AURORA, ON, Nov. 10, 2011 /CNW/ - MI Developments Inc. ("MID" or
the "Company") today announced its results for the three and
nine-month periods ended September 30, 2011. 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 that are leased primarily to the automotive
operating subsidiaries of Magna International Inc. (together
"Magna"). "We are pleased with the progress made since June 30 when
the new Board of Directors and senior management were put in
place. A new strategic plan has been announced which includes
converting the Company to a Canadian REIT; the dividend paid to
shareholders has been increased substantially; we have enhanced the
Company's disclosure to shareholders; today, the Board approved a
normal course issuer bid and we are announcing third quarter
results which reflect a significant reduction in our run rate
general and administrative expenses," commented Bill Lenehan,
Interim Chief Executive Officer. MID's consolidated results for the
three and nine-month periods ended September 30, 2011 and 2010 are
summarized below (all figures are in U.S. dollars): MID
CONSOLIDATED (in thousands, Three months ended Nine months ended
except per September 30, September 30, share figures) 2011 2010
2011 2010 Revenues(1) $ $ 42,595 $ $ 130,307 46,411 137,639 Income
from $ $ 13,894 $ $ 67,653 continuing 15,524 55,652 operations(1)
Income (loss) -- (24,419) (31,049) from 96,601 discontinued
operations(1) Net income $ $ (10,525) $ $ 36,604 (loss) 15,524
152,253 Diluted earnings (loss) per share from: $ $ $ $ continuing
0.33 0.30 1.18 1.45 operations -- (0.53) 2.06 (0.67) discontinued
operations Diluted $ $ (0.23) $ $ earnings 0.33 3.24 0.78 (loss)
per share Funds from $ $ 24,052 $ $ 98,359 operations 26,368 88,007
("FFO")(2) Diluted FFO $ $ 0.51 $ $ per share (2) 0.56 1.87 2.11
__________________________ (1) Following the close of business on
June 30, 2011, the Racing & Gaming Business, substantially all
of the Company's lands held for development, a property in the
United States and an income producing property in Canada (the
"Arrangement Transferred Assets & Business") 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 structure. 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 nine-month periods
ended September 30, 2011 and 2010 include those from continuing
operations and discontinued operations. Three-Month Period Ended
September 30, 2011 Continuing Operations For the three-month period
ended September 30, 2011, rental revenues increased by $3.8 million
from $42.6 million in the third quarter of 2010 to $46.4 million in
the third quarter of 2011 primarily due to the favourable effect of
changes in foreign currency exchange rates, additional rent earned
from contractual rent increases, completed projects on-stream and
the re-leasing of income producing properties. The Company's income
from continuing operations was $15.5 million in the third quarter
of 2011 compared to $13.9 million in the prior year period. The
increase in income from continuing operations of $1.6 million is
primarily due to the increase in rental revenue of $3.8 million,
the increase in foreign exchange gains of $0.4 million, the
reduction in interest expense and other financing costs of $0.8
million and the decrease in income tax expense of $1.7 million,
partially offset with the increase in general and administrative
expenses of $4.1 million and the increase in depreciation and
amortization expense of $0.7 million. The increase in general
and administrative expenses of $4.1 million is predominately due to
$5.6 million in employee termination expenses relating to former
officers, a director and other staff. FFO for the third quarter of
2011 increased $2.3 million from $24.1 million in the prior year
period to $26.4 million primarily due to the increased income from
continuing operations of $1.6 million for the reasons noted above
and the add back of increased depreciation and amortization expense
of $0.7 million. Discontinued Operations For the three-month period
ended September 30, 2011, the Company's results of operations were
not impacted by the Arrangement Transferred Assets & Business
as they were transferred to the Stronach Shareholder effective June
30, 2011. Net Income Net income of $15.5 million for the third
quarter of 2011 increased by $26.0 million from a net loss of $10.5
million in the prior year period. The $26.0 million increase
is primarily due to the loss from discontinued operations of $24.4
million in the third quarter of 2010. Nine-Month Period Ended
September 30, 2011 Continuing Operations For the nine-month period
ended September 30, 2011, revenues increased by $7.3 million from
$130.3 million in 2010 to $137.6 million in 2011.
