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PHOENIX-The sale of a Flagstaff, AZ, resort and a continuing sluggish economy contributed to a 10.2% decrease in revenues for locally based InnSuites Hospitality Trust in the first six months of this year.

The company has reported a net loss of $857,000 for the six months ending July 31 versus the $112,000 loss for the same period a year ago. Total revenue in the first six months was $13.4 million, compared to $14.9 million in 2002.

Subsequent to the end of the second quarter, the InnSuites sold its Flagstaff property to an affiliate of James Wirth for the appraised value of nearly $2.8 million, which resulted in a gain of $377,000. The trust also entered into an agreement to sell a Buena Park, CA property for $6.5 million, which is expected to result in a net cash flow of about $3.2 million.

The trust had recurring FFO of $230,000 for the six months ending July 31. Recurring FFO decreased $417,000 from $647,000 in the prior year.

In a statement, trust executives says the trust has taken steps, including tight cost controls and the disposition of under-performing assets, which it believes has mitigated the impact of the slowdown in travel and tourism and has positioned itself to benefit from a recovery in the travel industry. “Although the trust expects a modest pickup in the economy over the balance of the current year and in the coming year, it continues to take aggressive steps to cut costs and increase sales,” the statement says.

Earlier this month, the Arizona Department of Economic Security forecast that tourism-related jobs to increase by 1.8% this year, up from just 0.3% last year.

InnSuites Hospitality Trust is a mid-market studio and two-room suite hospitality REIT with nine moderate-service and full-service hotels. The portfolio contains 1,419 hotel suites in Arizona, New Mexico and Southern California.

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