Artis releases fourth quarter and 2007 results; posts record 21.6% increase in year-over-year FFO per unit



    WINNIPEG, March 24 /CNW/ - Today Artis Real Estate Investment Trust
("Artis" or "the REIT") issued its financial results and achievements for the
three month and twelve month periods ended December 31, 2007.

    
    FINANCIAL AND OPERATIONAL HIGHLIGHTS

    -  Q4 revenue increased 93.2% to $31.9 million; year over year, revenue
       increased 85.5% to $99.3 million.

    -  Q4 net operating income ("NOI") increased 111.8% to $22.1 million;
       year over year, NOI increased 97.0% to $67.5 million.

    -  Q4 distributable income ("DI") increased 145.7% to $12.7 million
       ($0.41 per unit). Year over year, DI increased 137.0% to $37.6 million
       ($1.49 per unit).

    -  Q4 funds from operations ("FFO") increased 167.9% to $12.3 million;
       year over year, FFO increased 154.9% to $35.7 million.

    -  Record FFO per unit results were achieved in Q4; FFO per unit
       increased 30.0% to $0.39; year over year, FFO per unit increased 21.6%
       to $1.41.

    -  Q4 same property NOI (excluding non-cash revenue adjustments)
       increased 9.0% over last year (year-to-date, 8.5%) as a result of
       positive absorption of space in the properties and rate increases
       achieved on lease rollovers, particularly in Alberta.

    -  2007 FFO results are exclusive of the $2.5 million gain on the
       disposition of a non-core property in Saskatoon, Saskatchewan
       ($0.08 per unit, net of tax).

    -  $566.9 million of acquisitions were completed in 2007; $179.6 million
       of acquisitions were completed in Q4.

    -  At December 31, 2007, mortgage debt-to-gross book value ("GBV")
       decreased to 49.2% from 52.1% at December 31, 2006.

    -  At December 31, 2007, portfolio occupancy increased to 97.4% (97.6%
       including committed space) from 95.8% at December 31, 2006.

    SELECTED FINANCIAL INFORMATION

    -------------------------------------------------------------------------
    $000's, except per    Three month period ended            Year ended
     unit amounts                   December 31,              December 31,
    -------------------------------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenue               $    31,850  $    16,489  $    99,259  $    53,522
    NOI                        22,097       10,433       67,469       34,251
    DI                         12,681        5,162       37,638       15,878
    FFO                        12,276        4,582       35,670       13,995

    DI per unit (basic)          0.41         0.34         1.49         1.32
    FFO per unit (basic)         0.39         0.30         1.41         1.16
    Distributions                0.26         0.26         1.05         1.05
    FFO payout ratio            66.7%        86.7%        74.5%        90.5%


    -------------------------------------------------------------------------
                                                    December 31, December 31,
    $000's                                                 2007         2006
    -------------------------------------------------------------------------
    Total assets                                    $ 1,176,448  $   492,940
    GBV                                               1,247,047      523,081
    Mortgage debt                                       612,996      272,341
    Debt-to-GBV                                           49.2%        52.1%
    Total market capitalization                     $   469,436  $   248,834
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    "Fiscal 2007 was, by every key measure, Artis REIT's most successful year
to date," said Armin Martens, President and Chief Executive Officer of Artis.
"Our portfolio GLA more than doubled and our total assets increased from
$493 million at the start of the year to almost $1.2 billion at December 31,
2007. We are particularly pleased to report our FFO per unit results increased
to $1.41, a 21.6% increase over last year. At the same time, we have decreased
our ratio of debt to GBV to less than 50% by year end, and our distribution
payout ratio to less than 75% of FFO. We also have an excellent mortgage
maturity profile and continue to enjoy a strong embedded growth profile."

    2007 Acquisition Highlights:

    In 2007, Artis acquired 45 commercial properties in western Canada, adding
nearly 3.2 million square feet of leasable area to the portfolio. In Q4-07,
Artis concluded the following acquisitions:

    -------------------------------------------------------------------------
    Property                  Location   Acquisition     Type    Square Feet
                                                Date             of Leasable
                                                                 Area (000's)
    -------------------------------------------------------------------------
    Glenmore Commerce      Calgary, AB    November 9,   Office          58
     Court                                      2007
    -------------------------------------------------------------------------
    Winnipeg Industrial   Winnipeg, MB   November 15,  Industrial      949
     Portfolio -                                2007
     16 Buildings
    -------------------------------------------------------------------------
    Brick Centre        Grande Prairie,  November 30,    Retail         46
                                    AB          2007
    -------------------------------------------------------------------------
    Paramount Building     Calgary, AB   November 30,    Office         68
                                                2007
    -------------------------------------------------------------------------
    North City Centre     Edmonton, AB   November 30,    Retail        105
                                                2007
    -------------------------------------------------------------------------
    Fort McMurray        Fort McMurray,  November 30,    Retail        164
     Portfolio -                    AB          2007
     6 Buildings
    -------------------------------------------------------------------------
    Total                                                            1,390
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Readers are invited to view more details on these properties on our web
site at www.artisreit.com.

