Press Release: Jameson Inns, Inc.
August 12, 2002
ATLANTA, GA -- Jameson Inns, Inc. (Nasdaq: JAMS), a hotel real estate investment trust (REIT), and owner of Jameson
Inn and Signature Inn hotels, August 7 announced financial results for the second quarter ended June 30, 2002.
Second Quarter 2002 Overview
Funds from operations ("FFO") of $4,368,000 or $0.37 per diluted share of common stock for the second
quarter ended June 30, 2002 represented a 20% increase over FFO of $3,638,000 or $0.31 per diluted share of common
stock, for the same quarter in 2001. Net income before dividends to preferred shareholders increased $501,000 to
$1,525,000, a 49% increase over second quarter 2001. The Company reported a net loss attributable to common stockholders
of ($142,000) or $(0.01) per share of common stock for the second quarter 2002 versus a net loss of ($643,000),
or $(0.05) per share of common for the second quarter of 2001.
Combined revenue per available room (REVPAR) for both brands of the Company was $32.83 for the second quarter of
2002, down $0.82, or 2.4% from the second quarter of 2001, due to a decline in occupancy to 55.2% from 57.9%, offset
partially by a 2.3% increase in average daily rate. REVPAR for the Jameson Inns increased 1.3% to $34.43 for the
second quarter of 2002 compared to $33.98 for the second quarter of 2001, resulting from a 2.6% increase in average
daily rate, partially offset by a decrease in occupancy to 59.8% from 60.5%. REVPAR for the Signature Inns decreased
9.5% to $29.94 for the second quarter of 2002 compared to $33.08 for the second quarter of 2001, due to a decline
in occupancy to 47.0% from 53.4%, offset partially by a 2.9% increase in average daily rate.
Lease revenues earned from Kitchin Hospitality, LLC, the company that leases and operates the Inns, increased $59,000
for the quarter compared to the second quarter of 2001. Lease revenues earned from the Jameson Inns increased $185,000
due primarily to the increase in REVPAR compared to the same period in 2001, and an increase of 8,796 room nights
available during 2002 compared to 2001. Lease revenues earned from the Signature Inns decreased $122,000 in the
second quarter of 2002 versus second quarter of 2001 due to a decrease of 9,009 room nights available in 2002 as
compared to 2001. Lease revenue earned from billboards decreased $4,000 in second quarter of 2002 versus second
quarter of 2001 due to the sale of certain billboards in connection with Inn sales during 2001.
"We are pleased that business trends continue to improve in this difficult environment," said Tom Kitchin,
CEO. "The second quarter decline in REVPAR was less than 3%, significantly better than the 11% decline in
the first quarter. We expect improvements in comparative REVPAR to continue during the remainder of the year."
Long-term Debt
At June 30, 2002 the Company had total indebtedness of $228 million compared to $227 million at December 31, 2001.
Approximately $200 million of the mortgage debt is variable rate debt, which primarily consists of individual property
mortgages that adjust one time per year and are based off the prime rate or U.S. Treasury rate. Most of the debt
that adjusts during 2002 will be fixed for a twelve-month period following the interest rate adjustment date. In
January 2002, interest rates on $39.9 million of adjustable rate debt were reset at a weighted average rate of
5.5%; in April 2002, interest rates on $39.1 million of adjustable rate debt were reset at a weighted average rate
of 5.1%; and in July 2002, interest rates on $52.3 million of adjustable rate debt were reset at a weighted average
rate of 5.65%. During the first six months of 2002 the weighted average interest rate was 6.5% as compared to 8.6%
during the same period in 2001.
The Company is anticipating full year 2002 required principal repayments of $8.8 million.
Properties Update
During the first six months of 2002, the Company opened one Jameson Inn in West Monroe, Louisiana (68 additional
rooms), expanded four existing Jameson Inns (76 additional rooms), sold two Jameson Inns (77 rooms) and one Signature
Inn (99 rooms). Construction of one additional expansion in Tullahoma, Tennessee is expected to begin during third
quarter 2002.
