Retrocom Mid-Market Real Estate Investment Trust

Retrocom Mid-Market Real Estate Investment Trust

March 30, 2007 19:53 ET

Retrocom Mid-Market REIT Announces Annual Financial Results

TORONTO, ONTARIO--(Marketwire - March 30, 2007) -


Attention Business/Financial Editors:

Retrocom Mid-Market Real Estate Investment Trust (the "REIT") (TSX: RMM.UN) announced today its financial results for the year ended December 31, 2006.

Financial Highlights

- Net Operating Income for the year was $31.3 million, versus
$22.4 million achieved on last year's results, primarily due to
the acquisition of seven income producing properties in the third
quarter of 2005.
- Trust expenses, excluding one time "Transaction" costs of
$3.2 million in 2006, are almost one million lower than 2005.
- As a result of the REIT's aggressive leasing strategy, deferred
leasing costs of approximately $4.7 million were incurred over the
twelve month period ended December 31, 2006, of which $2.2 million
were incurred in the fourth quarter of 2006.
- Through proactive asset management and its leasing plan, the
occupancy rate at year end has increased to 92.8%, up from 92% in
- The average cost of debt is 6.0%, down from 6.1% at the end of
last year.

Actual Actual Actual Actual
three three twelve 285 Day
months months months Period
ended ended ended ended
December December December December
31, 2006 31, 2005(i) 31, 2006 31, 2005(i)

(unaudited) (unaudited) (audited) (audited)

($000's) ($000's) ($000's) ($000's)
Rental Revenue and Other
Income $15,483 $15,241 $59,177 $42,322
Property Operating Expenses $7,495 $7,702 $27,882 $19,963
Net Operating Income $7,988 $7,539 $31,295 $22,359
Trust Expenses $1,679 $1,532 $6,047 $3,741
Income before Interest,
Depreciation & Amortization $6,309 $6,007 $25,248 $18,618
Interest $3,723 $3,588 $14,602 $9,966
Depreciation and
Amortization $5,191 $5,798 21,123 $15,662
Loss Before Discontinued
Operations ($2,605) ($3,379) ($10,477) ($7,010)
Loss from Discontinued
Operations ($69) ($1,304) ($4,379) ($4,175)
Loss ($2,674) ($4,683) ($14,856) ($11,185)

Loss Per Unit (Before
Discontinued Operations) (0.14) (0.18) (0.57) (0.47)

Distributable Income(xx) $3,479 $2,595 $15,077 $12,097
Distributable Income per
Basic $0.19 $0.14 $0.82 $0.81
Fully Diluted $0.14 $0.11 $0.62 $0.69
Distributable Income
Payout Ratio 96% 165% 95% 126%

Funds From Operations(xx) $2,956 $2,371 $12,814 $12,059
Funds From Operations:
Basic $0.16 $0.13 $0.69 $0.81
Fully Diluted $0.12 $0.10 $0.53 $0.69
Funds From Operations
Payout Ratio 113% 180% 112% 126%

Full Financial Results will be available on SEDAR ( as well
as the Investors Relations section of the REIT's website

(i) Previously reported results have been reclassified for discontinued

(xx) The reconciliations of Distributable Income and Funds From
Operations to Loss for the Year are included in the REIT's MD&A

The REIT's management considers Distributable Income and Funds From
Operations to be an indicative measure in evaluating the REIT's
performance. The table above, however, 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.

Operating Strategy Highlights

The REIT continues to implement its aggressive leasing strategy and focus
on improving efficiencies and taking advantage of opportunities in the
marketplace as well as within the REIT portfolio. These opportunities consist
primarily of the repositioning of certain properties.

Overall in 2006, the REIT has signed renewals for approximately
205 existing tenancies representing 560,000 square feet of existing tenancies,
at a weighted average net rent of $11.52 per square foot, an increase of
$0.58 per square foot. In addition, 67 new tenancies were signed this year,
representing 246,000 square feet, including several new anchor tenants, while
61 tenants confirmed the surrender of 180,000 square feet of leased space. The
weighted average net rent for new tenants was $9.13 per square foot, and $9.94
for vacating tenants. This difference is primarily due to the greater number
of large anchor tenants coming in as new tenants versus vacating.
Year-to-date, rental increases from signed renewals and new tenancies, net of
ending tenancies, have resulted in a $0.93 increase in the weighted average
net rent, from $8.06 to $8.99 per square foot.

Subsequent Events

From January 1, 2007 up to the date of this News Release, the REIT has
been actively engaged in acquisitions and dispositions of several properties,
as outlined below.

