MI Developments Inc. Announces its Strategic Plan following Completion of its Strategic Review Process
October 22 2011 - 9:48AM
PR Newswire (Canada)
AURORA, ON, Oct. 25, 2011 /CNW/ - MI Developments Inc. ("MID" or
the "Company") announced today that its Board of Directors has
completed its previously announced strategic review process and
unanimously approved a strategic plan that encompasses the
following major elements and objectives: 1. Convert MID from a
Canadian corporation to a Canadian Real Estate Investment Trust
("REIT"). 2. Increase the Company's quarterly dividend to US$0.50
per share to reflect a targeted annualized dividend of US$2.00 per
share. 3. Fortify MID's relationship with Magna International Inc.
("Magna") by selectively investing in MID properties and
opportunistically growing with Magna in new strategic locations. 4.
Diversify by significantly increasing the lease revenue derived
from new industrial tenants and reducing the proportion of capital
invested in Magna properties to less than 50% within approximately
three years. 5. Increase leverage to 40% to 50% of total capital.
"The Board's adoption of this strategic plan demonstrates our
determination to revitalize the Company, and to make it more
transparent for our shareholders. This plan brings MID much
closer into line with our industry peers across a range of
benchmarks," said William Lenehan, Interim Chief Executive
Officer. "For example, we are expecting to reduce our general
and administrative costs from approximately 30% of annual lease
revenue to an annual run-rate of around 8% to 10%; we estimate that
the REIT conversion, along with other structuring initiatives, will
save approximately US$8 million a year of taxes, a 50% reduction;
and, lastly, the Board has approved a dividend policy with a
targeted payout ratio of approximately 70% of normalized long term
distributable cashflow." The conversion to a REIT (which will take
place pursuant to a statutory plan of arrangement) will require
shareholder and court approval, and satisfaction of certain
regulatory requirements and other conditions. Although the
REIT structure further improves the tax efficiency of MID's
business, none of the other elements of the strategic plan are
contingent upon the REIT conversion. The revised dividend policy is
expected to maintain financial capacity for MID to grow or reinvest
in its portfolio. The Company anticipates growth opportunities with
Magna including the expansion of certain facilities currently owned
by MID as well as the construction of new facilities. The planned
diversification will be global in nature, targeting favourable tax
jurisdictions and focusing on acquiring manufacturing and
industrial buildings leased to tenants outside the automotive
sector. MID will be price disciplined in its acquisition
approach and also intends to explore strategic partnerships with
counterparties that can provide local capital, market intelligence
and commercial opportunities. By increasing financial leverage to
40% to 50% of total capital, the Company believes it can benefit
from a lower blended cost of capital, provide some natural hedging
against currency fluctuations, and efficiently pursue its accretive
diversification strategy. In addition, in 2012, the Company will
change its name and relocate its corporate office from Magna Drive
in Aurora, Ontario. Pursuant to the change in dividend policy
described above, MID's Board of Directors has declared a dividend
of US$0.50 per share on MID's common shares for the third quarter
ended September 30, 2011. The dividend is payable on or about
December 15, 2011 to shareholders of record at the close of
business on November 25, 2011. The common shares will begin
trading on an ex-dividend basis at the opening of trading on
November 23, 2011. Unless otherwise indicated, 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 respect to the designation of eligible dividends.
ABOUT MI DEVELOPMENTS INC. ------------------------------ MI
Developments Inc. ("MID" or the "Company") 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 International Inc. and its
automotive operating units. MID will host a teleconference call on
Wednesday, October 26, 2011 at 8:30 a.m. Eastern time. The number
to use for this call is 1-800-747-0367. Overseas callers should use
+1-416-981-9038. Please call in at least 10 minutes prior to
start time. The call will be chaired by William Lenehan,
Interim 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 (reservation number
is 21543257) and will be available until Wednesday, November 9,
2011. OTHER INFORMATION ------------------------------ 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,
capital structure, cost of capital, tenant base, tax consequences,
economic performance or expectations, or the assumptions underlying
any of the foregoing. In particular, this press release
contains forward-looking statements regarding a proposed conversion
to a REIT, the possible structure and tax impacts of a REIT
conversion, the proposed fortification and growth of MID's
relationship with Magna, the proposed expansion and diversification
of MID's lease portfolio, and expected increases in leverage and
reductions in general and administrative costs. Words such as
"may", "would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate",
"seek" 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, MID
cautions that 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 a conversion will be obtained in a timely manner
or at all, and there can be no assurance that the REIT conversion
will be completed in the manner noted above, or at all.
There can also be no assurance that the proposed
fortification and growth of MID's relationship with Magna, the
proposed expansion and diversification of MID's lease portfolio,
and expected increases in leverage and reductions in general and
administrative costs can be achieved 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 MID to develop a
suitable structure for the REIT conversion; the inability to obtain
all required consents and approvals for the REIT conversion;
economic, market and competitive conditions and other risks that
may adversely affect MID's ability to fortify and grow its
relationship with Magna, expand and diversify its lease portfolio
and increase its leverage; and 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. MI Developments Inc. CONTACT:
please contact Bill Lenehan, Interim Chief Executive Officer,
at905-726-7630 or Michael Forsayeth, Chief Financial Officer,
at905-726-7600.
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