Lakeview Hotel Investment Corp Announces Third Quarter Results

WINNIPEG, Nov. 27, 2015 /CNW/ - Lakeview Hotel Investment Corp ("LHIC") is pleased to report its financial results for the Quarter ended September 30, 2015.  The following comments in regard to the financial results should be read in conjunction with the September 30, 2015 financial statements and Management Discussion and Analysis which are available on the SEDAR website www.sedar.com.

The outlook for Lakeview Hotel Investment Corp. is closely linked to oil and gas drilling activity in Western Canada and thus is linked closely to the underlying commodity prices.  The decline in oil prices has resulted in significant capex cuts from oil producers which in turn have had a material impact on demand for hotel rooms and the operating results of Lakeview.  While average room rate held firm, third quarter occupancy declined from 77.14% in 2014 to 56.76% in the third quarter of 2015.

Most investment banks are expecting a slow recovery in the price of oil in 2016 with an expectation that by year end Nymex crude oil will be trading at between $50 and $70 per barrel.  The recovery will ultimately lead to increased capex expenditures and demand for hotel rooms, but as much of the capex plans for 2016 are already being put in place, the expectation is that a resumption in more normal levels of activity may not take place until later in 2016 and into 2017.

It is important to note that not all of Lakeview's hotels are dependent on drilling activity and thus tied to the price of oil.  However, the impact on certain markets, such as Drayton Valley, is substantial, where occupancy through the third quarter is at 33.0% vs 73.3% for the same period in 2014.   Lakeview is continuing to look at opportunities to reduce leverage and restructure debt to be well positioned for growth and to generate shareholder value when market conditions improve.

Following is a comparison of the operating results for the three and nine months ended September 30, 2015 and the comparable periods in 2014:

 


Three months ended

September 30

Nine months ended

September 30


2015

2014

2015

2014

Hospitality Revenue





Room

6,889,447

9,072,496

19,936,075

24,598,433

Food & Beverage

836,696

1,194,637

2,811,295

3,478,496

Other

403,891

519,884

1,215,183

1,456,686

Total Revenue

8,130,034

10,787,017

23,962,553

29,533,615

Expenses

8,899,793

10,673,932

26,741,560

28,677,594

Gain on sale of income properties

-

-

-

1,007,514

Net income (loss)

(769,759)

113,085

(2,779,007)

1,863,535

Basic and diluted income (loss) before income tax per share

(0.039)

0.006

(0.142)

0.095

Reconciliation to funds from operations





Add (deduct)





Amortization of income properties

762,829

767,919

2,284,556

2,288,025

Amortization of franchise fees

1,192

1,192

3,576

3,576

Gain on sale of income properties

-

-

-

(1,007,514)

Distributions from Lakeview Flag Licensing General Partnership

32,830

193,060

180,810

594,860

Distributions from Lakeview Flag Management General Partnership

27,500

146,500

154,750

485,250

Income from Lakeview Flag Licensing General Partnership

(164,432)

(209,542)

(442,005)

(538,028)

Income from Lakeview Flag Management General Partnership

(93,046)

(123,363)

(273,410)

(335,965)

Unrealized loss on change in fair value of interest rate swap

205,468

249,545

1,017,516

249,545

Amortization of discount on bankers' acceptance

-

-

198,712

-

Funds from operations

2,582

1,138,396

345,498

3,603,284

Basic and diluted funds from operations per share

0.000

0.058

0.018

0.184

Loss on derecognition of financial liability

-

580,732

-

580,732

Contributions to reserve account

(250,025)

(184,326)

(638,142)

(535,903)

Adjusted funds from operations

(247,443)

1,534,802

(292,644)

3,648,113

Basic and diluted adjusted funds from operations per share

(0.013)

0.078

(0.015)

0.187

Reconciliation to distributable income





Loss on derecognition of income properties

90,578

9,703

107,483

11,590

Accretion of debentures

40,118

36,622

119,199

109,181

Accretion of mortgages payable

22,963

42,142

70,459

87,971

Accretion of other long-term debt

38,534

12,735

139,222

12,735

Distributable income

(55,250)

1,636,004

143,719

3,869,590

Basic and diluted distributable income per share

(0.003)

0.084

0.007

0.198

Distributions

-

-

-

-

 

Lakeview Hotel Investment Corp is listed on the TSX Venture Exchange under the symbol "LHR".  Lakeview Hotel Investment Corp receives income from ownership, management and licensing of hotel properties.

The TSX Venture Exchange nor its Regulation Service Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Lakeview Hotel Investment Corp

For further information: Avrum Senensky, Executive Vice President, Tel: (204) 947-1161, Fax: (204) 957-1697, Email asenensky@lakeviewhotels.com

RELATED LINKS
http://www.lakeviewhotels.com

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