Press Releases

FIRST CAPITAL REALTY ANNOUNCES SOLID 2010 YEAR END RESULTS Investments totalled $473 million

March 03, 2011

Toronto, Ontario (March 3, 2011) – First Capital Realty Inc. (“First Capital Realty”) (TSX:FCR) Canada's leading owner, developer and operator of supermarket and drugstore anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas, announced today solid financial results for the year ended December 31, 2010.

YEAR HIGHLIGHTS

Year ended December 31 $ millions
2010 2009

Enterprise value

$ 5,253

$ 4,508

Debt to aggregate assets

52.2%

50.3%

Debt to total market capitalization

45.8%

45.9%

Property rental revenue

$ 485.0

$ 442.1

Net operating income (NOI)(1)

$ 316.1

$ 285.2

Year ended December 31 $ millions per share
2010 2009 2010 2009

Funds from operations (FFO) – Core operations

$ 154.7

$ 144.5

$ 0.97

$ 0.96

FFO – EQY and other non-recurring items

2.4

6.8

0.01

0.05

Total FFO(1)

$ 157.1

$ 151.3

$ 0.98

$ 1.01

Weighted average diluted shares for FFO (000's)

   

160,031

150,190

Adjusted funds from operations (AFFO) – Core operations

$ 156.2

$ 143.5

$ 0.87

$ 0.87

AFFO – EQY and other non-recurring items

4.4

8.3

0.02

0.05

Total AFFO(1)

$ 160.6

$ 151.8

$ 0.89

$ 0.92

Weighted average diluted shares for AFFO (000?s)

   

180,917

164,695

Note : In this press release, all per share information is presented on a post-split basis, after giving effect to the May 2010, 3.2:2 stock split.

  • (1) See “Non-GAAP Supplemental Financial Measures” section of this press release.

 

  • Invested $473 million in acquisitions, development activities and property improvements;

  • Added 1,391,000 square feet of gross leasable area from acquisitions, development and

    redevelopment coming on line;

  • Acquired four income-producing shopping centres and remaining interests in four existing shopping

    centres totalling 828,000 square feet, five properties adjacent to existing shopping centres totalling 176,000 square feet and six properties held for development and nine land parcels adjacent to existing properties for future development comprising a total of 14.5 acres;

  • 3.9% same property NOI growth; 2.2% excluding redevelopment and expansion space. Lease termination fees included in same property NOI total $1.4 million, which compares to $3.5 million in 2009;

  • 11.3% increase on rate per square foot on 858,000 square feet of renewal leases;

  • Occupancy of 96.4% up from 96.2% at December 31, 2009. Vacancy includes 0.6% of space held for

    redevelopment;

  • Gross new leasing totalled 787,000 square feet including development and redevelopment coming on

    line; lease closures totalled 409,000 square feet and closures for redevelopment totalled

    148,000 square feet;

  • Completed new leasing on existing space totalling 441,000 square feet at an average rate of $19.34 per square foot;

  • Lease rates on openings and redevelopment coming on line increased by 16.1% versus all lease closures;

  • Average lease rate per occupied square foot increased by 4.1% from December 31, 2009 to $16.35 at December 31, 2010.

 

FOURTH QUARTER HIGHLIGHTS

Three months ended December 31 $ millions per share
2010 2009 2010 2009

Property rental revenue

$ 130.7

$ 113.2

   

Net operating income (NOI)(1)

$ 86.5

$ 73.7

   

FFO – Core operations

$ 43.2

$ 36.7

$ 0.26

$ 0.24

FFO – EQY and other non-recurring items

1.8

(0.5)

0.01

(0.01)

Total FFO(1)

$ 45.0

$ 36.2

$ 0.27

$ 0.23

Weighted average diluted shares for FFO (000?s)

   

164,235

155,212

AFFO – Core operations

$ 41.3

$ 35.0

$ 0.22

$ 0.20

AFFO – EQY and other non-recurring items

2.0

3.8

0.01

0.02

Total AFFO(1)

$ 43.3

$ 38.8

$ 0.23

$ 0.22

Weighted average diluted shares for AFFO (000?s)

   

185,487

174,315

  • (1) See “Non-GAAP Supplemental Financial Measures” section of this press release.

