Gazit America announces its 2010 second quarter results

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

TORONTO, Aug. 10 /CNW/ - Gazit America Inc. ("Gazit America" or the "Company") (TSX: GAA) announced today financial and operating results for the three and six months ended June 30, 2010. Highlights include:

    
        -  Cash from operating activities of $0.5 million for the second
           quarter.

        -  Net loss of $4.4 million or $0.35 per share for the second
           quarter.

        -  Completion of a revolving credit facility with a Canadian
           chartered bank for $8.5 million.

        -  Filing of prospectus for a rights offering for 2.6 million units
           with expected initial gross proceeds of $12.8 million on exercise
           of the rights.
    

"Our second quarter results were in-line with our expectations", said Gail Mifsud, CEO of Gazit America. "During my six months at Gazit America, I am pleased to report that our portfolio continues to perform well, we completed the acquisition of a high quality medical property in Nepean, secured a revolving credit facility with a Canadian chartered bank at an attractive spread, and recently filed our final prospectus for a rights offering marking our first capital raise. In combination, these activities further solidify our balance sheet and provide the financial flexibility to fund our acquisition pipeline. We are working rigorously at revving up our acquisition pace and are optimistic that we will announce transactions shortly." added Ms. Mifsud.

FINANCIAL HIGHLIGHTS

Gazit America reported second quarter rental revenues and net operating income of $1.1 million and $0.6 million, 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 June 30, 2010.

Equity income in the second quarter was $1.9 million compared to the equity income of $3.4 million in the second 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.

Net loss for the second quarter of 2010 was $4.4 million or $0.35 per share compared to net income of $1.0 million or $0.11 per share in the second quarter of 2009. The 2010 results were impacted by $1.6 million in mark-to-market losses and other unrealized losses from hedges and $1.7 million in unrealized foreign exchange losses.

Financial statements and management's discussion and analysis for the three and six months ended June 30, 2010 will be filed on SEDAR at www.sedar.com and available through our website at www.gazitamerica.com.

OTHER HIGHLIGHTS

In July 2010, the Company entered into a binding agreement to purchase a property to be held for redevelopment for approximately $13.5 million (including closing costs). Closing is scheduled to occur in the third quarter of 2010. The purchase price is expected to be satisfied in part by an assumption of a mortgage in the approximate amount of $7.4 million. Although the Company has waived its due diligence condition in respect of this acquisition, it remains subject to customary closing conditions.

In early August 2010, the Company completed a revolving credit facility with a Canadian chartered bank for $8.5 million.

Also in early August 2010, the Company filed a prospectus in respect of the distribution of 12,847,877 rights to subscribe for 2,569,575 units of the Company. One right (a "Right") will be issued for each common share of Gazit America held by holders of the outstanding common shares of record as at 5:00 p.m. (Toronto time) on August 17, 2010 (the "Record Date"). These holders will be mailed the rights offering prospectus describing the rights offering as soon as practicable after August 17, 2010. A holder of rights will be entitled to subscribe, at or before 4:00 p.m. (Toronto time) on September 13, 2010 (the "Rights Expiry Date"), for one Unit for every five Rights held at a price of $5.00 per Unit. Only a shareholder on the Record Date with an address of record in Canada is entitled to receive Rights. Rights not exercised at or before, September 13, 2010 will be void and will have no value.

The Rights will be posted for trading on the TSX under the symbol "GAA.RT" until 12:00 noon (Toronto time) on the Rights Expiry Date, at which time they will be halted from trading.

The Units will separate into common shares (a "Unit Common Share") and Warrants immediately when issued. Each Warrant entitles the holder to purchase, at any time, one common share (a "Warrant Common Share") at a price of $6.00 per Warrant Common Share for the period from the closing of this rights offering up to and including November 30, 2013 and, thereafter, each Warrant entitles the holder to purchase one Warrant Common Share at a price of $7.00 per Warrant Common Share, each subject to adjustment in certain events. The Warrants will expire at 5:00 p.m. (Toronto time) on November 30, 2015. No fractional Units, Warrants or common shares will be issued, but, rather, will be rounded down without any consideration therefor.

The Rights are being issued to all of Gazit America's shareholders; however, Rights will not be registered under the laws of any foreign jurisdiction, including the United States Securities Act of 1933, as amended. Consequently, no Rights will be delivered to any registered or beneficial holder of Gazit America's common shares who has, or who appears to Gazit America, to have, an address not in Canada as of the record date. Such Rights will instead be delivered by Gazit America to the subscription agent for the Rights for sale. In lieu of Rights, such non-resident shareholders will receive their pro rata share of the cash proceeds from the sale of such Rights, less commissions, expenses and applicable withholding taxes.

