First Capital Realty Announces Solid Q3 Financial Results
Completed Special Dividend-in-kind
THIRD QUARTER 2009 HIGHLIGHTS:
- Invested $85 million in acquisitions, development activities and
property improvements.
- Added 363,000 square feet of gross leasable area from development,
redevelopment and acquisitions.
- 8.1% same property NOI growth; 3.1% same property NOI growth
excluding redevelopment and expansion.
- 9.4% increase on 251,000 square feet of renewal leases.
- Occupancy of 96.0% which compares to 95.8% at September 30, 2008.
Vacancy includes 0.8% of space held for redevelopment.
- Gross new leasing totalled 348,000 square feet including development
and redevelopment coming on line; lease closures totalled 149,000
square feet and closures for redevelopment totalled 28,000 square
feet.
- Average lease rate per occupied square foot increased by 4.7% to
$15.54 at September 30, 2009 compared to $14.84 in the prior year
third quarter.
- Completed new leasing on existing space totalling 84,000 square feet
at an average rate of $19.94 per square foot.
- Issued 3.45 million common shares (including 2.3 million warrants)
generating gross proceeds of $59.0 million.
- Issued $75 million principal amount of 6.25% convertible unsecured
subordinated debentures maturing December 2016.
- On August 14, 2009, the previously announced dividend-in-kind was
completed resulting in the Company no longer having an ownership
interest in Equity One.
-------------------------------------------------------------------------
Three months ended
-------------------------------------------------------------------------
30 Sept 30 Sept Percentage
($ millions, except per share amounts) 2009 2008 Change
-------------------------------------------------------------------------
Enterprise value $ 4,243 $ 4,221
-------------------------------------------------------------------------
Debt to aggregate assets 51.0% 53.1%
-------------------------------------------------------------------------
Debt to total market capitalization 48.9% 49.3%
-------------------------------------------------------------------------
Property rental revenue $ 108.8 $ 100.8 7.9%
-------------------------------------------------------------------------
Net operating income (NOI) $ 71.6 $ 65.5 9.3%
-------------------------------------------------------------------------
Funds from operations (FFO)(1) $ 38.5 $ 38.7 -0.5%
-------------------------------------------------------------------------
FFO per diluted share(1) $ 0.41 $ 0.43 -4.7%
-------------------------------------------------------------------------
Weighted average diluted shares for
FFO (000's) 94,902 90,022 5.4%
-------------------------------------------------------------------------
Adjusted funds from operations (AFFO) $ 37.5 $ 36.5 2.7%
-------------------------------------------------------------------------
AFFO per diluted share $ 0.36 $ 0.37 -2.7%
-------------------------------------------------------------------------
Weighted average diluted shares for
AFFO (000's) 103,879 98,648 5.3%
-------------------------------------------------------------------------
(1) Excludes, in 2008, the Company's share of Equity One's non-cash
impairment loss. See Funds from Operations section of this press
release.
NINE MONTHS HIGHLIGHTS:
- Invested $197 million in acquisitions, development activities and
property improvements.
- Added 740,000 square feet of gross leasable area from development,
redevelopment activities and acquisitions.
- Acquired four income-producing properties totalling 146,000 square
feet, one property held for future development and two land parcels
adjacent to existing properties comprising a total of 9.1 acres of
land held for future development.
- 7.6% same property NOI growth; 3.0% excluding redevelopment and
expansion space.
- 11.0% increase on 864,000 square feet of renewal leases.
- Gross new leasing totalled 939,000 square feet including development
and redevelopment coming on line; lease closures totalled 550,000
square feet and closures for redevelopment totalled 125,000 square
feet.
- Lease rates on openings and redevelopment coming on line increased by
27.9% versus all lease closures.
- Completed new leasing on existing space totalling 385,000 square feet
at an average rate of $19.63 per square foot.
- Completed $156 million of secured financing on 11 properties at a
weighted average rate of 6.23% and a weighted average term of 8.2
years.
- Issued a total of 5.9 million common shares for net proceeds of
$97.8 million.
