<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K-A
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
June 25, 1996
EQUITY INNS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Tennessee 34-0-23290 62-1550848
----------------- ------------------ -----------------
State or Other Commission File IRS Employer
Jurisdiction of Number Identification
Incorporation Number
4735 Spottswood, Suite 102, Memphis, TN 38117
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (901) 761-9651
N/A
- -------------------------------------------------------------------------------
(Former Name or Address, if Changed Since Last Report)
-1-
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 25, 1996, Equity Inns Partnership, L.P. (the "Partnership"),
of which a wholly-owned subsidiary of Equity Inns, Inc. (the "Company") serves
as the sole general partner and owns an approximately 97.0% partnership
interest, completed the acquisition of a 80-room Residence Inn hotel in
Madison, Wisconsin from Midwest Lodging Partners XIII.
On June 28, 1996, the Partnership completed the acquisition of a
160-room Holiday Inn hotel in Winston-Salem, North Carolina from W-S, Inc.
W-S, Inc. is jointly owned by Mr. Phillip H. McNeill, Sr. (McNeill) and his
son, Mr. Phillip H. McNeill, Jr. McNeill is the chairman of the board and
chief executive officer of the Company.
On July 16, 1996, the Partnership completed the acquisition of a
126-room Hampton Inn hotel in Scottsdale, Arizona from Scottsdale Hotel
Development, LLC.
On July 22, 1996, the Partnership completed the acquisition of a
167-room Hampton Inn hotel in Chattanooga, Tennessee from Amin Brothers
Partnership.
The purchase prices of these hotels were as follows:
<TABLE>
<S> <C>
Madison, WI $ 3,935,000
Winston-Salem, NC 5,100,000
Scottsdale, AZ 9,485,000
Chattanooga, TN 9,000,000
----------
$27,520,000
==========
</TABLE>
The purchase prices were paid through borrowings under the Company's
line of credit provided by a group of banks led by Smith Barney Mortgage
Capital Group, Inc., New York, New York.
Although the above transactions did not constitute acquisitions of a
significant amount, when considered in the aggregate, with the Partnership's
previous 1996 acquisitions of (i) a 118-room Hampton Inn hotel in Knoxville
(Alcoa), Tennessee (acquired on February 21, 1996) from Robert M. Sterchi, Inc.
for $4.7 million, (ii) a 116-room Hampton Inn hotel in Glen Burnie, Maryland
(acquired on March 14, 1996) from Rent Hotel Maryland, LLC for $5.3 million,
and (iii) a 125-room Hampton Inn hotel in Detroit (Northville), Michigan and a
132-room Homewood Suites hotel in Hartford (Windsor Locks), Connecticut (both
acquired on May 31, 1996) from Promus Hotels, Inc. for an aggregate amount of
$18.9 million, such acquisitions would exceed the threshold for reporting
acquisitions of a "significant amount of assets" under Rule 3-05 of Regulation
S-X.
-2-
<PAGE> 3
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS, Continued
All eight properties are leased by the Partnership to Trust Leasing,
Inc. (the Lessee), formerly known as McNeill Hotel Co., Inc., the lessee of the
Partnership's other hotel properties, pursuant to percentage leases which
provide for rent based, in part, on the room revenues from the hotels.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Properties Acquired
The following financial statements of hotel acquisitions represent
a substantial majority of the aggregate "insignificant acquisitions"
completed in 1996:
(1) Combined financial statements of the Hampton Inn, Detroit MI,
the Homewood Suites, Hartford, CT, the Hampton Inn,
Chattanooga, TN, and the Holiday Inn, Winston-Salem, NC
(collectively the "PCW Hotels") as of December 31, 1995 and
for the year then ended (audited) and the six months ended
June 30, 1995 and 1996 (unaudited) are presented, as
prescribed by Rule 3-01 and Rule 3-02 are included as an
exhibit to this Form 8-K-A.
(b) Pro Forma Financial Information
The pro forma statements of operations of the Company and the Lessee
for the year ended December 31, 1995 and the six months ended June 30,
1996 are presented as if the acquisition of all Hotels, the
consummation of the Company's Follow-On Offerings (consummated in July
1995 and April 1996) and the application of the net proceeds therefrom
(for hotel acquisitions and debt reduction) had occurred as of
January 1, 1995 and all of the Hotels had been leased to the Lessee
pursuant to the Percentage Leases.
The pro forma condensed consolidated balance sheet of the Company is
presented as if the acquisitions of the PCW Hotels and related
transactions had occurred on June 30, 1996.
-3-
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS, Continued
(b) Pro Forma Financial Information, continued
The pro forma consolidated statements of operations and pro forma
condensed consolidated balance sheet for the periods presented are not
necessarily indicative of what actual results of operations and actual
financial position of the Company or the Lessee would have been
assuming such transactions had been completed on the dates above, nor
does it purport to represent the results of operations or financial
position for future periods.
As of the date of this filing, the Company owned 45 hotels and a 97.0%
interest in the Partnership.
(c) Exhibits
See Exhibits Index
-4-
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
<TABLE>
<S> <C>
EQUITY INNS, INC.
BY: /s/ Howard A. Silver
----------------------------
Howard A. Silver
Chief Financial Officer
</TABLE>
Date: October 1, 1996
-5-
<PAGE> 6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Equity Inns, Inc.
