NPR reports first quarter 2013 financial results

CALGARY, May 8, 2013 /CNW/ - Northern Property Real Estate Investment Trust 
(the "REIT") and NorSerCo Inc. (the REIT together with NorSerCo, "NPR") 
(NPR.UN - TSX) today announced financial results for the three months ended 
March 31, 2013. NPR reported first quarter funds from operations ("FFO") per 
unit of $0.50. On a continuing operations basis, FFO per unit was $0.50 in the 
first quarter of 2013, up from $0.48 in the first quarter of 2012. 
Financial performance at a glance 


                                                                      

(thousands of                          Three months ended March 31
dollars,
except per
unit amounts)
                                 2013                           2012
              Continuing Discontinued  Total Continuing Discontinued  Total

Total revenue     41,762          149 41,911     38,265        4,536 42,801

Net operating     23,350           78 23,428     21,771        4,705 26,476
income

Net and           17,275           66 17,341     13,853        5,443 19,296
comprehensive
income

Net income          0.54            -   0.54       0.46         0.19  $0.65
per Stapled
Unit, basic

FFO               15,811           66 15,877     14,315        3,230 17,545

FFO per             0.50            -   0.50       0.48         0.11   0.59
Stapled Unit,
basic

FFO payout                             77.2%                          64.4%
ratio

Distributions                         12,259                         11,291
declared to
Unitholders

Distributions                           0.38                           0.38
per Stapled
Unit
                                                                      

President and COO Todd Cook commented, "NPR's lower first quarter results are 
entirely related to the sale of the seniors' portfolio in mid-2012. While we 
have replaced a portion of the income from the disposed properties, full 
redeployment, and replacement of the leverage associated with the sold assets, 
has not yet been completed. We are actively looking for quality acquisitions 
and we continue to increase our development capabilities but it will take 
another 12 - 18 months to fully replace the lost income."

CEO Jim Britton added "In late 2012, NPR shifted its business development 
philosophy and strategic direction to include a larger development component 
in its growth strategy. The first quarter of 2013 marks our first full quarter 
implementing our revised strategy and we are happy with the results so far. As 
a result of the new strategy, the only acquisition made in the quarter was a 
newly constructed commercial building in St. John's, NL. Two development 
projects were completed in the quarter, totalling 146 units, of which 142 
units were in Lloydminster. We have been very pleased with the Lloydminster 
project as it was fully leased in less than two months, will provide us with 
an expected cap rate in excess of 8.0% and came in on budget at approximately 
$18 million.

Mr. Britton continued, "Our experience in recent years has confirmed that, in 
certain markets, newly constructed apartments will command superior rental 
rates, provide higher yields and lower initial capex requirements resulting in 
greater returns for NPR unitholders, and Lloydminster is a great example of 
this."

FFO
FFO for the three months ended March 31, 2013 was $15.9 million or $0.50 per 
Stapled Unit compared to $17.5 million or $0.59 per Stapled Unit for the same 
period of 2012. The decrease in FFO was a result of 2012 financial results 
including the discontinued seniors' portfolio, which was sold in mid-2012, 
which represented $3.2 million of FFO or $0.11 per Stapled Unit in the first 
quarter of 2012. NPR is still in the process of redeploying the proceeds from 
the sale.

NPR's FFO payout ratio was 77.2% for the three months ended March 31, 2013 
compared to 64.4% for the same period of 2012. The higher payout ratio in the 
first quarter of 2013 resulted from lower FFO due to the seniors' portfolio 
sale and dilution from the additional Stapled Units issued in public offering 
in the first quarter of 2012.

Residential vacancy loss
                                                  
                      For the three months ended For the three months
                                       March 31,    ended December 31,

Region                 2013                 2012                  2012

British Columbia      12.9%                 4.1%                 10.5%

Alberta                2.7%                 5.7%                  4.3%

Newfoundland and       2.0%                 2.0%                  0.9%
Labrador

Northwest Territories  9.3%                 3.2%                  7.8%

Nunavut                3.6%                 0.9%                  4.5%

Saskatchewan          10.4%                14.2%                  4.6%

Quebec                 0.1%                    -                  0.0%

Overall                6.4%                 3.6%                  6.2%
                                                  

Residential vacancy loss for the first quarter of 2013 increased slightly to 
6.4% compared to 6.2% for the last quarter of 2012. British Columbia and 
Northwest Territories were the main regions with increasing vacancy while 
Nunavut and Alberta saw improvement.

Most regions of BC saw vacancy increases, with Fort Nelson and Campbell River 
seeing the largest increases. Fort Nelson's economy continues to struggle as 
development activity has slowed due to the delay in the LNG pipeline project. 
Another factor contributing to the increased vacancy in BC is that a large 
number of the 1,500 acquisitions in 2012 were in this province and come with 
higher normal vacancy levels than the rest of the portfolio. In several of our 
locations, specifically in Nanaimo, Abbotsford and Campbell River, the recent 
acquisitions are going through a transition to bring the properties up to NPR 
standards which normally leads to a temporary increase in vacancy.

