Press Releases

FIRST CAPITAL REALTY ANNOUNCES 2009 YEAR END RESULTS

March 11, 2010

Strong Core Operating Performance; Completed Dividend-in-kind

Toronto, Ontario (March 11, 2010) - 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 strong financial results for the year ended December 31, 2009.

YEAR HIGHLIGHTS

Year Ended December 31 $ millions
2009 2008

Enterprise value

$ 4,508

$ 4,111

Debt to aggregate assets

50.3%

53.5%

Debt to total market capitalization

45.9%

52.6%

Property rental revenue

$ 442.1

$ 410.2

Net operating income (NOI)

$ 285.2

$ 261.0

 

Year Ended December 31 $ millions per share
2009 2008 2009 2008

Funds from operations (FFO) - Core Operations

$ 144.4

$ 133.3

$1.54

$1.53

FFO - EQY and Other Non-Recurring Items (1)

$ 7.6

$ 12.6

$0.08

$0.14

Total FFO

$ 152.0

$ 145.9

$1.62

$1.67

Weighted average diluted shares for FFO (000’s)

93,869

87,260

 

 

Adjusted funds from operations (AFFO) - Core Operations

$ 143.4

$ 132.3

$1.40

$1.38

AFFO - EQY and Other Non-Recurring Items (1)

$ 8.4

$ 8.4

$0.08

$0.09

Total AFFO

$ 151.8

$ 140.7

$1.48

$1.47

Weighted average diluted shares for AFFO (000’s)

102,935

95,587

 

 

(1) Excludes the Company’s share of Equity One’s non cash impairment loss and dilution gain (losses). See Funds from Operations section of this press release.

2009 HIGHLIGHTS

  • Invested $285 million in development activities, property improvements and acquisitions
  • Added 1.0 million square feet of gross leasable area from development and redevelopment coming on line, and acquisitions
  • Acquired five income-producing properties totalling 225,000 square feet, two properties adjacent to existing shopping centres totalling 31,000 square feet, one land site and four land parcels adjacent to existing properties comprising a total of 9.7 acres
  • 6.8% same property NOI growth; 2.7% excluding redevelopment and expansion space
  • 13.1% increase on rate per square foot on 1.2 million square feet of renewal leases
  • Occupancy of 96.2% compares to 96.0% at September 30, 2009 and 96.4% at December 31, 2008. Vacancy includes 0.7% of space held for redevelopment
  • Gross new leasing totalled 1.2 million square feet including development and redevelopment coming on line; lease closures totalled 632,000 square feet and closures for redevelopment totalled 174,000 square feet
  • Average lease rate per occupied square foot increased by 3.6% from December 31, 2008 to $15.71 at December 31, 2009
  • Completed new leasing on existing space totalling 493,000 square feet at an average rate of $18.89 per square foot, representing a 20.4% increase over expiring rates
  • Completed approximately $1.1 billion of financing activities
  • Completed dividend-in-kind transaction resulting in the Company no longer having an ownership interest in Equity One effective August 14, 2009

FOURTH QUARTER HIGHLIGHTS

Three months ended December 31 $ millions per share
2009 2008 2009 2008

Property rental revenue

$113.2

$105.7

 

 

Net operating income (NOI)

$73.7

$67.9

 

 

FFO - Core Operations

$36.7

$35.9

$0.38

$0.40

FFO - EQY and Other Non-Recurring Items (1)

$(0.5)

$2.1

$(0.01)

$0.02

Total FFO

$36.2

$38.0

$0.37

$0.42

Weighted average diluted shares for FFO (000’s)

97,007

90,424

 

 

AFFO - Core Operations

$35.0

$34.5

$0.33

$0.35

AFFO - EQY and Other Non-Recurring Items(1)

$3.7

$3.2

$0.03

$0.03

Total AFFO

$38.7

$37.7

$0.36

$0.38

Weighted average diluted shares for AFFO (000’s)

108,947

99,053

 

 

(1) Excludes the Company’s share of Equity One’s non cash impairment loss and dilution gain on Equity One investment. See Funds from Operations section of this press release.

FOURTH QUARTER 2009 OPERATING HIGHLIGHTS

  • Invested $88 million in development activities, property improvements and acquisitions
  • Added 271,000 square feet of gross leasable area from development and redevelopment coming on line and acquisitions
  • Acquired one income-producing property totalling 80,000 square feet, two properties adjacent to existing shopping centres totalling 31,000 square feet and two land parcels adjacent to existing properties for future development
  • 5.9% same property NOI growth; 3.2% excluding redevelopment and expansion space
  • 17.7% increase on 382,000 square feet of renewal leases
  • Gross new leasing totalled 266,000 square feet including development and redevelopment coming on line; lease closures totalled 81,000 square feet and closures for redevelopment totalled 49,000 square feet

"I am very pleased with where our business is and where its headed coming out of 2009," said Dori J. Segal, President & CEO, "Our overall results reflect continued good core operating performance and gains on securities offset by the impact of the dividend-in-kind, higher debt and equity financing costs and certain one-time charges.”

 FINANCING AND CAPITAL MARKET HIGHLIGHTS

The Company completed the following financing activities in the twelve months ended December 31, 2009:

  • $450 million secured revolving credit facility maturing March 2012 with a syndicate of ten banks jointly led by RBC Capital Markets, TD Securities, and BMO Capital Markets. The new facility was used to replace the Company’s existing three year $350 million senior unsecured revolving credit facility, which had a maturity date of March 2010.
  • $75 million secured revolving credit facility with the Bank of Nova Scotia maturing January 2012.
  • $187.3 million from thirteen secured financing transactions at a weighted average interest rate of 6.21% and a weighted average term to maturity of 8.5 years.
  • $75 million principal amount of 6.25% cashless convertible unsecured subordinated debentures maturing December 2016 at a conversion price of $22.90 per common share. The Company’s convertible debentures are considered to be cashless as it is the current intention of the Company to satisfy its obligations to pay principal and interest on its convertible debentures by the issuance of common shares.
  • $125 million principal amount senior unsecured debentures, Series G, with 5.95% interest rate maturing June, 2015. The Company subsequently reduced the availability of the syndicated secured revolving credit facility to $375 million and unwound $20 million notional principle amount of hedges.
  • $50 million principal amount of 5.70% cashless convertible unsecured subordinated debentures maturing June 2017 at a conversion price of $30.00 per common share. The Company’s convertible debentures are considered to be cashless as it is the current intention of the Company to satisfy its obligations to pay principal and interest on its convertible debentures by the issuance of common shares. The Company further reduced the availability of the syndicated secured revolving credit facility to $285 million.
  • $1.5 million of unamortized deferred financing costs were recorded as a loss on settlement of debt in Q4, 2009 as a result of the reductions of the syndicated revolving credit facility. The Company also recorded a net loss on the settlement of hedges totalling $1.2 million.
  • Subsequent to year end, the Company completed $125 million principal amount senior unsecured debentures, Series H, with 5.85% interest rate maturing January, 2017. The Company further reduced the availability of the syndicated secured revolving credit facility to $250 million. The Company also reduced its $75 million secured revolving credit facility to $50 million.
  • $0.5 million of unamortized deferred financing costs will be recorded as a loss on settlement of debt in Q1, 2010 as a result of the reductions of the revolving credit facilities.