We have audited the accompanying combined balance sheet of the PCW
Hotels (as described in Note 1) as of December 31, 1995 and the related
combined statements of revenues over expenses, equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
management of the PCW Hotels. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 1 to the financial statements and are
not intended to be a complete presentation of the PCW Hotels.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the combined financial position of the PCW
Hotels as of December 31, 1995 and the combined results of their operations and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
Memphis, Tennessee
August 23, 1996
-6-
<PAGE> 7
PCW HOTELS
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -------------
(Unaudited)
ASSETS:
<S> <C> <C>
Investments in hotel properties, at cost:
Land $ 4,556,334 $ 789,168
Building and improvements 18,696,043 4,068,935
Furniture and equipment 4,906,574 867,155
Less accumulated depreciation (6,179,205) (1,280,367)
---------- ----------
Net investment in hotel properties 21,979,746 4,444,891
Cash and cash equivalents 232,610
Cash held in escrow (Note 3) 14,300
Accounts receivable, net 163,737 44,792
Inventories 66,837
Deferred expenses, net 103,625 139,477
Prepaid expenses 7,972
---------- ----------
Total assets $22,568,827 $ 4,629,160
========== ==========
LIABILITIES AND EQUITY (DEFICIT):
Debt $ 8,360,106 $ 5,216,899
Bank overdrafts 49,111
Accounts payable, trade, accrued expenses
and other liabilities 803,121 143,240
---------- ----------
Total liabilities 9,163,227 5,409,250
---------- ----------
Commitments and contingencies (Note 5)
Equity (deficit) 13,405,600 (780,090)
---------- ----------
Total liabilities and equity $22,568,827 $ 4,629,160
========== ==========
</TABLE>
The accompanying notes are an integral
part of these combined financial statements.
-7-
<PAGE> 8
PCW HOTELS
COMBINED STATEMENTS OF REVENUES OVER EXPENSES
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, 1995 June 30,
----------------- -------------------------
1995 1996
---- ----
(unaudited) (unaudited)
<S> <C> <C> <C>
Revenue
Room revenue $ 9,230,146 $4,471,494 $ 4,277,842
Food and beverage revenue 431,656 200,841 232,181
Other revenue 506,933 246,839 200,212
Gain on sale of hotel properties (Note 8) 9,786,795
---------- --------- ----------
Total revenue 10,168,735 4,919,174 14,497,030
---------- --------- ----------
Expenses
Property operating costs
and expenses 2,386,958 1,145,540 1,201,572
Food and beverage 332,672 162,311 166,640
General and administrative 907,481 522,140 445,717
Franchise costs 488,725 236,552 233,281
Advertising and promotion 349,181 186,760 177,477
Utilities 555,620 257,122 266,350
Repairs and maintenance 487,657 252,618 316,530
Real estate and personal
property taxes,
insurance and other 569,072 247,856 228,361
Interest 738,735 349,720 432,595
Depreciation and amortization 1,157,231 583,929 530,716
---------- --------- ----------
Total expenses 7,973,332 3,944,548 3,999,239
---------- --------- ----------
Revenues over expenses $ 2,195,403 $ 974,626 $10,497,791
========== ========= ==========
</TABLE>
The accompanying notes are an integral
part of these combined financial statements.
-8-
<PAGE> 9
PCW HOTELS
COMBINED STATEMENTS OF EQUITY (DEFICIT)
<TABLE>
<S> <C>
Balance, December 31, 1994 $ 14,656,712
Revenues over expenses 2,195,403
Capital contribution 105,033
Distributions (3,551,548)
-----------
Balance, December 31, 1995 13,405,600
Revenues over expenses (unaudited) 10,497,791
Distributions (Note 8) (unaudited) (24,683,481)
-----------
Balance, June 30, 1996 (unaudited) $ (780,090)
===========
</TABLE>
The accompanying notes are an integral
part of these combined financial statements.
-9-
<PAGE> 10
PCW HOTELS
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, 1995 June 30,
----------------- -----------------------
1995 1996
---- ----
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Revenues over expenses $ 2,195,403 $ 974,626 $ 10,497,791
Adjustments to reconcile revenues over
expenses to net cash provided by operating
activities:
Gain on sale of hotel properties (9,786,795)
Depreciation and amortization 1,157,231 583,929 530,716
Changes in assets and liabilities:
Cash held in escrow (2,003) (31,260) (26,050)
Accounts receivable 13,836 (95,749) (93,101)
Inventories, prepaid expenses
and deferred expenses 3,300 8,585 3,481
Accounts payable, trade,
accrued expenses and other
liabilities 254,492 81,404 (161,549)
---------- ---------- -----------
Net cash flows provided by
operating activities 3,622,259 1,521,535 964,493
---------- ---------- -----------
Cash flows from investing activities:
Sale of hotel properties 24,000,000
Acquisition and improvements in
hotel properties (922,683) (218,161) (1,816,139)
---------- ---------- -----------
Net cash flows used in
investing activities (922,683) (218,161) 22,183,861
---------- ---------- -----------
Cash flows from financing activities:
Borrowings of long-term debt 3,325,311 2,652,871 5,244,480
Repayments of long-term debt (2,358,142) (2,304,373) (3,822,644)
Cash paid for loan costs (31,789) (31,741) (77,509)
Increase in bank overdrafts 78,646
Capital contributions 105,033 121,561
Distributions paid (3,592,040) (1,569,356) (24,805,042)
Cash withdrawn at sale (120,456)
---------- ---------- -----------
Net cash flows provided by
(used in) financing activities (2,551,627) (1,252,599) (23,380,964)
---------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents 147,949 50,775 (232,610)
Cash and cash equivalents at
beginning of periods 84,661 84,661 232,610
---------- ---------- -----------
Cash and cash equivalents at
end of periods $ 232,610 $ 135,436 $
========== ========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the year for
interest $ 713,034 $ 347,483 $ 456,348
========== ========== ===========
</TABLE>
The accompanying notes are an integral
part of these combined financial statements.