-------------------------------------------------------------------------
Year-to-date
-------------------------------------------------------------------------
30 Sept 30 Sept Percentage
($ millions, except per share amounts) 2009 2008 Change
-------------------------------------------------------------------------
Property rental revenue $ 328.9 $ 304.5 8.0%
-------------------------------------------------------------------------
Net operating income (NOI) $ 211.5 $ 193.1 9.5%
-------------------------------------------------------------------------
Funds from operations (FFO)(1) $ 115.8 $ 108.0 7.2%
-------------------------------------------------------------------------
FFO per diluted share(1) $ 1.25 $ 1.25 -
-------------------------------------------------------------------------
Weighted average diluted shares
for FFO (000's) 92,895 86,232 7.7%
-------------------------------------------------------------------------
Adjusted funds from operations (AFFO) $ 113.1 $ 103.1 9.7%
-------------------------------------------------------------------------
AFFO per diluted share $ 1.12 $ 1.09 2.8%
-------------------------------------------------------------------------
Weighted average diluted shares for
AFFO (000's) 101,119 94,658 6.8%
-------------------------------------------------------------------------
(1) Excludes, in 2009, the dilution loss on Equity One investment and in
2008, the Company's share of Equity One's non-cash impairment loss.
See Funds from Operations section of this press release.
"While we continue to grow our business primarily by investing in value-added activities within our existing portfolio, we remain focused on uncovering and acquiring properties, one deal at a time, that are well located in supply constrained markets with potential for rent growth", said Dori J. Segal, President & C.E.O., "Our investment program continues to be supported by healthy interest from tenants for our asset class and locations, as well as a strong balance sheet, high-quality cash flow and financial flexibility".
FINANCIAL HIGHLIGHTS
FFO and AFFO presented herein are key financial measures used by the real estate industry to measure and compare the operating performance of real estate organizations. FFO and AFFO are supplemental non-GAAP financial measures and a complete reconciliation containing adjustments from GAAP net income to FFO and AFFO is included in this press release.
Funds from Operations
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------------------------------------------------------------
(thousands of dollars,
except per share Sept 30, Sept 30, Sept 30, Sept 30,
amounts) 2009 2008 2009 2008
-------------------------------------------------------------------------
Net operating income $ 71,612 $ 65,455 $ 211,469 $ 193,129
Interest expense (31,412) (27,862) (93,122) (85,064)
Interest and other income
(expense)(1) 2,390 2,932 3,077 4,577
Corporate expenses (5,320) (4,731) (16,321) (15,963)
Funds from operations
from Equity One(2) 2,553 (1,952) 15,009 8,749
Amortization (1,003) (547) (2,756) (1,567)
Current income taxes (318) (1,036) (2,195) (2,365)
-------------------------------------------------------------------------
FFO 38,502 32,259 115,161 101,496
Add: dilution loss on
Equity One investment - - 676 -
Add: the Company's share
of Equity One's non-cash
impairment loss - 6,480 - 6,480
-------------------------------------------------------------------------
FFO excluding dilution
loss on Equity One
investment and the
Company's share of
Equity One's non-cash
impairment loss $ 38,502 $ 38,739 $ 115,837 107,976
FFO per diluted share $ 0.41 $ 0.36 $ 1.24 $ 1.18
Add: dilution loss on
Equity One investment - - 0.01 -
Add: the Company's share
of Equity One's non-cash
impairment loss - 0.07 - 0.07
-------------------------------------------------------------------------
FFO per diluted share
excluding dilution loss
on Equity One investment
and the Company's share
of Equity One's non-cash
impairment loss $ 0.41 $ 0.43 $ 1.25 $ 1.25
-------------------------------------------------------------------------
Weighted average diluted
share - FFO 94,902,006 90,021,640 92,895,420 86,231,829
-------------------------------------------------------------------------
(1) Excludes gains on disposition of income-producing real estate.
(2) Current year amounts cover period to August 14, 2009, the date of the
dividend-in-kind related to the Company's interest in Equity One.
For the quarter and year-to-date, FFO was positively affected by same property NOI growth and the effect of acquisitions and development coming on line. This was largely offset by increased interest and amortization expense, decreased interest and other income, and the timing of the corporate expenses. Specifically the increase in the interest expense in the quarter and year-to-date is primarily due to the increased cost of the new secured revolving credit facility and one time costs related to specific financing activities. The increased credit facility costs were only partially offset by the effect of the reduced interest rate environment. In addition the third quarter results included the results of Equity One up to
Adjusted Funds from Operations
Management views AFFO as an effective measure of cash generated from operations. AFFO for the three months ended
Net Income
-------------------------------------------------------------------------
($ thousands, except per Three months ended Nine months ended
share amounts) Sept 30 Sept 30
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Net income $ 9,002 $ 8,227 $27,177 $26,767
-------------------------------------------------------------------------
Earnings per share
(basic and diluted) $ 0.09 $ 0.09 $ 0.29 $ 0.31
-------------------------------------------------------------------------
Weighted average common
shares - diluted (000's) 94,902 90,022 92,895 86,232
-------------------------------------------------------------------------
Net income for the three and nine months ended
DEVELOPMENT AND ACQUISITION HIGHLIGHTS
During the third quarter of 2009, the Company invested
During the third quarter of 2009, the Company acquired a 65,000 square foot property in Victoria, British Columbia for
OPERATING HIGHLIGHTS
Net operating income ("NOI") is defined as property rental revenue less property operating costs. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's shopping centre portfolio. Net operating income is not a measure defined by GAAP and there is no standard definition of net operating income. As a result, net operating income may not be comparable with similar measures presented by other entities. Net operating income is not to be construed as an alternative to net income or cash flow from operating activities determined in accordance with GAAP.
