Company raises
Strong growth underpins improvement in payout ratio to 85.7 per cent
Third Quarter 2009 Highlights
Three months ended September 30, 2009 versus three months ended September
30, 2008
- Increased revenue by 8.2 per cent to $5.0 million
- Increased distributable income per unit* by 2.6 per cent to 24.8
cents
- Improved payout ratio to 85.7 per cent from 87.9 per cent
- Announced offering of $20 million 7.75 per cent convertible
unsubordinated debentures, which closed subsequent to the end of the
third quarter on October 2, 2009
* See section entitled Non-GAAP measures.
"Fiscal 2009 continues to be a very good year for Scott's REIT," said
Financial Performance
Scott's REIT reported revenue of
The REIT's net operating income was
Operating expenses of
During the three month period ended
Recent Events
Convertible Debentures
On
The Debentures are convertible into fully paid and non-assessable units of Scott's REIT at a conversion price of
Demand Loan
On
Monthly Distribution
Scott's REIT announced a cash distribution for the month of
Scott's REIT also announced today a monthly cash distribution of $0.0708 per unit to Unitholders of record of Class B Limited Partnership Units in Scott's Real Estate LP on
Non-GAAP Measures
Distributable Income
Distributable income is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP. Distributable income is presented in this press release because management of Scott's REIT believes this non-GAAP measure is a relevant measure of the ability of Scott's REIT to earn and distribute cash returns to Unitholders. Distributable income as computed by Scott's REIT may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to distributable income as reported by such organizations. Distributable income in this press release represents income before non-controlling interest of Scott's REIT on a consolidated basis as determined in accordance with GAAP, plus depreciation and amortization expense and the guarantee fee, less the straight-line revenue accrual. For more information, please refer to the REIT's MD&A, which is included in its annual filings at sedar.com.
About Scott's Real Estate Investment Trust
Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property owner with 207 commercial properties in seven provinces across
Forward-Looking Statements
This document contains certain information that may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding future growth opportunities and potential and expected cash distributions or cash distribution levels. In particular, information regarding the REIT's monthly cash distributions and information relating to the impact of the REIT's recent acquisitions on annual revenues and interest expense is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, occupancy rates, property expense and capital expenditures. While the REIT considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what is currently expected. Such factors include risks relating to the REIT's reliance on Priszm LP, the REIT's largest tenant, risks associated with investment in real property, competition, reliance on key personnel, financing and refinancing risks, environmental matters, tenant risks, risks related to current economic conditions and other risk factors more particularly described in the REIT's Annual Information Form for the year ended
The following selected financial information, with the exception of the Reconciliation of Distributable Income, has been derived from and should be read in conjunction with the historical audited financial statements of Scott's REIT for the quarters ended
RECONCILIATION OF DISTRIBUTABLE INCOME (UNAUDITED)
(in thousands of dollars except per Unit amounts)
The following table outlines the reconciliation of distributable income to cash provided by operating activities:
-------------------------------------
Three months ended Nine months ended
September 30, September 30,
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Cash provided by operating activities $2,356 $1,733 $5,691 $4,157
Net change in non-cash working capital (559) 98 (199) 1,053
-------------------------------------------------------------------------
Distributable income 1,797 1,831 5,492 5,210
Distributions declared 1,541 1,611 4,622 4,861
-------------------------------------------------------------------------
Distributable income per Unit 0.248 0.242 0.757 0.687
Distributions per Unit 0.213 0.213 0.638 0.638
-------------------------------------------------------------------------
Distributable Income Payout Ratio 85.7% 87.9% 84.2% 92.8%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)
Sept 30, December 31,
2009 2008
ASSETS
Income-producing properties $ 168,824 $ 174,135
Intangible assets 8,211 9,151
Cash 1,403 102
Accounts receivable 243 574
Straight-line revenue accrual 2,386 2,133
Prepaid expenses and other assets 954 709
Due from related companies 1 80
-----------------------
182,022 186,884
-----------------------
-----------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Mortgages payable 111,779 112,225
Convertible debentures 19,104 18,903
Demand loan 3,200 1,900
Accounts payable and accrued liabilities 1,259 1,264
Due to related companies 128 94
Distributions payable to Unitholders 513 518
Intangible liabilities 162 242
-----------------------