-10-
<PAGE> 11
PCW HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS
_________
1. Organization and Basis of Presentation
The accompanying combined financial statements of the Hampton Inn in
Detroit, MI, the Homewood Suites in Hartford, CT, the Hampton Inn in
Chattanooga, TN and the Holiday Inn in Winston-Salem, NC (collectively
the "PCW Hotels") have been presented on a combined basis because the
entities were each the subject of a business combination effected May
31, 1996 (Detroit, MI and Hartford, CT), June 28, 1996 (Winston-Salem,
NC) and July 22, 1996 (Chattanooga, TN) with Equity Inns, Inc., a
Tennessee corporation established to acquire equity interests in
existing hotel properties. Equity Inns, Inc. purchased the Detroit, MI
and Hartford, CT hotels for approximately $18.9 million, the
Winston-Salem, NC hotel for approximately $5.1 million, and the
Chattanooga, TN hotel for approximately $9.0 million. The acquisitions
only included the investment in hotel properties and did not extend to
any other assets or liabilities.
Two hotels were owned by an entity that conducts business as a taxable
corporation. The remaining hotels were owned by Subchapter S
corporations for income tax purposes; therefore, income or loss was
taxed to the shareholders in their individual income tax returns. These
financial statements have been prepared to show the operations and
financial position of the PCW Hotels, substantially all of whose assets
and operations were acquired by the Equity Inns, Inc. Equity Inns, Inc.
has qualified as a REIT and does not pay any federal income taxes;
therefore, the financial statements related to such hotels and included
in these combined financial statements have been presented on a pretax
basis.
The accompanying unaudited interim combined financial statements
reflect, in the opinion of management, all adjustments necessary for a
fair presentation of the interim combined financial statements. All
such adjustments are of a normal and recurring nature.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
All highly liquid investments with maturity of three months or less when
purchased are considered to be cash equivalents.
Inventories
Inventories, consisting predominantly of linens and foods and beverages,
are stated at the lower of cost (generally, first-in, first-out) or
market.
-11-
<PAGE> 12
PCW HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
_________
2. Summary of Significant Accounting Policies, continued
Investments in Hotel Properties
The hotel properties are stated at cost. Depreciation is computed using
the straight-line method based upon the following estimated useful
lives:
Years
<TABLE> -----
<S> <C>
Buildings 31-40
Land improvements 15-20
Furniture and equipment 5 - 7
</TABLE>
The respective owners of the PCW Hotels review the carrying value of
each property to determine if circumstances exist indicating an
impairment in the carrying value of the investment of the hotel property
or that depreciation periods should be modified. If facts or
circumstances support the possibility of impairment, the respective
owners of the PCW Hotels will prepare a projection of the undiscounted
future cash flows, without interest charges, of the specific hotel
property and determine if the investment in hotel property is
recoverable based on the undiscounted future cash flows. The respective
owners of the PCW Hotels do not believe that there are any factors or
circumstances indicating impairment of any of its investment in hotel
properties.
Maintenance and repairs are charged to operations as incurred; major
renewals and betterments are capitalized. Upon the sale or disposition
of a fixed asset, the asset and related accumulated depreciation are
removed from the accounts, and the gain or loss is included in
operations.
Deferred Expenses
Deferred expenses primarily consist of franchise fees and deferred loan
costs. Amortization is computed using the straight-line method based
upon the terms of the franchise and loan agreements which range from 10
years to 20 years.
Accumulated amortization is $44,164 at December 31, 1995.
Revenue Recognition
Revenue is recognized as earned. Ongoing credit evaluations are
performed and an allowance for potential credit losses is provided
against the portion of accounts receivable which is estimated to be
uncollectible.
-12-
<PAGE> 13
PCW HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
_________
2. Summary of Significant Accounting Policies, continued
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents approximates fair value
because of the short maturity of these investments. The carrying amount
of long-term debt approximates its fair value which is estimated based
on discounted cash flows required under such debt.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. Debt
At December 31, 1995, debt consists of the following:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
Mortgage notes payable $8,160,106
Line of credit 200,000
---------
$8,360,106
=========
</TABLE>
Mortgage notes payable consist of two fixed interest rate loans and one
variable interest rate loan. One fixed rate loan bears interest at 8%
and is due in monthly payments of principal and interest of $7,654
through November 2006. The other fixed rate loan is a construction loan
with a capacity of $3,800,000 and bears interest at 8.875%. The
construction loan is due in payments of interest only until January 1996
and then in monthly payments of principal and interest of $43,235
through April 2005. The balances of these loans were $667,173 and
$3,125,311, respectively, at December 31, 1995.
-13-
<PAGE> 14
PCW HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
_________
3. Debt, continued
The variable rate loan bears interest at the bank's prime rate plus 1.5%
(10.25% at December 31, 1995) and is due in varying monthly payments of
principal and interest with a final balloon payment due in January 1997.
The balance of this loan was $4,367,622 at December 31, 1995.
Additionally, the Hotel is required to make escrow deposits for property
taxes. The amount held in escrow was $14,300 at December 31, 1995.
Total borrowings available under the line of credit are $300,000 of
which $200,000 was outstanding at December 31, 1995. The line bears
interest at the bank's prime rate plus 1% (9.5% at December 31, 1995)
and is due in monthly payments of interest only with principal due at
the expiration of the line in April 1996.
All debt is collateralized by the investments in hotel properties in
addition to personal guarantees from the owners.
Aggregate annual principal payments for the PCW Hotels' debt at December
31, 1995 are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1996 $ 526,831
1997 4,601,909
1998 329,402
1999 359,412
2000 392,161
Thereafter 2,150,391
---------
$8,360,106
=========
</TABLE>
The construction loan discussed above contains a provision which allows
the lenders to call for repayment in full without premium or penalty
after April 2000. No adjustment has been made for this provision to the
maturities in the table above as the loan was refinanced in 1996, as
discussed in Note 7.
