First Capital Realty Announces Solid Q3 Financial Results

Completed Special Dividend-in-kind

TORONTO, Nov. 9 /CNW/ - First Capital Realty Inc. ("First Capital Realty") (TSX:FCR) Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas, announced today solid financial results for the third quarter ended September 30, 2009.

    
    THIRD QUARTER 2009 HIGHLIGHTS:

    -   Invested $85 million in acquisitions, development activities and
        property improvements.
    -   Added 363,000 square feet of gross leasable area from development,
        redevelopment and acquisitions.
    -   8.1% same property NOI growth; 3.1% same property NOI growth
        excluding redevelopment and expansion.
    -   9.4% increase on 251,000 square feet of renewal leases.
    -   Occupancy of 96.0% which compares to 95.8% at September 30, 2008.
        Vacancy includes 0.8% of space held for redevelopment.
    -   Gross new leasing totalled 348,000 square feet including development
        and redevelopment coming on line; lease closures totalled 149,000
        square feet and closures for redevelopment totalled 28,000 square
        feet.
    -   Average lease rate per occupied square foot increased by 4.7% to
        $15.54 at September 30, 2009 compared to $14.84 in the prior year
        third quarter.
    -   Completed new leasing on existing space totalling 84,000 square feet
        at an average rate of $19.94 per square foot.
    -   Issued 3.45 million common shares (including 2.3 million warrants)
        generating gross proceeds of $59.0 million.
    -   Issued $75 million principal amount of 6.25% convertible unsecured
        subordinated debentures maturing December 2016.
    -   On August 14, 2009, the previously announced dividend-in-kind was
        completed resulting in the Company no longer having an ownership
        interest in Equity One.


    -------------------------------------------------------------------------
                                              Three months ended
    -------------------------------------------------------------------------
                                             30 Sept     30 Sept  Percentage
    ($ millions, except per share amounts)      2009        2008      Change
    -------------------------------------------------------------------------
    Enterprise value                        $  4,243    $  4,221
    -------------------------------------------------------------------------
    Debt to aggregate assets                   51.0%       53.1%
    -------------------------------------------------------------------------
    Debt to total market capitalization        48.9%       49.3%
    -------------------------------------------------------------------------
    Property rental revenue                 $  108.8    $  100.8        7.9%
    -------------------------------------------------------------------------
    Net operating income (NOI)              $   71.6    $   65.5        9.3%
    -------------------------------------------------------------------------
    Funds from operations (FFO)(1)          $   38.5    $   38.7       -0.5%
    -------------------------------------------------------------------------
    FFO per diluted share(1)                $   0.41    $   0.43       -4.7%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     FFO (000's)                              94,902      90,022        5.4%
    -------------------------------------------------------------------------
    Adjusted funds from operations (AFFO)   $   37.5    $   36.5        2.7%
    -------------------------------------------------------------------------
    AFFO per diluted share                  $   0.36    $   0.37       -2.7%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     AFFO (000's)                            103,879      98,648        5.3%
    -------------------------------------------------------------------------
    (1) Excludes, in 2008, the Company's share of Equity One's non-cash
        impairment loss. See Funds from Operations section of this press
        release.


    NINE MONTHS HIGHLIGHTS:

    -   Invested $197 million in acquisitions, development activities and
        property improvements.
    -   Added 740,000 square feet of gross leasable area from development,
        redevelopment activities and acquisitions.
    -   Acquired four income-producing properties totalling 146,000 square
        feet, one property held for future development and two land parcels
        adjacent to existing properties comprising a total of 9.1 acres of
        land held for future development.
    -   7.6% same property NOI growth; 3.0% excluding redevelopment and
        expansion space.
    -   11.0% increase on 864,000 square feet of renewal leases.
    -   Gross new leasing totalled 939,000 square feet including development
        and redevelopment coming on line; lease closures totalled 550,000
        square feet and closures for redevelopment totalled 125,000 square
        feet.
    -   Lease rates on openings and redevelopment coming on line increased by
        27.9% versus all lease closures.
    -   Completed new leasing on existing space totalling 385,000 square feet
        at an average rate of $19.63 per square foot.
    -   Completed $156 million of secured financing on 11 properties at a
        weighted average rate of 6.23% and a weighted average term of 8.2
        years.
    -   Issued a total of 5.9 million common shares for net proceeds of
        $97.8 million.

    -------------------------------------------------------------------------
                                                 Year-to-date
    -------------------------------------------------------------------------
                                             30 Sept     30 Sept  Percentage
    ($ millions, except per share amounts)      2009        2008      Change
    -------------------------------------------------------------------------
    Property rental revenue                 $  328.9    $  304.5        8.0%
    -------------------------------------------------------------------------
    Net operating income (NOI)              $  211.5    $  193.1        9.5%
    -------------------------------------------------------------------------
    Funds from operations (FFO)(1)          $  115.8    $  108.0        7.2%
    -------------------------------------------------------------------------
    FFO per diluted share(1)                $   1.25    $   1.25           -
    -------------------------------------------------------------------------
    Weighted average diluted shares
     for FFO (000's)                          92,895      86,232        7.7%
    -------------------------------------------------------------------------
    Adjusted funds from operations (AFFO)   $  113.1    $  103.1        9.7%
    -------------------------------------------------------------------------
    AFFO per diluted share                  $   1.12    $   1.09        2.8%
    -------------------------------------------------------------------------
    Weighted average diluted shares for
     AFFO (000's)                            101,119      94,658        6.8%
    -------------------------------------------------------------------------
    (1) Excludes, in 2009, the dilution loss on Equity One investment and in
        2008, the Company's share of Equity One's non-cash impairment loss.
        See Funds from Operations section of this press release.
    

