UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: INNKEEPERS USA TRUST, et al.,1 Debtors.

) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

SUPPLEMENTAL DECLARATION OF WILLIAM Q. DERROUGH IN SUPPORT OF DEBTORS MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE DEBTORS TO ENTER INTO THE COMMITMENT LETTER WITH FIVE MILE II POOLING REIT LLC, LEHMAN ALI INC., AND MIDLAND LOAN SERVICES, (II) APPROVING THE NEW PARTY/MIDLAND COMMITMENT BETWEEN THE DEBTORS AND MIDLAND LOAN SERVICES, (III) APPROVING BIDDING PROCEDURES, (IV) APPROVING BID PROTECTIONS, (V) AUTHORIZING AN EXPENSE REIMBURSEMENT TO BIDDER D, AND (VI) MODIFYING CASH COLLATERAL ORDER TO INCREASE EXPENSE RESERVE I, William Q. Derrough, declare as follows: 1. I am over the age of 18 and competent to testify. I am a Managing Director of

Moelis & Company LLC (Moelis), resident in Moeliss New York office, located at 399 Park Avenue, 5th Floor, New York, New York 10022. I have over 20 years of investment banking experience, having begun my career in 1988 at Salomon Brothers. During my career, I have worked on a number of transactions in the hotel, leisure, and real estate industries, ranging from debt and equity financings, to mergers, acquisitions, and restructurings. In the past 16 months, Moelis & Company has completed or is engaged in a number of large real estate transactions (financings, restructurings, and mergers and acquisitions) representing approximately $100

The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax identification number can be found by visiting the Debtors restructuring website at www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480.

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billion in value.

These include transactions involving Centro Properties Group (corporate

restructuring), Chrysler Corp HQ building (mortgage financing), Dubai World Holdings (advisor to government of Dubai), Fiddlers Creek (chapter 11 debtor advisory), Fleet Street (CMBS vehicle restructuring), Fontainebleau Resorts (restructuring, sale), GGP (chapter 11), LNR Partners (corporate restructuring), Stuyvesant Town/Peter Cooper Village (CMBS restructuring), and Xanadu (restructuring, equity financing). Moelis was the advisor to Hilton Hotels in its $26.5 billion sale to Blackstone Group in 2007. Our real estate group has completed numerous transactions for REITs, including for Simon Properties, Diamond Rock Hospitality Company, Starwood Financial Group, and iStar Financial. 2. I submit this declaration (the Supplemental Declaration) in accordance with

Rule 1007-2 of the Local Bankruptcy Rules for the Southern District of New York in support of the Motion for Entry of an Order (I) Authorizing the Debtors to Enter into the Commitment Letter with Five Mile Capital II Pooling REIT LLC, Lehman ALI Inc., and Midland Loan Services, (II) Approving the New Party/Midland Commitment Between the Debtors and Midland Loan Services, (III) Approving Bidding Procedures, (IV) Approving Bid Protections, (V) Authorizing an Expense Reimbursement To Bidder D, and (VI) Modifying Cash Collateral Order to Increase Expense Reserve (the Motion) and to supplement my previous declaration submitted in support of the Motion (the Declaration) [Docket No. 821], which I incorporate by reference herein.2 3. The facts set forth in this Supplemental Declaration are based upon my personal

knowledge, upon information and belief (where indicated), or upon client matter records kept in the ordinary course of business that were reviewed by me or other employees of Moelis under
2

Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Motion.

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my supervision and direction. To the extent I express opinions in this Supplemental Declaration, those opinions are based in part on my specialized knowledge, training, skill, and approximately 20 years of experience in investment banking, restructuring, and finance. If called and sworn as a witness, I could and would testify competently to the matters set forth herein.3 4. Because discovery is not complete and objections to the Motion are not due until

February 25, 2011, I expressly reserve the right to further supplement any opinions offered and may offer additional opinions and rebuttal testimony. To the extent I offer opinions in my Declaration or this Supplemental Declaration, those opinions are based on information presently available to me. 5. On or around March 24, 2010, the Debtors engaged Moelis to provide general

investment banking and financial advice in connection with the Debtors attempts to complete a strategic restructuring, reorganization, and/or recapitalization of all or a significant portion of the Debtors outstanding indebtedness, as well as to prepare for the potential commencement of chapter 11 cases. A. 6. The Debtors Are Engaging in a Broad Marketing Process and Will Consider Any and All Value-Maximizing Transactions. In addition to pursuing the Five Mile/Lehman Bid through the stalking horse

process and the Motion, the Debtors and their advisors have continued to engage in a broad marketing process that is deliberately and carefully designed to maximize the value of the estates. Consistent with the directions of the Board and the Independent Committee, Moelis and the Debtors management have contacted a broad range of prospective buyers, representing a
3

In accordance with Fed. R. Civ. P. 26, Moelis compensation in connection with these chapter 11 cases is set forth in the Debtors Application for the Entry of an Order Authorizing the Retention and Employment of Moelis & Company LLC as Financial Advisor and Investment Banker to the Debtors Nunc Pro Tunc to the Petition Date [Docket No. 21]. Given the expedited nature of the litigation in connection with the Motion, a list of all my testimony in the last four years would be unduly burdensome, as would a listing of all publications I have authored in the previous ten years.