In addition, the Company completed the following equity issuances in the twelve months ended December 31, 2009:

  • On February 17, 2009 the Company issued 1.4 million common shares to acquire 1.8 million shares of Allied Properties REIT at a ratio of 0.81 First Capital Realty shares per Allied Properties REIT Trust Unit.
  • The Company issued 772,000 common shares as payment of the interest due to holders of the 5.50% cashless convertible debentures.
  • Convertible debentures totalling $6.3 million in principal were converted at the option of the holder at a conversion price of $27.00 per common share resulting in the issuance of approximately 231,000 common shares.
  • In 2009, the Company raised gross proceeds of $59 million of equity issuing 3.45 million common shares (including 2.3 million warrants) through an equity offering at an average gross price of $17.10 per share

On August 14, 2009, First Capital Realty completed the dividend-in-kind of the Company’s interest in Gazit America. The Company calculated the fair market value of the Gazit America shares distributed to shareholders to be $41.5 million, or approximately $0.45 per First Capital Realty common share outstanding. As a result of this dividend-in-kind, First Capital Realty no longer has any ownership interest in Equity One.

For the year ended December 31, 2009, the following dividends were distributed to the Company’s shareholders:

 

Year Ended December 31(per share) 2009 2008

Regular dividends

Dividend-in-kind

0.45

0.45

$ 1.28

-

Total Dividends

$ 1.73

$ 1.28

 

FINANCIAL RESULTS SUMMARY

FFO and AFFO presented herein are key financial measures used by the real estate industry to measure and compare the operating performance of real estate organizations. FFO and AFFO are supplemental non-GAAP financial measures and a complete reconciliation containing adjustments from GAAP net income to FFO and AFFO is included in this press release.

Funds from Operations (FFO)

(thousands of dollars, except per share amounts) Year ended December 31, 2009 Year ended December 31, 2008 (1)
  FFO - Core Operations FFO - EQY and Other Non-recurring Items Total FFO FFO - Core Operations FFO - EQY and Other Non-recurring Items Total FFO

Net operating income

$

285,177

$

-

$

 285,177

$

261,040

$

-

$

 261,040

Interest expense - Canadian operations

 

(120,101)

 

-

 

(120,101)

 

(105,541)

 

-

 

(105,541)

Interest expense - US operations

 

-

 

(5,364)

 

(5,364)

 

-

 

(8,144)

 

(8,144)

Corporate expense

 

(22,122)

 

-

 

(22,122)

 

(21,577)

 

-

 

(21,577)

Interest and other income

 

5,612

 

-

 

5,612

 

1,559

 

-

 

1,559

Other (losses) gains and (expenses)

 

-

 

(1,475)

 

(1,475)

 

-

 

2,752

 

2,752

Funds from operations from Equity One (3)

 

-

 

15,009

 

15,009

 

-

 

20,005

 

20,005

Amortization of non-real estate assets

 

(4,207)

 

-

 

(4,207)

 

(2,159)

 

-

 

(2,159)

Current income taxes

 

-

 

(533)

 

(533)

 

-

 

(1,985)

 

(1,985)

FFO (2)

 

144,359

 

7,637

 

151,996

 

133,322

 

12,628

 

145,950

Add: the Company's share of Equity One's non-cash impairment loss

 

-

 

-

 

-

 

-

 

(7,503)

 

(7,503)

Add: Dilution (loss) gain on Equity One investment

 

-

 

(676)

 

(676)

 

-

 

2,898

 

2,898

FFO - Realpac

 

144,359

 

6,961

 

151,320

 

133,322

 

8,023

 

141,345

FFO per diluted share

$

1.54

$

0.08

$

1.62

$

1.53

$

0.14

$

1.67

Add: the Company's share of Equity One's non-cash impairment loss

 

-

 

-

 

-

 

-

 

(0.09)

 

(0.09)

Add: Dilution (loss) gain on Equity One investment

 

-

 

(0.01)

 

(0.01)

 

-

 

0.04

 

0.04

FFO per diluted share - Realpac

$

1.54

$

0.07

$

1.61

$

1.53

$

0.09

$

1.62

Weighted average diluted shares - FFO

 

93,868,815

 

93,868,815

 

93,868,815

 

87,260,224

 

87,260,224

 

87,260,224

 

(thousands of dollars, except per share amounts) Three months ended December 31, 2009 Three months ended December 31, 2008 (1)
  FFO - Core Operations FFO - EQY and Other Non­recurring Items Total FFO FFO - Core Operations FFO - EQY and Other Non-recurring Items Total FFO

Net operating income

$

73,708

$

 

$

73,708

$

67,911

$

-

$

67,911

Interest expense - Canadian operations

 

(32,343)

 

-

 

(32,343)

 

(26,177)

 

-

 

(26,177)

Interest expense - US operations

 

-

 

-

 

-

 

-

 

(2,444)

 

(2,444)

Corporate expense

 

(5,801)

 

-

 

(5,801)

 

(5,614)

 

-

 

(5,614)

Interest and other income

 

2,549

 

-

 

2,549

 

347

 

-

 

347

Other (losses) gains and (expenses)

 

-

 

(2,165)

 

(2,165)

 

-

 

(613)

 

(613)

Funds from operations from Equity One

 

-

 

-

 

-

 

-

 

4,776

 

4,776

Amortization of non-real estate assets

 

(1,451)

 

-

 

(1,451)

 

(592)

 

-

 

(592)

Current income taxes

 

-

 

1,662

 

1,662

 

-

 

380

 

380

FFO (2)

 

36,662

 

(503)

 

36,159

 

35,875

 

2,099

 

37,974

Add: the Company's share of Equity One's non-cash impairment loss

 

-

 

-

 

-

 

-

 

(1,023)

 

(1,023)

Add: Dilution gain on Equity One investment

 

-

 

-

 

-

 

-

 

2,898

 

2,898

FFO - Realpac

$

36,662

$

(503)

$

36,159

$

35,875

$

3,974

$

39,849

FFO per diluted share

$

0.38

$

(0.01)

$

0.37

$

 0.40

$

$ 0.02

$

$ 0.42

Add: the Company's share of Equity One's non-cash impairment loss

 

-

 

-

 

-

 

-

 

(0.01)

 

(0.01)

Add: Dilution gain on Equity One investment

 

-

 

-

 

-

 

-

 

0.03

 

0.03

FFO per diluted share - Realpac

$

0.38

$

(0.01)

$

0.37

$

 0.40

$

 0.04

$

 0.44

Weighted average diluted shares - FFO

 

97,007,411

 

97,007,411

 

97,007,411

 

90,423,576

 

90,423,576

 

90,423,576

  • (1) Prior year comparative figures have been restated for a change in accounting standards.

