AURORA, ON, May 7 /PRNewswire-FirstCall/ - MI Developments
Inc. (TSX: MIM.A, MIM.B; NYSE: MIM) ("MID" or the "Company") today
announced its results for the three-month period ended March 31, 2010.
"Net income from the Real Estate Business decreased as compared
to the prior year period primarily due to reduced interest and
other income from MEC as we discontinued accruing interest income
and fees on impaired loans receivable from MEC," stated
Dennis Mills, MID's Vice-Chairman
and Chief Executive Officer. "With the closing of the MEC Chapter
11 process, we look forward to a more stable operating
environment."
The results for the three-month period ended March 31, 2010 are summarized below (all figures
are in U.S. dollars):
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REAL ESTATE BUSINESS
Three months ended
March 31,
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(in thousands, except per share figures) 2010 2009
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Revenues $ 44,563 $ 53,819
Net income attributable to MID $ 15,129 $ 25,161
Funds from operations ("FFO")(1) $ 25,658 $ 34,927
Diluted FFO per share(1) $ 0.55 $ 0.75
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MID CONSOLIDATED
Three months ended
March 31,
-------------------------
(in thousands, except per share figures) 2010 2009(2)
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Revenues
Real Estate Business $ 44,563 $ 53,819
MEC(2),(3) - 152,935
Eliminations(2) - (9,636)
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$ 44,563 $ 197,118
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Net income (loss) attributable to MID
Real Estate Business $ 15,129 $ 25,161
MEC - continuing operations(2) - (54,763)
Eliminations(2) - (107)
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Income (loss) from continuing operations 15,129 (29,709)
Income from MEC discontinued
operations(2),(4) - 864
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$ 15,129 $ (28,845)
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Diluted earnings (loss) attributable to
MID per share from continuing operations $ 0.32 $ (0.64)
Diluted earnings (loss) attributable to
MID per share $ 0.32 $ (0.62)
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(1) 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
generally accepted accounting principles ("GAAP") 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(R) ("NAREIT"). For a reconciliation of FFO to net income,
please refer to the section titled "Reconciliation of Funds From
Operations to Net Income".
(2) On March 5, 2009 (the "Petition Date"), MEC and certain of its
subsidiaries (collectively, the "Debtors") filed voluntary petitions
for reorganization under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of Delaware (the "Court") and were granted
recognition of the Chapter 11 proceedings from the Ontario Superior
Court of Justice under section 18.6 of the Companies' Creditors
Arrangement Act (the "CCAA") in Canada. As a result of the MEC
Chapter 11 filing at the Petition Date, the Company concluded that,
under GAAP, it ceased to have the ability to exert control over MEC
on or about the Petition Date. Accordingly, the Company's investment
in MEC was deconsolidated from the Company's results beginning on the
Petition Date. The Company's results of operations for the three-
month period ended March 31, 2009 include the results of MEC up to
the Petition Date of March 5, 2009. Transactions and balances between
the "Real Estate Business" and "MEC" segments have not been
eliminated in the presentation of each segment's results of
operations. However, the effects of transactions between these two
segments are eliminated in the consolidated results of operations of
the Company for periods prior to the Petition Date.
(3) Excludes revenues from MEC's discontinued operations.
(4) Discontinued operations represent MEC's discontinued operations, net
of certain related consolidation adjustments. MEC's discontinued
operations for the three-month period ended March 31, 2009 includes
the operations of Remington Park, Thistledown, Portland Meadows and
Magna Racino(TM).
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REAL ESTATE BUSINESS FINANCIAL RESULTS
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Three-Month Period Ended March 31,
2010
Revenues were $44.6 million in the
first quarter of 2010 compared to $53.8
million in the first quarter of 2009. The $9.3 million decrease in revenues is due to a
$12.7 million reduction in interest
and other income from MEC, partially offset by a $3.4 million increase in rental revenues.
Rental revenues in the first quarter of 2010 increased to
$43.8 million from $40.4 million in the prior year period. The
additional rent earned from contractual rent increases and
completed projects on-stream and the effect of changes in foreign
currency exchange rates was partially offset by the negative impact
of vacancies, renewals and re-leasing and straight-line rent and
other adjustments.
