STELLARTON, NS, May 9, 2013 /CNW/ – Crombie Real Estate Investment Trust
("Crombie") (TSX: CRR.UN) is pleased to report strong results for the
first quarter ended March 31, 2013.
First Quarter 2013 Highlights (In thousands of CAD dollars, except per unit amounts and as otherwise
noted)
-
Strong 9.5% growth in Funds From Operations ("FFO") per unit for the
three months ended March 31, 2013 ("Q1") as FFO per unit fully diluted
("FD") was $0.28 per unit compared to $0.25 per unit FD for the same
period in 2012. Q1 FFO grew 33.3% over the same period in 2012 ($25,721
vs $19,301) with the FFO payout ratio of 79.5% compared to 88.9% for
the same period in 2012.
-
Strong 10.1% growth in Q1 Adjusted Funds From Operations ("AFFO") per
unit as AFFO per unit FD was $0.23 per unit compared to $0.21 per unit
FD for the same period in 2012. AFFO grew 35.0% over the same period in
2012 ($21,606 vs $16,007) for the three months ended March 31, 2013
with the AFFO payout ratio of 94.6% compared to 107.2% for the same
period in 2012.
- $164 million in acquisitions of high quality grocery and drug store
anchored or other retail properties from third parties, Sobeys and
Empire during Q1 -
Acquisition of a grocery anchored retail property from Sobeys for $21
million subsequent to the quarter end, bringing year to date
acquisitions to $185 million. -
Replacement of $92 million of short term debt with $135 million of 11.3
year average term mortgages at a 4.22% average interest rate.
-
Portfolio fair value reaches $2.8 billion – one of the largest retail
REITs in Canada.
-
Same Asset Cash Net Operating Income ("NOI") growth of 1.8% in Q1 over
Q1 2012.
-
Property revenue of $71,006, an increase of $11,559 or 19.4% over the
$59,447 for Q1 2012.
-
Solid occupancy on a committed basis of 93.5% compared with 92.7% at Q1
2012.
-
Crombie completed leasing activity on 243,000 square feet during the
quarter, which represents approximately 20.7% of its 2013 expiring
lease square footage.
-
Lease renewals during the quarter of 119,000 square feet at an average
rate of $16.37 per square foot, an increase of 2.2% over the expiring
lease rate. Lease renewals of 11,000 square feet for 2014 lease
expiries at an increase of 8.6% over the expiring lease rate.
-
Weighted average lease term of 10.3 years and weighted average mortgage
term of 7.7 years; amongst the longest and most defensive in the REIT
industry.
-
Weighted average interest rate on mortgages reduced to 5.09% from 5.21%
at December 31, 2012 and 5.59% at March 31, 2012. Strong 2.82 times
interest coverage.
-
Debt to Gross Book Value (fair value basis) of 48.3% (53.0% on a cost
basis).
Donald E. Clow, FCA, President and CEO commented: "We are pleased with
our cash flow growth and operating performance, as well as with the
solid growth of Crombie's high quality retail portfolio and platform
across Canada during the first few months of 2013. With the third party
acquisitions of four grocery and drug store anchored shopping centres
in Alberta for $132 million and the acquisition of two grocery anchored
plazas and two other retail properties in Atlantic Canada and Quebec
for $53 million through our strategic relationship with Sobeys and
Empire, we are leveraging our strengths and improving our geographic
and tenant diversification. The fair value of Crombie's assets now
exceeds $2.8 billion and our market capitalization exceeds $1.35
billion at the end of Q1."
Financial Highlights
Crombie's key financial metrics for the first quarter ended March 31,
2013 are as follows:
| (In thousands of CAD dollars, except per unit amounts and as otherwise noted) |
Three Months Ended March 31, | |||
| 2013 | 2012 | |||
| Property revenue | $ | 71,006 | $ | 59,447 |
| Operating income attributable to Unitholders | $ | 12,959 | $ | 9,563 |
| Basic and diluted operating income attributable to Unitholders per unit | $ | 0.14 | $ | 0.13 |
| FFO | $ | 25,721 | $ | 19,301 |
| FFO per unit – basic | $ | 0.28 | $ | 0.26 |
| FFO per unit- diluted | $ | 0.28 | $ | 0.25 |
| FFO payout ratio (%) | 79.5% | 88.9% | ||
| AFFO | $ | 21,606 | $ | 16,007 |
| AFFO per unit – basic | $ | 0.24 | $ | 0.22 |
| AFFO per unit – diluted | $ | 0.23 | $ | 0.21 |
| Distributions per unit | $ | 0.22 | $ | 0.22 |
| AFFO payout ratio (%) | 94.6% | 107.2% | ||
The increase in FFO and AFFO for the quarter ended March 31, 2013 was
primarily due to the significant acquisition activity during 2013 and
2012.