Net operating income for the three months ended
Acquisitions completed in 2009 and 2008 contributed
Net operating income for the nine months ended
Year to date acquisitions completed in 2009 and 2008 contributed
The lease termination fees for the nine months ended
Gross new leasing in the third quarter totalled 348,000 square feet including development and redevelopment space brought on line. The Company achieved a 9.4% increase on 251,000 square feet of renewal leases over the expiring lease rates. For the nine months ended
The average rate per occupied square foot at
Portfolio occupancy at
FINANCING AND CAPITAL MARKET HIGHLIGHTS
During the three months ending September 30, 2009, the Company completed
the following significant financing and capital market transactions:
- On August 5, 2009, 3,450,000 Units were issued at a price of $17.10
per unit for gross proceeds of $59 million. Each Unit consisted of
one common share and two-thirds of a warrant separable immediately.
Each whole warrant entitles the holder to acquire at any time up to
October 29, 2010, one common share of First Capital Realty at an
exercise price of $17.53.
- On September 18, 2009, the Company completed the issuance of
$75 million aggregate principal amount of 6.25% convertible unsecured
subordinated debentures due December 31, 2016. Interest is payable
semi-annually commencing March 31, 2010 and will be convertible at
the option of the holder into common shares of the Company at a
conversion price of $22.90 per common share. It is the current
intention of First Capital Realty to satisfy its obligation to pay
the interest and principal by issuing common shares of the Company
pursuant to the terms of the trust indenture.
The Company also completed the following financings in the nine months
ended September 30, 2009:
- Eleven secured financing transactions for gross proceeds of
$156.0 million at a weighted average interest rate of 6.23% and a
weighted average term to maturity of 8.2 years.
- A three year, $450 million secured revolving credit facility maturing
March 2012 with a syndicate of ten banks jointly led by RBC Capital
Markets, TD Securities, and BMO Capital Markets. The new facility was
used to replace the Company's existing three year $350 million Senior
Unsecured Revolving Credit Facility, which had a maturity date of
March 2010.
- A three year, $75 million secured revolving credit facility with the
Bank of Nova Scotia maturing January 2012.
- On February 17, 2009 the Company issued 1.4 million common shares to
acquire 1.8 million shares of Allied Properties REIT.
- The Company issued 772,000 common shares as payment of the interest
due to holders of the 5.50% convertible debentures.
- Convertible debentures totalling $6.3 million in principal were
converted at the option of the holder resulting in the issuance of
approximately 231,000 common shares.
In addition, on
QUARTERLY DIVIDEND
The Company announced that it will pay a fourth quarter dividend of
OUTLOOK
Over the past several years First Capital Realty has made significant progress in growing its business and generating accretive growth in funds from operations while enhancing the quality of its portfolio.
The current environment remains competitive with little transaction activity. Both debt and equity markets are accessible but continue to be challenging relative to pricing currently being asked by property vendors. The Company will continue to selectively acquire properties that are well-located and of high quality, where they add strategic value and/or operating synergies provided they will be accretive to FFO over the long term, and equity and debt capital can be priced and committed to maintain conservative leverage.
Development and redevelopment activities continue to provide the Company with opportunities to grow within its existing portfolio of assets. Once completed, these activities typically generate higher returns on investment.
With respect to acquisitions of both income-producing and development properties, the Company will continue to focus on maintaining the sustainability and growth potential of rental income to ensure that among other things, refinancing risk is minimized. This is particularly important given the current cost of capital.
Specifically, Management will focus on the following five areas to achieve its objectives in 2009 and 2010:
- same property net operating income growth, taking into account
maintaining high occupancy;
- development and redevelopment activities;
- selective acquisitions;
- increasing efficiency and productivity of operations; and
- careful capital allocation to decrease dependence on capital markets.
Overall, Management is confident that the quality of the Company's balance sheet, the defensive nature of its assets and operations will continue to serve it well in the current environment.
2009 GUIDANCE
Projections involve numerous assumptions such as rental income (including assumptions on timing of lease-up, development coming on line and levels of percentage rent), interest rates, tenant defaults, corporate expenses, level and timing of acquisitions of income-producing properties, the Company's share price, number of shares outstanding and numerous other factors. Not all factors which affect our range of projected funds from operations and adjusted funds from operations are determinable at this time and actual results may vary from the projected results in a material respect, and may be above or below the range presented in a material respect.