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spectrum of potential interest, from established hotel owners and operators, to large private equity investors, sovereign wealth funds, and individual investors. 7. As part of this effort, the Debtors management and Moelis began to circulate a

marketing teaser letter (the Initial Marketing Letter) on January 7, 2011 and, to date, have circulated the Initial Marketing Letter to over 100 potential financial, strategic, and other buyers. The Initial Marketing Letter, attached hereto as Exhibit A, explains the benefits of becoming a bidder for the Debtors enterprise or their individual assets. The Initial Marketing Letter sets forth in detail the investment opportunity in sponsoring a plan of reorganization for the Debtors or in otherwise offering a proposal to purchase or acquire all or a portion of the Debtors assets. 8. On January 24, 2011, the Debtors management and Moelis began to circulate a

more detailed and updated process letter (the Follow-Up Process Letter). To date, the Follow-Up Process Letter, attached hereto as Exhibit B, has been sent to over 70 potential buyers, including financial and strategic investors. The Follow-Up Process Letter invites

proposals in all forms that will maximize value. Specifically, the Follow-Up Process Letter invites proposals for superior enterprise-based transactions, asset pools, or individual assets[,] id. at 1, and also describes the process to conduct due diligence and to submit proposals both in advance of and after the March 8-9 hearing on the Motion (the Hearing). To facilitate the bidding process, the Debtors have requested that, to the extent possible, any pre-Hearing bids be submitted and negotiated at least two weeks before the Hearing. 9. The Debtors also issued a press release on January 24, 2011 announcing the

Stalking Horse Bid and the related Motion. See January 24, 2011 Press Release (the Press Release). The Press Release, attached hereto as Exhibit C, describes and further highlights the

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Debtors continued pursuit and consideration of all value-maximizing proposals, including nonenterprise based proposals. 10. On January 24 through January 26, 2011, representatives of Moelis attended The

American Lodging Investment Summit Conference in San Diego, California (the ALIS Conference) to promote or generate potential investor interest. At the ALIS Conference, Moelis representatives engaged with numerous potential buyers to discuss the investment opportunity in acquiring the Debtors enterprise or their individual assets. In addition to seven scheduled meetings with prospective investors, Moelis conducted several ad hoc discussions with potentially interested parties during the ALIS Conference. 11. On February 1, 2011, the Board held a meeting to discuss the ongoing marketing

process. In furtherance of this discussion, the Debtors and their advisors provided a detailed process update to the Board, presented a comparison of restructuring proposals (including the Five Mile/Lehman Bid, the stalking horse proposals of Bidders A-D, and earlier bids from Five Mile), discussed the Initial Marketing Letter, and informed the Board of the status of discussions with potential buyers. 12. As of the date of this Supplemental Declaration, the Debtors and their advisors

have identified over 180 potential buyers, including approximately 129 potential financial buyers and 53 strategic buyers, and have had contact with over 170 potential buyers. In addition, the Debtors have sent the Initial Marketing Letter to over 100 of the potential buyers, while also sending over 75 draft non-disclosure agreements to potential financial, strategic, and other buyers. Since filing the Motion, the Debtors have executed 20 non-disclosure agreements with

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potential bidders and have granted these parties data room access to conduct due diligence. The Debtors are currently negotiating the terms of an additional eight non-disclosure agreements.4 13. In concert with these actions, the Debtors and their advisors are currently engaged

in discussions with interested parties to facilitate due diligence, solicit bids, and explore potential interest in offering proposals in advance of the Hearing (as described in the Follow-Up Process Letter), submitting an Overbid at the Auction (as described in the Motion), or acquiring asset pools or individual assets. The current discussions between the Debtors and their advisors and numerous potential bidders, as well as the Debtors efforts to solicit and explore all transactional options that would maximize value, demonstrate that the marketing process has generated significant interest. 14. The Debtors also continue to engage with constituencies (and their respective

financial advisors) that have indicated they will object to the Motion, such as the Ad Hoc Committee of Preferred Shareholders and LNR, and have made a concerted effort to engage with parties advocated by these constituencies. Specifically, on January 18, 2011, Moelis contacted representatives of the Debtors constituencies and requested the names and contact information for parties these constituencies believed should be included in the marketing process. As a

result of these efforts, the Debtors received several names that they are now including in the marketing process, including facilitating diligence by two parties pursuing interest in the role of manager of the reorganized company and, at their request, permitting cooperation between the advisors to LNR and a bidder who has indicated it may propose an alternative stalking horse bid.

The figures listed in 12 do not include the original stalking horse bidders, as certain of these parties are still engaging with the Debtors, conducting further due diligence, and considering additional proposals.

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B. 15.

Objections to the Debtors Motion. I understand that objections to the Motion are due for filing on February 25, 2011.

I reserve the right to supplement my opinions at that time and respond fully to the concerns expressed by objectors to the Motion.

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Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true and correct.

Dated: February]', 2011 Respectfully submitted,

William Q. Derrough Managing Director, Moelis & Company LLC

Exhibit A

Investment Opportunity

January 2011 STRICTLY CONFIDENTIAL

Innkeepers USA Trust

On behalf of Innkeepers USA Trust (Innkeepers or the Company), Moelis & Company LLC (Moelis, we, us or our) thank you for your interest in a potential transaction involving the Company (the Transaction). We have been retained by the Company as its exclusive financial advisor in connection with the Transaction and, as such, all (i) communications regarding the Transaction, (ii) requests for additional information, and (iii) discussions or questions regarding procedures, should be submitted or directed to us. The Company is currently operating as a debtor-in-possession under Chapter 11 of the United States Bankruptcy Code. The information contained herein is being provided to you as a solicitation of indications of interest in the Transaction. This material does not constitute an offering and does not purport to be all-inclusive or to contain all information that a prospective investor may require. These materials contain only partial information in a brief, summary form; it is not a complete description of the Company or its operations and does not enumerate the significant risks faced by the Company. These materials also contain forward-looking statements and estimates of future performance that cannot be guaranteed. Furthermore, any forward-looking statements and estimates of future performance are based on assumptions that may change and depend on facts that are beyond the control of the Company. We expect that, if you provide an indication of interest, you will require a significant amount of due diligence and inquiry about the proposed Transaction. Such due diligence will be subject to your execution of a confidentiality agreement acceptable to the Company. We expect that in the course of your investigations you will retain your own lawyers, tax advisors, accountants, and other professionals to perform such due diligence and otherwise to assist you in any proposed transaction. Any investment will involve risks that you must independently evaluate. The information contained herein has been obtained from sources generally deemed by the Company to be reliable; however, the Company has not undertaken to independently investigate or confirm the accuracy or adequacy of such information. No representations or warranties of any kind are being made or should be inferred with respect to the material herein. If the Company pursues any indication of interest from you, no negotiations, due diligence, or dealings with you shall bind either party with respect to the Transaction or any other form of transactions except as may be set forth in definitive documentation executed by both parties and approved by the United States Bankruptcy Court for the Southern District of New York in the Chapter 11 bankruptcy proceedings of the Company and its debtor affiliates. This overview does not constitute an offer and does not constitute a solicitation to anyone in any State or other jurisdiction in which such solicitation is not authorized or permitted. ADDITONAL INFORMATION For additional information, please contact one of the following:

