Equity Inns, Inc. (NYSE: ENN), the third largest hotel real estate investment trust (REIT), today announced that the Company has filed a Form 8-K with the Securities Exchange Commission (SEC) in connection with agreement with Global Hyatt Corporation regarding the terms under which ENN will convert its 18 AmeriSuites to Hyatt Place hotels. Conversion of all hotels is expected to be completed by the end of 2007.
The agreement allows Equity Inns to continue to receive a minimum return guarantee under its existing agreements, with the guarantee expiring for nine of the hotels on December 31, 2007 and nine on June 30, 2008, as per the original management agreements, which were acquired by Hyatt through its purchase of the AmeriSuites system in January, 2005.
Following full conversion, Hyatt will continue to manage the hotels under a 10-year management agreement coupled with a 20-year Hyatt Place franchise agreement. In return for the Company converting the 18 hotels, Hyatt has agreed to subordinate its franchise and management fees for a defined period or until such time that Equity Inns receives a preferred return on its total hotel investment, including the anticipated conversion costs.
Howard Silver, President and Chief Executive Officer commented, "We are excited about entering our new partnership with Global Hyatt Corporation. The chance to add Hyatt Place as one of our core brands provides Equity Inns with three of the leading brand families in our segments of the industry. Along with our Hilton and Marriott brands, Hyatt should be able to command a premium pricing rate over other industry segment peers. We believe the investment we are making in converting the AmeriSuites brand to Hyatt Place positions Equity Inns to own one of the strongest new hotel brands in this segment."
"Equity Inns is one of the premiere real estate investment trusts in this segment and their confidence in Hyatt Place validates our strategy and position as one of the leading brands," said Jim Abrahamson, Senior Vice President for Hyatt Corporation, "The interest in Hyatt Place has been tremendous, and we are well on our way to converting over 120 hotels to Hyatt Place by the end of 2007 as well as signing on an additional 30 new build Hyatt Place projects this year."
