Temple REIT reports record operating results for 2008 second quarter



    WINNIPEG, Aug. 27 /CNW/ - Temple Real Estate Investment Trust ("TREIT")
(TSX Venture: TR.UN) is pleased to report the financial results for the
quarter ended June 30, 2008. The following comments in regard to the financial
position and operating results of TREIT 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 TREIT website at www.treit.ca or
the SEDAR website at www.sedar.com.

    2008 SECOND QUARTER HIGHLIGHTS

    
    Acquisition and Development

    -   Completed a $30 Million public offering of Series B Convertible
        Debentures on April 8, 2008. The debentures bear interest at a rate
        of 8.5% for a five-year term and are convertible into trust units at
        $7.50.

    -   Acquired the 130-room Best Western Wayside Inn & Suites in
        Lloydminster, Alberta in June 2008 at a price of $22.5 Million. TREIT
        is also undertaking a $1.5 Million capital expenditure program at the
        hotel, consisting primarily of refurbishment of the rooms, restaurant
        and the banquet and conference facilities.

    -   Property portfolio at June 30, 3008 consisting of nine hotels,
        comprised of 955 rooms/suites, with an appraised value of
        $237.5 Million

    Financial

    Second quarter of 2008 compared to first quarter of 2008:

    -   Revenue per available room (RevPar) decreased slightly from $144.08
        to $142.76, reflecting an increase in the average occupancy level
        from 76.8% to 78.4% and offset by a decrease in the average daily
        room rate (ADR) from $187.66 to $182.03. The decrease in the ADR is
        entirely attributable to Best Western Wayside, which has a lower ADR
        structure than the other properties in the TREIT portfolio.

    -   Operating income increased by $1.2 Million or 18.6% to
        $7.66 Million

    -   Operating profit margin of 53.8%, compared to 52.5%

    -   Net income increased by $0.51 Million or 22% to $2.8 Million

    -   Distributable income increased by $0.52 Million or 15% to
        $3.97 Million or $0.358 per unit, representing a payout ratio of
        74.5%

    -   Funds from operations (FFO) increased by $0.49 Million or 14% to
        $4.07 Million or $0.367 per unit, representing a payout ratio of
        72.7%

    Capital Structure

    -   Weighted average interest rate on the aggregate mortgage loan balance
        of 6.42% at June 30, 2008 compared to 6.45% as of December 31, 2007

    -   Mortgage loan debt to appraised property value ratio of 54% at
        June 30, 2008


    Financial and Operating Statistics
    -------------------------------------------------------------------------
                                                Three Months Ended
                                    -----------------------------------------
                                      June 30       March 31      June 30
                                        2008          2008          2007
                                    -----------------------------------------

    DISTRIBUTIONS
      Amount - total                $  2,956,159  $  2,373,014  $  1,326,984
             - per unit             $       0.26  $       0.24  $       0.15

    BALANCE SHEET
      Total assets                  $224,952,320  $200,238,463  $175,385,091
      Total long term debt and
       convertible debentures       $152,893,544  $142,273,686  $126,659,098

    KEY PERFORMANCE INDICATORS
    Operations:
      Occupancy                           78.43%        76.78%        79.08%
      ADR                           $     182.03  $     187.66  $     171.11
      RevPar                        $     142.76  $     144.08  $     135.19
      Operating profit margin             53.79%        52.54%        50.01%

    Operating results:
      Total revenue                 $ 14,246,410  $ 12,297,009  $  9,522,466
      Operating income              $  7,663,286  $  6,461,380  $  4,761,400
      Net income                    $  2,804,198  $  2,292,460  $  1,421,241

    Cash flows:
      Distributable income          $  3,968,198  $  3,446,530  $  2,256,419
      Funds from operations         $  4,065,315  $  3,571,889  $  2,444,081

    Financing:
      Weighted average interest
       rate of long-term debt              6.42%         6.55%         6.97%


    PER UNIT AMOUNTS      Basic  Diluted    Basic  Diluted    Basic  Diluted
                         ------- --------  ------- --------  ------- --------

    Net income           $0.253   $0.237   $0.236   $0.235   $0.161   $0.157
    Distributable income $0.358   $0.256   $0.356   $0.354   $0.255   $0.194
    FFO                  $0.367   $0.262   $0.368   $0.366   $0.276   $0.210
    

