Revenue Properties Company Limited Announces Third Quarter Results and Fourth Quarter Dividend



    TORONTO, Nov. 2 /CNW/ - Revenue Properties Company Limited (TSX: RPC)
announced financial results for the three months ended September 30, 2007.

    
    HIGHLIGHTS

    -   Income before non-recurring items and amortization for the three
        months ended September 30, 2007 was $7.6 million (2006 - $3.5
        million).

    -   Net loss for the three months ended September 30, 2007 was
        $5.2 million (2006 - net income of $1.8 million). The net loss
        incurred in third quarter of 2007 is primarily the result of
        $10.4 million of amortization expense charged against the Sizeler
        assets acquired in November 2006.

    -   Funds from operations were $6.8 million or $0.63 per share
        (2006 - $3.8 million, $0.35 per share).

    -   The Company's acquisition bridge loan was extinguished through a
        final payment of US$6.0 million.

    -   US$8.8 million of new mortgages were funded with an average interest
        rate of 5.6%.

    -   CDN$41.0 million of new mortgage was funded at interest rate of
        5.93%.

    -   The weighted average interest rate on all fixed-rate debt is now 5.7%
        (December 31, 2006 - 6.2%)

    -   Declaration of a five (5) cent dividend per common share, payable on
        December 28, 2007.


    FINANCIAL HIGHLIGHTS
    -------------------------------------------------------------------------
    (In thousands of
     Canadian dollars,              Three months ended     Nine months ended
     except per share                    September 30          September 30
     amounts)                     -------------------------------------------
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Property revenues               $30,537    $14,201    $93,471    $41,726
    Property operating expenses      13,402      7,384     41,138     20,849
    -------------------------------------------------------------------------
    Net operating income             17,135      6,817     52,333     20,877
    Interest expense                 (8,156)    (2,902)   (28,076)    (8,341)
    General and administrative       (1,390)      (405)    (4,475)    (1,073)
    -------------------------------------------------------------------------
    Income before non-recurring
     items and amortization           7,589      3,510     19,782     11,463

    Real estate sales, net                -          -          -      5,004
    Other income (expense)              405      1,387        220      3,516
    Foreign exchange loss                 -       (128)         -     (1,180)
    Amortization                    (12,410)    (1,946)   (38,559)    (5,752)
    -------------------------------------------------------------------------
    Operating (loss) income          (4,416)     2,823    (18,557)    13,051

    Costs associated new
     mortgages                         (394)         -     (5,748)         -
    Income taxes                       (376)      (985)    (2,483)    (4,904)
    -------------------------------------------------------------------------
    Net (loss) income               ($5,186)    $1,838   ($26,788)    $8,147
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)
     - per basic and
        diluted share                ($0.48)     $0.17     ($2.48)     $0.75

    Funds from operations            $6,812     $3,819    $11,212    $14,436
     - per basic and
        diluted share                 $0.63      $0.35      $1.04      $1.33
    -------------------------------------------------------------------------

    Net operating income is used by industry analysts, investors and
    management to measure operating performance at the Company's properties.
    Net operating income represents total property revenues less property
    operating expenses and maintenance expenses. Accordingly, net operating
    income excludes certain expenses included in the determination of net
    income such as property management and other indirect operating expenses,
    interest expense and amortization. Net operating income is not a
    recognized measure under Canadian generally accepted accounting
    principles and accordingly the term does not necessarily have a
    standardized meaning and may not be comparable to similarly titled
    measures presented by other publicly traded entities.
    

    REVIEW OF FINANCIAL RESULTS

    The significant changes to RPC's consolidated statement of income for the
three months ended September 30, 2007 relate primarily to the acquisition of
Sizeler Property Investors, Inc. ("Sizeler") that occurred on November 10,
2006. Revenues and expenses generated by the assets and liabilities acquired
have been included in RPC's consolidated results commencing on November 10,
2006. The Company incurred a net loss of $5.2 million for the three months
ended September 30, 2007 compared to net income of $1.8 million for the same
period in 2006. The significant change in net income relates primarily to an
additional $10.4 million of amortization recorded during the quarter as a
result of the Sizeler acquisition, $5.3 million of additional interest
expense, offset by $10.3 million of additional NOI.

