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CEO'S Message

Dennis Mills, Vice-Chairman and Chief Executive Officer (CEO), MI Developments (MID) 2008 was the sixth consecutive year in which MI Developments' revenues have grown on a year-over-year basis. Despite the global economic downturn that intensified in the latter part of the year and the significant difficulties experienced by the automotive industry throughout 2008, MID continues to achieve strong financial results, with a secure asset base, steady cash flow and substantially less leverage than our industry peers. At the same time, we are actively working to diversify our portfolio to achieve a less concentrated mix of properties and tenants, expand our development activities and seek new opportunities for growth outside of the Magna family.



2008 Highlights

The following are some of the key highlights from the past year: 

  • Our funds from operations were $178 million, an increase of 25% over 2007. On a per share basis, our funds from operations were $3.82, up from $2.96 in 2007.

  • We posted rental revenues of $179 million, an increase of 7% over 2007.
  • We had interest and other income from our secured loans to Magna Entertainment of $40.6 million, up from $22.5 million in 2007.
  • We completed eight Magna-related expansion projects and one third party expansion project, which added an aggregate of 154 thousand square feet of leaseable area, bringing the total square footage of our income-producing properties to 27.3 million.
  • We received approval from the Board of County Commissioners for Palm Beach County, Florida for the rezoning of our Palm Meadows property to allow for over 275 single family homes.
  • We continued to expand our customer base, including by signing long-term leases with affiliates of Cardinal Health and Siemens Canada.

Magna Entertainment

Since the time that MID became a public company, we have had a majority equity interest in Magna Entertainment, a separate public company. MID has made secured loans to MEC because we believed, and continue to believe, that MEC has very valuable lands under and adjacent to its racetracks. However, over the past several years, MEC has experienced significant financial challenges. Despite our efforts to develop a viable reorganization for MEC, in early March of this year, MEC filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in U.S. Bankruptcy Court. To protect the value of our secured loans, MID agreed to provide a debtor-in-possession financing facility to MEC so that MEC can continue its operations through the Chapter 11 proceedings and undertake an orderly process to sell its assets and repay debt, including the $372 million owed to MID at the time of MEC's filing. In addition, MID has taken steps to encourage a fair, transparent and robust auction process for MEC's assets. We believe that these steps will preserve the value of our secured loans to MEC and create value for our shareholders.

Looking Ahead

MID's high quality rental portfolio, sustainable income stream and strong balance sheet provide us with a solid basis for continued growth. One of our goals for 2009 is to restore our historically close relationship with Magna International, which we believe is well-positioned to win market share globally once the automotive industry recovers. Going forward, we will also more actively pursue a long-term strategy of identifying real estate opportunities outside of the automotive industry, where we can leverage our significant experience and expertise in property acquisition, development and management, as well as our financial flexibility and international capabilities. We intend to continue to seek new tenants and uses for industrial properties that become vacant and to look to develop our sizeable international land bank for both industrial and other purposes.

Despite the economic challenges confronting us in the year ahead, we remain optimistic about our future prospects. We have a proven track record of developing and constructing projects on time and on budget and we look forward to continuing to serve Magna's needs while cultivating new relationships and partnerships. By strengthening our core portfolio and expanding our horizons, we are confident in our ability to continue growing our business for many years to come. In closing, we wish to thank all of our major stakeholders and, in particular, our employees, whose dedication and talent are the cornerstone of our company, as well as our tenants, who have entrusted us with their business.