Scott's REIT reports strong first quarter 2009 financial results

        Scott's strategy of being Canada's leading small-box REIT is
     succeeding with its twelfth consecutive quarter of growth and lowest
                              ever payout ratio

           Scott's continues to be a top performer, announcing its
                 42nd consecutive monthly cash distribution

    TORONTO, May 13 /CNW/ - Scott's Real Estate Investment Trust (TSX:
SRQ.UN) ("Scott's REIT" or the "REIT"), Canada's leading owner of small-box
retail properties, today reported its financial results for the first quarter
ended March 31, 2009. The REIT also announced its 42nd consecutive monthly
cash distribution for the month of May 2009.

    First Quarter 2009 Financial Highlights

    -   Revenue increased 13.9 per cent to $4.8 million
    -   Net operating income increased 8.8 per cent to $4 million
    -   Distributable income per Unit(*) grew by 6.4 per cent
    -   Payout ratio improved to 90.3 per cent from 96.2 per cent
    -   Purchased 67,000 Units for cancellation pursuant to normal course
        issuer bid

    (*)See section entitled Non-GAAP measures.

    "Scott's REIT's continued performance demonstrates that it is an
attractive investment opportunity in today's markets," said John Bitove,
Chairman and Chief Executive Officer of Scott's REIT. "This is our twelfth
consecutive quarter of top line growth and our lowest ever payout ratio. Our
strong financial performance and financial flexibility has allowed us to
continue pursuing strategic acquisitions through these tight credit markets,
while maintaining stable, consistent cash distributions to our Unitholders."
    Regarding the REIT's $65 million mortgage that will mature in October
2010, Mr. Bitove stated, "We are encouraged by the positive dialogue with our
lenders, who indicate that they are open to renewal. Scott's REIT is in good
position and I believe we will continue to grow our asset base to create
long-term value for our Unitholders."

    Financial Performance

    Scott's REIT reported revenue of $4.8 million for the three-month period
ended March 31, 2009, an increase of 13.9 per cent over the first quarter of
2008. The increase was due mainly to acquisitions and contractual rent
increases that occurred in 2008, which were fully realized in the first
quarter of 2009. Operating expenses for the three-month period were $0.8
million, an increase of $0.2 million over the first quarter of 2008.
    The REIT's net operating income for the first quarter of 2009 was $4
million, an increase of 8.8 per cent over the prior year quarter.
    During the first three months of 2009, distributable income amounted to
$1.7 million, an increase of one per cent over the first quarter of 2008.

    Normal Course Issuer Bid

    On February 1, 2008, Scott's REIT announced a normal course issuer bid
permitting it to purchase approximately 493,930, or 10 per cent, of its Units
on the open market during the period from February 1, 2008 to January 31,
2009. Purchases were made at market prices through the facilities of the TSX.
Any tendered Units taken up and paid for by Scott's REIT were cancelled.
During the first quarter, Scott's REIT purchased 67,000 Units for a cost of
$0.3 million at a weighted average price of $4.48 per unit. In total, Scott's
REIT purchased and cancelled 435,100 Units for a cost of $2.1 million at a
weighted average cost of $4.83 per unit during the course of its normal course
issuer bid, which expired on January 31, 2009.


    At March 31, 2009, Scott's REIT increased its cash on hand to
approximately $1 million compared to $0.1 million as at December 31, 2008. The
REIT's cash balance is anticipated to be used for general corporate purposes
including monthly distributions paid to Unitholders.
    In 2009, cash provided by operating activities (including non cash
working capital) is higher than distributions. As such, Scott's REIT
anticipates that it will continue to maintain stable monthly cash
distributions to its Unitholders throughout the remaining fiscal year.
    During the quarter, the revolving credit facility terms were amended and
the maximum proceeds were reduced to $5 million. As in the past, once $4
million has been drawn, Scott's REIT must repay the entire amount of
borrowings within six months. At March 31, 2009, $3.2 million has been drawn
on the facility, which was used to fund recent acquisitions. Reductions on the
demand loan could come from payment of holdbacks, cash from the operations of
the business and future equity offerings.

