STELLARTON, NS, Feb. 22, 2012 /CNW/ – Crombie Real Estate Investment
Trust ("Crombie") (TSX: CRR.UN) is pleased to report its results for
the fourth quarter and fiscal year ended December 31, 2011.
2011 Highlights
-
Property revenue for the quarter ended December 31, 2011 of $58.7
million; an increase of $3.0 million or 5.4% over the $55.7 million for
the quarter ended December 31, 2010 and for the year ended December 31,
2011 was $226.1 million; an increase of $16.7 million or 8.0% over the
year ended December 31, 2010. -
Same-asset cash net operating income ("NOI") for the quarter ended
December 31, 2011 of $27.2 million; an increase of $0.4 million or
1.6%, compared to $26.8 million for the quarter ended December 31, 2010
and for the year ended December 31, 2011, same-asset cash NOI of $118.0
million; an increase of $1.4 million or 1.2% over the same period in
2010. -
Property leased space on a committed basis was 94.7% at December 31,
2011 compared with 95.4% at September 30, 2011. Actual occupancy at
December 31, 2011 was 93.3% compared with 94.7% at September 30, 2011
and 95.8% at December 31, 2010. -
Average rent per square foot from year to date leasing activity
increased to $15.71 compared to an expiring rent per square foot of
$14.15, an increase of 11.0%. -
Crombie completed new leasing and renewal activity on 776,000 square
feet of GLA during the year ended December 31, 2011, which represents
approximately 71.1% of the 2011 expiring lease square footage. The
primary shortfall arose from the departure of Nova Scotia Power Inc. in
Barrington Tower. This space will be occupied by new tenants lead by
the Nova Scotia Department of Health by September 2012. -
Funds from operations ("FFO") for the quarter ended December 31, 2011
was $0.27 per unit (payout ratio 83.9%) compared to $0.27 per unit
(payout ratio 81.6%) for the same period in 2010. For the year ended
December 31, 2011, FFO was $1.09 per unit (payout ratio 82.3%) compared
to $1.06 per unit (payout ratio 84.0%) for the same period in 2010. -
Adjusted funds from operations ("AFFO") for the quarter ended December
31, 2011 was $0.23 per unit (payout ratio 100.3%) compared to $0.23 per
unit (payout ratio 97.6%) for the same period in 2010. For the year
ended December 31, 2011, AFFO was $0.88 per unit (payout ratio 102.1%)
compared to $0.87 per unit (payout ratio 102.4%) for the same period in
2010. Excluding the impact of the second quarter settlement of the
delayed start interest rate swap, AFFO for the year ended December 31,
2011 was $0.91 per unit (payout ratio 99.2%). -
Crombie renewed its $150.0 million revolving credit facility at the end
of the second quarter for a three year period.
Commenting on the annual results, Donald E. Clow, FCA, President and
Chief Executive Officer stated: "We are pleased with the progress
achieved during 2011 towards our strategic plan of building a high
quality retail portfolio of primarily grocery anchored propertiesacross Canada. We leveraged the sustainable competitive advantage of
our relationship with Sobeys, to acquire $147 million of properties (8%
growth) and focused on the redevelopment and improvement of our
portfolio in 2011.
AFFO per unit for 2011 increased 4.6% to $0.91 per unit as compared to
$0.87 per unit in 2010, excluding the settlement of a forward rate
interest swap agreement in the second quarter.
Operating metrics remained stable with same asset cash NOI growth of
1.2% for the year. Our balance sheet continues to be strong with our
debt to gross book value finishing the year at 52.5% and $98.5 million
of our Revolving Credit Facility available at December 31, 2011.
Despite an uncertain global economy throughout 2011, we are pleased that
Crombie REIT was able to provide a total unitholder return of over 17%
for the year ended December 31, 2011".
