Macquarie Power & Infrastructure Income Fund
TSX : MPT.UN
TSX : MPT.DB

Macquarie Power & Infrastructure Income Fund

November 07, 2007 17:37 ET

Macquarie Power & Infrastructure Income Fund Announces Solid Third Quarter Performance

- Portfolio performing in line with expectations - Anticipate achieving payout ratio of approximately 95% - Significant capacity for continuing growth

TORONTO, ONTARIO--(Marketwire - Nov. 7, 2007) - Macquarie Power & Infrastructure Income Fund (TSX:MPT.UN)(TSX:MPT.DB) ("MPT" or the "Fund"), which invests in essential infrastructure assets in North America, today reported results for the third quarter ended September 30, 2007. The Fund's Management's Discussion and Analysis and unaudited financial statements are available on the Fund's website at www.macquarie.com/mpt or on SEDAR at www.sedar.com.

"During the quarter, our portfolio continued to deliver stable distributions to the Fund's unitholders, reflecting increased power production and higher power rates as well as predictable results from Leisureworld," said Mr. Gregory Smith, President and Chief Executive Officer of the Fund. "The Fund's power and social infrastructure assets are performing in line with our expectations."

Revenue for the quarter ended September 30, 2007 was $30.4 million compared with $20.4 million in the same period last year, reflecting three full months of contribution from the Fund's new wind, hydro and biomass power assets, acquired with Clean Power Income Fund on June 27, 2007, and strong performance from Cardinal attributable to the continuing impact of electricity rate increases under Cardinal's Power Purchase Agreement ("PPA").

Income from operations(1) for the Fund was $4.4 million for the quarter compared with $2.2 million for the third quarter of 2006, reflecting higher revenue of $10.1 million due to the Fund's expanded portfolio partially offset by a $4.6 million increase in operating costs due to a full quarter of results from the newly acquired assets as well as higher commodity rates and gas transportation costs. Administration expenses were consistent with the prior year's period as a reduction in the incentive fee was offset by a full quarter of results from the new assets and higher management fees and cost reimbursement charges. Depreciation and amortization charges increased by $3.4 million, reflecting the impact of the newly acquired assets.

The Fund's distributable cash(2) was $9.0 million ($0.180 per unit) compared with $6.9 million ($0.231 per unit) in the same quarter last year. Declared distributions to unitholders for the quarter were $12.9 million ($0.257 per unit) compared with $7.7 million ($0.255 per unit) in the same period last year, representing a payout ratio of 143% (2006 - 110%). The higher payout ratio reflects the seasonality associated with of the Fund's power assets. Distributions to unitholders are paid from cash flows from operations and unrestricted cash balances.

Total power production for the quarter was 524,319 MWh compared with 306,436 MWh in the same period last year due to the contribution from the Fund's new assets. Cardinal experienced high availability as did the Fund's hydro power facilities, which benefited from increased water flows. This performance was partially offset by lower than expected production at the Erie Shores Wind Farm due to atypically low wind speeds during the summer months.

The Fund owns an indirect 45% interest in Leisureworld Senior Care LP ("Leisureworld"), which is accounted for as an equity investment. Leisureworld achieved a 3.9% increase in revenue and an 11.9% increase in income from operations, reflecting the impact of improved occupancy and greater use of preferred accommodation across the portfolio as well as increased government funding. Average total occupancy for the quarter was 98.4% (2006 - 95.7%). Average preferred occupancy was 84.0% in the quarter (2006 - 80.8%). During the quarter, Leisureworld reached an agreement to acquire seven Class C long-term care homes from Counsel Corp. The acquisition, which is subject to approval by the Ministry of Health and Long-Term Care, will add 1,127 beds to Leisureworld's portfolio.

As at September 30, 2007, the Fund had working capital of $24.5 million, an uncommitted cash balance of $3.2 million and fully funded general, major maintenance and capital expenditure reserve accounts. The Fund is conservatively leveraged, with a debt to capitalization ratio of 41.8%.

Mr. Smith continued, "Our outlook for the remainder of fiscal 2007 is positive as our power facilities enter a seasonally high period of production. Leisureworld is expected to continue to maximize occupancy and preferred accommodation in its homes and to benefit from increased government funding. We also expect to realize increasing synergies through the fourth quarter of 2007 as we continue the rationalization of Fund administrative expenses following the acquisition of Clean Power Income Fund in late June. In addition, we have significant financial capacity for continuing growth, including a $75-million revolving credit facility earmarked for acquisitions that will further diversify our portfolio and enhance the Fund's cash flow profile."

