Lakeview Hotel Investment Corp Announces Third Quarter Results

WINNIPEG, Nov. 27, 2015 /CNW/ - Lakeview Hotel Investment Corp ("LHIC") is pleased to report its financial results for the Quarter ended September 30, 2015.  The following comments in regard to the financial results should be read in conjunction with the September 30, 2015 financial statements and Management Discussion and Analysis which are available on the SEDAR website www.sedar.com.

The outlook for Lakeview Hotel Investment Corp. is closely linked to oil and gas drilling activity in Western Canada and thus is linked closely to the underlying commodity prices.  The decline in oil prices has resulted in significant capex cuts from oil producers which in turn have had a material impact on demand for hotel rooms and the operating results of Lakeview.  While average room rate held firm, third quarter occupancy declined from 77.14% in 2014 to 56.76% in the third quarter of 2015.

Most investment banks are expecting a slow recovery in the price of oil in 2016 with an expectation that by year end Nymex crude oil will be trading at between $50 and $70 per barrel.  The recovery will ultimately lead to increased capex expenditures and demand for hotel rooms, but as much of the capex plans for 2016 are already being put in place, the expectation is that a resumption in more normal levels of activity may not take place until later in 2016 and into 2017.

It is important to note that not all of Lakeview's hotels are dependent on drilling activity and thus tied to the price of oil.  However, the impact on certain markets, such as Drayton Valley, is substantial, where occupancy through the third quarter is at 33.0% vs 73.3% for the same period in 2014.   Lakeview is continuing to look at opportunities to reduce leverage and restructure debt to be well positioned for growth and to generate shareholder value when market conditions improve.

Following is a comparison of the operating results for the three and nine months ended September 30, 2015 and the comparable periods in 2014:

	Three months ended September 30		Nine months ended September 30
	2015	2014	2015	2014
Hospitality Revenue
Room	6,889,447	9,072,496	19,936,075	24,598,433
Food & Beverage	836,696	1,194,637	2,811,295	3,478,496
Other	403,891	519,884	1,215,183	1,456,686
Total Revenue	8,130,034	10,787,017	23,962,553	29,533,615
Expenses	8,899,793	10,673,932	26,741,560	28,677,594
Gain on sale of income properties	-	-	-	1,007,514
Net income (loss)	(769,759)	113,085	(2,779,007)	1,863,535
Basic and diluted income (loss) before income tax per share	(0.039)	0.006	(0.142)	0.095
Reconciliation to funds from operations
Add (deduct)
Amortization of income properties	762,829	767,919	2,284,556	2,288,025
Amortization of franchise fees	1,192	1,192	3,576	3,576
Gain on sale of income properties	-	-	-	(1,007,514)
Distributions from Lakeview Flag Licensing General Partnership	32,830	193,060	180,810	594,860
Distributions from Lakeview Flag Management General Partnership	27,500	146,500	154,750	485,250
Income from Lakeview Flag Licensing General Partnership	(164,432)	(209,542)	(442,005)	(538,028)
Income from Lakeview Flag Management General Partnership	(93,046)	(123,363)	(273,410)	(335,965)
Unrealized loss on change in fair value of interest rate swap	205,468	249,545	1,017,516	249,545
Amortization of discount on bankers' acceptance	-	-	198,712	-
Funds from operations	2,582	1,138,396	345,498	3,603,284
Basic and diluted funds from operations per share	0.000	0.058	0.018	0.184
Loss on derecognition of financial liability	-	580,732	-	580,732
Contributions to reserve account	(250,025)	(184,326)	(638,142)	(535,903)
Adjusted funds from operations	(247,443)	1,534,802	(292,644)	3,648,113
Basic and diluted adjusted funds from operations per share	(0.013)	0.078	(0.015)	0.187
Reconciliation to distributable income
Loss on derecognition of income properties	90,578	9,703	107,483	11,590
Accretion of debentures	40,118	36,622	119,199	109,181
Accretion of mortgages payable	22,963	42,142	70,459	87,971
Accretion of other long-term debt	38,534	12,735	139,222	12,735
Distributable income	(55,250)	1,636,004	143,719	3,869,590
Basic and diluted distributable income per share	(0.003)	0.084	0.007	0.198
Distributions	-	-	-	-

Lakeview Hotel Investment Corp is listed on the TSX Venture Exchange under the symbol "LHR".  Lakeview Hotel Investment Corp receives income from ownership, management and licensing of hotel properties.

The TSX Venture Exchange nor its Regulation Service Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Lakeview Hotel Investment Corp

Avrum Senensky, Executive Vice President, Tel: [phone], Fax: [phone], Email [email protected]