    2007 Financing Initiatives

    During 2007, Artis concluded three public offerings of units, issuing at
total of 15.3 million new trust units for gross aggregate proceeds of
$259.2 million. The proceeds of the offerings were used to fund acquisitions
and for general working capital purposes. On December 12, 2007, Artis received
TSX approval to initiate a Normal Course Issuer Bid (the "NCIB"). The NCIB
commenced December 14, 2007 and remains in effect for one year. Under the
terms of the NCIB, Artis may acquire up to 3,055,099 units; in fiscal 2007,
Artis acquired 13,000 units for a total of $196,000.
    Artis entered into an agreement for a revolving term credit facility in
the amount of $75 million which may be utilized to fund acquisitions of
commercial properties. $7.5 million of the facility may be used for general
corporate purposes and an additional $10 million of the balance is available
to purchase units under its NCIB. At December 31 2007, no amounts were drawn
on the facility.

    Operational Improvements and Internal Growth:

    As a result of strong on-going leasing and renewal activity, Artis
achieved overall portfolio occupancy of 97.4% (97.6% including committed
space) at December 31, 2007, up from 95.8% at December 31, 2006. On a same
property basis, occupancy increased from 95.8% to 96.4% at the end of 2007.
    Quarterly growth in same property NOI was 2.8% (5.0% on a year-to-date
basis); same property NOI growth is calculated using revenue calculated in
accordance with generally accepted accounting principles ("GAAP"), less
property operating expenses. Excluding GAAP adjustments for straight-line rent
and above- and below-market rent adjustments, growth in same property NOI was
9.0% (8.5% on a year-to-date basis). The same property growth was driven
primarily by increases in base rental rates achieved on lease turnovers. In
Q4, the weighted average rental rates achieved on lease expiries in the period
were approximately 50% higher than the rates in-place at expiry. Year-to-date,
the increase over expiring rates was approximately 35%.

    "By actively managing our growing portfolio - consistently moving our
expiring below-market leases up to market rents - we have been able to surface
significant embedded growth in our existing portfolio", said Martens. "Looking
ahead, we have great visibility on our 2008 lease expiry schedule, with
approximately 56% of our 2008 lease expiries already renewed at rates
approximately 79% higher than the expiring rent rates. As we push ahead into
the remaining 2008 expiries and 2009 expiries, we expect that under current
market conditions, we can continue to surface embedded value for our
unitholders."

    At December 31, 2007, Artis estimates that the gap between in-place
rental rates and current market rental rates on the 747,000 square feet of
leases expiring in 2008 is over $7 per square foot on average. More details on
upcoming lease expiries and average in-place rents can be found in the REIT's
December 31, 2007, Supplemental Information package. The Supplemental
Information, as well as the audited Annual Consolidated Financial Statements
and Management's Discussion and Analysis for the years ended December 31, 2007
and 2006, can be accessed from the REIT's web site at www.artisreit.com.

    2008 Outlook

    Artis expects to deliver another year of strong growth in 2008. Artis
anticipates that there will be additional growth in revenues, property NOI, DI
and FFO as the full impact of 2007 acquisitions is realized in 2008.
    Acquisitions in 2008 are also expected to positively impact growth.
Acquisitions aggregating $45.6 million have already been concluded, as
follows:

    
    -  On January 15, 2008, the REIT acquired King Edward Centre, located in
       Coquitlam, British Columbia.
    -  On February 1, 2008, the REIT acquired the Leon's Building, located in
       Nanaimo, British Columbia.
    -  On March 20, 2008, the REIT acquired two single tenant properties,
       known as Moose Jaw Sobeys and Estevan Sobeys, located in Saskatchewan.
    

