First Capital Realty announces continued solid Q2 financial results



    TORONTO, Aug. 14 /CNW/ - First Capital Realty Inc. ("First Capital
Realty") (TSX:FCR) Canada's leading owner, developer and operator of
supermarket and drugstore-anchored neighbourhood and community shopping
centres, located predominantly in growing metropolitan areas, announced today
solid financial results for the second quarter ended June 30, 2009.

    
    SECOND QUARTER 2009 HIGHLIGHTS:

    -------------------------------------------------------------------------
    ($ millions, except                      30 June     30 June  Percentage
     per share amounts)                         2009        2008      Change
    -------------------------------------------------------------------------
    Property rental revenue                 $  109.7    $  101.9        7.7%
    -------------------------------------------------------------------------
    Net operating income (NOI)              $   71.6    $ 64.4(2)      11.2%
    -------------------------------------------------------------------------
    Funds from operations (FFO)
     excluding dilution loss on
     Equity One investment(1)               $   39.1    $ 34.7(2)      12.7%
    -------------------------------------------------------------------------
    FFO per diluted share excluding
     dilution loss on Equity One
     investment(1)                          $   0.42    $ 0.40(2)       5.0%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     FFO (000's)                              92,622      87,269        6.1%
    -------------------------------------------------------------------------
    Adjusted funds from operations (AFFO)   $   38.8    $ 35.0(2)      10.9%
    -------------------------------------------------------------------------
    AFFO per diluted share                  $   0.38    $ 0.37(2)       2.7%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     AFFO (000's)                            101,020      95,899        5.3%
    -------------------------------------------------------------------------
    Enterprise value                        $  4,060    $  4,328
    -------------------------------------------------------------------------
    Debt to aggregate assets                   54.8%       53.6%
    -------------------------------------------------------------------------
    Debt to total market capitalization        56.4%       46.8%
    -------------------------------------------------------------------------
    (1) See Funds from Operations section of this press release.
    (2) Comparative amounts have been restated for a change in accounting
        standards. See "Financial Highlights".

    OPERATIONS HIGHLIGHTS:

    -   Invested $67 million in acquisitions, development activities and
        property improvements.
    -   Completed 219,000 square feet of gross leasable area from
        acquisitions, development and redevelopment.
    -   Acquired two income-producing properties totalling 53,000 square feet
        and one property comprising 8.4 acres of land held for future
        development.
    -   9.3% same property NOI growth; 5.0% same property NOI growth
        excluding redevelopment and expansion.
    -   13.1% increase on rate per square foot on 343,000 square feet of
        renewal leases.
    -   Occupancy of 96.1% which compares to 96.4% at December 31, 2008.
        Vacancy includes 1.0% of space held for redevelopment.
    -   Gross new leasing totalled 317,000 square feet including development
        and redevelopment coming on line; lease closures totalled 120,000
        square feet and closures for redevelopment totalled 11,000 square
        feet.
    -   Average lease rate per occupied square foot increased by 3.9% to
        $15.37 at June 30, 2009 compared to $14.80 in the prior year second
        quarter.
    -   Completed new leasing on existing space totalling 151,000 square feet
        at an average rate of $21.70 per square foot.

    SIX MONTHS HIGHLIGHTS:

    -------------------------------------------------------------------------
    ($ millions, except                      30 June     30 June  Percentage
     per share amounts)                         2009        2008      Change
    -------------------------------------------------------------------------
    Property rental revenue                 $  220.1    $  203.7        8.1%
    -------------------------------------------------------------------------
    Net operating income (NOI)              $  139.9    $127.7(2)       9.6%
    -------------------------------------------------------------------------
    Funds from operations (FFO)
     excluding dilution loss on
     Equity One investment(1)               $   77.3    $ 69.2(2)      11.7%
    -------------------------------------------------------------------------
    FFO per diluted share excluding
     dilution loss on Equity One
     investment(1)                          $   0.84    $ 0.82(2)       2.4%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     FFO (000's)                              91,901      84,316        9.0%
    -------------------------------------------------------------------------
    Adjusted funds from operations (AFFO)   $   75.7    $ 66.6(2)      13.7%
    -------------------------------------------------------------------------
    AFFO per diluted share                  $   0.75    $ 0.72(2)       4.2%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     AFFO (000's)                            100,606      92,793        8.4%
    -------------------------------------------------------------------------

    (1) See Funds from Operations section of this press release.
    (2) Comparative amounts have been restated for a change in accounting
        standards. See "Financial Highlights".


    -   Invested $112 million in acquisitions, development activities and
        property improvements.
    -   377,000 square feet of gross leasable area coming on line from
        development and redevelopment activities and acquisitions.
    -   Acquired three income-producing properties totalling 80,000 square
        feet, one property held for future development and two land parcels
        adjacent to existing properties comprising a total of 9.12 acres of
        land held for future development.
    -   7.3% same property NOI growth; 3.4% excluding redevelopment and
        expansion space.
    -   11.7% increase on 612,000 square feet of renewal leases.
    -   Gross new leasing totalled 591,000 square feet including development
        and redevelopment coming on line; lease closures totalled 401,000
        square feet and closures for redevelopment totalled 97,000 square
        feet.
    -   Lease rates on openings and redevelopment coming on line increased by
        24.8% versus all lease closures.
    -   Completed new leasing on existing space totalling 301,000 square feet
        at an average rate of $19.54 per square foot.
    

    "We're pleased with the continuing strong performance of our portfolio
and believe it's the result of the quality of our properties and our well
executed asset and property management strategies", said Dori J. Segal,
President & C.E.O., "We have taken advantage of a number of acquisition
opportunities so far this year and we are carefully looking at a few more."