"While we continue to grow our business primarily by investing in value-added activities within our existing portfolio, we remain focused on uncovering and acquiring properties, one deal at a time, that are well located in supply constrained markets with potential for rent growth", said Dori J. Segal, President & C.E.O., "Our investment program continues to be supported by healthy interest from tenants for our asset class and locations, as well as a strong balance sheet, high-quality cash flow and financial flexibility".

FINANCIAL HIGHLIGHTS

FFO and AFFO presented herein are key financial measures used by the real estate industry to measure and compare the operating performance of real estate organizations. FFO and AFFO are supplemental non-GAAP financial measures and a complete reconciliation containing adjustments from GAAP net income to FFO and AFFO is included in this press release.

    
    Funds from Operations

    -------------------------------------------------------------------------
                                 Three months ended       Nine months ended
    -------------------------------------------------------------------------
    (thousands of dollars,
     except per share            Sept 30,    Sept 30,    Sept 30,    Sept 30,
     amounts)                       2009        2008        2009        2008
    -------------------------------------------------------------------------
    Net operating income      $   71,612  $   65,455  $  211,469  $  193,129
    Interest expense             (31,412)    (27,862)    (93,122)    (85,064)
    Interest and other income
     (expense)(1)                  2,390       2,932       3,077       4,577
    Corporate expenses            (5,320)     (4,731)    (16,321)    (15,963)
    Funds from operations
     from Equity One(2)            2,553      (1,952)     15,009       8,749
    Amortization                  (1,003)       (547)     (2,756)     (1,567)
    Current income taxes            (318)     (1,036)     (2,195)     (2,365)
    -------------------------------------------------------------------------
    FFO                           38,502      32,259     115,161     101,496
    Add: dilution loss on
     Equity One investment             -           -         676           -
    Add: the Company's share
     of Equity One's non-cash
     impairment loss                   -       6,480           -       6,480
    -------------------------------------------------------------------------
    FFO excluding dilution
     loss on Equity One
     investment and the
     Company's share of
     Equity One's non-cash
     impairment loss          $   38,502  $   38,739  $  115,837     107,976
    FFO per diluted share     $     0.41  $     0.36  $     1.24  $     1.18
    Add: dilution loss on
     Equity One investment             -           -        0.01           -
    Add: the Company's share
     of Equity One's non-cash
     impairment loss                   -        0.07           -        0.07
    -------------------------------------------------------------------------
    FFO per diluted share
     excluding dilution loss
     on Equity One investment
     and the Company's share
     of Equity One's non-cash
     impairment loss          $     0.41  $     0.43  $     1.25  $     1.25
    -------------------------------------------------------------------------
    Weighted average diluted
     share - FFO              94,902,006  90,021,640  92,895,420  86,231,829
    -------------------------------------------------------------------------
    (1) Excludes gains on disposition of income-producing real estate.
    (2) Current year amounts cover period to August 14, 2009, the date of the
        dividend-in-kind related to the Company's interest in Equity One.
    

For the quarter and year-to-date, FFO was positively affected by same property NOI growth and the effect of acquisitions and development coming on line. This was largely offset by increased interest and amortization expense, decreased interest and other income, and the timing of the corporate expenses. Specifically the increase in the interest expense in the quarter and year-to-date is primarily due to the increased cost of the new secured revolving credit facility and one time costs related to specific financing activities. The increased credit facility costs were only partially offset by the effect of the reduced interest rate environment. In addition the third quarter results included the results of Equity One up to August 14, 2009 compared to the inclusion in 2008 of full periods of Equity One results.

Adjusted Funds from Operations

Management views AFFO as an effective measure of cash generated from operations. AFFO for the three months ended September 30, 2009 totalled $37.5 million or $0.36 per diluted common share compared to $36.5 million or $0.37 per diluted common share in the prior year. AFFO is calculated by adjusting FFO for actual costs incurred for capital expenditures and leasing costs for maintaining shopping centre infrastructure and current lease revenues, and non cash items including straight-line and market rent adjustments, non-cash compensation expenses, interest payable in shares, gains or losses on debt and hedges. Land sales are excluded from AFFO. The Company's proportionate share of Equity One FFO is excluded and only the regular cash dividends received are included in AFFO. The weighted average diluted shares outstanding for AFFO is adjusted to assume conversion of the outstanding convertible debentures.

    
    Net Income

    -------------------------------------------------------------------------
    ($ thousands, except per      Three months ended       Nine months ended
     share amounts)                     Sept 30                 Sept 30
    -------------------------------------------------------------------------
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Net income                   $ 9,002     $ 8,227     $27,177     $26,767
    -------------------------------------------------------------------------
    Earnings per share
     (basic and diluted)         $  0.09     $  0.09     $  0.29     $  0.31
    -------------------------------------------------------------------------
    Weighted average common
     shares - diluted (000's)     94,902      90,022      92,895      86,232
    -------------------------------------------------------------------------
    

Net income for the three and nine months ended September 30, 2009 was $9.0 million or $0.09 per share (basic and diluted) and $27.2 million or $0.29 per share (basic and diluted). This compares to $8.2 million or $0.09 per share (basic and diluted) and $26.8 million or $0.31 per share (basic and diluted), respectively, for the three and nine months ended September 30, 2008. The increase in net income is primarily due to increase in NOI resulting from development projects coming on line and same property NOI growth, increased income from Equity One through to the dividend-in-kind of August 14, 2009, offset by increased interest expense, increased amortization expense and decreased interest and other income. In addition, there was an increase in the basic and weighted average diluted shares outstanding compared to the same prior year period.

