**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 
| **(Mark One)**                                                                                                                                                                                                            |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                | ** ** | ** ** |
| **ý**                                                                                                                                                                                                                | ** ** | **Quarterly report pursuant to  section 13 or 15(d) of the Securities Exchange Act of 1934** |
|                                                                                                                                                                                                                      |   |   |
| **for the quarterly period ended: March 31,  2006**                                                                                                                                                                       |
| ** **                                                                                                                                                                                                                | ** ** | ** ** |
| **o**                                                                                                                                                                                                                     | ** ** | **Transition report pursuant to  section 13 or 15(d) of the Securities Exchange Act of 1934** |
|                                                                                                                                                                                                                      |   |   |
| **for the transition period  from               to               ** |

 

**Commission File Number 333-120538**

 

**GTA-IB,LLC**(Exact name of registrant as specified in its charter)

 

| **Florida**                                                     | ** ** | **05-0546226**                           |
|-----------------------------------------------------------------|------------|------------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification Number) |

 

**36750 US 19 N., Palm Harbor, Florida 34684**(Address of principal executive offices) (Zip Code)

 

**(727) 942-2000**(Registrant’s telephone number, including area code)

 

SECURITIES REGISTERED PURSUANT TO SECTION12(d) OF THE ACT:

 

**None**

** **

SECURITIES REGISTERED PURSUANT TO SECTION12(g) OF THE ACT:

 

**None**

 

Indicate by check mark whether the Registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such report(s) and (2) hasbeen subject to such filing requirements for the past 90 days.

 

Yes ý  No o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Act.

 

Large accelerated filer o      Acceleratedfiler o      Non-acceleratedfiler x

 

Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act).

 

Yes o  No ý

 

No established market exists for the Registrant’s membership interests,so there is no market value for such membership interests.  There are no membership interests held bynon-affiliates as of March 31, 2006.

 

Issuer has no common stock subject to this report.

 

 

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**GTA-IB, LLC**

 

**FORM 10-Q**

 

**FOR THE THREE MONTHS ENDED MARCH 31,2006 AND 2005**

 

**INDEX**

 
| PART I.  FINANCIAL  INFORMATION |                                                                                                                                  |
|------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| Item 1.                                   | Financial Statements                                                                                                                  |   |
|                                           | Condensed Combined Balance Sheets as of March 31, 2006 (unaudited)  and December 31, 2005                                        |   |
|                                           | Condensed Combined Statements of Operations and Member’s Deficit  (unaudited) for the Three Months Ended March 31, 2006 and 2005 |   |
|                                           | Condensed Combined Statements of Cash Flows (unaudited) for the Three  Months Ended March 31, 2006 and 2005                           |   |
|                                           | Notes to Condensed Combined Financial Statements (unaudited)                                                                          |   |
|                                           | Rental Pool Lease Operation Condensed Financial Statements and Note                                                                   |   |
| Item 2.                                   | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                                           |   |
| Item 3.                                   | Quantitative and Qualitative Disclosures  About Market Risk                                                                           |   |
| Item 4.                                   | Controls and Procedures                                                                                                               |   |
| PART II.  OTHER INFORMATION     |                                                                                                                                  |
| Item 1.                                   | Legal Proceedings                                                                                                                     |   |
| Item 1.A.                                      | Risk Factors                                                                                                                          |   |
| Item 2.                                   | Unregistered Sales of Equity Securities and  Use of Proceeds                                                                          |   |
| Item 3.                                   | Defaults Upon Senior Securities                                                                                                       |   |
| Item 4.                                   | Submission of Matters to a Vote of Security  Holders                                                                                  |   |
| Item 5.                                   | Other Information                                                                                                                     |   |
| Item 6.                                   | Exhibits                                                                                                                              |   |
| Signatures                                     |                                                                                                                                  |   |

 

**Cautionary Note Regarding Forward-LookingStatements**

** **

The following report contains forward-looking statements within themeaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended. Forward-lookingstatements are statements that predict or describe future events or trends andthat do not relate solely to historical matters. All of our projections in thisquarterly report are forward-looking statements. You can generally identifyforward-looking statements as statements containing the words “believe,” “expect,”“hope,” “may, “will,” “anticipate,” “intend,” “estimate,” “project,” “assume”or other similar expressions. Certain factors that might cause such adifference include the following: changes in general economic conditions;including changes that may influence group conference and guests’ vacationplans; changes in travel patterns; changes in consumer tastes in destinationsor accommodations for group conferences and vacations; changes in rental poolparticipation by the current condominium owners; settlement of the class actionlawsuit involving the rental pool agreements; our ability to continue tooperate the Westin Innisbrook Golf Resort under our management contracts; andthe resale of condominiums to owners who elect neither to participate in therental pool nor to become members of the Innisbrook Resort and Golf Club. Youshould not place undue reliance on our forward-looking statements because thematters they describe are subject to known (and unknown) risks, uncertaintiesand other unpredictable factors, many of which are beyond our control. Ourforward-looking statements are based on the limited information currentlyavailable to us and speak only as of the date on which this report was filedwith the Securities and Exchange Commission. Our continued internet posting orsubsequent distribution of this dated report does not imply continuedaffirmation of the forward-looking statements included in it. We undertake noobligation, and we expressly disclaim any obligation, to issue any updates toour forward-looking statements, even if subsequent events cause ourexpectations to change regarding the matters discussed in those statements.Future events are inherently uncertain. Moreover, it is particularly difficultto predict business activity levels at the Resort with any certainty.Accordingly, our projections in this quarterly report are subject toparticularly high uncertainty. Our projections should not be regarded as legalpromises, representations or warranties of any kind whatsoever. Over time, ouractual results, performance or achievements will likely differ from theanticipated results, performance or achievements that are expressed or impliedby our forward-looking statements, and such differences might be significantand harmful to your interests.

 

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**GTA-IB,LLCCONDENSED COMBINED BALANCE SHEETSAS OF MARCH 31, 2006 AND DECEMBER 31, 2005(in thousands)**

 
| ** **                                      | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                      | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| **Assets**                                      |       |                     |       |                        |       |
| Current assets                                  |       | $                        | 10,291     |                        | $          | 6,491 |   |
| Property and equipment, net                     |       | 27,950                   |       | 28,322                      |       |
| Intangibles, net                                |       | 16,206                   |       | 16,635                      |       |
| Other assets                                    |       | 2,643                    |       | 2,647                       |       |
| **Total Assets**                                |       | $                        | 57,090     |                        | $          | 54,095 |   |
| **Liabilities**                                 |       |                     |       |                        |       |
| Current liabilities                             |       | $                        | 9,662      |                        | $          | 9,242 |   |
| Long-term debt, less current maturities         |       | 42,766                   |       | 42,841                      |       |
|                                            |       |                     |       |                        |       |
| Other long term liabilities                     |       | 10,676                   |       | 10,502                      |       |
| **Total Liabilities**                           |       | 63,104                   |       | 62,585                      |       |
| **Commitments and Contingencies**               |       |                     |       |                        |       |
| **Member’s Deficit**                       |       | (6,014                   | )          | (8,490                      | )          |
| **Total Liabilities and Member’s Deficit** |       | $                        | 57,090     |                        | $          | 54,095 |   |

 

*See accompanying notes to condensed combinedfinancial statements.*

 

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**GTA-IB,LLCCONDENSED COMBINED STATEMENTS OF OPERATIONS AND MEMBER’S DEFICITFOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005(in thousands) (unaudited)**

 
| ** **                                 | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                 | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| **Revenues**                               |       |                                                 |       |   |   |
| Hotel                                      |       | $                                                    | 5,845      |   | $ | 5,281 |   |
| Food and beverage                          |       | 5,132                                                |       | 4,244 |   |
| Golf                                       |       | 5,089                                                |       | 4,666 |   |
| Other                                      |       | 946                                                  |       | 1,289 |   |
| Total revenues                             |       | 17,012                                               |       | 15,480 |   |
| **Expenses**                               |       |                                                 |       |   |   |
| Hotel                                      |       | 4,107                                                |       | 3,885 |   |
| Food and beverage                          |       | 3,133                                                |       | 2,610 |   |
| Golf                                       |       | 1,856                                                |       | 1,839 |   |
| Other                                      |       | 2,835                                                |       | 2,523 |   |
| General and administrative                 |       | 1,742                                                |       | 1,601 |   |
| Depreciation and amortization              |       | 491                                                  |       | 798 |   |
| Total expenses                             |       | 14,164                                               |       | 13,256 |   |
| Operating income                           |       | 2,848                                                |       | 2,224 |   |
| Interest expense, net                      |       | 373                                                  |       | 439 |   |
| Net income                                 |       | 2,475                                                |       | 1,785 |   |
| Member’s deficit, beginning of period |       | (8,489                                               | )          | (4,440 | ) |
| Member’s deficit, end of period       |       | $                                                    | (6,014     | ) | $ | (2,655 | ) |

 

*See accompanying notes to condensed combinedfinancial statements.*

 

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### **GTA-IB, LLCCONDENSED COMBINED STATEMENTS OF CASH FLOWS FOR THE**THREE MONTHS ENDED MARCH 31, 2006AND 2005(in thousands) (unaudited)

 
| ** **                                                                         | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| **Cash flows from operating activities:**                                          |       |                                                 |       |   |   |
| Net income                                                                         |       | $                                                    | 2,475      |   | $ | 1,785 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |       |                                                 |       |   |   |
| Depreciation and amortization                                                      |       | 821                                                  |       | 1,130 |   |
| Provision for bad debts                                                            |       | 164                                                  |       | — |   |
| Non-cash interest                                                                  |       | 279                                                  |       | 336 |   |
| Other changes in operating assets and  liabilities                                 |       | (689                                                 | )          | (1,474 | ) |
| Net cash provided by operating activities                                          |       | 3,050                                                |       | 1,777 |   |
| **Cash flows used in investing activities:**                                       |       |                                                 |       |   |   |
| Purchases of property and equipment                                                |       | (20                                                  | )          | (146 | ) |
| **Cash flows used in financing activities:**                                       |       |                                                 |       |   |   |
| Repayment of long-term debt and capital  lease obligations                         |       | (304                                                 | )          | (232 | ) |
| Net increase in cash                                                               |       | 2,726                                                |       | 1,399 |   |
| **Cash and cash equivalents, beginning of  period**                                |       | 1,519                                                |       | 1,832 |   |
| **Cash and cash equivalents, end of period**                                       |       | $                                                    | 4,245      |   | $ | 3,231 |   |
| ** **                                                                         |       |                                                 |       |   |   |
| **Supplemental Cash Flow Information:**                                            |       |                                                 |       |   |   |
| Cash paid for interest                                                             |       | $                                                    | 98         |   | $ | 104 |   |

 

*See accompanying notes to condensed combinedfinancial statements.*

 

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**GTA-IB, LLC**

** **

**FORM 10-Q**

** **

**NOTESTO CONDENSED COMBINED FINANCIAL STATEMENTS**

** **

**FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND2005**

** **

**(in thousands) (unaudited)**

** **

**1.****         Innisbrook ResortOwnership and Operations**

** **

GTA-IB, LLC (the “Company”) is owned by GTA-IB Golf Resort, LLC, whichin turn is 100% owned by Golf Trust of America, L.P., (the “Lender”). GolfTrust of America, Inc. (“GTA”) indirectly owns 99.6% of the Lender. Theremaining 0.4% of the Lender is owned by its one limited partner. The Lender isan operating partnership of GTA. Golf Host Resorts, Inc. (“GHR”, “thepredecessor owner” or “the former borrower”), an entity affiliated withStarwood Capital Group LLC, is the former owner of the Westin Innisbrook GolfResort (the “Resort”) and the former borrower under a participating mortgageloan funded by the Lender. This participating mortgage loan was secured by theResort, cash, undeveloped land at the Resort and 368,365 shares of GTA’s commonstock. The Resort is a 72-hole destination golf and conference facility locatednear Tampa, Florida.

 

The Company entered into a Settlement Agreement dated July 15,2004 (the “Settlement Agreement”) with the Lender and GHR, GolfHosts, Inc., Golf Host Management, Inc., Golf HostCondominium, Inc. and Golf Host Condominium, LLC. The Settlement Agreementresolved a number of issues between the parties, including GHR’s default underthe $79,000 loan made by the Lender to GHR in June 1997. As part of theSettlement Agreement, the Company took ownership of the Resort on July 15,2004. In connection with the Settlement Agreement, the Company entered into amanagement agreement with Westin Management Company South (“Westin”), whichprovides for Westin’s management of the Resort, and Westin and Troon GolfL.L.C. (“Troon”) entered into a facility management agreement providing forTroon’s management of the golf facilities at the Resort.