    FINANCIAL HIGHLIGHTS

    FFO and AFFO presented herein are key financial measures used by the real
estate industry to measure and compare the operating performance of real
estate organizations. FFO and AFFO are supplemental non-GAAP financial
measures and a complete reconciliation containing adjustments from GAAP net
income to FFO and AFFO is included in this press release.
    Comparative amounts have been restated for a change in accounting
standards with respect to goodwill and intangible assets. This change resulted
in an increase in FFO for the second quarter of 2008 of $0.2 million.

    Funds from Operations

    Funds from operations excluding the dilution loss on Equity One
investment totalled $39.1 million or $0.42 per diluted common share for the
three months ended June 30, 2009 compared to $34.7 million or $0.40 per
diluted common share in the same period for the prior year. FFO excluding the
dilution loss on Equity One investment for the six months ended June 30, 2009
totalled $77.3 million or $0.84 per diluted common share, and increased from
$69.2 million or $0.82 per diluted common share in the same period in 2008.
    The Company's funds from operations including the dilution loss on Equity
One investment totalled $38.4 million or $0.41 per diluted common share for
the three months ended June 30, 2009. FFO for the six months ended June 30,
2009 totalled $76.7 million or $0.83 per diluted common share.
    The increase in FFO for the quarter and year-to-date was primarily due to
an increase in net operating income resulting from same property NOI growth as
well as acquisitions and development coming on line partially offset by
increased interest expense and decreased interest and other income.

    Adjusted Funds from Operations

    Management views AFFO as an effective measure of cash generated from
operations. AFFO for the three months ended June 30, 2009 totalled $38.8
million or $0.38 per diluted common share compared to $35.0 million or $0.37
per diluted common share in the prior year. AFFO is calculated by adjusting
FFO for straight-line and market rent adjustments, non-cash compensation
expenses, interest payable in shares, non-cash gains or losses on debt, hedges
and land sales and actual costs incurred for capital expenditures and leasing
costs for maintaining shopping centre infrastructure and current lease
revenues. The Company's proportionate share of Equity One FFO is excluded and
only the regular cash dividends received are included in AFFO. The weighted
average diluted shares outstanding for AFFO is adjusted to assume conversion
of the outstanding convertible debentures.

    
    Net Income

    -------------------------------------------------------------------------
    ($ thousands, except         Three months ended         Six months ended
     per share amounts)               June 30                   June 30
    -------------------------------------------------------------------------
                              2009         2008         2009         2008
    -------------------------------------------------------------------------
    Net income             $  9,093     $ 10,158(1)  $ 18,175     $ 18,540(1)
    -------------------------------------------------------------------------
    Earnings per share
     (basic and diluted)   $   0.10     $   0.12(1)  $   0.20    $    0.22(1)
    -------------------------------------------------------------------------
    Weighted average
     common shares -
     diluted (000's)         92,622       87,269       91,901       84,316
    -------------------------------------------------------------------------
    (1) Comparative amounts have been restated for a change in accounting
        standards.
    

    Net income for the three and six months ended June 30, 2009 was $9.1
million or $0.10 per share (basic and diluted) and $18.2 million or $0.20 per
share (basic and diluted). This compares to $10.2 million or $0.12 per share
(basic and diluted) and $18.5 million or $0.22 per share (basic and diluted),
respectively, for the three and six months ended June 30, 2008. The decrease
in net income is primarily due to increased amortization expense, decreased
interest and other income, and decreased income from Equity One offset by an
increase in NOI resulting from development projects coming on line and same
property NOI growth.
    Interest and other income for the six months ended June 30, 2008 included
$1.3 million in gains on the sale of land. In addition, there was an increase
in the basic and weighted average diluted shares outstanding compared to the
same prior year period.

    DEVELOPMENT AND ACQUISITION HIGHLIGHTS

    During the second quarter of 2009, the Company invested $47 million in
active development projects and improvements to existing properties bringing
the six month total investment to $85 million. Development of 147,400 square
feet was turned over to tenants for fixturing in the second quarter of 2009
and leased at an average rate of $19.77 per square foot. The Company also
turned over to tenants for fixturing 18,500 square feet of redeveloped space
at an average rate of $33.00 per square foot. Year-to-date, development of
234,600 square feet was brought on line with 228,900 square feet leased at an
average rate of $19.55 per square foot. Year-to-date the Company completed
61,400 square feet of redeveloped space at an average rate of $21.27 per
square feet.
    During the second quarter of 2009, the Company acquired an 11,000 square
foot retail property in Montreal, Quebec, a 42,000 square foot retail property
in Edmonton, Alberta and a property held for future development on 8.4 acres
of land in Toronto, Ontario. Total investment in the retail properties and
property held for development amounted to $20.0 million. Through the first six
months of 2009, the Company invested $27 million in the acquisition of three
income-producing shopping centres comprising 80,400 square feet and one
property held for development and two land parcels adjacent to existing
properties comprising a total of 9.1 acres of commercial land for future
development.

