Homburg Invest Inc. has released the September 30, 2005 financial results prepared under both Canadian Generally Accepted Accounting Principles (CDN. GAAP) and International Financial Reporting Standards (IFRS).
The results noted under both IFRS and Canadian GAAP reflect the continued growth of the property revenue and the property net operating income from its operations.
The third quarter of 2005 gives the full impact on a quarterly basis of the German/Netherlands transaction completed on June 1, 2005. Property revenue amounted to $17.2 million in the quarter compared to $9.3 million in 2004, an increase of 84%, while property net operating income increased by 118% between the third quarter of 2004 and the third quarter of 2005. Almost all of the 11 properties acquired in Germany and The Netherlands contain triple net leases which allow most, if not all, of the operating costs to be recovered from the tenant.
In the third quarter of 2004, 4 properties were appraised and the increases in value were reflected on the IFRS September 30, 2004 financial statements. The gain recognized in the quarter amounted to $19.9 million or $16.3 million after taking into account the full tax impact of the appraisal increase. When the unrealized valuation change is excluded from the calculations of net earnings, we see that net earnings excluding the unrealized valuation change amounted to $3.7 million in 2005 compared to $1.0 million in 2004. The increase in net earnings on a comparable basis was 270% and allowed the earnings per share to increase from $0.02 to $0.04 per share on a basic and fully diluted basis.
Another positive result from the operations in the third quarter of 2005 is that funds from operations ("FFO") which many consider to be the best indicator of the operating results of public real estate company, amounted to $5.4 million compared to $2.0 million in 2004, an increase of 173% over the same period last year. The resulting basic funds from operations per share amounted to $0.07 per share compared to $0.04 per share in 2004.
For the nine month period ended September 30, 2005, the property revenue growth was up 40% over 2004, the property net operating income increased by 60% to $28.5 million and net earnings excluding unrealized valuation changes amounted to $7.7 million compared to $2.9 million in 2004 an increase of 167% over the comparable nine month period in 2005. Earnings per share excluding unrealized valuation changes amounted to $0.14 per share in 2005 compared to $0.06 per share in 2004 for the nine month period.
The Company's total assets at September 30, 2005 was $909.4 million for IFRS purposes, up from $387.7 million at December 31, 2004.
The Canadian GAAP results for the third quarter of 2005 very closely resemble the IFRS operations when one excludes the third quarter 2004 IFRS appraisal increase reflected under unrealized valuation changes and the adjustment for depreciation. Property income increased 86% to $17.4 million in 2005, up from $9.3 million in 2004 as a direct result of the recognition of the full quarter revenue stream from the German/Netherlands properties. Property net operating income was $14.2 million up from $6.4 million, an increase of 122%. The realized gain on sale of property of $0.9 million related to the sale of the Mill Creek property in July 2005. The above operations resulted in net earnings of $1.7 million for the quarter, up 57% from $1.1 million in the same quarter in 2004. Funds from operations for the same periods were up 111% to $4.2 million in 2005 compared to $2.0 million in 2004.
On a year-to-date reporting, property revenue was $39.7 million compared to $28.1 million for the first nine months of 2004, an increase of 42%. Property net operating income increased to $29.5 million, up 60% over the $18.5 million earned in 2004. The year-to-date realized gain on sale of property of $15.1 million reflect principally the gain on the Vintage properties which took place in the second quarter of 2005. The result on net earnings is significant for th