Partners Real Estate Investment Trust ("REIT") (TSX VENTURE:PAR.UN) announced
today solid growth and strong performance for the three months and year ended
December 31, 2011. Effective January 1, 2011 the REIT adopted International
Financial Reporting Standards ("IFRS"). Please refer to the REIT's Management
Discussion and Analysis and the audited consolidated financial statements for
the year ended December 31, 2011 for a comprehensive description of the changes
arising from the transition.
HIGHLIGHTS:
-- NOI rises 56% and FFO up 39% in 2011 on contribution from acquisitions
and solid same property performance;
-- Acquisition of 18 properties (approx. 0.9 million sq. ft. of GLA) in
2011 and 2012 for a total acquisition costs of $196.45 million to make
contribution and significantly expand and strengthen portfolio;
-- Successful completion of a $22.7 million bought deal equity offering
(including the exercise of 90% of the overallotment option) completed
subsequent to year-end;
-- Equity has grown to $130.0 million from $56.0 million and the balance
sheet and liquidity position have improved with the NorRock Realty
Finance Corporation transaction on February 1, 2012;
-- Debt-to-Gross Book Value decreased to 62.6% following the acquisitions,
equity offering and NorRock transaction in 2012;
-- Unit consolidation concluded on February 14, 2012 on a four-for-one
basis;
-- Conditional approval for listing on Toronto Stock Exchange announced
March 1, 2012; and
-- Occupancies up to 98.0% as at December 31, 2011 from 95.7% in the
previous year.
"Partners REIT established a strong foundation in 2011. We significantly
expanded the size and scope of our property portfolio, strengthened the
occupancy base, and generated solid and consistent growth in all our key
performance benchmarks," commented Adam Gant, Chief Executive Officer. "Looking
ahead, we expect to build on this strong performance as the properties acquired
during and subsequent to 2011 contribute to our results, our proven property
management expertise generates higher occupancies and improved average rents.
With the subsequent completion of the NorRock transaction and equity offering,
along with the corresponding shopping centre purchases we have seen Partners
REIT triple in assets since our taking over management. We look forward to
further improvement in unit holder value along with continued growth with high
quality assets."
Significant Growth
During 2011, the REIT acquired 10 well-located retail properties aggregating
approximately 484,000 square feet of gross leasable area ("GLA") for a total
purchase price of approximately $93.5 million. Subsequent to the year-end it
completed six additional acquisitions comprising approximately 406,000 square
feet of GLA for an aggregate purchase price of approximately $103.0 million, and
announced a further two acquisitions totaling 131,000 square feet of GLA for a
collective purchase price of $30.6 million. The acquisitions were funded by new
credit facilities, the assumption of mortgages, including the expansion of such
mortgages, the equity bought deal offering, and the proceeds from the NorRock
transaction.
With the acquisitions either pending completion or completed during and
subsequent to the year-end, the REIT's portfolio will consist of 30 well-located
retail properties in Ontario, Quebec, Manitoba, British Columbia and Alberta
aggregating approximately 2.2 million square feet of GLA.
Solid Operating Performance
Weighted average occupancy at December 31, 2011 increased to 98.0% from 95.7%
last year. The increase is due primarily to solid leasing activity through the
REIT's portfolio.
Net Operating Income ("NOI") increased 78% to $4.7 million in the fourth quarter
of 2011 from $2.7 million in the same prior-year period. For the year ended
December 31, 2011 NOI increased 56% to $15.5 million from $9.9 million last
year. The increases were due primarily to the contribution from recent
acquisitions and same property NOI, which was flat in the fourth quarter of 2011
and increased by approximately 2.0% for the year ended December 31, 2011
compared to the same prior-year periods.
Funds from Operations ("FFO") rose to $1.4 million ($0.18 per unit) in the
fourth quarter of 2011 from $1.0 million ($0.15 per unit) in the fourth quarter
of the prior year. For the year ended December 31, 2011 FFO increased to $5.0
million ($0.65 per unit) from $3.6 million ($0.67 per unit) last year. The
increases were due primarily to the contribution from acquisitions and increased
same property NOI. Per unit amounts were impacted by the 20% and 43% increase in
the weighted average number of units outstanding for the three months and year
ended December 31, 2011, respectively, compared to the same prior-year periods.
