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Press release from CNW Group

FIRST CAPITAL REALTY ANNOUNCES SOLID Q3 RESULTS

Thursday, November 04, 2010

FIRST CAPITAL REALTY ANNOUNCES SOLID Q3 RESULTS17:08 EDT Thursday, November 04, 2010TORONTO, Nov. 4 /CNW/ - First Capital Realty Inc. ("First Capital Realty") (TSX:FCR) Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas,announced today solid financial results for the three and nine months ended September 30, 2010.NINE MONTHS HIGHLIGHTSNine Months Ended September 30$ millions20102009Enterprise value      $ 5,246      $ 4,243Debt to aggregate assets            51.6%            51.0%Debt to total market capitalization                           44.0%            48.9%Property rental revenue      $ 354.3      $ 328.9Net operating income (NOI)(1)      $ 229.6      $ 211.5Nine Months Ended September 30$ millionsper share2010200920102009    Funds from operations (FFO) - Core operations      $ 111.5      $ 107.8      $ 0.71      $ 0.73    FFO - EQY and other non-recurring items            0.7            7.4                -            0.05Total FFO (1)      $ 112.2      $ 115.2      $ 0.71      $ 0.78Weighted average diluted shares for FFO (000's)            158,607            148,633      Adjusted funds from operations (AFFO) - Core operations            $ 114.9            $ 108.4      $ 0.64      $ 0.67    AFFO - EQY and other non-recurring items                  2.3             4.6         0.01                  0.03Total AFFO (1)      $ 117.2      $ 113.0      $ 0.65      $ 0.70Weighted average diluted shares for AFFO (000's)                  179,837                  162,005  Note:In this press release, all per share information is presented on a post-split basis, after giving effect to the May 2010, 3.2:2 stock split. (1) See "Non-GAAP Supplemental Financial Measures" section of this press release. Invested $334 million in acquisitions, development activities and property improvementsAdded 937,000 square feet of gross leasable area from acquisitions, development and redevelopment coming on lineAcquired three income-producing shopping centres and additional interests in three existing shopping centres totalling 555,000 square feet, three properties adjacent to existing shopping centres totalling 117,000 square feet, four properties held for development, and five land parcels adjacent to existing properties for future development comprising a total of 10.3 acres2.7% same property NOI growth; 1.2% excluding redevelopment and expansion space10.3% increase on rate per square foot on 634,000 square feet of renewal leasesOccupancy of 96.4% compares to 96.0% at September 30, 2009. Vacancy includes 0.6% of space held for redevelopmentGross new leasing totalled 611,000 square feet including development and redevelopment coming on line; lease closures totalled 333,000 square feet and closures for redevelopment totalled 113,000 square feetCompleted new leasing on existing space totalling 384,000 square feet at an average rate of $18.97 per square footLease rates on openings and redevelopment coming on line increased by 20.2% versus all lease closuresAverage lease rate per occupied square foot increased by 4.6% from September 30, 2009 to $16.26 at September 30, 2010THIRD QUARTER HIGHLIGHTSThree months ended September 30$ millionsper share2010200920102009Property rental revenue $ 119.1$ 108.8               Net operating income (NOI) (1)$ 79.0      $ 71.6      FFO - Core operations$ 38.4      $ 36.8      $ 0.24      $ 0.24    FFO - EQY and other non-recurring items 0.1            1.7            -            0.01Total FFO (1)   $ 38.5      $ 38.5      $ 0.24      $ 0.25Weighted average diluted shares for FFO (000's)      162,157      151,843      AFFO - Core operations$ 39.1      $ 35.9      $ 0.22      $ 0.22    AFFO - EQY and other non-recurring items            0.6   1.6          -            0.01Total AFFO (1)      $ 39.7      $ 37.5      $ 0.22      $ 0.23Weighted average diluted shares for AFFO (000's)        183,760  166,207  (1) See "Non-GAAP Supplemental Financial Measures" section of this press release.Invested $71 million in acquisitions, development activities and property improvementsAdded 162,000 square feet of gross leasable area from acquisitions, development and redevelopment coming on lineAcquired one property adjacent to an existing shopping centre totalling 63,000 square feet, one property held for development, and two land parcels adjacent to existing properties for future development comprising a total of 4.7 acres2.5% same property NOI growth; 1.0% excluding redevelopment and expansion space12.4% increase on 224,000 square feet of renewal leasesGross new leasing totalled 192,000 square feet including development and redevelopment coming on line; lease closures totalled 100,000 square feet and closures for redevelopment totalled 41,000 square feet"We continue to perform well, generating solid operating results, although offset somewhat by our excess liquidity this quarter," said Dori J. Segal, President & CEO, "Year-to-date we have been very active, investing over $400M in additions to our growing portfolio that are exactly in-line with our strategy".FINANCING AND CAPITAL MARKET HIGHLIGHTS Year-to-date, through September 30, 2010 the Company raised $350 million through the issuance of senior unsecured debentures, $75 million in secured financings and $105.2 million from equity issuances.  