Restructuring William Derrough Managing Director Tel: (212) 883-3830 william.derrough@moelis.com Zul Jamal Managing Director Tel: (212) 883-3813 zul.jamal@moelis.com

Real Estate Alex Rubin Managing Director Tel: (212) 883-4545 alex.rubin@moelis.com Steve Moore Vice President Tel: (212) 883-3517 steve.moore@moelis.com

[2]

Innkeepers USA Trust

OPPORTUNITY OVERVIEW On July 19, 2010, Innkeepers filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the Southern District of New York (Case No. 10-13800). The Company has pursued reorganization through a Chapter 11 process and is soliciting interest from those who might wish to sponsor a plan of reorganization for the Company or otherwise render a proposal to purchase or acquire all or a portion of Innkeepers or its assets. Moelis & Company, financial advisor to the Company, is leading this marketing process. On January 14, 2011, the Company filed their motion seeking court approval to, among other things, enter into a commitment letter pursuant to which Five Mile Capital II Pooling REIT LLC, through its investment advisor Five Mile Capital Partners LLC, and Lehman ALI Inc. agreed to sponsor a plan of reorganization for the Company (the Stalking Horse Bid). In addition, the Companys motion seeks approval of certain procedures (the Bidding Procedures) pursuant to which it will solicit interest from other parties proposing value maximizing proposals. Both prior to and after approval of the Bidding Procedures, in accordance with the provisions thereof, the Company will continue to solicit other valuemaximizing proposals for the sponsorship and funding of the Companys Chapter 11 plan of reorganization. COMPANY OVERVIEW Innkeepers is a leading owner of upscale, extended stay hotel properties throughout the United States. Headquartered in Palm Beach, Florida, the Company owns interests in 73 hotels, of which 72 are fully owned and one is partially owned through a joint venture structure. The fully owned properties encompass 9,767 rooms in 18 states and the District of Columbia. The majority of the Companys hotels are located on the East and West coasts of the US with a presence in the Midwest, Texas, and Colorado. Independent hotel managers manage all of the Companys hotels. RECENT EVENTS The Company, along with the entire lodging industry, experienced declines in rates, occupancy and cash flow beginning in 2008. In response, the Company took aggressive steps to reduce expenses across its portfolio of hotels. Despite these and other efforts, the Companys performance and cash flow continued to decline. In April 2010, the Company announced it had not made interest payments on certain of its debt obligations. On July 19, 2010, the Company and its debtor affiliates filed for bankruptcy protection. The Company has pursued reorganization through a Chapter 11 process and is soliciting interest from those who might wish to sponsor a plan of reorganization for the Company or otherwise render a proposal to purchase or acquire all or a portion of Innkeepers or its assets.

[3]

Innkeepers USA Trust

INVESTMENT HIGHLIGHTS
Innkeepers concentrates on the upscale extended stay segment of the lodging industry Extended stay hotels currently comprise more than 65% of Innkeepers hotel portfolio Extended stay hotels typically have less volatile income patterns than traditional hotels due to historically higher than average occupancy rates, longer average stays, limited staffing and lower fixed costs The primary customer base for Innkeepers upscale, extended stay hotels consists of business travelers, employees on temporary work assignments or enrolled in training programs, and individuals engaged in corporate relocations The Company affiliates with well-recognized franchise brands that offer strong marketing support and command revenue premiums One of the largest Residence Inn by Marriott franchisees Platform expansion potential for investors seeking a foundation for future acquisitions or a complement to existing assets Innkeepers is able to generate significant value and stable revenues from the broad geographic distribution of its properties Innkeepers properties are located in 18 states and the District of Columbia The majority of Innkeepers hotels are located on the coasts with a limited presence in the Midwest, Texas and Colorado Innkeepers outsources all hotel management functions to third parties One independent manager manages 71 of Innkeepers 73 hotels Innkeepers is able to benefit from economies of scale, eliminating duplicative processes and costs that would otherwise apply to properties owned and managed on an individual basis Aggressive asset management and focus on the extended stay segment has resulted in high operating margin performance Peak cycle EBITDA margins of 44% Innkeepers management has taken several proactive steps to reduce costs, restructure business operations and address operational cash shortfalls The majority of the hotels in the portfolio have been open longer than five years, creating established market positions and customer bases Premium flags and aggressive revenue management create the potential to capitalize on cyclical recovery in the lodging sector The Companys hotels will benefit significantly from ongoing PIP programs and other upgrades and maintenance capital While the recent economic crisis has affected the hospitality industry, and thus Innkeepers business and overall revenue, Innkeepers operations remain strong and significant opportunities remain for the business in the future Given the pro-cyclical nature of the industry, hotels are expected to benefit from a broader macroeconomic recovery STR Global currently expects the US hotel industry to grow 2.5% in occupancy, 3.9% in average daily rate and 6.5% in revenue per available room in 20111

