Crombie REIT reports solid third quarter results

Crombie REIT (TSX:CRR.UN) 
STELLARTON, NS, Nov. 8, 2013 /CNW/ - Crombie Real Estate Investment Trust 
("Crombie") (TSX: CRR.UN) is pleased to report strong results for the three 
months and nine months ended September 30, 2013. 
Year to Date and Third Quarter 2013 Highlights (In thousands of CAD dollars, 
except per unit amounts and as otherwise noted) 


    --  Strong 10.2% growth in Funds From Operations ("FFO") per unit
        for the nine months ended September 30, 2013, as FFO per unit
        fully diluted ("FD") was $0.83 per unit compared to $0.76 per
        unit FD for the same period in 2012. FFO grew 23.1% over the
        same period in 2012 ($78,052 vs $63,386) with the FFO payout
        ratio 78.7% compared to 87.2% for the same period in 2012.
    --  13.2% growth in FFO per unit for the three months ended
        September 30, 2013 ("Q3") as FFO per unit FD was $0.28 compared
        to $0.24 for the same period in 2012. Q3 FFO grew 21.1% over
        the same period in 2012 ($25,841 vs $21,338) with the FFO
        payout ratio of 79.5% compared to 90.7% for the same period in
        2012.
    --  Strong 10.9% growth in Adjusted Funds From Operations ("AFFO")
        per unit for the nine months ended September 30, 2013, as AFFO
        per unit FD was $0.71 per unit compared to $0.64 per unit FD
        for the same period in 2012. AFFO grew 24.1% over the same
        period in 2012 ($66,032 vs $53,198) for the nine months ended
        September 30, 2013 with the AFFO payout ratio of 93.1% compared
        to 103.9% for the same period in 2012.
    --  13.2% growth in Q3 AFFO per unit as AFFO per unit FD was $0.24
        compared to $0.21 for the same period in 2012. Q3 AFFO grew
        20.6% over the same period in 2012 ($21,993 vs $18,237) with
        the AFFO payout ratio of 93.4% compared to 106.1% for the same
        period in 2012.
    --  Crombie was assigned an investment grade credit rating of BBB
        (low) with a Stable trend by DBRS.
    --  Acquisition of four drug store anchored freestanding properties
        in four different provinces totaling $44 million during Q3.
    --  Portfolio fair value of $2.9 billion; $3.9 billion including
        the subsequent acquisition.
    --  Solid growth of 1.6% in Same-Asset Cash Net Operating Income
        ("NOI") for the nine months ended September 30, 2013 over the
        nine months ended September 30, 2012. Slight reduction in
        Same-Asset Cash NOI of 0.3% for the three months ended
        September 30, 2013 compared to the same period in 2012.
    --  Property revenue of $213,044 for the nine months ended
        September 30, 2013, an increase of $25,492 or 13.6% over the
        $187,552 for the nine months ended September 30, 2012. Q3
        property revenue of $70,850, increased $6,391 or 9.9% over Q3
        2012.
    --  Solid occupancy on a committed basis of 92.2% at September 30,
        2013, compared with 93.5% at September 30, 2012. The September
        30, 2013 leased space is impacted by the leasing expiry of
        three Zellers since September 30, 2012, totalling 262,000
        square feet.
    --  Crombie completed leasing activity on a total of 995,000 square
        feet during the nine months ended September 30, 2013,


    including:
  o Renewals on 472,000 square feet of 2013 expiring leases at an 


    average rate of $12.78 per square foot, an increase of 7.7% over
    the expiring lease rate. This represents a renewal rate of 56% of
    the 2013 year to date expired lease space; excluding the expiry of
    three Zellers leases, renewals represent 82% of the expiring lease


space;
  o Renewals on 154,000 square feet of 2014 and later expiring leases 
at an average rate of $15.03 per square foot, an increase of 12.1% 
over the expiring lease rate; and
  o New leases on 369,000 square feet of space, at an average rate of 


    $16.00 per square foot.
    --  Weighted average lease term of 10.4 years and weighted average
        mortgage term of 7.5 years; amongst the longest and most
        defensive in the REIT industry.
    --  Weighted average interest rate on mortgages reduced to 4.99%
        from 5.21% at December 31, 2012 and 5.27% at September 30,
        2012. Strong 2.72 times interest coverage.
    --  Debt to Gross Book Value (fair value basis) of 49.8% (53.9% on
        a cost basis).

