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First Capital Realty announces solid Q1 2010 results

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^{Published in Business and Finance on Thursday, May 6th 2010 at 15:40 GMT by Market Wire}  

 ------------------------------------------------------------------------- $ millions Quarter Ended March 31 ------------------------- 2010 2009 ------------------------------------------------------------------------- Enterprise value $ 4,688 $ 3,861 ------------------------------------------------------------------------- Debt to aggregate assets 51.4% 54.5% ------------------------------------------------------------------------- Debt to total market capitalization 46.4% 58.1% ------------------------------------------------------------------------- Property rental revenue $ 118.1 $ 110.3 ------------------------------------------------------------------------- Net operating income (NOI) $ 74.7 $ 68.3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ millions per share Quarter Ended March 31 -------------------------------------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- Funds from operations (FFO) - Core Operations $ 37.3 $ 34.5 $ 0.38 $ 0.38 ------------------------------------------------------------------------- FFO - EQY and Other Non-Recurring Items $ 0.1 $ 3.7 $ 0.00 $ 0.04 ------------------------------------------------------------------------- Total FFO $ 37.4 $ 38.2 $ 0.38 $ 0.42 ------------------------------------------------------------------------- Weighted average diluted shares for FFO (000's) 97,298 91,172 ------------------------------------------------------------------------- Adjusted funds from operations (AFFO) - Core Operations $ 39.6 $ 35.4 $ 0.36 $ 0.36 ------------------------------------------------------------------------- AFFO - EQY and Other Non-Recurring Items $ 1.3 $ 1.4 $ 0.01 $ 0.01 ------------------------------------------------------------------------- Total AFFO $ 40.9 $ 36.8 $ 0.37 $ 0.37 ------------------------------------------------------------------------- Weighted average diluted shares for AFFO (000's) 110,872 99,552 ------------------------------------------------------------------------- 

 - Invested $114 million in development activities, property improvements and acquisitions - Added 278,000 square feet of gross leasable area from development and redevelopment coming on line, and acquisitions - Acquired one income-producing property and an additional interest in an existing shopping centre totalling 200,000 square feet, a 50% interest in one property adjacent to an existing shopping centre totalling 28,000 square feet, two properties held for development and two land parcels adjacent to existing properties for future development comprising a total of 5.0 acres - 5.2% same property NOI growth; 3.0% excluding redevelopment and expansion space - 7.2% increase on rate per square foot on 259,000 square feet of renewal leases - Occupancy of 96.3% compares to 96.2% at December 31, 2009 and 96.0% at March 31, 2009. Vacancy includes 0.6% of space held for redevelopment - Gross new leasing totalled 196,000 square feet including development and redevelopment coming on line; lease closures totalled 138,000 square feet and closures for redevelopment totalled 22,000 square feet - Completed new leasing on existing space totalling 146,000 square feet at an average rate of $17.37 per square foot - Lease rates on openings and redevelopment coming on line increased by 9% versus all lease closures - Average lease rate per occupied square foot increased by 4.0% from March 31, 2009 to $15.85 at March 31, 2010 

