Crombie REIT reports first quarter results

Crombie REIT (TSX:CRR.UN) 
STELLARTON, NS, May 14, 2014 /CNW/ - Crombie Real Estate Investment Trust 
("Crombie") (TSX:CRR.UN) is pleased to report its financial results for the 
first quarter ended March 31, 2014. 
First Quarter 2014 Highlights (In thousands of CAD dollars, except per unit 
amounts and as otherwise noted). 


        --  Portfolio fair value of $3.9 billion.
        --  Funds From Operations ("FFO"):
            o FFO per unit fully diluted remained stable at $0.28,
              unchanged from the same period in 2013.
            o FFO grew by 34.1% over the same period in 2013 ($34,494 vs.
              $25,721).
            o FFO payout ratio decreased slightly to 79.3% compared to
              79.5% for the same period in 2013.
        --  Adjusted Funds From Operations ("AFFO"):
            o AFFO per unit fully diluted remained stable at $0.23,
              unchanged from the same period in 2013.
            o AFFO grew by 33.2% over the same period in 2013 ($28,769 vs.
              $21,606).
            o AFFO payout ratio increased slightly to 95.1% compared to
              94.6% for the same period in 2013.
        --  Same-asset Cash Net Operating Income ("NOI") showed strong 2.5%
            growth over the same period in 2013.
        --  Property revenue of $90,913, an increase of $20,331 or 28.8%
            over the $70,582 for Q1 2013.
        --  Occupancy, on a committed basis, was 93.1% at March 31, 2014,
            compared with 93.2% at December 31, 2013.
        --  Crombie completed leasing activity on a total of 260,000 square
            feet during the quarter, including:
            o Renewals on 149,000 square feet of 2014 expiring leases at an
              average rate of $16.52 per square foot, an increase of 8.7%
              over the expiring lease rate; and
            o New leases on 111,000 square feet of space, at an average
              rate of $14.61 per square foot.
        --  Weighted average lease term of 11.8 years and weighted average
            mortgage term of 7.9 years; amongst the longest and most
            defensive in the REIT industry.
        --  Weighted average interest rate on mortgages reduced to 4.79%
            from 4.82% at December 31, 2013 and 5.09% at March 31, 2013.
            Strong 2.53 times interest coverage.
        --  Debt to Gross Book Value (fair value basis) of 53.1%.

Donald E. Clow, FCA, President and CEO commented:" We are pleased with our 
progress on the integration of the Safeway portfolio; our continued access to 
new sources of capital; and the enhancement of our national platform, 
including the improved focus of our senior leadership team and the addition of 
a new regional vice-president position in Western Canada."

Financial Highlights

Crombie's key financial metrics for the three months ended March 31, 2014 are 
as follows:
     
    (In thousands of CAD dollars, except per Three Months Ended March 31,
    unit amounts and
    as otherwise noted)                          2014                2013
    Property revenue                         $ 90,913 $            70,582
    Operating income attributable to         $ 15,900 $            12,959
    Unitholders
    Operating income attributable to         $   0.13 $              0.14
    Unitholders per unit - basic
    Operating income attributable to         $   0.13 $              0.14
    Unitholders per unit - diluted
    FFO                                      $ 34,494 $            25,721
    FFO per unit - basic                     $   0.28 $              0.28
    FFO per unit- diluted                    $   0.28 $              0.28
    FFO payout ratio (%)                        79.3%               79.5%
    AFFO                                     $ 28,769 $            21,606
    AFFO per unit - basic                    $   0.23 $              0.24
    AFFO per unit - diluted                  $   0.23 $              0.23
    Distributions                            $   0.22 $              0.22
    AFFO payout ratio (%)                       95.1%               94.6%

The increase in FFO and AFFO for the three months ended March 31, 2014 was 
primarily due to the 70 property Sobey / Safeway acquisition during the fourth 
quarter of 2013 and completed redevelopment and land use intensification 
projects during 2013, resulting in significant growth in property NOI, offset 
in part by higher finance costs - operations. 
The table below presents a summary of financial performance for the three 
months ended March 31, 2014 compared to the same period in fiscal 2013. 
     
                                              Three Months Ended March 31,
    (In thousands of CAD dollars, except per
    unit amounts and as otherwise noted)            2014              2013
    Property revenue                          $   90,913 $          70,582
    Property operating expenses                   29,554            26,818
    Property NOI                                  61,359            43,764
    NOI margin percentage                          67.5%             62.0%
    Other items:                                                          
      Gain (loss) on derecognition of              (157)               430
      investment properties
      Depreciation and amortization             (16,525)          (11,122)
      General and administrative expenses        (3,756)           (3,206)
    Operating income before finance costs and     40,921            29,866
    taxes
    Finance costs - operations                  (25,246)          (16,807)
    Operating income before taxes                 15,675            13,059
    Taxes - deferred                                 225             (100)
    Operating income attributable to              15,900            12,959
    Unitholders
    Finance costs - distributions to            (27,355)          (20,438)
    Unitholders
    Finance income (costs) - change in fair           55               617
    value of financial instruments
    Decrease in net assets attributable to    $ (11,400) $         (6,862)
    Unitholders