Further information regarding the offering of Rights can be found in the short form prospectus dated August 5, 2010 under Gazit America's profile on SEDAR at www.sedar.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. (NYSE: EQY), a U.S. real estate investment trust, 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 August 10, 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)
    -------------------------------------------------------------------------
                                                        June 30  December 31
                                                           2010         2009
    -------------------------------------------------------------------------

    ASSETS

    Rental properties                                   $27,167      $15,867
    Intangible assets                                     3,232        1,364
    -------------------------------------------------------------------------
                                                         30,399       17,231

    Investment in Equity One, Inc.                      200,124      192,806

    Cash                                                  4,418        3,891
    Receivables and other assets                          3,960        1,908
    -------------------------------------------------------------------------
                                                       $238,901     $215,836
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Term loans, credit facilities and mortgages        $124,475     $107,049
    Advances from affiliated entities                    38,419       38,736
    Accounts payable and other liabilities                9,040        6,191
    Intangible liabilities                                  167           90
    Future income tax liability                          13,118        9,852
    -------------------------------------------------------------------------
                                                        185,219      161,918
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY                                 53,682       53,918
    -------------------------------------------------------------------------
                                                       $238,901     $215,836
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GAZIT AMERICA INC.

    Consolidated Statements of (Losses) Earnings
    (thousands of dollars, except per share amounts)
    (unaudited)
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
                              June 30      June 30      June 30      June 30
                                 2010         2009         2010         2009
    -------------------------------------------------------------------------

    REVENUES
    Rental revenues            $1,113          $ -       $1,893          $ -
    Interest and other
     income                        36            -           36            6
    -------------------------------------------------------------------------
                                1,149            -        1,929            6
    -------------------------------------------------------------------------
    EXPENSES
    Property operating
     expenses                     522            -          974            -
    Interest expense            2,269        1,449        4,524        3,053
    General and
     administrative
     expenses                   1,198          190        2,300          398
    -------------------------------------------------------------------------
                                3,989        1,639        7,798        3,451
    -------------------------------------------------------------------------

    Equity income from
     Equity One, Inc.           1,878        3,369        3,618        7,399
    Dilution (loss) gain
     on investment in
     Equity One, Inc.               -         (676)       4,496         (676)
    -------------------------------------------------------------------------
                                1,878        2,693        8,114        6,723
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (Loss) income before
      the undernoted             (962)       1,054        2,245        3,278

    Amortization                 (360)         (28)        (640)         (40)
    Unrealized loss on
     interest rate swaps       (1,641)           -       (2,344)           -
    Unrealized gain (loss)
     on foreign exchange       (1,715)       1,059         (467)         826
    -------------------------------------------------------------------------
    (Loss) income before
      income taxes             (4,678)       2,085       (1,206)       4,064
    -------------------------------------------------------------------------

    Income taxes
      Current                     443          949          786        1,964
      Future                     (681)         116        1,059            -
    -------------------------------------------------------------------------
                                 (238)       1,065        1,845        1,964
    -------------------------------------------------------------------------
    Net (loss) income         ($4,440)      $1,020      ($3,051)      $2,100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Loss) earnings per
      common share, basic
      and diluted              ($0.35)       $0.11       ($0.24)       $0.23
    -------------------------------------------------------------------------



    GAZIT AMERICA INC.

    Consolidated Statements of Comprehensive (Loss) Income
    (thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
                              June 30      June 30      June 30      June 30
                                 2010         2009         2010         2009
    -------------------------------------------------------------------------

    Net (loss) income         ($4,440)      $1,020      ($3,051)      $2,100

    Other comprehensive
     (loss) income
      Foreign currency
       translation              3,245       (6,024)       2,077       (3,085)
      Other comprehensive
       (loss) income of
       Equity One, Inc.           (55)       1,010         (167)       4,375
      Derivative instruments
       designated as cash
       flow hedges                  6          788          100          893
      Future income tax
       recovery                    59          345           98          309
      Other                       113            -          153            -
    -------------------------------------------------------------------------
                                3,368       (3,881)       2,261        2,492
    -------------------------------------------------------------------------
    Comprehensive (loss)
     income                   ($1,072)     ($2,861)       ($790)      $4,592
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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 loss                        -            -            -       (3,051)

