First Capital Realty announces record 2006 results



    TORONTO, March 9 /CNW/ - First Capital Realty Inc. ("First Capital
Realty") (TSX:FCR) Canada's leading owner, developer and operator of
supermarket-anchored neighbourhood and community shopping centres, located
predominantly in growing metropolitan areas, announced today record financial
results for the fourth quarter and year ended December 31, 2006.

    
    YEAR HIGHLIGHTS:

    ($ millions, except share and     Year ended December 31      Percentage
     per share amounts)                     2006          2005        change
    -------------------------------------------------------------------------

    Property rental revenue          $     326.0   $     264.8         23.1%

    Net operating income (NOI)       $     205.6   $     165.0         24.6%

    Funds from operations (FFO)      $     117.2   $      94.7         23.8%

    FFO per diluted share            $      1.58   $      1.48          6.8%

    FFO per diluted share (before
     non-recurring items)            $      1.55   $      1.45          6.9%

    Debt to market capitalization          43.7%         44.7%

    Weighted average number of
     shares for FFO (000's)               74,322        63,996         16.1%
    -------------------------------------------------------------------------


    OPERATIONS HIGHLIGHTS FOR THE YEAR 2006:

    -   Invested $607 million in acquisitions, development activities and
        property improvements
    -   Added 2.5 million square feet of gross leasable area from
        acquisitions and development coming on line
    -   Acquired six development land sites and additional land at eight
        existing properties comprising a total of 58 acres
    -   3.7% same property NOI growth; 5.5% increase on renewal leases
    -   Occupancy increased to 95.7% from 95.0% at December 31, 2005
    -   Net new leasing totalled 509,500 square feet including development
        coming on line; renewal leasing totalled 1.4 million square feet
    -   Average lease rate per occupied square foot increased by 2.5% to
        $13.95 at December 31, 2006
    -   Completed new leasing on existing space totalling 468,700 square feet
        at an average rate of $15.69 per square foot, representing a 16.1%
        increase versus lost leases.


    FOURTH QUARTER HIGHLIGHTS:


    -------------------------------------------------------------------------
                                            Three months ended
     ($ millions, except share and             December 31        Percentage
     per share amounts)                     2006          2005        change
    -------------------------------------------------------------------------

    Property rental revenue          $      87.8   $      70.9         23.8%

    Net operating income (NOI)       $      57.3   $      45.3         26.5%

    Funds from operations (FFO)      $      32.7   $      26.9         21.6%

    FFO per diluted share            $      0.43   $      0.38         13.2%

    FFO per diluted share (before
     non-recurring items)            $      0.40   $      0.38          5.3%

    Weighted average number of
     shares for FFO (000's)               76,025        71,311          6.6%
    -------------------------------------------------------------------------


    -   Invested $190 million in acquisitions, development and property
        improvements
    -   Added 845,500 square feet of gross leasable area from acquisitions
        and development coming on line
    -   6.5% same property NOI growth; 5.9% increase on renewal leases
    -   Occupancy increased to 95.7% from 95.4% at September 30, 2006
    -   Net new leasing totalled 219,000 square feet, including development
        coming on line; renewal leasing totalled 477,000 square feet
    

    "2006 was another year of record results as we expanded our portfolio
through acquisitions and developments and generated solid organic growth in
NOI," said Dori J. Segal, President & CEO. "Looking ahead over the next
several years, our goal is to continue to grow the business by focussing
specifically on same property NOI growth, development activities, operating
efficiencies and our cost of capital. Simply put, our objective is to make
First Capital Realty the best shopping centre company in the country,
particularly in terms of earnings growth."

    FINANCIAL HIGHLIGHTS

    FFO presented herein is a key financial measurement used by the real
estate industry to measure and compare the operating performance of real
estate organizations. FFO is a supplemental non-GAAP financial measure and a
complete reconciliation containing adjustments from GAAP net income to FFO is
included in this press release.

