Revenue Properties Company Limited Announces First Quarter Results

TORONTO, May 2 /PRNewswire-FirstCall/ -- Revenue Properties Company Limited (TSX: RPC) announced financial results for the three months ended March 31, 2008.

HIGHLIGHTS

- Funds from operations were $6.8 million or $0.63 per share (2007 - $2.9 million, $0.26 per share).

- Income before non-recurring items and amortization for the three
months ended March 31, 2008 was $7.5 million (2007 - $6.3 million).

- Net loss for the three months ended March 31, 2008 was $0.8 million
(2007 - $10.5 million).

- On April 2, 2008, Morguard Corporation advised the Company of its
intention to make a take-over bid for RPC shares not already owned
for $12.00 cash per share or 0.33 of a Morguard common share.

FINANCIAL HIGHLIGHTS

------------------------------------------------------------------------- Three months ended March 31
----------------------------- (In thousands of Canadian dollars,
except per share amounts) 2008 2007
------------------------------------------------------------------------- Property revenues $29,224 $32,352
Property operating expenses 12,422 14,112
------------------------------------------------------------------------- Net operating income 16,802 18,240
Interest expense (8,015) (10,331)
General and administrative (1,308) (1,625)
------------------------------------------------------------------------- Income before non-recurring items,
amortization, taxes 7,479 6,284
Other income (expense) 294 (186)
Amortization (7,708) (13,386)
------------------------------------------------------------------------- Operating income (loss) 65 (7,288)
Debt transaction costs and costs of early
extinguishment of debt - (1,949)
Income taxes (891) (1,270)
------------------------------------------------------------------------- Net loss ($826) ($10,507)
------------------------------------------------------------------------- -------------------------------------------------------------------------
Net loss
- per basic and diluted share ($0.08) ($0.97)

Funds from operations $6,840 $2,862
- per basic and diluted share $0.63 $0.26
------------------------------------------------------------------------- -------------------------------------------------------------------------

Net operating income is used by industry analysts, investors and management to measure operating performance at the Company's properties. Net operating income represents total property revenues less property operating expenses and maintenance expenses. Accordingly, net operating income excludes certain expenses included in the determination of net income such as property management and other indirect operating expenses, interest expense and amortization. Net operating income is not a recognized measure under Canadian generally accepted accounting principles and accordingly the term does not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by other publicly traded entities.

REVIEW OF FINANCIAL RESULTS

The Company incurred a net loss of $0.8 million for the three months ended March 31, 2008, compared to a net loss of $10.5 million for the same period in 2007. The reduced loss is primarily due to lower amortization expense of $5.7 million, reduced interest expense of $2.3 million, and $1.9 million of debt transaction costs expensed in 2007 offset by lower net operating income of $1.4 million.

NET OPERATING INCOME

Net operating income for the three months ended March 31, 2008, was $16.8 million compared to $18.2 million for the same period in 2007. The following table details the Company's net operating income by geographic segment for the three months ended March 31, 2008 and 2007.

------------------------------------------------------------------------- (000's) 2008 2007
------------------------------------------------------------------------- U.S. (in US$) $8,672 $9,069
--------------------- ---------------------
U.S. (in CDN$) $8,712 $10,663
Canada 8,090 7,577
------------------------------------------------------------------------- $16,802 $18,240
------------------------------------------------------------------------- -------------------------------------------------------------------------

Net operating income from the Company's Canadian assets for the three months ended March 31, 2008, increased 6.8% to $8.1 million from $7.6 million in 2007. The increase is primarily due to strong leasing at one of the Company's mixed-use properties located in Toronto, Ontario which resulted in increased NOI of approximately $0.5 million.

Reported NOI from the Company's U.S. properties for the three months ended March 31, 2008, decreased 18.3% to $8.7 million from $10.7 million in 2007. The decrease is primarily due to the change in foreign exchange rates. Net operating income denominated in U.S. dollars for the three months ended March 31, 2008, was $0.4 million lower than the same period in 2007. The decrease was primarily due to a revised estimate of percent rent receivable at one enclosed shopping mall totaling $0.1 million in addition to various individually immaterial negative variances at several other retail properties.

FUNDS FROM OPERATIONS

Funds from operations for the three months ended March 31, 2008 and 2007 were calculated as follows:

------------------------------------------------------------------------- 2008 2007
------------------------------------------------------------------------- Net income (loss) ($826) ($10,507)
Add (deduct) non-cash items:
Amortization - rental properties 3,502 3,693
Amortization - intangible assets 1,916 8,285
Amortization - tenant allowances 2,290 1,408
Future income taxes (42) (17)
------------------------------------------------------------------------- $6,840 $2,862
------------------------------------------------------------------------- -------------------------------------------------------------------------

The Company uses Funds from Operations ("FFO") in addition to net income to report operating results. FFO is an industry standard for evaluating operating performance defined as net income plus amortization and future income taxes, excludes gains or losses from the sale of depreciable property and is not adjusted for gains realized on the disposition of portfolio investments. FFO is not indicative of funds available to meet the Company's cash requirements. The Company computes FFO in accordance with the recently amended definitions of the Real Property Association of Canada, formerly known as the Canadian Institute of Public and Private Real Estate Companies. However, FFO is not a recognized measure under Canadian generally accepted accounting principles and accordingly the term does not necessarily have a standardized meaning and may not be comparable to similarly titled measures presented by other publicly traded entities.

FFO for the three months ended March 31, 2008 increased 139.0% to $6.8 million from $2.9 million for the same period in 2007. The increase is primarily due to benefits derived from the 2007 refinancing program and other items discussed above offset by the negative impact of the change in foreign exchange rates.

FIRST QUARTER FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS

The Company's unaudited financial statements for the three months ended March 31, 2008, along with the Management's Discussion and Analysis are available on the Company's website at www.revprop.com and have been filed with SEDAR at
Revenue Properties Company Limited is a real estate company whose primary focus is the acquisition, ownership and development of income producing properties in Canada and the United States. The Company's diversified portfolio includes approximately 4.5 million square feet of retail and office space as well as 3,414 residential apartment suites.

Source: Revenue Properties Company Limited

CONTACT: Revenue Properties Company Limited, K. (Rai) Sahi, Chief
Executive Officer, (905) 281-5888; Paul Miatello, Chief Financial Officer,
(905) 281-5943

2008-05-02 16:55:22 0351790 PRNEWSWIRE