    Options and DSUs
     issued                         -            -          554            -

    Other comprehensive
     income                         -            -            -            -
    -------------------------------------------------------------------------
    Shareholders' equity,
     June 30, 2010         12,847,877  $    51,176  $     1,817  $    18,534
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

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

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

    Net loss                        -       (3,051)      (3,051)

    Options and DSUs
     issued                         -            -          554

    Other comprehensive
     income                     2,261        2,261        2,261
    ------------------------------------------------------------
    Shareholders' equity,
     June 30, 2010        $   (17,845) $       689  $    53,682
    ------------------------------------------------------------
    ------------------------------------------------------------



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

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

    Net income                      -            -            -        2,100
    Dividend                        -            -            -      (26,839)
    Other comprehensive
     income                         -            -            -            -
    -------------------------------------------------------------------------
    Shareholders' equity,
     June 30, 2009          9,212,413  $    34,804  $         -   $   21,195
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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


                                          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                      -        2,100        2,100
    Dividend                        -      (26,839)     (26,839)
    Other comprehensive
     income                     2,492        2,492        2,492
    ------------------------------------------------------------
    Shareholders' equity,
     June 30, 2009        $   (12,309) $     8,886  $    43,690
    ------------------------------------------------------------
    ------------------------------------------------------------

    See accompanying notes to the interim consolidated financial statements.



    GAZIT AMERICA INC.

    Consolidated Statements of Cash Flow
    (thousands of dollars)
    (unaudited)
    -------------------------------------------------------------------------
                               Three months ended           Six months ended
    -------------------------------------------------------------------------
                               June 30     June 30       June 30     June 30
                                  2010        2009          2010        2009
    -------------------------------------------------------------------------

    Operating Activities
    Net (loss) income         ($4,440)      $1,020      ($3,051)      $2,100
    Items not affecting
     cash:
      Amortization                360           28          640           40
      Non-cash interest
       expense                     23          101           65          150
      Equity income from
       Equity One, Inc.        (1,878)      (3,369)      (3,618)      (7,399)
      Dilution loss (gain)
       on investment in
       Equity One, Inc.             -          676       (4,496)         676
      Future income taxes
       (recovery)                (681)         116        1,059            -
      Unrealized (gain) loss
       on foreign exchange
       translation              1,715       (1,059)         467         (826)
      Unrealized loss on
       interest rate swaps      1,641            -        2,344            -
      Dividends from
       Equity One, Inc.         3,238        4,913        6,428       10,241
      Non-cash compensation
       expense                    375            -          554            -
      Net change in non-cash
       operating items            112         (441)       1,524          461
    -------------------------------------------------------------------------
    Cash provided by
     operating activities         465        1,985        1,916        5,443
    -------------------------------------------------------------------------

    Investing Activities
    Acquisition of rental
     property, net of
     mortgage assumed
     and cash acquired           (221)           -       (3,633)           -
    Capital expenditures            -            -          (18)           -
    Investment in common
     shares of
     Equity One, Inc.               -            -       (1,882)           -
    Investments in
     marketable securities       (592)           -       (1,923)           -
    -------------------------------------------------------------------------
    Cash used in
     investing activities        (813)           -       (7,456)           -
    -------------------------------------------------------------------------

    Financing Activities
    Proceeds from credit
     facilities                 3,001            -       10,994            -
    Repayment of term
     loans, credit
     facilities and
     mortgages                 (1,735)      (1,346)      (3,516)     (34,562)
    (Payments to) receipts
     from affiliated
     entities, net               (710)        (882)      (1,529)      29,326
    -------------------------------------------------------------------------
    Cash provided by
     (used in) financing
     activities                   556       (2,228)       5,949       (5,236)
    -------------------------------------------------------------------------

    Effect of currency
     rate movement on
     cash balances                177          (13)         118         (244)
    -------------------------------------------------------------------------

    Increase (decrease)
     in cash                      385         (256)         527          (37)
    Cash, beginning
     of period                  4,033        5,439        3,891        5,220
    -------------------------------------------------------------------------
    Cash, end of period        $4,418       $5,183       $4,418       $5,183
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SUPPLEMENTARY
     INFORMATION
    Income taxes paid          $    -         $907          $22       $1,365
    Interest paid              $3,064         $875       $4,149       $2,621
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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