  • (2) Excluding Equity One's non-cash impairment loss and dilution gains and losses on the Equity One investment.

  • (3) To August 14, 2009.

The Company’s funds from operations - core operations for the year ended December 31, 2009 totalled $144.4 million or $1.54 per diluted common share which compares to $133.3 million or $1.53 per diluted common share for the year ended December 31, 2008. FFO - core operations, was positively affected by same property NOI growth and the effect of acquisitions and development coming on line. This was offset by increased interest and amortization expense. The increase in interest and amortization expense is primarily attributed to the increased cost of the new secured revolving credit facilities. The increased credit facility costs were only partially offset by the effect of the reduced interest rate environment. In addition, the number of weighted average shares outstanding increased by 7.6% over the prior year.

FFO - EQY and other non-recurring items includes the effect of Equity One and its related interest expense, current income taxes arising from the Company’s U.S. operations and other gains and losses. For the year ended December 31, 2009, FFO - EQY and other non-recurring items totalled $7.6 million or $0.08 per diluted common share which compares to $12.6 million or $0.14 per diluted common share in the prior year. FFO - EQY and other non-recurring items included the results of Equity One up to August 14, 2009 compared to 2008 which included the results for the full year.

In addition, FFO - EQY and other non-recurring items included items such as gains on marketable securities offset by losses on debt extinguishment, losses on terminations of hedges, one-time severance payments and one time property management internalization costs, specifically:

 

($ in thousands) Year ended December 31 Three months ended December 31
  2009 2008 2009 2008

(Losses) gains on debt extinguishment

(2,394)

438

(1,497)

438

Realized loss on termination of hedges

(1,160)

-

(1,181)

-

Unrealized loss on interest rate swaps not designated as hedges

(1,203)

-

(1,203)

-

Gains (losses) on marketable securities

6,194

(1,978)

4,535

(1,033)

Gains on sales of land

118

3,945

-

-

Severance costs (including non-cash compensation)

(2,000)

-

(2,000)

-

Costs related to acquisition of remaining 40% interest in FCB

(752)

-

(752)

-

Other items, net

(278)

347

(67)

(18)

Total

(1,475)

2,752

(2,165)

(613)

The Company’s funds from operations - core operations for the three months ended December 31, 2009 totalled $36.7 million or $0.38 per diluted common share compared to $35.9 million or $0.40 per diluted common share in the same period in 2008. FFO - core operations, was positively affected by same property NOI growth and the effect of acquisitions and development coming on line. This was largely offset by increased interest and amortization expense.

For the three months ended December 31, 2009, FFO - EQY and other non-recurring items consisted of a net loss of $0.5 million or $0.01 per diluted common share which compares to a net gain of $2.1 million or $0.02 per diluted common share. FFO - EQY and other non-recurring items included one time items which consist of gains on marketable securities offset by losses on debt extinguishment, losses on termination of hedges, one-time severance payment and one time property management internalization costs, which are in the table above.

Adjusted Funds from Operations (AFFO)

(thousands of dollars, except per share amounts) Year ended December 31, 2009 Year ended December 31, 2008 (1)
  AFFO - Core Operations AFFO - EQY and Other Non-recurring Items Total AFFO AFFO - Core Operations AFFO - EQY and Other Nonrecurring Items Total AFFO

FFO excluding dilution loss on Equity One investment and the

 

Company's share of Equity One's non-cash impairment loss

$

144,359

$

7,637

$

151,996

$

133,322

$

12,628

$

145,950

Add / (deduct):

 

Interest expense payable in shares

 

15,342

 

-

 

15,342

 

14,031

 

-

 

14,031

Rental revenue recorded on a straight-line basis and market rent adjustments

 

(7,376)

 

-

 

(7,376)

 

(7,627)

 

-

 

(7,627)

Non-cash compensation expense

 

3,609

 

600

 

4,209

 

3,899

 

-

 

3,899

Revenue sustaining capital expenditures and leasing costs (2)

 

(12,171)

 

-

 

(12,171)

 

(11,866)

 

-

 

(11,866)

Funds from operations from Equity One excluding non-cash impairment loss

 

-

 

(15,009)

 

(15,009)

 

-

 

(20,005)

 

(20,005)

Dividends from Equity One (regular)

 

-

 

12,452

 

12,452

 

-

 

18,193

 

18,193

Return of capital portion of marketable securities, net

 

(299)

 

-

 

(299)

 

623

 

-

 

623

Change in cumulative unrealized (gain) loss on marketable securities

 

-

 

(1,952)

 

(1,952)

 

-

 

1,638

 

1,638

Loss (gain) on extinguishment of debt

 

-

 

2,394

 

2,394

 

-

 

(438)

 

(438)

Realized losses on termination of hedge

 

-

 

1,160

 

1,160

 

-

 

290

 

290

Unrealized losses on interest rate swaps not designated as hedges

 

-

 

1,203

 

1,203

 

-

 

-

 

-

Gain on disposition of land

 

-

 

(118)

 

(118)

 

-

 

(3,945)

 

(3,945)

Adjusted funds from operations ("AFFO")

$

 143,464

$

8,367

$

151,831

$

132,382

$

8,361

$

140,743

AFFO per diluted share

$

1.40

$

 0.08

$

1.48

$

1.38

$

0.09

$

1.47

Weighted average diluted shares for AFFO

 

102,934,634

 

102,934,634

 

102,934,634

 

95,586,511

 

95,586,511

 

95,586,511

 

(thousands of dollars, except per share amounts) Three months ended December 31. 2009 Three months ended December 31. 2008 (1)
  AFFO - Core Operations AFFO - EQY and Other Non-recurring Items Total AFFO AFFO - Core Operations AFFO - EQY and Other Nonrecurring Items Total AFFO

FFO excluding dilution loss on Equity One investment and the

 

 

 

 

 

 

 

 

 

 

Company's share of Equity One's non-cash impairment loss

$

 36,662

$

 (503)

$

36,159

$

35,875

$

2,099

$

37,974

Add / (deduct):

 

Interest expense payable in shares

 

