IAT Air Cargo Facilities Income Fund (TSX: ACF.UN), a limited purpose trust that owns all of the shares of International Aviation Terminals Inc., which owns and leases air cargo and aviation related buildings on ground-leased land at Canadian airports in Vancouver, Calgary, Edmonton, Saskatoon and Winnipeg, today announced a distribution to unitholders and reported results for the third quarter of 2008.
Operating Results
The Fund's portfolio of properties was approximately 87.4% leased as of September 30, 2008, up 30 basis points since June 30, 2008 and up 60 basis points from December 31, 2007. For the third quarter 2008, total rental revenues were $4.4 million, as compared to $4.1 million for the same quarter in 2007. "IAT had another strong operating quarter," commented Alison M. Hill, IAT's president & CEO. "Occupancy maintained its upward trend and leasing revenue increased both quarter-over-quarter and year-to-date."
Fourth Quarter 2008 Distribution
A distribution of $0.07 per unit is expected to be payable on January 15, 2009 to unitholders of record at the close of business on December 31, 2008. The distribution represents interest income on the subordinated notes of IAT for the fourth quarter 2008, less estimated administrative expenses of the Fund, and was determined by the Trustees of the Fund based on anticipated earnings, cash flow and capital reserves of IAT and anticipated expenses of the Fund. The decrease in the amount of the distribution from the $0.17 per unit distributed in prior quarters is due to extraordinary financial advisory and legal expenses incurred by the Fund in the third quarter of 2008 and a decision by the Trustees not to distribute capital as part of this distribution.
Consolidated Financial Results of the Fund and IAT for the Third Quarter of 2008
For the third quarter of 2008, the Fund reported a consolidated loss of $0.02 per unit, as compared to consolidated earnings of $0.09 per unit for the third quarter of 2007. Consolidated earnings for the nine month period ended September 30, 2008 were $0.18 per unit, as compared to $0.24 per unit for the same period in 2007. Results for the quarter and nine months ended September 30, 2008 decreased from the prior year due to extraordinary financial advisory and legal expenses incurred in responding to a take-over bid. "As a result of one time costs associated with the take-over offer, IAT's earnings were adversely affected despite solid operating results, and subsequently the fourth quarter distribution was reduced," said W. John Dawson, the Fund's chairman and trustee.
Supplemental Earnings Measures
For the third quarter of 2008, earnings before interest, income taxes, amortization, accretion and non-controlling interest's share of earnings ("Adjusted EBITDA") were $1.0 million, or $0.14 per unit, as compared to $1.8 million, or $0.26 per unit, for the same quarter in 2007. For the third quarter of 2008, funds from operations ("FFO") was $0.7 million, or $0.10 per unit, as compared to $1.6 million, or $0.23 per unit, for the same quarter in 2007.
Adjusted EBITDA and FFO are not recognized as appropriate earning measures under Canadian generally accepted accounting principles ("GAAP"), and are not construed as alternatives to earnings determined in accordance with GAAP, but are considered useful supplemental indicators of the Fund's performance.
FrontFour Take-over
During the third quarter 2008, FrontFour Capital Group LLC ("FrontFour") and its affiliates acquired an additional 2,415,553 outstanding units of the Fund as a result of a formal take-over bid. The additional units bring the aggregate of units controlled by FrontFour and its affiliates to 3,098,653 units, or 44.48% of the total outstanding units of the Fund. -- www.cnxmarketlink.com
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