-------------------------------------------------------------------------
(per share amounts,
except for projected
FFO, AFFO and shares 2009 Guidance 2009 Guidance
outstanding) as at Q3 as at Q2 Variance
-------------------------------------------------------------------------
FFO Guidance
-------------------------------------------------------------------------
Low High Low High Low High
-------------------------------------------------------------------------
Projected diluted
net income $0.39 $0.41 $0.41 $0.43 $(0.02) $(0.02)
-------------------------------------------------------------------------
Adjustments
Projected FFO from
Equity One 0.16 0.16 0.15 0.16 0.01 0.00
Projected equity
income from
Equity One (0.09) (0.09) (0.09) (0.09) 0.00 0.00
Projected
amortization and
future income
taxes 1.18 1.19 1.16 1.18 0.02 0.01
-------------------------------------------------------------------------
Projected FFO(1) $1.64 $1.67 $1.63 $1.68 $0.01 $(0.01)
-------------------------------------------------------------------------
Projected FFO(1) $153.9M $157.3M $152.7M $158.0M $1.2M $(0.7)M
-------------------------------------------------------------------------
Projected weighted
average shares
outstanding for
per share FFO
calculations 94.0M 93.9M 0.1M
-------------------------------------------------------------------------
-------------------------------------------------------------------------
AFFO Guidance
-------------------------------------------------------------------------
Projected FFO(1) $153.9M $157.3M $152.7M $158.0M $1.2M $(0.7)M
-------------------------------------------------------------------------
Projected weighted
average shares
outstanding for
per share AFFO
calculations
(including
conversion of
convertible
debentures) 103.2M 102.2M 1.0M
-------------------------------------------------------------------------
Projected AFFO
(using weighted
average AFFO
shares
outstanding)(1) $1.49 $1.52 $1.50 $1.54 $(0.02) $(0.04)
-------------------------------------------------------------------------
Projected dividend
income - return of
capital portion (0.00) (0.01) 0.02 0.03 (0.02) (0.04)
Projected dividends
from Equity One net
of FFO from
Equity One (0.02) (0.02) (0.01) (0.02) (0.01) 0.00
Projected revenue
sustaining capital
expenditures (0.12) (0.12) (0.11) (0.10) (0.01) (0.02)
Projected non cash
items, net 0.11 0.11 0.09 0.09 0.02 0.02
-------------------------------------------------------------------------
Projected AFFO(1) $1.46 $1.48 $1.49 $1.54 $(0.03) $(0.06)
-------------------------------------------------------------------------
(1) See Funds from Operations section of this press release.
The variance between Q2 and Q3 FFO and AFFO guidance is primarily
associated with the items noted below.
- Same property NOI excluding redevelopment and expansion is assumed to
grow ~ 2-3%, consistent with Q2 guidance assumptions;
- The increased investment in development, redevelopment and expansion
activities to approximately 675,000 square feet with gross book value
of approximately $250 million compares to Q2 guidance of 600,000 -
650,000 square feet with gross book value ranging from $175 to $200
million. These development projects coming on line in the fourth
quarter will essentially produce revenues in 2010;
- Existing vacancy and certain small CRU spaces in newly developed
properties are leasing slower than planned resulting in a slight
reduction in NOI forecast guidance from Q2 to Q3;
- Income-producing property acquisitions now total $61 million
which compares to $27 million year-to-date in the Q2 guidance
assumption;
- Interest expense is higher due to longer term financing activities
completed during Q3 including the 6.25% convertible debenture issue
plus other specific financing activities which together resulted in a
decreased utilization of the lower cost credit facility and increased
financing costs;
- Gains on marketable securities sold during Q3, offset by the related
dividend income reduction through year end, were not included in the
Q2 guidance;
- Non-cash items including amortization and straight-line rents are
adjusted based on actual amounts each quarter.
The ranges presented represent Management's estimate of results based upon these assumptions as of the date of this press release. The purpose of the Company's guidance is to provide readers with Management's view as to the expected financial performance of the Company for 2009, using factors that are commonly accepted and viewed as meaningful indicators of financial performance in the real estate industry. For financial information and analysis please refer to the Company's Management's Discussion and Analysis of Financial Position and Results of Operations for the third quarter of 2009 and 2008 and for the nine month periods ended
Readers should refer to the section below titled "Forward Looking Statements" for important information relating to our guidance, including risk factors.
