First Capital Realty reports strong Q2 operating results



    Also Announces Dividend Increase

    TORONTO, Aug. 10 /CNW/ - First Capital Realty Inc. ("First Capital
Realty") (TSX:FCR) Canada's leading owner, developer and operator of
supermarket-anchored neighbourhood and community shopping centres, located
predominantly in growing metropolitan areas, today announced strong operating
results for the second quarter ended June 30, 2007.

    
    SECOND QUARTER HIGHLIGHTS:

    -------------------------------------------------------------------------
    ($ millions, except share                June 30,    June 30, Percentage
     and per share amounts)                    2007        2006       Change
    -------------------------------------------------------------------------
    Enterprise value                        $  4,165    $  3,369       23.6%
    -------------------------------------------------------------------------
    Property rental revenue                 $   93.5    $   78.6       19.0%
    -------------------------------------------------------------------------
    Net operating income (NOI)              $   60.2    $   49.5       21.6%
    -------------------------------------------------------------------------
    Funds from operations (FFO)             $   30.0    $   28.9        3.8%
    -------------------------------------------------------------------------
    FFO - comparable accounting basis       $   31.9    $   28.9       10.4%
    -------------------------------------------------------------------------
    FFO per diluted share                   $   0.39    $   0.39           -
    -------------------------------------------------------------------------
    FFO per diluted share - comparable
     accounting basis                       $   0.41    $   0.39        5.1%
    -------------------------------------------------------------------------
    Debt to market capitalization              46.4%       46.6%           -
    -------------------------------------------------------------------------
    Weighted average number of shares
     for FFO (000's)                          77,904      73,987        5.3%
    -------------------------------------------------------------------------

    -   Invested $91 million in acquisitions, development activities and
        property improvements.
    -   Added 241,000 square feet of gross leasable area from acquisitions
        and development coming on line.
    -   Added 3.7 acres in two land parcels adjacent to existing properties.
    -   4.3% same property NOI growth; 11.0% increase on renewal leases.
    -   Net new leasing totalled 120,000 square feet including development
        coming on line and renewal leasing totalled 341,000 square feet.
    -   Average lease rate per occupied square foot increased by 3.0% to
        $14.20 at June 30, 2007 compared to the prior year second quarter.


    SIX MONTHS HIGHLIGHTS:

    -------------------------------------------------------------------------
    ($ millions, except share                June 30,    June 30, Percentage
     and per share amounts)                    2007        2006       Change
    -------------------------------------------------------------------------
    Property rental revenue                 $  184.1    $  156.6       17.6%
    -------------------------------------------------------------------------
    Net operating income (NOI)              $  116.9    $   95.9       21.9%
    -------------------------------------------------------------------------
    FFO                                     $   61.1    $   56.0        9.1%
    -------------------------------------------------------------------------
    FFO - comparable accounting basis       $   61.9    $   56.0       10.5%
    -------------------------------------------------------------------------
    FFO per diluted share                   $   0.79    $   0.77        2.6%
    -------------------------------------------------------------------------
    FFO per diluted share - comparable
     accounting basis                       $   0.80    $   0.77        3.9%
    -------------------------------------------------------------------------
    Weighted average number of shares
     for FFO (000's)                          77,351      73,082        5.8%
    -------------------------------------------------------------------------

    -   Invested $267 million in acquisitions, development activities and
        property improvements.
    -   Added 1.1 million square feet of gross leasable area from
        acquisitions and development coming on line.
    -   Added 42 acres from acquisition of two development sites and two
        parcels adjacent to existing properties.
    -   4.1% same property NOI growth; 10.9% increase on renewal leases.
    -   Occupancy remains at 95.0%; 2% of vacancy is from space held for
        redevelopment.
    -   Acquisitions during the six months at 91.3% occupancy; closures for
        redevelopment totalled 155,000 square feet.
    -   Net new leasing totalled 246,000 square feet including development
        coming on line and renewal leasing totalled 624,000 square feet.
    -   Completed new leasing on existing space totalling 251,000 square feet
        at an average rate of $16.17 per square foot, representing a 30.1%
        increase versus lost leases year-to-date.
    

