Article Excerpt:
TWST: We'd like to begin with a brief historical sketch of the company and a picture of the things you're doing at the present time.Mr. Wirth: Our company was founded in 1971 as a REIT in Cleveland. The company merged with InnSuites Hotels in 1998 and became a hotel REIT. Last year, the company gave up its REIT status similar to the way Starwood and others have done in order to provide additional flexibility. At this point, we are concentrating on three primary areas of profit. First is the ownership of hotels, which is primarily handled through RRF Limited Partnership, which we own approximately 65% of. Second, we provide management services to our hotels and others. Third, the company owns the trademark 'InnSuites' and provides trademark services to our hotels and to others. For reservations call 1-888- INNSUITES, 1-800-842-4242 or visit www.innsuites.com
TWST: Could you give us a brief explanation of why you and one or two
other companies have stopped being REITs? What is the reason for the
change?
Mr. Wirth: First of all, the reason to be a REIT is to avoid double
taxation at the federal level. The reason not to be an REIT is that you
have substantial additional flexibility. There's something called
'leakage' in REITs where particularly management fees are paid out to
third parties. We acquired our management contracts back in June of last
year, and we found that the benefit of avoiding the leakage overwhelms
the benefits of avoiding the double taxation. Also in our case, which is
a little unique, we had approximately an $18 million unused tax loss
carry-forward from a prior merger, so it will be many years before the
company gets to the point that the double taxation is a major issue.
Tickers included in this excerpt: IHT
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