Parkbridge announces second quarter results and commencement of dividend
program
CALGARY, May 5 /CNW/ - Parkbridge Lifestyle Communities Inc. ("Parkbridge" or the "Corporation"), (TSX: PRK) today announced its results for the three and six months ended March 31, 2010 and the commencement of a quarterly dividend program.
Financial Highlights
($000's except per share amounts)
Sept-
March 31 ember 30
Balance Sheet Data 2010 2009
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Income properties 422,502 400,120
Development properties 67,434 67,559
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489,936 467,679
Secured debt 291,893 279,495
Number of shares issued and
outstanding (000's) 66,927 66,769
Three Months Ended Six Months Ended
March 31 March 31
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Income Summary Data 2010 2009 2010 2009
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Revenues from all operations 22,975 21,400 49,321 44,100
Income from property operations 10,820 9,545 21,317 19,362
Home Sales income 262 465 942 816
Income from operations 11,082 10,010 22,259 20,178
Net income (loss) (176) 1,562 3,375 3,966
Net income per share - diluted 0.00 0.03 0.05 0.06
Funds from operations (FFO)(1) 5,353 4,756 10,977 9,864
FFO per share - diluted 0.08 0.08 0.16 0.16
Adjusted Funds from
operations (AFFO)(1) 4,857 4,291 10,117 8,953
AFFO per share - diluted 0.07 0.07 0.15 0.14
Dividends per share(2) - - - -
Weighted average no. of shares
- diluted (000's)(1) 68,810 61,769 68,616 61,769
Six Months Ended
March 31
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Operational Highlights 2010 2009
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Occupancy %
Communities 99 99
Resorts(3) 95 92
Sites leased 82 62
Home Sales volume 82 60
Home Sales backlog(4) 177 138
Operational Sites - end of period 17,133 15,845
Developed Sites - end of period 797 934
Expansion Sites - end of period 4,641 4,035
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(1) Management utilizes measures called Funds From Operations ("FFO") and
Adjusted Funds From Operations ("AFFO") to assess and evaluate the
Corporation's ability to generate cash, its return on each of its
projects, as well as the performance of the enterprise as a whole.
FFO and AFFO do not have standardized meanings prescribed by Canadian
generally accepted accounting principles ("GAAP"), and therefore may
not be comparable to similar measures presented by other issuers.
Users should be cautioned that these performance measures should not
be construed as an alternative to net income and that the
Corporation's definition of FFO differs from the Real Property
Association of Canada's ("REALpac") definition of FFO. REALpac has
not recognized a definition for AFFO. Parkbridge defines FFO as being
net income for the period before depreciation and amortization on
capital assets, certain defeasance costs, stock-based compensation
expense, internalization costs, future income tax expense and
deferred credits in income tax expense. Parkbridge defines AFFO as
being FFO for the period, adjusted for maintenance capital
expenditures.
(2) On May 5, 2010 the Board of Directors authorized a dividend payment
program and approved the payment of a dividend for the quarter ended
March 31, 2010, payable June 7, 2010 to shareholders of record on
May 17, 2010.
(3) The percentage occupancy for Cottage and RV Resorts represents the
average annual occupancy level of seasonal Sites and overnight Sites
within a particular Resort. In general, overnight Sites comprise 10%
or less of the total Sites within a particular Resort. Typically, the
average occupancy achievable in respect of overnight Sites is 45 to
75 days out of the total of the approximately 120 days the Resort is
open in a given season. Consequently, the total occupancy level for a
particular Resort property will generally be less than 100%.
(4) Includes 115 firm and 62 conditional sales contracts at April 30,
2010 compared to 76 firm and 62 conditional sales contracts at
April 30, 2009.
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Quarterly Results
Parkbridge's second quarter results continue to reflect the strong, consistent performance of its core property operations. Income from property operations rose 13% to $10.8 million for the three months ended March 31, 2010 as compared to $9.5 million for the comparable period in 2009 (a 10% increase to $21.3 million for the six months ended March 31, 2010 as compared to $19.4 million for the six months ended March 31, 2009). The majority of this increase (approximately 75%) was generated internally and reflects contributions from rent increases, the lease-up of Developed Sites and operational improvements. The remainder of the increase was attributable to contributions from properties acquired within fiscal 2010 and 2009.
