Gazit America announces its 2009 fourth quarter and year end results
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, March 18 /CNW/ - Gazit America Inc. ("Gazit America" or the "Company") (TSX: GAA) announced today financial results for the year ended December 31, 2009. Highlights for the fourth quarter include:
- Cash from operating activities of $0.9 million generated in the
fourth quarter
- Net income of $1.5 million or $0.12 per share in the fourth quarter
- Successfully extended credit facilities with primary U.S. lender
until January 2013
"2009 marked our beginning as a publicly traded company focused on creating long-term value for our shareholders", said Gail Mifsud, CEO of Gazit America. "The strong performance of Equity One, Inc. (NYSE: EQY) ("Equity One"), which is our largest investment, coupled with advancing our acquisition pipeline and the assembly of our senior management team highlight our progress to date. In addition, during the fourth quarter we extended the maturity terms of virtually all of our credit facilities to 2013", added Gail Mifsud.
FINANCIAL HIGHLIGHTS
Gazit America reported its fourth quarter rental revenues and net operating income of $708,000 and $293,000, respectively. For the year ended December 31, 2009, rental revenues and net operating income is $1.0 million and $0.4 million, respectively.
The Company's U.S. subsidiaries received dividends from its investment in Equity One of $3.3 million (US$3.1 million or US$0.22 per share) in the quarter ended December 2009. In November 2009, Equity One reported that starting with the quarter ended December 31, 2009 its quarterly dividend will be US$0.22 per share, representing an annualized rate of US$0.88 per share. Based on the Company's current holdings of Equity One shares, this equates to dividends of approximately US$12.5 million on an annual basis. The Company received dividends from Equity One of US$15.7 million or US$1.12 per share for the year ended December 31, 2009 and dividends received in 2008 of US$16.8 million or US$1.20 per share. The Canadian dollar equivalent amounts were $18.1 million and $18.2 million, in 2009 and 2008, respectively.
Equity income in the fourth quarter was $1.0 million compared to the equity income of $1.4 million in the fourth quarter of 2008 due mainly to an adjustment to the estimate of the taxable portion of dividends received in 2009. In early 2010, Equity One reported the taxable portion of its 2009 dividends. This figure was lower than previous years' and the initial estimates used by management. For the years ended December 31, 2009 and 2008 equity income was $11.3 million and $8.7 million, respectively. Equity income is a non-cash earnings measure and is generated from the Company's ownership interest in Equity One, Inc. ("Equity One") (NYSE:EQY), a U.S. real estate investment trust.
Net income for the fourth quarter of 2009 was $1.5 million or $0.12 per share. This compares to a net income of $1.2 million or $0.13 per share in the fourth quarter of 2008. Net income for the year ended December 31, 2009 was $5.0 million or $0.47 per share compared to $0.6 million or $0.06 per share for the year ended December 31, 2008.
EXTENSION OF CREDIT FACILITIES
The Company's U.S. subsidiaries and primary U.S. lender agreed to extend the maturity date of its existing term loans and US$25.0 million revolving term credit facility to January 1, 2013. Spreads over LIBOR remain unchanged at 280 basis points on the term loan and 250 basis points on the revolving term credit facility. All other significant terms also remain unchanged. In addition, a U.S. subsidiary exercised its option to extend the maturity date of a US$8.4 million term loan bearing interest at LIBOR plus 140 basis points to April 3, 2011. With these extensions, the Company has no debts maturing in 2010 and less than 10% of total debt outstanding maturing before the end of 2012. The amount available from the revolving term credit facility as of December 31, 2009 is US$18.3 million (equivalent to $19.2 million).
SUBSEQUENT EVENTS HIGHLIGHTS
In February 2010, the Company announced the appointment of its full-time Chief Executive Officer, Gail Mifsud.
In March 2010, the Company acquired the shares of Nepean Medical Centre Inc., a company that owns a 49,000 square foot, four-storey medical office building. The property is situated on a major arterial road, next to a public transportation hub and is about two miles from Queensway Carlton Hospital. The property is approximately 98% leased to a strong tenant roster including over 40 medical practitioners and has a weighted average term to maturity in excess of six years. The shares were acquired for approximately $3.1 million in cash and the assumption of a $7.8 million first mortgage at 5.76% that matures in September 2014.
Also in March 2010, Equity One completed a common stock offering that resulted in the issue of approximately 5.4 million shares of Equity One. The Company acquired 100,000 of these shares at the offering price of US$18.40 per share for total consideration of US$1.84 million. This brings the Company's ownership interest in Equity One to 14.18 million shares, representing approximately 15.5% of the total outstanding shares.
