AURORA, ON,
Aug. 11, 2011 /PRNewswire/ - MI
Developments Inc. (TSX: MIM) (NYSE: MIM) ("MID" or the
"Company") today announced its results for the three and six-month
periods ended June 30, 2011. Since
July 1, 2011, MID has been a Canadian
based real estate company engaged primarily in the acquisition,
development, construction, leasing, management and ownership of a
predominantly industrial rental portfolio of properties in
North America and Europe that are leased primarily to Magna
International Inc. ("Magna") and its automotive operating units.
The results of these business activities are reported as the
continuing operations of the Company.
Prior to July 1,
2011, MID also owned racing and gaming operations which
included the operation of four thoroughbred racetracks located in
the U.S. and a casino with alternative gaming machines, as well as
the simulcast wagering venues at these tracks. Accordingly, at that
time, the Company operated in two segments, the "Real Estate
Business" and the "Racing & Gaming Business". Following the
close of business on June 30, 2011,
the Racing & Gaming Business and substantially all of the Real
Estate Business' lands held for development were transferred to
entities owned by Mr. Frank Stronach
and his family (the "Stronach Shareholder") in consideration for
the elimination of MID's dual class share capital structure through
which the Stronach Shareholder controlled MID. The transaction was
completed through a court-approved plan of arrangement (the
"Arrangement"). The assets and business transferred to the Stronach
Shareholder pursuant to the Arrangement are collectively referred
to as the "Arrangement Transferred Assets & Business".
The results of the Arrangement Transferred Assets & Business
activities are reported as discontinued operations of the Company
("Plan of Arrangement and Discontinued Operations"
below).
"Post-Arrangement we promptly began the process of
reviewing MID's business model and assessing strategic alternatives
to enhance shareholder value," commented Bill Lenehan, Chief Executive Officer. "We
expect to conclude this strategic planning process during the fall
of 2011".
MID's consolidated results for the three and
six-month periods ended June 30, 2011
and 2010 are summarized below (all figures are in U.S.
dollars):
| |
|
|
|
|
|
|
|
|
|
|
| |
|
MID
CONSOLIDATED |
| (in thousands, except per
share figures) |
Three
months ended
June 30, |
|
Six months ended
June 30, |
| |
|
2011 |
2010 |
|
2011 |
2010 |
| |
|
|
|
|
|
|
|
|
|
| Revenues(1) |
$ |
46,361 |
$ |
43,321 |
|
$ |
91,228 |
$ |
87,712 |
| |
|
|
|
|
|
|
|
|
|
| Income from continuing
operations(1) |
$ |
27,292 |
$ |
38,472 |
|
$ |
40,128 |
$ |
53,759 |
| Income (loss) from
discontinued operations(1) |
|
85,716 |
|
(6,472) |
|
|
96,601 |
|
(6,630) |
| Net income |
$ |
113,008 |
$ |
32,000 |
|
$ |
136,729 |
$ |
47,129 |
| |
|
|
|
|
|
|
|
|
|
|
| Diluted earnings
(loss) per share from: |
|
|
|
|
|
|
|
|
|
| |
continuing operations |
$ |
0.58 |
$ |
0.82 |
|
$ |
0.86 |
$ |
1.15 |
| |
discontinued operations |
|
1.82 |
|
(0.14) |
|
|
2.05 |
|
(0.14) |
| Diluted earnings per share |
$ |
2.40 |
$ |
0.68 |
|
$ |
2.91 |
$ |
1.01 |
| |
|
|
|
|
|
|
|
|
|
| Funds from operations
("FFO")(2) |
$ |
38,207 |
$ |
48,587 |
|
$ |
61,639 |
$ |
74,307 |
| Diluted FFO per share
(2) |
$ |
0.81 |
$ |
1.04 |
|
$ |
1.31 |
$ |
1.59 |
___________________________
| (1) |
As a result of the approval by MID's shareholders and the
Ontario Superior Court of Justice of the Arrangement (please refer
to the section titled "Plan of Arrangement and Discontinued
Operations"), the operating results of the Arrangement
Transferred Assets & Business have been presented as
discontinued operations. Income from continuing operations
pertains to the Company's income producing property portfolio. |
| (2) |
FFO and diluted FFO per share are measures widely used by
analysts and investors in evaluating the operating performance of
real estate companies. However, FFO does not have a
standardized meaning under U.S. GAAP and therefore may not be
comparable to similar measures presented by other companies.