 ------------------------------------------------------------------------- (thousands of dollars, except per share amounts) Three months ended March 31, 2010 ------------------------------------------------------------------------- FFO - EQY and Other Non- FFO - Core recurring Operations items Total FFO ------------------------------------------------------------------------- Net operating income $ 74,675 $ - $ 74,675 Interest expense - Canadian operations (34,153) - (34,153) Interest expense - US operations - - - Corporate expenses (5,389) - (5,389) Interest and other income 1,280 - 1,280 Other gains (losses) and (expenses) 1,672 74 1,746 Funds from operations from Equity One - - - Amortization of non real estate assets (813) - (813) Current income taxes - - - ------------------------------------------------------------------------- Funds from operations $ 37,272 $ 74 $ 37,346 ------------------------------------------------------------------------- FFO per diluted share $ 0.38 $ - $ 0.38 ------------------------------------------------------------------------- Weighted average diluted shares - FFO 97,297,868 97,297,868 97,297,868 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- (thousands of dollars, except per share amounts) Three months ended March 31, 2009 ------------------------------------------------------------------------- FFO - EQY and Other Non- FFO - Core recurring Operations items Total FFO ------------------------------------------------------------------------- Net operating income $ 68,300 $ - $ 68,300 Interest expense - Canadian operations (28,211) (60) (28,271) Interest expense - US operations - (2,008) (2,008) Corporate expenses (5,449) - (5,449) Interest and other income 589 - 589 Other gains (losses) and (expenses) - (48) (48) Funds from operations from Equity One - 6,869 6,869 Amortization of non real estate assets (724) - (724) Current income taxes - (1,015) (1,015) ------------------------------------------------------------------------- Funds from operations $ 34,505 $ 3,738 $ 38,243 ------------------------------------------------------------------------- FFO per diluted share $ 0.38 $ 0.04 $ 0.42 ------------------------------------------------------------------------- Weighted average diluted shares - FFO 91,172,216 91,172,216 91,172,216 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Three months ended March 31 2010 2009 Non- Non- Core recurring recurring ($ in thousands) Operations items items ------------------------------------------------------------------------- Losses on debt extinguishment $ - $ (0.5) $ (0.7) Realized loss on termination of hedges - (1.6) - Unrealized gain on interest rate swaps not designated as hedges - 0.6 - Gains on marketable securities - 1.5 0.6 Gains on sales of land - - 0.1 Gain on Royal Oak Shopping Centre settlement 1.7 - - ------------------------------------------------------------------------- Total $ 1.7 $ 0.0 $ 0.0 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Three months ended March 31, 2010 ------------------------------------------------------------------------- AFFO - EQY and Other Non- (thousands of dollars, except AFFO - Core recurring per share amounts) Operations items Total AFFO ------------------------------------------------------------------------- Funds from operations $ 37,272 $ 74 $ 37,346 Add/(Deduct): Interest expense payable in shares 5,503 - 5,503 Rental revenue recorded on a straight-line basis and market rent adjustments (2,216) - (2,216) Non-cash compensation expense 665 (58) 607 Revenue sustaining capital expenditures and leasing costs (3,257) - (3,257) FFO from Equity One - - - Dividends from Equity One (Regular) - - - Return of Capital portion of marketable securities - net - - - Change in cumulative unrealized gain on marketable securities - (114) (114) Loss on extinguishment of debt - 477 477 Additional pre-settlement net cash from property acquisition 1,605 - 1,605 Realized losses on termination of hedges - 1,588 1,588 Unrealized gains on interest rate swaps not designated as hedges - (623) (623) Gain on disposition of land - - - ------------------------------------------------------------------------- Adjusted funds from operations $ 39,572 $ 1,344 $ 40,916 ------------------------------------------------------------------------- AFFO per diluted share $ 0.36 $ 0.01 $ 0.37 ------------------------------------------------------------------------- Weighted average diluted shares for AFFO 110,872,459 110,872,459 110,872,459 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, 2009 ------------------------------------------------------------------------- AFFO - EQY and Other Non- (thousands of dollars, except AFFO - Core recurring per share amounts) Operations items Total AFFO ------------------------------------------------------------------------- Funds from operations $ 34,505 $ 3,738 $ 38,243 Add/(Deduct): Interest expense payable in shares 3,458 - 3,458 Rental revenue recorded on a straight-line basis and market rent adjustments (1,690) - (1,690) Non-cash compensation expense 872 - 872 Revenue sustaining capital expenditures and leasing costs (2,427) - (2,427) FFO from Equity One - (6,869) (6,869) Dividends from Equity One (Regular) - 5,328 5,328 Return of Capital portion of marketable securities - net 636 - 636 Change in cumulative unrealized gain on marketable securities - (1,352) (1,352) Loss on extinguishment of debt - 738 738 Additional pre-settlement net cash from property acquisition - - - Realized losses on termination of hedges - - - Unrealized gains on interest rate swaps not designated as hedges - - - Gain on disposition of land - (118) (118) ------------------------------------------------------------------------- Adjusted funds from operations $ 35,354 $ 1,465 $ 36,819 ------------------------------------------------------------------------- AFFO per diluted share $ 0.36 $ 0.01 $ 0.37 ------------------------------------------------------------------------- Weighted average diluted shares for AFFO 99,552,226 99,552,226 99,552,226 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Three months ended March 31 ($ thousands, except per share amounts) 2010 2009 ------------------------------------------------------------------------- Net income $ 9,769 $ 9,082 Earnings per share (diluted) $ 0.10 $ 0.10 Weighted average common shares - diluted (000's) 97,298 91,172 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

