Result Partners REIT Announces First Quarter 2013 Results www.partnersreit.com., VICTORIA, BRITISH COLUMBIA--(Marketwired - May 13, 2013) - Partners Real Estate Investment Trust, (TSX:PAR.UN) announced today results for the three months ended March 31, 2013.
Operating Results
Net income increased to $8.1 million ($0.32 per unit) for
the three months ended March 31, 2013 compared to $3.6 million ($0.25
per unit) for the same comparable period last year. The increase was due
to the contribution from acquisitions completed over the prior twelve
months, as well as $4.2 million in increases in the fair value of prior
acquisitions.
Weighted average occupancy at March 31, 2013 was 96.0%
compared to 96.7% at December 31, 2012 and 95.9% at the end of the first
quarter of 2012. The decline in occupancy in the first quarter of 2013
compared to the fourth quarter of 2012 is primarily due to the
acquisition of two properties in the quarter having an average occupancy
of 83%. Both properties acquired in the first quarter of 2013 have
rental income guarantees in place which ensure the REIT will receive
monthly rental revenue while leasing up the vacant space.
Net Operating Income ("NOI") increased to $8.2 million in
the first quarter of 2013 compared to $5.8 million in the comparable
prior year period due primarily to the contribution from acquisitions
completed over the prior twelve months. Same property NOI for the three
months ended March 31, 2013 increased 8.0% due primarily to increased
recoveries at the REIT's Place Desormeaux property in Longueil, Quebec.
Funds from Operations ("FFO") were $3.8 million or $0.15 per
unit for the three months ended March 31, 2013 compared to $3.7 million
or $0.17 per unit in the fourth quarter of 2012 and $2.3 million or
$0.16 per unit in the first quarter of 2012. The increase in FFO was due
primarily to the contribution from acquisitions completed over the
prior twelve months. Adjusted Funds from Operations ("AFFO") were $3.4
million or $0.13 per unit for the three months ended March 31, 2013
compared to $3.5 million or $0.15 per unit for the three months ended
December 31, 2012 and $2.2 million or $0.15 per unit in the first
quarter of 2012. Per Unit amounts in the first quarter of 2013 compared
to the first quarter of 2012 were negatively impacted by the 77.2%
increase in the weighted average number of units outstanding. Compared
to the fourth quarter of 2012, FFO per Unit in the first quarter of 2013
were negatively impacted by the 14.6% increase in the weighted average
number of units outstanding and a delay in the closing of related
acquisitions.
The payout ratio of total distributions as a percentage of
FFO and AFFO increased in the first quarter of 2013 to 109% and 122%,
respectively, compared to 97% and 103%, respectively, in the fourth
quarter of 2012 and 103% and 105%, respectively, in the first quarter of
2012. The payout ratio of cash distributions, excluding distributions
of units issued under the DRIP and Option Unit Purchase Plan, as a
percentage of FFO and AFFO, were 102% and 115%, respectively in the
first quarter of 2013 compared to 91% and 97%, respectively, in the
fourth quarter of 2012 and 100% and 102%, respectively, in the first
quarter of 2012.
Acquisitions
During the first quarter of 2013 the REIT acquired two
retail and mixed-use properties in Quebec aggregating approximately
93,500 square feet of gross leasable area ("GLA") for a total purchase
price of approximately $26.1 million. The property purchases were funded
by cash raised in recent public offerings of equity and debt.
Leasing
Leases representing approximately 159,000 square feet are
scheduled to expire in 2013. As of May 13, 2013 the REIT has secured
lease renewals and new leases on approximately 10,000 square feet of
this space.
Financial Position
As at March 31, 2013 the REIT's ratio of debt to gross book
value was 44.1% (60.9% including convertible debentures) compared to
49.3% (62.4% including convertible debentures) at December 31, 2012.
Interest coverage and debt service coverage ratios were 2.49 times and
1.63 times, respectively, as at March 31, 2013 compared to 2.30 times
and 1.55 times as at December 31, 2012. During the first quarter of 2013
total debt increased by $14.0 million due to a $23.0 million
convertible debenture issue which closed on March 5, 2013, partially
offset by $7.5 million in repayments on the REIT's Credit Facility and
monthly mortgage principle repayments.
The REIT's mortgage portfolio incurred a weighted average
effective interest rate of 4.48% at quarter end, consistent with the
rate at December 31, 2012, with a weighted average term to maturity of
approximately four years. Over the next two years, the REIT has
approximately $30.3 million of debt maturing which carries an average
effective interest rate of 4.91%.
