New Initiatives Could Bring Higher Payouts

Article Excerpt

LEGACY HOTELS REAL ESTATE INVESTMENT TRUST $8.75 (Toronto symbol LGY.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) spent $1.1 million in the second quarter of 2006 studying new initiatives aimed at improving its long-term growth, including new acquisitions and condominium projects. It may also sell some properties. That should help Legacy maintain or increase its annual cash distribution rate of $0.32 a unit, which yields 3.7%. To put these costs in context, Legacy’s earnings in the second quarter soared to $0.15 a unit (total $13.3 million) from $0.05 a unit ($4.6 million) a year earlier. Cash flow per unit rose 50%, to $0.36 from $0.24, while revenue grew 8.6%, to $225.9 million from $208.0 million. Increasing business travel is helping to offset a drop in tourists from the United States. Legacy is a buy. buy…

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