TORONTO, Nov. 9 /CNW/ -- First Capital Realty Inc. ("First Capital Realty") (TSX:FCR) Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighbourhood and community shopping centres, located predominantly in growing metropolitan areas, announced today solid financial results for the third quarter ended September 30, 2009.

THIRD QUARTER 2009 HIGHLIGHTS:
-   Invested $85 million in acquisitions, development activities and
property improvements.
-   Added 363,000 square feet of gross leasable area from development,
redevelopment and acquisitions.
-   8.1% same property NOI growth; 3.1% same property NOI growth
excluding redevelopment and expansion.
-   9.4% increase on 251,000 square feet of renewal leases.
-   Occupancy of 96.0% which compares to 95.8% at September 30, 2008.
Vacancy includes 0.8% of space held for redevelopment.
-   Gross new leasing totalled 348,000 square feet including development
and redevelopment coming on line; lease closures totalled 149,000
square feet and closures for redevelopment totalled 28,000 square
feet.
-   Average lease rate per occupied square foot increased by 4.7% to
$15.54 at September 30, 2009 compared to $14.84 in the prior year
third quarter.
-   Completed new leasing on existing space totalling 84,000 square feet
at an average rate of $19.94 per square foot.
-   Issued 3.45 million common shares (including 2.3 million warrants)
generating gross proceeds of $59.0 million.
-   Issued $75 million principal amount of 6.25% convertible unsecured
subordinated debentures maturing December 2016.
-   On August 14, 2009, the previously announced dividend-in-kind was
completed resulting in the Company no longer having an ownership
interest in Equity One.
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Three months ended
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30 Sept     30 Sept  Percentage
($ millions, except per share amounts)      2009        2008      Change
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Enterprise value                        $  4,243    $  4,221
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Debt to aggregate assets                   51.0%       53.1%
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Debt to total market capitalization        48.9%       49.3%
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Property rental revenue                 $  108.8    $  100.8        7.9%
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Net operating income (NOI)              $   71.6    $   65.5        9.3%
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Funds from operations (FFO)(1)          $   38.5    $   38.7       -0.5%
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FFO per diluted share(1)                $   0.41    $   0.43       -4.7%
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Weighted average diluted shares for
FFO (000's)                              94,902      90,022        5.4%
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Adjusted funds from operations (AFFO)   $   37.5    $   36.5        2.7%
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AFFO per diluted share                  $   0.36    $   0.37       -2.7%
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Weighted average diluted shares for
AFFO (000's)                            103,879      98,648        5.3%
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(1) Excludes, in 2008, the Company's share of Equity One's non-cash
impairment loss. See Funds from Operations section of this press
release.
NINE MONTHS HIGHLIGHTS:
-   Invested $197 million in acquisitions, development activities and
property improvements.
-   Added 740,000 square feet of gross leasable area from development,
redevelopment activities and acquisitions.
-   Acquired four income-producing properties totalling 146,000 square
feet, one property held for future development and two land parcels
adjacent to existing properties comprising a total of 9.1 acres of
land held for future development.
-   7.6% same property NOI growth; 3.0% excluding redevelopment and
expansion space.
-   11.0% increase on 864,000 square feet of renewal leases.
-   Gross new leasing totalled 939,000 square feet including development
and redevelopment coming on line; lease closures totalled 550,000
square feet and closures for redevelopment totalled 125,000 square
feet.
-   Lease rates on openings and redevelopment coming on line increased by
27.9% versus all lease closures.
-   Completed new leasing on existing space totalling 385,000 square feet
at an average rate of $19.63 per square foot.
-   Completed $156 million of secured financing on 11 properties at a
weighted average rate of 6.23% and a weighted average term of 8.2
years.
-   Issued a total of 5.9 million common shares for net proceeds of
$97.8 million.
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Year-to-date
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30 Sept     30 Sept  Percentage
($ millions, except per share amounts)      2009        2008      Change
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Property rental revenue                 $  328.9    $  304.5        8.0%
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Net operating income (NOI)              $  211.5    $  193.1        9.5%
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Funds from operations (FFO)(1)          $  115.8    $  108.0        7.2%
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FFO per diluted share(1)                $   1.25    $   1.25           -
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Weighted average diluted shares
for FFO (000's)                          92,895      86,232        7.7%
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Adjusted funds from operations (AFFO)   $  113.1    $  103.1        9.7%
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AFFO per diluted share                  $   1.12    $   1.09        2.8%
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Weighted average diluted shares for
AFFO (000's)                            101,119      94,658        6.8%
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(1) Excludes, in 2009, the dilution loss on Equity One investment and in
2008, the Company's share of Equity One's non-cash impairment loss.
See Funds from Operations section of this press release.

"While we continue to grow our business primarily by investing in value-added activities within our existing portfolio, we remain focused on uncovering and acquiring properties, one deal at a time, that are well located in supply constrained markets with potential for rent growth", said Dori J. Segal, President & C.E.O., "Our investment program continues to be supported by healthy interest from tenants for our asset class and locations, as well as a strong balance sheet, high-quality cash flow and financial flexibility".

