Press Releases

FIRST CAPITAL REALTY ANNOUNCES RECORD 2007 RESULTS

March 06, 2008

Strong portfolio fundamentals, redevelopment and expansion activities drive 4.9% same property NOI growth.

Toronto, Ontario (March 06, 2008) - 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 record financial results for the year ended December 31, 2007.

YEAR HIGHLIGHTS:

  Year Ended December 31  
($ millions, except per share amounts) 2007 2006 Percentage Change

Enterprise value

$

4,218

$

4,080

3.4%

Property rental revenue

$

376.9

$

326.0

15.6%

Net operating income (NOI)

$

242.4

$

205.6

17.9%

Funds from operations (FFO)

$

125.4

$

117.2

7.0%

FFO per diluted share

$

1.60

$

1.58

1.3%

Adjusted funds from operations (AFFO)

$

122.3

$

106.7

14.6%

AFFO per diluted share

$

1.42

$

1.36

4.4%

Debt to Aggregate Assets

(Properties at 8.4% Cap rate and EQY at $14 USD per share)

56.4%

55.4%

 

Debt to market capitalization

48.9%

43.7%

 

Weighted average number of shares for FFO (000’s)

78,428

74,322

5.5%

Weighted average number of shares for AFFO (000’s)

86,305

78,272

10.3%

 

OPERATIONS HIGHLIGHTS FOR THE YEAR 2007:

  • Invested $490 million in acquisitions, development activities and property improvements
  • Added 1.6 million square feet of gross leasable area from acquisitions and development coming on line
  • Acquired eight development land sites and five land parcels adjacent to existing properties comprising a total of 90.3 acres
  • 3.4% same property NOI growth; 4.9% same property NOI growth including redevelopment and expansion
  • 13% increase on renewal leases
  • Occupancy of 95.3% compares to 95.0% at September 30, 2007 and 95.7% at December 31, 2006. Acquisitions throughout the year had average occupancy rate of 91%
  • Net new leasing totalled 605,000 square feet including development and redevelopments coming on line; renewal leasing totalled 1,081,000 square feet
  • Average lease rate per occupied square foot increased by 4.4% to $14.56 at December 31, 2007
  • Completed new leasing on existing space totalling 521,000 square feet at an average rate of $18.58 per square foot, representing a 53.3% increase versus lost leases

FOURTH QUARTER HIGHLIGHTS:

  Three months ended December 31  
($ millions, except per share amounts) 2007 2006 Percentage Change

Property rental revenue

96.6

$ 87.8

10.0%

Net operating income (NOI)

63.8

$ 57.3

11.3%

Funds from operations (FFO)

32.9

$ 32.7

0.6%

FFO per diluted share

0.41

$ 0.43

(4.7%)

Adjusted funds from operations (AFFO)

33.0

$ 30.5

8.2%

AFFO per diluted share

0.37

$ 0.38

(2.6%)

Weighted average number of shares for FFO (000’s)

80,003

76,025

5.2%

Weighted average number of shares for AFFO (000’s)

88,807

81,017

9.6%

 

  • Invested $100 million in acquisitions, development and property improvements
  • Added 268,000 square feet of gross leasable area from acquisitions and development coming on line
  • 3.2% same property NOI growth; 5.8% same property NOI growth including redevelopment and expansion
  • 19.7% increase on renewal leases
  • Net new leasing totalled 192,000 square feet, including development and redevelopments coming on line; renewal leasing totalled 261,000 square feet

“We continue to focus our efforts in our well-located shopping centre and land portfolio which we believe will remain the main driver of FFO growth” said Dori J. Segal, President & CEO. “I am confident that owning a property portfolio with good fundamentals combined with continued proactive management and development activities is a good place to be in today’s challenging environment, while we cautiously keep our eyes open for opportunities that may present themselves.”

FINANCIAL HIGHLIGHTS

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 for the fourth quarter of 2007 rose 0.6% to $32.9 million or $0.41 per diluted common share, from $32.7 million or $0.43 per diluted common share in the same period in 2006. The increase in FFO was primarily associated with increased net operating income resulting from same property NOI growth as well as acquisitions and development projects coming on line and decreased corporate expenses in the quarter partially offset by an increase in interest expense of $4.2 million, a decline in interest and other income of $ 3.3 million and a decline in the US dollar exchange rate.