In the Northwest Territories, both Yellowknife and Inuvik contributed to the 
increased vacancy. Inuvik is still experiencing a weakened economy as 
infrastructure projects wind down or are delayed. However, there has been some 
good news lately as a new corporate tenant lease was signed in late March 2013 
that will improve vacancy for the remainder of 2013, a government tenant was 
renewed and the Road to Tuktoyaktuk project is proceeding. The Yellowknife 
market has experienced a temporary increase in vacancy over the last several 
quarters, but we expect vacancy to return to its normal range of 2% - 3% in 
the latter half of 2013.

Alberta continued its improvement with Fort McMurray and Grande Prairie 
leading the way with vacancy of 3.3% and 2.2%, respectively, compared to 6.0% 
and 3.8%, respectively, at December 31, 2012. Vacancy loss in Lloydminster 
increased slightly to 2.3% during the first quarter of 2013 from 1.7% reported 
in the same quarter of 2012. This increase is a result of the first of two 
new 71 unit residential buildings being completed on March 1, 2013.

Nunavut, improved over the previous quarter as Iqaluit starts to absorb the 
new development units that were completed last year.

Acquisitions and development
The sole acquisition for the quarter was a newly constructed, 29,456 square 
foot commercial building, Bristol Court V, in St. John's NL, acquired for $6.8 
million. Leasing activity on the Bristol Court Office Park was strong in the 
first quarter. It is expected that all three buildings will be fully occupied 
by the end of the year. In the quarter, NPR also sold a 25,857 square foot 
commercial building in Iqaluit, NU for net proceeds of $4.2 million.

In the first quarter of 2013, NPR completed the development of 142 residential 
units in Lloydminster, AB and four residential units in Iqaluit, NU. The 
lease up of the 142 units, two 71 unit buildings, in Lloydminster has been 
successful. The buildings were completed March 1, 2013 and April 1, 2013 and 
as of May 1, 2013 both buildings have been fully leased.

For the remainder of 2013, NPR is expecting another 280 units to be completed, 
including our first property in Regina, SK with 189 units.

Portfolio Summary (including joint ventures at 100% and discontinued 
operations) - March 31, 2013
                                                                          
                                           Seniors'       Total
                          Execusuites (Discontinued Residential


                                &                   (units) Commercial
Region       Multi-family      Hotels   Operations)              (sq. ft.) 
British                                           -       2,831
Columbia            2,831           -                              123,164 
Alberta             2,239           -             -       2,239     83,243 
Newfoundland                                     54       1,657
and Labrador        1,461         142                              166,721 
Northwest                                         -       1,465
Territories         1,305         160                              535,711 
Nunavut               988         162             -       1,146    168,061 
Saskatchewan          240           -             -         240          - 
Quebec                161           -             -         161          - 
Total               9,225         464            54       9,743  1,076,900 
                                                                       
Financial strength 
                                                       
(thousands of dollars,  March 31, 2013 December 31, 2012 March 31, 2012
except per unit
amounts) 
Total assets                 1,368,821         1,350,072      1,373,299 
Total liabilities              576,750           564,110        611,597 
Mortgages payable              526,350           518,123        488,818 
Gross book value             1,350,476         1,331,514      1,326,127 
Debt                           560,724           545,354        575,775 
Debt to gross book               41.5%             41.0%          43.4%
value (fair value) 
Interest coverage ratio           3.60              3.65           3.30
(times) 
Debt service coverage             2.13              2.17           2.02
ratio (times) 
Weighted average                 4.31%             4.37%          4.66%
mortgage interest rate 
Weighted average term              4.0               4.1            5.4
to maturity (years) 
Weighted average                  8.0%              8.0%           8.0%
capitalization rate 
                                                                    