UPSCALE EXTENDED STAY FOCUS

PREMIUM BRANDS AND PLATFORM POTENTIAL

ATTRACTIVE GEOGRAPHIC MIX

OUTSOURCED HOTEL MANAGEMENT AND ECONOMIES OF SCALE

STRONG OPERATING PERFORMANCE

SEASONED ASSETS WITH SIGNIFICANT POTENTIAL UPSIDE

STRONG, LONGTERM INDUSTRY FUNDAMENTALS

US Hotel Industry Some Signs of Life by Jeff Higley, 10/7/2010 [4]

Innkeepers USA Trust

DIVERSIFIED BRAND AFFILIATIONS The Company affiliates its hotels with premier lodging brands that offer robust marketing support and services and that have demonstrated abilities to command revenue premiums over other brands. HOTEL FLAGS 1 HOTEL BREAKDOWN BY FLAG 2
Hilton Hampton Inn 8 Marriott Residence Inn 38 Hyatt Summerfield Suites 5

Others 21

FLAG OVERVIEW 1, 2
Brand Courtyard Flag Residence Inn

# of Hotels 38 3 1 8

# of Keys 4,942 526 95 1,022 539 156 146 105 650 224 216 154 135 857 9,767

TownePlace Suites Hampton Inn Hilton

/ Hilton Suites

2 1 1 1

Embassy Suites DoubleTree

Homewood Suites

Summerfield Suites Westin

5 1

Four Points by Sheraton Sheraton Best Western Independent and Other Various Total

1 1 1 8 72

Marriott, Residence Inn, Courtyard and TownePlace Suites trademarks owned by Marriott International Inc. (or its subsidiary); Hilton, Hampton Inn, Hilton Suites, Embassy Suites, Homewood Suites and DoubleTree trademarks owned by Hilton Worldwide (or its subsidiary); Hyatt and Summerfield Suites trademarks owned by Hyatt Hotels Corporation (or its subsidiary); Starwood, Westin, Four Points by Sheraton and Sheraton trademarks owned by Starwood Hotels and Resorts Worldwide Inc. (or its subsidiary); Best Western trademark owned by Best Western International, Inc. Excludes the Sheraton Raleigh, which is not fully owned by Innkeepers [5]

Innkeepers USA Trust

EXPERIENCED MANAGEMENT TEAM Innkeepers management has a substantial tenure and comprehensive knowledge of the portfolios assets, as well as strong relationships with its key brand affiliations. Marc Beilinson, 52 | Chief Restructuring Officer since November 2008 | 25+ years of restructuring experience Timothy Walker, 43 | Chief Executive Officer since June 2007 | 23 years of industry experience Mark Murphy, 49 | General Counsel since June 2007 | 18 years of industry experience CORPORATE ORGANIZATIONAL CHART 1

Chief Restructuring Officer Marc Beilinson

President / CEO Timothy Walker

Interim Chief Financial Officer Nathan Cook 1

General Counsel & Secretary Mark Murphy

Senior VP Design & Construction Chuck Engelhardt

Director Internal Audit

VP & Controller

VP Financial Analysis & Planning

VP Design & Construction

Director of Interior Design

Internal Auditor

Senior Accountant

Construction Accountant

A/P Supervisor

Project Management

Project Management

D&C Coordinator

Project Manager

Purchasing Manager

A/P Specialist

Tax Accountant

Purchasing Coordinator

ACCOMPLISHED THIRD PARTY MANAGER Innkeepers benefits from its long-standing relationship with Island Hospitality, one of the leading, third party hospitality managers. Island Hospitality provides management services for 71 of the Companys hotels. Offers sales & marketing support, revenue management, human resources, operational systems, preventive maintenance, purchasing and accounting & financial reporting services Provides approximately 2,650 employees to support the Company A prospective purchaser can choose to continue this relationship on terms to be negotiated with Island Hospitality or elect to provide management functions from another or internal source.
1 Nathan Cook is an employee of AlixPartners and is acting as Interim Chief Financial Officer [6]

Innkeepers USA Trust

GEOGRAPHIC DIVERSIFICATION The 72 fully owned properties encompass 9,767 rooms in 18 states and the District of Columbia. Select properties are located in close proximity to substantial demand generators, including major manufacturers, technology corridors and airports. HOTEL LOCATIONS 1

Flag Marriott Other

# Hotels 42 30

# Keys 5,563 4,204

SELECTED HISTORICAL FINANCIAL INFORMATION 2

ADR
$125 $124

Occupancy
$92

RevPAR
$90 $78 $76

Revenue ($mm)
$334 $324 $281 $289

EBITDA ($mm)
$125 $130

74%

72%

$112

$110

68%

70%

2007

2008

2007

2008

2009

2007

2008

2007

2008

2009

2009

2009

$95

LTM

LTM

1 2

Excludes the Sheraton Raleigh, which is not fully owned by Innkeepers LTM as of September 30, 2010; EBITDA does not include corporate overhead; figures exclude the Hilton Ontario, which was placed in receivership in April 2010 [7]