DEVELOPMENT AND ACQUISITION HIGHLIGHTS

During the third quarter of 2009, the Company invested $75 million in active development projects and improvements to existing properties. Year-to-date these investments totalled $160 million. Development of 239,900 square feet was brought on line in the third quarter of 2009 with 206,700 square feet leased at an average rate of $26.04 per square foot. The Company also brought on line 57,800 square feet of redeveloped space which was leased at an average rate of $25.01 per square foot. Year-to-date, development of 474,500 square feet was brought on line with 435,600 square feet leased at an average rate of $22.63 per square foot. Year-to-date the Company brought on line 119,200 square feet of redeveloped space at an average rate of $23.09 per square feet.

During the third quarter of 2009, the Company acquired a 65,000 square foot property in Victoria, British Columbia for $10 million. Through the first nine months of 2009, the Company invested $37 million in the acquisition of four income-producing shopping centres comprising 146,000 square feet, one property held for development and two land parcels adjacent to existing properties comprising a total of 9.1 acres of commercial land for future development.

OPERATING HIGHLIGHTS

Net operating income ("NOI") is defined as property rental revenue less property operating costs. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's shopping centre portfolio. Net operating income is not a measure defined by 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.

Net operating income for the three months ended September 30, 2009 totalled $71.6 million, an increase of $6.1 million or 9.3% compared to the same period in 2008. Same property NOI increased by 8.1% in the third quarter, compared with the same prior period, generating growth in NOI of $4.9 million, primarily attributed to redevelopment and expansion space coming on line ($3.1 million) and lease termination payments. Same property NOI for the quarter, excluding expansion and redevelopment, increased by $1.8 million or 3.1% over the same prior year period. Same property NOI growth excluding expansion and redevelopment space and the lease termination fees for the three months ended September 30, 2009 was $0.9 million or 1.5%.

Acquisitions completed in 2009 and 2008 contributed $1.4 million to NOI, while greenfield development activities contributed a further $2.6 million to NOI for the three months ended September 30, 2009.

Net operating income for the nine months ended September 30, 2009 totalled $211.5 million, compared to $193.1 million for the same period in 2008, an increase of 9.5%. Same property NOI increased by 7.6%, generating NOI growth of $13.7 million, primarily attributed to redevelopment and expansion space coming on-line ($8.5 million) and lease termination payments. Same property NOI for the nine months ended September 30, 2009 excluding expansion and redevelopment space increased by $5.2 million or 3.0% over the same prior year period. Same property NOI growth excluding expansion and redevelopment space and the lease termination fees, for the nine months ended September 30, 2009 was $2.6 million or 1.5%.

Year to date acquisitions completed in 2009 and 2008 contributed $3.4 million to NOI, while greenfield development activities contributed a further $7.7 million to NOI for the nine months ended September 30, 2009.

The lease termination fees for the nine months ended September 30, 2009 are from three tenants (two are non-retail tenants) at separate locations where 94,500 square feet with an annualized NOI of $1.3 million was vacated. 20,200 square feet has been re-leased replacing one half of the total NOI. The Company is currently negotiating the lease up of the remaining two locations.

Gross new leasing in the third quarter totalled 348,000 square feet including development and redevelopment space brought on line. The Company achieved a 9.4% increase on 251,000 square feet of renewal leases over the expiring lease rates. For the nine months ended September 30, 2009, gross new leasing totalled 939,000 square feet. Renewal leasing totalled 864,000 square feet with an 11.0% increase over expiring rates.

The average rate per occupied square foot at September 30, 2009 increased to $15.54. This compares to an average rate of $15.37 per square foot at June 30, 2009 and $14.84 per square foot at September 30, 2008.

Portfolio occupancy at September 30, 2009 of 96.0% compares to 96.1% at June 30, 2009 and 96.4% at December 31, 2008.

    
    FINANCING AND CAPITAL MARKET HIGHLIGHTS

    During the three months ending September 30, 2009, the Company completed
the following significant financing and capital market transactions:

    -   On August 5, 2009, 3,450,000 Units were issued at a price of $17.10
        per unit for gross proceeds of $59 million. Each Unit consisted of
        one common share and two-thirds of a warrant separable immediately.
        Each whole warrant entitles the holder to acquire at any time up to
        October 29, 2010, one common share of First Capital Realty at an
        exercise price of $17.53.
    -   On September 18, 2009, the Company completed the issuance of
        $75 million aggregate principal amount of 6.25% convertible unsecured
        subordinated debentures due December 31, 2016. Interest is payable
        semi-annually commencing March 31, 2010 and will be convertible at
        the option of the holder into common shares of the Company at a
        conversion price of $22.90 per common share. It is the current
        intention of First Capital Realty to satisfy its obligation to pay
        the interest and principal by issuing common shares of the Company
        pursuant to the terms of the trust indenture.

    The Company also completed the following financings in the nine months
ended September 30, 2009:

    -   Eleven secured financing transactions for gross proceeds of
        $156.0 million at a weighted average interest rate of 6.23% and a
        weighted average term to maturity of 8.2 years.
    -   A three year, $450 million secured revolving credit facility maturing
        March 2012 with a syndicate of ten banks jointly led by RBC Capital
        Markets, TD Securities, and BMO Capital Markets. The new facility was
        used to replace the Company's existing three year $350 million Senior
        Unsecured Revolving Credit Facility, which had a maturity date of
        March 2010.
    -   A three year, $75 million secured revolving credit facility with the
        Bank of Nova Scotia maturing January 2012.
    -   On February 17, 2009 the Company issued 1.4 million common shares to
        acquire 1.8 million shares of Allied Properties REIT.
    -   The Company issued 772,000 common shares as payment of the interest
        due to holders of the 5.50% convertible debentures.
    -   Convertible debentures totalling $6.3 million in principal were
        converted at the option of the holder resulting in the issuance of
        approximately 231,000 common shares.
    

