Jameson Inns, Inc. , a leading hotel company with 119 hotels and 8,135
rooms in 14 states, announced that at its annual meeting shareholders
approved the elements of a strategic restructuring of the Company, making
it a taxable corporation by terminating its status as a real estate
investment trust (“REIT”). The Company believes that this restructuring
will strengthen its balance sheet, simplify its corporate structure, and
set the stage to maximize its growth potential.

As a part of the restructuring, on January 2, 2004, the Company closed its
acquisition of Kitchin Hospitality, LLC, the operating company that,
together with its predecessors, has leased and operated the hotel
properties of Jameson since it became a REIT in 1994. As a result of that
closing, Thomas W. Kitchin, the chairman of the board and chief executive
officer of Jameson, and other members of his immediate family, the prior
owners of Kitchin Hospitality, have been issued a total of 2,185,430
shares of Jameson common stock and received a cash payment in the total
amount of $1.3 million used primarily to pay taxes on the transaction.
With the closing of this transaction, Kitchin Hospitality has become a
wholly owned subsidiary of Jameson and will continue to operate Jameson`s
hotel properties.
“The change in our tax status from a REIT to a taxable “C” corporation and
the acquisition of Kitchin Hospitality makes a lot of sense for all
concerned,” stated Mr. Kitchin. “This move will simplify our corporate
structure, and I believe it will improve the financial performance of the
Company. Although “C” corporations are taxable, they are traditional
corporations and not subject to the complex set of rules applicable to the
ownership and operation of REITs. This should make Jameson easier to
understand and analyze for both institutional and retail investors. I
believe that this new structure will provide us with greater flexibility
to use our cash flow to pay down debt, have a stronger balance sheet, and
fund internal and external growth as the Company moves forward.” Mr.
Kitchin continued, “This is a very exciting time for Jameson Inns. As the
founder and largest common shareholder of the Company, it is my goal to
create sustainable growth in earnings and cash flows with a commitment to
quality and performance for our guests and our shareholders.”

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