AURORA, ON, Nov. 11 /PRNewswire-FirstCall/ - MI Developments
Inc. (TSX: MIM.A, MIM.B; NYSE: MIM) ("MID" or the "Company")
today announced its results for the three and nine-month periods
ended September 30, 2010.
The results for the three and nine-month periods
ended September 30, 2010 are summarized below (all figures are in
U.S. dollars):
|
|
|
|
|
MID
CONSOLIDATED |
|
(in thousands, except per share
figures) |
Three months
ended
September 30, |
|
Nine months ended
September 30, |
|
|
2010 |
2009 |
|
2010 |
2009 |
Revenues |
|
|
|
|
|
|
Real Estate Business |
$
42,767 |
$
57,012 |
|
$
130,825 |
$ 165,992 |
|
Racing & Gaming
Business(1) |
48,414 |
- |
|
118,084 |
- |
|
MEC (2) (3) |
- |
- |
|
- |
152,935 |
|
Eliminations |
- |
- |
|
- |
(9,636) |
|
|
$
91,181 |
$ 57,012 |
|
$ 248,909 |
$ 309,291 |
Net income (loss) attributable to
MID |
|
|
|
|
|
|
Real Estate Business |
$
31,349 |
$
28,027 |
|
$
64,358 |
$ 84,517 |
|
Racing & Gaming Business |
(23,176) |
- |
|
(29,391) |
- |
|
MEC - continuing operations |
- |
- |
|
- |
(54,763) |
|
Eliminations |
- |
- |
|
- |
(107) |
|
Income from continuing
operations |
$
8,173 |
$ 28,027 |
|
$
34,967 |
$
29,647 |
|
Income from MEC discontinued
operations (4) |
- |
- |
|
- |
864 |
|
|
$
8,173 |
$ 28,027 |
|
$ 34,967 |
$ 30,511 |
|
|
|
|
|
|
|
Diluted earnings attributable to MID
per share from |
|
|
|
|
|
continuing
operations |
$
0.18 |
$
0.60 |
|
$
0.75 |
$
0.63 |
Diluted earnings attributable to MID
per share |
$
0.18 |
$
0.60 |
|
$
0.75 |
$
0.65 |
Real Estate Business |
|
|
|
|
|
|
Funds from operations
("FFO")(5) |
$
42,806 |
$
38,347 |
|
$
96,552 |
$ 114,733 |
|
Diluted FFO per share
(5) |
$
0.92 |
$
0.82 |
|
$
2.07 |
$
2.46 |
___________________________
(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
ParkTM, a joint venture between MEC and Forest City
Enterprises, Inc.), Portland Meadows, The Maryland Jockey Club
("MJC") which includes Pimlico Race Course and Laurel Park, AmTote
and XpressBet® (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"). Effective July
1, 2010, the Company has joint venture interests with Penn National
Gaming, Inc. in MJC's real estate and racing operations and future
gaming opportunities at the MJC properties.
(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 United States generally accepted accounting principles
("U.S. 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 nine-month period ended September 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 nine-month
period ended September 30, 2009 include the operations of Remington
Park, Thistledown, Portland Meadows and Magna Racino™.
(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 U.S. 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® ("NAREIT"). For a reconciliation of
FFO to net income, please refer to the section titled "Real
Estate Business - Reconciliation of Funds From Operations to
Net Income".
MID CONSOLIDATED FINANCIAL RESULTS
Three-Month Period Ended September 30,
2010
Revenues were $91.2 million in the third quarter
of 2010 compared to $57.0 million in the third quarter of
2009. The increase of $34.2 million in revenues is primarily
due to racing and gaming revenues of $48.4 million generated by the
Transferred Assets offset by a $13.3 million reduction in interest
and other income from MEC.
Rental revenues in the third quarter ended
September 30, 2010 decreased $1.0 million to $42.8 million from
$43.8 million in the prior year period. The additional rent
earned from contractual rent increases and completed projects
on-stream were more than offset by the effect of changes in foreign
currency exchange rates and 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, ceased in
the second quarter of 2010 as the Debtors' Chapter 11 process
concluded following the close of business on April 30, 2010, the
effective date of the Plan. As a result, the Company no
longer received interest and other income from MEC.
Real Estate Business net income in the third
quarter of 2010 was $31.3 million compared to net income of $28.0
million in the prior year period. The increase of $3.3
million is primarily due to an $18.7 million impairment recovery
relating to the loans receivable from MEC partially offset by a
decrease of $13.3 million in interest and other income from MEC and
the increase of $1.5 million relating to the loss on disposal of
real estate. During the third quarter of 2010, an additional
impairment recovery of $18.7 million relating to the loans
receivable from MEC was recorded as a result of additional
information and changes in facts and circumstances arising during
the third quarter of 2010 relating to the settlement of loans
receivable from MEC in exchange for the Transferred Assets.
FFO for the third quarter of 2010 increased by
$4.5 million or $0.10 per share as compared to the prior year
period due to increased net income for the reasons noted above.
