AURORA, ON, Aug. 11, 2011 /CNW/ -- AURORA, ON, Aug. 11, 2011 /CNW/
- MI Developments Inc. (TSX: MIM) (NYSE: MIM) ("MID" or the
"Company") today announced its results for the three and six-month
periods ended June 30, 2011. Since July 1, 2011, MID has been a
Canadian based real estate company engaged primarily in the
acquisition, development, construction, leasing, management and
ownership of a predominantly industrial rental portfolio of
properties in North America and Europe that are leased primarily to
Magna International Inc. ("Magna") and its automotive operating
units. The results of these business activities are reported as the
continuing operations of the Company. Prior to July 1, 2011, MID
also owned racing and gaming operations which included the
operation of four thoroughbred racetracks located in the U.S. and a
casino with alternative gaming machines, as well as the simulcast
wagering venues at these tracks. Accordingly, at that time, the
Company operated in two segments, the "Real Estate Business" and
the "Racing & Gaming Business". Following the close of business
on June 30, 2011, the Racing & Gaming Business and
substantially all of the Real Estate Business' lands held for
development were transferred to entities owned by Mr. Frank
Stronach and his family (the "Stronach Shareholder") in
consideration for the elimination of MID's dual class share capital
structure through which the Stronach Shareholder controlled MID.
The transaction was completed through a court-approved plan of
arrangement (the "Arrangement"). The assets and business
transferred to the Stronach Shareholder pursuant to the Arrangement
are collectively referred to as the "Arrangement Transferred Assets
& Business". The results of the Arrangement Transferred
Assets & Business activities are reported as discontinued
operations of the Company ("Plan of Arrangement and Discontinued
Operations" below). "Post-Arrangement we promptly began the process
of reviewing MID's business model and assessing strategic
alternatives to enhance shareholder value," commented Bill Lenehan,
Chief Executive Officer. "We expect to conclude this strategic
planning process during the fall of 2011". MID's consolidated
results for the three and six-month periods ended June 30, 2011 and
2010 are summarized below (all figures are in U.S. dollars): MID
CONSOLIDATED (in thousands, except per Three months ended Six
months ended share figures) June 30, June 30, 2011 2010 2011 2010
Revenues((1)) $ 46,361 $ 43,321 $ 91,228 $ 87,712 Income from
continuing operations( (1)) $ 27,292 $ 38,472 $ 40,128 $ 53,759
Income (loss) from discontinued operations( (1)) 85,716 (6,472)
96,601 (6,630) Net income $ 113,008 $ 32,000 $ 136,729 $ 47,129
Diluted earnings (loss) per share from: continuing $ operations $
0.58 $ 0.82 $ 0.86 1.15 discontinued operations 1.82 (0.14) 2.05
(0.14) Diluted earnings per share $ 2.40 $ 0.68 $ 2.91 $ 1.01 Funds
from operations ("FFO")((2)) $ 38,207 $ 48,587 $ 61,639 $ 74,307
Diluted FFO per share ( (2)) $ 0.81 $ 1.04 $ 1.31 $ 1.59
___________________________ (1) As a result of the approval by
MID's shareholders and the Ontario Superior Court of Justice of the
Arrangement (please refer to the section titled "Plan of
Arrangement and Discontinued Operations"), 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. 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 income from
continuing operations, please refer to the section titled
"Reconciliation of Funds from Operations to Income from Continuing
Operations". MID CONSOLIDATED FINANCIAL RESULTS The results of
operations of the Company for the three and six-month periods ended
June 30, 2011 and 2010 include those from continuing operations and
discontinued operations. Three-Month Period Ended June 30, 2011
Continuing Operations For the three-month period ended June 30,
2011, revenues increased by $3.1 million from $43.3 million in the
second quarter of 2010 to $46.4 million in the second quarter of
2011. Rental revenues increased from $42.3 million in
the second quarter of 2010 to $46.4 million in the second quarter
of 2011. Interest and other income from Magna Entertainment
Corp. ("MEC") decreased by $1.0 million to nil in the second
quarter of 2011. Rental revenue increased by $4.1 million in the
second quarter of 2011 compared to the prior year primarily due to
the effect of changes in foreign currency exchange rates,
additional rent earned from contractual rent increases and
completed projects on-stream. Interest and other income from MEC
