ENN Equity Inns

Equity Inns, Inc. (NYSE: ENN), the third largest hotel real estate investment trust (REIT), today announced that its Board of Directors has declared quarterly cash dividends of $0.23 per common share, $0.546875 per Series B preferred share and $0.50 per Series C preferred share. Mr. Howard Silver, President and Chief Executive Officer, commented, "We are pleased that continued profit growth allows us to meaningfully generate shareholder value by increasing the amount of the cash dividend we pay and still stay within a conservative CAD payout ratio of 70-75%. Our dividend is now 21% more than our second quarter 2006 dividend and 35% higher versus the amount distributed this time last year. Our ability to provide a significant increase in our common share dividend, while retaining our strong dividend coverage, stems from our confidence in the Company's hotel portfolio to continue to produce strong cash flow." The record date for the common dividend and the preferred dividends is September 29, 2006. The preferred dividends are payable on October 31, 2006, while the common dividend is payable on November 1, 2006. About Equity Inns Equity Inns, Inc. is a self-advised REIT that focuses on the upscale extended stay, all-suite and midscale limited-service segments of the hotel industry. The Company, which ranks as the third largest hotel REIT based on number of hotels, currently owns 125 hotels with 14,924 rooms located in 35 states. For more information about Equity Inns, visit the Company's Web site at www.equityinns.com. Forward Looking Statements Certain matters discussed in this press release which are not historical facts are "forward-looking statements" within the meaning of the federal securities laws and involve risks and uncertainties. The words "may," "plan," "project," "anticipate," "believe," "estimate," "forecast, "expect," "intend," "will," and similar terms are intended to identify forward-looking statements, which include, without limitation, statements concerning our outlook for the hotel industry, acquisition and disposition plans for our hotels and assumptions and forecasts of future results for fiscal year 2006. Forward-looking statements are not guarantees of future performance and involve numerous risks and uncertainties which may cause our actual financial condition, results of operations and performance to be materially different from the results of expectations expressed or implied by such statements. General economic conditions, future acts of terrorism or war, risks associated with the hotel and hospitality business, the availability of capital, risks associated with our debt financing, hotel operating risks and numerous other factors, may affect our future results and performance and achievements. These risks and uncertainties are described in greater detail in our 2005 Annual Report on Form 10-K filed on March 15, 2006, and our other periodic filings with the United States Securities and Exchange Commission (SEC). We undertake no obligation and do not intend to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially. Non-GAAP Financial Measures Included in this press release are certain "non-GAAP financial measures," which are measures of the Company's historical or future financial performance that are different from measures calculated and presented in accordance with generally accepted accounting principles, or GAAP, within the meaning of applicable SEC rules. This includes: (i) Cash Available for Distribution and (ii) CAD Payout Ratio. The following discussion defines these terms, which the Company believes can be useful measures of its performance. Cash available for distribution (CAD) and CAD Payout Ratio Cash available for distribution (CAD) is defined as AFFO, adjusted for certain non-cash amortization and an allowance for recurring capital expenditures equal to four percent of hotel room revenue from continuing operations. The Company computes the CAD Payout Ratio by dividing common dividends per share and unit paid over the last twelve months by trailing twelve-month CAD per share for the same period. The Company believes the CAD Payout Ratio also helps improve equity holders' ability to understand the Company's ability to make distributions to its shareholders.