We should call this thread, Canadian Reits and Trusts and humor thread.
Anyways, RioCan announced earnings today there will be a cc tomorrow on it.
RioCan Real Estate Investment Trust Announces Record Third Quarter Earnings
09:17 EST Tuesday, November 13, 2001
TORONTO, ONTARIO--RioCan Real Estate Investment Trust ("RioCan") today announced results for the nine months ended September 30, 2001.
For the three months For the nine months ended September 30 % ended September 30 % 2001 2000 Increase 2001 2000 Increase-------------------------------------------------------------------- (in thousands) (in thousands) --------------------------------------------------------------------Results of Operations Distributable income before distributable capital gains $42,087 $36,901 14% $125,078 $106,834 17%Total distributable income $56,524 $38,420 47% $142,928 $109,889 30%Net earnings $46,408 $27,975 66% $122,824 $92,667 33%Funds from operations $43,579 $38,170 14% $129,331 $110,350 17% -------------------------------------------------------------------- (per unit) (per unit) --------------------------------------------------------------------Results of Operations Distributable income before distributable capital gains $0.294 $0.280 5% $0.877 $0.830 6%Total distributable income $0.396 $0.290 37% $1.002 $0.850 18%Net earnings - basic and diluted $0.32 $0.22 45% $0.86 $0.72 19%Funds from operations - basic and diluted $0.30 $0.29 3% $0.91 $0.86 6%--------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Rental revenues for the nine months ended September 30, 2001 increased by 15% to $251,783,000 from $219,662,000 in the first nine months of 2000. For the quarter ended September 30, 2001, rental revenues increased by 11% to $84,025,000 from $75,835,000 for the three months ended September 30, 2000. Net earnings for the nine months ended September 30, 2001 increased by 33% to $122,824,000 ($0.86 per unit on 142,690,000 average units outstanding) from net earnings for the comparable period in 2000 of $92,667,000 ($0.72 per unit on 128,376,000 average units outstanding). For the three months ended September 30, 2001, net earnings grew to $46,408,000 ($0.32 per unit on 143,237,000 average units outstanding) as compared to $27,975,000 ($0.22 per unit on 130,081,000 average units outstanding) for the third quarter of 2000.
The complete consolidated financial statements of RioCan and a supplemental information package for the nine months ended September 30, 2001 are available on RioCan's website at www.riocan.com.
Edward Sonshine, Q.C., President & CEO will chair a telephone conference call to discuss RioCan's financial results for the quarter ended September 30, 2001 at 8:30 a.m. (ET) on November 14, 2001.
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. RioCan has total assets of approximately $2.5 billion consisting of ownership interests in a portfolio of 143 retail properties across Canada containing an aggregate of well over 21 million square feet of gross leasable area. RioCan derives about 75.5% of its gross revenue from national and anchor tenants with no one tenant providing more than 5.8% of gross revenue. RioCan's largest tenant is Wal-Mart and more than 16.1% of RioCan's revenue is provided by food supermarkets.