FFO for the fourth quarter of 2007 included non-recurring items amounting to approximately $0.5 million or $0.01 per share compared to approximately $2.0 million or $0.03 per share in the same period in 2006.

For the year ended December 31, 2007, FFO rose 7.0% to $125.4 million or $1.60 per diluted common share from $117.2 million or $1.58 per diluted common share in 2006. The increase in FFO was primarily due to increased net operating income resulting from same property NOI growth as well as acquisitions and development projects coming on line, partially offset by an increase in interest expense of $22.2 million, a decline in FFO from Equity One of $1.7 million and increase in corporate expenses associated with transaction costs of $2.3 million related to unsuccessful and unfeasible acquisitions and increase in non-cash compensation of $1.8 million.

FFO for the year ended December 31, 2007 included non-recurring items amounting to approximately $1.9 million or $0.02 per diluted common share compared to approximately $2.6 million or $0.03 per diluted common share in 2006.

Management also looks at FFO on a comparable basis in order to further analyze its core Canadian operations. FFO on a comparable basis was $1.60 per share in 2007 vs $1.52 per share in 2006, an increase of 5.3%. This is derived by eliminating non-recurring items in 2007 and 2006, as well as eliminating Equity One FFO variances.

Adjusted Funds from Operations

Management views AFFO as an effective measure of cash generated from operations. For the year ended December 31, 2007, AFFO rose 4.4% to $1.42 per diluted common share from $1.36 per diluted common share in 2006. AFFO is calculated by adjusting FFO for amortization of non-cash financing costs, accretion of debt discounts, straight-line and market rent adjustments, non-cash compensation expenses, interest payable in shares, non-cash gains or losses on debt and hedges and actual costs incurred for capital expenditures and leasing costs for maintaining shopping centre infrastructure and revenues from current leases. The Company’s proportionate share of Equity One FFO is reversed and only the regular cash dividends received are included in AFFO.

Net Income

($ thousands, except per share amounts) Three months ended Dec. 31 Year ended Dec. 31
  2007 2006 2007 2006

Net income

$9,252

$12,035

$30,353

$45,959

Earnings per share (diluted)

$0.12

$0.16

$0.39

$0.62

Weighted average common shares - diluted (000’s)

80,003

76,025

78,428

74,322

Net income in the fourth quarter of 2007 totalled $9.3 million or $0.12 per diluted common share compared to $12.0 million or $0.16 per diluted common share in the same period in 2006.

For the year ended December 31, 2007, net income was $30.4 million or $0.39 per diluted common share compared to $46.0 million or $0.62 per diluted common share in 2006.

The decrease in net income for the fourth quarter and the year is primarily attributed to the decrease in equity income from Equity One, Inc. associated with the disposition of their Texas portfolio from both the sale and reduced portfolio (approximately $19.4 million gain, net of taxes). Net income also decreased due to an increase in amortization expense of $11.4 million, increased interest expense of $22.2 million and a decline in the US$ exchange rate, and was somewhat offset by increased net operating income attributed to same property NOI growth along with NOI from acquisitions and development coming on-line.

ACQUISITION AND DEVELOPMENT HIGHLIGHTS

During the fourth quarter of 2007, the Company acquired an interest in one income-producing shopping centre comprising 106,000 square feet in Nanaimo, British Columbia. The aggregate acquisition amount of $29.6 million, including closing costs, was funded in cash. The Company also invested $14.7 million in acquiring additional space at existing properties and two land parcels adjacent to existing properties, adding 54,000 square feet of gross leasable area and 0.6 acres of expansion land to the portfolio.

For the year ended December 31, 2007, the Company invested a total of $319.7 million in the acquisition of interests in six income-producing shopping centres totalling 937,000 square feet; the purchase of additional space and land parcels adjacent to existing properties, adding 195,000 square feet of space at ten properties; 90.3 acres at 13 land sites; and the remaining interest in one of the Company’s properties.

Development of 168,000 square feet was brought on line during the fourth quarter leased at an average rate of $21.40 per square foot. For the year, the Company brought on line 521,000 square feet at an average rate of $19.52 per square foot.

The Company also invested $56.7 million during the fourth quarter in its active development projects and improvements to existing properties. For the year ended December 31, 2007, investment in these activities totalled $170.9 million.