    At the existing level of debt to GBV and with funds available on the
credit facility, Artis has sufficient capacity to pursue further acquisition
opportunities in its target markets in 2008.
    At December 31, 2007, in-place rental rates on our 2008 lease maturities
were estimated to be 38.6% below market rates. As these leases expire and are
renewed at current market rates, this will be an additional source of growth
in revenues, property NOI, DI and FFO.
    Artis has minimal exposure to financing risk, with 2% of its mortgage
debt maturing late in 2008 and 4% maturing in 2009. The REIT does not
anticipate difficulty in renewing or replacing these mortgages.
    With its existing acquisition capacity and embedded growth profile, Artis
expects to deliver another year of growth in 2008, in spite of turbulence in
the capital markets and uncertainties in the credit markets. Western Canadian
employment, retail sales growth and net migration figures outperformed Canada
again in 2007. Oil and gas production and oil-sands development continue to be
significant growth drivers in Alberta. Global demand for potash, uranium and
other precious metals, as well as agricultural commodities continue to fuel
growth in western Canada. In Alberta, new supply coming on the market,
particularly in the Calgary office market, has slowed the velocity of leasing
activity and had a moderating effect on rental rate increases. However, at
current and forecast occupancy levels, management anticipates that the Alberta
market will continue to be a strong landlord's market for 2008 and well in to
2009.

    Upcoming Webcast and Conference Call:

    Interested parties are invited to participate in a conference call with
management at 1:00 p.m. EST today. In order to participate, please dial
1-416-641-6135 or 1-866-542-4262. You will be required to indentify yourself
and the organization on whose behalf you are participating.
    Alternatively, you may access the simultaneous webcast by following the
link from our website at http://www.artisreit.ca/areit_investor.php. Prior to
the webcast, you may follow the link to confirm you have the right software
and system requirements.
    If you cannot participate on March 24th, a replay of the conference call
will be available by dialing 1-416-695-5800 or 1-800-408-3053 and entering
passcode No. 3252529. The replay will be available until March 31, 2008. The
webcast will be archived 24 hours after the end of the conference call and
will be accessible for 90 days.

    Artis is a growth oriented real estate investment trust focused
exclusively on commercial properties located in primary and growing secondary
markets in western Canada, particularly in Alberta. The REIT's goal is to
provide unitholders the opportunity to invest in high quality western Canadian
office, retail and industrial properties, as well as to provide monthly cash
distributions that are stable, tax efficient, and growing over time.
    Artis owns approximately $1.1 billion of commercial property, comprising
approximately 6.3 million square feet of leasable area in 84 properties.
Leasable area is approximately 31.0% in Manitoba, 7.9% in Saskatchewan, 55.4%
in Alberta, and 5.7% in B.C.; by asset class the portfolio is 32.5% retail,
42.1% office and 25.4% industrial.
    The REIT's Distribution Reinvestment Plan ("DRIP") allows unitholders to
have their monthly cash distributions used to purchase trust units without
incurring commission or brokerage fees, and receive bonus units equal to 4% of
their monthly cash distributions. More information can be obtained at
www.artisreit.com.

    Non-GAAP Performance Measures

    DI, Property NOI and FFO are non GAAP measures commonly used by Canadian
income trusts as an indicator of financial performance. Management uses DI,
Property NOI and FFO to analyze operating performance. DI, Property NOI and
FFO may not be comparable to similar measures presented by other issuers. DI,
Property NOI and FFO are not intended to represent operating profits for the
period or from a property nor should any such measure be viewed as an
alternative to net income, cash flow from operating activities or other
measures of financial performance calculated in accordance with GAAP.

    Cautionary Statements

    The comments and highlights herein should be read in conjunction with the
consolidated financial statements and management's discussion and analysis for
the same period. These documents are available on the SEDAR website at
www.sedar.com. They are also posted on the Artis web site at
www.artisreit.com.
    This press release contains forward looking statements. For this purpose,
any statements contained herein that are not statements of historical fact may
be deemed to be forward looking statements. Without limiting the foregoing,
the words "expects", "anticipates", "intends", "estimates", "projects", and
similar expressions are intended to identify forward looking statements.
    Artis is subject to significant risks and uncertainties which may cause
the actual results, performance or achievements of the REIT to be materially
different from any future results, performance or achievements expressed or
implied in these forward looking statements. Such risk factors include, but
are not limited to, risks associated with real property ownership,
availability of cash flow, general uninsured losses, future property
acquisitions, environmental matters, tax related matters, debt financing,
unitholder liability, potential conflicts of interest, potential dilution,
reliance on key personnel, changes in legislation and proposed changes in the
tax treatment of trusts. Artis cannot assure investors that actual results
will be consistent with any forward looking statements and Artis assumes no
obligation to update or revise such forward looking statements to reflect
actual events or new circumstances. All forward looking statements contained
in this press release are qualified by this cautionary statement.

    The Toronto Stock Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.





For further information:

For further information: Mr. Armin Martens, President and Chief
Executive Officer, Mr. Jim Green, Chief Financial Officer or Ms. Kirsty
Stevens, Senior Vice President of the REIT at (204) 947-1250


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