Press Releases


May 08, 2007

Toronto, Ontario (May 8, 2007) - First Capital Realty Inc. (“First Capital Realty”) (TSX:FCR) Canada’s leading owner, developer and operator of supermarket-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas, announced today strong financial results for the first quarter ended March 31, 2007.


($ millions, except share and per share amounts) 31-Mar-07 31-Mar-06 change
Enterprise value $ 4,236.0 $ 3,481.5 -
Property rental revenue $ 90.5 $ 77.9 16.2%
Net operating income (NOI) $ 56.7 $ 46.4 22.2%
Funds from operations (FFO) $ 31.0 $ 27.0 14.8%
FFO - comparable basis $ 30.0 $ 27.0 11.1%
FFO per diluted share $ 0.40 $ 0.37 8.1%
FFO per diluted share - comparable basis $ 0.39 $ 0.37 5.4%
Debt to market capitalization   45.7%   44.5% -
Weighted average number of shares for FFO (000's)   76,792   72,169 6.4%


  • Invested $176 million in acquisitions, development activities and property improvements.

  • Added 861,000 square feet of gross leasable area from acquisitions and development coming on line

  • Added two development sites comprising 38.6 acres.

  • 4.8% same property NOI growth; 10.5% increase on renewal leases.

  • Occupancy of 95.0% compares to 95.7% at December 31, 2006; acquisitions during the quarter at 89.5% occupancy; closures for redevelopment totalled 126,600 square feet.

  • Net new leasing totalled 126,300 square feet including development coming on line and renewal leasing totalled 283,000 square feet.

  • Average lease rate per occupied square foot increased by 2.6% to $14.05 at March 31, 2007 compared to the prior year first quarter.

  • Completed new leasing on existing space totalling 105,000 square feet at an average rate of $17.81 per square foot, representing a 52.4 % increase versus lost leases in the quarter.

“The strong internal growth generated in the first quarter demonstrates that our value-creation strategies are working,” said Dori J. Segal, President & CEO. “We will maintain our focus on same property NOI growth, development and redevelopment activities, and selective acquisitions complementary to our existing portfolio and in strategic new locations.”


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

Funds from Operations

Funds from operations for the three months ended March 31, 2007 totalled $31.0 million, or $0.40 per diluted common share, compared to $27.0 million, or $0.37 per diluted common share, in 2006. The Company adopted new accounting standards with respect to comprehensive income, financial instruments and hedging, effective January 1, 2007. On a comparable basis, FFO totaled $30.0 million or $0.39 per diluted share. The increase in FFO in the three month period is primarily due to the Company’s income- producing property acquisitions and development projects coming on line in the first quarter of 2007 and to a lesser degree, unrealized gains on marketable securities partially offset by increased interest and corporate expenses.

Net Income

($ millions, except per share amounts) Three months ended March 31
  2007 2006
Net income $7.9 $6.7
Net income - comparable basis $7.2 $6.7
Earnings per diluted share $0.10 $0.09
Earnings per diluted share - comparable basis $0.09 $0.09
Weighted average common shares (diluted) (000’s) 76,792 72,169

Net income for the three months ended March 31, 2007 amounted to $7.9 million or 10 cents per share basic and diluted. Excluding the effect of changes in accounting standards, net income was $7.2 million or 9 cents per share basic and diluted. This compares to $6.7 million, or 9 cents per share basic and diluted, for the three months ended March 31, 2006. The increase in net income is primarily due to the Company’s income-producing property acquisitions and development projects coming on line, offset by increased interest, amortization and corporate expenses.


During the first quarter of 2007, the Company acquired interests in three income-producing shopping centres; one in Ontario, one in Quebec and one in Alberta totalling 699,000 square feet of gross leasable area. The aggregate acquisition amount of $121.5 million, including closing costs, was funded with cash and assumed mortgages of $5.8 million.

The Company invested $13.1 million in acquiring additional space at existing properties adding 55,000 square feet of gross leasable area to the portfolio which was funded with cash and assumed mortgages of $5.1 million. The Company also invested $15.5 million in the acquisition of two land sites adding 38.6 acres of commercial land for future development.

The Company disposed of one retail property in Ontario for proceeds of $6.4 million resulting in a $0.3 million gain.

Development of 107,400 square feet (including two new supermarkets) was brought on line during the first quarter, leased at an average rate of $14.31 per square foot.

The Company also invested $26 million during the first quarter in its active development projects and improvements to existing properties in the portfolio.


