RICHMOND, BC, Aug. 11 /CNW/ - IAT Air Cargo Facilities Income Fund (the
"Fund") (TSX: ACF.UN), an open-ended, mutual fund trust that owns all of the
shares of International Aviation Terminals Inc. ("IAT"), which owns and leases
air cargo and aviation related buildings on ground-leased land at Canadian
airports in Vancouver, Calgary, Edmonton, Saskatoon and Winnipeg, and all of
the interests in IAT Management Limited Partnership ("IAT Management LP"),
which provides management and operation services to IAT and administrative
services to the Fund, today reported results for the second quarter of 2009
and declared a distribution to unitholders.
Consolidated Financial and Operating Results
For the three months ended June 30, 2009, total rental revenues were $4.5
million down 1.1% from $4.6 million for the same period in 2008. The decrease
in revenues is from a slight decline in average occupancy from 86.6% to 86.1%
for the three month periods ended June 30, 2009 compared to the same period in
2008 partially offset by marginal growth in average lease rate for the period
of $0.07 per square foot from $9.34 per square foot to $9.41 per square foot.
In respect of period end occupancy, the portfolio occupancy declined to 85.9%
as of June 30, 2009 down 120 basis points from June 30, 2008.
For the second quarter of 2009, the Fund reported earnings of $0.12 per
unit as compared to earnings of $0.10 per unit for the second quarter of 2008.
The increase of $0.02 per unit is attributable to the combined impact of (i)
the management internalization, (ii) higher recovery of future income taxes
and (iii) lower variable interest rates on the mortgage debt.
The second quarter of 2009 was the first full quarter whereby the Fund
operated with an internalized management. The internalization benefits consist
of: (i) cost savings from reduced operating costs and leasing and marketing
fees and (ii) increases in revenues from improvements in operations. For the
six months ended June 30, 2009, the Fund has benefited from cost savings and
operating improvements of approximately $475,000 as a result of an
internalized management. These benefits can be attributable to cost savings of
approximately $139,000 and operating improvements of approximately $336,000.
Zachary R. George, IAT's President and Chief Executive Officer commented
"IAT's second quarter results demonstrate the financial benefits of our new
internalized management model. We are currently evaluating strategic
opportunities and working to optimize our capital structure in a challenging
Supplemental Earnings Measures
For the second quarter of 2009, earnings before interest, income taxes,
amortization, accretion and non-controlling interest's share of earnings
("EBITDA") was $1.9 million, or $0.28 per unit, as compared to $1.8 million,
or $0.26 per unit, for the same quarter in 2008. For the second quarters of
2009 and 2008, funds from operations ("FFO") were $1.8 million, or $0.26 per
unit and $1.6 million, or $0.23 per unit respectively. The increase of $0.03
per unit was substantially due to savings from the internalization of
management which took effect February 27, 2009.
EBITDA and FFO are not recognized as appropriate earning measures under
Canadian generally accepted accounting principles ("GAAP"), and are not
construed as alternatives to earnings determined in accordance with GAAP, but
are considered useful supplemental indicators of the Fund's performance.
EBITDA is a common non-GAAP supplemental measure while FFO is a more common
measure for the real estate industry. Explanations as to why management
believes FFO is a useful supplemental measure of operating performance and
reconciliations from net income to FFO are provided in the 2008 supplemental
information package filed by the Fund on SEDAR at www.sedar.com.
Third Quarter 2009 Distribution
A distribution of $0.11 per unit is expected to be payable on October 15,
2009 to unitholders of record at the close of business on September 30, 2009.
The distribution represents interest income on the subordinated notes of IAT
for the second quarter 2009, plus 99.999% profit sharing interest in IAT
Management LP, less estimated administrative expenses of the Fund, and was
determined by the Trustees of the Fund based on anticipated earnings, cash
flow and capital reserves of IAT and anticipated expenses of the Fund. The
payout ratio, computed as a percentage of distributions declared over funds
from operations, changed from 50.0% in the prior quarter to 43.1% in the
current quarter. IAT's increased liquidity will enable management to actively
pursue opportunities that are accretive to unitholders' equity.
Internalization of IAT Management and Operations
On February 27, 2009, the Fund's management was internalized whereby
property management and operations were transferred from AMB Canada to an IAT
management team. As part of this transition, structural changes have occurred
that have affected the Fund's operations. Specifically, property management
and operations and maintenance fees have been internalized within the Fund and
are no longer paid to a third party. Accordingly, operating costs have
decreased as a result of this change. Leasing and marketing fees, previously
paid to AMB Canada, are no longer incurred by the Fund. However, general and
administration expenses have increased as a result of the internalization
which reflects salaries and office expenses.
IAT AIR CARGO FACILITIES INCOME FUND
The Fund, and IAT and IAT Management LP, the Fund's wholly-owned
subsidiaries, specialize in the ownership, construction, management and
marketing of aviation-related facilities. IAT currently owns, leases and
manages approximately 1.1 million square feet of air cargo and aviation
related facilities on land leased at five of Canada's leading international
airports. Approximately 65% of the Fund and IAT's holdings are located at
Vancouver International Airport, Canada's second largest airport.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS: Forward-looking statements,
including statements with respect to expected distributions, cash flows,
revenues, earnings, capital expenditures, occupancy rates, growth rates, value
of future lease extensions, ongoing business strategies or prospects. Possible
future Fund and IAT action and other measures are based on information
available at the time they are made, assumptions made by management, and
management's good faith belief with respect to future events, and are subject
to the risks and uncertainties outlined in the Fund's annual information form
that could cause actual performance or results to differ materially from those
reflected in the forward-looking statements, historical results or current
expectations. All forward-looking statements may be affected by and are
subject to the risks set out under Risk Factors in the Fund's annual
For further information:
For further information: IAT CONTACT, Zachary R. George, President and
Chief Executive Officer, International Aviation Terminals Inc., Direct: (604)
249-5119, Fax: (604) 249-5101, Email: firstname.lastname@example.org