LTM

LTM

LTM

2007

2008

2009

$96

Innkeepers USA Trust

CAPITALIZATION OVERVIEW As of September 30, 2010, the Company had secured indebtedness of approximately $1.4 billion, including approximately $1.3 billion of property-level secured debt. Approximately $1.0 billion of the Companys debt is securitized in the CMBS market. The Companys funded secured pre-petition debt is in nine groups with separate collateral packages. The Company is currently using $70.5 million in committed debtor-in-possession (DIP) financing provided by Five Mile Capital Partners and Solar Capital (an affiliate of Lehman Asset Management Company) for the specific purpose of funding most of the remaining incomplete property improvement programs (PIPs) required under its franchise agreements and certain other capital expenditures. The DIP financing will allow the Company to complete these PIPs, remain in compliance with the PIP requirements of its franchise agreements, increase the value of those hotels that enjoy capital improvements, and generally maintain and enhance the value of the Innkeepers enterprise. In addition to the Companys funded indebtedness, it also has two classes of preferred shares outstanding. As of the petition date, Grand Prix Holdings, LLC held substantially all of Innkeepers currently outstanding common shares. CAPITALIZATION TABLE 12
Non-Default Debt and Preferred Shares Five Mile Capital DIP Lehman / Solar DIP Total DIP Loans Fixed Rate Pool Mortgage Floating Pool Mortgage Mezzanine Floating Pool Total Hilton Anaheim Mortgage Mezzanine Hilton Anaheim Total Residence Inn Mission Valley Mortgage Residence Inn Anaheim Mortgage Hilton Ontario Mortgage DoubleTree Washington DC Mortgage Residence Inn Tysons Corner Mortgage Homewood Suites San Antonio Mortgage Total Pre-Petition Debt Total Debt Series A Preferred Shares
2 2

Principal Maturity 8/28/2011 8/27/2011 Balance ($mm) $53.0 17.5 $70.5

Rate L+500 1 L+500 1 6.71% L+205 5% Cash/15% PIK

7/9/2017 7/1/2010 7/1/2010

$825.4 $220.2 132.4 $352.6

5.41% 10% PIK 5.98% 5.98% 5.98% 6.03% 6.03% 6.03%

7/9/2017 7/1/2010 11/11/2016 11/11/2016 11/11/2016 10/1/2016 10/1/2016 10/1/2016

$13.0 22.6 $35.6 47.2 37.4 35.5 25.5 25.1 24.1 $1,408.3 $1,478.8 $75.0 145.0 $1,698.8

Series C Preferred Shares Total Debt and Preferred Shares

1 2

Subject to a 2.00% LIBOR floor Pre-petition amount outstanding, without PIK / unpaid dividends [8]

Innkeepers USA Trust

ASSET OVERVIEW
Property Name West Palm Beach Washington DC Valencia Columbia Germantown Islandia Louisville HI Naples Westchester Willow Grove Woburn Anaheim Hilton Hilton Ontario San Antonio Addison SS Belmont El Segundo Las Colinas Mount Laurel Atlantic City Fort Lauderdale Montvale Addison RI Altamonte Springs Anaheim RI Arlington Atlanta Downtown Atlanta Peachtree Bellevue Binghamton Bothell Cherry Hill Denver Downtown Denver Tech Fremont Gaithersburg Harrisburg Lexington KY Livonia Louisville RI Lynnwood Mission Valley Mountain View Ontario Portland ME Richmond Richmond NW Rosemont Saddle River San Jose San Jose South San Mateo Shelton Silicon Valley I Silicon Valley II Troy Southeast Tukwila Tysons Corner Windsor Horsham Fort Walton Beach Rockville Morristown Bulfinch East Lansing Grand Rapids Indianapolis Troy Central Fort Wayne Albany Lombard Schaumburg Brand Best Western Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hilton Hyatt Hyatt Hyatt Hyatt Hyatt Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Marriott Starwood Starwood Starwood Independent Independent Independent Independent Independent Independent Independent Independent Independent Flag Best Western DoubleTree Embassy Suites Hampton Inn Hampton Inn Hampton Inn Hampton Inn Hampton Inn Hampton Inn Hampton Inn Hampton Inn Hilton Hilton Homewood Suites Summerfield Suites Summerfield Suites Summerfield Suites Summerfield Suites Summerfield Suites Courtyard Courtyard Courtyard Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn Residence Inn TownePlace Suites Four Points by Sheraton Sheraton Westin Bulfinch Gatehouse Inns Gatehouse Inns Gatehouse Inns Gatehouse Inns Residence Inn Stay Inn Stay Inn Stay Inn Keys 135 105 156 83 178 120 173 107 112 150 99 230 309 146 132 132 122 148 116 206 136 184 150 128 200 114 160 120 120 72 120 96 159 128 80 132 122 80 112 96 120 192 112 200 78 80 104 192 174 80 150 160 96 231 247 96 144 121 96 95 216 154 224 79 60 96 88 152 80 126 128 128 Address 1505 Belvedere Road, West Palm Beach, FL 33406 801 New Hampshire Avenue, NW, Washington, DC 20037 28508 Westinghouse Place, Santa Clarita, CA 91355 8880 Columbia 100 Parkway, Columbia, MD 21045 20260 Goldenrod Lane, Germantown, MD 20876 1600 Veterans Memorial Highway, Islandia, NY 11722 101 East Jefferson Street, Louisville, KY, 40202 3210 Tamiami Trail North, Naples, FL 34103 2222 Enterprise Drive (22nd Street), Westchester, IL 60154 1500 Easton Road, Willow Grove, PA 19090 315 Mishawum Road, Woburn, MA 01801 400 North State College Boulevard, Orange, CA 92868 700 North Haven Avenue, Ontario, California 91764 432 West Market Street, San Antonio, TX 78205 4900 Edwin Lewis Drive, Addison, TX 75001 400 Concourse Drive, Belmont, CA 94002 810 South Douglas Street El Segundo, CA 90245 5901 North MacArthur Boulevard Irving, TX 75039 3000 Crawford Place, Mount Laurel, NJ 08054 1212 Pacific Avenue, Atlantic City, NJ 8401 2440 West Cypress Creek Road, Fort Lauderdale, FL 33309 100 Chestnut Ridge Road, Montvale, NJ 07645 14975 Quorum Drive, Dallas, TX 75254 270 Douglas Avenue, Altamonte Springs, FL 32714 11931 Harbor Boulevard, Garden Grove, California 92840 1050 Brookhollow Plaza Drive, Arlington, TX 76006 134 Peachtree Street NW, Atlanta, GA 30303 5500 Triangle Drive, Norcross, GA 30092 14455 Northeast 29th Place, Bellevue, WA 98007 4610 Vestal Parkway East, Vestal, NY 13850 11920 Northeast 195th Street, Bothell, WA 98011 1821 Old Cuthbert Road, Cherry Hill, NJ 08034 2777 Zuni Street Denver, CO 80211 6565 South Yosemite Englewood, CO 80111 5400 Farwell Place, Fremont, CA 94536 9721 Washingtonian Boulevard, Gaithersburg, MD 20878 4480 Lewis Road, Harrisburg, PA 17111 1080 Newtown Pike Lexington, KY 40511 17250 Fox Drive, Livonia, MI 48152 120 North Hurstbourne Parkway, Louisville, KY 40222 18200 Alderwood Mall Parkway, Lynnwood, WA 98037 1865 Hotel Circle South, San Diego, California 92108 1854 El Camino Real West, Mountain View, CA 94040 2025 Convention Center Way, Ontario, CA 91764 800 Roundwood Drive, Scarborough, ME 04074 2121 Dickens Road, Richmond, VA 23230 3940 Westerre Parkway, Richmond, VA 23233 7101 Chestnut Street, Rosemont, IL 60018 7 Boroline Road, Saddle River, NJ 07458 2761 South Bascom Avenue, Campbell, CA 95008 6111 San Ignacio Avenue, San Jose, CA 95119 2000 Winward Way, San Mateo, CA 94404 1001 Bridgeport Avenue, Shelton, CT 6484 750 Lakeway Drive Sunnyvale, CA 94085 1080 Stewart Drive Sunnyvale, CA 94086 32650 Stephenson Highway, Madison Heights, MI 48071 16201 West Valley Highway, Seattle, WA 98188 8400 Old Courthouse Road, Vienna, VA 22182 100 Dunfey Lane, Windsor, CT 06095 198 Precision Drive, Horsham, PA 19044 1325 Miracle Strip Parkway, Fort Walton Beach, FL 32548 920 King Farm Boulevard, Rockville, MD 20850 2 Whippany Road, Morristown, New Jersey 107 Merrimac Street, Boston, MA 02114 1600 East Grand River Avenue, East Lansing, MI 48823 2701 East Beltline Avenue SE, Grand Rapids, MI 49546 3553 Founders Road, Indianapolis, IN 46268 2600 Livernois Road, Troy, MI 48083 4919 Lima Road Fort Wayne, IN 46808 981 New Loudon Road, Cohoes, NY 12047 222 East 22nd Street, Lombard, IL 60148 1300 East Higgins Road, Schaumburg, IL 60173

