Lakeview Hotel REIT Reports Year End Financial Results
/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES/
WINNIPEG, April 29 /CNW/ - Lakeview Hotel Real Estate Investment Trust ("Lakeview REIT") reported its financial results for the year ended December 31, 2009. The following comments in regard to the financial results should be read in conjunction with the December 31, 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.
The past two years have been extremely challenging for Lakeview REIT. During the recession the hotel sector was especially hard hit. The challenges Lakeview REIT faced were magnified by its exposure to smaller markets, primarily in Alberta, that were and are dependant on natural gas drilling activity to drive occupancy. The past two years has seen markedly declining natural gas prices due to reduced consumption during the recession, record levels of natural gas in storage, and concerns over a developing glut of natural gas due to new technology which allows for the extraction of natural gas from shale. This problem of over supply was compounded by changes to the Alberta Royalty Tax structure which, in an environment of low natural gas prices, drove much of the remaining drilling activity out of the Province of Alberta.
While Lakeview REIT continues to deal with the challenges that it has faced over the past two years, there has been a number of significant developments that indicate a significant improvement in operating results from properties operating in natural gas markets will be achieved within the next 12 to 18 months. Some of these developments are market specific while others are more global in nature. The more significant developments are discussed in detail in Lakeview REIT's Management Discussion and Analysis.
Lakeview REIT has benefited from the support of "related parties" that own over 1/3 of the units of the REIT. By way of an informal understanding, the related parties have agreed to the deferral of fees from the REIT to ensure the accounts payables of all unrelated parties remain current. It is anticipated that this support from the related parties will continue until the cash flow from Lakeview REIT improves later in 2010 or in 2011.
Following is a comparison of the operating results for the three months and the year ended December 31, 2009 and the comparable periods in 2008:
Three months ended Year ended
December 31 December 31
2009 2008 2009 2008
Hospitality Revenue
Room 6,594,497 8,626,842 29,916,503 35,134,621
Food & Beverage 698,987 916,585 2,911,317 3,732,213
Other 308,761 568,111 1,673,716 1,881,507
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Total Revenue 7,602,245 10,111,538 34,501,536 40,748,341
Expenses 10,420,526 11,542,946 42,569,646 43,003,769
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Net Income (Loss)
before future
income tax
expense (2,818,281) (1,431,408) (8,068,110) (2,255,428)
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Basic and diluted
income (loss)
before income
tax per unit (0.144) (0.074) (0.414) (0.117)
Future Income Tax
(Expense)
Recovery(1) 816,000 734,000
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Net Loss (2,818,281) (615,408) (8,068,110) (1,521,428)
Basic and Diluted
Income (Loss)
per Unit (0.144) (0.032) (0.414) (0.079)
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Reconciliation to
funds from
Operations
Add (deduct)
Amortization of income
properties 1,680,893 1,669,487 6,694,496 6,212,645
Amortization of
franchise fees 8,734 12,435 57,141 48,534
Distributions from
Lakeview Flag
Licensing General
Partnership 19,600 182,280 439,530 537,530
Income from Lakeview
Flag Licensing
General Partnership (105,614) (177,302) (584,552) (617,334)
Future income tax
expense
(recovery)(1) (816,000) (734,000)
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Funds from Operations (1,214,668) 255,492 (1,461,495) 3,925,947
Basic and diluted
funds from
Operations per
unit (0.062) 0.013 (0.075) 0.204
Contributions to
reserve account (172,255) (236,047) (774,515) (1,160,788)
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Adjusted funds from
Operations (1,386,923) 19,445 (2,236,010) 2,765,159
Basic and diluted
adjusted funds
from Operations
per unit (0.071) 0.001 (0.115) 0.143
Reconciliation to
distributable
income
Accretion on debt
component of
convertible
debentures 267,423 245,109 1,038,698 846,657
Accretion of debentures 47,786 43,005 183,814 124,372
Accretion of mortgages
payable 62,913 51,764 222,905 204,192
Decretion of mortgages
receivable 3,554 56,877 6,879
Compensation costs of
unit options 55,845
Loss on settlement of
mortgage receivable 98,244
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Distributable income (1,008,801) 362,877 (635,472) 4,003,104
Basic and diluted
distributable
income per units (0.052) 0.019 (0.033) 0.208
Distributions 0 1,092,879 192,748 7,458,352
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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, Executive Vice President, Tel: (204) 947-1161, Fax: (204) 957-1697, Email [email protected]
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