Lanesborough REIT reports 2006 financial results and achievements



    WINNIPEG, March 26 /CNW/ - Lanesborough Real Estate Investment Trust
("LREIT") (TSX: LRT.UN) is pleased to report the financial results for the
year ended December 31, 2006. The following comments in regard to the
financial position and operating results of LREIT should be read in
conjunction with the 2006 Annual Report and the financial statements for the
year ended December 31, 2006, which may be obtained from the LREIT website at
www.lreit.com or the SEDAR website at www.sedar.com.

    
    2006 HIGHLIGHTS

    OBJECTIVE: CREATE A LARGE, DIVERSIFIED PORTFOLIO OF QUALITY RESIDENTIAL
               PROPERTIES.

    RESULTS: - Property portfolio increased by $68 Million;
             - Acquisitions encompassed 713 rental units;
             - Geographic diversification expanded to include property
               acquisitions in Port Elgin, Ontario, Brandon, Manitoba and
               Moose Jaw, Saskatchewan;
             - Year end portfolio consists of 29 residential properties with
               2,268 rental units and four commercial properties with
               224,545 square feet of leasable area;

    OBJECTIVE: MAXIMIZE OPERATING RESULTS THROUGH PRO-ACTIVE MANAGEMENT AND
               VALUE-ADDED CAPITAL IMPROVEMENTS.

    RESULTS: - Total rental revenues increased by $11.9 Million or 69%;
             - Operating income increased by $6.7 Million or 69%;
             - Overall profit margin sustained at over 50% (51% in 2006;
               52% in 2005);
             - Invested over $2.5 Million in major renovation/expansion
               programs at two properties.

    OBJECTIVE: MAXIMIZE CASH FLOWS FROM THE PROPERTY PORTFOLIO.

    RESULTS: - Cash from operations increased by $2.0 Million or 64%;
             - Distributable income increased by $2.6 Million or 34%;
             - FFO increased by $1.25 Million or 100%.

    OBJECTIVE: MAXIMIZE UNIT VALUES.

    RESULTS: - Unit value increased by $0.65 or 12.4%;
             - Cash distributions provided return of 10.7%, based on opening
               unit value;
             - Units provided total return of 24% to investors.
    

    LREIT's portfolio of income-producing properties was significantly
enhanced in 2006 with the acquisition of 12 additional residential properties
at a cost of approximately $68 Million, representing a total of 713 rental
units. After considering the impact of the new property acquisitions, the
operating income of LREIT increased by 69% in 2006, while cash from operations
and funds from operations increased by 64% and 100%, respectively.
    As the acquisitions of the 12 additional properties were completed
throughout the first six months of 2006, the operating results for 2006 do not
fully reflect the income potential of the year end property portfolio. During
the second half of 2006, the 12 properties contributed to an increase in
operating income of approximately $2.2 Million, compared to the first half of
the year. After providing for a full year of operations for the 2006 property
acquisitions and the anticipated improvements in results for the remaining
properties, the additional operating income potential of the 2006 year ending
property portfolio is projected to be in excess of $2.5 Million. The current
market value of the property portfolio, as of December 31, 2006, is
approximately $299 Million or 27.9% greater than the portfolio acquisition
cost.
    The ongoing growth in the asset base and underlying value of the LREIT
trust units is continuing at a strong pace in 2007, with over $200 Million of
new property acquisitions completed or under contract, a $9.5 Million property
expansion underway at Elgin Lodge in Port Elgin, Ontario and a two year,
$2.5 Million major renovation program nearing completion at Highland Tower in
Thompson, Manitoba.
    In summary, LREIT is well positioned to achieve another year of strong
growth in operating cash flows and unit values in 2007, given the income
potential of the existing property portfolio, the impact of value-added
improvements and the extent of new property acquisitions.

