Riocan...Q-4 ho-hum another record...RioCan Real Estate Investment Trust Announces Fourth Quarter And Record 2005 Results
TORONTO, ONTARIO, Feb 7, 2006 (CCNMatthews via COMTEX) --
RioCan Real Estate Investment Trust ("RioCan")(TSX:REI.UN) -
2005 HIGHLIGHTS
- RDI per unit increased by 4.7% over 2004
- RioCan acquired shopping centres aggregating a total of 1.8 million square feet
RioCan today announced its financial results for the three and twelve months ended December 31, 2005.
Financial Highlights
RioCan today reported record recurring distributable income ("RDI") of $275,046,000 ($1.417 per unit) for the twelve months ended December 31, 2005, and $66,052,000 ($0.338 per unit) for the three months ended December 31, 2005.
Total rental revenue for the twelve months ended December 31, 2005 increased by 2.1% to $563,739,000 from $552,079,000 for the comparable period in 2004. For the quarter ended December 31, 2005 total rental revenue decreased by 1.8% to $138,949,000 from $141,442,000 for the three months ended December 31, 2004.
During the first quarter of 2005, RioCan redeemed certain of its unsecured debentures so as to enable it to ultimately increase its leverage limit closer to its unitholder approved 60% of aggregate assets. The total cost of this initiative was $20,549,000 and was expensed in the three months ended March 31, 2005 as required by Canadian generally accepted accounting principles ("GAAP"), resulting in a reduction of both net earnings and funds from operations ("FFO"). Primarily as a result of this unusual item, RioCan reported a decrease in net earnings to $132,574,000 ($0.68 per unit basic and diluted) for the twelve months ended December 31, 2005 as compared with net earnings of $158,321,000 ($0.88 per unit basic and $0.87 per unit diluted) for the comparative period in 2004. FFO, which was also negatively impacted by the above unusual item, for the twelve months ended December 31, 2005 increased by 3% to $257,358,000 from $249,945,000 for the comparable period in 2004.
For the fourth quarter of 2005, FFO increased by 8% to $66,455,000 ($0.34 per unit) from $61,291,000 ($0.33 per unit) for the comparable period in 2004. Also for the fourth quarter of 2005, RioCan reported net earnings of $37,308,000 ($0.19 per unit basic and diluted) as compared with net earnings of $35,978,000 ($0.20 per unit basic and diluted) for the comparable period in 2004.
RioCan's Consolidated Financial Statements, Management's Discussion and Analysis and a Supplemental Information Package for the year ended December 31, 2005, along with 2005 Income Tax Information, 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. The GAAP measurement most directly comparable to RDI and FFO is net earnings (to which a reconciliation is provided in Management's Discussion and Analysis for the year ended December 31, 2005). RDI and FFO should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with GAAP as an indicator of RioCan's performance. 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 the end of, and for the year ending, December 31, 2005:
- RioCan had a portfolio occupancy of 97.1%;
- 82.4% of annualized gross rental revenue was derived from national and anchor tenants;
- No individual tenant comprised more than 6.7% of annualized gross rental revenue; and
- 458 new leases totaling more than 2 million square feet of gross leasable area, including partners' interests, were signed.
Portfolio Activity and Repositioning
RioCan continues to focus on owning properties mainly in Canada's six primary markets, those being Toronto, Calgary, Edmonton, Vancouver, Ottawa and Montreal, all of which have in excess of 1 million people and have experienced consistent population growth. At December 31, 2005, over 62.2% of RioCan's annualized rental revenue was from properties located in these six primary markets.
In 2005, RioCan acquired shopping centres aggregating a total of 1.8 million square feet. The vast majority of these properties were new format retail centres and located in Canada's six primary markets or dominant secondary markets. During 2005, RioCan completed the dispositions of 21 properties totaling 3.4 million square feet. All but one of these dispositions were located outside of Canada's six primary markets. Twelve of these properties were enclosed malls. Highlights of these transactions include:
- RioCan acquired 2290 Cambie Street, in Vancouver, British Columbia, a newly constructed 148,215 square foot 4-storey urban retail facility for a purchase price of $44.5 million. The complex is fully tenanted by Canadian Tire and Best Buy, with long term leases of twenty and fifteen years, respectively.