 

In connection with the Settlement Agreement, the Company assumedcontrol and operation of the Rental Pool Lease Operations at the Resort (the “RentalPool”) which were previously operated and controlled by GHR. On a year-to-yearbasis, approximately 500 of the 938 condominium units at the Resort are leasedby the Company from the condominium owners and used as hotel accommodations forthe Resort pursuant to rental pool lease arrangements. The Company is thelessee under the lease operation agreements, which provide for the distributionof a percentage of room revenues to participating condominium owners as lessorsunder the lease operation agreements. The operations under this arrangement arereferred to as the Rental Pool.

 

The Lender had previously entered into an agreement with GHR and theprospective purchaser of a parcel of undeveloped land within the Resort whichis known as Parcel F and owned by GHR. This agreement, known as theParcel F Development Agreement, was executed on March 29, 2004 andheld in escrow pending the closing of the transactions contemplated by theSettlement Agreement. The Parcel F Development Agreement provides for theterms and conditions under which Parcel F may be developed, includingrestrictions on the owner of Parcel F designed to avoid interference with theongoing operations of the Resort

 

On August 10, 2005, the Company and the Lender entered into anamendment to the Parcel F Development Agreement which the Lender believeswill allow the Lender to better manage the location of the Parcel F accessroad and also adds the Company as a party to the Parcel F DevelopmentAgreement.

 

GTA is presently in the process of liquidating pursuant to a plan ofliquidation approved by its stockholders on May 22, 2001.

 

#### *Going Concern*

 

As of March 31, 2006, the Company has working capital of approximately$629 and a member deficit of $6,014. The Company reported net income ofapproximately $2,475 for the three months ended March 31, 2006.  The Company continues to experience seasonalfluctuations in its net working capital position. In July 2004, and aftertaking possession of the Resort’s operational assets, GTA advanced to theCompany $2,000 to support working capital needs. During 2005, GTA

 

6

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advanced to the Company an additional $1,050. The net proceeds of theseloans have been utilized by the Resort’s manager to support operationalexpenses. Generally, the Company’s only source of cash is from profitableoperations of the Resort. While the financial performance of the Resort hasshown signs of recovery since the Company assumed title to the Resort on July15, 2004, current projections provided by Westin indicate an operational cashflow shortfall by the end of the summer of 2006. Further, the Resort’s creditcapacity is limited. GTA is currently seeking a buyer for the Resort, pursuantto the stockholder-approved plan of liquidation. In the event that the Resortis not sold, it may become necessary for the Resort to seek further cashinfusion from GTA, if available, or to seek some other form ofre-capitalization to seek to insure the Company’s ongoing viability. GTA iscurrently in the process of liquidation. There are no assurances that GTA, orany affiliate, will have the ability to provide future funding to the Resort,nor are there any assurances that the Company will be able to secure are-capitalization of some other form.

 

**2.****         Basis of Presentation**

** **

The settlement described in Note 1 above, pursuant to which theCompany took title to the Resort, was accounted for using methods consistentwith purchase accounting in accordance with Statement of Financial AccountingStandards (“SFAS”) No. 141, Business Combinations. Accordingly, theCompany, with the assistance of its independent financial advisor, stated thetangible and identified intangible assets of the Resort at their respectivefair values. The long-term liabilities of the Resort were stated at their fairvalue based on a net present value calculation.

 

*Principles of Combination*

* *

The financial statements and footnotes reflect the combined financialresults of the Company, GTA-IB Condominium, LLC and GTA-IB Management, LLC.These legal entities are all wholly owned subsidiaries of the Lender, GTA-IBCondominium, LLC holds the title to three condominium units at the Resort thatparticipate in the Rental Pool.  GTA-IBManagement, LLC is the entity that employs substantially all of the employeesworking at the Resort. There are no other operations of GTA-IB Condominium, LLCand GTA-IB Management, LLC. The Company holds title to the Resort and is theentity in which all of the Resort operations are recorded. All intercompanytransactions and account balances have been eliminated in combination.

 

*Interim Statements*

* *

The accompanying condensed combined financial statements have beenprepared in accordance with (i) accounting principles generally acceptedin the United States of America (“GAAP”) and (ii) the instructions toForm 10-Q and Article 10 of Regulation S-X. These financialstatements have not been audited by an independent registered accounting firm,however, they include adjustments (consisting of normal recurring adjustments)which are, in the judgment of management, necessary for a fair presentation offinancial condition, results of operations and cash flows for the interimperiods presented. However, these results are not necessarily indicative ofresults for any other interim period or for the full year. In particular, it isimportant to note that the Company’s business is seasonal.

 

Certain information and footnote disclosures normally included infinancial statements in accordance with GAAP have been omitted as allowed inquarterly reports by the rules of the Securities and Exchange Commission.Management believes that the disclosures included in the accompanying interimfinancial statements and footnotes are adequate to make the information notmisleading, but also believes that these statements should be read inconjunction with the summary of significant accounting policies and notes tothe combined financial statements included in the Company’s Annual Report onForm 10-K for the year ended December 31, 2005.

 

**3.****         Property and Equipment**

 

Property and equipment consists of the following:

 
| ** **                                      | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                      | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| Land                                            |       | $                        | 1,968      |                        | $          | 1,968 |   |
| Buildings                                       |       | 14,722                   |       | 14,722                      |       |
| Golf course improvements                        |       | 7,533                    |       | 7,533                       |       |
| Machinery and equipment                         |       | 6,250                    |       | 6,230                       |       |
|                                            |       | 30,473                   |       | 30,453                      |       |
| Less accumulated depreciation and  amortization |       | (2,523                   | )          | (2,131                      | )          |
|                                            |       | $                        | 27,950     |                        | $          | 28,322 |   |

 

At March 31, 2006, machinery and equipmentincludes certain equipment with a net book value of $926 that is recorded undercapital leases. Depreciation expense amounted to approximately $392 and $407for the three months ended March 31, 2006 and 2005, respectively.

 

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**4.****         Intangibles and OtherAssets**

** **

Intangible assets represent the value of the following that existed atJuly 15, 2004: the trademark and tradename of “Innisbrook”; the RentalPool; the guest room bookings; the club memberships; and the water contractthat provides irrigation water for the golf courses at no charge up to certainspecified limits. The intangible assets are being amortized over the specificterm or benefit period of each related contract.

 
| **Intangible Assets**     | ** ** | **Amortization Period**        | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------|------------|-------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | ** **                          | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| Water Contract                 |       | None since  renewable in perpetuity |       | $                        | 2,300      |                        | $          | 2,300 |   |
| Rental Pool                    |       | 89.5 months                         |       | 9,870                    |       | 9,870                       |       |
| Guest Bookings                 |       | Less than 24  months                |       | 1,100                    |       | 1,100                       |       |
| Club Memberships               |       | 144 months                          |       | 4,400                    |       | 4,400                       |       |
| Trade Name                     |       | None since  renewable in perpetuity |       | 2,500                    |       | 2,500                       |       |
|                           |       |                                |       | 20,170                   |       | 20,170                      |       |
| Less  accumulated amortization |       |                                |       | (3,964                   | )          | (3,535                      | )          |
|                           |       |                                |       | $                        | 16,206     |                        | $          | 16,635 |   |

 

Amortization expense amounted to approximately $429 and $723 for thethree months ended March 31, 2006 and 2005, respectively. Of these amounts,approximately $330 in both the three months ended March 31, 2006 and 2005,respectively, are included in hotel expenses and are not included indepreciation and amortization in the Statements of Operations. The intangibleassets of the predecessor owner consisted of the rental pool refurbishmentasset and the management agreement between Westin and the predecessor owner,which was amortized over twenty years on a straight-line basis.

 

Anticipated amortization expense for the next five years and thereafteris set forth in the table below:

 

| **Year**   | ** ** | **Principal** | ** ** |
|------------|------------|---------------|------------|
| 2006       |       | $             | 1,300      |   |
| 2007       |       | 1,688         |       |
| 2008       |       | 1,688         |       |
| 2009       |       | 1,688         |       |
| 2010       |       | 1,688         |       |
| Thereafter |       | 3,354         |       |
| Total      |       | $             | 11,406     |   |

 

Other assets include the Company’s interest in the net proceeds from anysale of Parcel F, which are estimated to be $2,200 (see Note 1), butcould be substantially less in the event of a sale thereof. Also included inother assets are certain design fees for the refurbishment program of $221 and$236 as of March 31, 2006 and December 31, 2005, respectively. The Companyhas a contractual right to be reimbursed for these design fees by the RentalPool participants in the form of a deduction from the quarterly rental poolrefurbishment payments.

 

**5.****         Current Liabilities**

 

Current liabilities consist of the following:

 
| ** **                                 | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|--------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                 | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| Accounts payable                           |       | $                        | 2,035      |                        | $          | 2,008 |   |
| Accrued payroll costs                      |       | 1,085                    |       | 1,554                       |       |
| Other payables and accrued expenses        |       | 2,517                    |       | 1,833                       |       |
| Deposits and deferred revenue              |       | 2,525                    |       | 2,438                       |       |
| Current portion of capital leases          |       | 340                      |       | 336                         |       |
| Current portion of refurbishment liability |       | 1,160                    |       | 1,073                       |       |
|                                       |       | $                        | 9,662      |                        | $          | 9,242 |   |

 

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**6.****         Long-Term Debt**

** **

Long-term debt consists of the following:

 
| ** **                                                                        | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|-----------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                        | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| Non-interest bearing mortgage note due to  the Lender, maturing in June 2027 |       | $                        | 39,240     |                        | $          | 39,240 |   |
| Advances from the Lender, net                                                     |       | 2,976                    |       | 2,976                       |       |
| Capital leases                                                                    |       | 550                      |       | 625                         |       |
|                                                                              |       | $                        | 42,766     |                        | $          | 42,841 |   |

 

**7.****         Other Long-TermLiabilities**

** **

*Master Lease Refurbishment Obligation*

* *

On July 16, 2004, the Company recorded a liability of $4,532 forthe refurbishment program pursuant to the master lease agreement, or MLA, ofthe Rental Pool.  This liabilityrepresented the Company’s obligation to pay the various participants in theRental Pool 50% of the costs to refurbish their respective units, at the thennet present value (calculated at a discount rate of 15%) of the total principalpayments of $7,273.  Interest on thisliability accrues at a rate of 5% and is paid quarterly.  Principal and interest payments are duequarterly over the repayment period of the program, beginning with the firstquarter of 2005 and ending with the fourth quarter of 2009. Interest on thisliability accrues at a rate of 5% and is paid quarterly. Amortization of thediscount is charged to interest expense ratably over the period through 2009.In addition, the Company agreed to provide refurbishment reimbursement forunits placed into the rental pool during 2005 at a level of 25% of thecondominium owners investment in the refurbishment, with interest at 2.5% perannum.  These additional 2005 amountsreceive interest currently and principal payments begin in 2008 and are paidout through 2012.  The amortizationcharged to interest expense for the three months ended March 31, 2006 and 2005is $178 and $236, respectively. The net present value of this liability is$4,587 and $4,647 as of March 31, 2006 and December 31, 2005,respectively, of which $1,160 and $1,073, respectively, is included in currentliabilities (see Note 5).

 

The corresponding benefit from the MLA refurbishment program wasincluded in the valuation of the rental pool intangible asset which is beingamortized over the term of the current master lease agreement that expires in2011. Minimum undiscounted principal payments on the refurbishment program areas follows:

 
| **Year**                         | ** ** | **Amount** | ** ** |
|----------------------------------|------------|------------|------------|
| April 1 – December 31, 2006 |       | $          | 804        |   |
| 2007                             |       | 1,428      |       |
| 2008                             |       | 1,789      |       |
| 2009                             |       | 2,148      |       |
| 2010                             |       | 7          |       |
| Thereafter                       |       | 20         |       |
| **Total**                        |       | $          | 6,196      |   |

 

*Westin Termination Fee*

* *

The July 15, 2004 management agreement that the Company executedwith Westin (the “Management Agreement”) provides for the payment of atermination fee to Westin of $5,900, subject to the terms and conditions ofthat agreement. If not earlier terminated, the Management Agreement will expireon December 31, 2017. The termination fee is reduced $0.365 for each daythat elapses from the effective date until the termination date; provided,however, that the termination fee shall not be reduced to less than $5,500. Theobligation, which is included in other long-term liabilities on the balancesheet, was recorded at its net present value on July 16, 2004 of $4,631(calculated at a discount rate of 7%). Amortization of the discount is chargedto interest expense ratably over the period through December 31, 2006. Theamortization charged to interest expense was $88 for both the three monthsended March 31, 2006 and 2005.  As ofMarch 31, 2006 and December 31, 2005, the net present value of this liabilityis $5,235 and $5,147.

