Primaris Retail REIT Announces Third Quarter Financial

Primaris Retail REIT Announces Third Quarter Financial Results and
Financing Update 
TORONTO, ONTARIO -- (Marketwire) -- 11/08/12 -- Primaris Retail REIT
(TSX:PMZ.UN) is pleased to report third quarter operating results for
the period ending September 30, 2012. These results have been
prepared in accordance with International Financial Reporting
Standards ("IFRS"). 
President and CEO, John Morrison, commented "We are very pleased with
the strong operating results at the core of our business, as
evidenced by the growth in tenant sales and strong performance in
same property net operating income.  With the conversion of $99.1
million of convertible debentures into units during this quarter and
our solid operating results, we continue to see improvement in our
credit metrics and expect this trend to persist over the coming
quarters. On October 31, Primaris announced the acquisition of Regent
Mall in Fredericton, New Brunswick and McAllister Place in Saint
John, New Brunswick. These acquisitions are consistent with our
property strategy of owning dominant centres in secondary markets."  
Highlights 
Funds from Operations (FFO) 


 
--  FFO for the quarter ended September 30, 2012 was $36.2 million, up $6.9
    million from the $29.3 million reported for the third quarter of 2011. 
    On a per unit diluted basis, FFO for the third quarter of 2012 was
    $0.383, up $0.034 from the $0.349 reported in the same quarter of 2011. 
    
    
--  FFO is not a term defined under IFRS and may not be comparable to
    similar measures used by other Trusts.  A reconciliation of net income
    to FFO is included.

 
Net Operating Income (NOI) 


 
--  NOI for the quarter ended September 30, 2012 was $58.9 million, an
    increase of $3.6 million from the $55.3 million recorded in the third
    quarter of 2011. 
    
--  NOI is not a term defrined under IFRS and may not be comparable to
    similar measures used by other Trusts.  A calculation of NOI is
    included. 

 
Same Properties - Net Operating Income 


 
--  NOI for the third quarter ended September 30, 2012, for the 32
    properties held continually for the past 24 months, increased 5.8% from
    the comparative three month period. Removing the effects of lease-
    surrender revenue, NOI, on a s
ame-property basis, would be 3.0% higher
    than the comparative period. 

 
Net Income 


 
--  Net income for the quarter ended September 30, 2012 was $139.2 million,
    an increase of $110.0 million from the $29.2 million recorded in the
    third quarter of 2011. The increase is driven by fluctuations in the
    recording of investment properties at fair value. 

 
Operations 


 
--  During the third quarter of 2012, Primaris leased 523,003 square feet
    comprised of 162,370 square feet to 121 smaller tenants and the
    remainder to five major and anchor tenants.  Approximately 62.9% of the
    space leased during the current quarter of 2012 resulted from the
    renewal of existing tenants (85.1% if the major tenants are excluded).
    The weighted average new rent for renewals of existing tenants in the
    current quarter, on a cash basis, represented an 8.7% increase over the
    previous rent (10.6% if the major tenants are excluded). 
    
--  The portfolio occupancy for 2012 is relatively stable.  It was 97.5% at
    September 30, 2012, compared to 97.4%% at June 30, 2012, and 96.5% at
    September 30, 2011.  
    
    For the 18 reporting properties owned throughout both twelve month
    periods ended August 31, 2012 and 2011, sales per square foot, on a
    same-tenant basis, have increased to $470 per square foot, from $467 in
    the prior year. 

 
Liquidity 


 
--  At September 30, 2012, Primaris had no cash on hand and $1 million drawn
    on its $100 million credit facility.  

