Crombie REIT reports second quarter results

Crombie REIT (TSX: CRR.UN) 
STELLARTON, NS, Aug. 8, 2014 /CNW/ - Crombie Real Estate Investment Trust 
("Crombie") (TSX: CRR.UN) is pleased to report its financial results for the 
three months and six months ended June 30, 2014. 
Second 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 for the six months ended June 30, 2014 increased 32.8% to
        $69,330; or $0.55 per unit Diluted, a decrease of $0.01 per unit
        from the same period in 2013.
      o FFO for the three months ended June 30, 2014 increased 31.5% to
        $34,836; or $0.27 per unit Diluted, a decrease of $0.01 per unit
        from the three months ended June 30, 2013.
      o FFO payout ratio of 80.5% for the six months ended June 30, 2014
        compared to 78.4% for the same period in 2013.
      o FFO payout ratio of 81.8% for the three months ended June 30, 2014
        compared to 77.3% for the three months ended June 30, 2013.
        --  Adjusted Funds From Operations ("AFFO"):
      o AFFO for the six months ended June 30, 2014 increased 31.1% to
        $57,741; or $0.46 per unit Diluted, a decrease of $0.02 per unit
        from the same period in 2013.
      o AFFO for the three months ended June 30, 2014 increased 29.1% to
        $28,972; or $0.23 per unit Diluted, a decrease of $0.01 per unit
        from the three months ended June 30, 2013.
      o AFFO payout ratio of 96.7% for the six months ended June 30, 2014
        compared to 92.9% for the same period in 2013.
      o AFFO payout ratio of 98.3% for the three months ended June 30, 2014
        compared to 91.3% for the same period in 2013.
        --  Same-asset Cash Net Operating Income ("NOI") for the six months
            ended June 30, 2014 showed solid growth of 1.9% compared to the
            same six months ended June 30, 2013. Increase in same-asset
            cash NOI of 1.3% for the three months ended June 30, 2014
            compared to the same period in 2013.
        --  Property revenue for the six months ended June 30, 2014 of
            $179,921, an increase of $38,069 or 26.8% over the six months
            ended June 30, 2013. Property revenue of $89,008 for Q2 2014
            increased $17,738 or 24.9% over Q2 2013.
        --  Occupancy, on a committed basis, was 93.3% at June 30, 2014,
            compared with 93.1% at March 31, 2014.
        --  Crombie completed leasing activity on a total of 531,000 square
            feet during the six months ended June 30, 2014, including:
      o Renewals on 237,000 square feet of 2014 expiring leases at an
        average rate of $17.50 per square foot, an increase of 10.0% over
        the expiring lease rate;
      o Renewals on 20,000 square feet of 2015 and later expiring leases at
        an average rate of $15.17 per square foot, an increase of 8.5% over
        the expiring lease rate; and
      o New leases on 274,000 square feet of space, at an average rate of
        $15.26 per square foot.
        --  Weighted average lease term of 12.0 years and weighted average
            mortgage term of 7.8 years; amongst the longest and most
            defensive in the REIT industry.
        --  Strong 2.54 times interest coverage. Weighted average interest
            rate on mortgages reduced to 4.78% from 4.79% at March 31, 2014
            and 5.00% at June 30, 2013.
        --  Debt to Gross Book Value (fair value basis) of 51.6% compared
            to 53.1% at March 31, 2014.
        --  Completed $100,000 Units and Class B LP Units issuance on May
            30, 2014; $60,000 of which is the first issuance under the
            $500,000 Short Form Shelf Prosspectus filed on May 13, 2014.
        --  Closed $100,000 principal amount Series B Senior Unsecured
            Notes offering with an effective yield of 3.90% on March 5,
            2014.

Donald E. Clow, FCA, President and CEO commented: "Focus on our long term 
strategy of owning one of the best real estate portfolios in Canada, building 
a national platform and enhancing our financial condition is clear and 
unwavering. During the quarter we continued the integration and scoping of 
development opportunities in the new Safeway acquisitions as well as assessing 
other significant value creation projects in urban markets in the rest of 
Canada. In addition to retail development opportunities we are considering 
participating in mixed use components of these developments including Crombie 
developing up to 4,000 residential units over the next 10 to 15 years."