The Company determines FFO using the definition prescribed in the
United States by the National Association of Real Estate Investment
Trusts® ("NAREIT"). For a reconciliation of FFO to income
from continuing operations, please refer to the section titled
"Reconciliation of Funds from Operations to Income from
Continuing Operations". |
MID CONSOLIDATED FINANCIAL RESULTS
The results of operations of the Company for the
three and six-month periods ended June 30,
2011 and 2010 include those from continuing operations and
discontinued operations.
Three-Month Period Ended June 30, 2011
Continuing Operations
For the three-month period ended June 30, 2011, revenues increased by $3.1 million from $43.3
million in the second quarter of 2010 to $46.4 million in the second quarter of
2011. Rental revenues increased from $42.3 million in the second quarter of 2010 to
$46.4 million in the second quarter
of 2011. Interest and other income from Magna Entertainment
Corp. ("MEC") decreased by $1.0
million to nil in the second quarter of 2011.
Rental revenue increased by $4.1 million in the second quarter of 2011
compared to the prior year primarily due to the effect of changes
in foreign currency exchange rates, additional rent earned from
contractual rent increases and completed projects on-stream.
Interest and other income from MEC consist of
interest and fees earned in relation to loan facilities between MID
and MEC and certain of its subsidiaries. These loan
facilities were settled and interest and other income thereon
ceased in the second quarter of 2010 as MEC's Chapter 11 process
concluded.
The Company's income from continuing operations was
$27.3 million in the second quarter
of 2011 compared to $38.5 million in
the prior year period. The decrease in income from continuing
operations of $11.2 million is
primarily due to (i) $30.3 million of
gains in the second quarter of 2010 pertaining to MEC, including a
loan provision recovery of $10.0
million in respect of loans previously made to MEC by the
Company and a $20.3 million increase
in the consideration received by the Company in satisfaction of the
former MEC loans offset by (ii) an income tax recovery of
$13.3 million recorded in the second
quarter of 2011 related to successfully setting aside an internal
amalgamation undertaken in 2010 that had caused MID to incur a tax
expense in a prior period and (iii) a revaluation of the Company's
future tax assets in 2010 in respect of loan recoveries from
MEC.
FFO for the second quarter of 2011 decreased
$10.4 million from $48.6 million in the prior year period to
$38.2 million primarily due to the
reduced income from continuing operations for the reasons noted
above.
Discontinued Operations
Income from discontinued operations increased
$92.2 million from a loss of
$6.5 million in the second quarter of
2010 to income of $85.7 million in
the second quarter of 2011. During the second quarter of
2011, income from discontinued operations included $89.5 million net of income taxes of $10.8 million relating to the net gain on
disposition of the Arrangement Transferred Assets &
Business. The transfer of the Arrangement Transferred Assets
& Business is considered a non-pro rata distribution and
therefore has been recorded as a fair value disposition.
Net Income
Net income of $113.0
million for the second quarter of 2011 increased by
$81.0 million from net income of
$32.0 million in the prior year
period. The $81.0 million
increase was primarily due to the increase in income from
discontinued operations of $92.2
million partially offset by the reduction of net income from
continuing operations of $11.2
million as noted above.
Six-Month Period Ended June 30, 2011
Continuing Operations
For the six-month period ended June 30, 2011, revenues increased by $3.5 million from $87.7
million in 2010 to $91.2
million in 2011. Rental revenues increased from
$85.9 million in the six-month period
ended 2010 to $91.2 million in
2011. Interest and other income from MEC decreased by
$1.8 million to nil during the same
period.
Rental revenue increased by $5.3 million in the six-month period ended of
2011 compared to the prior year primarily due to the effect of
changes in foreign currency exchange rates, additional rent earned
from contractual rent increases and completed projects
on-stream.
Interest and other income from MEC consist of
interest and fees earned in relation to loan facilities between MID
and MEC and certain of its subsidiaries. These loan
facilities were settled and interest and other income thereon
ceased in the second quarter of 2010 as MEC's Chapter 11 process
concluded.
