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

Retrocom Mid-Market Real Estate Investment Trust

August 14, 2008 17:05 ET

Retrocom Mid-Market REIT Announces Second Quarter 2008 Financial Results

TORONTO, ONTARIO--(Marketwire - Aug. 14, 2008) -

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

Retrocom Mid-Market Real Estate Investment Trust (the "REIT")(TSX:RMM.UN) announced today its financial results for the Second Quarter of 2008.

Highlights

- On July 8, 2008 the REIT closed the purchase of $55 million of assets in the Greater Toronto Area ("GTA") through the assumption of debt and the issuance of equity, 9.1 million Class B units of Retrocom Limited Partnership, resulting in a change of effective control of the REIT (approximately 38% represented by one investor), and a significant relationship with SmartCentres.

- The REIT has entered into a property management agreement with Arcturus Limited Partnership to manage all of the REIT properties owned at June 30, 2008. SmartCentres will perform the value added functions of leasing, development and re-development of the entire portfolio as well as manage the four GTA properties acquired.

- The REIT has entered into lease transactions with new tenants for 109,490 square feet of space being occupied in 2008, a net absorption of 59,927 square feet.

- At June 30, 2008, the REIT's occupancy rate has increased to 91.5% from 90.9% in Q1-2008.

- Refinancing of $30 million debenture on July 8, 2008.

- Refinancing of Orangeville Mall for $17.5 million at approximately 6.75%, on August 1, 2008, with a new lender.

- The REIT's average cost of debt at June 30, 2008 was 6.0%, consistent with the prior quarter and year end, and its June 30, 2008 leverage ratio was a conservative 58.2% inclusive of all debentures and mortgages. At quarter end, the REIT had cash on hand of $9.4 million and an unused demand line draw capacity of $5 million. The impact of the above noted purchase transaction, the purchase of $55 million of properties and the assumption of $9 million of debt, has resulted in a decrease in the leverage ratio by approximately 5%.

- Funds From Operations ("FFO") increased slightly in the second quarter of 2008 at $3.2 million or $0.18 per unit as compared to $0.17 per unit in the second quarter of 2007. A decrease in net property operating costs, lower debt and trust expenses in the current quarter were offset by a drop in income generated by the discontinued assets versus 2007.

- Net Operating Income for the quarter was $7.3 million, versus $7.1 million achieved on the same quarter last year. Results were consistent with the second quarter of 2007. The $0.2 million increase reflects mainly timing variances that occur quarter-over-quarter with cost recovery estimates based on lease terms and costs.



Financial Highlights:
---------------------
---------------------

Actual six Actual six
Actual three Actual three months months
months ended months ended ended ended
June 30, June 30, June 30, June 30,
2008 2007(i) 2008 2007(i)

(unaudited) (unaudited) (unaudited) (unaudited)
(in thousands of
dollars except per
unit amounts
and ratios)

Rental Revenue and
Other Income $13,881 $13,898 $27,927 $27,231
Property Operating
Expenses 6,566 6,782 13,746 13,589
----------------------------------------------------
Net Operating Income 7,315 7,116 14,181 13,642
Trust Expenses 634 861 1,488 1,854
----------------------------------------------------
Income before
Interest,
Depreciation &
Amortization 6,681 6,255 12,693 11,788
Interest 3,328 3,412 6,679 7,057
Depreciation and
Amortization 4,429 4,724 8,974 9,293
----------------------------------------------------
Loss before
Discontinued
Operations (1,076) (1,881) (2,960) (4,562)
Gain (loss) from
Discontinued
Operations (118) 9,065 279 22,539
----------------------------------------------------
Net income (loss)
after Discontinued
Operations $(1,194) $7,184 $(2,681) $17,977
----------------------------------------------------

Loss Per Unit
(before Discontinued
Operations) $(0.06) $(0.10) $(0.16) $(0.24)



Funds From
Operations(ii) $3,245 $3,155 $5,956 $5,867
Funds From Operations
per Unit:
Basic $0.18 $0.17 $0.32 $0.32
Funds From
Operations Payout
Ratio Accrual Basis 86% 88% 93% 95%

Distributions -
Accrual basis $2,778 $2,778 $5,555 $5,555



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).

(i)Previously reported results have been reclassified for discontinued operations.

(ii)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