Equity Inns Expects First Quarter and Full Year 2007 Funds from Operations to Exceed Expectations
29 Marzo 2007 - 2:00PM
Business Wire
Equity Inns, Inc. (NYSE: ENN), the third largest hotel real estate
investment trust (REIT), today announced that the Company expects
funds from operations (FFO) for the first quarter 2007 to be in the
range of $0.36 to $0.37 per diluted share versus previous
expectations of $0.31 to $0.33 per diluted share. The Company
expects net income applicable to common shareholders for the first
quarter 2007 to be in the range of $0.07 to $0.09 per diluted
share. The better than expected performance is primarily due to the
Company achieving higher than anticipated results from hotel
operations due to higher average daily rate. The Company is
increasing its full year 2007 FFO guidance to a range of $1.45 to
$1.52 per share from its initial range of $1.40 to $1.48 per share.
In addition, Equity Inns is raising its 2007 full year net income
per diluted share to $0.30 to $0.38 from its previous per share
range of $0.25 to $0.33. Howard Silver, President and Chief
Executive Officer commented, �As we communicated earlier this year,
we anticipated that normalized results for the first quarter of
2007 would be difficult to predict because of the unusual positive
impact that unexpected hurricane business had on the Company�s
financial performance in the first quarter of 2006. Our
expectations proved to be conservative, resulting in better than
expected gross operating margins during the first quarter of 2007.�
The Company anticipates providing a full report of its first
quarter 2007 earnings on May 7, 2007. Forward Looking Statements
Certain matters discussed in this press release which are not
historical facts are �forward-looking statements� within the
meaning of the federal securities laws and involve risks and
uncertainties. The words �may,� �plan,� �project,� �anticipate,�
�believe,� �estimate,� �forecast, �expect,� �intend,� �will,� and
similar terms are intended to identify forward-looking statements,
which include, without limitation, statements concerning our
outlook for the hotel industry, acquisition and disposition plans
for our hotels and assumptions and forecasts of future results for
fiscal year 2007. Forward-looking statements are not guarantees of
future performance and involve numerous risks and uncertainties
which may cause our actual financial condition, results of
operations and performance to be materially different from the
results of expectations expressed or implied by such statements.
General economic conditions, future acts of terrorism or war, risks
associated with the hotel and hospitality business, the
availability of capital, risks associated with our debt financing,
hotel operating risks and numerous other factors, may affect our
future results and performance and achievements. These risks and
uncertainties are described in greater detail in Item 1.A. of our
2006 Annual Report on Form 10-K filed on February 28th, 2007, and
our other periodic filings with the United States Securities and
Exchange Commission (SEC). We undertake no obligation and do not
intend to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
Although we believe our current expectations to be based upon
reasonable assumptions, we can give no assurance that our
expectations will be attained or that actual results will not
differ materially. Notes to Financial Information The Company
operates as a self-managed and self-administered real estate
investment trust, or REIT. Readers are encouraged to find further
detail regarding Equity Inns� organizational structure in its
annual report on Form 10-K for the year ended December 31, 2006 as
filed with the SEC. Non-GAAP Financial Measures Included in this
press release are certain "non-GAAP financial measures," which are
measures of the Company's historical or future financial
performance that are different from measures calculated and
presented in accordance with generally accepted accounting
principles, or GAAP, within the meaning of applicable SEC rules.
These include: (i) Funds From Operations, (ii) Adjusted Funds From
Operations and (iii) Adjusted EBITDA. The following discussion
defines these terms, which the Company believes can be useful
measures of its performance. Funds from Operations The National
Association of Real Estate Investment Trusts, or NAREIT, defines
funds from operations, or FFO, as net income (loss) applicable to
common shareholders, excluding gains (or losses) from sales of real
estate, the cumulative effect of changes in accounting principles,
real estate-related depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. FFO
does not include the cost of capital improvements or any related
capitalized interest. Equity Inns uses FFO per diluted share as a
measure of performance to adjust for certain non-cash expenses such
as depreciation and amortization because historical cost accounting
for real estate assets implicitly assumes that the value of real
estate assets diminishes predictably over time. Because real estate
values have historically risen or fallen with market conditions,
many industry investors have considered presentation of operating
results for real estate companies that use historical cost
accounting to be less informative. NAREIT adopted the definition of
FFO in order to promote an industry-wide standard measure of REIT
operating performance. Accordingly, as a member of NAREIT, Equity
Inns adopted FFO as a measure to evaluate performance and
facilitate comparisons between the Company and other REITs,
although FFO and FFO per diluted share may not be comparable to
those measures, or similarly titled measures, as reported by other
companies. Additionally, FFO is used by management in the annual
budget process. Adjusted Funds From Operations Equity Inns further
adjusts FFO for losses on impairment of hotels, prepayment
penalties on extinguishment of debt and other non-cash or unusual
items. We refer to this as adjusted funds from operations, or AFFO.
