Lanesborough REIT Reports 2010 Q3 Results

Lanesborough Real Estate Investment Trust (LREIT) reported its operating results for the quarter ended September 30, 2010. The following comments in regard to the financial position and operating results of LREIT should be read in conjunction with the Management Discussion & Analysis and the financial statements for the quarter September 30, 2010, which may be obtained from the LREIT website at www.lreit.com or the SEDAR website at www.sedar.com.

During the third quarter of 2010, LREIT incurred a loss from continuing operations $3.43 million, which was virtually unchanged in comparison to the loss from continuing operations of $3.45 million in the third quarter of 2009. The slight decrease in the loss mainly reflects a decrease in financing expense, offset by a decrease in operating income. The decrease in operating income mainly reflects a decrease in the overall occupancy level of the Fort McMurray property portfolio as a result of the May 31, 2010 expiry of the corporate lease agreement for 100% of Lakewood Manor. The expiry of the lease agreement resulted in a corresponding decrease in the average occupancy level of the entire property portfolio. Lakewood Manor is currently 51% occupied. The decrease in financing expense is mainly due to a decrease in "non-cash" financing charges related to the change in value of interest swap arrangements.

LREIT completed the third quarter of 2010, with a cash outflow from operating activities, before changes in non-cash operating items, of $1.49 million, representing a decrease of $0.98 million, compared to the third quarter of 2009. The decrease mainly reflects a decrease in operating income, on a cash basis and, to a lesser extent, an increase in financing expense, on a cash basis. After providing for changes in non-cash operating items, as well as the net cash outflow from financing and investing activities, LREIT completed the third quarter of 2010 with a net cash outflow from continuing operations of $2.45 million. Cash inflows from investing and financing activities include $6.34 million from the collection of a mortgage loan receivable, $2.06 million from new mortgage financing and additional advances on the revolving loan commitment and line of credit of $1.35 million. Cash outflows from investing and financing activities include $1.45 million of regular mortgage loan principal payments, the retirement of $4.50 million of second mortgage loan financing, an increase in restricted cash of $2.01 million and the investment of $3.34 million in a defeasance asset.

Discontinued Operations

During the third quarter of 2010, LREIT completed the sale of a two apartment properties, resulting in combined gain on sale of $4.25 million. After accounting for the gain on sale and the income from the rental operation on "held for sale" properties, LREIT completed the third quarter of 2010 with income from discontinued operations of $4.69 million. The two property sales generated net cash proceeds of $6.88 million. After accounting for mortgage loan repayments of $4.31 million and the net cash outflow from other investing and financing activities, LREIT completed the third quarter of 2010 with a net cash inflow from discontinued operations of $2.22, which effectively served to fund the net cash outflow from continuing operations of $2.45 million. Year-to-Date Results During the first nine months of 2010, income from the discontinued operations exceeded the loss from continuing operations by $0.96 million, primarily due to the sale of four properties and the resulting gain on sale of $11.84 million. In comparison, the net cash outflow from continuing operations exceeded the total cash inflows from discontinued operations by $2.06 million during the first nine months of 2010, largely due to the extent of long-term debt repayments and an increase in mortgage loan escrow deposits. The cash shortfall was funded from existing cash resources.

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on November 10, 2010