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Exhibit 99.1
AT EQUITY INNS: AT THE FINANCIAL RELATIONS BOARD
Howard Silver Harriet Fried - General Info (212) 661-8030
EVP of Finance and CFO Claire Koeneman - Analyst Info (312) 266-7800
(901) 761-9651 Alicia Nieva-Woodgate - Media Info (212) 661-8030
AT RFS:
Michael Pascal - (901) 767-7005
Mimi Hall - (901) 682-1360
FOR IMMEDIATE RELEASE:
April 21, 1998
EQUITY INNS, RFS AGREE TO STOCK MERGER
TO CREATE $1.8 BILLION HOTEL REIT
MEMPHIS, TN, APRIL 21, 1998 -- Equity Inns, Inc. (NYSE:ENN) and RFS Hotel
Investors, Inc. (NYSE:RFS) today announced that they have signed a definitive
agreement to merge the two companies in a stock transaction which will create a
$1.8 billion hotel REIT with a diversified portfolio of full service, upscale
extended stay, all suite and premium limited-service hotels.
Under the terms of the agreement, which was approved unanimously by the Boards
of Directors of both companies, each share of RFS will be exchanged for 1.5
shares of Equity Inns. At closing, RFS board members Robert M. Solmson and
Bruce E. Campbell, Jr. will join the Equity Inns Board of Directors, increasing
its size to six persons. In addition, Mr. Solmson will become a member of a
newly-created executive committee of the Equity Inns board consisting of
Messrs. Phillip H. McNeill, Sr., Robert M. Solmson and William W. Deupree, Jr.
Mr. McNeill will continue as chairman and CEO of the combined company. The
transaction is expected to close in the third quarter, and is subject to the
approval of both companies' shareholders and other customary conditions.
Based upon yesterday's closing stock price of Equity Inns, the transaction is
valued at approximately $990 million, including the assumption of approximately
$300 million in debt including the anticipated costs of terminating certain of
the operating leases on RFS' hotels. Upon completion of the transaction and
certain announced acquisitions, Equity Inns will have a total market
capitalization in excess of $1.8 billion and will own 156 hotels with over
20,000 rooms and suites.
The acquisition is expected to be immediately accretive to Equity Inns' funds
from operations (FFO) for 1998 and 1999, taking into account annual cost
savings of approximately $3.5 million, fees relating to termination of the
current RFS leases and new leases with an independent hotel
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lessee/manager. The acquisition will add 61 hotels plus six hotel development
opportunities to Equity Inns' current portfolio of 95 hotels. In 1997,
approximately 66% of RFS' hotel revenues were derived from full service and
upscale extended stay properties. In addition, approximately 27% of RFS'
revenue was generated from hotels located in the state of California.
Equity Inns' Chairman and CEO Phillip H. McNeill, Sr. said, "We believe this is
an exceptional opportunity to acquire a high-quality portfolio of hotel
properties and to expand our presence in the upscale extended stay and full
service segments and in certain states, like California. This transaction
provides compelling financial and strategic benefits to our shareholders and
will more than double ENN's market capitalization and increase the number of
rooms owned by 82%. RFS' hotels are successful and are located in some of the
most attractive markets in the United States. Silicon Valley, for example, where
RFS invested over $100 million for four hotels last year, has been cited as
perhaps the best hotel market in the country.
This transaction complements our already strong mix of extended stay, all suite
and premier limited-service hotels, enhances the quality and diversity of our
assets and improves the internal growth prospects of our Company. Our focus on
growing our portfolio on both coasts and the Midwest part of the United States
is greatly accelerated with this merger. RFS also provides us with six
excellent development opportunities."
Equity Inns' headquarters will remain in Memphis, and Mr. McNeill noted that he
expects several RFS personnel to be offered positions with Equity Inns.
Upon closing of the acquisition, providing Equity Inns' average stock price is
between $14 and $17 per share during an agreed upon 20 day measurement period,
RFS shareholders will receive 1.5 Equity Inns shares for each RFS share. If
Equity Inns' average stock price during the measurement period exceeds $17 per
share, the exchange ratio will be adjusted to provide RFS shareholders with
$25.50 worth of Equity Inns' stock for each share of RFS.