4,819

 

-

 

4,819

 

3,540

 

-

 

3,540

Rental revenue recorded on a straight-line basis and market rent adjustments

 

(2,731)

 

-

 

(2,731)

 

(1,461)

 

-

 

(1,461)

Non-cash compensation expense

 

882

 

600

 

1,482

 

928

 

-

 

928

Revenue sustaining capital expenditures and leasing costs

 

(3,329)

 

-

 

(3,329)

 

(4,779)

 

-

 

(4,779)

Funds from operations from Equity One excluding non-cash impairment loss

 

-

 

-

 

-

 

-

 

(4,776)

 

(4,776)

Dividends from Equity One (regular)

 

-

 

-

 

-

 

-

 

5,145

 

5,145

Return of capital portion of marketable securities, net

 

(1,273)

 

-

 

(1,273)

 

409

 

-

 

409

Change in cumulative unrealized (gain) loss on marketable securities

 

-

 

(314)

 

(314)

 

-

 

850

 

850

Loss (gain) on extinguishment of debt

 

-

 

1,497

 

1,497

 

-

 

(438)

 

(438)

Realized losses on termination of hedge

 

-

 

1,181

 

1,181

 

-

 

290

 

290

Unrealized losses on interest rate swaps not designated as hedges Gain on disposition of land

 

-

 

1203

 

1203

 

-

 

(3)

 

(3)

Adjusted funds from operations ("AFFO")

$

35,030

$

3,664

$

38,694

$

34,512

$

3,167

$

37,679

AFFO per diluted share

$

 0.33

$

0.03

$

0.36

$

0.35

$

0.03

$

0.38

Weighted average diluted shares for AFFO

 

108,946,987

 

108,946,987

 

108,946,987

 

99,053,205

 

99,053,205

 

99,053,205

  • (1) Prior year comparative figures have been restated for a change in accounting standards.

  • (2) Estimated at $0.60 per square foot per annum on gross leasable area for 2009 ($0.50 per square foot per annum in 2008)

Management views AFFO as an effective measure of cash generated from operations. AFFO is calculated by adjusting FFO for actual costs incurred for capital expenditures and leasing costs for maintaining shopping centre infrastructure, current lease revenues, and non-cash items including straight­line and market rent adjustments, non-cash compensation expenses, interest paid in shares, gains or losses on debt and hedges. Land sales are excluded from AFFO. The Company’s proportionate share of Equity One FFO is excluded and only the regular cash dividends received are included in AFFO. The weighted average diluted shares outstanding for AFFO is adjusted to assume conversion of the outstanding convertible debentures. Non-recurring AFFO items primarily consists of dividends from Equity One, net of the associated interest expense, realized gains on marketable securities, cash severance costs and the costs associated with the acquisition of 40% FCB that the Company did not already own.

 

  Three months ended December 31 Year ended December 31
($ thousands, except per share amounts) 2009 2008(1) 2009 2008 (1)

Net income

$ 14,736

$ 10,574

$ 41,913

$ 37,341

Earnings per share (diluted)

$ 0.15

$ 0.12

$ 0.45

$ 0.43

Weighted average common shares - diluted (000’s)

97,007

90,424

93,869

87,260

(1)Prior year comparative figures have been restated for a change in accounting standards

Net income for the three and twelve months ended December 31, 2009 was $14.7 million or $0.15 per share (basic and diluted) and $41.9 million or $0.45 per share (basic and diluted). This compares to $10.6 million or $0.12 per share (basic and diluted) and $37.3 million or $0.43 per share (basic and diluted), respectively, for the three and twelve months ended December 31, 2008. The increase in net income is primarily due to the increase in NOI resulting from development projects coming on line and same property NOI growth, increased interest and other income, offset by increased interest expense, increased amortization expense, decreased other gains(losses) and (expenses) and decreased income from Equity One, as a result of the dividend-in-kind. In addition, there was an increase in the basic and weighted average diluted shares outstanding compared to the same prior year periods.

DEVELOPMENT AND ACQUISITION ACTIVITIES

During the fourth quarter of 2009, the Company invested $49 million in active development projects and improvements to existing properties bringing the year-to-date total investment to $209 million. Development and redevelopment of 160,000 square feet was brought on line in the fourth quarter, space leased was at an average rate of $23.01 per square foot. Year-to-date the Company brought on line 754,000 square feet of development and redevelopment space leased at an average rate of $22.79 per square foot

In addition, during the fourth quarter of 2009 the Company invested $39 million in the acquisition of an income-producing property adding 80,000 square feet of gross leasable area, two properties adjacent to existing shopping centres totalling 31,000 square feet and two parcels adjacent to existing properties. For the year ended December 31, 2009, the Company invested $76 million on five income-producing properties comprising 225,000 square feet, two properties adjacent to existing shopping centres totalling 31,000 square feet, one land site and four land parcels adjacent to existing properties comprising a total of 9.7 acres of commercial land for future development.

OPERATING SUMMARY

Net operating income for the year ended December 31, 2009 totalled $285.2 million, compared to $261.0 million for year ended December 31, 2008, an increase of $24.2 million or 9.3%. Same property NOI increased by 6.8% in 2009, compared to the same prior year period, generating NOI growth of $16.7 million, primarily attributed to redevelopment and expansion space coming on line, lease termination payments and increases in lease rates and occupancy. Same property NOI for the year, excluding expansion or redevelopment space, increased by $6.4 million or 2.7% over the same prior year period.

Acquisitions completed in 2009 and 2008 contributed $5.0 million to NOI in 2009, while greenfield development activities contributed a further $10.8 million in 2009.

The lease termination fees for the year ended December 31, 2009 are from three tenants (two are non­retail tenants) at separate locations where 94,500 square feet with an annualized NOI of $1.5 million was vacated. 20,200 square feet has been re-leased replacing one half of the total NOI. The Company is currently negotiating the lease up of the remaining two locations.

Net operating income for the three months ended December 31, 2009 totalled $73.7 million, compared to $67.9 million in the fourth quarter of 2008, an increase of $5.8 million or 8.5%. Same property NOI increased by 5.9% generating NOI growth of $3.7 million in the fourth quarter 2009 over the fourth quarter of 2008, due primarily to redevelopment and expansion space and increases in lease rates and occupancy. Same property NOI in the fourth quarter of 2009, excluding expansion or redevelopment space, increased by $1.9 million or 3.2% over the same prior year period.

Acquisitions completed in 2009 and 2008 contributed $1.7 million to NOI in the fourth quarter of 2009, while greenfield development activities contributed a further $2.5 million.

