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First Capital Realty Announces Solid Q3 Financial Results

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  Published in Business and Finance on Monday, November 9th 2009 at 3:46 GMT by Market Wire
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 THIRD QUARTER 2009 HIGHLIGHTS: - Invested $85 million in acquisitions, development activities and property improvements. - Added 363,000 square feet of gross leasable area from development, redevelopment and acquisitions. - 8.1% same property NOI growth; 3.1% same property NOI growth excluding redevelopment and expansion. - 9.4% increase on 251,000 square feet of renewal leases. - Occupancy of 96.0% which compares to 95.8% at September 30, 2008. Vacancy includes 0.8% of space held for redevelopment. - Gross new leasing totalled 348,000 square feet including development and redevelopment coming on line; lease closures totalled 149,000 square feet and closures for redevelopment totalled 28,000 square feet. - Average lease rate per occupied square foot increased by 4.7% to $15.54 at September 30, 2009 compared to $14.84 in the prior year third quarter. - Completed new leasing on existing space totalling 84,000 square feet at an average rate of $19.94 per square foot. - Issued 3.45 million common shares (including 2.3 million warrants) generating gross proceeds of $59.0 million. - Issued $75 million principal amount of 6.25% convertible unsecured subordinated debentures maturing December 2016. - On August 14, 2009, the previously announced dividend-in-kind was completed resulting in the Company no longer having an ownership interest in Equity One. ------------------------------------------------------------------------- Three months ended ------------------------------------------------------------------------- 30 Sept 30 Sept Percentage ($ millions, except per share amounts) 2009 2008 Change ------------------------------------------------------------------------- Enterprise value $ 4,243 $ 4,221 ------------------------------------------------------------------------- Debt to aggregate assets 51.0% 53.1% ------------------------------------------------------------------------- Debt to total market capitalization 48.9% 49.3% ------------------------------------------------------------------------- Property rental revenue $ 108.8 $ 100.8 7.9% ------------------------------------------------------------------------- Net operating income (NOI) $ 71.6 $ 65.5 9.3% ------------------------------------------------------------------------- Funds from operations (FFO)(1) $ 38.5 $ 38.7 -0.5% ------------------------------------------------------------------------- FFO per diluted share(1) $ 0.41 $ 0.43 -4.7% ------------------------------------------------------------------------- Weighted average diluted shares for FFO (000's) 94,902 90,022 5.4% ------------------------------------------------------------------------- Adjusted funds from operations (AFFO) $ 37.5 $ 36.5 2.7% ------------------------------------------------------------------------- AFFO per diluted share $ 0.36 $ 0.37 -2.7% ------------------------------------------------------------------------- Weighted average diluted shares for AFFO (000's) 103,879 98,648 5.3% ------------------------------------------------------------------------- (1) Excludes, in 2008, the Company's share of Equity One's non-cash impairment loss. See Funds from Operations section of this press release. NINE MONTHS HIGHLIGHTS: - Invested $197 million in acquisitions, development activities and property improvements. - Added 740,000 square feet of gross leasable area from development, redevelopment activities and acquisitions. - Acquired four income-producing properties totalling 146,000 square feet, one property held for future development and two land parcels adjacent to existing properties comprising a total of 9.1 acres of land held for future development. - 7.6% same property NOI growth; 3.0% excluding redevelopment and expansion space. - 11.0% increase on 864,000 square feet of renewal leases. - Gross new leasing totalled 939,000 square feet including development