OPERATING HIGHLIGHTS

Acquisitions during 2007, combined with the full impact of acquisitions in the prior year, contributed $10.4 million to NOI in the quarter, while development and redevelopment activities contributed a further $8.1 million. Acquisitions completed in 2007, combined with the full impact of acquisitions in the prior year contributed $35.6 million to NOI, while development and redevelopment activities contributed a further $28.8 million. Same property NOI increased 3.2% and 3.4%, generating growth of $1.4 million and $5.5 million in the three months and year ended December 31, 2007, respectively.

Leasing activity in the fourth quarter, including development coming on line, resulted in net new leasing of 192,000 square feet. Renewal leasing totalled 261,000 square feet with a 19.7% increase over expiring rates. For the year, net new leasing, including development coming on line totalled 605,000 square feet. Renewal leasing totalled 1.1 million square feet with a 13% increase over expiring rates.

Properties acquired in 2007 had an occupancy of 91.0%, providing potential for future income growth as vacant space is leased. The average rate per occupied square foot at December 31, 2007 increased to $14.55 per square foot, before the impact of 2007 acquisitions and to $14.56 including the 2007 acquisitions from $13.95 at December 31, 2006.

Portfolio occupancy at December 31, 2007 was 95.3% compared to 95.0% at September 30, 2007 and 95.7% at December 31, 2006.

FINANCING AND CAPITAL MARKET HIGHLIGHTS

During 2007, the Company completed financing transactions to further enhance the Company’s financial flexibility and provide capital for continued growth.

During the year the Company issued 4.4 million common shares for total equity raised of $109.4 million through various financing transactions including the exercise of warrants and options, the payment of interest on certain of its convertible debentures in shares and the dividend reinvestment plan.

The Company also issued in January and April 2007 two additional series of senior unsecured debentures totalling $200 million using the proceeds for acquisition and development activities, payment of maturing mortgages and general corporate purposes. Series E carries a coupon of 5.36% and matures on January, 2014. Series F carries a coupon of 5.32% and matures October, 2014.

The Company completed an unsecured facility for $250 million in March, 2007 with a syndicate of six financial institutions. In October 2007 the Company completed an expansion of this facility to $350 million with a seventh bank joining the syndicate. The facility has a term to March 2010.

In addition, the Company completed a $25 million revolving term credit facility with a U.S. financial institution. The facility is secured by shares of Equity One.

On June 29, 2007 the Company also issued, via private placement, $50 million 5.50% convertible unsecured subordinated debentures for total proceeds of $53.5 million. These debentures are in addition to and part of the issue of $200 million of convertible debentures completed in the prior years. The 5.50% debentures are due September 30, 2017. It is the current intention of the Company to continue to satisfy its obligations to pay principal and interest on these convertible debentures by the issuance of common shares.

SUBSEQUENT EVENT HIGHLIGHTS

Interest on Convertible Debentures

On February 13, 2008, the Company announced that it will pay the interest due on March 31, 2008 to holders of both classes of its 5.50% convertible unsecured subordinated debentures due September 30, 2017 by the issuance of common shares.

Acquisitions

Since January 1, 2008, First Capital Realty has invested $15.8 million in two development sites totalling 15.6 acres of commercial land and three adjacent land parcels to existing centres totaling 3.2 acres of commercial land.

DIVIDENDS

The Company will pay a first quarter dividend of $0.32 per common share on April 9th, 2008 to shareholders of record on March 28th, 2008.

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.

The current environment remains extremely competitive, however the competition seems to have shifted to the capital side of our business. Both debt and equity markets are challenging relative to pricing currently being asked by the 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.

Development and redevelopment activities continue to provide the Company with opportunities to grow within its existing portfolio and to participate in new growth markets. 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 in the current environment of low capitalization rates, increasing cost and scarcity of capital.

Specifically, Management will focus on the following four areas to achieve its objectives in 2008:

  • same property net operating income growth;
  • development and redevelopment activities;
  • increasing efficiency and productivity of operations; and
  • capital preservation in order to decrease dependence on capital markets.

Overall, Management is confident that the quality of the Company’s real estate will continue to generate sustainable and growing cash flows while producing superior returns on investment over the long term.

