Retrocom Mid-Market Real Estate Investment Trust
TSX : RMM.UN

Retrocom Mid-Market Real Estate Investment Trust

May 14, 2009 17:46 ET

Retrocom Mid-Market REIT Announces First Quarter 2009 Financial Results and the Waiving of Conditions of the Previously Announced Sale of Two Properties

TORONTO, ONTARIO--(Marketwire - May 14, 2009) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN SOURCE

Retrocom Mid-Market Real Estate Investment Trust (TSX:RMM.UN) announced today its continued solid financial position with the release of its financial results for the First Quarter of 2009 and the waiving of conditions on its previously announced sale of two properties.

Highlights

- Completed a $5 million new financing secured on one of the four properties purchased in July 2008 at an interest rate of 5.75% per annum; and a new approximately $5 million operating line secured on another one of the four properties purchased in July 2008;

- Average cost of mortgage debt at the end of first quarter is 6.29%, as compared with 6.25% at year end. The REIT had a leverage ratio is 55.0% inclusive of all debentures and mortgages. At quarter end, the REIT had cash on hand of approximately $11.6 million and unused operating lines capacity of approximately $15 million;

- At March 31, 2009, the REIT's occupancy rate had decreased to 90.0% from 92.5% in Q4-2008 mainly as a result of two previously disclosed vacating tenancies impacting occupancy by 1.8%. In addition, a further reduction of 0.7% occured due to seasonality and the slowing economy. The combined gross rent from these tenants is approximately $76,000 a quarter, the financial impact of which has been reflected in the Q1 results. Overall average net rent per square foot has increased for the portfolio from $9.11 at December 31, 2008 to $9.23 at March 31, 2009;

- Net Operating Income ("NOI") for the quarter was $7.7 million, compared to $6.7 million achieved on Q1 2008 results. The $1.0 million increase in NOI is primarily the result of the addition of four properties purchased in July 2008;

- Funds From Operations ("FFO") increased for the quarter to $3.5 million or $0.13 per unit (adjusted for conversion of non-controlling interest) as compared to $2.8 million or $0.15 per unit in Q1 2008. This increase reflects primarily the impact of increased FFO of $1.0 million from the addition of the four properties purchased in July 2008 offset by $0.2 million higher interest expense and reduced FFO of $0.1 million resulting from the sale of properties. The FFO payout ratio in this first quarter of 2009 was 88% on an accrual and cash basis, as compared to 97% in the first quarter of 2008.

David Fiume, President and CEO said, "Although we are seeing a softening of the leasing market due to seasonal fluctuations and the slowdown in the economy, the REIT continues to solidify its financial position with further borrowings, an additional line of credit of approximately $5 million and the sale of non-core properties adding to a growing cash balance. We feel that we are well positioned to take advantage of future tenancies and other opportunities as they arise."



Financial Highlights
Actual three Actual three
months ended months ended
(in thousands of dollars except per unit March 31 March 31
amounts and ratios) 2009 2008(1)
(unaudited) (unaudited)

Rental revenue and other income 15,449 13,469

Property operating expenses 7,769 6,794
------------------------------

Net operating income 7,680 6,675

Trust expenses 758 854
------------------------------

Income before interest, depreciation &
amortization 6,922 5,821

Interest 3,427 3,172

Depreciation & amortization 5,012 4,476
------------------------------
Loss before income tax, non-controlling
interest and discontinued operations (1,517) (1,827)

Future income tax recovery 1,440 -
------------------------------
Income (loss) before non-controlling interest
and discontinued operations (77) (1,827)

Non-controlling interest 501 -
------------------------------

Income (loss) before discontinued operations 424 (1,827)

Gain (loss) from discontinued operations 28 371
------------------------------

Net income (loss) 452 (1,456)

Funds From Operations(2) 3,537 2,856

Funds From Operations per Unit (basic-adjusted
for conversion of non-controlling interest) 0.13 0.15

Funds From Operations Payout Ratio Accrual
Basis 0.88 0.97

Distributions -accrual basis 3,108 2,778


Full Financial Results will be available on SEDAR (www.sedar.com) as well as the Investors Relations section of the REIT's website (http://www.rmmreit.com/investor_finance.htm).

(1) Previously reported results have been reclassified for discontinued operations. Results of 2008 have been restated to reflect a change in accounting policy that was adopted on a retroactive basis.

(2) The reconciliations Funds From Operations to Net income (loss) after Discontinued Operations are included in the REIT's MD&A

The REIT's management considers 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.

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 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.

Contact Information

  • Retrocom Mid-Market Real Estate Investment Trust
    David Fiume
    Chief Executive Officer
    (416) 741-7999
    (416) 741-7993 (FAX)
    Email: dfiume@rmmreit.com