Fiscal 2001 Annual Report InnSuites Hospitality Trust by xiuliliaofz

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									InnSuites Annual Report 2001 4C    5/17/01   12:47 PM       Page 1




 Yuma I-8 & 16th St.                                                                       Scottsdale Eldorado Park
                                                                                                                            Albuquerque Airport



                                  Tucson City Center/I-10




                                                      Tempe/Phoenix Airport                   Ft. Worth/Dallas Metroplex



   Buena Park/Anaheim           Phoenix Northern
                                                                                                                           San Diego Balboa Park




                                                                                          Tucson Catalina Foothills




                                                             Ontario Airport/LosAngeles




                                                                                                                  Flagstaff/Grand Canyon




                                                                                                                                                   Fiscal 2001           InnSuites
                        InnSuites® Hotels Centre • 1615 E. Northern Ave. #102 • Phoenix, Arizona 85020                                             Annual Report   Hospitality Trust
                                www.innsuitestrust.com • Fax (602) 678-0281 • Phone (602) 944-1500
InnSuites Annual Report 2001 4C                        5/17/01          12:47 PM        Page 3




                                                                                                                                                                                                                                                       Investor Information
                        InnSuites Hospitality Trust - Total F.F.O.
    $1,200,000                                                                                                                      InnSuites Hospitality Trust - F.F.O. per Basic Share                        Corporate Offices:                                              Hotel Information & Reservations:
     $900,000                                                                                                        $0.60
                                                                                                                                                                                                                InnSuites Hospitality Trust                                     Toll Free: 1-888-INNSUITES
     $600,000                                                                                                                                                                                                   InnSuites Hotels Centre                                         Or: 1-800-842-4242
                                                                                                                     $0.30
     $300,000                                                                                                                                                                                                   1615 E. Northern Ave. #102                                      www.innsuites.com
                                                                                                                          0
            $0
                                                                                                                                                                                                                Phoenix, Arizona 85020
                                                                                                                   $(0.30)
    $(300,000)
                                                                                                                   $(0.60)
                                                                                                                                                                                                                Phone: (602) 944-1500                                           InnSuites Hotels, Inc.
    $(600,000)
                                                                                                                                                                                                                Fax: (602) 678-0281                  Shareholder Information:
    $(900,000)                                                                                                    $(0.90)                                                                                                                                                       (Wholly Owned Lessee):
                     1997              1998             1999            2000            2001
    Fiscal Year                                                                                               Fiscal Year          1997               1998              1999                  2000     2001
                                                                                                                                                                                                                                                     Investor Relations:
    Total F.F.O. $(888,365)         $(573,509)        $372,508         $52,227        $223,414           F.F.O. per Share         $(0.87)            $(0.56)            $0.19                 $0.02    $0.10                                                                    James Wirth, Chief Executive Officer
                                                                                                                                                                                                                Trust Officers:                      Marc Berg
                                                                                                                                                                                                                                                                                J.R. Chase, Vice President & Secretary/Treasurer
                                                                                                                                                                                                                James Wirth: President/CEO           Phone (602) 944-1500
                                                                                                                                                                                                                Marc Berg: Executive Vice            Fax (602)-678-0281
                                                                                                                                                                                                                                                                                Stock Information:
                                                                                                                                                                                                                President, Secretary & Treasurer     www.innsuitestrust.com
                                                                                                                                                                                                                                                                                Fiscal Year 2001       High        Low
                          InnSuites Hospitality Trust - Revenue                                                                                                                                                 Anthony Waters: Controller & CFO                                First Quarter          2 3/8       2 1/16
                                                                                                                                 InnSuites Hotels - Occupancy                                                                                        Listed Securities:
    $10,000,000                                                                                                                                                                                                 James Aronoff: Assistant Secretary                              Second Quarter         2 1/2       1 3/4
                                                                                                                65.0%                                                                                                                                American Stock Exchange
                                                                                                                                                                                                                                                                                Third Quarter          2 3/8       2 1/16
                                                                                                                                                                                                                Board of Trustees:                   Symbol: IHT
                                                                                                                60.0%                                                                                                                                                           Fourth Quarter         2 3/8       1 7/16
     $5,000,000
                                                                                                                                                                                                                James Wirth: Chairman                Cusip #457919 108
                                                                                                                 55.0%
                                                                                                                                                                                                                Marc Berg                                                       Fiscal Year 2000       High        Low
                                                                                                                                                                                                                Lee Flory                            Transfer Agent:
              $0
                          1997             1998             1999            2000       2001
                                                                                                              50.0%
                                                                                                                                 1997             1998                1999              2000
                                                                                                                                                                                                                                                                                First Quarter          3 1/16      2 1/4
