‌

The Keg Royalties Income Fund Posts Strong Quarterly Results and Announces a Third Distribution Increase

August 4th 2006

Vancouver, August 4, 2006 – The Keg Royalties Income Fund (the “Fund”) has reported its financial results for the three and six months ended June 30, 2006. Gross sales, same stores sales, royalty income, earnings, and distributable cash all increased from the comparable periods of the prior year.

The Fund is also pleased to announce that for the third time in the past twelve months, it is increasing its monthly cash distributions to unitholders. The Fund periodically reviews distribution levels with the objective of providing a consistent monthly distribution flow to Unitholders at the highest sustainable level.

Monthly distributions will increase 2.0% from $0.0937 per unit to $0.0956 per unit beginning with the September 2006 distribution. This equates to an annualized distribution in excess of $1.147 per unit. The distribution of $0.0956 per unit for the period from August 1, 2006 to August 31, 2006 will be payable to Unitholders of record at the close of business on September 21, 2006 and will be paid on September 29, 2006.

“We are exceptionally pleased with our sales results at The Keg,” said David Aisenstat, President and CEO of Keg Restaurants Ltd. “Both same store sales at existing locations and very successful new Kegs are contributing to our continued growth. This ultimately adds strength and value to The Keg brand. We are happy to demonstrate this to our Unitholders with another increase in our monthly distributions.”

As previously announced, gross sales reported by Keg restaurants in the Royalty Pool increased by $8,833,000 or 11.1% to $88,266,000 during the quarter and by $21,601,000 or 13.4% to $182,224,000 year to date. The increase in gross sales reflects the net impact of the addition of net new sales to the Royalty Pool at the beginning of the year and an increase in same store sales.

KRL’s same store sales (sales of restaurants that operated during the entire period of both the current and prior years) increased by 6.0% in Canada and by 5.0% in the United States for the 13-week period ended July 2, 2006, and by 7.7% in Canada and by 7.1% in the U.S. for the 26-week period ended July 2, 2006. After translating the sales of the U.S. restaurants into their Canadian dollar equivalent, consolidated same store sales increased by 3.7% for the 13-week period and by 5.9% for the 26-week period, despite the continuing negative effect of the exchange rate between Canadian and US dollars.

Royalty income increased by $355,000 or 11.1% to $3,564,000 for the quarter and by $863,000 or 13.4% to $7,325,000 year to date, as a result of the increase in gross sales.

Earnings increased by 2.5% to 28.3 cents/Fund unit from 27.6 cents/Fund unit during the quarter and by 6.1% to 59.1 cents/Fund unit from 55.7 cents/Fund unit year to date. Distributable cash available to pay distributions to Fund unitholders increased by 2.5% to 28.4 cents/Fund unit from 27.7 cents/Fund unit for the quarter and by 6.3% to 59.3 cents/Fund unit from 55.8 cents/Fund unit year to date. The Fund declared distributions of 28.1 cents/Fund unit during the quarter and 47.1 cents/Fund unit year to date.

A copy of the complete financial results will be available at www.sedar.com or on the Fund’s website at www.kegincomefund.com.

The Keg Royalties Income Fund (TSX – KEG.UN) is a limited purpose, open-ended trust established under the laws of the Province of Ontario that, through The Keg Rights Limited Partnership, owns certain trademarks and other related intellectual property used by Keg Restaurants Ltd. (“KRL”). In exchange for use of those trademarks, KRL pays the Fund a royalty of 4% of gross sales of Keg restaurants included in the royalty pool. Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of the steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. For more information on Keg Restaurants Ltd. visit www.kegsteakhouse.com.

This press release may contain certain "forward looking" statements reflecting The Keg Royalties Income Fund's current expectations in the casual dining segment of the restaurant food industry. Investors are cautioned that all forward looking statements involve risks and uncertainties, including changes in market and competition, competitive developments, and potential downturns in economic conditions generally. Additional information on these and other potential factors that could affect the Fund's financial results are detailed in documents filed from time to time with the provincial securities commissions in Canada.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of the prospectus, nor shall there be any sale of the Fund units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state, province or jurisdiction. The Keg Royalties Income Fund units have not been, and will not be registered under the U.S. Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an application for exemption from the registration requirement under U.S. securities laws.

For further information contact:
Karyn Byrne, Investor Relations Manager
Tel: (416) 646-4960 Email: karynb@kegrestaurants.com

‌