The following significant financing activities were completed in the quarter ended September 30, 2010:Completed or committed on $101.4 million from three secured financing transactions at a weighted average interest rate of 4.78% and a weighted average term to maturity of 7.99 years;Issued $50 million principal amount senior unsecured debentures, Series J, with a coupon rate of 5.25% (5.45% yield-to-maturity), maturing August 2018;Issued $50 million principal amount senior unsecured debentures, Series K, with a coupon rate of 4.95% (5.00% yield-to-maturity), maturing November 2018; and$18.9 million of gross equity issued for interest payments on convertible debentures, partial exercise of over-allotment option of the June 2010 share offering, and options and warrants exercised.Subsequent to September 30, 2010, the Company issued an additional $50 million principal amount senior unsecured debentures, Series K, with a coupon rate of 4.95% (4.897% yield-to-maturity), maturing November 2018.Quarterly DividendThe Company announced that it will pay a fourth quarter dividend of $0.20 per common share onJanuary 11, 2011 to shareholders of record on December 30, 2010.NET INCOME  Three months ended Sept 30 Nine months ended Sept 30 ($ thousands, except per share amounts)2010200920102009     Net income$  11,083$  9,002$  30,355      $ 27,177Earnings per share (diluted)$  0.07$  0.06$  0.19      $ 0.18Weighted average common shares (diluted) (000's)      162,157      151,843      158,607      148,633Net income for the three months ended September 30, 2010 was $11.1 million or $0.07 per share (basic and diluted) compared to $9.0 million or $0.06 per share (basic and diluted) for the prior year comparable period. Net income for the nine months ended September 30, 2010 was $30.4 million or $0.19 per share (basic and diluted) compared to $27.2 million or $0.18 per share (basic and diluted) for the prior year comparable period. The increase in net income is primarily due to the increase in NOI resulting from new acquisitions, development and redevelopment projects coming on line, same property NOI growth, increased other gains (losses) and (expenses) offset by increased interest expense, increased amortization expense, and decreased income from Equity One as a result of the August 2009 dividend-in-kind of the Company's interest in Gazit America Inc. In addition, there was an increase in the basic and weighted average diluted shares outstanding compared to the same prior year period.SUBSEQUENT ACQUISITIONOn October 25, 2010, the Company acquired Parkway Mall, in Toronto, Ontario, a shopping centre comprising 257,000 square feet of retail space on 18.3 acres.  Major tenants include Metro Supermarket, Shoppers Drugmart, LCBO, Staples, Home Hardware, TD Canada Trust, CIBC, Bank of Nova Scotia, McDonald's and Tim Hortons. The purchase price of $61.8 million, inclusive of closing costs, was satisfied by cash.OUTLOOK Over the past several years, First Capital Realty has made significant progress in growing its business and generating accretive growth in funds from operations while enhancing the quality of its portfolio.The current property acquisition environment is competitive, with increasing transaction activity. Both equity and long-term debt and equity markets are accessible but continue to represent tight spreads relative to pricing currently being asked by vendors of high quality, well located urban properties. The Company will continue to selectively acquire properties that are well-located and of high quality, where they add strategic value and/or operating synergies provided they will be accretive to FFO over the long term, and equity and long-term debt capital can be priced and committed to maintain conservative leverage.Development and redevelopment activities continue to provide the Company with opportunities to grow within its existing portfolio of assets. These activities typically generate higher returns on investment over the long term.With respect to acquisitions of both income-producing and development properties, as well as in its existing portfolio, the Company will continue to focus on the quality, sustainability and growth potential of rental income.  