FINANCIAL HIGHLIGHTS

FFO and AFFO presented herein are key financial measures used by the real estate industry to measure and compare the operating performance of real estate organizations. FFO and AFFO are supplemental non-GAAP financial measures and a complete reconciliation containing adjustments from GAAP net income to FFO and AFFO is included in this press release.

Funds from Operations
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Three months ended       Nine months ended
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(thousands of dollars,
except per share            Sept 30,    Sept 30,    Sept 30,    Sept 30,
amounts)                       2009        2008        2009        2008
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Net operating income      $   71,612  $   65,455  $  211,469  $  193,129
Interest expense             (31,412)    (27,862)    (93,122)    (85,064)
Interest and other income
(expense)(1)                  2,390       2,932       3,077       4,577
Corporate expenses            (5,320)     (4,731)    (16,321)    (15,963)
Funds from operations
from Equity One(2)            2,553      (1,952)     15,009       8,749
Amortization                  (1,003)       (547)     (2,756)     (1,567)
Current income taxes            (318)     (1,036)     (2,195)     (2,365)
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FFO                           38,502      32,259     115,161     101,496
Add: dilution loss on
Equity One investment             -           -         676           -
Add: the Company's share
of Equity One's non-cash
impairment loss                   -       6,480           -       6,480
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FFO excluding dilution
loss on Equity One
investment and the
Company's share of
Equity One's non-cash
impairment loss          $   38,502  $   38,739  $  115,837     107,976
FFO per diluted share     $     0.41  $     0.36  $     1.24  $     1.18
Add: dilution loss on
Equity One investment             -           -        0.01           -
Add: the Company's share
of Equity One's non-cash
impairment loss                   -        0.07           -        0.07
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FFO per diluted share
excluding dilution loss
on Equity One investment
and the Company's share
of Equity One's non-cash
impairment loss          $     0.41  $     0.43  $     1.25  $     1.25
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Weighted average diluted
share - FFO              94,902,006  90,021,640  92,895,420  86,231,829
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(1) Excludes gains on disposition of income-producing real estate.
(2) Current year amounts cover period to August 14, 2009, the date of the
dividend-in-kind related to the Company's interest in Equity One.

For the quarter and year-to-date, FFO was positively affected by same property NOI growth and the effect of acquisitions and development coming on line. This was largely offset by increased interest and amortization expense, decreased interest and other income, and the timing of the corporate expenses. Specifically the increase in the interest expense in the quarter and year-to-date is primarily due to the increased cost of the new secured revolving credit facility and one time costs related to specific financing activities. The increased credit facility costs were only partially offset by the effect of the reduced interest rate environment. In addition the third quarter results included the results of Equity One up to August 14, 2009 compared to the inclusion in 2008 of full periods of Equity One results.

Adjusted Funds from Operations

Management views AFFO as an effective measure of cash generated from operations. AFFO for the three months ended September 30, 2009 totalled $37.5 million or $0.36 per diluted common share compared to $36.5 million or $0.37 per diluted common share in the prior year. AFFO is calculated by adjusting FFO for actual costs incurred for capital expenditures and leasing costs for maintaining shopping centre infrastructure and current lease revenues, and non cash items including straight-line and market rent adjustments, non-cash compensation expenses, interest payable in shares, gains or losses on debt and hedges. Land sales are excluded from AFFO. The Company's proportionate share of Equity One FFO is excluded and only the regular cash dividends received are included in AFFO. The weighted average diluted shares outstanding for AFFO is adjusted to assume conversion of the outstanding convertible debentures.

Net Income
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($ thousands, except per      Three months ended       Nine months ended
share amounts)                     Sept 30                 Sept 30
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2009        2008        2009        2008
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Net income                   $ 9,002     $ 8,227     $27,177     $26,767
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Earnings per share
(basic and diluted)         $  0.09     $  0.09     $  0.29     $  0.31
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Weighted average common
shares - diluted (000's)     94,902      90,022      92,895      86,232
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Net income for the three and nine months ended September 30, 2009 was $9.0 million or $0.09 per share (basic and diluted) and $27.2 million or $0.29 per share (basic and diluted). This compares to $8.2 million or $0.09 per share (basic and diluted) and $26.8 million or $0.31 per share (basic and diluted), respectively, for the three and nine months ended September 30, 2008. The increase in net income is primarily due to increase in NOI resulting from development projects coming on line and same property NOI growth, increased income from Equity One through to the dividend-in-kind of August 14, 2009, offset by increased interest expense, increased amortization expense and decreased interest and other income. In addition, there was an increase in the basic and weighted average diluted shares outstanding compared to the same prior year period.

DEVELOPMENT AND ACQUISITION HIGHLIGHTS

During the third quarter of 2009, the Company invested $75 million in active development projects and improvements to existing properties. Year-to-date these investments totalled $160 million. Development of 239,900 square feet was brought on line in the third quarter of 2009 with 206,700 square feet leased at an average rate of $26.04 per square foot. The Company also brought on line 57,800 square feet of redeveloped space which was leased at an average rate of $25.01 per square foot. Year-to-date, development of 474,500 square feet was brought on line with 435,600 square feet leased at an average rate of $22.63 per square foot. Year-to-date the Company brought on line 119,200 square feet of redeveloped space at an average rate of $23.09 per square feet.

