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Press release from Marketwire

Retrocom Mid-Market REIT Announces Fourth Quarter 2010 Financial Results

Wednesday, March 16, 2011

Retrocom Mid-Market REIT Announces Fourth Quarter 2010 Financial Results08:00 EDT Wednesday, March 16, 2011TORONTO, ONTARIO--(Marketwire - March 16, 2011) -NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN SOURCERetrocom Mid-Market Real Estate Investment Trust (TSX:RMM.UN) (the "REIT") announced today its financial results for the fourth quarter ended December 31, 2010.HighlightsCompleted equity offering of 8.6 million Units for gross proceeds of $50.0 million on March 15, 2011Announced the agreement to acquire four income-producing properties for $43 million from Calloway REITCompleted acquisition of seven income-producing properties for $142.6 million on December 30, 2010.Reinstated Distribution Reinvestment PlanOperational & Financial SummaryOn December 30, the REIT closed the acquisition of seven investment properties totaling approximately 812,000 square feet for approximately $142.6 million (inclusive of approximately $2.6 million of transaction costs). The portfolio is 98% leased with an overall average remaining lease term of approximately 11 years on anchor tenants and over 8 years on the overall portfolio. The addition of this portfolio has increased the REIT's investment property base by approximately 38%. On November 16, 2010, the REIT announced the reinstatement of its Unitholder Distribution Reinvestment Plan ("DRIP") effective with the November 2010 cash distribution. Eligible investors that choose to participate in the DRIP will have their monthly cash distributions used to purchase Units of the REIT, and will also receive bonus Units equal to 4% of their monthly cash distributions. The portfolio occupancy rate was 86.6% as at December 31, 2010, compared to 84.4% at the end of the third quarter 2010 and 89.9% as at the 2009 year end. The increase in the occupancy rate in the quarter was primarily the result of new acquisitions, which became effective in Q4 2010.The decrease since 2009 year end was mainly the result of Zellers not renewing its lease at Lansdowne Plaza and Walmart leaving Southland Mall. Same Property Net Operating Income ("NOI") for Q4, 2010 was $8.2 million, approximately $0.2 million lower than Q4, 2009 mainly due to the impact of higher vacancy. For the year ended December 31, 2010, same property NOI increased year over year by approximately $0.8 million primarily due to the receipt of lease surrender fees and lower bad debt provisions. FFO for Q4, 2010 was $3.0 million ($0.10 per unit, adjusted for non-controlling interest), as compared to $3.8 million ($0.14 per unit, adjusted for non-controlling interest) for Q4, 2009. The $0.8 million decrease in FFO was attributable to Same Property NOI decrease of $0.2 million, increased interest expense of $0.4 million mainly due to the convertible debenture issuance in July 2010, and increased trust expenses of $0.2 million. FFO per unit for the fourth quarter was also affected by the temporary dilutive impact of the REIT's issuance of 4.6 million Trust units on October 19, 2010 ($0.02/unit).FFO for year 2010 was $12.3 million ($0.43 per unit, adjusted for non-controlling interest), as compared to $13.7 million ($0.49 per unit, adjusted for non-controlling interest) for the year 2009. FFO decreased by $1.4 million as a result of increased trust expenses of $0.9 million due to non-recurring SIFT restructuring costs, IFRS conversion costs and severance costs, increased interest expense of $1.0 million mostly related to the convertible debenture issue in July 2010, and the impact of property dispositions in 2009 of $0.3 million, partially offset by Same Property NOI increase of $0.8 million due to the receipt of lease termination fees and lower bad debt provisions than 2009. FFO per unit for the year was also affected by the temporary dilutive impact of the REIT's issuance of 4.6 million Trust units on October 19, 2010 ($0.01/unit). As of December 31, 2010, the REIT's average cost of mortgage debt was 6.0%, as compared to 6.22% at the end of the third quarter and 6.19% at the end of 2009. Subsequent to the year end, the REIT renewed two maturing mortgages totaling $10.5 million at a weighted average interest rate of 5.04% and refinanced a third mortgage of $17.6 million with a variable interest rate mortgage of $14.4 million fixed at 5.07% through an interest rate swap. The REIT's leverage ratio, including convertible debentures, was 63.5% as at December 31, 2010, within the 70% permitted under the REIT's trust indenture and the 65% permitted under the REIT's operating line. Recent AnnouncementsOn March 15, 2011, the REIT completed a public offering of 8.6 million Units for gross proceeds of $50.0 million. On February 23, 2011, The REIT announced it had entered into a letter of intent with Calloway REIT to acquire four investment properties for a total purchase price of approximately $43 million. The total purchase price is expected to be satisfied by the assumption of existing mortgage debt of approximately $13.0 million, proceeds received from the equity offering that closed March 15, 2011, and additional financing to be placed on two of the acquired properties. The acquisition is expected to close in early Q2, 2011 and is subject to the completion of due diligence and customary closing conditions. As of today's date the REIT has a solid liquidity position with approximately $28.1 million cash on hand and $19.2 million available on the operating line. On March 15, 2011, the REIT repaid fully the outstanding balance on the operating line with the proceeds from the public offering that closed the same day. Richard Michaeloff, President and CEO of the REIT, said, "2010 was a transformational year for Retrocom. We refinanced our business successfully with an appropriate mix of corporate debt, equity offerings and mortgage refinancings; we grew our business by increasing our asset base by approximately 38% through the acquisition of seven investment properties; and, we commenced our longer term strategy of value creation through the launch of redevelopments at three of our properties. For 2011, we expect to continue to execute on our longer term strategies of growing the REIT and creating value for our Unitholders through focused asset management and through accretive acquisitions."Financial Highlights (all amounts in $000's, except per unit amounts and ratios)Three monthsended Dec 312010 (1)Three monthsended Dec 312009 (1)Year ended Dec 31 2010 (1)Year ended Dec 31 2009 (1)Rental revenue and other income15,60615,79560,37960,567Property operating expenses7,3687,41328,17429,112Net operating income (2)8,2388,38232,20531,455Trust expenses1,0789294,2843,360Income before interest, depreciation & amortization7,1607,45327,92128,095Interest4,1773,74015,66514,692Depreciation & amortization4,1695,20418,09420,324Loss before income tax, non-controlling interest and discontinued operations(1,186)(1,491)(5,838)(6,921)Future income tax recovery---2,093Loss before non-controlling interest and discontinued operations(1,186)(1,491)(5,838)(4,828)Non-controlling interest3334921,8682,284Loss before discontinued operations(853)(999)(3,970)(2,544)Discontinued operations-21-1,415Net loss(853)(978)(3,970)(1,129)Funds From Operations (FFO) (3)2,9833,74512,25613,651FFO per unitBasic0.100.140.430.49Diluted0.100.140.430.49FFO payout ratio, accrual basis1.170.831.050.91FFO payout ratio, cash basis1.140.831.040.91Distributions to unitholders-accrual basis3,4923,10812,81812,433Distributions to unitholders-cash basis3,4053,10812,73112,433Full 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 community-based commercial properties in primary and secondary markets 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: Richard MichaeloffRetrocom Mid-Market Real Estate Investment TrustChief Executive Officer(416) 741-7999(416) 741-7993 (FAX)rmichaeloff@rmmreit.com