5. Commitments and Contingencies
Franchise costs represent the annual expense for franchise royalties,
reservation and advertising services under the terms of hotel franchise
agreements expiring at various dates through April 2008. Fees are
computed based upon a percentage of gross room revenue ranging in
aggregate from 7% to 8% for two of the PCW Hotels. The other two are
owned by the franchisor, and thus fees are only paid for reservation and
advertising services, computed as 4% of gross room revenue. The hotels
will continue to be operated under the existing franchise agreements
with the same franchisors.
-14-
<PAGE> 15
PCW HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
_________
5. Commitments and Contingencies, continued
One of the hotels participates in a self-insurance arrangement
maintained by the management company discussed in Note 6 for employee
health and workers' compensation claims. Stop loss insurance policies
are maintained to limit the per occurrence and aggregate liability in
any given year. Actual claims and premiums on stop loss insurance are
paid through a combination of employer and employee contributions.
Included in insurance expense is $25,601 related to this arrangement.
6. Related Party Transactions
As discussed in Note 1, the Winston-Salem, NC hotel was sold to Equity
Inns, Inc. for approximately $5.1 million. The hotel was owned by a
Subchapter S corporation that Mr. Phillip H. McNeill, Sr. (McNeill)
owned jointly with his son, Mr. Phillip H. McNeill, Jr. McNeill is
chairman of the board and chief executive officer of Equity Inns, Inc.
Additionally, McNeill owns 100% of Trust Leasing, Inc. which was formed
to operate and lease hotels owned by Equity Inns, Inc. pursuant to
separate percentage lease agreements.
One of the hotels is operated under a management agreement with a hotel
management company owned by the majority owner of the hotel. The
management agreement provides for a management fee of five percent of
gross revenues and expires on December 1996. Management fee expense
under this agreement was $117,507 for the year ended December 31, 1995,
of which $6,772 is included in accrued expenses at December 31, 1995.
Additionally, the hotel reimburses the management company for direct
labor and the related insurance expense discussed above, and is also
charged $600 per month for accounting fees.
The management company discussed above maintains a cash management
account in which excess funds of one of the PCW Hotels and other
properties under its management are invested. Investments in the cash
management account are invested in overnight repurchase agreements. At
December 31, 1995, one of the PCW Hotels had invested $136,186 in the
cash management account.
Two of the hotels are owned and operated by the owner of the franchises
under which they operate. Included in franchise fees for the year ended
December 31, 1995 is $170,944 paid to the franchisor for use of the
marketing and reservation systems.
-15-
<PAGE> 16
PCW HOTELS
NOTES TO COMBINED FINANCIAL STATEMENTS, Continued
_________
6. Related Party Transactions, continued
One of the fixed interest loans (discussed in Note 3) was utilized to
purchase the land for the hotel as well as an additional parcel used in
the operations of another partnership owned by the owners of the hotel.
The mortgage note is collateralized by both parcels of land. As the
additional parcel of land is not used in the operations of the hotel and
is held in a separate partnership, it is not included in the financial
statements of the PCW hotels at December 31, 1995. The additional debt
assumed related to the additional parcel of land was reflected as an
equity distribution at the date of the transaction.
7. Subsequent Event
During 1995, one of the hotels began construction of an additional 42
guest rooms. This construction was completed and these rooms were
placed into service in June 1996.
The two fixed rate loans discussed in Note 3 were refinanced in June
1996 and replaced with a loan which bears interest at 7.55% and is due
in payments of principal and interest of $58,572 with a balloon payment
of $3,876,811 due at maturity in April 1999.
8. Gain on Sale of Hotel Properties
As discussed in Note 1, three of the four hotels (Hampton Inn in
Detroit, MI, the Homewood Suite in Hartford, CT and the Holiday Inn in
Winston-Salem, NC) were sold to Equity Inns, Inc. in May and June of
1996 for approximately $24 million. Accordingly, these three hotels are
not included in the June 30, 1996 combined balance sheet and a gain of
approximately $9.8 million has been recognized in the statement of
revenues over expenses for the six months ended June 30, 1996.
Additionally, the Hampton Inn in Chattanooga, TN was sold to Equity Inn,
Inc. on July 22, 1996.
-16-
<PAGE> 17
EQUITY INNS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the Year Ended December 31, 1995
(Unaudited, amounts in thousands except for per share amounts)
<TABLE>
<CAPTION>
Current Hotels Acquisition Hotels
------------------------------------------------ ------------------------------------
Prior to
Acquisition
Historical By the Pro Forma Pro PCW Additional Scottsdale
Company Company (A) Adjustments Forma Hotels (B) Hotels (B) Hotel (C)
---------- ----------- ----------- ----- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Percentage lease revenue (D) $24,101 $8,344 $ $32,445 $4,223 $1,955 $780
Interest income (E) 44 (44)
------ ----- ----- ------ ------ ------ ---
Total revenue 24,145 8,344 (44) 32,445 4,223 1,955 780
------ ----- ----- ------ ------ ------ ---
Expenses
Depreciation and
amortization (F) 6,904 2,906 9,810
Real estate and personal
property taxes (G) 2,158 636 2,794 261 146 104
Salaries 750 (133) 617
Amortization of loan
costs (H) 793 535 1,328
General and administrative (I) 688 73 761
Interest expense (J) 3,701 (538) 3,163
Amortization of unearned
directors' compensation (K) 31 31
Rental expense 107 107 115
------ ----- ----- ------ ----- ------ ---
Income before minority
interest 9,013 7,708 (2,887) 13,834 3,962 1,694 676
Minority interest (L) 502 415
------ ------
Net income applicable to
common shareholders $ 8,511 $13,419
====== ======
Net income per common share $ .70 $ .57
====== ======
Weighted average number of
common shares outstanding 12,227 23,410
====== ======
<CAPTION>
Acquisition Hotels
----------------------- Current
Hotels
and
Acquisition
Pro Forma Pro Hotels
Adjustments Forma Total
----------- ----- -----------
<S> <C> <C> <C>
Revenue
Percentage lease revenue (D) $ $6,958 $39,403
Interest income (E)
------ ----- ------
Total revenue 6,958 39,403
------ ----- ------
Expenses
Depreciation and
amortization (F) 2,020 2,020 11,830
Real estate and personal
property taxes (G) 511 3,305
Salaries 133 133 750
Amortization of loan
costs (H) 288 288 1,616
General and administrative (I) 165 165 926
Interest expense (J) 684 684 3,847
Amortization of unearned
directors' compensation (K) 31
Rental expense 115 222
------ ----- ------
Income before minority
interest (3,290) 3,042 16,876
Minority interest (L) 506
------
Net income applicable to
common shareholders $16,370
======
Net income per common share $ .70
======
Weighted average number of
common shares outstanding 23,410
======
</TABLE>
See Notes to Pro Forma Consolidated Statements of Operations.
