TORONTO, Aug. 8, 2012 /PRNewswire/ - Granite Real
Estate Inc. (TSX: GRT) (NYSE: GRP) ("Granite" or the "Company")
today announced its results for the three and six-month periods
ended June 30, 2012 and declared a
Canadian dollar denominated dividend of $0.50 per share on the Company's Common
Shares.
"Our results for the second quarter continue to
demonstrate stability in rental revenues and overall cash flows and
are in line with our expectations. We are pleased to be reporting
for the first time under our new name, Granite Real Estate Inc. In
addition, during the quarter we relocated our Canadian and European
offices. These steps as well as several others taken during this
second quarter are part of our continuing effort to be
well-positioned for stability and for future growth" commented
Tom Heslip, Chief Executive
Officer.
Granite's consolidated results for the three and
six-month periods ended June 30, 2012
and 2011 are summarized below (all figures are in Canadian ("Cdn.")
dollars):
|
|
|
(in thousands, except per share
figures) |
Three months ended
June 30, |
|
Six months ended
June 30, |
|
|
2012 |
2011 |
|
2012 |
2011 |
|
|
(previously reported
in US dollars) |
|
|
(previously reported
in US dollars) |
Revenues(1) |
$ 45,455 |
$ 44,861 |
|
$ 91,115 |
$ 89,092 |
|
|
|
|
|
|
Income before income taxes |
$
23,811 |
$
15,508 |
|
$ 46,732 |
$
30,978 |
Income from continuing
operations(1)(3) |
18,707 |
26,362 |
|
37,270 |
39,051 |
Income from discontinued
operations(1) |
-- |
83,684 |
|
-- |
94,449 |
Net income |
$
18,707 |
$ 110,046 |
|
$ 37,270 |
$ 133,500 |
|
|
|
|
|
|
|
Diluted earnings per share from: |
|
|
|
|
|
- continuing operations
|
$
0.40 |
$ 0.56 |
|
$ 0.79 |
$
0.83 |
- discontinued operations |
-- |
1.77 |
|
-- |
2.01 |
Diluted earnings per share |
$
0.40 |
$ 2.33 |
|
$ 0.79 |
$ 2.84 |
|
|
|
|
|
|
Funds from operations
("FFO")(2) |
$ 29,374 |
$ 36,938 |
|
$
58,780 |
$
60,074 |
Diluted FFO per share
(2) |
$
0.63 |
$ 0.78 |
|
$ 1.25 |
$ 1.28 |
|
|
|
|
|
|
__________________________
(1) |
Following the close of business on
June 30, 2011, the Racing & Gaming Business, substantially all
of the Company's lands held for development, a property in the
United States and an income-producing property in Canada (the
"Arrangement Transferred Assets & Business") were transferred
to entities owned by Mr. Frank Stronach and his family (the
"Stronach Shareholder") in consideration for the elimination of the
Company's dual class share structure (the "Arrangement"). The
operating results of the Arrangement Transferred Assets &
Business have been presented as discontinued operations.
Income from continuing operations pertains to the Company's
income-producing property portfolio. |
|
(2) |
FFO and diluted FFO per share are
measures widely used by analysts and investors in evaluating the
operating performance of real estate companies. However, FFO
does not have a standardized meaning under U.S. generally accepted
accounting principles and therefore may not be comparable to
similar measures presented by other companies. The Company
determines FFO using the definition prescribed in the United States
by the National Association of Real Estate Investment
Trusts®. For a reconciliation of FFO to income from
continuing operations, please refer to the section titled
"Reconciliation of Funds from Operations to Income from
Continuing Operations". |
|
|
(3) |
Income from continuing operations for the three and six-month
period ended June 30, 2011 includes the recovery of $12.9 million
in income tax resulting from an internal amalgamation that was set
aside and cancelled by the courts. |
CURRENCY CHANGE FOR FINANCIAL REPORTING
The consolidated financial statements for periods prior to
January 1, 2012 were reported using
the U.S. dollar. As a result of the Company's shareholder base
becoming increasingly Canadian and the Company's stated intention
of becoming a Canadian Real Estate Investment Trust ("REIT"), and
to mitigate the impact of foreign exchange fluctuations on our
reported results, effective January 1,
2012, the Company's reporting currency was changed to the
Cdn. dollar. All comparative financial information contained in
this press release, the unaudited interim consolidated financial
statements and Management's Discussion and Analysis for the three
and six-month periods ended June 30,
2012, has been recast to reflect the Company's results as if
the information had been historically reported in Cdn.