Subsequent Events

Effective November 3, 2013, Crombie acquired a portfolio of 70 retail 
properties (the "Properties") representing approximately 3.0 million square 
feet of gross leaseable area. The Properties were acquired from a wholly-owned 
subsidiary of Sobeys Inc., a related party, for an aggregate purchase price of 
$991,300, excluding closing adjustments and transaction costs. As a condition 
to the closing, a wholly-owned subsidiary of Sobeys Inc. entered into leases 
for each of the Properties on a fully net basis. The Properties are among the 
assets acquired by a wholly-owned subsidiary of Sobeys Inc. from Canada 
Safeway Limited.

A summary of the acquisition and related financing is as follows (in millions 
of CAD dollars):

Purchase price                                             $ 991.3  
                                                                    

Net proceeds from Subscription Receipts issued in August     213.9  
2013

Proceeds from Series E Debentures issued in August 2013       75.0  

Net proceeds from Series A Notes issued October 31, 2013     174.2  

Proceeds from Class B LP Units issued upon closing the       150.0  
acquisition

Mortgage proceeds received since the closing                 297.6  

Customary closing adjustments                                  4.6  

Utilization of bridge credit facility                         76.0  
                                                           $ 991.3  

Further financing details are:
    --  In August 2013, Crombie issued 17,720,000 Subscription Receipts
        at a price of $12.70 each for gross proceeds of $225 million.
        On closing of the acquisition, the Subscription Receipts were
        automatically exchanged for REIT Units on a one-for-one basis.
    --  In August 2013, Crombie issued $75 million of Series E
        convertible, extendible, unsecured subordinated debentures with
        a maturity date that automatically extended to March 31, 2021
        on completion of the acquisition.
    --  On October 31 2013, Crombie issued $175 million of 3.986%
        Series A Notes (Senior Unsecured) due October 31, 2018 with a
        rating of BBB(low) stable trend from DBRS.
    --  On closing of the acquisition, Crombie issued 11,811,024 Class
        B LP Units at a price of $12.70 each for gross proceeds of $150
        million to ECL Developments Limited, a wholly-owned subsidiary
        of Empire Company Limited.
    --  Fixed rate mortgage proceeds of $297.6 million have an average
        term of 9.5 years, an average interest rate of 4.31% and 25
        year amortizations.



Donald E. Clow, FCA, President and CEO commented: "We are successfully 
executing on our growth strategy of accretively acquiring primarily grocery 
and drug store anchored retail properties in the top 36 markets in Canada. 
This focus has resulted in strong funds from operations growth and improved 
payout ratios in spite of the loss of four Zellers locations. Our disciplined 
approach and strong balance sheet are evident in our ability to complete over 
$1 billion in year to date acquisitions and attain an investment grade credit 
rating, which enhances Crombie's financial flexibility and liquidity options. 
This is demonstrated by Crombie having quickly completed permanent financing 
for the Canada Safeway acquisition as $297.6 million of long term mortgages 
with an average duration of 9.5 years and average interest rate of 4.31% has 
been completed since the November 3(rd )closing date."

Financial Highlights

Crombie's key financial metrics for the three months and nine months ended 
September 30, 2013 are as follows:
                                                                 

(In thousands
of CAD
dollars,
except per
unit amounts
and as
otherwise       Three months ended    Nine months ended September
noted)             September 30,                  30,
                   2013        2012         2013             2012

Property                     64,459               
revenue       $  70,850   $           $  213,044   $      187,552

Operating                     7,911               
income
attributable
to
Unitholders   $  11,504   $           $   37,044   $       27,910

Operating                      0.09               
income
attributable
to
Unitholders
per unit -
basic         $    0.13   $           $     0.40   $         0.34

Operating                      0.09               
income
attributable
to
Unitholders
per unit -
diluted       $    0.12   $           $     0.40   $         0.34

FFO           $  25,841   $  21,338   $   78,052   $       63,386

FFO per unit                   0.25               
- basic       $    0.28   $           $     0.85   $         0.78

