Realex Properties Corp. - Results for the three months ended December 31, 2008 and declaration of dividend


    CALGARY, Feb. 11 /CNW/ - Realex Properties Corp. ("Realex" or
"Corporation") today announced its fiscal 2009 first quarter results from
    Financial highlights for the three months ended December 31, 2008 are as

    Financial Highlights

    Income Statement Summary Data
                                           Three Months Ended December 31,
    ($000's except per share amounts)                2008     2007   % change
                                        ------------------ -------- ---------
    Revenues                                       14,607    8,258       77 %
    NOI(1)                                          7,546    4,697       61 %
    Net Income                                        143   (2,929)      (*)%
    Net income per share - basic/diluted            0.001   (0.026)      (*)%
    FFO(2)                                          5,044    2,668       89 %
    FFO per share - basic/diluted                   0.033    0.024       38 %
    AFFO(3)                                         3,793    2,785       36 %
    AFFO per share - basic/diluted                  0.025    0.025        - %
    Dividends on common and non-voting
     shares                                         1,150      850       35 %
    Weighted average shares outstanding
     (000's) - diluted                            153,364  113,302
                                                           (*) Not meaningful

    Balance Sheet Summary Data
    ($000's)                            December 31, 2008  September 30, 2008
                                        ------------------ ------------------
    Income Properties                             371,921           374,632
    Assets                                        436,126           435,770
    Debt                                          252,521           252,562
    Shares outstanding (000's)                    153,364           113,302

    (1) Net Operating Income (NOI) - is a measure used to assist management
        to evaluate the Corporation's profitability from its principal
        business activities without regard to the manner in which these
        activities are financed or amortized, the allocation of general,
        administrative and stock-based compensation costs, or the manner in
        which the results are taxed. Realex defines NOI as rent from income
        properties, excluding straight lining of rents and amortization of
        above- and below-market leases, less property operating costs.

    (2) Funds From Operations (FFO) - is a measure used to assist management
        to evaluate the Corporation's operating performance. As FFO excludes,
        among other items, depreciation, leasing cost amortization, future
        income tax and gains and losses from certain property dispositions,
        it provides an operating performance measure that, when compared
        period over period, reflects the impact on operations of trends in
        occupancy levels, rentals rates, operating costs and realty taxes,
        acquisition activities and interest costs and provides a perspective
        of the financial performance that is not immediately apparent from
        net income determined in accordance with GAAP. FFO as presented
        should not be viewed as an alternative to cash from operations, net
        income, or other measures calculated in accordance with GAAP. Realex
        defines FFO as being net income for the period before amortization
        (which includes amortization of buildings, tenant improvements, in
        place lease values, tenant relationship values and deferred leasing
        costs), future income tax expense and extraordinary items. The method
        of calculation of FFO has been changed commencing October 1, 2008 so
        as to provide additional comparability to other real estate issuers,
        and to correspond with the definition provided by the Real Property
        Association of Canada ("REALpac").

    (3) Adjusted Funds From Operations (AFFO) - is a measure used to assist
        management to evaluate the Corporation's ability to generate cash,
        evaluate its return on projects and evaluate the performance of the
        enterprise as a whole. AFFO as presented should not be viewed as an
        alternative to cash from operations, net income, or other measures
        calculated in accordance with GAAP. Users are cautioned that this
        measure may not be comparable to other issuers calculation of AFFO.
        Realex defines AFFO as being FFO for the period, adjusted for
        amortization of below-market leases, straight-lining of rents,
        amortization of fair value mortgages payable adjustment and deferred
        financing costs, stock based compensation expense, internalization
        costs, amortization of non-recoverable maintenance capital
        expenditures and amortization of deferred leasing costs.

        NOI, FFO and AFFO do not have any standardized meaning prescribed by
        GAAP and users are cautioned that these measures may not be
        comparable to similar measures presented by other issuers, and should
        not be construed as an alternative or replacement to GAAP measures.


