InnSuites Hospitality Trust (IHT) Reports Full Fiscal 2011 Results

Highlights:

• Adjusted EBITDA was $744,000 for the 2011 fiscal year ended January 31, 2011 compared to $1.7 million in the prior year. Net loss attributable to controlling interest was $(2.0) million, or $(0.23) per basic and diluted share, for the fiscal year ended January 31, 2011.  This loss includes $1.9 million of non-cash depreciation expense.  This compares to a loss of $(1.1) million, or $(0.12) per basic share and diluted share, for the fiscal year ended January 31, 2010.  This loss includes $1.9 million of non-cash depreciation expense.
• Revenues for fiscal year 2011 were $15.7 million compared to $16.9 million in the prior year, reflecting declining occupancy and rates in the current economic conditions.
• The Trust's syndication of investment units in the subsidiary which owns and operates the Albuquerque, New Mexico hotel property were fully subscribed with the Trust increasing equity by $2.2 million and receiving a net of $2.2 million in cash proceeds during fiscal year 2011 and 2012.
• The Trust has begun syndication of investment units in the subsidiary which owns and operates the Tucson Foothills, Arizona hotel property, through private placements to accredited investors, with strong preliminary indication of interest in approximately $1.6 million of the $2.5 million offering of 49%.

InnSuites Hospitality Trust reported an operating loss of $1.1 million for the fiscal year ended January 31, 2011, a decline of $834,000 from the prior year operating loss of $(248,000).  The Trust also reported a net loss attributable to controlling interest of $(2.0) million, or $(0.23) per basic and diluted share, for the fiscal year ended January 31, 2011, declining from a loss of $1.1 million, or $(0.12) per basic and diluted share, in the prior year.  Decreased hotel revenues, reflecting weakened economic conditions, were the primary driver of the decreased income figures. Both years reported loss included approximately $1.9 million in non-cash depreciation expenses.

The Trust projects an increase in revenue and profits for the balance of Fiscal Year 2012 (February 1, 2011 to January 31, 2012) versus the same period last fiscal year.

The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $744,000 for the fiscal year ended January 31, 2011, as compared to $1.7 million in the prior year, a decline of $978,000, or 56.8%. 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).

The Trust reported revenue of $15.7 million for the fiscal year ended January 31, 2011, a decrease of 7.0% from $16.9 million for the prior year.  The decreases in revenues are primarily due to a decrease in occupancy and rates caused by the current difficult economic conditions.

Through January 31, 2011, the Trust has sold approximately 67% of its membership interests in Albuquerque Suite Hospitality, LLC, the subsidiary which owns and operates the Albuquerque, New Mexico hotel property, receiving $2.2 million in cash proceeds.  An additional $206,000 is due on membership subscriptions in the first half of fiscal year 2012.  Rare Earth Financial, LLC, an affiliate of the Trust's President and CEO James Wirth, purchased $400,000 of the amount sold and received $320,000 of equity as a formation fee, representing approximately a 19.3% interest in the subsidiary.

These transactions were a reduction in the Partnership's controlling interest, and therefore no gain or loss was reflected in the statements of operations and funds received in excess of cost basis were recorded to equity. These transactions resulted in an increase in equity of $2.2 million.

The Trust began selling membership interests in the subsidiary which owns and operates the Tucson Foothills, Arizona hotel property in April 2011, through private placements to accredited investors.  The offering has received strong interest with Investors interested in $1.6 million of units as of this date.

FUTURE POSITIONING

For the current fiscal year 2012, InnSuites projects a moderate improvement to the difficult economic environment, with an increase in both revenue and gross operating profits (GOP) for the balance of fiscal year 2012 based on trends and advanced bookings.  The Trust plans to focus 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 with large flat screen HDTVs, increased boutique fashion trends, as well as increased 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.

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