Net operating income for the three months ended March 31, 2007 totalled $56.7 million, compared to $46.4 million in the first quarter of 2006, an increase of $10.3 million or 22.2%. Acquisitions during 2007, combined with the full impact of acquisitions in the prior year, contributed $7.2 million to net operating income in the quarter, while development and redevelopment activities contributed a further $5.5 million. Same property net operating income increased 4.8%, generating growth of $1.9 million in the first quarter 2007.

Net new leases in the first quarter totalled 126,300 square feet including development coming on line. The Company achieved a 52.4% increase in rates on new leases versus lost leases in the quarter. Renewal leasing totalled 283,000 square feet in the quarter. The Company achieved a 10.5% increase on the renewal lease rates over the expiring rates.

The average rate per occupied square foot at March 31, 2007 increased to $14.05 including the impact of the 2007 acquisitions, which had an average lease rate of $13.20 per square foot. This compares to an average rate of $13.95 per square foot at December 31, 2006.

Portfolio occupancy at March 31, 2007 of 95.0% compares to 95.7% at December 31, 2006 and 94.7% at March 31, 2006. Properties acquired during the quarter were at 89.5% occupancy while closures for redevelopment totalled 126,600 square feet providing, potential for future income growth through leasing and redevelopment activities.


On January 31, 2007, the Company completed the sale of $100 million principal amount of 5.36% Series E unsecured debentures maturing on January 31, 2014. The senior unsecured debentures are rated BBB(low) with a stable trend by Dominion Bond Rating Services and Baa(3) with a stable outlook by Moody’s Investor Services.

On March 5, 2007, the Company completed a $250 million three-year unsecured revolving credit facility syndicated with six financial institutions. Two of the Company’s three existing secured credit facilities were cancelled effective the same date. As of March 5, 2007, properties with a gross book value of $195.4 million were released as security under the existing secured credit facilities. The remaining secured facility expired on April 30, 2007 and was not renewed.

In the aggregate, the Company issued approximately 1.0 million common shares during the three month period ended March 31, 2007 primarily from the following activities:1

  • on January 11, 2007 the Company issued 681,881 common shares at a net price of $26.83 to participants in the Dividend Reinvestment Plan (“DRIP”); and
  • on March 31, 2007, the Company issued 204,818 common shares at a net price of $26.78 as payment of the interest due to holders of the 5.50% convertible debentures.

Dividend Reinvestment Plan

On April 5, 2007, the Company issued 691,319 common shares at a net price of $26.60 to participants in the Dividend Reinvestment plan.

Issuance of Senior Unsecured Debentures

On April 15, 2007, the Company issued $100 million of Series F senior unsecured debentures at a coupon rate of 5.32% for net proceeds of $99.3 million. These debentures mature October 30, 2014 with interest payable on April 30 and October 30 each year.

Take-over bid for Sterling Centrecorp Inc.

On April 29, 2007, the Company announced that it intends to make an all-cash take-over bid to acquire all of the outstanding common shares of Sterling Centrecorp Inc. (“Sterling”), at a price of $1.62 per share. This offer price represents a 29% premium over the consideration offered in the going-private transaction proposed by SCI Acquisition Inc. (“SCI Acquisition”), and an 80% premium over the closing price of the Sterling common shares on the Toronto Stock Exchange on February 7, 2007, the last trading day prior to the announcement of the SCI Acquisition transaction. The offer will be subject to customary conditions, except that it will not be subject to any minimum tender condition, and will be subject to the condition that the plan of arrangement proposed by Sterling and SCI Acquisition does not receive final approval. First Capital Realty and its affiliates currently own approximately 8.4% of Sterling’s outstanding common shares.

The Ontario Securities Commission announced that it has convened a hearing to consider whether SCI Acquisition and the parties to support agreements in respect of the proposed plan of arrangement are “joint actors” for the purposes of Ontario securities laws. The votes of “joint actors” would be excluded from the vote by minority shareholders at the upcoming meeting.

First Capital Realty also announced that it intends to make a concurrent offer to acquire all of the outstanding 8.5% convertible unsecured debentures of Sterling at 105% of the principal amount thereof, together with accrued and unpaid interest. This purchase price is the same as that provided for in connection with the plan of arrangement. This offer would be subject to the same conditions as the concurrent offer for common shares, as well as a further condition that at least 39% of the outstanding Sterling common shares shall have been tendered to First Capital Realty’s offer.