    "I am very pleased with our operating performance which is a direct
result of our acquisitions, development, leasing and property management teams
across the country," said Dori J. Segal, President & CEO. "We have the highest
level of activity in both our portfolio and our development and redevelopment
pipeline since 2001 which, combined with our presence in growing urban markets
with high barriers to entry, will continue to deliver strong and sustainable
growth."

    FINANCIAL HIGHLIGHTS

    FFO presented herein is a key financial measurement used by the real
estate industry to measure and compare the operating performance of real
estate organizations. FFO is a supplemental non-GAAP financial measure and a
reconciliation containing adjustments from GAAP net income to FFO is included
in this press release.
    Effective January 1, 2007, the Company adopted certain new Canadian
accounting standards (GAAP). These standards did not require restatement of
prior periods. Where the results for 2007 using GAAP that was applicable prior
to January 1, 2007 are compared to the results for 2006, this is referred to
as "comparable accounting basis" and is considered a non-GAAP measure.

    Funds from Operations ("FFO")

    Funds from operations for the three months ended June 30, 2007 totalled
$30.0 million, or $0.39 per diluted common share, compared to $28.9 million,
or $0.39 per diluted common share in 2006. FFO for the first half of 2007
totalled $61.1 million or $0.79 per diluted common share compared to
$56.0 million or $0.77 per diluted common share in the first half of 2006. On
a comparable accounting basis, FFO totalled $31.9 million or $0.41 per diluted
share and $61.9 million or $0.80 per diluted share for the three and six month
periods ended June 30, 2007, respectively. The increase in FFO in the three
and six month periods ended June 30, 2007 on a comparable accounting basis, is
primarily due to the Company's income-producing property acquisitions and
development projects coming on line in 2007 and to a lesser degree, realized
gains on marketable securities, partially offset by increased interest and
corporate expenses. Corporate expenses include $1.9 million and $2.1 million
in transaction costs related to unsuccessful and unfeasible acquisitions for
the three and six months ended June 30, 2007, respectively, which compares to
$0.2 million and $0.5 million in the same periods in 2006. During the three
month period ended June 30, 2007, these costs include $1.2 million related to
the unsuccessful Sterling Centrecorp take-over bid. The three month period
ended June 30, 2006 included $1.4 million of income tax adjustments primarily
related to the elimination of the large corporations tax that reduced income
tax expense.

    
    Net Income
    -------------------------------------------------------------------------
                                Three months ended         Six months ended
                                      June 30                   June 30
    -------------------------------------------------------------------------
    ($ millions, except share
     and per share amounts)      2007         2006         2007         2006
    -------------------------------------------------------------------------
    Net income            $       6.3  $      20.7(1) $    14.2  $    27.4(1)
    -------------------------------------------------------------------------
    Net income -
     comparable accounting
     basis                        7.5         20.7(1)      14.7       27.4(1)
    -------------------------------------------------------------------------
    Earnings per
     diluted share               0.08         0.28         0.18         0.37
    -------------------------------------------------------------------------
    Earnings per
     diluted share
     - comparable
     accounting basis            0.10         0.28         0.19         0.37
    -------------------------------------------------------------------------
    Weighted average
     common shares
     (diluted) (000's)         77,904       77,691       77,351       73,082
    -------------------------------------------------------------------------
    (1) Includes the Company's share in the gain (~$13.4 million, net of tax)
        realized by Equity One on the disposition of its Texas portfolio.
    

    Net income for the three and six months ended June 30, 2007 amounted to
$6.3 million or eight cents per share basic and diluted and $14.2 million or
18 cents per share basic and diluted, respectively. On a comparable accounting
basis, net income was $7.5 million or ten cents per share basic and diluted
and $14.7 million or 19 cents per share basic and diluted, respectively. This
compares to $20.7 million, or 28 cents per share basic and diluted, for the
three months ended June 30, 2006 and $27.4 million or 38 cents per share basic
and 37 cents per share diluted, respectively. The decrease in net income is
primarily due to the Company's share in the gain (approximately $13.4 million,
net of taxes) realized on the disposition of the Texas property portfolio of
Equity One, Inc. in the second quarter of 2006.

