InnSuites Hospitality Trust (IHT) Reports Third Fiscal Quarter Results

Dec 13, 2010, 12:24 ET from InnSuites Hospitality Trust

PHOENIX, Dec. 13, 2010 /PRNewswire-FirstCall/ -- InnSuites Hospitality Trust (NYSE Amex: IHT) Highlights:

  • Adjusted EBITDA was $730,000 for the nine month period ended October 31, 2010 compared to $1.5 million in the prior year period.
  • Net loss attributable to controlling interest was $(1.4) million, or $(0.16) per basic and diluted share, for the nine months ended October 31, 2010. This loss includes $1.4 million of non-cash depreciation. This compares to a loss of $(633,000), or $(0.07) per basic share and diluted share, for the nine months ended October 31, 2009. This loss includes $1.5 million of non-cash depreciation.
  • Revenues for the first nine months of fiscal 2011 were $11.8 million compared to $13.1 million in the prior year period, reflecting declining occupancy and rates in the current economic conditions.
  • The Trust's sales of membership interests in the subsidiary which owns and operates the Albuquerque, New Mexico hotel property were strong during the third quarter and subsequently.
  • Subsequent to the end of the quarter, the Trust entered into a new revolving bank line of credit agreement for $500,000.

InnSuites Hospitality Trust reported an operating loss of $(670,000) for the nine months ended October 31, 2010, a decline of $680,000 from the prior year period operating income of $10,000. The Trust also reported a net loss attributable to controlling interest of $(1.4) million, or $(0.16) per basic and diluted share, for the nine months ended October 31, 2010, declining from $(633,000), or $(0.07) per basic and diluted share, in the prior year period. For the three months ended October 31, 2010, the Trust reported an operating loss of $(493,000), a decline of $102,000 from the prior year period operating loss of $(391,000). The Trust also reported a net loss attributable to controlling interest of $(675,000), or $(0.08) per basic and diluted share, for the three months ended October 31, 2010, declining from $(522,000), or $(0.06) 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 $730,000 for the nine months ended October 31, 2010, as compared to $1.5 million in the prior year period, a decline of $777,000, or 51.7%. Adjusted EBITDA was $(28,000) for the three months ended October 31, 2010, as compared to $123,000 in the prior year period, a decline of $151,000, 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 nine and three months ended October 31 follows:



For the nine months ended


For the three months ended


10/31/2010


10/31/2009


10/31/2010


10/31/2009

Net loss attributable to controlling interest

$(1,363,030)


$(632,513)


$(674,822)


$(522,200)

Add back:








   Depreciation

1,400,263


1,460,517


465,025


478,212

   Interest expense

1,192,565


1,170,610


400,605


411,858

   Non-controlling interest

(498,390)


(481,007)


(219,113)


(243,222)

Less:








   Interest income

(1,289)


(9,983)


(56)


(1,353)

ADJUSTED EBITDA

$730,119


$1,507,624


$(28,361)


$123,295




The Trust reported revenue of $11.8 million for the nine months ended October 31, 2010, a decrease of 10.2% from $13.1 million for the prior year period. The Trust reported revenue of $3.3 million for the three months ended October 31, 2010, a decrease of 7.8% from $3.6 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.

Through October 31, 2010, the Trust has sold approximately 25% of its membership interests in Albuquerque Suite Hospitality, LLC, the subsidiary which owns and operates the Albuquerque, New Mexico hotel property, receiving $840,000 in cash proceeds. Rare Earth Financial, LLC, an affiliate of the Trust's President and CEO James Wirth, purchased $400,000 of this amount, representing approximately a 12% interest in the subsidiary. Subsequently, the Trust sold approximately 21% of additional interests in the month of November, receiving $705,000 in cash proceeds.

On November 23, 2010, the Trust entered into a $500,000 revolving bank line of credit agreement. The line of credit bears interest at the prime rate plus either 1.0% or 2.75%, depending on the level of the Trust's cash deposits with the lender, with a floor of 6.0%. The line of credit matures on May 23, 2011.

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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