[9]

Exhibit B

399 PARK AVENUE 5th FLOOR NEW YORK, NEW YORK 10022 T 212.883.7300 F 212.880.4260

[DATE] PRIVATE AND CONFIDENTIAL [COMPANY NAME] [ADDRESS] [ADDRESS] Attention: [NAME, TITLE]

Moelis & Company LLC (Moelis, we, us, or our) has been retained by Innkeepers USA Trust (Innkeepers or the Company) to represent the Company as its exclusive financial advisor in connection with a potential transaction involving the Company (the Transaction). As we have previously, we are again contacting you regarding your interest in a Transaction and to provide an update regarding the Companys efforts on this front. On January 14, 2011, the Company filed a motion seeking authority from the Court presiding over the Companys pending chapter 11 cases to enter into a commitment letter for a stalking horse bid submitted by Five Mile/Lehman (the Stalking Horse Bid). The Court scheduled a hearing for March 8, 2011 (the Hearing), to consider approval of (among other things) (1) the Stalking Horse Bid, (2) bidding procedures governing an auction at which overbids to the Stalking Horse Bid will be solicited, and (3) a break-up fee to Five Mile/Lehman if the Company completes a transaction other than the Stalking Horse Bid (and provided certain other conditions are satisfied). The Stalking Horse Bid contemplates an enterprise-level transaction involving the Companys entire portfolio and is valued at $1.139 billion (including approximately $790.5 million of debt financing and approximately $348.2 million of equity). Under the Stalking Horse Bid, Fixed Pool mortgage holders are to receive consideration of $622.5 million in debt, the Floating Pool mortgage holder is to receive consideration of $200.3 million in equity and cash, and the other mortgage holders are to receive consideration of $168.2 million. For your convenience, attached hereto is a summary of the pro-forma capitalization contemplated by the Stalking Horse Bid. As we have stated, the Company will evaluate all credible and viable proposals that will maximize value on behalf of our constituents. To be clear, the Company can and will continue to fully consider other value-maximizing restructuring proposals it may receive before or after the Hearing, including proposals for superior enterprise-based transactions, asset pools, or individual assets. As such, we encourage you to submit and we will consider enterprise and non-enterprise-level bids that maximize value, including proposals for pools and individual assets. Proposals Received Prior to the Hearing If you are interested in submitting a proposal prior to the Hearing, we urge you to contact us as soon as possible, but ideally before February 23, 2011. We estimate that it will take at least two weeks, if not longer, to negotiate your proposal before the Hearing. To make this process as efficient as possible, we have made available certain documents in the Companys on-line data room related to the plan sponsor process, including the commitment letter, Stalking Horse Bid,