    ACQUISITION AND DEVELOPMENT AND OTHER INVESTMENT HIGHLIGHTS

    During the second quarter of 2007, the Company acquired interests in two
income-producing shopping centres: one in Ontario and one in Alberta totalling
132,000 square feet of gross leasable area. The aggregate acquisition amount
of $39.0 million, including closing costs, was funded with cash and assumed
mortgages of $4.2 million.
    The Company also invested $11.2 million in acquiring additional space at
existing properties and two land parcels at or adjacent to existing properties
adding 18,000 square feet of gross leasable area and 3.7 acres of expansion
land to the portfolio.
    Through the first six months of 2007, the Company has invested a total of
$200.4 million in the acquisition of five income-producing properties
totalling 831,000 square feet; the purchase of additional space and land
parcels at or adjacent to existing properties adding 73,000 square feet of
space at three properties and 3.7 acres of expansion land at two others; and
38.6 acres of commercial land for future development at two sites.
    Development of 91,000 square feet was brought on line during the second
quarter, leased at an average rate of $17.19 per square foot. Through the
first six months of 2007, the Company has brought on line 199,000 square feet
of space, including three supermarkets, which was 100% occupied at an average
lease rate of $15.64 per square foot.
    In addition to the acquisitions of income-producing properties and
development assets, the Company invested $40.4 million during the second
quarter in its active development projects and improvements to existing
properties in the portfolio. In the first six months of 2007, investments in
these activities totalled $66.7 million.

    OPERATING HIGHLIGHTS

    Net operating income for the three months ended June 30, 2007 totalled
$60.2 million, compared to $49.5 million in the second quarter of 2006, an
increase of $10.7 million or 21.6%. Acquisitions during 2007 and 2006,
contributed $9.2 million to net operating income in the quarter, while
development and redevelopment activities contributed a further $6.2 million.
Same property net operating income increased 4.3%, generating growth of
$1.8 million in the second quarter 2007.
    Year-to-date, acquisitions completed in 2007 and 2006 contributed
$16.6 million, while development and redevelopment activities contributed a
further $12.3 million. Same property net operating income increased 4.1%,
generating growth of $3.3 million in the six month period ended June 30, 2007.
    Net new leasing in the second quarter totalled 120,000 square feet
including development coming on line, while renewal leasing totalled 341,000
square feet in the quarter. For the six months ended June 30, 2007, net new
leasing totalled 246,000 square feet, including development coming on-line,
and renewal leasing totalled 624,000 square feet. The Company achieved a 30.1%
increase in rates on new versus lost leases year-to-date and a 10.9% increase
on renewal lease rates over expiring lease rates.
    The average rate per occupied square foot at June 30, 2007 increased to
$14.20 per square foot including the impact of the 2007 acquisitions, which
had an average lease rate of $14.07 per square foot. This compares to an
average rate of $13.95 per square foot at December 31, 2006 and $13.78 at
June 30, 2006.
    Portfolio occupancy at June 30, 2007 of 95.0% compares to 95.7% at
December 31, 2006 and 95.1% at June 30, 2006. Properties acquired during the
six month period ended June 30, 2007 were at 91.3% occupancy while closures
for redevelopment totalled 155,000 square feet, providing potential for future
income growth through leasing and redevelopment activities.

    FINANCING AND CAPITAL MARKET HIGHLIGHTS

    On April 5, 2007, the Company completed the issuance of $100 million in
principal senior unsecured debentures (Series F), bearing interest at 5.32%
and maturing on October 30, 2014.
    During the quarter $12 million of the convertible unsecured subordinated
debentures bearing interest at 5.50% were converted at the holder's option
into common shares. A total of 444,443 common shares were issued in connection
with the conversion of these debentures.
    On June 29, 2007, the Company issued, via private placement, an
additional $50 million principal amount of 5.50% convertible unsecured
subordinated debentures maturing on September 30, 2017 at a price of $107 per
$100 principal amount for total proceeds of $53.5 million. Gazit Canada Inc.,
the Company's largest shareholder, acquired $49 million of the principal
amount of these debentures on the same terms as the other investors.
    In the aggregate, the Company issued approximately 2.2 million common
shares during the six month period ended June 30, 2007 primarily from
participation in the Dividend Reinvestment Plan, payment of interest on
convertible debentures and the conversion of convertible debentures.
    "The second quarter of 2007, followed by DBRS' upgrade of our credit
rating, marks an important milestone in our three year strategy of becoming an
investment grade credit with a significant portion of our balance sheet
unencumbered," said Karen H. Weaver, Chief Financial Officer. "Our strong
financial position, particularly in a volatile market, provides us with
financial flexibility and the ability to continue to grow."