 

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*Troon Supplemental Fee*

* *

The July 15, 2004 facility management agreement executed withTroon provides for the payment by the Company to Troon of a supplemental fee,subject to the terms and conditions of that facility management agreement, of$800. If not earlier terminated, the facility management agreement will expirein July 15, 2009. The obligation was recorded at its net present value onJuly 16, 2004. The net present value on that date was $682 (calculated ata discount rate of 7%). Amortization of the discount is charged to interestexpense ratably over the period through December 31, 2006. Theamortization charged to interest expense for both the three months ended March31, 2006 and 2005 was $12.  As of March31, 2006 and December 31, 2005, the net present value of this liability is $764and $752, respectively.

 

*Other*

* *

As of March 31, 2006 and December 31, 2005, the Company recordeddeferred management fees of $265 and $204, and deferred revenue from memberinitiation fees of $985 and $825, respectively.

 

**8.****         Commitments andContingencies**

** **

*Employee Benefit Plans*

* *

The Company maintains a defined contribution Employee Thrift andInvestment Plan, which provides retirement benefits for all eligible employees,including employees of GTA-IB Operations, LLC, who have elected to participate.Employees must fulfill a 90-day service requirement to be eligible toparticipate in this plan. The Company currently matches one half of the first6% of an employee’s contribution. The Company made contributions ofapproximately $63 and $47 for the three months ended March 31, 2006 and 2005,respectively

 

*Westin Management Company South and TroonGolf L.L.C..*

* *

The Management Agreement between the Company and Westin provides thatWestin will manage the Resort for a fee equal to 2.2% of the Resort’s grossrevenue. Contemporaneously with the signing of the Management Agreement, Westinentered into a management contract with Troon providing for Troon to manage thegolf facilities of the Resort for a fee equal to 2% of the Resort’s gross golfrevenue. Management fees are paid to Westin and Troon on a monthly basis. TheCompany’s agreements with Westin and Troon also provide for the opportunity forWestin and Troon to earn supplemental fees based on financial performance. TheManagement Agreement between the Company and Westin will terminate onDecember 31, 2017, unless it is earlier terminated pursuant to its terms.Troon’s contract with Westin will terminate on July 15, 2009 unlessearlier terminated pursuant to its terms.

 

For the three months ended March 31, 2006 and 2005, the payments madeto Westin and Troon under their respective management agreements are reflectedin the table below: 

 
| ** ** | ** ** | **Three months  ended March 31,** | ** ** |
|------------|------------|--------------------------------------------------|------------|
| ** ** | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| ** ** | ** ** | **(unaudited)**                                  | ** ** |
| Westin     |       | $                                                | 364        |   | $ | 328 |   |
| Troon      |       | 102                                              |       | 93 |   |
| Total      |       | $                                                | 466        |   | $ | 421 |   |

 

*Land Use Lawsuit*

* *

On March 10, 2005 in the Circuit Court of the Sixth JudicialCircuit, in and for Pinellas County, Florida, Civil Division, the Company fileda Motion to Intervene in the suit titled Innisbrook CondominiumAssociation, Inc., C. Frank Wreath, Meredith P. Sauer, and Mark Banning,Plaintiffs (the “Plaintiffs”) vs. Pinellas County, Florida, Golf HostResorts, Inc. and Innisbrook F LLC, Defendants (the “Defendants”), CaseNo. 043388CI-15 (the “Initial Land Use Lawsuit”). The Plaintiffs havefiled a multi-count complaint seeking injunctive and declaratory relief withrespect to the land use and

 

10

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development rights of a tract of land known as Parcel F.Parcel F is a parcel of land located within the Resort. The Plaintiffsallege that there are no remaining development units (residential units)available to be developed within the Resort property. On March 29, 2005,the Company filed a Motion to Intervene as a defendant in the Initial Land UseLawsuit in order to protect the Company’s property, and the Company’s land useand development rights with respect to Parcel F and its property. Thecourt ruled in favor of all Defendants and against all Plaintiffs as to eachcount in both cases. Subsequent to the court’s oral rulings, defense counselprepared a proposed final judgment which reflects the court’s factual findingsand legal conclusions. On March 8, 2006, the court formally entered its finaljudgment on the record ruling in favor of the defendants on all counts anddenying all claims asserted by the plaintiffs in both cases. On March 31, 2006,the plaintiffs in the consolidated cases filed a notice of appeal.

 

As an intervenor in the Initial Land Use Lawsuit, the Company will seekto obtain a ruling from the court which preserves and protects the Company’sproperty, the Company’s land use and development rights with respect to Parcel Fand the Company’s property in order to maximize the value of those rights asthey relate both to Parcel F and the Resort in general. The Company refersto these two matters as the “Land Use Lawsuits.”

 

In the event that the defendants in the Land Use Lawsuits do notprevail in the appeal, the owner of Parcel F may lose substantially all of itsland use and development rights with respect to Parcel F. As a result, theCompany may experience reduced club memberships at the Resort, and its abilityto realize the benefits from proposed development of Parcel F would beadversely impacted. In addition, failure by the defendants to prevail in theLand Use Lawsuits could jeopardize the Company’s land use and developmentrights in the remaining units that the Company may have the opportunity todevelop at the Resort if a court subsequently applied a similar interpretationof the Company’s rights with respect to those units. In that instance, theCompany might lose all or substantially all of those rights with respect to theremaining units. As a result of a successful challenge to the Company’s landuse and development rights relating to the remaining units at the Resort, theCompany’s ability to develop the Resort would be adversely affected.

 

*Property Tax Lawsuit*

 

We filed a lawsuit against the property appraiser of Pinellas CountyFlorida, or Pinellas County to challenge the 2004 and 2005 real estateassessment on the Resort property. Pinellas County filed a motion to dismiss,which was denied by the court. No trial date has been set. If Pinellas Countywere to prevail, management believes that there would be no material adverseeffect upon our financial statements, as the entire Pinellas County assessmentis fully accrued and accounted for at March 31, 2006.

 

**10.****       Subsequent Events**

** **

On April 25,2006, the Company entered into an agreement with Suncoast Charities, Inc., or Suncoast,which provides for Suncoast to lease the Copperhead golf course for seven andone half days during the month of March for a PGA TOUR event, and for the sameperiod during each of the years 2007 through 2012. The agreement provides,among other things, for a base fee plus a participation fee in the event theaggregate ticket sales during any tournament year exceed the greater of 115% ofthe 2005 or 2006 tournament ticket sales.

 

11

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**INNSBROOKRENTAL POOL LEASE OPERATIONCONDENSED BALANCE SHEETSAS OF MARCH 31, 2006 AND DECEMBER 31, 2005(in thousands)**

 
| ** **                                                  | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                  | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| **DISTRIBUTION  FUND**                                      |       |                     |       |                        |       |
| **Assets**                                                  |       |                     |       |                        |       |
| Receivable from GTA-IB, LLC for  distribution               |       | $                        | 2,044      |                        | $          | 918 |   |
| Interest receivable from maintenance escrow  fund           |       | 18                       |       | 17                          |       |
| **Total assets**                                            |       | $                        | 2,062      |                        | $          | 935 |   |
| **Liabilities**                                             |       |                     |       |                        |       |
| Due to participants for distribution                        |       | $                        | 1,661      |                        | $          | 688 |   |
| Due to maintenance escrow fund                              |       | 401                      |       | 247                         |       |
| **Total liabilities**                                       |       | $                        | 2,062      |                        | $          | 935 |   |
| **MAINTENANCE  ESCROW FUND**                                |       |                     |       |                        |       |
| **Assets**                                                  |       |                     |       |                        |       |
| Cash and cash equivalents                                   |       | $                        | 290        |                        | $          | 202 |   |
| Short-term investments                                      |       | 1,615                    |       | 1,595                       |       |
| Receivable from distribution fund                           |       | 401                      |       | 247                         |       |
| Inventory                                                   |       | 1                        |       | —                      |       |
| Interest receivable                                         |       | 18                       |       | 18                          |       |
| **Total assets**                                            |       | $                        | 2,325      |                        | $          | 2,062 |   |
| **Liabilities and participants’ fund balances**        |       |                     |       |                        |       |
| Accounts payable                                            |       | $                        | 13         |                        | $          | 9 |   |
| Construction retainage                                      |       | 5                        |       | 6                           |       |
| Interest payable to distribution fund                       |       | 18                       |       | 17                          |       |
| Carpet care reserve                                         |       | 67                       |       | 55                          |       |
| Participants’ fund balances                            |       | 2,222                    |       | 1,975                       |       |
| **Total liabilities and participants’ fund  balances** |       | $                        | 2,325      |                        | $          | 2,062 |   |

 

*See accompanying notes to these condensedfinancial statements.*

 

12

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**INNISBROOK RENTAL POOL LEASE OPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCESFOR THREE ENDED MARCH 31, 2006 AND 2005(in thousands) (unaudited)**

** **
| ** **                                                    | ** ** | **Three months  ended March 31,** | ** ** |
|---------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                    | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| **DISTRIBUTION  FUND**                                        | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Balance, beginning of period                                  |       | $                                                | —     |   | $ | — |   |
| Additions:                                                    |       |                                             |       |   |   |
| Amounts available for distribution                            |       | 2,044                                            |       | 1,899 |   |
| Interest received or receivable from  Maintenance Escrow Fund |       | 18                                               |       | 8 |   |
| Reductions:                                                   |       |                                             |       |   |   |
| Amounts withheld for Maintenance Escrow  Fund                 |       | (401                                             | )          | (416 | ) |
| Distribution accrued or paid to  participants                 |       | (1,661                                           | )          | (1,491 | ) |
| Balance, end of period                                        |       | $                                                | —     |   | $ | — |   |

 

*See accompanying notes to these condensedfinancial statements.*

 

13

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**INNISBROOK RENTAL POOL LEASE OPERATIONCONDENSED STATEMENTS OF CHANGES IN PARTICIPANTS’ FUND BALANCESFOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005(in thousands) (unaudited)**

** **
| ** **                                                       | ** ** | **Three months  ended March 31,** | ** ** |
|------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                       | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| **MAINTENANCE  ESCROW FUND**                                     | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Balance, beginning of period                                     |       | $                                                | 1,975      |   | $ | 1,998 |   |
| Additions:                                                       |       |                                             |       |   |   |
| Amounts withheld from occupancy fees                             |       | 401                                              |       | 416 |   |
| Interest earned                                                  |       | 18                                               |       | 8 |   |
| Charges to participants to establish or  restore escrow balances |       | 175                                              |       | 70 |   |
| Reductions:                                                      |       |                                             |       |   |   |
| Maintenance charges                                              |       | (216                                             | )          | (215 | ) |
| Carpet care reserve deposit                                      |       | (20                                              | )          | (23 | ) |
| Interest accrued or paid to Distribution  Fund                   |       | (18                                              | )          | (8 | ) |
| Refunds to participants pursuant to the  Master Lease Agreements |       | (93                                              | )          | (49 | ) |
| Balance, end of period                                           |       | $                                                | 2,222      |   | $ | 2,197 |   |

 

*See accompanying notes to these condensedfinancial statements.*

 