    NET OPERATING INCOME

    Net operating income ("NOI") for the three months ended September 30,
2007 increased 151% to $17.1 million, compared to $6.8 million for the same
period in 2006. The increase results primarily from properties acquired in the
Sizeler transaction contributing $9.8 million to net operating income for
three months ended September 30, 2007.
    Upon the purchase of Sizeler, the Company was required to ascribe value
to intangible assets representing the above and below market rate leases
acquired. These intangible assets and liabilities are subsequently amortized
to rental income over the remaining term of the underlying leases. As a result
of this amortization, rental revenues for the three months ended September 30,
2007 have been increased by approximately $1.4 million.
    The following table details the Company's net operating income by
geographic segment for the three months ended September 30, 2007 and 2006

    
    -------------------------------------------------------------------------
    (000's)                                                  2007       2006
    -------------------------------------------------------------------------
    Canada                                                 $7,366     $6,817
    U.S.                                                    9,769          -
    -------------------------------------------------------------------------
                                                          $17,135     $6,817
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net operating income from the Company's Canadian properties held
throughout the three-month period ended September 30, 2007 was $7.4 million
compared to $6.8 million for the same period in 2006. The increase is
primarily the result of increased occupancy levels and increases in rents
experienced at Prairie Mall, Grande Prairie, Alberta and at Centerpoint Mall,
East York Town Centre and The Colonnade, Toronto, Ontario.

    FUNDS FROM OPERATIONS

    Funds from operations for the three months ended September 30, 2007 and
2006 were calculated as follows:

    -------------------------------------------------------------------------
                                                             2007       2006
    -------------------------------------------------------------------------
    Net income (loss)                                     ($5,186)    $1,838
    Add (deduct) non-cash items:
      Amortization - rental properties                      3,724      1,596
      Amortization - intangible assets                      7,400         97
      Amortization - tenant allowances                      1,286        253
      Future income taxes                                    (415)        33
    Other                                                       3          2
    -------------------------------------------------------------------------
                                                           $6,812     $3,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company uses Funds from Operations ("FFO") in addition to net income
    to report operating results. FFO is an industry standard for evaluating
    operating performance defined as net income plus amortization and future
    income taxes, excludes gains or losses from the sale of depreciable
    property and is not adjusted for gains realized on the disposition of
    portfolio investments. FFO is not indicative of funds available to meet
    the Company's cash requirements. The Company computes FFO in accordance
    with the recently amended definitions of the Real Property Association of
    Canada, formerly known as the Canadian Institute of Public and Private
    Real Estate Companies. However, FFO is not a recognized measure under
    Canadian generally accepted accounting principles and accordingly the
    term does not necessarily have a standardized meaning and may not be
    comparable to similarly titled measures presented by other publicly
    traded entities.
    

    FFO for the three months ended September 30, 2007 were $6.8 million
($0.63 per common share) compared to $3.8 million ($0.35 per common share) for
the same period in 2006. The increase reflects primarily the increased NOI
generated from the Sizeler assets offset by increased interest costs related
to new U.S. mortgages funded earlier in 2007.

    THIRD QUARTER FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
    ANALYSIS

    The Company's unaudited financial statements for the three and nine
months ended September 30, 2007, along with the Management's Discussion and
Analysis are available on the Company's website at www.revprop.com and have
been filed with SEDAR at www.sedar.com.

    Revenue Properties Company Limited is a real estate company whose primary
focus is the acquisition, ownership and development of income producing
properties in Canada and the United States. The Company's diversified
portfolio includes approximately 4.5 million square feet of retail and office
space as well as 3,414 residential apartment suites.




For further information:

For further information: Revenue Properties Company Limited, K. (Rai)
Sahi, Chief Executive Officer, (905) 281-5888, Paul Miatello, Chief Financial
Officer, (905) 281-5943

Organization Profile

REVENUE PROPERTIES COMPANY LIMITED

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