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Note 7 - Sale of Partnership Interests in Tucson Hospitality Properties, LP | 9 Months Ended
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Oct. 31, 2013
Sale Of Partnership Interests In Tucson Hospitality Properties LP [Abstract] |
Sale Of Partnership Interests In Tucson Hospitality Properties LP [Text Block] | 7. SALE OF PARTNERSHIP INTERESTS IN TUCSON HOSPITALITY PROPERTIES, LP On October 1, 2013, the Trust and Partnership entered into an updated restructuring agreement with Rare Earth to allow for the sale of additional interest units in Tucson Hospitality Properties, LP (the “Tucson entity”), which operates the Tucson Foothills hotel property. Under the agreement, Rare Earth agreed to either purchase or bring in other investors to purchase up to 160 (and potentially up to 200 if the overallotment is exercised) units. As of October 31, 2013 and per the updated restructuring agreement, the Partnership agreed to hold at least 50.1% of the outstanding limited partnership units in the Tucson entity, on a post-transaction basis. The Board of Trustees approved this restructuring on September 14, 2013. The Tucson entity is raising $1,600,000 by selling 160 units. Of the 160 units, the Partnership and Trust are purchasing a net of 46 units. Consolidated proceeds after the Partnership and Trust purchase are expected to be $1,140,000. Under the updated restructured limited partnership agreement, Rare Earth continues as general partner of the Tucson entity along with the Partnership. The limited partnership interests in the Tucson entity are allocated to three classes with differing cumulative discretionary priority distribution rights through June 30, 2016 at which point it is anticipated the hotels will be owned free and clear. Class A units are owned by unrelated third parties and have first discretionary priority for distributions. Class B units are owned by the Trust and/or the Partnership and have second discretionary priority for distributions. Class C units are owned by Rare Earth or other affiliates of Mr. Wirth and have the lowest discretionary priority for distributions from the Tucson entity. Discretionary priority distributions are cumulative through June 30, 2016. After June 30, 2016, the Partnership will make distributions per the Partnership agreement, at the discretion of the General Partner. Rare Earth will receive a restructuring fee of $128,000, conditioned upon and arising from the sale of the first 100 units in the Tucson entity following the October 1, 2013 restructuring. If certain triggering events related to the Tucson entity occur prior to the payment of all accumulated distributions to its members, such accumulated distributions will be paid out of any proceeds of the event before general distribution of the proceeds to the members. In the event that funds generated from a triggering event are insufficient to pay the total amount of all such accumulated distributions owed to the members, all Class A members will participate pro rata in the funds available for distribution to them until paid in full, then Class B, and then Class C. After all investors have received their initial capital plus a 7% per annum simple return, any additional profits will be allocated 50% to Rare Earth, with the remaining 50% allocated proportionately to all unit classes. Assuming all 160 units are sold from the offering discussed above, discretionary priority distributions to all Classes are projected to be $540,400 annually through June 30, 2016. The Tucson entity plans to use its best efforts to pay the discretionary priority distributions. The Trust does not guarantee and is not otherwise obligated to pay the cumulative discretionary priority distributions. InnSuites Hotels will continue to provide management, licensing and reservation services to the property. At October 31, 2013, the Partnership had sold seven units to unrelated parties at $10,000 per unit totaling $70,000 under the updated restructuring agreement. As of October 31, 2013, the Partnership holds a 53.31% ownership interest in the Tucson entity, the Trust holds a 1.78% ownership interest, Mr. Wirth and his affiliates hold a 1.94% interest, and other parties hold a 42.97% interest. The Tucson entity has discretionary payments to unrelated unit holders of $186,200, to the Trust of $7,700, to the Partnership of $255,500 and to Rare Earth of $8,400 per year payable quarterly for calendar years 2014 and 2015. See Note 11 - “Subsequent Events - Additional Sale of Partnership Interests in Tucson Hospitality Properties, LP” for additional information on related party transactions.

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- Definition Disclosure of sale of partnership interests in Tucson Hospitality Properties, LP. + References No definition available. + Details
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