      Fiscal Year                                                                                         Fiscal Year                                                                                  2001
                                                                                                                                                                                                                Ed Hill                              National City Bank
        Revenue        $3,915,506       $1,421,979       $9,909,758      $9,546,181 $9,738,455            Occupancy             57.3%             58.8%              60.8%              59.8%
                                                                                                         The Trust did not own all 11 InnSuites Hotels during the entire time period shown.
                                                                                                                                                                                                      63.2%                                                                     Second Quarter         3 1/8       2 5/16
                                                                                                                                                                                                                Steve Robson                         629 Euclid Ave. #835
                                                                                                                                                                                                                                                                                Third Quarter          2 15/16     2
                                                                                                                                                                                                                Peter Thoma                          Cleveland, OH 44114
                                                                                                                                                                                                                                                                                Fourth Quarter         2 7/8       1 3/4
                                                                                                                                                                                                                                                     Toll Free 800-622-6757
                             InnSuites Hospitality Trust - Number of Suites                                                            InnSuites Hotels - Average Daily Rate (ADR)                                                                   Fax (216) 476-8508
                                                                                                                                                                                                                Committees of the Board                                         Fiscal Year 1999       High        Low
             2,000                                                                                               $70.00
                                                                                                                                                                                                                of Trustees:                                                    First Quarter          4 3/8       4 1/16
                                                                                                                                                                                                                                                     General Counsel:
             1,500
                                                                                                                                                                                                                Executive Committee:                                            Second Quarter         5 3/8       4 1/4
                                                                                                                 $65.00
                                                                                                                                                                                                                                                     Thompson Hine LLP
             1,000                                                                                                                                                                                                 James Wirth: Chairman                                        Third Quarter          5 1/2       3 13/16
                                                                                                                                                                                                                                                     3900 Key Center
                                                                                                                 $60.00                                                                                            Marc Berg                                                    Fourth Quarter         3 15/16     2 15/16
                 500                                                                                                                                                                                                                                 Cleveland, OH 44114
                                                                                                                                                                                                                   Ed Hill
                 0
        Fiscal Year          1997             1998             1999          2000         2001
                                                                                                            $55.00
                                                                                                         Fiscal Year              1997                1998               1999              2000         2001
                                                                                                                                                                                                                                                     Phone (216) 566-5500
     Suites Growth             0              1,034            1,665         1,665*      1,751*   Average Daily Rate             $63.50              $65.67             $66.89            $67.70       $66.46   Audit Committee:                     Fax (216) 566-5800
                                                                                                  The Trust did not own all 11 InnSuites Hotels during the entire time period shown.
                                                                                                                                                                                                                   Ed Hill: Chairman
     *Not included is the 168 suite Fort Worth/Dallas InnSuites for which the Trust obtained
     an option to purchase effective May 23, 2000 pursuant to its Intercompany Agreement.                                                                                                                          Lee Flory                         Independent Auditors:
                                                                                                                                                                                                                   Steve Robson                      KPMG LLP
                                                                                                                                                                                                                Compensation Committee:              400 E. Van Buren #1100
                            InnSuites Hospitality Trust - Total Assets (Book Value)                                                 InnSuites Hotels - Revenue per Available Suite (REVPAR)                        Lee Flory: Chairman               Phoenix, Arizona 85004
       100,000,000
                                                                                                                  $50.00
                                                                                                                                                                                                                   Ed Hill
        75,000,000
                                                                                                                                                                                                                   Steve Robson
        50,000,000
                                                                                                                  $40.00
        25,000,000

        10,000,000

                 0                                                                                              $30.00
        Fiscal Year         1997            1998            1999        2000        2001                     Fiscal Year           1997              1998               1999               2000         2001
       Total Assets      $6,416,123      $43,619,639     $67,804,770 $65,305,519 $63,905,561                    Rev Par           $36.41             $38.70            $40.65             $40.46       $42.02
                                                                                                             The Trust did not own all 11 InnSuites Hotels during the entire time period shown.
InnSuites Annual Report 2001 4C   5/17/01   12:49 PM    Page 5




                                   InnSuites Hospitality Trust Mission Statement                                                                                                  Fiscal 2001 Highlights
                                                                                                                           • Funds From Operations (FFO) continued to improve during fiscal 2001. FFO increased to $.10 per basic share
                                        Innsuites Hospitality Trust, its affiliates and its                                  up from $.02 in the prior year.
                                             employees are dedicated to maximizing                                         • InnSuites Hospitality Trust added its eleventh hotel with the acquisition of the 104-suite Best Western
                                                                                                                             InnSuites Albuquerque Airport Hotel.
                                            shareholder wealth and guest satisfaction.
                                                                                                                           • The Trust obtained an option to purchase the 168-suite Best Western InnSuites Fort Worth/Dallas Hotel. If the
                                                                                                                             option is exercised, the Trust’s hotel suites will increase to 1,919.

