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
                          ---------------------------------------------------
    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
                          ---------------------------------------------------
    Net Income (Loss)
     before future
     income tax
     expense               (2,818,281)  (1,431,408)  (8,068,110)  (2,255,428)
                          ---------------------------------------------------
    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
                          ---------------------------------------------------
    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)
                          ---------------------------------------------------
    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)
                          ---------------------------------------------------
    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)
                          ---------------------------------------------------
    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
                          ---------------------------------------------------
    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
                          ---------------------------------------------------

    

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: [phone], Fax: [phone], Email [email protected]