Crombie REIT (TSX:CRR.UN) STELLARTON, NS, Feb. 26, 2014 /CNW/ - Crombie Real Estate Investment Trust ("Crombie") (TSX: CRR.UN) is pleased to report its financial results for the three months and year ended December 31, 2013. Year to Date and Fourth Quarter 2013 Highlights (In thousands of CAD dollars, except per unit amounts and as otherwise noted). Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO") in this News Release are based on "as adjusted" amounts as further explained in Crombie's MD&A for December 31, 2013. -- Acquisition of a portfolio of 70 retail properties, adding 3 million square feet, from a subsidiary of Sobeys Inc., a related party, for $991.3 million on November 3, 2013. -- Portfolio fair value of $3.9 billion. -- Crombie was assigned an investment grade credit rating of BBB (low) with a Stable trend by DBRS. -- FFO for the year ended December 31, 2013 increased 20.0% to $108,376 or $1.10 per unit Diluted, a 4.1% increase over the same period in 2012. FFO for the three months ended December 31, 2013 increased 26.7% to $30,324 or $0.27 per unit Diluted, a 0.4% increase over the same period in 2012. -- AFFO for the year ended December 31, 2013 increased 21.3% to $91,525 or $0.94 per unit Diluted, a 5.0% increase over the same period in 2012. AFFO for the three months ended December 31, 2013 increased 27.4% to $25,493 or $0.23 per unit Diluted, a 1.1% increase over the same period in 2012. -- FFO payout ratio of 79.9% for the year ended December 31, 2013 improved from 83.1% for the same period in 2012. FFO payout ratio of 83.0% for the quarter ended December 31, 2103 increased slightly compared to 82.7% for the same period in 2012. AFFO payout ratio improved by 4.8% to 94.7% for the year ended December 31, 2013 from 99.5% for the year ended December 31, 2012. AFFO payout ratio of 98.8% for the quarter ended December 31, 2103 improved slightly from 99.1% for the same period in 2012. -- Solid growth of 1.9% in Same-Asset Cash Net Operating Income ("NOI") for the year ended December 31, 2013 over the year ended December 31, 2012. Same-Asset Cash NOI growth of 1.3% for the three months ended December 31, 2013 compared to the same period in 2012. -- Property revenue of $296,558 for the year ended December 31, 2013, an increase of $40,536 or 15.8% over the $256,022 for the year ended December 31, 2012. Q4 property revenue of $83,950, increased $15,480 or 22.6% over Q4 2012. -- Occupancy, on a committed basis, was 93.2% at December 31, 2013, an improvement from 92.2% at September 30, 2013, and unchanged from December 31, 2012.The December 31, 2013 leased space is impacted by the acquisition of 70 fully-occupied properties in the fourth quarter of 2013 and offset by lease expiries of three Zellers since December 31, 2012, totaling 262,000 square feet. -- Crombie completed leasing activity on a total of 1,105,000 square feet during the year ended December 31, 2013, including: o Renewals on 486,000 square feet of 2013 expiring leases at an average rate of $12.99 per square foot, an increase of 7.2% over the expiring lease rate. o Renewals on 170,000 square feet of 2014 and later expiring leases at an average rate of $19.89 per square foot, an increase of 23.9% over the expiring lease rate; and o New leases on 449,000 square feet of space, at an average rate of $16.30 per square foot. -- Weighted average lease term of 10.4 years and weighted average mortgage term of 8.0 years; amongst the longest and most defensive in the REIT industry. -- Weighted average interest rate on mortgages reduced to 4.82% from 5.21% at December 31, 2012. Strong 2.73 times interest coverage. -- Debt to Gross Book Value (fair value basis) of 53.0% (55.9% on a cost basis). Donald E. Clow, FCA, President and CEO commented: "During 2013 we made significant progress on our long-term strategy by accretively growing our high quality grocery and drug store anchored portfolio by over 40% or $1.2 billion including the acquisition of the T&T and Safeway portfolios mostly in urban markets in Western Canada. In addition, our disciplined approach continued to improve our credit quality and access to capital which was recognized with the attainment of an investment grade credit rating." Financial Highlights Crombie's key financial metrics for the three months and year ended December 31, 2013 are as follows: (In thousands of Three months ended December Year ended December 31, CAD dollars, 31, except per unit amounts and 2013 2012 2013 2012 as otherwise noted) Property revenue $ 83,950 $ 68,470 $ 296,558 $ 256,022 Operating income attributable to Unitholders $ (492) $ 11,825 $ 36,552 $ 39,735 Operating income attributable to Unitholders per unit - basic $ (0.00) $ 0.13 $ 0.38 $ 0.48 Operating income attributable to Unitholders per unit - diluted $ (0.00) $ 0.13 $ 0.38 $ 0.48 FFO $ 30,324 $ 23,941 $ 108,376 $ 90,327 FFO per unit - basic $ 0.27 $ 0.27 $ 1.12 $ 1.09 FFO per unit - diluted $ 0.27 $ 0.27 $ 1.10 $ 1.06 FFO payout ratio 82.7% (%) 83.0% 79.9% 83.1% AFFO $ 25,493 $ 19,997 $ 91,525 $ 75,478 AFFO per unit - basic $ 0.23 $ 0.23 $ 0.95 $ 0.91 AFFO per unit - diluted $ 0.23 $ 0.22 $ 0.94 $ 0.89 Distributions per unit $ 0.22 $ 0.22 $ 0.89 $ 0.89 AFFO payout 99.1% ratio (%) 98.8% 94.7% 99.5% The increase in FFO and AFFO for the three months and year ended December 31, 2013 was primarily due to acquisition and redevelopment activity during 2013 and 2012. The three months ended December 31, 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 year ended December 31, 2013 compared to the same period in fiscal 2012. Three months ended December Year