MI Developments Announces 2012 First Quarter Results

AURORA, ON, May 9, 2012 /CNW/ - MI Developments Inc. (TSX/NYSE: MIM) ("MID" or the "Company") today announced its results for the three-month period ended March 31, 2012.

"Our revenue and operating results for the first quarter were solid and in line with our expectations.  The Company continues to focus on all components of its strategic plan.  We believe that steps taken on several fronts during this first quarter with respect to our people, our properties and our relationship with Magna have strengthened the Company overall," commented Tom Heslip, Chief Executive Officer.

MID's consolidated results for the three-month periods ended March 31, 2012 and 2011 are summarized below (all figures are in Canadian ("Cdn.") dollars):

(in thousands, except per share figures)					Three months ended  March 31,
					2012		2011
							(previously reported in US dollars)
Revenues^(1)					$ 45,660		$ 44,231
Income from continuing operations^(1)					$ 18,563		$ 12,689
Income from discontinued operations^(1)					—		10,765
Net income					$  18,563		$  23,454
Diluted earnings per share from:
- continuing operations					$ 0.40		$  0.27
-  discontinued operations					—		0.23
Diluted earnings per share					$ 0.40		$ 0.50
Funds from operations ("FFO")^(2)					$ 29,406		$ 23,136
Diluted FFO per share ^(2)					$  0.63		$ 0.49

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(1)	Following the close of business on June 30, 2011, the Racing & Gaming Business, substantially all of the Company's lands held for development, a property in the United States and an income producing property in Canada (the "Arrangement Transferred Assets & Business") were transferred to entities owned by Mr. Frank Stronach and his family (the "Stronach Shareholder") in consideration for the elimination of MID's dual class share structure.  The operating results of the Arrangement Transferred Assets & Business have been presented as discontinued operations.  Income from continuing operations pertains to the Company's income producing property portfolio.
(2)	FFO and diluted FFO per share are measures widely used by analysts and investors in evaluating the operating performance of real estate companies.  However, FFO does not have a standardized meaning under U.S. generally accepted accounting principles and therefore may not be comparable to similar measures presented by other companies.  The Company determines FFO using the definition prescribed in the United States by the National Association of Real Estate Investment Trusts®.  For a reconciliation of FFO to income from continuing operations, please refer to the section titled "Reconciliation of Funds from Operations to Income from Continuing Operations".

CURRENCY CHANGE FOR FINANCIAL REPORTING

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The consolidated financial statements for previous periods were reported using the U.S. dollar. As a result of the Company's shareholder base becoming increasingly Canadian and the Company's stated intention of becoming a Canadian Real Estate Investment Trust ("REIT") and to mitigate the impact of foreign exchange fluctuations on our reported results, effective January 1, 2012, the Company's reporting currency was changed to the Cdn. dollar. All comparative financial information contained in this press release, the unaudited interim consolidated financial statements and Management's Discussion and Analysis for the three-months ended March 31, 2012, has been recast to reflect the Company's results as if the information had been historically reported in Cdn. dollars.  As a result of the change in reporting currency, dividends will be declared in Cdn. dollars commencing with the dividend declared today. Please refer to the section titled "Dividends". The Company continues to report in accordance with U.S. generally accepted accounting principles.

MID CONSOLIDATED FINANCIAL RESULTS

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The results of operations of the Company for the three-month periods ended March 31, 2012 and 2011 include those from continuing operations and discontinued operations.

Continuing Operations

For the three-month period ended March 31, 2012, rental revenues increased by $1.5 million from $44.2 million in the first quarter of 2011 to $45.7 million in the first quarter of 2012 primarily due to completed projects coming on-stream as well as the additional rent earned from contractual rent increases.

The Company's income from continuing operations was $18.6 million in the first quarter of 2012 compared to $12.7 million in the prior year period. The increase in income from continuing operations of $5.9 million was primarily due to (i) an increase in rental revenue of $1.5 million for the reasons described above and (ii) a decrease in general and administrative expenses of $6.6 million primarily due to a reduction in advisory costs, decreased compensation expense pertaining to director retainer and meeting fees and reduced insurance expense primarily related to reduced Directors' and Officers' liability insurance premiums, partially offset by (iii) an increase in property operating costs of $0.4 million resulting primarily from appraisal and valuation costs associated with the proposed REIT conversion, (iv) an increase in income tax expense of $1.6 million resulting from higher pre-tax income, changes in the mix of income earned in the various countries in which the Company operates and changes in statutory income tax rates and (v) an increase in depreciation and amortization expense of $0.4 million, primarily due to additional depreciation charges related to various expansion and improvement projects that were completed in 2011.

FFO for the first quarter of 2012 increased $6.3 million from $23.1 million in the prior year period to $29.4 million in the current period primarily due to the increased income from continuing operations of $5.9 million and the increased add back of depreciation and amortization expense of $0.4 million.

Discontinued Operations

For the three-month period ended March 31, 2012, the Company's results of operations were not impacted by the Arrangement Transferred Assets & Business as they were transferred to the Stronach Shareholder effective June 30, 2011. Income from discontinued operations for the three-month period ended March 31, 2011 primarily comprised of net income from the Racing & Gaming Business and was generally reflective of the seasonality of when the racetracks hold live racing.