Financial Highlights

Crombie's key financial metrics for the three months and six months ended June 
30, 2014 are as follows:
                                                                           
    (In thousands     Three Months Ended June
    of CAD dollars,                       30,     Six Months Ended June 30,
    except per unit
    amounts and as   
    otherwise
    noted)              2014             2013        2014              2013
    Property
    revenue         $ 89,008 $         71,270   $ 179,921 $         141,852
    Operating
    income
    attributable to
    Unitholders     $ 17,000 $         12,581   $  32,900 $          25,540
    Operating
    income
    attributable to
    Unitholders per
    unit - basic    $   0.14 $           0.14   $    0.27 $            0.28
    Operating
    income
    attributable to
    Unitholders per
    unit - diluted  $   0.14 $           0.14   $    0.26 $            0.28
    FFO             $ 34,836 $         26,490   $  69,330 $          52,211
    FFO per unit -
    basic           $   0.28 $           0.29   $    0.56 $            0.57
    FFO per unit-                              
    diluted         $   0.27 $           0.28   $    0.55 $            0.56
    FFO payout
    ratio (%)          81.8%            77.3%       80.5%             78.4%
    AFFO            $ 28,972 $         22,433   $  57,741 $          44,039
    AFFO per unit -
    basic           $   0.23 $           0.24   $    0.47 $            0.48
    AFFO per unit -
    diluted         $   0.23 $           0.24   $    0.46 $            0.48
    Distributions   $   0.22 $           0.22   $    0.45 $            0.45
    AFFO payout
    ratio (%)          98.3%            91.3%       96.7%             92.9%

The increase in FFO and AFFO for the three months and six months ended June 
30, 2014 was primarily due to the 70 property Sobey / Safeway acquisition 
during the fourth quarter of 2013 and completed development 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 and six months ended June 30, 2014 compared to the same period in 
fiscal 2013.
     
    (In thousands of   Three Months Ended June     Six Months Ended June
    CAD dollars,                 30,                        30,
    except per unit
    amounts and as    
    otherwise noted)       2014           2013         2014         2013
    Property revenue $   89,008 $       71,270   $  179,921 $    141,852
    Property          
    operating
    expenses             27,049         25,696       56,963       52,514
    Property NOI         61,599         45,574      122,958       89,338
    NOI margin        
    percentage            69.2%          63.9%        68.3%        63.0%
    Other items:                                                        
      Gain (loss) on                              
      derecognition
      of investment
      properties            (3)              6        (160)          436
      Depreciation                                
      and
      amortization     (15,943)       (11,985)     (32,468)     (23,107)
      General and                                 
      administrative
      expenses          (4,083)        (3,366)      (7,839)      (6,572)
    Operating income  
    before finance
    costs and taxes      41,570         30,229       82,491       60,095
    Finance costs -   
    operations         (25,070)       (17,648)     (50,316)     (34,455)
    Operating income  
    before taxes         16,500         12,581       32,175       25,640
    Taxes - deferred        500              -          725        (100)
    Operating income  
    attributable to
    Unitholders          17,000         12,581       32,900       25,540
    Finance costs -   
    distributions to
    Unitholders        (28,480)       (20,480)     (55,835)     (40,918)
    Finance income    
    (costs) - change
    in fair value of
    financial
    instruments             130          1,585          185        2,202
    Decrease in net  $
    assets
    attributable to
    Unitholders        (11,350) $      (6,314)   $ (22,750) $   (13,176)

Growth Highlights
                                               Initial
                                              Purchase   Occupancy   Key
                                    GLA          Price        Rate   Tenants
    Acquisitions             
    in Q1                                                             
      Penhorn    Dartmouth                                                Mr.
      Plaza                                                             Lube,
                                                                         Fast
                           NS     6,683   $  1,490,000        100%      Fuels
    Acquisitions             
    in Q2                                                             
      London     London                                              FreshCo,
      Pine                                                             Dollar
      Valley               ON    39,000     10,176,000        100%       Tree
    Completed to             
    date in 2014                 45,683   $ 11,666,000        100%    

Since January 1, 2014, Crombie's GLA reflects a net increase of 21,000 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 
acquisitions.