RioCan Real Estate Investment Trust Consolidated Balance Sheets At At At(in thousands) September 30 December 31 September 30 2001 2000 2000 (unaudited) (audited) (unaudited) ASSETS Real estate investments Income properties (Note 2) $2,222,370 $2,007,890 $1,901,472 Properties under development 33,907 37,328 50,348 Mortgages and loans receivable (Note 3) 219,182 268,860 254,229------------------------------------------------------------------ 2,475,459 2,314,078 2,206,049Rents receivable 26,459 21,161 19,086Prepaid expenses and other assets 30,462 17,534 19,939Cash and short-term investments 15,360 61,741 16,438------------------------------------------------------------------ $2,547,740 $2,414,514 $2,261,512------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Mortgages payable (Note 4) $933,217 $858,482 $802,083Debentures payable (Note 5) 300,000 300,000 300,000Accounts payable and accrued liabilities 106,920 95,515 89,060------------------------------------------------------------------ 1,340,137 1,253,997 1,191,143 UNITHOLDERS' EQUITY Unitholders' equity (Note 6) 1,207,603 1,160,517 1,070,369------------------------------------------------------------------ $2,547,740 $2,414,514 $2,261,512------------------------------------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of the financialstatements Consolidated Statements of Unitholders' Equity (in thousands) 3 months ended 9 months ended September 30 September 30 (unaudited) 2001 2000 2001 2000 Balance, beginning of period $1,170,222 $1,074,251 $1,160,517 $1,009,542Net earnings 46,408 27,975 122,824 92,667Distributions to unitholders (38,875) (34,641) (115,098) (102,815)Unit issue proceeds 30,763 3,110 40,333 73,202Unit issue expenses (915) (326) (973) (1,556)Units purchased for cancellation - - - (671)-----------------------------------------------------------------Balance, end of period $1,207,603 $1,070,369 $1,207,603 $1,070,369----------------------------------------------------------------------------------------------------------------------------------Units issued and outstanding 145,801 130,223 145,801 130,223---------------------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of the financialstatements RioCan Real Estate Investment TrustConsolidated Statements of Earnings (in thousands, except per unit amounts) 3 months ended 9 months ended September 30 September 30 (unaudited) 2001 2000 2001 2000 Rental revenue $84,025 $75,835 $251,783 $219,662----------------------------------------------------------------- Operating costs 27,164 25,828 85,979 77,482Amortization of buildings 3,668 3,470 10,971 9,913Amortization of deferred leasing costs 1,492 1,269 4,253 3,516----------------------------------------------------------------- 32,324 30,567 101,203 90,911-----------------------------------------------------------------Operating income from income properties 51,701 45,268 150,580 128,751Interest and fee income 11,167 7,411 32,262 25,907-----------------------------------------------------------------Operating income before undernoted 62,868 52,679 182,842 154,658Interest expense (Note 7) 21,503 17,712 62,484 53,799General and administrative expenses (Note 7) 2,946 1,536 6,251 3,938-----------------------------------------------------------------Operating income 38,419 33,431 114,107 96,921Gain (loss) on sale of real estate investments 7,989 (5,456) 9,817 (4,254)Property management internalization start-up costs (Note 8) - - (1,100) ------------------------------------------------------------------Net earnings $46,408 $27,975 $122,824 $92,667---------------------------------------------------------------------------------------------------------------------------------- Net earnings per unit - basic and diluted $0.32 $0.22 $0.86 $0.72---------------------------------------------------------------------------------------------------------------------------------- Weighted average number of units outstanding 143,237 130,081 142,690 128,376---------------------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of the financialstatements RioCan Real Estate Investment Trust Consolidated Statements of Distributable Income (in thousands, except per unit amounts) 3 months ended 9 months ended September 30 September 30 (unaudited) 2001 2000 2001 2000 Net earnings $46,408 $27,975 $122,824 $92,667Amortization of buildings 3,668 3,470 10,971 9,913(Gain) loss on sale of real estate investments (7,989) 5,456 (9,817) 4,254Property management internalization start-up costs (Note 8) - - 1,100 ------------------------------------------------------------------Distributable income before distributable capital gains 42,087 36,901 125,078 106,834 Distributable capital gains 14,437 1,519 17,850 3,055-----------------------------------------------------------------Distributable income 56,524 38,420 142,928 109,889Retention of distributable income (17,649) (3,779) (27,830) (7,074)-----------------------------------------------------------------Distributions to unitholders $38,875 $34,641 $115,098 $102,815---------------------------------------------------------------------------------------------------------------------------------- Per unit Distributable income before distributable capital gains $0.29400 $0.28000 $0.87700 $0.83000Distributable