Lanesborough REIT Reports 2007 Third Quarter Results



    WINNIPEG, Nov. 9 /CNW/ - Lanesborough Real Estate Investment Trust
("LREIT") (TSX: LRT.UN) is pleased to report the financial results for the
quarter ended September 30, 2007. The following comments in regard to the
financial position and operating results of LREIT should be read in
conjunction with the 2007 Third Quarter Report and the financial statements
for the quarter ended September 30, 2007, which may be obtained from the LREIT
website at www.lreit.com or the SEDAR website at www.sedar.com.

    
    2007 THIRD QUARTER HIGHLIGHTS

    Acquisition and Development

    -   Invested $73.4 Million in the acquisition of Lakewood Manor and in
        the partial acquisition of Millennium Village (Phase I and Phase II).

    -   Invested $11.1 Million in construction, expansion and renovation
        costs primarily in regard to Laird's Landing (formerly known as "Park
        View Apartments") and Elgin Lodge.

    -   Quarter ending portfolio consisting of 40 properties, comprised of
        2,983 apartment units and 224,545 square feet of commercial leasable
        area.

    Financial

    Third quarter of 2007, compared to third quarter of 2006:

    -   Operating income increased by $2.9 Million or 60% in total and by
        $0.165 or 58% on a per unit basis.

    -   "Same property" operating income increased by $752,416 or 19.4%.

    -   Average occupancy rate for entire portfolio, excluding properties
        under development, increased from 93.2% to 96.1%.

    Capital Structure

    -   Financed $70.8 Million of mortgage debt in the third quarter of 2007.

    -   Weighted average interest rate on the aggregate mortgage loan balance
        of 6.5% at September 30, 2007.

    -   Mortgage loan debt to current estimated property value ratio of 59.7%
        at September 30, 2007.
    

    The third quarter of 2007 was highlighted by the acquisition of Lakewood
Manor on July 1, 2007, followed by the acquisition of Phase I and Phase II of
Millennium Village on August 3, 2007 and September 13, 2007, respectively.
Located in Fort McMurray, Alberta and consisting of 175 apartment units, all
of which are fully leased under a three-year lease agreement with a major oil
sands company, Lakewood Manor contributed $1.2 Million to the third quarter
operating income. After considering the impact of the properties which were
acquired during the first and second quarters of 2007 and the improvement in
operating results for the remaining portfolio, the overall operating results
improved significantly during the third quarter of 2007, as reflected in the
following statistics:

    
    Third quarter of 2007, compared to the third quarter of 2006:

    -   operating income increased by $2,932,802, representing an increase of
        60% or $0.165 per unit;

    -   cash flow from operating activities, excluding changes in non-cash
        operating items, increased by $594,581, representing an increase of
        45% or $0.033 per unit; and

    -   distributable income increased by $158,550, representing an increase
        of 8% or $0.008 per unit.

    Third quarter of 2007, compared to the second quarter of 2007:

    -   operating income increased by $1,325,545 representing an increase of
        20% or $0.075 per unit;

    -   cash flow from operating activities, excluding changes in non-cash
        operating items, increased by $292,197, representing an increase of
        19% or $0.160 per unit; and

    -   distributable income increased by $507,242, representing an increase
        of 33% or $0.029 per unit.
    

    In the upcoming months, the real estate portfolio of LREIT will be
further enhanced as a result of the acquisition of the remaining two phases of
Millennium Village and the completion of the Laird's Landing development
(formerly known as "Park View Apartments"). Millennium Village and Laird's
Landing are also located in Fort McMurray, Alberta and the lease-up of the
properties is progressing exceptionally well, as new oil sands projects are
attracting an unprecedented number of new residents to Fort McMurray and
resulting in a demand for rental accommodations which is significantly
outpacing the available supply.
    To date, LREIT has completed the acquisition of three of the four phases
of the Millennium Village development, with an anticipated closing date of
November 15, 2007 for the remaining phase. In total, the apartment complex
consists of 72 units, of which 74% are leased as of November 7, 2007. As a
result of the favourable market conditions, the rental rates that are being
achieved for the leased suites at Millennium Village are approximately 18%
higher than was originally anticipated in 2006. The lease-up stage of
development is expected to be completed by November 30, 2007 at which time
Millennium Village will be reclassified as an income-producing property and
will also begin contributing to quarterly operating income.
    Although the construction of Laird's Landing is not expected to be fully
completed until January 2008, pre-leasing efforts have resulted in the
lease-up of 44 of the 189 units, as of November 7, 2007, including 40 units,
which are leased by a major oil sands company. The rental rates for the leased
units at Laird's Landing are approximately 27% higher than was originally
anticipated at the outset of construction in 2006. The lease-up of the entire
complex is expected to be completed by February 2008.
    In summary, the acquisition and development of very large and profitable
properties, particularly in the City of Fort McMurray, has resulted in a
significant improvement in the operating income and cash flow during the first
nine months of 2007 and has established a strong foundation for ongoing growth
in the fourth quarter of 2007 and into 2008.