On June 30, 2002, there were 97 operating Jameson Inns and 25 Signature Inns, compared to 98 operating Jameson
Inns and 26 Signature Inns at December 31, 2001. Our operating properties are currently located in the following
fourteen states:
Jameson Inns Signature Inns Combined Brands
State Hotels Rooms Hotels Rooms Hotels Rooms
Alabama 18 954 -- -- 18 954
Florida 6 390 -- -- 6 390
Georgia 26 1,391 -- -- 26 1,391
Iowa -- -- 1 119 1 119
Illinois -- -- 3 372 3 372
Indiana -- -- 14 1,594 14 1,594
Kentucky 1 67 3 363 4 430
Louisiana 3 213 -- -- 3 213
Mississippi 6 351 -- -- 6 351
N. Carolina 14 675 -- -- 14 675
Ohio -- -- 3 380 3 380
S. Carolina 10 568 -- -- 10 568
Tennessee 11 636 1 124 12 760
Virginia 2 122 -- -- 2 122
Total 97 5,367 25 2,952 122 8,319
The Company is currently anticipating full year 2002 maintenance capital expenditures of approximately $6.2 million.
Dividends
On June 18, 2002, the Company declared a quarterly dividend of $0.5781 per share for Series A Preferred Stock and
$0.425 per share for Series S Preferred Stock. These dividends were paid on July 22, 2002 to shareholders of record
on June 28, 2002.
On July 25, 2002, the Company declared a quarterly dividend of $0.05 per common share. The dividend is payable
on August 20, 2002, to shareholders of record on August 2, 2002.
The Company's future decisions to pay its common dividend will be determined each quarter based upon the operating
results of that quarter, economic conditions, and other operating trends. We currently anticipate that the Company
will pay an aggregate of $0.20 in cash dividends per common share during the full year of 2002. The Company expects
to pay the full quarterly cash dividends on its Series A and Series S preferred stock during 2002.
2002 FFO Guidance
FFO per diluted share of common stock for the full year of 2002 is anticipated to be within the range of $1.15
to $1.30.
"Our guidance this year anticipated REVPAR levels gradually improving during the year and also interest rates
remaining low. Fortunately both of these assumptions are happening," said Mr. Kitchin.
Jameson Inns, Inc. is a REIT that develops and owns the Jameson Inn and Signature Inn limited service hotel properties.
For more information, visit the Company's website at www.jamesoninns.com
.
Forward-Looking Statements
Certain matters discussed in this press release are forward-looking statements within the meaning of federal securities
regulations. All forward- looking statements involve known and unknown risks, uncertainties and other factors which
may cause the actual transactions, results, performance or achievements to be materially different from any future
transactions, results, performance or achievements expressed or implied by such forward-looking statements. General
economic conditions, competition, and governmental actions will affect future transactions, results, performance,
and achievements. These risks are presented in detail in our filings with the Securities and Exchange Commission.
Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that our expectations will be attained or that any deviations will not be
material. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect any future events or circumstances.
Supplemental Non-GAAP Information
The Company believes that Funds from Operations is an additional meaningful measure of operating performance. FFO
has been calculated as net income attributable to common stockholders before depreciation expense, gains or losses
on disposal of real estate assets, impairment losses of real estate assets and extraordinary items. However, this
information will necessarily be different from comparable information provided by other companies and should not
be used as an alternative to the operating and other financial information as determined under accounting principles
generally accepted in the United States.