capital gains 0.10200 0.01000 0.12500 0.02000-----------------------------------------------------------------Distributable income 0.39600 0.29000 1.00200 0.85000Retention of distributable income (0.12600) (0.02375) (0.19700) (0.05125)-----------------------------------------------------------------Distributions to unitholders $0.27000 $0.26625 $0.80500 $0.79875---------------------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of the financialstatements RioCan Real Estate Investment Trust Consolidated Statements of Cash Flows (in thousands, except per 3 months ended 9 months ended unit amounts) September 30 September 30 (unaudited) 2001 2000 2001 2000 CASH FLOW PROVIDED BY (USED IN): Operating activities Net earnings $46,408 $27,975 $122,824 $92,667Items not affecting cash Amortization of buildings 3,668 3,470 10,971 9,913 Amortization of deferred leasing costs 1,492 1,269 4,253 3,516 (Gain) loss on sale of real estate investments (7,989) 5,456 (9,817) 4,254 Property management internalization start-up costs - - 1,100 ------------------------------------------------------------------Funds from operations 43,579 38,170 129,331 110,350Expenditures on deferred leasing costs (3,660) (3,452) (8,893) (12,681)Change in other non-cash operating items (4,835) (2,410) (25,015) (4,268)-----------------------------------------------------------------Cash flow from operating activities 35,084 32,308 95,423 93,401----------------------------------------------------------------- Investing activities Acquisition of income properties (57,596) (45,810) (97,726) (47,024)Capital expenditures on income properties and properties under development (8,516) (17,381) (38,146) (45,568) Mortgages and loans receivable Advances (14,124) (9,333) (23,842) (37,293) Repayments 63,510 9,627 83,623 53,061Property management internalization - - (3,650) -Proceeds from disposition of real estate investments 7,458 17,276 35,413 38,360-----------------------------------------------------------------Cash flow used in investing activities (9,268) (45,621) (44,328) (38,464)----------------------------------------------------------------- Financing activities Mortgages payable Borrowings 6,561 72,875 28,688 171,125 Repayments (16,627) (32,889) (50,080) (152,448)Issue of units, net 29,848 2,784 39,360 46,419Distributions paid (38,608) (34,610) (115,444) (103,595)-----------------------------------------------------------------Cash flow (used in) provided by financing activities (18,826) 8,160 (97,476) (38,499)----------------------------------------------------------------- Increase (decrease) in cash and equivalents 6,990 (5,153) (46,381) 16,438 Cash and equivalents, beginning of period 8,370 21,591 61,741 ------------------------------------------------------------------Cash and equivalents, end of period $15,360 $16,438 $15,360 $16,438---------------------------------------------------------------------------------------------------------------------------------- Other cash flow information Acquisition of income properties Through assumption of liabilities $73,434 $ - $112,690 $29,400 Through issue of units $ - $ - $ - $24,566 Other non-cash items $15,755 $7,700 $19,106 $13,950 Interest paid $22,270 $18,269 $64,073 $55,759Funds from operations per unit - basic and diluted $0.30 $0.29 $0.91 $0.86The accompanying notes are an integral part of the financialstatements Notes to Consolidated Financial Statements(Tabular amounts in thousands)September 30, 2001 (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The Trust's accounting policies and its standards of financial disclosure are in accordance with generally accepted accounting principles and with the recommendations of the Canadian Institute of Public and Private Real Estate Companies, of which the Trust is a member. The interim consolidated financial statements include the accounts of the Trust and its wholly owned subsidiaries. The interim consolidated financial statements follow the same accounting policies and methods of computation as the 2000 annual consolidated financial statements and should be read in conjunction with those financial statements.
(b) Real estate investments
(i) Income properties
Income properties are stated at the lower of cost less accumulated amortization and net recoverable amount. The net recoverable amount represents the undiscounted estimated future net cash flow expected to be received from the ongoing use and residual worth of the properties, and is intended to determine recovery of an investment and is not an expression of a property's fair market value.
Amortization is recorded on the buildings on a 5% forty-year sinking fund basis. Under this method, amortization is charged to income at an amount which increases annually consisting of a fixed annual sum, together with a factor compounded at the rate of 5% per annum so as to fully amortize the buildings over a forty-year period.
Re-leasing costs and the cost of tenant improvements are deferred and amortized on a straight-line basis over the term of the respective lease.
Real estate investments where the Trust exercises significant influence are accounted for using the equity method. This method adjusts the original cost of an investment for the Trust's share of net income and changes in equity.