MANAGEMENT CONFERENCE CALL AND WEBCAST
Management will hold a conference call on
You may participate in the live conference toll free at 866-299-6657 or at 416-641-6135. To ensure your participation, please call five minutes prior to the scheduled start of the call. The call will be archived through
Management's presentation will be followed by a question and answer period. To ask a question, press '*1' on a touch-tone phone. The conference call coordinator is immediately notified of all requests in the order in which they are made, and will introduce each questioner. To cancel your request, press the pound key (the number sign). If you hang up, you can reconnect by dialing 866-299-6657 or 416-641-6135. For assistance at any point during the call, press '*0'.
ABOUT First Capital Realty (TSX:FCR)
First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas. The Company currently owns interests in 176 properties, including four under development, totalling approximately 20.8 million square feet of gross leasable area and six land sites in the planning stage for future retail development.
* * * *
Forward Looking Statements
This press release and in particular the "Outlook" section, contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can generally be identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", "outlook", "objective", "may", "will", "should", "plan", "continue" and similar expressions. The forward-looking statements are not historical facts but reflect the Company's current expectations regarding future results or events and are based on information currently available to Management. Certain material factors and assumptions were applied in providing these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements.
Management believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, Management can give no assurance that actual results will be consistent with these forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks and Uncertainties" in the Company's MD&A for the year ended
Factors that could cause actual results or events to differ materially from those expressed, implied or projected by forward-looking statements in addition to those described in the "Risk and Uncertainties" section include, but are not limited to, general economic conditions, the availability of new competitive supply of retail properties which may become available either through construction or sublease, First Capital Realty's ability to maintain occupancy and to lease or re-lease space at current or anticipated rents, tenant bankruptcies, the relative illiquidity of real-property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, financial difficulties and defaults, changes in interest rates and credit spreads, changes in the U.S.-Canadian foreign currency exchange rate, changes in operating costs, First Capital Realty's ability to obtain insurance coverage at a reasonable cost and the availability of financing. The assumptions underlying the Company's forward-looking statements contained in the "Outlook" section of this press release include that consumer demand will remain stable, demographic trends will continue and there will continue to be barriers to entry in the markets in which the Company operates. The assumptions used in developing the Company's guidance are set out in the "Outlook" section of this press release.
Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. First Capital Realty undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by security laws.
These forward-looking statements are made as of November 6, 2009.
NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES
Funds from Operations and Adjusted Funds from Operations
In Management's view, funds from operations ("FFO") and adjusted funds from operations ("AFFO") are commonly accepted and meaningful indicators of financial performance in the real estate industry. First Capital Realty believes that financial analysts, investors and shareholders are better served when the clear presentation of comparable period operating results generated from FFO and AFFO disclosures supplement Canadian generally accepted accounting principles ("GAAP") disclosure. These measures are the primary methods used in analyzing real estate organizations in
Funds from Operations - RealPac Recommendations
First Capital Realty calculates FFO in accordance with the recommendations of the Real Property Association of
FFO is considered a meaningful additional measure of operating performance, as it excludes amortization of real estate assets. Amortization expense assumes that the value of real estate assets diminishes predictably over time, which is clearly not a valid assumption. FFO also adjusts for certain items included in GAAP net income that may not be the most appropriate determinants of the long-term operating performance of the Company including gains and losses on depreciable real estate assets.
Net Operating Income
Net operating income ("NOI") is defined as property rental revenue less property operating costs. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's shopping centre portfolio. Net operating income is not a measure defined by GAAP and there is no standard definition of net operating income. As a result, net operating income may not be comparable with similar measures presented by other entities. Net operating income is not to be construed as an alternative to net income or cash flow from operating activities determined in accordance with GAAP.
FIRST CAPITAL REALTY INC.
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
(unaudited) September 30 December 31
(thousands of dollars) 2009 2008(1)
-------------------------------------------------------------------------
(restated)
ASSETS
Real Estate Investments
Shopping centres $ 3,193,742 $ 3,040,257
Land and shopping centres under development 257,661 281,959
Deferred leasing costs 16,934 16,146
Intangible assets 23,069 29,312
-------------------------------------------------------------------------
3,491,406 3,367,674
Investment in Equity One, Inc. - 227,259
Loans, mortgages and other real estate assets 82,627 32,480
-------------------------------------------------------------------------
3,574,033 3,627,413
Other assets 38,073 27,448
Amounts receivable 46,647 45,501
Cash and cash equivalents 19,400 7,263
Future income tax assets 18,109 11,977
-------------------------------------------------------------------------
$ 3,696,262 $ 3,719,602
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Mortgages, loans and credit facilities $ 1,499,011 $ 1,573,530
Accounts payable and other liabilities 135,955 166,507
Intangible liabilities 12,412 17,264
Senior unsecured debentures 592,786 593,288
Convertible debentures 282,788 218,247
Future income tax liabilities 63,957 55,620
-------------------------------------------------------------------------
2,586,909 2,624,456
SHAREHOLDERS' EQUITY 1,109,353 1,095,146
-------------------------------------------------------------------------
$ 3,696,262 $ 3,719,602
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Prior year comparative figures have been restated for a change in
accounting standards.