Gross new leasing in the fourth quarter of 2009 totalled 266,000 square feet including development and redevelopment space coming on line. The Company achieved a 17.7% increase on 382,000 square feet of renewal leases over the expiring rates. For the year ended December 31, 2009, gross new leasing totalled 1.2 million square feet. Renewal leasing totalled 1.2 million square feet with a 13.1 % increase over expiring lease rates.

The average rate per occupied square foot at December 31, 2009 increased to $15.71. This compares to an average rate of $15.17 per square foot at December 31, 2008 and $15.54 at September 30, 2009.

Portfolio occupancy at December 31, 2009 of 96.2% compares to 96.0% at September 30, 2009 and 96.4% at December 31, 2008. Closures for redevelopment totalled 174,000 square feet for 2009 providing potential for future income growth through leasing and redevelopment activities.

 SUBSEQUENT EVENT HIGHLIGHTS

Acquisitions

The Company invested $61 million in the acquisition of one income-producing property totalling 66,000 square feet in Victoria, BC, one property adjacent to an existing shopping centre totalling 15,000 square feet, two properties held for future development and two land parcels adjacent to existing properties comprising a total of 5.0 acres of commercial land for future development.

Interest on Convertible Debentures

On February 18, 2010, the Company announced that it will pay the interest due on March 31, 2010 to holders of both classes of its 5.50% convertible unsecured subordinated debentures, due September 30, 2017 and to holders of its 6.25% convertible unsecured subordinated debentures due December 31, 2016, 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, 2010. The interest payment due is approximately $8.7 million.

It is the current intention of the Company 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 shares.

 Quarterly Dividend

The Company announced that it will pay a first quarter dividend of $0.32 per common share on April 13, 2010 to shareholders of record on March 26, 2010.

2009 ACTUAL RESULTS COMPARED TO 2009 GUIDANCE

Projections involve numerous assumptions such as rental income (including assumptions on timing of lease-up, development coming on line and levels of percentage rent), interest rates, tenant defaults, corporate expenses, level and timing of acquisitions of income-producing properties, the Company’s share price, number of shares outstanding and numerous other factors. Not all factors which affect our range of projected funds from operations and adjusted funds from operations are determinable at this time and actual results may vary from the projected results in a material respect, and may be above or below the range presented in a material respect.

The purpose of the Company’s guidance is to provide readers with 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 2009 results to the previously updated guidance follows.

 

(per share amounts, except for projected FFO, AFFO and shares outstanding) 2009 Guidance Provided in Q3 2009 Actual
Low High Actual

FFO Guidance

Projected diluted net income before taxes, per share

$0.57

$0.59

$0.54

Projected current taxes

(0.02)

(0.02)

(0.01)

Projected future taxes

(0.16)

(0.16)

(0.08)

Projected diluted net income per share

$0.39

$0.41

$0.45

Adjustments

 

 

 

Projected FFO from Equity One

0.16

0.16

0.16

Projected equity income from Equity One

(0.09)

(0.09)

(0.08)

Projected amortization and future income taxes

1.18

1.19

1.09

Projected FFO per share(1)

$1.64

$1.67

$1.62

Projected FFO (1)

$153.9M

$157.3M

$152.0M

Projected weighted average shares outstanding for per share FFO calculations

94.0M

93.9M

AFFO Guidance

Projected FFO(1)

$153.9M

$157.3M

$152.0M

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

103.2M

102.9M

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

$1.49

$1.52

$1.48

Projected dividend income - return of capital portion

(0.00)

(0.01)

(0.00)

Projected dividends from Equity One, net of FFO from Equity One

(0.02)

(0.02)

(0.02)

Projected revenue sustaining capital expenditures

(0.12)

(0.12)

(0.12)

Projected non cash items, net

0.11

0.11

0.14

Projected AFFO per share(1)

$1.46

$1.48

$1.48

(1) Excludes the Company’s share of Equity One’s non cash impairment loss and the dilution loss. See Funds from Operations section.

The net income variance was primarily driven by:

  • the decrease in future income taxes which was primarily attributed to a change in the future income tax rate, not anticipated in the guidance;
  • the effect of Equity One tax matters which resulted in an adjustment in current income taxes arising from the Company’s U.S. operations greater than the amount in the guidance: and
  • non-recurring items as outlined below, which were the result of financing transactions that were not anticipated in the guidance, and the departure of two senior executives.

 

  2009 2009
($ millions) (Per share)

Losses on debt extinguishment

(1,497)

(0.02)

Realized loss on termination of hedges

(1,160)

(0.01)

Unrealized loss on interest rate swaps not designated as hedges

(1,203)

(0.01)

Severance costs (including non-cash compensation)

(2,000)

(0.02)

Total

(5,860)

(0.06)

OUTLOOK

Over the past several years First Capital Realty has made significant progress in growing its business and generating accretive growth in funds from operations while enhancing the quality of its portfolio.

The current environment remains competitive with little transaction activity. Both debt and equity markets are accessible but continue to be challenging relative to pricing currently being asked by property vendors. The Company will continue to selectively acquire properties that are well-located and of high quality, where they add strategic value and/or operating synergies provided they will be accretive to FFO over the long term, and equity and 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. Once completed, these activities typically generate higher returns on investment.

With respect to acquisitions of both income-producing and development properties, the Company will continue to focus on maintaining the sustainability and growth potential of rental income to ensure that among other things, refinancing risk is minimized. This is particularly important given the current cost of capital.

Specifically, Management will focus on the following five areas to achieve its objectives in 2010:

  • same property net operating income growth, taking into account maintaining high occupancy;
  • development and redevelopment activities;
  • selective acquisitions;
  • increasing efficiency and productivity of operations; and
  • improving the cost of capital, for both debt and equity.

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

2010 GUIDANCE

(per share amounts, except for projected FFO and shares outstanding) Low High

FFO Guidance

Projected diluted net income per share

Adjustments

Projected amortization and future income taxes

$0.38

 

1.14

$0.41

 

1.16

Projected FFO per share

$1.52 $1.57

Projected FFO

$150.5M

$155.0M

Projected weighted average shares outstanding for per share FFO calculations

99.0M

AFFO Guidance

Projected FFO

$150.5M

$155.0M

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

112.4

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

Projected revenue sustaining capital expenditures

Projected non-cash items, net

$1.34

 

(0.12)

0.13

$1.38

 

(0.12)

0.15

Projected AFFO per share

$1.35

$1.41

Projections involve numerous assumptions such as rental income (including assumptions on timing of lease-up, development coming on line and levels of percentage rent), interest rates, tenant defaults, corporate expenses, the level and timing of acquisitions of income-producing properties, the Company’s share price, the number of shares outstanding and numerous other factors. Not all factors which affect our range of projected funds from operations and adjusted funds from operations are determinable at this time, actual results may vary from the projected results in a material respect, and may be above or below the range presented in a material respect.

