Lanesborough REIT reports 2007 operating results



    WINNIPEG, March 26 /CNW/ - Lanesborough Real Estate Investment Trust
("LREIT") (TSX: LRT.UN) is pleased to report the operating results for the
year ended December 31, 2007. The following comments in regard to the
financial position and operating results of LREIT should be read in
conjunction with the 2007 Annual Report and the financial statements for the
year ended December 31, 2007, which may be obtained from the LREIT website at
www.lreit.com or the SEDAR website at www.sedar.com.

    
    2007 HIGHLIGHTS

    Acquisition and Development

    -   Acquired seven multi-family residential properties during 2007,
        comprised of 747 suites, at a total purchase price of $169 Million.

    -   Invested $36.8 Million in construction, expansion and renovation
        costs primarily in regard to Laird's Landing (formerly Park View
        Apartments) and Elgin Lodge.

    -   Year-end property portfolio consists of 40 properties, comprised of
        3,074 suites and 224,545 square feet of commercial leasable area,
        including Laird's Landing, a 189-suite apartment complex which was
        under construction and approximately 75% complete as of
        December 31, 2007.

    Financial

    Compared to 2006:

    -   Rental revenues increased by $16.5 Million or 57%.

    -   Net operating income increased by $10.0 Million or 58% in total and
        by $0.555 or 56% on a per unit basis.

    -   Operating margin for property portfolio improved from 56% in 2006 to
        58% in 2007.

    -   "Same property" revenues increased by $2.6 Million or 13%, while
        "same property" net operating income increased by $2.2 Million or
        21%.

    Capital Structure

    -   Financed $176.8 Million of mortgage debt in 2007.

    -   Weighted average interest rate on the aggregate mortgage loan balance
        of 6.2% at December 31, 2007, compared to 5.7% of December 31, 2006.

    -   Mortgage loan debt to estimated current property value ratio of
        59.4% at December 31, 2007, compared to 61.8% at December 31, 2006.

    Estimated Current Value

    -   The real estate portfolio of LREIT had an estimated current market
        value of $642 Million, as of December 31, 2007.

    In 2007, the ongoing efforts of LREIT to maximize the long-term value of
its real estate portfolio were highlighted in three main areas:

    1.    Growth in asset base - The real estate portfolio increased by over
          $205.8 Million, representing the highest single year growth rate
          since the inception of LREIT in 2002. The increase in the real
          estate portfolio includes $169 Million of new property acquisitions
          and the investment of $36.8 Million in major renovation and
          expansion projects.

    2.    Concentration of property acquisitions in one of Canada's strongest
          rental markets - Approximately 72% of LREIT's investment in new
          properties was related to the acquisition of three multi-family
          properties in Fort McMurray, Alberta, only two of which had
          progressed to the "income-producing" stage before the fourth
          quarter of 2007. Overall, LREIT's total portfolio of income-
          producing properties in Fort McMurray achieved a 96% occupancy
          level in 2007 and an operating profit margin of 73%, with the
          rental rates for Millennium Village and Laird's Landing
          approximately 18% and 27% higher than originally anticipated in
          2006, respectively. In 2008, the outlook for the Fort McMurray
          portfolio is more favourable as a result of several factors,
          including the quality of the new properties, the existence of
          long-term lease agreements with major corporations and the
          continued high rate of growth in the Alberta oilsands.

    3.    Sustained growth in "same property" NOI - The revenues and net
          operating income ("NOI") for the 18 properties which have been
          owned by LREIT since January 1, 2006 increased by 13% and 21%
          respectively, compared to 2006.
    

    The positive accomplishments of LREIT, in terms of creating an accretive
investment base, were tempered by an increase in financing expense in 2007, in
large part due to the additional interest expense, which was incurred as a
result of the issuance of $25.7 Million of convertible debentures in December
2006. The cost of the convertible debentures was fully reflected in the
2007 income and cash flow results, in the form of interest expense of
$1.93 Million, whereas the revenue from the investment of the net debenture
proceeds is gradually being realized as additional properties are acquired
and/or as properties move from the "development" stage to the
"income-producing" stage by the end of 2008.
    In particular, the increased financing costs are reflected in "cash flow"
measurements, including Cash from Operating Activities, Distributable Income,
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO), whereas
the positive developments in terms of the longer term income-producing
capabilities of the LREIT are evident in the increase in revenue, NOI and
current portfolio value, as summarized in the following chart:

    
    Financial Summary - 2007
    -------------------------------------------------------------------------
                                  Year Ended December 31
                -------------------------------------------------------------
                              Total                    Per Unit - Basic
                ---------------------------------  --------------------------
                     2007          2006   %Change   2007     2006   $Change
                ------------  ----------  -------  -----  --------  ---------
    Cash from
     operating
     activities   $7,079,227    $6,373,416   11%   $0.406   $0.371    $0.035
    Distributable
     income       $5,724,554    $5,147,071   11%   $0.328   $0.301    $0.027
    FFO           $2,000,321    $3,229,848 (38)%   $0.115   $0.189   $(0.074)
    AFFO          $2,896,707    $4,040,961 (28)%   $0.166   $0.236   $(0.070)

    Total
     revenue     $46,311,315   $30,538,848   52%   $2.653   $1.780    $0.873
    NOI          $27,072,655   $17,092,657   58%   $1.551   $0.996    $0.555
    Portfolio
     estimated
     current
     value      $642,000,000  $318,000,000  102%  $36.775  $18.530   $18.245
    

