LHR.UN Lakeview Hotel Invest Corp

WINNIPEG, Aug. 27 /CNW/ -- /NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTIBUTION TO U.S. NEWS WIRE SERVICES/ WINNIPEG, Aug. 27 /CNW/ - Lakeview Hotel Real Estate Investment Trust ("Lakeview REIT") is pleased to report its financial results for the quarter ended June 30, 2010. The following comments in regard to the financial results should be read in conjunction with the June 30, 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. Lakeview REIT has seen a slow and steady improvement in operating results since February, 2010, which from management's perspective represented the bottom of the market. Since February there has been a year-over-year increase in monthly room revenues in every month but May. Revenues are still well below the levels they were at when the market had peaked, but the reversal of the downward trend is encouraging and is expected to continue. The potential exists for significantly improved operating results within the next 18 months. This is based on a combination of factors including overall improving market conditions and from several market specific developments. Market specific developments expected within the next 18 months include a major carbon-capture project near Whitecourt, Alberta; the Nipisi and Mitsue pipeline projects proximate to Slave Lake, Alberta; the Dokie wind project near Chetwynd, British Columbia; the North West Upgrading project which would benefit Lakeview REIT's properties in Sherwood Park and Fort Saskatchewan, Alberta; and anticipated increases in drilling activity in the Pembina Cardium formation which would benefit Drayton Valley and Edson, Alberta hotels. Lakeview REIT's results are still closely tied to natural gas prices which remain soft and it is unclear when gas pricing will improve. In 2011 the terms will be up on many of the mortgages on properties owned by Lakeview REIT. While Lakeview REIT believes it will be able to renew these mortgages as they come due, the cash flow of the REIT remains constrained and it is unclear what interest rates will be on the mortgage renewals. Renewing mortgages at higher interest rates could create challenges for the REIT. Following is a comparison of the operating results for the three and six months ended June 30, 2010 and the three and six months ended June 30, 2009: Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 Hospitality Revenue Room 7,511,982 7,592,028 14,342,859 15,350,471 Food & Beverage 734,455 737,379 1,412,571 1,504,435 Other 326,666 493,273 761,754 1,011,601 --------------------------------------------------- Total Revenue 8,573,103 8,822,680 16,517,184 17,866,507 Expenses 10,360,831 11,071,985 20,501,968 21,586,982 --------------------------------------------------- Net Income (Loss) before future income tax expense (1,787,728) (2,249,305) (3,984,784) (3,720,475) --------------------------------------------------- Basic and diluted income (loss) before income tax per unit (0.091) (0.115) (0.204) (0.192) Future (Income Tax Expense) Recovery - - - - Net (Loss) (1,787,728) (2,249,305) (3,984,784) (3,720,475) Basic and Diluted Income (Loss) per Unit (0.091) (0.115) (0.204) (0.192) --------------------------------------------------- Reconciliation to funds from Operations Add (deduct) Amortization of income properties 1,674,879 1,670,211 3,357,497 3,343,262 Amortization of franchise fees and licenses 8,734 27,238 17,468 39,674 Distributions from Lakeview Flag Licensing General Partnership 19,600 124,460 49,000 297,430 Income from Lakeview Flag Licensing General Partnership (127,725) (149,909) (243,104) (331,298) Future income tax expense (recovery) - - - - --------------------------------------------------- Funds from Operations (212,240) (577,305) (803,923) (371,407) Basic and diluted funds from Operations per unit (0.011) (0.030) (0.041) (0.019) Contributions to reserve account (180,754) (205,015) (338,374) (383,199) --------------------------------------------------- Adjusted funds from Operations (392,994) (782,320) (1,142,297) (754,606) Basic and diluted adjusted funds from Operations per unit (0.020) (0.040) (0.058) (0.039) Reconciliation to distributable income Accretion on debt component of convertible debentures 284,647 251,951 568,067 504,735 Accretion of debentures 50,372 45,332 99,433 89,485 Accretion of mortgages 63,731 52,519 126,995 104,662 Decretion of mortgages receivable - 51,217 - 56,877 Loss on settlement of mortgages receivable - 98,244 - 98,244 Compensation costs of unit options - - - - --------------------------------------------------- Distributable income 5,756 (283,057) (347,802) 99,397 Basic and diluted distributable income per units 0.000 (0.015) (0.018) 0.005 Distributions - - - 192,748 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. %SEDAR: 00020441E Keith Levit, President, or Avrum Senensky, Executive Vice President, Tel: (204) 947-1161, Fax: (204) 957-1697, Email asenensky@lakeviewhotels.com

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