 
Financial Results 
FFO for the quarter ended September 30, 2012 was $36.2 million, up
$6.9 million from the $29.3 million reported for the third quarter of
2011. On a per unit diluted basis, FFO for the third quarter of 2012
was $0.383, up $0.034 from the $0.349 reported for the third quarter
of 2011.     
Net income for the quarter ended September 30, 2012 was $139.2
million, an increase of $110.0 million from the $29.2 million
recorded in the third quarter of 2011. The increase is driven by
fluctuations in the recording of investment properties at fair value. 
The FFO distribution payout ratio for the third quarter of 2012,
calculated on a diluted basis, was 79.6% as compared to an 87.4%
payout ratio for the third quarter of 2011 and 81.0% for the previous
quarter ended June 30, 2012. The payout ratios are sensitive to both
seasonal operating results and financial leverage. 
At September 30, 2012, Primaris' total enterprise value was
approximately $3.8 billion (based on the market closing price of
Primaris' units on September 30, 2012 plus total debt outstanding).
At September 30, 2012 Primaris had $1,485.9 million of outstanding
debt, equating to a debt to total enterprise value ratio of 39.1%.
Primaris' debt consisted of $1,387.7 million of fixed-rate senior
debt with a weighted average interest rate of 5.4% and a weighted
average term to maturity of 5.1 years, $1 million drawn on the
operating line of credit, and $97.2 million of fixed-rate convertible
debentures.   
Primaris had a debt to total asset ratio of 38.9% at September 30,
2012.  During the three months ended September 30, 2012, Primaris had
an interest coverage ratio of 2.7 times as expressed by EBITDA
divided by interest expense on mortgages, convertible debentures and
bank indebtedness.  Primaris defines EBITDA as net income increased
by depreciation, finance costs, income tax expense and amortization
of leasing costs and straight-line rent.  EBITDA is not a term
defined under IFRS and may not be comparable to similar measures used
by other Trusts.  See below under "Non-IFRS Measures". 
On July 18, 2012 Primaris called the 5.85% series of convertible
debentures for redemption. Prior to redemption, holders of $84,018 of
convertible debentures at face value exercised their option to
convert to units. The redemption of the debentures was effective on
August 17, 2012 when Primaris redeemed the remaining debentures at a
face value of $9,458. 
Operating Results 
Comparison to Prior Period Financial Results (in thousands of
dollars) 
FFO for the quarter ended September 30, 2012 was $6.9 million
($0.0.34 per unit diluted) greater than the comparative period. 


 
                                        Three Months Ended                  
                                             September 30,     Favourable / 
(Unaudited)                             2012          2011   (Unfavourable) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Revenue                                                                     
  Minimum rent                  $     59,763  $     58,574  $         1,189 
  Recoveries from tenants             38,601        35,558            3,043 
  Percent rent                           511           711             (200)
  Parking                              1,624         1,483              141 
  Other income                         1,767           263            1,504 
                                --------------------------------------------
                                     
102,266        96,589            5,677 
                                                                            
Expenses                                                                    
  Property operating                  25,759        23,882           (1,877)
  Property tax                        19,109        18,291             (818)
  Ground rent                            332           325               (7)
  General & administrative             3,331         2,080           (1,251)
  Depreciation                           257           286               29 
                                --------------------------------------------
                                      48,788        44,864           (3,924)
                                                                            
Income from operations          $     53,478  $     51,725  $         1,753 
Finance income                             9            13               (4)
Finance costs                        (24,194)      (19,518)          (4,676)
Fair value adjustment on                                                    
 investment properties               109,879        (2,997)         112,876 
                                --------------------------------------------
Net income                      $    139,172  $     29,223  $       109,949 
                                                                            
Fair value adjustment on                                                    
 investment properties              (109,879)        2,997         (112,876)
Fair value adjustment on                                                    
 convertible debentures                1,213        (3,721)           4,934 
Fair value adjustment on                                                    
 exchangeable units                    1,740        (1,203)           2,943 
Fair value adjustment on unit-                                              
 based compensation                      995          (459)           1,454 
Distributions on exchangeable                                               
 units                                   647           667              (20)
Amortization of tenant                                                      
 improvement allowances                2,344         1,783              561 
                                --------------------------------------------
Funds from operations(1)        $     36,232  $     29,287  $         6,945 
                                --------------------------------------------
                                --------------------------------------------
                                                                            
Funds from operations per unit -                                            
 basic                          $      0.389  $      0.355  $         0.034 
Funds from operations per unit -                                            
 diluted                        $      0.383  $      0.349  $         0.034 
Funds from operations - payout                                              
 ratio                                  79.6%         87.4%            -7.8%
Distributions per unit          $      0.305  $      0.305  $             - 
Weighted average units                                                      
 outstanding - basic              93,040,645    82,439,758       10,600,887 
Weighted average units                                                      
 outstanding - diluted            96,898,901    91,295,759        5,603,142 
Units outstanding, end of period                                            
 (including exchangeable units)   95,021,808    82,543,264       12,478,544 
                                                                            
(1) Funds from Operations, which is not a defined term within IFRS, has been
    calculated by management, using IFRS, in accordance with REALpac's White
    Paper on Funds from Operations.  The White Paper adds back to net income
    items that do not arise from operating activities, such as amortization 
    of tenant improvements, deferred income taxes and fair value            
    adjustments.  Funds from Operations may not be comparable to similar    
    measures used by other entities.  See below under "Non-IFRS Measures".  