-17-
<PAGE> 18
EQUITY INNS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the Six Months Ended June 30, 1996
(Unaudited, amounts in thousands except for per share data)
<TABLE>
<CAPTION>
Current Hotels Acquisition Hotels
------------------------------------------ ----------------------------------
Historical Pro Forma PCW Additional Scottsdale
Company Adjustments Pro Forma Hotels (B) Hotels (B) Hotel (C)
----------- ----------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Percentage lease revenue (D) $16,557 $16,557 $1,805 $337 $390
Interest income (E) 79 $ (79)
------- ---- ------ ----- --- ---
Total revenue 16,636 (79) 16,557 1,805 337 390
------- ---- ------ ----- --- ---
Expenses
Depreciation and
amortization (F) 4,897 8 4,905
Real estate and personal
property taxes (G) 1,593 61 1,654 135 45 52
Salaries 440 (79) 361
Amortization of loan
costs (H) 789 (125) 664
General and administrative (I) 586 (105) 481
Interest expense (J) 2,096 (609) 1,487
Amortization of unearned
directors' compensation (K) 15 15
Rental expense 96 96 23
------- ---- ------ ----- ------ ---
Income before minority
interest 6,124 770 6,894 1,670 269 338
Minority interest (L) 192 207
------- ------
Net income applicable to
common shareholders $ 5,932 $ 6,687
====== ======
Net income per common share $ .32 $ .29
====== ======
Weighted average number of
common shares outstanding 18,366 23,410
====== ======
<CAPTION>
Acquisition Hotels Current
----------------------- Hotels
and
Acquisition
Pro Forma Pro Hotels
Adjustments Forma Total
----------- ----- -----------
<S> <C> <C> <C>
Revenue
Percentage lease revenue (D) $ $2,532 $19,089
Interest income (E)
------ ----- ------
Total revenue 2,532 19,089
------ ----- ------
Expenses
Depreciation and
amortization (F) 1,010 1,010 5,915
Real estate and personal
property taxes (G) 232 1,886
Salaries 79 79 440
Amortization of loan
costs (H) 144 144 808
General and administrative (I) 105 105 586
Interest expense (J) 321 321 1,808
Amortization of unearned
directors' compensation (K) 15
Rental expense 23 119
------ ----- ------
Income before minority
interest (1,659) 618 7,512
Minority interest (L) 225
------
Net income applicable to
common shareholders $ 7,287
======
Net income per common share $ .31
======
Weighted average number of
common shares outstanding $23,410
======
</TABLE>
See Notes to Pro Forma Consolidated Statements of Operations.
-18-
<PAGE> 19
EQUITY INNS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(A) Represents historical results of operations of the Current Hotels
acquired by the Company subsequent to the beginning of the historical
periods presented as adjusted by the provisions of the lease agreement
with the Lessee and the Percentage Lease agreements with the Company.
The Current Hotels consist of and were acquired as follows:
<TABLE>
<CAPTION>
Hotel Location Acquisition Date
----- -------- ----------------
<S> <C> <C>
Hampton Inn Albany, NY March 1994
Hampton Inn Cleveland, OH March 1994
Hampton Inn College Station, TX March 1994
Hampton Inn Columbus, GA March 1994
Hampton Inn Fort Worth, TX March 1994
Hampton Inn Little Rock, AR March 1994
Hampton Inn Louisville, KY March 1994
Hampton Inn Sarasota, FL March 1994
Hampton Inn Ann Arbor, MI April 1994
Comfort Inn Enterprise, AL May 1994
Hampton Inn Gurnee, IL June 1994
Hampton Inn Traverse City, MI June 1994
Hampton Inn Arlington, TX July 1994
Residence Inn Eagan, MN September 1994
Residence Inn Tinton Falls, NJ September 1994
Hampton Inn Meriden, CT September 1994
Hampton Inn Milford, CT September 1994
Hampton Inn Beckley, WV November 1994
Holiday Inn Bluefield, WV November 1994
Hampton Inn Gastonia, NC November 1994
Hampton Inn Morgantown, WV November 1994
Holiday Inn Oak Hill, WV November 1994
Hampton Inn Shelby, NC November 1994
Holiday Inn Express Wilkesboro, NC November 1994
Hampton Inn Naperville, IL December 1994
Hampton Inn State College, PA January 1995
Comfort Inn Rutland, VT June 1995
Hampton Inn Cleveland, TN July 1995
Hampton Inn Fayetteville, N.C. September 1995
Hampton Inn Indianapolis, IN September 1995
Hampton Inn Jacksonville, FL September 1995
Holiday Inn Mt. Pleasant, S.C. September 1995
Hampton Inn Scranton, PA September 1995
Comfort Inn Jacksonville Beach, FL November 1995
Hampton Inn Austin, TX December 1995
Hampton Inn Garland, TX December 1995
Residence Inn Omaha, NB December 1995
</TABLE>
-19-
<PAGE> 20
EQUITY INNS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
(B) Represents historical results of operations of the Acquisition
Hotels as adjusted by the provisions of the lease agreements with
the Lessee and the Percentage Lease agreements with the Company.
