Cominar REIT - Sustained Growth in the First Quarter of 2009
Wed May 13, 8:00 AM
- Increases of 18.4% in operating revenues and 16.6% in net operating
income
- Distributable income of $17.4 million, up 10.5%
- Funds from operations of $20.9 million, up 11.4%
- Strategic acquisition in Montréal: $37 million investment
Events subsequent to March 31, 2009:
- Unit offering: $57.5 million
- Designation of Complexe Jules-Dallaire (Laurier Boulevard project,
Québec City) and investment by the Dallaire family in this important
real estate complex
TSX - CUF.UN
QUÉBEC CITY, May 13 /CNW Telbec/ - Cominar Real Estate Investment Trust ("Cominar" or the "REIT") announces solid growth in the first quarter ended March 31, 2009.
Financial Highlights
--------------------
-------------------------------------------------------------------------
For the quarters ended March 31
(in thousands of dollars except per 2009 2008 %
unit amounts) Change
-------------------------------------------------------------------------
Operating revenues(1)(2) 67,867 57,333 18.4
Net operating income(1)(2)(3) 36,684 31,450 16.6
Net income(1) 4,042 4,125 (2,0)
Recurring distributable income(1)(3) 17,445 15,794 10.5
Recurring funds from operations(1)(3) 20,859 18,726 11.4
Recurring adjusted funds from
operations(1)(3) 17,046 15,682 8.7
Distributions 16,523 15,369 7.5
Per unit
Net income 0.09 0.09 -
Recurring distributable income (FD)(3)(4) 0.38 0.35 8.6
Recurring funds from operations (FD)(3)(4) 0.44 0.40 10.0
Recurring adjusted funds from
operations (FD)(3)(4) 0.37 0.35 5.7
Distributions (basic) 0.360 0.339 6.2
-------------------------------------------------------------------------
(1) Certain figures for 2008 have been modified following the adoption of
a new accounting policy implemented retroactively.
(2) Certain figures for 2008 have been reclassified as discontinued
operations in conformity with GAAP.
(3) Non-GAAP financial measure. See the reconciliation with the most
similar GAAP measure included herein.
(4) Fully diluted.
-------------------------------------------------------------------------
"The first three months of 2009 were our 43rd consecutive quarter of
growth, despite the economic context prevailing since 2008. Our occupancy rate
remained stable and high at 94.5% for the first quarter, holding steady with
the corresponding quarter of 2008 and comparable to the near-stationary
average occupancy rate of the last five years. We see that there is still
solid demand for rental space in our portfolio. Furthermore, despite tighter
lending conditions, we renewed, in advance and at low interest rates, our $255
million operating and acquisition credit facility. We also contracted or
assumed mortgages payable totalling $88.0 million. On April 21, 2009, we
completed a $57.5 million unit offering, the net proceeds of which were used
to pay down the outstanding debt used to finance our ongoing acquisition and
development pipeline. Our financial position remains healthy and solid,
enabling us to pursue our business strategy," indicated Michel Dallaire,
President and Chief Executive Officer of Cominar.
Operating revenues totalled $67.9 million for the first quarter ended
March 31, 2009, up 18.4%. This increase is due mainly to the contribution of
the office and industrial and mixed-use property acquisitions and developments
completed in 2008 and the beginning of 2009.
Net operating income amounted to $36.7 million, up 16.6% over the first
quarter of 2008. The operating profit margin stood at 54.1%, slightly below
the average of previous periods, whereas the same property profit margin held
virtually steady with 2008, at 53.6%.
Net income amounted to $4.0 million or $0.09 per unit, which is comparable
to the corresponding quarter of 2008.
Distributable income totalled $17.4 million, up 10.5% over the first
quarter of 2008. Recurring distributable income per fully diluted unit
amounted to $0.38, up from $0.35 for the corresponding quarter of 2008, an
increase of 8.6%.
Recurring funds from operations totalled $20.9 million, an increase of
11.4% reflecting the contribution of the acquisitions and developments
completed in 2008 and the beginning of 2009 and the 2.3% growth in same
property net operating income. Recurring adjusted funds from operations per
fully diluted unit grew by 5.7% to $0.37, up from $0.35 for the first quarter
of 2008.