    In 2008, LREIT is expected to achieve a substantial increase in NOI from
its existing property portfolio as the income contribution period from new
property acquisitions and capital improvements will encompass a significantly
longer time frame in 2008. Although there will be an increase in debt service
costs in regard to the mortgage loan financing for the new property
acquisitions and capital improvements, the incremental increase in NOI is
expected to be well in excess of the incremental increase in debt service
costs.
    In terms of enhancing the underlying value of the Trust units, LREIT will
continue to pursue accretive property acquisitions in 2008 and undertake
measures to further improve its "same property" NOI results. At the forefront
of new developments are the contracted acquisitions of Parsons Landing, a
160-suite apartment complex currently under construction in Fort McMurray,
Alberta and Colony Square, a mixed-use 428-suite apartment and 83,200 square
foot office complex in downtown Winnipeg, Manitoba.

    
    RESULTS OF OPERATIONS

    Financial and Operating Summary
                                                     Year Ended December 31
                                                -----------------------------
                                                      2007           2006
                                                --------------  -------------
                                                                   (restated)
    DISTRIBUTIONS
      Total                                     $   9,767,655  $   9,626,529
      Per unit                                  $        0.56  $        0.56

    BALANCE SHEET
      Total assets                              $ 476,199,270  $ 294,222,201
      Total face value of mortgage loans
       and convertible debentures               $ 396,224,160  $ 226,106,511

    KEY PERFORMANCE INDICATORS
    Operations
      Average residential occupancy rate                95.2%          92.0%
      Operating residential cost ratio                  42.4%          47.2%

    Operating Results
      Total revenue                             $  46,311,315  $  30,538,848
      Net operating income                      $  27,072,655  $  17,092,657
      Loss for the year, before future income
       tax recoveries                           $  (6,133,767) $  (3,887,616)
      Loss for the year                         $  (1,400,904) $  (3,152,367)

    Cash Flows
      Cash flow from operating activities       $   7,079,227  $   6,373,416
      Funds from Operations (FFO)               $   2,000,321  $   3,229,848
      Adjusted Funds from Operations (AFFO)     $   2,896,707  $   4,040,961
      Distributable income                      $   5,724,554  $   5,147,071

    Financing
      Mortgage loans to estimated current
       value ratio                                      59.4%          61.8%
      Weighted average interest rate of
       mortgage loans                                    6.2%           5.7%

    Per Unit
    Net operating income
    - basic                                     $       1.551  $       0.996
    - diluted                                   $       1.144  $       0.925
    Loss for the year, before future
     income tax recoveries
    - basic                                     $      (0.351) $      (0.227)
    - diluted                                   $      (0.351) $      (0.227)
    Loss for the year
    - basic                                     $      (0.080) $      (0.184)
    - diluted                                   $      (0.080) $      (0.184)
    Distributable income
    - basic                                     $       0.328  $       0.301
    - diluted                                   $       0.321  $       0.297
    Funds from Operations (FFO)
    - basic                                     $       0.115  $       0.189
    - diluted                                   $       0.112  $       0.187
    Adjusted Funds from Operations (AFFO)
    - basic                                     $       0.166  $       0.236
    - diluted                                   $       0.163  $       0.233


    LREIT completed 2007 with a loss of $1,400,904, compared to a loss of
$3,152,367 in 2006. After excluding future income tax recoveries, LREIT
incurred a loss of $6,133,767 in 2007, compared to a loss of $3,887,616 in
2006. The increase in the loss before future income tax recoveries mainly
reflects an increase in net operating income, offset by an increase in
financing expense and further reduced by an increase in trust expense and
amortization charges.

    Comparison to 2007 Third Quarter

    -------------------------------------------------------------------------
                               Three Months Ended
                          ----------------------------
                             Dec. 31,     Sept. 30,     Increase/(Decrease)
                               2007          2007
                          ---------------------------------------------------
    Rental revenue        $ 13,374,143  $ 12,484,344  $    889,799      7.1%
    Interest and other
     income                    160,732       112,747        47,985     42.6%
    Property operating
     costs                   5,712,067     4,751,783       960,284     20.2%
                          ------------- ------------- -------------
    Net Operating
     Income (NOI)            7,822,808     7,845,308       (22,500)   (0.3)%
    Trust expense              599,231       465,499       133,732     28.7%
                          ------------- ------------- -------------
    Income before
     financing expense,
     amortization,
     non-controlling
     interest and taxes
     (EBITDA)                7,223,577     7,379,809      (156,232)   (2.1)%
    Financing expense        6,681,193     6,331,266       349,927      5.5%
                          ------------- ------------- -------------
    Income before
     amortization,
     non-controlling
     interest and taxes        542,384     1,048,543      (506,159)  (48.3)%
    Amortization             2,277,406     2,245,918        31,488      1.4%
    Non-controlling
     interest                   (7,305)        9,028       (16,333) (180.9)%
                          ------------- ------------- -------------
    Loss before future
     income tax recoveries  (1,742,327)   (1,188,347)     (553,980)    46.6%
    Future income tax
     recovery                  633,429     1,914,082    (1,280,653)  (66.9)%
                          ------------- ------------- -------------
    Income (loss) for
     the period           $ (1,108,898) $    725,735  $ (1,834,633) (252.8)%
                          ------------- ------------- -------------
                          ------------- ------------- -------------
    

    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 17,568,905 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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