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Press release from Marketwire

Retrocom Mid-Market REIT Announces First Quarter 2011 Financial Results

Thursday, May 12, 2011

Retrocom Mid-Market REIT Announces First Quarter 2011 Financial Results18:13 EDT Thursday, May 12, 2011TORONTO, ONTARIO--(Marketwire - May 12, 2011) -NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN SOURCERetrocom Mid-Market Real Estate Investment Trust (the "REIT") (TSX:RMM.UN) announced today its financial results for the first quarter ended March 31, 2011.HighlightsClosed the acquisition of four investment properties for $42.8 million from Calloway REIT on May 6, 2011Completed equity offering including over-allotment, of 9.8 million Units for gross proceeds of $57.5 million on March 15, 2011Announced new anchor tenants and $11 million revitalization project at Chilliwack MallNet Operating Income increased 22% in the three month period ending March 31, 2011 versus same period last yearYear to date, refinanced approximately $35.9 million of mortgage debt resulting in a 233 basis points decrease in the related debt's weighted average interest rateOperational & Financial SummaryOn May 6, 2011 the REIT closed the acquisition of four investment properties totaling 226,016 square feet for approximately $42.8 million (inclusive of approximately $1.2 million of transaction costs). The portfolio is located in Ontario and Quebec and is currently 100% leased.Net Operating Income ("NOI") for Q1, 2011 was $9.4 million, which has grown by $1.7 million or 22% as compared to NOI for the same period of 2010. The increase is mainly attributable to the fully integrated operating results of seven investment properties that the REIT acquired in December, 2010, partially offset by the decrease of same property NOI due to higher overall vacancy.Funds from Operation ("FFO") for Q1, 2011 was $3.0 million ($0.09 per unit, basic and diluted), as compared to $3.1 million ($0.11 per unit, basic and diluted) for Q1, 2010. FFO remains relatively flat as the NOI growth of $2.8 million from the seven investment properties acquired in December 2010 was offset by same property NOI decrease of $1.1 million, increased interest expense of $1.6 million and increased trust expense of $0.2 million.The portfolio occupancy rate was 84.9% as at March 31, 2011, compared to 86.6% at 2010 year-end. This decrease was mainly due to the departure of Walmart at Chilliwack Mall effective January 1, 2011. However, the former Walmart space has now been leased to three new tenants, Winners, Sportchek and Reitmans, in conjunction with an $11 million revitalization plan to upgrade and renovate the interior and exterior of the mall.The REIT's average cost of mortgage debt was 5.84% at the end of Q1, 2011, as compared to 6.02% at the end of 2010 and 6.19% at the end of Q1, 2010. The improvement is the result of the REIT's recent efforts in refinancing maturing debt at lower interest rates. The REIT's leverage ratio, including convertible debentures, was 56.7% as at March 31, 2011, within the 70% permitted under the REIT's trust indenture and the 65% permitted under the REIT's operating line.The REIT retains a solid liquidity position. As of today's date, the REIT has approximately $18.4 million cash on hand and $19.3 million available on the operating line. Richard Michaeloff, President and CEO of the REIT, said, "In this first quarter of 2011 we continued to focus on Retrocom's three-pronged growth strategy: increasing occupancy in our existing portfolio; redeveloping assets to increase value; and executing on acquisitions which will be accretive to our operations. Our results now fully integrate the operating results of seven investment properties that the REIT acquired December, 2010, thus demonstrating our commitment to generating stable and growing cash distributions over time. The REIT worked on closing the acquisition of four investment properties from Calloway REIT which will grow our asset base and will be accretive to our operating income. And, in March 2011, we announced the launch of a redevelopment project at Chilliwack Mall, the fourth redevelopment project announced in the past twelve months."Financial Highlights(all amounts in $000's, except per unit amounts and ratios)Three months ended Mar 31 2011 (1)Three months ended Mar 31 2010 (1)Rental revenue and other income18,73714,940Property operating expenses(9,335)(7,231)Net operating income (2)9,4027,709Trust expenses(1,084)(850)Finance costs-operations(5,260)(3,638)Finance costs-distributions on Class B Units(1,025)(1,025)Income (loss) before income taxess and fair value gains (losses)2,0332,196Fair value gains (losses) associated with finance costs:Fair value gains losses on convertible debentures(1,472)(360)Fair value losses on Class B Units(6,104)(8,017)Fair value gains losses on warrants(520)(128)Fair value gains on interest rate swaps628-Fair value gains (losses) on investment property(254)116Fair value losses on participant's rights under LTIP(56)(103)Future income tax recovery-1,452Loss for the period(5,745)(4,844)Funds From Operations (FFO) (3)3,0253,120FFO per unitBasic0.090.11Diluted0.090.11FFO payout ratio, accrual basis1.261.00FFO payout ratio, cash basis1.151.00Distributions to unitholders-accrual basis3,8073,108Distributions to unitholders-cash basis3,4753,108Full 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 financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standard Board ("IASB"). Results of 2010 have been restated to conform to IFRS. (2)A non-IFRS 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-IFRS 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 IFRS.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.comwww.rmmreit.com