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

 ------------------------------------------------------------------------- (before the effect of the proposed stock split) Low High ------------------------------------------------------------------------- FFO Guidance ------------------------------------------------------------------------- Projected diluted net income per share $0.38 $0.41 Adjustments Projected amortization and future income taxes 1.14 1.16 ------------------------------------------------------------------------- Projected FFO per share $1.52 $1.57 ------------------------------------------------------------------------- Projected FFO $150.5M $155.0M ------------------------------------------------------------------------- Projected weighted average shares outstanding for per share FFO calculations before the effect of the proposed stock split 99.2M ------------------------------------------------------------------------- AFFO Guidance ------------------------------------------------------------------------- Projected FFO $150.5M $155.0M ------------------------------------------------------------------------- Projected weighted average shares outstanding for per share AFFO calculations (including conversion of convertible debentures) before the effect of the proposed stock split 112.4M ------------------------------------------------------------------------- Projected FFO per share (using weighted average AFFO shares outstanding) $1.34 $1.38 Projected revenue sustaining capital expenditures (0.12) (0.12) Projected non-cash items, net 0.13 0.15 ------------------------------------------------------------------------- Projected AFFO per share $1.35 $1.41 ------------------------------------------------------------------------- 

 - Same property NOI growth of 1.0% to 1.5% (excluding redevelopment and expansion); - Development, redevelopment and expansion coming on-line of 400,000 to 450,000 square feet with approximate gross book value of $100 to $120 million; - Income-producing property acquisitions totalling $100 million; - Development property acquisitions totalling $30 million; and - Revenue sustaining capital expenditure is expected to be approximately $0.65 per average square foot. 