and redevelopment coming on line; lease closures totalled 550,000 square feet and closures for redevelopment totalled 125,000 square feet. - Lease rates on openings and redevelopment coming on line increased by 27.9% versus all lease closures. - Completed new leasing on existing space totalling 385,000 square feet at an average rate of $19.63 per square foot. - Completed $156 million of secured financing on 11 properties at a weighted average rate of 6.23% and a weighted average term of 8.2 years. - Issued a total of 5.9 million common shares for net proceeds of $97.8 million. ------------------------------------------------------------------------- Year-to-date ------------------------------------------------------------------------- 30 Sept 30 Sept Percentage ($ millions, except per share amounts) 2009 2008 Change ------------------------------------------------------------------------- Property rental revenue $ 328.9 $ 304.5 8.0% ------------------------------------------------------------------------- Net operating income (NOI) $ 211.5 $ 193.1 9.5% ------------------------------------------------------------------------- Funds from operations (FFO)(1) $ 115.8 $ 108.0 7.2% ------------------------------------------------------------------------- FFO per diluted share(1) $ 1.25 $ 1.25 - ------------------------------------------------------------------------- Weighted average diluted shares for FFO (000's) 92,895 86,232 7.7% ------------------------------------------------------------------------- Adjusted funds from operations (AFFO) $ 113.1 $ 103.1 9.7% ------------------------------------------------------------------------- AFFO per diluted share $ 1.12 $ 1.09 2.8% ------------------------------------------------------------------------- Weighted average diluted shares for AFFO (000's) 101,119 94,658 6.8% ------------------------------------------------------------------------- (1) Excludes, in 2009, the dilution loss on Equity One investment and in 2008, the Company's share of Equity One's non-cash impairment loss. See Funds from Operations section of this press release. 

 Funds from Operations ------------------------------------------------------------------------- Three months ended Nine months ended ------------------------------------------------------------------------- (thousands of dollars, except per share Sept 30, Sept 30, Sept 30, Sept 30, amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net operating income $ 71,612 $ 65,455 $ 211,469 $ 193,129 Interest expense (31,412) (27,862) (93,122) (85,064) Interest and other income (expense)(1) 2,390 2,932 3,077 4,577 Corporate expenses (5,320) (4,731) (16,321) (15,963) Funds from operations from Equity One(2) 2,553 (1,952) 15,009 8,749 Amortization (1,003) (547) (2,756) (1,567) Current income taxes (318) (1,036) (2,195) (2,365) ------------------------------------------------------------------------- FFO 38,502 32,259 115,161 101,496 Add: dilution loss on Equity One investment - - 676 - Add: the Company's share of Equity One's non-cash impairment loss - 6,480 - 6,480 ------------------------------------------------------------------------- FFO excluding dilution loss on Equity One investment and the Company's share of Equity One's non-cash impairment loss $ 38,502 $ 38,739 $ 115,837 107,976 FFO per diluted share $ 0.41 $ 0.36 $ 1.24 $ 1.18 Add: dilution loss on Equity One investment - - 0.01 - Add: the Company's share of Equity One's non-cash impairment loss - 0.07 - 0.07 ------------------------------------------------------------------------- FFO per diluted share excluding dilution loss on Equity One investment and the Company's share of Equity One's non-cash impairment loss $ 0.41 $ 0.43 $ 1.25 $ 1.25 ------------------------------------------------------------------------- Weighted average diluted share - FFO 94,902,006 90,021,640 92,895,420 86,231,829 ------------------------------------------------------------------------- (1) Excludes gains on disposition of income-producing real estate. (2) Current year amounts cover period to August 14, 2009, the date of the dividend-in-kind related to the Company's interest in Equity One. 

