Artis releases Q2-07 results, posts double-digit growth in FFO per unit



    WINNIPEG, Aug. 14 /CNW/ - Today Artis Real Estate Investment Trust
("Artis" or "Artis REIT") issued its financial results and achievements for
the three month and six month periods ended June 30, 2007.

    
    FINANCIAL HIGHLIGHTS

    -   Q2 revenues increased 90.7% to $22.8 million; year-to-date, revenues
        increased 89.6% to $40.4 million.

    -   Q2 net operating income ("NOI") increased 88.1% to $15.1 million;
        year-to-date, NOI increased 94.5% to $26.7 million.

    -   Q2 distributable income ("DI") increased 140.5% to $8.6 million;
        year-to-date, DI increased 136.4% to $14.5 million. DI per unit
        increased 23.3% to $0.37; year-to-date, DI per unit increased 15.3%
        to $0.68.

    -   Q2 funds from operations ("FFO") increased 155.1% to $8.0 million;
        year-to-date, FFO increased 148.9% to $13.4 million. FFO per unit
        increased 30.8% to $0.34; year-to-date, FFO per unit increased 21.2%
        to $0.63.

    -   Q2 same property NOI increased 6.2% over last year (year-to-date,
        5.3%) as a result of absorption of space in the portfolio of
        properties owned at January 1, 2006, and rate increases achieved on
        lease rollovers, particularly in Alberta.

    -   Occupancy increased to 97.2% (98.0% including committed space).

    -   $46.7 million of acquisitions were completed in Q2 ($226.0 million
        completed year-to-date).

    -   Mortgage debt-to-gross book value ("GBV") decreased to 45.8% from
        52.1% at December 31, 2006.


    SELECTED FINANCIAL INFORMATION

    -------------------------------------------------------------------------
    (unaudited)           Three month period ended   Six month period ended
    $000's, except per             June 30                   June 30
     unit amounts
    -------------------------------------------------------------------------
                              2007         2006         2007        2006
    -------------------------------------------------------------------------
    Revenues              $    22,759  $    11,932  $    40,368  $    21,289
    NOI                        15,088        8,020       26,717       13,739
    DI                          8,579        3,567       14,487        6,129
    FFO                         7,958        3,119       13,361        5,368

    DI per unit (basic)          0.37         0.30         0.68         0.59
    FFO per unit (basic)         0.34         0.26         0.63         0.52
    Distributions                0.26         0.26         0.53         0.53

    Weighted average
     units outstanding:
    Basic                  22,604,325   11,850,099   20,547,632   10,392,545
    Basic, including
     Class B units         23,325,672   11,850,099   21,268,979   10,392,545
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    "Our second quarter financial results continue to demonstrate the
effectiveness of our internal and external growth strategies," said Armin
Martens, President and Chief Executive Officer of Artis. "Our acquisition
program is going strong, and we have significant capacity to pursue more
acquisitions through the balance of 2007. We are particularly pleased to
report double-digit growth in our key DI and FFO per unit results, while
achieving substantial reductions in our payout ratios (77.9% and 84.1%,
respectively) and decreasing our leverage."

    $92.0 million in new equity raised:

    On May 10, 2007, Artis announced it had entered into a bought-deal
arrangement with a syndicate of underwriters for the sale of 5,232,500 trust
units ("units"), inclusive of units issued upon exercise of the underwriters'
over-allotment option, at a price of $17.60 per unit. The offering closed on
June 11, 2007, for aggregate gross proceeds of $92.0 million.

    
    Q2-2007 Acquisition highlights:

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

    Property            Location             Acquisition  Type   Square Feet
                                                Date             of Leasable
                                                                 Area (000's)
    -------------------------------------------------------------------------
    1. MTS Call Centre  365 Osborne Street,    April 1,   Office          76
                        Winnipeg, MB             2007

    2. Windley -        488 Albert Street,     June 19,   Office          30
        Albert          Nanaimo, BC              2007
        Street(1)

    3. Windley -        6475 Metral Drive,     June 19,   Office          38
        Metral          Nanaimo, BC              2007
        Drive(1)

    4. Windley - Aulds  6551 Aulds Road,       June 19,   Office          36
        Corner(1)       Nanaimo, BC              2007

    5. Imperial -       8220 Davies Road,      June 30,   Industrial      14
        Can-K(2)        Edmonton, AB             2007

    6. Imperial -
        Mayfield(2)    11304/24 - 163 Street,  June 30,   Industrial      24
                        Edmonton, AB             2007
    -------------------------------------------------------------------------
    Total                                                                218
    -------------------------------------------------------------------------
    (1) The Windley properties were acquired as a portfolio.
    (2) The Imperial Equities properties were acquired as a portfolio.
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    With the successful closing of the above six acquisitions, Artis added
over 218,000 square feet of gross leasable area ("GLA") to the portfolio,
increasing the total portfolio GLA to nearly 4.1 million square feet.
Subsequently, on July 5, 2007, Artis acquired one more property, known as
TransAlta Place. Readers are invited to view more details on these properties
on the Artis web site at www.artisreit.com.