The Racing & Gaming Business includes the
results of operations for the entire period in the three-month
period ended September 30, 2010 since the Transferred Assets were
acquired April 30, 2010. The results of operations for the
nine-months ended September 30, 2009 include the results of MEC for
the period up to March 5, 2009, the Petition Date. 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 the third quarter of 2010, our racetracks
hosted a total of 46 live race days and generated racing, gaming
and other revenues of $48.4 million, with no comparable figures as
a result of MID's acquisition of the Transferred Assets effective
April 30, 2010. Net loss in the third quarter from the Racing
& Gaming Business was $23.2 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, a decrease in account wagering revenues due to certain
credit card companies choosing to block internet gambling-related
transactions at XpressBet® and costs incurred to pursue alternative
gaming opportunities.
Nine-Month Period Ended September 30,
2010
Revenues were $248.9 million in the first
nine-months of 2010 compared to $309.3 million in the first
nine-months of 2009. The $60.4 million decrease in revenues
is due to a $28.4 million reduction in interest and other income
from MEC and reduced racing, gaming and other revenue of $34.9
million in comparison to the nine-month period ended September 30,
2009.
Rental revenues in the first nine-months of 2010
increased $2.9 million to $129.0 million from $126.2 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 $38.0 million, from $39.8 million in the first nine-months of
2009 to $1.8 million in the first nine-months of 2010.
Real Estate Business net income of $64.4 million
for the first nine-months of 2010 decreased by $20.2 million
compared to net income of $84.5 million in the prior year
period. The decrease is primarily due to the reduction in
interest and other income from MEC of $38.0 million and increases
of $11.3 million in income tax expense partially offset by the
$28.7 million impairment recovery relating to the loans receivable
from MEC.
FFO for the first nine-months of 2010 decreased
by $18.2 million or $0.39 per share as compared to the prior year
period primarily due to reduced net income of $20.2 million for the
reasons noted above and the increase in the loss on disposal of
real estate and depreciation as compared to the prior year
period.
The Racing & Gaming Business' results for
the nine-month period ended September 30, 2010 include the results
of the Transferred Assets from the date of transfer of April 30,
2010. During the period from the date the Transferred
Assets were transferred to MID to September 30, 2010, our
racetracks hosted a total of 88 live race days and generated
racing, gaming and other revenues of $118.1 million, with no
comparable figures as a result of MID's acquisition of the
Transferred Assets effective April 30, 2010. Net loss in
the first nine-months of 2010 from the Racing & Gaming Business
was $29.4 million due to the factors described above.
A more detailed discussion of MID's consolidated
financial results for the three and nine-month period ended
September 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.
REAL ESTATE BUSINESS - RECONCILIATION OF FUNDS FROM
OPERATIONS TO NET INCOME
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
(in thousands, except per share
information) |
2010 |
2009 |
|
2010 |
2009 |
|
|
|
|
|
|
|
Net income |
$
31,349 |
$ 28,027 |
|
$
64,358 |
$
84,517 |
Add back depreciation and
amortization |
10,252 |
10,583 |
|
30,989 |
30,479 |
Add back (deduct) loss
(gain) on disposal of real estate |
1,205 |
(263) |
|
1,205 |
(263) |
Funds from operations |
$
42,806 |
$ 38,347 |
|
$
96,552 |
$ 114,733 |
|
|
|
|
|
|
|
Basic and diluted funds from
operations per share |
$
0.92 |
$
0.82 |
|
$
2.07 |
$
2.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted number of shares
outstanding |
46,708 |
46,708 |
|
46,708 |
46,708 |
DIVIDENDS
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 third quarter ended September 30,
2010. The dividend is payable on or about December 15, 2010
to shareholders of record at the close of business on November 26,
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.
MANAGEMENT CHANGES
Dennis Mills resigned from his position as Chief
Executive Officer of MID effective today and will continue in his
role as Vice-Chairman and director of MID. The Board of
Directors has appointed Frank Stronach as Chief Executive Officer
of MID. Mr. Stronach will continue in his role as Chairman of
MID.
"I would like to thank Dennis Mills for his extraordinary
efforts during his time as Chief Executive Officer of MID," stated
Frank Stronach. "I look forward to working with Dennis as he
continues to assist MID going forward."
The operations of MID will formally be separated into Real
Estate and Racing & Gaming divisions. The Company has
appointed Lyle Strachan as Executive Vice-President, Finance of the
Racing & Gaming division and Mike Rogers as Vice-President,
Operations of the Racing & Gaming division. The Real
Estate division will be managed by the management of MID.
ABOUT MID
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™, a joint venture with Forest City
Enterprises, Inc.), an interest in joint ventures in The Maryland
Jockey Club with Penn National Gaming, Inc., Portland Meadows,
AmTote and XpressBet®, and through some of these assets, is a
supplier, via simulcasting, of live horseracing content to the
inter-track, off-track and account wagering markets. For further
information about MID, please visit www.midevelopments.com or call
905-713-6322.
OTHER INFORMATION
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
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.
Copyright . 11 PR Newswire