Crombie REIT reports solid third quarter 2012 results

STELLARTON, NS, Nov. 13, 2012 /CNW/ - Crombie Real Estate Investment Trust 
("Crombie") (TSX: CRR.UN) is pleased to report its results for the third 
quarter ended September 30, 2012. 
2012 Highlights 


    --  Funds from operations ("FFO") for the quarter ended September
        30, 2012 was $0.25 per unit (payout ratio 90.7%) compared to
        $0.27 per unit (payout ratio 84.2%) for the same period in
        2011. Excluding the impact of the approximately $3.0 million
        expense relating to the Refinanced Mortgages (see Finance Costs
        - Operations below), FFO for the quarter ended September 30,
        2012 would have been $0.28 (payout ratio 79.5%).
    --  FFO for the nine months ended September 30, 2012 was $0.78 per
        unit (payout ratio 87.2%) compared to $0.82 per unit (payout
        ratio 81.7%) for the same period in 2011. Excluding the
        approximately $3.0 million Refinanced Mortgages impact, FFO for
        the nine months ended September 30, 2012 would have been $0.81
        (payout ratio 83.3%).
    --  Adjusted funds from operations ("AFFO") for the quarter ended
        September 30, 2012 was $0.21 per unit (payout ratio 106.1%)
        compared to $0.22 per unit (payout ratio 101.9%) for the same
        period in 2011. Excluding the impact of the approximately $3.0
        million expense relating to the Refinanced Mortgages, AFFO for
        the quarter ended September 30, 2012 would have been $0.24
        (payout ratio 94.3%).
    --  AFFO for the nine months ended September 30, 2012 was $0.65 per
        unit (payout ratio 103.9%) compared to $0.65 per unit (payout
        ratio 102.7%) for the same period in 2011. Excluding the
        approximately $3.0 million Refinanced Mortgages impact, AFFO
        for the nine months ended September 30, 2012 would have been
        $0.68 (payout ratio 99.6%).
    --  Crombie completed the acquisition of two properties in the
        quarter ended September 30, 2012 totalling $29.6 million; 30
        retail properties totalling $340.8 million have been acquired
        year to date which increases total assets in excess of $2.0
        billion.
    --  Property revenue for the quarter ended September 30, 2012 of
        $64.5 million; an increase of $9.7 million or 17.7% over the
        $54.8 million for the quarter ended September 30, 2011.
    --  Same-asset cash net operating income ("NOI") for the quarter
        ended September 30, 2012 of $33.3 million; an increase of $1.5
        million or 4.7%, compared to $31.8 million for the quarter
        ended September 30, 2011 and for the nine months ended
        September 30, 2012, same-asset cash NOI of $99.2 million; an
        increase of $2.5 million or 2.5% over the same period in 2011.
    --  Occupancy on a committed basis was 93.5% at September 30, 2012
        compared with 93.5% at June 30, 2012, and 94.7% at December 31,
        2011.  Actual occupied space at September 30, 2012 was 92.2%
        compared with 91.8% at June 30, 2012, and 93.3% at December 31,
        2011.
    --  Crombie completed leasing activity on 864,000 square feet of
        GLA during the nine months ended September 30, 2012, which
        represents approximately 83.8% of its 2012 expiring lease
        square footage.
    --  Crombie's 2012 leasing activity included lease renewals during
        the first nine months on 371,000 square feet at an average rate
        of $14.27 per square foot; an increase of 8.3% over the
        expiring lease rate. Crombie's new leasing activity during the
        first nine months was completed at an average rate of $13.24
        per square foot.

Commenting on the third quarter results, Donald E. Clow, FCA, President and 
Chief Executive Officer stated: "The refinancing of a portfolio of mortgages 
on 23 properties in September is a tremendous win for Crombie and its 
stakeholders. While expenses of $3.0 million were realized in the quarter, the 
payback on this transaction is short and significant. At current interest 
rates, the interest savings in less than one year should offset the costs 
incurred. The immediate remortgaging of these properties in the coming few 
quarters should provide additional funds to further our continued development, 
redevelopment and property acquisitions. Our strong year to date acquisitions 
growth is aligned with our strategy to increase our pace of high quality 
growth and national geographic diversification while maintaining ample 
liquidity and financial flexibility in these uncertain global economic times. 
We continue to focus on building a national portfolio of primarily grocery and 
drug anchored retail centres supported by a strong national real estate 
platform."

The table below presents a summary of financial performance for the quarter 
and nine months ended September 30, 2012 compared to the same period in fiscal 
2011.


