Crombie REIT (TSX:CRR.UN)
STELLARTON, NS, May 14, 2014 /CNW/ – Crombie Real Estate Investment
Trust ("Crombie") (TSX:CRR.UN) is pleased to report its financial
results for the first quarter ended March 31, 2014.
First Quarter 2014 Highlights (In thousands of CAD dollars, except per unit amounts and as otherwise
noted).
- Portfolio fair value of $3.9 billion.
-
Funds From Operations ("FFO"):
-
FFO per unit fully diluted remained stable at $0.28, unchanged from the
same period in 2013. - FFO grew by 34.1% over the same period in 2013 ($34,494 vs. $25,721).
-
FFO payout ratio decreased slightly to 79.3% compared to 79.5% for the
same period in 2013.
-
FFO per unit fully diluted remained stable at $0.28, unchanged from the
-
Adjusted Funds From Operations ("AFFO"):
-
AFFO per unit fully diluted remained stable at $0.23, unchanged from the
same period in 2013. - AFFO grew by 33.2% over the same period in 2013 ($28,769 vs. $21,606).
-
AFFO payout ratio increased slightly to 95.1% compared to 94.6% for the
same period in 2013.
-
AFFO per unit fully diluted remained stable at $0.23, unchanged from the
-
Same-asset Cash Net Operating Income ("NOI") showed strong 2.5% growth
over the same period in 2013. -
Property revenue of $90,913, an increase of $20,331 or 28.8% over the
$70,582 for Q1 2013. -
Occupancy, on a committed basis, was 93.1% at March 31, 2014, compared
with 93.2% at December 31, 2013. -
Crombie completed leasing activity on a total of 260,000 square feet
during the quarter, including:-
Renewals on 149,000 square feet of 2014 expiring leases at an average
rate of $16.52 per square foot, an increase of 8.7% over the expiring
lease rate; and -
New leases on 111,000 square feet of space, at an average rate of $14.61
per square foot.
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Renewals on 149,000 square feet of 2014 expiring leases at an average
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Weighted average lease term of 11.8 years and weighted average mortgage
term of 7.9 years; amongst the longest and most defensive in the REIT
industry.
-
Weighted average interest rate on mortgages reduced to 4.79% from 4.82%
at December 31, 2013 and 5.09% at March 31, 2013. Strong 2.53 times
interest coverage.
- Debt to Gross Book Value (fair value basis) of 53.1%.
Donald E. Clow, FCA, President and CEO commented:" We are pleased with
our progress on the integration of the Safeway portfolio; our continued
access to new sources of capital; and the enhancement of our national
platform, including the improved focus of our senior leadership team
and the addition of a new regional vice-president position in Western
Canada."
Financial Highlights
Crombie's key financial metrics for the three months ended March 31,
2014 are as follows:
| (In thousands of CAD dollars, except per unit amounts and as otherwise noted) |
Three Months Ended March 31, | |||
| 2014 | 2013 | |||
| Property revenue | $ | 90,913 | $ | 70,582 |
| Operating income attributable to Unitholders | $ | 15,900 | $ | 12,959 |
| Operating income attributable to Unitholders per unit – basic | $ | 0.13 | $ | 0.14 |
| Operating income attributable to Unitholders per unit – diluted | $ | 0.13 | $ | 0.14 |
| FFO | $ | 34,494 | $ | 25,721 |
| FFO per unit – basic | $ | 0.28 | $ | 0.28 |
| FFO per unit– diluted | $ | 0.28 | $ | 0.28 |
| FFO payout ratio (%) | 79.3% | 79.5% | ||
| AFFO | $ | 28,769 | $ | 21,606 |
| AFFO per unit – basic | $ | 0.23 | $ | 0.24 |
| AFFO per unit – diluted | $ | 0.23 | $ | 0.23 |
| Distributions | $ | 0.22 | $ | 0.22 |
| AFFO payout ratio (%) | 95.1% | 94.6% | ||
The increase in FFO and AFFO for the three months ended March 31, 2014
was primarily due to the 70 property Sobey / Safeway acquisition during
the fourth quarter of 2013 and completed redevelopment and land use
intensification projects during 2013, resulting in significant growth
in property NOI, offset in part by higher finance costs – operations.
The table below presents a summary of financial performance for the
three months ended March 31, 2014 compared to the same period in fiscal
2013.
| (In thousands of CAD dollars, except per unit amounts and as otherwise noted) |
Three Months Ended March 31, | ||||
| 2014 | 2013 | ||||
| Property revenue | $ | 90,913 | $ | 70,582 | |
| Property operating expenses | 29,554 | 26,818 | |||
| Property NOI | 61,359 | 43,764 | |||
| NOI margin percentage | 67.5% | 62.0% | |||
| Other items: | |||||
| Gain (loss) on derecognition of investment properties | (157) | 430 | |||
| Depreciation and amortization | (16,525) | (11,122) | |||
| General and administrative expenses | (3,756) | (3,206) | |||
| Operating income before finance costs and taxes | 40,921 | 29,866 | |||
| Finance costs – operations | (25,246) | (16,807) | |||
| Operating income before taxes | 15,675 | 13,059 | |||
| Taxes – deferred | 225 | (100) | |||
| Operating income attributable to Unitholders | 15,900 | 12,959 | |||
| Finance costs – distributions to Unitholders | (27,355) | (20,438) | |||
| Finance income (costs) – change in fair value of financial instruments | 55 | 617 | |||
| Decrease in net assets attributable to Unitholders | $ | (11,400) | $ | (6,862) | |
Growth Highlights
| GLA |
Initial Purchase Price |
Occupancy Rate |
Key Tenants | ||||
| Acquisitions in Q1 | |||||||
| Penhorn Plaza | Dartmouth | NS | 6,683 | $ | 1,490,000 | 100% | Mr. Lube, Fast Fuels |
| Completed to date in 2014 | 6,683 | $ | 1,490,000 | ||||
Since January 1, 2014, Crombie's GLA reflects a net decrease of 18,000
square feet from acquisition and disposition activity. Crombie
exchanged a property in Alberta for another Alberta property, resulting
in no net change in GLA. In addition, Crombie disposed of part of an
existing property in Nova Scotia, resulting in a 25,000 square foot
reduction in GLA and completed the above acquisition of additional
development property.