The Company�s computation of AFFO and AFFO per diluted share is not
comparable to the NAREIT definition of FFO or to similar measures
reported by other REITs, but the Company believes it is an
appropriate measure for this Company. The Company uses AFFO because
it believes that this measure provides investors a useful indicator
of the operating performance of the Company�s hotels by adjusting
for the effects of certain non-cash or non-recurring items arising
from the Company�s financing activities, impairment charges on
hotels held for sale and other areas. In addition to being used by
management in the annual budget process, AFFO per diluted share is
also used by the Compensation Committee of the Board of Directors
as one of the criteria for performance-based executive
compensation. EBITDA and Adjusted EBITDA Earnings before Interest
Expense, Income Taxes, Depreciation and Amortization, or EBITDA, is
a commonly used measure of performance in many industries, which
the Company believes provides useful information to investors
regarding its results of operations. The Company believes that
EBITDA helps investors evaluate the ongoing operating performance
of its properties and facilitates comparisons with other lodging
REITs, hotel owners who are not REITs, and other capital-intensive
companies. The Company uses EBITDA to provide a baseline when
evaluating hotel results. The Company also uses EBITDA as one
measure in determining the value of acquisitions and dispositions
and, like FFO and AFFO, it is also used by management in the annual
budget process. The Company further adjusts EBITDA to exclude
preferred stock dividends, income or losses from discontinued
operations, minority interests and losses on impairment of hotels
because it believes that including such items in EBITDA is not
consistent with reflecting the ongoing operating performance of the
remaining assets. The Company has historically adjusted EBITDA when
evaluating its performance because management believes that the
exclusion of certain non-cash and non-recurring items described
above assists the Company in measuring the performance of its
hotels and reflects the ongoing value of the Company as a whole.
Therefore, the Company modifies EBITDA and refers to this measure
as Adjusted EBITDA. About Equity Inns Equity Inns, Inc. is a
self-advised REIT that focuses on the upscale extended stay,
all-suite and midscale limited-service segments of the hotel
industry. The Company, which ranks as the third largest hotel REIT
based on number of hotels, currently owns 132 hotels with 15,731
rooms located in 35 states. For more information about Equity Inns,
visit the Company's Web site at www.equityinns.com. EQUITY INNS,
INC. 2007 GUIDANCE RECONCILIATION (unaudited) � The following is a
reconciliation of the Company�s 2007 forecast of net income (loss)
to FFO��and AFFO, both applicable to common shareholders, and
Adjusted EBITDA, and illustrates the difference in these measures
of operating performance (in thousands, except per share and unit
data): � Three Months EndedMarch 31, 2007 � Twelve Months
EndedDecember 31, 2007 Low End Range � High End Range � Low End
Range � High End Range FFO AND AFFO RECONCILIATION: � Net income
(loss) applicable to common shareholders $3,800� $4,800� $16,400�
$20,800� � Add (subtract): (Gain) loss on sale of hotel properties
-� -� -� -� Minority interests (income) expense 70� 70� 385� 385�
Depreciation 16,000� 16,000� 64,000� 64,000� Depreciation from
discontinued operations -� -� -� -� � Funds From Operations (FFO)
19,870� 20,870� 80,785� 85,185� � Loss on impairment of hotels -�
-� -� -� Other -� -� -� -� � Adjusted Funds From Operations (AFFO)
$19,870� $20,870� $80,785� $85,185� � Weighted average number of
diluted common shares and Partnership units outstanding 55,864�
55,864� 55,892� 55,892� � FFO per Share and Unit $0.36� $0.37�
$1.45� $1.52� � AFFO per Share and Unit $0.36� $0.37� $1.45� $1.52�
� ADJUSTED EBITDA RECONCILIATION: � Net income (loss) applicable to
common shareholders $3,800� $4,800� $16,400� $20,800� � Add
(subtract): Preferred stock dividends 3,087� 3,087� 12,347� 12,347�
(Income) loss from discontinued operations -� -� -� -� Minority
interests (income) expense 70� 70� 385� 385� Interest expense, net
11,000� 11,000� 47,000� 48,000� Loss on impairment of hotels -� -�
-� -� Depreciation 16,000� 16,000� 64,000� 64,000� Amortization of
non-cash stock-based compensation and deferred expenses 875� 875�
3,600� 3,600� � Adjusted EBITDA $34,832� $35,832� $143,732�
$149,132�
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