Artis Releases Q3-07 Results; Posts Record Quarterly FFO Per Unit Results

    WINNIPEG, Nov. 12 /CNW/ - Today Artis Real Estate Investment Trust
("Artis" or "the REIT") issued its financial results and achievements for the
three month and nine month periods ended September 30, 2007.


    -   Q3 revenue increased 71.8% to $27.0 million; year-to-date, revenue
        increased 82.0% to $67.4 million.

    -   Q3 net operating income ("NOI") increased 85.1% to $18.7 million;
        year-to-date, NOI increased 90.5% to $45.4 million.

    -   Q3 distributable income ("DI") increased 128.3% to $10.5 million
        ($0.38 per unit). Year-to-date, DI increased 132.9% to $25.0 million
        ($1.07 per unit).

    -   Q3 funds from operations ("FFO") increased 147.5% to $10.0 million;
        year-to-date, FFO increased 148.5% to $23.4 million.

    -   Record FFO per unit results achieved in Q3; FFO per unit increased
        5.9% to $0.36; year-to-date, FFO per unit increased 16.3% to $1.00.

    -   Q3 FFO results are exclusive of the $2.5 million gain on the
        disposition of a non-core property in Saskatoon, Saskatchewan
        ($0.09 per unit).

    -   Q3 same property NOI (excluding non-cash revenue adjustments)
        increased 10.5% over last year (year-to-date, 8.4%) 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 remained strong at 97.1% (97.4% including committed space).

    -   $161.3 million of acquisitions were completed in Q3 ($387.3 million
        completed year-to-date).

    -   Mortgage debt-to-gross book value ("GBV") decreased to 49.9% from
        52.1% at December 31, 2006.


    (unaudited)                 Three month period         Nine month period
    $000's, except                    ended                     ended
     per unit amounts              September 30              September 30
                                 2007         2006         2007         2006
    Revenue                $   27,041   $   15,744   $   67,409   $   37,033
    NOI                        18,656       10,079       45,373       23,818
    DI                         10,471        4,587       24,958       10,716
    FFO                        10,013        4,045       23,395        9,413

    DI per unit (basic)          0.38         0.38         1.07         0.98
    FFO per unit (basic)         0.36         0.34         1.00         0.86
    Distributions                0.26         0.26         0.79         0.79

    Weighted average units
    Basic                  26,824,956   12,072,151   22,663,067   10,958,562
    Basic, including
     Class B units         27,546,303   12,072,151   23,384,414   10,958,562

                                                  September 30,  December 31,
                                                          2007          2006
    Total assets                                     $  996,846   $  492,940
    GBV                                              $1,054,433   $  523,081
    Mortgage debt                                    $  525,640   $  272,341
    Debt-to-GBV                                           49.9%        52.1%
    Total market capitalization                      $  477,241   $  248,834

    "Our third 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. "We are particularly
pleased to report our strongest FFO per unit results since our formation as a
REIT. At the same time, we have decreased our leverage and achieved
substantial reductions in our year-to-date payout ratios (the DI payout ratio
decreased to 73.8% from 80.6%; the FFO payout ratio decreased to 79.0% from
91.9%). Artis is well positioned to execute further accretive acquisitions
through to the end of 2007, further improving our financial performance and
enhancing ongoing value for our Unitholders."

    $75.1 Million in New Equity Raised:

    On September 26, 2007, Artis announced it had entered into a bought-deal
arrangement with a syndicate of underwriters for the sale of 4,230,000 units
(exclusive of units issuable upon the exercise of the over-allotment option
granted to the underwriters) at a price of $17.75 per unit. The offering
closed on October 17, 2007, for aggregate gross proceeds of $75.1 million.

