KPA Innkeepers Usa Tr

PALM BEACH, Fla., Feb. 28 /PRNewswire-FirstCall/ -- 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. % Full Yr Full Yr % 4Q 2005* 4Q 2004* Change* 2005* 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. 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 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." 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 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; * 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 http://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. 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. 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 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. Contact: Bruce Riggins (Company) Jerry Daly or Carol McCune Chief Financial Officer Daly Gray (Media) (561) 227-1302 (703) 435-6293 INNKEEPERS USA TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Three Months Ended Twelve Months Ended December 31, 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 Twelve Months Ended December 31, 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 Twelve Months Ended December 31, 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 Twelve months ended March 31, 2006 December 31, 2006 Low End High End Low End High End Range Range Range 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 Twelve months ended March 31, 2006 December 31, 2006 Low End High End Low End High End Range Range Range 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, December 31, 2005 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 -- 19,299 ------------------------------------------------------------------------- 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) Outstanding Stated Maturity Encumbered Balance Interest Date Properties DEBT Rate -------------------------------------------------------------------------- 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, December 31, 2005 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) Three Months Ended December 31, December % 31, 2005 2005 2004 Inc (dec) ------------------------------------ PORTFOLIO(1) ------------------------------------ -------------------------- Average Daily Rate $103.42 $96.47 7.20% -------------------------- Occupancy 70.79% 70.79% 0.00% -------------------------- RevPAR $73.21 $68.29 7.20% -------------------------- ------ 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% -------------------------- Occupancy 73.75% 73.07% 0.93% -------------------------- RevPAR $76.64 $71.53 7.14% -------------------------- ------ 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% -------------------------- Occupancy 64.57% 63.04% 2.43% -------------------------- RevPAR $73.31 $66.28 10.61% -------------------------- ------ 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% -------------------------- Occupancy 61.27% 64.33% -4.76% -------------------------- RevPAR $60.05 $56.50 6.28% ------ 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% -------------------------- Occupancy 73.28% 72.08% 1.66% -------------------------- RevPAR $76.25 $70.63 7.96% -------------------------- ------ 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% -------------------------- Occupancy 76.38% 79.51% -3.94% -------------------------- RevPAR $75.35 $73.66 2.29% -------------------------- ------ Number of hotel properties 6 ------ Percent of total rooms 9.4% ------ Percent of room revenue(2) 9.7% ------ Hampton Inn(1) -------------------------- Average Daily Rate $99.08 $88.28 12.23% -------------------------- Occupancy 60.83% 64.18% -5.22% -------------------------- RevPAR $60.27 $56.66 6.37% -------------------------- ------ 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% -------------------------- Occupancy 71.11% 71.39% -0.39% -------------------------- RevPAR $73.85 $69.01 7.01% -------------------------- ------ 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% -------------------------- Occupancy 59.13% 49.24% 20.09% -------------------------- RevPAR $50.04 $42.40 18.02% -------------------------- ------ 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% -------------------------- Occupancy 65.15% 71.95% -9.45% -------------------------- RevPAR $69.65 $70.02 -0.53% -------------------------- ------ 