Temple REIT reports 2008 operating results



    WINNIPEG, April 22 /CNW/ - Temple Real Estate Investment Trust ("TREIT")
(TSX Venture: TR.UN) today reported its financial results for the year ended
December 31, 2008. The following comments in regard to the financial position
and operating results of TREIT should be read in conjunction with the 2008
Management Discussion & Analysis and the financial statements for the year
ended December 31, 2008, which may be obtained from the TREIT website at
www.treit.ca or the SEDAR website at www.sedar.com.
    During 2008, TREIT attained its investment objective of creating a
diversified hotel portfolio and maximizing investment returns to the
Unitholders.

    
    2008 HIGHLIGHTS

    Property Portfolio

    -   Acquired three properties during 2008, comprised of 431 rooms/suites
        at a total purchase price of $81.9 million
    -   Invested $1.2 million in property improvements during 2008, including
        a $500,000 payment in regard to the expansion of the Merit Hotel in
        Fort McMurray
    -   Property portfolio at December 31, 2008 consisting of ten hotels,
        comprised of 1,173 rooms/suites, with an appraised value of $287.8
        million

    Financial

    2008 compared to 2007:

    -   Revenue per available room (RevPar) at the Fort McMurray properties
        increased by 8.42% from $143.92 to $156.04
    -   RevPar at the other properties increased by 4.8% from $109.11 to
        $114.32
    -   Operating income increased by $11.6 million or 68% to $28.6 million
    -   Operating profit margin of 51%, compared to 49% in 2007
    -   Net income increased by $5.4 million (166.5%) to $8.7 million ($0.76
        per unit)
    -   Distributable income increased by $8.4 million (136.3%) to $14.6
        million or $1.27 per unit, representing a payout ratio of 88.8% for
        the year
    -   Funds from operations (FFO) increased by $8.6 million (126.6%) to
        $15.1 million or $1.31 per unit, representing a payout ratio of 85.5%
        for the year

    Capital Structure

    -   Weighted average interest rate on the aggregate long-term debt of
        6.34% at December 31, 2008 compared to 6.45% at December 31, 2007
    -   Mortgage loan debt to appraised property value ratio of 58% at
        December 31, 2008, based on appraisals completed for two properties
        (26% of total appraised value) in 2008, for seven properties (54% of
        total appraised value) in 2007 and one property (20% of total
        appraised value) completed in 2006


    FINANCIAL AND OPERATING STATISTICS
    -------------------------------------------------------------------------
                                                 Year Ended
                              -----------------------------------------------
                                 December 31     December 31     December 31

                              -----------------------------------------------
                                        2008            2007            2006
                              -----------------------------------------------

    DISTRIBUTIONS
      Amount - total           $  12,931,226   $   5,348,041   $     328,417
             - per unit        $        1.10   $        0.64   $        0.14

    BALANCE SHEET
      Total Assets             $ 260,478,528   $ 184,615,851   $  32,961,791
      Total Long-Term Debt
       and Convertible
       Debentures              $ 187,941,446   $ 131,212,484   $  18,995,485

    KEY PERFORMANCE INDICATORS
    Operations:
      Occupancy                       73.55%          76.87%          74.04%
      ADR                      $      183.78   $      172.14   $      139.66
      RevPar                   $      135.18   $      132.32   $      103.40
      Operating profit margin         50.70%          49.47%          27.57%

    Operating results:
      Total revenue            $  56,481,296   $  34,406,559   $   2,985,282
      Operating income         $  28,637,201   $  17,018,646   $     823,174
      Net income               $   8,708,263   $   3,267,422   $     109,377

    Cash flows:
      Distributable income     $  14,558,662   $   6,160,804   $     349,346
      Funds from operations    $  15,115,604   $   6,583,385   $     347,378

    Financing:
      Weighted average
       interest rate of
       long-term debt                  6.34%           6.45%           6.15%
    Per Unit Amounts          Basic  Diluted  Basic  Diluted  Basic  Diluted

      Net income              $0.76    $0.75  $0.41    $0.40  $0.10    $0.10
      Distributable income    $1.27    $0.97  $0.77    $0.76  $0.31    $0.31
      Funds from operations   $1.31    $1.01  $0.82    $0.81  $0.31    $0.31

    TREIT completed 2008 with net income of $8.7 million, compared to $3.3
million during 2007, representing an increase in net income of $5.4 million. 
The increase in net income mainly reflects the following factors:

    (i)   an increase in operating income from hotel operations of $11.6
          million or 68%;
    (ii)  an increase in financing expense of $3.0 million or 32%;
    (iii) an increase in amortization expense of $1.9 million or 58%;
    (iv)  an unrecognized book loss of $0.9 million in regard to a change in
          the fair value of the marketable securities which were purchased
          during the year;
    (v)   an increase in income taxes of $0.5 million or 90%; and
    (vi)  a decrease in trust expense of $27,000 or 4%.
    