Growth Highlights
                                         Initial
                                        Purchase Occupancy
                                 GLA       Price      Rate Key Tenants
    Acquisitions                                                         
    in Q1
    Penhorn Plaza Dartmouth NS                             Mr. Lube, Fast
                               6,683 $ 1,490,000      100%          Fuels
    Completed to                                                         
    date in 2014               6,683 $ 1,490,000          

Since January 1, 2014, Crombie's GLA reflects a net decrease of 18,000 square 
feet from acquisition and disposition activity. Crombie exchanged a property 
in Alberta for another Alberta property, resulting in no net change in GLA. In 
addition, Crombie disposed of part of an existing property in Nova Scotia, 
resulting in a 25,000 square foot reduction in GLA and completed the above 
acquisition of additional development property.  

Operating Highlights
                                     Three Months Ended March 31,          
    (In thousands of CAD  
    dollars)                                       2014      2013  Variance
    Property NOI                     $           61,359 $  43,764 $  17,595
    Non-cash              
    straight-line rent                          (2,754)   (1,359)   (1,395)
    Non-cash tenant       
    incentive
    amortization                                  2,137     1,970       167
    Property cash NOI                            60,742    44,375    16,367
    Acquisition,          
    disposition and
    redevelopment
    property cash NOI                            19,541     4,175    15,366
    Same-asset property   
    cash NOI                         $           41,201 $  40,200 $   1,001
     
                           Three Months Ended March 31,                    
    (In thousands of CAD  
    dollars)                    2014               2013  Variance   Percent
    Retail Enclosed        $   6,492 $            6,061 $     431      7.1%
    Retail Freestanding        8,533              8,181       352      4.3%
    Retail Plaza              20,045             19,882       163      0.8%
    Retail total              35,070             34,124       946      2.8%
    Mixed Use                  3,155              3,166      (11)    (0.3)%
    Office                     2,976              2,910        66      2.3%
    Same-asset property   
    cash NOI               $  41,201 $           40,200 $   1,001      2.5%

Property NOI, on a cash basis, excludes straight-line rent recognition and 
amortization of tenant incentive amounts. The 2.5% increase in same-asset cash 
NOI for the three months ended March 31, 2014 is primarily the result of 
increased average rent per square foot from leasing activity and rental rate 
increases in existing leases as well as improved recovery rates and revenues 
from land use intensifications at several properties.

During the first quarter of 2014, Crombie classified an investment property as 
held for sale. The operating results for that property are included in 
acquisition, disposition and redevelopment for the current and comparative 
periods.

Crombie believes that cash NOI is a better measure of AFFO sustainability and 
same-asset property performance.

Acquisition, disposition and redevelopment property cash NOI is as follows:
                                    Three Months Ended March 31,          
    (In thousands of CAD dollars)       2014                2013  Variance
    Acquisition and disposition     $ 17,998 $             1,926 $  16,072
    property cash NOI
    Redevelopment property cash NOI    1,543               2,249     (706)
    Total acquisition, disposition  $ 19,541 $             4,175 $  15,366
    and redevelopment property cash
    NOI

The significant growth in Acquisition and disposition property cash NOI was 
primarily due to the 70 property Sobeys / Safeway acquisition during the 
fourth quarter of 2013.

Capital Highlights
                                          Three Months Ended March 31,
                                               2014               2013
    Weighted Average Mortgage Term        7.9 years          7.7 years
    Weighted Average Interest Rate            4.79%              5.09%
    Debt to Gross Book Value (Fair Value)     53.1%              48.3%
    Interest Coverage                          2.53               2.79
    Debt Service Coverage                      1.69               1.85

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 $50,000 was drawn as 
at March 31, 2014, 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 53.1% (including convertible 
debentures) at March 31, 2014, compared to 48.3% at March 31, 2013.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2014, 
as a percentage of property revenue, decreased by 0.4% from 4.5% to 4.1%, when 
compared to the same period in 2013, reflecting the impact of significant 
business growth during 2013.

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 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 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 ended March 31, 2014 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 three months ended 
March 31, 2014  results on a conference call to be held Wednesday, May 14, 
2014, at 12:00 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 May 28, 2014 by 
dialing (416) 849-0833 or (855) 859-2056 and entering pass code 34849692, or 
on the Crombie website for 90 days after the meeting.



SOURCE  Crombie REIT 
Glenn Hynes, FCA Executive Vice President, 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/May2014/14/c7386.html 
CO: Crombie REIT
ST: Nova Scotia
NI: ERN CONF REL  
-0- May/14/2014 11:46 GMT
 
 
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