    SUBSEQUENT EVENT HIGHLIGHTS

    Credit Rating Upgrade

    On July 9, 2007, DBRS upgraded the Company's unsecured debenture rating
to BBB from BBB (low). Moody's confirmed the Company's unsecured debenture
rating of Baa(3).

    Dividend Reinvestment Plan

    On July 10, 2007, the Company issued 760,540 common shares at a net price
of $25.04 to participants in the DRIP.


    DIVIDENDS

    The Company announced that it will pay a third quarter dividend of
$0.32 per common share, which represents a $0.04 per annum increase, on
October 10, 2007 to shareholders of record on September 28, 2007.

    PAYMENT OF DEBENTURE INTEREST OWING ON SEPTEMBER 30, 2007 IN SHARES

    The Company also announced today that it will pay the interest due on
September 30, 2007 to holders of both classes of its 5.50% convertible
unsecured subordinated debentures due September 30, 2017 (FCR.DB.A and
FCR.DB.B) by the issuance of common shares. The number of common shares to be
issued per $1000 principal amount of debentures will be calculated by dividing
the dollar amount of interest payable by an amount equal to 97% of the
volume-weighted average trading price of the common shares of First Capital
Realty on the Toronto Stock Exchange calculated for the 20 consecutive trading
days ending on September 24, 2007. The interest payment due is approximately
$6.56 million, plus any accrued and unpaid interest on debentures which are
converted after the date hereof and on or before September 24, 2007.
    It is the current intention of First Capital Realty to continue to
satisfy its obligations to pay principal and interest on its 5.50% convertible
unsecured subordinated debentures by the issuance of common shares.

    OUTLOOK

    The current acquisition environment remains extremely competitive.
Nevertheless, 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.
    Development and redevelopment activities will continue to provide the
Company with opportunities to grow within its existing portfolio and to
participate in new growth markets. 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 in
the current environment of low capitalization rates and increasing cost of
capital.
    Specifically, Management is focusing on the following four areas to
achieve its objectives in 2007:

    
    -   same property net operating income growth;
    -   development and redevelopment activities;
    -   increasing efficiency and productivity of operations; and
    -   improving the cost of capital.
    

    Overall, Management is confident that the quality of the Company's real
estate will continue to generate sustainable and growing cash flows while
producing superior returns on investment over the long term.

    GUIDANCE

    Guidance for the year ending December 31, 2007 remains unchanged from the
prior quarter.
    Readers should refer to the section below titled "Forward Looking
Statements" for important information relating to our guidance, including risk
factors.

    CONFERENCE CALL

    Management will hold a conference call at 9:00 a.m. ET on Friday,
August 10, 2007 to discuss the Company's second quarter results. The call and
supporting slides can be accessed at the Company's website at
www.firstcapitalrealty.ca. You may participate in the live conference toll
free at 800-633-8949 or at 416-641-6700. To ensure your participation, please
call five minutes prior to the scheduled start of the call. The call will be
archived through August 17, 2007 and can be accessed by dialing toll free
800-558-5253 or 416-626-4100 with access code 21345007.

    WEBCAST

    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 the Conference Calls section of our
website.
    Management's presentation will be followed by a question and answer
period. To ask a question, press '1' followed by '4' 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 '1' followed by '3'. If you hang up, you can reconnect by
dialing 800-633-8949 or 416-641-6700. For assistance at any point during the
call, press '(*)0'.

    COMPANY INFORMATION

    The Company's Supplementary Information for the second quarter will be
posted on the Company's website at www.firstcapitalrealty.ca.

    ABOUT FIRST CAPITAL REALTY (TSX:FCR)

    First Capital Realty is Canada's leading owner, developer and operator of
supermarket-anchored neighbourhood and community shopping centres, located
predominantly in growing metropolitan areas. The Company currently owns
interests in 163 properties, including 6 under development, totalling
approximately 19.1 million square feet of gross leasable area and 9 land sites
in the planning stage for future retail development. In addition, the Company
owns 14 million shares of Equity One (approximately 19%), one of the largest
shopping centre REITS in the southern U.S., that trades on the New York Stock
Exchange under the ticker symbol EQY. Including its investments in Equity One,
the Company has interests in 340 properties totalling approximately
37.2 million square feet of gross leasable area.