    
    RESULTS OF OPERATIONS

    Summary of Operating/Cash Flow Results
    -------------------------------------------------------------------------
                                                    Year Ended December 31
                                                      2006          2005
                                                  ------------- -------------
    Total revenue                                 $ 30,538,848  $ 17,792,929
    Operating income                              $ 16,362,751  $  9,668,548
    Cash from operations                          $  5,194,987  $  3,161,869
    Loss for the year                             $ (3,785,751) $ (2,135,105)
    Distributable income                          $  3,447,578  $  2,568,504
    Funds from operations (FF0)                   $  2,499,942  $  1,248,734
    Adjusted Funds from Operations (AFF0)         $  3,071,373  $  1,927,398
    Cash distributions - total                    $  9,766,357  $  6,230,007
                       - per unit                 $       0.56  $       0.56

    Per Unit
                                            Basic  Diluted    Basic  Diluted
                                          -----------------------------------
    Operating income                        0.953    0.882    1.035    0.552
    Loss for the year                      (0.221)  (0.221)  (0.229)  (0.229)
    Distributable income                    0.201    0.198    0.275    0.271
    Funds from operations (FFO)             0.146    0.143    0.134    0.133
    Adjusted funds from operations (AFFO)   0.179    0.176    0.206    0.203
    

    At the end of 2005, the expectation for 2006 was that LREIT would achieve
a significant increase in operating income, cash from operations and net
income, excluding amortization expense, while continuing to incur a net loss
and operate with a cash distribution payout ratio, which exceeded operating
cash flows. Overall, operating results were generally in accordance with
expectations, with LREIT achieving a $6,694,203, or 69.2%, increase in
operating income and a $2,033,118, or 64.3%, increase in cash from operations.
The increase in operating income is almost entirely due to an increase in the
number of properties in the LREIT portfolio.
    LREIT incurred a loss of $3,785,751 during 2006, compared to a loss of
$2,135,105 during 2005. The loss reflects total amortization charges of
approximately $7.7 Million in 2006, compared to approximately $4.2 Million in
2005.

    
    Comparison to 2006 Third Quarter
    -------------------------------------------------------------------------
                                         Three Months Ended
                                    ---------------------------
                                     December 31, September 30,   Increase
                                        2006          2006       (Decrease)
                                    ------------- ------------- -------------
    Operating income                $  4,587,426  $  4,702,153  $   (114,727)
    Financing expense                  3,380,688     2,998,531       382,157
                                    ------------- ------------- -------------
    Operating income, net of
     financing expense                 1,206,738     1,703,622      (496,884)
    Trust expense                        518,494       728,057      (209,563)
                                    ------------- ------------- -------------
    Income, before amortization,
     future income tax recovery
     and non-controlling interest        688,244       975,565      (287,321)
    Amortization                       1,936,904     2,255,423      (318,519)
    Future income tax recovery          (455,245)     (236,454)     (218,791)
    Non-controlling interest             (52,898)      (33,419)      (19,479)
                                    ------------- ------------- -------------

    Loss for the period             $   (740,517) $ (1,009,985) $    269,468
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------
    

    During the fourth quarter of 2006, income, before amortization expense,
future income tax recovery and non-controlling interest, decreased by $287,321
or 29%, compared to the third quarter of 2006. The loss during the fourth
quarter decreased by $269,468 compared to the third quarter of 2006. The
decrease in the net loss is mainly due to a decrease in amortization expense
of $318,519 and an increase in income tax recovery of $218,791.

    LREIT is a real estate investment trust, which is listed on the Toronto
Stock Exchange under the symbol "LRT.UN". The objective of LREIT is to provide
Unitholders with stable cash distributions from investment in a geographically
diversified Canadian portfolio of quality real estate properties. There are
currently 17,424,874 trust units outstanding. For further information on
LREIT, please visit our website at www.lreit.com.

    This press release contains certain statements that could be considered
as forward-looking information. The forward-looking information is subject to
certain risks and uncertainties, which could result in actual results
differing materially from the forward-looking statements.

    The Toronto Stock Exchange has not reviewed or approved the contents of
    this press release and does not accept responsibility for the adequacy or
    accuracy of this press release.




For further information:

For further information: Arni Thorsteinson, Chief Executive Officer; or
Gino Romagnoli, Investor Relations, Tel: (204) 475-9090, Fax: (204) 452-5505,
Email: info@lreit.com


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