dollars. As a result of the change in reporting currency,
dividends are declared in Cdn. dollars. Please refer to the section
titled "Dividends". The Company continues to report in accordance
with U.S. generally accepted accounting principles.
GRANITE'S CONSOLIDATED FINANCIAL RESULTS
The results of operations of the Company for the three and
six-month periods ended June 30, 2012
and 2011 include those from continuing operations and discontinued
operations.
Three-Month Period Ended June 30, 2012
Continuing Operations
For the three-month period ended June 30, 2012, rental revenue increased by
$0.6 million from $44.9 million in the second quarter of 2011 to
$45.5 million in the second quarter
of 2012 primarily due to completed projects coming on-stream and
the additional rent earned from contractual rent increases
partially offset by the unfavourable effects of changes in foreign
currency exchange rates.
The Company's income from continuing operations
was $18.7 million in the second
quarter of 2012 compared to $26.4
million in the prior year period. Income from continuing
operations in the second quarter of 2011 includes the recovery of
$12.9 million in income tax resulting
from an internal amalgamation undertaken in 2010 that was set aside
and cancelled by the Ontario Superior Court of Justice. Excluding
the $12.9 million recovery of income
tax, income from continuing operations increased by $5.2 million primarily due to (i) an increase in
rental revenue of $0.6 million, (ii)
a decrease in general and administrative expenses of $5.2 million (primarily due to reduced insurance
expense and compensation expense to former executives of the
Company as well as the settlement of an outstanding legal
proceeding in 2011), (iii) an increase in foreign exchange gains of
$0.5 million and (iv) a decrease in
the write-down of a long-lived asset of $2.7
million. Partially offsetting these increases in income from
continuing operations are (i) increases in property operating costs
of $0.5 million, (ii) increased net
interest expense of $0.2 million and
(iii) an increase in income tax expense of $3.1 million excluding the income tax recovery
noted above.
FFO for the second quarter of 2012 decreased
$7.6 million from $36.9 million in the prior year period to
$29.4 million in the current period
primarily due to lower income from continuing operations of
$7.7 million.
Discontinued Operations
For the three-month period ended June 30, 2012, the Company's results of
operations were not impacted by the Arrangement Transferred Assets
& Business as they were transferred to the Stronach Shareholder
effective June 30, 2011. Income from
discontinued operations for the three-month period ended
June 30, 2011 of $83.7 million is primarily comprised of the net
gain on the disposal of the Arrangement Transferred Assets &
Business of $87.4 million.
Six-Month Period Ended June 30, 2012
Continuing Operations
For the six-month period ended June 30, 2012, rental revenue increased by
$2.0 million from $89.1 million in 2011 to $91.1 million in 2012 primarily due to completed
projects coming on-stream, the additional rent earned from
contractual rent increases and renewals and re-leasing of
income-producing properties partially offset by the unfavourable
effects of changes in foreign currency exchange rates.