 
Net Operating Income - Same Properties (in thousands of dollars) 
The same-property comparison consists of the 32 properties that were
owned throughout both the current and comparative three month
periods. NOI, on a same-property basis, increased $3.2 million, or
5.8%, in relation to the comparable three month period.  Removing the
effects of lease-surrender revenue, net operating income, on a
same-property basis, would be $1.6 million or 3.0% higher than the
comparative period. 


 
                                        Three Months Ended                  
                                             September 30,     Favourable / 
(Unaudited)                              2012         2011   (Unfavourable) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Operating revenue(1)              $   103,157  $    97,588  $         5,569 
Less operating expenses               (44,743)     (42,355)          (2,388)
                                  ------------------------------------------
                                                                            
Net operating income(1)           $    58,414  $    55,233  $         3,181 
                                  ------------------------------------------
                                  ------------------------------------------
                                                                            
(1)Not a term defined under IFRS                                            

 
NOI is not a term defined under IFRS and may not be comparable to
similar measures used by other Trusts.  Operating revenue from
properties includes an adjustment for amortization of tenant
improvement allowances, tenant inducements and straight-line rent to
remove non-cash transactions from revenue for the calculation of net
operating income.  Operating expenses include operating expenses from
properties, property taxes and ground rent.  
Financing Update & Liquidity 
Stone Road Mall 
Primaris refinanced Stone Road Mall on November 7, 2012. The mortgage
was originally scheduled to mature on July 1, 2013.  The new loan
amount is $120 million and bears interest at a fixed rate of 4.132%
(old rate 5.494%) for a term of ten years. Funds were used to repay
the balance outstanding on the existing loan of $100.1 million, to
pay a penalty of approximately $870 thousand, to pay normal
transaction costs, and to fund general corporate purposes. The
penalty results from the difference in interest rates for the period
between refinance date and the previously scheduled maturity date of
July 1, 2013. The penalty has been recorded as an expense in the
fourth quarter of 2012. 
Regent Mall and McAllister Place 
On October 31, 2012, Primaris agreed to purchase two shopping
centres: Regent Mall in Fredericton, New B
runswick and McAllister
Place in Saint John, New Brunswick; for a purchase price of $317.6
million. Primaris has entered into a commitment to borrow $114
million, to be secured by Regent Mall. This loan will have a ten year
term and will bear interest at a fixed rate of 4.034%. Primaris has
entered into a second commitment to borrow $76 million, to be secured
by McAllister Place. This second loan will have a seven year term and
will bear interest at a fixed rate of 3.682%. The second commitment
will replace the bridge facility initially announced on October 31,
2012. In addition, Primaris has agreed to issue approximately $115
million of units, before issuance costs. The issuance is expected to
close on November 9, 2012. Primaris also expects to draw on its
operating line to fund this transaction. 
At September 30, 2012, Primaris had no cash on hand and $1 million
drawn on its $100 million credit facility.     
Tenant Sales 
For the 18 reporting properties owned throughout both twelve month
periods ended August 31, 2012 and 2011, sales per square foot, on a
same-tenant basis, have increased to $470 per square foot from $467.
For the same 18 properties the all-tenant total sales volume has
increased 2.0%.   


 
           Same Tenant                                                      
            Sales per                    All Tenant Total                   
           Square Foot Variance             Sales Volume     Variance       
(Unaudited) 2012  2011        $     %        2012       2011        $     % 
-------------------------------------- -------------------------------------
-------------------------------------- -------------------------------------
Cataraqui  $ 504 $ 513 $     (9) -1.8%     86,116     87,354   (1,238) -1.4%
Dufferin                                                                    
 Mall        520   513 $      7   1.4%     95,077     89,665    5,412   6.0%
Eglinton                                                                    
 Square      378   380 $     (2) -0.5%     31,273     28,997    2,276   7.8%
Heritage                                                                    
 Place       314   316 $     (2) -0.6%     25,425     25,193      232   0.9%
Lambton                                                                     
 Mall        322   328 $     (6) -1.8%     44,423     47,443   (3,020) -6.4%
Place                                                                       
 d'Orleans   444   463 $    (19) -4.1%     98,097    102,483   (4,386) -4.3%
Place Du                                                                    
 Royaume     426   427 $     (1) -0.2%    114,171    114,574     (403) -0.4%
Place                                                                       
 Fleur De                                                                   
 Lys         339   339 $      -   0.0%     68,572     70,754   (2,182) -3.1%
Stone Road                                                                  
 Mall        530   527 $      3   0.6%    116,596    114,225    2,371   2.1%
Aberdeen                                                                    
 Mall        391   387 $      4   1.0%     49,299     48,622      677   1.4%
Cornwall                                                                    
 Centre      578   551 $     27   4.9%     89,048     81,911    7,137   8.7%
Grant Park   592   574 $     18   3.1%     26,631     26,807     (176) -0.7%
Midtown                                                                     
 Plaza       622   602 $     20   3.3%    141,019    129,899   11,120   8.6%
Northland                                                                   
 Village     458   460 $     (2) -0.4%     42,517     43,794   (1,277) -2.9%
Orchard                                                                     
 Park        500   496 $      4   0.8%    132,906    129,828    3,078   2.4%
Park Place                                                                  
 Mall        490   477 $     13   2.7%     77,991     75,469    2,522   3.3%
Sunridge                                                                    
 Mall        509   500 $      9   1.8%     98,485     91,120    7,365   8.1%
Woodgrove                                                                   
 Centre      473   470 $      3   0.6%     92,235     93,477   (1,242) -1.3%
           --------------------------- -------------------------------------
           --------------------------- -------------------------------------
           $ 470 $ 467 $      3   0.6% $1,429,881 $1,401,615 $ 28,266   2.0%
           --------------------------- -------------------------------------
           --------------------------- -------------------------------------