    Monthly Distribution for May 2009

    Scott's REIT announced a cash distribution for the month of May 2009 of
$0.0708 per unit payable on June 15, 2009 to Unitholders of record on May 29,
    Scott's REIT also announced today a monthly cash distribution of $0.0708
per unit to Unitholders of record of Class B Limited Partnership Units in
Scott's Real Estate LP on May 29, 2009. This distribution marks the 42nd
consecutive cash distribution declared since Scott's REIT began operations on
October 6, 2005.

    Non-GAAP Measures

    Distributable income

    Distributable Income is not a measure recognized under GAAP and does not
have a standardized meaning prescribed by GAAP. Distributable Income is
presented in this MD&A because management of Scott's REIT believes this
non-GAAP measure is a relevant measure of the ability of Scott's REIT to earn
and distribute cash returns to Unitholders. Distributable Income as computed
by Scott's REIT may differ from similar computations as reported by other
similar organizations and, accordingly, may not be comparable. Distributable
Income in this MD&A represents income before non-controlling interest of
Scott's REIT on a consolidated basis as determined in accordance with GAAP,
plus amortization expense, income taxes, stock compensation, less the
straight-line revenue accrual, deferred financing costs, deferred amortization
costs, below market rents and interest accretion.

    About Scott's Real Estate Investment Trust

    Scott's REIT (TSX: SRQ.UN) is Canada's premier small-box retail property
owner with 207 commercial properties in seven provinces across Canada. Scott's
REIT's properties are well-located and geographically diverse across Canada
and nearly all properties are long-term quadruple net leases. The REIT has
approximately 68.9 per cent interest in Scott's Real Estate LP. To find out
more about Scott's Real Estate Investment Trust (TSX: SRQ.UN), visit our
website at

    Forward-Looking Statements

    This document contains certain information that may constitute
forward-looking information within the meaning of securities laws. In some
cases, forward-looking information can be identified by the use of terms such
as "may", "will", "should", "expect", "plan", "anticipate", "believe",
"intend", "estimate", "predict", "potential", "continue" or other similar
expressions concerning matters that are not historical facts. Forward-looking
information may relate to management's future outlook and anticipated events
or results, and may include statements or information regarding future growth
opportunities and potential and expected cash distributions or cash
distribution levels. In particular, information regarding the REIT's monthly
cash distributions and information relating to the impact of the REIT's recent
acquisitions on annual revenues and interest expense is forward-looking
information. Forward-looking information is based on certain factors and
assumptions regarding, among other things, occupancy rates, property expense
and capital expenditures. While the REIT considers these assumptions to be
reasonable based on information currently available to it, they may prove to
be incorrect. Forward looking-information is subject to certain factors,
including risks and uncertainties, which could cause actual results to differ
materially from what is currently expected. Such factors include risks
relating to the REIT's reliance on Priszm LP, the REIT's largest tenant, risks
associated with investment in real property, competition, reliance on key
personnel, financing and refinancing risks, environmental matters, tenant
risks, risks related to current economic conditions and other risk factors
more particularly described in the REIT's Annual Information Form for the year
ended December 31, 2008. You should not place undue importance on
forward-looking information and should not rely upon this information as of
any other date. Other than as required by applicable Canadian securities law,
the REIT does not undertake to update this information at any particular time.
Additional information identifying risks and uncertainties is contained in
Scott's REIT filings with the Canadian securities regulators, available at

    The following selected financial information, with the exception of the
Reconciliation of Distributable Income, has been derived from and should be
read in conjunction with the historical audited financial statements of
Scott's REIT for the quarter ended March 31, 2009 and 2008, and the notes
thereto included in Scott's REIT's annual filings at

    Reconciliation of Distributable Income to Cash Provided by Operating
                                                 Three months ended March 31,
                                                        2009            2008
    Cash provided by operating activities              1,594           1,328
    Net change in non-cash working capital               116             367
    Distributable income                               1,710           1,695
    Distributions declared                             1,541           1,631
    Distributable income per Unit                       0.24            0.22
    Distributions per Unit                              0.21            0.21
    Distributable Income Payout Ratio                  90.3%           96.2%

    (in thousands of dollars)