The table below presents a summary of financial performance for the
quarter and year ended December 31, 2011, compared to the same periods
in fiscal 2010. All amounts are presented in accordance with
International Financial Reporting Standards ("IFRS").
| (In millions of CAD dollars, except per unit amounts) | Three months ended Dec. 31, 2011 |
Three months ended Dec. 31, 2010 |
Year ended Dec. 31, 2011 |
Year ended Dec. 31, 2010 |
|
| Property revenue | $58.682 | $55.693 | $226.138 | $209.437 | |
| Property operating expenses | 22.528 | 21.670 | 84.202 | 79.300 | |
| Property NOI | 36.154 | 34.023 | 141.936 | 130.137 | |
| NOI margin percentage | 61.6% | 61.1% | 62.8% | 62.1% | |
| Other items: | |||||
| Lease terminations | 0.005 | — | 0.168 | 0.347 | |
| Depreciation and amortization | (8.302) | (7.949) | (31.387) | (31.246) | |
| General and administrative expenses | (2.806) | (1.609) | (10.654) | (9.762) | |
| Operating income before financing costs and income taxes | 25.051 | 24.465 | 100.063 | 89.476 | |
| Finance costs – operations | (14.978) | (15.532) | (62.148) | (58.410) | |
| Operating income before income taxes | 10.073 | 8.933 | 37.915 | 31.066 | |
| Income taxes – deferred | 0.600 | 0.300 | (0.300) | 1.000 | |
| Operating income attributable to Unitholders | 10.673 | 9.233 | 38.215 | 32.066 | |
| Finance costs – distributions to Unitholders | (16.530) | (14.702) | (61.283) | (56.090) | |
| Decrease in net assets attributable to Unitholders | $(5.857) | $(5.469) | $(23.068) | $(24.024) | |
| Operating income attributable to Unitholders per Unit, Basic and Diluted |
$0.15 | $0.14 | $0.56 | $0.51 | |
Property NOI – Cash Basis
|
(In millions of CAD dollars) |
Three months ended Dec. 31, 2011 |
Three months ended Dec. 31, 2010 |
Year ended Dec. 31, 2011 |
Year ended Dec. 31, 2010 |
|
| Property NOI | $36.154 | $34.023 | $141.936 | $130.137 | |
| Non-cash tenant incentive amortization | 1.333 | 1.126 | 5.169 | 4.489 | |
| Non-cash straight-line rent | (1.004) | (0.734) | (3.619) | (3.346) | |
| Property cash NOI | 36.483 | 34.415 | 143.486 | 131.280 | |
| Acquisition, disposition and redevelopment property cash NOI | 9.285 | 7.651 | 25.483 | 14.636 | |
| Same-asset property cash NOI | $27.198 | $26.764 | $118.003 | $116.644 | |
Property NOI, on a cash basis, excludes straight-line rent recognition
and tenant incentive amortization amounts. The 1.2% increase in
same-asset cash NOI for the year ended December 31, 2011 is primarily
the result of increased average rent per square foot resulting from
2011 leasing activity, reduced in part by the lower occupancy rate in
2011.
Crombie believes that cash NOI is a better measure of AFFO
sustainability and same-asset property performance.
Same-Asset Property NOI
|
(In millions of CAD dollars) |
Three months ended Dec. 31, 2011 |
Three months ended Dec. 31, 2010 |
Year ended Dec. 31, 2011 |
Year ended Dec. 31, 2010 |
|
| Same-asset property revenue | $48.339 | $47.681 | $188.633 | $185.194 | |
| Same-asset property operating expenses | 19.278 | 19.003 | 72.223 | 69.906 | |
| Same-asset property NOI | $29.061 | $28.678 | $116.410 | $115.288 | |
| Same-asset NOI margin % | 60.1% | 60.1% | 61.7% | 62.3% | |
Same-asset property NOI increased slightly over Q4 of 2010. Same-asset
property revenue of $48.3 million for the quarter ended December 31,
2011 increased by 1.4% compared to the same quarter in 2010. The
property revenue variance was impacted by increases in rental rates
offset by lower occupancy rates. Same-asset property revenue of $188.6
million for the year ended December 31, 2011 was 1.9% higher than the
year ended December 31, 2010 due to increased base rent as a result of:
lease renewal rates exceeding expiring lease rates; offset in part by
lower occupancy rates; and higher recoverable property expenses.
