INNKEEPERS USA 2005 ANNUAL REPORT

Size: px

Start display at page:

Download "INNKEEPERS USA 2005 ANNUAL REPORT"

Edith Stafford
6 years ago
Views:

1 I INNKEEPERS USA 2005 ANNUAL REPORT

2 California Residence Inn Fremont - Silicon Valley Residence Inn Ontario - Airport Residence Inn Palo Alto - Mountain View Residence Inn San Francisco - Airport San Mateo Residence Inn San Jose - Campbell Residence Inn San Jose - South Residence Inn Sunnyvale - Silicon Valley I Residence Inn Sunnyvale - Silicon Valley II Summerfield Suites Belmont - Redwood Shores Summerfield Suites El Segundo Colorado Residence Inn Denver - Downtown Residence Inn Denver - Tech Center Connecticut Residence Inn Hartford - Windsor Residence Inn Shelton - Fairfield County Florida Courtyard Fort Lauderdale - North Cypress Creek Four Points Destin - Fort Walton Beach Hampton Inn Naples - Central Hampton Inn Tallahassee - I-10 Hampton Inn West Palm Beach - Airport Residence Inn Orlando - Altamonte Springs Georgia Residence Inn Atlanta - Downtown Residence Inn Atlanta - Norcross Peachtree Corners Illinois Hampton Inn Chicago - Lombard Oak Brook Hampton Inn Chicago - Schaumburg Hampton Inn Chicago - Westchester Oak Brook Residence Inn Chicago - O'Hare Indiana Residence Inn Fort Wayne Residence Inn Indianapolis - North Kansas Residence Inn Wichita - East Kentucky Hampton Inn Louisville Residence Inn Lexington - North Residence Inn Louisville - East Maine Residence Inn Portland - Scarborough Massachusetts Hampton Inn Boston - Woburn Michigan Residence Inn Detroit - Livonia Residence Inn Detroit - Troy Central Residence Inn Detroit - Troy Madison Heights Residence Inn East Lansing Residence Inn Grand Rapids - East New Jersey Courtyard Atlantic City Courtyard Montvale Residence Inn Cherry Hill - Philadelphia Residence Inn Saddle River Summerfield Suites Mount Laurel Sunrise Suites Tinton Falls New York Hampton Inn Albany - Latham Hampton Inn Long Island - Islandia Residence Inn Binghamton Ohio Residence Inn Columbus - Southeast Pennsylvania Hampton Inn Philadelphia - Willow Grove Residence Inn Harrisburg - Hershey TownePlace Suites Philadelphia - Horsham Texas Homewood Suites San Antonio - Riverwalk Downtown Residence Inn Arlington Residence Inn Dallas - Addison Quorum Drive Summerfield Suites Addison Summerfield Suites Las Colinas Virginia Residence Inn Richmond - Northwest Residence Inn Richmond - West End Residence Inn Tysons Corner - Mall Washington Residence Inn Seattle - Bellevue Residence Inn Seattle - Northeast Bothell Residence Inn Seattle - North Lynnwood Everett Residence Inn Seattle - South Tukwila Washington D.C. Doubletree Guest Suites Maryland Hampton Inn Columbia Hampton Inn Germantown - Gaithersburg Residence Inn Gaithersburg - Washingtonian Center

3 To Our Shareholders: 2004 was an excellent year for the industry and for Innkeepers. We achieved significant internal growth, as measured by revenue per available room (RevPAR), and external growth through acquisitions. This robust growth propelled a 25 percent increase in adjusted funds from operations (FFO) per share, a doubling of our quarterly common share dividend to $0.06 per share and substantial returns to you, our shareholders. It was the first year since 2000 in which we saw a year-over-year increase in RevPAR, a key industry benchmark. After three years of negative RevPAR, which declined nearly 30 percent during that time, we reported positive RevPAR in 2004 not only for the year, but in every quarter. Even more gratifying was the accelerating contribution of room rate to our RevPAR gains. Positive industry fundamentals of increasing demand and minimal new supply suggest that we are in the early stages of a RevPAR recovery. The hotel acquisition market, a major source of external growth for us, is favorable, as buyers and sellers expectations concerning future cash flows have become more aligned. We are confident that 2005 will be marked by solid gains in RevPAR and an active acquisition environment. Internal Growth RevPAR across our portfolio rose 7.8 percent for 2004, as occupancy increased 4.2 percent and average daily rate (ADR) was up 3.5 percent. The strength in RevPAR has persisted in January and February We are forecasting 6 percent RevPAR growth in 2005, which translates into a 19 percent increase in adjusted FFO per share from 2004, and does not include the earnings benefit of any future acquisitions.