Statement of Operations Data
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Lease Revenue $11,710,009 $11,650,990 $21,599,035 $22,414,966
Property and
Other Tax
Expense 948,609 1,004,915 1,756,801 2,018,400
Insurance
Expense 365,000 238,800 690,000 489,600
Depreciation 4,944,994 4,818,604 10,062,818 9,679,454
General and
Administrative
Expenses 589,711 358,063 1,130,151 715,137
(Gain) Loss on
Sale of Real
Estate (488,863) (730,498) (434,111) (1,229,921)
Loss on
Impairment of
Real Estate --- 100,000 --- 1,000,000
Interest
Expense, Net of
Capitalized
Amounts 3,787,985 4,752,651 7,913,343 9,586,692
Other Income 8,431 8,148 16,579 16,295
Income Before
Extraordinary
Item 1,571,004 1,116,603 496,612 368,967
Extraordinary
Loss from Early
Extinguishment
of Debt 45,711 92,240 57,645 185,039
Net Income 1,525,293 1,024,363 438,967 183,928
Cumulative
Preferred Stock
Dividends 1,667,190 1,667,176 3,334,380 3,334,359
Net Income (Loss)
Attributable
to Common
Shareholders $(141,897) $(642,813) $(2,895,413) $(3,150,431)
Net Income (Loss)
Attributable
to Common
Shareholders
Per Share:
Basic $(0.01) $(0.05) $(0.26) $(0.27)
Diluted $(0.01) $(0.06) $(0.26) $(0.28)
Funds From
Operations Per
Common Share:
Basic $0.39 $0.33 $0.60 $0.58
Diluted $0.37 $0.31 $0.57 $0.56
Funds From
Operations $4,367,915 $3,637,533 $6,798,909 $6,484,141
Selected Balance Sheet Data June 30, December 31,
2002 2001
Property and Equipment, Net $323,343,572 $329,782,859
Cash 5,087,585 4,755,991
Restricted Cash 521,530 648,924
Receivable from Affiliate 3,077,801 87,037
Other Assets, Net 4,377,578 4,086,385
Total Assets 336,408,066 339,361,196
Mortgage Notes Payable 228,316,345 227,062,652
Other Liabilities 3,612,077 4,015,948
Preferred Stock Dividends Payable 1,667,820 1,667,190
Total Shareholders' Equity $102,811,824 $106,615,406
Selected Hotel Statistics Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Jameson Inns
All Inns (110):
Occupancy Rate 59.8% 60.5% 54.8% 57.9%
Average Daily Rate $57.58 $56.13 $57.62 $55.81
REVPAR $34.43 $33.98 $31.58 $32.32
Interior (26):
Occupancy Rate 56.2% 54.7% 51.8% 54.1%
Average Daily Rate $60.50 $59.32 $61.22 $60.17
REVPAR $34.02 $32.45 $31.74 $32.57
60 Room Exterior (39):
Occupancy Rate 62.7% 64.7% 57.2% 61.4%
Average Daily Rate $56.22 $55.60 $56.21 $55.03
REVPAR $35.28 $35.99 $32.12 $33.81
40 Room Exterior (45):
Occupancy Rate 59.4% 60.1% 54.8% 56.7%
Average Daily Rate $56.69 $54.55 $56.05 $53.72
REVPAR $33.65 $32.76 $30.71 $30.45
Same Inns (91 hotels):
Occupancy Rate 60.5% 61.3% 55.6% 58.3%
Average Daily Rate $57.55 $56.12 $57.70 $55.79
REVPAR $34.80 $34.43 $32.11 $32.54
Signature Inns
All Inns (26):
Occupancy Rate 47.0% 53.4% 41.3% 48.4%
Average Daily Rate $63.69 $61.91 $62.66 $62.56
REVPAR $29.94 $33.08 $25.87 $30.31
Same Inns (25 hotels):
Occupancy Rate 47.0% 54.0% 41.5% 49.1%
Average Daily Rate $63.69 $62.03 $62.68 $62.69
REVPAR $29.94 $33.52 $26.03 $30.79
Combined Brands
All Inns (136):
Occupancy Rate 55.2% 57.9% 50.0% 54.4%
Average Daily Rate $59.43 $58.09 $59.11 $58.01
REVPAR $32.83 $33.65 $29.53 $31.58
Same Inns (116 hotels):
Occupancy Rate 55.4% 58.6% 50.4% 54.9%
Average Daily Rate $59.50 $58.20 $59.24 $58.09
REVPAR $32.98 $34.08 $29.83 $31.89
"All Inns" refers to our Inns, which were operating at anytime during each
period, including sold hotels up to the date of sale.
"Same Inns" refers to our Inns, which were operating during the entire
period for each of the comparison periods.
SOURCE: Jameson Inns, Inc.