InnSuites Hospitality Trust (IHT) Reports Second Fiscal Quarter Results

Sep 03, 2010, 16:03 ET from InnSuites Hospitality Trust

PHOENIX, Sept. 3 /PRNewswire-FirstCall/ --

InnSuites Hospitality Trust (NYSE AMEX: IHT) Highlights:

  • Adjusted EBITDA was $758,000 for the six month period ended July 31, 2010 compared to $1.4 million in the prior year period.
  • Net loss attributable to controlling interest was $(688,000), or $(0.08) per basic and diluted share, for the six months ended July 31, 2010. This loss includes $935,000 of non-cash depreciation. This compares to a loss of $(111,000), or $(0.01) per basic share and diluted share, for the six months ended July 31, 2009.
  • Revenues for the first six months of fiscal 2011 were $8.4 million compared to $9.5 million in the prior year period, reflecting declining occupancy and rate in the current economic conditions.
  • During the second quarter ended July 31, 2010, the Trust sold a 12% minority interest in the subsidiary which owns and operates the Albuquerque, New Mexico hotel property. The Trust plans to consider additional minority interest sales in the quarters ahead.
  • Subsequent to the end of the quarter, the Trust entered into a new line of credit agreement for $1.0 million replacing the prior bank line of credit of $350,000.

InnSuites Hospitality Trust reported an operating loss of $(177,000) for the six months ended July 31, 2010, a decline of $577,000 from the prior year period operating income of $401,000. The Trust also reported a net loss attributable to controlling interest of $(688,000), or $(0.08) per basic and diluted share, for the six months ended July 1, 2010, declining from $(111,000), or $(0.01) per basic and diluted share, in the prior year period. For the three months ended July 31, 2010, the Trust reported an operating loss of $(647,000), a decline of $106,000 from the prior year period operating loss of $(541,000). The Trust also reported a net loss attributable to controlling interest of $(785,000), or $(0.09) per basic and diluted share, for the three months ended July 1, 2010, declining from $(645,000), or $(0.07) per basic and diluted share, in the prior year period. Decreased hotel revenues, reflecting weakened economic conditions, were the primary driver of the decreased income figures.

The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $758,000 for the six months ended July 31, 2010, as compared to $1.4 million in the prior year period, a decline of $625,000, or 45.2%. Adjusted EBITDA was $(182,000) for the three months ended July 31, 2010, as compared to $(54,000) in the prior year period, a decline of $128,000, or over 100.0%. Adjusted EBITDA is a non-GAAP financial measure that management believes provides meaningful insight into the Trust's financial performance and its operating profitability before non-operating expenses (such as interest and "other" non-core expenses) and non-cash charges (depreciation and amortization).

A reconciliation of EBITDA to net income attributable to Shareholders of Beneficial Interest for the six and three months ended July 31 follows:

For the six months ended

For the three months ended

7/31/2010

7/31/2009

7/31/2010

7/31/2009

Net loss attributable to controlling interest

$(688,208)

$(111,113)

$(785,446)

$(644,555)

Add back:

 Depreciation

935,238

982,305

465,494

487,402

 Interest expense

791,960

758,753

402,473

376,671

 Non-controlling interest

(279,277)

(236,985)

(263,561)

(269,686)

Less:

 Interest income

(1,233)

(9,926)

(769)

(3,589)

ADJUSTED EBITDA

$758,480

$1,383,034

$(181,809)

$(53,757)

The Trust reported revenue of $8.4 million for the six months ended July 31, 2010, a decrease of 11.1% from $9.5 million for the prior year period. The Trust reported revenue of $3.5 million for the three months ended July 31, 2010, a decrease of 12.1% from $4.0 million for the prior year period.  The decreases in revenues are primarily due to a decrease in occupancy caused by the current difficult economic conditions.

On July 29, 2010, the Trust sold a 12% minority interest in Albuquerque Suite Hospitality, LLC, which owns and operates the Albuquerque, New Mexico hotel property. The minority interest was sold to Rare Earth Financial, LLC, an affiliate of James F. Wirth, who is Chairman, President and Chief Executive Officer of the Trust. The cash sales price for the minority interest was $400,000, which was $408,000 above its carrying value. On August 30, 2010, the Trust entered into an agreement with Rare Earth Financial, LLC to market for sale additional ownership interests in Albuquerque Suite Hospitality, LLC.  

On August 1, 2010, the Trust entered into a $1.0 million line of credit agreement with Rare Earth Financial, LLC. The line of credit bears interest at 7.0% per annum and matures on March 1, 2012.  The Trust entered into the agreement to replace its bank line of credit, which expired on June 30, 2010.

FUTURE POSITIONING

For the current fiscal year 2011, InnSuites projects a continued difficult economic environment, negatively affecting hotel revenue levels. The Trust plans to offset the decline in revenues by focusing on improved sales efficiency and effective cost controls. Although the travel and hospitality industries are down worldwide, InnSuites is experiencing strength relative to the rest of the industry by continuing to refurbish its hotels, increase boutique fashion trends, as well as increase internet marketing as more and more travelers move to the value-oriented InnSuites Suite Hotels and value suite concept "By the day and extended stay."

Our long-term strategic plan is to obtain the full benefit of our real estate equity and to migrate our focus from a hotel owner to a hospitality service company by expanding our trademark license, management, reservation and advertising services. This plan is similar to strategies followed by international diversified hotel industry leaders, which over the last several years have reduced real estate holdings and concentrated on hospitality services.

Your Suite Choice®- Value Concept

InnSuites Hospitality Trust is a mid-market studio and two-room suite hospitality business trust owning five moderate service and full service hotels containing 843 hotel suites and managing and/or licensing hotels located primarily in Arizona, New Mexico, Texas and Southern California.  For reservations, call 1-888-INNSUITES, or visit www.innsuites.com. For investor information, visit www.innsuitestrust.com.

Certain matters within this press release may be discussed using forward-looking language as specified in the 1995 Private Securities Litigation Reform Act and InnSuites Hospitality Trust intends that such forward-looking statements be subject to the safe-harbor created thereby.  Such forward-looking statements include, but are not limited to: (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) the Trust's financing plans; (v) the Trust's position regarding investments, acquisitions, developments, financings, conflicts of interest and other matters; (vi) the Trust's plans and expectations regarding future sales of hotel properties; and (vii) trends affecting the Trust's or any hotel's financial condition or results of operations. InnSuites Hospitality Trust cautions that these statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements contained herein.  Such risks include, but are not limited to: a) local or national economic and business conditions, including, without limitation, conditions which may affect public securities markets generally, the hospitality industry or the markets in which the Trust operates or will operate, b) fluctuations in hotel occupancy rates; c) changes in room rental rates which may be charged by InnSuites Hotels in response to market rental rate changes or otherwise; d) seasonality of our business; e) interest rate fluctuations; f) changes in governmental regulations, including federal income tax laws and regulations; g) competition; h) any changes in the Trust's financial condition or operating results due to acquisitions or dispositions of hotel properties; i) insufficient resources to pursue our current strategies; j) concentration of our investments in the InnSuites Hotels® brand; k) loss of franchise contracts; l) real estate and hospitality market conditions; m) hospitality industry factors, n) our ability to meet present and future debt service obligations; o) terrorist attacks or other acts of war; p) outbreaks of communicable diseases; q) natural disasters; and r) loss of key personnel.

SOURCE InnSuites Hospitality Trust



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