                                                                                                                           • In view of an estimated net asset value of approximately $4 per share and unit, the Trust has repurchased
                                                                                                                             831,730 shares and units at a substantial discount in Fiscal 2001.

                                                                                                                           • Steps commenced in the Fourth Quarter of Fiscal 2001 to replace the $12 million floating rate line of credit
                                                        Board of Trustees                                                    with fixed rate long-term financing. With the completion of two hotel refinances during the first quarter of
                                                                                                                             Fiscal 2002, the line of credit was reduced to $2.3 million with lender agreement to extend the balance, which
                                                                                                                             substantially enhances the Trust’s long-term stability by eliminating quarterly covenant requirements and elimi-
                                                                                                                             nating short-term interest rate fluctuations.

                                                                                                                           • During Fiscal 2001, steps were taken to benefit from the REIT Modernization Act (RMA) culminating in the
                                                                                                                             purchase of InnSuites Hotels, Inc., the Trust’s exclusive lessee, effective on February 1, 2001. The need for a
                                                                                                                             reserve for uncollectible rent provided in each of the last three years is eliminated with the consolidation of the
                                                                                                                             lessee corporation.

                                                                                                                           • Consistent with the RMA and the Trust’s efforts to improve occupancy, average daily rate, revenue per available
                                                                                                                             suite, cost control and overall profitability, Suite Hospitality Management, Inc., headquartered in Tucson,
                                                                                                                             Arizona, became the exclusive management company for InnSuites Hotels, Inc., effective February 1, 2001.

                                                                                                                           • During Fiscal 2001, assets were enhanced with $2.2 million in furniture, fixtures and equipment, capital
                      Board of Trustees: Lee Flory, Steve Robson, Marc Berg, Ed Hill, Peter Thoma, James Wirth               expenditures and refurbishment. It is estimated that the refurbishment program will continue at a lower rate of
                                                                                                                             approximately 4% during Fiscal 2002, which is consistent with industry standards.


                                                                                                                                                                                      Operating Results
                                                 Your Suite Choice - Value                                                    Trust Data                                 2001                  2000                 1999             1998             1997

                InnSuites® Hotels offer “Your Suite Choice” of Studio and Two-Room Suites                                     Trust Revenue                          $ 9,738,455          $ 9,546,181          $ 9,909,758       $ 1,421,979      $ 3,915,506
                                                                                                                              Trust Assets at Book Value             $ 63,905,561         $ 65,305,519         $ 67,804,770      $ 43,619,639     $ 6,416,123
                                      plus the free “InnSuites extras”.
                                                                                                                              Earnings
                                                                                                                              Reported Loss                          $ (2,594,754)            ($951,811)           ($193,071)        ($573,509)       ($888,365)
                                                                                                                              Reported Loss per                      $      (1.12)                ($.40)               ($.10)            ($.56)           ($.87)
                                                                                                                              Share Basic
                                                                                                                              Adjusted Loss                          $ (1,099,555)*           ($951,811)           ($193,071)        ($573,509)       ($888,365)
                                                                                                                              Adjusted Loss per                      $      (0.47)                ($.40)               ($.10)            ($.56)           ($.87)
                                                                                                                              Share Basic and Diluted
                                                                                                                              Hotel Statistics
                                                                                                                              Average Daily Rate (ADR)               $       66.46        $        67.70       $         66.89   $       65.67    $        63.50
                                                                                                                              Occupancy                                      63.2%                59.8%                  60.8%           58.9%            57.3%
                                                                                                                              Revenue per Available Suite            $        42.02       $        40.46       $         40.65   $       38.70    $        36.41
                                                                                                                              (REVPAR)
                  Two Room                                                                                                    Number of Hotel Suites                          1,751                1,665                 1,665           1,034               —
             Executive/Family Suite                                                           Presidential Jacuzzi Suite
                                                                                                                              Funds from Operations
                                                                                                                              Funds From Operations                  $    223,414         $       52,227       $     372,508         ($573,509)       ($888,365)
                                                                                                                              Reported FFO per Share                 $       0.10                    .02                 .19              (.56)            (.87)


