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Press release from Marketwire

Retrocom Mid-Market REIT Announces Second Quarter 2010 Financial Results and August 2010 Monthly Distribution

Friday, August 13, 2010

Retrocom Mid-Market REIT Announces Second Quarter 2010 Financial Results and August 2010 Monthly Distribution16:19 EDT Friday, August 13, 2010TORONTO, ONTARIO--(Marketwire - Aug. 13, 2010) - NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN SOURCERetrocom Mid-Market Real Estate Investment Trust (TSX:RMM.UN) announced today its financial results for the second quarter ended June 30, 2010.Highlights -- Shortly following the second quarter-end, the REIT strengthened its liquidity position: On July 8, 2010, the REIT issued $20 million principal amount of 6.75% convertible unsecured subordinated, five-year debentures. In addition, the REIT completed the issuance of an additional $2.84 million principal amount pursuant to the underwriters' exercise of the over-allotment option. The debentures are convertible at the debenture holder's option at a conversion price of $5.05 per unit.On July 26, 2010, the REIT renewed and amended its operating line with an increased maximum availability of $20 million, maturing on June 29, 2012.The REIT repaid the remaining balance of $12.6 million on its bridge facility, which was related to the acquisition of four Toronto area properties in July 2008.As of today's date, the REIT has cash on hand of approximately $21 million and approximately $20 million undrawn operating line available to it. -- The REIT's average cost of mortgage debt at the second quarter end was 6.21%, as compared to 6.23% at the second quarter end of 2009. The REIT's leverage ratio was 54.9% as at June 30, 2010, well below the 70% permitted under the REIT's Trust Indenture. The REIT has repaid two of the three maturing mortgages due in 2010, one of which was subsequently refinanced at a higher amount; and the REIT is actively seeking renewal or refinancing of the third mortgage maturing in the fourth quarter. -- Net Operating Income ("NOI") for the second quarter was $8.5 million, compared to $7.8 million for the comparable quarter in 2009. The $0.7 million increase was mainly due to the receipt of lease surrender fees as compared to 2009 results which were impacted by bad debt provisions. For the six months ended June 30, 2010 as compared to the same period of 2009, NOI increased by approximately $0.8 million. -- Funds from Operations ("FFO") for the second quarter was $3.8 million ($0.14 per unit, adjusted for non- controlling interest), compared to $3.2 million ($0.12 per unit, adjusted for non-controlling interest) for the same quarter in 2009. The $0.6 million favourable variance is mainly accounted for by the impact of same- property NOI increase. FFO for the six months ended June 30, 2010 was $7.1 million ($0.26 per unit, adjusted for non-controlling interest) compared to $6.7 million ($0.24 per unit, adjusted for non-controlling interest) for the same period in 2009. FFO increased by $0.4 million as a result of same-property NOI growth of $0.8 million, which was partially offset by increased trust expense of $0.1 million, increased interest expense of $0.2 million and the impact of property dispositions of $0.1 million. -- The portfolio occupancy rate decreased during the second quarter to 87.0% as at June 30, 2010, compared to 90.0% at the end of the first quarter 2010 and 89.9% as at the 2009 year end, reflecting the departure of Walmart from Southland Mall effective May 31, 2010. However, the space has been predominately leased by Zellers. Adjusting for the Zellers lease, expected to commence Q2 2011, occupancy would be at 89.2%. -- On July 20, 2010 the Board of Trustees of the REIT announced the resignation of Mr. David Fiume as President, Chief Executive Officer and Trustee and also announced the appointment of Mr. Richard Michaeloff as President and Chief Executive Officer. Mr. Michaeloff has been a Trustee of the REIT since 2008 and will remain as a Trustee. On June 29, 2010 the REIT appointed Ms. Teresa Neto as Chief Financial Officer. -- The REIT is pleased to announce the launch of its new corporate website at www.rmmreit.com. The newly designed website features comprehensive information on portfolio, leasing, management and investor information. -- Effective August 20, 2010, the REIT's head office will relocate and operate from SmartCentres' home office building in Vaughan, Ontario. Richard Michaeloff, President and CEO of the REIT, said, "We approach the remainder of 2010 with renewed focus and with cautious optimism in the recovery of the retailing and leasing markets. With our strengthened liquidity position we are ready to execute on key opportunities