In addition, on August 14, 2009, First Capital Realty completed its previously announced special dividend-in-kind of the Company's interest in Gazit America. The Company calculated the fair market value of the Gazit America shares distributed to be $41.5 million, or approximately $0.45 per First Capital Realty common share outstanding on July 28, 2009. As a result of this special dividend, First Capital Realty no longer has any ownership interest in Equity One.

QUARTERLY DIVIDEND

The Company announced that it will pay a fourth quarter dividend of $0.32 per common share on January 12, 2010 to shareholders of record on December 30, 2009.

OUTLOOK

Over the past several years First Capital Realty has made significant progress in growing its business and generating accretive growth in funds from operations while enhancing the quality of its portfolio.

The current environment remains competitive with little transaction activity. Both debt and equity markets are accessible but continue to be challenging relative to pricing currently being asked by property vendors. The Company will continue to selectively acquire properties that are well-located and of high quality, where they add strategic value and/or operating synergies provided they will be accretive to FFO over the long term, and equity and debt capital can be priced and committed to maintain conservative leverage.

Development and redevelopment activities continue to provide the Company with opportunities to grow within its existing portfolio of assets. Once completed, these activities typically generate higher returns on investment.

With respect to acquisitions of both income-producing and development properties, the Company will continue to focus on maintaining the sustainability and growth potential of rental income to ensure that among other things, refinancing risk is minimized. This is particularly important given the current cost of capital.

Specifically, Management will focus on the following five areas to achieve its objectives in 2009 and 2010:

    
    -   same property net operating income growth, taking into account
        maintaining high occupancy;
    -   development and redevelopment activities;
    -   selective acquisitions;
    -   increasing efficiency and productivity of operations; and
    -   careful capital allocation to decrease dependence on capital markets.
    

Overall, Management is confident that the quality of the Company's balance sheet, the defensive nature of its assets and operations will continue to serve it well in the current environment.

2009 GUIDANCE

Projections involve numerous assumptions such as rental income (including assumptions on timing of lease-up, development coming on line and levels of percentage rent), interest rates, tenant defaults, corporate expenses, level and timing of acquisitions of income-producing properties, the Company's share price, number of shares outstanding and numerous other factors. Not all factors which affect our range of projected funds from operations and adjusted funds from operations are determinable at this time and actual results may vary from the projected results in a material respect, and may be above or below the range presented in a material respect.

    
    -------------------------------------------------------------------------
    (per share amounts,
     except for projected
     FFO, AFFO and shares  2009 Guidance       2009 Guidance
     outstanding)             as at Q3           as at Q2           Variance
    -------------------------------------------------------------------------
                                    FFO Guidance
    -------------------------------------------------------------------------
                            Low     High      Low     High      Low     High
    -------------------------------------------------------------------------
    Projected diluted
     net income           $0.39    $0.41    $0.41    $0.43   $(0.02)  $(0.02)
    -------------------------------------------------------------------------
    Adjustments
      Projected FFO from
       Equity One          0.16     0.16     0.15     0.16     0.01     0.00
      Projected equity
       income from
       Equity One         (0.09)   (0.09)   (0.09)   (0.09)    0.00     0.00
      Projected
       amortization and
       future income
       taxes               1.18     1.19     1.16     1.18     0.02     0.01
    -------------------------------------------------------------------------
    Projected FFO(1)      $1.64    $1.67    $1.63    $1.68    $0.01   $(0.01)
    -------------------------------------------------------------------------
    Projected FFO(1)    $153.9M  $157.3M  $152.7M  $158.0M    $1.2M  $(0.7)M
    -------------------------------------------------------------------------
    Projected weighted
     average shares
     outstanding for
     per share FFO
     calculations             94.0M             93.9M             0.1M
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                  AFFO Guidance
    -------------------------------------------------------------------------
    Projected FFO(1)    $153.9M  $157.3M  $152.7M  $158.0M    $1.2M  $(0.7)M
    -------------------------------------------------------------------------
    Projected weighted
     average shares
     outstanding for
     per share AFFO
     calculations
     (including
     conversion of
     convertible
     debentures)             103.2M            102.2M             1.0M
    -------------------------------------------------------------------------
    Projected AFFO
     (using weighted
     average AFFO
     shares
     outstanding)(1)      $1.49    $1.52    $1.50    $1.54   $(0.02)  $(0.04)
    -------------------------------------------------------------------------
    Projected dividend
     income - return of
     capital portion      (0.00)   (0.01)    0.02     0.03    (0.02)   (0.04)
    Projected dividends
     from Equity One net
     of FFO from
     Equity One           (0.02)   (0.02)   (0.01)   (0.02)   (0.01)    0.00
    Projected revenue
     sustaining capital
     expenditures         (0.12)   (0.12)   (0.11)   (0.10)   (0.01)   (0.02)
    Projected non cash
     items, net            0.11     0.11     0.09     0.09     0.02     0.02
    -------------------------------------------------------------------------
    Projected AFFO(1)     $1.46    $1.48    $1.49    $1.54   $(0.03)  $(0.06)
    -------------------------------------------------------------------------
    (1) See Funds from Operations section of this press release.

    The variance between Q2 and Q3 FFO and AFFO guidance is primarily
associated with the items noted below.