Management believes per unit amounts will improve over time as recent
acquisitions make a full contribution to FFO.
Active Leasing
Management remains committed to actively pursuing new leases and lease renewals
with the objective of increasing occupancy and weighted average rental income
per square foot of gross leasable area. One of the REIT's goals is to generate
organic growth through redevelopment and lease renewal activities at its
existing centres. For the year ended December 31, 2011, the portfolio had lease
expiries of 64,850 square feet, and new or renewed leases of 77,058 square feet
had been entered into during the year. In addition, the weighted average rent
including any material new and renewed leases completed by March 15, 2012 is
$12.85 per square foot, an increase of $1.65 per square foot over the prior
year.
Financial Position
As at December 31, 2011 the REIT's ratio of debt to gross book value was 73.0%
compared to 59.8% at December 31, 2010. Interest coverage and debt service
coverage ratios remained a conservative 1.70 times and 1.26 times, respectively.
During 2011, the REIT acquired new debt and assumed mortgages totaling $68.75
million on the properties acquired during the year. Overall, the REIT's mortgage
portfolio incurred a weighted average effective interest rate of 4.95% at
December 31, 2011 with a weighted average term to maturity of approximately four
years. Through the end of 2013 the REIT has approximately $21.0 million of debt
maturing with a weighted average interest rate of 5.91%. Management expects to
refinance this debt at lower interest rates, positively impacting the REIT's
future cash flows.
Recent Events
On February 1, 2012, the REIT completed the acquisition of substantially all of
the assets of NorRock Realty Finance Corporation ("NorRock"), consisting of
cash, cash equivalents, mortgages and other assets of NorRock, in exchange for
the issuance of Partners REIT units, certain rights to acquire Partners REIT
units, and cash. The acquisition, combined with a successful equity offering
described below, significantly enhances the REIT's liquidity position providing
Management with the resources and the flexibility to continue prudently
expanding and strengthening its property portfolio through acquisitions as well
as through the redevelopment and remerchandising of certain properties. With the
completion of this transaction, the equity offering and the closing of six of
the acquisitions, Management expects its debt-to-gross-book-value ratio to
improve to approximately 62.6% from 73.0% at December 31, 2011. Full details of
the transaction can be found in the REIT's Management Discussion and Analysis
for the year ended December 31, 2011 and other regulatory filings.
On February 8, 2012 the REIT closed a public offering of 10,753,000 units
(2,688,250 post-consolidation units) at a price of $1.86 per unit ($7.44 per
post-consolidation unit), representing gross proceeds of approximately $20
million, on a bought deal basis, to a syndicate of underwriters.. On March 6,
2012 the REIT received notice that the underwriters would exercise their
over-allotment option to purchase an additional 1,443,248 units (360,812
post-consolidation units) at the same offering price. The net proceeds to the
REIT from the public offering, net of underwriters' fees and including the
overallotment option, is expected to be approximately $21.6 million. The net
proceeds are expected to be used to pay out a loan facility entered into in
connection with certain property purchases and to pay down a portion of the
REIT's Acquisition Facility advanced in respect of a property purchase completed
in 2011.
In February 2012, the REIT completed the acquisition of six properties
aggregating approximately 406,000 square feet. The aggregate purchase price was
approximately $102.95 million and was funded, in part, by new credit facilities
of $14 million and the assumption of existing mortgages which were expanded to
$40.75 million, of which $8 million is currently not funded.
On February 10, 2012, the REIT received approval from the TSX Venture Exchange
to consolidate its issued and outstanding units on the basis of one
post-consolidation unit for every four pre-consolidation units. The exercise
price and number of units issuable upon the exercise of outstanding options,
warrants and convertible debentures will be proportionately adjusted with the
implementation of the unit consolidation. The post-consolidation of the units
began trading on the Exchange on February 14, 2012. Full details of the
transaction can be found in the REIT's Management Discussion and Analysis for
the year ended December 31, 2011 and other regulatory filings.
On March 1, 2012 the REIT announced that it received conditional approval to
list its securities on the Toronto Stock Exchange (TSX) at which point such
securities will no longer be listed on the TSX Venture Exchange. The approval is
conditional upon Partners REIT fulfilling certain conditions. Management expects
that it will receive final listing approval shortly.