    Financing for Recently Announced Planned Acquisitions

    On November 7, 2007, Artis announced a series of planned acquisitions:
$97.8 million now unconditional and closing in the fourth quarter of 2007,
plus $126 million conditional, planned to close in the fourth quarter of 2007
as well. The REIT is pleased to note that all equity funds are already in hand
to finance these acquisitions. In addition, appropriate mortgage financing has
been arranged for most of these acquisitions, at a weighted average interest
rate estimated to be 5.6% to 5.7%. Management anticipates that the remaining
mortgage funding will be successfully arranged at a similar rate upon closing
of the respective properties. The most recent equity offering of
$75.1 million, plus the new $75 million credit facility, combined with Artis'
strong internal growth, will provide the REIT with ample financial flexibilty
for the forseeable future.


    Q3-2007 Acquisition Highlights:

    Property    Location              Acquisition    Type        Square Feet
                                      Date                       of Leasable
                                                                 Area (000's)
    TransAlta   110 - 12th Avenue     July 5,        Office              336
     Place       SW, Calgary, AB      2007
    Winnipeg    360 Main Street,      August 29,     Office/             598
     Square(1)   Winnipeg, MB         2007            Retail
    Pepco       608 - 17th Avenue,    September 15,  Industrial           20
     Building    Nisku, AB            2007
    Delta       8037 - 120th Street,  September 24,  Retail               75
     Shoppers    Delta, BC            2007
    Total                                                              1,029
    (1) The REIT acquired a 38% ownership interest in Winnipeg Square.
        Approximately 11% of Winnipeg Square's GLA is allocated to retail.

    With the successful closing of the above four acquisitions, Artis now
owns or has an ownership interest in 54 properties comprising nearly
5.1 million square feet of leasable area. Readers are invited to view more
details on these properties on our web site at

    Credit Facility

    On September 28, 2007, Artis entered into an agreement for a revolving
term credit facility in the amount of $75 million which may be utilized to
fund acquisitions of office, retail and industrial properties. $7.5 million of
the facility may be used for general corporate purposes. As at September 30,
2007, no amounts have been drawn on the facility.

    Operational Improvements and Internal Growth:

    As a result of strong on-going leasing and renewal activity, Artis
achieved overall portfolio occupancy of 97.1% at September 30, 2007. 
Including committed space, the occupancy ratio increases to 97.4% at September
30, 2007. Quarterly growth in same property NOI was 6.9% (5.8% on a
year-to-date basis); same property NOI growth is calculated using revenue
calculated in accordance with generally accepted accounting principles
("GAAP"), less property operating expenses. Excluding GAAP adjustments for
straight-line rent and above- and below-market rent adjustments, growth in
same property NOI was 10.5% (8.4% on a year-to-date basis). The calculation
includes only those properties owned from January 1, 2006, through to
September 30, 2006, and thus 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 primarily by increases in base rental rates
achieved on lease turnovers.
    "Internal growth has been achieved by actively managing our growing
portfolio, in particular, consistently increasing rents to market upon lease
turnover ", said Martens. "Looking ahead, through the balance of 2007 and into
2008, a substantial proportion of the REIT's lease expiries are in markets
where we continue to see strong upside potential in our growth profile based
on continuing strong demand and sustained pressure on market rates."
    At September 30, 2007, Artis estimates that the gap between in-place
rental rates and current market rental rates on the 608,000 square feet of
leases expiring in 2008 is over $8 per square foot on average. More details on
upcoming lease expiries and average in-place rents can be found in the REIT's
September 30, 2007, Supplemental Package. The Supplemental Package, as well as
the Interim Financial Statements and Management's Discussion and Analysis, 
can be accessed from the REIT's web site at


    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.
    Including all owned and proposed acquisitions, Artis will own or have an
ownership interest in approximately $1.1 billion of commercial property; the
REIT's proportionate share will be approximately 6.3 million square feet of
the total leasable area in 84 properties. Leasable area will be approximately
31.1% in Manitoba, 6.6% in Saskatchewan, 55.4% in Alberta, and 6.9% in B.C; by
asset class the portfolio will be 31.4% retail, 43.3% office and 25.3%
    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

    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 are not 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 They are also posted on the Artis web site at
    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; Mr. Jim Green, Chief Financial Officer or Ms. Kirsty
Stevens, Senior VP - Investor Relations of the REIT at (204) 947-1250

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