AMEX:IHT Phoenix, Arizona 85020
FOR FURTHER INFORMATION:
602-944-1500
email:
mberg@innsuites.com
INNSUITES HOSPITALITY TRUST
(IHT) REPORTS A YEAR-END INCREASE IN OPERATING PROFIT OF OVER 300% FOR FISCAL
2007
Phoenix, AZ, May 2, 2007-
InnSuites Hospitality Trust (AMEX:IHT)
Highlights:
InnSuites Hospitality Trust reported
operating income of $1.5 million for the fiscal year ended January 31, 2007, an
improvement of $1.2 million from the prior year operating income of
$349,000. This increase of over 300% reflects
continuing improvement in the operations of the Trust’s core hotels and
successful rate management strategies.
The Trust reported a loss
of $(46,000) attributable to Shares of Beneficial Interest or $(0.01) per basic
and diluted share, for the fiscal year ended January 31, 2007, down from net
income of $542,000, or $0.06 per basic share and $0.02 per diluted share in the
prior fiscal year. Prior year earnings
reflected a $1.8 million gain on the sale of the Phoenix, AZ property, $1.3
million of which was attributable to Trust shareholders.
The Trust had a net loss
attributable to Shares of Beneficial Interest of $(385,000), or $(0.04) per
basic and diluted share, for the fourth fiscal quarter of fiscal year 2007,
which was $223,000 lower than the $(162,000) reported for the same period in
fiscal year 2006. This decrease was primarily due to a sharp increase in the
income tax provision in the fourth quarter, which also adversely affected the
Trust’s full year results.
The Trust reported
earnings before minority interest, interest, taxes, depreciation and amortization
(Adjusted EBITDA) of $4.6 million for the twelve months ended January 31, 2007,
compared to $4.4 million in fiscal year 2006 and $6.8 million in fiscal year
2005. Gains on sale of hotels and properties
totaling $139,000, $1.8 million and $5.1 million are included in Adjusted EBITDA
for fiscal years 2007, 2006 and 2005 respectively. Adjusted EBITDA is a
non-GAAP financial measure that management believes provides meaningful insight
into the Trust’s cash flow performance.
A reconciliation of EBITDA to net income attributable to Shareholders of
Beneficial Interest follows:
|
|
FY 2007 |
|
FY 2006 |
|
FY 2005 |
|
|
|
|
|
|
|
|
Net
income (loss) attributable to Shareholders of Beneficial Interest |
($46,430) |
|
$541,578 |
|
$240,442 |
|
Add
back: |
|
|
|
|
|
|
Minority interest |
428,855 |
|
(267,265) |
|
1,384,985 |
|
Depreciation |
2,032,955 |
|
2,118,492 |
|
2,755,499 |
|
Interest expense |
1,816,371 |
|
1,909,097 |
|
2,259,581 |
|
Income tax expense |
316,164 |
|
75,175 |
|
160,000 |
|
Less: |
|
|
|
|
|
|
Interest income |
(3,431) |
|
(2,134) |
|
(7,517) |
|
ADJUSTED
EBITDA |
$4,551,346 |
|
$4,374,943 |
|
$6,792,990 |
The Trust reported revenue of $21.8 million for the fiscal year ended January 31, 2007, an increase of 2.5% from $21.2 million for the prior year. The increase in revenues is primarily due to an increase in both occupancy and room rates.
The Trust’s hotel operations continue to improve as economic and industry conditions remain stable. In addition, the Trust continues to benefit from management and trademark licensing agreements acquired during the fiscal year 2005.
.
FUTURE POSITIONING
The Board of Trustees is
exploring potential strategic alternatives, including the possibility of
selling one or more of the Trust’s hotels. Management believes that the market
value of each of the Trust's hotels exceeds that hotel's net book value and
outstanding debt, and the Trust intends to sell a Hotel only if the sale price
were to exceed the hotel's net book value and outstanding debt. Such a sale would result in a profit to the
extent the sale price exceeded the net book value and cash flow to the extent
the sale price exceeded the outstanding debt.
The cash generated from any hotel sales will be used initially to reduce
the Trust's outstanding debt.
The Trust listed its Yuma,
Arizona hotel property for sale at a price above its net book value and outstanding
debt.
The Trust can provide no
assurances that it will be able to sell any of its hotels or that, if the Trust
did sell a hotel, that it would be able to sell the hotel at the advertised
listing price. In addition, in
connection with any real estate sales the Trust will incur real estate
commissions and other closing costs.
InnSuites Hospitality Trust is a mid-market studio and
two-room suite hospitality business trust owning 5 moderate service and full
service hotels containing 843 hotel suites and managing and/or licensing ten hotels
located 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 or condo-hotel conversions; 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) fluctuations in hotel occupancy rates, b) changes in room rental rates which may be charged by InnSuites Hotels in response to market rental rate changes or otherwise, c) seasonality of our business, d) interest rate fluctuations, e) changes in governmental regulations, including federal income tax laws and regulations, f) competition, g) any changes in the Trust’s financial condition or operating results due to acquisitions or dispositions of hotel properties, h) insufficient resources to pursue our current strategies, i) concentration of our investments in the InnSuites Hotels® brand, j) loss of franchise contracts, k) real estate and hospitality market conditions, l) hospitality industry factors, m) our ability to meet present and future debt service obligations, n) terrorist attacks or other acts of war, o) outbreaks of communicable diseases, p) natural disasters, q) loss of key personnel, r) 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, and s) uncertainties the Trust might encounter in changing from a REIT to a tax-paying entity. From time to time, these and other risks are discussed in the Trust’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.