InnSuites Hospitality Trust (IHT) Reports Second Fiscal Quarter Results

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.

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. 

Logos, product and company names mentioned are the property of their respective owners.

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