FIRST CAPITAL REALTY INC.
CONSOLIDATED STATEMENTS OF EARNINGS
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------------------------------------------------------------
(unaudited)
(thousands of September 30 September 30 September 30 September 30
dollars, except 2009 2008(1) 2009 2008(1)
per share amounts)
-------------------------------------------------------------------------
(restated) (restated)
REVENUE
Property rental
revenue $ 108,829 $ 100,830 $ 328,899 $ 304,497
Interest and
other income 2,390 2,932 3,288 4,577
-------------------------------------------------------------------------
111,219 103,762 332,187 309,074
-------------------------------------------------------------------------
EXPENSES
Property
operating costs 37,217 35,375 117,430 111,368
Interest expense 31,412 27,862 93,122 85,064
Amortization
Shopping centres 21,697 18,507 62,748 55,456
Deferred leasing
costs 934 741 2,716 2,515
Intangible assets 2,061 1,803 6,015 6,077
Deferred financing
fees 623 222 1,558 628
Other assets 380 325 1,198 939
Corporate expenses 5,320 4,731 16,321 15,963
-------------------------------------------------------------------------
99,644 89,566 301,108 278,010
-------------------------------------------------------------------------
Equity income (loss)
from Equity One, Inc. 954 (1,506) 8,353 7,311
-------------------------------------------------------------------------
Income before income
taxes 12,529 12,690 39,432 38,375
-------------------------------------------------------------------------
Income taxes
Current 318 1,036 2,195 2,365
Future 3,209 3,427 10,060 9,243
-------------------------------------------------------------------------
3,527 4,463 12,255 11,608
-------------------------------------------------------------------------
Net income $ 9,002 $ 8,227 $ 27,177 $ 26,767
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per common
share, basic and
diluted $ 0.09 $ 0.09 $ 0.29 $ 0.31
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Prior year comparative figures have been restated for a change in
accounting standards.
FIRST CAPITAL REALTY INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------------------------------------------------------------
(unaudited)
(thousands of September 30 September 30 September 30 September 30
dollars) 2009 2008(1) 2009 2008(1)
-------------------------------------------------------------------------
(restated) (restated)
NET INCOME $ 9,002 $ 8,227 $ 27,177 $ 26,767
-------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
Unrealized foreign
currency gains on
translating self-
sustaining foreign
operations
(Losses) gains arising
during the period (3,146) 2,095 (6,156) 3,363
Reclassification
adjustment for
dilution loss
on investment in
Equity One, Inc. - - 1,669 -
Reclassification
adjustment for
dividend-in-kind 17,288 - 17,288 -
-------------------------------------------------------------------------
14,142 2,095 12,801 3,363
-------------------------------------------------------------------------
Other comprehensive
(losses) income of
Equity One, Inc.
Gains arising during
the period - 2,975 4,346 1,088
Reclassification
adjustment for
dilution loss
included in net
income - - 29 -
Reclassification
adjustment for
dividend-in-kind (1,124) - (1,124) -
-------------------------------------------------------------------------
(1,124) 2,975 3,251 1,088
-------------------------------------------------------------------------
Unrealized gains
(losses) on cash
flow hedges of
interest rates
Unrealized gains
(losses) arising
during the period 196 (22) 9,080 (440)
Reclassification
adjustments for
gains included in
net income (7) - (21) -
Reclassification
adjustment for
dividend-in-kind 4,407 - 4,407 -
-------------------------------------------------------------------------
4,596 (22) 13,466 (440)
-------------------------------------------------------------------------
Change in cumulative
unrealized gain
(losses) on available-
for-sale marketable
securities
Unrealized gains
(losses) arising
during the period 5,341 (1,707) 12,163 (2,054)
Reclassification
adjustments for
(gains) losses
included in net
income (1,668) 3 (1,470) 55
-------------------------------------------------------------------------
3,673 (1,704) 10,693 (1,999)
-------------------------------------------------------------------------
Other comprehensive
income before
income taxes 21,287 3,344 40,211 2,012
Future income tax
expense (recovery) 1,298 (580) 5,501 (875)
-------------------------------------------------------------------------
Other comprehensive
income 19,989 3,924 34,710 2,887
-------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 28,991 $ 12,151 $ 61,887 $ 29,654
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Prior year comparative figures have been restated for a change in
accounting standards.