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% -------------------------- Occupancy 69.04% 70.38% -1.90% -------------------------- RevPAR $75.03 $71.66 4.70% -------------------------- ------ 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% -------------------------- Occupancy 67.70% 70.47% -3.93% -------------------------- RevPAR $73.16 $67.69 8.08% -------------------------- ------ Number of hotel properties 15 ------ Percent of total rooms 23.9% ------ Percent of room revenue(2) 24.4% ------ East North Central [OH, MI, IN, IL, WI] -------------------------- Average Daily Rate $90.03 $88.00 2.31% -------------------------- Occupancy 68.00% 65.09% 4.47% -------------------------- RevPAR $61.22 $57.28 6.88% -------------------------- ------ 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% -------------------------- Occupancy 69.81% 78.96% -11.59% -------------------------- RevPAR $62.39 $64.10 -2.67% -------------------------- ------ 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% -------------------------- Occupancy 77.16% 74.05% 4.20% -------------------------- RevPAR $62.53 $58.74 6.45% -------------------------- ------ 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% -------------------------- Occupancy 78.02% 76.19% 2.40% -------------------------- RevPAR $74.44 $67.78 9.83% -------------------------- ------ 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% -------------------------- Occupancy 73.56% 64.80% 13.52% -------------------------- RevPAR $65.49 $57.97 12.97% -------------------------- ------ 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% -------------------------- Occupancy 74.55% 73.02% 2.10% -------------------------- RevPAR $82.70 $76.18 8.56% -------------------------- ------ Number of hotel properties 14 ------ Percent of total rooms 25.4% ------ Percent of room revenue(2) 28.1% ------ BY SELECTED MSA ------------------------------------ Atlanta -------------------------- Average Daily Rate $105.08 $86.52 21.45% -------------------------- Occupancy 70.85% 65.76% 7.74% -------------------------- RevPAR $74.45 $56.89 30.87% -------------------------- ------ 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% -------------------------- Occupancy 54.53% 59.54% -8.41% -------------------------- RevPAR $53.52 $51.38 4.17% -------------------------- ------ 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% -------------------------- Occupancy 66.64% 64.45% 3.40% -------------------------- RevPAR $61.37 $56.79 8.06% -------------------------- ------ Number of hotel properties 4 ------ Percent of total rooms 7.0% ------ Percent of room revenue(2) 5.8% ------ Dallas/Ft. Worth -------------------------- Average Daily Rate $87.37 $80.08 9.10% -------------------------- Occupancy 78.34% 76.67% 2.18% -------------------------- RevPAR $68.45 $61.40 11.48% -------------------------- ------ 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% -------------------------- Occupancy 73.56% 64.80% 13.52% -------------------------- RevPAR $65.49 $57.97 12.97% -------------------------- ------ 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% -------------------------- Occupancy 72.26% 64.11% 12.71% -------------------------- RevPAR $65.20 $59.23 10.08% -------------------------- ------ Number of hotel properties 3 ------ Percent of total rooms 4.5% ------ Percent of room revenue(2) 4.0% ------ Hartford -------------------------- Average Daily Rate $112.40 $104.04 8.04% -------------------------- Occupancy 72.83% 75.08% -3.00% -------------------------- RevPAR $81.85 $78.12 4.77% -------------------------- ------ 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% -------------------------- Occupancy 74.46% 74.52% -0.08% -------------------------- RevPAR $75.92 $70.78 7.26% -------------------------- ------ 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% -------------------------- Occupancy 74.23% 75.31% -1.43% -------------------------- RevPAR $70.40 $66.67 5.59% -------------------------- ------ 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% -------------------------- Occupancy 72.63% 70.07% 3.65% -------------------------- RevPAR $81.33 $72.80 11.72% -------------------------- ------ 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% -------------------------- Occupancy 