 
The same tenants' sales per square foot increased 0.6% per square
foot, while the national average tenant sales as reported by the
International Council of Shopping Centers ("ICSC") for the 12-month
period ended August 31, 2012, increased 1.8%. Primaris' sales
productivity of $470 is lower than the ICSC average of $595, largely
because the ICSC includes sales from super regional malls that have
the highest sales per square foot in the country.   
Leasing Activity 
Primaris Retail REIT's property portfolio remains well leased. 
The portfolio occupancy rate is relatively stable. It was 97.5% at
September 30, 2012, compared to 97.4% at June 30, 2012, and 96.5% at
September 30, 2011. These percentages include space for which signed
leases are in place, but where the tenant may not yet be in
occupancy. 
During the third quarter of 2012, Primaris leased 523,003 square feet
comprised of 162,370 square feet to 121 smaller tenants and the
remainder to five major and anchor tenants.  Approximately 62.9% of
the space leased during the current quarter of 2012 resulted from the
renewal of existing tenants (85.1% if the major tenants are
excluded). The weighted average new rent for renewals of existing
tenants in the current quarter, on a cash basis, represented an 8.7%
increase over the previous rent (10.6% if the major tenants are
excluded). 
At September 30, 2012, Primaris had a weighted average term to
maturity of leases of 5.5 years. 
With respect to the four remaining Zellers' leases in Primaris'
portfolio, two now terminate on April 30, 2013, the third includes a
mutual termination clause with six months' notice and the fourth
expires naturally on March 31, 2013.  Our leasing and development
teams are already at work on plans to make the most of the
opportunity to bring new brands to the properties.   
Development Activity 
During 2009 and 2011, Primaris completed phases one and two of a
three phase redevelopment at Lambton Mall in Sarnia, Ontario. 
Work is well underway on the third phase of the Lambton Mall
redevelopment. The project involves the redevelopment of the vacant
anchor space (approximately 92,000 square feet), formerly occupied by
Canadian Tire. Part of the existing building will be demolished and
replaced with a new Gal
axy Theatre building comprising approximately
32,000 square feet, a Sport Chek which will occupy approximately
31,000 square feet and 1,000 square feet of commercial retail space.
The plan also creates a new mall entrance next to H&M. The project
includes the acquisition of the existing 5.9 acre Cineplex property
located at 1450 London Road, adjacent to Lambton Mall. With the
opening of the new Galaxy Theatre at Lambton Mall, Cineplex will
close its existing theatre. This phase will cost approximately $16
million, including the purchase of 1450 London Road. A spring 2013
opening of both the Galaxy Theatre and the Sport Chek is expected. 
The first phase of a redevelopment project is now complete at Grant
Park Shopping Centre in Winnipeg, Manitoba to accommodate an expanded
and repositioned Manitoba Liquor Control Commission ("MLCC") store.
This project also included the realignment and upgrade of almost
11,500 square feet of common area with new floor and ceiling finishes
which has revitalized the west end of the shopping centre. A portion
of the exterior of the building and the west mall entrance were also
renovated to provide a marquee entry to the new redevelopment inside.
Primaris invested $6.4 million in this project. This phased
redevelopment has already created an additional consumer draw to the
centre.   
The second phase of the redevelopment at Grant Park comprises a 5,000
square foot expansion of the shopping centre, re-leasing and
remerchandising of approximately 23,000 square feet of other retail
area, renovation and expansion of washrooms, and upgrade of an
additional 5,000 square feet of common area. Landlord
pre-construction activities commenced in September 2012. Common area
improvements and washroom renovations are expected to be completed by
spring 2013, and the expansion is expected to open in July 2013. This
second phase has a $5.4 million budget. 
A 12,000 square foot freestanding pad development at Tecumseh Mall,
in Windsor, Ontario, was turned over to the LCBO for fixturing on
October 31, 2012, on time and under budget. The LCBO plans to open in
spring 2013. Primaris invested $3.3 million in this project.  
Redevelopment projects will be funded through a combination of cash,
draws on the operating line and mortgage refinancing. 
Supplemental Information 
Primaris' condensed interim consolidated financial statements and
Management's Discussion and Analysis ("MD&A") for the three and nine
months periods ended September 30, 2012 and 2011 are available on
Primaris' website at www.primarisreit.com. 
Conference Call 
Primaris invites you to participate in the conference call that will
be held on Friday November 9, 2012 at 9am EST to discuss these
results. Senior management will speak to the results and provide a
brief corporate update. The telephone numbers for the conference call
are: 416-340-8530 (within Toronto), and 1-877-240-9972 (within North
America). 
Audio replays of the conference call will be available immediately
following the completion of the conference call, and will remain
active for 24 hours, by dialling 905-694-9451 or 1-800-408-3053 and
using pass code 1208535. The audio replay will also be available for
download at www.primarisreit.com/q3conference. 
About Primaris 
Primaris is a TSX listed real estate investment trust (TSX:PMZ.UN).
Primaris owns 33 income-producing properties comprising approximately
13.7 million square feet located in Canada. As of October 31, 2012,
Primaris had 95,085,289 units issued and outstanding (including
2,122,261 exchangeable units for which units have yet to be issued). 
Forward-Looking Information 
The MD&A contains forward-looking information based on management's
best estimates and the current operating environment. These
forward-looking statements are related to, but not limited to,
Primaris' operations, anticipated financial performance, business
prospects and strategies. Forward-looking information typically
contains statements with words such as "anticipate", "believe",
"expect", "plan" or similar words suggesting future outcomes. Such
forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially
from future results expressed, projected or implied by such
forward-looking statements.  
In particular, certain statements in this document discuss Primaris'
anticipated outlook of future events. These statements include, but
are not limited to: 