Guidance is based on specific assumptions including:

  • Same property NOI growth of 1.0% to 1.5% (excluding redevelopment and expansion);
  • Development, redevelopment and expansion coming on-line of 450,000 to 550,000 square feet with approximate gross book value of $100 to $120 million;
  • Income-producing property acquisitions totalling $100 million (includes $31 million invested to- date);
  • Development property acquisitions totalling $30 million, acquired in the first quarter of 2010;
  • Refinancing the credit facility to current market rates;
  • Revenue sustaining capital expenditure is expected to be approximately $0.65 per average square foot; and
  • Other non-recurring (losses) gains and expenses totalled net loss of $0.5 million consisting of;
  • gains on marketable securities - $1.2 million
  • loss on termination of hedges - $1.2 million
  • loss on debt extinguishment - $0.5 million

The ranges presented represent Management’s estimate of results based upon these assumptions as of the date of this press release. The purpose of the Company’s guidance is to provide readers with Management’s view as to the expected financial performance of the Company for 2010, using factors that are commonly accepted and viewed as meaningful indicators of financial performance in the real estate industry.

Readers should refer to the section below titled “Forward Looking Statements” for important information relating to our guidance, including risk factors.

MANAGEMENT CONFERENCE CALL AND WEBCAST

First Capital Realty invites you to participate at its live conference call with senior management announcing our 2009 year end results on Friday, March 12, 2010 at 10:00 a.m. E.S.T.

Year end financial results will be released prior to the call and made available on First Capital Realty’s website in the Pressroom section. The Supplemental Package link will be on our Home Page at www.firstcapitalrealty.ca or click on Investor Relations, investor downloads.

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, 2010 and can be accessed by dialing toll free 800-408-3053 or 416-695-5800 with access code 5030774.

Webcast:

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

Slide Presentation:

A slide presentation to accompany Management’s comments during the conference call will be available. To view the slides, please go to First Capital Realty’s website at www.firstcapitalrealty.ca and click on the link for the Conference Call at the top of our Home Page.

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 176 properties, including three under development, totalling approximately 20.9 million square feet of gross leasable area and six land sites in the planning stage for future retail development.

* * * *

Forward Looking Statements

This press release and in particular the "Outlook" and "2010 Guidance " section, 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", "expect", "intend", "outlook", "objective", "may", "will", "should", "continue" and similar expressions. The forward-looking statements are not historical facts but 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. All forward-looking statements in this press release are qualified by these cautionary statements.

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 current Management’s Discussion and Analysis.

Factors that could cause actual results or events to differ materially from those expressed, implied or projected by forward­looking statements in addition to those described in the "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, construction, environmental matters, legal matters, reliance on key personnel, 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 financing. The assumptions underlying the Company’s forward-looking statements contained in the "Outlook" and "2010 Guidance" section of this press release 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.

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 security laws.

These forward-looking statements are made as of March 11, 2010.

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

NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

Funds from Operations and Adjusted Funds from Operations

In Management’s view, funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) are commonly accepted and meaningful indicators of financial performance in the real estate industry. First Capital Realty believes that financial analysts, investors and shareholders are better served when the clear presentation of comparable period operating results generated from FFO and AFFO disclosures supplement Canadian generally accepted accounting principles (“GAAP”) disclosure. These measures are the primary methods used in analyzing real estate organizations in Canada. The Company’s method of calculating FFO and AFFO may be different from methods used by other corporations or REITs (real estate investment trusts) and, accordingly, may not be comparable to such other corporations or REITs. FFO and AFFO are presented to assist investors in analyzing the Company’s performance. FFO and AFFO: (i) do not represent cash flow from operating activities as defined by GAAP, (ii) are not indicative of cash available to fund all liquidity requirements, including payment of dividends and capital for growth and (iii) are not to be considered as alternatives to GAAP net income for the purpose of evaluating operating performance.

Funds from Operations (“FFO”)

First Capital Realty calculates FFO in accordance with the recommendations of the Real Property Association of Canada (“RealPac”). The definition is meant to standardize the calculation and disclosure of FFO across real estate entities in Canada, modelled on the definition adopted by the National Association of Real Estate Investment Trusts (“NAREIT”) in the United States. FFO as defined by RealPac differs in two respects from the definition adopted by NAREIT. Under the RealPac definition, future income taxes are excluded from FFO, whereas under the NAREIT definition, they are included. In addition, impairment losses on depreciable assets are excluded from the RealPac FFO definition, whereas the NAREIT definition includes them. As a result, when calculating FFO, the Company adjusts the FFO reported by Equity One to comply with the RealPac definition, when appropriate.

FFO is considered a meaningful additional measure of operating performance, as it excludes amortization of real estate assets. Amortization expense assumes that the value of real estate assets diminishes predictably over time, which is clearly not a valid assumption. FFO also adjusts for certain items included in GAAP net income that may not be the most appropriate determinants of the long-term operating performance of the Company including gains and losses on depreciable real estate assets.

Net Operating Income

NOI is defined as property rental revenue less property operating costs. In Management’s opinion, NOI is useful in analyzing the operating performance of the Company’s shopping centre portfolio. NOI is not a measure defined by GAAP and as such there is no standard definition. As a result, NOI may not be comparable with similar measures presented by other entities. NOI is not to be construed as an alternative to net income or cash flow from operating activities determined in accordance with GAAP.

CONSOLIDATED BALANCE SHEETS

 

    December 31   December 31
(thousands of dollars)   2009   2008 (1)

 

 

 

 

(restated)

ASSETS

 

 

 

 

Real Estate Investments

 

 

 

 

Shopping centres

$

3,288,759

$

3,040,257

Land and shopping centres under development

 

224,772

 

281,959

Deferred leasing costs

 

17,471

 

16,146

Intangible assets

 

22,549

 

29,312

 

 

3,553,551

 

3,367,674

Investment in Equity One, Inc.

 

-

 

227,259

Loans, mortgages and other real estate assets

 

59,220

 

32,480

 

 

3,612,771

 

3,627,413

Other assets

 

28,726

 

27,448

Amounts receivable

 

45,598

 

45,501

Cash and cash equivalents

 

4,548

 

7,263

 

$

3,691,643

$

3,707,625

LIABILITIES

 

 

 

 

Mortgages, loans and credit facilities

$

1,354,668

$

1,573,530

Accounts payable and other liabilities

 

137,658

 

166,507

Intangible liabilities

 

13,193

 

17,264

Senior unsecured debentures

 

717,040

 

593,288

Convertible debentures

 

329,739

 

218,247

Future income tax liabilities

 

43,502

 

43,643

 

 

2,595,800

 

2,612,479

SHAREHOLDERS' EQUITY

 

1,095,843

 

1,095,146

 

$

3,691,643

$

3,707,625

(1) Prior year comparative figures have been restated for a change in accounting standards.

