Lanesborough REIT reports 2008 second quarter results



    WINNIPEG, Aug. 13 /CNW/ - Lanesborough Real Estate Investment Trust
("LREIT") (TSX: LRT.UN) is pleased to report the operating results for the
quarter ended June 30, 2008. The following comments in regard to the financial
position and operating results of LREIT should be read in conjunction with the
2008 Second Quarter Report and the financial statements for the quarter ended
June 30, 2008, which may be obtained from the LREIT website at www.lreit.com
or the SEDAR website at www.sedar.com.

    
    2008 SECOND QUARTER HIGHLIGHTS

    Acquisition and Development

    -   During the second quarter of 2008, LREIT completed the construction
        and lease-up of Laird's Landing and the property began contributing
        to operating income, effective June 1, 2008.

    -   Property portfolio as of June 30, 2008 consists of 42 properties,
        comprised of 3,343 suites and 224,545 square feet of commercial
        leasable area.

    Financial

    Second quarter of 2008 compared to the second quarter of 2007.

    -   Rental revenues increased by $4 Million or 38%, with $3.5 Million
        derived from properties in Fort McMurray.

    -   Net operating income increased by $2.6 Million or 40% ($0.146 per
        unit).

    -   Operating margin for property portfolio improved from 59% in 2007 to
        61% in 2008.

    -   "Same property" revenues increased by $1.1 Million or 12%, while
        "same property" net operating income increased by $0.7 Million or
        13%.

    -   FFO increased by $1.15 Million ($0.065 per unit).

    -   AFFO increased by $1.24 Million ($0.070per unit).

    Capital Structure

    -   Weighted average interest rate on the aggregate mortgage loan balance
        of 6.3% at June 30, 2008.

    -   Mortgage loan debt to estimated current property value ratio of 59.4%
        at June 30, 2008.

    Ongoing Investment Activities - 2008

    -   On July 2, 2008, LREIT acquired Siena Apartments, a 66-suite luxury
        apartment property in Fort McMurray, Alberta, at a price of
        $30 Million.

    -   Acquisition of Phase II of Parsons Landing, a 160-suite apartment
        property in Fort McMurray, Alberta is scheduled to close in September
        2008. The total acquisition cost of Parsons Landing is $60.7 Million,
        plus GST.

    -   Acquisition of an 89.4% interest in Colony Square, a mixed-use
        development in downtown Winnipeg, Manitoba, comprised of 428 suites
        and 83,190 square feet of leasable office/commercial space, is
        scheduled to close on October 1, 2008 at a purchase price of
        $34.2 Million.

    Estimated Current Value

    -   Estimated current market value of the real estate portfolio of
        $655 Million as of June 30, 2008.



    RESULTS OF OPERATIONS
    Financial and Operating Summary

                              Three Months Ended         Six Months Ended
                                    June 30                   June 30
                          ---------------------------------------------------
                               2008         2007         2008         2007
                          ------------ ------------ ------------ ------------
    DISTRIBUTIONS
      Total               $ 2,463,744  $ 2,439,035  $ 4,920,645  $ 4,865,858
      Per unit            $      0.14  $      0.14  $      0.28  $      0.28

    KEY PERFORMANCE
     INDICATORS(1)
    Operations
      Average residential
       occupancy rate           96.0%        94.3%        95.0%        93.7%
      Operating
       residential cost
       ratio                    39.0%        43.0%        41.0%        45.0%

    Operating Results
      Total revenue       $14,975,258  $11,127,584  $28,604,251  $20,179,348
      Net operating
       income             $ 9,111,999  $ 6,519,763  $17,061,941  $11,404,540
      Loss for the period,
       before future
       income tax         $  (752,648) $(1,417,123) $(2,705,546) $(3,203,090)
      Income (loss) for
       the period         $(4,988,811) $   688,355  $(4,988,510) $(1,017,738)

    Cash Flows
      Cash flow from
       operating
       activities         $ 3,037,717  $ 1,044,668  $ 4,369,932  $ 2,181,114
      Funds from
       Operations (FFO)   $ 1,655,318  $   504,160  $ 2,055,887  $   409,396
      Adjusted Funds from
       Operations (AFFO)  $ 2,054,414  $   814,053  $ 3,114,458  $ 1,162,078
      Distributable
       income             $ 2,567,347  $ 1,456,792  $ 4,055,399  $ 2,238,941

    Financing
      Mortgage loans to
       estimated current
       value ratio                                        59.4%        56.7%
      Weighted average
       interest rate of
       mortgage loans                                      6.3%         6.2%

    Per Unit
    Net operating income
    - basic               $     0.520  $     0.374  $     0.975  $     0.654
    - diluted             $     0.357  $     0.295  $     0.670  $     0.516
    Loss for the period,
     before future income
     tax
    - basic               $    (0.043) $    (0.081) $    (0.155) $    (0.184)
    - diluted             $    (0.043) $    (0.081) $    (0.155) $    (0.184)
    Income (loss) for
     the period
    - basic               $    (0.284) $     0.039  $    (0.285) $    (0.058)
    - diluted             $    (0.284) $     0.039  $    (0.285) $    (0.058)
    Distributable income
    - basic               $     0.147  $     0.084  $     0.232  $     0.128
    - diluted             $     0.139  $     0.082  $     0.219  $     0.126
    FFO
    - basic               $     0.094  $     0.029  $     0.118  $     0.023
    - diluted             $     0.094  $     0.028  $     0.116  $     0.023
    AFFO
    - basic               $     0.117  $     0.047  $     0.178  $     0.067
    - diluted             $     0.117  $     0.046  $     0.172  $     0.065
    