    OPERATING HIGHLIGHTS

    Net operating income for the three months ended June 30, 2009 totalled
$71.6 million, compared to $64.4 million in the second quarter of 2008, an
increase of $7.2 million or 11.2%. Same property NOI increased by 9.3%,
generating growth in NOI of $5.6 million during the second quarter of 2009,
primarily attributed to redevelopment and expansion space coming on-line,
increases in lease rates and occupancy, a lease termination payment from a
tenant of $1.8 million and prior year operating cost and tax recovery
adjustments booked in the quarter.
    Excluding the lease termination fee, same property NOI growth for the
three months ended June 30, 2009 would have been 6.3%. Same property NOI for
the second quarter of 2009, excluding expansion and redevelopment space
increased by $2.9 million or 5.0% over the same prior year period.
    Net operating income for the six months ended June 30, 2009 totalled
$139.9 million, compared to $127.7 million for the same period in 2008, an
increase of $12.2 million or 9.6%. Same property NOI increased by 7.3%,
generating growth in NOI of $8.8 million, primarily attributed to
redevelopment and expansion space coming on-line, increases in lease rates and
occupancy, a lease termination payment and prior year operating cost and tax
recovery adjustments booked in Q2, 2009.
    Excluding the lease termination fee, same property NOI growth for the six
month period ended June 30, 2009 would have been 5.8%. Same property NOI for
the six months ended June 30, 2009, excluding expansion and redevelopment
space increased by $4.0 million or 3.4% over the same prior year period.
Excluding expansion and redevelopment and the lease termination fee, same
property NOI growth for the six month period ended June 30, 2009 would have
been 1.9%.
    Year-to-date, acquisitions completed in 2009 and 2008 contributed $2.0
million to NOI, while greenfield development activities contributed a further
$5.1 million.
    Gross new leasing in the second quarter totalled 317,000 square feet
including development and redevelopment coming on line. The Company achieved a
13.1% increase on 343,000 square feet of renewal leases over the expiring
lease rates. For the six months ended June 30, 2009, gross new leasing
totalled 591,000 square feet. Renewal leasing totalled 612,000 square feet
with an 11.7% increase over expiring rates.
    The average rate per occupied square foot at June 30, 2009 increased to
$15.37. This compares to an average rate of $15.24 per square foot at March
31, 2009.
    Portfolio occupancy at June 30, 2009 of 96.1% compares to 96.0% at March
31, 2009 and 95.5% at June 30, 2008.

    FINANCING AND CAPITAL MARKET HIGHLIGHTS

    For the three months ending June 30, 2009, First Capital Realty closed on
the following financings:

    
    -   Four secured financing transactions for gross proceeds of $54.8
        million at a weighted average interest rate of 6.7% and a weighted
        average term to maturity of 10 years.
    

    For the six months ending June 30, 2009, First Capital Realty closed on
the following financings:

    
    -   Nine secured financing transactions for gross proceeds of
        $135.3 million at a weighted average interest rate of 6.3% and a
        weighted average term to maturity of 8 years.
    -   A three year, $450 million secured revolving credit facility with a
        syndicate of ten banks jointly led by RBC Capital Markets, TD
        Securities, and BMO Capital Markets. The new facility was used to
        replace the Company's existing three year $350 million Senior
        Unsecured Revolving Credit Facility, which had a maturity date of
        March 2010.
    -   A three year, $75 million secured revolving credit facility with the
        Bank of Nova Scotia maturing January 2012.
    

    First Capital Realty issued 2.1 million common shares for net proceeds of
$35.9 million in the first two quarters of 2009 primarily from the following
activities:

    
    -   On February 17, 2009 the Company issued 1.4 million common shares to
        acquire 1.8 million shares of Allied Properties REIT;
    -   On March 31, 2009, the Company issued 434,000 common shares at a net
        price of $14.66 as payment of the interest due to holders of the
        5.50% convertible debentures.
    -   Convertible debentures totalling $6.3 million in principal were
        converted at the option of the holder resulting in the issuance of
        approximately 231,000 common shares
    

    SUBSEQUENT EVENT HIGHLIGHTS

    Issuance of Shares

    On August 5, 2009 the Company completed a bought deal common share issue
generating total gross proceeds of $59.0 million from the issuance of
3,450,000 common shares at a price of $17.10 per common share. Each Unit
issued consists of one common share of First Capital Realty, and two-thirds of
a common share purchase warrant expiring October 2010 at an exercise price
equal to $17.53.

    Dividend-In-Kind

    On August 14, 2009, First Capital Realty completed its previously
announced special dividend-in-kind of the Company's interest in Gazit America
Inc. (formerly known as First Capital America Holding Corp.) ("Gazit
America"). Gazit America is a Canadian company that, indirectly, owns the
Company's shares in Equity One (approximately 14.1 million shares), the debt
secured by the Equity One shares (approximately US$100 million) and certain
other liabilities, including subordinated debt owing to First Capital Realty
in the amount of approximately US$36 million. As a result of this special
dividend, First Capital Realty no longer has any interest in Gazit America, or
the shares in Equity One owned by it.
    With the closing of the spin-off, Gary Samuel currently a director with
First Capital Realty, will be resigning. Mr. Samuel is joining the Board of
Gazit America.
    "Gary has been one of the longest serving independent directors on our
Board," said Chaim Katzman, Chairman, First Capital Realty, "We thank Gary for
his outstanding dedication, experience and competence, as well as his overall
contribution to the success of our Company. We wish him all the best in his
future endeavours."

    Acquisitions

    On July 15, 2009 the Company acquired Langford Centre, a 60,000 square
foot shopping centre and a 0.5 acre adjacent land parcel located on Goldstream
Avenue, in Victoria, BC. The purchase price of $10.3 million, including
closing costs, was satisfied in cash and the assumption of $5.6 million of
debt at a rate of 4.4% maturing November 2010.

    Payment of Interest in Shares

    The Company will pay the interest due on September 30, 2009 to holders of
both classes of its 5.50% convertible unsecured subordinated debentures due
September 30, 2017 (FCR.DB.A and FCR.DB.B) by the issuance of common shares.
The number of common shares to be issued per $1000 principal amount of
debentures will be calculated by dividing the dollar amount of interest
payable by an amount equal to 97% of the volume-weighted average trading price
of the common shares of First Capital Realty on the Toronto Stock Exchange
calculated for the 20 consecutive trading days ending on September 23, 2009.
The interest payment is approximately $6.25 million, plus any accrued and
unpaid interest on debentures which are converted after the date hereof and on
or before September 23, 2009.
    It is the current intention of First Capital Realty to satisfy its
obligations to pay principal and interest on its 5.50% convertible unsecured
subordinated debentures by issuance of common shares.