Income from Home Sales operations decreased $0.2 million to $0.3 million in the second quarter as compared to $0.5 million generated in the same quarter last year (increase of $0.1 million to $0.9 million for the six months ended March 31, 2010 from $0.8 million for the six months ended March 31, 2009). Home Sales income fluctuates on a quarterly basis and is dependent on the timing of closing of sales. Of significance is the momentum seen at the Corporation's Lifestyle Community and Cottage and RV Resort sales centers which continues to be encouraging and is supported by the increases in sales volumes and a healthy backlog of firm and conditional sales commitments (see Highlights).
Funds from operations ("FFO") for the three months ended March 31, 2010 rose 13% to $5.4 million as compared to the $4.8 million achieved during the same three month period a year earlier (a 10% increase to $11.0 million for the six months ended March 31, 2010 as compared to $9.9 million for the six months ended March 31, 2009). FFO growth was negatively impacted by an increase in general and administrative expense pertaining to "marking to market" the Corporation's outstanding deferred share units ($0.1 million increase in expense during the current quarter and a $0.5 million increase during the six months ended March 31, 2010, compared to the prior year's periods). FFO per share amounted to $0.08 per share for the second quarter, and $0.16 per share year to date, and remained flat relative to the comparable periods last year. The per share results reflect the dilutive effects of the equity issue completed on September 30, 2009 which increased the Corporation's issued and outstanding shares by 8%.
Net income for the three months ended March 31, 2010 amounted to a loss of $0.2 million ($0.00 per share) as compared to income of $1.6 million ($0.03 per share) for the same three month period a year earlier ($3.4 million ($0.05 per share) for the six months ended March 31, 2010 as compared to $4.0 million ($0.06 per share for the six months ended March 31, 2009)). The $1.8 million reduction in net income for the current quarter is primarily due to the recognition of $2.3 million of tax provision (expense) related to the one time reclassification of temporary differences between book and tax carrying values offset by a $0.5 million reduction in stock-based compensation expense. The year to date net income result also benefited from a $0.8 million tax provision recovery resulting from changes in enacted tax rates recognized in the first quarter ($0.6 million decrease for the six months ended March 31, 2010). These changes in the income tax provision did not give rise to a current tax liability, nor did they impact Parkbridge's cash flows from operating activities.
Highlights
- Parkbridge properties continue to enjoy high occupancy levels (99% for
Communities and 95% for Resorts) and fiscal 2010 rent increases
averaging 4% have been implemented across the portfolio. Lease
renewals at Cottage and RV Resorts remain at historical levels with
approximately 97% of last year's tenants having already renewed their
leases for the 2010 season.
- New Home Sales volumes increased to 32 sales for the three months
ended March 31, 2010 compared to 28 sales in the prior year's quarter
(increased to 82 sales for the six months ended March 31, 2010, from
60 sales in the comparative six month period). As of April 30, 2010,
177 lease and Home Sales contracts were in hand (115 firm and
62 conditional contracts) as compared to 138 such contracts as of
April 30, 2009 (76 firm and 62 conditional contracts). Parkbridge
continues to observe an increase in sales traffic and Home buyers'
confidence, which it believes is a reflection of improvement in the
broader economy. In addition, growing awareness of the benefits of the
Parkbridge brand are positively contributing to the steady progress in
sales and lease-up activity.
- Parkbridge continues to actively pursue select property acquisitions.
To date, Parkbridge completed the acquisition of 3 properties - one
Community and two Cottage and RV Resorts (1,200 operational sites and
418 expansion sites) for a total cost of approximately $18.2 million.
Subsequent to March 31, 2010, the Corporation completed the
acquisition of one Cottage and RV Resort (298 Operational Sites) for a
total cost of approximately $2.8 million. In addition, Parkbridge has
two Cottage and RV Resorts and one Community under conditional
purchase contracts which are anticipated to close later in calendar
2010 (total cost of approximately $10.7 million and 776 Operational
Sites).
