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GERMANTOWN, Tenn. -- Equity Inns, Inc. (NYSE: ENN), a hotel real estate investment trust (REIT), today announced that it has entered into an agreement to purchase four hotels from the McKibbon Hotel Group, a hotel developer and management company, for $28.5 million, including the assumption of $13 million of debt. Before the acquisition is completed, the Company will perform its customary due diligence procedures. The hotels are in addition to the nine hotels that Equity Inns acquired from the McKibbon Hotel Group earlier in 2004.
Equity Inns will acquire two Marriott Courtyards located in Knoxville, Tennessee and Mobile, Alabama. The Company will also purchase a Residence Inn in Macon, Georgia and a Springhill Suites in Asheville, North Carolina. The Springhill Suites hotel will be Equity Inns' first acquisition of this brand, which was developed by Marriott in 1998 to compete in the moderately priced all-suite segment. Springhill Suites achieved a revenue per available room (REVPAR) index of 117% in 2003.
The four hotels will collectively add 322 rooms to the Company's hotel portfolio and have an average age of seven years. The properties will continue to be managed by McKibbon Hotel Management, Inc. for a minimum of three years under a performance based management contract. The transaction was executed at an average cap rate of 10.3% on a trailing twelve-month cash flow basis. Equity Inns estimates that the impact of the hotels will be positive to its 2005 funds from operations ("FFO"). The transaction is expected to close by the end of the first quarter 2005.
Phillip H. McNeill, Sr., Chief Executive Officer and Chairman of the Board commented, "We continue to add high-quality properties to our portfolio as we solidify our relationship with the McKibbon Hotel Group. These four hotels share many of the same attributes of our previous acquisitions, in that they are all formidable brands in good locations that generate strong cash flows. In addition, our closer relationship with the McKibbon Hotel Group provides us with additional opportunities for future acquisitions."
Howard A. Silver, President and Chief Operating Officer added, "The four hotels are all located in cities in which we already have a presence or similarly offer compelling demographics. Collectively, they provide proximity and great visibility from high-traffic regional malls, corporate offices, university campuses, medical facilities and tourist attractions. We are therefore encouraged by their capacity to attract both business and leisure travelers. Moreover, they have all demonstrated an ability to achieve RevPAR premiums above their local competition."
When this transaction and the other announced acquisitions are complete, Equity Inns will own 110 hotels.
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," "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 2004 and 2005 FFO and FFO per diluted share. Forward-looking statements are not guarantees of future performance and involve numerous risks and uncertainties which may cause our actual financial condition, results of operation 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 our periodic filings with the United States Securities and Exchange Commission (SEC), including our Form 8-K dated March 11, 2004. 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.
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 currently owns 104 hotels with 12,981 rooms located in 34 states. For more information about Equity Inns, visit the Company's Web site at www.equityinns.com.
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