The Board of Directors of Equity Inns was advised by Bear Stearns & Co. Inc.,
and Morgan Keegan & Company, Inc. The Board of Directors of RFS was advised by
Salomon Smith Barney.
STRATEGIC AND FINANCIAL BENEFITS:
The merger will provide a number of strategic and financial benefits to Equity
Inns, including:
Increased size and improved geographic diversity: The transaction increases
Equity Inns' portfolio by 82%, based on total rooms, and by 88%, based upon
lease revenue. The combined company will have hotels in 34 states and
significant market penetration in key markets including Silicon Valley,
Chicago, Dallas, Atlanta and Detroit.
Increase full service, upscale, extended stay: The transaction will further
diversify Equity Inns' portfolio, resulting in a reduction of the percentage of
1997 total hotel revenue derived from premium limited-service hotels from 61%
to 48% of the total portfolio. Conversely, income from
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upscale extended stay, all suite and full service properties will increase from
39% of total revenue to 52%.
Increased critical mass and liquidity: Combined company equity value, based on
Equity Inns' current stock price, will exceed $1.2 billion with more than 80
million shares outstanding. Pro forma total market capitalization will be
approximately $1.8 billion. The companies expect the critical mass and brand,
segment and geographic diversity to result in lower funding costs.
Operating synergies: Asset management operations, acquisitions and the
development program will be enhanced. The best elements of each organization
will be combined, resulting in a larger, more professional management structure.
Financial synergies: The transaction is expected to result in approximately
$3.5 million in annual operating synergies and will be immediately accretive to
FFO in 1998 and 1999.
Enhanced internal growth: RFS' active development program together with its
significant portfolio of California hotels should accelerate internal growth
for the combined company.
RFS Chairman Robert M. Solmson said of the merger with Equity Inns, "We expect
that this transaction will add significant value to our shareholders'
investment. We have been examining for a number of months the best direction in
which to take the company, and we are confident that this merger, with a
company and a management team we know well and respect, is a decision that
benefits our shareholders and offers important synergies for the future."
Memphis-based Equity Inns, Inc. is a self-advised REIT that focuses on the
upscale extended stay, all suite and premium limited-service segments of the
hotel industy. With the settlement of previously announced acquisitions, the
Company will own 95 hotels with a total of 11,676 rooms located in 32 states.
RFS is a Memphis-based REIT that owns a diversified portfolio of 61 full
service, extended stay and premium limited-service hotels comprising
approximately 8,800 rooms in 24 states.
Certain matters discussed in this press release may constitute forward-looking
statements within the meaning of the federal securities laws. Actual results
and the timing of certain events could differ materially from those projected
in or contemplated by the forward-looking statements due to a number of factors
including general economic conditions, competitive factors, interest rates and
the other risks inherent in the real estate business. For further information
on factors which could impact the companies and the statements contained
herein, reference is made to the filings of Equity Inns and RFS, with the
Securities and Exchange Commission, including quarterly reports on Form 10-Q,
reports on Form 8-K and annual reports on Form 10-K, including factors
described in the Form 10-K for the fiscal year ended December 31, 1997 filed by
Equity Inns and RFS.
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SUMMARY FACT SHEET
RFS Equity Inns Combined
(actual) (actual) (pro forma)
-------- ----------- -----------
Owned Hotels(1) 61 95 156
Rooms(1) 8,837 11,676 20,513
States 24 32 34
Brands 10 7 12
Leading Brands Residence Inn Hampton Inn Hampton Inn
Hampton Inn Residence Inn Residence Inn
Sheraton AmeriSuites Sheraton
AmeriSuites
Equity Market Capitalization(2) $550 $586 $1,246
Debt (3/31/98)(3) $223 $231 $ 561
Total Market Capitalization(2) $773 $817 $1,807
Debt/Total Market Capitalization 29.0% 28.3% 31.0%
Shares (fully diluted)(2) 28.5 38.1 81.0
(1) Includes announced acquisitions. Excludes hotels under development.
(2) Combined based on 1.5 fixed exchange ratio and Equity Inns current stock
price of $15.38 per share.
(3) Combined debt includes anticipated costs of terminating certain of the
operating leases on RFS' hotels and estimated transaction expenses.