RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

November 03, 2006 10:51 ET

RioCan Real Estate Investment Trust Announces Third Quarter 2006 Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 3, 2006) - RioCan Real Estate Investment Trust ("RioCan")(TSX:REI.UN) -

HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006:

- Portfolio occupancy hits a new all-time high of 97.5%

- Monthly distribution increases to unitholders, the twelfth straight consecutive yearly increase

- First component of agreement to sell 50% interest in three developments to the Canada Pension Plan Investment Board is completed

RioCan Real Estate Investment Trust ("RioCan") today announced its financial results for the three and nine months ended September 30, 2006.

Financial Highlights

For the nine months ended September 30, 2006, RioCan reported net earnings of $120,377,000 ($0.61 per unit basic and diluted) as compared to $95,266,000 ($0.49 per unit basic and diluted) for the comparable period in 2005. Net earnings for the quarter ended September 30, 2006, increased to $41,763,000 ($0.21 per unit basic and diluted) from $40,142,000 ($0.21 per unit basic and diluted) for the three months ended September 30, 2005.

Total rental revenue for the nine months ended September 30, 2006, was $429,291,000 versus $424,790,000 for the comparable period in 2005. For the quarter ended September 30, 2006, total rental revenue was $145,339,000 as compared to $134,197,000 for the three months ended September 30, 2005.

Recurring distributable income ("RDI") for the nine months ended September 30, 2006, was $209,019,000 ($1.057 per unit) as compared to $208,994,000 ($1.079 per unit) for the comparable period in 2005. For the quarter ended September 30, 2006, RDI was $72,456,000 ($0.365 per unit) versus $68,680,000 ($0.352 per unit) for the three months ended September 30, 2005.

Funds from operations ("FFO") for the nine months ended September 30, 2006, increased to $209,440,000 ($1.06 per unit) from $190,903,000 ($0.99 per unit) for the comparable period in 2005. For the quarter ended September 30, 2006, FFO was $72,533,000 ($0.36 per unit) as compared to $68,974,000 ($0.36 per unit) for the three months ended September 30, 2005.

RioCan's Consolidated Financial Statements, Management's Discussion and Analysis and Supplemental Information Package for the three and nine months ended September 30, 2006, are available on RioCan's website at www.riocan.com.

Both RDI and FFO are widely accepted supplemental measures of a Canadian real estate investment trust's performance. RDI and FFO should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with the Canadian generally accepted accounting principles. RioCan's method of calculating RDI and 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, 2006:

- Portfolio occupancy was 97.5%;

- 83.1% of annualized gross rental revenue was derived from national and anchor tenants;

- No individual tenant comprised more than 6% of annualized gross rental revenue; and

- Over 62.7% of RioCan's annualized rental revenue was derived from properties located in Canada's six high growth markets (Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver).

Portfolio Activity

Although the acquisition market remains extremely competitive, RioCan was able to acquire two properties during the third quarter. Impact Plaza, located in Surrey, British Columbia, is a 134,000 square foot unenclosed shopping centre anchored by T&T Supermarket, Sleep Country and Pharmasave. Other national tenants include Moores Clothing for Men, Dollar Giant, M&M Meat Shops and Mac's Convenience Store. Cherry Hill Shopping Centre is a 74,000 square foot Loblaws anchored unenclosed shopping centre located in Fergus, Ontario.

On September 29, 2006, RioCan announced that it has completed the first component of its previously announced agreement to sell a 50% interest in three new developments located in Calgary, Edmonton and Oakville to the Canada Pension Plan Investment Board. The first component consists of approximately 168,000 square feet of newly completed retail space at RioCan Beacon Hill in Calgary, Alberta. Upon full completion, RioCan Beacon Hill will comprise approximately 800,000 square feet including Costco and Home Depot, both of whom are already open for business. Additional retailers who are already open include Winners/HomeSense, Royal Bank, Linens 'N Things, Golf Town, Michaels and The Shoe Company. The development is essentially fully leased or committed and will include other tenants such as Canadian Tire, Reitmans, Roots, TD Canada Trust, Mark's Work Wearhouse, Sport Chek, La Senza and other national retailers. All the properties are, and will continue to be, leased and managed by RioCan.

