Partners Real Estate Investment Trust
TSX VENTURE : PAR.UN

Partners Real Estate Investment Trust

August 09, 2011 18:24 ET

Partners REIT Announces Second Quarter 2011 Results

VICTORIA, BRITISH COLUMBIA--(Marketwire - Aug. 9, 2011) - Partners Real Estate Investment Trust (TSX VENTURE:PAR.UN) announced today results for the three and six months ended June 30, 2011. Effective November 3, 2010, the name of Charter Real Estate Investment Trust was changed to Partners Real Estate Investment Trust. All references to "Partners Real Estate Investment Trust", "Partners REIT", the "REIT" and similar references in this press release refer to Charter Real Estate Investment Trust prior to the name change. In addition, effective January 1, 2011 the REIT adopted International Financial Reporting Standards ("IFRS"). Please refer to the REIT's Management Discussion and Analysis and the consolidated interim financial statements for the three and six months ended June 30, 2011 for a comprehensive description of the changes arising from the transition.

2011 HIGHLIGHTS:

  • Q2 NOI up 51% from prior year
  • Q2 same property NOI up 3.3% over prior year
  • Acquisitions make solid contribution to second quarter and year-to-date results
  • Occupancies improve to 98.3% at June 30, 2011 from 95.1% last year
  • Strong leasing activities continue with renewals and new leasing
  • Acquisition of Centuria Urban Village in Kelowna B.C. in May extends geographic diversification
  • Acquisitions of Place Desomoreaux in Longueuil, Quebec and Evergreen Mall in Sooke, B.C. subsequent to quarter-end to further strengthen portfolio and accelerate growth
  • Focus on growing Unitholder value through accretive acquisitions and enhanced property performance continues

Solid Operating Performance

Occupancy levels as at June 30, 2011 rose to 98.3% from 97.6% at March 31, 2011 and 95.1% at June 30, 2010 due primarily to the acquisition of Centuria Urban Village in May 2011, which was 100% occupied, the purchase of the Wellington Southdale property in December 2010 and the six Shoppers Drug Mart properties in March 2011, as well as successful initiatives to enhance occupancies at other REIT properties.

Net Operating Income ("NOI") increased to $3.7 million in the second quarter of 2011 from $2.4 million in the same quarter last year, and rose to $6.7 million for the six months ended June 30, 2011 from $4.8 million for the same prior-year period. The increases are due to the contribution from the above-mentioned acquisitions, as well as growth in same property NOI, which rose 3.3% in the second quarter of 2011 and 1.2% for the six months ended June 30, 2011 compared to the same periods last year.

Funds from Operations ("FFO") increased to $1.2 million ($0.04 per unit) in the second quarter of 2011 from $0.8 million ($0.04 per unit) in the same quarter last year, and rose to $2.3 million ($0.07 per unit) for the six months ended June 30, 2011 compared to $1.7 million ($0.09 per unit) for the same prior-year period. The increases in the gross amounts were due primarily to the contribution from acquisitions completed over the prior twelve months. The per unit amounts were impacted by the 67% increase in the weighted average number of units outstanding for the three and six months ended June 30, 2011 due to equity offerings completed in July 2010 and December 2010. Management believes per unit amounts will improve over time as recent acquisitions make a full contribution to FFO.

"Our focus on expanding the size, quality and diversity of our property portfolio continues to generate solid growth in cash flows, and as our proven leasing and property management programs generate higher occupancies and enhanced NOI, we believe our performance will only accelerate in the quarters ahead," commented Adam Gant, Chief Executive Officer.

Strong Leasing Activity

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. As of August 8, 2011, the REIT had renewed or signed new leases representing 69,000 square feet as compared to 59,000 square feet of anticipated lease expiries for 2011. Management expects the portfolio's occupancy rate to improve over the remainder of 2011 and going forward from property acquisitions and further new or renewed leases.

Solid Financial Position

As at June 30, 2011 the REIT's ratio of debt to gross book value was 67.6% compared to 59.8% at December 31, 2010 and 63.8% at June 30, 2010. Interest coverage and debt service coverage ratios remained a conservative 1.7 times and 1.4 times respectively.

During the six months ended June 30, 2011 the REIT assumed first mortgages on the six Shoppers Drug Mart properties acquired in March aggregating $17.2 million with a weighted average interest rate of 4.9% maturing between 2015 and 2012.

Overall, the REIT's mortgage portfolio incurs a weighted average effective interest rate of 5.24% as at June 30, 2010, down from 5.88% at the same time last year. The weighted average term to maturity of 5 years compared to a weighted average term to maturity for existing property leases of approximately seven years.