- RioCan acquired a portfolio of three new format retail centres in Quebec, which will comprise upon full completion almost 2 million square feet (including shadow anchors) of newly constructed retail space. This transaction is being completed in stages and on February 3, 2005 RioCan announced that it completed the acquisition of 544,000 square feet for a purchase price of $112.7 million. In December 2005, RioCan also closed on another 229,000 square feet for a purchase price of $48.6 million. Acquisitions of a further 442,500 square feet are expected over the next two years as construction is completed. The user-owned shadow anchors will aggregate approximately 757,000 square feet when completed.
- RioCan purchased a 50% interest in Quartiers 10/30 in Brossard, Quebec, which is currently under development. The first phase of the development is expected to be complete in the summer of 2006. Upon anticipated full completion in the spring of 2007, this centre will comprise over 1,375,000 square feet of retail space, including shadow anchors. Extensive pre-leasing has been completed and tenancies include Canadian Tire, Cineplex Odeon, Winners, HomeSense and Sport Chek, and the site will also be home to a user-owned Loblaws. RioCan also entered into a firm agreement to purchase a 50% interest in an additional 30 acres of land adjacent to Quartiers 10/30 that RioCan will co-develop with the vendor.
- In July, a portfolio comprised of seven enclosed mid-market malls was sold to Retrocom Mid-Market REIT for $182 million. The seven properties included: South Hill Mall, Prince Albert, Saskatchewan; Southland Mall, Regina, Saskatchewan; Town N Country Mall, Moose Jaw, Saskatchewan; Elgin Mall, St. Thomas, Ontario; Mountainview Mall, Midland, Ontario; Orangeville Mall, Orangeville, Ontario; and Plaza LaSarre, LaSarre, Quebec. RioCan will perform all property management functions for this portfolio for a period of three years from closing.
- Markington Square, a 174,997 square foot retail property located in the Greater Toronto Area, was acquired for $14.3 million. The centre features a newly renovated A&P.
- RioCan completed the dispositions of four properties totaling over 1.1 million square feet to RioCan Retail Value Limited Partnership ("RRVLP"). The four properties included: 1000 Islands Mall, Brockville, Ontario; Confederation Mall, Saskatoon, Saskatchewan; Mountain Plaza Mall, Hamilton, Ontario; and Frontenac Mall, Kingston, Ontario. RioCan will continue to manage these properties and earn market based asset management, property management, development and leasing fees in addition to incentive compensation for out-performance by RRVLP.
Development Program
RioCan has an extensive in-house development program through which it expects to complete approximately 3.9 million square feet of retail space over the next few years. Development projects for which construction has commenced or is imminent include:
- Oakville, Ontario - RioCan received full zoning and official site plan approval from the Ontario Municipal Board for its RioCan Centre Burloak development located at the intersection of Burloak Drive and Queen Elizabeth Way. Upon full completion, this new format retail centre will comprise approximately 555,000 square feet of retail space. Substantial pre-leasing has been achieved to national and anchor tenants including a Home Depot (retailer owned), Cineplex Odeon, Longo's and Home Outfitters. Construction is expected to commence in summer 2006.
- Toronto, Ontario - A Staples/Business Depot leased site and 12.5 acres of land adjacent to RioCan's existing Rona Centre were acquired thereby assembling a 28.8 acre development and redevelopment site. The existing centre, currently totaling 179,395 square feet, is located at the intersection of Eglinton Avenue and Warden Avenue in an already established retail node. Planning is currently underway for the additional development, with actual construction of the expansion expected in 2007.
- Toronto, Ontario - RioCan announced a joint venture with Tribute Communities for redevelopment and intensification of an existing RioCan owned retail facility. The objective of the joint venture is to develop a mixed-use building (retail and residential) at the corner of Avenue Road and St. Germain Avenue. This joint venture is conditional upon completion of final zoning approvals being achieved to the satisfaction of both parties.
