AURORA, ON, Aug. 12 /CNW/ -- AURORA, ON, Aug. 12 /CNW/ - MI
Developments Inc. (TSX: MIM.A, MIM.B; NYSE: MIM) ("MID" or the
"Company") today announced its results for the three and six-month
period ended June 30, 2010. "We exceeded our expectations during
the second quarter with the level of activity related to the assets
transferred from MEC, and which resulted in the closing of our
joint venture transaction with Penn National Gaming relating to the
Maryland Jockey Club, and the sale of Thistledown, both occurring
after the quarter," stated Dennis Mills, MID's Vice-Chairman and
Chief Executive Officer. "These two significant transactions
generated aggregate net proceeds of approximately $45.9 million and
are consistent with our plan to enhance the returns of our real
estate, racing and gaming assets." The results for the three and
six-month period ended June 30, 2010 are summarized below (all
figures are in U.S. dollars):
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MID CONSOLIDATED Three months ended Six months ended (in thousands,
except June 30, June 30, per share figures)
------------------------ ------------------------ 2010 2009 2010
2009 ------------------------ ------------------------ Revenues
Real Estate Business $ 43,495 $ 55,161 $ 88,058 $ 108,980 Racing
& Gaming Business(1) 69,670 - 69,670 - MEC(2)(3) - - - 152,935
Eliminations - - (9,636) ------------------------
------------------------ $ 113,165 $ 55,161 $ 157,728 $ 252,279
------------------------ ------------------------
------------------------ ------------------------ Net income (loss)
attributable to MID Real Estate Business $ 17,880 $ 31,329 $ 33,009
$ 56,490 Racing & Gaming Business (6,215) - (6,215) - MEC -
continuing operations - - - (54,763) Eliminations - - - (107)
------------------------ ------------------------ Income (loss)
from continuing operations $ 11,665 $ 31,329 $ 26,794 $ 1,620
Income from MEC discontinued operations(4) - - - 864 $ 11,665 $
31,329 $ 26,794 $ 2,484 ------------------------
------------------------ ------------------------
------------------------ Diluted earnings attributable to MID per
share from continuing operations $ 0.25 $ 0.67 $ 0.57 $ 0.03
Diluted earnings attributable to MID per share $ 0.25 $ 0.67 $ 0.57
$ 0.05 Real Estate Business Funds from operations ("FFO")(5) $
28,088 $ 41,459 $ 53,746 $ 76,386 Diluted FFO per share(5) $ 0.60 $
0.89 $ 1.15 $ 1.64
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---------------------- (1) On April 30, 2010, certain assets of
Magna Entertainment Corp. ("MEC") were transferred to MID,
including 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.),
Portland Meadows, The Maryland Jockey Club which includes Pimlico
Race Course and Laurel Park, AmTote and XpressBet(R) (the
"Transferred Assets"), pursuant to the Joint Plan of Affiliated
Debtors, the Official Committee of Unsecured Creditors, MID and MI
Developments US Financing Inc. pursuant to the Bankruptcy Code (as
amended, the "Plan") (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 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 six-month period ended June 30, 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 June 30,
2009 include the operations of Remington Park, Thistledown,
Portland Meadows and Magna Racino(TM). (5) 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". MID CONSOLIDATED FINANCIAL RESULTS
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Three-Month Period Ended June 30, 2010 Revenues were $113.2 million
in the second quarter of 2010 compared to $55.2 million in the
second quarter of 2009. The increase of $58 million in revenues is
due to racing and gaming revenues of $69.7 million generated by the
Transferred Assets, as well as a $0.5 million increase in rental
revenues, partially offset by a $12.1 million reduction in interest
and other income from MEC. Rental revenues in the second quarter
ended June 30, 2010 increased $0.5 million to $42.5 million from
$42.0 million in the prior year period. The additional rent earned
from contractual rent increases, 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. Interest and other income from MEC, consisting of
interest and fees earned in relation to loan facilities between the
MID Lender and MEC and certain of its subsidiaries, decreased by
$12.1 million, from $13.1 million in the second quarter of 2009 to
$1.0 million in the second 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 under the DIP
Loan to the extent income was earned in the period and cash had
been either collected as at or subsequent to the balance sheet
date. In the second quarter of 2010, $1.0 million represents
interest and fees relating to the DIP Loan. Real Estate Business
net income in the second quarter of 2010 was $17.9 million compared
to net income of $31.3 million in the prior year period. The
decrease of $13.4 million is primarily due to a decrease of $12.1
million in interest and other income from MEC, increases of $3.9
million and $8.8 million in general and administrative expenses and
income taxes, respectively, offset by a $10.0 million reversal of
the loan impairment provision. FFO for the second quarter of 2010
decreased by $13.4 million or $0.29 per share as compared to the
prior year period due to reduced net income for the reasons noted
above. The Racing & Gaming Business includes the results of
operations since April 30, 2010, the acquisition date of the
Transferred Assets in the second quarter of 2010. The results for
the six-month period ended June 30, 2009 include the results of
MEC. The deconsolidation of MEC as at March 5, 2009 and the
acquisition of the racing and gaming assets on April 30, 2010
affects virtually all of the Company's reported revenue, expense,
asset and liability balances, thus significantly limiting the
comparability from period to period of the Company's financial
statements. During May and June 2010, our racetracks hosted a total
of 42 live race days and generated racing, gaming and other
revenues of $69.7 million, with no comparable figures as a result
of MID's acquisition of the Transferred Assets effective April 30,
2010. Net loss in the second quarter from the Racing & Gaming
Business was $6.2 million. Overall, the loss is generally
reflective of the seasonal nature of our Racing & Gaming
Business, lower average daily revenue at many of our racetracks and
costs incurred to pursue alternative gaming opportunities.