Cominar paid distributions totalling $16.5 million to unitholders in the
first quarter de 2009, compared with $15.4 million in the corresponding
quarter of 2008, an increase of 7.5%. Distributions per unit amounted to
$0.360, compared with $0.339 in the first quarter of 2008.
Financial Position
------------------
On February 19, 2009, Cominar announced the renewal of its $255 million
operating and acquisition credit facility, which will now mature on June 19,
2010. During the first quarter of 2009, Cominar also contracted or assumed
mortgages payable totalling $88.0 million and bearing interest at a weighted
average contractual rate of 4.65%. In addition, it repaid outstanding
mortgages payable of $47.1 million bearing interest at a weighted average
contractual rate of 5.53% using its credit facilities and new mortgages
payable.
The overall debt ratio stood at 62.8%, which is less than the maximum debt
ratio of 65.0% allowed by the REIT's Contract of Trust when convertible
debentures are outstanding. The interest coverage ratio remained conservative
at 2.42:1 - on an annualized basis this ratio is rather at 2.6:1 - and the
weighted average contractual interest rate of its long-term debt was 5.55%,
down eight basis points from December 31, 2008.
Occupancy Rate of Portfolio Properties
--------------------------------------
As at March 31, 2009, the occupancy rate stood at 94.5%, holding steady
with the first quarter of 2008 and comparable to the average occupancy rate of
the last five years. In the first quarter, the leasing team renewed 35.0% of
expiring leases in 2009; note that 13.4% of Cominar's leases will expire this
year. In addition, Cominar signed new leases representing 0.2 million square
feet of leasable space.
Acquisition Completed in the First Quarter of 2009
--------------------------------------------------
On January 16, 2009, Cominar acquired a 227,260-square-foot office
property located at 8400 Décarie Boulevard in Montréal, for a $36.8 million
purchase price, and the capitalization rate is 8.8%. This property is attached
to another Cominar property and these two buildings are fully leased to the
same tenant. For this acquisition, Cominar assumed a $13.5 million mortgage
payable bearing interest at 5.55%, and the balance of the purchase price was
paid cash.
Ongoing Developments
--------------------
Ongoing developments in the Québec City and Montréal regions represent an
additional leasable area of approximately 0.7 million square feet and a total
estimated investment of $97.4 million. Their average capitalization rate is
estimated at 9.4%, which is much higher than current market rates for similar
properties. These developments are progressing on schedule.
Events Subsequent to March 31, 2009
-----------------------------------
Complexe Jules-Dallaire - In recent weeks, Cominar announced that its
large-scale real estate project on Laurier Boulevard, in Québec City, had been
officially named "Complexe Jules-Dallaire", in honour and memory of Cominar's
founder, the late Jules Dallaire. The REIT also announced that the Dallaire
family had entered into an agreement pursuant to which it acquired, effective
May 4, 2009, a 5% interest in this large-scale complex for a purchase price of
approximately $2.0 million, reflecting the share of the investments made to
date in the complex. In addition, the Dallaire family will assume its share of
the project's future expenses. Complexe Jules-Dallaire will be managed by Les
services administratifs Cominar inc., a wholly-owned subsidiary of Cominar.
Day-to-day management, budgetary matters and leasing will remain under the
control of Cominar.
$57.5 million unit offering - On April 21, 2009, Cominar completed an
offering of 4,792,050 units for proceeds of $57.5 million. The net proceeds
from the offering were used to pay down debt outstanding under current credit
facilities, which debt was used to finance Cominar's ongoing acquisition and
development pipeline. Cominar thus lowered its overall debt ratio to 59.9% as
at May 12, 2009.
Distribution Reinvestment Plan
------------------------------
The REIT has a distribution reinvestment plan for its unitholders that
allows participants to reinvest their monthly distributions in additional
Trust units. Participants will be given the right to receive an effective
discount of 5% of distributions to which they are entitled in the form of
additional units. Additional information and enrolment forms are available at
www.cominar.com.
Additional Financial Information
--------------------------------
Cominar's interim consolidated financial statements and the management's
discussion and analysis for the first quarter ended March 31, 2009 will be
filed with SEDAR at www.sedar.com and are available on Cominar's website at
www.cominar.com.
May 13, 2009 Conference Call
----------------------------
On Wednesday, May 13, 2009, at 11:00 a.m. (EDT) Cominar's management will
hold a conference call to discuss the results for the first quarter of 2009.