 FIRST CAPITAL REALTY INC. CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------- (unaudited) March 31 December 31 (thousands of dollars) 2010 2009 ------------------------------------------------------------------------- ASSETS Real Estate Investments Shopping centres $ 3,337,161 $ 3,288,759 Land and shopping centres under development 268,078 224,772 Deferred leasing costs 17,642 17,471 Intangible assets 21,868 22,549 ------------------------------------------------------------------------- 3,644,749 3,553,551 Loans, mortgages and other real estate assets 59,318 59,220 ------------------------------------------------------------------------- 3,704,067 3,612,771 Other assets 32,537 28,726 Amounts receivable 49,546 45,598 Cash and cash equivalents 2,350 4,548 ------------------------------------------------------------------------- $ 3,788,500 $ 3,691,643 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES Mortgages, loans and credit facilities $ 1,333,334 $ 1,354,668 Accounts payable and other liabilities 125,380 137,658 Intangible liabilities 13,593 13,193 Senior unsecured debentures 841,294 717,040 Convertible debentures 330,252 329,739 Future income tax net liabilities 46,362 43,502 ------------------------------------------------------------------------- 2,690,215 2,595,800 SHAREHOLDERS' EQUITY 1,098,285 1,095,843 ------------------------------------------------------------------------- $ 3,788,500 $ 3,691,643 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF EARNINGS ------------------------------------------------------------------------- Three months ended ------------------------------------------------------------------------- (unaudited) March 31 March 31 (thousands of dollars, except per share amounts) 2010 2009 ------------------------------------------------------------------------- REVENUE Property rental revenue $ 118,113 $ 110,343 Interest and other income 1,280 589 ------------------------------------------------------------------------- 119,393 110,932 ------------------------------------------------------------------------- EXPENSES Property operating costs 43,438 42,043 Interest expense 34,153 30,279 Amortization Shopping centres 22,182 20,550 Deferred leasing costs 1,014 929 Intangible assets 1,362 2,107 Deferred financing fees 429 328 Other assets 384 396 Corporate expenses 5,389 5,449 ------------------------------------------------------------------------- 108,351 102,081 ------------------------------------------------------------------------- Income before the undernoted items 11,042 8,851 ------------------------------------------------------------------------- Equity income from Equity One, Inc. - 4,030 Other gains (losses) and (expenses) 1,727 163 ------------------------------------------------------------------------- Income before income taxes 12,769 13,044 ------------------------------------------------------------------------- Income taxes Current - 1,015 Future 3,000 2,947 ------------------------------------------------------------------------- 3,000 3,962 ------------------------------------------------------------------------- Net income $ 9,769 $ 9,082 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per common share, basic and diluted $ 0.10 $ 0.10 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ------------------------------------------------------------------------- Three months ended ------------------------------------------------------------------------- (unaudited) March 31 March 31 (thousands of dollars) 2010 2009 ------------------------------------------------------------------------- NET INCOME $ 9,769 $ 9,082 ------------------------------------------------------------------------- OTHER COMPREHENSIVE INCOME (LOSS) Unrealized foreign currency gains on translating self-sustaining foreign operations Gains arising during the period - 1,658 Other comprehensive income of Equity One, Inc. Gains arising during the period - 3,365 Unrealized gains on cash flow hedges of interest rates Unrealized gains arising during the period - 421 Change in cumulative unrealized gains (losses) on available-for-sale marketable securities Unrealized losses arising during the period - (2,309) Reclassification adjustments for gains included in net income (1,093) - ------------------------------------------------------------------------- Other comprehensive (loss) income before income taxes (1,093) 3,135 ------------------------------------------------------------------------- Future income tax (recovery) expense (175) 233 ------------------------------------------------------------------------- Other comprehensive (loss) income (918) 3,368 ------------------------------------------------------------------------- COMPREHENSIVE INCOME $ 8,851 $ 12,450 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS ------------------------------------------------------------------------- (thousands of dollars, except per share amounts) Three months ended ------------------------------------------------------------------------- March 31 March 31 2010 2009 ------------------------------------------------------------------------- Net income for the period $ 9,769 $ 9,082 Add (deduct): Amortization of shopping centres, deferred leasing costs and intangible assets 24,558 23,586 Loss (gain) on disposition of income-producing shopping centres 19 (211) Equity income from Equity One - (4,030) Funds from operations from Equity One - 6,869 Future income taxes 3,000 2,947 ------------------------------------------------------------------------- Funds from operations ("FFO") 37,346 38,243 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FFO per diluted share $ 0.38 $ 0.42 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average diluted shares - FFO 97,297,869 91,172,216 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FIRST CAPITAL REALTY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------------------------------------------- Three months ended ------------------------------------------------------------------------- (unaudited) March 31 March 31 (thousands of dollars) 2010 2009 ------------------------------------------------------------------------- CASH FLOW PROVIDED BY (USED IN): OPERATING ACTIVITIES Net income $ 9,769 $ 9,082 Items not affecting cash Amortization 25,371 24,310 Amortization of above- and below-market leases (513) (713) Rent revenue recognized on a straight-line basis (1,703) (977) Gain on disposition of income-producing property 19 (211) Gains on disposition of land - (118) Realized (gains) losses on sale of marketable securities (1,379) 780 Change in cumulative unrealized (gains) losses on marketable securities held-for-trading (114) (1,352) Loss on settlement of debt 477 738 Non-cash compensation expense 607 872 Interest paid in excess of effective interest on assumed mortgages (282) (320) Effective interest rate in excess of coupon rate on senior unsecured and convertible debentures 338 218 Convertible debenture interest paid in common shares 8,710 6,360 Other non-cash interest expense 825 652 Equity income from Equity One, Inc. - (4,030) Unrealized gains on interest rate swaps not designated as hedges (623) - Loss on foreign currency exchange 35 - Future income taxes 3,000 2,947 Deferred leasing costs (1,184) (1,025) Dividends received from Equity One, Inc. - 5,328 Net change in non-cash operating items (11,643) (18,411) ------------------------------------------------------------------------- Cash provided by operating activities 31,710 24,130 ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of shopping centres (32,343) (5,685) Acquisition of land and shopping centres held for development (21,167) (1,399) Proceeds from disposition of shopping centre 200 - Proceeds from disposition of land held for development - 70 Expenditures on shopping centres (5,478) (6,183) Expenditures on land and shopping centres under development (23,227) (30,833) Changes in accounts payable and accrued liabilities related to investing activities (8,950) (23,455) Increase in loans and mortgages receivable (90) (693) Investment in marketable securities (10,551) (2,687) Return of capital from investments in marketable securities (179) 636 Proceeds from disposition of marketable securities 9,848 3,295 ------------------------------------------------------------------------- Cash used in investing activities (91,937) (66,934) ------------------------------------------------------------------------- FINANCING ACTIVITIES Mortgage financings, loans and credit facilities Borrowings, net of financing costs 29,151 267,843 Principal instalment payments (8,633) (10,078) Other repayments on maturity (71,092) (186,186) Issuance of convertible debentures, net of issue costs (40) - Issuance of senior unsecured debentures, net of issue costs 123,950 - Issuance of common shares, net of issue costs 15,427 (60) Payment of dividends (30,734) (29,103) ------------------------------------------------------------------------- Cash provided by financing activities 58,029 42,416 ------------------------------------------------------------------------- Effect of currency rate movement on cash balances - 1,205 ------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (2,198) 817 Cash and cash equivalents, beginning of the period 4,548 7,263 ------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 2,350 $ 8,080 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SUPPLEMENTARY INFORMATION Cash income taxes paid $ - $ 458 ------------------------------------------------------------------------- Cash interest paid $ 28,966 $ 30,587 ------------------------------------------------------------------------- -------------------------------------------------------------------------