    Quarterly Dividend

    The Company announced that it will pay a third quarter dividend of $0.32
per common share on October 14, 2009 to shareholders of record on September
29, 2009.

    OUTLOOK

    Over the past several years First Capital Realty has made significant
progress in growing its business and generating accretive growth in funds from
operations while enhancing the quality of its portfolio.
    The current environment remains extremely competitive; however the
competition seems to have shifted to the capital side of the Company's
business. Both debt and equity markets are accessible but continue to be
challenging relative to pricing currently being asked by property vendors. The
Company will continue to selectively acquire properties that are well-located
and of high quality, where they add strategic value and/or operating synergies
provided they will be accretive to FFO over the long term, and equity and debt
capital can be priced and committed to maintain conservative leverage.
    Development and redevelopment activities continue to provide the Company
with opportunities to grow within its existing portfolio of assets. Once
completed, these activities typically generate higher returns on investment.
    With respect to acquisitions of both income-producing and development
properties, the Company will continue to focus on maintaining the
sustainability and growth potential of rental income to ensure that among
other things, refinancing risk is minimized. This is particularly important
given the current cost of capital
    Specifically, Management will focus on the following four areas to
achieve its objectives in 2009:
    
    -   same property net operating income growth, taking into account
        maintaining high occupancy;
    -   development and redevelopment activities;
    -   selective acquisitions
    -   increasing efficiency and productivity of operations; and
    -   careful capital allocation to decrease dependence on capital markets.
    

    Overall, Management is confident that the quality of the Company's
balance sheet, the defensive nature of its assets and operations will continue
to serve it well in the current environment.

    2009 GUIDANCE

    Projections involve numerous assumptions such as rental income (including
assumptions on timing of lease-up, development coming on line and levels of
percentage rent), interest rates, tenant defaults, the U.S. - Canadian foreign
currency exchange rate, corporate expenses, level and timing of acquisitions
of income-producing properties, the Company's share price, number of shares
outstanding and numerous other factors. Not all factors which affect our range
of projected funds from operations and adjusted funds from operations are
determinable at this time and actual results may vary from the projected
results in a material respect, and may be above or below the range presented
in a material respect.

    
    -------------------------------------------------------------------------
    (per share amounts,
     except for projected
     FFO and shares
     outstanding)                Q2                Q1            Variance
    -------------------------------------------------------------------------
                                 FFO Guidance
    -------------------------------------------------------------------------
                            Low     High      Low     High      Low     High
    -------------------------------------------------------------------------
    Projected diluted
     net income          $ 0.41   $ 0.43   $ 0.41   $ 0.43        -        -
    -------------------------------------------------------------------------
    Adjustments

      Projected FFO
       from Equity One     0.15     0.16     0.22     0.24    (0.07)   (0.08)

      Projected equity
       income from
       Equity One         (0.09)   (0.09)   (0.14)   (0.16)    0.05     0.07

      Projected
       amortization
       and future
       income taxes        1.16     1.18     1.14     1.19     0.02    (0.01)
    -------------------------------------------------------------------------
    Projected FFO
     per share(1)       $  1.63  $  1.68  $  1.63  $  1.70        -    (0.02)
    -------------------------------------------------------------------------
    Projected FFO(1)    $152.7M  $158.0M  $150.2M  $156.8M  $  2.5M  $  1.2M
    -------------------------------------------------------------------------
    Projected weighted
     average shares
     outstanding for
     per share FFO
     calculations             93.9M            92.4M              1.5M
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    (per share amounts,
     except for projected
     FFO and shares
     outstanding)                Q2                Q1            Variance
    -------------------------------------------------------------------------
                                AFFO Guidance
    -------------------------------------------------------------------------
    Projected FFO(1)    $152.7M  $158.0M  $150.2M  $156.8M  $  2.5M  $  1.2M
    -------------------------------------------------------------------------
    Projected weighted
     average shares
     outstanding for
     per share AFFO
     calculations
     (including
     conversion of
     convertible
     debentures)             102.2M           100.8M              1.4M
    -------------------------------------------------------------------------
    Projected FFO
     (using weighted
     average AFFO
     shares
     outstanding)(1)    $  1.50  $  1.54  $  1.49  $  1.56  $  0.01  $ (0.02)
    -------------------------------------------------------------------------
      Projected
       dividend
       income -
       return of
       capital
       portion             0.02     0.03     0.03     0.03    (0.01)       -

      Projected
       dividends from
       Equity One net
       of FFO from
       Equity One         (0.01)   (0.02)    0.01    (0.01)   (0.02)   (0.01)

      Projected revenue
       sustaining
       capital
       expenditures       (0.11)   (0.10)   (0.12)   (0.10)    0.01        -

      Projected non
       cash items, net     0.09     0.09     0.08     0.09     0.01        -
    -------------------------------------------------------------------------
    Projected AFFO(1)   $  1.49  $  1.54  $  1.49  $  1.57        -  $ (0.03)
    -------------------------------------------------------------------------
    (1) See Funds from Operations section of this press release.
    

    The variance between Q1 and Q2 FFO and AFFO guidance is primarily
associated with the Dividend-In-Kind transaction that was finalized on August
14, 2009 and the specific assumptions noted below.
    In addition, the variance in the projected weighted average shares
outstanding for per share FFO and AFFO calculations is due to the equity
issuance completed on August 5, 2009, excluding the warrants.

