Realex Properties Corp. - Results for the year ended September 30, 2007 and declaration of dividend


    CALGARY, Dec. 13 /CNW/ - Realex Properties Corp. ("Realex") today
announced its first year end results since completing its going public
initiative on September 29, 2006.
    Financial highlights for the three months and fiscal year ended
September 30, 2007 are as follows:

    Financial Highlights


    Income Statement Summary Data

                                      Three Months Ended          Year Ended
                                            September 30,       September 30,
                                      ------------------- -------------------
    ($000's except per share amounts)     2007      2006      2007      2006
                                      --------- --------- --------- ---------

    Revenues                             7,462         8    27,180        31

    Net Income (loss)                    1,149       (59)    1,800      (590)
    Net income (loss) per share          0.010    (0.003)    0.016    (0.087)

    FFO(1)                               2,421       (59)    8,864      (320)
    FFO per share                        0.022    (0.007)    0.079    (0.047)

    Dividends paid to common and
     non-voting shareholders               849         -     2,549         -

    Weighted average shares
     outstanding (000's) - basic       113,302     8,310   112,870     6,817

    Balance Sheet Summary Data

    Assets                                                 250,359    39,036
    Mortgages payable                                      118,064         -
    Shares outstanding (000's)                             113,302    37,384

    (1) Management utilizes a measure called Funds From Operations ("FFO") to
        evaluate the Corporation's ability to generate cash, evaluate its
        return on projects and evaluate the performance of the enterprise as
        a whole. FFO does not have a standardized meaning prescribed by GAAP,
        and therefore may not be comparable to similar measures presented by
        other issuers. 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), amortization of below-market leases,
        straight-lining of rents, amortization of fair value mortgages
        payable adjustment and deferred financing costs, debenture liability
        accretion expense, stock-based compensation expense, and future
        income tax expense. Users should be cautioned that this measure
        should not be construed as an alternative to net income or cash flow
        from operating activities.

    Year End Highlights

    The first year of Realex's operation as a public real estate investment
company has been a period of significant and disciplined growth, highlighted
by the acquisition of properties with good upside potential and the initiation
of strategic partnerships. Realex's growth strategy focused on acquiring high
quality assets with a blend of short and longer term leases with in-place,
below market rents. Subsequent to Realex's fiscal year end, the Corporation
completed the acquisition of three, well tenanted, high quality buildings in
Edmonton, Alberta. When taking these acquisitions into account, Realex
increased its owned square footage by over 58% from approximately 561,000 to
890,000 square feet since acquiring its initial portfolio on October 3, 2006.
During the same period, the area of properties under Realex management
increased by 238% to over 1.66 million square feet. These properties are well
leased, with Realex's owned square footage having an occupancy level of 99%,
forming the exceptional platform from which to advance our strategic plan.
    Among the Corporation's most noteworthy achievements in 2007 were the
acquisitions made with strategic partners. Realex completed a number of its
recent transactions within co-ownership structures, combining our exceptional
management capabilities with significant sources of capital. The five
building, $92 million acquisition undertaken with GE Real Estate in June 2007
and the more recent $70 million acquisition of two office buildings and one
flex industrial building in Edmonton with a strong U.S. based fund manager,
confirms Realex's abilities in the areas of asset and property management.
Coupled with this strategic partnership initiative is the internalization of
Realex's Asset Manager, effective November 1st, 2007. The Asset Manager
provides asset and property management services for all Realex Properties,
except for property management services to Realex's initial portfolio. (Realex
Property Management Inc., a corporation owned by certain directors and
officers of Realex, will continue to provide and be paid fees for property
management services for Realex's initial portfolio). All of the shares of the
Asset Manager are to be acquired by Realex at a cost to the Corporation of
$1.133 million, payable in non-voting shares of Realex priced at the initial
private placement price of $1.434 per share. The issuance of the non-voting
shares necessary to complete this transaction (which is the last closing
matter) is subject to the approval of the TSX Venture Exchange. We expect that
the management revenues generated in 2008, combined with savings realized by
not having to pay contract fees to the Asset Manager, will effectively offset
the additional 2008 general and administrative costs associated with the
internalization of the asset manager.
    The past fiscal year has also seen continued internal growth in Realex's
core property portfolio, located in Calgary and Edmonton in that, lease rates
were effectively doubled on those leases which were renewed during the year.
The Corporation estimates that the weighted average rental rate of the
property portfolio is now approximately $19 per square foot while the current
estimated market net rent across the portfolio exceeds $27 per square foot
(capturing these values will depend, in part, on lease expiry dates). Going
forward, Realex is in discussions with tenants having lease expiries in 2008
and 2009, in an effort to bring many of these negotiations to a successful
conclusion well in advance of these lease expiries. This proactive approach
reduces the nearer term uncertainty resulting from the current productivity
and revenue decline in western Canada's natural gas sector, along with
revisions to the royalty rates. While the current reduction in conventional
gas drilling activity may slow Alberta's growth over the short term,
management believes this moderation will translate into a more balanced cost
structure and that the Alberta economy will continue to outperform the rest of
Canada in all major measurements of economic activity.
    During the year, management undertook the pursuit of a significant
acquisition. While this acquisition did not proceed, Realex had secured the
requisite financing to complete the transaction, demonstrating Realex's
capabilities in pursuing large scale acquisition and merger and acquisition
("M & A") opportunities. The pursuit expenditures of approximately $577,000
for this transaction were fully expensed and reported in Realex's general and
administrative expenses for the year ended September 30th, 2007. Realex
believes there are a significant number of M & A opportunities which it
intends to pursue in early 2008.
    Realex's mezzanine loan portfolio has grown to approximately $7.7 million
as of September 30th, 2007, and is currently yielding an average annual return
of more than 16%. Management plans to prudently expand this program, as Realex
continues to see a consistent flow of new lending opportunities.
    The prospects for the future development of Realex's East Village
property in Calgary have improved significantly with the City of Calgary's
announcement of a $175 million infrastructure upgrade of the 40-acre district
surrounding our site. This initiative will aid Realex in the pursuit of public
private partnership opportunities with educational institutions seeking to
develop downtown campuses in East Village.


    The Board of Directors has authorized the payment of a dividend for the
quarter ended September 30, 2007 to common and non voting shareholders at a
rate of $0.0075 per share. The dividend will be paid January 15, 2008 to
shareholders of record on December 31, 2007 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.
    "Realex continues to grow its excellent platform of stable, core assets
with embedded upside potential utilizing its newly developed strategic
relationships and its exceptional management capabilities," stated Marc
Sardachuk, Realex's president and CEO. "We are well positioned to take
advantage of opportunities arising from current market conditions and build
long term value for our shareholders through disciplined asset acquisition,
select development opportunities and time tested management strategies", he
    Full reports of the financial results are outlined in the audited
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

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890