and bidding procedures, and ask that you provide us a markup of the documents with your proposal. To the extent your proposal is not fully negotiated in advance of the Hearing, the Company expects to proceed with its request for approval of the Stalking Horse Bid. Proposals after the Hearing Of course, if you are not interested in submitting a proposal before the Hearing or are unable to submit a finalized, alternative proposal within a reasonable time before the Hearing, we encourage you to submit a proposal prior to the bid deadline for overbids to the Stalking Horse Bid, which the Company currently expects to occur approximately on April 22, 2011 (45 days after the Hearing). In summary, we encourage you to submit non-enterprise-level proposals for pools or individual assets, should you have an interest in pursuing such a transaction. We will evaluate all credible and viable proposals that will maximize value on behalf of our constituents. Process Summary This process is designed to encourage the participation of investors and to provide those investors who can complete their due diligence quickly an opportunity to submit an enterprise or non-enterprise-level bid that maximizes value. The timeline and next steps for this process, however, depend on several factors, including the details of your proposal. Time is of the essence and your proposal is expected to be binding. The Company will place significant weight on proposals that are specific with respect to consideration, structure, ease of execution, and timing. The Companys goal in this process is to secure the highest and best Transaction possible and to generate as much value for its chapter 11 estates as possible. For us to evaluate the proposals on a comparable basis, any proposal you submit should address the following points, along with any others you feel will be helpful to us in evaluating your proposal: Valuation / Structure The proposal should indicate the purchase price for either: a) 100% of the Company, in which case we request that you provide an aggregate debt balance range and the associated debt-to-capitalization, or b) the desired pool, including proposed treatment of claims in the desired pool, or c) individual assets, including the proposed treatment of claims per asset

If your proposal contemplates a combination of these alternatives, please be precise regarding the configuration of such a combination. Committed Financing The proposal must include committed financing documented to the Companys satisfaction that demonstrates the proposal has: a) received sufficient debt and/or equity funding commitments, and b) adequate working capital financing or resources to finance going concern operations and the proposed restructuring transactions Identity The proposal must fully disclose the identity, contact information,

and a description of the financial position and hospitality industry experience of each entity that will be submitting a proposal or otherwise participating in connection with such proposal (including any equity holder or other financial backer if the proposal is made from an entity formed for the purpose of consummating the proposed transaction contemplated by the proposal) and the complete terms of any such participation. Under no circumstances shall any undisclosed principals be associated with any proposal. All proposals must also include contact information for the specific person(s) Moelis & Company LLC or Kirkland & Ellis LLP should contact regarding the proposal. Contingencies - No Financing or Diligence Outs A proposal may include covenants and conditions reasonably acceptable to the Company, but under no circumstances shall a proposal be conditioned on the obtaining or the sufficiency of financing or any internal or credit committee approval, syndication requirements, or on the outcome or review of due diligence, but may be subject to the accuracy at the closing of specified representations and warranties or the satisfaction at the closing of specified conditions. A proposal must demonstrate to the Companys satisfaction the necessary financial capacity to consummate the proposed transactions required by its proposal. A proposal shall be irrevocable until and unless the Company consummates a higher or otherwise better proposal. A proposal shall provide evidence that you have obtained all necessary internal authorization or approval, including from your Board of Directors (or comparable governing body), with respect to the submission, execution, delivery, and closing of your proposal and transactions contemplated thereby. Midland Loan Services, a division of PNC Bank, National Association, has agreed to provide financing, subject to certain conditions, to prospective bidders at the auction. The proposal should indicate if a bidder is interested in taking advantage of this opportunity. Moelis will make arrangements for discussion between you and Midland, at the appropriate time and should we, in our sole discretion deem it to be appropriate. This is not intended to be, and is not, a commitment of any form whatsoever on behalf of Midland Loan Services, the Company or us. The proposal should include a description of any other conditions you anticipate, including anticipated timing of satisfying such conditions. The proposal should include a list of the name(s), and respective function(s), of any advisors you have engaged or would plan to engage in connection with the Transaction and the name(s), phone number(s), email(s), and fax number(s) of the parties prepared to answer any questions regarding your proposal.

Demonstrated Financial Capacity Irrevocable Authorization

Midland Financing

Other Conditions

Advisors and Contacts

If you are interested in submitting a proposal, you shall be granted access to a virtual data room containing confidential financial and operational materials, provided that you have executed a confidentiality agreement and provided sufficient information to the Company demonstrating your wherewithal to consummate a restructuring transaction. This letter is not intended to be, and is not, a solicitation for the acceptance or rejection of a chapter 11 plan for the Company. Acceptance of any such plan by any party will not be solicited from any person or entity until such person or entity has received the disclosures required under or otherwise in compliance with applicable law. All (a) communications regarding the Transaction, (b) requests for additional information, and (c) discussions or questions regarding the procedures and guidelines in this letter or any other matter related to the Transaction should be submitted or directed to us (contact information below). We will be available throughout the process to assist you in your evaluation of the Company. In no event should you contact the management, employees, advisors (other than us), suppliers, franchisors, or customers of the Company regarding any matter relating to the Transaction. We remind you that your conduct is or will be subject to the terms and conditions outlined in the executed Confidentiality Agreement. On behalf of Innkeepers, we appreciate your continued interest in the Company and your cooperation in complying with these procedures. Sincerely,

William Q. Derrough Managing Director, Co-Head of Recapitalization & Restructuring MOELIS & COMPANY LLC

399 Park Avenue, 5th Floor New York, NY 10022 Tel: (212) 883-3800 William Derrough Managing Director Tel: (212) 883-3830 william.derrough@moelis.com Steve Moore Vice President Tel: (212) 883-3517 steve.moore@moelis.com Alex Rubin Managing Director Tel: (212) 883-4545 alex.rubin@moelis.com Brian Bacal Associate Tel: (212) 883-4548 brian.bacal@moelis.com Zul Jamal Managing Director Tel: (212) 883-3813 zul.jamal@moelis.com Adam Pieczonka Analyst Tel: (212) 883-3547 adam.pieczonka@moelis.com