    Funds from Operations

    FFO in the fourth quarter of 2006 increased 21.6% to $32.7 million or
$0.43 per diluted common share, from $26.9 million or $0.38 per diluted common
share in the same period in 2005. For the year ended December 31, 2006, FFO
rose 23.8% to $117.2 million or $1.58 per diluted common share from
$94.7 million or $1.48 per diluted common share in 2005. The increase in FFO
per share was due primarily to net operating income growth (defined as
property rental revenue less property operating expenses) resulting from
acquisitions and development projects coming on line, partially offset by an
increase in interest expense of $5.8 million and $13.5 million, and a decline
in FFO from Equity One of $1.9 million and $3.8 million for the fourth quarter
and year, respectively, and a 16.1% increase in the weighted average number of
diluted common shares. FFO for the year ended December 31, 2006 included
non-recurring items amounting to approximately $1.8 million or $0.03 per
diluted common share. Non-recurring items included in FFO in 2005 amounted to
approximately $1.6 million or $0.03 per diluted common share.
    Non-recurring items in FFO for the year ended December 31, 2006, includes
gains on the sale of marketable securities of $3.7 million and income from
non-recourse cash flow participation loans of $0.5 million offset by
unrealized losses on certain interest rate swaps of $0.4 million, a loss on
early extinguishment of debt at Equity One of $0.4 million, and severance,
write-off of abandoned transactions and management transition costs at Equity
One of $1.6 million. Non-recurring items in FFO for the year ended
December 31, 2005 included gains on the redemptions of convertible debentures
of $1.0 million and a $0.6 million non-recurring gain from Equity One.


    
    Net Income
    -------------------------------------------------------------------------
    ($ thousands, except    Three months ended
     per share amounts)           Dec. 31              Year ended Dec. 31
    -------------------------------------------------------------------------
                           2006          2005          2006          2005

    Net income         $    12,035   $     7,626   $    45,959   $    29,196
    Earnings per share
     (diluted)         $      0.16   $      0.11   $      0.62   $      0.50
    Weighted average
     commons shares
     (diluted)          76,025,000    71,311,000    74,322,000    68,893,000
    -------------------------------------------------------------------------
    


    Net income in the fourth quarter of 2006 totalled $12.0 million or
$0.16 per diluted common share compared to $7.6 million or $0.11 per diluted
common share in the same period in 2005. For the year ended December 31, 2006,
net income was $46.0 million or $0.62 per diluted common share compared to
$29.2 million or $0.50 per diluted common share in 2005. The increase in net
income was primarily from net operating income growth (property rental revenue
growth less property operating expenses) due to acquisitions and development
coming on line, increased equity income from Equity One, Inc. that resulted
from a gain on disposition of their Texas portfolio (approximately $19.4
million, net of taxes) partially offset by increased interest expense of $13.5
million, an increase in amortization expense of $18.1 million and to a lesser
degree, an increase in the weighted average number of shares outstanding.

    ACQUISITION AND DEVELOPMENT HIGHLIGHTS

    During the fourth quarter of 2006, the Company acquired interests in
seven income-producing shopping centres; three in Ontario, two in British
Columbia, and two in Quebec. The aggregate acquisition amount of
$127.5 million, including closing costs, was funded with cash and assumed
mortgages of $37.8 million.
    The Company invested $8.5 million in acquiring additional space at
existing properties and two land parcels at or adjacent to existing
properties, adding 18,000 square feet of gross leasable area and 6.7 acres of
expansion land to the portfolio.
    The Company also invested $18.2 million in the acquisition of four land
sites adding 32.3 acres of commercial land for future development.
    For the year ended December 31, 2006, the Company invested a total of
$475.7 million in the acquisition of interests in 25 income-producing shopping
centres totalling 1.8 million square feet; the purchase of additional space
and land parcels at or adjacent to existing properties, adding 235,100 square
feet of space at eleven properties; 17.3 acres of commercial land at nine
properties; and, additional interests at two of the Company's properties.
    During the year, the Company also acquired six development land sites
comprising 40.7 acres for an aggregate acquisition amount of $22.6 million.
    Development of 200,500 square feet was brought on line during the fourth
quarter leased at an average rate of $14.73 per square foot. For the year, the
Company brought on line 376,000 square feet of which 100% was occupied at an
average rate of $16.35 per square foot. In addition a 102,900 square foot
grocery store was built by a tenant on one of the Company's properties.
    The Company also invested $35.6 million during the fourth quarter in its
active development projects and improvements to existing properties in the
portfolio. For the year ended December 31, 2006, investment in these
activities totalled $108.5 million.