CONSOLIDATED STATEMENTS OF EARNINGS

    Three months ended   Year ended  
    December 31   December 31   December 31   December 31
(thousands of dollars, except per share amounts)   2009   2008 (1)   2009   2008 (1)

 

 

 

 

(restated)

 

 

 

(restated)

REVENUE

 

 

 

 

 

 

 

 

Property rental revenue

$

113,232

$

105,695

$

442,131

$

410,192

Interest and other income

 

2,549

 

347

 

5,612

 

1,559

 

 

115,781

 

106,042

 

447,743

 

411,751

EXPENSES

 

 

 

 

 

 

 

 

Property operating costs

 

39,524

 

37,784

 

156,954

 

149,152

Interest expense

 

32,343

 

28,621

 

125,465

 

113,685

Amortization

 

 

 

 

 

 

 

 

Shopping centres

 

20,594

 

18,950

 

83,342

 

74,406

Deferred leasing costs

 

946

 

881

 

3,662

 

3,396

Intangible assets

 

1,482

 

1,706

 

7,497

 

7,783

Deferred financing fees

 

644

 

226

 

2,202

 

854

Other assets

 

807

 

366

 

2,005

 

1,305

Corporate expenses

 

5,801

 

5,614

 

22,122

 

21,577

 

 

102,141

 

94,148

 

403,249

 

372,158

Income before the undernoted items

 

13,640

 

11,894

 

44,494

 

39,593

Equity (loss) income from Equity One, Inc.

 

(1,287)

 

1,405

 

7,066

 

8,716

Other (losses) gains and (expenses)

 

(1,639)

 

3,916

 

(1,414)

 

7,281

Income before income taxes

 

10,714

 

17,215

 

50,146

 

55,590

Income taxes (recovery):

 

 

 

 

 

 

 

 

Current

 

(1,662)

 

(380)

 

533

 

1,985

Future

 

(2,360)

 

7,021

 

7,700

 

16,264

 

 

(4,022)

 

6,641

 

8,233

 

18,249

Net income

$

14,736

$

10,574

$

41,913

$

37,341

Earnings per common share, basic and diluted

$

0.15

$

0.12

$

0.45

$

0.43

(1) Prior year comparative figures have been restated for a change in accounting standards.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

  Three months ended Year ended
(thousands of dollars) December 31 December 31 December 31 December 31
 2009  2008 (1)  2009  2008 (1)

 

 

(restated)

 

(restated)

NET INCOME

$

14,736

$

10,574

$

41,913

$

37,341

OTHER COMPREHENSIVE (LOSS) INCOME                
Unrealized foreign currency gains on translating self-sustaining foreign operations                

Gains (losses) arising during the period

  -   8,680   (6,156)   12,043

Reclassification adjustment for dilution (gain) loss on investment in Equity One, Inc.

  -   -   1,669   (724)

Reclassification adjustment for dividend-in-kind

 

-

 

(724)

 

17,288

 

-

 

 

-

 

7,956

 

12,801

 

11,319

Other comprehensive (losses) income of Equity One, Inc.

 

 

 

 

 

 

 

 

(Losses) gains arising during the period

 

-

 

(3,021)

 

4,346

 

(1,933)

Reclassification adjustment for dilution (gain) loss included in net income

 

-

 

(11)

 

29

 

(11)

Reclassification adjustment for dividend-in-kind

 

-

 

-

 

(1,124)

 

-

 

 

-

 

(3,032)

 

3,251

 

(1,944)

Unrealized gains (losses) on cash flow hedges of interest rates

 

 

 

 

 

 

 

 

Unrealized gains (losses) arising during the period

 

1,102

 

(16,003)

 

10,182

 

(16,443)

Reclassification adjustments for losses included in net income

 

2,642

 

-

 

2,621

 

-

Reclassification adjustment for dividend-in-kind

 

-

 

-

 

4,407

 

-

 

 

3,744

 

(16,003)

 

17,210

 

(16,443)

Change in cumulative unrealized (losses) gains on available-for-sale marketable securities

 

 

 

 

 

 

 

Unrealized gains (losses) arising during the period

 

1,524

 

(4,591)

 

13,687

 

(6,645)

Reclassification adjustments for (gains) losses included in net income

 

(4,568)

 

-

 

(6,038)

 

55

 

 

(3,044)

 

(4,591)

 

7,649

 

(6,590)

Other comprehensive income (loss) before income taxes

 

700

 

(15,670)

 

40,911

 

(13,658)

Future income tax expense (recovery)

 

701

 

(4,957)

 

6,202

 

(5,832)

Other comprehensive (loss) income

 

(1)

 

(10,713)

 

34,709

 

(7,826)

COMPREHENSIVE INCOME (LOSS)

$

14,735

$

(139)

$

76,622

$

29,515

(1) Prior year comparative figures have been restated for a change in accounting standards

CONSOLIDATED STATEMENTS OF CASH FLOWS

  Three months ended Year ended
  December 31 December 31 December 31 December 31
(thousands of dollars)   2009   2008 (1)   2009   2008 (1)

 

 

 

 

(restated)

 

 

 

(restated)

CASH FLOW PROVIDED BY (USED IN): OPERATING ACTIVITIES                
Net income                

Items not affecting cash

$

14,736

$

10,574

$

41,913

$

37,341

Amortization

 

24,473

 

22,129

 

98,708

 

87,744

Amortization of above- and below-market leases

 

(578)

 

(574)

 

(2,323)

 

(2,253)

Rent re^nue recognized on a straight-line basis

 

(2,153)

 

(887)

 

(5,053)

 

(5,374)

Gain on disposition of income-producing property

 

(526)

 

(1,631)

 

(737)

 

(1,631)

Gains on disposition of land

 

-

 

(3)

 

(118)

 

(3,945)

Realized (gains) losses on sale of marketable securities Change in cumulative unrealized (gains) losses

 

(3,340)

 

160

 

(4,242)

 

212

on marketable securities held-for-trading

 

(314)

 

850

 

(1,952)

 

1,638

Loss (gain) on settlement of debt

 

1,497

 

(438)

 

2,394

 

(438)

Non-cash compensation expense

 

1,482

 

928

 

4,209

 

3,899

Less settlement of restricted shares units

 

(2,463)

 

(1,275)

 

(2,463)

 

(1,275)

Less settlement of deferred shares units

 

(514)

 

-

 

(514)

 

-

Interest paid in excess of effective interest on assumed mortgages Effective interest rate in excess of coupon rate on senior unsecured

 

(294)

 

(294)

 

(1,189)

 

(1,436)

and convertible debentures

 

306

 

225

 

984

 

864

Convertible debenture interest paid in common shares

 

-

 

-

 

12,613

 

12,891

Other non-cash interest expense

 

749

 

617

 

2,769

 

2,466

Equity income from Equity One, Inc.