FFO per unit                   0.24               
- diluted     $    0.28   $           $     0.83   $         0.76

FFO payout                    90.7%               
ratio (%)         79.5%                    78.7%            87.2%

AFFO          $  21,993   $  18,237   $   66,032   $       53,198

AFFO per unit                  0.21               
- basic       $    0.24   $           $     0.72   $         0.65

AFFO per unit                  0.21               
- diluted     $    0.24   $           $     0.71   $         0.64

Distributions                  0.22               
per unit      $    0.22   $           $     0.67   $         0.67

AFFO payout                  106.1%               
ratio (%)         93.4%                    93.1%           103.9%

The increase in FFO and AFFO for the three months and nine months ended 
September 30, 2013 was primarily due to acquisition and redevelopment activity 
during 2013 and 2012. The three months ended September 30, 2013 was also 
impacted by lower finance costs related to refinancing activity.

The table below presents a summary of financial performance for the three 
months and nine months ended September 30, 2013 compared to the same period in 
fiscal 2012.
                                                                      
                     Three Months Ended    Nine Months Ended September
                          September 30,                            30,

(In thousands        2013          2012         2013              2012
of CAD
dollars)                                                
                                    (As                  (As Restated)
                              Restated)                 

Property           70,850        64,459      213,044           187,552
revenue        $            $             $            $

Property           25,596        22,181       78,110            68,718
operating
expenses                                                

Property NOI       45,254        42,278      134,934           118,834

NOI margin          63.9%         65.6%        63.3%             63.4%
percentage                                              

Other items:                                                          

Lease                 311           273          405               386
terminations                                            

Depreciation     (11,876)      (12,200)     (34,983)          (32,077)
and
amortization                                            

General and       (2,851)       (2,655)      (9,423)           (7,863)
administrative
expenses                                                

Operating          30,838        27,696       90,933            79,280
income before
finance costs
and taxes                                               

Finance costs    (18,834)      (20,285)     (53,289)          (52,770)
- operations                                            

Operating          12,004         7,411       37,644            26,510
income before
taxes                                                   

Taxes -             (500)           500        (600)             1,400
deferred                                                

Operating          11,504         7,911       37,044            27,910
income
attributable
to Unitholders                                          

Finance costs    (20,545)      (19,343)     (61,463)          (55,270)
-
distributions
to Unitholders                                          

Finance costs       (151)       (4,047)        2,051           (5,862)
- change in
fair value of
financial
instruments                                             

Decrease in       (9,192)      (15,479)     (22,368)          (33,222)
net assets
attributable
to Unitholders $            $             $            $

Growth Highlights
                                                 Initial              
                                                           Occupancy
                                                Purchase                   Key
                                         GLA       Price        Rate     Tenants

Acquisitions in                                                         
Q1
                                                                        

Clearwater      Fort McMurray                  $                       Sobeys,
Landing                                                                The Brick,
                                                                       Mark's
                                                                       Work
                                                                       Wearhouse,
                                  AB 143,000      62,757        100%   Sport Chek

West Lethbridge Lethbridge                                             Safeway
Towne Centre                      AB 105,000      37,869        100%

Namao Centre    Edmonton                                               Shoppers
                                  AB  34,000      14,544         85%   Drug Mart

West Highland   Lethbridge                                             Shoppers
Towne Centre                      AB  29,000      16,720         95%   Drug Mart

Dartmouth       Halifax                                                Empire
Crossing                          NS  45,000      15,450        100%   Theatres

Findlay Blvd.   Riverview         NB  66,000      14,650        100%   Sobeys 

Rivière-du-Loup Rivière-du-Loup                                        Société
                                                                       des
                                                                       alcools du
                                  QC   9,000       2,455        100%   Québec

Acquisition in                                                          
Q2
                                                                        

Beaumont        Beaumont                                               Sobeys
Shopping Centre                   AB  59,000      20,875        100%

Acquisitions in                                                         
Q3                                                                  

Whyte Avenue    Edmonton                                               Shoppers
                                  AB  21,000      20,565        100%   Drug Mart

Saskatchewan    Portage La                                             Shoppers
Avenue East     Prairie           MB  20,000       7,362        100%   Drug Mart

Weston Road     Toronto                                                Shoppers
                                  ON  15,000       6,758        100%   Drug Mart

Westminister    Montreal                                               Shoppers
Avenue North                      QC  21,000       9,685        100%   Drug Mart

Completed to                                   $                        
date in 2013                         567,000     229,690            

These acquisitions continue Crombie's growth strategy of acquiring high 
quality grocery or drug store anchored retail properties in the top 36 markets 
in Canada.

