Gazit America announces its 2010 first quarter results

/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/

TORONTO, May 13 /CNW/ - Gazit America Inc. ("Gazit America" or the "Company") (TSX: GAA) announced today financial results for the three months ended March 31, 2010. Highlights for the quarter include:

    
    -   Cash from operating activities of $1.5 million generated in the
        quarter

    -   Net income of $1.4 million or $0.11 per share in the first quarter

    -   Completed its first acquisition as a stand-alone public company, a
        49,000 sq. ft. medical office building in Ottawa, Ontario
    

"We are pleased with the results generated by our assets during the first quarter of 2010," said Gail Mifsud, CEO of Gazit America. "Our largest investment, Equity One, Inc., a company that trades on the New York Stock Exchange under the ticker EQY, continued to perform well during the quarter. We remain focused on expanding our portfolio in Canada and acquired a high quality 49,000 square foot medical office building located in Ottawa, Ontario during the quarter. We are in discussions with a number of vendors with respect to potential acquisitions," added Ms. Mifsud.

FINANCIAL HIGHLIGHTS

Gazit America reported its first quarter rental revenues and net operating income of $780,000 and $328,000, respectively. The Company's U.S. subsidiaries received dividends from its investment in Equity One of $3.2 million (US$3.1 million or US$0.22 per share) in the quarter ended March 31, 2010.

Equity income in the first quarter was $1.7 million compared to the equity income of $4.0 million in the first quarter of 2009 due mainly to Equity One reporting lower net income in 2010 and foreign exchange differences. Equity income is a non-cash earnings measure and is generated from the Company's ownership interest in Equity One.

In March 2010, Equity One issued a total of approximately 6.0 million additional shares of which the Company acquired 100,000 for cash of US$1.84 million. This resulted in the Company's equity percentage being reduced from 16.3% to approximately 15.4% and a net pre-tax dilution gain of $4.5 million.

Net income for the first quarter of 2010 was $1.4 million or $0.11 per share. This compares to a net income of $1.1 million or $0.12 per share in the first quarter of 2009.

Financial statements and management's discussion and analysis for the three months ended March 31, 2010 will be filed on SEDAR at www.sedar.com and available through our website at www.gazitamerica.com.

ABOUT GAZIT AMERICA (TSX: GAA)

Gazit America is focused on entrepreneurial real estate investments including the acquisition and development of income-producing properties, investments in public and private real estate entities, investments in joint ventures and other structured acquisitions and investments in commercial and residential mortgage-backed securities. Gazit America currently owns approximately 15.4% of Equity One, Inc., a company that trades on the New York Stock Exchange under the ticker EQY, and three properties comprised of six medical office buildings totalling approximately 164,000 square feet of rentable space located in Cambridge, London and Ottawa, Ontario.

FORWARD LOOKING STATEMENT ADVISORY

This press release contains forward-looking statements, and other statements concerning Gazit America's objectives and strategies and Management's beliefs, plans, estimates and intentions. Forward-looking statements can generally be identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", "outlook", "objective", "may", "will", "should", "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 current Management's Discussion and Analysis.

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 "Risks and Uncertainties" section include, but are not limited to, general economic conditions, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, 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, the Company'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. Gazit America 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 securities laws.

These forward-looking statements are made as of May 13, 2010.

NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

Net Operating Income

Net operating income ("NOI") is defined as rental revenues less property operating expenses. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's portfolio. Net operating income is not a measure defined by Canadian Generally Accepted Accounting Principles ("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.

    
    GAZIT AMERICA INC.
    Consolidated Balance Sheets
    (thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
                                                       March 31  December 31
                                                           2010         2009
    -------------------------------------------------------------------------

    ASSETS

    Rental properties                                 $  27,100    $  15,867
    Intangible assets                                     3,419        1,364
    -------------------------------------------------------------------------
                                                         30,519       17,231