Development Program

RioCan's development program remained robust throughout the third quarter. Over 6.8 million square feet is under development in Ontario, Alberta and Quebec, of which RioCan's interest is approximately 3.5 million square feet. In addition to the 6.8 million square feet of current developments, an additional 3.9 million square feet is in the development pipeline. Third quarter activity highlights for some of these projects, which are being developed by RioCan, include:

Ajax, Ontario - RioCan has received site plan approval for the development adjacent to RioCan Durham Centre and site work is well underway. Approximately 50% of the required 65,000 cubic metres of fill have been placed, with completion of the pond retrofit program anticipated by the end of November. Construction of the buildings, which are fully pre-leased to Bank of Montreal, Nike, The Keg, 2001 Audio Video and Ardene, is expected to commence late November.

London, Ontario - RioCan has completed the rough grading and underground servicing is nearing completion at Summerside Shopping Centre, located at the intersection of Commissioners Road and Highbury Avenue. Major retailers anchoring this 180,000 square foot centre include Loblaws (retailer owned) and Rona. Construction is underway for a multi-tenant building that will feature First Choice Haircutters, Pizza Pizza, Starbuck's, Pet Valu and Dollar Blitz. Construction for Rona and Bank of Montreal will begin mid-November.

Milton, Ontario - Anchors Home Depot (retailer owned) and Galaxy Cinemas are now open for business at RioCan Centre Milton, a 291,000 square foot new format retail centre. Construction is well underway for several tenants including Sleep Country, The Beer Store, Boston Pizza, Casey's, Mr. Greek, Super Cuts and Bank of Montreal. Store openings will be phased-in over the remainder of the year and early 2007.

Oakville, Ontario - Off-site and on-site work continues at RioCan Centre Burloak, a 551,000 square foot new format retail centre located at the intersection of Burloak Drive and Queen Elizabeth Way. Upon full completion, this centre will be anchored by Home Depot (retailer owned), Cineplex Odeon, Longo's and Home Outfitters. RioCan has applied for building permits for the first six buildings and construction is expected to commence mid-November.

Edmonton, Alberta - Construction has been progressing well at RioCan Meadows, a 504,000 square foot new format retail centre located at the corner of 17th Street and Whitemud Drive. The centre will be anchored by Real Canadian Superstore (retailer owned) and Home Depot, and will be tenanted by, amongst others, Staples/Business Depot, Mark's Work Wearhouse, TD Canada Trust, Royal Bank of Canada and Alberta Treasury Branch. Home Depot opened on October 24, 2006, and Staples/Business Depot and Mark's Work Wearhouse are expected to open late 2006.

Increase in Monthly Distribution

On September 18, 2006, RioCan announced that it would increase its monthly distribution to 11 cents per unit commencing with the October 2006 distribution, payable in November 2006. This increase of 3 cents per unit on an annualized basis will increase RioCan's annualized distribution to $1.32 per unit. RioCan has increased its distributions to unitholders every year since its inception over 12 years ago.

Conference Call and Webcast

Analysts and investors are invited to participate in a conference call with management on Monday, November 6, 2006 at 9:00 a.m. Eastern Time. You will be required to identify yourself and the organization on whose behalf you are participating.

In order to participate in the conference call, please dial 416-695-6622 or outside of Toronto dial 1-888-789-0150. If you cannot participate in the live mode, a replay will be available until November 20, 2006. To access the replay, please dial 416-695-5275 or 1-888-509-0081 and enter passcode 632586.

Scheduled speakers are Edward Sonshine, Q.C., President and Chief Executive Officer, Fred Waks, Senior Vice President and Chief Operating Officer, and Robert Wolf, Vice President and 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 https://riocan.com/_bin/presentations/webcast.cfm and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference 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 $7.5 billion. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 204 retail properties, including 8 under development, containing an aggregate of over 50.7 million square feet. For further information, please refer to RioCan's website at www.riocan.com.

Contact Information

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