                                                       Business Studio InnSuite                                               * Adjusted for certain charges of $1,495,199 for the impairment of the Scottsdale Hotel.
InnSuites Annual Report 2001 4C        5/17/01     12:49 PM     Page 7




                                   Dear Fellow InnSuites Hospitality Trust Shareholders                                                                                                                                      Capitalization
                                                                                                                                                                                                                         End of Fiscal 2001                 End of Fiscal 2000                   End of Fiscal 1999
                                                                                                                                                                                                                         (January 31, 2001)                 (January 31, 2000)                   (January 31, 1999)


                                                                                                                                                         Closing Stock Price                                             $               2.38               $                   2.31             $                 3.06
                                                                                                                                                         Shares Outstanding                                                         2,126,484                              2,507,949                          2,286,951
                                                                                                                                                         Shares Held by Officers & Trustees                                           804,862                              1,006,762                            949,812
                                                                                                                                                         Estimated Float                                                            1,312,622                              1,501,187                          1,337,139
      Dear Fellow Shareholder:                                                                                                                           Market Capitalization                                           $          5,050,400               $              5,799,632             $            7,003,787
                                                                                                                                                         Class A Operating Partnership Units                                        1,621,627                              2,072,392                          2,586,883
      Over the past three years, we have built a promising Real Estate Investment Trust, which owns eleven hotel properties with an esti-                  (Convertable 1 for 1 into Trust Shares at Owner’s option)
      mated net asset value of $36 million or approximately $4 per share and unit. We have spent over $2 million in cash for acquisitions                Total Shares & Class A Convertable Units:                                  3,748,111                              4,580,341                          4,873,834
      of four new hotels to expand "InnSuites"® brand recognition and, in addition, we spent over $6 million to refurbish and enhance
                                                                                                                                                         Shares & Class A Convertable Units held                                      923,206                              1,436,432                          1,379,482
      our eleven "InnSuites"® properties to the upgraded suite concept to better position them in an increasingly competitive market.
      We have paid out, over the past three years, dividends and distributions totaling more than $1.6 million. We have spent over $1.9                    by Officers and Trustees
      million repurchasing Trust shares and Operating Partnership units to capture the valuation difference between the estimated net                    Class B Partnership Units                                                  5,226,364                              5,226,364                          5,246,364
      asset value per share and our stock price, which has traded at about half of the net asset value. While these accomplishments have                   (Convertable 1 for 1 into Trust Shares
      taxed the Trust’s cash flow and slightly increased leverage, they have added long-term Trust value, strength and stability.
                                                                                                                                                           with Board of Trustees Approval)

      As in the past two years, for fiscal year 2001, the Trust recorded a provision for uncollected rents from the Lessee and recorded a                Total Shares and Units                                                     8,974,475                           9,806,705                           10,120,198
      non-cash provision against earnings of $3.2 million for the write-down in value of its Scottsdale property. These charges totaling                 Implied Market Capitalization 1                                 $         21,314,378               $          22,678,005                $          30,993,106
      $5.6 million resulted in the Trust reporting a loss before minority interest of $5.1 million. Both of these issues have been addressed.              (Shares and Units)
      With our adoption of the REIT Modernization Act on February 1, 2001, the beginning of our current fiscal year 2002, the Trust                      Appraised Value of Assets 2,3                                   $        81,364,185                $          82,541,172                $          83,710,583
      purchased the Lessee, InnSuites Hotels, Inc., and restructured the lease agreements to reflect current market conditions eliminating
      future rent provisions. The appraised values of all eleven Trust Hotels were updated as of January 31, 2001, and although it was                   Debt                                                            $        45,776,537                $          39,884,830                $          39,113,543
      required by accounting principles generally accepted in the United States of America that we write-down the carrying value our                     Debt as a Percent of Appraised Value 2                                         56%                                  48%                                  47%
      Scottsdale asset, we were not allowed to write up other assets, which had appreciated. Overall, updated value based on appraisals                  Pro Forma Enterprise Value 1                                    $        67,090,915                $          62,562,835                $          70,106,649
      remained strong at $81.4 million versus $82.5 million in the previous year’s calculation, as detailed in this Annual Report.                       Net Equity 1 (appraised value less debt)                        $        35,587,648                $          42,656,342                $          44,597,040
      To improve Funds From Operations (FFO) and help achieve positive earnings to benefit our stock price, we are taking steps to reduce                Net Equity Per Share & Unit 1                                   $              3.97                $                 4.35               $                 4.41
      expenses and increase sales revenue. Suite Hospitality Management, Inc., with a veteran staff of operations, sales, and cost control spe-
                                                                                                                                                         Footnote:   1 Not calculated according to accounting principals generally accepted in the United States of America but presented for shareholder information only.
      cialists, assumed management of the eleven Trust Hotels on February 1, 2001. Thus far, Suite Hospitality Management has reduced
                                                                                                                                                                     2 2001 appraised values are updated as of January 31, 2001. 2000 and prior appraisals vary by hotel with certain appraisals done in early 1998. More
      labor and increased operating efficiencies, which will result in an annual savings of $800,000. In addition, new sales initiatives are underway.                 recent appraisals in 1999 and 2000 were used for the Tucson I-10 Hotel, Buena Park Hotel, San Diego Hotel, Ontario Hotel, Tucson
                                                                                                                                                                       Oracle Hotel, Tempe Hotel, Albuquerque Hotel and Scottsdale Hotel valuations.
      Operating on a solid base with proactive professional management and a team of experienced hospitality associates, as well as an                               3 Appraised value includes the aforementioned property appraisals and the carrying value of cash and other assets, which approximates fair value.