14

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**INNISBROOK RENTAL POOL LEASE OPERATIONCONDENSED STATEMENTS OF OPERATIONSFOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005(in thousands) (unaudited)**

 
| ** **                                 | ** ** | **Three months  ended March 31,** | ** ** |
|--------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                 | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| **DISTRIBUTION  FUND**                     | ** ** | ** **                                       | ** ** | ** ** | ** ** |
| Gross revenue                              |       | $                                                | 5,755      |   | $ | 5,197 |   |
| Deductions:                                |       |                                             |       |   |   |
| Agents’ commissions                   |       | 294                                              |       | 284 |   |
| Resort fees                                |       | 112                                              |       | — |   |
| Credit card fees                           |       | 132                                              |       | 119 |   |
| Professional fees                          |       | 6                                                |       | 6 |   |
| Linen replacements                         |       | 75                                               |       | 52 |   |
| Rental pool complimentary fees             |       | 1                                                |       | — |   |
|                                       |       | 620                                              |       | 461 |   |
| Adjusted gross revenue                     |       | 5,135                                            |       | 4,736 |   |
| Amount retained by lessee                  |       | (3,081                                           | )          | (2,841 | ) |
| Gross income distribution                  |       | 2,054                                            |       | 1,895 |   |
| Adjustments to gross income distribution:  |       |                                             |       |   |   |
| General pooled expense                     |       | (1                                               | )          | — |   |
| Corporate complimentary occupancy fees     |       | 6                                                |       | 6 |   |
| Interest                                   |       | (3                                               | )          | (3 | ) |
| Occupancy fees                             |       | (446                                             | )          | (462 | ) |
| Advisory committee expenses                |       | (54                                              | )          | (48 | ) |
| Net income distribution                    |       | 1,556                                            |       | 1,388 |   |
| Adjustments to net income distribution:    |       |                                             |       |   |   |
| Occupancy fees                             |       | 446                                              |       | 462 |   |
| Westin Associate room fees                 |       | 42                                               |       | 49 |   |
| Available for distribution to participants |       | $                                                | 2,044      |   | $ | 1,899 |   |

 

*See accompanying notes to these condensedfinancial statements.*

 

15

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** **

**INNISBROOK RENTAL POOL LEASE OPERATION**

** **

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

** **

**FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005**

** **

**(unaudited)**

 

**1.****             RentalPool Lease Operations**

** **

**Organization and Operations**

 

GTA-IB, LLC (the “Company”) is a single member limited liabilitycompany, wholly owned by GTA-IB Golf Resorts, LLC. GTA-IB Golf Resorts, LLC isitself a wholly owned subsidiary of Golf Trust of America, L.P. There is noestablished market for the Company’s membership interests. The precedingunaudited financial statements of the Rental Pool Lease Operations (the “RentalPool”) at the Westin Innisbrook Golf Resort (the “Resort”) are for the periodsended March 31, 2006 and 2005.  TheRental Pool consists of condominiums at the Resort which are provided as resortaccommodations by their owners.

 

Historically, GHR and the GTA-IB, LLC have offered several differentRental Pool programs to the condominium owners. Effective January 1, 2002, GHRoffered a new Master Lease Agreement (“NMLA”) which permitted all Rental Poolparticipants the opportunity to convert to the new agreement. Each condominiumowner may elect to participate in either the NMLA or a prior agreement. Theonly existing prior agreement that an owner may elect to participate in is theGuaranteed Master Lease Agreement (“GMLA”) dated January 1, 1998. As ofJanuary 1, 2004, there are no longer any condominium owners participatingunder the GMLA agreement. If an owner elected to participate in the NMLA, theowner is prohibited from returning to the any previous agreement. EffectiveJanuary 1, 2003, all but one Rental Pool participants elected to convert to theNMLA. In addition as part of the MLA process, each owner on an annual basis mayelect to participate in the rental pool for the following year by signing anAnnual Lease Agreement (“ALA”). The NMLA provides for Adjusted Gross Revenues,as defined, to be divided 40% to the Innisbrook Rental Pool participants and60% to the Resort.

 

The Rental Pool consists of the Distribution Fund and the MaintenanceEscrow Fund. The Distribution Fund’s balance sheets primarily reflect amountsreceivable from the Company for the Rental Pool distribution payable toParticipants and amounts due to the Maintenance Escrow Fund. The operations ofthe Distribution Fund reflect Participants’ earnings in the Rental Pool. TheMaintenance Escrow Fund reflects the accounting for certain escrowed assets ofthe Participants and, therefore, has no operations. It consists primarily ofamounts escrowed by Participants or due from the Distribution Fund to meetescrow requirements, fund the carpet care reserve and maintain the interior ofthe unit.

 

Under the NMLA, the Resort pays the owner a fee equal to 40% of theAdjusted Gross Revenues in accordance with the terms of the agreement. AdjustedGross Revenues are defined as Gross Revenues less agent’s commissions, auditfees, occupancy fees when the unit is used by the Resort owner for non-rentalpurposes, linen replacements and credit card fees. Each Participant receives afixed occupancy fee, based upon apartment size, for each day of unit specificoccupancy. After allocation of occupancy fees and the payment of general RentalPool expenses, the balance is allocated proportionally to the Participants,based on the Participation Factor as defined in the Agreement.

 

Corporate complimentary occupancy fees are rental fees paid by theResort owner to the Participants for complimentary rooms unrelated to RentalPool operations. Westin Associate Room Fees represent total room revenuesearned from the rental of condominiums by Westin employees passed through tothe Rental Pool.

 

In addition, the predecessor Resort owner has agreed, as part of theNMLA, to reimburse Rental Pool participants in the NMLA for up to 50% of theactual unit refurbishment costs, plus interest at a rate of 5% per annum on the50% of the refurbishment costs, beginning in 2002, so long as the minimumparticipation threshold as defined, is maintained. The NMLA and ALAs arereferred to collectively as the “Agreements.” The Company assumed theobligations of GHR under the Agreements.

 

16

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**Maintenance Escrow Fund Accounts**

 

The NMLA provides that 90% of the Occupancy Fees earned by eachParticipant are deposited in the Participant’s Maintenance Escrow Fund account.This account provides funds for payment of amounts that are due fromParticipants under the Agreements for maintenance and refurbishment services.Should a Participant’s balance fall below that necessary to provide adequatefunds for maintenance and replacements, the Participant is required to restorethe escrow balance to a defined minimum level. The NMLA provides for specificfund balances to be maintained, by unit type, size and age of refurbishment, asdefined in the Agreement. Under the NMLA, a percentage of the Occupancy Feesare deposited into the carpet care reserve in the Maintenance Escrow Fund,which bears the expenses of carpet cleaning for all Participants. Thispercentage is estimated to provide the amount necessary to fund carpet cleaningexpenses and may be adjusted annually. The amounts expended for carpet carewere approximately $36,000, $37,000 and $35,000 for the years ended for 2005,2004 and 2003.

 

The Lessors’ Advisory Committee invests the maintenance escrow funds onbehalf of the Participants and in compliance with restrictions in theAgreements. The Lessors’ Advisory Committee consists of nine Participantselected to advise the Resort owner in Rental Pool matters and negotiateamendments to the lease agreement. Income earned on these investments isallocated proportionately to Participants’ Maintenance Escrow Fund accounts andpaid quarterly through the Distribution Fund. At March 31, 2006 and 2005,the Maintenance Escrow Fund held certificates of deposit of $1,615,000 and$1,520,000 respectively, with maturity terms ranging from three months totwelve months and bearing interest at rates from 3.65% to 4.85% and 1.8% to3.45, respectively, At March 31, 2006 and 2005, the cost of these investmentsapproximates fair value.

 

**Going Concern**

** **

The continuation and success of the Rental Pool is contingent upon thecontinuation of the operations of the Resort. In turn, the success of Resortoperations is contingent upon the continued participation of condominium ownersin the Rental Pool. The Company had income from operations of approximately$2,475 for the three months ended March 31, 2006; however, the impact ofseasonality on the Resort’s operations and the projections from the Resort’smanager of the Resort’s cash flow through the end of 2006 raise substantialdoubt about the Company’s ability to continue as a going concern. Items relatedto the continuation of the Resort as a going concern include such issuesas:  the sale of condominium units whichdo not participate in the Rental Pool or through a sale are removed from theRental Pool, owners of units opting to live in their units, owners rentingtheir units outside of the Rental Pool, and general economic conditions relatedto the destination resort industry.  TheCompany’s parent is currently seeking a buyer for the Resort, pursuant to thestockholder-approved plan of liquidation. In the event that the Resort is notsold, it may become necessary for the Resort to seek further cash infusionfrom its parent, if available, or to seek some other form ofre-capitalization to seek to insure the Company’s ongoing viability. TheCompany’s parent is currently in the process of liquidation. There are noassurances that the Company’s parent, or any affiliate, will have the abilityto provide future funding to the Resort, nor are there any assurances that theCompany will be able to secure a re-capitalization of some other form.

 

17

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**ITEM 2. Management’s Discussion andAnalysis of Financial Condition and Results of Operations**

** **

We were formed on December 30, 2002 as a wholly-owned subsidiaryof GTA-IB Golf Resort, LLC, or our parent, which in turn is a wholly-ownedsubsidiary of Golf Trust of America, L.P. Golf Trust of America, L.P. is an operating partnership of Golf Trust ofAmerica, Inc., or GTA. Golf Host Resorts, Inc., or GHR, is the formerowner of the Resort and the former borrower under a $79 millionparticipating mortgage loan funded by Golf Trust of America, L.P. inJune 1997.

 

We, Golf Trust of America, L.P. and one of its subsidiaries enteredinto a Settlement Agreement dated July 15, 2004, or the SettlementAgreement, with GHR, Golf Hosts, Inc., Golf Host Management, Inc. andGolf Host Condominium, Inc. The Settlement Agreement resolved a number ofissues between the parties, including GHR’s default under the $79 millionloan made by Golf Trust of America, L.P. to GHR in June 1997. As part ofthe Settlement Agreement, we took ownership of the Westin Innisbrook GolfResort, or the Resort, effective at the close of business on July 15,2004. Additionally, in connection with the Settlement Agreement, we enteredinto a management agreement with Westin Management Company South, or Westin,providing for Westin’s management of the Resort, and Westin and Troon GolfL.L.C., or “Troon”, entered into a facility management agreement providing forTroon’s management of the golf facilities at the Resort.

 

Golf Trust of America, L.P. had previously entered into an agreement withGHR and the prospective purchaser of a parcel of undeveloped land within theResort, which is owned by GHR, known as Parcel F. This agreement, known asthe Parcel F Development Agreement, was executed on March 29, 2004and held in escrow pending the closing of the transactions contemplated by theSettlement Agreement. The Parcel F Development Agreement sets forth theterms and conditions under which Parcel F may be developed and includesrestrictions on the owner of Parcel F designed to avoid interference withthe operations of the Resort. On August 10, 2005, we and Golf Trust ofAmerica, L.P. entered into an amendment to the Parcel F DevelopmentAgreement which we believe will allow us to better manage the location of theParcel F access road and adds us as a party to the Parcel FDevelopment Agreement. 

 

**Results of Operations**

** **

*Forward Looking Statements*

* *

This report contains forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, or theExchange Act. Forward-looking statements are statements that predict ordescribe future events or trends and that do not relate solely to historicalmatters. All of our projections in this quarterly report are forward-lookingstatements. You can generally identify forward-looking statements as statementscontaining the words “believe,” “expect,” “hope,” “may,” “will,” “anticipate,” “intend,”“estimate,” “project,” “assume” or other similar expressions. Certain factorsthat might cause such a difference include the following: changes in generaleconomic conditions, including changes that may influence group conferences andguests’ vacation plans, changes in travel patterns, changes in consumer tastesin destinations or accommodations for group conferences and vacations, ourability to continue to operate the Resort under our management contracts,changes in Rental Pool participation by the current condominium owners,settlement of the class action lawsuit involving the Rental Pool agreements,and the resale of condominiums to owners who elect neither to participate inthe Rental Pool nor to become club members. You should not place undue relianceon our forward-looking statements because the matters they describe are subjectto known (and unknown) risks, uncertainties and other unpredictable factors,many of which are beyond our control. Our forward-looking statements are basedon the limited information currently available to us and speak only as of thedate on which this report was filed with the SEC. Our continued internetposting or subsequent distribution of this dated report does not implycontinued affirmation of the forward-looking statements included in it. Weundertake no obligation, and we expressly disclaim any obligation, to issue anyupdates to our forward-looking statements, even if subsequent events cause ourexpectations to change regarding the matters discussed in those statements.Future events are inherently uncertain. Moreover, it is particularly difficultto predict business activity levels at the Resort with any certainty.Accordingly, our projections in this quarterly report are subject toparticularly high uncertainty. Our projections should not be regarded as legalpromises, representations or warranties of any kind whatsoever. Over time, ouractual results, performance or achievements will likely differ from theanticipated results, performance or achievements that are expressed or impliedby our forward-looking statements, and such differences might be significantand harmful to your interests.