FIRST CAPITAL REALTY INC.
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------------------------------------------------------------
(unaudited)
(thousands of September 30 September 30 September 30 September 30
dollars, except 2009 2008(1) 2009 2008(1)
per share amounts)
-------------------------------------------------------------------------
(restated) (restated)
Net income for
the period $ 9,002 $ 8,227 $ 27,177 $ 26,767
Add (deduct):
Amortization of
shopping centres,
deferred costs
and intangible
assets 24,692 21,051 71,479 64,048
Gain on disposition
of income-
producing shopping
centre - - (211) -
Equity income
(loss) from
Equity One(2) (954) 1,506 (8,353) (7,311)
Funds from
operations from
Equity One(2) 2,553 (1,952) 15,009 8,749
Future income taxes 3,209 3,427 10,060 9,243
-------------------------------------------------------------------------
Funds from
operations ("FFO") 38,502 32,259 115,161 101,496
Add: dilution loss on
Equity One investment - - 676 -
Add: the Company's
share of Equity One's
non-cash impairment
loss - 6,480 - 6,480
-------------------------------------------------------------------------
FFO excluding dilution
loss on Equity One
investment and the
Company's share of
Equity One's non-cash
impairment loss $ 38,502 $ 38,739 $ 115,837 $ 107,976
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FFO per diluted
share $ 0.41 $ 0.36 $ 1.24 $ 1.18
Add: dilution loss
on Equity One
investment - - 0.01 -
Add: the Company's
share of Equity
One's non-cash
impairment loss - 0.07 - 0.07
-------------------------------------------------------------------------
FFO per diluted
share excluding
dilution loss on
Equity One
investment and the
Company's share of
Equity One's non-
cash impairment
loss $ 0.41 $ 0.43 $ 1.25 $ 1.25
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
diluted shares
- FFO 94,902,006 90,021,640 92,895,420 86,231,829
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF ADJUSTED FUNDS FROM OPERATIONS
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------------------------------------------------------------
(unaudited)
(thousands of September 30 September 30 September 30 September 30
dollars, except 2009 2008(1) 2009 2008(1)
per share amounts)
-------------------------------------------------------------------------
(restated) (restated)
FFO excluding
dilution loss on
Equity One
investment and the
Company's share of
Equity One's non-
cash impairment
loss $ 38,502 $ 38,739 $ 115,837 $ 107,976
Add/(deduct):
Rental revenue
recorded on a
straight-line
basis and market
rent adjustments (1,421) (2,274) (4,645) (6,166)
Non-cash
compensation
expense 914 904 2,727 2,971
Interest expense
payable in shares 3,642 3,525 10,523 10,491
Change in cumulative
unrealized gain on
marketable
securities - 529 (1,638) 788
Dividend income -
return of capital
portion 484 214 1,766 214
Return of capital
portion -
previously
recognized (792) - (792) -
Loss on
extinguishment
of debt 209 - 897 -
Funds from
operations from
Equity One (2,553) (4,528) (15,009) (15,229)
Dividends from
Equity One
(regular) 2,211 4,464 12,452 13,048
Gain on
termination of
hedge (7) - (21) -
Gain on disposition
of land - (2,667) (118) (3,942)
Revenue sustaining
capital
expenditures and
leasing costs (3,733) (2,436) (8,842) (7,087)
-------------------------------------------------------------------------
Adjusted funds from
operations
("AFFO") $ 37,456 $ 36,470 $ 113,137 $ 103,064
-------------------------------------------------------------------------
-------------------------------------------------------------------------
AFFO per diluted
share $ 0.36 $ 0.37 $ 1.12 $ 1.09
-------------------------------------------------------------------------
Weighted average
diluted shares
for AFFO(3) 103,879,309 98,648,017 101,119,140 94,657,945
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Prior year comparative figures have been restated for a change in
accounting standards.
(2) Current year amounts cover period to August 14, 2009, the date of the
dividend-in-kind related to the Company's interest in Equity One.
(3) Includes the weighted average outstanding shares that would result
from the conversion of the convertible debentures.