consist of interest and fees earned in relation to loan facilities
between MID and MEC and certain of its subsidiaries. These
loan facilities were settled and interest and other income thereon
ceased in the second quarter of 2010 as MEC's Chapter 11 process
concluded. The Company's income from continuing operations was
$27.3 million in the second quarter of 2011 compared to $38.5
million in the prior year period. The decrease in income from
continuing operations of $11.2 million is primarily due to (i)
$30.3 million of gains in the second quarter of 2010 pertaining to
MEC, including a loan provision recovery of $10.0 million in
respect of loans previously made to MEC by the Company and a $20.3
million increase in the consideration received by the Company in
satisfaction of the former MEC loans offset by (ii) an income tax
recovery of $13.3 million recorded in the second quarter of 2011
related to successfully setting aside an internal amalgamation
undertaken in 2010 that had caused MID to incur a tax expense in a
prior period and (iii) a revaluation of the Company's future tax
assets in 2010 in respect of loan recoveries from MEC. FFO for the
second quarter of 2011 decreased $10.4 million from $48.6 million
in the prior year period to $38.2 million primarily due to the
reduced income from continuing operations for the reasons noted
above. Discontinued Operations Income from discontinued operations
increased $92.2 million from a loss of $6.5 million in the second
quarter of 2010 to income of $85.7 million in the second quarter of
2011. During the second quarter of 2011, income from
discontinued operations included $89.5 million net of income taxes
of $10.8 million relating to the net gain on disposition of the
Arrangement Transferred Assets & Business. The transfer
of the Arrangement Transferred Assets & Business is considered
a non-pro rata distribution and therefore has been recorded as a
fair value disposition. Net Income Net income of $113.0 million for
the second quarter of 2011 increased by $81.0 million from net
income of $32.0 million in the prior year period. The $81.0
million increase was primarily due to the increase in income from
discontinued operations of $92.2 million partially offset by the
reduction of net income from continuing operations of $11.2 million
as noted above. Six-Month Period Ended June 30, 2011 Continuing
Operations For the six-month period ended June 30, 2011, revenues
increased by $3.5 million from $87.7 million in 2010 to $91.2
million in 2011. Rental revenues increased from $85.9
million in the six-month period ended 2010 to $91.2 million in
2011. Interest and other income from MEC decreased by $1.8
million to nil during the same period. Rental revenue increased by
$5.3 million in the six-month period ended of 2011 compared to the
prior year primarily due to the effect of changes in foreign
currency exchange rates, additional rent earned from contractual
rent increases and completed projects on-stream. Interest and other
income from MEC consist of interest and fees earned in relation to
loan facilities between MID and MEC and certain of its
subsidiaries. These loan facilities were settled and interest
and other income thereon ceased in the second quarter of 2010 as
MEC's Chapter 11 process concluded. The Company's income from
continuing operations was $40.1 million in the six-month period
ended 2011 compared to $53.8 million in the prior year period.
Items decreasing income from continuing operations include (i)
$30.3 million of gains in 2010 pertaining to MEC, including a loan
loss provision recovery of $10.0 million in respect of loans
previously made to MEC by the Company and a $20.3 million increase
in the consideration received by the Company in satisfaction of the
former MEC loans, (ii) an increase in general and administrative
expenses of $4.4 million, (iii) the write-down of long-lived asset
of $2.8 million, (iv) a reduction in other gains of $1.9 million
recognized in 2010 in respect of a lease termination payment and
(v) an increase in depreciation expense and other items of $3.5
million. These items were offset by (i) an increase of $5.3
million in rental revenue and (ii) a decrease of income tax expense
of $23.9 million in the six-month period ended June 30, 2011 for
the reasons noted above. FFO for the six-month period ended June
30, 2011 decreased $12.7 million from $74.3 million in the prior
year period to $61.6 million primarily due to the reduced income
from continuing operations for the reasons noted above.