Investor Conference Call
A conference call to discuss the recent operating and financial results will be
hosted by Adam Gant, Chief Executive Officer and Patrick Miniutti, President and
Chief Operating Officer, on Monday March 19, 2012 at 1:00 pm ET (10.00 am PT).
The telephone numbers for the conference call are Local / International: (416)
849-2698 and North American Toll Free: (866) 400-2270. The telephone numbers to
listen to the call after it is completed (Instant Replay) are Local /
International (416) 915-1035 or North American toll free (866) 245-6755. The
Passcode for the Instant Replay is 304494#.
The financial results for the year ended December 31, 2011 and prior periods for
Partners Real Estate Investment Trust can be found on SEDAR and on the REIT's
website (www.partnersreit.com).
Financial Highlights
As at and for the three As at and for the year
months ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2011 2010 2011 2010
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NOI(1) $ 4,736,360 $ 2,658,906 $ 15,538,859 $ 9,984,739
NOI - same
property(1) 2,571,844 2,604,836 10,081,752 9,930,467
FFO(1) 1,416,637 1,015,345 5,018,796 3,617,783
FFO per unit, basic
and diluted(1) 0.18 0.15 0.65 0.67
Net income 3,060,828 2,581,014 7,253,430 4,703,835
Net income per
unit, diluted 0.39 0.43 0.87 0.87
Distributions(2) 1,244,844 1,100,392 4,967,664 3,614,357
Distributions per
unit(2) 0.16 0.16 0.64 0.64
Cash
distributions(3) 1,161,756 951,553 4,687,812 3,177,516
Cash distributions
per unit(3) 0.15 0.15 0.60 0.59
Total assets 265,748,040 166,405,845 265,748,040 166,405,845
Total debt(4) 202,592,032 107,148,141 202,592,032 107,148,141
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Debt-to-gross book
value(4) 73.0% 59.8% 73.0% 59.8%
Interest coverage
ratio(5) 1.93 1.78 1.70 1.69
Debt service
coverage ratio(5) 1.35 1.44 1.26 1.38
Weighted average
interest rate(6) 4.95% 5.26% 4.95% 5.26%
Cash distribution
payout ratio(7) 82.0% 93.7% 93.4% 87.8%
Portfolio occupancy 98.0% 95.7% 98.0% 95.7%
1. Net operating income or "NOI" and funds from operations or "FFO" are
non-IFRS financial measures widely used in the real estate industry. See
"Part III - 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 15thday
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. 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.
4. See calculation under "Debt-to-Gross Book Value" in "Part V - Results of
Operations" in the MD&A for the year ended December 31, 2011.
5. Calculated on a rolling four quarter basis.
6. Represents the weighted average effective interest rate for secured debt
excluding the bank credit facility, which has a floating rate of
interest.
7. Cash distributions as a percentage of funds from operations (FFO).
For the complete 2011 financial statements and Management's Discussion and
Analysis, please visit www.sedar.com or www.partnersreit.com.
About Partners REIT
Partners REIT is a growth-oriented real estate investment trust, which currently
owns (directly or indirectly) 27 retail properties located in Ontario, Quebec,
Manitoba, Alberta and British Columbia aggregating approximately 2.1 million
square feet of leasable space. Partners REIT focuses on expanding and managing a
portfolio of retail and mixed-use community and neighbourhood shopping centres
located in both primary and secondary markets across Canada.
Certain statements included in this press release constitute forward-looking
statements, including, but not limited to, those identified by the expressions
"expect," "will" and similar expressions to the extent they relate to Partners
REIT. The forward-looking statements are not historical facts but reflect
Partners REIT's current expectations regarding future results or events. These
forward looking statements are subject to a number of risks and uncertainties
that could cause actual results or events to differ materially from current
expectations, including the timing of the offering, success of the offering,
listing of the units, use of proceeds of the Offering, access to capital,
regulatory approvals, intended acquisitions and general economic and industry
conditions. Although Partners REIT believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking statements are not
guarantees of future performance and, accordingly, readers are cautioned not to
place undue reliance on such statements due to the inherent uncertainty therein.
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