    OPERATING HIGHLIGHTS

    Acquisitions during 2006, combined with the full impact of acquisitions
in the prior year, contributed $12.6 million to NOI in the quarter, while
development and redevelopment activities contributed a further $5.6 million.
Acquisitions completed in 2006, combined with the full impact of acquisitions
in the prior year contributed $43.3 million to NOI, while development and
redevelopment activities contributed a further $19.7 million. Same property
NOI increased 6.5% and 3.7%, generating growth of $2.2 million and
$4.8 million in the three months and year ended December 31, 2006,
respectively.
    Leasing activity in the fourth quarter, including development coming on
line, resulted in net new leasing of 219,000 square feet. Renewal leasing
totalled 477,000 square feet. The Company achieved a 5.9% increase on renewal
leases over expiring rates. For the year, net new leasing, including
development coming on line totalled 509,500 square feet. Renewal leasing
totalled 1.4 million square feet.
    Properties acquired in 2006 had an occupancy of 93.9% providing potential
for future income growth as vacant space is leased. The average rate per
occupied square foot at December 31, 2006 increased to $13.72 per square foot,
before the impact of the 2006 acquisitions, and to $13.95 per square foot
including the 2006 acquisitions from $13.61 at December 31, 2005.
    Portfolio occupancy at December 31, 2006 increased to 95.7% from 95% at
December 31, 2005 and 95.4% at September 30, 2006.

    FINANCING AND CAPITAL MARKET HIGHLIGHTS

    During 2006, Management implemented a series of capital markets
transactions to further strengthen the Company's balance sheet. The debt to
market capitalization improved to 43.7% at December 31, 2006, from 44.7% at
December 31, 2005.
    During the year the Company issued 4.7 million common shares for total
equity raised of $106.2 million through various financing transactions
including an equity offering on a bought deal basis, the exercise of warrants
and options, the payment of interest on certain of its convertible debentures
in shares and the dividend reinvestment plan.
    The Company also issued an additional $300 million of senior unsecured
debentures using proceeds in its acquisition and development activities and
for payment of maturing mortgages.
    "We are continuing to implement our unsecured financing strategy with our
issuance of unsecured debentures, and, subsequent to year end, closing our
three year unsecured revolving credit facility", said Karen Weaver, Chief
Financial Officer. "We believe over the long term this strategy will reduce
our cost of capital and provide further flexibility in financing our growth".
    As of the date of this press release the Company has 75,992,289 common
shares outstanding.

    SUBSEQUENT EVENT HIGHLIGHTS

    Acquisitions
    Since January 1, 2007, First Capital Realty has invested $15.5 million in
the acquisition of two development sites totalling 38.6 acres of commercial
land.

    Issuance of Senior Unsecured Debentures
    On January 31, 2007 the Company issued $100 million of Series E senior
unsecured debentures at a coupon rate of 5.36% for net proceeds of
$99.3 million. These debentures mature January 31, 2014 with interest payable
on January 31 and July 31 each year.

    Interest on Convertible Debentures
    On February 27, 2007, the Company announced that it will pay the interest
due on March 31, 2007 to holders of both classes of its 5.50% convertible
unsecured subordinated debentures due September 30, 2017 by the issuance of
common shares.