 

  • Invested $139 million in acquisitions, development activities and property improvements;

  • Added 453,000 square feet of gross leasable area from acquisitions, development and redevelopment coming on line;

  • Acquired one income-producing shopping centre and a remaining interest in an existing shopping centre totalling 273,000 square feet, two properties adjacent to existing shopping centres totalling 59,000 square feet and two properties held for development and four land parcels adjacent to existing properties for future development comprising a total of 4.2 acres;

  • 7.3% same property NOI growth; 5.8% excluding redevelopment and expansion space;

  • 14.0% increase on 224,000 square feet of renewal leases;

  • Gross new leasing totalled 176,000 square feet including development and redevelopment coming on line; lease closures totalled 76,000 square feet and closures for redevelopment totalled 35,000 square feet.

 

"2010 was another year of solid operating and financial performance," said Dori J. Segal, President & CEO, "Looking ahead, our focus continues towards maximizing the long-term value of our business. We will continue to grow and strengthen the portfolio through the acquisition of older, urban properties where we can add value, the purchase of properties near or adjacent to our current locations and the intensification of certain properties where we can enhance cash flows through retail expansions and residential development.”

FINANCING AND CAPITAL MARKET HIGHLIGHTS

The Company completed the following debt financing activities for the year ended December 31, 2010:

  • Issued $125 million principal amount senior unsecured debentures, Series H, with a coupon rate of 5.85%, maturing January 2017;

  • Reduced the availability of the syndicated secured revolving credit facility to $250 million and reduced its $75 million secured revolving credit facility to $50 million;

  • Issued $125 million principal amount senior unsecured debentures, Series I, in two tranches, with a coupon rate of 5.70% maturing November 2017;

  • Issued $50 million principal amount senior unsecured debentures, Series J, with a coupon rate of 5.25% maturing August 2018;

  • Issued $100 million principal amount senior unsecured debentures, Series K, in two tranches, with a coupon rate of 4.95% maturing November 2018;

  • Completed $101.4 million from three secured financing transactions at a weighted average interest rate of 4.78% and a weighted average term to maturity of 7.99 years;

  • Subsequent to year end, the Company issued $150 million principal amount of senior unsecured debentures, Series L, with a coupon rate of 5.48% maturing July 2019. The Company also committed to $23 million in a secured financing transaction at an interest rate of 5.108% and a term of 10 years.

In addition, the Company completed the following equity issuances for the year ended December 31, 2010:

  • 3.7 million common shares were issued through an equity public offering at a price of $14.35 per common share for gross proceeds of $52.9 million;

  • 1.4 million common shares were issued as payment-in-kind of the interest, in the aggregate amount of $19.3 million, due to holders of the 5.50%, 5.70% and 6.25% convertible debentures;

  • 4.7 million common shares were issued primarily through the exercise of warrants and options for proceeds of $53.3 million;

  • On May 27, 2010, the Company completed the subdivision of its common shares at a ratio of 3.2 common shares for each two common shares.

Interest on Convertible Debentures

On February 23, 2011, the Company announced that, consistent with past practice, it will pay the interest due on March 31, 2011 to holders of its 5.50% convertible unsecured subordinated debentures, due September 30, 2017, to holders of its 6.25% convertible unsecured subordinated debentures due December 31, 2016, and to holders of its 5.70% convertible unsecured subordinated debentures due June 30, 2017, by the issuance of common shares. The number of common shares to be issued per $1,000 principal amount of debentures will be calculated by dividing the dollar amount of interest payable by an amount equal to 97% of the volume-weighted average trading price of the common shares of First Capital Realty on the Toronto Stock Exchange, calculated for the 20 consecutive trading days ending on March 24, 2011. The interest payment due is approximately $9.7 million.