 

1,287

 

(1,405)

 

(7,066)

 

(8,716)

Dilution (gain) loss on Equity One, Inc. investment

 

-

 

(2,898)

 

676

 

(2,898)

Future income taxes

 

(2,360)

 

7,021

 

7,700

 

16,264

Loss on foreign exchange currency

 

67

 

-

 

278

 

-

Unrealized loss on interest rate swaps not designated as hedges

 

1,203

 

-

 

1,203

 

-

Deferred leasing costs

 

(1,517)

 

(1,021)

 

(5,022)

 

(4,033)

Dividends received from Equity One, Inc.

 

-

 

5,145

 

12,452

 

18,193

Net change in non-cash operating items

 

18,695

 

20,911

 

(6,592)

 

(1,994)

Cash provided by operating activities

 

50,436

 

58,134

 

148,628

 

147,519

INVESTING ACTIVITIES

Acquisition of shopping centres

 

(35,633)

 

(10,757)

 

(59,039)

 

(56,704)

Acquisition of land and shopping centres held for development

 

(886)

 

(284)

 

(10,273)

 

(11,887)

Proceeds from disposition of shopping centre

 

4,756

 

-

 

4,756

 

-

Proceeds from disposition of land held for development

 

-

 

433

 

70

 

10,581

Expenditures on shopping centres

 

(12,886)

 

(11,935)

 

(35,309)

 

(26,619)

Expenditures on land and shopping centres under development Changes in accounts payable and accrued liabilities related to

 

(33,733)

 

(77,179)

 

(168,110)

 

(227,775)

investing activities

 

(11,671)

 

19,372

 

(15,595)

 

32,908

In^stment in common shares of Equity One, Inc.

 

-

 

(1,263)

 

-

 

(1,263)

Increase in loans and mortgages receivable

 

(2,324)

 

(227)

 

(3,714)

 

(1,507)

Investment in marketable securities

 

(3,631)

 

(14,869)

 

(6,743)

 

(37,110)

Return of capital from investments in marketable securities

 

264

 

304

 

2,030

 

623

Proceeds from disposition of marketable securities

 

31,305

 

5,292

 

59,067

 

7,474

Cash used in investing activities

 

(64,439)

 

(91,113)

 

(232,860)

 

(311,279)

FINANCING ACTIVITIES

Mortgage financings, loans and credit facilities

 

 

 

 

 

 

 

 

Borrowings, net of financing costs

 

72,250

 

207,363

 

621,208

 

552,708

Principal instalment payments

 

(8,422)

 

(9,835)

 

(38,917)

 

(38,139)

Other repayments on maturity

 

(210,000)

 

(134,248)

 

(685,930)

 

(452,273)

Purchase of senior unsecured debentures

 

-

 

(2,543)

 

(1,145)

 

(2,543)

Issuance of senior unsecured debentures, net of issue costs

 

124,000

 

-

 

124,000

 

-

Issuance of convertible debentures, net of issue costs

 

47,996

 

-

 

120,071

 

-

Issuance of common shares, net of issue costs

 

2,791

 

1,306

 

57,771

 

149,797

Issuance of warrants, net of issue costs

 

-

 

-

 

1,821

 

-

Cash balance included in dividend-in-kind

 

(65)

 

-

 

(492)

 

-

Payment of dividends

 

(29,399)

 

(28,682)

 

(118,192)

 

(49,312)

Cash provided by financing activities

 

(849)

 

33,361

 

80,195

 

160,238

Effect of currency rate movement on cash balances

 

-

 

379

 

1,322

 

334

Increase in cash and cash equivalents

 

(14,852)

 

761

 

(2,715)

 

(3,188)

Cash and cash equivalents, beginning of the period

 

19,400

 

6,502

 

7,263

 

10,451

Cash and cash equivalents, end of the period

$

4,548

$

7,263

$

4,548

$

7,263

SUPPLEMENTARY INFORMATION

Cash income taxes paid

$

-

$

611

$

1,358

$

2,251

Cash interest paid

$

30,065

$

30,774

$

126,695

$

120,183

(1) Prior year comparative figures have been restated for a change in accounting standards.

CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS

(thousands of dollars, except per share amounts) Three months ended Year ended
    December 31   December 31   December 31   December 31
     2009   2008 (1)   2009   2008 (1)

 

 

 

 

(restated)

 

 

 

(restated)

Net income for the period

$

14,736

$

10,574

$

41,913

$

37,341

Add (deduct):

 

 

 

 

 

 

 

 

Amortization of shopping centres, deferred costs and intangible assets

 

23,022

 

21,537

 

94,501

 

85,585

Gain on disposition of income-producing shopping centre

 

(526)

 

(1,631)

 

(737)

 

(1,631)

Equity income (loss) from Equity One (2)

 

1,287

 

(1,405)

 

(7,066)

 

(8,716)

Funds from operations from Equity One (2)

 

-

 

3,753

 

15,009

 

12,502

Future income taxes (recovery)

 

(2,360)

 

7,021

 

7,700

 

16,264

Funds from operations ("FFO")

 

36,159

 

39,849

 

151,320

 

141,345

Deduct: the Company's share of Equity One's non-cash impairment loss

 

-

 

1,023

 

-

 

7,503

Deduct: dilution (gain) loss on Equity One investment

 

-

 

(2,898)

 

676

 

(2,898)

FFO excluding dilution (gain) loss on Equity One in^stment and the Company's

 

 

 

 

 

 

 

 

share of Equity One's non-cash impairment loss

$

36,159

$

37,974

$

151,996

$

145,950

FFO per diluted share

$

0.37

$

0.44

$

1.61

$

1.62

Deduct: the Company's share of Equity One's non-cash impairment loss

 

-

 

0.01

 

-

 

0.09

Deduct: dilution (gain) loss on Equity One investment

 

-

 

(0.03)

 

0.01

 

(0.04)

FFO per diluted share excluding dilution loss on Equity One investment

 

 

 

 

 

 

 

 

and the Company's share of Equity One's non-cash impairment loss

$

0.37

$

0.42

$

1.62

$

1.67

Weighted average diluted shares - FFO

 

97,007,411

 

90,423,576

 

93,868,815

 

87,260,224

  • (1) Prior year comparative figures have been restated for a change in accounting standards.

  • (2) Current year amounts cover period to August 14, 2009.

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