Maintenance and repairs costs are expensed against operations as incurred, while significant improvements, replacements and major renovations are capitalized to income properties.
(ii) Properties under development
Properties under development are stated at the lower of cost and net recoverable amount. Cost includes acquisition costs, initial leasing costs, other direct costs, property taxes, interest on both specific and general debt, all operating revenues and expenses and the applicable portion of general and administrative expenses.
Capitalization of costs to properties continues until the property reaches its accounting completion date, the determination of which is based on achieving a satisfactory occupancy level within a predetermined time limit.
2. INCOME PROPERTIES
Net Net Net Accumulated Carrying Carrying Carrying Cost Amortization Amount Amount Amount September 30 December 30 September 30 2001 2000 2000--------------------------------------------------------------------Land $ 464,463 $ - $ 464,463 $ 415,967 $ 392,190Buildings 1,723,970 (42,096) 1,681,874 1,542,627 1,461,048Deferred costs 46,674 (13,262) 33,412 32,346 31,960Equity investments in income properties 42,621 - 42,621 16,950 16,274-------------------------------------------------------------------- $ 2,277,728 $ (55,358) $ 2,222,370 $ 2,007,890 $ 1,901,472--------------------------------------------------------------------3. MORTGAGES AND LOANS RECEIVABLE September 30 December 31 September 30 2001 2000 2000--------------------------------------------------------------------Mortgages and loans receivable from co-owners $ 24,639 $ 25,406 $ 38,627Participating mortgages and loans receivable 138,437 186,135 160,950Other mortgages and loans receivable 56,106 57,319 54,652-------------------------------------------------------------------- $ 219,182 $ 268,860 $ 254,229--------------------------------------------------------------------
Mortgages and loans receivable from co-owners bear interest at rates varying from 10% to 12% per annum with a weighted average quarter-end rate of 10.49% (December 2000 - 10.49%).
Of these mortgages and loans receivable from co-owners $15,639,000 will be repaid from the cash flows generated from capital transactions related to the underlying properties.
With respect to $9,000,000 of these mortgages and loans receivable from co-owners, future repayments are due between 2007 and 2008.
Participating mortgages and loans receivable bear interest at rates ranging from 10% to 12% per annum and entitle the Trust to a share of the income generated by the properties securing those mortgages ("the properties").
Of these participating mortgages and loans receivable $40,416,000 mature on the earlier of (i) ten years from the date of initial advance and (ii) subject to the borrower's right to extend for a further five years, the date of completion of the acquisition by the Trust of its 50% interest. The Trust has options to purchase (and the borrowers have options to require the Trust to purchase) a 50% interest in the properties. These options can be exercised upon the substantial completion of the properties. Prior to maturity, these participating mortgages and loans will also be repaid from the cash flows generated from the exercise of the Trust's options to purchase the properties and from operating and capital transactions relating to the properties.
With respect to $98,021,000 of these participating mortgages and loans receivable, the Trust has options to purchase a 50% interest in the properties. The mortgages and loans receivable maturity and the options' expiry dates range from December 31, 2003 to November 10, 2005. If an option is exercised, the maturity of the mortgage and loan receivable ranges on a property-by-property basis from three years from the date the 50% interest in the property is purchased to the original maturity date of the loan. If an option is declined by the Trust or expires without exercise, the maturity of the mortgage and loan receivable is the earlier of (i) two years from the date of notice that the option is declined or (ii) its expiry. Prior to maturity, these participating mortgages and loans will also be repaid from the cash flows generated from the exercise of the Trust's options to purchase the properties and from all other net cash flows relating to the properties.
Other mortgages and loans receivable bear interest at rates varying from 6.43% to 12% per annum with a weighted average quarter-end rate of 10.00% (December 2000 - 10.06%).