4 Operationally, we are well positioned to take advantage of the recovery. We are located in major MSAs on both coasts, in areas with strong demand generators and relatively high barriers to entry. We are affiliated with the industry s strongest brands, including Marriott and Hilton. Our portfolio is in excellent physical condition, as we have continued to reinvest in our properties. We have spent an average of $20 million to $30 million annually in capital expenditures to maintain their competitive condition. External Growth We began to step up our acquisition program in May 2004 in response to the improvement in the capital markets and growing evidence of a sustainable recovery. We purchased the Homewood Suites Riverwalk/Downtown in San Antonio, our first hotel in that city. In June, we acquired a hotel in downtown Louisville, which we are renovating and converting to a Hampton Inn. In September, we purchased a site in Valencia, Calif., outside of Los Angeles, with plans to build an Embassy Suites hotel there. At the end of 2004 and in the first quarter of 2005, we closed on three acquisitions we announced in December 2004, all in the Northeast: the Doubletree Guest Suites in downtown Washington, D.C., the Hampton Inn in Columbia, Md., and a hotel in Montvale, N.J., which we are rebranding to a Courtyard. All of these acquisitions demonstrate or reinforce our strategy and capabilities in purchasing existing stabilized hotels, developing new hotels, and repositioning and rebranding hotels. Our focus is to continue to acquire hotels in our existing markets, such as northern New Jersey, and to enter new markets, such as the Washington, D.C. to Baltimore, Md. corridor and southern California. These kinds of markets reflect strong demand growth and relatively high barriers to entry, such as lengthy entitlement processes and the high cost of land. We are continuing to seek

5 upscale hotels, including full service, that cater to the leisure segment and upscale extended-stay hotels, which primarily attract business travelers. Balance Sheet Strength We continue to maintain one of the industry s strongest capital structures and lowestlevered balance sheets. Our debt to investment in hotels at cost ratio was 30 percent at year-end 2004, with no debt maturities until Our weighted average interest rate on our total debt is 6.8 percent, and 76 percent of our total debt is at fixed rates at year-end We completed a $60 million common share stock offering in February 2005, further enhancing our flexibility. Our $135 million unsecured line of credit has an outstanding balance of $31 million currently with substantial availability for new acquisitions. Outlook We believe we are in the early stages of a well-entrenched, multi-year recovery, and we are looking forward to a prosperous We will continue to be a disciplined acquirer of hotels, to selectively sell non-strategic hotels, to focus on internal growth and expanding margins and profitability, with a keen eye on cost containment. We appreciate your interest in and continued support of our company. Jeffrey H. Fisher Chief Executive Officer and President April 1, 2005

83 MANAGEMENT Jeffrey H. Fisher Chairman Of The Board, Chief Executive Officer and President David Bulger Executive Vice President, Chief Financial Officer and Treasurer Mark A. Murphy General Counsel and Secretary Richard F. Fenton Vice President Financial Analysis and Budgeting Linda K. Price Vice President and Controller Tomas V. Rodriguez Vice President Construction and Renovation Peter M. Willis Vice President Acquisitions BOARD OF TRUSTEES Miles Berger Chairman and Chief Executive Officer Berger Management Services LLC Randall L. Churchey Private Investor Former President and Chief Operating Officer RFS Hotel Investors, Inc. Thomas J. Crocker Chief Executive Officer CRT Properties, Inc. Jack P. DeBoer Chairman Consolidated Holdings, Inc. SHAREHOLDER INFORMATION Investor Relations And Shareholder Inquiries: Innkeepers USA Trust 306 Royal Poinciana Way Palm Beach, FL Tel: Fax: Correspondence To: ANNUAL MEETING OF SHAREHOLDERS The Annual Meeting Of Shareholders Will Be Held On Wednesday May 4, 2005 At 9:00 a.m. EST At: Colony Hotel 155 Hammon Avenue Palm Beach, FL INDEPENDENT PUBLIC ACCOUNTANTS PricewaterhouseCoopers LLP 200 East Las Olas Boulevard Suite 1700 Fort Lauderdale, FL TRANSFER AGENT, REGISTRAR AND DRIP PLAN ADMINISTRATION Computershare Investor Services, L.L.C. 2 North LaSalle Street Chicago, IL C. Gerald Goldsmith Director Property Corp. International and Plymouth Rubber Company Rolf E. Ruhfus Chairman and Chief Executive Officer Wichita Consulting Company, L.P. Joel F. Zemans Managing General Partner The Blackstone Fund, L.P.

84 306 ROYAL POINCIANA WAY PALM BEACH, FL TEL: FAX: Listed NYSE: KPA Common KPA.C Preferred

Investor Presentation March, 2008

Investor Presentation March, 2008 Business Plan Overview Repositioning Strategy Repositioning Portfolio Lowering Leverage Internal Growth Fully Renovating Portfolio Redevelopment Projects New Asset Management