HOMBURG INVEST REPORTS 2011 FIRST QUARTER FINANCIAL RESULTS

Shares issued:  Class A - 17,034,489    Class B - 3,104,838

HALIFAX, May 16 /CNW/ - (TSX: HII.A HII.B AEX: HII) - Homburg Invest Inc. ("Homburg Invest" or the "Company") announced today its financial results for the first quarter ended March 31, 2011, prepared under International Financial Reporting Standards ("IFRS").

"We recorded an increase in unrealized valuation changes during the first quarter, indicating that some stability has returned to European real estate markets particularly in the Baltics; although continuing difficulties in the Dutch real estate markets are apparent," said Jan Schöningh, President and Chief Executive Officer. "We believe that our assets are of high quality and will recover when European business conditions improve".

"We recently received an unsolicited, non-binding proposal from controlling shareholder Richard Homburg and Homburg Canada Inc., to eliminate the control block in HII, internalize management and optimize the balance sheet.  An independent committee of the Board has been formed to review Mr. Homburg's proposal. The Committee will seek to engage an independent financial advisor to assist it in evaluating the Proposal and any eventual transaction.  Our Board of Directors and the Independent Committee has indicated that they will consider the Proposal carefully in the best interests of all stakeholders, including minority shareholders," concluded Mr. Schöningh.

Financial Results (Quarter ended March 31, 2011)

Property revenues from continuing operations were $32.3 million during the first quarter ended March 31, 2011, compared to $35.6 million for the same quarter in 2010. The decrease is due primarily to a 6.6% decrease in the average value of the Euro against the Canadian dollar in the first quarter of 2011.

Net operating income (NOI) was $25.8 million in the first quarter of 2011, compared to $30.1 million in the first quarter of 2010. The decrease is primarily due to property revenue fluctuations in Europe and increased head lease commitments in the first quarter, compared to the first quarter in 2010.

The Company recorded pre-tax earnings from continuing operations of $0.3 million for the first quarter ended March 31, 2011, compared to pre-tax earnings of $16.0 million for the first quarter in 2010.  The decrease is due primarily to a $15.6 million net increase in the fair value of investment properties, an increase in the value of investment properties under development and lower interest expense; offset in part by a $10.2 million foreign exchange loss compared to a $13.2 million foreign exchange gain in 2010, and a $9.6 million first quarter loss on the Company's share of income in relation to a bought deal by an associated company, which resulted in a deemed disposal of the Company's investment and a decrease in ownership.

Net loss for the first quarter of 2011 was $3.5 million or $0.21 per share, compared to net earnings of $17.8 million or $0.84 per share in the first quarter of 2010.

Funds from operations (FFO), net of the sale of properties developed for resale, were $0.2 million for the three-month period ended March 31, 2011, compared to $2.9 million recorded in the same period in 2010.

Net asset value per share stood at $4.98 at March 31, 2011.

Key Financial Results for the Quarters Ended March 31
  March 31, 2011 March 31, 2010
  (millions of CDN $, except per share items)
Property revenue 32.3 35.6
Sale of properties developed for resale 1.7 5.5
Net operating income 25.8 30.1
Net income (3.5) 17.8
Basic earnings per share (0.21) 0.84
Diluted earnings per share (0.21) 0.84
Funds from operations, net of the sale of properties developed for resale 0.2 2.9
Funds from operations per share 0.01 0.14

For complete financial statements, along with the Management's Discussion and Analysis of Results as at and for the quarter ended March 31, 2011, please refer to the Company's website at www.homburginvest.com or www.sedar.com.

About Homburg Invest

Homburg Invest Inc. owns and develops a diversified portfolio of quality commercial real estate including office, retail, industrial and development properties throughout Europe and the United States, as well as 23.1% of the units of Homburg Canada Real Estate Investment Trust. The head office of the Company is located in Halifax, Nova Scotia.

Forward Looking Statements

This news release may contain statements which by their nature are forward looking and express the Company's beliefs, expectations or intentions regarding future performance, future events or trends. Forward looking statements are made by the Company in good faith, given management's expectations or intentions. They are however subject to market conditions, acquisitions, occupancy rates, capital requirements, sources of funds, expense levels, operating performance and other matters. Forward looking statements therefore contain assumptions which are subject to various factors including: unknown risks and uncertainties, general economic conditions, local market factors, performance of other third parties, environmental concerns and interest rates, any of which may cause actual results to differ from the Company's good faith beliefs, expectations or intentions which have been expressed in or may be implied from this news release. Forward looking statements are therefore not guarantees of future performance and are subject to known and unknown risks. Information and statements in this document, other than historical information, should be considered forward-looking and reflect management's current views of future events and financial performance that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include, but are not limited to, the following: general economic conditions and developments within the real estate industry, competition and the management of growth. The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.

Note

Non-IFRS Financial Measures

This news release includes measures widely accepted within the real estate industry which are not defined under IFRS. These measures include funds from operations, funds from operations per share, property net operating income, and net asset value per share. As these are not defined measures under IFRS, other issuers may have different calculations from those used by the Company.

The Company considers these amounts to be measures of operating and financial performance.

a)  Funds from operations ("FFO") and FFO per share are presented by the Company as net income (loss) from continuing operations adjusted for amortization, non-recurring stock based compensation, deferred and capital income taxes, gain on sale of investment properties, net adjustments to fair value of investment properties, held for trading financial assets and derivative financial instruments and net exchange differences divided by the weighted average number of shares outstanding.
   
b)  Property net operating income ("NOI") is presented by the Company as property revenue less property operating expenses.
   
c)  Net asset value per share is presented by the Company as shareholders equity divided by the number of shares outstanding at period end.

 

SOURCE HOMBURG INVEST INC.

For further information:

Paul de la Plante
NATIONAL Public Relations
514 843-2332

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HOMBURG INVEST INC.

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