ended December 31, 31, (In thousands of CAD dollars) 2013 2012 2013 2012 Property revenue $ 83,950 $ 68,470 $ 296,558 $ 256,022 Property 25,804 operating expenses 28,563 106,673 94,522 Property NOI 55,387 42,666 189,885 161,500 NOI margin 62.3% percentage 66.0% 64.0% 63.1% Other items: Lease 3,458 terminations 80 485 3,844 Gain on - derecognition of investment properties 2,422 2,858 - Impairment of - investment properties (12,270) (12,270) - Depreciation (12,493) and amortization (15,045) (50,028) (44,570) General and (3,667) administrative expenses (4,243) (13,666) (11,530) Operating 29,964 income before finance costs and taxes 26,331 117,264 109,244 Finance costs - (16,639) operations (29,098) (82,387) (69,409) Operating 13,325 income before taxes (2,767) 34,877 39,835 Taxes - (1,500) deferred 2,275 1,675 (100) Operating 11,825 income attributable to Unitholders (492) 36,552 39,735 Finance costs - (19,809) distributions to Unitholders (25,157) (86,620) (75,079) Finance costs - 3,984 change in fair value of financial instruments 422 2,473 (1,878) Decrease in net assets attributable to Unitholders $ (25,227) $ (4,000) $ (47,595) $ (37,222) Growth Highlights Initial Purchase Occupancy Key GLA Price Rate Tenants Acquisitions in Q1 Clearwater Sobeys, Landing The Brick, Mark's Work Wearhouse, Fort McMurray AB 143,000 $ 62,757 100% Sport Chek West Lethbridge Towne Centre Lethbridge AB 105,000 37,869 100% Safeway Namao Centre Shoppers Edmonton AB 34,000 14,544 85% Drug Mart West Highland Shoppers Towne Centre Lethbridge AB 29,000 16,720 95% Drug Mart Dartmouth Empire Crossing Halifax NS 45,000 15,450 100% Theatres Findlay Blvd. Riverview NB 66,000 14,650 100% Sobeys Riviere-du-Loup Societe des alcools du Riviere-du-Loup QC 9,000 2,455 100% Quebec Acquisition in Q2 Beaumont Shopping Centre Beaumont AB 59,000 20,875 100% Sobeys Acquisitions in Q3 Whyte Avenue Shoppers Edmonton 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 Shoppers Toronto ON 15,000 6,758 100% Drug Mart Westminister Shoppers Avenue North Montreal QC 21,000 9,685 100% Drug Mart Acquisitions in Q4 70 Safeway Properties AB, BC, MB, SK 3,105,000 991,300 100% Safeway Total for 2013 3,672,000 $ 1,220,990 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 December Year ended December 31, 31, (In thousands of 2013 2012 2013 2012 CAD dollars) Property NOI $ 55,387 $ 42,666 $ 189,885 $ 161,500 Non-cash (1,245) straight-line rent (1,934) (5,484) (4,809) Non-cash tenant 1,533 incentive amortization 2,165 8,026 6,332 Property cash NOI 55,618 42,954 192,427 163,023 Acquisition, 9,363 disposition and redevelopment property cash NOI 21,602 52,650 25,870 Same-asset property cash NOI $ 34,016 $ 33,591 $ 139,777 $ 137,153 Property NOI, on a cash basis, excludes straight-line rent recognition and amortization of tenant incentive amounts. The 1.9% increase in same-asset cash NOI for the year ended December 31, 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 1.3% increase in same-asset cash NOI for the three months ended December 31, 2013 is primarily the result of increased average rent per square foot from leasing activity and land use intensification at several properties. Crombie believes that cash NOI is a better measure of AFFO sustainability and same-asset property performance. Three months ended December Year ended December 31, 31, (In thousands of 2013 2012 2013 2012 CAD dollars) Acquisition, disposition and redevelopment property revenue $ 28,838 $ 13,856 $ 78,207 $ 43,156 Acquisition, disposition and redevelopment property operating expenses 6,990 5,069 24,558 17,683 Acquisition, disposition and redevelopment property NOI $ 21,848 $ 8,787 $ 53,649 $ 25,473 Margin % 75.8% 63.4% 68.6% 59.0% Capital Highlights Year ended December 31, 2013 2012 Weighted Average Mortgage Term 8.0 years 7.4 years Weighted Average Interest Rate 4.82% 5.21 % Debt to Gross Book Value (Fair Value) 53.0 % 46.5 % Debt to Gross Book Value (Cost) 55.9 % 50.0 % Interest Coverage 2.73 2.61 Debt Service Coverage 1.79 1.76 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 $120,000 was drawn as at December 31, 2013, 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 53.0% (including convertible debentures) at December 31, 2013, compared to 46.5% at December 31, 2012. General and Administrative Expenses General and administrative expenses for the year ended December 31, 2013 as a percentage of property revenue, increased by 0.1% from 4.5% to 4.6%, when compared to the same period in 2012. For the three months ended December 31, 2013, general and administrative expenses as a percentage of property revenue, decreased by 0.3% from 5.4% to 5.1%, 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 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 249 commercial properties across Canada, comprising approximately 17.6 million square feet with a strategy to own and operate a portfolio of 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 and year ended December 31, 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 year ended December 31, 2013 results on a conference call to be held Thursday, February 27, 2014, at 2:00 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 March 13, 2014 by dialing (416) 849-0833 or (855) 859-2056 and entering pass code 92921878, 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 To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/February2014/26/c6322.html CO: Crombie REIT ST: Nova Scotia NI: ERN CONF -0- Feb/26/2014 22:08 GMT
Crombie REIT reports fourth quarter and fiscal 2013 results
Press spacebar to pause and continue. Press esc to stop.