Operating Highlights
| Three Months Ended March 31, | |||||||||
| (In thousands of CAD dollars) | 2014 | 2013 | Variance | ||||||
| Property NOI | $ | 61,359 | $ | 43,764 | $ | 17,595 | |||
| Non-cash straight-line rent | (2,754) | (1,359) | (1,395) | ||||||
| Non-cash tenant incentive amortization | 2,137 | 1,970 | 167 | ||||||
| Property cash NOI | 60,742 | 44,375 | 16,367 | ||||||
| Acquisition, disposition and redevelopment property cash NOI | 19,541 | 4,175 | 15,366 | ||||||
| Same-asset property cash NOI | $ | 41,201 | $ | 40,200 | $ | 1,001 | |||
| Three Months Ended March 31, | |||||||||
| (In thousands of CAD dollars) | 2014 | 2013 | Variance | Percent | |||||
| Retail Enclosed | $ | 6,492 | $ | 6,061 | $ | 431 | 7.1% | ||
| Retail Freestanding | 8,533 | 8,181 | 352 | 4.3% | |||||
| Retail Plaza | 20,045 | 19,882 | 163 | 0.8% | |||||
| Retail total | 35,070 | 34,124 | 946 | 2.8% | |||||
| Mixed Use | 3,155 | 3,166 | (11) | (0.3)% | |||||
| Office | 2,976 | 2,910 | 66 | 2.3% | |||||
| Same-asset property cash NOI | $ | 41,201 | $ | 40,200 | $ | 1,001 | 2.5% | ||
Property NOI, on a cash basis, excludes straight-line rent recognition
and amortization of tenant incentive amounts. The 2.5% increase in
same-asset cash NOI for the three months ended March 31, 2014 is
primarily the result of increased average rent per square foot from
leasing activity and rental rate increases in existing leases as well
as improved recovery rates and revenues from land use intensifications
at several properties.
During the first quarter of 2014, Crombie classified an investment
property as held for sale. The operating results for that property are
included in acquisition, disposition and redevelopment for the current
and comparative periods.
Crombie believes that cash NOI is a better measure of AFFO
sustainability and same-asset property performance.
Acquisition, disposition and redevelopment property cash NOI is as
follows:
| Three Months Ended March 31, | ||||||
| (In thousands of CAD dollars) | 2014 | 2013 | Variance | |||
| Acquisition and disposition property cash NOI | $ | 17,998 | $ | 1,926 | $ | 16,072 |
| Redevelopment property cash NOI | 1,543 | 2,249 | (706) | |||
| Total acquisition, disposition and redevelopment property cash NOI | $ | 19,541 | $ | 4,175 | $ | 15,366 |
The significant growth in Acquisition and disposition property cash NOI
was primarily due to the 70 property Sobeys / Safeway acquisition
during the fourth quarter of 2013.
Capital Highlights
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Weighted Average Mortgage Term | 7.9 years | 7.7 years |
| Weighted Average Interest Rate | 4.79% | 5.09% |
| Debt to Gross Book Value (Fair Value) | 53.1% | 48.3% |
| Interest Coverage | 2.53 | 2.79 |
| Debt Service Coverage | 1.69 | 1.85 |
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 $50,000 was drawn as at March 31, 2014, and an
additional $4,135 encumbered by outstanding letters of credit,
resulting in significant available liquidity.
Debt to gross book value on a fair value basis is 53.1% (including
convertible debentures) at March 31, 2014, compared to 48.3% at March
31, 2013.
General and Administrative Expenses
General and administrative expenses for the three months ended March 31,
2014, as a percentage of property revenue, decreased by 0.4% from 4.5%
to 4.1%, when compared to the same period in 2013, reflecting the
impact of significant business growth during 2013.
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 operating 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, senior
unsecured notes 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; (ii) subscription receipts held in trust; and (iii) 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 operating 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, plus depreciation and
amortization expense, deferred income taxes, finance costs –
distributions to Unitholders, impairment charges and recoveries and
change in fair value of financial instruments.
-
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 250 retail and office properties across Canada,
comprising approximately 17.6 million square feet with a strategy to
own and operate a portfolio of primarily high quality grocery and drug
store anchored shopping centres and freestanding stores in Canada's top
36 markets.
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
2013 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, 2014 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 three months
ended March 31, 2014 results on a conference call to be held
Wednesday, May 14, 2014, 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 28, 2014 by dialing (416)
849-0833 or (855) 859-2056 and entering pass code 34849692, or on the
Crombie website for 90 days after the meeting.
SOURCE Crombie REIT