    Unsecured Credit Facility
    On March 5, 2007 the Company completed a $250 million three year senior
unsecured revolving credit facility syndicated with six financial
institutions. Two of the Company's three existing secured credit facilities
were cancelled effective the same date. As of March 5, 2007 properties with a
gross book value of $195.4 million were released as security under the
existing secured credit facilities. The remaining secured facility will expire
on April 30, 2007 and will not be renewed. Properties with a gross book value
of $29.5 million will be released as security on its expiry.

    DIVIDENDS

    The Company will pay a first quarter dividend of $0.31 per common share
on April 5, 2007 to shareholders of record on March 28, 2007.

    OUTLOOK

    In 2006, First Capital Realty made significant progress in meeting or
exceeding all of its stated goals and objectives. The Company grew its
business and generated solid increases in funds from operations while
finishing the year with a strong balance sheet.
    The acquisition environment remains extremely competitive. Nevertheless,
the Company will continue to acquire properties that are well-located and of
high quality that add strategic value and/or operating synergies, provided
they will be accretive to FFO over the long term.
    Development and redevelopment activities will continue to provide the
Company with opportunities to participate in growth markets and, once
completed, 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 in
the current environment with decreasing capitalization rates resulting from
increasing real estate prices.

    
    Specifically, Management will focus on the following four areas to achieve
its objectives in 2007:
        -   same property net operating income growth;
        -   development and redevelopment activities;
        -   improving efficiency and productivity of our operations;
        -   improving the cost of capital.

    Overall, Management is confident that the quality of the Company's real
estate will continue to generate sustainable and growing cash flows while
producing superior returns on investment over the long term.

    GUIDANCE

    Guidance for the year ending December 31, 2007 is as follows:

    -------------------------------------------------------------------------
    (per share amounts)                                Low           High
    -------------------------------------------------------------------------

    Projected diluted net income                   $      0.34   $      0.38

    Adjustments
      Projected FFO from Equity One net of
       equity income                                      0.11          0.12
      Projected amortization and future
       income taxes                                       1.10          1.11
    -------------------------------------------------------------------------
    Projected FFO                                  $      1.55   $      1.61
    -------------------------------------------------------------------------
    

    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, participation by shareholders in our Dividend
Reinvestment Plan and numerous other factors. In addition, the projected range
of funds from operations includes Equity One based on publicly available
information. Not all factors which affect our range of projected 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. Specific assumptions include acquisitions
totalling $300 million, development coming on line of 575,000 square feet and
the current interest rate environment and current U.S.-Canadian foreign
exchange rate. The range presented represents Management's estimate of results
based upon these assumptions as of the date of this press release.
    Readers should refer to the section below titled "Forward-Looking
Statements" for important information relating to our guidance, including risk
factors.

    CONFERENCE CALL

    Management will hold a conference call at 1:00 p.m. ET on Friday,
March 9, 2007 to discuss the Company's 2006 year end results. The call and
supporting slides can be accessed at the Company's website at
www.firstcapitalrealty.ca You may participate in the live conference toll free
at 800-633-8954 or at 416-641-6652. To ensure your participation, please call
five minutes prior to the scheduled start of the call. The call will be
archived through March 16, 2007 and can be accessed by dialing toll free
800-558-5253 or 416-626-4100 with access code 21325986.

    WEBCAST

    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.
    Management's presentation will be followed by a question and answer
period. To ask a question, press '1' followed by '4' 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 '1' followed by '3'. If you hang up, you can reconnect by
dialing 800-633-8954 or 416-641-6652. For assistance at any point during the
call, press '(*)0'.

    COMPANY INFORMATION

    The Company's Supplementary Information for the fourth quarter and year
ended 2006 will be posted on the Company's website at
www.firstcapitalrealty.ca.

