July 13, 2007

On June 22nd, Lakeview closed its $26.5 million purchase of the 120-room Marriot Residence Inn located near the Calgary International Airport. The four story, all suite hotel will be the largest hotel in Lakeview’s portfolio (which currently averages 72 rooms per hotel). Keeping in line with the REIT’s brand strategy, the hotel will be re-flagged with the Lakeview banner. This acquisition represents a new direction for the REIT in many respects. The Calgary area is a departure from the secondary markets that have been Lakeview’s focus to date. Lakeview’s current portfolio consists of limited service hotels located in markets that serve the oil & gas industry. In contrast, this new airport focused hotel caters to sophisticated travelers that demand the best services and comfort. In fact, the new hotel’s average room rate of $135 is 20% higher than the $112 nightly rate of the current portfolio.

While the hotel presents a new strategic focus, we believe the acquisition is positive. Most importantly, we believe Lakeview’s management team has the experience necessary to not only navigate the Calgary market successfully but increase the market position of the hotel. On balance, the purchase metrics are accretive to Lakeview’s net asset value and cash flow. The capitalization rate of the acquisition at approximately 8.5% is well above Lakeview’s recent 6.5% convertible debenture financing. The 200 basis point spread should provide a meaningful bump to this year’s FFO and AFFO figures. From a marketing perspective, having a presence in a major urban center will raise the profile of the Lakeview name and is an important step to building a nationally recognized brand. We suspect that by year end Lakeview will be in position to raise its distribution and transition to the TSX.

September 14, 2007

On August 30th, Lakeview announced Q2 results. Total revenue for the period was $6.6 million, an increase of 60% over last year. Cash provided by operating activities during the second quarter decreased to $403,873. For the first six months of 2007, cash from operations was $2.31 million, roughly the same as the $2.32 million recorded during the first six months of last year. With the exception of higher average room rates, all performance measures were lower compared to Q2 2006. Average daily RevPAR (revenue per available room) was $61.20, down from $73.03. Occupancy came in at 55.54% compared to the 72.19% rate experienced last year.

Overall, Q2 results were below management’s expectations. Soft natural gas prices, coupled with a prolonged spring breakup, reduced travel to Lakeview’s properties. High levels of snow cover restricted road access to the remote natural gas drilling areas in Alberta and BC. These factors translated to an occupancy rate of 55.5%, down from 72.2% for the same period last year. The REIT’s Fort Nelson, BC and Edson, AB properties were particularly weak during the second quarter. Due to Lakeview’s small portfolio, one or two poorly performing hotels can have a big impact on total results. As a consequence, the payout ratio for the first half of the year stood at 155%.

Going forward, as the REIT adds hotels with less exposure to natural gas and oil drilling, operating results will become more stable and less dependent on commodity prices. For example, the recently purchased 120-room Marriot Residence Inn at the Calgary Airport will provide a balance against the REIT’s remote locations that are directly linked to drilling activity. Lakeview management expects that as drilling activity increases in late 2007 and the recently acquired Marriot becomes reflected in results, the REIT will see a significant improvement in its cash flow and, as a result, a much lower payout ratio.

November 30, 2007

On November 28th, Lakeview reported Q3 results. Overall, the Trust’s Q3 results were a substantial improvement over Q2 and demonstrate that Lakeview’s management team is doing a good job of navigating turbulent markets. Most importantly, the Trust’s payout ratio came in below 100%, which should give comfort to investors. Looking at the income statement, total revenue for the period increased by 73% to $9.7 million. The increase in revenue for the third quarter was a result of including room, food and beverage contribution from fifteen hotels versus nine hotels for the comparable period last year. Revenue from licensing increased by 28%, reflecting the contribution from the six new Lakeview Inns & Suites banners added to the portfolio since last year.

Despite impressive top line growth, Lakeview’s hotel performance numbers continue to reflect reduced oil & gas activity in Western Canada. Lower occupancy in the quarter offset higher room rates to bring RevPAR (revenue per available room) down to $78.80 from the $86.06 achieved during the same period last year. Negatively impacting the performance numbers is the slower than expected start of two newly developed hotels purchased in 2007. Excluding these two hotels, occupancy, rate, and RevPAR would have been essentially on par with 2006 numbers.

Like many REITs, Lakeview’s stock price declined after the subprime/asset backed commercial paper turmoil surfaced in August. Additionally, a temporary payout ratio in excess of 100% during Q2 further bothered investors who then went on to seek larger capitalization, well-known names. As a result, Lakeview’s unit price now trades at a discount of approximately 50% to our calculation of net asset value. With the credit market stabilizing, T-bill rates nearing multi-year lows, and hotel fundamentals remaining firm, we believe that Lakeview’s discount to NAV positions it as a prime takeover candidate.

May 2, 2008

On April 29th, Lakeview reported its financial results for 2007. As expected, key performance measures were down compared to 2006. Operating results at Lakeview’s Alberta and British Columbia properties were impacted by a cyclical downturn in natural gas drilling activity. Natural gas prices hovered between $5-$7 per Mcf for most of 2007, down significantly from the $10-$15 range recorded during the last half of 2006. Drilling budgets were slashed even further when the Alberta government announced its royalty regime change in October. New hotel acquisitions completed during the second half of 2007 failed to deliver anticipated occupancy and disproportionately skewed the results of the entire portfolio. Looking at Lakeview’s key performance measures, occupancy for 2007 was 61.87%, down from 73.68% recorded for 2006. RevPar – revenue per available room – declined 9% to $70.49. A higher average room rate of $113.93, up from $105.30, helped to mitigate the impact of lower occupancy numbers.

Looking ahead, Lakeview is expecting much stronger results for 2008. Drilling activity has started to return to normalized levels. Natural gas prices now hover around $10 and the Alberta government has relaxed its previously announced royalty rate changes. While properties located in places such as the Montney Region, Fort Nelson, and Fredericton will benefit as drilling activity resumes, management has made an effort to diversify the portfolio away from the cyclical nature of natural gas drilling activity. New acquisitions in Calgary, Slave Lake, and Prince George have reduced Lakeview’s exposure to oil & gas activity to 40% from 50%. Initiatives to spark organic growth should pay dividends. Lakeview’s recently announced mezzanine financing package speaks to management’s creativity. Lakeview will extend the facility to a private developer for the construction of properties in BC, Alberta, and Saskatchewan. Yielding over 14% for the REIT, the facility transfers all development and start up risk to the developer. Additionally, Lakeview receives the right to purchase the properties at today’s prices for up to two years after construction. With a cost of financing around 8.5%, Lakeview will enjoy a 5.5% spread on the loan.