    Operational improvements and internal growth:

    As a result of strong on-going leasing and renewal activity, Artis
increased its overall portfolio occupancy to 97.2% at June 30, 2007. Including
committed space, the occupancy ratio increases to 98.0% at June 30, 2007. Same
property NOI results have also seen improvements. Quarterly growth in same
property NOI was 6.2% (5.3% on a year-to-date basis) based on the 25
properties owned at January 1, 2006. The same property NOI growth does not
include the impact on internal growth of lease turnovers on any of the
properties acquired in fiscal 2006 or 2007. The same property growth was
driven by absorption, as well as increases in base rental rates achieved on
leases turnovers.
    "The main source of our internal growth thus far has been through the
effective management of our growing portfolio", said Martens. "We have been
able to consistently increase rents to market upon lease turnover, plus
increase our occupancy level. Looking ahead, Artis REIT anticipates
complementing this internal growth strategy by increasing its mezzanine loan
and development program, to further enhance unitholder value."

    Artis is a growth-oriented real estate investment trust focused
exclusively on commercial properties located in primary and growing secondary
markets in western Canada, particularly in Alberta. The REIT's goal is to
provide unitholders the opportunity to invest in high-quality western Canadian
office, retail and industrial properties, as well as to provide monthly cash
distributions that are stable, tax efficient, and growing over time. To date,
Artis has acquired approximately $825 million of commercial property;
approximately 17.4% in Manitoba, 10.4% in Saskatchewan, 69.0% in Alberta, and
3.2% in B.C. Artis owns 52 properties, comprising over 4.4 million square feet
of leasable area (33.0% retail, 52.9% office and 14.1% industrial).
    The REIT's Distribution Reinvestment Plan ("DRIP") allows unitholders to
have their monthly cash distributions used to purchase trust units without
incurring commission or brokerage fees, and receive bonus units equal to 4% of
their monthly cash distributions. More information can be obtained at
www.artisreit.com.

    Non-GAAP Performance Measures

    DI, Property NOI and FFO are non-GAAP measures commonly used by Canadian
income trusts as an indicator of financial performance. Management uses DI,
Property NOI and FFO to analyze operating performance. DI, Property NOI and
FFO may not be comparable to similar measures presented by other issuers. DI,
Property NOI and FFO not are intended to represent operating profits for the
period or from a property nor should any such measure be viewed as an
alternative to net income, cash flow from operating activities or other
measures of financial performance calculated in accordance with GAAP.

    Cautionary Statements

    The comments and highlights herein should be read in conjunction with the
consolidated financial statements and management's discussion and analysis for
the same period. These documents are available on the SEDAR website at
www.sedar.com. They are also posted on the Artis web site at
www.artisreit.com.

    This press release contains forward-looking statements. For this purpose,
any statements contained herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing,
the words "expects", "anticipates", "intends", "estimates", "projects", and
similar expressions are intended to identify forward-looking statements.
    Artis is subject to significant risks and uncertainties which may cause
the actual results, performance or achievements of the REIT to be materially
different from any future results, performance or achievements expressed or
implied in these forward-looking statements. Such risk factors include, but
are not limited to, risks associated with real property ownership,
availability of cash flow, general uninsured losses, future property
acquisitions, environmental matters, tax related matters, debt financing,
unitholder liability, potential conflicts of interest, potential dilution,
reliance on key personnel, changes in legislation and proposed changes in the
tax treatment of trusts. Artis cannot assure investors that actual results
will be consistent with any forward-looking statements and Artis assumes no
obligation to update or revise such forward-looking statements to reflect
actual events or new circumstances. All forward-looking statements contained
in this press release are qualified by this cautionary statement.

    The Toronto Stock Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.





For further information:

For further information: Mr. Armin Martens, President and Chief
Executive Officer of the REIT or Mr. Jim Green, Chief Financial Officer of the
REIT at (204) 947-1250


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