    Investment in Equity One, Inc.                      192,319      192,806

    Cash                                                  4,033        3,891
    Prepaid expenses, receivables and other assets        3,378        1,708
    Future income tax asset                                   -          200
    -------------------------------------------------------------------------
                                                      $ 230,249    $ 215,836
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Term loans, credit facilities and mortgages       $ 117,867    $ 107,049
    Advances from affiliated entities                    37,414       38,736
    Accounts payable and other liabilities                7,266        6,191
    Intangible liabilities                                  184           90
    Future income tax liability                          13,139        9,852
    -------------------------------------------------------------------------
                                                        175,870      161,918
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY                                 54,379       53,918
    -------------------------------------------------------------------------
                                                      $ 230,249    $ 215,836
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GAZIT AMERICA INC.
    Consolidated Statements of Earnings
    (thousands of dollars, except per share amounts)
    (unaudited)
    -------------------------------------------------------------------------
                                                          Three months ended
    -------------------------------------------------------------------------
                                                       March 31     March 31
                                                           2010         2009
    -------------------------------------------------------------------------

    REVENUES

    Rental revenues                                   $     780    $       -
    Interest income                                           -            6
    -------------------------------------------------------------------------
                                                            780            6
    -------------------------------------------------------------------------
    EXPENSES

    Property operating expenses                             452            -
    Interest expense                                      2,255        1,604
    General and administrative expenses                   1,102          208
    -------------------------------------------------------------------------
                                                          3,809        1,812
    -------------------------------------------------------------------------

    Equity income from Equity One, Inc.                   1,740        4,030
    Dilution gain on investment in Equity One, Inc.       4,496            -
    -------------------------------------------------------------------------
                                                          6,236        4,030
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Income before the undernoted                          3,207        2,224

    Amortization                                           (280)         (12)
    Unrealized loss on interest rate swaps                 (703)           -
    Unrealized gain (loss) on foreign exchange            1,248         (233)
    -------------------------------------------------------------------------
    Income before income taxes                            3,472        1,979
    -------------------------------------------------------------------------

    Income taxes
      Current                                               343        1,015
      Future                                              1,740         (116)
    -------------------------------------------------------------------------
                                                          2,083          899
    -------------------------------------------------------------------------
    Net income                                        $   1,389    $   1,080
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share, basic and diluted      $    0.11    $    0.12
    -------------------------------------------------------------------------



    GAZIT AMERICA INC.
    Consolidated Statements of Comprehensive Income
    (thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
                                                          Three months ended
    -------------------------------------------------------------------------
                                                       March 31     March 31
                                                           2010         2009
    -------------------------------------------------------------------------

    Net income                                        $   1,389   $    1,080

    Other comprehensive (loss) income
      Foreign currency translation                       (1,168)       2,939
      Other comprehensive (loss) income of Equity
       One, Inc.                                           (112)       3,365
      Derivative instruments designated as cash
       flow hedges                                           94          105
      Future income tax recovery (expense)                   39          (36)
      Other                                                  40            -
    -------------------------------------------------------------------------
                                                         (1,107)       6,373
    -------------------------------------------------------------------------
    Comprehensive income                              $     282   $    7,453
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GAZIT AMERICA INC.
    Consolidated Statements of Shareholders' Equity
    (thousands of dollars, except share numbers)
    (unaudited)
    -------------------------------------------------------------------------


                                Share Capital
                          ------------------------
                                                    Contributed     Retained
                               Number       Amount      Surplus     Earnings
    -------------------------------------------------------------------------

    Shareholders' equity,
     December 31, 2009     12,847,877  $    51,176  $     1,263  $    21,585

    Net income                      -            -            -        1,389
    Options issued                  -            -          179            -
    Other comprehensive loss        -            -            -            -
    -------------------------------------------------------------------------
    Shareholders' equity,
     March 31, 2010        12,847,877  $    51,176  $     1,442  $    22,974
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ------------------------------------------------------------

                                          Retained
                                      Earnings and
                                       Accumulated
                          Accumulated  Other Comp-
                          Other Comp-    rehensive
                            rehensive     Income /
                                (Loss)       (Loss)       Total
    ------------------------------------------------------------

    Shareholders' equity,
     December 31, 2009     $  (20,106) $     1,479  $    53,918