GUIDANCE

Guidance for the year ending December 31, 2008 is as follows:

(per share amounts) Low High

Projected diluted net income

$0.37

$0.39

Adjustments

 

 

Projected FFO from Equity One

0.23

0.26

Projected equity income from Equity One

(0.14)

(0.16)

Projected amortization and future income taxes

1.16

1.18

Projected FFO

$1.62

$1.67

 

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, the U.S. - Canadian foreign currency exchange rate, corporate expenses, level and timing of acquisitions of income producing properties, participation by shareholders in our Dividend Reinvestment Plan and numerous other factors. In addition, the projected range of funds from operations includes Equity One based on publicly available information. Not all factors which affect our range of projected 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. Specific assumptions include same property NOI growth of 2-3%, income producing property acquisitions totalling $50 million, development coming on line of 800,000 to 900,000 square feet with approximate gross book value of $200 to $230 and the current interest rate environment and current US-Canadian foreign exchange rate. The range presented represents Management’s estimate of results based upon these assumptions as of the date of this press release.

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

2007 actual results compared to 2007 guidance

The 2007 actual results were consistent with the 2007 Guidance presented by the Company in the Q3 results press release dated November 8, 2007.

  Guidance issued November 8, 2007 Actual 2007
(per share amounts) Low High

Diluted net income

$0.36

$0.38

$0.39

Adjustments

 

 

 

FFO from Equity One net of equity income

0.26

0.27

0.26

Equity income from Equity One

(0.15)

(0.16)

(0.18)

Amortization and future income taxes

1.11

1.11

1.13

FFO

$1.58

$1.60

$1.60

Shopping centre acquisitions

$250M

$254M

Development coming on-line

480,000 sq. ft

521,000 sq. ft.

 

The company’s FFO for the year ended December 31, 2007 was $1.60 per diluted share compared to guidance of $1.58 to $1.60. The 2007 actual net income of $0.39 was $0.01 above projected due to lower than forecast corporate expenses. Income from Equity One was higher than anticipated primarily due to gains on sale of specific assets. The higher equity income also resulted in higher future income taxes.

CONFERENCE CALL

Management will hold a conference call at 1:00 p.m. ET on Friday, March 7, 2008 to discuss the Company’s 2007 year end results. The call and supporting slides can be accessed at the Company’s website at www.firstcapitalrealty.ca. 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, downloads.

TELECONFERENCE:

You may participate in the live conference toll free at 800-633-8949 or at 416-641-6700. To ensure your participation, please call five minutes prior to the scheduled start of the call. The call will be archived through March 14, 2008 and can be accessed by dialing toll free 800-558-5253 or 416-626-4100 with access code 21372707.

WEBCAST:

To access the webcast, go to First Capital Realty’s website at www.firstcapitalrealtv.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 our Conference Calls section of our website.

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 800-633-8949 or 416-641-6700. For assistance at any point during the call, press ‘*0’.

COMPANY INFORMATION

The Company’s Supplementary Information for the fourth quarter and year ended 2007 will be posted on the Company’s website at www.firstcapitalrealty.ca.

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 161 properties, including six under development, totalling approximately 19.4 million square feet of gross leasable area and 14 land sites in the planning stage for future retail development. In addition, the Company owns 14 million shares of Equity One (approximately 19%), one of the largest shopping centre REITS in the southern U.S., that trades on the New York Stock Exchange under the ticker symbol EQY. Including its investments in Equity One, the Company has interests in 326 properties totalling approximately 36.5 million square feet of gross leasable area.

* * * *

Forward Looking Statements

Certain statements included in this press release constitute forward-looking statements, including those identified by the expressions “anticipate ", “believe ", “plan ", “estimate ", “expect", “intend" and similar expressions to the extent they relate to the Company or its Management. 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.

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 “Risk Management" in the Management's Discussion and Analysis (“MD&A") which is available on SEDAR at www.sedar.com.

Factors that could cause actual results or events to differ materially from those expressed or implied by forward-looking statements in addition to those described in the MD&A, 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, financial difficulties and defaults, changes in interest rates, credit spreads, changes in operating costs, First Capital Realty’s ability to obtain insurance coverage at a reasonable cost and the availability of 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.

These forward-looking statements are made as of March 7, 2008.

