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Highlights:
- Growth in operation revenues of 13.7% for the second quarter, 11.0% for the first six months.
- Increase in net operating income (NOI) of 32.7% for the second quarter, 25.8% for the first six months.
- Increase in income from real estate activities of 67.2% for the second quarter, 65.6% for the first six months.
- Growth in fund from operations (FFO) of 52.3% (before variation in non-cash working capital) for the second quarter, 43.3% for the first six months.
- Net income of $6,226 in the second quarter compared to a loss of $33,048 for the corresponding period in 2008, loss of $48,039 for the first six months compared to a loss of $131,360 in 2008.
- Continued construction of Complexe Lebourgneuf, a building of over 215,000 square feet. The Corporation owns 50% of this project through one of its subsidiaries.
- 1.5% increase in the occupancy rate over June 30, 2008. Had it not been for the recent expansion of Edifice Centre d'Affaires Le Mesnil, which is not yet leased, the increase would have been 3.6%, and all buildings would have seen their occupancy rates rise.
Selected Financial Information:
For the three month period ended June 30 2009 2008 Variation %
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Operating revenues 1 075 007 945 248 13,7
Net operating income (NOI)(1) 604 170 455 369 32,7
Income from real estate activities(1) 370 422 221 531 67,2
Fund from operations (FFO)(2) 224 444 147 331 52,3
Net income (net loss) 6 226 (33 048) N/A
Occupancy rate of income properties 90,0% 88,5% 1,5
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(1) Net operating income (NOI) and income from real estate activities are
not measures of performance in compliance with Canadian GAAP but are
measures commonly used in the real estate sector.
(2) Before variation in non-cash working capital
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A second quarter marked by growth despite the current economic environment. The growth is due to higher occupancy rates of income properties, primarily Place d'Affaires Lebourgneuf, Phase 2 and Edifice Centre d'Affaires Le Mesnil.
Management Discussion and Analysis of Financial Position and Results of Operations
Operating revenus
During the second 2009 quarter, operating revenues totalled $1,075,007 compared to $945,248 in the second quarter of 2008, representing a 13.7% increase. The change in operating revenues between the periods is due primarily to increase in the occupancy rate of income properties. For the six-month period ended June 30, 2009, growth was up 11% over the first six months of 2008.
Net operating income (NOI)
Net operating income totalled $604,170 for the second quarter ended June 30, 2009, compared to $455,369 in 2008. This represents an increase of 32.7% over the same period in 2008, due to an increase in the occupancy rate of income properties. The increase stands at $213,013, or 25.8%, for the first six months of the year. Consequently, the net operating margin rose from 48.2% in the second quarter of 2008 to 56.2% in 2009.
Income from real estate activities
Operating income from real estate operations increased by $148,891, or 67.2%, during the second quarter of 2009 compared to the same quarter last year. This translated into a $231,711 increase or 65.6% rise for the first six months of 2009 to $585,108.
Net income
For the quarter ended June 30, 2009, the Corporation posted a net income of $6,226 or $0.000 per share, compared to a net loss of $33,048 or $0.002 per share in 2008. This represents an improvement of $39,274. For the first six months of 2009, there was a net loss of $48,039, a decrease in net loss of $83,321 which stood at $131,360 in 2008.
Occupancy rate of income properties
The occupancy rate of our income properties rose significantly in the second quarter of 2009, going from 88.5% at June 30, 2008 to 90.0% at June 30, 2009, attesting to our hard work and the vibrancy of the Quebec region, where four of our buildings are located. Had it not been for the recent expansion of Edifice Centre d'Affaires Le Mesnil that is not yet leased, the occupancy rate would have been 92.1%.
Financing
In April 2009, the Corporation renewed a hypothecary loan with a balance of $822,496 that expired during that month. The term is of one year and comes with an annual interest rate of 6%.
In May 2009, the Corporation closed a 2nd rank hypothecary loan in the amount of $1,000,000 for Edifice Centre d'Affaires Le Mesnil. The hypothec provides a four year term, a capital payable at maturity of the term in May 2013, and a 9% per annum interest rate payable by monthly instalments. This arm's length financing was set to defray the costs of expansion of the leasable area of the aforementioned building, as well as the cost of the leasehold improvements for a leased premise of over 16,500 square feet in Edifice Centre d'Affaires Le Mesnil for the Ministry of Transport, which occupies the leased premises since February 1, 2009.
The fact that the Corporation secured these two financings in the current economic environment shows the lenders' confidence towards the Corporation.
Financial measures not in compliance with Canadian GAAP
Net operating income and income from real estate activities are not measures defined by GAAP, but they are useful measures to evaluate the performance of the Corporation and are commonly used in the real estate sector. We wish to warn you that these measures have non standardized meanings and may therefore differ from a public corporation to another. That is why we provide you with the following chart which reconciles these measures to the most similar GAAP measures.
Three month period ended June 30, 2009 2008 -------------------------------------------------------------------------- Net income (net loss) 6,226 (33,048) Income from discontinued operations (172) Taxes and capital taxes 24,758 8,490 Charges related to stock market listing and shareholder communications 79,016 55,937 Administration costs 56,351 55,428 Amortization 208,271 172,144 Financial revenues (4,200) (37,248) -------------------------------------------------------------------------- Income from real estate activities 370,422 221,531 Financing costs 233,748 233,838 -------------------------------------------------------------------------- Net operating income (NOI) 604,170 455,369 --------------------------------------------------------------------------
About Cagim Real Estate Corporation
Cagim Real Estate Corporation is listed on the TSX Venture Exchange and operates property management and acquisition activities. The Corporation operates its activities through its subsidiaries ADG Immobilier Inc. and Complexe Lebourgneuf Inc.
FORWARD-LOOKING INFORMATION - This press release contains forward-looking statements reflecting Cagim objectives, estimates, expectations and the impact of acquisitions on Cagim's financial performance. These statements are identified by the use of verbs such as "believe", "anticipate", "estimate", and "expect" as well as by the use of future or conditional tenses. By their very nature, these types of statements involve risks and uncertainty. Consequently, reality may differ materially from Cagim's projections or expectations.
SOURCE: Cagim Real Estate Corporation
Cagim Real Estate Corporation Mr. Denis Lepine Chief Financial Officer 418-622-6644 Cagim Real Estate Corporation Mr. Guy Boutin Leasing and Development Officer 418-622-6644
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