TORONTO, Aug. 8, 2012 /CNW/ - Granite Real Estate Inc. ("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 Three months ended Six months ended share
figures) June 30, June 30, 2012 2011 2012 2011 (previously
(previously reported reported in US in US dollars) 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 $ $ 0.56 $ $ 0.83 operations 0.40 0.79 -
discontinued -- 1.77 -- 2.01 operations 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 Six
months ended June 30, June 30, (in thousands, 2012 2011 2012 2011
except per share information) (previously (previously reported
reported in US dollars) in US dollars) Income from $ $ 26,362 $ $
39,051 continuing 18,707 37,270 operations Add back 10,576 21,023
depreciation 10,667 21,510 and amortization Funds from $ $ 36,938 $
$ 60,074 operations 29,374 58,780 Basic and $ $ $ $ diluted funds
0.63 0.78 1.25 1.28 from operations per share Basic number of
shares 46,880 47,128 46,882 46,919 outstanding Diluted number of
shares 46,896 47,165 46,902 47,063 outstanding 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.
Granite Real Estate Inc. CONTACT: Please contact Tom Heslip,
Chief Executive Officer, at647-925-7539 orMichael Forsayeth, Chief
Financial Officer, at 647-925-7600.
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