(In millions of  Three months  Three months   Nine months   Nine months
CAD dollars,            ended         ended         ended         ended
except per unit      Sep. 30, Sep. 30, 2011 Sep. 30, 2012 Sep. 30, 2011
amounts)                 2012 
Property revenue      $64.459       $54.781      $187.552      $167.456 
Property               21.731        19.611        67.368        61.674
operating
expenses 
Property NOI           42.728        35.170       120.184       105.782 
NOI margin              66.3%         64.2%         64.1%         63.2%
percentage 
Other items:                                                            
Lease                 0.273            --         0.386         0.163
  terminations 
Depreciation       (12.200)       (7.718)      (32.077)      (23.085)
  and
  amortization 
General and         (3.105)       (2.487)       (9.213)       (7.848)
  administrative
  expenses 
Operating income       27.696        24.965        79.280        75.012
before finance
costs and income
taxes 
Finance costs -      (20.285)      (16.075)      (52.770)      (47.170)
operations 
Operating income        7.411         8.890        26.510        27.842
before income
taxes 
Taxes - deferred        0.500         0.200         1.400       (0.300) 
Operating income        7.911         9.090        27.910        27.542
attributable to
Unitholders 
Finance costs -      (19.343)      (15.132)      (55.270)      (44.753)
distributions to
Unitholders 
Decrease in net     $(11.432)      $(6.042)     $(27.360)     $(17.211)
assets
attributable to
Unitholders 
                                                                    
Operating income
attributable to
Unitholders per
Unit,
Basic and
Diluted                 $0.09         $0.13         $0.34         $0.41 


    

Property NOI - Cash Basis
                 Three months
                               Three months   Nine months   Nine months


                   ended          ended         ended         ended
(In millions of      Sep. 30, Sep. 30, 2011 Sep. 30, 2012 Sep. 30, 2011
CAD dollars)             2012 
Property NOI          $42.728       $35.170      $120.184      $105.782 
Non-cash tenant         1.727         1.369         4.799         3.836
incentive
amortization 
Non-cash              (1.249)       (0.800)       (3.564)       (2.615)
straight-line
rent 
Property cash          43.206        35.739       121.419       107.003
NOI 
Acquisition,
disposition and
redevelopment
property cash
NOI                     9.850         3.895        22.179        10.216 
Same-asset            $33.356       $31.844       $99.240       $96.787
property cash
NOI 
Property NOI, on a cash basis, excludes straight-line rent recognition and 
tenant incentive amortization amounts. The 4.7% and 2.5% increases in 
same-asset cash NOI for the quarter ended and nine months ended September 30, 
2012 respectively are 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. 
Same-Asset                                                             
Property NOI 
             Three months  Three months   Nine months   Nine months
(In millions of         ended         ended         ended         ended
CAD dollars)    Sep. 30, 2012 Sep. 30, 2011 Sep. 30, 2012 Sep. 30, 2011 
Same-asset            $50.355       $48.468      $152.704      $149.229
property
revenue 
Same-asset             17.483        16.969        54.588        53.128
property
operating
expenses 
Same-asset            $32.872       $31.499       $98.116       $96.101
property NOI 
Same-asset NOI          65.3%         65.0%         64.3%         64.4%
margin % 
Same-asset property NOI for the quarter grew 4.4% over Q3 of 2011. 
Same-asset property revenue of $50.4 million for the quarter ended September 
30, 2012 increased by 3.9% compared to the same quarter in 2011. Same-asset 
property revenue of $152.7 million for the nine months ended September 30, 
2012 was 2.3% higher than the nine months ended September 30, 2011 due to 
increased base rent driven by lease renewal activity, completed land use 
intensification development projects at several properties and recoveries as a 
result of higher recoverable property expenses. 
Same-asset property operating expenses of $17.5 million for the quarter ended 
September 30, 2012 were 3.0% higher than the quarter ended September 30, 2011 
due primarily to higher recoverable property expenses. Same-asset property 
expenses of $54.6 million for the nine months ended September 30, 2012 
increased by 2.7% from the nine months ended September 30, 2011 due primarily 
to higher recoverable property expenses. 
Acquisition, Disposition and Redevelopment Property NOI 
             Three months  Three months   Nine months   Nine months
(In millions of         ended         ended         ended         ended
CAD dollars)    Sep. 30, 2012 Sep. 30, 2011 Sep. 30, 2012 Sep. 30, 2011 
Property              $14.104        $6.313       $34.848       $18.227
revenue 
Property                4.248         2.642        12.780         8.546
operating
expenses 
Property NOI           $9.856        $3.671       $22.068        $9.681 
NOI margin %            69.9%         58.1%         63.3%         53.1% 
For the quarter ended and nine months ended September 30, 2012, the 
acquisition, disposition and redevelopment property results have significantly 
increased over the same periods in 2011. The growth is impacted by the 
significant acquisition activity during 2011 and 2012 as well as the increased 
focus on property redevelopment over that same period. 
General and Administrative Expenses 
General and administrative expenses for the quarter ended September 30, 2012 
increased by 0.3% from 4.5% to 4.8% as a percentage of property revenue, when 
compared to the same period in 2011. Salaries and benefits increased due to 
the hiring of additional staff related to continued growth and higher 
incentive payments. Other increases are primarily due to higher travel 
costs, training and development and increased public company costs. 
General and administrative expenses as a percentage of property revenue 
increased by 0.2% from 4.7% to 4.9% as a percentage of revenue for the nine 
months ended September 30, 2012 when compared to the same period in 2011. 
Salaries and benefits increased due to the hiring of additional staff related 
to continued growth and higher incentive payments. Other increases are 
primarily due to higher travel costs, training and development, increased 
public company costs and costs associated with due diligence on potential 
property acquisitions. 
Finance Costs - Operations 
                          Three months   Nine months   Nine months
(In millions    Three months         ended         ended         ended
of CAD                 ended Sep. 30, 2011 Sep. 30, 2012 Sep. 30, 2011
dollars)       Sep. 30, 2012 
Same-asset
finance costs(
(1))                 $12.324       $12.723       $35.913       $38.251 
Acquisition,           3.752         1.324         8.994         3.303
disposition
and
redevelopment
finance costs 
Amortization
of effective
swaps and
deferred
financing
charges((1))           4.209         2.028         7.863         5.616 
Finance costs        $20.285       $16.075       $52.770       $47.170
- operations 
(1)  In September 2012, Crombie assigned a portfolio of mortgages on 23 