Five Mile / Lehman Proposal Pro Forma Capitalization(a)

Current Principal Balance (b) DIP Five Mile DIP Lehman DIP (c) Fixed Pool Fixed Rate CMBS Mortgage Loan Floating Pool Floating Rate Mortgage Loan Floating Rate Mezzanine Loan Others Anaheim Mortgage Loan Anahaim Mezzanine Loan Capmark Mission Valley CMBS Mortgage Loan Capmark Garden Grove CMBS Mortgage Loan Capmark Ontario CMBS Mortgage Loan Merrill Lynch Washington DC CMBS Mortgage Loan Merrill Lynch Tysons Corner CMBS Mortgage Loan Merrill Lynch San Antonio CMBS Mortgage Loan Total Others Total Debt Public Preferred Stock Total Debt and Preferred Stock Implied Equity Total Capital Structure Adjusted Principal Balance Pro Forma Principal Balance

Impairment

Pay Down / Conversion

$53.0 17.5 825.4 220.2 132.4 13.0 22.6 47.2 37.4 35.5 25.5 25.1 24.1 230.3 $1,478.8 145.0 $1,623.8 $7.4 $1,631.2

--(202.9) (19.9) (132.4) -(19.0) -(12.1) (27.5) ---(58.7) ($413.9) (139.1) ($553.0)

$53.0 17.5 622.5 200.3 -13.0 3.6 47.2 25.3 8.0 25.5 25.1 24.1 171.6 $1,064.9 5.9 $1,070.8 $59.4

($53.0) (17.5) -(200.3) --(3.6) ------(3.6) ($274.4) (5.9) ($280.3) $288.8 $8.5

--622.5 --13.0 -47.2 25.3 8.0 25.5 25.1 24.1 168.0 $790.5 -$790.5 $348.2 $1,138.7

($553.0)

$1,130.2

a) Refer to Commitment Letter and Appendix A of Commitment Letter for further details b) Represents principal balance as of July 19, 2010 and does not include any accrued or unpaid interest, default interest, or other fees and charges c) Assumes DIP financing facility is fully drawn

[1]

Exhibit C

INNKEEPERS USA TRUST IN BROAD MARKETING PROCESS AS PART OF CHAPTER 11 RESTRUCTURING

PALM BEACH, Fla., January 24, 2011 Innkeepers USA Trust (OTC: INKPP) (Innkeepers or the Company), a real estate investment trust and a leading owner of upscale extended-stay hotel properties throughout the United States, filed a motion on January 14, 2011 seeking authority from the Court presiding over the Companys pending chapter 11 cases to enter into a commitment letter for a stalking horse bid submitted by Five Mile Capital II Pooling REIT LLC / Lehman ALI Inc. (the Stalking Horse Bid). The Stalking Horse Bid contemplates an enterprise-level transaction involving the Companys entire portfolio and is valued at $1.14 billion (including approximately $790.5 million of debt financing and approximately $348.2 million of equity). The Court has scheduled a hearing for March 8, 2011, to consider approval of (among other things) (1) the Stalking Horse Bid, (2) bidding procedures governing an auction at which overbids to the Stalking Horse Bid will be solicited, and (3) a break-up fee to Five Mile / Lehman if the Company completes a transaction other than the Stalking Horse Bid (and certain other conditions are satisfied). The Stalking Horse Bid includes $622.5 million of mortgage debt provided by an existing creditor. This creditor has agreed to make this debt available to other bidders at the auction that want to use it and that meet certain conditions. We are pleased with the progress of our restructuring process thus far. The bid submitted by Five Mile and Lehman provides both baseline recoveries for Innkeepers constituents and a benchmark for the valuation of our portfolio, said Marc Beilinson, the Companys Chief Restructuring Officer. The Company can and will continue to fully consider all other value-maximizing restructuring proposals it may receive, whether for enterprise-based transactions, asset pools or individual assets, said Beilinson. Our process is ongoing and we are actively soliciting interest, both in advance of the March hearing and afterward, in accordance with the bid procedures (if approved at the hearing). As such, we encourage interested parties to submit bids at any time for enterprise-based transactions or for individual or collections of assets. Moelis & Company LLC (Moelis) has been retained by Innkeepers to represent the Company as its exclusive financial advisor in connection with a potential transaction. Interested parties who have not already done so, are encouraged to reach out to Steve Moore at Moelis (steve.moore@moelis.com) for further information involving the marketing process and accessing detailed financial and operational information on the Company and its assets. The chapter 11 cases are pending in the United States Bankruptcy Court for the Southern District of New York. The description of the Stalking Horse Bid and the other matters discussed above are qualified by reference to the motion for approval of the Stalking Horse Bid, and the exhibits to the motion, filed with the Court on January 14, 2011. For access to the motion, other court documents and other general information about the chapter 11 cases, please visit www.omnimgt.com/innkeepers.

About Innkeepers USA Trust Innkeepers USA Trust is a real estate investment trust and a leading owner of upscale and extended-stay hotel properties throughout the United States. The Company currently owns interests in 72 hotels with approximately 10,000 rooms in 19 states and the District of Columbia. Forward Looking Statements: This press release contains forward-looking statements. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, the impact of our bankruptcy filing, our ability to refinance, extend or repay our near and intermediate term debt, our substantial level of indebtedness and interest rates, hotel and credit market conditions. The Company disclaims any obligation to update any forward-looking statements. Media Contact For Innkeepers: Michelle Campbell AP Services, LLC 310-871-8436