With respect to financing activities, the Company will continue to focus on maintaining access to all sources of long-term capital at the lowest possible price.  In particular, the Company is focussed on both extending and staggering the term of debt.Specifically, Management has identified the following five areas to achieve its objectives going forward into 2011:same property net operating income growth, taking into account maintaining high occupancy;development and redevelopment activities;selective acquisitions;increasing efficiency and productivity of operations; andimproving the cost of both debt and equity capital.Overall, Management is confident that the quality of the Company's balance sheet and the defensive nature of its assets and operations will continue to serve it well in the current environment.2010 GUIDANCE The Company sets out its FFO and AFFO per share guidance for 2010 below.  All information presented on a per share basis has been adjusted to reflect the 3.2:2 common share split which took effect on May 27, 2010.  (per share amounts, except for projected FFO, AFFO and shares outstanding)2010 Guidanceas at Q32010 Guidanceas at Q2VarianceFFO Guidance LowHighLowHighLowHighProjected diluted net income per share$0.25$0.26$0.25$0.27$ -$(0.01)Adjustments         Projected amortization and future income taxes 0.700.71 0.70 0.71 - -Projected FFO per share(1)$0.95$0.97$0.95$0.98$ -$(0.01)Projected FFO (1)$151.25M$155.50M$151.7M$156.6M$(0.45)M$(1.1)MProjected weighted average shares outstanding for per share FFO calculations 160.3M 160.4M (0.1)MAFFO GuidanceProjected FFO(1)$151.25M$155.50M$151.7M$156.6M$(0.45)M$(1.1)MProjected weighted average shares outstanding for per share AFFO calculations (including conversion of convertible debentures) 181.5M 181.7M(0.2)MProjected FFO per share (using weighted average AFFO shares outstanding) (1) $0.83 $0.86 $0.83 $0.86 $ - $ -   Projected revenue sustaining capital expenditures (0.07) (0.07) (0.08) (0.08) 0.01 0.01Projected non cash items, net0.100.090.090.100.01(0.01)Projected AFFO per share(1)$0.86$0.88$0.84$0.88$0.02-(1) See "Non-GAAP Supplemental Financial Measures" section of this press release.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, corporate expenses, the level and timing of acquisitions of income-producing properties, the Company's share price, the number of shares outstanding, and numerous other factors.  While these projections include year-to-date actual results through September 30, 2010, not all factors which may affect our range of projected funds from operations and adjusted funds from operations are determinable at this time. Actual results for the year may vary from the projected results in a material respect, and may be above or below the range presented in a material respect. Guidance is based on specific assumptions, including:Same property NOI growth of 1.0% to 1.5% (excluding redevelopment and expansion) consistent with Q2 guidance;Development, redevelopment and expansion coming on line of 300,000 to 350,000 square feet with approximate gross book value of $100 to $110 million (includes 263,000 square feet and $91.2 million completed through September 30, 2010).  This compares to Q2 guidance of approximate gross book value of $100 to $120 million;Income-producing property acquisitions totalling $250 million (includes $244 million committed or completed to-date). This compares to Q2 guidance of $200 million in acquisitions;Development property acquisitions totalling $65 million (includes $53 million committed or completed to-date);Revenue sustaining capital expenditure is expected to be approximately $0.65 per square foot on average;Projected average cash balances of greater than $35 million in the fourth quarter.The ranges presented represent Management's estimate of results based upon these assumptions as of the date of this press release.  The purpose of the Company's guidance is to provide readers with Management's view as to the expected financial performance of the Company for 2010, using factors that are commonly accepted and viewed as meaningful financial indicators of operating performance in the real estate industry.Readers should refer to the section below titled "Forward-Looking Statements" for important information relating to our guidance, including risk factors.REGULATORY FILINGS AND SUPPLEMENTAL INFORMATIONFirst Capital Realty's financial statements and MD&A for the three and nine months ended September 30, 2010 will be filed today on the Company's website at www.firstcapitalrealty.ca in the Investors section, and on the Canadian Securities Administrators' website at www.sedar.com.  