 Net Income ------------------------------------------------------------------------- ($ thousands, except per Three months ended Nine months ended share amounts) Sept 30 Sept 30 ------------------------------------------------------------------------- 2009 2008 2009 2008 ------------------------------------------------------------------------- Net income $ 9,002 $ 8,227 $27,177 $26,767 ------------------------------------------------------------------------- Earnings per share (basic and diluted) $ 0.09 $ 0.09 $ 0.29 $ 0.31 ------------------------------------------------------------------------- Weighted average common shares - diluted (000's) 94,902 90,022 92,895 86,232 ------------------------------------------------------------------------- 

 FINANCING AND CAPITAL MARKET HIGHLIGHTS During the three months ending September 30, 2009, the Company completed the following significant financing and capital market transactions: - On August 5, 2009, 3,450,000 Units were issued at a price of $17.10 per unit for gross proceeds of $59 million. Each Unit consisted of one common share and two-thirds of a warrant separable immediately. Each whole warrant entitles the holder to acquire at any time up to October 29, 2010, one common share of First Capital Realty at an exercise price of $17.53. - On September 18, 2009, the Company completed the issuance of $75 million aggregate principal amount of 6.25% convertible unsecured subordinated debentures due December 31, 2016. Interest is payable semi-annually commencing March 31, 2010 and will be convertible at the option of the holder into common shares of the Company at a conversion price of $22.90 per common share. It is the current intention of First Capital Realty to satisfy its obligation to pay the interest and principal by issuing common shares of the Company pursuant to the terms of the trust indenture. The Company also completed the following financings in the nine months ended September 30, 2009: - Eleven secured financing transactions for gross proceeds of $156.0 million at a weighted average interest rate of 6.23% and a weighted average term to maturity of 8.2 years. - A three year, $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. - A three year, $75 million secured revolving credit facility with the Bank of Nova Scotia maturing January 2012. - On February 17, 2009 the Company issued 1.4 million common shares to acquire 1.8 million shares of Allied Properties REIT. - The Company issued 772,000 common shares as payment of the interest due to holders of the 5.50% convertible debentures. - Convertible debentures totalling $6.3 million in principal were converted at the option of the holder resulting in the issuance of approximately 231,000 common shares. 

 - 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 - careful capital allocation to decrease dependence on capital markets. 

 ------------------------------------------------------------------------- (per share amounts, except for projected FFO, AFFO and shares 2009 Guidance 2009 Guidance outstanding) as at Q3 as at Q2 Variance ------------------------------------------------------------------------- FFO Guidance ------------------------------------------------------------------------- Low High Low High Low High ------------------------------------------------------------------------- Projected diluted net income $0.39 $0.41 $0.41 $0.43 $(0.02) $(0.02) ------------------------------------------------------------------------- Adjustments Projected FFO from Equity One 0.16 0.16 0.15 0.16 0.01 0.00 Projected equity income from Equity One (0.09) (0.09) (0.09) (0.09) 0.00 0.00 Projected amortization and future income taxes 1.18 1.19 1.16 1.18 0.02 0.01 ------------------------------------------------------------------------- Projected FFO(1) $1.64 $1.67 $1.63 $1.68 $0.01 $(0.01) ------------------------------------------------------------------------- Projected FFO(1) $153.9M $157.3M $152.7M $158.0M $1.2M $(0.7)M ------------------------------------------------------------------------- Projected weighted average shares outstanding for per share FFO calculations 94.0M 93.9M 0.1M ------------------------------------------------------------------------- ------------------------------------------------------------------------- AFFO Guidance ------------------------------------------------------------------------- Projected FFO(1) $153.9M $157.3M $152.7M $158.0M $1.2M $(0.7)M ------------------------------------------------------------------------- Projected weighted average shares outstanding for per share AFFO calculations (including