Lanesborough REIT Reports 2021 Third Quarter Results
November 25, 2021 at 05:01 pm
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WINNIPEG, MB, Nov. 25, 2021 /CNW/ - Lanesborough Real Estate Investment Trust ("LREIT") (TSXV: LRT.UN) today reported its operating results for the quarter ended September 30, 2021. The following comments in regard to the financial position and operating results of LREIT should be read in conjunction with interim management's discussion & analysis – quarterly highlights and the interim financial statements for the quarter ended September 30, 2021, which may be obtained from the SEDAR website at www.sedar.com.
ANALYSIS OF OPERATING RESULTS
Analysis of Loss and Comprehensive Loss
Three Months Ended September 30
Nine Months Ended September 30
Increase (Decrease)
in Income
2021
2020
Amount
%
2021
2020
Rentals from investment properties
$
5,377,117
$
4,497,114
$
880,003
20%
$
14,382,769
$
13,297,433
Property operating costs
(3,205,468)
(3,015,558)
(189,910)
(6)%
(9,556,479)
(9,082,734)
Net operating income(NOI)
2,171,649
1,481,556
690,093
47%
4,826,290
4,214,699
Interest income
43,715
45,012
(1,297)
(3)%
130,356
137,778
Interest expense
(3,166,891)
(4,519,349)
1,352,458
30%
(9,178,341)
(13,531,934)
Trust expense
(288,962)
(295,328)
6,366
2%
(917,822)
(994,506)
Loss before the following
(1,240,489)
(3,288,109)
2,047,620
62%
(5,139,517)
(10,173,963)
Fair value adjustments
(546,573)
(19,915,171)
19,368,598
97%
(10,908,331)
(23,747,044)
Loss before discontinued operations
(1,787,062)
(23,203,280)
21,416,218
92%
(16,047,848)
(33,921,007)
Loss from discontinued operations
(535,198)
(632,986)
97,788
15%
(1,421,690)
(1,840,033)
Loss and comprehensive loss
$
(2,322,260)
$
(23,836,266)
$
21,514,006
90%
$
(17,469,538)
$
(35,761,040)
Overall Results
LREIT completed Q3-2021 with a loss and comprehensive loss of $2.3 million, compared to a loss and comprehensive loss of $23.8 million during Q3-2020. The decrease in the extent of the loss and comprehensive loss mainly reflects a $19.4 million decrease in the loss relating to fair value adjustments, a $1.4 million decrease in interest expense and a $0.7 million increase in net operating income ("NOI").
The decrease in the loss relating to fair value adjustments mainly reflects the comparatively high loss from fair value adjustments of $19.9 million recognized during Q3-2020. Losses from fair value adjustments which were recognized during Q3-2020 primarily reflected changes made to key valuation assumptions to incorporate new information, obtained at the time from external appraisals and market reports, with respect to the risks associated with and the outlook for the Fort McMurray rental accommodation market.
The decrease in interest expense during Q3-2021 mainly reflects a $1.0 million decrease in interest on the revolving loan from 2668921 Manitoba Ltd. ("revolving loan"), and a $0.3 million decrease in mortgage loan interest. The decrease in interest on the revolving loan was primarily due to the reduction in the interest rate from 7% to 2% per annum, effective January 1, 2021, partially offset by an increase in the average outstanding balance of the revolving loan. The decrease in mortgage loan interest was primarily due to the decrease in the weighted average interest rate of the Trust's mortgage loan debt, which decreased from 5.7% as at September 30, 2020 to 5.3% as at September 30, 2021.
The increase in NOI mainly reflects a $0.9 million increase in rental revenues, primarily as a result of an increase in the rental revenue of the Fort McMurray properties segment, LREIT's primary operating segment, which increased by $0.8 million or 23%. The increase in the rental revenue of the Fort McMurray properties segment was primarily due to the recognition of insurance proceeds receivable in the amount of $0.6 million during Q3-2021 with respect to rental losses incurred by the Trust as a result of the April 2020 flood in downtown Fort McMurray. Also contributing to the increase in rental revenue of the Fort McMurray properties segment were comparatively low revenues during Q3-2020 due to $0.2 million of vacancy loss recorded during the quarter as a result of the flood.
ABOUT LREIT LREIT is a real estate investment trust, which is listed on the TSX Venture Exchange under the symbols LRT.UN (Trust Units) and LRT.DB.G (Series G Debentures). For further information on LREIT, please visit our website at www.lreit.com.
This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Lanesborough Real Estate Investment Trust (The Trust) is a Canada-based closed-end real estate investment trust. The investment properties of the Trust operate through three segments: Fort McMurray Properties, Other Investment Properties, and Held for Sale and/or Sold Properties. Its Fort McMurray Properties include 10 properties. Its Other Investment Properties includes three properties. Itâs Held for Sale and/or Sold Properties includes four properties. The Trust's property portfolio consists of 13 rental properties, encompassing 12 multi-unit residential properties, including the unsold condominium units at Lakewood Townhomes.