    ABOUT FIRST CAPITAL REALTY (TSX:FCR)

    First Capital Realty is Canada's leading owner, developer and operator of
supermarket-anchored neighbourhood and community shopping centres, located
predominantly in growing metropolitan areas. The Company currently owns
interests in 157 properties, including 6 under development, with approximately
18.2 million square feet of gross leasable area. In addition, the Company owns
13.9 million shares of Equity One (approximately 19.1%), one of the largest
shopping centre REITS in the southern U.S., that trades on the New York Stock
Exchange under the ticker symbol EQY. Including its investment in Equity One,
the Company has interests in 336 properties totalling approximately
36.4 million square feet of gross leasable area.

    Forward-Looking Statements

    Certain statements included in this press release constitute
forward-looking statements, including those identified by the expressions
"anticipate", "believe", "plan", "estimate", "expect", "intend" and similar
expressions to the extent they relate to the Company or its Management. 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.
    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
"Risk Management" in the Management's Discussion and Analysis ("MD&A") which
is available on SEDAR at www.sedar.com.
    Factors that could cause actual results or events to differ materially
from those expressed or implied by forward-looking statements in addition to
those described in the MD&A, 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, financial difficulties
and defaults, changes in interest rates, changes in operating costs, First
Capital Realty's ability to obtain insurance coverage at a reasonable cost and
the availability of financing.
    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.
    These forward-looking statements are made as of March 8, 2007.

    NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

    Funds from Operations

    In Management's view, funds from operations ("FFO") is a commonly
accepted and meaningful indicator of financial performance in the real estate
industry. First Capital Realty believes that financial analysts, investors and
stockholders are better served when the clear presentation of comparable
period operating results generated from FFO disclosure supplements Canadian
Generally Accepted Accounting Principles ("GAAP") disclosure. The Company's
method of calculating FFO may be different from methods used by other
corporations or REITs and accordingly, may not be comparable to such other
corporations or REITs. FFO is presented to assist investors in analyzing the
Company's performance. FFO: (i) does not represent cash flow from operating
activities as defined by GAAP (ii) is not indicative of cash available to fund
all liquidity requirements, including payment of dividends and capital for
growth and (iii) should not be considered as an alternative to net income
(which is determined in accordance with GAAP) 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, and is modelled on the definition
adopted by the National Association of Real Estate Investment Trusts
("NAREIT") in the United States.

    Net Operating Income

    Net operating income 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. Accordingly, net operating
income may not be comparable with similar measures presented by other
entities. Net operating income should not 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

    -------------------------------------------------------------------------
                                                   December 31   December 31
    (thousands of dollars)                                2006          2005
    -------------------------------------------------------------------------
    ASSETS
    Real Estate Investments
    Shopping centres                               $ 2,423,801   $ 1,939,775
    Land and shopping centres under development        178,347       136,475
    Deferred costs                                      74,778        52,938
    Intangible assets                                   31,868        24,340
    -------------------------------------------------------------------------
                                                     2,708,794     2,153,528
    Investment in Equity One, Inc.                     228,665       211,830
    Loans, mortgages and other real estate assets       24,056        26,912
    -------------------------------------------------------------------------
                                                     2,961,515     2,392,270
    Other assets                                        47,129        37,592
    Amounts receivable                                  28,070        17,026
    Cash and cash equivalents                            6,810         5,335
    Future income tax assets                            17,355        17,065
    -------------------------------------------------------------------------
                                                   $ 3,060,879   $ 2,469,288
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Mortgages and credit facilities                $ 1,388,650   $ 1,297,040
    Accounts payable and other liabilities             106,145        89,959
    Intangible liabilities                              18,453        12,157
    Senior unsecured debentures                        399,813       100,000
    Convertible debentures                             192,189        96,990
    Future income tax liabilities                       44,036        30,598
    -------------------------------------------------------------------------
                                                     2,149,286     1,626,744
    SHAREHOLDERS' EQUITY                               911,593       842,544
    -------------------------------------------------------------------------
                                                   $ 3,060,879   $ 2,469,288
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                           Three months ended              Year ended
    -------------------------------------------------------------------------
    (thousands of
     dollars, except   December 31   December 31   December 31   December 31
     per share amounts)       2006          2005          2006          2005
    -------------------------------------------------------------------------