It is the current intention of the Company to continue to satisfy its obligations to pay principal and interest on its convertible debentures by the issuance of common shares. Since issuance, all interest payments on the Company?s convertible debentures have been made using common shares.

Dividend

For the years ended December 31, 2010 and 2009, the following dividends were distributed to the Company?s shareholders:

Year Ended December 31(per share) 2010 2009

Regular dividends

Dividend-in-kind

$ 0.80

-

$ 0.80

0.28

Total dividends

$ 0.80

$ 1.08

The Company also announced today that it will pay a first quarter dividend of $0.20 per common share on April 12, 2011 to shareholders of record on March 30, 2011.

NET INCOME

  Three months ended Dec 31 Year ended Dec 31
($ thousands, except per share amounts) 2010 2009 2010 2009

Net income

$ 10,983

$ 14,736

$ 41,338

$ 41,913

Earnings per share (diluted)

$ 0.07

$ 0.09

$ 0.26

$ 0.28

Weighted average common shares (diluted) (000?s)

164,235

155,212

160,031

150,190

 

Net income for the three months ended December 31, 2010 was $11.0 million or $0.07 per share (basic and diluted) compared to $14.7 million or $0.09 per share (basic and diluted) for the prior year comparable period. Net income for the year ended December 31, 2010 was $41.3 million or $0.26 per share (basic and diluted) compared to $41.9 million or $0.28 per share (basic and diluted) for the prior year. The decrease in net income is primarily due to increased interest expense, increased amortization expense and future income taxes and decreased income from Equity One as a result of the August 2009 dividend-in-kind. The effects of the decreases in net income were offset by increases in NOI resulting from new acquisitions, development and redevelopment projects coming on line, same property NOI growth and increased straight-line rent revenue, as well as increased other gains (losses) and (expenses). In addition, there was an increase in the weighted average basic and diluted shares outstanding compared to the same prior year period.

 

SUBSEQUENT ACQUISITION

On January 26, 2011, the Company acquired Tomken Plaza, an income-producing shopping centre in Mississauga, Ontario comprising 88,000 square feet of retail space on 7.13 acres. Major tenants include No Frills (Loblaws), TD Canada Trust and Blockbuster Video. The purchase price of $22 million, inclusive of closing costs, was satisfied by cash.

2010 ACTUAL RESULTS COMPARED TO 2010 GUIDANCE

The purpose of the Company?s guidance is to provide Management?s view as to the expected financial performance of the Company using factors that are commonly accepted and viewed as meaningful indicators of financial performance in the real estate industry. A reconciliation of the Company?s year end 2010 results to the previously updated guidance follows. All information presented on a per share basis has been adjusted to reflect the 3.2:2 common share split which took effect on May 27, 2010.

(per share amounts, except for projected FFO, AFFO and shares outstanding) 2010 Guidance Provided in Q3 2010 Actual
Low High Actual
FFO Guidance

Projected diluted net income per share

$0.25

$0.26

$0.26

Adjustments

Projected amortization and future income taxes

 

0.70

 

0.71

 

0.72

Projected FFO per share(1)

$0.95

$0.97

$0.98

Projected FFO(1)

$151.25M

$155.50M

$157.13M

Projected weighted average shares outstanding for per share FFO calculations

160.3M

160.0M

Projected FFO(1)

$151.25M

$155.50M

$157.13M

Projected weighted average shares outstanding for per share AFFO calculations (including conversion of convertible debentures)

181.5M

180.9M

Projected FFO per share (using weighted average AFFO shares outstanding)(1)

Projected revenue sustaining capital expenditures

Projected non cash items, net

$0.83

 

(0.07) 

0.10

$0.86

 

(0.07)

0.09

$0.87

 

(0.07)

0.09

Projected AFFO per share(1)

$0.86

$0.88

$0.89

  • (1)See “Non-GAAP Supplemental Financial Measures” section of this press release.

