Lakeview Hotel REIT Reports 3rd Quarter Financial Results

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

WINNIPEG, Nov. 29, 2012 /CNW/ - Lakeview Hotel Real Estate Investment Trust ("Lakeview REIT") is pleased to report its financial results for the quarter ended September 30, 2012.  The following comments in regard to the financial results should be read in conjunction with the September 30, 2012 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.

Management anticipated, as discussed in the previous quarterly Management's Discussion and Analysis, that third quarter revenues would be flat or down from the third quarter of 2011 related to lower than expected levels of drilling activity in Western Canada.  Room revenues did in fact decline by 4.7% or $475,132.  Total revenues for the REIT, however, were only down by 1.4% or $161,579 as Food & Beverage and Other revenues increased over the third quarter in the previous year.

While revenues were down marginally, lower operating costs resulted in quarterly increases in Net Income ($780,788 vs. $313,177 in the third quarter of 2011), Adjusted Funds From Operations ($1,362,387 vs. $988,992 in the third quarter of 2011), and Distributable Income ($1,593,462 vs. $1,425,791 in the third quarter of 2011).  Adjusted Funds From Operations year to date has increased by $1,528,637 to $2,513,689 when compared to the same nine month period in the previous year.

Fourth quarter revenues are expected to be lower than in the fourth quarter of 2011.  Occupancies in markets dependent upon gas drilling activity are primarily responsible for the anticipated overall decline in revenues.  Activity in these markets was quite robust in the fourth quarter of 2011.  Hotels in Edson and Hinton, Alberta and Fort Nelson, British Columbia are expected to see significantly weaker results when compared to last year.  While recoveries in these markets are expected, it is difficult at this time to forecast exactly when the recoveries may occur.

While visibility in drilling related markets remains uncertain, management expects the REIT to remain cash flow positive in 2013.  Strong improvements in operating results, related to various drivers, are expected in several markets including Calgary, Drayton Valley, Fort Saskatchewan and Slave Lake, Alberta; Prince George, British Columbia; and Fredericton, New Brunswick.  Management also anticipates the REIT will receive increased licensing royalties in 2013 from properties outside REIT ownership as new licensed Lakeview hotels are expected to open during the year.

Management expects Unitholders of Lakeview Hotel REIT will approve converting the REIT to a corporation next month.  The conversion will allow distributions in the form of dividends to flow more tax efficiently to owners when a resumption of distributions becomes possible.

Following is a comparison of the operating results for the three and nine months ended September 30, 2012 and the comparable period in 2011:

					Three months ended						Nine months ended
					September 30						September 30
					2012			2011			2012			2011
Hospitality Revenue
	Room				9,551,733			10,026,865			26,568,515			26,327,392
	Food & Beverage				958,794			906,085			3,017,031			2,485,052
	Other				889,229			628,385			1,782,072			1,797,349
Total Revenue					11,399,756			11,561,335			31,367,618			30,609,793
Expenses					10,618,968			11,248,158			32,676,005			32,523,161
Net Income (Loss)					780,788			313,177			(1,308,387)			(1,913,368)
Basic and diluted income (loss) before income tax per unit					0.040			0.016			(0.067)			(0.098)
Reconciliation to funds from Operations
Add (deduct)
Amortization of income properties					1,038,538			1,359,795			3,428,347			4,217,033
Amortization of franchise fees and licenses					1,193			5,076			11,347			20,284
Loss on restructuring of convertible debentures					4,233			-			932,823			-
Compensation Costs of Unit Options					-			-			16,800			-
Distributions from Lakeview Flag Licensing General Partnership					159,250			110,250			437,080			406,455
Distributions from Lakeview Flag Management General Partnership					192,500			160,000			754,000			263,250
Income from Lakeview Flag Licensing General Partnership					(169,642)			(181,830)			(465,217)			(466,119)
Income from Lakeview Flag Management General Partnership					(127,407)			(133,076)			(357,422)			(352,098)
Recovery of impaired amounts previously written off					(328,495)			(106,069)			(328,495)			(283,795)
Funds from Operations					1,550,958			1,527,323			3,120,876			1,891,642
Basic and diluted funds from Operations per unit					0.079			0.078			0.160			0.097
Contributions to reserve account					(188,571)			(538,331)			(607,187)			(906,590)
Adjusted funds from Operations					1,362,387			988,992			2,513,689			985,052
Basic and diluted adjusted funds from Operations per unit					0.070			0.051			0.129			0.050
Reconciliation to distributable income
Accretion on debt component of convertible debentures					98,003			340,467			468,484			981,979
Accretion of debentures					53,212			57,466			115,334			167,954
Accretion of mortgages payable					66,789			63,142			256,602			178,412
Loss (Gain) on disposal of income properties					13,071			(24,276)			15,241			(6,983)
Distributable income					1,593,462			1,425,791			3,369,350			2,306,414
Basic and diluted distributable income per unit					0.081			0.073			0.172			0.118
Distributions					-			-			-			-

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.  For further information on Lakeview REIT please visit our website www.lakeviewreit.com.

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. 

SOURCE: Lakeview Hotel Real Estate Investment Trust

Keith Levit, President, or Avrum Senensky, Executive Vice President
Tel: [phone], Fax: [phone], Email [email protected]