 
(i)      the accretive acquisition of properties and the anticipated extent 
         of the accretion of any acquisitions, which could be impacted by   
         demand for properties and the effect that demand has on acquisition
         capitalization rates and changes in the cost of capital;           
                                                                            
(ii)     reinvesting to make improvements and maintenance to existing       
         properties, which could be impacted by the availability of labour  
         and capital resource allocation decisions;                         
                                                                            
(iii)    generating improved rental income and occupancy levels, which could
         be impacted by changes in demand for Primaris' properties, tenant  
         bankruptcies, the effects of general economic conditions and supply
         of competitive locations in proximity to Primaris locations;       
                                                                            
(iv)     overall indebtedness levels, which could be impacted by the level  
         of acquisition activity Primaris is able to achieve and future     
         financing opportunities;                                           
                                                                            
(v)      tax exempt status, which can be impacted by regulatory changes     
         enacted by governmental authorities;                               
                                                                            
(vi)     anticipated distributions and payout ratios, which could be        
         impacted by capital expenditures, results of operations and capital
         resource allocation decisions;                                     
                                                                            
(vii)    the effect that any contingencies could have on Primaris' financial
         statements;                                                        
                                                                            
(viii)   anticipated replacement of expiring tenancies, which could be      
         impacted by the effects of general economic conditions and the     
         supply of competitive locations; and                               
                                                                            
(ix)     the development of properties which could be impacted by real      
         estate market cycles, the availability of labour and general       
         economic conditions.                                               

