Retrocom Mid-Market Real Estate Investment Trust

Retrocom Mid-Market Real Estate Investment Trust

November 14, 2007 17:00 ET

Retrocom Mid-Market REIT Announces Quarterly Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 14, 2007) -


Attention Business/Financial Editors

Retrocom Mid-Market Real Estate Investment Trust (TSX: RMM.UN) (the "REIT") announced today its financial results for the three and nine months ended September 30, 2007.

- Secured operating line decreased by $15.8 million from $29.7 million at December 31, 2006 to $13.9 million on September 30, 2007.

- The sale of six Kingston, ON properties closed on October 5, 2007 for gross proceeds of $12.5 million, which were used to repay mortgages and reduce the REIT's exposure to short-term financing to zero.

- As a result of applying the proceeds of sales to reduce debt, the REIT has decreased its leverage ratio from 63.3% in the fourth quarter of 2006 to 59.8% in the third quarter of 2007, which includes the convertible debenture debt. This previously stated goal to reduce debt is expected to allow the REIT flexibility to reinvest in the portfolio through Management's aggressive leasing strategy and repositioning plans. Based on the Trust's current financial position, should it exercise full debt to gross book value borrowing potential, approximately $122.5 million could be made available to fund further acquisitions.

- Distributions paid to Unitholders in the third quarter of 2007 were 112% of Distributable Income and 108% period-to-date, compared to 91% and 93% in the same periods last year. After adjusting in Q3 2007 for one-time charges and changes in estimates related to prior periods, the DI Payout Ratio for the third quarter of 2007 is 92% and 101% period-to-date.

- The occupancy rate for the third quarter of 2007 decreased slightly to 90.9% from 91.2% reported in the second quarter of 2007. Management expects that the REIT will continue to experience short- term fluctuations in occupancy and financial results while certain properties are repositioned and major leasing plans are executed.

- Net Operating Income was $6.8 million for the third quarter and $20.5 million period-to-date, down from $7.2 million and $20.9 million reported for the same periods last year. This is primarily due to the positive impact of an increase in ownership (from 50% to 100%) of Staples and Lansdowne Plazas purchased in the first quarter of 2007, offset by prior year recovery adjustments, vacancy, and repositioning time-lag.

- Trust expenses decreased $0.2 million for the quarter and $1.7 million period-to-date from comparative periods in 2006 due to significant transaction fees incurred in 2006 and a reduction in asset management fees following the Trust's decision to internalize its asset management function in Q1 2006, despite one-time G&A charges of $0.2 million this quarter.

Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2007 2006(i) 2007 2006(i)
(unaudited) (unaudited) (unaudited) (unaudited)
($000's) ($000's) ($000's) ($000's)

Rental Revenue and
Other Income $13,417 $13,234 $40,856 $39,561
Property Operating
Expenses 6,637 6,002 20,313 18,663

Net Operating
Income 6,780 6,232 20,543 20,898
Trust Expenses 791 1,030 2,645 4,368

Income before
Depreciation &
Amortization 5,989 6,202 17,898 16,530
Interest 3,413 3,329 10,385 9,823
Depreciation and
Amortization 4,845 4,737 14,202 14,363

Loss Before
Operations (2,269) (1,864) (6,689) (7,656)
Income (Loss) from
Operations 217 (267) 22,614 (4,526)

Net Income (Loss)
for the Period and
Income (Loss) ($2,052) ($2,131) $15,925 ($12,182)

Loss Per Unit
(Before Discontinued
Operations) ($0.12) ($0.14) ($0.36) ($0.41)

Income(ii) $2,473 $4,039 $7,685 $11,788
Distributable Income
per Unit:
Basic $0.13 $0.22 $0.41 $0.64
Fully Diluted $0.10 $0.17 $0.31 $0.48
Distributable Income
Payout Ratio 1.12 0.91 1.08 0.93

Funds From
Operations(ii) $2,879 $3,782 $8,757 $9,857
Funds From Operations:
Basic $0.16 $0.20 $0.47 $0.53
Fully Diluted $0.12 $0.16 $0.36 $0.40
Funds From Operations
Payout Ratio 0.97 0.97 0.95 1.11

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 operations.

(ii)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

Overall in 2007, the REIT has signed renewals for approximately 144 existing tenancies representing 710,718 square feet of existing tenancies, at a weighted average net rent of $10.28 per square foot, an increase of $1.20 per square foot over net rent of $9.08 paid by the same tenants under the expiring lease. In addition, 39 new tenancies were signed this year, representing 120,497 square feet, while 36 tenants confirmed the surrender of 143,984 square feet of leased space (including over 73,000 square feet of anchor space). The weighted average net rent for new tenants was $13.60 per square foot, and $8.85 for vacating tenants. This difference is primarily due to the greater amount of square footage attributable to anchor tenant space at lower lease rates becoming vacant, while vacant higher yielding CRU space and anchor space was filled. Period-to-date rental increases from signed renewals and new tenancies have resulted in a $1.47 increase in weighted average net rent to $10.02 from $8.55 per square foot.

The REIT continues to implement its internal restructuring plan, which to date encompasses a number of property dispositions, acquisitions, refinancings and an aggressive leasing strategy, with a focus on improving efficiencies and taking advantage of opportunities in the marketplace as well as within the REIT portfolio. "We are encouraged by the increase in the net rent per foot for new tenants and renewals and continue to work on larger leasing transactions and repositioning," said David Fiume, President & CEO.

Fiume continued, "Our plan was to first stabilize the balance sheet by lowering our debt and improving our cash position to enable the REIT to have the financial capability to execute on our leasing and intensification program. Due to the time lag between repositioning and leasing and the tenant occupying the space and paying rent, there will be fluctuations in results as we execute on these plans. For example, we are pleased to announce that a national tenant has signed a conditional lease for approximately 25,000 square feet at Mountainview Mall, and when occupancy commences in the second quarter of 2008, the mall's occupancy will be 96%, based on the current situation. We are pleased at the traction our strategy has had so far, and are looking forward to continuing the implementation of our plan and future leasing successes."

Investor Conference Call

A conference call to discuss the results will be held Thursday November 15, 2007, at 10:00 AM EST 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: 416-915-9618
Toll-Free Access: 1-866-215-8862

Local Access: 416-915-1028
Toll-Free Access: 1-866-244-4494, passcode: 15043

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.

Contact Information

  • Retrocom Mid-Market Real Estate Investment Trust
    David Fiume
    Chief Executive Officer
    (416) 741-7999
    (416) 741-7993