The Company's income from continuing operations was
$40.1 million in the six-month period
ended 2011 compared to $53.8 million
in the prior year period. Items decreasing income from continuing
operations include (i) $30.3 million
of gains in 2010 pertaining to MEC, including a loan loss provision
recovery of $10.0 million in respect
of loans previously made to MEC by the Company and a $20.3 million increase in the consideration
received by the Company in satisfaction of the former MEC loans,
(ii) an increase in general and administrative expenses of
$4.4 million, (iii) the write-down of
long-lived asset of $2.8 million,
(iv) a reduction in other gains of $1.9
million recognized in 2010 in respect of a lease termination
payment and (v) an increase in depreciation expense and other items
of $3.5 million. These items
were offset by (i) an increase of $5.3
million in rental revenue and (ii) a decrease of income tax
expense of $23.9 million in the
six-month period ended June 30, 2011
for the reasons noted above.
FFO for the six-month period ended June 30, 2011 decreased $12.7 million from $74.3
million in the prior year period to $61.6 million primarily due to the reduced income
from continuing operations for the reasons noted above.
Discontinued Operations
Income from discontinued operations increased
$103.2 million from a loss of
$6.6 million during the six-month
period ended June 30, 2010 to income
of $96.6 million during 2011.
The increase in income from discontinued operations was due to the
gain of $89.5 million recorded on the
disposition of the Arrangement Transferred Assets &
Business. For the six-month period ended June 30, 2011, the Racing & Gaming Business
generated operating income of $9.9
million whereas in the prior year period it generated a loss
of $6.2 million. In the
six-month period ended June 30, 2010,
the Racing & Gaming Business is only included for two months
commencing on April 30, 2010, the
date the Racing & Gaming Business was acquired from MEC.
Net Income
Net income of $136.7
million for the six-month period ended June 30, 2011 increased by $89.6 million from net income of $47.1 million in the prior year period. The
$89.6 million increase was primarily
due to the increase in income from discontinued operations of
$103.2 million partially offset by
the reduction of income from continuing operations of $13.6 million as noted above.
A more detailed discussion of MID's consolidated
financial results for the three and six-month periods ended
June 30, 2011 and 2010 is contained
in MID's Management's Discussion and Analysis of Results of
Operations and Financial Position and the unaudited interim
consolidated financial statements and notes thereto, which are
available through the internet on Canadian Securities
Administrators' Systems for Electronic Document Analysis and
Retrieval (SEDAR) and can be accessed at www.sedar.com and on the
United States Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval System (EDGAR) which can be
accessed at www.sec.gov.
RECONCILIATION OF FUNDS FROM OPERATIONS TO
INCOME FROM CONTINUING OPERATIONS
| |
|
Three months
ended
June 30, |
|
Six months ended
June 30, |
| (in thousands, except per share
information) |
|
2011 |
|
2010 |
|
|
2011 |
|
2010 |
| |
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations |
$ |
27,292 |
$ |
38,472 |
|
$ |
40,128 |
$ |
53,759 |
| Add back depreciation and
amortization |
|
10,915 |
|
10,115 |
|
|
21,511 |
|
20,548 |
| Funds from operations |
$ |
38,207 |
$ |
48,587 |
|
$ |
61,639 |
$ |
74,307 |
| |
|
|
|
|
|
|
|
|
|
|
| Basic and diluted
funds from operations per share |
$ |
0.81 |
$ |
1.04 |
|
$ |
1.31 |
$ |
1.59 |
| |
|
|
|
|
|
|
|
|
|
|
| Basic number of shares
outstanding |
|
47,128 |
|
46,708 |
|
|
46,919 |
|
46,708 |
| Diluted number of shares
outstanding |
|
47,165 |
|
46,708 |
|
|
47,063 |
|
46,708 |
PLAN OF ARRANGEMENT AND DISCONTINUED
OPERATIONS
On June 30, 2011, the
Company completed the Arrangement under the Business
Corporations Act (Ontario) which eliminated MID's dual class
share capital structure through which the Stronach Shareholder
controlled MID. Definitive agreements with respect to the
Arrangement were entered into by the Company on January 31, 2011. The Arrangement was
approved on March 29, 2011 by 98.08%
of the votes cast by shareholders at the annual general and special
meeting and on March 31, 2011, the
Ontario Superior Court of Justice issued a final order approving
the Arrangement. The Arrangement eliminated MID's dual
class share capital structure through:
| i) |
the purchase for cancellation of 363,414 MID Class B Shares
held by the Stronach Shareholder upon the transfer to the Stronach
Shareholder of the Company's Racing & Gaming Business including
$20 million of working capital at January 1, 2011,
substantially all of the Company's lands held for development and
associated assets and liabilities (MID was granted an option to
purchase at fair value certain of these development lands if needed
