Press Release
June 7, 2001
PALM BEACH, FL -- Innkeepers USA Trust (NYSE: KPA), a hotel real estate investment trust (REIT) and the nation's
leading REIT owner of upscale, extended-stay hotel properties throughout the U.S., yesterday announced that the
continuing softness in the economy, which is dampening lodging demand and business travel, is expected to negatively
impact its earnings for the remainder of 2001.
As a result, the company is lowering its quarterly and year-end 2001 earnings guidance.
``We indicated in our first quarter earnings announcement that we would closely watch the economy and adjust our
guidance in response to economic changes and lodging demand,'' said Jeffrey H. Fisher, chief executive officer
and president. ``The economy, particularly in the technology sector, continues to exhibit softness, and lodging
demand remains sluggish as reflected in negative industry-wide RevPAR results for April and May.
``The falloff in demand at most of our hotels in March, April and May is continuing into June, which has particularly
impacted occupancy rates at our Silicon Valley properties, which accounted for 29 percent of our total 2000 revenues.
While the future direction of the economy, and lodging demand in particular, remains difficult to predict for the
second half, we are now assuming that the softness we have experienced since March will continue,'' Fisher said.
``As a result, we are lowering our FFO earnings guidance for full year 2001 to a range of $1.72 to $1.80 from the
current analysts consensus estimate of $1.86, and compared to the $1.92 we achieved in 2000. This range assumes
a RevPAR decline of between 3.5 percent and 5.5 percent for the entire year.
``We currently estimate second quarter FFO per share at $0.43, with a range of $0.47 to $0.51 for the third quarter
and $0.37 to $0.41 for the fourth quarter.
Fisher noted that the company's dividend remains well covered. ``We expect that our revised cash flow, or the difference
between revised FFO and total dividends, will total approximately $24 million to $28 million,'' Fisher added. ``Based
on our $1.72 FFO estimate, our dividend to FFO payout ratio is 70 percent. We previously reported that $40 million
of cash flow would be earmarked for capital expenditures. Consequently, the $12 million to $16 million shortfall
will be borrowed on our $130 million line of credit, as we are committed to maintaining the high quality of our
properties. Currently, we have $11 million borrowed on our line of credit.
``We firmly believe the Silicon Valley remains an excellent location to own hotels long term and that the region
will rebound following this period of reduced business travel,'' Fisher said. ``RevPAR increases averaged more
than 18 percent at our hotels there last year, and 10 percent in the first quarter 2001. Under our current assumptions,
our Silicon Valley properties reflect a second half RevPAR decline of 15 percent to 20 percent. Excluding Silicon
Valley, we estimate average RevPAR declines of 3 percent to 4 percent for the remainder of our portfolio in the
second half of 2001. In the meantime, we have redoubled our proactive sales efforts and are actively asset-managing
these hotels, taking advantage of moderating occupancies to complete property refurbishments with a minimum of
disruptions to our guests. When business travel recovers, these properties are well-positioned to resume RevPAR
growth.''
Fisher noted that management's assumptions for 2001 do not include the effects of any additional sales, acquisitions
or new development of hotels or any other transactions that may occur in conjunction with the REIT Modernization
Act, or otherwise. ``Our guidance reflects expectations about how our hotels and the economy will perform; however,
our actual results could differ materially from our guidance. If economic conditions should improve or deteriorate
from our current assumptions, we will adjust our earnings guidance accordingly.''
Florida-based Innkeepers USA Trust is a hotel real estate investment trust and the nation's leading REIT owner
of upscale, extended-stay hotel properties throughout the U.S. The company owns 67 hotels with a total of 8,131
suites or rooms in 23 states and focuses on acquiring and/or developing Residence Inns and other upscale extended-stay
hotels in markets with high barriers to entry 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.
This release contains ``forward-looking statements'' within the meaning of federal securities law. Known and unknown
risks and other factors may cause actual results to materially differ from any future results expressed or implied
by such forward-looking statements. Cautionary statements set forth in reports filed by the company from time to
time with the Securities and Exchange Commission discuss important factors with respect to such forward looking
statements. These factors include, without limitation, (i) the relative strength and performance of businesses
and industries that are important demand generators in the company's key bi-coastal markets, (ii) international,
national, regional and local economic conditions that will, among other things, affect demand for the company's
hotel rooms and the availability and terms of financing, (iii) the company's ability to maintain its properties
in a first-class manner, (iv) the company's ability to acquire or develop additional properties and risks that
potential acquisitions or developments may not perform in accordance with expectations, (v) changes in travel patterns
or the prevailing means of commerce, i.e., e-commerce, and (vi) the complex tax rules that the company must satisfy
to qualify as a REIT, and other governmental regulation. Although we believe that the expectations reflected in
the forward-looking statements are based on reasonable assumptions, we can give no assurances that our expectations
will be attained or that any deviations will not be material. We are not obligated to release results of revisions
to forward-looking statements made to reflect future circumstances.
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Contact:
(Company)
Innkeepers USA Trust, Palm Beach
David Bulger, 561/835-1800 x302
or
(Media)
Daly Gray
Jerry Daly or Carol McCune, 703/435-6293