    -   Same property NOI excluding redevelopment and expansion is assumed to
        grow ~ 2-3%, consistent with Q2 guidance assumptions;
    -   The increased investment in development, redevelopment and expansion
        activities to approximately 675,000 square feet with gross book value
        of approximately $250 million compares to Q2 guidance of 600,000 -
        650,000 square feet with gross book value ranging from $175 to $200
        million. These development projects coming on line in the fourth
        quarter will essentially produce revenues in 2010;
    -   Existing vacancy and certain small CRU spaces in newly developed
        properties are leasing slower than planned resulting in a slight
        reduction in NOI forecast guidance from Q2 to Q3;
    -   Income-producing property acquisitions now total $61 million
        which compares to $27 million year-to-date in the Q2 guidance
        assumption;
    -   Interest expense is higher due to longer term financing activities
        completed during Q3 including the 6.25% convertible debenture issue
        plus other specific financing activities which together resulted in a
        decreased utilization of the lower cost credit facility and increased
        financing costs;
    -   Gains on marketable securities sold during Q3, offset by the related
        dividend income reduction through year end, were not included in the
        Q2 guidance;
    -   Non-cash items including amortization and straight-line rents are
        adjusted based on actual amounts each quarter.
    

The ranges presented represent Management's estimate of results based upon these assumptions as of the date of this press release. The purpose of the Company's guidance is to provide readers with Management's view as to the expected financial performance of the Company for 2009, using factors that are commonly accepted and viewed as meaningful indicators of financial performance in the real estate industry. For financial information and analysis please refer to the Company's Management's Discussion and Analysis of Financial Position and Results of Operations for the third quarter of 2009 and 2008 and for the nine month periods ended September 30, 2009 and 2008.

Readers should refer to the section below titled "Forward Looking Statements" for important information relating to our guidance, including risk factors.

MANAGEMENT CONFERENCE CALL AND WEBCAST

Management will hold a conference call on Monday, November 9th, 2009 at 1:00p.m. EST. Third quarter financial results will be released prior to the call and made available on First Capital Realty's website in the News section. The Supplemental Package link will be on our Home Page at www.firstcapitalrealty.ca or click on Investor, Downloads. To access the webcast, go to First Capital Realty's website at www.firstcapitalrealty.ca, and click on the link for the webcast at the bottom of our Home Page. The webcast will be archived on our Home Page for 30 days and can be accessed, thereafter, in our Conference Calls section of our website.

You may participate in the live conference toll free at 866-299-6657 or at 416-641-6135. To ensure your participation, please call five minutes prior to the scheduled start of the call. The call will be archived through November 16, 2009 and can be accessed by dialing toll free 800-408-3053 or 416-695-5800 with access code 3135053.

Management's presentation will be followed by a question and answer period. To ask a question, press '*1' on a touch-tone phone. The conference call coordinator is immediately notified of all requests in the order in which they are made, and will introduce each questioner. To cancel your request, press the pound key (the number sign). If you hang up, you can reconnect by dialing 866-299-6657 or 416-641-6135. For assistance at any point during the call, press '*0'.

ABOUT First Capital Realty (TSX:FCR)

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas. The Company currently owns interests in 176 properties, including four under development, totalling approximately 20.8 million square feet of gross leasable area and six land sites in the planning stage for future retail development.

    
                               * * * *
    

Forward Looking Statements

This press release and in particular the "Outlook" section, contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can generally be identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", "outlook", "objective", "may", "will", "should", "plan", "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 MD&A for the year ended December 31, 2008.

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 "Risk and Uncertainties" section include, but are not limited to, general economic conditions, the availability of new competitive supply of retail properties which may become available either through construction or sublease, First Capital Realty's ability to maintain occupancy and to lease or re-lease space at current or anticipated rents, tenant bankruptcies, the relative illiquidity of real-property, unexpected costs or liabilities related to acquisitions, construction, 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, First Capital Realty's ability to obtain insurance coverage at a reasonable cost and the availability of financing. The assumptions underlying the Company's forward-looking statements contained in the "Outlook" section of this press release include that consumer demand will remain stable, demographic trends will continue and there will continue to be barriers to entry in the markets in which the Company operates. The assumptions used in developing the Company's guidance are set out in the "Outlook" section of this press release.

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. First Capital Realty 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 security laws.

    
    These forward-looking statements are made as of November 6, 2009.

    NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

    Funds from Operations and Adjusted Funds from Operations
    

In Management's view, funds from operations ("FFO") and adjusted funds from operations ("AFFO") are commonly accepted and meaningful indicators of financial performance in the real estate industry. First Capital Realty believes that financial analysts, investors and shareholders are better served when the clear presentation of comparable period operating results generated from FFO and AFFO disclosures supplement Canadian generally accepted accounting principles ("GAAP") disclosure. These measures are the primary methods used in analyzing real estate organizations in Canada. The Company's method of calculating FFO and AFFO may be different from methods used by other corporations or REITs (real estate investment trusts) and accordingly, may not be comparable to such other corporations or REITs. FFO and AFFO are presented to assist investors in analyzing the Company's performance. FFO and AFFO: (i) do not represent cash flow from operating activities as defined by GAAP, (ii) are not indicative of cash available to fund all liquidity requirements, including payment of dividends and capital for growth and (iii) are not to be considered as alternatives to GAAP net income for the purpose of evaluating operating performance.