Anyone who is interested may take part in this call by dialing 1 (800)
595-8550. A presentation of the results will be available before the
conference call on the REIT's website at www.cominar.com under the title
"Conference Call". The event will also be simultaneously webcast on its
website and archived for 90 days.
PROFILE as at May 13, 2009
--------------------------
Cominar is the largest commercial property owner in the Province of
Quebec. The REIT owns a real estate portfolio of 215 high-quality properties,
consisting of 38 office, 38 retail and 139 industrial and mixed-use buildings
that cover a total area of over 18.5 million square feet in the Greater Québec
City, Montréal and Ottawa areas. Cominar's objectives are to deliver growing
cash distributions to its unitholders and to maximize unitholder value through
proactive management and the growth of its portfolio.
Forward-Looking Statements
--------------------------
This press release may contain forward-looking statements with respect to
Cominar and its operations, strategy, financial performance and financial
condition. These statements generally can be identified by the use of
forward-looking words such as "may", "will", "expect", "estimate",
"anticipate", "intend", "believe" or "continue" or the negative thereof or
similar variations. The actual results and performance of Cominar discussed
herein could differ materially from those expressed or implied by such
statements. Such statements are qualified in their entirety by the inherent
risks and uncertainties surrounding future expectations. Some important
factors that could cause actual results to differ materially from expectations
include, among other things, general economic and market factors, competition,
changes in government regulation and the factors described under "Risk
Factors" in the Annual Information Form of Cominar. The cautionary statements
qualify all forward-looking statements attributable to Cominar and persons
acting on its behalf. Unless otherwise stated, all forward-looking statements
speak only as of the date of this press release.
Non-GAAP Financial Measures
---------------------------
Net operating income, distributable income (DI), funds from operations
(FFO) and adjusted funds from operations (AFFO) are not measures recognized
under Canadian generally accepted accounting principles (GAAP) and do not have
standardized meanings prescribed by GAAP. NOI, DI, FFO and AFFO computed by
Cominar may differ from similar computations as reported by other similar
organizations and, accordingly, may not be comparable to similar measures
reported by such organizations. The following table shows the reconciliation
of DI, FFO and AFFO with the most similar GAAP measures:
-------------------------------------------------------------------------
Quarters ended March 31 2009 2008
DI FFO AFFO DI FFO AFFO
-------------------------------------------------------------------------
Net income (GAAP) 4,042 4,042 4,042 4,125 4,125 4,125
+ Amortization of income
properties 14,219 14,219 14,219 12,470 12,470 12,470
+ Amortization of
capitalized leasing
costs - 2,598 2,598 - 2,131 2,131
- Amortization of
below-market leases (204) - (204) (127) - (127)
+ Compensation expense
related to unit option
plan 173 - 173 130 - 130
+ Accretion of liability
component of convertible
debentures 10 - - 9 - -
- Rental income -
straight-line accounting
for leases (764) - (764) (782) - (782)
- Amortization of fair
value adjustments on
assumed indebtedness (31) - - (31) - -
- Amortization of
capitalized leasing
costs - - (2,598) - - (2,131)
- Capital expenditures -
maintenance of ability
to generate rental
income - - (420) - - (134)
-------------------------------------------------------------------------
17,445 20,859 17,046 15,794 18,726 15,682
-------------------------------------------------------------------------
Complete consolidated financial statements, including accompanying notes,
are available on Cominar's website at www.cominar.com under "Investor
Relations - Interim Reports".
