EQI Financing Partnership I, L.P. Affirmed By Fitch IBCA.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 13, 2000

EQI Financing Partnership I, L.P.'s commercial mortgage bonds, series 1997-1, $17.7 million class A bonds are affirmed at `AA' by Fitch IBCA. In addition, the following bonds are affirmed: the $50.6 million class B bonds at `A' and the $10.0 million class C bonds at `BBB'. The rating affirmations follow Fitch IBCA's annual review of the transaction, which closed on Feb. 11, 1997.

The bonds are currently secured by cross-collateralized and cross-defaulted first mortgages on 22 hotel properties located in 13 states - flagged as 18 Hampton Inns, 2 Holiday Inns, 1 Residence Inn and 1 Comfort Inn. The properties are owned by the issuer, a bankruptcy-remote special purpose entity (SPE) owned by Equity Inns, Inc., a publicly traded real estate investment trust (REIT). In Feb. 2000, the issuer sold the Residence Inn located in Madison, WI and prepaid $2.9 million of the outstanding balance.

As of the March 2000 distribution date, the class A bonds have paid down by 35.5% to $17.7 million. The class B and C bonds remain at their origination balance. The Fitch IBCA adjusted net cash flow (NCF), based on the unaudited 1999 year-end financial statements, has increased 1.6% since deal closing. The Fitch IBCA adjusted debt service coverage ratio (DSCR) for the pool, based on the stressed interest rate constant of 10.48% on the outstanding debt, increased to 1.86 times (x) from 1.65x at closing. The higher DSCR can be attributed to principal amortization and a partial prepayment on the loan, which has been partially offset by recent poor performance of the collateral pool. Fitch IBCA adjusted NCF has decreased 14.5% from year-end 1998, primarily due to increased competition in most of the markets, an increase in costs such as maintenance and marketing, and the displacement of guests due to renovations.

The hotels are leased to Crossroads/Memphis Financing Co., LLC, an indirectly owned subsidiary of Interstate Hotels Co., which has entered into long-term management agreements with the operators of the properties. Since certificate closing, Patriot American Hospitality, Inc. purchased Interstate Hotels Co. As a result, Patriot assumed the guarantee and operating responsibilities for the portfolio. Subsequently, Patriot has spun-off Interstate Hotels Co., which resumed operating the hotels under the name Interstate Hotels Management, Inc. A lease modification between Interstate Hotels Management, Inc. and EQI releases Patriot American Hospitality from all existing lease guarantees and substitutes Interstate Hotels Management Inc. as the guarantor. Furthermore, the modification is a positive factor because, the lease now requires Interstate to maintain a net worth equal to 15% of the annual contractual lease payments on all Interstate operated hotels, and the enforcement of performance standards based on operating revenues among other provisions. The underlying mortgages have not changed.

Fitch IBCA will continue to monitor closely the properties' performance as part of its ongoing surveillance.