Financial statements and management's discussion and analysis for the year ended December 31, 2009 will be filed on SEDAR at www.sedar.com and available through our website at www.gazitamerica.com.
ABOUT GAZIT AMERICA (TSX: GAA)
Gazit America is focused on entrepreneurial real estate investments including the acquisition and development of income-producing properties, investments in public and private real estate entities, investments in joint ventures and other structured acquisitions and investments in commercial and residential mortgage-backed securities. Gazit America currently owns approximately 15.5% of Equity One, Inc. (NYSE: EQY), a U.S. real estate investment trust, and three properties comprised of six medical office buildings totalling approximately 164,000 square feet of rentable space located in Cambridge, London and Ottawa, Ontario.
FORWARD LOOKING STATEMENT ADVISORY
This press release contains forward-looking statements, and other statements concerning Gazit America's objectives and strategies and Management's beliefs, plans, estimates and intentions. Forward-looking statements can generally be identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", "outlook", "objective", "may", "will", "should", "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 current Management's Discussion and Analysis.
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 "Risks and Uncertainties" section include, but are not limited to, general economic conditions, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, 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, the Company's ability to obtain insurance coverage at a reasonable cost and the availability of financing.
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. Gazit America 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 securities laws.
These forward-looking statements are made as of March 18, 2010.
NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES
Net Operating Income
Net operating income ("NOI") is defined as rental revenues less property operating expenses. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's portfolio. Net operating income is not a measure defined by Canadian Generally Accepted Accounting Principles ("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.
GAZIT AMERICA INC.
Consolidated Balance Sheets
December 31 (all amounts in thousands of dollars)
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2009 2008
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ASSETS
Rental properties $ 15,867 $ -
Intangible assets 1,364 -
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17,231 -
Investment in Equity One, Inc. 192,806 227,259
Cash 3,891 5,220
Prepaid expenses, receivable and other 937 299
Advances to affiliated entities - 4,707
Future income tax asset 200 -
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$ 215,065 $ 237,485
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LIABILITIES
Term loans, credit facilities and mortgages $ 107,049 $ 153,772
Advances from affiliated entities 38,736 -
Accounts payable and other 5,420 5,251
Intangible liabilities 90 -
Future income tax liability 9,852 12,525
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161,147 171,548
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SHAREHOLDERS' EQUITY 53,918 65,937
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$ 215,065 $ 237,485
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GAZIT AMERICA INC.
Consolidated Statements of Earnings
(thousands of dollars, except per share amounts)
-------------------------------------------------------------------------
Three months ended Years ended
-------------------------------------------------------------------------
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
(unaudited) (unaudited)
REVENUES
Rental revenues $ 708 $ - $ 1,042 $ -
Interest income - - 14 870
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708 - 1,056 870
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EXPENSES
Property operating
expenses 415 - 595 -
Interest expense 2,311 2,124 7,503 7,950
General and
administrative
expenses 461 (140) 1,161 855
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3,187 1,984 9,259 8,805
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Equity income from
Equity One, Inc. 1,024 1,405 11,252 8,716
Dilution (loss) gain
on investment in
Equity One, Inc. (392) 2,898 (1,068) 2,898
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632 4,303 10,184 11,614
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(Loss) income before
the undernoted (1,847) 2,319 1,981 3,679
Amortization (357) (13) (587) (64)
Other income 350 - 350 -
Unrealized gain
on foreign exchange 1,757 - 3,965 -
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(Loss) income before
income taxes (97) 2,306 5,709 3,615
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Income taxes
Current (1,161) (256) 974 1,715
Future (483) 1,322 (256) 1,322
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(1,644) 1,066 718 3,037
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Net income $ 1,547 $ 1,240 $ 4,991 $ 578
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Earnings per
common share,
basic and
diluted $ 0.12 $ 0.13 $ 0.47 $ 0.06
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GAZIT AMERICA INC.
Consolidated Statements of Comprehensive (Loss) Income
(thousands of dollars)
-------------------------------------------------------------------------
Three months ended Years ended
-------------------------------------------------------------------------
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
(unaudited) (unaudited)
Net income $ 1,547 $ 1,240 $ 4,991 $ 578
Other comprehensive
income (loss)
Foreign currency
translation (2,187) 9,922 (8,778) 14,024
Other comprehensive
(loss) income of
Equity One, Inc. (11) (3,032) 3,346 (1,944)
Derivative instruments
designated as cash
flow hedges 816 (3,391) 194 (2,906)
Future income tax
(expense) recovery (282) 1,197 (67) 1,030
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(1,664) 4,696 (5,305) 10,204
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Comprehensive
(loss) income $ (117) $ 5,936 $ (314) $ 10,782
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GAZIT AMERICA INC.
