Jameson Inns, Inc. , a leading hotel company, and owner of Jameson Inn and
Signature Inn hotels, today announced financial results for the quarter
and year ended December 31, 2003.
On January 2, 2004, the Company completed the transaction resulting in
Jameson Inns, Inc. terminating its status as a real estate investment
trust and acquiring Kitchin Hospitality, LLC, the operating company that
leased and operated all of the hotel properties owned by Jameson Inns,
Inc. The Company will no longer be treated as a REIT for income tax
purposes in 2004.
Jameson Inns’ Chairman and Chief Executive Officer, Thomas W. Kitchin
said, “We are very pleased to have the transaction behind us. We no longer
have any conflicts of interest in our structure or management. The timing
of the deal is advantageous, as we will own and operate all of our
properties for the full year of 2004. As the hotel industry rebounds from
a difficult environment in the last few years, Jameson Inns, Inc.
shareholders won’t have to share the upside with a lessee. The Company is
well positioned to benefit from an improving industry and economy.”
Costs of the acquisition totaling $880,000 and $1,605,000 were expensed
for the fourth quarter and full year of 2003, respectively. The
consideration for the purchase of Kitchin Hospitality that relates to the
lease buy-out will be expensed in first quarter 2004.
In an article entitled “Customer Satisfaction: Applying Concepts to
Industry Wide Measures,” written by Jonathon Barsky, PhD, and Leonard Nash
and appearing in the Cornell Hotel and Restaurant Administration
Quarterly, Vol. 44, Nos. 5 & 6 (October-December, 2003), pages 173-183,
the authors noted that Jameson Inns was ranked number one in customer
satisfaction for the economy segment of the hotel market from the third
quarter of 2002 to the third quarter of 2003, based on the quarterly
ratings published by Market Metrix, LLC, a leading provider of
comprehensive market research services for the hospitality industry.
Market Metrix queries more than 35,000 hotel guests quarterly in areas
including room cleanliness, friendly staff and value for price.
Thomas W. Kitchin, President and CEO said, “We are pleased with this
finding. Our consistent focus continues to be on providing quality
accommodations and superior service to our loyal clientele as we realize
that it is the complete satisfaction of our guests that ensures our
Lease revenues for the fourth quarter 2003 were $9,549,000 versus
$9,577,000 for the 2002 fourth quarter. The Company reported a net loss
attributable to the common stockholders of ($3,951,000) or ($0.35) per
share for fourth quarter 2003 versus a net loss of ($2,234,000) or ($0.20)
per share of common stock for fourth quarter 2002. Funds from operations
(FFO), a non- GAAP measure, was $117,000 in fourth quarter 2003 versus
$2,576,000 in fourth quarter 2002. The increase in the net loss and
corresponding decrease in FFO were primarily attributable to costs related
to the Company’s strategic restructuring and acquisition of Kitchin
Hospitality, LLC, early extinguishment of debt and impairment losses on
certain Inns, including:
- Loss on impairment of real estate of $1,310,000
- Costs of acquisition of $880,000
Combined revenue per available room (REVPAR) for all of the Company’s Inns
was $26.46 for fourth quarter 2003, down $0.37 or 1.4%, from fourth
quarter 2002 due to a decrease in average daily rate from $60.02 to
$59.26, as occupancy remained flat at 44.7%. REVPAR for the Jameson Inn
brand increased 0.7% to $29.27 for fourth quarter 2003, resulting from an
increase in occupancy to 50.5% from 49.6%, offset partially by a $0.66
decrease in average daily rate from the fourth quarter of 2002. REVPAR for
the Signature Inn brand decreased 7.1% to $21.17 for fourth quarter 2003
compared to $22.80 for fourth quarter 2002. This was due to a $0.61
decrease in the average daily rate and a decrease in occupancy from 36.0%
Combined REVPAR for all of the Company’s Inns was $29.53 for 2003, down
$.06 or .02% from 2002 due to a decrease in average daily rate from $59.81
to $59.20. Occupancy increased from 49.5% for 2002 to 49.9% for 2003.
