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
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
Net and 17,275 66 17,341 13,853 5,443 19,296
Net income 0.54 - 0.54 0.46 0.19 $0.65
FFO 15,811 66 15,877 14,315 3,230 17,545
FFO per 0.50 - 0.50 0.48 0.11 0.59
FFO payout 77.2% 64.4%
Distributions 12,259 11,291
Distributions 0.38 0.38
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
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
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
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%
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
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
(thousands of dollars, March 31, 2013 December 31, 2012 March 31, 2012
except per unit
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
Debt service coverage 2.13 2.17 2.02
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%
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.
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.
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
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.
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
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
For further information contact Robert Palmer, CFO, at 403-531-0720.
SOURCE: Northern Property Real Estate Investment Trust
To view this news release in HTML formatting, please use the following URL:
CO: Northern Property Real Estate Investment Trust
NI: REL ERN
-0- May/08/2013 23:18 GMT
Press spacebar to pause and continue. Press esc to stop.