Funds from Operations - RealPac Recommendations

First Capital Realty calculates FFO in accordance with the recommendations of the Real Property Association of Canada ("RealPac"). The definition is meant to standardize the calculation and disclosure of FFO across real estate entities in Canada, modelled on the definition adopted by the National Association of Real Estate Investment Trusts ("NAREIT") in the United States. FFO as defined by RealPac differs in two respects from the definition adopted by NAREIT. Under the RealPac definition, future income taxes are excluded from FFO, whereas under the NAREIT definition, they are included. In addition, impairment losses on depreciable assets are excluded from the RealPac FFO definition, whereas the NAREIT definition includes them. As a result, when calculating FFO, the Company adjusts the FFO reported by Equity One to comply with the RealPac definition, when appropriate.

FFO is considered a meaningful additional measure of operating performance, as it excludes amortization of real estate assets. Amortization expense assumes that the value of real estate assets diminishes predictably over time, which is clearly not a valid assumption. FFO also adjusts for certain items included in GAAP net income that may not be the most appropriate determinants of the long-term operating performance of the Company including gains and losses on depreciable real estate assets.

Net Operating Income

Net operating income ("NOI") is defined as property rental revenue less property operating costs. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's shopping centre portfolio. Net operating income is not a measure defined by 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.

    
    FIRST CAPITAL REALTY INC.

    CONSOLIDATED BALANCE SHEETS


    -------------------------------------------------------------------------
    (unaudited)                                    September 30  December 31
    (thousands of dollars)                                 2009       2008(1)
    -------------------------------------------------------------------------
                                                                   (restated)
    ASSETS
    Real Estate Investments
    Shopping centres                                $ 3,193,742  $ 3,040,257
    Land and shopping centres under development         257,661      281,959
    Deferred leasing costs                               16,934       16,146
    Intangible assets                                    23,069       29,312
    -------------------------------------------------------------------------
                                                      3,491,406    3,367,674
    Investment in Equity One, Inc.                            -      227,259
    Loans, mortgages and other real estate assets        82,627       32,480
    -------------------------------------------------------------------------
                                                      3,574,033    3,627,413
    Other assets                                         38,073       27,448
    Amounts receivable                                   46,647       45,501
    Cash and cash equivalents                            19,400        7,263
    Future income tax assets                             18,109       11,977
    -------------------------------------------------------------------------
                                                    $ 3,696,262  $ 3,719,602
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Mortgages, loans and credit facilities          $ 1,499,011  $ 1,573,530
    Accounts payable and other liabilities              135,955      166,507
    Intangible liabilities                               12,412       17,264
    Senior unsecured debentures                         592,786      593,288
    Convertible debentures                              282,788      218,247
    Future income tax liabilities                        63,957       55,620
    -------------------------------------------------------------------------
                                                      2,586,909    2,624,456

    SHAREHOLDERS' EQUITY                              1,109,353    1,095,146
    -------------------------------------------------------------------------
                                                    $ 3,696,262  $ 3,719,602
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF EARNINGS


    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of        September 30 September 30 September 30 September 30
     dollars, except             2009       2008(1)        2009       2008(1)
     per share amounts)
    -------------------------------------------------------------------------
                                         (restated)                (restated)
    REVENUE
    Property rental
     revenue              $   108,829  $   100,830  $   328,899  $   304,497
    Interest and
     other income               2,390        2,932        3,288        4,577
    -------------------------------------------------------------------------
                              111,219      103,762      332,187      309,074
    -------------------------------------------------------------------------
    EXPENSES
    Property
     operating costs           37,217       35,375      117,430      111,368
    Interest expense           31,412       27,862       93,122       85,064
    Amortization
      Shopping centres         21,697       18,507       62,748       55,456
      Deferred leasing
       costs                      934          741        2,716        2,515
      Intangible assets         2,061        1,803        6,015        6,077
      Deferred financing
       fees                       623          222        1,558          628
      Other assets                380          325        1,198          939
    Corporate expenses          5,320        4,731       16,321       15,963
    -------------------------------------------------------------------------
                               99,644       89,566      301,108      278,010
    -------------------------------------------------------------------------
    Equity income (loss)
     from Equity One, Inc.        954       (1,506)       8,353        7,311
    -------------------------------------------------------------------------
    Income before income
     taxes                     12,529       12,690       39,432       38,375
    -------------------------------------------------------------------------
    Income taxes
      Current                     318        1,036        2,195        2,365
      Future                    3,209        3,427       10,060        9,243
    -------------------------------------------------------------------------
                                3,527        4,463       12,255       11,608
    -------------------------------------------------------------------------
    Net income            $     9,002  $     8,227  $    27,177  $    26,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common
     share, basic and
     diluted              $      0.09  $      0.09  $      0.29  $      0.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of        September 30 September 30 September 30 September 30
     dollars)                    2009       2008(1)        2009       2008(1)
    -------------------------------------------------------------------------
                                         (restated)                (restated)

    NET INCOME            $     9,002  $     8,227  $    27,177  $    26,767
    -------------------------------------------------------------------------

