WINNIPEG, MB, March 21, 2023 /CNW/ - Lanesborough Real Estate Investment Trust ("LREIT") (TSXV: LRT.UN) today reported its operating results for the year ended December 31, 2022. The following comments in regard to the financial position and operating results of LREIT should be read in conjunction with management's discussion & analysis, annual report and the financial statements for the year ended December 31, 2022, which may be obtained from the SEDAR website at www.sedar.com.
ANALYSIS OF OPERATING RESULTS
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Analysis of Income (Loss) and Comprehensive Income (Loss)
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Year Ended December 31
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|
|
|
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Increase (Decrease)
in Income
|
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2022
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2021
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Amount
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%
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|
|
|
|
|
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Rentals from investment properties
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$ 17,848,025
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$ 18,327,013
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$ (478,988)
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(3) %
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|
Rental loss insurance proceeds (reversal of proceeds)
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(790,734)
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1,872,888
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(2,663,622)
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- %
|
|
Property operating costs
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(13,078,969)
|
(12,833,102)
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(245,867)
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(2) %
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|
Net operating income(NOI)
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3,978,322
|
7,366,799
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(3,388,477)
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(46) %
|
|
Interest income
|
62,849
|
239,462
|
(176,613)
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(74) %
|
|
Interest expense
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(11,390,280)
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(12,250,385)
|
860,105
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7 %
|
|
Trust expense
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(1,510,694)
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(1,243,802)
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(266,892)
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(21) %
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|
Loss before the following
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(8,859,803)
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(5,887,926)
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(2,971,877)
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(50) %
|
|
Fair value adjustments
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15,283,441
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(10,097,524)
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25,380,965
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251 %
|
|
Gain on extinguishment of Series G Debentures
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19,797,489
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-
|
19,797,489
|
100 %
|
|
Income (loss) before discontinued operations
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26,221,127
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(15,985,450)
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42,206,577
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264 %
|
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Loss from discontinued operations
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(2,324,993)
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(3,345,566)
|
1,020,573
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31 %
|
|
Income (loss) and comprehensive income (loss)
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$ 23,896,134
|
$ (19,331,016)
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$ 43,227,150
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224 %
|
|
Analysis of Income (Loss) per Unit
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|
|
Year Ended December 31
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|
|
|
2022
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2021
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Change
|
|
|
|
|
|
|
|
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Income (loss) before discontinued operations
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|
|
|
|
|
|
– basic and diluted
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$ 0.045
|
$ (0.756)
|
$ 0.801
|
106 %
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|
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Loss from discontinued operations
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|
|
|
|
|
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– basic and diluted
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(0.004)
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(0.158)
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0.154
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97 %
|
|
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Income (loss) and comprehensive income (loss)
|
|
|
|
|
|
|
– basic and diluted
|
$ 0.041
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$ (0.914)
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$ 0.955
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104 %
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|
|
|
|
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|
|
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Overall Results
LREIT completed 2022 with income and comprehensive income of $23.9 million, compared to a loss and comprehensive loss of $19.3 million in 2021, representing an increase in income and comprehensive income of $43.2 million. The increase mainly reflects a $25.4 million increase from fair value adjustments, a $19.8 million gain upon the extinguishment of Series G Debentures, a $1.0 million decrease in loss from discontinued operations and a $0.9 million decrease in interest expense, partially offset by a $3.4 million decrease in the NOI of the investment properties and investment properties held for sale and/or sold property segments.
The fair value gain is mainly due to a $15.3 million fair value adjustment during 2022, compared to a $10.1 million loss from fair value adjustments during 2021. The increase in 2022 was primarily due to an increase in the carrying value of the properties located in Fort McMurray, Alberta as a result of changes made to key valuation assumptions to incorporate information obtained from external appraisals received during the year and in recognition of the existing favourable occupancy trend. Losses from fair value adjustments recognized during 2021 mainly reflected a decrease in the carrying value of the Fort McMurray properties as a result of a reduction in the normalized rent potential that was considered to be achievable in the Fort McMurray rental market and an increase in the normalized property operating costs primarily as a result of a further hardening of the insurance market.
The gain on extinguishment of the Series G Debentures was the result of the exchange transaction completed on February 24, 2022 pursuant to which the Series G Debentures, in the aggregate principal amount outstanding of $24.8 million, and all accrued or unpaid interest owing thereon in the amount of $8.2 million, were exchanged for 659,916,300 Trust Units. The Trust Units had a fair value of $13.2 million and debt in the aggregate amount of $33.0 million was extinguished, resulting in a gain of $19.8 million.
The decrease in loss from discontinued operations is primarily due to an impairment adjustment of $1.4 million recognized during 2021 due to the impact of a reduction in the NOI that was considered to be achievable in the Saskatchewan seniors' residence market on the valuation of the property.
The decrease in interest expense mainly reflects a $1.1 million decrease in interest on the debentures due to the exchange of the Series G Debentures for Trust Units on February 24, 2022.
The decrease in NOI for the investment properties and investment properties held for sale and/or sold property segments is mainly due to the recognition and subsequent receipt of $1.9 million of rental loss insurance proceeds during 2021 and the reversal of $0.8 million of such proceeds during 2022. During 2022 a provision was recorded to estimate the amount of the previous legal award that may have to be returned to the insurers as a result of a partially successful appeal. Also contributing to the decrease in NOI is a $0.5 million decrease in rental revenues, primarily attributable to the sale of Woodland Park on March 15, 2022, and a $0.2 million increase in property operating costs.
ABOUT LREIT
LREIT is a real estate investment trust, which is listed on the TSX Venture Exchange under the symbol LRT.UN (Trust Units). 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.
SOURCE Lanesborough Real Estate Investment Trust
View original content: http://www.newswire.ca/en/releases/archive/March2023/21/c7322.html