- Rental revenue increased 9% for the quarter and 12% for the year
- Funds from operations ("FFO") increased 13% for the quarter and 10% for the year
- Almost 763,600 square feet of newly developed retail space, of which RioCan's ownership interest was approximately 380,500 square feet, opened during the fourth quarter
- Monthly distribution increased to 11.25 cents per unit during the fourth quarter
- A total of $404 million of new or replacement financing was completed in the third and fourth quarters
TORONTO, ONTARIO--(Marketwire - Feb. 11, 2008) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced its financial results for the three and twelve months ended December 31, 2007.
RioCan reported net earnings for the quarter ended December 31, 2007 of $65,148,000 ($0.32 earnings per unit basic and diluted) as compared to net earnings of $43,435,000 ($0.22 per unit basic and diluted) for the three months ended December 31, 2006. For the twelve months ended December 31, 2007, RioCan reported net earnings of $32,358,000 ($0.16 per unit basic and diluted) as compared to net earnings of $163,812,000 ($0.83 per unit basic and diluted) for the comparable period in 2006.
RioCan's net earnings for the three and twelve months ended December 31, 2007 include non-cash charges for future income tax recovery of $13,000,000 and future income tax expense of $144,000,000, respectively. These non-cash charges have no impact on RioCan's cash flows or distributions and relate to RioCan's future income tax liabilities as a result of tax legislation included in Bill C-52, the Budget Implementation Act, 2007 ("Bill C-52"), which received Royal Assent on June 22, 2007. Bill C-52 is not expected to apply to RioCan until 2011 as it provides for a transition period for publicly traded entities that existed prior to November 1, 2006. Bill C-52 will not apply to an entity that meets specific defined requirements under the legislation for the real estate investment trust exemption (the "REIT Exemption"). RioCan intends to take the necessary steps to qualify for the REIT Exemption prior to 2011.
For the quarter ended December 31, 2007, rental revenue was $165,170,000 as compared to $151,181,000 for the three months ended December 31, 2006. Rental revenue for the twelve months ended December 31, 2007 was $648,994,000 versus $580,472,000 for the comparable period in 2006.
FFO for the quarter ended December 31, 2007 was $87,493,000 ($0.42 per unit) as compared to $77,115,000 ($0.39 per unit) for the three months ended December 31, 2006. For the year ended December 31, 2007, FFO was $314,613,000 ($1.51 per unit) as compared to $286,555,000 ($1.45 per unit) for the year ended December 31, 2006.
RioCan's Audited Consolidated Financial Statements, Management's Discussion and Analysis and a Supplemental Information Package as at and for the year ended December 31, 2007, along with 2007 Income Tax Information, are available on RioCan's website at www.riocan.com.
FFO is a widely accepted supplemental measure of a Canadian real estate investment trust's performance and should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with Canadian generally accepted accounting principles. RioCan's method of calculating FFO may differ from certain other issuers' methods and accordingly may not be comparable to measures reported by other issuers.
At December 31, 2007:
- Portfolio occupancy was 97.6%;
- 65.5% of rental revenue was derived from properties located in Canada's six high growth markets (including and surrounding Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver);
- 82.5% of annualized rental revenue was derived from, and 83.4% of space was leased to, national and anchor tenants;
- Approximately 48.9% of annualized rental revenue was derived from its 25 largest tenants; and
- No individual tenant comprised more than 5.6% of annualized rental revenue.
At the end of 2007, RioCan had 22 active development and redevelopment projects underway, totalling over 8.4 million square feet, of which RioCan's ownership interest will be approximately 3.5 million square feet. Total projected costs of these projects are estimated at $1.6 billion and capitalization rates for these investments on completion are estimated between 7.1% to 9.8%. Most of these projects are located in Canada's six high growth markets and range in size from 106,000 square feet to 2 million square feet.
Almost 763,600 square feet of newly developed retail space, of which RioCan's ownership interest was approximately 380,500 square feet, opened during the fourth quarter. Highlights include:
- Oakville, Ontario - RioCan Centre Burloak celebrated its initial opening in October. This 552,000 square foot new format retail centre is anchored by Home Depot (retailer owned), SilverCity Oakville Cinemas, Longo's and Home Outfitters and is a joint venture with the Canada Pension Plan ("CPP") Investment Board. Forty-four stores, totalling over 237,000 square feet, opened in 2007 and the remaining retailers will be opening this year.
- Ajax, Ontario - At RioCan Durham Centre an additional two retailers, Le Chateau and Smart Set, opened in a 33,000 square foot addition. These retailers join the already outstanding line-up of national retailers at this existing 515,000 square foot RioCan centre.
- Toronto, Ontario - Upon completion, over 27,000 square feet of additional retail space will be added at RioCan Colossus Centre. Approximately 12,800 square feet opened during the fourth quarter including Spence Diamonds, Second Cup, Sally Beauty and Hero Burgers.
- Richmond Hill, Ontario - At Elgin Mills Crossing, four retailers totalling over 168,000 square feet opened in the fourth quarter including Costco, Kelsey's, Scotiabank and TD Bank. Also open for business is retailer owned Home Depot. This greenfield development with joint venture partner Trinity Development Group Inc. ("Trinity") features approximately 445,000 square feet and will be substantially completed by the second quarter of 2008.