REVPAR for the Jameson Inn brand increased 1.5% to $31.65 for 2003,
resulting from an increase in occupancy to 54.3% from 53.7% and an
increase in the average daily rate from $58.09 in 2002 to $58.30 in 2003.
REVPAR for the Signature Inn brand decreased 4.4% to $25.55 for 2003
compared to $26.72 for 2002. This was due to a decrease in occupancy from
41.9% to 41.6% and a $2.38 decrease in the average daily rate.
“We are relatively pleased with the Company’s performance in 2003. It
marked a turning point in the business cycle for us. We were able to
increase occupancy rates overall during the year, which is the key to
driving a recovery in REVPAR,” said Mr. Thomas Kitchin.
The Company believes FFO and EBITDA to be meaningful non-GAAP measures of
operating performance. However, they should not be considered an
alternative to accounting principles generally accepted in the United
States. The Company calculates FFO for all periods consistent with the
National Association of Real Estate Investment Trusts, Inc. definition.
FFO has been calculated as net income attributable to common stockholders
before depreciation expense and gains or losses on disposal of depreciable
real estate assets. However, FFO as presented in this table may not be
comparable to similarly titled measures presented by other companies.
EBITDA is defined as income before interest expense, income tax expense,
depreciation and amortization. Restructuring and other special items and
gains and losses on asset dispositions and impairments are also excluded
from EBITDA as these items do not impact operating results on a recurring
basis. Management considers EBITDA to be one measure of the cash flows
from operations of the Company before debt service that provides a
relevant basis for comparison, and EBITDA is presented to assist investors
and lenders in analyzing the performance of the Company. This information
should not be considered as an alternative to any measure of performance
as promulgated under accounting principles generally accepted in the
United States, nor should it be considered as an indicator of the overall
financial performance of the Company. The Company’s calculation of EBITDA
may be different from the calculation used by other companies and,
therefore, comparability may be limited.
The Company invested approximately $4.1 million into refurbishing projects
and product upgrades on existing hotels during 2003. The Company
anticipates investing $4.4 million in 2004 for refurbishment projects and
As of December 31, 2003, the Company had total indebtedness of $213.8
million compared to $222.8 million on December 31, 2002, a reduction in
debt of $9.0 million. During 2003, the Company made scheduled long-term
debt payments of $10.0 million and further reduced debt by $3.1 million by
retiring debt secured by two Inns that were sold during 2003. The Company
refinanced two hotel loans resulting in $4.1 million of net proceeds to
Craig Kitchin, President and CFO of Jameson Inns, Inc. stated, “We are
pleased to continue on our path of repaying long term indebtedness. In
2003 we reduced debt by approximately $9.0 million. We will pay down
almost $1.0 million of debt per month during 2004.”
During 2003, the weighted average interest rate on all debt was 5.5%
compared to 6.1% during the same period in 2002, a reduction of 60 basis
The Company expects REVPAR growth between 1% and 5% for 2004. The Company
further expects EBITDA to be between $31 and $34 million. Historically,
the Company has given FFO per share guidance. However, since FFO is
typically a measure of performance used by the REIT industry, the Company
believes that it is more appropriate to set expectations around EBITDA.
The Company will hold a fourth quarter earnings conference call at 11:00
am eastern time today, February 24 2004. You may listen to a simultaneous
webcast of the conference call by accessing the Investor section of the
Company’s website. To listen to the call, dial 877-462-0700 and ask for
the Jameson Inns, Inc. fourth quarter earnings conference call hosted by
Mr. Tom Kitchin. International callers can call 706-679-3971. A replay of
the conference call will be available for thirty days at
http://www.jamesoninns.com/ and by telephone until March 2, 2004 by
calling 800-642-1687 and requesting call number 5462354.