Temple REIT Reports 2009 second quarter results



    WINNIPEG, Aug. 19 /CNW/ - Temple Real Estate Investment Trust ("TREIT")
(TSX Venture: TR.UN) today reported its financial results for the quarter
ended June 30, 2009. The following comments in regard to the financial
position and operating results of TREIT should be read in conjunction with the
June 30, 2009 Management Discussion & Analysis and the financial statements
for the quarter ended June 30, 2009, which may be obtained from the TREIT
website at www.treit.ca or the SEDAR website at www.sedar.com.

    
    2009 SECOND QUARTER SUMMARY

    Property Portfolio

    -   The newest addition to the TREIT hotel portfolio, the Capri Centre in
        Red Deer, Alberta completed its second full quarter of operations,
        contributing $3.1 million to operating income.

    -   TREIT invested approximately $0.4 million in property improvements

    Financial

    Q2 2009 compared to Q1 2009:

    -   Revenue per available room (RevPar) at the Fort McMurray properties
        decreased by 5.8%, from $114.74 to $108.13

    -   RevPar at the other properties was relatively unchanged $78.14,
        compared to $78.36 in Q1

    -   Operating income decreased by approximately $0.3 million or 4.1% to
        $6.5 million

    -   Operating profit margin was unchanged at 39%

    -   Net income was unchanged at $0.8 million ($0.06 per unit)

    -   Distributable income decreased by $0.1 million (5.2%) to $2.5 million
        or $0.19 per unit, representing a payout ratio of 51.9% for the
        quarter

    -   Funds from operations (FFO) decreased by $0.1 million (5.2%) to $2.7
        million or $0.21 per unit, representing a payout ratio of 47.4% for
        the quarter

    Capital Structure

    -   Weighted average interest rate on the aggregate long-term debt of
        6.34% at March 31, 2009, unchanged from March 31, 2009

    -   Mortgage loan debt to appraised property value ratio of 57% at June
        30, 2009, based on appraisals completed for six properties (58% of
        total appraised value) in 2009, for two properties (25% of total
        appraised value) in 2008 and two properties (17% of total appraised
        value) completed in 2007
    

    The slowdown of activity in the oil sands industry has negatively
impacted the operating results during the first six months of 2009, given that
TREIT has a high concentration of hotels located in Fort McMurray, Alberta.
Although operating results for the second quarter of 2009 have declined in
comparison to the second quarter of 2008 when economic activity in Fort
McMurray was booming, there has been a leveling off of hotel occupancy. The
results for the second quarter of 2009 are similar to the 2009 first quarter
results, as disclosed in the following chart.

    
                                 Per Unit - Basic
                       -----------------------------------
                                           Distri-
                       Operating   Net    butable                   Operating
                         Income   Income   Income     FFO    RevPar   Margin
                       ------------------------------------------------------
    2009 Q2              $ 0.51   $ 0.06   $ 0.19   $ 0.21   $94.80       39%
    2009 Q1              $ 0.53   $ 0.06   $ 0.20   $ 0.22   $98.57       39%
    

    The stabilization of operations is also reflected in the operating
results for the Fort McMurray hotel portfolio. During the second quarter of
2009, the operating income from the Fort McMurray hotel portfolio was $3.5
million, which was virtually identical to the operating income for the first
quarter of 2009.
    Overall, TREIT completed the second quarter of 2009 with operating income
of $6.5 million and net income of $0.8 million, compared to $6.8 million and
$0.8 million, respectively, during the first quarter of 2009. The reduction in
operating income is mainly due to seasonal changes in demand for the
conference facilities and the guest rooms at the Capri Centre in Red Deer.

    
    FINANCIAL AND OPERATING SUMMARY
    -------------------------------------------------------------------------
                           Three Months Ended            Six Months Ended
                                June 30                      June 30
                      -------------------------------------------------------
                           2009          2008          2009          2008
                      -------------------------------------------------------
    DISTRIBUTIONS
      Amount - total  $  1,282,535  $  2,956,159  $  3,844,939  $  5,329,173
             - per
              unit    $       0.10  $       0.26  $       0.30  $       0.50
    BALANCE SHEET
      Total Assets    $258,084,378  $224,952,320  $258,084,378  $224,952,320
      Total Long-Term
       Debt and
       Convertible
       Debentures     $186,021,034  $152,983,544  $186,021,034  $152,983,544

    KEY PERFORMANCE
     INDICATORS
    Operations:
      Occupancy              54.01%        78.43%        53.61%        76.47%
      ADR             $     175.52  $     182.03  $     180.35  $     181.90
      RevPar          $      94.80  $     142.76  $      96.69  $     139.09
      Operating
       profit margin         38.75%        53.79%        39.01%        53.22%

    Operating results:
      Total revenue   $ 16,780,369  $ 14,246,410  $ 34,048,791  $ 26,543,419
      Operating
       income         $  6,501,010  $  7,663,286  $ 13,279,438  $ 14,124,666
      Net income      $    828,023  $  2,804,198  $  1,666,398  $  5,096,658

    Cash flows:
      Distributable
       income         $  2,470,033  $  3,968,198  $  5,075,612  $  7,414,727
      Funds from
       operations     $  2,706,903  $  4,065,315  $  5,558,141  $  7,637,204

    Financing:
      Weighted
       average
       interest rate
       of long-term
       debt                   6.34%         6.42%         6.34%         6.42%

    PER UNIT AMOUNTS  Basic Diluted Basic Diluted Basic Diluted Basic Diluted
                      ----- ------- ----- ------- ----- ------- ----- -------
      Net income      $0.06  $0.06  $0.25  $0.24  $0.13  $0.13  $0.49  $0.45
      Distributable
       income         $0.19  $0.19  $0.36  $0.26  $0.40  $0.40  $0.71  $0.53
      Funds from
       operations     $0.21  $0.21  $0.37  $0.26  $0.43  $0.43  $0.73  $0.55
    

    In comparison to the second quarter of 2008, income, before taxes and the
change in value of marketable securities, decreased by $1.8 million. The
decrease mainly reflects a decrease in operating income from hotel operations
of $1.2 million, an increase in financing expense of $0.3 million and an
increase in amortization expense of $0.4 million. In general terms, the
increases in financing expense and amortization are mainly attributable to the
Best Western Wayside and Capri Centre hotels which were acquired during or
subsequent to the second quarter of 2008, while the decrease in operating
income mainly reflects a decline in operating income from the Fort McMurray
properties.