conversion of convertible debentures) 103.2M 102.2M 1.0M ------------------------------------------------------------------------- Projected AFFO (using weighted average AFFO shares outstanding)(1) $1.49 $1.52 $1.50 $1.54 $(0.02) $(0.04) ------------------------------------------------------------------------- Projected dividend income - return of capital portion (0.00) (0.01) 0.02 0.03 (0.02) (0.04) Projected dividends from Equity One net of FFO from Equity One (0.02) (0.02) (0.01) (0.02) (0.01) 0.00 Projected revenue sustaining capital expenditures (0.12) (0.12) (0.11) (0.10) (0.01) (0.02) Projected non cash items, net 0.11 0.11 0.09 0.09 0.02 0.02 ------------------------------------------------------------------------- Projected AFFO(1) $1.46 $1.48 $1.49 $1.54 $(0.03) $(0.06) ------------------------------------------------------------------------- (1) See Funds from Operations section of this press release. The variance between Q2 and Q3 FFO and AFFO guidance is primarily associated with the items noted below. - Same property NOI excluding redevelopment and expansion is assumed to grow ~ 2-3%, consistent with Q2 guidance assumptions; - The increased investment in development, redevelopment and expansion activities to approximately 675,000 square feet with gross book value of approximately $250 million compares to Q2 guidance of 600,000 - 650,000 square feet with gross book value ranging from $175 to $200 million. These development projects coming on line in the fourth quarter will essentially produce revenues in 2010; - Existing vacancy and certain small CRU spaces in newly developed properties are leasing slower than planned resulting in a slight reduction in NOI forecast guidance from Q2 to Q3; - Income-producing property acquisitions now total $61 million which compares to $27 million year-to-date in the Q2 guidance assumption; - Interest expense is higher due to longer term financing activities completed during Q3 including the 6.25% convertible debenture issue plus other specific financing activities which together resulted in a decreased utilization of the lower cost credit facility and increased financing costs; - Gains on marketable securities sold during Q3, offset by the related dividend income reduction through year end, were not included in the Q2 guidance; - Non-cash items including amortization and straight-line rents are adjusted based on actual amounts each quarter. 

 * * * * 

 These forward-looking statements are made as of November 6, 2009. NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES Funds from Operations and Adjusted Funds from Operations 

 FIRST CAPITAL REALTY INC. CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------- (unaudited) September 30 December 31 (thousands of dollars) 2009 2008(1) ------------------------------------------------------------------------- (restated) ASSETS Real Estate Investments Shopping centres $ 3,193,742 $ 3,040,257 Land and shopping centres under development 257,661 281,959 Deferred leasing costs 16,934 16,146 Intangible assets 23,069 29,312 ------------------------------------------------------------------------- 3,491,406 3,367,674 Investment in Equity One, Inc. - 227,259 Loans, mortgages and other real estate assets 82,627 32,480 ------------------------------------------------------------------------- 3,574,033 3,627,413 Other assets 38,073 27,448 Amounts receivable 46,647 45,501 Cash and cash equivalents 19,400 7,263 Future income tax assets 18,109 11,977 ------------------------------------------------------------------------- $ 3,696,262 $ 3,719,602 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES Mortgages, loans and credit facilities $ 1,499,011 $ 1,573,530 Accounts payable and other liabilities 135,955 166,507 Intangible liabilities 12,412 17,264 Senior unsecured debentures 592,786 593,288 Convertible debentures 282,788 218,247 Future income tax liabilities 63,957 55,620 ------------------------------------------------------------------------- 2,586,909 2,624,456 SHAREHOLDERS' EQUITY 1,109,353 1,095,146 ------------------------------------------------------------------------- $ 3,696,262 $ 3,719,602 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Prior year comparative figures have been restated for a change in accounting standards. FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF EARNINGS ------------------------------------------------------------------------- Three months ended Nine months ended ------------------------------------------------------------------------- (unaudited) (thousands of September 30 September 30 