    OTHER COMPREHENSIVE INCOME

    Unrealized foreign
     currency gains on
     translating self-
     sustaining foreign
     operations
      (Losses) gains arising
       during the period       (3,146)       2,095       (6,156)       3,363
      Reclassification
       adjustment for
       dilution loss
       on investment in
       Equity One, Inc.             -            -        1,669            -
      Reclassification
       adjustment for
       dividend-in-kind        17,288            -       17,288            -
    -------------------------------------------------------------------------
                               14,142        2,095       12,801        3,363
    -------------------------------------------------------------------------
    Other comprehensive
     (losses) income of
     Equity One, Inc.
      Gains arising during
       the period                   -        2,975        4,346        1,088
      Reclassification
       adjustment for
       dilution loss
       included in net
       income                       -            -           29            -
      Reclassification
       adjustment for
       dividend-in-kind        (1,124)           -       (1,124)           -
    -------------------------------------------------------------------------
                               (1,124)       2,975        3,251        1,088
    -------------------------------------------------------------------------
    Unrealized gains
     (losses) on cash
     flow hedges of
     interest rates
      Unrealized gains
       (losses) arising
       during the period          196          (22)       9,080         (440)
      Reclassification
       adjustments for
       gains included in
       net income                  (7)           -          (21)           -
      Reclassification
       adjustment for
       dividend-in-kind         4,407            -        4,407            -
    -------------------------------------------------------------------------
                                4,596          (22)      13,466         (440)
    -------------------------------------------------------------------------
    Change in cumulative
     unrealized gain
     (losses) on available-
     for-sale marketable
     securities
      Unrealized gains
       (losses) arising
       during the period        5,341       (1,707)      12,163       (2,054)
      Reclassification
       adjustments for
       (gains) losses
       included in net
       income                  (1,668)           3       (1,470)          55
    -------------------------------------------------------------------------
                                3,673       (1,704)      10,693       (1,999)
    -------------------------------------------------------------------------
    Other comprehensive
     income before
     income taxes              21,287        3,344       40,211        2,012
    Future income tax
     expense (recovery)         1,298         (580)       5,501         (875)
    -------------------------------------------------------------------------
    Other comprehensive
     income                    19,989        3,924       34,710        2,887
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME  $    28,991  $    12,151  $    61,887  $    29,654
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS


    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of        September 30 September 30 September 30 September 30
     dollars, except             2009       2008(1)        2009       2008(1)
     per share amounts)
    -------------------------------------------------------------------------
                                         (restated)                (restated)

    Net income for
     the period           $     9,002  $     8,227  $    27,177  $    26,767

    Add (deduct):
      Amortization of
       shopping centres,
       deferred costs
       and intangible
       assets                  24,692       21,051       71,479       64,048
      Gain on disposition
       of income-
       producing shopping
       centre                       -            -         (211)           -
      Equity income
       (loss) from
       Equity One(2)             (954)       1,506       (8,353)      (7,311)
      Funds from
       operations from
       Equity One(2)            2,553       (1,952)      15,009        8,749
      Future income taxes       3,209        3,427       10,060        9,243
    -------------------------------------------------------------------------
    Funds from
     operations ("FFO")        38,502       32,259      115,161      101,496
    Add: dilution loss on
     Equity One investment          -            -          676            -
    Add: the Company's
     share of Equity One's
     non-cash impairment
     loss                           -        6,480            -        6,480
    -------------------------------------------------------------------------
    FFO excluding dilution
     loss on Equity One
     investment and the
     Company's share of
     Equity One's non-cash
     impairment loss      $    38,502  $    38,739  $   115,837  $   107,976
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FFO per diluted
     share                $      0.41  $      0.36  $      1.24  $      1.18
    Add: dilution loss
     on Equity One
     investment                     -            -         0.01            -
    Add: the Company's
     share of Equity
     One's non-cash
     impairment loss                -         0.07            -         0.07
    -------------------------------------------------------------------------
    FFO per diluted
     share excluding
     dilution loss on
     Equity One
     investment and the
     Company's share of
     Equity One's non-
     cash impairment
     loss                 $      0.41  $      0.43  $      1.25  $      1.25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     diluted shares
     - FFO                 94,902,006   90,021,640   92,895,420   86,231,829
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF ADJUSTED FUNDS FROM OPERATIONS

    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of        September 30 September 30 September 30 September 30
     dollars, except             2009       2008(1)        2009       2008(1)
     per share amounts)
    -------------------------------------------------------------------------
                                         (restated)                (restated)

    FFO excluding
     dilution loss on
     Equity One
     investment and the
     Company's share of
     Equity One's non-
     cash impairment
     loss                 $    38,502  $    38,739  $   115,837  $   107,976
      Add/(deduct):
      Rental revenue
       recorded on a
       straight-line
       basis and market
       rent adjustments        (1,421)      (2,274)      (4,645)      (6,166)
      Non-cash
       compensation
       expense                    914          904        2,727        2,971
      Interest expense
       payable in shares        3,642        3,525       10,523       10,491
      Change in cumulative
       unrealized gain on
       marketable
       securities                   -          529       (1,638)         788
      Dividend income -
       return of capital
       portion                    484          214        1,766          214
      Return of capital
       portion -
       previously
       recognized                (792)           -         (792)           -
      Loss on
       extinguishment
       of debt                    209            -          897            -
      Funds from
       operations from
       Equity One              (2,553)      (4,528)     (15,009)     (15,229)
      Dividends from
       Equity One
       (regular)                2,211        4,464       12,452       13,048
      Gain on
       termination of
       hedge                       (7)           -          (21)           -
      Gain on disposition
       of land                      -       (2,667)        (118)      (3,942)
      Revenue sustaining
       capital
       expenditures and
       leasing costs           (3,733)      (2,436)      (8,842)      (7,087)
    -------------------------------------------------------------------------
    Adjusted funds from
     operations
     ("AFFO")             $    37,456  $    36,470  $   113,137  $   103,064
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    AFFO per diluted
     share                $      0.36  $      0.37  $      1.12  $      1.09
    -------------------------------------------------------------------------
    Weighted average
     diluted shares
     for AFFO(3)          103,879,309   98,648,017  101,119,140   94,657,945
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.
    (2) Current year amounts cover period to August 14, 2009, the date of the
        dividend-in-kind related to the Company's interest in Equity One.
    (3) Includes the weighted average outstanding shares that would result
        from the conversion of the convertible debentures.