 
Although the forward-looking statements contained in this document
are based on what management of Primaris believes are reasonable
assumptions, forward-looking statements involve significant risks and
uncertainties. They should not be read as guarantees of future
performance or results and will not necessarily be an accurate
indicator of whether or not such results will be achieved. Readers
are cautioned not to place undue reliance on forward-looking
statements as a number of factors could cause actual future results
to differ from targets, expectations or estimates expressed in the
forward-looking statements. Material factors or assumptions that were
applied in drawing a conclusion or making an estimate set out in the
forward-looking information may include: a less robust retail
environment; relatively stable interest costs; access to equity and
debt capital markets to fund, at acceptable costs, the future growth
program and to enable Primaris to refinance debts as they mature and
the availability of purchase opportunities for growth. 
Except as required by applicable law, Primaris undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. 
Non-IFRS Measures 
Funds from operations ("FFO"), net operating income ("NOI") and
earnings before interest, taxes, depreciation and amortization
("EBITDA") are widely used supplemental measures of a Canadian real
estate investment trust's performance and are not defined under IFRS.
Management uses these measures when comparing itself to industry data
or others in the marketplace. Primaris' MD&A describes FFO, NOI and
EBITDA and provides reconciliations to net income, as defined under
IFRS, for FFO and EBITDA. A reconciliation of FFO to net income, as
defined by IFRS, and a calculation of NOI also appear at the end of
the 
press release. FFO, NOI and EBITDA should not be considered
alternatives to net income or other measures that have been
calculated in accordance with IFRS and may not be comparable to
measures presented by other issuers. 


 
PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST                                
Condensed Consolidated Interim Statements of Financial Position             
(In thousands of dollars)                                                   
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                             September 30,      December 31,
                                                      2012              2011
                                               (Unaudited)                  
----------------------------------------------------------------------------
                                                                            
Assets                                                                      
                                                                            
Non-current assets:                                                         
  Investment properties                   $      3,766,650  $      3,557,900
                                                                            
Current assets:                                                             
  Rents receivable                                   4,770             7,387
  Other assets and receivables                      26,511            25,010
  --------------------------------------------------------------------------
                                                    31,281            32,397
                                                                            
----------------------------------------------------------------------------
                                          $      3,797,931  $      3,590,297
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities and Equity                                                      
                                                                            
Non-current liabilities:                                                    
  Mortgages payable                       $      1,137,083  $      1,372,871
  Convertible debentures                           115,857           268,766
  Exchangeable units                                51,741            45,079
  Accounts payable and other liabilities             4,296             1,205
  --------------------------------------------------------------------------
                                                 1,308,977         1,687,921
                                                                            
Current liabilities:                                                        
  Current portion of mortgages payable             244,896            53,004
  Bank indebtedness                                    910             6,779
  Accounts payable and other liabilities            55,908            61,744
  Distribution payable                               9,501             8,251
  --------------------------------------------------------------------------
                                                   311,215           129,778
----------------------------------------------------------------------------
                                                 1,620,192         1,817,699
                                                                            
Equity                                           2,177,739         1,772,598
                                                                            
----------------------------------------------------------------------------
                                          $      3,797,931  $      3,590,297
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST                                
Interim Consolidated Statements of Income and Comprehensive Income          
(In thousands of dollars, except per unit amounts)                          
(Unaudited)                                                                 
                                                                            
                                  Three months ended     Nine months ended  
                                     September 30,         September 30,    
                                      2012       2011       2012       2011 
----------------------------------------------------------------------------
                                                                            
Revenue:                                                                    
  Minimum rent                   $  59,763  $  58,574  $ 178,171  $ 157,280 
  Recoveries from tenants           38,601     35,558    112,873     96,844 
  Percentage rent                      511        711      1,685      1,759 
  Parking                            1,624      1,483      5,059      4,558 
  Other income                       1,767        263      3,797        849 
  --------------------------------------------------------------------------
                                   102,266     96,589    301,585    261,290 
                                                                            
Expenses:                                                                   
  Property operating                25,759     23,882     75,082     65,363 
  Property taxes                    19,109     18,291     57,182     49,972 
  Ground rent                          332        325        994        914 
  General and administrative         3,331      2,080      9,533      7,730 
  Depreciation                         257        286      1,000        757 
  --------------------------------------------------------------------------
                                    48,788     44,864    143,791    124,736 
----------------------------------------------------------------------------
                                                                            
Income from operations              53,478     51,725    157,794    136,554 
                                                                            
Finance income                           9         13         68         96 
Finance costs                      (24,194)   (19,518)   (87,308)   (76,445)
Fair value adjustment on                                                    
 investment properties             109,879     (2,997)   134,693     15,157 
----------------------------------------------------------------------------
                                                                            
Income before income taxes         139,172     29,223    205,247     75,362 
                                                                            
Other comprehensive income:                                                 
Deferred loss on cash flow hedge      (368)         -       (333)         - 
Amortization of deferred net                                                
 loss on cash flow hedges               57         58        170        173 
----------------------------------------------------------------------------
Comprehensive income             $ 138,861  $  29,281  $ 205,084  $  75,535 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
   
                                                                         
                                                                            
PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST                                
Interim Consolidated Statements of Cash Flows                               
(In thousands of dollars)                                                   
(Unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                         Three months ended 
                                                              September 30, 
                                                            2012       2011 
----------------------------------------------------------------------------
Cash flows from operating activities:                                       
  Net income for the period                            $ 139,172  $  29,223 
  Adjustments for:                                                          
    Amortization of tenant improvement allowances          2,344      1,783 
    Amortization of tenant inducements                        55         38 
    Amortization of straight-line rent                      (569)      (634)
    Value of units and options granted under unit-                          
     based compensation plan                               1,370       (131)
    Depreciation of fixtures and equipment                   257        286 
    Net finance costs                                     24,185     19,505 
    Fair value adjustments on investment properties     (109,879)     2,997 
    ------------------------------------------------------------------------
                                                          56,935     53,067 
    Other non-cash operating working capital              11,123      6,853 
    Leasing commissions                                     (187)      (215)
    Tenant improvement allowances                         (7,856)    (7,456)
    Tenant inducements                                       (25)         - 
  --------------------------------------------------------------------------
  Cash generated from operating activities                59,990     52,249 
  Interest received                                            9         13 
  --------------------------------------------------------------------------
  Net cash from operating activities                      59,999     52,262 
                                                                            
Cash flows from financing activities:                                       
  Mortgage principal repayments                           (8,239)    (7,645)
  Repayment of financing                                 (21,227)         - 
  Advance (repayment) of bank indebtedness                   910     (3,000)
  Interest paid on financing                             (21,535)   (23,811)
  Capitalized debt placement costs                          (190)         9 
  Cash received on exercise of options                         -        101 
  Unit issue costs                                            43        (18)
  Redemption of convertible debentures                    (9,458)         - 
  Distributions to Unitholders                           (23,777)   (22,715)
  Purchase of units under normal course issuer bid             -       (589)
  --------------------------------------------------------------------------
  Net cash flow used in financing activities             (83,473)   (57,668)
                                                                            
Cash flows used in investing activities:                                    
  Acquisitions of investment properties                   (5,642)         - 
  Additions to buildings and building improvements        (3,142)    (3,196)
  Additions to recoverable improvements                   (2,288)    (2,998)
  Additions to fixtures and equipment                       (212)       (62)
  Proceeds of disposition                                      -      1,567 
  --------------------------------------------------------------------------
  Net cash flow used in investing activities             (11,284)    (4,689)
----------------------------------------------------------------------------
                                                                            
Decrease in cash and cash equivalents                    (34,758)   (10,095)
                                                                            
Cash and cash equivalents, beginning of period            34,758     11,233 
                                                                            
----------------------------------------------------------------------------
Cash and cash equivalents, end of period               $       -  $   1,138 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Supplemental disclosure of non-cash operating,                              
 financing and investing activities:                                        
  Value of units issued from conversion of convertible                      
   debentures                                            108,581      2,138 
  Value of units issued under distribution                                  
   reinvestment plan                                       4,517      2,480 
  Value of units issued upon exchange                          -          - 
  Value of units issued under unit-based compensation                       
   plan                                                        -         94 
  Deferred loss on cash flow hedge                          (368)         - 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST                                
Interim Consolidated Statements of Cash Flows                               
(In thousands of dollars)                                                   
(Unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                          Nine months ended 
                                                              September 30, 
                                                            2012       2011 
----------------------------------------------------------------------------
Cash flows from operating activities:                                       
  Net income for the period                            $ 205,247  $  75,362 
  Adjustments for:                                                          
    Amortization of tenant improvement allowances          6,959      5,243 
    Amortization of tenant inducements                       165         98 
    Amortization of straight-line rent                    (1,518)    (1,361)
    Value of units and options granted under unit-                          
     based compensation plan                               4,306      1,593 
    Depreciation of fixtures and equipment                 1,000        757 
    Net finance costs                                     87,240     76,349 
    Fair value adjustments on investment properties     (134,693)   (15,157)
    -
-----------------------------------------------------------------------
                                                         168,706    142,884 
    Other non-cash operating working capital              (3,707)   (12,038)
    Leasing commissions                                     (644)      (365)
    Tenant improvement allowances                        (14,396)   (11,502)
    Tenant inducements                                       (25)         - 
  --------------------------------------------------------------------------
  Cash generated from operating activities               149,934    118,979 
  Interest received                                           68         96 
  --------------------------------------------------------------------------
  Net cash from operating activities                     150,002    119,075 
                                                                            