The Acquisition Hotels consist of and were acquired as follows:
<TABLE>
<S> <C> <C>
PCW Hotels:
Hampton Inn Detroit, MI May 1996
Homewood Suites Hartford, CT May 1996
Holiday Inn Winston-Salem, NC June 1996
Hampton Inn Chattanooga, TN July 1996
Additional Hotels:
Hampton Inn Knoxville, TN February 1996
Hampton Inn Glen Burnie, MD March 1996
Residence Inn Madison, WI June 1996
</TABLE>
For the six months ended June 30, 1996, amounts represent historical
results adjusted as described above from January 1, 1996 until the
date of acquisition by the Company. Results from the date of
acquisition through June 30, 1996 are included in the historical
Company column of the pro forma consolidated statement of
operations for the six months ended June 30, 1996.
(C) Represents information for the Hampton Inn in Scottsdale, AZ (the
"Scottsdale Hotel"). This hotel was in development during the year
ended December 31, 1995 and the six months ended June 30, 1996 and had
no operations until acquisition by the Company in July 1996.
Percentage lease revenue represents the base minimum rent required
under the percentage lease since the hotel had no operations during
the year ended December 31, 1995 and the six months ended June 30,
1996.
(D) Represents historical and pro forma lease revenue from the Lessee to
the Partnership calculated by applying the rent provisions of the
Percentage Leases to the historical room revenues of all the Hotels.
Also includes $350 and $184 for the year ended December 31, 1995, and
the six months ended June 30, 1996, respectively, relating to food and
beverage operations.
(E) Represents the elimination of historical interest income earned on
excess cash.
(F) Represents depreciation on the hotel properties and amortization of
franchise fees and loan costs. Depreciation is computed based upon
estimated useful lives of 31 years for buildings and improvements and
7 years for furniture, fixtures and equipment, respectively. These
estimated useful lives are based on management's knowledge of the
properties and the hotel industry in general. Amortization of
franchise fees is computed using the straight-line method over the
lives of the franchise agreements which range from 10 to 15 years.
-20-
<PAGE> 21
EQUITY INNS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
The depreciation pro forma adjustment for the year ended December 31,
1995 is as follows:
<TABLE>
<CAPTION>
Buildings Furniture
and Fixtures and
Improvements Equipment
------------ -------------
<S> <C> <C>
Prior to Acquisition by the Company:
Cost $185,564 $30,526
Depreciation expense 1,470 1,401
PCW Hotels:
Cost 23,439 2,775
Depreciation expense 756 405
Additional Hotels:
Cost 11,884 913
Depreciation expense 383 131
Scottsdale Hotel:
Cost 6,566 715
Depreciation expense 212 103
</TABLE>
Pro forma depreciation for the six months ended June 30, 1996 is
computed in a similar manner as the year ended December 31, 1995 pro
forma depreciation expense. The Company's net investment in hotel
properties in the PCW Hotels, Additional Hotels, and Scottsdale Hotel
acquisitions is approximately $33 million, $14 million and $9 million,
respectively, of which $7 million, $1 million, $2 million,
respectively, is allocated to land.
Total pro forma adjustments for amortization of franchise fees for the
year ended December 31, 1995 were approximately $65. Pro forma
franchise fees for the six months ended June 30, 1996 is computed in a
similar manner as the year ended December 31, 1995 pro forma
amortization expense.
(G) Pro forma real estate and personal property tax ($3,305) and rental
expense ($222) for the year ended December 31, 1995 represent expenses
to be paid by the Partnership. Such amounts were derived from
historical amounts paid with respect to the hotels. The six months
ended June 30, 1996 real estate and personal property and rental
expenses are computed in a similar manner as the year ended December
31, 1995 pro forma adjustments.
-21-
<PAGE> 22
EQUITY INNS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
(H) Represents amortization of loan costs. Amortization of loan costs is
computed using the straight-line methods over the commitment of the
related debt instrument.
(I) Pro forma general and administrative expenses for the year ended
December 31, 1995 represent professional fees ($375), franchise taxes
and insurance $(305) and other expenses ($246). These amounts are
based on historical general and administrative expenses as well as
probable 1996 expenses. The six months ended June 30, 1996 expenses
are computed in a similar manner as the year ended December 31, 1995
pro forma adjustments.
(J) Pro forma interest expense is computed based on the borrowings
outstanding for the respective periods multiplied by the applicable
interest rate as stated in the applicable debt instrument. The
Company's borrowings include variable rate debt instruments which
include interest rates primarily based on LIBOR plus 1.75%. The
Company has the option to choose the 30-day, 60-day or 90-day LIBOR
contract rate. Pro forma interest expense is based on the 30-day
contract rate and is calculated as follows:
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, 1995 June 30, 1996
----------------- -----------------
<S> <C> <C>
Debt $50,285 $50,285
Weighted average
interest rate 7.65% 7.19%
Interest expense $3,847 $1,808
</TABLE>
If the variable interest rate debt above increased or decreased by
1/8%, net income (after adjusting minority interest expense) would
increase or decrease by $63 and $32 for the year ended December 31,
1995 and the six months ended June 30, 1996, respectively.
(K) Represents amortization of unearned directors' compensation (15,000
shares at $10.00 per share issued on March 1, 1994) amortized ratably
over five years.
(L) Calculated as approximately 3.0% of income before minority interest
for pro forma results of operations for all Hotels for all periods
presented.
