Crombie REIT reports fourth quarter and fiscal 2013 results

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
 
 
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