    The favourable performance has continued into the second quarter of 2008,
with TREIT achieving additional growth in net income and operating income and
maintaining favourable per unit results for distributable income and funds
from operations (FFO). As disclosed in the above chart, the second quarter
results also reflect the continuation of high occupancy levels and average
daily room rates (ADR) for the entire portfolio of hotel properties and a
further improvement in the operating profit margin.
    During the second quarter of 2008 total distributions declared amounted
to $2,956,159, compared to FFO of $4,065,315 and distributable income of
$3,968,198. Total distributions declared reflect a monthly distribution of
$0.08 per unit for April and May 2008 and the previously announced increased
monthly distribution of $0.10 per for June 2008.
    In regard to financing activities, TREIT completed a $30 Million public
offering of Series B Convertible Debentures in April 2008. The proceeds from
the debenture offering were primarily used to fund the acquisition of the Best
Western Wayside Inn and Suites in Lloydminster, Alberta on June 1, 2008. The
purchase price of the hotel, in the amount of $22.5 Million, was paid entirely
in cash, pending the finalization of the first mortgage loan. A capital
expenditure program is also being undertaken at the hotel, at an estimated
cost of $1.5 Million, consisting primarily of the refurbishment of the rooms,
restaurant and the banquet and conference facilities.
    As a result of the acquisition of the Best Western Wayside Inn and Suites
and the acquisition of Advantage West Inn and Suites in January 2008, the
property portfolio of TREIT increased to nine hotels as of June 30, 2008, with
a total purchase price of approximately $206 Million. The nine hotels
encompass a total of 955 hotel rooms, representing an increase of 29%, in
comparison to the 742 hotel rooms that were in the portfolio as of
December 31, 2007.
    In July 2008, a first mortgage loan of $13.5 Million was obtained for the
Best Western Wayside Inn and Suites, with the mortgage proceeds serving to
replenish cash reserves. After considering the $1.5 Million cost of capital
improvements, TREIT has in excess of $15 Million of cash available to fund the
equity component of additional hotel acquisitions. A number of potential
acquisitions are currently under review and the objective is to have the
existing reserves of capital fully invested in new income-producing properties
before the end of 2008.
    Construction of the 64-room expansion to the Merit Hotel in Fort
McMurray, Alberta commenced in July. The fixed cost price of the expansion is
$19,040,000 of which $18,540,000 will be payable upon receipt of occupancy
permits, expected to be at the end of 2009. The final payment will be
partially financed by the issuance of a $4,500,000, 4.5% convertible debenture
due December 31, 2014. The debenture will be convertible at anytime into
300,000 units at a price of $15 per unit.
    During the second quarter of 2008, the outstanding trust units increased
by approximately 17%, primarily due to debenture conversions. Based on the
number of trust units outstanding as of June 30, 2008 and a monthly
distribution of $0.10 per unit, the monthly distributions for the third
quarter of 2008 would amount to approximately $3.6 Million. During the third
quarter of 2008, FFO is expected to be greater than the second quarter amount
of $4,065,315, after considering the additional two months of operating income
from the Best Western Wayside Inn and Suites and the reduction in debenture
interest associated with debenture conversions. The acquisition of additional
income-producing properties should also result in immediate growth in
distributable income and FFO, as the cost of carrying uninvested capital is
already reflected in the second quarter results.


    COMPARISON TO PREVIOUS QUARTER

    
    Analysis of Net Income - Q2 2008 vs Q1 2008
    -------------------------------------------------------------------------
                                               Three Months Ended
                                   ------------------------------------------
                                      June 30,      March 31,
                                        2008          2008         Change
                                    ------------- ------------- -------------
    Hotel revenue
      Room                          $ 11,755,872  $ 10,386,769  $  1,369,103
      Other                            1,776,407     1,353,477       422,930
                                    ------------- ------------- -------------
        Total hotel revenue           13,532,279    11,740,246     1,792,033
    Interest and other income            714,131       556,763       157,368
                                    ------------- ------------- -------------
        Total revenue                 14,246,410    12,297,009     1,949,401
    Operating expenses                 6,583,124     5,835,629       747,495
                                    ------------- ------------- -------------
    Operating income                   7,663,286     6,461,380     1,201,906
    Finance expense                    3,217,974     2,746,841       471,133
    Trust expense                        233,011       228,754         4,257
    Amortization                       1,244,433     1,156,260        88,173
    Provision for taxes                  163,670        37,065       126,605
                                    ------------- ------------- -------------

    Net income                       $ 2,804,198  $  2,292,460  $    511,738
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------
    

    TREIT completed the second quarter of 2008 with net income of $2,804,198,
compared to net income of $2,292,460 in the first quarter of 2008. The
increase in net income mainly reflects an increase in operating income,
partially offset by an increase in finance expense, amortization and provision
for taxes.
    During the second quarter of 2008, room revenue increased $1,369,103,
compared to the first quarter of 2008. Approximately 50% of the increase in
room revenue during the second quarter of 2008, compared to the first quarter
of 2008, is attributable to the acquisition of the Best Western Wayside Inn &
Suites on June 1, 2008, as well as an additional month of operations for the
Advantage West Inn & Suites. Specifically, the Best Western Wayside Inn &
Suites accounts for $286,860 or 21% of the increase in room revenue, while the
Advantage West Inn & Suites accounts for $423,470 or 31% of the increase. The
remaining increase mainly reflects an increase in the occupancy level of the
seven hotels, which were in the TREIT portfolio as of January 1, 2008.
    The ADR for the "pre-2008" hotel portfolio decreased by $0.81 during the
second quarter of 2008, compared to the first quarter of 2008, while the
average occupancy level increased from 75% to 80%. Overall, RevPar for the
"pre-2008" properties increased to $151.69, compared to $142.35 in the first
quarter of 2008. At the Advantage West Inn & Suites, ADR increased from
$181.99 compared to $177.62 in the first quarter, occupancy remained constant
at 87% and RevPar increased from $154.44 to $157.85. With the inclusion of
Best Western Wayside Inn & Suites, the RevPar for the entire hotel portfolio
during the second quarter of 2008 was $142.76, reflecting an average occupancy
level of 78% and an ADR of $182.03.
    During the second quarter of 2008, operating costs increased by $747,495,
compared to the first quarter of 2008. Approximately 94% of the increase is
attributable to the acquisition of the Best Western Inn & Suites on
June 1, 2008 and an additional month of operation for the Advantage West Inn &
Suites. The remaining increase is attributable to the seven hotels which were
in the TREIT portfolio as of January 1, 2008.
    Overall, the operating profit margin for the entire portfolio of hotel
properties was 54% in the second quarter of 2008, compared to 53% in the first
quarter of 2008.

    TREIT is a real estate investment trust, which is listed on the TSX
Venture Exchange under the symbol TR.UN. 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 12,473,163 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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