Homburg Invest reports improved net income from continuing operations for
2010 second quarter IFRS financial results
Shares issued: Class A - 17,094,490 Class B - 3,148,538
HALIFAX, Aug. 16 /CNW/ - (TSX: HII.A & HII.B and NYSE Euronext Amsterdam: HII) - Richard Homburg, Chairman and Chief Executive Officer of Homburg Invest Inc. ("Homburg Invest" or the "Company") announced today that Homburg Invest has released its financial results for the second quarter ended June 30, 2010. This is the first quarter the Company will provide International Financial Reporting Standards ("IFRS") financial statements only. The Company has received the necessary regulatory approvals to no longer file Canadian Generally Accepted Accounting Principles financial statements.
The financial results for the quarter ended June 30, 2010 are Homburg Invest's first financial results following the completion on May 25, 2010 of the initial public offering of the Homburg Canada Real Estate Investment Trust ("Homburg Canada REIT" or the "REIT"), of which the Company is a major unitholder, and the sale of all of the Company's Canadian income-producing properties to Homburg Canada REIT. Proceeds from the transaction were primarily used to reduce the Company's long-term debt.
"During the second quarter, Homburg Invest achieved a major milestone in our value creation strategy when we created the Homburg Canada Real Estate Investment Trust and spun out our Canadian income-producing assets to it," said Richard Homburg, Chairman and Chief Executive Officer of Homburg Invest. "Based on the current market price of Homburg Canada REIT units, the market value of Homburg Invest's ongoing investment in the REIT is currently greater than the total market capitalization of the Company, which of course continues to own and manage approximately $2 billion of high quality assets throughout Europe and the United States.
"We are achieving the strategic goals we established last year. In the short term, the sale to Homburg Canada REIT of our Canadian portfolio of income-producing properties impacted our second quarter results. However, our investment in this large, high quality REIT is already providing us with a solid income stream and over the medium to long-term, our investment in the REIT has strong growth potential," concluded Mr. Homburg.
Financial Results (Quarter ended June 30, 2010)
To allow comparisons with financial results for previous periods, the financial results for 2009 presented in this news release have been restated to reflect the sale on May 25, 2010, of the Company's Canadian operating portfolio to Homburg Canada REIT. The sale resulted in a net loss from discontinued operations after tax of $101.6 million.
Key Financial Results from Continuing Operations for the Quarter Ended
June 30, 2010
Three Six Three Six
----- --- ----- ---
Months Months Months Months
------ ------ ------ ------
Ended Ended Ended Ended
----- ----- ----- -----
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
2010 2010 2009 2009
---- ---- ---- ----
(millions of CDN $, except per share items)
Property revenue $31.2 $66.8 $47.9 $91.4
Sale of properties developed
for resale 5.2 10.6 15.6 39.8
Total revenues and other gains 44.8 107.6 74.7 145.4
Net operating income 26.6 56.9 39.3 77.7
Net income (9.5) 6.7 (28.4) (25.4)
Basic and diluted earnings
(loss) per share (0.51) 0.26 (1.44) (1.29)
Funds from operations, net of
the sale of properties
developed for resale (2.6) 0.3 5.7 7.4
Funds from operations per share (0.13) 0.01 0.29 0.37
For complete IFRS financial statements, along with the Management's Discussion and Analysis of Results as at and for the quarter ended June 30, 2010, please refer to the Company's website at www.homburginvest.com or www.sedar.com.
Financial results in the second quarter were driven by the aforementioned sale of the Company's Canadian income-producing properties to Homburg Canada REIT, along with a 14.4% ($7.3 million) decrease in the value of the Euro against the Canadian dollar during the quarter; and by the loss of (euro)6.3 million in revenues following the bankruptcy of a client in Germany, as previously reported.
For the six month period, HII recorded net income from continuing operations of $6.7 million compared to a net loss of $25.4 million for the first six months of 2009. The significant reduction in the net loss from continuing operation during the quarter and for the first six months is due primarily to an improvement in the fair value loss on investments compared to the same quarter last year. The fair value (non-cash) loss for the quarter was $2.1 million compared to a fair value loss of $40.1 million for the same period last year. The strong improvement in fair value loss demonstrates the strength of the Company's key assets and a return to relative stability in global real estate markets. Net loss from continuing operations for the quarter ended June 30, 2010 improved to $9.5 million compared to a net loss of $28.4 million for the same quarter last year.
Funds from operations (FFO) from continuing operations, net of the sale of properties developed for resale, were $0.3 million for the six-month period ended June 30, 2010, compared to restated $7.4 million recorded in the same period in 2009. FFO was impacted by the above-mentioned devaluation of the Euro against the Canadian dollar, as well as the previously discussed reduction in property revenue of (euro)6.3 million.
"In line with the previous quarter, the overall market in Germany and Netherlands remained fairly quiet in the second quarter of 2010. Take-up figures remained low and cost reductions still dominate the market," said Richard Stolle, President and Chief Operating Officer. "Rents held stable across the board and further yield compression was witnessed in certain prime locations. Investment volumes rose slightly during the quarter. In the Baltic market, we notice more activity from the market and expect property prices to stabilize and slowly increase during the second half of 2010 provided the pace of economic recovery stays similar and increases to that of the second half of 2009. We are cautiously optimistic about the return to stability in real estate markets."
About Homburg Invest
Homburg Invest Inc. owns and develops a diversified portfolio of quality commercial real estate including office, retail, industrial and development properties throughout Europe and the United States, as well as 41.3% of the units of Homburg Canada Real Estate Investment Trust. The head office of the Company is located in Halifax, Nova Scotia.
Forward-looking Statements
This news release may contain statements which by their nature are forward-looking and express the Company's beliefs, expectations or intentions regarding future performance, future events or trends. Forward looking statements are made by the Company in good faith, given management's expectations or intentions, which are subject to market conditions, acquisitions, occupancy rates, capital requirements, sources of funds, expense levels, operating performance and other matters. Therefore, forward-looking statements contain assumptions which are subject to various factors including: unknown risks and uncertainties; general economic conditions; local market factors; performance of other third parties; environmental concerns; and interest rates, any of which may cause actual results to differ from the Company's good faith beliefs, expectations or intentions which have been expressed in or may be implied from this news release. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks. Information and statements in this document, other than historical information, should be considered forward-looking and reflect management's current views of future events and financial performance that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include, but are not limited to, the following: general economic conditions and developments within the real estate industry, competition and the management of growth. The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.
Note
Non-IFRS Financial Measures
This news release includes measures widely accepted within the real estate industry which are not defined under IFRS. These measures include funds from operations, funds from operations per share, property net operating income, and net asset value per share. As these are not defined measures under IFRS, other issuers' may have different calculations from those used by the Company.
The Company considers these amounts to be measures of operating and financial performance.
a) Funds from operations ("FFO") and FFO per share are presented by the
Company as net income (loss) from continuing operations adjusted for
amortization, deferred and capital income taxes (recovery), unrealized
and realized valuation changes, fair value change in financial
instruments, loss (gain) on derivative instruments, goodwill
impairment loss, impairment loss on development properties, foreign
exchange loss (gain), and changes in provisions.; divided by the
weighted average number of shares outstanding.
b) Property net operating income ("NOI") is presented by the Company as
property revenue less property operating expenses.
%SEDAR: 00013330E
For further information: Mr. Richard Homburg, Chairman and CEO, Homburg Invest Inc., (902) 468-3395; J. Richard Stolle, President and COO, Homburg Invest Inc., 31-20-573-3855
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