OUTLOOK

Over the past several years, First Capital Realty has made significant progress in growing its business across the country, generating modest accretion in funds from operations while dramatically enhancing the quality of its portfolio.

The current property acquisition environment remains competitive for assets with similar quality to those the Company owns, with increasing transaction activity. Both equity and long-term debt markets are accessible but continue to represent tight spreads, (if at all) relative to pricing currently being asked by vendors of high quality, well-located urban properties. The Company will continue to selectively acquire properties that are well-located and of high quality, when they add strategic value and/or operating synergies, provided that they will be accretive to FFO over the long term, and provided that equity and long-term debt capital can be priced and committed to maintain conservative leverage.

Development and redevelopment activities continue to provide the Company with opportunities to grow within its existing portfolio of assets. These activities typically generate higher returns on investment over the long term.

With respect to acquisitions of both income-producing and development properties, as well as in its existing portfolio, the Company will continue to focus on the quality, sustainability and growth potential of rental income. Consistent with First Capital Realty?s past practices and in the normal course of business, First Capital Realty is engaged in discussions, and has various agreements, with respect to possible acquisitions of new properties and dispositions of existing properties in its portfolio. However, there can be no assurance that these discussions or agreements will result in acquisitions or dispositions, or if they do, what the final terms or timing of such acquisitions or dispositions would be. The Company expects to continue current discussions and actively pursue other acquisition, investment and disposition opportunities.

With respect to financing activities, the Company will continue to focus on maintaining access to all sources of long-term capital at the lowest possible price. In particular, the Company is focussed on both extending the term and staggering the maturity of its debt.

Specifically, Management has identified the following six areas to achieve its objectives going forward into 2011 and 2012:

  • continued focus on proactive management that results in higher rent growth;

  • development, redevelopment and repositioning activities on existing and newly acquired properties;

  • selective acquisitions of strategic assets and adjacent sites;

  • densification activities in the existing portfolio;

  • increasing efficiency and productivity of operations; and

  • improving the cost of both debt and equity capital.

Overall, Management is confident that the quality of the Company?s balance sheet and the defensive nature of its assets and operations will continue to serve it well in the current environment.

2011 GUIDANCE

The Company?s 2011 guidance will be given in conjunction with the issuance of its IFRS financial statements for the first quarter of 2011.

2011 guidance will be based on the following operating activity assumptions:

  • Same property NOI growth of 2% to 2.50% (excluding redevelopment and expansion);

  • Development, redevelopment and expansion coming on line of 300,000 to 360,000 square feet with approximate gross book value of $110 to $130 million;

  • Income-producing property acquisitions totalling $200 million;

  • General and administrative expenses will be similar to 2010;

  • Revenue sustaining capital expenditures are expected to be approximately $0.65 per square foot on average;

  • Capital structure and leverage on the balance sheet will be similar to 2010.

The information above represents Management?s best estimate of operating and financing activities for 2011 as of the date of this press release.

Based on these assumptions, using a consistent basis of accounting and presentation, we expect FFO per share to increase 1-3% in 2011. A stronger pace of FFO per share growth is expected in 2012 and 2013.

Readers should refer to the section below titled “Forward-Looking Statements” for important information on risk factors.

REGULATORY FILINGS AND SUPPLEMENTAL INFORMATION

First Capital Realty?s financial statements and MD&A for the year ended December 31, 2010 will be filed today on the Company?s website at www.firstcapitalrealty.ca in the Investors section, and on the Canadian Securities Administrators? website at www.sedar.com. First Capital Realty?s Supplemental Information Package dated December 31, 2010 will also be available today on the Company?s website.

MANAGEMENT CONFERENCE CALL AND WEBCAST

First Capital Realty invites you to participate in its live conference call with senior management announcing our fourth quarter and year-end results on Friday, March 4, 2011 at 1:00 p.m. E.S.T.

