AURORA, ON, Oct. 25, 2011 /PRNewswire/ - MI Developments
Inc. ("MID" or the "Company") (TSX: MIM) (NYSE: MIM) announced
today that its Board of Directors has completed its previously
announced strategic review process and unanimously approved a
strategic plan that encompasses the following major elements and
objectives:
- Convert MID from a Canadian corporation to a Canadian Real
Estate Investment Trust ("REIT").
- Increase the Company's quarterly dividend to US$0.50 per share to reflect a targeted
annualized dividend of US$2.00 per
share.
- Fortify MID's relationship with Magna International Inc.
("Magna") by selectively investing in MID properties and
opportunistically growing with Magna in new strategic
locations.
- Diversify by significantly increasing the lease revenue derived
from new industrial tenants and reducing the proportion of capital
invested in Magna properties to less than 50% within approximately
three years.
- Increase leverage to 40% to 50% of total capital.
"The Board's adoption of this strategic plan demonstrates our
determination to revitalize the Company, and to make it more
transparent for our shareholders. This plan brings MID much
closer into line with our industry peers across a range of
benchmarks," said William Lenehan,
Interim Chief Executive Officer. "For example, we are
expecting to reduce our general and administrative costs from
approximately 30% of annual lease revenue to an annual run-rate of
around 8% to 10%; we estimate that the REIT conversion, along with
other structuring initiatives, will save approximately US$8 million a year of taxes, a 50% reduction;
and, lastly, the Board has approved a dividend policy with a
targeted payout ratio of approximately 70% of normalized long term
distributable cashflow."
The conversion to a REIT (which will take place pursuant to a
statutory plan of arrangement) will require shareholder and court
approval, and satisfaction of certain regulatory requirements and
other conditions. Although the REIT structure further
improves the tax efficiency of MID's business, none of the other
elements of the strategic plan are contingent upon the REIT
conversion.
The revised dividend policy is expected to maintain financial
capacity for MID to grow or reinvest in its portfolio.
The Company anticipates growth opportunities with Magna
including the expansion of certain facilities currently owned by
MID as well as the construction of new facilities.
The planned diversification will be global in nature, targeting
favourable tax jurisdictions and focusing on acquiring
manufacturing and industrial buildings leased to tenants outside
the automotive sector. MID will be price disciplined in its
acquisition approach and also intends to explore strategic
partnerships with counterparties that can provide local capital,
market intelligence and commercial opportunities.
By increasing financial leverage to 40% to 50% of total capital,
the Company believes it can benefit from a lower blended cost of
capital, provide some natural hedging against currency
fluctuations, and efficiently pursue its accretive diversification
strategy.
In addition, in 2012, the Company will change its name and
relocate its corporate office from Magna Drive in Aurora, Ontario.
Pursuant to the change in dividend policy described above, MID's
Board of Directors has declared a dividend of US$0.50 per share on MID's common shares for the
third quarter ended September 30,
2011. The dividend is payable on or about December 15, 2011 to shareholders of record at
the close of business on November 25,
2011. The common shares will begin trading on an
ex-dividend basis at the opening of trading on November 23, 2011. Unless otherwise
indicated, 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 respect to the designation of eligible
dividends.
ABOUT MI DEVELOPMENTS INC.
MI Developments Inc. ("MID" or the "Company")
(TSX: MIM, NYSE: MIM) 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 International Inc. (TSX: MG, NYSE: MGA) and its
automotive operating units.
MID will host a teleconference call on Wednesday, October 26, 2011 at 8:30 a.m. Eastern time. The number to use for
this call is 1-800-747-0367. Overseas callers should use
+1-416-981-9038. Please call in at least 10 minutes prior to
start time. The call will be chaired by William Lenehan, Interim Chief Executive
Officer.
For anyone unable to listen to the scheduled call, the
rebroadcast numbers will be: North
America - 1-800-558-5253 and Overseas - +1-416-626-4100
(reservation number is 21543257) and will be available until
Wednesday, November 9, 2011.
OTHER INFORMATION
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, capital
structure, cost of capital, tenant base, tax consequences, economic
performance or expectations, or the assumptions underlying any of
the foregoing. In particular, this press release contains
forward-looking statements regarding a proposed conversion to a
REIT, the possible structure and tax impacts of a REIT conversion,
the proposed fortification and growth of MID's relationship with
Magna, the proposed expansion and diversification of MID's lease
portfolio, and expected increases in leverage and reductions in
general and administrative costs. Words such as "may",
"would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate",
"seek" 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. In particular, MID
cautions that the timing or completion of the REIT conversion
process cannot be predicted with certainty, and there can be no
assurance at this time that all required or desirable approvals and
consents to effect a conversion will be obtained in a timely manner
or at all, and there can be no assurance that the REIT conversion
will be completed in the manner noted above, or at all.
There can also be no assurance that the proposed
fortification and growth of MID's relationship with Magna, the
proposed expansion and diversification of MID's lease portfolio,
and expected increases in leverage and reductions in general and
administrative costs can be achieved in a timely manner, or at
all. 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 risk of changes to tax or other laws that may
adversely affect the REIT conversion; inability of MID to develop a
suitable structure for the REIT conversion; the inability to obtain
all required consents and approvals for the REIT conversion;
economic, market and competitive conditions and other risks that
may adversely affect MID's ability to fortify and grow its
relationship with Magna, expand and diversify its lease portfolio
and increase its leverage; and 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.