136,145 135,146
-----------------------
Class B Exchangeable Units 15,180 16,910
-----------------------
UNITHOLDERSHOLDERS' EQUITY
Contributed surplus 2,588 2,218
Class A Units of Scott's REIT 44,676 45,346
Convertible debentures 299 299
Cumulative earnings 630 1,277
Cumulative distributions declared on Class A Units (17,496) (14,312)
-----------------------
30,697 34,828
-----------------------
182,022 186,884
-----------------------
-----------------------
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND CUMULATIVE EARNINGS
(LOSS)
(UNAUDITED)
(in thousands of dollars, except Unit and per Unit amounts)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
REVENUE
Rental revenue received $ 4,911 $ 4,445 $ 14,695 $ 12,712
Amortization of above
(below) market rents (22) (3) (26) 14
Straight-line revenue
accrual 126 193 253 476
----------------------------------------------
5,015 4,635 14,922 13,202
----------------------------------------------
EXPENSES
Amortization 1,991 1,924 6,042 5,532
Operating expenses 809 551 2,410 1,696
Interest 1,991 1,879 5,958 5,221
General and administrative 450 421 1,451 1,057
----------------------------------------------
5,241 4,775 15,861 13,506
----------------------------------------------
Loss before non-controlling
interest (226) (140) (939) (304)
Non-controlling interest
of Class B Exchangeable
Units (70) (42) (292) (91)
----------------------------------------------
Net loss for the period (156) (98) (647) (213)
Cumulative earnings (loss) -
Beginning of period 786 1,698 1,277 1,813
----------------------------------------------
Cumulative earnings -
End of period 630 1,600 630 1,600
----------------------------------------------
----------------------------------------------
Basic and diluted loss
per Unit (0.031) (0.018) (0.129) (0.039)
----------------------------------------------
----------------------------------------------
Class A Units outstanding 4,993,964 5,292,064 4,993,964 5,292,064
----------------------------------------------
----------------------------------------------
Class B Exchangeable
Units outstanding 2,254,909 2,254,909 2,254,909 2,254,909
----------------------------------------------
----------------------------------------------
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands of dollars)
Three months ended Nine months ended
September 30 September 30
----------------------------------------------
2009 2008 2009 2008
----------------------------------------------
Net earnings (loss)
for the period $ (156) $ (98) $ (647) $ (213)
Other comprehensive income - - - -
----------------------------------------------
Comprehensive income (loss) (156) (98) (647) (213)
----------------------------------------------
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
CASH PROVIDED BY (USED IN)
Operating activities
Net loss for the period $ (156) $ (98) $ (647) $ (213)
Add (deduct)
Non-controlling interest
of Class B Exchangeable
Units (70) (42) (292) (91)
Amortization of
income-producing
properties 1,729 1,671 5,185 4,833
Amortization of
intangibles 284 256 883 685
Amortization of deferred
financing charges 117 107 353 311
Amortization of deferred
costs 5 2 15 5
Acquisitions-in-progress - - 206 -
Interest accretion 14 14 42 42
Straight-line revenue
receivable (126) (193) (253) (476)
Employee non-cash bonuses - 114 - 114
----------------------------------------------
1,797 1,831 5,492 5,210
Change in other non-cash
operating items
Accounts receivable (7) - 331 -
Prepaid expenses and
other assets 5 (865) (240) (1,247)
Accounts payable and
accrued liabilities 504 645 (5) 351
Due to related companies 57 122 113 (157)
----------------------------------------------
Cash provided by operating
activities 2,356 1,733 5,691 4,157
----------------------------------------------
Investing activities
Computer software (23) - (23) -
Construction-in-progress (6) (22) (20) (44)
Property acquisitions (54) (9,593) (61) (9,903)
Acquisitions-in-progress - (30) 1 (134)
Tenant inducements and
leasing commissions (3) - (20) -
----------------------------------------------
(86) (9,645) (123) (10,081)
----------------------------------------------
Financing activities
Buy back of Class A Units - (475) (300) (828)
Proceeds from mortgage
payable - 15,700 - 15,700
Mortgage financing fees (10) (348) (14) (356)
Principal repayments on
mortgages payable (227) (64) (626) (166)
Distributions paid (1,541) (1,614) (4,627) (4,869)
Demand loan - (5,200) 1,300 (4,100)
Convertible debenture - 37 - 37
----------------------------------------------
(1,778) 8,036 (4,267) 5,418
----------------------------------------------
Increase (decrease) in cash
and short-term investments
during the period 492 124 1,301 (506)
Cash - Beginning of period 911 75 102 705
----------------------------------------------
Cash - End of period 1,403 199 1,403 199
----------------------------------------------
----------------------------------------------
Supplemental cash flow
disclosure
Interest paid 1,860 1,294 5,563 4,408
%SEDAR: 00022537E
For further information: For investor information please contact Trish Moran, (416) 624-5133, [email protected]; For media information, please contact Wilcox Group, (416) 203-6666, [email protected]
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