First Capital Realty intends to make the formal offers as soon as reasonably possible.

This news release does not constitute an offer for or solicitation of Sterling common shares in any jurisdiction. Any such offer or solicitation will be made only by formal offer and only in those jurisdictions where First Capital Realty may legally do so.


The Company will pay a second quarter dividend of $0.31 per common share on July 10, 2007 to shareholders of record on June 27, 2007.


The current acquisition environment remains extremely competitive. Nevertheless, the Company will continue to 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 will continue to provide the Company with opportunities to participate in growth markets and once completed, 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 with decreasing capitalization rates resulting from increasing real estate prices.

Specifically, Management is focusing on the following four areas to achieve its objectives in 2007:

  • same property net operating income growth;

  • development and redevelopment activities;

  • increasing efficiency and productivity of our operations; and

  • improving the cost of capital.

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 for the year ending December 31, 2007 is as follows:

(per share amounts)   Low High
Projected net income per diluted share $ 0.37 $ 0.40
Projected FFO from Equity One net of equity income   0.09 0.10
Projected amortization and future income taxes   1.11 1.12
Projected FFO per diluted share $ 1.57 $ 1.62

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 acquisitions totalling $250 million, development coming on line of 575,000 square feet 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.


Management will hold a conference call at 2:00 p.m. ET on Wednesday, May 9, 2007 to discuss the Company’s first quarter results. The call and supporting slides can be accessed at the Company’s website at You may participate in the live conference toll free at 800-633-8954 or at 416-641-6652. To ensure your participation, please call five minutes prior to the scheduled start of the call. The call will be archived through May 16, 2007 and can be accessed by dialing toll free 800-558­5253 or 416-626-4100 with access code 21336610.


To access the webcast, go to First Capital Realty’s website at 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 800-633-8954 or 416-641-6652. For assistance at any point during the call, press ‘20’.


The Company will hold its Annual Shareholders’ Meeting on Thursday, May 24, 2007 at 1:00 p.m. The meeting will be held at the Design Exchange, 234 Bay Street, Toronto Ontario. Shareholders and interested parties are invited to attend.


The Company’s Supplementary Information for the fourth quarter and year ended 2006 will be posted on the Company’s website at


First Capital Realty is Canada’s leading owner, developer and operator of supermarket-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas. The Company currently owns interests in 161 properties, including 7 under development, totalling approximately 18.9 million square feet of gross leasable area and 9 land sites in the planning stage for future retail development. In addition, the Company owns 13.9 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 337 properties totalling approximately 36.8 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

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, 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 May 8, 2007

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


Funds from Operations

In Management’s view, funds from operations (“FFO”) is a commonly accepted and meaningful indicator 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 disclosure supplements Canadian generally accepted accounting principles (“GAAP”) disclosure. The Company’s method of calculating FFO 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 is presented to assist investors in analyzing the Company’s performance. FFO: (i) does not represent cash flow from operating activities as defined by GAAP (ii) is 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 an alternative 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, and is modelled on the definition adopted by the National Association of Real Estate Investment Trusts (“NAREIT”) in the United States.

Net Operating Income

Net operating income 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.


(unaudited)   March 31   December 31
(thousands of dollars)   2007   2006
Real Estate Investments        
Shopping centres $ 2,535,498 $ 2,423,801
Land and shopping centres under development   210,293   178,347
Deferred costs   77,332   74,778
Intangible assets   38,475   31,868
    2,861,598   2,708,794
Investment in Equity One, Inc.   224,461   228,665
Loans, mortgages and other real estate assets   33,157   24,056
    3,119,216   2,961,515
Other assets   35,796   47,129
Amounts receivable   33,272   28,070
Cash and cash equivalents   6,403   6,810
Future income tax assets   17,027   17,355
  $ 3,211,714 $ 3,060,879
Mortgages and credit facilities $ 1,448,441 $ 1,388,650
Accounts payable and other liabilities   95,971   106,145
Intangible liabilities   18,651   18,453
Senior unsecured debentures   495,568   399,813
Convertible debentures   186,097   192,189
Future income tax liabilities   46,760   44,036
    2,291,488   2,149,286
SHAREHOLDERS' EQUITY   920,226   911,593
  $ 3,211,714 $ 3,060,879