The Fund anticipates achieving an annual payout ratio of approximately 95% in 2007, providing unitholders with stability and the potential for growth. Management expects the return of capital portion of distributions to be approximately 70% for the 2007 fiscal year, based on current operations and barring any significant external shocks.

The Fund also announced the resignation of Shemara Wikramanayake from the Fund's Board of Trustees as she is returning to Australia to assume a new role with Macquarie Group Limited ("Macquarie"). Ms. Wikramanayake has represented Macquarie Power Management Limited ("MPML" or the "Manager"), which is a wholly-owned subsidiary of Macquarie Group Limited, on the Board of Trustees since late 2005. Management extends thanks to Ms. Wikramanayake for her valuable contribution to the Fund's growth and success. The Manager's new representative on the Board of Trustees is Stephen Mentzines, who is a managing director of Macquarie and most recently served as the Chief Operating Officer for Macquarie's IB Funds division where he was responsible for developing and supporting new funds globally. Mr. Mentzines has assumed the leadership of Macquarie's IB Funds division in North America.

(1) Income from operations refers to income before net interest, foreign exchange losses, share of losses from long-term investments, unrealized gains (losses) on swap contracts and on embedded derivatives in gas purchase contracts.

(2) Distributable cash is cash flows from operating activities after removing changes in working capital and reflecting the impacts of releases from maintenance reserves, allocations to major maintenance and capital expenditure reserves, non-discretionary payments and receipts and distributions from Leisureworld.

Conference Call and Webcast

The Fund will hold a conference call (with accompanying slides) to discuss the third quarter results on Thursday, November 8, 2007 at 8:30 a.m. ET. The conference call will be accessible via webcast (with accompanying slides) through the Fund's website at www.macquarie.com/mpt and by telephone at 416-641-6125 (Canada) or 1-866-542-4236 (North America). A replay of the call will be available until November 22, 2007 by dialling 416-695-5800 or 1-800-408-3053 and entering the passcode 3238573.

Analyst Day

The Fund will host its 2007 Analyst Day on November 15, 2007. The event will take place at The Albany Club, located at 91 King Street East, in Toronto, Ontario, commencing at 9:30 a.m. ET. For more information or to RSVP, please visit the event registration site at http://www.macquarie.com.au/ibg/ibftoronto/MPTAnalystDay/rsvp.htm. MPT will also provide a live and archived audio webcast of the Analyst Day with accompanying slide presentations. The event will be available in the Investor Centre section of the Fund's website.

Distribution Reinvestment Plan (DRIP)

Eligible unitholders may elect to participate in the Fund's Distribution Reinvestment Plan. For more information about the DRIP, please visit the Fund's website at www.macquarie.com/mpt.

About the Fund

Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets in North America with an emphasis on power infrastructure. MPT's strategy is to acquire and actively manage a diverse, high quality portfolio of infrastructure assets to improve their financial performance and provide growing and sustainable distributions to unitholders. MPT's portfolio includes investments in gas cogeneration, wind, hydro and biomass power generating facilities, totalling 459 MW of installed capacity, and a 45% indirect interest in Leisureworld Senior Care LP, a leading provider of long-term care, or social infrastructure, in Ontario. MPT is managed by a wholly-owned subsidiary of Macquarie Group Limited. Please visit www.macquarie.com/mpt for additional information.

Forward-looking Statements

Certain statements in this news release may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Forward-looking statements use such words as "may", "will", "anticipate", "believe", "expect", "plan" and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: risks associated with the Fund's gas cogeneration, wind, hydro and biomass power generating assets and the power industry generally; risks associated with MPT's interest in Leisureworld and the long-term care sector; risks associated with the structure of MPT; and risks associated with business, regulatory and economic conditions. The risks and uncertainties described above are not exhaustive and other events and risk factors including risk factors disclosed in MPT's filings with Canadian securities regulatory authorities could cause actual results to differ materially from the results discussed in the forward-looking statements.

The forward-looking statements contained in this news release are based upon information currently available and what the Fund currently believes are reasonable assumptions. However, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and the Fund and the Manager assume no obligation to update or revise them to reflect new events or circumstances. The Fund cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

Non-GAAP Financial Measures

"Income from operations" and "distributable cash" do not have any standardized meaning under Canadian Generally Accepted Accounting Principles (GAAP). Management believes they are useful measures of performance as they provide investors with indications of income from operations and the amount of cash available for distribution to unitholders. The Fund's method of calculating "income from operations" and "distributable cash" may not be comparable to other similarly named calculations.

Macquarie Power & Infrastructure Income Fund is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power & Infrastructure Income Fund's obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.

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