-22-
<PAGE> 23
EQUITY INNS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1996
(Unaudited, amounts in thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Investment in hotel properties, net $263,602 $18,485 (A) $282,087
Cash and cash equivalents 27 27
Due from Lessee 5,016 5,016
Deferred expenses, net 3,803 3,803
Prepaid expenses and other assets 492 492
------- ------ -------
Total assets $272,940 $18,485 $291,425
======= ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt $ 31,877 $18,485 (B) $ 50,362
Accounts payable, trade and accrued
expenses 2,987 2,987
Distributions payable 6,758 6,758
Minority interest in Partnership 6,940 6,940
------- ------ -------
Total liabilities 48,562 18,485 67,047
------- ------ -------
Shareholders' Equity:
Common stock 234 234
Additional paid-in capital 235,208 235,208
Unearned officers' and directors'
compensation (78) (78)
Predecessor basis assumed (1,264) (1,264)
Distributions in excess of
net earnings (9,722) (9,722)
------- ------ -------
Total shareholders' equity 224,378 224,378
------- ------ -------
Total liabilities and
shareholders' equity $272,940 $18,485 $291,425
======= ====== =======
</TABLE>
(A) Increase represents the purchases of the Chattanooga Hotel ($9,000),
and the Scottsdale Hotel ($9,485). All other acquisitions were
completed prior to June 30, 1996 and are thus included in the
Company's historical amounts.
(B) Increase represents $18,485 of borrowings on the line of credit to
fund the purchases of the Chattanooga Hotel and the Scottsdale Hotel
and related transactions.
-23-
<PAGE> 24
TRUST LEASING, INC.
PRO FORMA STATEMENT OF OPERATIONS
for the Year Ended December 31, 1995
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Current Hotels Acquisition Hotels
------------------------------------------------- ----------------------
Prior to
Acquisition
Historical By the Pro Forma Pro PCW Additional
Company Company (A) Adjustments Forma Hotels Hotels
---------- ----------- ----------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Room revenue $52,585 $18,118 $70,703 $ 9,230 $5,025
Food and beverage
revenue 1,543 722 2,265 432
Other revenue 2,363 1,014 3,377 507 225
------ ------ ------ ------ -----
Total revenue 56,491 19,854 76,345 10,169 5,250
------ ------ ------ ------ -----
Expenses
Property operating
costs and expenses 12,713 4,430 (229)(B) 16,914 2,387 1,451
Food and beverage 1,216 521 1,737 333
General and
administrative 4,215 2,568 (878)(C) 5,905 907 796
Management fees
Franchise fees 4,122 1,125 5,247 489 307
Advertising and promotion 1,619 723 2,342 349 223
Utilities 2,773 1,172 3,945 556 272
Repairs and maintenance 2,197 716 2,913 488 318
Taxes, insurance and
other 634 1,065 (780)(E) 919 569 195
Consulting fee 1,000 1,000
Interest expense 2,758 (2,758)(F) 739 322
Depreciation and
amortization 1,080 (1,080)(G) 1,157 23
Percentage lease
expenses 24,101 8,344 (H) 32,445
Lessee overhead
expense 744 181 (I) 925
------ ------ ------ ------ ------ -----
Total expenses 55,334 16,158 2,800 74,292 7,974 3,907
------ ------ ------ ------ ------ -----
Net income (loss) $ 1,157 $ 3,696 $(2,800) $ 2,053 $ 2,195 $1,343
====== ====== ====== ====== ====== =====
<CAPTION>
Acquisition Hotels Current
----------------------- Hotels
and
Acquisition
Pro Forma Pro Hotels
Adjustments Forma Total
----------- ----- -----------
<S> <C> <C> <C>
Revenue
Room revenue $14,255 $84,958
Food and beverage
revenue 432 2,697
Other revenue 732 4,109
------ ------
Total revenue 15,419 91,764
------ ------
Expenses
Property operating
costs and expenses (121)(B) 3,717 20,631
Food and beverage 333 2,070
General and
administrative (371)(C) 1,332 7,237
Management fees 107 (D) 107 107
Franchise fees 796 6,043
Advertising and promotion 572 2,914
Utilities 828 4,773
Repairs and maintenance 806 3,719
Taxes, insurance and
other (407)(E) 357 1,276
Consulting fee 1,000
Interest expense (1,061)(F)
Depreciation and
amortization (1,180)(G)
Percentage lease
expenses 6,958 (H) 6,958 39,403
Lessee overhead
expense 200 (I) 200 1,125
------ ------ ------
Total expenses 4,125 16,006 90,298
------ ------ ------
Net income (loss) $(4,125) $ (587 $ 1,466
====== ====== ======
</TABLE>
See Notes to Pro Forma Statements of Operations.
-24-
<PAGE> 25
TRUST LEASING, INC.
PRO FORMA STATEMENT OF OPERATIONS
for the Six Months Ended June 30, 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Current Hotels Acquisition Hotels
-------------- ------------------------------------------------------
Total
Current
Historical and
Historical PCW Additional Pro Forma Pro Acquisition
Company Hotels Hotels Adjustments Forma Hotels
----------- ------------ ---------- ----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Room revenue $36,645 $4,278 $1,158 $ $5,436 $42,081
Food and beverage
revenue 1,140 232 232 1,372
Other revenue 1,627 200 64 264 1,891
Gain on sale of hotel properties 9,787 (9,787)
------ ------ ----- ------- ----- ------
Total revenue 39,412 14,497 1,222 (9,787) 5,932 45,344
------ ------ ----- ------- ----- ------
Expenses
Property operating
costs and expenses 8,687 1,201 401 (24)(B) 1,578 10,265
Food and beverage 932 167 167 1,099
General and
administrative 2,513 447 200 (161)(C) 486 2,999
Management fees 70 (D) 70 70
Franchise fees 2,889 233 73 306 3,195
Advertising and promotion 1,182 177 58 235 1,417
Utilities 2,100 266 90 356 2,456
Repairs and maintenance 1,613 317 136 453 2,066
Taxes, insurance and
other 452 228 56 (182)(E) 102 554
Consulting fee 500 500
Interest expense 432 61 (493)(F)
Depreciation and
amortization 531 32 (563)(G)
Percentage lease
expenses 16,557 2,532 2,532 19,089
Lessee overhead
expense 557 6 6 563
------ ------ ----- ------- ----- ------
Total expenses 37,982 3,999 1,107 1,185 6,291 44,273
------ ------ ----- ------- ----- ------
Net income (loss) $ 1,430 $10,498 $ 115 $(10,972) $ (359) $ 1,071
====== ====== ===== ======= ===== ======
</TABLE>
See Notes to Pro Forma Statements of Operations.