    
    COMPARISON TO PRECEDING QUARTER

    Analysis of Net Income - Q2 2009 vs. Q1 2009
    -------------------------------------------------------------------------
                           Three Months Ended         Increase (Decrease)
                      -------------------------------------------------------
                         June 30      March 31        Amount          %
                      ------------- ------------- ------------- -------------
    Hotel revenue
      Room            $ 10,333,821  $ 10,583,067  $   (249,246)          (2)%
      Other              5,668,100     5,969,028      (300,928)          (5)%
                      ------------- ------------- ------------- -------------
      Total hotel
       revenue          16,001,921    16,552,095      (550,174)          (3)%
    Interest and
     other income          778,448       716,327        62,121            9 %
                      ------------- ------------- ------------- -------------
      Total revenue     16,780,369    17,268,422      (488,053)          (3)%
    Hotel operating
     expenses           10,279,359    10,489,994      (210,635)          (2)%
                      ------------- ------------- ------------- -------------
    Operating income     6,501,010     6,778,428      (277,418)          (4)%
    Finance expense      3,541,697     3,680,200      (138,503)          (4)%
    Trust expense          225,491       198,809        26,682           13 %
    Amortization         1,595,755     1,594,538         1,217            - %
                      ------------- ------------- ------------- -------------
                         1,138,067     1,304,881      (166,814)         (13)%
    Change in
     marketable
     securities            (26,175)      116,925      (143,100)        (122)%
    Income taxes           336,219       349,581       (13,362)          (4)%
                      ------------- ------------- ------------- -------------
    Net income        $    828,023  $    838,375  $    (10,352)          (1)%
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    

    OUTLOOK

    Recent announcements by producers regarding the commencement of new oil
sands projects or the resumption of work on halted projects are indicators
that economic conditions in Fort McMurray are beginning to strengthen.
    TREIT has debt repayment requirements in the next two years and may incur
an increase in interest costs pending an improvement in hotel mortgage lending
conditions. The management of TREIT anticipates improvement in the Fort
McMurray hotel market and continues to believe that TREIT offers potential for
future long-term growth.

    Merit Hotel Expansion

    The 68-room expansion of the Merit Hotel was substantially completed in
July 2009 and the new rooms were available to TREIT, effective August 1, 2009.
The funding for the balance owing has occurred by way of a $14.04 million
mortgage from the builder of the expansion, bearing interest at 12%, and
through the issuance of $4.5 million of 4.5% convertible mortgage debt. The
payment terms for the total debt of $18.54 million are as follows:

    
    (i)    a principal payment of $2 million is due on October 15, 2009,
           which TREIT intends to fund from the proceeds from the upward
           refinancing of the mortgage loan debt of the Temple Gardens Hotel.
    (ii)   the balance of $12.04 million on the mortgage from the builder is
           due on October 31, 2010.
    (iii)  the convertible mortgage debt of $4.5 million is due on October
           31, 2014.
    

    TREIT expected to finance $12.04 million of the Merit Hotel expansion by
way of new first mortgage loan financing. The new financing arrangements could
not be completed in August 2009, however, due to the current lower occupancy
of the Merit Hotel. Based on an anticipated improvement in hotel market
conditions in the upcoming months, management believes that new first mortgage
loan financing can be arranged in 2010, although there is no assurance that
this will be the case.

    Mortgage Loan Receivable

    TREIT's mortgage loan receivable of approximately $7 million, including
accrued interest, which is secured by two hotel properties in Edson and
Whitecourt, Alberta, became due and payable on June 1, 2009. After the
borrower failed to repay the outstanding balance on the due date, TREIT
initiated legal action to recover the amount due. The borrower has since
arranged new financing and the management of TREIT expects to receive the full
amount due by August 31, 2009.

    Second Mortgage Loan - Clearwater Suites

    The acquisition of Clearwater Suites in March 2007 encompassed a second
mortgage loan of $10 million, with a maturity date of February 1, 2010. The
interest rate on the second mortgage loan increased from 6% to 20%, effective
August 1, 2009. As disclosed in the 2008 Annual Report and 2009 First Quarter
Report, TREIT had intended to obtain lower cost replacement financing for the
second mortgage loan prior to August 1, 2009. TREIT now intends to repay the
loan in full from the proceeds of a $3.8 million, 11.5% interest-only interim
loan, to be secured by a second mortgage charge registered against all of the
hotels in Fort McMurray, with the remaining balance of $6.2 million to be paid
upon the collection of the above noted mortgage loan receivable. A commitment
has been received for the $3.8 million interim loan and the loan is expected
to be advanced in September 2009.

    Capital Expenditures

    The capital expenditure plans for the Capri Centre and Best Western
Wayside Inn and Suites have been reduced for 2009, due to the decline in hotel
market conditions. The upgrade programs are now planned to occur in 2010.

    
    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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