    REVENUE
    Property rental
     revenue           $    87,815   $    70,936   $   325,980   $   264,840
    Interest and other
     income                  3,746           805         6,917         3,802
    -------------------------------------------------------------------------
                            91,561        71,741       332,897       268,642
    -------------------------------------------------------------------------
    EXPENSES
    Property operating
     costs                  30,481        25,676       120,354        99,791
    Interest expense        25,323        19,562        93,809        80,332
    Amortization            18,831        14,856        68,441        50,321
    Corporate expenses       6,238         4,521        19,282        14,372
    -------------------------------------------------------------------------
                            80,873        64,615       301,886       244,816
    -------------------------------------------------------------------------
    Equity income from
     Equity One, Inc.        5,517         1,918        32,696        17,475
    Gain on redemption
     of convertible
     debentures                  -             -             -         1,018
    -------------------------------------------------------------------------
    Income before
     income taxes           16,205         9,044        63,707        42,319
    -------------------------------------------------------------------------
    Income taxes:
      Current                  653           458         4,155         4,067
      Future                 3,517           960        13,593         9,056
    -------------------------------------------------------------------------
                             4,170         1,418        17,748        13,123
    -------------------------------------------------------------------------
    Net income         $    12,035   $     7,626   $    45,959   $    29,196
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings
     per common share
    Basic              $      0.16   $      0.11   $      0.62   $      0.72
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted            $      0.16   $      0.11   $      0.62   $      0.50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS

    -------------------------------------------------------------------------
                           Three months ended              Year ended
    -------------------------------------------------------------------------
    (thousands of
     dollars, except   December 31   December 31   December 31   December 31
     per share amounts)       2006          2005          2006          2005
    -------------------------------------------------------------------------

    Net income for
     the period        $    12,035   $     7,626   $    45,959   $    29,196

    Add (deduct):
      Amortization of
       shopping centres,
       deferred costs
       and intangible
       assets               17,579        14,151        64,252        47,816
      Loss (gain) on
       disposition of
       real estate               -            24             -          (202)
      Current income
       tax on Equity
       One special
       dividend from
       gain on real
       estate                  919             -         3,621             -
      Equity income
       from Equity One      (5,517)       (1,918)      (32,696)      (17,475)
      Funds from
       operations from
       Equity One            4,155         6,046        22,457        26,275
      Future income taxes    3,517           960        13,593         9,056
    -------------------------------------------------------------------------

    Funds from
     operations        $    32,688   $    26,889   $   117,186   $    94,666
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Per diluted
       share
        total          $      0.43   $      0.38   $      1.58   $      1.48
        before non-
         recurring
         items         $      0.40   $      0.38   $      1.55   $      1.45
    -------------------------------------------------------------------------