During the third quarter of 2009, the Company acquired a 65,000 square foot property in Victoria, British Columbia for $10 million. Through the first nine months of 2009, the Company invested $37 million in the acquisition of four income-producing shopping centres comprising 146,000 square feet, one property held for development and two land parcels adjacent to existing properties comprising a total of 9.1 acres of commercial land for future development.

OPERATING HIGHLIGHTS

Net operating income ("NOI") is defined as property rental revenue less property operating costs. In Management's opinion, net operating income is useful in analyzing the operating performance of the Company's shopping centre portfolio. Net operating income is not a measure defined by GAAP and there is no standard definition of net operating income. As a result, net operating income may not be comparable with similar measures presented by other entities. Net operating income is not to be construed as an alternative to net income or cash flow from operating activities determined in accordance with GAAP.

Net operating income for the three months ended September 30, 2009 totalled $71.6 million, an increase of $6.1 million or 9.3% compared to the same period in 2008. Same property NOI increased by 8.1% in the third quarter, compared with the same prior period, generating growth in NOI of $4.9 million, primarily attributed to redevelopment and expansion space coming on line ($3.1 million) and lease termination payments. Same property NOI for the quarter, excluding expansion and redevelopment, increased by $1.8 million or 3.1% over the same prior year period. Same property NOI growth excluding expansion and redevelopment space and the lease termination fees for the three months ended September 30, 2009 was $0.9 million or 1.5%.

Acquisitions completed in 2009 and 2008 contributed $1.4 million to NOI, while greenfield development activities contributed a further $2.6 million to NOI for the three months ended September 30, 2009.

Net operating income for the nine months ended September 30, 2009 totalled $211.5 million, compared to $193.1 million for the same period in 2008, an increase of 9.5%. Same property NOI increased by 7.6%, generating NOI growth of $13.7 million, primarily attributed to redevelopment and expansion space coming on-line ($8.5 million) and lease termination payments. Same property NOI for the nine months ended September 30, 2009 excluding expansion and redevelopment space increased by $5.2 million or 3.0% over the same prior year period. Same property NOI growth excluding expansion and redevelopment space and the lease termination fees, for the nine months ended September 30, 2009 was $2.6 million or 1.5%.

Year to date acquisitions completed in 2009 and 2008 contributed $3.4 million to NOI, while greenfield development activities contributed a further $7.7 million to NOI for the nine months ended September 30, 2009.

The lease termination fees for the nine months ended September 30, 2009 are from three tenants (two are non-retail tenants) at separate locations where 94,500 square feet with an annualized NOI of $1.3 million was vacated. 20,200 square feet has been re-leased replacing one half of the total NOI. The Company is currently negotiating the lease up of the remaining two locations.

Gross new leasing in the third quarter totalled 348,000 square feet including development and redevelopment space brought on line. The Company achieved a 9.4% increase on 251,000 square feet of renewal leases over the expiring lease rates. For the nine months ended September 30, 2009, gross new leasing totalled 939,000 square feet. Renewal leasing totalled 864,000 square feet with an 11.0% increase over expiring rates.

The average rate per occupied square foot at September 30, 2009 increased to $15.54. This compares to an average rate of $15.37 per square foot at June 30, 2009 and $14.84 per square foot at September 30, 2008.

Portfolio occupancy at September 30, 2009 of 96.0% compares to 96.1% at June 30, 2009 and 96.4% at December 31, 2008.

FINANCING AND CAPITAL MARKET HIGHLIGHTS
During the three months ending September 30, 2009, the Company completed
the following significant financing and capital market transactions:
-   On August 5, 2009, 3,450,000 Units were issued at a price of $17.10
per unit for gross proceeds of $59 million. Each Unit consisted of
one common share and two-thirds of a warrant separable immediately.
Each whole warrant entitles the holder to acquire at any time up to
October 29, 2010, one common share of First Capital Realty at an
exercise price of $17.53.
-   On September 18, 2009, the Company completed the issuance of
$75 million aggregate principal amount of 6.25% convertible unsecured
subordinated debentures due December 31, 2016. Interest is payable
semi-annually commencing March 31, 2010 and will be convertible at
the option of the holder into common shares of the Company at a
conversion price of $22.90 per common share. It is the current
intention of First Capital Realty to satisfy its obligation to pay
the interest and principal by issuing common shares of the Company
pursuant to the terms of the trust indenture.
The Company also completed the following financings in the nine months
ended September 30, 2009:
-   Eleven secured financing transactions for gross proceeds of
$156.0 million at a weighted average interest rate of 6.23% and a
weighted average term to maturity of 8.2 years.
-   A three year, $450 million secured revolving credit facility maturing
March 2012 with a syndicate of ten banks jointly led by RBC Capital
Markets, TD Securities, and BMO Capital Markets.