 

***Results ofoperations***

*** ***

Because the Resort is a destination golf resort, we believe it appealsto a different market than the market to which a stand-alone hotel located in adowntown metropolitan area appeals. The Resort provides recreation, food andbeverages to business meetings or group travelers, transient guests who playgolf and golf package purchasers and guests who bring their families to theResort. As a destination golf resort, the Resort’s performance is sensitive toweather conditions and seasonality. The Resort had higher realized revenue andfewer room nights during the first three months of 2006 than during thecorresponding period in 2005. We believe that this increase in realized revenue,even though room nights were down, resulted from continuing improved sales andmarketing efforts directed towards improving retail sales to group andtransient business in addition to increasing sales of golf packages and golfmemberships at the Resort.  These marketsegments produce a greater aggregate spending level per room night.  While overall room nights and golf roundswere down 5.1% and 1.8%, respectively, overall gross revenue per room night increasedby $73.25 to $535.40.

 

18

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The following table shows utilization of the Resort facilities brokeninto facility type, results of operations and selected Rental Pool statisticaldata during the three month period ended March 31, 2006 and March 31, 2005:

 

 
| ** **                            | ** ** | **Three Months Ended March 31,** | ** ** |
|---------------------------------------|------------|------------------------------------------------------|------------|
| ** **                            | ** ** | **2006**                                             | ** ** | **2005** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Utilization of Resort facilities:** |       |                                                 |       |   |   |   |   |   |   |
| Available room nights                 |       | 51,067                                               |       | 52,158 |   | (1,091 | ) | (2.1 | )% |
| Actual room nights                    |       |                                                 |       |   |   |   |   |   |   |
| Group                                 |       | 23,093                                               |       | 21,129 |   | 1,964 |   | 9.3 | % |
| Transient                             |       | 8,683                                                |       | 12,368 |   | (3,685 | ) | (29.8 | )% |
| Total room nights                     |       | 31,776                                               |       | 33,497 |   | (1,721 | ) | (5.1 | )% |
| Food and beverage meals               |       | 158,709                                              |       | 143,017 |   | 15,692 |   | 11.0 | % |
| Golf rounds                           |       |                                                 |       |   |   |   |   |   |   |
| Resort guests                         |       | 23,421                                               |       | 25,373 |   | (1,952 | ) | (7.7 | )% |
| Member/guests                         |       | 12,858                                               |       | 11,582 |   | 1,276 |   | 11.0 | % |
| Total golf rounds                     |       | 36,279                                               |       | 36,955 |   | (676 | ) | (1.8 | )% |

 
| ** **                                 | ** ** | **Three Months Ended March 31** | ** ** |
|--------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                 | ** ** | **2006**                                            | ** ** | **2005** | ** ** | **Increase  (decrease)** | ** ** | **Percentage  Change** | ** ** |
| **Results of operations (in thousands):**  |       |                                                |       |   |   |   |   |   |   |
| Revenues                                   |       |                                                |       |   |   |   |   |   |   |
| Hotel                                      |       | $                                                   | 5,845      |   | $ | 5,281 |   | $ | 564 |   | 10.7 | % |
| Food and beverage                          |       | 5,132                                               |       | 4,244 |   | 888 |   | 20.9 | % |
| Golf                                       |       | 5,089                                               |       | 4,666 |   | 423 |   | 9.1 | % |
| Other                                      |       | 946                                                 |       | 1,289 |   | (343 | ) | (26.6 | )% |
| Total revenues                             |       | 17,012                                              |       | 15,480 |   | 1,532 |   | 9.9 | % |
| Expenses                                   |       |                                                |       |   |   |   |   |   |   |
| Hotel                                      |       | 4,107                                               |       | 3,885 |   | 222 |   | 5.7 | % |
| Food and beverage                          |       | 3,133                                               |       | 2,610 |   | 523 |   | 20.1 | % |
| Golf                                       |       | 1,856                                               |       | 1,839 |   | 17 |   | 0.9 | % |
| Other                                      |       | 2,835                                               |       | 2,523 |   | 312 |   | 12.4 | % |
| General and administrative                 |       | 1,742                                               |       | 1,601 |   | 141 |   | 8.8 | % |
| Depreciation and amortization              |       | 491                                                 |       | 798 |   | (307 | ) | (38.5 | )% |
| Total expenses                             |       | 14,164                                              |       | 13,256 |   | 908 |   | 6.8 | % |
| Operating income                           |       | 2,848                                               |       | 2,224 |   | 624 |   | 28.0 | % |
| Interest expense, net                      |       | 373                                                 |       | 439 |   | (66 | ) | (15.0 | )% |
| Net income                                 |       | $                                                   | 2,475      |   | $ | 1,785 |   | $ | 690 |   | 38.7 | % |
| **Selected Rental Pool statistical data:** |       |                                                |       |   |   |   |   |   |   |
| Average daily distribution                 |       | $                                                   | 40.03      |   | $ | 36.40 |   | $ | 3.63 |   | 10.0 | % |
| Average room rate                          |       | $                                                   | 183.95     |   | $ | 157.66 |   | $ | 26.30 |   | 16.7 | % |
| Occupancy percentage                       |       | 62.2                                                | %          | 64.2 | % | (2.0 | )% | (3.1 | )% |
| Average number of available units          |       | 567                                                 |       | 580 |   | (13 | ) | (2.2 | )% |

 

19

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***Three months endedMarch 31, 2006 and 2005.***

*** ***

During the first quarter of 2006, there were 1,721, or 5.1%, feweroccupied room nights than there were for the first quarter of 2005.  As compared to the first quarter of 2005,during the first quarter of 2006 there were 3,685 fewer transient room nightsand 1,964 more group room nights, resulting in an aggregate of 1,721 feweroccupied room nights.  Group room nightsconsist of conference room nights, or room nights which are booked andcorrelated to a meeting or convention at the Resort, and transient room nights,which are room nights which are booked and do not correlate to a meeting orconvention at the Resort.  Transient roomnights are often booked 24 hours or less from the date of stay, whilegroup room nights are typically booked no less than 120 days in advance ofthe date of a stay, with larger groups typically booking 16 to 18 monthsin advance of a stay.  Transient roomnights are often booked as part of golf packages and Internet bookings, amongothers, but during the first quarter of 2005 a significant number of transientrooms were attributable to the consumption of golf packages at the Resort.  Management believes that transient roomnights were lower in the first quarter of 2006 than in the corresponding periodin 2005, due primarily to the mild winter months experienced during 2006 in thenorthern states.  Because the wintermonths were much warmer in the northern states during the first quarter of 2006than in 2005, we believe the desire of the transient guest and moreparticularly the golf package guest, to “get away” was reduced.  This, in turn, resulted in reduced transientbusiness in the first quarter of 2006. Current booking patterns for 2006 continue to suggest that groupbusiness is returning to the Resort. Booked group and conference room nights atthe Resort for the quarter ended March 31, 2006 have increased by approximately1,964, or 9.3%, as compared to the same period last year.  

 

The effect of the reduction in the occupied room nights during thefirst quarter of 2006 was offset by improved average room rates and ancillaryspending patterns of the guests, specifically, increased golf package nightswith their significantly higher food and beverage spending, coupled withincreases in banquet sales. Total revenue for the Resort was greater during thethree months ended March 31, 2006 than in the three months ended March 31,2005. An overall increase in spending by the Resort’s guests, for rooms and foodand beverage spending attributable to package nights, offset the reduction ingross revenue that resulted from the lower number of room nights in the firstquarter of 2006 as compared to the first quarter of 2005.  The average room rate increased from $157.66in 2005 to $183.95 in 2006.  Aggregatespending during the first quarter of 2006, per room night was, as compared tothe same period in 2005, was $535.40 versus $462.14.   The most significant increase in revenues atthe Resort occurred in the Food & Beverage department. Revenues of thatdepartment increased by approximately $888,000, or 21%, for the three monthsended March 31, 2006, as compared to the same period in 2005. Overall food and

 

20

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beverage revenues increased asthe food and beverage total covers (meals) increased by 15,692 or 11.0%.  This aggregate increase in covers served wasprimarily attributed to the Resort’s banquets, catering and room service, with acombined increase of approximately 16,034 covers. Covers attributed to theResort’s casual restaurants and pool service decreased by approximately 342.Golf revenue increased by approximately $423,000, primarily as a result of theutilization of the specific golf-marketing fund to promote the sale of golfpackages throughout the eastern United States. As a result, golf package business increased by 801 rounds or 7.0% forthe three months ended March 31, 2006 as compared to the three months endedMarch 31, 2005.   In the aggregate, golfrounds were down by 676 while revenues were higher as a result of the captureof higher greens fees and ancillary spending in the pro shops. The netreduction in aggregate rounds resulted primarily from 2,221 fewer rounds playedby the transient resort guest, while other player categories, includingpackages, experienced increases in round play in the aggregate of 1,545 roundsplayed.  The number of total golf roundsplayed in the three months ended March 31, 2006 was 36,279 compared to 36,955in the same period of 2005. Golf revenue does not necessarily increase ordecrease exactly in proportion to occupied room nights because golf revenuealso includes member dues and fees and day golf group fees, neither of which isdirectly related to occupied room nights. Increases in total revenue due toimproved spending of the Resort’s guests in the first quarter or 2006 ascompared to the first quarter of 2005 were offset by a decrease in OtherRevenue of approximately $343,000, primarily as a result of the Resort no longercharging a resort fee.  

 

We continue to monitor total operating expenses in an attempt to insurethat the Resort manager controls expenses and that the expenses bear a directcorrelation to the room nights, food and beverage covers and golf round demand.Aggregate total operating expenses do not generally increase or decrease on aone-to-one basis with total operating revenue because the Resort must carry aminimum fixed operating staff and other support expenses at all times. In thoseoperating departments where the variable costs can best be managed, we managethese costs consistent with room, food and beverage and golf demand. TotalResort operating expenses, before depreciation and amortization and excludingthe Rental Pool amortization in hotel operations, increased by approximately$1,215,000, or 9.9%, for the three month period ended March 31, 2006 ascompared to the corresponding period in the prior year. This increase of 9.9%is primarily attributable to the increase in total operating revenue ofapproximately 9.9% during the three-month comparative period.

 

Depreciation and amortization expense, excluding the Rental Poolamortization included in hotel expenses, was approximately $491,000 and$798,000 for the three months ended March 31, 2006 and 2005, respectively.  The net decrease in this expense is primarilyrelated to certain intangible assets being fully amortized prior to the threemonths ended March 31, 2006.  

 

Interest expense, net of interest income, was approximately $373,000and $439,000 for the three months ended March 31, 2006 and 2005, respectively,and reflect amortization of the discount on the Rental Pool obligation, WestinLong-Term liability and the Troon Long-Term liability. The participatingmortgage loan that was assumed by us from GHR was amended to adjust theoutstanding balance to $39,240,000. That note is now non-interest bearing.

 

The net income for the three months ended March 31, 2006 wasapproximately $2,475,000, compared to a net income for the three months ended March31, 2005 of approximately $1,785,000.

 

During the three months ended March 31, 2006, approximately $226,000 ofthe capital reserve funds were disbursed. Of those disbursed funds, $207,000was used to pay lease payments on existing and additional equipment consistingof bellman vehicles, golf cart leases, golf course equipment leases, telephoneequipment leases and cable leases and the balance was for various capitalimprovement projects and replacements throughout the Resort.  During the three months ended March 31,2005, approximately $319,000 of the capital reserve funds were disbursed to (i)pay lease payments on existing equipment consisting of bellman vehicles, golfcart leases, golf course equipment leases, telephone equipment leases and cableleases, (ii) replace carpet in the Edinburgh conference center, (iii) replaceaging fuel tanks, (iv) repair the roof of the Highlands clubhouse and (v)repair to the driving range tents, nature walks, electrical systems and tenniscenter air conditioning.

 

**OtherMatters**

** **

On April 25,2006, the Company entered into an agreement with Suncoast Charities, Inc., or Suncoast,which provides for Suncoast to lease the Copperhead golf course for seven andone half days during the month of March for a PGA TOUR event, and for the sameperiod during each of the years 2007 through 2012. The agreement provides,among other things, for a base fee plus a participation fee in the event theaggregate ticket sales during any tournament year exceed the greater of 115% ofthe 2005 or 2006 tournament ticket sales. 