    
    Q2 Guidance is based on specific assumptions including:

    -   Same property NOI growth of 2 - 3% (excluding redevelopment and
        expansion), an increase from 1.5 - 2.25% in Q1 2009;
    -   Development, redevelopment and expansion coming on-line of 600,000 -
        650,000 square feet with approximate gross book value of $175 to $200
        million;
    -   Income-producing property acquisitions totalling $27 million;
    -   Equity One FFO is based on year-to-date actual results and publicly
        available information and guidance adjusted to Canadian GAAP through
        to the dividend-in-kind payment date;
    -   Current dividend income from securities held is based on publicly
        available information;
    -   Current interest rate environment in Canada and the United States;
    -   Current income tax rates;
    -   Non-cash items adjusted based on year-to-date actual amounts.
    

    The ranges presented represent Management's estimate of results based
upon these assumptions as of the date of this press release. The purpose of
the Company's guidance is to provide readers with Management's view as to the
expected financial performance of the Company for 2009, using factors that are
commonly accepted and viewed as meaningful indicators of financial performance
in the real estate industry. For year-to-date financial information and
analysis please refer to the Company's Management's Discussion and Analysis of
financial position and Results of Operations for the second quarter of 2009
and 2008 and for the six month periods ended June 30, 2009 and 2008.
    Readers should refer to the section below titled "Forward Looking
Statements" for important information relating to our guidance, including risk
factors.

    MANAGEMENT CONFERENCE CALL AND WEBCAST

    Management will hold a conference call on Friday, August 14th, 2009 at
1:00 p.m. EST. Second quarter financial results will be released prior to the
call and made available on First Capital Realty's website in the News section.
The Supplemental Package link will be on our Home Page at
www.firstcapitalrealty.ca or click on Investor Relations, Downloads. To access
the webcast, go to First Capital Realty's website at
www.firstcapitalrealty.ca, and click on the link for the webcast at the bottom
of our Home Page. The webcast will be archived on our Home Page for 30 days
and can be accessed, thereafter, in our Conference Calls section of our
website.
    You may participate in the live conference toll free at 866-299-6657 or
at 416-641-6135. To ensure your participation, please call five minutes prior
to the scheduled start of the call. The call will be archived through August
21, 2009 and can be accessed by dialing toll free 800-408-3053 or 416-695-5800
with access code 5670824.
    Management's presentation will be followed by a question and answer
period. To ask a question, press '(*)1' on a touch-tone phone. The conference
call coordinator is immediately notified of all requests in the order in which
they are made, and will introduce each questioner. To cancel your request,
press the pound key (the number sign). If you hang up, you can reconnect by
dialing 866-299-6657 or 416-641-6135. For assistance at any point during the
call, press '(*)0'.

    ABOUT FIRST CAPITAL REALTY (TSX:FCR)

    First Capital Realty is Canada's leading owner, developer and operator of
supermarket and drugstore-anchored neighbourhood and community shopping
centres, located predominantly in growing metropolitan areas. The Company
currently owns interests in 175 properties, including four under development,
totalling approximately 20.4 million square feet of gross leasable area and 7
land sites in the planning stage for future retail development.

    
                               (*) (*) (*) (*)
    

    Forward Looking Statements

    This press release and in particular the "Outlook" section, contains
forward-looking statements and information within the meaning of applicable
securities legislation. Forward-looking statements can generally be identified
by the expressions "anticipate", "believe", "plan", "estimate", "expect",
"intend", "outlook", "objective", "may", "will", "should", "plan", "continue"
and similar expressions. The forward-looking statements are not historical
facts but reflect the Company's current expectations regarding future results
or events and are based on information currently available to Management.
Certain material factors and assumptions were applied in providing these
forward-looking statements. All forward-looking statements in this press
release are qualified by these cautionary statements.
    Management believes that the expectations reflected in forward-looking
statements are based upon reasonable assumptions; however, Management can give
no assurance that actual results will be consistent with these forward-looking
statements. These forward-looking statements are subject to a number of risks
and uncertainties that could cause actual results or events to differ
materially from current expectations, including the matters discussed under
"Risks and Uncertainties" in the Company's MD&A for the year ended December
31st, 2008.
    Factors that could cause actual results or events to differ materially
from those expressed, implied or projected by forward-looking statements in
addition to those described in the "Risk and Uncertainties" section include,
but are not limited to, general economic conditions, the availability of new
competitive supply of retail properties which may become available either
through construction or sublease, First Capital Realty's ability to maintain
occupancy and to lease or re-lease space at current or anticipated rents,
tenant bankruptcies, the relative illiquidity of real-property, unexpected
costs or liabilities related to acquisitions, construction, environmental
matters, legal matters, reliance on key personnel, financial difficulties and
defaults, changes in interest rates and credit spreads, changes in the
U.S.-Canadian foreign currency exchange rate, changes in operating costs,
First Capital Realty's ability to obtain insurance coverage at a reasonable
cost and the availability of financing. The assumptions underlying the
Company's forward-looking statements contained in the "Outlook" section of
this press release include that consumer demand will remain stable,
demographic trends will continue and there will continue to be barriers to
entry in the markets in which the Company operates. The assumptions used in
developing the Company's guidance are set out in the "Outlook" section of this
press release.
    Readers, therefore, should not place undue reliance on any such
forward-looking statements. Further, a forward-looking statement speaks only
as of the date on which such statement is made. First Capital Realty
undertakes no obligation to publicly update any such statement or to reflect
new information or the occurrence of future events or circumstances except as
required by security laws.
    These forward-looking statements are made as of August 14, 2009.