Cash flows from financing activities:                                       
  Mortgage principal repayments                          (24,620)   (20,113)
  Proceeds of new mortgage financing                           -    333,600 
  Repayment of financing                                 (21,227)   (37,039)
  Advance (repayment) of bank indebtedness                (5,869)    (3,000)
  Interest paid on financing                             (66,207)   (62,408)
  Capitalized debt placement costs                          (485)    (2,743)
  Cash received on exercise of options                       829        457 
  Issuance of units                                      115,058    260,590 
  Unit issue costs                                        (5,213)   (11,094)
  Redemption of convertible debentures                    (9,458)         - 
  Issuance of convertible debentures                           -     75,000 
  Convertible debenture issue costs                            -     (3,029)
  Distributions to Unitholders                           (68,476)   (60,853)
  Purchase of units under normal course issuer bid             -       (589)
  --------------------------------------------------------------------------
  Net cash flow from (used in) financing activities      (85,668)   468,779 
                                                                            
Cash flows used in investing activities:                                    
  Acquisitions of investment properties                  (50,336)  (582,383)
  Additions to buildings and building improvements        (7,398)    (8,030)
  Additions to recoverable improvements                   (5,027)    (4,266)
  Additions to fixtures and equipment                     (1,573)      (104)
  Proceeds of disposition                                      -      1,567 
  --------------------------------------------------------------------------
  Net cash flow used in investing activities             (64,334)  (593,216)
----------------------------------------------------------------------------
                                                                            
Decrease in cash and cash equivalents                          -     (5,362)
                                                                            
Cash and cash equivalents, beginning of period                 -      6,500 
                                                                            
----------------------------------------------------------------------------
Cash and cash equivalents, end of period               $       -  $   1,138 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Supplemental disclosure of non-cash operating,                              
 financing and investing activities:                                        
  Value of units issued from conversion of convertible                      
   debentures                                            155,269     15,889 
  Value of units issued under distribution                                  
   reinvestment plan                                      11,672      6,635 
  Value of units issued upon exchange                      1,409        597 
  Value of units issued under unit-based compensation                       
   plan                                                      481        478 
  Deferred loss on cash flow hedge                          (333)         - 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST                                
Reconciliation of Net Income to Funds from Operations                       
(In thousands of dollars)                                                   
(Unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                 Three Months  Three Months 
                                                        Ended         Ended 
                                                September 30, September 30, 
                                                         2012          2011 
----------------------------------------------------------------------------
                                                                            
Net income                                       $    139,172  $     29,223 
Fair value adjustment on investment properties       (109,879)        2,997 
Fair value adjustment on convertible debentures         1,213        (3,721)
Fair value adjustment on exchangeable units             1,740        (1,203)
Fair value adjustment on unit-based compensation          995          (459)
Distributions on exchangeable units                       647           667 
Amortization of tenant improvement allowances           2,344         1,783 
----------------------------------------------------------------------------
                                                                            
Funds from operations(1)                         $     36,232  $     29,287 
----------------------------------------------------------------------------
                                                                            
(1)Funds from Operations, which is not a defined term within IFRS, has been 
 calculated by management, using International Financial Reporting          
 Standards, in accordance with REALpac's White Paper on Funds from          
 Operations. The White Paper adds back to net income items that do not arise
 from operating activities, such as amortization of tenant improvements,    
 deferred income taxes and certain fair value adjustments. Funds from       
 Operations may not be comparable to similar measures used by other         
 entities.                                                                  
                                                                            
                                                                            
Calculation of Net Operating Income All Properties                          
(In thousands of dollars)                                                   
(Unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
                                             Three Months      Three Months 
                                                    Ended             Ended 
       
                                     September 30,     September 30, 
                                                     2012              2011 
----------------------------------------------------------------------------
                                                                            
Revenue                                 $         102,266  $         96,589 
                                                                            
Add:  Amortization of leasing costs                 1,830             1,187 
Less: Property operating expenses                 (25,759)          (23,882)
      Property tax expense                        (19,109)          (18,291)
      Ground Rent                                    (332)             (325)
                                        ------------------------------------
Net operating income                    $          58,896  $         55,278 
                                        ------------------------------------
                                        ------------------------------------
                                                                            
Net Operating Income is not a defined term within IFRS. Net Operating       
 Income may not be comparable to similar measures used by other entities.   

Contacts:
Primaris Retail REIT
John R. Morrison
President & Chief Executive Officer
(416) 642-7860 
Primaris Retail REIT
Louis M. Forbes
Executive Vice President & Chief Financial Officer
(416) 642-7810
 
 
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