Same-asset property operating expenses of $19.3 million for the quarter
ended December 31, 2011 were marginally higher than the quarter ended
December 31, 2010 due primarily to increased recoverable property
taxes. Same-asset property expenses of $72.2 million for the year
ended December 31, 2011 increased by 3.3% from the year ended December
31, 2010 due primarily to increased recoverable property taxes and snow
clearing costs offset in part by reduced non-recoverable costs.
Acquisition, Disposition and Redevelopment Property NOI
|
(In millions of CAD dollars) |
Three months ended Dec. 31, 2011 |
Three months ended Dec. 31, 2010 |
Year ended Dec. 31, 2011 |
Year ended Dec. 31, 2010 |
|
| Acquisition, disposition and redevelopment property revenue | $10.343 | $8.012 | $37.505 | $24.243 | |
| Acquisition, disposition and redevelopment property expenses | 3.250 | 2.667 | 11.979 | 9.394 | |
| Acquisition, disposition and redevelopment property NOI | $7.093 | $5.345 | $25.526 | $14.849 | |
| Acquisition, disposition and redevelopment NOI margin % | 68.6% | 66.7% | 68.1% | 61.3% | |
For the three months and year ended December 31, 2011, the acquisition
and redevelopment property results include the retail properties
acquired in December, September and May 2011, the 20 retail properties
acquired during 2010, the property disposed of in October 2011 and the
operating results of six properties that were under redevelopment.
General and Administrative Expenses
General and administrative expenses for the quarter ended December 31,
2011 increased by 1.9% from 2.9% to 4.8% as a percentage of property
revenue, when compared to the same period in 2010. Salaries and
benefits in the fourth quarter of 2010 were favourably impacted by the
recognition of actuarial gains on Crombie's benefit plans.
General and administrative expenses as a percentage of property revenue
remained virtually unchanged for the year ended December 31, 2011 when
compared to the same period in 2010.
Finance Costs – Operations
|
(In millions of CAD dollars) |
Three months ended Dec. 31, 2011 |
Three months ended Dec. 31, 2010 |
Year ended Dec. 31, 2011 |
Year ended Dec. 31, 2010 |
| Same-asset finance costs | $10.673 | $11.610 | $45.083 | $46.518 |
| Acquisition, disposition and redevelopment finance costs | 2.573 | 2.054 | 9.717 | 5.306 |
| Amortization of effective swaps and deferred financing charges | 1.732 | 1.868 | 7.348 | 6.586 |
| Finance costs – operations | $14.978 | $15.532 | $62.148 | $58.410 |
Same-asset finance costs for the year ended December 31, 2011 have
decreased by $1.4 million or 3.1% due to: conversion of Series B
Convertible Debentures; lower interest rate on the Revolving Credit
Facility; and, mortgage maturities. Growth in acquisition and
redevelopment finance costs is consistent with Crombie's significant
acquisition activity in 2011 and 2010.
FFO and AFFO
Crombie's FFO and AFFO had the following results for the fourth quarter
and year ended December 31, 2011 and 2010:
|
Three months ended Dec. 31, |
Variance | |||
| (In millions of CAD dollars, except per unit amounts) | 2011 | 2010 | $ | % |
| FFO | $19.708 | $18.008 | $1.700 | 9.4% |
| FFO Per Unit – Basic | $0.27 | $0.27 | — | — |
| FFO Per Unit – Diluted | $0.26 | $0.26 | — | — |
| FFO Payout ratio | 83.9% | 81.6% | (2.3)% | |
| AFFO | $16.486 | $15.059 | $1.427 | 9.5% |
| AFFO Per Unit – Basic | $0.23 | $0.23 | — | — |
| AFFO Per Unit – Diluted | $0.22 | $0.22 | — | — |
| AFFO Payout ratio | 100.3% | 97.6% | (2.7)% | |
The increase in FFO for the three months ended December 31, 2011 of $1.7
million was primarily due to growth in acquisition property NOI, net of
finance cost increases related to the acquisitions.