Rental revenue increased from $128.5 million in the nine-month
period ended 2010 to $137.6 million in 2011. Interest and
other income from Magna Entertainment Corp. ("MEC") decreased by
$1.8 million to nil during the same period. Rental revenue
increased by $9.1 million in the nine-month period ended 2011
compared to the prior year primarily due to the favourable 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 $55.7 million in
the nine-month period ended 2011 compared to $67.7 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) a decrease in
interest and other income from MEC of $1.8 million, (iii) an
increase in general and administrative expenses of $8.5 million,
(iv) the write-down of a long-lived asset of $2.8 million, (v) a
reduction in other gains of $1.9 million recognized in 2010 in
respect of a lease termination payment and (vi) an increase in
depreciation and amortization expense of $1.7 million. These
items were offset by: (i) an increase of $9.1 million in rental
revenue, (ii) a decrease of $1.3 million in interest expense and
other financing costs and (iii) a decrease of income tax expense of
$25.6 million in the nine-month period ended September 30, 2011.
FFO for the nine-month period ended September 30, 2011 decreased
$10.4 million from $98.4 million in the prior year period to $88.0
million primarily due to the reduced income from continuing
operations for the reasons noted above and the add back of
increased depreciation and amortization expense of $1.7 million.
Discontinued Operations Income from discontinued operations
increased $127.6 million from a loss of $31.0 million during the
nine-month period ended September 30, 2010 to income of $96.6
million during 2011. For the nine-month period ended
September 30, 2011, the operating results of the Racing &
Gaming Business are included to June 30, 2011, the date of transfer
to the Stronach Shareholder. In the nine-month period
ended September 30, 2010, the operating results of the Racing
& Gaming Business are included commencing on April 30,
2010, the date the Racing & Gaming Business was acquired from
MEC. Given these facts, a comparison of the results is not
meaningful, however, one of the main reasons for 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 nine-month period ended
September 30, 2011, the Racing & Gaming Business generated
operating income of $9.9 million whereas in the prior year period
it generated a loss of $29.4 million, which is reflective of the
seasonality of the business. Net Income Net income of $152.3
million for the nine-month period ended September 30, 2011
increased by $115.7 million from net income of $36.6 million in the
prior year period. The $115.7 million increase was primarily
due to the increase in income from discontinued operations of
$127.6 million partially offset by the reduction of income from
continuing operations of $12.0 million as noted above. A more
detailed discussion of MID's consolidated financial results for the
three and nine-month periods ended September 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 Nine months
ended September 30, September 30, (in 2011 2010 2011 2010
thousands, except per share information) Income from $ 15,524 $ $ $
continuing 13,894 55,652 67,653 operations Add back 10,932 10,158
32,443 30,706 depreciation and amortization Deduct gain (88) --
(88) -- on disposal of real estate Funds from $ 26,368 $ $ $
operations 24,052 88,007 98,359 Basic funds $ $ $ $ from 0.56 0.51
1.88 2.11 operations per share Diluted funds $ 0.56 $ $ $ from 0.51
1.87 2.11 operations per share Basic number 46,843 46,708 46,894
46,708 of shares outstanding Diluted 46,862 46,708 46,996 46,708
number of shares outstanding NORMAL COURSE ISSUER BID
------------------------------ The Board has approved a normal
course issuer bid to purchase, from time to time over the next 12
months, if the Company's Common Shares are trading at a price that
the Company believes is materially below intrinsic value, up to an
aggregate number of Common Shares that is equal to 10% of MID's
public float, expected to be approximately 8.5% of the 46,871,356
currently issued and outstanding Common Shares. Purchases under the
normal course issuer bid will be made on the Toronto Stock Exchange
("TSX"), the New York Stock Exchange (the "NYSE") and any
alternative trading system in Canada, pending required regulatory
approvals. MID will file with the TSX a notice of intention to make
a normal course issuer bid. Purchases may commence through the TSX
two trading days after the TSX accepts the notice and through the
NYSE or any automated trading system in Canada five days after
filing of the news release announcing such acceptance. The Board of
Directors of MID believes that the proposed purchases are in the
best interests of MID and are a desirable use of corporate funds.
All Common Shares purchased by MID pursuant to the notice will be
cancelled. 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.
OTHER INFORMATION ------------------------------ Additional
property statistics have been posted to MID's website at
http://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. In particular,
this press release contains forward-looking statements regarding a
strategic plan and a proposed conversion to a REIT. 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. In particular,
MID cautions that the timing or completion of the strategic plan
and 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 the plan and a REIT conversion will be obtained 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; 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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