Legacy Has Room to Grow

Article Excerpt

LEGACY HOTELS REIT $11.24 (Toronto symbol LGY.UN; SI Rating: Extra Risk) owns 25 luxury hotels with over 10,700 guestrooms in Canada and the United States, including The Fairmont Royal York in Toronto and the Fairmont Le Château Frontenac in Quebec City. Legacy lowered its losses in the three months ended December 31, 2006, to $2.6 million or $0.03 a unit from $5.5 million or $0.06 a unit a year earlier. Revenue rose 5.0%, to $208.9 million from $198.9 million, as higher room rates offset a slight drop in occupancy. Cash flow per share rose 24.8%, to $0.17 from $0.14. Legacy recently agreed to buy the minority interest in Moncton’s Delta Beausejour hotel for $21.2 million. In addition, it plans to spend $6 million on renovations at the hotel. These moves should improve occupancy rates at this hotel, and help Legacy maintain its $0.32 annual distribution rate, which gives it a current yield of 2.9%. Legacy could become the subject of a takeover offer…

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