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at As at
March 31, December 31,
2009 2008
$ $
-------------------------------------------------------------------------
ASSETS
Income properties
Buildings 1,241,937 1,228,770
Land 202,211 199,211
Intangible assets 77,893 79,106
----------- -----------
1,522,041 1,507,087
Properties under development 98,521 72,945
Land held for future development 37,176 20,857
Capitalized leasing costs and other assets 45,061 44,141
Prepaid expenses 8,892 1,954
Accounts receivable 26,444 21,352
-------------------------------------------------------------------------
1,738,135 1,668,336
-------------------------------------------------------------------------
LIABILITIES
Mortgages payable 767,135 730,711
Convertible debentures 204,084 203,723
Bank indebtedness 218,401 186,987
Accounts payable and accrued liabilities 43,134 34,987
Distributions payable to unitholders 5,505 -
-------------------------------------------------------------------------
1,238,259 1,156,408
-------------------------------------------------------------------------
UNITHOLDERS' EQUITY
Unitholders' equity 499,876 511,928
-------------------------------------------------------------------------
1,738,135 1,668,336
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF
UNITHOLDERS' EQUITY
For the quarters ended March 31
(unaudited, in thousands of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008
$ $
-------------------------------------------------------------------------
Unitholders' contributions
Balance, beginning of period 600,965 591,172
Issue of units 256 1,132
-------------------------------------------------------------------------
Balance, end of period 601,221 592,304
-------------------------------------------------------------------------
Cumulative net income
Balance, beginning of period 272,399 247,779
Change due to new accounting policy - (365)
Net income 4,042 4,125
-------------------------------------------------------------------------
Balance, end of period 276,441 251,539
-------------------------------------------------------------------------
Cumulative distributions
Balance, beginning of period (362,817) (298,080)
Distributions to unitholders (16,523) (15,369)
-------------------------------------------------------------------------
Balance, end of period (379,340) (313,449)
-------------------------------------------------------------------------
Contributed surplus
Balance, beginning of period 1,069 513
Unit option plan 173 124
-------------------------------------------------------------------------
Balance, end of period 1,242 637
-------------------------------------------------------------------------
Other equity component
Equity component of convertible debentures 312 312
-------------------------------------------------------------------------
Total unitholders' equity 499,876 531,343
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the quarters ended March 31
(unaudited, in thousands of dollars except per unit amounts)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008
$ $
-------------------------------------------------------------------------
Operating revenues
Rental revenue from income properties 67,867 57,333
-------------------------------------------------------------------------
Operating expenses
Operating costs 14,887 11,959
Realty taxes and services 15,431 13,332
Property management expenses 865 592
-------------------------------------------------------------------------
31,183 25,883
-------------------------------------------------------------------------
Operating income before the undernoted 36,684 31,450
-------------------------------------------------------------------------
Interest on borrowings 14,696 11,850
Depreciation of income properties 14,219 12,459
Amortization of capitalized leasing costs 2,598 2,124
Amortization of other assets 91 62
-------------------------------------------------------------------------
31,604 26,495
-------------------------------------------------------------------------
Operating income from real estate assets 5,080 4,955
-------------------------------------------------------------------------
Trust administrative expenses (1,093) (879)
Other revenues 55 51
-------------------------------------------------------------------------
Net income from continuing operations 4,042 4,127
Net loss from discontinued operations - (2)
-------------------------------------------------------------------------
Net income and comprehensive income 4,042 4,125
-------------------------------------------------------------------------
Basic net income per unit 0.088 0.091
-------------------------------------------------------------------------
Diluted net income per unit 0.088 0.090
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the quarters ended March 31
(unaudited, in thousands of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008
$ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income 4,042 4,125
Items not affecting cash:
Depreciation of income properties 14,219 12,470
Amortization of below-market leases (204) (127)
Amortization of capitalized leasing costs 2,598 2,131
Amortization of capitalized financing costs
and other assets 711 435
Amortization of fair value adjustments on
assumed indebtedness (31) (31)
Accretion of liability component of convertible
debentures 10 9
Compensation expense related to unit option plan 173 130
-------------------------------------------------------------------------
21,518 19,142
-------------------------------------------------------------------------
Change in non-cash working capital items (4,802) (14,590)
-------------------------------------------------------------------------
16,716 4,552
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to income properties (26,773) (23,241)
Additions to properties under development and
land held for future development (28,930) (5,907)
Capitalized leasing costs (4,236) (4,574)
Other assets (94) (540)
-------------------------------------------------------------------------
(60,033) (34,262)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Mortgages payable 74,318 29,864
Repayment of mortgages payable (51,546) (55,228)
Bank indebtedness 31,307 70,505
Net proceeds from issue of units (12) 572
Distributions to unitholders (10,750) (16,003)
-------------------------------------------------------------------------
43,317 29,710
-------------------------------------------------------------------------
Net change in cash and cash equivalents - -
Cash and cash equivalents, beginning of period - -
-------------------------------------------------------------------------
Cash and cash equivalents, end of period - -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ContactsMichel Dallaire P.Eng.
President and Chief Executive Officer
(418) 681-8151
mdallaire@cominar.com Michel Berthelot
CA
Executive Vice President and Chief Financial Officer
(418) 681-8151
mberthelot@cominar.com