    During the first quarter of fiscal 2009, ended December 31, 2008, the
Corporation successfully completed the integration of its largest acquisition
since acquiring the Initial Properties in 2006. The integration of the six
building, 933,000 square foot Kitchener and Waterloo, Ontario property
portfolio and related management company has gone well with synergies between
the Realex and Southwestern Ontario management teams continuing to unfold. The
completion of the acquisition more than doubled Realex's owned rentable office
and industrial area to over 1.8 million square feet (approximately 2.4 million
square feet under management) and established a national platform for the
Corporation. This provides Realex with an exceptional base of high quality
properties, located in strong, long term growth markets in both Western and
Central Canada.
    Subsequent to the end of the first quarter, on January 29, 2009, Realex's
bid to acquire Investus Real Estate Inc. ("Investus") a publicly listed,
Quebec based company, by way of a share exchange was terminated as it did not
achieve the required shareholder support at the Investus shareholders meeting.
It is unfortunate that this transaction, which the Board of Investus had
determined was in the best interest of Investus and all its shareholders, and
to which Realex was committed, will not be completed. Realex will, however,
continue to seek out opportunities of acquiring high quality assets through
consolidation of private or public entities.

    Review of Q1 Operations

    The results for the first quarter ended December 31, 2008 reflect the
added operating revenue of the Kitchener/Waterloo portfolio and revenue gains
from Realex's portfolio in Western Canada. When comparing the financial
results of the first quarter of fiscal 2009 to the previous quarter ended
September 30, 2009, revenues rose by $6.0 million (69%), NOI increased by $2.7
million (56%), with FFO and AFFO increasing by $1.16 million (30%) and $0.9
million (30%), respectively. Similarly, the table of Income Statement Summary
Data above highlights the significant increase in Revenue, NOI, FFO and AFFO
for the first quarter of 2009, ended December 31, 2008, as compared to the
same period last year.
    A discussion of Realex's three most significant business units follows.

    Western Region

    Realex's Western region office/industrial portfolio has continued to
    perform very well, during the quarter, in line with management
    expectations. The Western portfolio is well leased with vacancy of only
    1.7% (15,600 square feet) as at December 31, 2008. Realex's primary
    leasing efforts remain focused on renewals of existing tenancies and
    replacement of vacating tenants. Of the 70,203 square feet (Realex owned)
    of lease renewals pending for calendar 2009, 9,134 square feet have been
    or are anticipated to be finalized and lease renewals for the remaining
    square footage are currently under active negotiation or have been listed
    for releasing. Currently, Realex's most significant releasing initiative
    lies with space coming available in June 2009 at the Corporation's St.
    Albert Trail building in Edmonton (48,400 square feet - Realex owned).
    The existing rental rate of the current tenant of the St. Albert Trail
    property is approximately one half of the current market rate and
    Realex's marketing efforts have already produced interest from potential

    The Corporation's releasing exposure in downtown Calgary is limited, with
    only 9% (34,500 square feet) of Realex's owned downtown leased area
    expiring before the end of fiscal 2012. Realex has aggressively
    renegotiated many of its existing leases ahead of their lease expiry
    dates and ahead of new buildings projected to come on stream in 2009 and
    2010. These leased areas also have the added advantage of being fully
    improved for tenant use, in contrast to the additional costs faced by
    tenants taking occupancy of newly developed office space.

    Southwestern Ontario Region

    During its first quarter of operation under the Realex banner, the
    integration and re-branding of the newly acquired Kitchener/Waterloo,
    Ontario portfolio and property manager was one of Realex's highest
    priorities. To date the integration process has been very successful,
    aided by common accounting systems and operating standards, compatible
    corporate cultures and good interdivisional communication. Through this
    acquisition, Realex has affirmed the validity of its business unit model,
    blending high quality assets in growth markets with sound, local
    management expertise.

    During the quarter, the Southwestern Ontario management team renewed a
    significant lease (17,200 square feet) with a major insurance services
    tenant, raising the expiry rental rate by 20% to current market levels.
    Approximately 7,200 square feet of the remaining 66,000 square feet of
    rentable area expiring in calendar 2009 has been renewed with the balance
    under active negotiation.

    While much of Southwestern Ontario has many challenges in the current
    economy, the Kitchener/Waterloo region has not seen a comparable decline.
    This is primarily due to the region's strong underpinning by financial
    support services and technology oriented businesses as well as the
    positive impact of several universities within the region.

    Self Storage

    During the quarter the Real Storage partnership completed and opened two
    new projects, bringing the total number of operational, self storage
    facilities to four, with an aggregate rentable area of approximately
    280,000 square feet. Leasing of space within the operating properties has
    been robust, meeting or exceeding management expectations. The
    partnership also has two additional development properties under
    development which would add a further 200,000 square feet to the
    portfolio upon completion.

