The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group

Lakeview Hotel REIT Reports Year End Financial Results

Friday, April 29, 2011

Lakeview Hotel REIT Reports Year End Financial Results19:29 EDT Friday, April 29, 2011/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, 2010.  The following comments in regard to the financial results should be read in conjunction with the December 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.The bottom of the market for Lakeview REIT took place in February, 2010.  Since that time, operating results have been in a clear uptrend.  Starting in March, 2010, year-over-year monthly revenues for Lakeview REIT have increased in every month in 2010 but May.The improvement in operating results is expected to continue.  The overall outlook in the hotel sector has been improving as the economy in North America has been strengthening.  Resource drilling activity in northern Alberta and British Columbia is also expected to show continued improvements from the very low levels of activity that began in 2008.  This is very important for many of the hotels in Lakeview REIT located in smaller resource driven markets in that region.It is important to note that as a result of the improvement in operating results Lakeview REIT is no longer in a negative distributable income position on an annual basis.  If operating results continue to improve and distributable income becomes more positive, available cash flow will be used to reduce liabilities of the REIT, for capital improvements to the properties owned by the REIT, and to replenish the capital reserve which was reduced in 2010.  It is unknown when Lakeview REIT will be in a position to resume distributions to its Unitholders.Lakeview REIT has faced significant cash flow challenges over the past three years.  The support of related parties that own over 1/3 of the units of the REIT and the agreement of the related parties to defer fees has allowed Lakeview REIT to remain current on all payments to all unrelated parties.  Lakeview REIT has remained current on all debt service payments to all mortgage holders, on all payments to all debenture holders, and on all property tax and tax payments to all government agencies.  While the need for further deferrals of fees is expected to be reduced significantly as operating results continue to improve, the related parties remain committed to the welfare of the REIT and will continue to do what is deemed necessary to benefit the REIT and its Unitholders.Following is a comparison of the operating results for the three months and the year ended December 31, 2010 and the comparable periods in 2009:    Three months endedDecember 31  Year endedDecember 31    2010  2009  2010  2009Hospitality Revenue              Room   7,706,385  6,594,497  30,863,747  29,916,503 Food & Beverage   852,082  698,987  2,932,247  2,911,317 Other   341,756  308,761  1,466,078  1,673,716Total Revenue   8,900,223  7,602,245  35,262,072  34,501,536Expenses   12,797,437  10,420,526  45,491,476  42,569,646Net Loss   (3,897,214)  (2,818,281)  (10,229,404)  (8,068,110)Basic and Diluted Income (Loss) per Unit   (0.199)  (0.144)  (0.523)  (0.414)Reconciliation to funds from Operations             Add (deduct)             Amortization of income properties   1,639,171  1,680,893  6,632,795  6,694,496Amortization of franchise fees   8,214  8,734  34,416  57,141Provision for Impairment of Note Receivable         1,396,062   Provision for impairment of income properties   2,000,000     2,000,000   Distributions from Lakeview Flag Licensing General Partnership   122,500  19,600  534,100  439,530Income from Lakeview Flag Licensing General Partnership   (134,437)  (105,614)  (532,124)  (584,552)Funds from Operations   (261,766)  (1,214,668)  (164,155)  (1,461,495)Basic and diluted funds from Operations per unit   (0.013)  (0.062)  (0.008)  (0.075)Contributions to reserve account   (199,177)  (172,255)  (770,056)  (774,515)Adjusted funds from Operations   (460,943)  (1,386,923)  (934,211)  (2,236,010)Basic and diluted adjusted funds from Operations per unit   (0.024)  (0.071)  (0.048)  (0.115)Reconciliation to distributable income             Accretion on debt component of convertible debentures   302,182  267,423  1,170,714  1,038,698Accretion of debentures   53,098  47,786  204,248  183,814Accretion of mortgages payable   64,550  62,913  254,688  222,905Decretion of mortgages receivable            56,877Compensation costs of unit options         124,000   Loss on settlement of mortgage receivable            98,244Loss on disposal of income properties   46,483     46,483   Distributable income   5,370  (1,008,801)  865,922  (635,472)Basic and diluted distributable income per units   0  (0.052)  0.044  (0.033)Distributions   0  0  0  192,748Lakeview 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.For further information: Keith Levit, President, or Avrum Senensky, Executive Vice President Tel: (204) 947-1161, Fax: (204) 957-1697, Email asenensky@lakeviewhotels.com