Discontinued Operations Income from discontinued operations
increased $103.2 million from a loss of $6.6 million during the
six-month period ended June 30, 2010 to income of $96.6 million
during 2011. The increase in income from discontinued
operations was due to the gain of $89.5 million recorded on the
disposition of the Arrangement Transferred Assets &
Business. For the six-month period ended June 30, 2011, the
Racing & Gaming Business generated operating income of $9.9
million whereas in the prior year period it generated a loss of
$6.2 million. In the six-month period ended June 30, 2010,
the Racing & Gaming Business is only included for two months
commencing on April 30, 2010, the date the Racing & Gaming
Business was acquired from MEC. Net Income Net income of $136.7
million for the six-month period ended June 30, 2011 increased by
$89.6 million from net income of $47.1 million in the prior year
period. The $89.6 million increase was primarily due to the
increase in income from discontinued operations of $103.2 million
partially offset by the reduction of income from continuing
operations of $13.6 million as noted above. A more detailed
discussion of MID's consolidated financial results for the three
and six-month periods ended June 30, 2011 and 2010 is contained in
MID'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, except per share information) 2011 2010 2011 2010
Income from continuing operations $ 27,292 $ 38,472 $ 40,128 $
53,759 Add back depreciation and amortization 10,915 10,115 21,511
20,548 Funds from operations $ 38,207 $ 48,587 $ 61,639 $ 74,307
Basic and diluted funds from operations per share $ 0.81 $ 1.04 $
1.31 $ 1.59 Basic number of shares outstanding 47,128 46,708 46,919
46,708 Diluted number of shares outstanding 47,165 46,708 47,063
46,708 PLAN OF ARRANGEMENT AND DISCONTINUED OPERATIONS On June 30,
2011, the Company completed the Arrangement under the Business
Corporations Act (Ontario) which eliminated MID's dual class share
capital structure through which the Stronach Shareholder controlled
MID. Definitive agreements with respect to the Arrangement
were entered into by the Company on January 31, 2011. The
Arrangement was approved on March 29, 2011 by 98.08% of the votes
cast by shareholders at the annual general and special meeting and
on March 31, 2011, the Ontario Superior Court of Justice issued a
final order approving the Arrangement. The Arrangement
eliminated MID's dual class share capital structure through: i) the
purchase for cancellation of 363,414 MID Class B Shares held by the
Stronach Shareholder upon the transfer to the Stronach Shareholder
of the Company's Racing & Gaming Business including $20 million
of working capital at January 1, 2011, substantially all of the
Company's lands held for development and associated assets and
liabilities (MID was granted an option to purchase at fair value
certain of these development lands if needed to expand our income
producing properties), a property located in the United States, an
income producing property located in Canada which is also currently
MID's Head Office and cash in the amount of $8.5 million. In
addition, the Stronach Shareholder received a 50% interest in the
note receivable and cash proceeds from the sale of Lone Star LP, a
50% interest in future payments, if any, under a holdback agreement
relating to MEC's prior sale of The Meadows racetrack and a second
right of refusal in respect of certain properties; and ii) the
purchase for cancellation by MID of each of the other 183,999 MID
Class B Shares in consideration for 1.2 MID Class A Subordinate
Voting Shares per MID Class B Share, which following cancellation
of the MID Class B Shares, and together with the existing
outstanding MID Class A Subordinate Voting Shares, were renamed
Common Shares. DIVIDENDS MID's Board of Directors has declared a
dividend of $0.10 per share on MID's Common Shares for the second
quarter ended June 30, 2011. The dividend is payable on or
about September 15, 2011 to shareholders of record at the close of
business on August 26, 2011. The common shares will begin trading
on an ex-dividend basis at the opening of trading on August 24,
2011. 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 MID is a
Canadian-based real estate company engaged primarily in the
acquisition, development, construction, leasing, management and
ownership of a predominantly industrial rental portfolio of
properties in North America and Europe leased primarily to Magna
and its automotive operating units. OTHER INFORMATION Additional
property statistics have been posted to MID's website at
http://www.midevelopments.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 MID, please
see our website. 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. 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 2010, 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, 2010, 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. To view this news release in
HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/August2011/11/c3027.html
p Bill Lenehan, Chief Executive Officer, at 905-726-7630 or Michael
Forsayeth, Chief Financial Officer, at 905-726-7600 /p
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