FIRST CAPITAL REALTY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------------------------------------------------------------
(unaudited)
(thousands of September 30 September 30 September 30 September 30
dollars) 2009 2008(1) 2009 2008(1)
-------------------------------------------------------------------------
(restated) (restated)
CASH FLOW PROVIDED
BY (USED IN):
OPERATING ACTIVITIES
Net income $ 9,002 $ 8,227 $ 27,177 $ 26,767
Items not affecting
cash
Amortization 25,695 21,598 74,235 65,615
Amortization of
above- and below-
market leases (602) (592) (1,745) (1,679)
Rent revenue
recognized on a
straight-line
basis (819) (1,682) (2,900) (4,487)
Gain on disposition
of income-
producing
property - - (211) -
Gains on
disposition
of land - (2,667) (118) (3,942)
Realized (losses)
gains on sale
of marketable
securities (1,875) - (902) 52
Change in
cumulative
unrealized
losses (gains) on
marketable
securities held-
for-trading - 529 (1,638) 788
Loss on settlement
of debt 209 - 897 -
Non-cash
compensation
expense 914 904 2,727 2,971
Interest paid in
excess of
effective interest
on assumed
mortgages (284) (293) (895) (1,142)
Effective interest
rate in excess of
coupon rate on
senior unsecured
and convertible
debentures 236 217 678 639
Convertible
debenture
interest paid in
common shares 6,253 6,408 12,613 12,891
Other non-cash
interest expense 677 588 2,020 1,849
Equity income from
Equity One, Inc. (954) 1,506 (8,353) (7,311)
Dilution loss on
Equity One, Inc.
investment - - 676 -
Loss on foreign
exchange currency 211 - 211 -
Future income taxes 3,209 3,427 10,060 9,243
Deferred leasing
costs (1,304) (1,428) (3,505) (3,012)
Dividends received
from Equity
One, Inc. 2,211 4,464 12,452 13,048
Net change in non-
cash operating
items (4,518) 1,926 (25,287) (22,905)
-------------------------------------------------------------------------
Cash provided by
operating
activities 38,261 43,132 98,192 89,385
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of
shopping centres (5,364) (39,299) (23,406) (45,947)
Acquisition of land
and shopping
centres held for
development (28) (496) (9,387) (11,603)
Proceeds from
disposition of land
held for development - 8,322 70 10,148
Expenditures on
shopping centres (10,363) (6,145) (22,423) (14,684)
Expenditures on land
and shopping
centres under
development (63,147) (59,009) (134,377) (150,596)
Changes in accounts
payable and accrued
liabilities related
to investing
activities 20,514 (10,034) (3,924) 13,536
Increase in loans and
mortgages receivable (364) (980) (1,390) (1,280)
Investment in
marketable
securities (367) (13,053) (3,112) (22,241)
Return of capital
from investments
in marketable
securities 484 245 1,766 319
Proceeds from
disposition of
marketable
securities 19,159 52 27,762 2,182
-------------------------------------------------------------------------
Cash used in
investing
activities (39,476) (120,397) (168,421) (220,166)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Mortgage financings,
loans and credit
facilities
Borrowings, net of
financing costs 63,049 121,718 548,958 345,345
Principal
instalment
payments (10,260) (9,563) (30,495) (28,304)
Other repayments
on maturity (140,535) (69,343) (475,930) (318,025)
Purchase of senior
unsecured
debentures - - (1,145) -
Issuance of
convertible
debentures, net
of issue costs 72,075 - 72,075 -
Issuance of common
shares, net of
issue costs 54,942 42,991 54,980 148,491
Issuance of
warrants, net
of issue costs 1,821 - 1,821 -
Dividend-in-kind
cash payment (427) - (427) -
Payment of
dividends (30,041) (7,264) (88,793) (20,630)
-------------------------------------------------------------------------
Cash provided by
financing
activities 10,624 78,539 81,044 126,877
-------------------------------------------------------------------------
Effect of
currency rate
movement on
cash balances 1,514 20 1,322 (45)
-------------------------------------------------------------------------
Increase in cash
and cash
equivalents 10,923 1,294 12,137 (3,949)
Cash and cash
equivalents,
beginning of
the period 8,477 5,208 7,263 10,451
-------------------------------------------------------------------------
Cash and cash
equivalents, end
of the period $ 19,400 $ 6,502 $ 19,400 $ 6,502
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SUPPLEMENTARY
INFORMATION
Cash income taxes
paid $ 9 $ 714 $ 1,358 $ 1,640
-------------------------------------------------------------------------
Cash interest paid $ 33,886 $ 29,428 $ 96,630 $ 89,409
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Prior year comparative figures have been restated for a change in
accounting standards.
For further information: Dori J. Segal, President & C.E.O., or Karen H. Weaver, E.V.P. & C.F.O., First Capital Realty Inc., 85 Hanna Avenue, Suite 400, Toronto, Ontario, Canada, M6K 3S3, Tel: (416) 504-4114, Fax: (416) 941-1655, www.firstcapitalrealty.ca
Share this article