    
    RESULTS OF OPERATIONS

    Financial and Operating Summary

                              Three Months Ended        Nine Months Ended
                                September 30              September 30
                          ---------------------------------------------------
                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
                                        (restated)                (restated)

    DISTRIBUTIONS
      Total               $ 2,451,342  $ 2,417,797  $ 7,317,200  $ 7,186,707
      Per unit            $      0.14  $      0.14  $      0.42  $      0.42

    KEY PERFORMANCE
     INDICATORS

    Operations
      Average residential
       occupancy rate           96.1%        93.2%        94.9%        92.1%
      Operating residential
       cost ratio               37.0%        44.0%        42.0%        47.0%

    Operating Results
      Total revenue       $12,597,091  $ 8,370,252  $32,776,440  $21,703,291
      Operating income    $ 7,845,308  $ 4,912,506  $19,249,847  $12,300,746
      Income (loss) for
       the period         $   725,735  $  (829,956) $  (292,006) $(2,574,986)

    Cash Flows
      Cash flow from
       operating
       activities         $ 1,431,198  $ 1,245,311  $ 3,612,312  $ 3,765,953
      Funds from
       Operations (FFO)   $ 1,048,543  $ 1,072,635  $ 1,457,937  $ 2,566,111
      Adjusted Funds from
       Operations (AFFO)  $ 1,185,032  $ 1,571,496  $ 2,347,097  $ 3,155,236
      Distributable
       income             $ 2,061,208  $ 1,902,658  $ 4,497,783  $ 4,138,944

    Financing
      Mortgage loans to
       current value ratio                                59.7%        55.9%
      Weighted average
       interest rate of
       mortgage loans                                      6.5%         5.8%


    Per Unit Amounts

    Operating income
      - basic             $     0.449  $     0.284  $     1.104  $     0.719
      - diluted           $     0.331  $     0.267  $     0.825  $     0.677

    Income (loss) for
     the period
      - basic             $     0.042  $    (0.048) $    (0.017) $    (0.151)
      - diluted           $     0.042  $    (0.048) $    (0.017) $    (0.151)

    Distributable income
      - basic             $     0.118  $     0.110  $     0.258  $     0.242
      - diluted           $     0.114  $     0.107  $     0.253  $     0.239

    Funds from
     Operations (FFO)
      - basic             $     0.060  $     0.062  $     0.084  $     0.150
      - diluted           $     0.059  $     0.060  $     0.082  $     0.148

    Adjusted Funds from
     Operations (AFFO)
      - basic             $     0.068  $     0.091  $     0.135  $     0.185
      - diluted           $     0.066  $     0.089  $     0.132  $     0.182



    Comparison to Preceding Quarter

    Comparison to 2007 Second Quarter
    -------------------------------------------------------------------------
                                           Three Months Ended
                                       -------------------------
                                       September 30,    June 30,   Increase
                                               2007        2007   (Decrease)
                                       ------------ ------------ ------------

    Operating income - rental
     properties                        $ 7,825,483  $ 6,230,562  $ 1,594,921
    Interest income - Trust                 19,825      289,201     (269,376)
                                       ------------ ------------ ------------
    Operating income                     7,845,308    6,519,763    1,325,545
                                       ------------ ------------ ------------
    Financing expense
      Mortgage loans                     4,353,368    3,496,451      856,917
      Debentures                         1,617,178    1,610,378        6,800
      Transaction costs                    360,720      375,038      (14,318)
                                       ------------ ------------ ------------
                                         6,331,266    5,481,867      849,399
                                       ------------ ------------ ------------
    Operating income, net of financing
     expense                             1,514,042    1,037,896      476,146
    Trust expense                          465,499      533,736      (68,237)
                                       ------------ ------------ ------------
    Income, before amortization,
     future income tax recovery and
     non-controlling interest            1,048,543      504,160      544,383
    Amortization                         2,245,918    1,936,304      309,614
    Future income tax recovery          (1,914,082)  (2,105,478)     191,396
    Non-controlling interest                 9,028       15,021       (5,993)
                                       ------------ ------------ ------------
    Income for the period              $   725,735  $   688,355  $    37,380
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------
    

    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 17,500,287 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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