For further information:
Dori J. Segal, President & C.E.O., or
Karen H. Weaver, 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. 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) should not be considered as alternatives to GAAP net income for the purpose of evaluating operating performance.

Funds from Operations - RealPac Recommendations

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 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.

Net Operating Income

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

CONSOLIDATED BALANCE SHEETS

December 31 (thousands of dollars)   2007   2006

ASSETS

 

 

 

 

Real Estate Investments

 

 

 

 

Shopping centres

$

2,718,078

$

2,423,801

Land and shopping centres under development

 

284,077

 

178,347

Deferred costs

 

79,606

 

74,778

Intangible assets

 

35,938

 

31,868

 

 

3,117,699

 

2,708,794

Investment in Equity One

 

191,536

 

228,665

Loans, mortgages and other real estate assets

 

11,589

 

24,056

 

 

3,320,824

 

2,961,515

Other assets

 

32,395

 

47,129

Amounts receivable

 

36,008

 

28,070

Cash and cash equivalents

 

10,451

 

6,810

Future income tax assets

 

9,731

 

17,355

 

$

3,409,409

$

3,060,879

LIABILITIES

 

 

 

 

Mortgages, loans and credit facilities

$

1,471,114

$

1,388,650

Accounts payable and other liabilities

 

110,006

 

106,145

Intangible liabilities

 

17,795

 

18,453

Senior unsecured debentures

 

595,376

 

399,813

Convertible debentures

 

217,030

 

192,189

Future income tax liabilities

 

46,757

 

44,036

 

 

2,458,078

 

2,149,286

SHAREHOLDERS' EQUITY

 

951,331

 

911,593

 

$

3,409,409

$

3,060,879

 

CONSOLIDATED STATEMENTS OF EARNINGS

  Three months ended December 31   Years ended December 31
(thousands of dollars, except per share amounts) 2007   2006   2007   2006

REVENUE

Property rental revenue

$ 96,643

$

87,815

$

376,891

$

325,980

Interest and other income

469

 

3,746

 

6,033

 

6,917

 

97,112

 

91,561

 

382,924

 

332,897

EXPENSES

 

 

 

 

 

 

 

Property operating costs

32,832

 

30,481

 

134,446

 

120,354

Interest expense

28,882

 

25,323

 

116,043

 

93,809

Amortization

 

 

 

 

 

 

Shopping centres

14,505

 

12,522

 

55,118

 

46,441

Deferred costs

3,555

 

3,398

 

14,629

 

12,118

Intangible assets

2,242

 

1,658

 

8,217

 

5,693

Deferred financing fees

813

 

905

 

813

 

3,178

Other assets

264

 

348

 

1,051

 

1,011

Corporate expenses

5,165

 

6,238

 

23,544

 

19,282

 

88,258

 

80,873

 

353,861

 

301,886

Equity income from Equity One

4,455

 

5,517

 

14,375

 

32,696

Loss on settlement of debt

-

 

-

 

(483)

 

-

Income before income taxes

13,309

 

16,205

 

42,955

 

63,707

Income taxes:

 

 

 

 

 

 

 

Current

368

 

653

 

1,672

 

4,155

Future

3,689

 

3,517

 

10,930

 

13,593

 

4,057

 

4,170

 

12,602

 

17,748

Net income

$ 9,252

$

12,035

$

30,353

$

45,959

Earnings per common share

 

 

 

 

 

 

 

Basic

$ 0.12

$

0.16

$

0.39

$

0.62

Diluted

$ 0.12

$

0.16

$

0.39

$

0.62

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

  Three months ended December 31 Years ended December 31
(thousands of dollars) 2007 2006 2007 2006

NET INCOME

$ 9,252

$12,035

$30,353

$45,959

OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

Unrealized foreign currency (loss) gain on translating self-sustaining foreign operations

(138)

2,805

(9,950)

407

Other comprehensive loss of Equity One

-

-

(320)

-

Loss on cash flow hedges of interest rates

(1,517)

-

(2,300)

-

 Change in cumulative unrealized gain (loss) on available-for-sale marketable securities

103

-

(241)

-

Reclassification of adjustment for gains and losses on cash flow hedges of interest rates included in income

(436)

Other comprehensive (loss) income before income taxes

(1,552)

2,805

(13,247)