- London, Ontario - In the fourth quarter, Pizza Pizza and Brandz Beauty Supply opened for business at Summerside Shopping Centre. Additional retailers that opened in 2007 include Rona, Bank of Montreal, Pet Valu, Dollar Blitz, Mr. Sub and Starbucks. Upon completion, this new format retail centre joint venture with Sun Life Assurance Company of Canada will feature over 176,000 square feet.
- Edmonton, Alberta - RioCan Meadows, another development joint venture with CPP Investment Board, is a 502,000 square foot new format retail centre anchored by Real Canadian Superstore (retailer owned) and Home Depot. Over 233,000 square feet of space has opened for business, of which, seven retailers totalling almost 49,600 square feet opened in the fourth quarter. Substantial completion of this greenfield development is scheduled for the second quarter of 2008.
- Calgary, Alberta - Moving towards completion is RioCan Beacon Hill, a 788,000 square foot new format retail centre featuring shadow anchors Costco and Home Depot, both of whom are open for business, as well as Canadian Tire, which is expected to open in the first quarter of 2008. An additional seven retailers, totalling almost 11,400 square feet, recently opened at this joint venture with Trinity and CPP Investment Board.
Increase in Monthly Distribution
During the third quarter, RioCan announced an increase to its monthly distribution to 11.25 cents per unit commencing with the October 2007 distribution, payable in November 2007. This increase of 3 cents per unit on an annualized basis increases RioCan's annualized distribution to $1.35 per unit. RioCan has increased its distributions to unitholders every year since its inception 14 years ago.
Despite the current challenging credit markets, RioCan was able to successfully complete secured financing transactions that it required in the third and fourth quarters on the following eleven properties:
- Dilworth Shopping Centre in Kelowna, BC;
- RioCan Centre Grande Prairie in Grande Prairie, AB;
- RioCan Shawnessy in Calgary, AB;
- Miracle Plaza in Hamilton, ON;
- Kennedy Commons in Toronto, ON;
- Elmvale Shopping Centre in Ottawa, ON;
- RioCan Centre Windsor in Windsor, ON;
- Collingwood Centre in Collingwood, ON;
- Kendalwood Park Plaza in Whitby, ON;
- Five Points Shopping Centre in Oshawa, ON; and
- Walker Place in Burlington, ON.
A total of $284 million was financed, of which RioCan's share is approximately $220 million. The mortgages bear contractual interest rates ranging from 5.288% to 5.84%, with a weighted average interest rate of 5.44%. All of the refinanced transactions were completed at lower interest rates, resulting in significant cost savings.
In addition, on September 11, 2007 RioCan completed the issuance, on a bought deal basis, of $120 million Series K debentures, maturing September 11, 2012, bearing interest at 5.7% per annum and payable semi-annually. The amount of the bought transaction was increased to $120 million, up from the original $100 million amount, due to strong investor demand.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Tuesday, February 12, 2008 at 11:00 a.m. eastern time. You will be required to identify yourself and the organization on whose behalf you are participating.
In order to participate, please dial 416-641-6120 or 1-866-303-7746. If you cannot participate in the live mode, a replay will be available until May 31, 2008. To access the replay, please dial 416-695-5800 or 1-800-408-3053 and enter passcode 3245638#.
Scheduled speakers are Edward Sonshine, Q.C., President and Chief Executive Officer, Fred Waks, Executive Vice President and Chief Operating Officer, and Robert Wolf, Chief Financial Officer ("CFO"). Also in attendance will be Rags Davloor, Robert Wolf's successor as CFO. Management's presentation will be followed by a question and answer period. To ask a question, press "star 1" on a touch-tone phone. The conference call operator will be notified of all requests in the order in which they are made, and will introduce each questioner.
Alternatively, to access the simultaneous webcast, go to the following link on RioCan's website https://riocan.com/_bin/presentations/webcast.cfm and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 120 days.
RioCan is Canada's largest real estate investment trust with a total market capitalization of approximately $7.6 billion. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 214 retail properties, including 12 under development, containing an aggregate of over 55 million square feet. For further information, please refer to RioCan's website at www.riocan.com.
This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.
These statements are not guarantees of future performance and are based on our estimates and assumptions that are subject to risks and uncertainties, including those described under Risks and Uncertainties in the MD&A available on www.sedar.com, which could cause our actual results to differ materially from the forward-looking statements contained herein. Those risks and uncertainties include risks associated with real property ownership, financing and interest rates, environmental matters, construction, unitholder liability, and income taxes. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: an increasing divergence in the general economy between eastern and western Canada; a less robust retail environment than we have seen for the last few years; interest costs to us remain relatively stable; acquisition capitalization rates increase and land costs for greenfield development decrease; a continuing and accelerating trend towards land use intensification in high growth markets; and equity and debt capital markets will continue to provide access to capital to fund at acceptable costs our future growth program and refinance our debts as they mature. Although the forward-looking information contained herein is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this MD&A are qualified by these cautionary statements. Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
RioCan Real Estate Investment Trust
Edward Sonshine, Q.C.
President & CEO