- During the six months ended March 31, 2010, $5.6 million has been
invested in the 18 projects under active development. Parkbridge
continues to be well positioned for growth with a current inventory of
797 Developed Sites available for lease-up and 4,641 Expansion Sites
available for future development. For the remainder of the 2010 fiscal
year, the Corporation anticipates investing a further $12.4 million in
its development projects.
- Parkbridge's capital structure remains conservative and debt
maturities are well spaced out. The majority of fiscal 2010 debt
maturities amounting to $5.7 million have been renewed or refinanced.
As of March 31, 2010, Parkbridge had cash and cash equivalents of
$6.5 million on hand, $25.2 million available under the Operating
Facility (net of outstanding letters of credit), and $25.0 million
available under the Acquisition Facility.
- As mentioned earlier, Parkbridge continues to examine initiatives
which may help surface additional value for shareholders, as well as
continuing with efforts to secure CMHC-backed financing.
Dividends
On May 5, 2010, the Corporation's Board of Directors authorized the commencement of a quarterly dividend payment program, with Parkbridge's first dividend payment to be applicable for the quarter ended March 31, 2010 to common shareholders at the rate of $0.0375 per Common Share. The dividend will be paid June 7th, 2010 to shareholders of record on May 17th, 2010 and is designated as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act. An eligible dividend paid to a Canadian resident individual is entitled to the enhanced dividend tax credit.
Management and Board
Several organizational changes have been made to better streamline responsibilities, maximize opportunities that may be realized within the Corporation's existing property portfolio and facilitate execution of strategic initiatives. Effective May 5, 2010, Bill Wells has been appointed Senior Vice President and Chief Operating Officer, Eastern Operations and will assume all operational responsibilities for Communities and Resorts located in Ontario. Dave Rozycki, President and Co-CEO, Eastern Operations will assume sales and development responsibilities on a company wide basis for all development projects being undertaken by Parkbridge and increasingly focus on opportunities in the Quebec region. Bill Wells, in his expanded role, will continue to report to Dave Rozycki. Iain Stewart, President and Co-CEO, Western Operations will retain responsibility for Western Operations, growth initiatives in the West and along with Joe Killi concentrate on execution of strategic initiatives.
February 2010 marked the retirement of Barry Emes, Chairman, from Parkbridge's Board. Barry has served as a director since Parkbridge went public in 2004. The Board and management have benefited immensely from his leadership, breadth of knowledge and tireless work ethic. Barry played a critical role in the Corporation's success over the last five years and Parkbridge is very grateful for all of his contributions.
Ian Cockwell has been appointed lead independent director and will be supported by Kent Kufeldt, Corporate Secretary in ensuring the responsibilities of the Board and high standards of corporate governance are met and adhered to.
Outlook
The principal elements of Parkbridge's fiscal 2010 outlook, which refer to growth from three sources, remain unchanged: (i) projected rent increases averaging 4% have been implemented across most properties, (ii) Parkbridge continues to see signs of economic improvement and is maintaining its estimate of the lease-up of Developed Sites and new Home Sales in the range of 300 units, and (iii) the Corporation continues to actively pursue select and accretive acquisitions in addition to those recently completed.
During this last quarter, Parkbridge made significant progress in advancing its longer term planning and setting itself on a path that will ensure a continuation of strong growth. The Corporation also revisited its classification to tax pools and their ability to shelter future taxable income and, as a result, Parkbridge's tax horizon has been extended to the onset of its 2013 fiscal year. "The Corporation's next leg of growth will build upon the exceptional operating platform established over the last 5 years. Parkbridge is uniquely positioned to generate strong organic growth through the opportunities that flow from our core operating assets, as well as a strong development pipeline. Growth generated internally will continue to be augmented with accretive acquisitions and we are pleased with the high quality of asset purchases concluded to date," commented Mr. Dave Rozycki, President, Eastern Operations and Co-Chief Executive Officer. "We are also in a position to reward our shareholders for their past patience and support by initiating a quarterly dividend program. We believe the commencement of a dividend program is appropriate and should enhance shareholders' value, particularly at a time when shareholders are increasingly looking for a component of total return to be realized by way of dividends," added Mr. Iain Stewart, President, Western Operations and Co-Chief Executive Officer.
