Q2 2009 Report to Unitholders - English version (PDF 1.78 ... - RioCan

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MANAGEMENT’S DISCUSSION AND ANALYSIS Operational and Financial Highlights RioCan reported net earnings for the three months ended June 30, 2009 of $27.2 million ($0.12 per Unit) compared to $44.8 million ($0.21 per Unit) for the same period in 2008. The primary difference between net earnings and funds from operations (“FFO”) is amortization expense and future income tax. FFO for the quarter ended June 30, 2009 is $67.9 million ($0.30 per Unit) compared to $86.9 million ($0.40 per Unit) for the same period in 2008. The $19 million decrease in FFO is primarily comprised of decreased gains on properties held for resale of $17.4 million, increased interest expense of $7.0 million, increased general and administrative expenses of $1.4 million, offset, in part, by increased net operating income from rental properties of $7.1 million. General and administrative expenses in the second quarter of 2009 includes $1.3 million in restructuring charges with respect to the centralization of RioCan’s accounting department in Toronto. The increase in net operating income from rental properties of $7.1 million was primarily due to same property growth of 1.5%, acquisitions, completion of Greenfield Developments and intensification of existing properties. RioCan reported net earnings for the six months ended June 30, 2009 of $57.9 million ($0.26 per Unit) compared to $75.0 million ($0.35 per Unit) for the same period in 2008. FFO for the six months ended June 30, 2009 was $138.5 million ($0.62 per Unit) compared to $155.2 million ($0.72 per Unit) for the same period in 2008. The $16.7 million decrease in FFO is primarily comprised of decreased gains on properties held for resale of $19.1 million, increased interest expense of $9.2 million, offset, in part, by increased net operating income from rental properties of $11.4 million. The increase in net operating income from rental properties of $11.4 million was primarily due to same property growth of 0.7%, acquisitions and completion of Greenfield Developments and intensification of existing properties. Additionally, in the first quarter of 2009, RioCan received a lease cancellation fee of $11.5 million on the Queen and Portland development, which has been applied against the development cost of this property. Other operational and financial highlights, discussed throughout this MD&A, as at and for the three and six months ended June 30, 2009 and 2008, together with results as at December 31, 2008 are as follows: Operational Information (thousands of square feet, except other data) June 30, December 31, June 30, As at 2009 2008 2008 10 Operational Information Number of properties: Income producing properties 234 223 212 Under development (i) 13 17 15 Portfolio occupancy 97.1% 96.9% 97.0% Net leasable area (“NLA”) at RioCan’s interest: Total portfolio 33,536 32,807 32,538 Average in place rent $ 14.32 $ 14.61 $ 14.19 Completed Greenfield Development and land use intensification activities during the quarter ended 173 63 129 Acquired during the quarter ended – – 575 Greenfield Development pipeline upon completion: Total project NLA 9,364 9,622 10,240 RioCan’s interest of project NLA 3,282 3,421 4,100 Percentage of portfolio rental revenue derived from: Six Canadian high growth markets (annualized) (ii) 66.2% 66.0% 66.6% National and anchor tenants (annualized) 84.6% 83.4% 83.5% Largest tenant (annualized) 5.3% 5.4% 5.4% Number of employees (excluding seasonal) 608 646 670 (i) (ii) The number of properties under development excludes those properties with phased development where tenancies have already commenced operations. These properties are included in the number of income properties. See RioCan’s discussion in “Vision and Business Strategy”.