The Company's income from continuing operations
was $37.3 million in the six-month
period ended June 30, 2012 compared
to $39.1 million in the prior year
period. Excluding the recovery in the second quarter of 2011 of
income tax of $12.9 million noted
above, income from continuing operations increased by $11.1 million primarily due to (i) an increase in
rental revenue of $2.0 million, (ii)
a reduction in general and administrative expenses of $11.8 million (primarily related to reduced
advisory costs, decreased insurance expense, decreased compensation
expense to former executives of the Company and higher director
fees in 2011 due to the Arrangement), (iii) an increase in foreign
exchange gains of $0.8 million and
(iv) the decrease in the write-down of a long-lived asset of
$2.7 million. Partially offsetting
these increases are (i) an increase of $0.9
million in property operating costs, (ii) an increase of
$0.5 million in depreciation and
amortization expense and (iii) an increase of income tax expense of
$4.7 million excluding the income tax
recovery noted above.
FFO for the six-month period ended June 30, 2012 decreased $1.3 million from $60.1
million in the prior year period to $58.8 million primarily due to the reduction in
income from continuing operations of $1.8
million partially offset by the increased add back of
depreciation and amortization expense of $0.5 million.
Discontinued Operations
Income from discontinued operations for the
six-month period ended June 30, 2011
of $94.4 million is primarily
comprised of the net gain on the disposal of the Arrangement
Transferred Assets & Business of $87.4
million.
Net Income
Three-Month Period Ended June 30, 2012
Net income of $18.7
million for the second quarter of 2012 decreased by
$91.3 million from $110.0 million in the prior year period.
The decrease was due to the reductions in income from discontinued
operations of $83.7 million and
income from continuing operations of $7.7
million.
Six-Month Period Ended June 30, 2012
Net income for the six-month period ended
June 30, 2012 decreased by
$96.2 million to $37.3 million from $133.5
million in the prior year period. The decrease was due to
the reductions in income from discontinued operations of
$94.4 million and income from
continuing operations of $1.8
million.
A more detailed discussion of Granite's
consolidated financial results for the three and six-month periods
ended June 30, 2012 and 2011 is
contained in the Company's Management's Discussion and Analysis of
Results of Operations and Financial Position and the unaudited
interim consolidated financial statements and notes thereto, which
are available through the internet on Canadian Securities
Administrators' Systems for Electronic Document Analysis and
Retrieval (SEDAR) and can be accessed at www.sedar.com and on the
United States Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval System (EDGAR) which can be
accessed at www.sec.gov.
RECONCILIATION OF FUNDS FROM OPERATIONS TO INCOME FROM
CONTINUING OPERATIONS
|
|
|
Three
months ended
June 30, |
|
Six
months ended
June 30, |
(in thousands, except per share
information) |
2012 |
2011 |
|
2012 |
2011 |
|
|
|
(previously reported
in US dollars) |
|
|
(previously reported
in US dollars) |
Income from continuing operations |
$
18,707 |
$ 26,362 |
|
$
37,270 |
$ 39,051 |
Add back depreciation
and amortization |
10,667 |
10,576 |
|
21,510 |
21,023 |
Funds from operations |
$ 29,374 |
$ 36,938 |
|
$ 58,780 |
$ 60,074 |
|
|
|
|
|
|
|
Basic and diluted
funds from operations per share |
$
0.63 |
$ 0.78 |
|
$
1.25 |
$
1.28 |
|
|
|
|
|
|
|
Basic number of shares
outstanding |
46,880 |
47,128 |
|
46,882 |
46,919 |
Diluted number of shares
outstanding |
46,896 |
47,165 |
|
46,902 |
47,063 |
|
|
|
|
|
|
DIVIDENDS
Granite's Board of Directors has declared a Cdn.
dollar denominated dividend of $0.50
per share on the Company's Common Shares for the second quarter
ended June 30, 2012. The
dividend is payable on or about September
13, 2012 to shareholders of record at the close of business
on August 24, 2012. The Common Shares
will begin trading on an ex-dividend basis at the opening of
trading on August 22, 2012.
Unless indicated otherwise, Granite has
designated the entire amount of all past and future taxable
dividends paid since January 1, 2006
to be an "eligible dividend" for purposes of the Income Tax Act
(Canada).