September 30 September 30 dollars, except 2009 2008(1) 2009 2008(1) per share amounts) ------------------------------------------------------------------------- (restated) (restated) REVENUE Property rental revenue $ 108,829 $ 100,830 $ 328,899 $ 304,497 Interest and other income 2,390 2,932 3,288 4,577 ------------------------------------------------------------------------- 111,219 103,762 332,187 309,074 ------------------------------------------------------------------------- EXPENSES Property operating costs 37,217 35,375 117,430 111,368 Interest expense 31,412 27,862 93,122 85,064 Amortization Shopping centres 21,697 18,507 62,748 55,456 Deferred leasing costs 934 741 2,716 2,515 Intangible assets 2,061 1,803 6,015 6,077 Deferred financing fees 623 222 1,558 628 Other assets 380 325 1,198 939 Corporate expenses 5,320 4,731 16,321 15,963 ------------------------------------------------------------------------- 99,644 89,566 301,108 278,010 ------------------------------------------------------------------------- Equity income (loss) from Equity One, Inc. 954 (1,506) 8,353 7,311 ------------------------------------------------------------------------- Income before income taxes 12,529 12,690 39,432 38,375 ------------------------------------------------------------------------- Income taxes Current 318 1,036 2,195 2,365 Future 3,209 3,427 10,060 9,243 ------------------------------------------------------------------------- 3,527 4,463 12,255 11,608 ------------------------------------------------------------------------- Net income $ 9,002 $ 8,227 $ 27,177 $ 26,767 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per common share, basic and diluted $ 0.09 $ 0.09 $ 0.29 $ 0.31 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Prior year comparative figures have been restated for a change in accounting standards. FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ------------------------------------------------------------------------- Three months ended Nine months ended ------------------------------------------------------------------------- (unaudited) (thousands of September 30 September 30 September 30 September 30 dollars) 2009 2008(1) 2009 2008(1) ------------------------------------------------------------------------- (restated) (restated) NET INCOME $ 9,002 $ 8,227 $ 27,177 $ 26,767 ------------------------------------------------------------------------- OTHER COMPREHENSIVE INCOME Unrealized foreign currency gains on translating self- sustaining foreign operations (Losses) gains arising during the period (3,146) 2,095 (6,156) 3,363 Reclassification adjustment for dilution loss on investment in Equity One, Inc. - - 1,669 - Reclassification adjustment for dividend-in-kind 17,288 - 17,288 - ------------------------------------------------------------------------- 14,142 2,095 12,801 3,363 ------------------------------------------------------------------------- Other comprehensive (losses) income of Equity One, Inc. Gains arising during the period - 2,975 4,346 1,088 Reclassification adjustment for dilution loss included in net income - - 29 - Reclassification adjustment for dividend-in-kind (1,124) - (1,124) - ------------------------------------------------------------------------- (1,124) 2,975 3,251 1,088 ------------------------------------------------------------------------- Unrealized gains (losses) on cash flow hedges of interest rates Unrealized gains (losses) arising during the period 196 (22) 9,080 (440) Reclassification adjustments for gains included in net income (7) - (21) - Reclassification adjustment for dividend-in-kind 4,407 - 4,407 - ------------------------------------------------------------------------- 4,596 (22) 13,466 (440) ------------------------------------------------------------------------- Change in cumulative unrealized gain (losses) on available- for-sale marketable securities Unrealized gains (losses) arising during the period 5,341 (1,707) 12,163 (2,054) Reclassification adjustments for (gains) losses included in net income (1,668) 3 (1,470) 55 ------------------------------------------------------------------------- 3,673 (1,704) 10,693 (1,999) ------------------------------------------------------------------------- Other comprehensive income before income taxes 21,287 3,344 40,211 2,012 Future income tax expense (recovery) 1,298 (580) 5,501 (875) ------------------------------------------------------------------------- Other comprehensive income 19,989 3,924 34,710 2,887 ------------------------------------------------------------------------- COMPREHENSIVE INCOME $ 28,991 $ 