     investment properties (the "Refinanced Mortgages") to a new
     lender. Concurrent with the assignment of the mortgages to the new
     lender, Crombie renegotiated the terms of the debt, refinancing
     them with a 30 month floating rate term credit facility. Included
     in finance costs for the quarter are expenses of approximately
     $3.0 million associated with this transaction (approximately $1.5
     million in cash costs related to legal fees, term loan set up fees
     and a repayment fee paid to the mortgage lender are included in
     same-asset finance costs and approximately $1.5 million
     representing the unamortized balance of deferred financing and
     other costs previously paid in respect of the 2008 mortgage
     financing are included in Amortization of effective swaps and
     deferred financing charges). The mortgages, with a weighted
     average interest rate of 5.91% and terms to maturity from 2013 to
     2017, totalled $92.4 million, while the floating rate term credit
     facility of $92.7 million had an interest rate of 3.07% at
     September 30, 2012. The floating rate is based on Bankers'
     Acceptance rates plus a spread or Prime Rates plus a spread.

Excluding the additional costs associated with the Refinanced Mortgages, 
same-asset finance costs for the nine months ended September 30, 2012 would 
have decreased by approximately $3.8 million compared to the nine months ended 
September 30, 2011 and same-asset finance costs for the three months ended 
September 30, 2012 would have decreased by approximately $1.9 million compared 
to the three months ended September 30, 2011. The savings are primarily due 
to greater utilization of lower cost floating rate debt, mortgage refinancings 
and interest savings from conversions of Convertible Debentures. Growth in 
acquisition, disposition and redevelopment finance costs is consistent with 
Crombie's significant acquisition activity in 2012 and 2011.

FFO and AFFO

Crombie's FFO and AFFO had the following results for the third quarter ended 
September 30, 2012 and 2011:
                                                                       
                               Three months ended
                                    Sep. 30,               Variance

(In millions of CAD dollars,
except per unit amounts)          2012       2011       $          %

FFO                            $21.338    $17.977    $3.361       18.7%

FFO Per Unit - Basic             $0.25      $0.27   $(0.02)      (7.4)%

FFO Per Unit - Diluted           $0.24      $0.26   $(0.02)      (7.7)%

FFO Payout ratio                 90.7%      84.2%                (6.5)%

Excluding the impact of $3.0
million of costs on Refinanced
Mortgages:((1))                                                        

  FFO Per Unit - Basic           $0.28      $0.27     $0.01        3.7%

  FFO Per Unit - Diluted         $0.27      $0.26     $0.01        3.8%

  FFO Payout ratio               79.5%      84.2%                  4.7%
                                                                       

AFFO                           $18.237    $14.851    $3.386       22.8%

AFFO Per Unit - Basic            $0.21      $0.22   $(0.01)      (4.5)%

AFFO Per Unit - Diluted          $0.21      $0.22   $(0.01)      (4.5)%

AFFO Payout ratio               106.1%     101.9%                (4.2)%

Excluding the impact of $3.0
million of costs on Refinanced
Mortgages:((1))                                                        

  AFFO Per Unit - Basic          $0.24      $0.22     $0.02        9.1%

  AFFO Per Unit - Diluted        $0.23      $0.22     $0.01        4.5%

  AFFO Payout ratio              94.3%     101.9%                  7.6%

(1) During the third quarter of 2012, Crombie refinanced $92.4 million
    of mortgages with a floating rate term credit facility. 
    Refinancing expenses of approximately $3.0 million were incurred.