The table below presents a summary of financial performance for the
quarter ended March 31, 2013 compared to the same period in fiscal
2012.
| (In thousands of CAD dollars, except per unit amounts and as otherwise noted) |
Three Months Ended March 31, | ||||
| 2013 | 2012 | ||||
| (As Restated) | |||||
| Property revenue | $ | 71,006 | $ | 59,447 | |
| Property operating expenses | 26,818 | 23,502 | |||
| Property NOI | 44,188 | 35,945 | |||
| NOI margin percentage | 62.2% | 60.5% | |||
| Other items: | |||||
| Lease terminations | 6 | 113 | |||
| Depreciation and amortization | (11,122) | (8,525) | |||
| General and administrative expenses | (3,206) | (2,520) | |||
| Operating income before finance costs and taxes | 29,866 | 25,013 | |||
| Finance costs – operations | (16,807) | (15,750) | |||
| Operating income before taxes | 13,059 | 9,263 | |||
| Taxes – deferred | (100) | 300 | |||
| Operating income attributable to Unitholders | 12,959 | 9,563 | |||
| Finance costs – distributions to Unitholders | (20,438) | (17,167) | |||
| Finance costs – change in fair value of financial instruments | 617 | 1,860 | |||
| Decrease in net assets attributable to Unitholders | $ | (6,862) | $ | (5,744) | |
Growth Highlights
| GLA |
Initial Purchase Price |
Occupancy Rate |
Key Tenants | |||||
| Acquisitions in Q1 | ||||||||
| Clearwater Landing | Fort McMurray | AL | 143,000 | $ | 62,757 | 100% | Sobeys, The Brick, Mark's Work Warehouse, Sport Chek | |
| West Lethbridge Towne Centre | Lethbridge | AL | 105,000 | 37,869 | 100% | Safeway | ||
| Namao Centre | Edmonton | AL | 34,000 | 14,544 | 85% | Shoppers Drug Mart | ||
| West Highland Towne Centre | Lethbridge | AL | 29,000 | 16,720 | 95% | Shoppers Drug Mart | ||
| Dartmouth Crossing | Halifax | NS | 45,000 | 15,450 | 100% | Empire Theatres | ||
| Findlay Blvd. | Riverview | NB | 66,000 | 14,650 | 100% | Sobeys | ||
| Riviere-du-Loup | Riviere-du-Loup | QC | 9,000 | 2,455 | 100% | Societe des alcools du Quebec | ||
| 431,000 | 164,445 | |||||||
| Acquisition subsequent to Q1 | ||||||||
| Beaumont Shopping Centre | Beaumont | AL | 59,000 | 20,875 | 100% | Sobeys | ||
| Completed to date in 2013 | 490,000 | $ | 185,320 | |||||
These acquisitions continue Crombie's growth strategy of acquiring high
quality grocery or drug store anchored retail properties in the top 30
markets or stable or growing trade areas in Canada.
Operating Highlights
| Three Months Ended March 31, | ||||||
| (In thousands of CAD dollars) | 2013 | 2012 | Variance | |||
| Property NOI | $ | 44,188 | $ | 35,945 | $ | 8,243 |
| Non-cash straight-line rent | (1,359) | (1,021) | (338) | |||
| Non-cash tenant incentive amortization | 1,970 | 1,513 | 457 | |||
| Property cash NOI | 44,799 | 36,437 | 8,362 | |||
| Acquisition, disposition and redevelopment property cash NOI | 8,497 | 792 | 7,705 | |||
| Same-asset cash NOI | $ | 36,302 | $ | 35,645 | $ | 657 |
Property NOI, on a cash basis, excludes straight-line rent recognition
and amortization of tenant incentive amounts. The 1.8% increase in
same-asset cash NOI for the quarter ended March 31, 2013 is primarily
the result of increased average rent per square foot from leasing
activity during the past 12 months, completed land use intensification
development projects and improved recovery rates.
Crombie believes that cash NOI is a better measure of AFFO
sustainability and same-asset property performance.
Capital Highlights
| Three Months Ended March 31, | ||
| 2013 | 2012 | |
| Weighted Average Mortgage Term | 7.7 years | 7.7 years |
| Weighted Average Interest Rate | 5.09% | 5.59% |
| Debt to Gross Book Value (Fair value) | 48.3% | 47.6% |
| Debt to Gross Book Value (Cost) | 53.0% | 49.1% |
| Interest Coverage | 2.82 | 2.49 |
| Debt Service Coverage | 1.86 | 1.71 |
Crombie's objectives when managing its capital structure are to optimize
weighted average cost of capital; maintain financial flexibility
through access to long-term debt and equity markets; and maintain ample
liquidity. In pursuit of these objectives, Crombie utilizes staggered
debt maturities, optimizes its ongoing exposure to floating rate debt,
pursues a range of fixed rate secured and unsecured debt and maintains
sustainable payout ratios. Crombie has an authorized floating rate
revolving credit facility of up to $285,000, subject to available
borrowing base of which $145,000 was drawn as at March 31, 2013, and an
additional $11,329 encumbered by outstanding letters of credit,
resulting in significant available liquidity. On February 22, 2013,
Crombie increased the maximum principal amount of its revolving credit
facility from $200,000 to $285,000 in conjunction with property
acquisitions on that date.
