Equity Inns Secures Additional Funding and Interest Rate Swap to Drive Growth

Strategic Insights -

Equity Inns, a self-advised real estate investment trust, has announced the exercise of an over-allotment option by Salomon Smith Barney and J.C. Bradford & Co. to purchase an additional 350,000 shares of common stock, generating $5.3 million in additional gross proceeds. This brings the total gross proceeds from the company's recent equity offering to approximately $44.6 million. The company plans to capitalize on growth opportunities in the premium limited-service, all-suite, and extended-stay segments of the hotel industry.

Key Takeaways:

  • Equity Inns has secured an additional $5.3 million in funding through the exercise of an over-allotment option, bringing the total gross proceeds from the equity offering to $44.6 million.
  • The company plans to utilize the additional funds to capitalize on growth opportunities in the premium limited-service, all-suite, and extended-stay segments of the hotel industry.
  • Equity Inns has arranged a $75 million interest rate swap with First National Bank of Chicago to hedge against its LIBOR-based senior revolving credit facility.
  • The swap agreement will expire in October 2000 and is expected to provide the company with a highly attractive interest rate for the life of the line of credit.
  • The company will own 91 hotels with a total of 11,192 rooms located in 31 states, consisting of 57 Hampton Inns, ten AmeriSuites, nine Residence Inns, seven Homewood Suites, three Comfort Inns, four Holiday Inns, and one Holiday Inn Express.
  • The company has disclosed that certain matters discussed in the press release may involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ from those projected.

Statistics:

  • Additional gross proceeds from the over-allotment option: $5.3 million
  • Total gross proceeds from the equity offering: $44.6 million
  • Number of hotels owned by Equity Inns: 91
  • Total number of rooms owned by Equity Inns: 11,192
  • States where Equity Inns has hotel locations: 31
  • Number of Hampton Inns owned by Equity Inns: 57
  • Number of AmeriSuites owned by Equity Inns: 10
  • Number of Residence Inns owned by Equity Inns: 9
  • Number of Homewood Suites owned by Equity Inns: 7
  • Number of Comfort Inns owned by Equity Inns: 3
  • Number of Holiday Inns owned by Equity Inns: 4
  • Number of Holiday Inn Express owned by Equity Inns: 1

Sources:

  • Equity Inns, Inc. press release, dated December 29, 1997
  • Securities and Exchange Commission filings
  • The Financial Relations Board's web site: http://www.frbinc.com