74.83% 74.61% 0.29% -------------------------- RevPAR $81.83 $77.32 5.83% -------------------------- ------ 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% -------------------------- Occupancy 67.62% 71.08% -4.87% -------------------------- RevPAR $91.88 $85.85 7.02% -------------------------- ------ Number of hotel properties 4 ------ Percent of total rooms 6.7% ------ Percent of room revenue(2) 8.3% ------ Twelve Months Ended December 31, % 2005 2004 Inc (dec) ------------------------------------ PORTFOLIO(1) ------------------------------------ ------------------------------- Average Daily Rate $103.82 $97.42 6.57% ------------------------------- Occupancy 75.21% 74.80% 0.55% ------------------------------- RevPAR $78.08 $72.87 7.15% ------------------------------- Upscale Extended Stay ------------------------------- Average Daily Rate $103.84 $98.12 5.83% ------------------------------- Occupancy 78.19% 77.41% 1.01% ------------------------------- RevPAR $81.20 $75.95 6.91% ------------------------------- Upscale(1) ------------------------------- Average Daily Rate $123.57 $115.07 7.39% ------------------------------- Occupancy 68.54% 73.82% -7.15% ------------------------------- RevPAR $84.70 $84.95 -0.29% ------------------------------- Mid Priced(1) ------------------------------- Average Daily Rate $97.66 $88.38 10.50% ------------------------------- Occupancy 65.77% 65.09% 1.04% ------------------------------- RevPAR $64.23 $57.53 11.65% ------------------------------- BY FRANCHISE AFFILIATION ------------------------------------ Residence Inn ------------------------------- Average Daily Rate $103.98 $98.05 6.05% ------------------------------- Occupancy 77.63% 76.55% 1.41% ------------------------------- RevPAR $80.73 $75.06 7.55% ------------------------------- Summerfield Suites ------------------------------- Average Daily Rate $98.35 $93.76 4.90% ------------------------------- Occupancy 81.61% 83.06% -1.75% ------------------------------- RevPAR $80.26 $77.88 3.06% ------------------------------- Hampton Inn(1) ------------------------------- Average Daily Rate $98.50 $88.87 10.84% ------------------------------- Occupancy 65.52% 64.64% 1.36% ------------------------------- RevPAR $64.53 $57.45 12.32% ------------------------------- BY MANAGEMENT COMPANY Innkeepers Hospitality Management(1)(3)(4) ------------------------------- Average Daily Rate $103.67 $97.19 6.67% ------------------------------- Occupancy 75.61% 74.91% 0.93% ------------------------------- RevPAR $78.38 $72.80 7.66% ------------------------------- Third Party Managed ------------------------------- Average Daily Rate $110.53 $106.45 3.83% ------------------------------- Occupancy 61.02% 70.94% -13.98% ------------------------------- RevPAR $67.44 $75.52 -10.70% ------------------------------- BY GEOGRAPHIC REGION ------------------------------------ New England [ME, NH, VT, MA, CT, RI] ------------------------------- Average Daily Rate $106.57 $99.37 7.25% ------------------------------- Occupancy 70.39% 69.89% 0.72% ------------------------------- RevPAR $75.02 $69.45 8.02% ------------------------------- Middle Atlantic(1) [NY, NJ, PA] ------------------------------- Average Daily Rate $108.88 $103.26 5.44% ------------------------------- Occupancy 74.36% 74.00% 0.49% ------------------------------- RevPAR $80.97 $76.41 5.97% ------------------------------- South Atlantic(1) [DE, MD, WV, DC, VA, NC, SC, GA, FL] ------------------------------- Average Daily Rate $109.35 $98.94 10.52% ------------------------------- Occupancy 72.91% 74.47% -2.09% ------------------------------- RevPAR $79.72 $73.68 8.20% ------------------------------- East North Central [OH, MI, IN, IL, WI] ------------------------------- Average Daily Rate $91.62 $87.22 5.04% ------------------------------- Occupancy 71.57% 68.94% 3.81% ------------------------------- RevPAR $65.57 $60.13 9.05% ------------------------------- East South Central(1) [KY, TN, AL, MS] ------------------------------- Average Daily Rate $88.18 $81.28 8.49% ------------------------------- Occupancy 79.68% 86.33% -7.70% ------------------------------- RevPAR $70.26 $70.17 0.13% ------------------------------- West North Central [MN, IA, MO, KS, NE, SD, ND] ------------------------------- Average