    Management previously projected that significant improvements in
operating income and cash flows would occur throughout 2008, as additional
properties in Fort McMurray moved from the development stage to the
income-producing stage. As anticipated, the operating results for the second
quarter of 2008 have improved significantly in comparison to both the second
quarter results for 2007 and the first quarter results for 2008, as summarized
in the following chart:

    
                                               Per Unit - Basic
                            -------------------------------------------------
                             2008 Q2   2008 Q1 Comparison  2007 Q2 Comparison
                            -------------------------------------------------
                              Amount    Amount  Increase    Amount  Increase
                            -------------------------------------------------

    Net operating income
     (NOI)                   $ 0.520   $ 0.455   $ 0.065   $ 0.374   $ 0.146
    FFO                      $ 0.094   $ 0.023   $ 0.071   $ 0.029   $ 0.065
    AFFO                     $ 0.117   $ 0.061   $ 0.056   $ 0.047   $ 0.070
    Distributable income     $ 0.147   $ 0.085   $ 0.062   $ 0.084   $ 0.063
    

    In addition to the growth in the per unit amounts for Distributable
Income, FFO and AFFO, the 2008 second quarter results are highlighted by the
improvement in the distribution payout ratio. During the second quarter of
2008, distributable income exceeded distributions declared by $103,603 or
4.2%, while cash flow from operating activities exceeded distributions
declared by $573,973 or 23.3%.
    The improvement in operating results for the second quarter of 2008
reflect the impact of property acquisitions in 2007; an improvement in the
operating results of properties which were acquired prior to 2007; and the
inclusion of Laird's Landing as an income-producing property, effective
June 1, 2008. In particular, the portfolio of income-producing properties in
Fort McMurray, Alberta has continued to achieve favourable operating margins
(73% for the second quarter of 2008) and has accounted for approximately 84%
of the total increase in NOI in the second quarter of 2008, compared to the
second quarter of 2007.
    The favourable operating results for the second quarter of 2008 are a
positive indicator for ongoing improvements in the second half of the year,
after considering the following variables:

    
    -   during the third quarter of 2008, Laird's Landing will contribute
        three months of operating income, compared to one month in the second
        quarter of 2008. The NOI for Laird's Landing was $436,991 for the
        month of June 2008;

    -   on July 2, 2008, LREIT acquired Siena Apartments, a 66-suite luxury
        apartment property in Fort McMurray, Alberta. The property is 100%
        leased on a net basis for four years and will essentially make a full
        contribution to the NOI during the third quarter of 2008;

    -   on May 14, 2008, LREIT acquired Phase I of Parsons Landing Apartments
        and it is anticipated that the remaining portion (Phase II) will be
        acquired in September 2008. The lease-up of the property is expected
        to be completed in October 2008, at which time the property will
        begin contributing to operating income;

    -   the $34 Million acquisition of Colony Square is scheduled to close on
        October 1, 2008. The property is located near the centre of the
        Winnipeg business district, is 100% leased and will add 428
        residential suites and 83,190 square feet of leasable commercial area
        to the property portfolio of LREIT; and

    -   additional properties to be added to the portfolio of income-
        producing properties include the 60-suite expansion of Elgin Lodge
        (Q4 2008) and the 126-suite Clarington Seniors Residence (2009).


    In summary, LREIT is well-positioned to achieve additional growth in
operating income and cash flows in the second half of 2008, especially given
the favourable returns from the new Fort McMurray properties.

    Comparison to 2008 First Quarter
    -------------------------------------------------------------------------
                              Three Months Ended
                          -------------------------
                            June 30,     March 31,           Increase
                              2008         2008             (Decrease)
                          ---------------------------------------------------
    Rental revenue        $14,768,829  $13,276,821  $ 1,492,008        11.2%
    Interest and other
     income                   206,429      352,172     (145,743)     (41.4)%
    Property operating
     costs                  5,863,259    5,679,051      184,208         3.2%
                          ------------ ------------ ------------
    Net Operating Income
     (NOI)                  9,111,999    7,949,942    1,162,057        14.6%
    Trust expense             551,996      734,907     (182,911)     (24.9)%
                          ------------ ------------ ------------
    Income before financing
     expense, amortization,
     non-controlling
     interest and taxes
     (EBITDA)               8,560,003    7,215,035    1,344,968        18.6%
    Financing expense       6,904,685    6,814,465       90,220         1.3%
                          ------------ ------------ ------------
    Income before
     amortization,
     non-controlling
     interest and taxes     1,655,318      400,570    1,254,748       313.2%
    Amortization            2,390,830    2,332,098       58,732         2.5%
    Non-controlling
     interest                  17,136       21,370       (4,234)     (19.8)%
                          ------------ ------------ ------------
    Loss before future
     income tax recoveries   (752,648)  (1,952,898)   1,200,250      (61.5)%
    Future income tax
     (expense) recovery    (4,236,163)   1,953,199   (6,189,362)    (316.9)%
                          ------------ ------------ ------------
    Income (loss) for
     the period           $(4,988,811) $       301  $(4,989,112)
                          ------------ ------------ ------------
                          ------------ ------------ ------------
    

    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 17,578,829 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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