Three months ended
(unaudited)   March 31 March 31
(thousands of dollars, except per share amounts)   2007 2006
Property rental revenue $ 90,509 $ 77,939
Interest and other income   3,116 1,630
    93,625 79,569
Property operating costs   33,812 31,518
Interest expense   28,403 21,522
Amortization   18,679 15,149
Corporate expenses   5,215 4,291
    86,109 72,480
Equity income from Equity One, Inc.   4,426 4,312
Loss on settlement of debt   (483) -
Income before income taxes   11,459 11,401
Income taxes:      
Current   619 1,250
Future   2,965 3,455
    3,584 4,705
Net income $ 7,875 $ 6,696
Earnings per common share      
Basic $ 0.10 $ 0.09
Diluted $ 0.10 $ 0.09


Three months ended
(unaudited)   March 31 March 31
(thousands of dollars, except per share amounts)   2007 2006
Net income for the period $ 7,875 $ 6,696
Add (deduct):      
Amortization of shopping centres, deferred costs      
and intangible assets   18,441 14,256
Gain on disposition of income-producing shopping centre   (333) -
Equity income from Equity One, Inc.   (4,426) (4,312)
Funds from operations from Equity One, Inc.   6,517 6,930
Future income taxes   2,965 3,455
Funds from operations $ 31,039 $ 27,025
FFO per diluted share $ 0.40 $0.37
Weighted average diluted shares - FFO 76,791,907 72,168,535


Three months ended

(unaudited)   March 31   March 31
(thousands of dollars   2007   2006
NET INCOME $ 7,875 $ 6,696
Unrealized foreign currency (loss) gain on translating        
self-sustaining foreign operations   (714)   341
Other comprehensive income of        
Equity One, Inc. (net of tax of $12)   22   -
Loss on cash flow hedges of interest rates (net of tax of $97)   (198)   -
Unrealized loss on available-for-sale marketable securities        
(net of tax of $105)   (200)   -
Reclassification of adjustment for gains and losses on cash flow hedges        
of interest rates included in income (net of tax of $90)   (183)   -
Other comprehensive (loss) income   (1,273)   341


Three months ended
(unaudited)   March 31   March 31
(thousands of dollars)   2007   2006
Net income $ 7,875 $ 6,696
Items not affecting cash        
Amortization   18,679   15,149
Amortization of above- and below-market leases   (479)   (393)
Rent revenue recognized on a straight-line basis   (1,609)   (1,023)
Gain on disposition of shopping centre   (333)   -
Realized gain on sale of marketable securities   (683)   (537)
Unrealized gain on investment in marketable securities   (1,044)   -
Loss on settlement of debt   483   -
Non-cash compensation expenses   582   404
Interest paid in excess of implicit interest on        
assumed mortgages   (256)   (523)
Debenture interest in excess of coupon   138   46
Convertible debenture interest paid in common shares   5,485   1,537
Other non-cash interest expense   913   -
Equity income from Equity One, Inc.   (4,426)   (4,312)
Future income taxes   2,965   3,455
Unrealized gains on certain interest rate swaps   (143)   -
Deferred leasing costs   (547)   (1,574)
Dividends received from Equity One, Inc.   4,816   4,674
Net change in non-cash operating items   (9,585)   (5,745)
Cash provided by operating activites   22,831   17,854
Acquisition of shopping centres   (123,664)   (136,963)
Acquisition of land for development   (15,529)   (9,159)
Proceeds from disposition of shopping centre   6,400   -
Expenditures on shopping centres   (3,525)   (3,770)
Expenditures on land and shopping centres under development   (22,283)   (9,656)
(Increase) decrease in loans and mortgage receivable   (227)   3,214
Investment in marketable securities   (19,950)   (5,694)
Proceeds from disposition of marketable securities   12,542   10,004
Cash used in investing activities   (166,236)   (152,024)
Mortgage financings and credit facilities        
Borrowings, net of financing costs   114,486   132,410
Principal instalment payments   (9,999)   (8,501)
Repayments on maturity   (55,895)   (82,489)
Issuance of common shares, net of issue costs   339   969
Issuance of senior unsecured debentures, net of issue costs   99,102   98,773
Payment of dividends   (5,067)   (5,181)
Cash provided by financing activities   142,966   135,981
Effect of currency rate movement on cash balances   32   (4)
(Decrease) increase in cash and cash equivalents   (407)   1,807
Cash and cash equivalents, beginning of period   6,810   5,335
Cash and cash equivalents, end of period $ 6,403 $ 7,142
Cash income taxes paid $ 446 $ 337
Cash interest paid $ 27,346 $ 20,889
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