MANAGEMENT’S DISCUSSION AND ANALYSIS Financial Information (thousands of dollars, except other data) June 30, December 31, June 30, As at and for the six months ended 2009 2008 2008 Total assets (i) $ 5,721,699 $ 5,337,491 $ 5,339,442 Debt (mortgages and debentures payable) $ 3,567,355 $ 3,260,295 $ 3,200,783 Debt to Aggregate Assets (ii) 55.8% 54.9% 54.5% Debt to total capitalization (iii) 49.9% 51.8% 42.3% Interest coverage ratio (iv) 2.5 2.6 2.7 Debt service coverage ratio (v) 1.9 2.0 2.0 Unitholders’ equity (i) $ 1,821,153 $ 1,746,450 $ 1,793,004 Units outstanding 234,245 222,042 220,106 Closing market price $ 15.28 $ 13.66 $ 19.86 Market capitalization (vi) $ 3,579,264 $ 3,033,094 $ 4,371,305 Total capitalization (vii) $ 7,146,619 $ 6,293,389 $ 7,572,088 Three months ended June 30, Six months ended June 30, 2009 2008 2009 2008 Total revenue $ 187,352 $ 194,385 $ 378,426 $ 377,752 Net earnings $ 27,212 $ 44,751 $ 57,881 $ 75,003 Net earnings per Unit – basic and diluted $ 0.12 $ 0.21 $ 0.26 $ 0.35 FFO (viii) $ 67,922 $ 86,865 $ 138,475 $ 155,152 FFO per Unit (ix) $ 0.30 $ 0.40 $ 0.62 $ 0.72 AFFO (viii) $ 60,871 $ 81,290 $ 133,531 $ 145,406 AFFO per Unit (ix) $ 0.27 $ 0.37 $ 0.60 $ 0.68 Distributions to unitholders $ 78,418 $ 74,172 $ 155,248 $ 145,571 Distributions to unitholders per Unit $ 0.3450 $ 0.3375 $ 0.6900 $ 0.6750 Distributions per Unit (annualized) $ 1.38 $ 1.35 $ 1.38 $ 1.35 Distributions to unitholders net of distribution reinvestment plan $ 65,568 $ 56,338 $ 126,805 $ 108,809 Distributions to unitholders net of distribution reinvestment plan per Unit $ 0.29 $ 0.26 $ 0.57 $ 0.51 Unit issue proceeds under distribution reinvestment plan $ 12,850 $ 17,834 $ 28,443 $ 36,762 Distribution reinvestment plan participation rate 16.4% 24.0% 18.3% 25.3% RIOCAN REAL ESTATE INVESTMENT TRUST SECOND QUARTER REPORT 2009 11 (i) Certain 2008 balances have been restated to reflect a change in accounting policy that was adopted on a retroactive basis, refer to Note 1(b) of the unaudited interim consolidated financial statements for the three and six months ended June 30, 2009 and 2008. (ii) A non generally accepted accounting principle (“GAAP”) measurement defined in RioCan’s Declaration (see “Capital Structure”). (iii) A non-GAAP measurement. Calculated by the Trust as debt divided by total capitalization. RioCan’s method of calculating debt to total capitalization may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. (iv) Interest coverage is defined as GAAP net earnings for a rolling twelve month period, before net interest expense, income taxes and income property amortization (including provisions for impairment) divided by total interest expense (including interest that has been capitalized). (v) RioCan defines debt service coverage as GAAP net earnings for a rolling twelve month period, before net interest expense, income taxes and income property amortization (including provisions for impairment) divided by total interest expense (including interest that has been capitalized) and scheduled mortgage principal amortization. (vi) A non-GAAP measurement. Calculated by the Trust as closing market price multiplied by the number of Units outstanding. RioCan’s method of calculating market capitalization may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. (vii) A non-GAAP measurement. Calculated by the Trust as debt plus market capitalization. RioCan’s method of calculating total capitalization may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. (viii) A non-GAAP measurement for which a reconciliation to net earnings can be found in RioCan’s discussion under “FFO”. (ix) A non-GAAP measurement for which a reconciliation to AFFO from FFO can be found in RioCan’s discussion under “AFFO”.
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CONSOLIDATED STATEMENTS OF UNITHOLD
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CONSOLIDATED STATEMENTS OF CASH FLO
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NOTES TO CONSOLIDATED FINANCIAL STA
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SENIOR MANAGEMENT, BOARD OF TRUSTEE
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Q2 2009 Report to Unitholders - English version (PDF 1.78 ... - RioCan

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