RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust

November 01, 2007 11:00 ET

RioCan Real Estate Investment Trust Announces Third Quarter 2007 Results

HIGHLIGHTS: - Rental revenue increased 10% for the quarter and 13% for the nine months - Funds from operations ("FFO") increased 5% for the quarter and 8% for the nine months - Monthly distribution increased to 11.25 cents per unit - Issuance of $120 million Series K senior unsecured debentures

TORONTO, ONTARIO--(Marketwire - Nov. 1, 2007) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced its financial results for the three and nine months ended September 30, 2007.

Financial Highlights

RioCan reported net earnings for the quarter ended September 30, 2007 of $35,917,000 ($0.17 earnings per unit basic and diluted) as compared to net earnings of $41,763,000 ($0.21 per unit basic and diluted) for the three months ended September 30, 2006. For the nine months ended September 30, 2007, RioCan reported a net loss of $32,790,000 ($0.16 loss per unit basic and diluted) as compared to net earnings of $120,377,000 ($0.61 per unit basic and diluted) for the comparable period in 2006.

RioCan's net earnings for the third quarter and its net loss for the nine months ended September 30, 2007 include non-cash charges for future income taxes of $7 million and $157 million respectively. These non-cash charges to earnings relates to RioCan's share of the temporary differences between the accounting and tax basis of RioCan's assets and liabilities. These charges have no impact on RioCan's cash flows or distributions. These charges 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-C52 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 qualifies 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 September 30, 2007, rental revenue was $160,559,000 as compared to $145,339,000 for the three months ended September 30, 2006. Rental revenue for the nine months ended September 30, 2007 was $483,824,000 versus $429,291,000 for the comparable period in 2006.

FFO for the quarter ended September 30, 2007 was $76,029,000 ($0.36 per unit) as compared to $72,533,000 ($0.36 per unit) for the three months ended September 30, 2006. For the nine months ended September 30, 2007, FFO was $227,120,000 ($1.09 per unit) as compared to $209,440,000 ($1.06 per unit) for the nine months ended September 30, 2006.

RioCan's Consolidated Financial Statements, Management's Discussion and Analysis and a Supplemental Information Package for the three and nine months ended September 30, 2007 are available on RioCan's website at

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.

Portfolio Stability

At September 30, 2007:

- Portfolio occupancy was 97.6%;

- 65.1% 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);

- 82.6% of annualized rental revenue was derived from, and 83.1% of space was leased to, national and anchor tenants;

- Approximately 49.7% of annualized rental revenue was derived from its 25 largest tenants; and

- No individual tenant comprised more than 5.7% of annualized rental revenue.

Development Activity

With over a billion dollars at cost of ongoing developments, project activities remained strong throughout the third quarter as RioCan continues to focus on its development program. At the end of the third quarter, approximately 8 million square feet was under development, of which RioCan's ownership interest was approximately 3.4 million square feet. Third quarter highlights include:

- Oakville, Ontario - RioCan Centre Burloak, located at the intersection of Burloak Drive and Queen Elizabeth Way, is a 552,000 square foot new format retail centre anchored by Home Depot (retailer owned), SilverCity Oakville Cinemas, Longo's and Home Outfitters. This joint venture with the Canada Pension Plan ("CPP") Investment Board is 100% leased with approximately 92% to be occupied by national and regional retailers.

Construction is well underway and store openings are now being phased-in. A number of retailers have recently opened for business including Home Depot, Nike, Sony and Tommy Hilfiger. Additional retailers opening by the end of 2007 include SilverCity Oakville Cinemas, Suzy Shier, Guess, La Vie En Rose, Reitmans, Le Chateau, Urban Barn, Benix & Co., Bowring and many more. Other retailers such as Longo's, Home Outfitters, Urban Planet, Kitchen Stuff Plus, Structube, Solutions, Kelsey's, Montana's and Swiss Chalet will be opening in 2008.

- Toronto, Ontario - On July 4, 2007, RioCan received the Ontario Municipal Board's decision approving the mixed-use redevelopment of 1717 Avenue Road. The development includes the intensification of an existing RioCan owned retail facility. Upon completion, the new 6-storey building will total approximately 170,000 square feet, including 5-storeys of residential space, along with approximately 25,000 square feet of street retail space. The presentation centre for the residential component, which is being developed and marketed by Tribute Communities, recently opened.

- Edmonton, Alberta - Construction is ongoing at RioCan Meadows, another development joint venture with CPP Investment Board. Upon completion, this 502,000 square foot new format retail centre will be anchored by a Real Canadian Superstore (retailer owned) and Home Depot. Some retailers that recently opened for business include Winners, Dollarama, TD Canada Trust and Wok Box. Additional retailers opening later this year and in 2008 include Petsmart, Reitmans, Laura, Scotia Bank and Swiss Chalet.

- Calgary, Alberta - Also moving towards completion is the construction of 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 and Shoppers Drug Mart, both of which are expected to open in spring 2008. This joint venture with Trinity Development Group Inc. and CPP Investment Board boasts a number of national retailers, many of which are already open for business, including Winners, HomeSense, Royal Bank, Linens 'N Things, Golf Town, Michaels, The Shoe Company, Mark's Work Wearhouse, LaSenza, Thyme Maternity and Sport Chek. Additional retailers such as EB Games, Telus and Bell Mobility are anticipated to open later this year.

Increase in Monthly Distribution

On September 17, 2007, RioCan announced that it would increase 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 will increase RioCan's annualized distribution to $1.35 per unit. RioCan has increased its distributions to unitholders every year since its inception almost 14 years ago.

Financing Transaction

On September 11, 2007, the Trust 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.

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Friday, November 2, 2007 at 10:00 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 416-641-6125 or 1-866-542-4236. If you cannot participate in the live mode, a replay will be available until December 31, 2007. To access the replay, please dial 416-695-5800 or 1-800-408-3053 and enter passcode 3237311#.

Scheduled speakers are Edward Sonshine, Q.C., President and Chief Executive Officer, Fred Waks, Senior Vice President and Chief Operating Officer, and Robert Wolf, Chief Financial Officer. 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 and click on the link for the webcast. The webcast will be archived 24 hours after the end of the call and can be accessed for 120 days.

About RioCan

RioCan is Canada's largest real estate investment trust with a total market capitalization of approximately $8 billion. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 207 retail properties, including 12 under development, containing an aggregate of over 53 million square feet. For further information, please refer to RioCan's website at

Contact Information

  • RioCan Real Estate Investment Trust
    Edward Sonshine, Q.C.
    President & CEO
    (416) 866-3018