    Forward Looking Statements

    Certain statements included in this press release constitute
forward-looking statements, including those identified by the expressions
"anticipate", "believe", "plan", "estimate", "expect", "intend" and similar
expressions to the extent they relate to the Company or its Management. 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.
    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
"Risk Management" in the Management's Discussion and Analysis ("MD&A")
contained in the Company's 2006 Annual Report which is available on SEDAR at
www.sedar.com.
    Factors that could cause actual results or events to differ materially
from those expressed or implied by forward-looking statements in addition to
those described in the MD&A, 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, financial difficulties
and defaults, changes in interest rates, changes in operating costs, First
Capital Realty's ability to obtain insurance coverage at a reasonable cost and
the availability of financing.
    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.
    These forward-looking statements are made as of August 9, 2007

    NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

    Funds from Operations

    In Management's view, funds from operations ("FFO") is a commonly
accepted and meaningful indicator 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 disclosure supplements Canadian
generally accepted accounting principles ("GAAP") disclosure. The Company's
method of calculating FFO 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 is presented to assist
investors in analyzing the Company's performance. FFO: (i) does not represent
cash flow from operating activities as defined by GAAP (ii) is not indicative
of cash available to fund all liquidity requirements, including payment of
dividends and capital for growth and (iii) should not be considered as an
alternative 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, and is modelled on the definition
adopted by the National Association of Real Estate Investment Trusts
("NAREIT") in the United States.

    Net Operating Income

    Net operating income 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. Accordingly, net operating
income may not be comparable with similar measures presented by other
entities. Net operating income should not be construed as an alternative to
net income or cash flow from operating activities determined in accordance
with GAAP.

    Comparable Accounting Basis

    Effective January 1, 2007, the Company adopted several new accounting
standards issued by the Canadian Institute of Chartered Accountants including
comprehensive income, financial instruments and hedges. The standards were
applied on a retroactive basis without restatement of prior periods.
    Management, in preparing this press release, has presented results for
the three and six months ended June 30, 2007 using both the new accounting
standards as well as the accounting standards that applied in 2006 where
applicable. Where results for the three and six months ended June 30, 2007
using GAAP that was applicable prior to January 1, 2007 are compared to the
results for June 30, 2006 this is referred to as "comparable accounting
basis". This measure should not be construed as an alternative to net income
determined in accordance with current GAAP.


    
    FIRST CAPITAL REALTY INC.

    CONSOLIDATED BALANCE SHEETS

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

    -------------------------------------------------------------------------
    (unaudited)                                         June 30  December 31
    (thousands of dollars)                                 2007         2006
    -------------------------------------------------------------------------
    ASSETS
    Real Estate Investments
    Shopping centres                                $ 2,571,367  $ 2,423,801
    Land and shopping centres under development         244,179      178,347
    Deferred costs                                       78,636       74,778
    Intangible assets                                    38,737       31,868
    -------------------------------------------------------------------------
                                                      2,932,919    2,708,794
    Investment in Equity One, Inc.                      208,882      228,665
    Loans, mortgages and other real estate assets        31,099       24,056
    -------------------------------------------------------------------------
                                                      3,172,900    2,961,515
    Other assets                                         36,915       47,129
    Amounts receivable                                   35,720       28,070
    Cash and cash equivalents                            34,376        6,810
    Future income tax assets                             12,093       17,355
    -------------------------------------------------------------------------
                                                    $ 3,292,004  $ 3,060,879
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Mortgages and credit facilities                 $ 1,365,626  $ 1,388,650
    Accounts payable and other liabilities              109,435      106,145
    Intangible liabilities                               18,033       18,453
    Senior unsecured debentures                         594,954      399,813
    Convertible debentures                              221,104      192,189
    Future income tax liabilities                        44,693       44,036
    -------------------------------------------------------------------------
                                                      2,353,845    2,149,286
    SHAREHOLDERS' EQUITY                                938,159      911,593
    -------------------------------------------------------------------------
                                                    $ 3,292,004  $ 3,060,879
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF EARNINGS
    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of dollars,
     except per share         June 30      June 30      June 30      June 30
     amounts)                    2007         2006         2007         2006
    -------------------------------------------------------------------------
    REVENUE
    Property rental
     revenue              $    93,547  $    78,634  $   184,056  $   156,573
    Interest and other
     income                     1,942        1,305        5,058        2,935
    -------------------------------------------------------------------------
                               95,489       79,939      189,114      159,508
    -------------------------------------------------------------------------
    EXPENSES
    Property operating
     costs                     33,335       29,119       67,147       60,637
    Interest expense           29,272       22,950       57,675       44,472
    Amortization               19,619       16,409       38,298       31,558
    Corporate expenses          7,148        4,903       12,363        9,194
    -------------------------------------------------------------------------
                               89,374       73,381      175,483      145,861
    -------------------------------------------------------------------------
    Equity income from
     Equity One, Inc.           3,241       19,995        7,667       24,307
    Loss on settlement
     of debt                        -            -         (483)           -
    -------------------------------------------------------------------------
    Income before
     income taxes               9,356       26,553       20,815       37,954
    -------------------------------------------------------------------------
    Income taxes:
      Current                     648        1,935        1,267        3,185
      Future                    2,422        3,932        5,387        7,387
    -------------------------------------------------------------------------
                                3,070        5,867        6,654       10,572
    -------------------------------------------------------------------------
    Net income            $     6,286  $    20,686  $    14,161  $    27,382
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per
     common share
    Basic                  $     0.08   $     0.28  $      0.18  $      0.38
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted                $     0.08   $     0.28  $      0.18  $      0.37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)
    (thousands of dollars,
     except per share         June 30      June 30      June 30      June 30
     amounts)                    2007         2006         2007         2006
    -------------------------------------------------------------------------

