Lakeview Hotel REIT Reports 3rd Quarter Financial Results

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

WINNIPEG, Nov. 30 /CNW/ - Lakeview Hotel Real Estate Investment Trust ("Lakeview REIT") reported its financial results for the quarter ended September 30, 2009. The following comments in regard to the financial results should be read in conjunction with the September 30, 2009 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.

Lakeview REIT continues to operate in a very challenging environment of declining demand for hotel accommodations. During this period, Lakeview REIT has been carefully monitoring its capital resources to ensure it continues to be in a position to meet all of its ongoing obligations. The REIT continually reviews its capital assets in close consultation and cooperation with its lenders for opportunities to improve both its balance sheet and cash flows. While hotels located in gas markets have been challenged by the lack of drilling activity, Lakeview REIT continues to benefit from its assets located outside of its gas markets which have provided more stable cash flow to the REIT. These assets will provide Lakeview REIT with a strong base for future growth when the overall economy improves and as gas prices ultimately strengthen.

Following is a comparison of the operating results for the three and nine months ended September 30, 2009 and the comparable periods in 2008:

    
                                Three months ended        Nine months ended
                             September 30            September 30
                                 2009        2008        2009        2008

    Hospitality Revenue
      Room                     7,971,535  10,223,940  23,322,006  26,507,779
      Food & Beverage            707,895     771,880   2,212,330   2,815,628
      Other                      353,354     491,404   1,364,955   1,313,396
                             ------------------------------------------------
    Total Revenue              9,032,784  11,487,224  26,899,291  30,636,803
    Expenses                  10,562,138  11,343,464  32,149,120  31,460,823
                             ------------------------------------------------
    Net Income (Loss)
     before future income
     tax expense              (1,529,354)    143,760  (5,249,829)   (824,020)
                             ------------------------------------------------
    Basic and diluted income
     (loss) before income
     tax per unit                 (0.078)      0.007      (0.270)     (0.043)
    Future Income Tax
     (Expense) Recovery(1)             -     (86,000)          -     (82,000)
    Net Income (Loss)         (1,529,354)     57,760  (5,249,829)   (906,020)
    Basic and Diluted Income
     (Loss) per Unit              (0.078)      0.003      (0.270)     (0.047)
                             ------------------------------------------------
    Reconciliation to funds
     from Operations
    Add (deduct)
    Amortization of income
     properties                1,670,341   1,603,196   5,013,603   4,543,158
    Amortization of franchise
     fees                          8,733      12,161      48,407      36,099
    Distributions from Lakeview
     Flag Licensing General
     Partnership                 122,500      55,860     419,930     355,250
    Income from Lakeview Flag
     Licensing General
     Partnership                (147,640)   (121,734)   (478,938)   (440,032)
    Future income tax expense
     (recovery)                        -      86,000           -      82,000
                             ------------------------------------------------
    Funds from Operations
     (FFO)                       124,580   1,693,243    (246,827)  3,670,455
    Basic and diluted funds
     from Operations per unit      0.006       0.088      (0.013)      0.190
    Contributions to reserve
     account                    (219,061)   (353,969)   (602,260)   (924,741)
                             ------------------------------------------------
    Adjusted funds from
     Operations (AFFO)           (94,481)  1,339,274    (849,087)  2,745,714
    Basic and diluted adjusted
     funds from Operations
     per unit                     (0.005)      0.069      (0.044)      0.142
    Reconciliation to
     distributable income
    Accretion on debt component
     of convertible debentures   266,540     246,741     771,275     601,548
    Accretion of debentures       46,543      41,886     136,028      81,367
    Accretion of mortgages
     payable                      55,330      51,385     159,992     152,428
    Decretion of mortgages
     receivable                        -       1,029      56,877       3,325
    Compensation costs of
     unit options                      -      55,845           -      55,845
    Loss on settlement of
     mortgage receivable               -           -      98,244           -
                             ------------------------------------------------
    Distributable income         273,932   1,736,160     373,329   3,640,227
    Basic and diluted
     distributable income
     per units                     0.014       0.090       0.019       0.189
    Distributions                      0   2,122,150     192,748   6,365,473
    

The management and Trustees of Lakeview REIT believe that natural gas prices will rise over time, although the timing is uncertain, and ultimately there will be resumed drilling activity in many of Lakeview REIT's markets. In the interim, Lakeview REIT continues to take all measures it believes necessary to be in a position to capitalize on improved market conditions when they occur. These measures include focused sales and marketing efforts to increase market share for Lakeview REIT hotels. While drilling activity is depressed, there is still activity related to the oil and gas industry in the form of refinery, pipeline and compressor station infrastructure development and servicing activity of existing wells. Lakeview REIT is focusing on capturing the business from these ancillary activities.

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

SOURCE Lakeview Hotel Real Estate Investment Trust

For further information: For further information: Keith Levit, President, or Avrum Senensky, Vice President Finance, Tel: (204) 947-1161, Fax: (204) 957-1697, Email asenensky@lakeviewhotels.com