Acquisition/Disposition of Remaining 50% Partnership Interest:

As detailed in a press release on March 8, 2007, the REIT acquired the
remaining 50% interest in two properties pursuant to buy-out provisions
contained in each of the REIT's co-ownership agreements with Plazacorp Retail
Properties Ltd.; Staples Plaza in Dartmouth, Nova Scotia; and Lansdowne Place
in Saint John, New Brunswick. In a similar transaction, the REIT sold its 50%
interest in Les Promenades St. Francois, located in Laval, Quebec. The
purchase transactions required approximately $6.0 million, while the sale
transaction generated approximately $1.1 million in proceeds. The net cash
requirement of approximately $4.9 million (plus costs) was funded primarily
through the proceeds of sale transactions that closed prior to this
acquisition. The REIT is pleased to have acquired the remaining interests in
those properties at pricing that is immediately accretive to its Unitholders.

Disposition of Properties to Sunstone Realty Group:

As the REIT announced on March 2, 2007, the sale of three properties
closed, with gross proceeds of approximately $40.4 million, and net proceeds
(purchase price less secured debt, excluding closing cost) of approximately
$21.3 million. The sale of these properties was previously announced on
January 2, 2007. The REIT anticipates closing the remaining three properties
in the coming weeks and estimates the remaining net proceeds from the
transactions will be approximately $1.4 million (less costs). All of these
properties are classified as discontinued operations in the REIT's
December 31, 2006 financial statements.

Disposition of Driftwood Mall, Courtenay, British Columbia:

As the REIT announced on February 21, 2007, it entered into a conditional
agreement with a purchaser to sell Driftwood Mall, located in Courtenay, B.C.
This agreement is conditional on financing and final due diligence and is
expected to close in late May, 2007 and provide net proceeds of approximately
$8.9 million (less costs).

Disposition of 135 Queens Plate Drive, Toronto, Ontario:

As the REIT announced on March 23, 2007, it has entered into a
conditional agreement with a purchaser to sell its main office building in the
REIT's portfolio; 135 Queens Plate Drive, Toronto. This property is classified
as a discontinued operation in the REIT's financial statements. The agreement
is conditional on financing and final due diligence and is expected to close
in late May, 2007.

The gross proceeds from this transaction amount to approximately
$12.5 million, which will be used to discharge the mortgage in the amount of
approximately $2.5 million, and the remainder of the net proceeds, estimated
to be approximately $10.0 million (less costs), will be used to reduce short
term debt, to invest in the balance of the portfolio, and potentially to buy
back units through the normal course issuer bid that was recently approved by
the TSX (see below).

Normal Course Issuer Bid and Suspension of Distribution Reinvestment Plan:

On March 21, 2007, the REIT announced that the Toronto Stock Exchange
(TSX) approved its application to make a Normal Course Issuer Bid for the
repurchase of its units. Pursuant to the bid, the REIT will be entitled to
repurchase up to 1,797,914 of its units (representing approximately 10% of the
REIT's public float of outstanding units as at March 20, 2007) over the
twelve-month period commencing on March 23, 2007.

The Trustees of the REIT have concluded that the ongoing purchase by the
REIT of certain of its units, in accordance with the Bid, is a sound
investment opportunity for the REIT based on the current market price for its
units and would be in the best interests of the REIT and its Unitholders. All
purchases will be made through the facilities of the TSX, and the units
purchased under the bid will be cancelled.

Also announced in conjunction with its repurchase of units, the REIT has
suspended until further notice its Unitholder Distribution Reinvestment Plan
("DRIP") effective immediately. For Unitholders that have been participating
in the DRIP, all future distributions made by the REIT will now automatically
be paid in cash and will no longer be used to purchase additional units of the

Extension of REIT's Operating Line

The REIT reached an agreement with its lender providing the $35 million
revolving operating line to extend the maturity date of the credit facility to
March 31, 2008 on similar terms, except as follows. In keeping with the REIT's
plan to reduce its dependence on this short-term facility, the terms of the
credit facility include a phased reduction of the credit limit from
$28 million on March 31, 2007 to $15 million by Sept 30, 2007.

Investor Conference Call

A conference call to discuss the results will be held Tuesday April 3,
2007, at 10:00 AM ET and will be followed by a question and answer period. The
phone numbers for those who wish to participate in the question and answer
period are as follows:

Live Conference Access information:
Local Access: 416-915-1028
Toll-Free Access: 1-866-244-4494

About Retrocom Mid-Market REIT

Retrocom Mid-Market REIT is an Ontario unincorporated open-end real
estate investment trust which focuses on owning and acquiring mid-market
retail properties in primary and secondary cities 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.

%SEDAR: 00020305E

Contact Information

  • Retrocom Mid-Market REIT
    David Fiume
    Chief Executive Officer
    (416) 741-7999
    (416) 741-7993 (FAX)