      excellent concept and product, we believe that a long-term investment in the Trust offers an opportunity for increasing value not
      only of assets, but also FFO, earnings and solid future returns for our investors.

      Looking ahead, the current fiscal year 2002 (February 1, 2001 through January 31, 2002), is a year of consolidation. The Trust has
                                                                                                                                                                             InnSuites 2002 Overview
      largely restructured its debt from the $12 million short-term floating rate line of credit to long-term fixed rate mortgages currently             InnSuites Hospitality Trust is a mid-market studio and two-room suite hos-
                                                                                                                                                         pitality Real Estate Investment Trust optioning 1 and owning 11 moderate
      available on a favorable basis. Emphasis for Fiscal 2002 is on profitability as opposed to expenditures for system growth and
                                                                                                                                                         and full service hotels containing 1,919 hotel suites located in Arizona,
      upgrades. The operations management has been realigned. Expenses, at both the corporate level and at the hotel level, continue to
                                                                                                                                                         Southern California, New Mexico and Texas. The Trust and it’s wholly-
      be scrutinized and reduced. Emphasis on sales and marketing has been significantly increased.                                                      owned lessee, InnSuites Hotels, Inc., through a strategic alliance, work
                                                                                                                                                         closely with Suite Hospitality Management, Inc., manager of the hotels, and                                              InnSuites Hotels - Net Equity Per Share and Unit   1
      We see continued growth in estimated net asset value per share. We see improved Funds From Operations (FFO) and cash flow. We                      InnSuites Licensing Corporation, owner of the “InnSuites”® trademarks
      work toward positive annual earnings through the building of sales and the "InnSuites"® brand and further cost control to fully                    (which allow the Trust to enter markets that are not available to other                                   $5.00
      reward the patient long-term investor. We wish to express our appreciation for the continued support of our shareholders and unit                  hotel companies that do not have control of a brand name).
      holders as the Trust’s progress continues. Thank you.
                                                                                                                                                         InnSuites Hotels distinguishes itself by offering “Your Suite Choice”® of                                 $4.00

      Sincerely,                                                                                                                                         “Studio InnSuites”, “Two-room Executive/Family Suites”, and
                                                                                                                                                         “Presidential/Jacuzzi Suites”. InnSuites creates extra value for all guests with                          $3.00
      INNSUITES HOSPITALITY TRUST                                                                                                                        complimentary “InnSuites Extras”sm including healthy fruit and cereal
                                                                                                                                                         breakfast buffet, afternoon social hour, Wednesday evening BBQ, HBO,                                      $2.00
                                                                                                                                                                                                                                                               Fiscal Year     1998          1999           2000           2001
                                                                                                                                                         local phone calls, inn-room refrigerator with bottled water, coffeemaker               Net Equity Per Share Unit     $3.37         $4.41          $4.35          $3.97
                                                                                                                                                         with coffee and tea, microwave, morning newspaper, and more.

      James Wirth                                          Marc E. Berg                                           Anthony Waters                         For reservations, call toll free 1-888-INNSUITES, 1-800-842-4242 or visit
      President                                            Executive Vice President                               Controller & Chief                     www.innsuites.com.
      Chief Executive Officer                              & Secretary/Treasurer                                  Financial Officer

								
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