12,151 $ 61,887 $ 29,654 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Prior year comparative figures have been restated for a change in accounting standards. FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS ------------------------------------------------------------------------- Three months ended Nine months ended ------------------------------------------------------------------------- (unaudited) (thousands of September 30 September 30 September 30 September 30 dollars, except 2009 2008(1) 2009 2008(1) per share amounts) ------------------------------------------------------------------------- (restated) (restated) Net income for the period $ 9,002 $ 8,227 $ 27,177 $ 26,767 Add (deduct): Amortization of shopping centres, deferred costs and intangible assets 24,692 21,051 71,479 64,048 Gain on disposition of income- producing shopping centre - - (211) - Equity income (loss) from Equity One(2) (954) 1,506 (8,353) (7,311) Funds from operations from Equity One(2) 2,553 (1,952) 15,009 8,749 Future income taxes 3,209 3,427 10,060 9,243 ------------------------------------------------------------------------- Funds from operations ("FFO") 38,502 32,259 115,161 101,496 Add: dilution loss on Equity One investment - - 676 - Add: the Company's share of Equity One's non-cash impairment loss - 6,480 - 6,480 ------------------------------------------------------------------------- FFO excluding dilution loss on Equity One investment and the Company's share of Equity One's non-cash impairment loss $ 38,502 $ 38,739 $ 115,837 $ 107,976 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FFO per diluted share $ 0.41 $ 0.36 $ 1.24 $ 1.18 Add: dilution loss on Equity One investment - - 0.01 - Add: the Company's share of Equity One's non-cash impairment loss - 0.07 - 0.07 ------------------------------------------------------------------------- FFO per diluted share excluding dilution loss on Equity One investment and the Company's share of Equity One's non- cash impairment loss $ 0.41 $ 0.43 $ 1.25 $ 1.25 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average diluted shares - FFO 94,902,006 90,021,640 92,895,420 86,231,829 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF ADJUSTED FUNDS FROM OPERATIONS ------------------------------------------------------------------------- Three months ended Nine months ended ------------------------------------------------------------------------- (unaudited) (thousands of September 30 September 30 September 30 September 30 dollars, except 2009 2008(1) 2009 2008(1) per share amounts) ------------------------------------------------------------------------- (restated) (restated) FFO excluding dilution loss on Equity One investment and the Company's share of Equity One's non- cash impairment loss $ 38,502 $ 38,739 $ 115,837 $ 107,976 Add/(deduct): Rental revenue recorded on a straight-line basis and market rent adjustments (1,421) (2,274) (4,645) (6,166) Non-cash compensation expense 914 904 2,727 2,971 Interest expense payable in shares 3,642 3,525 10,523 10,491 Change in cumulative unrealized gain on marketable securities - 529 (1,638) 788 Dividend income - return of capital portion 484 214 1,766 214 Return of capital portion - previously recognized (792) - (792) - Loss on extinguishment of debt 209 - 897 - Funds from operations from Equity One (2,553) (4,528) (15,009) (15,229) Dividends from Equity One (regular) 2,211 4,464 12,452 13,048 Gain on termination of hedge (7) - (21) - Gain on disposition of land - (2,667) (118) (3,942) Revenue sustaining capital expenditures and leasing costs (3,733) (2,436) (8,842) (7,087) ------------------------------------------------------------------------- Adjusted funds from operations ("AFFO") $ 37,456 $ 36,470 $ 113,137 $ 103,064 ------------------------------------------------------------------------- ------------------------------------------------------------------------- AFFO per diluted share $ 0.36 $ 0.37 $ 1.12 $ 1.09 ------------------------------------------------------------------------- Weighted average diluted shares for AFFO(3) 103,879,309 98,648,017 101,119,140 94,657,945 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Prior year comparative figures have been restated for a change in accounting standards. (2) Current year amounts cover period to August 14, 2009, the date of the dividend-in-kind related to the Company's interest in Equity One. (3) Includes the weighted average outstanding shares that would result from the conversion of the convertible debentures. FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------------------------------------------- Three