Six-Month Period Ended June 30, 2010 Revenues were $157.7 million
in the first six-months of 2010 compared to $252.3 million in the
first six-months of 2009. The $94.6 million decrease in revenues is
due to a $24.8 million reduction in interest and other income from
MEC, and the impact from consolidating MEC's operations in 2009 up
to the Petition Date, partially offset by a $3.8 million increase
in rental revenues and revenues generated by the Transferred Assets
in May and June 2010 of $69.7 million. Rental revenues in the first
six-months of 2010 increased $3.8 million to $86.2 million from
$82.4 million in the prior year period mainly due to the positive
impact of foreign exchange. Interest and other income from MEC,
consisting of interest and fees earned in relation to loan
facilities between the MID Lender and MEC and certain of its
subsidiaries, decreased by $24.8 million, from $26.6 million in the
first six-months of 2009 to $1.8 million in the first six-months of
2010. Real Estate Business net income of $33.0 million for the
first six-months of 2010 decreased by $23.5 million compared to net
income of $56.5 million in the prior year period. The decrease is
primarily due to the reduction in interest and other income from
MEC of $24.8 million and increases of $4.3 million and $8.9 million
in general and administrative expenses and income tax expense,
respectively. Offsetting the reductions in net income are increases
of $10.0 million in impairment recovery relating to loans
receivable from MEC, $3.8 million relating to increased rental
revenues and $1.9 million of other gains. FFO for the first
six-months of 2010 decreased by $22.6 million or $0.49 per share as
compared to the prior year period primarily due to reduced net
income of $23.5 million for the reasons noted above, partially
offset by increased depreciation and amortization of $0.8 million
due to the impact of foreign exchange. As discussed above, the
Racing & Gaming Business includes the results of operations
since April 30, 2010, the acquisition date of the Transferred
Assets. As a result, Racing & Gaming Business operating results
for the second quarter and first six-months ended of 2010 are
consistent. A more detailed discussion of MID's consolidated
financial results for the three and six-month period ended June 30,
2010 is contained in 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 Six months ended June 30, June 30, (in
thousands, except ------------------------ ------------------------
per share information) 2010 2009 2010 2009 ------------------------
------------------------ Net income $ 17,880 $ 31,329 $ 33,009 $
56,490 Add back depreciation and amortization 10,208 10,130 20,737
19,896 ------------------------ ------------------------ Funds from
operations $ 28,088 $ 41,459 $ 53,746 $ 76,386
------------------------ ------------------------
------------------------ ------------------------ Basic and diluted
funds from operations per share $ 0.60 $ 0.89 $ 1.15 $ 1.64
------------------------ ------------------------
------------------------ ------------------------ Basic and diluted
number of shares outstanding 46,708 46,708 46,708 46,708
------------------------ ------------------------
------------------------ ------------------------ DIVIDENDS
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As a result of the decrease in Real Estate Business net income,
together with the continued uncertainty concerning current economic
conditions and the potential negative impact on real estate
markets, MID's Board of Directors has declared a dividend of $0.10
per share on MID's Class A Subordinate Voting Shares and Class B
Shares for the second quarter ended June 30, 2010. The dividend is
payable on or about September 15, 2010 to shareholders of record at
the close of business on August 27, 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. FORBEARANCE
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The Special Committee of the Board of Directors of MID continues to
consider appropriate forbearance terms to apply to the Transferred
Assets. The Corporation has adopted a process pursuant to which the
Special Committee will determine annually, commencing with the 2011
financial year, appropriate forbearance terms for the applicable
Transferred Assets. 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. MID also acquires land that it
intends to develop for mixed-use and residential projects.
Additionally, MID owns Santa Anita Park, Golden Gate Fields,
Gulfstream Park (including an interest in The Village at Gulfstream
Park(TM), a joint venture with Forest City Enterprises, Inc.), The
Maryland Jockey Club, Portland Meadows, AmTote and XpressBet(R),
and through some of these assets, is a supplier, via simulcasting,
of live horseracing content to the inter-track, offtrack and
account wagering markets. For further information about MID, please
visit www.midevelopments.com or call 905-713-6322. 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. Dennis Mills, Vice-Chairman
and Chief Executive Officer at 905-726-7614; or Rocco Liscio,
Executive Vice-President and Chief Financial Officer, at
905-726-7507
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