                                                    March 31,    December 31,
                                                        2009            2008
    Income-producing properties                  $   172,404     $   174,135
    Intangible assets                                  8,590           8,909
    Cash and short-term investments                      965             102
    Accounts receivable                                  420             574
    Prepaid expenses and other assets                    951             709
    Due from related companies                             9              80
    Straight-line revenue accrual                      2,181           2,133
                                                     185,520         186,642
    Mortgages payable                                112,102         112,225
    Convertible debentures                            18,970          18,903
    Demand loan                                        3,200           1,900
    Accounts payable and accrued liabilities           1,144           1,264
    Due to related companies                             121              94
    Distributions payable to Unitholders                 513             518
                                                     136,050         134,904
    Class B Exchangeable Units                        16,298          16,910
    Contributed surplus                                2,588           2,218
    Class A Units of Scott's REIT                     44,676          45,346
    Convertible debentures                               299             299
    Cumulative earnings                                  983           1,277
    Cumulative distributions declared on
     Class A Units                                   (15,374)        (14,312)
                                                      33,172          34,828
                                                     185,520         186,642

    (in thousands of dollars, except unit
     and per unit amounts)
                                                    March 31,       March 31,
                                                        2009            2008
    Rental revenue received                            4,735           4,123
    Amortization of below-market accruals                 19               8
    Straight-line revenue accrual                         48             103
                                                       4,802           4,234
    Amortization                                       2,066           1,804
    Operating expenses                                   806             560
    Interest expense                                   1,977           1,670
    General and administrative                           380             315
                                                       5,229           4,349
    Loss before non-controlling interest                (427)           (115)
    Non-controlling interest of Class B
     Exchangeable Units                                 (133)            (34)
    Net loss for the period                             (294)            (81)
    Cumulative earnings - Beginning of period          1,277           1,813
    Cumulative earnings - End of period                  983           1,732
    Basic and diluted earnings per Unit               (0.059)         (0.015)
    Class A Units outstanding                      4,993,964       5,410,527
    Class B Exchangeable Units outstanding         2,254,909       2,254,909

    (in thousands of dollars)

                                                 Period from     Period from
                                                   January 1,      January 1,
                                                     2008 to        2008  to
                                              March 31, 2008  March 31, 2008

    Net loss for the period                      $      (294)    $       (81)
    Other comprehensive income                             -               -
    Comprehensive loss                                   (81)            (81)

    (in thousands of dollars)

                                                    March 31,       March 31,
                                                        2009            2008
    Cash provided by (used in)
    Operating activities
    Net earnings (loss) for the period                  (294)            (81)
    Add (deduct)
      Non-controlling interest of Class B
       Exchangeable Units                               (133)            (34)
      Amortization of income-producing
       properties                                      1,728           1,581
      Amortization of intangible assets                  319             215
      Amortization of deferred financing
       charges                                           118             102
      Amortization of deferred costs                       6               1
      Interest accretion                                  14              14
      Straight-line revenue accrual                      (48)           (103)
                                                       1,710           1,695
    Change in other non-cash operating items
      Prepaid expenses and other assets                 (248)           (326)
      Accounts receivable                                154               -
      Accounts payable and accrued
       liabilities                                      (120)            121
      Due to/from related companies                       98            (162)
                                                       1,594           1,328
    Investing activities
    Construction-in-progress                               -             (15)
    Property acquisitions                                  2             (32)
    Acquisitions in progress                               1             (56)
                                                           3            (103)
    Financing activities
    Buy Back of Class A units                           (300)              -
    Demand loan                                        1,300               -
    Mortgage financing fees                               (4)              -
    Principal repayments on mortgages
     payable                                            (184)            (53)
    Distributions paid                                (1,546)         (1,632)
                                                        (734)         (1,685)
    Increase (decrease) in cash and
     short-term investments during
     the period                                          863            (460)
    Cash and short-term investments -
     Beginning of period                                 102             705
    Cash and short-term investments -
     End of period                                       965             245
    Cash and short-term investments
     consist of
    Cash                                                 565             245
    Short-term investments                               400               -
                                                         965             245
    Supplemental cash flow disclosure
    Interest paid                                      1,493           1,196

    %SEDAR: 00022537E

For further information:

For further information: For investor information, please contact: Trish
Moran, (416) 624-5133,; For media information,
please contact: Wilcox Group, (416) 203-6666,

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