Daily Rate $81.66 $81.22 0.54% ------------------------------- Occupancy 83.89% 77.99% 7.57% ------------------------------- RevPAR $68.50 $63.35 8.13% ------------------------------- West South Central [AR, LA, OK, TX] ------------------------------- Average Daily Rate $93.30 $89.60 4.13% ------------------------------- Occupancy 81.92% 78.91% 3.81% ------------------------------- RevPAR $76.43 $70.71 8.09% ------------------------------- Mountain [MT, ID, WY, CO, UT, NM, AZ, NV] ------------------------------- Average Daily Rate $92.58 $88.22 4.94% ------------------------------- Occupancy 76.00% 70.19% 8.28% ------------------------------- RevPAR $70.36 $61.92 13.63% ------------------------------- Pacific [WA, OR, CA, AK, HI] ------------------------------- Average Daily Rate $110.63 $104.48 5.89% ------------------------------- Occupancy 78.04% 78.44% -0.51% ------------------------------- RevPAR $86.34 $81.95 5.36% ------------------------------- BY SELECTED MSA ------------------------------------ Atlanta ------------------------------- Average Daily Rate $99.18 $89.95 10.26% ------------------------------- Occupancy 73.67% 71.97% 2.36% ------------------------------- RevPAR $73.07 $64.74 12.87% ------------------------------- Boston ------------------------------- Average Daily Rate $95.35 $85.36 11.70% ------------------------------- Occupancy 57.59% 55.74% 3.32% ------------------------------- RevPAR $54.91 $47.58 15.41% ------------------------------- Chicago ------------------------------- Average Daily Rate $93.10 $88.79 4.85% ------------------------------- Occupancy 69.20% 64.46% 7.35% ------------------------------- RevPAR $64.43 $57.24 12.56% ------------------------------- Dallas/Ft. Worth ------------------------------- Average Daily Rate $84.33 $80.45 4.82% ------------------------------- Occupancy 82.44% 79.08% 4.25% ------------------------------- RevPAR $69.53 $63.62 9.29% ------------------------------- Denver ------------------------------- Average Daily Rate $92.58 $88.22 4.94% ------------------------------- Occupancy 76.00% 70.19% 8.28% ------------------------------- RevPAR $70.36 $61.92 13.63% ------------------------------- Detroit ------------------------------- Average Daily Rate $93.58 $90.19 3.76% ------------------------------- Occupancy 74.47% 74.57% -0.13% ------------------------------- RevPAR $69.69 $67.26 3.61% ------------------------------- Hartford ------------------------------- Average Daily Rate $112.58 $105.08 7.14% ------------------------------- Occupancy 73.79% 73.02% 1.05% ------------------------------- RevPAR $83.07 $76.73 8.26% ------------------------------- Philadelphia ------------------------------- Average Daily Rate $101.64 $94.85 7.16% ------------------------------- Occupancy 78.19% 76.61% 2.06% ------------------------------- RevPAR $79.47 $72.66 9.37% ------------------------------- Richmond ------------------------------- Average Daily Rate $95.40 $91.34 4.44% ------------------------------- Occupancy 80.53% 76.64% 5.08% ------------------------------- RevPAR $76.83 $70.01 9.74% ------------------------------- San Francisco/San Jose/Oakland (Silicon valley) ------------------------------- Average Daily Rate $110.63 $103.78 6.60% ------------------------------- Occupancy 74.31% 74.68% -0.50% ------------------------------- RevPAR $82.21 $77.51 6.06% ------------------------------- Seattle/Portland ------------------------------- Average Daily Rate $109.14 $105.27 3.68% ------------------------------- Occupancy 82.53% 80.81% 2.13% ------------------------------- RevPAR $90.07 $85.07 5.88% ------------------------------- Washington, D.C.(1) ------------------------------- Average Daily Rate $134.05 $118.98 12.67% ------------------------------- Occupancy 71.98% 76.43% -5.82% ------------------------------- RevPAR $96.49 $90.93 6.11% ------------------------------- (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. First Call Analyst: FCMN Contact: julie@dalygray.com DATASOURCE: Innkeepers USA Trust CONTACT: Bruce Riggins, Chief Financial Officer of Innkeepers USA Trust, +1-561-227-1302, or Jerry Daly or Carol McCune, both of Daly Gray, +1-703-435-6293, for Innkeepers USA Trust Web site: http://www.innkeepersusa.com/

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