-25-
<PAGE> 26
TRUST LEASING, INC.
NOTES TO PRO FORMA STATEMENT OF OPERATIONS
(A) Represents the historical results of operations of the Current Hotels
acquired by the Company subsequent to the beginning of the historical
periods presented.
(B) Reflects the elimination of historical rental expense where rental
obligations were not assumed by the Company upon acquisition.
(C) Represents the elimination of historical management fees.
(D) Represents pro forma management fees paid to Promus under management
contracts for two of the Acquisition Hotels.
(E) Reflects the elimination of historical real estate and personal
property taxes and property insurance which is to be paid by the
Partnership.
(F) Reflects the elimination of historical interest expense. Any future
interest expense related to Debt will be paid by the Partnership.
(G) Reflects the elimination of historical depreciation and amortization
which is to be recorded by the Partnership.
(H) Represents lease expenses calculated on a pro forma basis by applying
the rent provisions of the Percentage Leases to the historical room
revenues and historical food and beverage revenues of the Hotels.
Also includes minimum base rents associated with the Scottsdale hotel.
(I) Represent lessee overhead expenses (estimated at $24 per hotel) based
on historical administrative and general expenses as well as probable
1996 expenses.
(J) As supplemental information, the following condensed financial
information for each acquisition for the period prior to acquisition
by the Company is presented for the year ended December 31, 1995
<TABLE>
<CAPTION>
Depreciation
Date of Room and Interest Income
Acquisition Revenue Amortization Expense (Loss)
----------- ------- ------------ -------- ------
<S> <C> <C> <C> <C> <C>
Current Hotels:
State College, PA January 1995
Rutland, VT June 1995 $ 708 $ 76 $ (14)
Cleveland, TN July 1995 333 $ 41 28 43
Fayetteville, NC September 1995 1,162 133 254 $ 144
Indianapolis, IN September 1995 1,606 132 408 217
Jacksonville, FL September 1995 1,228 112 294 118
Mount Pleasant, SC September 1995 2,071 211 650 92
Austin, TX December 1995 2,240 928
Garland, TX December 1995 1,822 705
Scranton, PA September 1995 1,937 192 404 214
Jacksonville Beach, FL November 1995 3,131 259 327 934
Omaha, NE December 1995 1,880 317 315
------ ----- ----- -----
Totals $18,118 $1,080 $2,758 $3,696
====== ===== ===== =====
Acquisition Hotels:
PCW Hotels:
Detroit, MI May 1996 $ 2,004 $ 257 $ 9 $ 702
Hartford, CT May 1996 3,026 532 985
Winston-Salem, NC June 1996 2,016 222 466 (44)
Chattanooga, TN July 1996 2,184 146 264 552
------ ----- ----- -----
9,230 1,157 739 2,195
------ ----- ----- -----
Additional Hotels:
Knoxville, TN February 1996 1,587 23 322 192
Glen Burnie, TN March 1996 2,038 751
Madison, WI June 1996 1,400 400
------ ----- ----- -----
5,025 23 322 1,343
------ ----- ----- -----
Totals $14,255 $1,180 $1,061 $3,538
====== ===== ===== =====
</TABLE>
-26-
<PAGE> 27
TRUST LEASING, INC.
NOTES TO PRO FORMA STATEMENT OF OPERATIONS, Continued
As supplemental information, the following condensed financial information for
each acquisition for the period prior to acquisition by the Company is
presented for the six months ended June 30, 1996.
<TABLE>
<CAPTION>
Depreciation
Date of Room and Interest Income
Acquisition Revenue Amortization Expense (Loss)
----------- ------- ------------ -------- ------
<S> <C> <C> <C> <C> <C>
Acquisition Hotels:
PCW Hotels:
Detroit, MI May 1996 $ 886 $106 $334
Hartford, CT May 1996 1,299 221 436
Winston-Salem, NC June 1996 1,050 131 $233 (13)
Chattanooga, TN July 1996 1,043 73 199 (46)
----- --- --- ---
4,278 531 432 711
----- --- --- ---
Additional Hotels:
Knoxville, TN February 1996 191 4 46 (11)
Glen Burnie, MD March 1996 349 28 15 40
Madison, WI June 1996 618 86
----- --- --- ---
1,158 32 61 115
----- --- --- ---
Totals $5,436 $563 $493 $826
===== === === ===
</TABLE>
-27-
<PAGE> 28
EXHIBIT INDEX
Exhibit No. and Description:
23.1 Consent of Coopers & Lybrand L.L.P.
28
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Equity Inns, Inc. on Form S-3 (File Nos. 99-99480 and 33-90364)
of our report dated August 23, 1996, on our audit of the combined financial
statement of the PCW Hotels as of December 31, 1995 and for the year then
ended, which report is included in this Form 8-K-A.
/s/ Coopers & Lybrand L.L.P.
Memphis, Tennessee
October 2, 1996