Consolidated Statements of Shareholders' Equity
(thousands of dollars, except share number)
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Share Capital
-------------
Contributed Retained
Number Amount Surplus Earnings
-------------------------------------------------------------------------
Shareholders'
equity, December
31, 2008 9,212,413 $ 34,804 $ - $ 45,934
Net income - - - 4,991
Dividend - - - (29,340)
Contributed surplus - - 1,263 -
Common shares
issued 3,635,464 16,372 - -
Other comprehensive
loss - - - -
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Shareholders'
equity, December
31, 2009 12,847,877 $ 51,176 $ 1,263 $ 21,585
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Retained
Earnings and
Accumulated Accumulated
Other Other
Comprehensive Comprehensive
(Loss) Income/(Loss) Total
-------------------------------------------------------------------------
Shareholders'
equity, December
31, 2008 $ (14,801) $ 31,133 $ 65,937
Net income - 4,991 4,991
Dividend - (29,340) (29,340)
Contributed surplus - - 1,263
Common shares
issued - - 16,372
Other comprehensive
loss (5,305) (5,305) (5,305)
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Shareholders'
equity, December
31, 2009 $ (20,106) $ 1,479 $ 53,918
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Share Capital
-------------
Contributed Retained
Number Amount Surplus Earnings
-------------------------------------------------------------------------
Shareholders' equity,
December 31, 2007 9,212,413 $ 34,804 $ - $ 45,356
Net income - - - 578
Other comprehensive
income - - - -
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Shareholders'
equity, December 31,
2008 9,212,413 $ 34,804 $ - $ 45,934
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Retained
Earnings and
Accumulated Accumulated
Other Other
Comprehensive Comprehensive
Income/(Loss) Income Total
-------------------------------------------------------------------------
Shareholders' equity,
December 31, 2007 $ (25,005) $ 20,351 $ 55,155
Net income - 578 578
Other comprehensive
income 10,204 10,204 10,204
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Shareholders'
equity, December
31, 2008 $ (14,801) $ 31,133 $ 65,937
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GAZIT AMERICA INC.
Consolidated Statements of Cash Flow
(thousands of dollars)
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Three months ended Years ended
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
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(Unaudited) (Unaudited)
Operating
Activities
Net income $ 1,547 $ 1,240 $ 4,991 $ 578
Items not
affecting cash:
Amortization 357 13 587 64
Non-cash interest
expense 88 86 328 164
Equity income from
Equity One, Inc. (1,024) (1,405) (11,252) (8,716)
Dilution loss
(gain) on investment
in Equity One, Inc. 392 (2,898) 1,068 (2,898)
Future income taxes (483) 1,322 (256) 1,322
Unrealized gain on
foreign exchange
translation of
intercompany amounts (1,757) - (3,965) -
Unrealized gain on
interest rate swaps (350) - (350) -
Dividends from
Equity One, Inc. 3,274 5,145 18,098 18,193
Net change in
non-cash operating
items (1,174) (1,345) (1,612) (794)
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Cash provided by
operating activities 870 2,158 7,637 7,913
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Investing Activities
Acquisition of rental
properties for common
stock, net of cash
acquired - - 227 -
Capital expenditures (152) - (165) -
Investment in common
shares of Equity
One, Inc. - (1,263) - (1,263)
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Cash provided by
(used in) investing
activities (152) (1,263) 62 (1,263)
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Financing Activities
Proceeds from
(repayment of)
credit facilities 1,696 56,693 (22,851) 56,752
Repayment of term
loans and mortgages (1,798) (54,886) (7,786) (60,042)
Financing costs
on loans (381) - (715) -
(Payments to) receipts
from affiliated
entities, net (2,601) (2,909) 22,796 (7,161)
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Cash used in
financing activities (3,084) (1,102) (8,556) (10,451)
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Effect of currency
rate movement on
cash balances 159 1,205 (472) 1,587
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Increase (decrease)
in cash (2,207) 998 (1,329) (2,214)
Cash, beginning
of year 6,098 4,222 5,220 7,434
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Cash, end of year $ 3,891 $ 5,220 $ 3,891 $ 5,220
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SUPPLEMENTARY
INFORMATION
Income taxes paid $ 629 $ 651 $ 2,003 $ 2,188
Interest paid $ 1,992 $ 2,721 $ 5,248 $ 8,817
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For further information: regarding Gazit America: Gail Mifsud, C.E.O., Gazit America Inc., 109 Atlantic Avenue, Suite 303, Toronto, Ontario, Canada, M6K 1X4, Tel: (416) 447-6400, Fax: (416) 447-6488, www.gazitamerica.com
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