Subsequent Events
Subsequent to March 31, 2013 the Centuria Urban Village
property with a carrying value of $10.2 million was added as security to
the REIT's Credit Facility, increasing the formula-based amount
available under the facility to $34.3 million. The property was
simultaneously removed from the REIT's Acquisition Facility which was
subsequently closed.
On April 10, 2013 the REIT completed the financing of
properties acquired during the quarter ended March 31, 2013. New
seven-year mortgages with contractual interest rates of 3.7% were placed
on the Sorel Shopping Centre and the Saint Remi Shopping Centre for
$4.2 million and $11.5 million, respectively.
On April 15, 2013 the REIT completed the acquisition of the
Mariner Square Shopping Centre, a six-building 101,000 square foot
open-air retail centre. Anchored by necessity-based tenants, the centre
is situated in downtown Campbell River on the east coast of Vancouver
Island about 260 kilometers north of Victoria. The REIT paid
approximately $25.8 million for the property, satisfied by the
assumption of a $14.7 million current mortgage maturing in November 2017
bearing a mark-to-market interest rate of 3.5%, with the balance paid
in cash, utilizing funds from the REIT's Credit Facility.
On May 6, 2013 the REIT completed the acquisition of
Marcel-Laurin, a 120,566 newly-constructed, necessity based, open-air
retail centre in Saint Laurent, Quebec. The REIT paid approximately
$35.8 million for the property, satisfied by a new $22.0 million
ten-year mortgage on the property with a contractual interest rate of
3.85%, with the balance paid in cash, utilizing proceeds of the Sorel
and Saint Remi Shopping Centre financings.
On May 6, 2013 the REIT completed the acquisition of the
Repentigny Shopping Centre, a stabilized, 49,366 square - foot open-air
centre in Repentigny, Quebec. The REIT paid approximately $10.0 million
for the property, satisfied by a new $5.7 million five-year mortgage on
the property with a contractual interest rate of 3.34%, with the balance
paid in cash, utilizing proceeds of the Sorel and Saint Remi Shopping
Centre financings.
On May 1, 2013 the REIT repaid its floating-rate mortgage
secured by a second charge on five Shoppers Drug Mart properties located
in Manitoba. The REIT utilized funds from its Credit Facility to repay
the interest-only loan, which had a contractual interest rate of 7.0% at
the time of repayment.
Internalization
On May 2, 2013 the independent trustees of the REIT
announced that they had provided notice to LAPP Global Asset Management
Corp., the external manager of the REIT (the "Manager"), that they had
decided to internalize management of the REIT, effective at the close of
business on November 1, 2013. It has always been the intention of the
trustees to have the management performed on a full time basis by
individuals employed directly by the REIT when the size of the Trust
permitted this to be done on a more economic basis than is the case
under the management agreement with the Manager provided the independent
trustees also concluded that internalizing management was otherwise in
the best interests of unitholders. The management agreement provides for
the termination of the Manager under such circumstances, provided that
the Manager is given six months' notice and a stipulated termination
payment.
The independent trustees believe that it is in the best
interests of the unitholders to internalize management. The independent
trustees have concluded, after seeking independent advice, that it would
be less expensive for the REIT to employ individuals directly rather
than have the REIT managed by the external Manager. The independent
trustees also believe the internalization of management will remove any
conflicts of interest between the external Manager and the REIT, and
significantly improve corporate governance of the REIT. Additional
information about this decision is available in a proxy circular mailed
to unitholders in connection with the upcoming annual meeting of
unitholders, which is expected to be held on June 6, 2013 at 2:30 p.m.
in Toronto, available on SEDAR.
| 1. NOI, FFO and AFFO are non-IFRS financial measures widely used in the real estate industry. See "Part II - Performance Measurement" for further details and advisories. |
| 2. Represents distributions to unitholders on an accrual basis. Distributions are payable as at the end of the period in which they are declared by the Board of Trustees, and are paid on or around the 15th day of the following month. Distributions per unit exclude the 5% bonus units given to participants in the Distribution Reinvestment and Optional Unit Purchase Plan. |
| 3. Total distributions as a percentage of FFO/AFFO. |
| 4. Represents distributions on a cash basis, and as such, excludes the non-cash distributions of units issued under the Distribution Reinvestment and Optional Unit Purchase Plan. |
| 5. Cash distributions as a percentage of FFO/AFFO. |
| 6. See calculation under "Debt-to-Gross Book Value" in "Part IV - Results of Operations". |
| 7. Calculated on a rolling four-quarter basis. See definition under "Mortgages and Other Financing" in "Part IV - Results of Operations". |
| 8. Represents the weighted average effective interest rate for secured debt excluding debentures and credit facilities. |
For the complete Financial Statements and Management's Discussion and Analysis for the period, please visit www.sedar.com or www.partnersreit.com.
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