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You're at a fruit market. But, instead of just being able to buy apples at this fruit market, you can also sell fruit.
You're not a farmer, so you come to the market to buy some apples and you see two fruit stands. Fruit Stand A on the left
is buying and selling apples at 50 cents apiece. However, Fruit Stand B on the right is buying and selling apples at 53 cents
apiece. People are buying and selling apples at these two stands all the time, and the price at a stand could change at any
moment. But, while you're there, apples are 50 cents and 53 cents, respectively.
You're a smart person, and you quickly
realize that you can buy apples from Stand A and then sell them across the street to Stand B and make a 3-cent profit. But
you have to do it now; you can't wait. So you buy all the apples at Stand A and then run to sell them all to Stand B.
Congratulations.
You've committed fruit-stand arbitrage.
Arbitrage is exactly that: the selling of the same item between two different
markets to make a profit off the mathematical differences in price. However, it's not apples that are traded--the goods in
question are usually stocks, currencies and other securities. Arbitrage happens when you get a stock, usually a common one
like General Electric that's traded on multiple markets (Japan, Hong Kong, U.S., etc¿). The stock is usually worth within
fractions of a penny the same on each of those markets. However, there are often some minor variations.
People who
participate in arbitrage take advantage of these variations--and make a ton of money doing it. As seen in the fruit stand
example, you can make a "riskless profit" from buying and selling apples between different markets.
There are some
big hedge funds that make almost all their money off arbitrage. But, despite this simple example, arbitrage is mathematically
complex--and involves a good portion of risk if you don't know what you're doing. You probably won't be able to participate
in arbitrage directly, but you can always invest in a mutual fund that does.
Home / Markets / Industries / Finance
Wednesday, May 14, 2008
Retrocom Mid-Market REIT announces first quarter 2008 financial results
Comtex
TORONTO, May 14, 2008 (Canada NewsWire via COMTEX News Network) ----/NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN
SOURCE/
(TSX: RMM.UN) - Retrocom Mid-Market Real Estate Investment Trust (the "REIT") announced today its financial results for the First Quarter of 2008.
<<
2008 Highlights - The REIT has entered into lease transactions with new tenants for 104,049 square feet of space occupying
in 2008. At March 31, 2008, the REIT's occupancy rate has decreased to 90.9% from 91.5% in Q4-2007 mainly as a result of temporary
tenants vacating after the holiday season. While surrendered space may increase prior to the new space occupying, the number
of new tenants already committed with occupancy in 2008 is positive. Recently, the REIT received the five year renewal of
Wal-Mart anchor tenant space at the Chilliwack Mall which will now expire in late 2013. - On April 30, 2008 the REIT announced
a purchase agreement for $55 million of assets in the Greater Toronto Area ("GTA") through the assumption of debt and the
issuance of equity, resulting in a change of effective control of the REIT, (approximately 38% represented by one investor).
In addition, SmartCentres will become property manager for substantially all of the REIT's portfolio. (see April 30, 2008
press release for more details of the transaction which is subject to unitholder approval) - Funds From Operations ("FFO")
were consistent with the first quarter of 2007 at $2.7 million. Increases from the purchase of the remaining 50% of two co-owned
properties, lower debt and trust expenses were offset by FFO in 2007 generated by the discontinued assets. - The REIT's average
cost of debt is 6.0%, consistent with the year end, and its leverage ratio is a conservative 58.3% inclusive of all debentures
and mortgages. At quarter end, the REIT had cash on hand of $13.1 mm and an unused demand line draw capacity of $5 mm. - Net
Operating Income for the quarter was $6.9 million, versus $6.5 million achieved on the same quarter last year. Increased NOI
was mainly from the acquisition of the remaining 50% of two of the REIT's co-owned properties. Actual three Actual three months
ended months ended March 31, March 31, 2008 2007 (unaudited) (unaudited) ($000's) ($000's) ------------------------------
Rental Revenue and Other Income $14,046 $13,334 Property Operating Expenses $7,180 $6,807 ------------------------------ Net
Operating Income $6,866 $6,527 Trust Expenses $854 $993 ------------------------------ Income before Interest, Depreciation
& Amortization $6,012 $5,534 Interest $3,351 $3,646 Depreciation and Amortization $4,545 $4,569 ------------------------------
Loss Before Discontinued Operations ($1,884) ($2,681) Gain from Discontinued Operations $397 $13,474 ------------------------------
Net income (loss) after Discontinued Operations ($1,487) $10,793 ------------------------------ Loss Per Unit (Before Discontinued
Operations) (0.10) (0.14) Funds From Operations(xx) $2,667 $2,712 Funds From Operations: Basic $0.14 $0.15 Funds From Operations
Payout Ratio 104% 102% Full Financial Results will be available on SEDAR (www.sedar.com) as well as the Investors Relations
section of the REIT's website (http://www.rmmreit.com/investor_finance.htm). * Previously reported results have been reclassified
for discontinued operations. (xx) The reconciliation Funds From Operations to Loss after Discontinued Operations are included
in the REIT's MD&A >> The REIT's management considers Funds From Operations to be an indicative measure in evaluating the REIT's performance. The table above, however, includes non-GAAP information that should not be construed as an alternative to net earnings or cash flows from operations and may not be comparable to similar measures presented by other issuers as there is no standardized meaning prescribed by GAAP.
About Retrocom Mid-Market REIT
Retrocom Mid-Market REIT is an Ontario unincorporated open-end real estate investment trust which focuses on owning and acquiring mid-market retail properties in primary and secondary cities across Canada with the objective of producing a geographically diversified portfolio of properties with stable and growing cash flows.
This document may contain forward-looking statements, which although based on Management's best estimates as well as the current operating environment are subject to risks and uncertainties. As such, terms such as "anticipate", "believe", "expect", "plan" or other similar words should be taken as forward-looking statements. As a result of these potential uncertainties, any future results could differ materially from the predictions listed herein. Although Retrocom makes every effort to meet our predictions as listed in this document, we are unable to control certain circumstances such as economic, competitive or commercial real estate conditions.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of a prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under securities laws of any such state, province or other jurisdiction. The Units of the Retrocom Mid-Market REIT have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered in the United States absent registration or an application for exemption from the registration requirements of U.S. securities laws.
SOURCE: Retrocom Mid-Market Real Estate Investment Trust
David Fiume, Chief Executive Officer, Tel: (416) 741-7999, Fax: (416) 741-7993, E-mail: dfiume@rmmreit.com
Copyright (C) 2008 CNW Group. All rights reserved.
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