under our long-term restructuring plan; to pursue tenants and to invest in our properties."DistributionThe REIT announced today that the cash distribution for the month of August 2010 will be $0.0375 per unit, or $0.45 per unit on an annual basis and will be payable on September 15, 2010 to Unitholders of record as of August 31, 2010. Distributions paid to Unitholders who are non-residents of Canada will be subject to Canadian withholding tax. Financial Highlights Three months Three months Six months Six months ended June 30 ended June 30 ended June 30 ended June 30 (all amounts in $000's , except per unit amounts and ratios) 2010 (1) 2009 (1) 2010 (1) 2009 (1) ---------------------------------------------------------------------------- Rental revenue and other income 15,226 14,890 30,213 30,339 Property operating expenses 6,740 7,048 13,971 14,817 --------------------------------------------------------- Net operating income (2) 8,486 7,842 16,242 15,522 Trust expenses 901 898 1,751 1,656 --------------------------------------------------------- Income before interest, depreciation & amortization 7,585 6,944 14,491 13,866 Interest 3,738 3,813 7,436 7,240 Depreciation & amortization 4,610 5,023 9,652 10,035 --------------------------------------------------------- Loss before income tax, non- controlling interest and (763) (1,892) (2,597) (3,409) discontinued operations Future income tax recovery - 332 - 1,772 --------------------------------------------------------- Loss before non- controlling interest and discontinued operations (763) (1,560) (2,597) (1,637) Non-controlling interest 252 624 857 1,125 --------------------------------------------------------- Loss before discontinued operations (511) (936) (1,740) (512) Discontinued operations - 1,298 - 1,326 --------------------------------------------------------- Net income (loss) (511) 362 (1,740) 814 Funds From Operations (FFO) (3) 3,847 3,203 7,055 6,740 FFO per Unit (adjusted for conversion of non- controlling interest) 0.14 0.12 0.26 0.24 FFO payout ratio based on accrued distributions 0.81 0.97 0.88 0.92 Distributions -accrual basis 3,109 3,108 6,217 6,216 Full Financial Results and MD&A will be available on SEDAR (www.sedar.com) as well as the Investors Relations section of the REIT's website (www.rmmreit.com). 1. Based on unaudited financial statements. 2. A non generally accepted accounting principle ("GAAP") measurement, calculated by the REIT as rental revenue (net rents, property tax and operating cost recoveries, as well as other miscellaneous income from tenants) less operating expenses from rental properties. 3. The reconciliations from Net income (loss) to Funds From Operations are included in the REIT's MD&A The REIT's management considers Net Operating Income and Funds From Operations to be indicative measures in evaluating the REIT's performance. The table above includes non-GAAP information that should not be construed as an alternative to net earnings or cash flows from operations and may not be comparable to similar measures presented by other issuers as there is no standardized meaning prescribed by GAAP.About Retrocom Mid-Market REITRetrocom Mid-Market REIT is an Ontario unincorporated open-end real estate investment trust which focuses on owning and acquiring mid-market properties in primary and secondary cities across Canada with the objective of producing a geographically diversified portfolio of properties with stable and growing cash flows.This document may contain forward-looking statements, which although based on Management's best estimates as well as the current operating environment are subject to risks and uncertainties. As such, terms such as "anticipate", "believe", "expect", "plan" or other similar words should be taken as forward-looking statements. As a result of these potential uncertainties, any future results could differ materially from the predictions listed herein. Although Retrocom makes every effort to meet our predictions as listed in this document, we are unable to control certain circumstances such as economic, competitive or commercial real estate conditions.This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of a prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under securities laws of any such state, province or other jurisdiction. The Units of the Retrocom Mid-Market REIT have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered in the United States absent registration or an application for exemption from the registration requirements of U.S. securities laws.FOR FURTHER INFORMATION PLEASE CONTACT: Retrocom Mid-Market Real Estate Investment Trust Richard Michaeloff Chief Executive Officer (416) 741-7999 (416) 741-7993(FAX) rmichaeloff@rmmreit.com www.rmmreit.com