- Milton, Ontario - RioCan Centre Milton comprises 31 acres and is strategically located at the southwest corner of Highway 401 and Steeles Avenue East. Upon full completion, this new format retail centre will total approximately 293,000 square feet of leasable area anchored by Home Depot (retailer owned), which opened for business in January 2006, a national supermarket chain (retailer owned) and Galaxy Cinemas. The centre will also feature a strong mix of national and regional tenants including The Beer Store, Boston Pizza, Casey's, Super Cuts and two Canadian chartered banks.
- London, Ontario - RioCan completed the acquisition of the lands for Summerside Shopping Centre. The site comprises 31 acres and is located at the intersection of Commissioners Road and Highbury Avenue in the southeast quadrant of London. Upon full completion, this unenclosed shopping centre will total approximately 183,000 square feet of leasable area anchored by a national home improvement retailer (99,000 square feet), a national supermarket chain (39,000 square feet, retailer owned) and approximately 45,000 square feet of ancillary retail space.
- Toronto, Ontario - In January 2006, RioCan acquired an urban retail site for development in downtown Toronto. Just one block east of Bathurst Street and bordered by Queen, Portland and Richmond Streets, the site is currently zoned mixed-use. RioCan is exploring a number of highest and best-use development scenarios including a pure retail facility of approximately 125,000 square feet or a multi-use facility of at least 225,000 square feet. A number of national retailers have already expressed interest in this location for their urban prototypes. Construction is expected to commence sometime in 2007.
- Edmonton, Alberta - RioCan completed the acquisition of the lands for RioCan Centre Edmonton, which comprises 49 acres at the intersection of 17th Street and Whitemud Drive. Major retailers anchoring this 510,000 square foot new format retail centre include Real Canadian Superstore (158,000 square feet, retailer owned), Home Depot (98,000 square feet, land lease) and approximately 254,000 square feet of ancillary retail space. Site work has commenced and construction is anticipated to begin in spring 2006. Store openings will be phased in beginning fall 2006.
- Joint Venture Developments - RioCan and Trinity Development Group Inc. entered into five additional greenfield developments that will comprise approximately 2.1 million square feet of retail space (including retailer owned anchors totaling 807,000 square feet) at an estimated total cost of $253 million. The five developments include: RioCan Beacon Hill, Calgary, Alberta; Innes Road and Lanthier Drive, Ottawa, Ontario; Highway 5 and Highway 6, Hamilton, Ontario; Main Street and Thompson Road, Milton, Ontario; and Leslie Street and Elgin Mills Road, Richmond Hill, Ontario.
Co-ownership Activities
RRVLP is a partnership between the Teachers Insurance and Annuity Association-College Retirement Equities Fund, the Ontario Municipal Employees Retirement System and RioCan. In September 2005, RioCan announced that it had committed the capital resources of the RRVLP and had completed the Investment Period for the Partnership. At December 31, 2005 RRVLP owned 10 retail properties with an aggregate of 2,992,793 square feet.
RioCan and Kimco Realty Corporation, a U.S. REIT listed on the New York Stock Exchange, which also focuses on the ownership of shopping centres, each have a 50% interest in a joint venture ("RioKim"). At December 31, 2005 RioKim owned interests in 34 retail properties totaling over 7.9 million square feet. RioCan provides property management, development and leasing services for all properties owned by RioKim.
About RioCan
RioCan's purpose is to deliver to its unitholders stable and reliable cash distributions, which continuously increase over time. RioCan is Canada's largest real estate investment trust with a total market capitalization of approximately $6.9 billion. It has ownership interests in a portfolio of 200 retail properties, including 14 under development, across Canada containing an aggregate of approximately 50.8 million square feet, including partners' and shadow anchors' interests.
SOURCE: RioCan Real Estate Investment Trust
RioCan Real Estate Investment Trust Edward Sonshine, Q.C. President & CEO (416) 866-3018 www.riocan.com