    
    NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

    Funds from Operations and Adjusted Funds from Operations
    
    In Management's view, funds from operations ("FFO") and adjusted funds
from operations ("AFFO") are commonly accepted and meaningful indicators of
financial performance in the real estate industry. First Capital Realty
believes that financial analysts, investors and shareholders are better served
when the clear presentation of comparable period operating results generated
from FFO and AFFO disclosures supplement Canadian generally accepted
accounting principles ("GAAP") disclosure. These measures are the primary
methods used in analyzing real estate organizations in Canada. The Company's
method of calculating FFO and AFFO may be different from methods used by other
corporations or REITs (real estate investment trusts) and accordingly, may not
be comparable to such other corporations or REITs. FFO and AFFO are presented
to assist investors in analyzing the Company's performance. FFO and AFFO: (i)
do not represent cash flow from operating activities as defined by GAAP, (ii)
are not indicative of cash available to fund all liquidity requirements,
including payment of dividends and capital for growth and (iii) are not to be
considered as alternatives to GAAP net income for the purpose of evaluating
operating performance.

    Funds from Operations - RealPac Recommendations

    First Capital Realty calculates FFO in accordance with the
recommendations of the Real Property Association of Canada ("RealPac"). The
definition is meant to standardize the calculation and disclosure of FFO
across real estate entities in Canada, modelled on the definition adopted by
the National Association of Real Estate Investment Trusts ("NAREIT") in the
United States. FFO as defined by RealPac differs in two respects from the
definition adopted by NAREIT. Under the RealPac definition, future income
taxes are excluded from FFO, whereas under the NAREIT definition, they are
included. In addition, impairment losses on depreciable assets are excluded
from the RealPac FFO definition, whereas the NAREIT definition includes them.
As a result, when calculating FFO, the Company adjusts the FFO reported by
Equity One to comply with the RealPac definition, when appropriate.
    FFO is considered a meaningful additional measure of operating
performance, as it excludes amortization of real estate assets. Amortization
expense assumes that the value of real estate assets diminishes predictably
over time, which is clearly not a valid assumption. FFO also adjusts for
certain items included in GAAP net income that may not be the most appropriate
determinants of the long-term operating performance of the Company including
gains and losses on depreciable real estate assets.

    Net Operating Income

    Net operating income ("NOI") is defined as property rental revenue less
property operating costs. In Management's opinion, net operating income is
useful in analyzing the operating performance of the Company's shopping centre
portfolio. Net operating income is not a measure defined by GAAP and there is
no standard definition of net operating income. As a result, net operating
income may not be comparable with similar measures presented by other
entities. Net operating income is not to be construed as an alternative to net
income or cash flow from operating activities determined in accordance with
GAAP.



    
    FIRST CAPITAL REALTY INC.

    CONSOLIDATED BALANCE SHEETS


    -------------------------------------------------------------------------
    (unaudited)                                         June 30  December 31
    (thousands of dollars)                                 2009       2008(1)
    -------------------------------------------------------------------------
                                                                   (restated)
    ASSETS
    Real Estate Investments
    Shopping centres                                $ 3,087,517  $ 3,040,257
    Land and shopping centres under development         304,245      281,959
    Deferred leasing costs                               16,563       16,146
    Intangible assets                                    25,225       29,312
    -------------------------------------------------------------------------
                                                      3,433,550    3,367,674

    Investment in Equity One, Inc.                      219,060      227,259
    Loans, mortgages and other real estate assets        57,445       32,480
    -------------------------------------------------------------------------
                                                      3,710,055    3,627,413

    Other assets                                         32,550       27,448
    Amounts receivable                                   50,419       45,501
    Cash and cash equivalents                             8,477        7,263
    Future income tax assets                             11,941       11,977
    -------------------------------------------------------------------------
                                                    $ 3,813,442  $ 3,719,602
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Mortgages, loans and credit facilities          $ 1,703,274  $ 1,573,530
    Accounts payable and other liabilities              114,960      166,507
    Intangible liabilities                               15,987       17,264
    Senior unsecured debentures                         592,552      593,288
    Convertible debentures                              213,013      218,247
    Future income tax liabilities                        66,870       55,620
    -------------------------------------------------------------------------
                                                      2,706,656    2,624,456

    SHAREHOLDERS' EQUITY                              1,106,786    1,095,146
    -------------------------------------------------------------------------
                                                    $ 3,813,442  $ 3,719,602
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of dollars,    June 30      June 30      June 30      June 30
     except per share amounts)   2009       2008(1)        2009       2008(1)
    -------------------------------------------------------------------------
                                         (restated)                (restated)
    REVENUE
    Property rental
     revenue              $   109,727  $   101,905  $   220,070  $   203,667
    Interest and other
     income (expense)             146          (18)         898        1,645
    -------------------------------------------------------------------------
                              109,873      101,887      220,968      205,312
    -------------------------------------------------------------------------
    EXPENSES
    Property
     operating costs           38,170       37,530       80,213       75,993
    Interest expense           31,431       27,587       61,710       57,202
    Amortization
      Shopping centres         20,501       18,836       41,051       36,949
      Deferred leasing
       costs                      853          925        1,782        1,774
      Intangible assets         1,847        2,061        3,954        4,274
      Deferred
       financing fees             607          202          935          406
      Other assets                422          341          818          614
    Corporate expenses          5,552        5,357       11,001       11,232
    -------------------------------------------------------------------------
                               99,383       92,839      201,464      188,444
    -------------------------------------------------------------------------
    Equity income from
     Equity One, Inc.           3,369        5,007        7,399        8,817
    -------------------------------------------------------------------------
    Income before
     income taxes              13,859       14,055       26,903       25,685
    -------------------------------------------------------------------------
    Income taxes
      Current                     862          687        1,877        1,329
      Future                    3,904        3,210        6,851        5,816
    -------------------------------------------------------------------------
                                4,766        3,897        8,728        7,145
    -------------------------------------------------------------------------
    Net income            $     9,093  $    10,158  $    18,175  $    18,540
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common
     share, basic
     and diluted          $      0.10  $      0.12  $      0.20  $      0.22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)               June 30      June 30      June 30      June 30
    (thousands of dollars)       2009       2008(1)        2009       2008(1)
    -------------------------------------------------------------------------
                                         (restated)                (restated)