Interest and other income from MEC in the first quarter of 2010
decreased to $0.8 million from
$13.5 million in the prior year
period as the Company discontinued accruing interest income and
fees on the loans receivable from MEC in the first quarter of 2010.
During the fourth quarter of 2009, the Company estimated that it
would be unable to realize on all amounts due in accordance with
the contractual terms of the loan agreements with MEC and,
accordingly the Real Estate Business recorded an impairment
provision relating to the loans receivable from MEC. Given the
impairment, the Company discontinued accruing interest income and
fees on the loans receivable from MEC; however, interest income and
fees were recognized to the extent income was earned in the period
and cash had been either collected as at or subsequent to the
balance sheet date. Interest and other income from MEC recognized
in the first quarter of 2010 of $0.8
million represent interest and fees relating to the DIP
Loan.
Net income attributable to MID in the first quarter of 2010 was
$15.1 million compared to
$25.2 million in the prior year
period. The decrease is primarily due to a decrease of $12.7 million in interest and other income from
MEC, increases of $0.4 million in
general and administrative expenses, $0.8
million in depreciation and amortization, $0.7 million in net interest expense and
$0.1 million in income tax expense.
These reductions to net income were partially offset by increases
of $3.4 million in rental revenues
and $0.7 million in foreign exchange
gains, as well as the $0.5 million
adjustment recorded in the prior year period relating to the
carrying values of the MEC loan facilities on deconsolidation of
MEC.
FFO for the first quarter of 2010 decreased by $9.3 million or $0.20 per share as compared to the prior year
period primarily due to reduced net income of $10.1 million for the reasons noted above,
partially offset by increased depreciation and amortization of
$0.8 million primarily due to the
impact of foreign exchange.
A more detailed discussion of MID's consolidated financial
results for the first quarter ended March
31, 2010 is contained in the 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 NET INCOME
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Three months ended
March 31,
-------------------------
(in thousands, except per share information) 2010 2009
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Net income $ 15,129 $ 25,161
Add back depreciation and amortization 10,529 9,766
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Funds from operations $ 25,658 $ 34,927
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Basic and diluted funds from operations per
share $ 0.55 $ 0.75
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Basic and diluted number of shares outstanding
(thousands) 46,708 46,708
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DIVIDENDS
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MID's Board of Directors has declared a dividend of $0.15 per share on MID's Class A Subordinate
Voting Shares and Class B Shares for the first quarter ended
March 31, 2010. The dividend is
payable on or about June 15, 2010 to
shareholders of record at the close of business on May 28, 2010.
Unless indicated otherwise, MID 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), as amended from time to time. Please
contact your tax advisor if you have any questions with regard to
the designation of eligible dividends.
ABOUT MID
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MID is a real estate operating company engaged primarily in the
acquisition, development, construction, leasing, management and
ownership of a predominantly industrial rental portfolio leased
primarily to Magna International Inc. and its automotive operating
units in North America and
Europe. In addition, MID owns land
for industrial development and owns and acquires land that it
intends to develop for mixed-use and residential projects.
As discussed further in Management's Discussion and Analysis of
Results of Operations and Financial Position for the three-month
period ended March 31, 2010 under the
heading "SIGNIFICANT MATTERS - Participation in MEC's Bankruptcy
and Asset Sales", following the close of business on April 30, 2010, certain assets of MEC were
transferred to MID pursuant to MEC's Chapter 11 Plan of
Reorganization, including among other assets, Santa Anita Park, Golden Gate Fields, Gulfstream
Park (including MEC's interest in The Village at Gulfstream
Park(TM), a joint venture between MEC and Forest City Enterprises,
Inc.), The Maryland Jockey Club, Portland Meadows, AmTote and
XpressBet. MEC was an owner and operator of horse racetracks, and a
supplier, via simulcasting, of live horseracing content to the
inter-track, off-track and account wagering markets.
OTHER INFORMATION
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For further information about MID, please see our website at
www.midevelopments.com. 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.
FORWARD-LOOKING STATEMENTS
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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
relating to the MEC Chapter 11 proceeding and the Company's
participation therein and 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. 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. 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 risks set forth in the "Risk Factors"
section in the Company's Annual Information Form for 2009, 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, 2009, which investors are strongly
advised to review. The "Risk 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 MI Developments Inc.