Operating Highlights
               
                Three months ended   Nine months ended September
                     September 30,                           30,

(In thousands                             2013              2012
of CAD
dollars)          2013        2012                 

Property NOI  $ 45,254   $  42,278   $  134,934   $      118,834

Non-cash                                (3,550)          (3,564)
straight-line
rent             (983)     (1,249)                 

Non-cash                                  5,861            4,799
tenant
incentive
amortization     1,961       1,727                 

Property cash                           137,245          120,069
NOI             46,232      42,756                 

Acquisition,                             30,545           15,018
disposition
and
redevelopment
property cash
NOI             10,849       7,274                 

Same-asset                           $  106,700          105,051
property cash
NOI           $ 35,383   $  35,482                $

Property NOI, on a cash basis, excludes straight-line rent recognition and 
amortization of tenant incentive amounts. The 1.6% increase in same- asset 
cash NOI for the nine months ended September 30, 2013 is primarily the result 
of increased average rent per square foot from leasing activity, improved 
recovery rates and land use intensifications at several properties. The 0.3% 
decrease in same-asset cash NOI for the three months ended September 30, 2013 
is primarily the result of slightly lower occupancy rates and related higher 
non-recoverable costs.

Crombie believes that cash NOI is a better measure of AFFO sustainability and 
same-asset property performance.
                  Three Months Ended   Nine Months Ended September
                    September 30,                           30,

(In thousands                                 
of CAD
dollars)          2013       2012       2013               2012

Acquisition,                                  
disposition
and
redevelopment
property
revenue       $ 16,220   $ 10,894   $ 46,610   $         25,607

Acquisition,                                  
disposition
and
redevelopment
property
operating
expenses         5,378      3,669     15,934             11,006

Acquisition,                                  
disposition
and
redevelopment
property NOI  $ 10,842   $  7,225   $ 30,676   $         14,601

Margin %         66.8%      66.3%      65.8%              57.0%

Capital Highlights
                                      Nine months ended September 30,
                                           2013                  2012

Weighted Average Mortgage Term        7.5 years             7.6 years

Weighted Average Interest Rate            4.99%                 5.27%

Debt to Gross Book Value (Fair Value)     49.8%                 48.8%

Debt to Gross Book Value (Cost)           53.9%                 51.6%

Interest Coverage                          2.72                  2.58

Debt Service Coverage                      1.77                  1.75

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 $81,134 was drawn as 
at September 30, 2013, and an additional $4,129 encumbered by outstanding 
letters of credit, resulting in significant available liquidity.

Debt to gross book value on a fair value basis is 49.8% (including convertible 
debentures) at September 30, 2013, compared to 48.8% at September 30, 2012.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 
2013 as a percentage of property revenue, increased by 0.2% from 4.2% to 4.4%, 
when compared to the same period in 2012. For the three months ended September 
30, 2013, general and administrative expenses as a percentage of property 
revenue, decreased by 0.1% from 4.1% to 4.0%, when compared to the same period 
in 2012.

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 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 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
        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.

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 the 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 2012 
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 and nine months ended September 30, 2013 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 September 30, 2013 
third quarter and year to date results on a conference call to be held Friday, 
November 8, 2013, at 12:30 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 22, 2013 
by dialing (416) 849-0833 or (855) 859-2056 and entering pass code 92977150, 
or on the Crombie website for 90 days after the meeting.





SOURCE  Crombie REIT 
Glenn Hynes, FCA Chief Financial Officer and Secretary Crombie REIT (902) 
755-8100  
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CO: Crombie REIT
ST: Nova Scotia
NI: ERN FIN  
-0- Nov/08/2013 13:30 GMT
 
 
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