Net Income

Net income of $18.6 million for the first quarter of 2012 decreased by $4.9 million from $23.5 million in the prior year period.  The decrease was due to the reduction in income from discontinued operations of $10.8 million, partially offset by an increase in income from continuing operations of $5.9 million.

A more detailed discussion of MID's consolidated financial results for the three-month periods ended March 31, 2012 and 2011 is contained in MID's Management's Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are available through the internet on Canadian Securities Administrators' Systems for Electronic Document Analysis and Retrieval (SEDAR) and can be accessed at www.sedar.com and on the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System (EDGAR) which can be accessed at www.sec.gov.

RECONCILIATION OF FUNDS FROM OPERATIONS TO INCOME FROM CONTINUING OPERATIONS

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					Three months ended March 31,
(in thousands, except per share information)					2012	2011
						(previously reported in US dollars)
Income from continuing operations					$        18,563	$      12,689
Add back depreciation and amortization					10,843	10,447
Funds from operations					$        29,406	$      23,136
Basic funds from operations per share					$           0.63	$          0.50
Diluted funds from operations per share					$           0.63	$          0.49
Basic number of shares outstanding					46,884	46,708
Diluted number of shares outstanding					46,906	46,947

DIVIDENDS

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MID's Board of Directors has declared a Cdn. dollar denominated dividend of $0.50 per share on MID's Common Shares for the first quarter ended March 31, 2012.  The dividend is payable on or about June 14, 2012 to shareholders of record at the close of business on May 25, 2012. The Common Shares will begin trading on an ex-dividend basis at the opening of trading on May 23, 2012.

Unless indicated otherwise, MID has designated the entire amount of all past and future taxable dividends paid since January 1, 2006 to be an "eligible dividend" for purposes of the Income Tax Act (Canada). 

CONFERENCE CALL

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MID will hold a conference call on Thursday, May 10, 2012 at 8:30 a.m. Eastern time.  The number to use for this call is 1-800-741-3792.  Overseas callers should use [phone].  Please call in at least 10 minutes prior to start time. The conference call will be chaired by Tom Heslip, Chief Executive Officer.   For anyone unable to listen to the scheduled call, the rebroadcast numbers will be: North America - 1-800-558-5253 and Overseas - [phone] (enter reservation number 21588446) and will be available until Thursday, May 17, 2012.

ABOUT MID

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MID is a Canadian-based real estate company engaged primarily in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to the automotive operating subsidiaries of Magna International Inc.

OTHER INFORMATION

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Additional property statistics have been posted to MID's website at http://www.midevelopments.com/uploads/file/propertystatistics.pdf.  Copies of financial data and other publicly filed documents are available through the internet on Canadian Securities Administrators' Systems for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com and on the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System (EDGAR) which can be accessed at www.sec.gov. For further information about MID, please see our website.

FORWARD-LOOKING STATEMENTS

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This press release may contain statements that, to the extent they are not recitations of historical fact, constitute "forward-looking statements" within the meaning of applicable securities legislation, including the United States Securities Act of 1933 and the United States Securities Exchange Act of 1934.  Forward-looking statements may include, among others, statements regarding the Company's future plans, goals, strategies, intentions, beliefs, estimates, costs, objectives, economic performance or expectations, or the assumptions underlying any of the foregoing.  In particular, this press release contains forward-looking statements regarding a strategic plan and a proposed conversion to a REIT. Words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions are used to identify forward-looking statements.  Forward-looking statements should not be read as guarantees of future events, performance or results and will not necessarily be accurate indications of whether or the times at or by which such future performance will be achieved.  Undue reliance should not be placed on such statements. In particular, MID cautions that the timing or completion of the strategic plan and the timing or completion of the REIT conversion process cannot be predicted with certainty, and there can be no assurance at this time that all required or desirable approvals and consents to effect the plan and a REIT conversion will be obtained in a timely manner or at all. Forward-looking statements are based on information available at the time and/or management's good faith assumptions and analyses made in light of our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances, and are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control, that could cause actual events or results to differ materially from such forward-looking statements.  Important factors that could cause such differences include, but are not limited to, the risk of changes to tax or other laws that may adversely affect the REIT conversion; inability of MID to implement a suitable structure for the REIT conversion; the inability to obtain all required consents and approvals for the REIT conversion; and the risks set forth in the "Risks Factors" section in the Company's Annual Information Form for 2011, filed on SEDAR at www.sedar.com and attached as Exhibit 1 to the Company's Annual Report on Form 40-F for the year ended December 31, 2011, which investors are strongly advised to review. The "Risks Factors" section also contains information about the material factors or assumptions underlying such forward-looking statements.  Forward-looking statements speak only as of the date the statements were made and unless otherwise required by applicable securities laws, the Company expressly disclaims any intention and undertakes no obligation to update or revise any forward-looking statements contained in this press release to reflect subsequent information, events or circumstances or otherwise.

 

 

Tom Heslip, Chief Executive Officer, at 905-726-7639 or Michael Forsayeth, Chief Financial Officer, at 905-726-7600