      Weighted average
       diluted shares
       - FFO            76,024,888    71,311,303    74,321,824    63,995,995
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                           Three months ended              Year ended
    -------------------------------------------------------------------------
    (thousands of      December 31   December 31   December 31   December 31
     dollars                  2006          2005          2006          2005
    -------------------------------------------------------------------------
    CASH FLOW PROVIDED
     BY (USED IN):
    OPERATING
     ACTIVITIES
    Net income         $    12,035   $     7,626   $    45,959   $    29,196
    Items not
     affecting cash
      Amortization          18,831        14,856        68,441        50,321
      Amortization of
       above- and
       below-market
       leases                 (470)         (419)       (1,643)       (1,130)
      Rent revenue
       recognized on a
       straight-line
       basis                (3,132)         (659)       (5,839)       (3,677)
      Loss (gain) on
       disposition of
       real estate              (3)           24          (137)         (202)
      Gain on sale of
       marketable
       securities           (3,297)          (89)       (4,221)          (89)
      Gain on redemption
       of convertible
       debentures                -             -             -        (1,018)
      Non-cash
       compensation
       expense                 790           398         2,543         1,532
      Interest paid in
       excess of implicit
       interest on
       assumed mortgages      (589)         (515)       (2,323)       (1,710)
      Debenture interest
       in excess of
       coupon                   88             5           242         1,438
      Convertible
       debenture
       interest paid in
       common shares             -             -         4,295        10,465
      Equity income from
       Equity One, Inc.     (5,517)       (1,918)      (32,696)      (17,475)
      Future income taxes    3,517           960        13,593         9,056
      Unrealized losses
       on certain
       interest rate swaps      57             -           389             -
    Deferred leasing costs    (698)       (1,445)       (5,613)       (7,621)
    Settlement of
     restricted share
     units                  (1,914)            -        (1,914)            -
    Dividends received
     from Equity One, Inc.   4,758         4,619        33,266        18,221
    Net change in
     non-cash operating
     items                  10,780        14,870           831         7,352
    -------------------------------------------------------------------------
    Cash provided by
     operating activites    35,236        38,313       115,173        94,659
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Acquisition of
     shopping centres     (109,366)      (36,063)     (361,329)     (309,317)
    Acquisition of land
     for development        (6,262)       (7,357)      (34,227)      (52,161)
    Proceeds from
     disposition of land
     for development             -             -         1,236             -
    Expenditures on
     shopping centres       (6,906)       (9,283)      (19,429)      (27,050)
    Expenditures on land
     and shopping centres
     under development     (27,947)      (25,745)      (83,449)      (62,843)
    Investment in common
     shares of Equity
     One, Inc.             (16,936)       (2,740)      (16,936)      (15,882)
    (Increase) decrease
     in loans and
     mortgages receivable     (216)        3,301         3,560         3,065
    Investment in
     marketable
     securities            (13,617)       (8,165)      (30,627)      (30,509)
    Proceeds from
     disposition of
     marketable
     securities             15,608        10,174        33,635        19,056
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities           (165,642)      (75,878)     (507,566)     (475,641)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Mortgage financings
     and credit
     facilities
      Borrowings, net of
       financing costs      48,901        68,777       280,904       437,950
      Principal
       instalment
       payments             (7,714)      (12,434)      (29,183)      (23,577)
      Repayment on
       maturity             (4,563)     (109,665)     (267,675)     (236,787)
    Issuance of common
     shares, net of
     issue costs             2,359           686        35,867        61,842
    Issuance of senior
     unsecured debentures,
     net of issue costs        (48)         (271)      297,035        98,912
    Issuance of
     convertible
     debentures, net of
     issue costs            99,029        95,365        99,029        95,365
    Payment of dividends    (5,634)       (4,114)      (22,466)      (52,363)
    -------------------------------------------------------------------------
    Cash provided by
     financing activities  132,330        38,344       393,511       381,342
    -------------------------------------------------------------------------
    Effect of currency
     rate movement on
     cash balances              27           283           357            92
    -------------------------------------------------------------------------
    Increase in cash
     and cash equivalents    1,951         1,062         1,475           452
    Cash and cash
     equivalents,
     beginning of the
     period                  4,859         4,273         5,335         4,883
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of the period     $     6,810   $     5,335   $     6,810   $     5,335
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUPPLEMENTARY
     INFORMATION
    Cash income taxes
     paid              $       666   $     1,415   $     4,051   $     4,495
    -------------------------------------------------------------------------
    Cash interest
     paid              $    25,516   $    22,888   $    94,293   $    75,935
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Dori J. Segal, President & C.E.O., or Karen H.
Weaver, 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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