CONFERENCE CALL
Granite will hold a conference call on
Thursday, August 9, 2012 at
8:30 a.m. Eastern time. The
number to use for this call is 1-800-768-6483. Overseas
callers should use +1-416-981-9026. Please call in at least
10 minutes prior to start time. The conference call will be
chaired by Tom Heslip, Chief
Executive Officer. For anyone unable to listen to the
scheduled call, the rebroadcast numbers will be: North America - 1-800-558-5253 and Overseas -
+1-416-626-4100 (enter reservation number 21600234) and will be
available until Thursday, August 16,
2012.
ABOUT GRANITE
Granite is a Canadian-based real estate company
engaged in the ownership and management of predominantly industrial
properties in Canada, the United States, Mexico and Europe. The Company owns and manages
approximately 28 million square feet in 105 rental income
properties. Our tenant base currently includes operating
subsidiaries of Magna International Inc. (together "Magna") as our
largest tenants, together with tenants from other industries.
OTHER INFORMATION
Additional property statistics have been posted
to our website at
http://www.graniterealestate.com/uploads/File/propertystatistics.pdf.
Copies of financial data and other publicly filed documents are
available through the internet on Canadian Securities
Administrators' Systems for Electronic Document Analysis and
Retrieval (SEDAR) which can be accessed at www.sedar.com and on the
United States Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval System (EDGAR) which can be
accessed at www.sec.gov. For further information about
Granite, please see our website at www.graniterealestate.com.
FORWARD-LOOKING STATEMENTS
This press release may contain statements that,
to the extent they are not recitations of historical fact,
constitute "forward-looking statements" within the meaning of
applicable securities legislation, including the United States
Securities Act of 1933 and the United States Securities Exchange
Act of 1934. Forward-looking statements may include, among
others, statements regarding the Company's future plans, goals,
strategies, intentions, beliefs, estimates, costs, objectives,
economic performance or expectations, or the assumptions underlying
any of the foregoing. In particular, this press release
contains forward-looking statements regarding a strategic plan and
a proposed conversion to a REIT. Words such as "may", "would",
"could", "will", "likely", "expect", "anticipate", "believe",
"intend", "plan", "forecast", "project", "estimate" and similar
expressions are used to identify forward-looking statements.
Forward-looking statements should not be read as guarantees of
future events, performance or results and will not necessarily be
accurate indications of whether or the times at or by which such
future performance will be achieved. Undue reliance should
not be placed on such statements. In particular, Granite cautions
that the timing or completion of the strategic plan and the timing
or completion of the REIT conversion process cannot be predicted
with certainty, and there can be no assurance at this time that all
required or desirable approvals and consents to effect the plan and
a REIT conversion will be obtained in a timely manner or at all.
Forward-looking statements are based on information available at
the time and/or management's good faith assumptions and analyses
made in light of our perception of historical trends, current
conditions and expected future developments, as well as other
factors we believe are appropriate in the circumstances, and are
subject to known and unknown risks, uncertainties and other
unpredictable factors, many of which are beyond the Company's
control, that could cause actual events or results to differ
materially from such forward-looking statements. Important
factors that could cause such differences include, but are not
limited to, the risk of changes to tax or other laws that may
adversely affect the REIT conversion; inability of Granite to
implement a suitable structure for the REIT conversion; the
inability to obtain all required consents and approvals for the
REIT conversion; and the risks set forth in the "Risks Factors"
section in the Company's Annual Information Form for 2011, filed on
SEDAR at www.sedar.com and attached as Exhibit 1 to the Company's
Annual Report on Form 40-F for the year ended December 31, 2011, which investors are strongly
advised to review. The "Risks Factors" section also contains
information about the material factors or assumptions underlying
such forward-looking statements. Forward-looking
statements speak only as of the date the statements were made and
unless otherwise required by applicable securities laws, the
Company expressly disclaims any intention and undertakes no
obligation to update or revise any forward-looking statements
contained in this press release to reflect subsequent information,
events or circumstances or otherwise.
SOURCE Granite Real Estate Inc.