WINNIPEG, Dec. 3, 2019 /CNW/ - Lakeview Hotel Investment Corp ("LHIC") is pleased to report its financial results for the Quarter ended September 30, 2019. The following comments in regard to the financial results should be read in conjunction with the September 30, 2019 financial statements and Management Discussion and Analysis which are available on the SEDAR website www.sedar.com.
The outlook for Lakeview Hotel Investment Corp (LHIC) has not changed materially since the last quarterly report, largely tied to an elusive recovery in the energy sector in Alberta and Northern British Columbia. As discussed last quarter, there are expectations that activity levels may be improving in at least 2 of the markets that LHIC operates in. Demand for accommodations in Fort Saint John is expected to accelerate related to BC Hydro's Site C Dam project beyond. The demand is expected to greatly exceed the capacity of camps set up to house workers. In Fort Saskatchewan development of the Heartland Petrochemical Complex continues with the promise of robust demand for hotel rooms in the region. To date these expectations have largely been unrealized.
LHIC has taken positive steps to address its financing needs. Management believes it is making progress in its efforts of repaying its loan with its primary lending syndicate. LHIC's Series C and Series D Redeemable Subordinate debentures were successfully extended until August 31, 2022. The debentures secured by LHIC's Prince George property were extended until October 31, 2020. Given these extensions and the continued cooperation of related parties, LHIC remains confident that it will be able to address and overcome the challenges it faces.
Management assessed the changes made to the Series C and Series D Redeemable Subordinated Debenture under the extension agreement and determined that the modification should be accounted for as a derecognition of the previous financial liability and the recording of the new liability at the fair value determined as of the date of the modification.
The gain on derecognition of the Series C and Series D debenture financial liabilities amounted to $12,855,504 and $7,040,672 respectively. It should be noted that these gains are non-cash gains that do not affect the operation of the Company and do not provide any additional cash for operations. The risks associated with the going concern position of the Company do not change and all of the inherent risks remain the same. The large gain on derecognition of the debenture financial liabilities reflects the degrees of risk associated with the Series C and Series D Debentures.
It should also be noted that as part of the accounting under IFRS #9, the total effect of the gain of $19,896,176 will be reduced to nil over the course of the next three years to the date of maturity of the debentures (August 31, 2022) by accreting the debentures and recording an interest expense. As was the case with the gain on the derecognition of the financial liabilities the interest charge over the next three years is also a non-cash item and does not have any effect on the operation of the Company.
Please see note 8 to the financial statements for additional details.
Following is a comparison of the operating results for the three and nine months ended September 30, 2019 and the comparable period in 2018:
| Three months ended September 30 | Nine months ended September 30 |
| 2019 | 2018 | 2019 | 2018 |
Hospitality Revenue |
|
|
|
|
Room | 3,192,186 | 4,637,703 | 8,893,813 | 11,284,876 |
Food & Beverage | 578,349 | 554,738 | 1,672,624 | 1,721,228 |
Other | 206,634 | 303,797 | 609,220 | 758,187 |
Total Revenue | 3,977,169 | 5,496,238 | 11,175,657 | 13,764,291 |
Expenses | (14,193,946) | 6,328,625 | (1,821,836) | 18,229,490 |
(Loss) Gain on sale of income properties | 3,419 | - | 1,370,156 | 6,728 |
Net income (loss) | 18,174,534 | (832,387) | 14,367,649 | (4,458,471) |
Basic and diluted income (loss) before income tax per share | 0.929 | (0.043) | 0.735 | (0.228) |
Reconciliation to funds from operations |
|
|
|
|
Add (deduct) |
|
|
|
|
Gain on derecognition of financial liabilities | (19,896,176) | - | (19,896,176) | - |
Amortization of income properties | 214,187 | 475,474 | 951,124 | 1,419,126 |
Amortization of franchise fees | 375 | 375 | 1,123 | 1,123 |
Loss (Gain) on sale of income properties | (3,419) | - | (1,370,156) | (6,728) |
Provision for impairment of income properties | 2,623 | - | 1,162,871 | - |
Amortization of right of use assets | - | - | 7,149 | - |
Income from Lakeview Flag Licensing General Partnership | (103,303) | (135,558) | (286,257) | (323,708) |
Income from Lakeview Flag Management General Partnership | (44,124) | (63,371) | (125,553) | (158,076) |
Unrealized loss (gain) on change in fair value of interest rate swap | (13,844) | (74,707) | 43,648 | (143,155) |
Funds from operations | (1,669,147) | (630,174) | (5,144,578) | (3,669,889) |
Basic and diluted funds from operations per share | (0.085) | (0.032) | (0.263) | (0.188) |
Contributions to reserve account | (69,944) | (108,052) | (180,900) | (256,744) |
Adjusted funds from operations | (1,739,091) | (738,226) | (5,325,478) | (3,926,633) |
Basic and diluted adjusted funds from operations per share | (0.089) | (0.038) | (0.272) | (0.201) |
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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