    Realex expects the self storage properties to perform relatively well
    during economic downturns, as a response to personal and small business
    downsizing. In addition, the Canadian market is considerably underserved
    relative to the U.S. self storage market. Currently, Real Storage is
    investigating a number of acquisition opportunities which includes
    operating properties that would enhance the near term earnings of the
    partnership. As management refines the self storage business plan and
    growth strategy, Realex is confident that it will realize the potential
    of becoming one of Canada's industry leaders in the self storage

    Mezzanine Loan Portfolio

    We continued to take steps to obtain repayment of amounts outstanding
under the Corporation's $6.15 million mezzanine loan portfolio and during the
quarter ended December 31, 2008, $200,000 was repaid. The loan portfolio is
secured; however, various borrowers have not secured additional or replacement
financing. Consequently, $4.7 million of loans have gone into arrears with
respect to the payment of interest and management is working closely with the
loan portfolio manager to ensure that actions are taken as required to ensure
repayment of all loan amounts owing. Realex will retain loan repayment
proceeds for general corporate purposes as they are received and will
discontinue further investment in mezzanine lending for the foreseeable

    Dividend and Proposed Dividend Reinvestment Plan (DRIP)

    The Board of Directors has authorized the payment of a dividend for the
quarter ended December 31, 2008 to common and non voting shareholders at the
rate of $0.0075 per share (the "Dividend"). The Dividend will be paid March
31, 2009 to shareholders of record on March 13, 2009 and is designated as an
eligible dividend pursuant to subsection 89(14) of the Income Tax Act. An
eligible dividend paid to a Canadian resident individual is entitled to the
enhanced dividend tax credit.
    In conjunction with the Dividend declaration, the Corporation has
determined to implement a Dividend Reinvestment Plan ("DRIP") such that
eligible participants would be entitled to automatically reinvest their
dividends to acquire additional shares of the Corporation. Implementation of
the DRIP is subject to the approval of the TSX Venture Exchange. Further
details of the DRIP will be announced in due course.
    All of the directors of Realex have advised the Corporation that, subject
to any regulatory approval, they intend to participate in the DRIP.

    Business Environment and Outlook

    The Corporation's balance sheet remains strong with relatively low debt
levels (56.4% to gross book value) and minimal mortgage maturities over the
next five year period. Mortgage maturities in respect of 2009, 2010 and 2011
amount to $4.4 million, $20.4 million and $nil, respectively.
    For fiscal 2009 the Corporation's financing objectives are to retire the
Acquisition Loan, renew the Operating Facility and refinance $4.4 million of
maturing mortgages. The Corporation's plan to repay or refinance the $25
million Acquisition Loan includes measures to preserve internally generated
funds and generate proceeds from non-core asset sales and refinancings, and
achieve repayment of mortgages receivable.
    While confidence remains low in the current economic environment and the
current share prices of most, if not all, companies in our industry are well
below intrinsic net asset values, measured in traditional industry measures,
Realex believes that its business fundamentals remain strong.
    "Realex's assets and capital structure are underpinned by sound,
experienced, management capabilities able to meet the current challenges and
seek out opportunities for growth," stated Marc Sardachuk, President and CEO
of Realex, who added, "We look forward to the return of investor confidence in
the capital markets and economic stability in the future as management remains
committed to building value for shareholders by utilizing the critical mass
and added management strength garnered by the Corporation over the past year".
    Full reports of the financial results are outlined in the unaudited
Consolidated Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations, which are available on SEDAR
and on the Realex Properties Corp. website at

    The TSX Venture Exchange has neither approved nor disapproved the
    contents of this news release. The TSX Venture Exchange does not accept
    responsibility for the adequacy or accuracy of this news release.

    This news release contains forward looking statements subject to various
significant risks and uncertainties which may cause actual results,
performances and achievements of Realex to be materially different from any
future results, performances or achievements, expressed or implied by such
forward looking statements. Realex cannot assure investors that actual results
will be consistent with these forward looking statements and Realex assumes no
obligation to update or revise them to reflect new events or circumstances.

For further information:

For further information: Marc Sardachuk, President and Chief Executive
Officer, Realex Properties Corp., Telephone: (403) 264-5889, Facsimile: (403)
264-5892; Mark Suchan, Chief Financial Officer, Realex Properties Corp.,
Telephone: (403) 264-5889, Facsimile: (403) 264-5892

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