    NET INCOME            $     9,093  $    10,158  $    18,175  $    18,540
    -------------------------------------------------------------------------

    OTHER COMPREHENSIVE
     INCOME (LOSS)

    Unrealized foreign
     currency (losses)
     gains on
     translating self-
     sustaining foreign
     operations
      (Losses) gains
       arising during
       the period              (4,668)        (326)      (3,010)       1,268
      Reclassification
       adjustment for
       dilution loss
       on investment in
       Equity One, Inc.         1,669            -        1,669            -
    -------------------------------------------------------------------------
                               (2,999)        (326)     ( 1,341)       1,268
    -------------------------------------------------------------------------
    Other comprehensive
     income (losses) of
     Equity One, Inc.
      Gains (losses)
       arising during
       the period                 981         (613)       4,346       (1,887)
      Reclassification
       adjustment for
       dilution loss
       included in net
       income                      29            -           29            -
    -------------------------------------------------------------------------
                                1,010         (613)       4,375       (1,887)
    -------------------------------------------------------------------------
    Unrealized gains
     (losses) on cash
     flow hedges of
     interest rates
      Unrealized gains
       (losses) arising
       during the period        8,463        1,457        8,884        (418)
      Reclassification
       adjustments for
       gains included
       in net income              (14)           -          (14)           -
    -------------------------------------------------------------------------
                                8,449        1,457        8,870         (418)
    -------------------------------------------------------------------------
    Change in cumulative
     unrealized gain on
     available-for-sale
     marketable securities
      Unrealized gains
       (losses) arising
       during the period        9,131         (244)       6,822         (347)
      Reclassification
       adjustments for
       losses included
       in net income              198            -          198           52
    -------------------------------------------------------------------------
                                9,329         (244)       7,020         (295)
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss) before
     income taxes              15,789          274       18,924       (1,332)

    Future income
     tax expense (recovery)     4,436          381        4,203         (295)
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)             11,353         (107)      14,721       (1,037)
    -------------------------------------------------------------------------

    COMPREHENSIVE
     INCOME               $    20,446  $    10,051  $    32,896  $   17,503
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS

    ------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of dollars,    June 30      June 30      June 30      June 30
     except per share amounts)   2009       2008(1)        2009       2008(1)
    -------------------------------------------------------------------------
                                         (restated)                (restated)

    Net income for
     the period           $     9,093  $    10,158  $    18,175   $   18,540

    Add (deduct):
      Amortization of
       shopping centres,
       deferred costs and
       intangible assets       23,201       21,822       46,787       42,997
      Gain on disposition
       of income-producing
       shopping centres             -            -         (211)           -
      Equity income
       from Equity One         (3,369)      (5,007)      (7,399)      (8,817)
      Funds from
       operations from
       Equity One               5,587        4,519       12,456       10,701
      Future income taxes       3,904        3,210        6,851        5,816
    -------------------------------------------------------------------------
    Funds from
     operations ("FFO")        38,416       34,702       76,659       69,237
    Add: dilution loss
     on Equity One
     investment                   676            -          676            -
    -------------------------------------------------------------------------
    FFO excluding dilution
     loss on Equity One
     investment           $    39,092  $    34,702  $    77,335  $    69,237
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FFO per diluted
     share                $      0.41  $      0.40  $      0.83  $      0.82
    Add: dilution
     loss on Equity
     One investment              0.01            -         0.01            -
    -------------------------------------------------------------------------
    FFO per diluted
     share excluding
     dilution loss on
     Equity One
     investment           $      0.42  $      0.40  $      0.84  $      0.82
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     diluted shares
     - FFO                 92,622,290   87,269,113   91,901,234   84,315,976
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF ADJUSTED FUNDS FROM OPERATIONS

    ------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of dollars,    June 30      June 30      June 30      June 30
     except per share amounts)   2009       2008(1)        2009       2008(1)
    -------------------------------------------------------------------------
                                         (restated)                (restated)

    FFO excluding
     dilution loss on
     Equity One
     investment           $    39,092  $    34,702  $    77,335  $    69,237
      Add/(deduct):
      Rental revenue
       recorded on a
       straight-line
       basis and market
       rent adjustments        (1,534)      (2,006)      (3,224)      (3,892)
      Non-cash
       compensation
       expense                    941        1,102        1,813        2,067
      Interest expense
       payable in shares        3,423        3,486        6,881        6,966
      Change in cumulative
       unrealized gain on
       marketable
       securities                (369)         268       (1,638)         259
      Dividend income -
       return of
       capital portion            646            -        1,282            -
      Non-cash (gain)
       loss on
       extinguishment
       of debt                    (50)           -          688            -
      Funds from
       operations from
       Equity One              (5,587)      (4,519)     (12,456)     (10,701)
      Dividends from
       Equity One (regular)     4,913        4,278       10,241        8,584
      Gain on termination
       of hedge                   (14)           -          (14)           -
      Gain on disposition
       of land                      -            -         (118)      (1,275)
      Revenue sustaining
       capital expenditures
       and leasing costs       (2,682)      (2,318)      (5,109)      (4,651)
    -------------------------------------------------------------------------
    Adjusted funds from
     operations ("AFFO")  $    38,779  $    34,993  $    75,681  $    66,594
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    AFFO per diluted
     share                $      0.38  $      0.37  $      0.75  $      0.72
    -------------------------------------------------------------------------
    Weighted average
     diluted shares
     for AFFO(2)          101,020,439   95,898,743  100,605,649   92,793,235
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.
    (2) Includes the weighted average outstanding shares that would result
        from the conversion of the convertible debentures.



