Lakeview Hotel REIT Reports 1st Quarter Financial Results

/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES/

WINNIPEG, May 28 /CNW/ - Lakeview Hotel Real Estate Investment Trust ("Lakeview REIT") reported its financial results for the quarter ended March 31, 2010. The following comments in regard to the financial results should be read in conjunction with the March 31, 2010 financial statements and Management Discussion and Analysis which are available on the SEDAR website www.sedar.com and the Lakeview REIT website www.lakeviewreit.com.

There is some evidence that the very worst may be behind Lakeview REIT in terms of operating results. In both March and April of 2010, total room revenues for Lakeview REIT exceeded the total room revenues achieved in March and April 2009. These revenue figures reversed a lengthy trend of declining year-over-year monthly room revenues.

Although there may be setbacks, this trend towards improved operating results is expected to continue, with the potential for significantly improved operating results within the next 12 to 18 months.

Some of the reasons why improved operating results are anticipated are global in nature. These include, among other things, an expectation that natural gas prices will eventually rebound benefiting many of the hotels Lakeview REIT has located in natural gas markets; reduced royalty taxes on oil and gas drilling revenues from Alberta which will potentially benefit many Lakeview hotels operating in Alberta; and anticipation that operating results will improve in general as the economy improves.

Market specific developments which may positively impact on operating results are outlined in the Management Discussion and Analysis.

Following is a comparison of the operating results for the three months ended March 31, 2010 and the comparable period in 2009:

    
                                                         Three months ended
                                                       March 31
                                                           2010         2009
    Hospitality Revenue
      Room                                            6,830,877    7,758,443
      Food & Beverage                                   678,116      767,056
      Other                                             435,088      518,328
                                                    -------------------------
    Total Revenue                                     7,944,081    9,043,827
    Expenses                                         10,141,137   10,514,997
                                                    -------------------------
    Net Loss before future income tax expense        (2,197,056)  (1,471,170)
                                                    -------------------------
    Basic and diluted Loss before income tax
     per unit                                            (0.112)      (0.076)
    Net Loss                                         (2,197,056)  (1,471,170)
    Basic and diluted Loss per Unit                      (0.112)      (0.076)
                                                    -------------------------
    Reconciliation to Funds from Operations
    Add (deduct)
    Amortization of income properties                 1,682,618    1,673,051
    Amortization of franchise fees                        8,734       12,436
    Distributions from Lakeview Flag Licensing
     General Partnership                                 29,400      172,970
    Income from Lakeview Flag Licensing General
     Partnership                                       (115,379)    (181,389)
                                                    -------------------------
    Funds from Operations                              (591,683)     205,898
    Basic and diluted Funds from Operations
     per unit                                            (0.030)       0.011
    Contributions to reserve account                   (157,620)    (178,184)
                                                    -------------------------
    Adjusted Funds from Operations                     (749,303)      27,714
    Basic and diluted adjusted Funds from
     Operations per unit                                 (0.038)       0.001
    Reconciliation to distributable income
    Accretion on debt component of convertible
     debentures                                         283,420      252,784
    Accretion of debentures                              49,061       44,153
    Accretion of mortgages payable                       63,264       52,143
    Decretion of mortgages receivable                         -        5,660
                                                    -------------------------
    Distributable Income                               (353,558)     382,454
    Basic and diluted distributable income
     per unit                                            (0.018)       0.020
    Distributions                                             -      192,748
    

Lakeview REIT is a real estate investment trust, which is listed on the TSX Venture Exchange under the symbol "LHR.UN". Lakeview REIT 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.

%SEDAR: 00020441E

For further information: Keith Levit, President, or Avrum Senensky, Vice President Finance, Tel: [phone], Fax: [phone], Email [email protected]