to expand our income producing properties), a property located in
the United States, an income producing property located in Canada
which is also currently MID's Head Office and cash in the amount of
$8.5 million. In addition, the Stronach Shareholder received
a 50% interest in the note receivable and cash proceeds from the
sale of Lone Star LP, a 50% interest in future payments, if any,
under a holdback agreement relating to MEC's prior sale of The
Meadows racetrack and a second right of refusal in respect of
certain properties; and |
| ii) |
the purchase for cancellation by MID of each of the other
183,999 MID Class B Shares in consideration for 1.2 MID Class
A Subordinate Voting Shares per MID Class B Share, which
following cancellation of the MID Class B Shares, and together with
the existing outstanding MID Class A Subordinate Voting Shares,
were renamed Common Shares. |
DIVIDENDS
MID's Board of Directors has declared a dividend of
$0.10 per share on MID's Common
Shares for the second quarter ended June 30,
2011. The dividend is payable on or about September 15, 2011 to shareholders of record at
the close of business on August 26,
2011. The common shares will begin trading on an ex-dividend
basis at the opening of trading on August
24, 2011.
Unless indicated otherwise, MID has designated the
entire amount of all past and future taxable dividends paid since
January 1, 2006 to be an "eligible
dividend" for purposes of the Income Tax Act (Canada), as amended from time to time.
Please contact your tax advisor if you have any questions with
regard to the designation of eligible dividends.
ABOUT MID
MID is a Canadian-based real estate company engaged
primarily in the acquisition, development, construction, leasing,
management and ownership of a predominantly industrial rental
portfolio of properties in North
America and Europe leased
primarily to Magna and its automotive operating units.
OTHER INFORMATION
Additional property statistics have been posted to
MID's website at
http://www.midevelopments.com/uploads/file/propertystatistics.pdf.
Copies of financial data and other publicly filed documents are
available through the internet on Canadian Securities
Administrators' Systems for Electronic Document Analysis and
Retrieval (SEDAR) which can be accessed at www.sedar.com and on the
United States Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval System (EDGAR) which can be
accessed at www.sec.gov. For further information about MID, please
see our website.
FORWARD-LOOKING STATEMENTS
This press release may contain statements that, to
the extent they are not recitations of historical fact, constitute
"forward-looking statements" within the meaning of applicable
securities legislation, including the United States Securities Act
of 1933 and the United States Securities Exchange Act of
1934. Forward-looking statements may include, among others,
statements regarding the Company's future plans, goals, strategies,
intentions, beliefs, estimates, costs, objectives, economic
performance or expectations, or the assumptions underlying any of
the foregoing. Words such as "may", "would", "could", "will",
"likely", "expect", "anticipate", "believe", "intend", "plan",
"forecast", "project", "estimate" and similar expressions are used
to identify forward-looking statements. Forward-looking
statements should not be read as guarantees of future events,
performance or results and will not necessarily be accurate
indications of whether or the times at or by which such future
performance will be achieved. Undue reliance should not be
placed on such statements. Forward-looking statements are
based on information available at the time and/or management's good
faith assumptions and analyses made in light of our perception of
historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate
in the circumstances, and are subject to known and unknown risks,
uncertainties and other unpredictable factors, many of which are
beyond the Company's control, that could cause actual events or
results to differ materially from such forward-looking
statements. Important factors that could cause such
differences include, but are not limited to, the risks set forth in
the "Risk Factors" section in the Company's Annual Information Form
for 2010, filed on SEDAR at www.sedar.com and attached as Exhibit 1
to the Company's Annual Report on Form 40-F for the year ended
December 31, 2010, which investors
are strongly advised to review. The "Risk Factors" section also
contains information about the material factors or assumptions
underlying such forward-looking statements.
Forward-looking statements speak only as of the date the statements
were made and unless otherwise required by applicable securities
laws, the Company expressly disclaims any intention and undertakes
no obligation to update or revise any forward-looking statements
contained in this press release to reflect subsequent information,
events or circumstances or otherwise.
SOURCE MI Developments Inc.
