WINNIPEG, May 2, 2018 /CNW/ – Lakeview Hotel Investment Corp (“LHIC”) is pleased to report its financial results for the Year ended December 31, 2017. The following comments in regard to the financial results should be read in conjunction with the December 31, 2017 financial statements and Management Discussion and Analysis which are available on the SEDAR website www.sedar.com.
Operating results were much improved in the first quarter of 2017 when compared to the first quarter of 2016. This improvement did not carry through as expected for the balance of the year or into the first quarter of 2018. The increase in WTI (West Texas Intermediate) oil prices into the $50 to $55 range in 2017 did not translate into robust activity in the Alberta oil patch or into increased occupancies at our hotels in Alberta and British Columbia.
Management remains optimistic that a trend towards improved performance that was expected in 2017 has only been deferred but will still take place. Our Calgary property was adversely impacted by the loss of a large, long term contract. The contract while in place limited our ability to secure other long term stay clients. We are now aggressively taking steps to replace the lost business and are beginning to see some traction. The increase in oil prices into the $50 to $55 range did not have the expected impact on our properties in resource driven markets. A prime reason for this is the disparity between WTI crude prices and Canadian crude prices. A large difference in prices developed as a result of constraints on pipeline capacity to transport Alberta crude. The price differential between WTI and Canadian crude, which in the last 5 years hit nearly US$20, is expected to shrink to approximately US$3.50 by 2019. With WTI now trading at over $65, management of Lakeview Hotel Investment Corp expects the environment will be conducive to improved operating results in the second half of 2018.
Lakeview Hotel Investment Corp. remains cash flow challenged and will continue to be dependent on the ability of the Company to generate positive cash flows from operations, to satisfy working capital requirements, meet debt covenant requirements, along with scheduled principal and interest payments and to refinance other debt as it becomes due. The continued financial support from its related parties through the deferral of payments due is also required.
Following is a comparison of the operating results for the three months and year ended December 31, 2017 and the comparable period in 2016:
|
Three months ended December 31 |
Year ended December 31 |
||||
|
2017 |
2016 |
2017 |
2016 |
||
|
$ |
$ |
$ |
$ |
||
|
Hospitality Revenue |
|||||
|
Room |
3,644,853 |
4,048,946 |
17,343,498 |
18,817,442 |
|
|
Food & Beverage |
619,874 |
629,345 |
2,443,899 |
2,632,134 |
|
|
Other |
287,032 |
250,884 |
1,125,421 |
1,180,965 |
|
|
Total Revenue |
4,551,759 |
4,929,175 |
20,912,818 |
22,630,541 |
|
|
Expenses |
(5,234,766) |
(8,471,978) |
(24,206,562) |
(30,415,750) |
|
|
Gain (loss) on sale of income properties |
– |
– |
(24,342) |
4,347,629 |
|
|
Net Income (Loss) |
(683,007) |
(3,542,803) |
(3,318,086) |
(3,437,580) |
|
|
Basic and diluted income (loss) per share |
(0.035) |
(0.181) |
(0.170) |
(0.176) |
|
|
Reconciliation to Funds from Operations |
|||||
|
Add (deduct) |
|||||
|
Provision for (recovery of) impairment of income properties |
(866,994) |
2,500,000 |
(866,994) |
2,500,000 |
|
|
Forgiveness of debt |
75,000 |
– |
75,000 |
200,000 |
|
|
Amortization of income properties |
508,279 |
645,922 |
2,059,523 |
2,667,029 |
|
|
Amortization of franchise fees |
375 |
375 |
1,497 |
2,860 |
|
|
Unrealized loss (gain) on change in fair value of interest rate swap |
(105,145) |
(460,859) |
(902,533) |
(604,987) |
|
|
Distributions from Lakeview Flag Management General Partnership |
– |
6,875 |
18,000 |
18,875 |
|
|
Income from Lakeview Flag Licensing General Partnership |
(99,247) |
(111,387) |
(478,252) |
(472,961) |
|
|
Income from Lakeview Flag Management General Partnership |
(51,285) |
(56,073) |
(237,881) |
(259,815) |
|
|
Loss (gain) on sale of income properties |
– |
– |
24,342 |
(4,347,629) |
|
|
Amortization of discount on bankers’ acceptance |
– |
– |
– |
168,066 |
|
|
Funds from Operations |
(1,222,024) |
(1,017,950) |
(3,625,384) |
(3,566,142) |
|
|
Basic and diluted funds from operations per share |
(0.062) |
(0.052) |
(0.185) |
(0.182) |
|
|
Contributions to reserve account |
(89,810) |
(94,004) |
(408,142) |
(411,907) |
|
|
Adjusted Funds from Operations |
(1,311,834) |
(1,111,954) |
(4,033,526) |
(3,978,049) |
|
|
Basic and diluted adjusted funds from operations per share |
(0.067) |
(0.057) |
(0.206) |
(0.203) |
|
|
Reconciliation to Distributable Income |
|||||
|
Accretion of other long-term debt |
81,827 |
59,410 |
336,557 |
208,629 |
|
|
Accretion of debentures |
43,379 |
28,172 |
171,596 |
88,767 |
|
|
Accretion of mortgages payable |
1,129 |
5,951 |
4,567 |
69,632 |
|
|
Loss on derecognition of franchise fees |
– |
– |
– |
2,726 |
|
|
Loss on derecognition of income properties |
20,042 |
(1,488) |
35,147 |
50,090 |
|
|
Loss on derecognition of financial liability |
– |
– |
– |
19,804 |
|
|
Distributable income |
(1,165,457) |
(1,019,909) |
(3,485,659) |
(3,538,401) |
|
|
Basic and diluted distributable income per share |
(0.060) |
(0.052) |
(0.178) |
(0.181) |
|
|
Dividends |
0 |
0 |
0 |
0 |
|
Lakeview Hotel Investment Corp is listed on the TSX Venture Exchange under the symbol “LHR”. Lakeview Hotel Investment Corp 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.
SOURCE Lakeview Hotel Investment Corp
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