Debt to Gross Book Value on a fair value basis is 48.3% (including
convertible debentures) at March 31, 2013, compared to 47.6% at March
31, 2012.
General and Administrative Expenses
General and administrative expenses for the quarter ended March 31, 2013
as a percentage of property revenue, increased by 0.3% from 4.2% to
4.5% when compared to the same period in 2012.
Definition of Non-GAAP Measures
Certain financial measures included in this news release do not have
standardized meaning under IFRS and therefore may not be comparable to
similarly titled measures used by other publicly traded entities.
Crombie includes these measures because it believes certain investors
use these measures as a means of assessing Crombie's financial
performance.
- Property NOI is property revenue less property expenses.
-
Property Cash NOI is Property NOI adjusted to remove non-cash
straight-line rent and tenant incentive amortization. -
Debt is defined as bank loans plus investment property debt and
convertible debentures. -
Gross book value means, at any time, the book value of the assets of
Crombie and its consolidated subsidiaries plus deferred financing
charges, accumulated depreciation and amortization in respect of
Crombie's properties (and related intangible assets) and cost of any
below-market component of properties less (i) the amount of any
receivable reflecting interest rate subsidies on any debt assumed by
Crombie and (ii) the amount of deferred income tax liability arising
out of the fair value adjustment in respect of the indirect
acquisitions of certain properties. Gross book value (fair value basis)
differs from gross book value as defined above in that it includes
Crombie's investment properties at fair value and excludes the book
value of investment properties and related accumulated depreciation and
amortization as well as intangible assets, tenant incentives and
accumulated straight-line rent receivable. -
EBITDA is calculated as property revenue, adjusted to remove the impact
of amortization of tenant incentives, less property expenses and
general and administrative expenses. -
FFO is calculated as Increase (decrease) in net assets attributable to
Unitholders (computed in accordance with IFRS), excluding gains (or
losses) from sales of depreciable real estate and extraordinary items,
plus depreciation and amortization expense, deferred income taxes,
finance costs – distributions to Unitholders and after adjustments for
equity accounted entities and non-controlling interests. -
AFFO is defined as FFO adjusted for non-cash amounts affecting revenue,
amortization of effective swap agreements, less maintenance capital
expenditures, maintenance tenant incentives and deferred leasing costs,
and the settlement of effective interest rate swap agreements.
About Crombie
Crombie is an open-ended real estate investment trust established under,
and governed by, the laws of the Province of Ontario. Crombie currently
owns a portfolio of 176 retail and office properties across Canada,
comprising approximately 14.5 million square feet with a strategy to
own and operate a portfolio of primarily high quality grocery and drug
store anchored shopping centers and freestanding stores in the top 30
markets or stable or growing trade areas in Canada.
This news release contains forward-looking statements that reflect the
current expectations of management of Crombie about Crombie's future
results, performance, achievements, prospects and opportunities.
Wherever possible, words such as "may", "will", "estimate",
"anticipate", "believe", "expect", "intend" and similar expressions
have been used to identify these forward-looking statements. These
statements reflect current beliefs and are based on information
currently available to management of Crombie. Forward-looking
statements necessarily involve known and unknown risks and
uncertainties. A number of factors, including those discussed in the
2012 annual Management Discussion and Analysis under "Risk Management",
could cause actual results, performance, achievements, prospects or
opportunities to differ materially from the results discussed or
implied in the forward-looking statements. These factors should be
considered carefully and a reader should not place undue reliance on
the forward-looking statements. There can be no assurance that the
expectations of management of Crombie will prove to be correct. Readers
are cautioned that such forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from these statements. Crombie can give no assurance
that actual results will be consistent with these forward-looking
statements.
Crombie's consolidated financial statements and management's discussion
and analysis for the three months ended March 31, 2013 can be found on
Crombie's web site at www.crombiereit.com or on the SEDAR web site for Canadian regulatory filings at www.sedar.com.
Conference Call Invitation
Crombie will provide additional details concerning its first quarter
ended March 31, 2013 results on a conference call to be held Thursday,
May 9, 2013, at 12:00 p.m. Eastern time. To join this conference call
you may dial (647) 427-7450 or (888) 231-8191. You may also listen to a
live audio web cast of the conference call by visiting Crombie's
website located at www.crombiereit.com. Replay will be available until midnight May 23, 2013, by dialling
(416) 849-0833 or (855) 859-2056 and entering pass code 45221702, or on
the Crombie website for 90 days after the meeting.