TORONTO, Jan. 15 /CNW/ - Pizza Pizza Royalty Income Fund (the "Fund") (TSX: PZA.UN) today announced an increase in its monthly cash distributions to Unitholders. This is the fourth distribution increase since the Fund's 2005, initial public offering.
For the period January 1 to January 31, 2007, the monthly distribution per unit will increase 2.8% to $0.073 from $0.071. It will be paid on February 15, 2007 to Unitholders of record at the close of business on January 31, 2007.
Business activities underlying the Fund continued to be solid in the fourth quarter ended December 31, 2006 as Pizza Pizza Limited experienced a 5% same-store sales growth over the same period last year. System Sales of the Pizza Pizza restaurants in the Royalty Pool for the fourth quarter were $93.9 million and the payout ratio was 91%. For the year ended December 31, 2006 the Fund's payout ratio was 95%.
A percentage of the 2006 distributions received by Unitholders will be a tax-deferred return of capital. The return of capital percentage is estimated to be 53% with the remaining 47% being taxable.
About the Fund, a publicly-traded entity
The Fund is a limited purpose, open-ended trust established under the laws of Ontario to indirectly acquire the trademarks and trade names used by Pizza Pizza Limited ("Pizza Pizza") in its restaurants. The trademarks were licensed to Pizza Pizza in 2005 for 99 years, for which Pizza Pizza pays the Fund a royalty equal to 6% of the system sales of its Pizza Pizza restaurants in the Royalty Pool. As of January 1, 2007, there were 531 Pizza Pizza restaurants in the Royalty Pool.
A key attribute of the Fund is that it is based on top-line, system sales of the Royalty Pool restaurants and not on the profitability of either Pizza Pizza or the restaurants in the Royalty Pool. The success of the Fund depends primarily on the ability of Pizza Pizza to maintain and increase system sales of the Royalty Pool and to meet its royalty obligations.
The Fund's trust units are listed on the Toronto Stock Exchange under the symbol PZA.UN.
About Pizza Pizza Limited, the privately-owned operating company
Pizza Pizza Limited, a privately-held Canadian corporation, is one of Canada's most successful operators in the quick service restaurant industry. Founded in 1967, Pizza Pizza is guided by a mission to provide the "best food, made especially for you" and a focus on quality ingredients, customer service, community contribution and continual innovation.
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