407

Future income tax recovery

(421)

-

(1,044)

-

Other comprehensive (loss) income

(1,131)

2,805

(12,203)

407

COMPREHENSIVE INCOME

$ 8,121

$14,840

$18,150

$46,366

 

CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS

    Three months ended December 31   Years ended December 31
(thousands of dollars, except per share amounts)   2007   2006   2007   2006

Net income for the year

$

9,252

$

12,035

$

30,353

$

45,959

Add (deduct):

 

 

 

 

 

 

 

 

Amortization of shopping centres, deferred costs and intangible assets

 

20,302

 

17,579

 

77,964

 

64,252

Gain on disposition of income-producing shopping centre

 

-

 

-

 

(323)

 

-

Current income tax on Equity One special dividend from gain on real estate

 

-

 

919

 

-

 

3,621

Equity income from Equity One

 

(4,455)

 

(5,517)

 

(14,375)

 

(32,696)

Funds from operations from Equity One

 

4,116

 

4,155

 

20,807

 

22,457

Future income taxes

 

3,689

 

3,517

 

10,930

 

13,593

Funds from operations

$

32,904

$

32,688

$

125,356

$

117,186

FFO per diluted share

$

0.41

$

0.43

$

1.60

$

1.58

Weighted average diluted shares - FFO

 

80,002,983

 

76,024,888

 

78,427,583

 

74,321,824

 

CONSOLIDATED STATEMENTS OF ADJUSTED FUNDS FROM OPERATIONS

  Three months ended December 31 Years ended December 31
(thousands of dollars, except per share amounts)   2007   2006   2007   2006

FFO

$

32,904

$

32,688

$

125,356

$

117,186

Add / (Deduct):

 

 

 

 

 

 

 

 

Amortization of deferred financing fees

 

505

 

620

 

2,058

 

2,329

Amortization of deferred debenture issue costs

 

315

 

285

 

1,235

 

850

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

 

(2,091)

 

(3,602)

 

(8,875)

 

(7,482)

Non-cash compensation expense

 

1,142

 

790

 

4,295

 

2,543

Accretion and amortization of discount on debt

 

210

 

87

 

696

 

242

Interest paid in excess of implicit interest on assumed mortgages

 

(507)

 

(589)

 

(1,890)

 

(2,323)

Interest expense payable in shares

 

3,299

 

1,868

 

12,030

 

5,981

Change in cumulative unrealized gains on marketable securities

 

(273)

 

-

 

 

 

 

Non-cash loss on extinguishment of debt

 

-

 

-

 

483

 

-

Revenue sustaining capital expenditures and leasing costs

 

(2,551)

 

(2,340)

 

(9,292)

 

(8,892)

Funds from operations from Equity One

 

(4,116)

 

(4,155)

 

(20,807)

 

(22,457)

Dividends from Equity One (Regular)

 

4,159

 

4,757

 

17,617

 

18,373

Non-cash (gain) loss on interest rate swaps not designated as hedges

 

-

 

57

 

(643)

 

389

Adjusted Funds from Operations (1)

$

32,996

$

30,466

$

122,263

$

106,739

Adjusted Funds from Operations per diluted share

$

0.37

$

0.38

$

1.42

$

1.36

Weighted average diluted shares for AFFO (2)

 

88,807,137

 

81,016,837

 

86,304,978

 

78,272,322

  1. Excludes the 2006 Equity One Special Dividend of $1.00 per share or $14.9 million and the related tax effect of $3.6 million.

  2. Includes the weighted average outstanding shares that would result from the conversion of the convertible debentures.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

  Three months ended December 31   Years ended December 31
(thousands of dollars)   2007   2006   2007   2006

CASH FLOW PROVIDED BY (USED IN):

 

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

$

9,252

$

12,035

$

30,353

$

45,959

Items not affecting cash

 

 

 

 

 

 

 

 

Amortization

 

21,379

 

18,831

 

79,828

 

68,441

Amortization of above- and below-market leases

 

(584)

 

(470)

 

(2,122)

 

(1,643)

Rent revenue recognized on a straight-line basis

 

(1,507)

 

(3,132)

 

(6,753)

 

(5,839)

Gains on land and property sales

 

-

 

(3)

 

(323)

 

(137)