    Net income                      -        1,389        1,389
    Options issued                  -            -          179
    Other comprehensive loss   (1,107)      (1,107)      (1,107)
    ------------------------------------------------------------
    Shareholders' equity,
     March 31, 2010        $  (21,213) $     1,761  $    54,379
    ------------------------------------------------------------
    ------------------------------------------------------------



    -------------------------------------------------------------------------


                                Share Capital
                          ------------------------
                                                    Contributed     Retained
                               Number       Amount      Surplus     Earnings
    -------------------------------------------------------------------------

    Shareholders' equity,
     December 31, 2008      9,212,413  $    34,804  $         -  $    45,934

    Net income                      -            -            -        1,080
    Other comprehensive
     income                         -            -            -            -
    -------------------------------------------------------------------------
    Shareholders' equity,
     March 31, 2009         9,212,413  $    34,804  $         -  $    47,014
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ------------------------------------------------------------

                                           Retained
                                       Earnings and
                          Accumulated   Accumulated
                          Other Comp-   Other Comp-
                            rehensive     rehensive
                         Income/(Loss)       Income        Total
    ------------------------------------------------------------

    Shareholders' equity,
     December 31, 2008     $  (14,801)  $   31,133  $    65,937

    Net income                      -        1,080        1,080
    Other comprehensive
     income                     6,373        6,373        6,373
    ------------------------------------------------------------
    Shareholders' equity,
     March 31, 2009        $   (8,428)  $   38,586  $    73,390
    ------------------------------------------------------------
    ------------------------------------------------------------



    GAZIT AMERICA INC.
    Consolidated Statements of Cash Flow
    (thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
                                                          Three months ended
    -------------------------------------------------------------------------
                                                       March 31     March 31
                                                           2010         2009
    -------------------------------------------------------------------------
    Operating Activities
    Net income                                        $   1,389   $    1,080
    Items not affecting cash:
      Amortization                                          280           12
      Non-cash interest expense                              42           49
      Equity income from Equity One, Inc.                (1,740)      (4,030)
      Dilution gain on investment in Equity One, Inc.    (4,496)           -
      Future income taxes (recovery)                      1,740         (116)
      Unrealized (gain) loss on foreign exchange
       translation                                       (1,248)         233
      Unrealized loss on interest rate swaps                703            -
      Dividends from Equity One, Inc.                     3,190        5,328
      Non-cash compensation expense                         179            -
      Net change in non-cash operating items              1,412          902
    -------------------------------------------------------------------------
    Cash provided by operating activities                 1,451        3,458
    -------------------------------------------------------------------------

    Investing Activities
    Acquisition of rental property, net of mortgage
     assumed and cash acquired                           (3,412)           -
    Capital expenditures                                    (18)           -
    Investment in common shares of Equity One, Inc.      (1,882)           -
    Investments in marketable securities                 (1,331)           -
    -------------------------------------------------------------------------
    Cash used in investing activities                    (6,643)           -
    -------------------------------------------------------------------------

    Financing Activities
    Proceeds from credit facilities                       7,993            -
    Repayment of term loans and mortgages                (1,781)     (33,216)
    (Payments to) receipts from affiliated entities,
     net                                                   (819)      30,208
    -------------------------------------------------------------------------
    Cash provided by (used in) financing activities       5,393       (3,008)
    -------------------------------------------------------------------------

    Effect of currency rate movement on cash balances       (59)        (231)
    -------------------------------------------------------------------------
    Increase in cash                                        142          219
    Cash, beginning of period                             3,891        5,220
    -------------------------------------------------------------------------
    Cash, end of period                               $   4,033   $    5,439
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUPPLEMENTARY INFORMATION
    Income taxes paid                                 $      22   $      458
    Interest paid                                     $   1,085   $    1,746
    -------------------------------------------------------------------------
    

SOURCE Gazit America Inc.

For further information: For further information: regarding Gazit America: Gail Mifsud, C.E.O., Gazit America Inc., 109 Atlantic Avenue, Suite 303, Toronto, Ontario, Canada, M6K 1X4, Tel: (416) 447-6400, Fax: (416) 447-6488, investor.relations@gazitamerica.com; www.gazitamerica.com

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