    Net income for the
     period               $     6,286  $    20,686  $    14,161  $    27,382

    Add (deduct):
      Amortization of
       shopping centres,
       deferred costs and
       intangible assets       19,369       15,473       37,810       29,729
      Loss (gain) on
       disposition of
       income-producing
       shopping centre             10            -         (323)           -
      Current income tax
       on Equity One,
       Inc. special
       dividend from
       gain on real
       estate                       -        2,702            -        2,702
      Equity income from
       Equity One, Inc.        (3,241)     (19,995)      (7,667)     (24,307)
      Funds from
       operations from
       Equity One, Inc.         5,203        6,135       11,720       13,065
      Future income taxes       2,422        3,932        5,387        7,387
    -------------------------------------------------------------------------

    Funds from
     operations           $    30,049  $    28,933  $    61,088  $    55,958
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    FFO per diluted
     share                $      0.39  $      0.39  $      0.79  $      0.77
    Weighted average
     diluted shares
     - FFO                 77,904,479   73,987,091   77,350,655   73,082,386
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)               June 30      June 30      June 30      June 30
    (thousands of dollars)       2007         2006         2007         2006
    -------------------------------------------------------------------------

    NET INCOME            $     6,286  $    20,686  $    14,161  $    27,382
    -------------------------------------------------------------------------