Teleconference:

You may participate in the live conference toll free at 866-299-6657 or at 416-641-6135. To ensure your participation, please call five minutes prior to the scheduled start of the call. The call will be archived through March 19, 2011 and can be accessed by dialing toll free 800-408-3053 or 905-694-9451 with access code 2555175.

Webcast:

To access the webcast, go to First Capital Realty?s website at www.firstcapitalrealty.ca and click on the link for the webcast on our Home Page. The webcast will be archived on our Home Page for 30 days and can be accessed, thereafter, in the Investors section of our website, under Conference Calls.

Management?s presentation will be followed by a question and answer period. To ask a question, press „1" followed by „4" on a touch-tone phone. The conference call coordinator is immediately notified of all requests in the order in which they are made, and will introduce each questioner. To cancel your request, press „1" followed by „3". If you hang up, you can reconnect by dialing 866-299-6657 or 416-641-6135. For assistance at any point during the call, press „*0".

ABOUT FIRST CAPITAL REALTY (TSX:FCR)

First Capital Realty is Canada?s leading owner, developer and operator of supermarket and drugstore- anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas. The Company currently owns interests in 179 properties, including three under development, totalling approximately 21.8 million square feet of gross leasable area and eight sites in the planning stage for future retail development.

* * * *

Non-GAAP Supplemental Financial Measures

First Capital Realty prepares and releases unaudited quarterly and audited consolidated annual financial statements prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with GAAP, the Company also discloses and discusses certain non-GAAP financial measures, including NOI, FFO and AFFO. These non-GAAP measures are further defined and discussed in First Capital Realty’s MD&A for the year ended December 31, 2010, which should be read in conjunction with this news release. Since NOI, FFO and AFFO do not have standardized meanings prescribed by GAAP, they may not be comparable to similar measures reported by other issuers. The Company uses and presents these non-GAAP measures as Management believes they are commonly accepted and meaningful financial measures of operating performance in the real estate industry. A reconciliation of net income and such non-GAAP measures is included in the Company’s MD&A. These non-GAAP measures should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with GAAP as measures of First Capital Realty’s operating performance.

Forward-Looking Statements

This press release, and in particular the “Outlook” and “2011 Guidance” sections hereof, contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can generally be identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “project”, “expect”, “intend”, “outlook”, “objective”, “may”, “will”, “should”, “continue” and similar expressions. The forward-looking statements are not historical facts but, rather, 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, including, without limitation, those set forth in the “2011 Guidance” section of this press release. Moreover, the assumptions underlying the Company’s forward-looking statements contained in the “Outlook” and “2011 Guidance” sections of this press release also include that consumer demand will remain stable, demographic trends will continue and there will continue to be barriers to entry in the markets in which the Company operates.

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 Management’s Discussion and Analysis for the year ended December 31, 2010.

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 factors described in the aforementioned “Risk and Uncertainties” section, include, but are not limited to, general economic conditions, the availability of new competitive supply of retail properties which may become available either through construction or sublease, First Capital Realty’s ability to maintain occupancy and to lease or re-lease space at current or anticipated rents, tenant bankruptcies, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, development and construction, environmental liability and compliance costs, legal matters, reliance on key personnel, tenant 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, First Capital Realty’s ability to obtain insurance coverage at a reasonable cost and the availability of debt and equity 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. First Capital Realty 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 applicable securities law.

All forward-looking statements in this press release are made as of the date of this press release and are qualified by these cautionary statements.

For further information:
Dori J. Segal, President & C.E.O., or
Karen H. Weaver, Executive Vice President & C.F.O.
First Capital Realty Inc.
85 Hanna Avenue, Suite 400
Toronto, Ontario, Canada M6K 3S3
Tel: (416) 504-4114
Fax: (416) 941-1655

www.firstcapitalrealty.ca

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