    The increase in operating income from hotel operations is comprised of a
$21 million increase in revenue from hotel operations, net of a $10.5 million
increase in hotel operating costs.

    
    COMPARISON TO PREVIOUS QUARTER

    Analysis of Net Income - Q4 2008 vs. Q3 2008
    -------------------------------------------------------------------------
                                      Three Months Ended
                               ----------------------------------------------
                                          Q4              Q3          Change
                               -------------- --------------- ---------------
                                                  (restated)
    Hotel revenue
    Room                       $  11,151,490   $  12,115,366   $    (963,876)
    Other                          2,723,443       2,446,958         276,485
                               -------------- --------------- ---------------
      Total hotel revenue         13,874,933      14,562,324        (687,391)
    Interest and other income        749,824         750,796            (972)
                               -------------- --------------- ---------------
      Total revenue               14,624,757      15,313,120        (688,363)
    Operating expenses             8,009,462       7,415,880         593,582
                               -------------- --------------- ---------------
    Operating income               6,615,295       7,897,240      (1,281,945)
    Finance expense               (3,210,504)     (3,105,913)        104,591
    Trust expense                   (128,299)       (143,414)        (15,115)
    Amortization                  (1,339,212)     (1,337,719)          1,493
    Change in marketable
     securities                     (786,142)        (95,655)        690,487
    Provision for taxes             (517,790)       (236,282)        281,508
                               -------------- --------------- ---------------

    Net income                 $     633,348   $   2,978,257   $  (2,344,909)
                               -------------- --------------- ---------------
                               -------------- --------------- ---------------
    

    Operating income decreased by $1.3 million during the fourth quarter of
2008, compared to the third quarter of 2008, primarily due to a reduction in
demand for the Fort McMurray hotels. Specifically, the operating income of the
Fort McMurray hotel portfolio decreased by $0.9 million during the fourth
quarter of 2008, while operating income from the other hotels decreased by
$0.4 million.
    After accounting for the increased loss in the fourth quarter pertaining
to the change in value of marketable equity securities, as well as the
increase in income taxes and finance expense and minor changes in trust
expense and amortization, TREIT completed the fourth quarter of 2008 with net
income of $0.6 million compared to net income of $3.0 million during the third
quarter of 2008.

    OUTLOOK FOR 2009

    The 2009 slowdown in the Alberta oilsands is reducing occupancy levels
for TREIT's hotel portfolio in Fort McMurray. Given the unknown extent and
length of the prevailing market conditions and the concentration of hotels in
Fort McMurray, TREIT reduced the distribution amount for 2009 in order to
conserve capital. Specifically TREIT has established a total distribution
policy of $0.50 per unit for 2009. The reduction in the total distribution is
being implemented with a change in the distribution policy from monthly
distributions to quarterly distributions. Under the quarterly policy,
distributions of $0.10 per unit would be payable during the balance of 2009 on
July 15, October 15 and December 31 to the Unitholders of record as of June
30, September 30 and December 15, respectively. The three quarterly
distributions in the combined amount of $0.30 per unit, plus the distribution
of $0.10 per unit for January 2009 and February 2009 comprise the total
projected annual distribution of $0.50 per unit for 2009.
    During 2009, TREIT will commence hotel upgrades at two of its new hotels
(the Capri Centre in Red Deer and the Best Western Hotel in Lloydminster). The
upgrades at the Capri Centre will consist primarily of the refurbishment of
guest rooms. It is anticipated that the room refurbishments and other hotel
upgrades, will result in an improvement in the RevPar of the hotel. For the
Best Western Hotel, the hotel upgrades will consist of the refurbishment of
rooms, restaurant and the banquet and conference facilities. Due to the
decline in market conditions, the upgrades will be completed over a longer
time period than was previously anticipated and are expected to be completed
by the end of next year.
    The 68-room addition under construction at the Merit Hotel in Fort
McMurray is expected to be completed during the second half of 2009 and will
further improve the income potential and value of the property portfolio in
2010.
    Given the favourable market positioning of the hotels located outside of
Fort McMurray and the likelihood that market conditions in Fort McMurray will
recover, we believe that TREIT offers potential for future growth.

    
    ABOUT TREIT
    -----------
    

    TREIT is a real estate investment trust, which is listed on the TSX
Venture Exchange under the symbols TR.UN (Trust Units), TR.DB.A (Series A
Convertible Debentures) and TR.DB.B (Series B Convertible Debentures).. The
objective of TREIT is to provide Unitholders with stable cash distributions
from investment in a geographically diversified Canadian portfolio of hotel
properties and related assets. There are currently 12,825,352 trust units
outstanding. For further information on TREIT, please visit our website at
www.treit.ca.

    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 TSX Venture 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@treit.ca


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