %   -0.08 %     78.19 %     76.61 %   2.06 %

RevPAR

      $ 75.92     $ 70.78     7.26 %   $ 79.47     $ 72.66     9.37 %

Number of hotel properties

    4              

Percent of total rooms

    5.8 %            

Percent of room revenue(2)

    5.9 %            

Richmond

               

Average Daily Rate

      $ 94.84     $ 88.54     7.12 %   $ 95.40     $ 91.34     4.44 %

Occupancy

        74.23 %     75.31 %   -1.43 %     80.53 %     76.64 %   5.08 %

RevPAR

      $ 70.40     $ 66.67     5.59 %   $ 76.83     $ 70.01     9.74 %

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

      $ 111.99     $ 103.89     7.80 %   $ 110.63     $ 103.78     6.60 %

Occupancy

        72.63 %     70.07 %   3.65 %     74.31 %     74.68 %   -0.50 %

RevPAR

      $ 81.33     $ 72.80     11.72 %   $ 82.21     $ 77.51     6.06 %

Number of hotel properties

    8              

Percent of total rooms

    15.0 %            

Percent of room revenue(2)

    15.8 %            

Seattle/Portland

               

Average Daily Rate

      $ 109.34     $ 103.62     5.52 %   $ 109.14     $ 105.27     3.68 %

Occupancy

        74.83 %     74.61 %   0.29 %     82.53 %     80.81 %   2.13 %

RevPAR

      $ 81.83     $ 77.32     5.83 %   $ 90.07     $ 85.07     5.88 %

Number of hotel properties

    4              

Percent of total rooms

    6.3 %            

Percent of room revenue(2)

    7.3 %            

Washington, D.C.(1)

               

Average Daily Rate

      $ 135.88     $ 120.77     12.51 %   $ 134.05     $ 118.98     12.67 %

Occupancy

        67.62 %     71.08 %   -4.87 %     71.98 %     76.43 %   -5.82 %

RevPAR

      $ 91.88     $ 85.85     7.02 %   $ 96.49     $ 90.93     6.11 %

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, one Westin hotel acquired in May 2005 and one Independent hotel acquired in November 2005.
(2) Room revenue for YTD December 2005.
(3) Innkeepers Hospitality Management, Inc. assumed management of one Sunrise Suites hotel previously managed by affiliates of Wyndham International, Inc. on March 1, 2004, and five Summerfield Suites by Wyndham hotels previously managed by affiliates of Wyndham International, Inc. on April 1, 2004.
(4) Operating statistics for hotels acquired in 2004 and 2005 include room revenue for those periods prior to our acquisition of the hotels.