    OTHER COMPREHENSIVE
     INCOME
    Unrealized foreign
     currency loss on
     translating
     self-sustaining
     foreign operations        (5,767)      (2,804)      (6,481)      (2,463)
    Other comprehensive
     income of
     Equity One, Inc.             857            -          891            -
    Gain on cash flow
     hedges of interest
     rates                        640            -          345            -
    Change in cumulative
     unrealized gain on
     available-for-sale
     marketable
     securities                  (299)           -         (604)           -
    Reclassification of
     adjustment for gains
     and losses on cash
     flow hedges of
     interest rates
     included in income          (163)           -         (436)           -
    -------------------------------------------------------------------------
    Other comprehensive
     loss before income
     taxes                     (4,732)      (2,804)      (6,285)     (2,463)
    Income taxes
      Future                      376            -           96           -
    -------------------------------------------------------------------------
    Other comprehensive
     loss                      (5,108)      (2,804)      (6,381)     (2,463)
    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME  $     1,178  $    17,882  $     7,780  $   24,919
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    FIRST CAPITAL REALTY INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                Three months ended          Six months ended
    -------------------------------------------------------------------------
    (unaudited)               June 30      June 30      June 30      June 30
    (thousands of dollars)       2007         2006         2007         2006
    -------------------------------------------------------------------------
    CASH FLOW PROVIDED
     BY (USED IN):
    OPERATING ACTIVITIES
    Net income            $     6,286  $    20,686  $    14,161  $    27,382
    Items not affecting
     cash
      Amortization             19,619       16,409       38,298       31,558
      Amortization of
       above- and below-
       market leases             (514)        (327)        (993)        (720)
      Rent revenue
       recognized on a
       straight-line
       basis                   (1,735)        (795)      (3,324)      (1,818)
      Gain on disposition
       of shopping centre          10            -         (323)           -
      Realized gain on
       sale of marketable
       securities              (2,590)         (99)      (3,273)        (636)
      Change in unrealized
       loss on investment
       in marketable
       securities               1,865            -          821            -
      Loss on settlement
       of debt                      -            -          483            -
      Non-cash
       compensation
       expense                  1,264          725        1,846        1,129
      Interest paid in
       excess of implicit
       interest on
       assumed mortgages         (565)        (599)        (821)      (1,122)
      Debenture interest
       in excess of coupon        142           53          280           99
      Convertible
       debenture interest
       paid in common
       shares                       -            -        5,485        1,537
      Other non-cash
       interest expense           790            -        1,703            -
      Equity income from
       Equity One, Inc.        (3,241)     (19,995)      (7,667)     (24,307)
      Future income taxes       2,422        3,932        5,387        7,387
      Unrealized gains on
       certain interest
       rate swaps                (533)           -         (676)           -
    Deferred leasing costs     (1,081)      (1,393)      (1,628)      (2,967)
    Dividends received
     from Equity One, Inc.      4,469       19,360        9,285       24,034
    Net change in non-cash
     operating items           12,111        4,329        2,506       (1,416)
    -------------------------------------------------------------------------
    Cash provided by
     operating activites       38,719       42,286       61,550       60,140
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Acquisition of
     shopping centres         (41,337)     (51,348)    (165,001)    (188,311)
    Acquisition of land
     for development           (4,845)      (2,782)     (20,374)     (11,941)
    Proceeds from
     disposition of
     shopping centre                -            -        6,400            -
    Expenditures on
     shopping centres          (4,949)      (2,696)      (8,474)      (6,466)
    Expenditures on land
     and shopping centres
     under development        (34,357)     (21,091)     (56,640)     (30,747)
    Investment in common
     shares of Equity
     One, Inc.                 (2,254)           -       (2,254)           -
    (Increase) decrease
     in loans and
     mortgage receivable          (67)         627         (294)       3,841
    Investment in
     marketable
     securities                (7,994)      (6,458)     (27,944)     (12,152)
    Proceeds from
     disposition of
     marketable
     securities                 9,947        2,886       22,489       12,890
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities               (85,856)     (80,862)    (252,092)    (232,886)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Mortgage financings
     and credit
     facilities
      Borrowings, net of
       financing costs         47,401       93,639      161,887      226,049
      Principal instalment
       payments                (9,857)      (8,851)     (19,856)     (17,352)
      Repayments on
       maturity              (111,635)     (70,569)    (167,530)    (153,058)
    Issuance of common
     shares, net of
     issue costs                2,647       30,259        2,986       31,228
    Issuance of senior
     unsecured debentures,
     net of issue costs        99,202          (49)     198,304       98,724
    Issuance of
     convertible
     debentures, net of
     issue costs               53,306            -       53,306            -
    Payment of dividends       (5,155)      (4,847)     (10,222)     (10,028)
    -------------------------------------------------------------------------
    Cash provided by
     financing activities      75,909       39,582      218,875      175,563
    -------------------------------------------------------------------------
    Effect of currency
     rate movement on
     cash balances               (799)         299         (767)         295
    -------------------------------------------------------------------------
    Increase in cash and
     cash equivalents          27,973        1,305       27,566        3,112
    Cash and cash
     equivalents,
     beginning of the
     period                     6,403        7,142        6,810        5,335
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     the period           $    34,376  $     8,447  $    34,376  $     8,447
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUPPLEMENTARY
     INFORMATION
    Cash income taxes
     paid                 $       458  $       685  $       904  $     1,022
    -------------------------------------------------------------------------
    Cash interest paid    $    26,143  $    23,692  $    53,489  $    44,581
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Dori J. Segal, President & C.E.O., or Karen H.
Weaver, 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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