months ended Nine months ended ------------------------------------------------------------------------- (unaudited) (thousands of September 30 September 30 September 30 September 30 dollars) 2009 2008(1) 2009 2008(1) ------------------------------------------------------------------------- (restated) (restated) CASH FLOW PROVIDED BY (USED IN): OPERATING ACTIVITIES Net income $ 9,002 $ 8,227 $ 27,177 $ 26,767 Items not affecting cash Amortization 25,695 21,598 74,235 65,615 Amortization of above- and below- market leases (602) (592) (1,745) (1,679) Rent revenue recognized on a straight-line basis (819) (1,682) (2,900) (4,487) Gain on disposition of income- producing property - - (211) - Gains on disposition of land - (2,667) (118) (3,942) Realized (losses) gains on sale of marketable securities (1,875) - (902) 52 Change in cumulative unrealized losses (gains) on marketable securities held- for-trading - 529 (1,638) 788 Loss on settlement of debt 209 - 897 - Non-cash compensation expense 914 904 2,727 2,971 Interest paid in excess of effective interest on assumed mortgages (284) (293) (895) (1,142) Effective interest rate in excess of coupon rate on senior unsecured and convertible debentures 236 217 678 639 Convertible debenture interest paid in common shares 6,253 6,408 12,613 12,891 Other non-cash interest expense 677 588 2,020 1,849 Equity income from Equity One, Inc. (954) 1,506 (8,353) (7,311) Dilution loss on Equity One, Inc. investment - - 676 - Loss on foreign exchange currency 211 - 211 - Future income taxes 3,209 3,427 10,060 9,243 Deferred leasing costs (1,304) (1,428) (3,505) (3,012) Dividends received from Equity One, Inc. 2,211 4,464 12,452 13,048 Net change in non- cash operating items (4,518) 1,926 (25,287) (22,905) ------------------------------------------------------------------------- Cash provided by operating activities 38,261 43,132 98,192 89,385 ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of shopping centres (5,364) (39,299) (23,406) (45,947) Acquisition of land and shopping centres held for development (28) (496) (9,387) (11,603) Proceeds from disposition of land held for development - 8,322 70 10,148 Expenditures on shopping centres (10,363) (6,145) (22,423) (14,684) Expenditures on land and shopping centres under development (63,147) (59,009) (134,377) (150,596) Changes in accounts payable and accrued liabilities related to investing activities 20,514 (10,034) (3,924) 13,536 Increase in loans and mortgages receivable (364) (980) (1,390) (1,280) Investment in marketable securities (367) (13,053) (3,112) (22,241) Return of capital from investments in marketable securities 484 245 1,766 319 Proceeds from disposition of marketable securities 19,159 52 27,762 2,182 ------------------------------------------------------------------------- Cash used in investing activities (39,476) (120,397) (168,421) (220,166) ------------------------------------------------------------------------- FINANCING ACTIVITIES Mortgage financings, loans and credit facilities Borrowings, net of financing costs 63,049 121,718 548,958 345,345 Principal instalment payments (10,260) (9,563) (30,495) (28,304) Other repayments on maturity (140,535) (69,343) (475,930) (318,025) Purchase of senior unsecured debentures - - (1,145) - Issuance of convertible debentures, net of issue costs 72,075 - 72,075 - Issuance of common shares, net of issue costs 54,942 42,991 54,980 148,491 Issuance of warrants, net of issue costs 1,821 - 1,821 - Dividend-in-kind cash payment (427) - (427) - Payment of dividends (30,041) (7,264) (88,793) (20,630) ------------------------------------------------------------------------- Cash provided by financing activities 10,624 78,539 81,044 126,877 ------------------------------------------------------------------------- Effect of currency rate movement on cash balances 1,514 20 1,322 (45) ------------------------------------------------------------------------- Increase in cash and cash equivalents 10,923 1,294 12,137 (3,949) Cash and cash equivalents, beginning of the period 8,477 5,208 7,263 10,451 ------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 19,400 $ 6,502 $ 19,400 $ 6,502 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SUPPLEMENTARY INFORMATION Cash income taxes paid $ 9 $ 714 $ 1,358 $ 1,640 ------------------------------------------------------------------------- Cash interest paid $ 33,886 $ 29,428 $ 96,630 $ 89,409 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Prior year comparative figures have been restated for a change in accounting standards.