 

21

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**Contractual Obligations, ContingentLiabilities and Commitments**

** **

The following table summarizes our contractual obligations at March 31,2006, and the effect such obligations are expected to have on our liquidity andcash flow (or upon our successors in interest under the applicable contracts,if the contracts are not terminated) in future periods:

 
| ** **                                                                           | ** ** | **Payments Due by Period (in thousands)** | ** ** |
|--------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| **Contractual Obligations**                                                     | ** ** | **Total**                                                          | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **More than 5  years** | ** ** |
| Master lease agreement with the condominium  owners participating in the Rental Pool |       | $                                                                  | 6,854      |   | $ | 1,435 |   | $ | 3,739 |   | $ | 1,662 |   | $ | 18 |   |
| Management agreements(1)                                                             |       | 20,685                                                             |       | 1,900 |   | 5,585 |   | 3,300 |   | 9,900 |   |
| Troon supplemental fee                                                               |       | 800                                                                |       | — |   | — |   | — |   | 800 |   |
| Mortgage Note payable to Golf Trust of  America, L.P.                                |       | 39,240                                                             |       | — |   | — |   | — |   | 39,240 |   |
| Operating and capital leases                                                         |       | 1,689                                                              |       | 530 |   | 1,159 |   | — |   | — |   |
| Service agreements and other                                                         |       | 2,639                                                              |       | 1,056 |   | 1,528 |   | 55 |   | — |   |
| Working capital advances from Golf Trust of  America, L.P., net                      |       | 2,976                                                              |       | — |   | 2,976 |   | — |   | — |   |
|                                                                                 |       |                                                               |       |   |   |   |   |   |   |   |   |
| Total of the Resort’s obligations                                               |       | $                                                                  | 74,883     |   | $ | 4,921 |   | $ | 14,987 |   | $ | 5,017 |   | $ | 49,958 |   |

 

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(1)  If our management agreementwith Westin is terminated prior to its expiration date of December 31,2017, a minimum termination fee of $5,500 will be due at termination in lieu offees otherwise payable to Westin pursuant to that management agreement.

 

Interest is reflected, as applicable, in the commitments andobligations listed above.

 

Please refer to “Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Contractual Obligations, ContingentLiabilities and Commitments” in our Form 10-K for the year endedDecember 31, 2005, filed on April 17, 2006, for a description of ourcontractual obligations.

 

**Liquidity and Capital Resources**

** **

Our working capital position is approximately $629,000 as of March 31,2006. We continue to experience seasonal fluctuations in our net workingcapital position. Seasonality impacts our liquidity because there is moreavailable cash during the winter months, specifically in the first quarter,than in the late summer months when cash becomes very limited. We receivedintercompany advances from Golf Trust of America, L.P. to support workingcapital needs in the amounts of $2,000,000, $400,000 and $650,000 inJuly 2004, September 2005 and November 2005, respectively.  The net proceeds of these loans have beenfully expended by Westin to support operational expenses of the Resort.Generally, our only source of cash is from any profitable operations of theResort. While the financial performance of the Resort is showing signs of recoverysince the Company assumed title to the Resort on July 15, 2004, currentprojections provided by Westin indicate an operational cash flow shortfall byAugust 2006.  Further, the Resort’scredit capacity is limited.  Workingcapital needs may require us to seek a further intercompany advance from GolfTrust of America, L.P.; however, there can be no assurances as to the specifictiming or amount of any such intercompany advance.

 

22

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**Item 3. Quantitative And QualitativeDisclosures About Market Risk**

** **

We do not have significant market risk with respect to foreign currencyexchanges or other market rates. Our debt to Golf Trust of America, L.P. isnon-interest bearing and, accordingly, fluctuations in interest rates are notexpected to affect financial results.

 

**Item 4. Controls And Procedures**

** **

We maintain disclosure controls and procedures that are designed toensure that information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the time periods specifiedin the SEC’s rules and forms, and that such information is accumulated andcommunicated to our management, including our Chief Executive Officer and ourChief Financial Officer, as appropriate, to allow timely decisions regardingrequired disclosure. Our management assesses the costs and benefits of suchcontrols and procedures based upon the prevailing facts and circumstances,including management’s reasonable judgment of such facts. As we neithercontrolled nor managed the Resort prior to July 16, 2004, our disclosurecontrols and procedures with respect to the Resort and its employees arenecessarily more limited than those we maintain with respect to our owncorporate operations. At close of business on July 15, 2004, we took titleto the Resort; however, despite the fact that our amended management agreementwith Westin provides us with heightened control and access to information, wedo not directly assemble the financial information for the Resort (although wehave taken steps that we deem to be reasonable under the circumstances to seekto verify such financial information) and consequently, our disclosure controlsand procedures with respect to the Resort, while strengthened, remainnecessarily more limited than those we maintain with respect to our own corporateoperations. Since taking title to the Resort, we have focused upon integratingoperations at the Resort into our disclosure controls and procedures andinternal control procedures. In particular, those controls and procedures havebeen updated to account for the challenges presented by the increased size andscope of our operations now that we own the Resort.

 

The integration of a new business of significant size and scope ofoperations increases the risk that conditions may have been introduced that wedid not anticipate in our design of our systems of control. Any pre-existingdeficiencies in the predecessor owner’s financial systems, processes andrelated internal controls increase the risk that the historical unauditedfinancial statements of the Resort’s operations and cash flows which thepredecessor owner has provided to us may not be accurate. We have out ofnecessity placed a certain amount of reliance on the historical financialinformation and reports of the Resort’s predecessor owner for the periods priorto July 16, 2004, and continue to rely on the information provided byWestin as manager of the Resort.

 

As of March 31, 2006, we carried out an evaluation, under thesupervision and with the participation of our management, including our ChiefExecutive Officer and our Chief Financial Officer, of the effectiveness of thedesign and operation of our disclosure controls and procedures pursuant toExchange Act Rule 15d-15. With the assistance of Westin, our ChiefExecutive Officer and our Chief Financial Officer concluded that as of March31, 2006 our disclosure controls and procedures are effective in timelyalerting them to material information relating to us (including ourconsolidated subsidiaries) required to be included in our Exchange Act reports.Except as described above, there have been no significant changes in ourinternal controls or in other factors which could significantly affect internalcontrols subsequent to the date we carried out our evaluation.

 

There has been no change in our internal controls over financialreporting during our most recent fiscal quarter that has materially affected,or is reasonably likely to materially affect, our internal controls overfinancial reporting.

 

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**PART II—OTHERINFORMATION**

** **

**Item 1. Legal Proceedings**

** **

*Land Use Lawsuits*

* *

On March 10, 2005 in the Circuit Court of the Sixth JudicialCircuit, in and for Pinellas County, Florida, Civil Division, the Company fileda Motion to Intervene in the suit titled Innisbrook CondominiumAssociation, Inc., C. Frank Wreath, Meredith P. Sauer, and Mark Banning,Plaintiffs vs. Pinellas County, Florida, Golf Host Resorts, Inc. andInnisbrook F LLC, Defendants, Case No. 043388CI-15. In this report, we referto this matter as the “Initial Land Use Lawsuit.” The plaintiffs in the InitialLand Use Lawsuit have filed a multi-count complaint seeking injunctive anddeclaratory relief with respect to the land use and development rights of atract of land known as Parcel F. Parcel F is a parcel of land locatedwithin the Resort. The plaintiffs allege that there are no remainingdevelopment units (residential units) available to be developed within theResort property. On March 29, 2005, we filed a Motion to Intervene as adefendant in the Initial Land Use Lawsuit in order to protect our property, andour land use and development rights with respect to Parcel F and ourproperty. A hearing on the Motion to Intervene was held on April 4, 2005,after which the court granted our Motion to Intervene. On April 5, 2005,we joined in the filing of a Motion to Dismiss and Motion to Strike three ofthe seven counts of the plaintiffs’ complaint. The court granted the Motion toDismiss on April 26, 2005. On that same date, four individuals (Joseph E.Colwell, Marcia G. Colwell, Kirk E. Covert, Deborah A. Covert)and Autumn Woods Homeowner’s Association, Inc. moved to intervene in theInitial Land Use Lawsuit. The court has not ruled on that motion. OnApril 8, 2005, a separate suit was filed by James M. and Mary H.Luckey and Andrew J. and Aphrodite B. McAdams against PinellasCounty, a political subdivision of the State of Florida, Golf HostResorts, Inc., a foreign corporation and Bayfair Innisbrook, LLC, aFlorida limited liability corporation. In this report we refer to this matteras the “Subsequent Land Use Lawsuit.” The Subsequent Land Use Lawsuit seeks injunctive and declaratory reliefin six separate counts, all relating to the land use and development rights ofParcel F. This suit was consolidated with the Initial Land Use Lawsuit onMay 3, 2005. After May 6, 2005 we have filed our Motion to Dismissthe Subsequent Land Use Lawsuit. The motion was heard by the court onMay 31, 2005. Since that hearing, we have filed an Answer and AffirmativeDefenses to both complaints that have been filed in the consolidated action. OnAugust 3, 2005, a case management conference was held before the judge whois now presiding over this case. At that hearing, the court scheduled a hearingon the defense motions for summary judgment for August 30, 2005, and atrial starting on December 12, 2005. On August 30, 2005, the judgeheard extensive argument on the defense motions for summary judgment andentered a number of rulings in the defendants’ favor. In summary, the courtdismissed those claims in the Initial Land Use Lawsuit and the Subsequent LandUse Lawsuit which are founded upon the theory that the proposed development isinconsistent with the Pinellas Countywide Plan and Rules adopted pursuant toChapter 73-594, Laws of Florida. The court further dismissed for lack ofjurisdiction those claims of the plaintiffs’ in the Subsequent Land Use Lawsuitthat are based on the theory that the proposed development is inconsistent withthe Pinellas Comprehensive Plan. The court entered a similar ruling on certaincounts of the Third Amended Complaint as to some, but not all, of thePlaintiffs in the Initial Land Use Lawsuit.

 

The defendants in the Initial Land Use Lawsuit also filed a Motion toStrike the plaintiffs’ Demand for Jury Trial. In the face of that motion, theplaintiffs dropped their jury trial demand and the court confirmed by orderdated September 21, 2005 that this case would not be tried by a jury. Thecourt then entered an order scheduling the remaining claims for non-jury trialduring December 2005.

 

In addition, the plaintiffs in the Initial Land Use Lawsuit have fileda motion for summary judgment. The court set the hearing date for the summaryjudgment review for December 7, 2005.

 

As an intervenor in the Initial Land Use Lawsuit, we will seek toobtain a ruling from the court which preserves and protects our property, andour land use and development rights with respect to Parcel F and ourproperty, in order to maximize the value of those rights as they relate both toParcel F and the Resort in general. We refer to these two matters as the “LandUse Lawsuits.”  See further discussion ofthe Land Use Lawsuits under the heading “Risk Factors” in Part I,Item 1A of this report.

 

From December 19 through December 23, 2005, the court tried theseconsolidated cases in a non-jury trial. At the conclusion of the evidentiaryportion of the trial, the court deferred final argument until Friday, January6, 2006. On that date, the court heard final arguments and rendered itsdecision. The court ruled in favor of all defendants and against all plaintiffsas to each count in both Land Use Lawsuits. On March 8, 2006, the courtformally entered its final judgment on the record ruling in favor of thedefendants on all counts and denying all claims asserted by the plaintiffs inboth Land Use Lawsuits. On March 31, 2006, the plaintiffs in the consolidatedcases filed a notice of appeal.

 

24

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*Property Tax Lawsuit*

* *

We filed a lawsuit against the property appraiser of Pinellas CountyFlorida, or Pinellas County to challenge the 2004 and 2005 real estateassessment on the Resort property. Pinellas County filed a motion to dismiss,which was denied by the court. No trial date has been set. If Pinellas Countywere to prevail, management believes that there would be no material adverseeffect upon our financial statements, as the entire Pinellas County assessmentis fully accrued and accounted for at March 31, 2006.

 

**Item 1A. Risk Factors**

** **

***In the event that the Resort does not providesufficient cash flow to us, we may be forced to reduce capital expenditures andimprovements at the Resort, diminishing the value of the Rental Pool units.***

 

As the owner of the Resort, we will be responsible for any negativecash flow associated with the ownership and operation of the Resort. As aresult of our assumption of these liabilities and our responsibility for anynegative cash flow of the Resort, we may be exposed to liabilities andexpenditures exceeding our expectations or ability to pay. In the event cashflow is insufficient to fund planned improvements, the ability of theparticipants in the Rental Pool to rent their units may decline. A decline inthe rental rates that can be charged for the units or related vacanciesresulting from our inability to make necessary capital expenditures may causethe value of the Rental Pool units, and the Resort, to decline.