NPR continues to have one of the healthiest balance sheets in the Canadian 
multi-family space. Debt to gross book value remained low at 41.5% for March 
31, 2013 compared to 41.0% at December 31, 2012 and 43.4% at March 31, 2012. 
During the three months ended March 31, 2013, NPR completed $18.4 million in 
mortgage financings and renewals at a weighted average interest rate of 3.21% 
and a weighted average term to maturity of 4.38 years. The remainder of 2013 
has a significant amount of mortgage renewals worth approximately $90 million. 
In addition to the refinancing on existing mortgages, NPR has over 50 
unencumbered properties with a debt capacity of approximately $100 million as 
of March 31, 2013. 
Distributions to Stapled Unit holders
During the three months ended March 31, 2013, NPR declared monthly cash 
distributions of $0.1275 (2012 -$0.1275) per Unit. 
Tax status
Bill C-48, which includes proposed rules related to real estate investment 
trusts, originally announced on December 16, 2010, received second reading in 
the House of Commons on March 8, 2013, and is now before the House of Commons 
Standing Committee on Finance. Management believes it meets the requirements 
of the amended legislation. Bill C-48 has not been passed into legislation as 
of May 8, 2013. 
There have been no updates to the draft stapled securities legislation 
("Stapled Securities Proposals") since our 2012 financial results media 
release dated March 13, 2013. As at March 31, 2013, NPR's total cash tax 
liability resulting from the Stapled Securities Proposals is estimated to be 
$1.1 million. This amount has not been recorded in NPR's financial statements 
because the Stapled Securities Proposals are not yet substantively enacted. 
Additional Information
NPR's unaudited condensed combined interim financial statements and the notes 
thereto and Management's Discussion and Analysis for the three months ended 
March 31, 2013 can be found on NPR's website at www.npreit.com or on 
www.sedar.com. 
Conference call
NPR's conference call will take place on Thursday on May 9, 2013 at 12:00 p.m. 
Mountain Time, 2:00 p.m. Eastern Time. Participating on the call will be Mr. 
B. James Britton (Chair), Chief Executive Officer, Mr. Todd Cook, President 
and Chief Operating Officer, and Mr. Robert Palmer, Chief Financial Officer. 
Investors and analysts are invited to participate in the call by calling 
1-888-231-8191 or 647-427-7450. You will be required to provide the Conference 
Call Operator with the Conference ID #89560032 prior to being admitted to the 
call. A recorded playback of the call will be available from May 10, 2013 to 
May 17, 2013 by calling 416-849-0833 or 1-855-859-2056, passcode #89560032. 
The recording will also be available on our website on May 13, 2013. 
About NPR
The REIT is an unincorporated open-end real estate investment trust and 
NorSerCo is a corporation under the Business Corporations Act (Alberta). NPR 
is primarily a multi-family residential real estate investor, providing a 
broad spectrum of rental accommodations in Canadian secondary markets with 
strong economic fundamentals where capitalization rates are somewhat higher 
and competition somewhat restrained. NPR's residential portfolio is comprised 
of a multi-family segment: apartments, town homes and single family rental 
units; and execusuites and hotels, where the rental periods range from a few 
days to several months. NPR also has a portfolio of commercial buildings 
focused on government tenancies predominantly located in Canada's far north. 
Geographically, NPR operates in British Columbia, the Northwest Territories, 
Alberta, Saskatchewan, Nunavut, Quebec and Newfoundland and Labrador. As at 
March 31, 2013 NPR has 9,743 residential units and 1,076,900 square feet of 
commercial space. 
Cautionary/forward looking statements
This news release contains forward‐looking statements relating to our growth 
strategy, acquisition activity, completion of apartments for which development 
approvals have been obtained, commencement of development of new buildings, 
and federal rules respecting the 10% qualifying exemption for REITs. These 
statements are not guarantees of future events, performance or results and 
will not necessarily be accurate indications of whether, or the times at 
which, such events, performance or results will be achieved. 
Forward-looking statements are based on information available at the time they 
are made, underlying estimates and assumptions made by management and 
management's good faith belief with respect to future events, performance and 
results, and are subject to inherent risks and uncertainties surrounding 
future expectations generally which could cause actual results to differ 
materially from what is currently expected. Such risks and uncertainties 
include, but are not limited to risks associated with investment in and 
development of real property, competition, financing and refinancing risks, 
risks related to economic conditions, changes in taxation rules, reliance on 
key personnel, environmental matters, tenant risks, and other risk factors 
more particularly described in the our most recent Annual Information Form 
available on SEDAR at www.sedar.com. Additional risks and uncertainties not 
presently known to NPR or that NPR currently believes to be less significant 
may also adversely affect NPR. 
Readers are cautioned that the above list of factors is not exhaustive and 
that should certain risks or uncertainties materialize, or should underlying 
estimates or assumptions prove incorrect, actual events, performance and 
results may vary significantly from those expected. There can be no assurance 
that the actual results, performance, events or activities anticipated by NPR 
will be realized or, even if substantially realized, that they will have the 
expected consequences to, or effect on, NPR. Readers, therefore, should not 
place undue importance on forward-looking information. Further, 
forward‐looking statements speak only as of the date on which such 
statements are made. NPR disclaims any intention or obligation to update or 
revise any forward-looking information, whether as a result of new 
information, future events or otherwise, except as required under applicable 
securities laws. 
For further information contact Robert Palmer, CFO, at 403-531-0720. 
SOURCE: Northern Property Real Estate Investment Trust 
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CO: Northern Property Real Estate Investment Trust
ST: Alberta
NI: REL ERN  
-0- May/08/2013 23:18 GMT