Operating Highlights
                       Three Months Ended June  
                                 30,             Six Months Ended June 30,
    (In thousands of      2014            2013        2014            2013
    CAD dollars)
    Property NOI     $  61,599 $        45,574   $ 122,958 $        89,338
    Non-cash                                                
    straight-line
    rent               (2,706)         (1,208)     (5,460)         (2,567)
    Non-cash tenant                                         
    incentive
    amortization         2,390           1,930       4,527           3,900
    Property cash                                           
    NOI                 61,283          46,296     122,025          90,671
    Acquisitions,                                           
    dispositions and
    development
    property cash
    NOI                 20,161           5,691      39,702           9,866
    Same-asset       $         $                 $         $
    property cash
    NOI                 41,122          40,605      82,323          80,805
                      Three Months Ended June
                                          30,     Six Months Ended June 30,
    (In thousands
    of CAD dollars)     2014             2013       2014               2013
    Retail Enclosed $  6,075 $          5,985   $ 12,567 $           12,046
    Retail                                     
    Freestanding       8,487            8,183     17,020             16,364
    Retail Plaza      20,492           20,086     40,537             39,968
    Retail total      35,054           34,254     70,124             68,378
    Mixed Use          3,341            3,243      6,496              6,409
    Office             2,727            3,108      5,703              6,018
    Same-asset                                 
    property cash
    NOI             $ 41,122 $         40,605   $ 82,323 $           80,805

Property NOI, on a cash basis, excludes straight-line rent recognition and 
amortization of tenant incentive amounts. The 1.3% and 1.9% increases in 
same-asset property cash NOI for the three months and six months ended June 
30, 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 
acquisitions, dispositions and development for the current and comparative 
periods.

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

Acquisitions, dispositions and development property cash NOI is as follows:
                      Three Months Ended June
                                          30,     Six Months Ended June 30,
    (In thousands                                
    of CAD dollars)     2014             2013       2014               2013
    Acquisitions    $                           $
    and
    dispositions
    property cash
    NOI               18,956 $          4,912     36,954 $            6,838
    Development                                  
    property cash
    NOI                1,205              779      2,748              3,028
    Total           $                           $
    acquisition,
    disposition and
    development
    property cash
    NOI               20,161 $          5,691     39,702 $            9,866

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

Capital Highlights
                                          Six Months Ended June 30,
                                               2014            2013
    Weighted Average Mortgage Term        7.8 years       7.7 years
    Weighted Average Interest Rate            4.78%           5.00%
    Debt to Gross Book Value (Fair Value)     51.6%           49.6%
    Interest Coverage                          2.54            2.77
    Debt Service Coverage                      1.70            1.80

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 
$300,000, subject to available borrowing base, of which $28,785 was drawn as 
at June 30, 2014, and an additional $2,535 encumbered by outstanding letters 
of credit, resulting in significant available liquidity.

Debt to gross book value on a fair value basis is 51.6% (including convertible 
debentures) at June 30, 2014, compared to 49.6% at June 30, 2013.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2014, as 
a percentage of property revenue, decreased by 0.2% from 4.6% to 4.4%, when 
compared to the same period in 2013. For the three months ended June 30, 2014, 
general and administrative expenses as a percentage of property revenue, 
decreased by 0.1% from 4.7% to 4.6%, when compared to the same period in 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 high quality grocery and drug store anchored shopping centres and 
freestanding stores primarily 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 six months ended June 30, 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 June 30, 2014 second 
quarter and year to date results on a conference call to be held Friday, 
August 8, 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 August 22, 2014 
by dialing (416) 849-0833 or (855) 859-2056 and entering pass code 76367802, 
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/August2014/08/c8934.html 
CO: Crombie REIT
ST: Nova Scotia
NI: ERN FIN CONF  
-0- Aug/08/2014 12:25 GMT
 
 
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