 

***We have been unsuccessful in our attempts tosell the Resort and the terms of a sale of the Resort, if any, remainuncertain.***

 

We cannot guarantee that we will be able to sell the Resort onreasonable terms, if at all. Further, we cannot predict the amount of time thatwill be required to negotiate and close a sale of the Resort. In the event thatGTA experiences liquidity constraints or other financial pressures due to theprotracted negotiation of the sale of the Resort, GTA may be unwilling orunable to fund the Resort and the Rental Pool refurbishment. Even in the eventthat we successfully sell the Resort in the near term, we expect that the partywho purchases the Resort will assume responsibility for the operational costsof the Resort and the Rental Pool. We cannot guarantee the level of funding andmanagement attention that will be given to the Resort and the Rental Pool afterwe sell it. In the event that we, GTA and, if applicable, the Resort’s ultimateowner do not devote sufficient management resources and funding to the Resortand the Rental Pool, distributions to the Rental Pool participants could be substantiallyreduced.

 

***The Resort’s performance may not provideadequate resources to fund the refurbishment reimbursement to the Rental Poolparticipants.***

 

Pursuant to the former borrower’s arrangement with many of the personswho own condominium units at the Resort, the condominiums owned by theseparticipating persons are placed in a securitized pool and rented as hotelrooms to guests of the Resort. We refer to this securitized pool ofparticipating condominiums as the Rental Pool. In addition to the currentRental Pool agreement, the former owner of the Resort agreed with theAssociation that the former owner of the Resort would reimburse 50% of therefurbishment costs, plus accrued interest at 5% per annum on the unpaid balanceof that portion of the unpaid refurbishment costs which we are required toreimburse. This amount will be reimbursed to participating condominium owners(or transferees of their condominium unit(s)) over the five-year periodbeginning in 2005. The reimbursement is contingent on the units remaining inthe Rental Pool from the time of their refurbishment through 2009. If the unitdoes not remain in the Rental Pool during the reimbursement period from 2005through 2009, the owner or successor owner forfeits any unpaid installments atthe time the unit is removed from the Rental Pool.

 

Accordingly, maintaining condominium owner participation in the RentalPool is very important to the continued economic success of the Resort. Weassumed certain existing or modified financial obligations of the formerborrower, including its responsibilities regarding the administration of thecondominium unit Rental Pool, when we took ownership of the Resort pursuant tothe Settlement Agreement. Also as part of the Settlement Agreement, we assumedGHR’s obligation to reimburse the refurbishment expenses paid by thecondominium owners.

 

As owner of the Resort, we are responsible for any negative cash flowassociated with the ownership and operation of the Resort. As a result of theassumption of these liabilities and our responsibility for any negative cashflow, we face the risk that our ultimate liabilities and expenditures might begreater than we expected. In that case, we may not have sufficient cashavailable for the payment of the refurbishment expenses relating to the RentalPool units, or we may otherwise decide not to use our funds in this manner. Ifthis occurs, a disagreement involving the funding for the Rental Pool mayarise, and this disagreement could both divert our management’s attention fromthe operation of the Resort and prove costly to the parties to any suchdispute.

 

25

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In the event that we sell the Resort, we expect that we will no longerbe responsible for the Rental Pool obligations, and that the party who acquiresthe Resort will determine the funding for the Rental Pool based upon itswillingness and ability to pay these obligations**.**Wecannot guarantee that the party who acquires the Resort will provide adequatefunding for the Resort in general or for refurbishment expenses in particular.

 

***The number of Rental Pool units may declineif current owners find alternative uses of the units that are more attractivethan participating in the Rental Pool, thereby reducing the number of availableRental Pool units and diminishing the value of the remaining units.***

 

Participants in the Rental Pool may decide that alternative uses oftheir condominium units are more attractive than participating in the RentalPool. In particular, condominium owners may determine that it is morefinancially advantageous to rent their units to longer term tenants, or to livein their units rather than paying to live elsewhere and allowing their units toparticipate in the Rental Pool. Any such reduction in the number ofparticipants in the Rental Pool may result in increased pro-rata costs andreduced revenues for the remaining Rental Pool participants. In particular, adecrease in the number of participants in the Rental Pool will result in higherper capita costs relating to fixed costs that are incurred in connection withthe administration of the Rental Pool. In the event that the number of units inthe Rental Pool declines below 575, our obligation to reimburse refurbishmentexpenses for the units will be abated until the number of units in the RentalPool is restored to 575 or higher.

 

***Ifwe are not able to sell the Resort, obtain some form of financing or receiveadditional intercompany advances from our parent if we indeed experience theanticipated operating cash shortfall at the end of the summer of 2006, we mayexperience severe liquidity problems, not be able to meet the demands of ourcreditors and, ultimately become subject to bankruptcy proceedings.***

*** ***

Generally, the Company’sonly source of cash is from profitable operations of the Resort. While thefinancial performance of the Resort has shown signs of recovery since theCompany assumed title to the Resort on July 15, 2004, current projectionsprovided by Westin indicate an operational cash flow shortfall by the end ofthe summer of 2006. Further, the Resort’s credit capacity is limited.   If the Resort experiences the currentlyprojected cash flow shortfall in 2006, we may be required to seek to provideadditional capital to the Resort. In 2005, our parent funded $1,050,000 toaddress seasonal cash flow shortfalls. However, there are no assurances thatadditional intercompany advances will not be necessary prior to theconsummation of a sale of the Resort. In the event that we are unable to sellthe Resort, obtain some form of financing or receive additional intercompanyadvances from our parent, we may be unable to pay our obligations as theybecome due or upon demand.,We may experience liquidity problems and not be ableto meet our financial obligations of our creditors. If we cannot meet ourobligations to our creditors, we could ultimately become subject to bankruptcyproceedings.

 

***Severe weather patterns experienced byFlorida during 2004 and the southeastern portion of the United States during2005 could result in depressed bookings, adversely affecting the Resort’sresults of operations and reducing proceeds to the participants in the RentalPool.***

 

We expect that bookings at the Resort during the late summer and earlyfall of future years may be adversely affected as a result of a series ofhurricanes that affected Florida during 2004 and the southeastern portion ofthe United States during 2005. In particular, the hurricanes that occurredduring 2005 may have increased the awareness of potential guests, particularlythose not residing in the southeastern portion of the United States, to thedanger that hurricanes and tropical storms present. We expect that potentialguests may be more reluctant to book rooms in regions subject to such weatherpatterns. In particular, it is possible that groups will choose alternativedestinations for travel during the hurricane season. In the event thatpotential guests and groups choose alternative destinations as a result ofthese weather-related concerns, the Resort may experience lower bookings andreduced revenues, which in turn will result in reduced distributions to theRental Pool participants.

 

***Recent severe weather patterns could furtherintensify the seasonal nature of the results of the Resort.***

 

The hotel industry is cyclical in nature. Our business has historicallybeen weaker during the third quarter of each year. In the event that we sufferfrom reduced bookings during the third quarter as a result of hurricane-relatedconcerns of potential guests, this effect could reduce the revenues to theResort in the third quarter of each year, increasing the disparity between ourresults in the third quarter as compared to other quarters. This increasedcyclicality could make it more difficult for us to project the results of theResort, and may result in a lower than expected percentage of the Resort’sfixed costs being offset by revenue during the third quarter.

 

26

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***We are subject to all the operating riskscommon to the hotel industry which could adversely affect our results ofoperations.***

 

Operating risks common to the Resort include:

 
| • |   | changes in general economic conditions, including the timing and  robustness of the apparent recovery in the United States from the recent  economic downturn and the prospects for improved performance in other parts  of the world;                               |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | the impact of war and terrorist activity (including threatened  terrorist activity) and heightened travel security measures instituted in  response thereto;                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | domestic and international political and geopolitical conditions;                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | decreases in the demand for transient rooms and related lodging  services, including a reduction in business travel as a result of general  economic conditions;                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | the impact of internet intermediaries on pricing and our increasing  reliance on technology;                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | cyclical over-building in the hotel industry which increases the  supply of hotel rooms;                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | changes in travel patterns;                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | changes in operating costs, including, but not limited to, energy,  labor costs (including the impact of unionization), workers’ compensation and  health-care related costs, insurance and unanticipated costs such as acts of  nature and their consequences; |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | disputes with the managers of the Resort which may result in  litigation;                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | the availability of capital to allow us to fund renovations and  investments at the Resort; and                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                 |
| • |   | the financial condition of the airline industry and the impact on air  travel.                                                                                                                                                                                       |

 

***General economic downturns, or an increase inlabor or insurance costs, may negatively impact our results.***

 

Moderate or severe economic downturns or adverse conditions maynegatively affect the operations of the Resort. These conditions may bewidespread or isolated to one or more geographic regions. A tightening of thelabor markets in Florida may result in fewer and/or less qualified applicantsfor job openings at the Resort. Higher wages, related labor costs and theincreasing cost trends in the insurance markets may negatively impact ourresults as these costs increase. A general economic downturn, or increase inexpenditures on insurance and labor costs, would adversely impact theoperations of the Resort, potentially reducing funding that we provide to theRental Pool and reducing the distributions to the Rental Pool participants.

 

***If we are unable to successfully compete forcustomers, it may adversely affect our operating results and reduce theproceeds to participants in the Rental Pool.***

 

The hotel industry is highly competitive. The Resort competes forcustomers with other hotel and resort properties. Some of our competitors mayhave substantially greater marketing and financial resources than we do, andthey may improve their facilities, reduce their prices, or expand or improvetheir marketing programs in ways that adversely affect the Resort and ouroperating results, and reduce the proceeds to participants in the Rental Pool.

 

***Internet reservation channels may negativelyimpact our bookings and results of operations.***

 

Internet travel intermediaries such as Travelocity.com®, Expedia.com®and Priceline.com® are attempting to commoditize hotel rooms by increasing theimportance of price and general indicators of quality at the expense of brandor property-specific identification. These travel intermediaries hope thatconsumers will eventually develop brand loyalties to their reservations systemrather than to lodging brands. Although we expect to derive most of ourbusiness from traditional channels, if the amount of sales made throughinternet intermediaries increases significantly, our business and profitabilitymay be significantly harmed, and proceeds to participants in the Rental Poolmay be reduced.

 

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***The Resort places significant reliance ontechnology.***

 

The hospitality industry continues to demand the use of sophisticatedtechnology and systems including technology utilized for property management,procurement, reservation systems, operation of customer loyalty programs,distribution and guest amenities. These technologies can be expected to requirerefinements and there is the risk that advanced new technologies will beintroduced. There can be no assurance that as various systems and technologiesbecome outdated or new technology is required we will be able to replace orintroduce them as quickly as our competition or within budgeted costs for suchtechnology. Further, there can be no assurance that we will achieve thebenefits that may have been anticipated from any new technology or system.

 

***The Resort is capital intensive, and maybecome uncompetitive in the event that sufficient financing is not available.***

 

For the Resort to remain attractive and competitive, we must spendmoney periodically to keep the properties well maintained, modernized andrefurbished. These expenditures result in an ongoing need for cash. To theextent we cannot fund expenditures from cash generated by the Resort’soperations, we must seek to obtain funds by borrowing or otherwise. We may beunable to find such financing on favorable terms, if at all. To the extent thatwe are unsuccessful in obtaining such financing, it could adversely impact theResort’s results from operations and proceeds to the Rental Pool participants.

 

***Our investment in the Resort is subject tonumerous risks, which could adversely affect our income.***

 

As a result of our ownership of the Resort, we are subject to the risksthat generally relate to investments in real property. The investment returnsavailable from equity investments in real estate such as the Resort depends inlarge part on the amount of income earned and capital appreciation generated bythe Resort, reduced by the expenses incurred to operate it. In addition, avariety of other factors affect both income from the Resort and the Resort’sreal estate value, including governmental regulations, real estate, insurance,zoning, tax and eminent domain laws, interest rate levels and the availabilityof financing. When interest rates increase, the cost of developing, expandingor renovating real property increases and real property values may decrease asthe number of potential buyers decreases. Any of these factors could have amaterial adverse impact on our results of operations or financial condition. Ifthe Resort does not generate revenue sufficient to meet operating expenses,including debt service and capital expenditures, our income will be adverselyaffected.