Future repayments are due as follows: Year ending December 31, 2001 $ 7,789 2002 22,217 2003 15,636 2004 2,809 2005 5,171 Thereafter 2,484-------------------------------------------------------------------- $ 56,106--------------------------------------------------------------------
4. MORTGAGES PAYABLE
Mortgages payable bear interest at rates ranging between 5.75% and 12.95% per annum with a weighted average quarter-end rate of 7.55% (December 2000 - 7.59%) and mature between 2001 and 2020. At September 30, 2001 no amounts are drawn against revolving lines of credit (December 2000 - nil). At September 30, 2001 the Trust had revolving lines of credit totaling $120,000,000 (December 2000 - $120,000,000) with major Canadian financial institutions, secured by certain income properties. The facilities are subject to annual renewal. The Trust had letters of credit of $11,087,000 (December 2000 - $15,956,000) outstanding at September 30, 2001, of which $10,153,000 (December 2000 - $14,576,000) were drawn against the revolving lines of credit.
Future repayments are due as follows: Year ending December 31, 2001 $ 50,392 2002 124,927 2003 76,109 2004 115,211 2005 71,518 Thereafter 495,060-------------------------------------------------------------------- $ 933,217--------------------------------------------------------------------5. DEBENTURES PAYABLESeries A senior unsecured, initial maturity of October 31, 2002, interest bearing at 6.60% (December 2000 - 6.35%) per annum, payable semi-annually until initial maturity, extendible at the option of the debenture holders to October 31, 2007 at an interest rate of 7.07% per annum. $ 100,000Series B senior unsecured, maturity of April 25, 2005, interest bearing at 6.75% (December 2000 - 6.50%) per annum, payable semi-annually. 50,000RealFund Series A senior unsecured, maturity of August 1, 2007, interest bearing at 7.05% (December 2000 - 6.80%) per annum, payable semi-annually. 150,000-------------------------------------------------------------------- $ 300,000--------------------------------------------------------------------
6. UNITHOLDERS' EQUITY
As at September 30, 2001 there were 2,500,000 warrants outstanding, expiring on September 7, 2006. Each warrant entitles the holder to acquire one unit of the Trust at $11.02.
7. CAPITALIZATION OF CARRYING COSTS
The following costs were capitalized to properties: 3 Months Ended 9 Months Ended September 30 September 30 2001 2000 2001 2000--------------------------------------------------------------------InterestTotal interest incurred $ 22,375 $ 19,085 $ 64,580 $ 57,558Less: capitalized to properties (872) (1,373) (2,096) (3,759)--------------------------------------------------------------------Net interest expense $ 21,503 $ 17,712 $ 62,484 $ 53,799--------------------------------------------------------------------General and administrativeTotal general and administrative expenses incurred $ 3,582 $ 2,575 $ 8,280 $ 5,871Less: capitalized to properties (636) (1,039) (2,029) (1,933)--------------------------------------------------------------------Net general and administrative expense $ 2,946 $ 1,536 $ 6,251 $ 3,938--------------------------------------------------------------------
8. PROPERTY MANAGEMENT INTERNALIZATION START-UP COSTS
Effective July 1, 2001 the Trust internalized all property management functions for its shopping center portfolio. These functions encompass the physical maintenance of its properties, the collection of all rents and all accounting related functions. These duties were previously performed by a number of arm's length third-party property managers.
The total costs of this initiative were $3,650,000, of which $1,100,000 has been charged to earnings in the nine months ended September 30, 2001. The balance of costs in the amount of $2,550,000 represents expenditures for capital assets (computer hardware and software, furniture and equipment, etc.) which will be charged to earnings over their estimated useful lives.
9. INCOME TAXES
The Trust intends to distribute its income for tax purposes in each year to such an extent that it will not be liable for income tax under Part 1 of the Income Tax Act. Therefore, no provision for income taxes is required.
10. SEGMENTED DISLOSURES
Substantially all of the Trust's assets are in, and its revenue is derived from, the Canadian retail real estate industry segment. No single tenant accounted for 10% or more of the Trust's rental revenue.
11. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with the current period's financial statement presentation.
FOR FURTHER INFORMATION PLEASE CONTACT: RioCan Real Estate Investment Trust, Edward Sonshine, Q.C, President & CEO, (416) 866-3018, Website: riocan.com |