First Capital Realty's Supplemental Information Package dated September 30, 2010 will also be available today on the Company's website.MANAGEMENT CONFERENCE CALL AND WEBCASTFirst Capital Realty invites you to participate at its live conference call with senior management announcing our third quarter results on Friday, November 5, 2010 at 1:00 p.m. E.S.T. Teleconference:You may participate in the live conference toll free at 866-299-6657 or at 416-641-6135.  To ensure your participation, please call five minutes prior to the scheduled start of the call.  The call will be archived through November 12, 2010 and can be accessed by dialing toll free 800-408-3053 or 416-695-5800 with access code 2555175.Webcast:To access the webcast, go to First Capital Realty's website at www.firstcapitalrealty.ca, and click on the link for the webcast at the bottom of our Home Page.  The webcast will be archived on our Home Page for 30 days and can be accessed, thereafter, in the 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 866-299-6657 or 416-641-6135.  For assistance at any point during the call, press '*0'.ABOUT FIRST CAPITAL REALTY (TSX:FCR)First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas. The Company currently owns interests in 178 properties, including three under development, totalling approximately 21.6 million square feet of gross leasable area and nine sites in the planning stage for future retail development.Non-GAAP Supplemental Financial MeasuresFirst Capital Realty prepares and releases unaudited quarterly and audited consolidated annual financial statements prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with GAAP, the Company also discloses and discusses certain non-GAAP financial measures, including NOI, FFO and AFFO. These non-GAAP measures are further defined and discussed in First Capital Realty's MD&A for the three and nine months ended September 30, 2010, which should be read in conjunction with this news release. Since NOI, FFO and AFFO do not have standardized meanings prescribed by GAAP, they may not be comparable to similar measures reported by other issuers. The Company uses and presents these non-GAAP measures as Management believes they are commonly accepted and meaningful financial measures of operating  performance in the real estate industry. A reconciliation of net income and such non-GAAP measures is included in the Company's MD&A. These non-GAAP measures should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with GAAP as measures of First Capital Realty's operating performance.Forward-Looking StatementsThis press release, and in particular the "Outlook" and "2010 Guidance" sections hereof, contains forward-looking statements and information within the meaning of applicable securities legislation.  Forward-looking statements can generally be identified by the expressions "anticipate", "believe", "plan", "estimate", "project", "expect", "intend", "outlook", "objective", "may", "will", "should", "continue" and similar expressions.  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.  All forward-looking statements in this press release are qualified by these cautionary 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 "Risks and Uncertainties" in the Company's Management's Discussion and Analysis for the year ended December 31, 2009.Factors that could cause actual results or events to differ materially from those expressed, implied or projected by forward-looking statements in addition to those described in the aforementioned "Risk and Uncertainties" section 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, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, financial difficulties and defaults, changes in interest rates and credit spreads, changes in the U.S.-Canadian foreign currency exchange rate, changes in operating costs, First Capital Realty's ability to obtain insurance coverage at a reasonable cost and the availability of financing.  The assumptions underlying the Company's forward-looking statements contained in the "Outlook" and "2010 Guidance" sections of this press release also include that consumer demand will remain stable, demographic trends will continue and there will continue to be barriers to entry in the markets in which the Company operates.  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 except as required by securities laws.These forward-looking statements are made as of the date of this press release.For further information: Dori J. Segal, President & C.E.O., or Karen H. Weaver, Executive Vice President & 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