AFFO for the three months ended December 31, 2011 of $16.5 million was
an increase of $1.4 million over the same period in 2010 due primarily
to the improved FFO results.
| Year ended Dec. 31, | Variance | |||
| (In millions of CAD dollars, except per unit amounts) | 2011 | 2010 | $ | % |
| FFO | $74.471 | $66.801 | $7.670 | 11.5% |
| FFO Per Unit – Basic | $1.09 | $1.06 | $0.03 | 2.8% |
| FFO Per Unit – Diluted | $1.04 | $1.01 | $0.03 | 3.0% |
| FFO Payout ratio | 82.3% | 84.0% | 1.7% | |
| AFFO | $60.051 | $54.783 | $5.268 | 9.6% |
| AFFO Per Unit – Basic | $0.88 | $0.87 | $0.01 | 1.1% |
| AFFO Per Unit – Diluted | $0.86 | $0.85 | $0.01 | 1.2% |
| AFFO Payout ratio | 102.1% | 102.4% | 0.3% | |
| AFFO Payout ratio – Adjusted for Q2 2011 swap settlement | 99.2% | 102.4% | 3.2% | |
The increase in FFO for the year ended December 31, 2011 was primarily
due to growth in same-asset NOI and higher NOI from the 2011 and 2010
acquisition properties offset in part by higher finance costs related
to those acquisitions.
AFFO for the year ended December 31, 2011 was $60.1 million, an increase
of $5.3 million or 9.6% over the same period in 2010, due primarily to
the improved FFO results, offset in part by the negative impact of
settlement of the swap agreement. During the second quarter of 2011,
Crombie settled the last of its forward rate interest rate swaps for
$1.7 million. Excluding the swap settlement, AFFO Per Unit – Basic
would have been $0.91 and AFFO Payout ratio would have been 99.2%; a
significant improvement over the 102.4% payout ratio for the same
period in 2010.
Liquidity and Financings
Crombie's objectives when managing its capital structure are to optimize
weighted average cost of capital; maintain financial flexibility and
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
and maintains sustainable payout ratios. Crombie has an authorized
floating rate revolving credit facility of up to $150 million, of which
$40.0 million was drawn as at December 31, 2011, and an additional
$11.5 million encumbered by outstanding letters of credit, resulting in
significant available liquidity.
Debt to gross book value is 52.5% (including convertible debentures) at
December 31, 2011 compared to 54.8% at December 31, 2010. This leverage
ratio is below the maximum 60%, or 65% including convertible
debentures, permitted pursuant to Crombie's Declaration of Trust. On a
long-term basis, Crombie intends to maintain overall indebtedness,
including convertible debentures, in the range of 50% to 60% of gross
book value, depending upon Crombie's future acquisitions and financing
opportunities.
Crombie's interest and debt service coverage for the year ended December
31, 2011 were 2.49 times EBITDA and 1.79 times EBITDA respectively.
This compares to 2.41 times EBITDA and 1.74 times EBITDA respectively
for the year ended December 31, 2010.
Definition of Non-IFRS 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 commercial 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. -
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,
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. The trust
invests in income-producing retail, office and mixed-use properties in
Canada, with a future growth strategy focused primarily on the
acquisition of retail properties. Crombie currently owns a portfolio of
138 investment properties in eight provinces, comprising approximately
12.6 million square feet of rentable space.
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
2011 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.
In particular, certain statements in this document discuss Crombie's
anticipated outlook of future events, including the announced
acquisition of properties and other pending growth opportunities, the
anticipated funding of those acquisitions and the anticipated extent of
the accretion of those acquisitions, which could be impacted by due
diligence matters or the demand for properties and the effect that
demand has on acquisition capitalization rates and changes in interest
rates. 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 year ended December 31, 2011 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 fourth quarter
and year ended December 31, 2011 results on a conference call to be
held Thursday, February 23, 2012, at 1:00 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 March 8, 2012, by dialling
(416) 849-0833 or (855) 859-2056 and entering pass code 45513010, or on
the Crombie website for 90 days after the meeting.