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VARIABLE INTEREST ENTITIES
 12 Months Ended
Jan. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
VARIABLE INTEREST ENTITIES

5. VARIABLE INTEREST ENTITIES

 

Management evaluates the Trust’s explicit and implicit variable interests to determine if they have any interests in variable interest entities (“VIEs”). Variable interests are contractual, ownership, or other pecuniary interests in an entity whose value changes with changes in the fair value of the entity’s net assets, exclusive of variable interests. Explicit variable interests are those which directly absorb the variability of a VIE and can include contractual interests such as loans or guarantees as well as equity investments. An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing of variability indirectly, such as through related party arrangements or implicit guarantees. The analysis includes consideration of the design of the entity, its organizational structure, including decision making ability over the activities that most significantly impact the VIE’s economic performance. GAAP requires a reporting entity to consolidate a VIE when the reporting entity has a variable interest, or combination of variable interest, that provides it with a controlling financial interest in the VIE. The entity that consolidates a VIE is referred to as the primary beneficiary of that VIE.

 

The Partnership has determined that the Albuquerque entity is a variable interest entity with the Partnership as the primary beneficiary with the ability to exercise control, as determined under the guidance of ASC Topic 810-10-25. In its determination, management considered the following qualitative and quantitative factors:

 

a) The Partnership, Trust, and their related parties, which share common ownership and management, have guaranteed material financial obligations of the Albuquerque hotel.

 

b) The Partnership, Trust and their related parties have maintained, as a group, a controlling ownership interest in the Albuquerque hotel, with the largest ownership belonging to the Trust.

 

c) The Partnership, Trust and their related parties have maintained control over the decisions which most impact the financial performance of the Albuquerque hotel, including providing the personnel to operate the property daily.

 

 

During the Fiscal Years ended January 31, 2024, and January 31, 2023, neither the Trust nor the Partnership have provided any implicit or explicit financial support for which they were not previously contracted, respectively. Both the Partnership and the Trust provided mortgage loan guarantees which allow our properties to obtain new financing as needed, including the refinance of the Tucson Hotel on March 29, 2022.

 

The following table includes assets that can only be used to settle the liabilities of Albuquerque Suites Hospitality LLC (Albuquerque Hotel) and the creditors have no recourse to the Trust. These assets and liabilities, with the exception of the intercompany accounts, which are eliminated upon consolidation with the Trust, are included in the accompanying consolidated balance sheets.

 

   2024   2023 
   January 31, 
   2024   2023 
Assets        
Cash  $136,405   $60,506 
Accounts Receivable   12,650    11,514 
Prepaid Expenses and Deposits   9,689    - 
Employee Retention Credit   -    - 
Hotel Properties, Net   995,235    1,017,392 
Operating Lease -Right of Use   2,088,693    2,108,418 
           
Total Assets  $3,242,672   $3,197,830 
           
Liabilities          
Accounts Payable and Accrued Expenses  $899,921   $496,109 
Operating Lease Liability (ASC 842)   2,255,341    2,279,655 
Mortgage Notes Payable   1,204,481    1,251,356 
Total Liabilities  $4,359,743   $4,027,120 
           
Equity   (1,117,071)   (829,290)
           
Liabilities & Equity  $3,242,672   $3,197,830