 

***Environmental regulations may increase theResort’s costs, or limit our ability to develop, use or sell the Resort.***

 

Environmental laws, ordinances and regulations of various federal,state, local and foreign governments impact our properties and could make usliable for the costs of removing or cleaning up hazardous or toxic substanceson, under, or in property we currently own or operate. These laws could imposeliability without regard to whether we knew of, or were responsible for, thepresence of hazardous or toxic substances. The presence of hazardous or toxic substances,or the failure to properly clean up such substances when present, couldjeopardize our ability to develop, use, sell or rent the real property or toborrow using the real property as collateral. If we arrange for the disposal ortreatment of hazardous or toxic wastes, we could be liable for the costs ofremoving or cleaning up wastes at the disposal or treatment facility, even ifwe never owned or operated that facility. Other laws, ordinances andregulations could require us to manage, abate or remove lead or asbestoscontaining materials. Certain laws, ordinances and regulations, particularlythose governing the management or preservation of wetlands, coastal zones andthreatened or endangered species, could limit our ability to develop, use, or sellthe Resort. Further, in the event that environmental obligations prevent usfrom developing, using or selling the Resort, distributions to the Rental Poolparticipants may be adversely affected either directly or as a result ofreduced funding for the marketing and operation of the Rental Pool.

 

***Although the courts have recently deliveredfavorable rulings in the Land Use Lawsuits to which we are a party, in theevent that the ultimate rulings in these matters are unfavorable to us, thevalue of Parcel F and the Resort would be adversely effected.***

 

As discussed in further detail under the heading “Legal Matters” inPart I, Item 3 of this report, on March 10, 2005 we filed a motion tointervene as a defendant in the lawsuit styled Innisbrook Condominium Association, Inc.,C. Frank Wreath, Meredith P. Sauer, and Mark Banning (as plaintiffs) vs.Pinellas County, Florida, Golf Host Resorts, Inc. and Innisbrook F LLC (asdefendants), Case No. 043388CI-15. This matter relates to a tract of landwithin the Resort known as Parcel F. In April 2005, a subsequent lawsuitrelating to this matter was filed. We are also a defendant in this subsequentlawsuit. In this report, we refer to the March 2005 and the April 2005 lawsuitscollectively as the Land Use Lawsuits.

 

On January 6, 2006, the court ruled in favor of all defendants andagainst all plaintiffs as to each count in both cases. While we believe thatthe January 6, 2006 ruling is a favorable result for us and for the otherdefendants, the plaintiffs in the Land Use Lawsuits filed an appeal of thatruling on March 31, 2006.

 

In the event that the plaintiffs convince a court to overturn theJanuary 6, 2006 ruling, we could lose all or substantially all of our land useand development rights with respect to Parcel F. Such an unfavorable resultcould also cause us to experience reduced club memberships at the Resort andcould adversely impact our ability to realize the benefits from

 

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the proposed development ofParcel F. In addition, if the defendants do not ultimately prevail in the LandUse Lawsuits and a court subsequently applies a similar interpretation of ourrights with respect to the remaining developable units at the Resort, our landuse and development rights in those remaining units could be jeopardized,adversely effecting both our ability to develop the Resort and the value of theRental Pool units.

 

***So-called acts of God, terrorist activity andwar could adversely affect the Resort.***

 

The Resort’s financial and operating performance may be adverselyaffected by so-called acts of God, such as natural disasters, in Florida and inareas of the world from which we draw a large number of guests. Similarly, wars(including the potential for war), terrorist activity (including threats ofterrorist activity), political unrest and other forms of civil strife andgeopolitical uncertainty have caused in the past, and may cause in the future,our results to differ materially from anticipated results. The returns to participantsin the Rental Pool could be adversely impacted in the event that acts of God,war or terrorism impact the Resort’s ability to attract guests.

 

***Some potential losses of the Resort are notcovered by insurance.***

 

We carry comprehensive insurance coverage for general liability,property, business interruption and other risks with respect to the Resort. Ourpolicies offer coverage features and insured limits that we believe arecustomary for similar types of property. Generally, our “all-risk” property policiesprovide that coverage is available on a per occurrence basis and that, for eachoccurrence, there is a limit as well as various sub-limits on the amount ofinsurance proceeds we can receive. In addition, there may be overall limitsunder the policies. Sub-limits exist for certain types of claims such asservice interruption, abatement, expediting costs or landscaping replacement,and the dollar amounts of these sub-limits are significantly lower than thedollar amounts of the overall coverage limit.

 

In addition, there are also other risks such as war, certain forms ofterrorism such as nuclear, biological or chemical terrorism, acts of God suchas hurricanes and earthquakes and some environmental hazards that may be deemedto fall completely outside the general coverage limits of our policies or mayeither be uninsurable or too expensive to justify insuring against.

 

***Our operations at the Resort are dependentupon outside managers, and if those managers are less successful than expected,the Resort’s results of operations and the proceeds available for distributionto the Rental Pool participants will be adversely affected, potentially in amaterial way.***

 

Westin manages the daily operations of the Resort pursuant to ourmanagement agreement with Westin, and Troon manages the golf facilities at theResort pursuant to related contractual commitments with Westin. In the eventthat these third party managers fail to perform under their respectivecontracts as expected, or in the event that they default on their obligations,the Resort’s results of operations and proceeds available for distribution tothe Rental Pool participants will be adversely affected, potentially in amaterial way.

 

***A sustained increase in energy costs maynegatively impact the Resort’s results by increasing its energy-related costsand by discouraging potential guests from traveling and taking part inrecreational activities.***

 

During the past year, energy costs in the United States have increasedsubstantially. Energy costs represent an increasingly larger percentage of thecosts of the Resort, and we expect energy costs to increase in both absoluteand relative terms in future periods. In addition, we expect that higher energycosts will negatively affect the Resort by discouraging travel and recreationalactivities. In particular, potential guests of the Resort are less likely totravel as they bear the affects of higher energy costs as either higher airlinefares or in an increased cost per gallon of gasoline. In addition, higher energycosts may reduce the disposable income of potential guests, making them lesslikely to spend money for travel and recreational activities. As a result ofthese factors, a sustained increase in energy costs may negatively impact theResort’s results by increasing its energy-related costs and by discouragingtraveling and taking part in recreational activities.

 

**Risk factors relating to GTA and GTA’s operating partnership**

 

Our parent is a subsidiary of GTA’s operating partnership. GTA is apublic reporting company under the Exchange Act. Due to our relationship withGTA, including our dependence upon GTA, its operating partnership or itssubsidiaries for funding that we may require, we believe that its risk factorsare relevant to our sole member and to the participants in the Rental Pool. Youshould note that certain of the information contained in GTA’s risk factorsfrom GTA’s Form 10-Q for the quarter ended March 31, 2006, which are filed as Exhibit 99.1hereto, particularly those specific to GTA’s liquidating distributions, are notrelevant to you unless you are a holder of GTA’s common stock; however, suchrisk factors are informative in that they may indicate certain factors orevents that may impact GTA and reduce GTA’s willingness or ability to providefunding to the Resort and the Rental Pool units.

 

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**Item 2. Unregistered Sales of EquitySecurities and Use of Proceeds**

** **

Not applicable.

 

**Item 3. Defaults Upon Senior Securities**

** **

Not applicable.

 

**Item 4. Submission of Matters to a Voteof Security Holders**

** **

Not applicable.

 

**Item 5. Other Information**

** **

Not applicable.

 

**Item 6. Exhibits**

** **

**EXHIBIT INDEX**

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                            |
|-----------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1             |       | Articles of Organization of GTA-IB, LLC(1)                                                                                                                                                                                                                 |
| 3.2             |       | Amended and Restated Operating Agreement of GTA-IB, LLC(1)                                                                                                                                                                                                 |
| 10.1            |       | Settlement Agreement dated July 15, 2004 by and among Golf Trust  of America, L.P., GTA-IB, LLC, Golf Host Resorts, Inc., Golf Hosts, Inc.,  Golf Host Management, Inc., Golf Host Condominium, Inc. and Golf Host  Condominium, LLC(2)               |
| 10.2            |       | Defense and Escrow Agreement dated July 15, 2004 by and among  Golf Host Resorts, Inc., GTA-IB, LLC, Golf Trust of America, L.P., Golf Trust  of America, Inc. and Chicago Title Insurance Company(2)                                                 |
| 10.3            |       | Operational Benefits Agreement dated July 15, 2004 by and among  Golf Host Resorts, Inc., Golf Hosts, Inc., GTA-IB, LLC, and Golf Trust of  America, L.P.(2)                                                                                          |
| 10.4            |       | Management Agreement dated July 15, 2004 by and between Westin  Management Company South and GTA-IB, LLC(2)                                                                                                                                           |
| 10.5            |       | Assignment, Consent, Subordination and Nondisturbance Agreement dated  July 15, 2004 by and among GTA-IB, LLC, Golf Trust of America, L.P. and  Westin Management Company South(2)                                                                    |
| 10.6            |       | Facility Management Agreement dated July 15, 2004 by and between  Troon Golf L.L.C. and Westin Management Company South(2)                                                                                                                            |
| 10.7            |       | Loan Agreement dated July 15, 2004 by and between Golf Trust of  America, L.P. and Elk Funding, L.L.C. and related Notes A and B(2)                                                                                                                   |
| 10.8.1          |       | Parcel F Development Agreement dated March 29, 2004 by and  among Golf Hosts Resorts, Inc., Golf Trust of America, L.P. and  Parcel F, LLC, formerly known as Innisbrook F, LLC, formerly known as  Bayfair Innisbrook, L.L.C.(2)           |
| 10.8.2          |       | First Amendment to Parcel F Development Agreement by and among  Golf Hosts Resorts, Inc., Golf Trust of America, L.P. and Parcel F, LLC  (formerly known as Innisbrook F, LLC)(3)                                                                |
| 10.8.3          |       | Second Amendment to Parcel F Development Agreement by and among  Golf Hosts Resorts, LLC (formerly known as Golf Host Resorts, Inc.), Golf  Trust of America, L.P., GTA-IB, LLC and Parcel F, LLC (formerly known as  Innisbrook F, LLC)(3) |
| 10.9            |       | Amendment to Loan Agreement between GTA-IB, LLC and Golf Trust of  America, L.P.(1)                                                                                                                                                                        |
| 10.10           |       | Loan Agreement dated June 20, 1997 between Golf Host Resorts,  Inc. and Golf Trust of America, L.P.(1)                                                                                                                                                |
| 10.11           |       | Promissory Note issued by GTA-IB, LLC to Golf Trust of America,  L.P.(1)                                                                                                                                                                                   |
| 10.12           | *          | Asset Purchase Agreement by and between Golf Trust of America, Inc.,  Golf Trust of America, L.P., GTA-IB, LLC, GTA-IB Golf Resort, LLC, GTA-IB  Condominium, LLC, GTA-IB Management, LLC and CMI Financial Network, LLC dated  October 27, 2005      |
| 31.1            | **         | Certification of the Registrant’s President and Chief Executive  Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002                                                                                                                   |
| 31.2            | **         | Certification of the Registrant’s Chief Financial Officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                             |
| 32.1            | **         | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act  of 2002                                                                                                                                                                             |
| 99.1            | **         | Risk Factors of Golf Trust of America, Inc.                                                                                                                                                                                                                |

 

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(1)           Previously filed asExhibits (same Exhibit numbers as referenced above) to our Quarterly Report onForm 10-Q, filed on November 23, 2004, and incorporated herein byreference.

 

(2)           Previously filed asExhibits 10.1 through 10.8 to our Current Report on Form 8-K, filedNovember 16, 2004, and incorporated herein by reference.

 

(3)           Previously filed asExhibits 10.8.2 and 10.8.3 to our Quarterly Report on Form 10-Q,filed August 15, 2005, and incorporated herein by reference.

 

*              Thisagreement was terminated pursuant to its terms on November 23, 2005.

 

**           Filedas an exhibit hereto.

 

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**SIGNATURES**

** **

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
| ** **         | **GTA-IB, LLC**,  registrant            |
|--------------------|-----------------------------------------|
| ** **         | ** **                              |
| ** **         | ** **                              |
| Date: May 15, 2006 | /s/ W. Bradley Blair, II                |   |
|               | W. Bradley Blair, II               |
| * *           | *President and Chief Executive Officer* |
| * *           | * *                                |
| Date: May 15, 2006 | /s/ Scott D. Peters                     |   |
|               | Scott D. Peters                         |
| * *           | *Secretary and Chief Financial Officer* |
|                    |                                         |  |  |

 

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