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS


    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of        September 30 September 30 September 30 September 30
     dollars)                    2009       2008(1)        2009       2008(1)
    -------------------------------------------------------------------------
                                         (restated)                (restated)
    CASH FLOW PROVIDED
     BY (USED IN):
    OPERATING ACTIVITIES
    Net income            $     9,002  $     8,227  $    27,177  $    26,767
    Items not affecting
     cash
      Amortization             25,695       21,598       74,235       65,615
      Amortization of
       above- and below-
       market leases             (602)        (592)      (1,745)      (1,679)
      Rent revenue
       recognized on a
       straight-line
       basis                     (819)      (1,682)      (2,900)      (4,487)
      Gain on disposition
       of income-
       producing
       property                     -            -         (211)           -
      Gains on
       disposition
       of land                      -       (2,667)        (118)      (3,942)
      Realized (losses)
       gains on sale
       of marketable
       securities              (1,875)           -         (902)          52
      Change in
       cumulative
       unrealized
       losses (gains) on
       marketable
       securities held-
       for-trading                  -          529       (1,638)         788
      Loss on settlement
       of debt                    209            -          897            -
      Non-cash
       compensation
       expense                    914          904        2,727        2,971
      Interest paid in
       excess of
       effective interest
       on assumed
       mortgages                 (284)        (293)        (895)      (1,142)
      Effective interest
       rate in excess of
       coupon rate on
       senior unsecured
       and convertible
       debentures                 236          217          678          639
      Convertible
       debenture
       interest paid in
       common shares            6,253        6,408       12,613       12,891
      Other non-cash
       interest expense           677          588        2,020        1,849
      Equity income from
       Equity One, Inc.          (954)       1,506       (8,353)      (7,311)
      Dilution loss on
       Equity One, Inc.
       investment                   -            -          676            -
      Loss on foreign
       exchange currency          211            -          211            -
      Future income taxes       3,209        3,427       10,060        9,243
    Deferred leasing
     costs                     (1,304)      (1,428)      (3,505)      (3,012)
    Dividends received
     from Equity
     One, Inc.                  2,211        4,464       12,452       13,048
    Net change in non-
     cash operating
     items                     (4,518)       1,926      (25,287)     (22,905)
    -------------------------------------------------------------------------
    Cash provided by
     operating
     activities                38,261       43,132       98,192       89,385
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Acquisition of
     shopping centres          (5,364)     (39,299)     (23,406)     (45,947)
    Acquisition of land
     and shopping
     centres held for
     development                  (28)        (496)      (9,387)     (11,603)
    Proceeds from
     disposition of land
     held for development           -        8,322           70       10,148
    Expenditures on
     shopping centres         (10,363)      (6,145)     (22,423)     (14,684)
    Expenditures on land
     and shopping
     centres under
     development              (63,147)     (59,009)    (134,377)    (150,596)
    Changes in accounts
     payable and accrued
     liabilities related
     to investing
     activities                20,514      (10,034)      (3,924)      13,536
    Increase in loans and
     mortgages receivable        (364)        (980)      (1,390)      (1,280)
    Investment in
     marketable
     securities                  (367)     (13,053)      (3,112)     (22,241)
    Return of capital
     from investments
     in marketable
     securities                   484          245        1,766          319
    Proceeds from
     disposition of
     marketable
     securities                19,159           52       27,762        2,182
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities               (39,476)    (120,397)    (168,421)    (220,166)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Mortgage financings,
     loans and credit
     facilities
      Borrowings, net of
       financing costs         63,049      121,718      548,958      345,345
      Principal
       instalment
       payments               (10,260)      (9,563)     (30,495)     (28,304)
      Other repayments
       on maturity           (140,535)     (69,343)    (475,930)    (318,025)
    Purchase of senior
     unsecured
     debentures                     -            -       (1,145)           -
    Issuance of
     convertible
     debentures, net
     of issue costs            72,075            -       72,075            -
    Issuance of common
     shares, net of
     issue costs               54,942       42,991       54,980      148,491
    Issuance of
     warrants, net
     of issue costs             1,821            -        1,821            -
    Dividend-in-kind
     cash payment                (427)           -         (427)           -
    Payment of
     dividends                (30,041)      (7,264)     (88,793)     (20,630)
    -------------------------------------------------------------------------
    Cash provided by
     financing
     activities                10,624       78,539       81,044      126,877
    -------------------------------------------------------------------------
    Effect of
     currency rate
     movement on
     cash balances              1,514           20        1,322          (45)
    -------------------------------------------------------------------------
    Increase in cash
     and cash
     equivalents               10,923        1,294       12,137       (3,949)
    Cash and cash
     equivalents,
     beginning of
     the period                 8,477        5,208        7,263       10,451
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of the period        $    19,400  $     6,502  $    19,400  $     6,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUPPLEMENTARY
     INFORMATION
    Cash income taxes
     paid                 $         9  $       714  $     1,358  $     1,640
    -------------------------------------------------------------------------
    Cash interest paid    $    33,886  $    29,428  $    96,630  $    89,409
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Prior year comparative figures have been restated for a change in
        accounting standards.
    

SOURCE First Capital Realty Inc.

For further information: For further information: Dori J. Segal, President & C.E.O., or Karen H. Weaver, E.V.P. & C.F.O., First Capital Realty Inc., 85 Hanna Avenue, Suite 400, Toronto, Ontario, Canada, M6K 3S3, Tel: (416) 504-4114, Fax: (416) 941-1655, www.firstcapitalrealty.ca


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