The increase in FFO for the quarter ended September 30, 2012 was primarily due 
to the significant acquisition activity during 2011 and 2012.

AFFO for the quarter ended September 30, 2012 was $18.2 million, an increase 
of $3.4 million or 22.8% over the same period in 2011, due primarily to the 
improved FFO results as previously discussed.
                                                                     
                               Nine months ended
                                   Sep. 30,               Variance

(In millions of CAD dollars,      2012
except per unit amounts)                    2011       $         %

FFO                            $63.386   $54.763   $8.623       15.7%

FFO Per Unit - Basic             $0.78     $0.82  $(0.04)      (4.9)%

FFO Per Unit - Diluted           $0.76     $0.78  $(0.02)      (2.6)%

FFO Payout ratio                 87.2%     81.7%               (5.5)%

Excluding the impact of $3.0
million of costs on Refinanced
Mortgages:((1))                                                      

  FFO Per Unit - Basic           $0.81     $0.82  $(0.01)      (1.2)%

  FFO Per Unit - Diluted         $0.79     $0.78    $0.01        1.3%

  FFO Payout ratio               83.3%     81.7%               (1.6)%
                                                                     

AFFO                           $53.198   $43.566   $9.632       22.1%

AFFO Per Unit - Basic            $0.65     $0.65       --          --

AFFO Per Unit - Diluted          $0.64     $0.64       --          --

AFFO Payout ratio               103.9%    102.7%               (1.2)%

Excluding the impact of $3.0
million of costs on Refinanced
Mortgages:((1))                                                      

  AFFO Per Unit - Basic          $0.68     $0.65    $0.03        4.6%

  AFFO Per Unit - Diluted        $0.67     $0.64    $0.03        4.7%

  AFFO Payout ratio              99.6%    102.7%                 3.1%

(1) During the third quarter of 2012, Crombie refinanced $92.4 million
    of mortgages with a floating rate term credit facility. 
    Refinancing expenses of approximately $3.0 million were incurred.

The increase in FFO for the nine months ended September 30, 2012 was due 
primarily to significant acquisition activity which resulted in improved NOI 
results offset in part by increased operations finance costs related to the 
acquisitions.

AFFO for the nine months ended September 30, 2012 was $53.2 million, an 
increase of $9.6 million or 22.1% over the same period in 2011, due primarily 
to the improved FFO results and the unfavourable swap agreement settlement of 
$1.7 million in the nine months ended September 30, 2011.

Liquidity and Financings

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 
$200 million, subject to available borrowing base of which $62.6 million was 
drawn as at September 30, 2012, and an additional $11.4 million encumbered by 
outstanding letters of credit, resulting in significant available liquidity.

Debt to gross book value is 51.6% (including convertible debentures) at 
September 30, 2012 compared to 52.4% at June 30, 2012, 52.5% at December 31, 
2011 and 54.8% at September 30, 2011. 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 nine months ended 
September 30, 2012 were 2.58 times EBITDA and 1.75 times EBITDA 
respectively. This compares to 2.45 times EBITDA and 1.73 times EBITDA 
respectively for the nine months ended September 30, 2011.

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, 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.

Interim Financial Reporting

While the financial figures included in this preliminary interim earnings 
announcement have been computed in accordance with IFRS applicable to interim 
periods, this announcement does not contain sufficient information to 
constitute an interim financial report as that term is defined in IFRS. The 
Trustees expect to publish an interim financial report that complies with 
International Accounting Standard 34, Interim Financial Reporting, on November 
13, 2012.

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 
grocery-anchored and drug store-anchored retail properties. Crombie currently 
owns a portfolio of 170 investment properties in nine provinces, comprising 
approximately 14.0 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 the realization of any 
benefits from refinancing the portfolio of mortgages, future development and 
acquisition of properties and other pending growth opportunities and expected 
pace of growth, all of which could be impacted by financing market conditions, 
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 period ended September 30, 2012 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 third quarter ended 
September 30, 2012 results on a conference call to be held Tuesday, November 
13, 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 November 27, 
2012, by dialling (416) 849-0833 or (855) 859-2056 and entering pass code 
49536472, or on the Crombie website for 90 days after the meeting.







Glenn Hynes, FCA Chief Financial Officer and Secretary Crombie REIT (902) 
755-8100

SOURCE: CROMBIE REIT

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/13/c4590.html

CO: CROMBIE REIT
ST: Nova Scotia
NI: REL ERN CONF 

-0- Nov/13/2012 13:02 GMT


 
Press spacebar to pause and continue. Press esc to stop.