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: -
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. -
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 -
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 CAD dollars, except per unit amounts and as otherwise noted) |
Three months ended December 31, | Year ended December 31, | |||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||
| 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 (%) | 83.0% | 82.7% | 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 ratio (%) | 98.8% | 99.1% | 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.
| (In thousands of CAD dollars) | Three months ended December 31, | Year ended December 31, | ||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||
| Property revenue | $ | 83,950 | $ | 68,470 | $ | 296,558 | $ | 256,022 | ||||||
| Property operating expenses | 28,563 | 25,804 | 106,673 | 94,522 | ||||||||||
| Property NOI | 55,387 | 42,666 | 189,885 | 161,500 | ||||||||||
| NOI margin percentage | 66.0% | 62.3% | 64.0% | 63.1% | ||||||||||
| Other items: | ||||||||||||||
| Lease terminations | 80 | 3,458 | 485 | 3,844 | ||||||||||
| Gain on derecognition of investment properties | 2,422 | – | 2,858 | – | ||||||||||
| Impairment of investment properties | (12,270) | – | (12,270) | – | ||||||||||
| Depreciation and amortization | (15,045) | (12,493) | (50,028) | (44,570) | ||||||||||
| General and administrative expenses | (4,243) | (3,667) | (13,666) | (11,530) | ||||||||||
| Operating income before finance costs and taxes | 26,331 | 29,964 | 117,264 | 109,244 | ||||||||||
| Finance costs – operations | (29,098) | (16,639) | (82,387) | (69,409) | ||||||||||
| Operating income before taxes | (2,767) | 13,325 | 34,877 | 39,835 | ||||||||||
| Taxes – deferred | 2,275 | (1,500) | 1,675 | (100) | ||||||||||
| Operating income attributable to Unitholders | (492) | 11,825 | 36,552 | 39,735 | ||||||||||
| Finance costs – distributions to Unitholders | (25,157) | (19,809) | (86,620) | (75,079) | ||||||||||
| Finance costs – change in fair value of financial instruments | 422 | 3,984 | 2,473 | (1,878) | ||||||||||
| Decrease in net assets attributable to Unitholders | $ | (25,227) | $ | (4,000) | $ | (47,595) | $ | (37,222) | ||||||
Growth Highlights
| GLA |
Initial Purchase Price |
Occupancy Rate |
Key Tenants | ||||||||
| Acquisitions in Q1 | |||||||||||
| Clearwater Landing | Fort McMurray | AB | 143,000 | $ | 62,757 | 100% | Sobeys, The Brick, Mark's Work Wearhouse, Sport Chek | ||||
| West Lethbridge Towne Centre | Lethbridge | AB | 105,000 | 37,869 | 100% | Safeway | |||||
| Namao Centre | Edmonton | AB | 34,000 | 14,544 | 85% | Shoppers Drug Mart | |||||
| West Highland Towne Centre | Lethbridge | AB | 29,000 | 16,720 | 95% | Shoppers Drug Mart | |||||
| Dartmouth Crossing | Halifax | NS | 45,000 | 15,450 | 100% | Empire Theatres | |||||
| Findlay Blvd. | Riverview | NB | 66,000 | 14,650 | 100% | Sobeys | |||||
| Riviere-du-Loup | Riviere-du-Loup | QC | 9,000 | 2,455 | 100% | Societe des alcools du Quebec | |||||
| Acquisition in Q2 | |||||||||||
| Beaumont Shopping Centre | Beaumont | AB | 59,000 | 20,875 | 100% | Sobeys | |||||
| Acquisitions in Q3 | |||||||||||
| Whyte Avenue | Edmonton | AB | 21,000 | 20,565 | 100% | Shoppers Drug Mart | |||||
| Saskatchewan Avenue East | Portage La Prairie | MB | 20,000 | 7,362 | 100% | Shoppers Drug Mart | |||||
| Weston Road | Toronto | ON | 15,000 | 6,758 | 100% | Shoppers Drug Mart | |||||
| Westminister Avenue North | Montreal | QC | 21,000 | 9,685 | 100% | Shoppers 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 31, | Year ended December 31, | |||||||||||
| (In thousands of CAD dollars) | 2013 | 2012 | 2013 | 2012 | ||||||||
| Property NOI | $ | 55,387 | $ | 42,666 | $ | 189,885 | $ | 161,500 | ||||
| Non-cash straight-line rent | (1,934) | (1,245) | (5,484) | (4,809) | ||||||||
| Non-cash tenant incentive amortization | 2,165 | 1,533 | 8,026 | 6,332 | ||||||||
| Property cash NOI | 55,618 | 42,954 | 192,427 | 163,023 | ||||||||
| Acquisition, disposition and redevelopment property cash NOI | 21,602 | 9,363 | 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 31, | Year ended December 31, | ||||||||||
| (In thousands of CAD dollars) | 2013 | 2012 | 2013 | 2012 | |||||||
| 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