The Palm Beach-based hotel real estate investment trust expects to post quarterly funds from operations of at least three cents a share less than the consensus forecast of 46 cents that First Call Corp. is reporting across its global financial network.

Because of the soft demand, the company also is lowering year-end FFO earnings estimates to a range of $1.72 to $1.80 a share from the current analysts consensus estimate of $1.86.

"The falloff in demand at most of our hotels in March, April and May is continuing into June, which has particularly impacted occupancy rates at our Silicon Valley properties, which accounted for 29% of our total 2000 revenues," Jeffrey H. Fisher, Innkeepers president and chief executive officer, says in a prepared statement. "While the future direction of the economy, and lodging demand in particular, remains difficult to predict for the second half, we are now assuming that the softness we have experienced since March will continue."