For a complete discussion of the foregoing please refer to the Corporation's March 31, 2010 unaudited interim consolidated financial statements and Management's Discussion and Analysis, which have been concurrently filed on SEDAR.
Parkbridge Profile
Parkbridge is one of Canada's leading owners, operators and developers of lifestyle-oriented properties consisting of residential communities and seasonal recreational resorts. The portfolio is concentrated in the provinces of Ontario, Alberta, Quebec and British Columbia.
Parkbridge now owns 80 properties containing approximately 17,900 sites with a capacity to add approximately 4,600 additional sites through expansion of current property holdings.
Parkbridge is listed on the Toronto Stock Exchange and its head office is in Calgary, Alberta.
CONSOLIDATED BALANCE SHEETS (Unaudited)
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Sept-
($000's) March 31 ember 30
2010 2009
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Assets
Income properties 422,502 400,120
Development properties 67,434 67,559
Cash and cash equivalents 6,481 15,628
Accounts receivable 13,612 5,176
Inventory and other assets 28,275 24,298
Defeasance collateral 10,082 10,361
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548,386 523,142
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Liabilities and Shareholders' Equity
Secured debt 291,893 279,495
Accounts payable and other liabilities 28,130 23,463
Future income tax liability and deferred credit 20,650 16,747
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340,673 319,705
Shareholders' Equity 207,713 203,437
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548,386 523,142
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INTERIM STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
($000's) Three Months Ended Six Months Ended
March 31 March 31
(Unaudited) (Unaudited)
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2010 2009 2010 2009
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PROPERTY OPERATIONS
Rental and other property
revenues 16,965 15,466 34,423 31,685
Property operating expenses
and taxes (6,134) (5,832) (13,165) (12,326)
Brokerage and resale
income (loss) (net) (11) (89) 59 3
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Income from property operations 10,820 9,545 21,317 19,362
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HOME SALES OPERATIONS
Sales revenue 5,541 4,933 13,582 9,987
Cost of sales (4,906) (4,139) (11,953) (8,413)
Operating expenses (373) (329) (687) (758)
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Income from home sales
operations 262 465 942 816
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INCOME FROM OPERATIONS BEFORE THE
UNDERNOTED 11,082 10,010 22,259 20,178
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Interest expense 4,291 3,761 8,419 7,654
Interest income (85) (140) (179) (253)
General and administrative
expenses 1,523 1,633 3,042 2,913
Depreciation and amortization 2,310 1,963 4,651 3,936
Stock-based compensation 242 717 415 941
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8,281 7,934 16,348 15,191
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INCOME BEFORE INCOME TAXES 2,801 2,076 5,911 4,987
Future income taxes, net of
deferred credit 2,977 514 2,536 1,021
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NET INCOME (LOSS) (176) 1,562 3,375 3,966
Add:
Depreciation and amortization 2,310 1,963 4,651 3,936
Stock-based compensation 242 717 415 941
Future income taxes, net of
deferred credit 2,977 514 2,536 1,021
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FUNDS FROM OPERATIONS 5,353 4,756 10,977 9,864
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The TSX has not in any way passed upon the merits of these transactions, has not approved or disapproved the contents of this news release, nor does it accept any responsibility for the adequacy of this release.
This news release contains forward-looking statements concerning the Corporation's business and operations. The Corporation cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Corporation's results could differ materially from those expressed or implied in such statements. Reference should be made to the Corporation's March 31, 2010 Unaudited Interim Consolidated Financial Statements, the most recent Management's Discussion and Analysis in the interim report for the period ended March 31, 2010, the Annual Information Form dated November 19, 2009, and Management's Discussion and Analysis and Audited Consolidated Financial Statements for the year ended September 30, 2009. All reports may be viewed on Parkbridge's website www.parkbridge.ca or on the SEDAR website www.sedar.com.
For further information: Mr. Iain Stewart, President, Western Operations and Co-CEO, Telephone: (403) 215-2109, Email: [email protected]; Mr. Calvin Wilson, Chief Financial Officer, Telephone: (403) 215-2105, Email: [email protected]; Parkbridge Lifestyle Communities Inc., Telephone: (403) 215-2100, Facsimile: (403) 215-2115, 700, 505 - 3rd Street SW, Calgary, AB, T2P 3E6
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