    FIRST CAPITAL REALTY INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                               Three months ended         Six months ended
    -------------------------------------------------------------------------
    (unaudited)               June 30     June 30       June 30      June 30
    (thousands of dollars)       2009      2008(1)         2009       2008(1)
    -------------------------------------------------------------------------
                                        (restated)                 (restated)

    CASH FLOW PROVIDED
     BY (USED IN):
    OPERATING ACTIVITIES
    Net income            $     9,093  $    10,158  $    18,175  $    18,540
    Items not affecting
     cash
      Amortization             24,230       22,365       48,540       44,017
      Amortization of
       above- and
       below-market
       leases                    (430)        (543)      (1,143)      (1,087)
      Rent revenue
       recognized on a
       straight-line basis     (1,104)      (1,463)      (2,081)      (2,805)
      Gain on disposition
       of income-producing
       property                     -            -         (211)           -
      Gains on disposition
       of land                      -            -         (118)      (1,275)
      Realized losses on
       sale of marketable
       securities                 276            -          973           52
      Change in cumulative
       unrealized losses
       (gains) on
       marketable
       securities
       held-for-trading          (369)         268       (1,638)         259
      (Gain) loss on
       settlement of debt         (50)           -          688            -
      Non-cash
       compensation
       expense                    941        1,102        1,813        2,067
      Interest paid in
       excess of effective
       interest on assumed
       mortgages                 (291)        (384)        (611)        (849)
      Effective interest
       rate in excess of
       coupon rate on
       senior unsecured
       and convertible
       debentures                 224          215          442          422
      Convertible
       debenture interest
       paid in common
       shares                       -            -        6,360        6,483
      Other non-cash
       interest expense           691          605        1,343        1,261
      Equity income from
       Equity One, Inc.        (3,369)      (5,007)      (7,399)      (8,817)
      Dilution loss on
       Equity One, Inc.
       investment                 676            -          676            -
      Future income taxes       3,904        3,210        6,851        5,816
    Deferred leasing costs     (1,176)        (626)      (2,201)      (1,584)
    Dividends received
     from Equity One, Inc.      4,913        4,278       10,241        8,584
    Net change in non-cash
     operating items           (2,358)      (9,773)     (20,769)     (24,831)
    -------------------------------------------------------------------------
    Cash provided by
     operating activities      35,801       24,405       59,931       46,253
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Acquisition of
     shopping centres         (12,357)           -      (18,042)      (6,648)
    Acquisition of land
     and shopping centres
     held for development      (7,960)         (90)      (9,359)     (11,107)
    Proceeds from
     disposition of land
     held for development           -        1,826           70        1,826
    Expenditures on
     shopping centres          (5,877)      (4,348)     (12,060)      (8,539)
    Expenditures on land
     and shopping centres
     under development        (40,397)     (65,074)     (71,230)     (91,587)
    Changes in accounts
     payable and accrued
     liabilities related
     to investing
     activities                  (984)      21,669      (24,438)      23,570
    Increase in loans and
     mortgages receivable        (333)         (81)      (1,026)        (300)
    Investment in
     marketable securities        (58)      (9,016)      (2,745)      (9,188)
    Return of capital from
     investments in
     marketable securities        645           74        1,282           74
    Proceeds from
     disposition of
     marketable securities      5,309        2,130        8,603        2,130
    -------------------------------------------------------------------------
    Cash used in
     investing activities     (62,012)     (52,910)    (128,945)     (99,769)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Mortgage financings,
     loans and credit
     facilities
      Borrowings, net of
       financing costs        218,066      136,237      485,909      223,627
      Principal instalment
       payments               (10,157)      (9,380)     (20,235)     (18,741)
      Other repayments on
       maturity              (149,209)    (130,321)    (335,395)    (248,682)
    Issuance of common
     shares, net of issue
     costs                         98          838           38      105,500
    Purchase of senior
     unsecured debentures      (1,145)           -       (1,145)           -
    Payment of dividends      (29,649)      (7,517)     (58,752)     (13,366)
    -------------------------------------------------------------------------
    Cash provided by
     financing activities      28,004      (10,143)      70,420       48,338
    -------------------------------------------------------------------------
    Effect of currency
     rate movement on cash
     balances                  (1,396)         (40)        (192)         (65)
    -------------------------------------------------------------------------
    Increase in cash and
     cash equivalents             397      (38,688)       1,214       (5,243)
    Cash and cash
     equivalents,
     beginning of the
     period                     8,080        43,896       7,263       10,451
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     the period           $     8,477  $      5,208  $    8,477  $     5,208
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUPPLEMENTARY
     INFORMATION
    Cash income taxes
     paid                 $       891  $        613  $    1,349  $       926
    -------------------------------------------------------------------------
    Cash interest paid    $    32,157  $     29,586  $   62,744  $    59,981
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.
    





For further information:

For further information: Dori J. Segal, President & C.E.O., or Karen H.
Weaver, E.V.P. & C.F.O., First Capital Realty Inc., 85 Hanna Avenue, Suite
400, Toronto, Ontario, Canada, M6K 3S3, Tel: (416) 504-4114, Fax: (416)
941-1655, www.firstcapitalrealty.ca


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