Realized loss (gain) on sale of marketable securities

 

238

 

(3,297)

 

(2,504)

 

(4,221)

Change in unrealized gain on investment in marketable

 

 

 

 

 

 

 

 

securities

 

(273)

 

-

 

-

 

-

Loss on settlement of debt

 

-

 

-

 

483

 

-

Non-cash compensation expense

 

1,142

 

790

 

4,295

 

2,543

Interest paid in excess of coupon interest on

 

 

 

 

 

 

 

 

assumed mortgages

 

(507)

 

(589)

 

(1,890)

 

(2,323)

Debenture interest expense in excess of coupon

 

210

 

88

 

696

 

242

Convertible debenture interest paid in common shares

 

-

 

-

 

12,048

 

4,295

Other non-cash interest expense

 

7

 

-

 

2,480

 

-

Equity income from Equity One

 

(4,455)

 

(5,517)

 

(14,375)

 

(32,696)

Future income taxes

 

3,689

 

3,517

 

10,930

 

13,593

Unrealized losses (gains) on interest rate swaps not

 

 

 

 

 

 

 

 

designated as hedges

 

-

 

57

 

(643)

 

389

Deferred leasing costs

 

(702)

 

(698)

 

(3,429)

 

(5,613)

Settlement of restricted share units

 

(1,826)

 

(1,914)

 

(1,826)

 

(1,914)

Dividends received from Equity One

 

4,159

 

4,758

 

17,617

 

33,266

Net change in non-cash operating items

 

15,513

 

10,780

 

8,191

 

831

Cash provided by operating activites

 

45,735

 

35,236

 

133,056

 

115,173

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisition of shopping centres

 

(42,885)

 

(109,366)

 

(230,554)

 

(361,329)

Acquisition of land for development

 

(1,150)

 

(6,262)

 

(65,562)

 

(34,227)

Proceeds from disposition of shopping centre

 

-

 

-

 

6,400

 

-

Proceeds from disposition of land for development

 

-

 

-

 

-

 

1,236

Expenditures on shopping centres

 

(6,597)

 

(6,906)

 

(23,718)

 

(19,429)

Expenditures on land and shopping centres under development

 

(49,414)

 

(27,947)

 

(143,744)

 

(83,449)

Investment in common shares of Equity One

 

-

 

(16,936)

 

(2,254)

 

(16,936)

(Increase) decrease in loans and mortgage receivable

 

(309)

 

(216)

 

1,538

 

3,560

Investment in marketable securities

 

-

 

(13,617)

 

(32,556)

 

(30,627)

Proceeds from disposition of marketable securities

 

7,399

 

15,608

 

45,031

 

33,635

Cash used in investing activities

 

(92,956)

 

(165,642)

 

(445,419)

 

(507,566)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Mortgage financings, loans and credit facilities

 

 

 

 

 

 

 

 

Borrowings, net of financing costs

 

143,805

 

48,901

 

425,428

 

280,904

Principal instalment payments

 

(9,299)

 

(9,636)

 

(39,400)

 

(36,412)

Repayments on maturity

 

(82,257)

 

(2,641)

 

(305,554)

 

(260,446)

Issuance of common shares, net of issue costs

 

1,667

 

2,359

 

5,976

 

35,867

Issuance of senior unsecured debentures, net of issue costs

 

20

 

(48)

 

198,296

 

297,035

Issuance of convertible debentures, net of issue costs

 

(3)

 

99,029

 

53,299

 

99,029

Payment of dividends

 

(5,853)

 

(5,634)

 

(21,066)

 

(22,466)

Cash provided by financing activities

 

48,080

 

132,330

 

316,979

 

393,511

Effect of currency rate movement on cash balances

 

(590)

 

27

 

(975)

 

357

Increase in cash and cash equivalents

 

269

 

1,951

 

3,641

 

1,475

Cash and cash equivalents, beginning of the year

 

10,182

 

4,859

 

6,810

 

5,335

Cash and cash equivalents, end of the year

$

10,451

$

6,810

$

10,451

$

6,810

SUPPLEMENTARY INFORMATION

 

 

 

 

 

 

 

 

Cash income taxes paid

$

26

$

666

$

787

$

4,051

Cash interest paid

$

32,010

$

25,516

$

115,948

$

94,293

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