Recent Events

On May 16, 2011, the REIT completed the acquisition of the majority of the retail units in Centuria Urban Village, a food and drug store anchored mixed-use retail and high-rise residential property located in Kelowna, British Columbia, for an aggregate purchase price of $8.9 million. The purchase was funded by cash raised from the March 2011 debenture offering and the REIT's credit facilities as discussed below.

On May 16, 2011, the REIT renewed its revolving operating and acquisition facility for an amount of $5.8 million, with upward expansion, replacing the prior facility. The new facility bears interest at a rate equal to the Bank's prime rate plus 2.25% (previosuly 3.50%) per annum or the Banker's Acceptance stamping fee plus 3.25% (previously 4.50%) per annum. On May 16, 2011, $2.25 million was drawn on this facility to partially fund the purchase of Centruria Urban Village. As at July 19, 2011, the facility was completely paid down using a portion of the mortgage proceeds from Mortgage Fund # 3 described below.

On July 14, 2011, the REIT acquired a second mortgage with Mortgage Fund Three in the amount of $4 million. This mortgage is secured by the SDM properties located in Manitoba. It is an interest only loan maturing April 30, 2013 and bears interest at a floating rate equal to the prime rate plus 4%.

On July 18, 2011, the REIT announced that it will be acquiring Place Desormeaux, a 250,000 square foot enclosed shopping centre in Longueuil, Québec. The property is anchored by a Super C grocery store, Pharmaprix, Zellers, Dollarama, the SAAQ, National Bank and Bank of Montréal. The REIT paid approximately $32.2 million for the property and will incur approximately $3.6 million in acquistion and capital improvement costs. The aggregate outlay of funds was satisfied by the placement of a $23.0 million mortgage bearing interest at 4.25% with a 58 month term to maturity. The balance of the purchase price was funded from the REIT's lines of credit. The closing of this transaction is expected to be on or before August 8, 2011.

On August 3, 2011, the REIT announced that it will be acquiring Evergreen Mall, a combined 88,180 square foot plaza located in Sooke, British Columbia. The property is a free-standing building, comprised of office and retail space. The aggregate purchase price of the property is $15.9 million and will be funded by the assumption of a $10.5 million mortgage bearing interest at 175 basis points over the Bank of Canada prime rate maturing in five years. The remainder of the purchase will be financed from the REIT's lines of credit.

"With these acquisitions we have significantly strengthened the portfolio and extended our geographic presence in strong and growing urban markets across Canada," Mr. Gant added. "Looking ahead, we will continue to evaluate growth opportunities that add value to our asset base and accretively grow our Funds from Operations."

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 Thursday August 11, 2011 at 4.00 pm ET. The telephone numbers for the conference call are: Local: (416) 915-8110 and North American Toll Free: (866) 838-1265.

The telephone numbers to listen to the call after it is completed (Instant Replay) are local (416) 915-1035 or North American toll free (866) 245-6755. The Passcode for the Instant Replay is 392805#. A recording of the call will also be archived on the REIT's website at www.partnersreit.com.

Financial Highlights
As at and for the three months ended As at and for the six months ended
June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010

NOI(1)
$ 3,658,055 $ 2,421,024 $ 6,664,552 $ 4,820,759
NOI same property(1) 2,501,168 2,421,024 4,879,058 4,820,759
FFO(1) 1,196,381 790,450 2,304,213 1,662,125
FFO per unit(1) 0.04 0.04 0.07 0.09
Net income 1,011,425 (1,024,268 ) 2,079,363 (399,240 )
Net income per unit 0.04 (0.05 ) 0.07 (0.02 )
Distributions(2) 1,240,553 743,173 2,479,196 1,484,300
Distributions per unit(2) 0.04 0.04 0.08 0.08
Cash distributions(3) 1,185,279 679,494 2,363,355 1,358,409
Cash distributions per unit(3) 0.04 0.04 0.08 0.07
Total assets 202,447,135 131,883,398 202,447,135 131,883,398
Total debt(4) 145,279,730 93,048,556 145,279,730 93,048,556
Debt-to-gross book value(5) 67.6 % 63.8 % 67.6 % 63.8 %
Interest coverage ratio(6) 1.70 1.71 1.70 1.71
Debt service coverage ratio(6) 1.31 1.40 1.31 1.40
Weighted average interest rate(7) 5.24 % 5.88 % 5.24 % 5.88 %
Portfolio occupancy 98.3 % 95.1 % 98.3 % 95.1 %
  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" of the MD&A 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. 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. Includes secured debt, unsecured debt and bank credit facility.
  5. See calculation under "Debt-to-Gross Book Value" in "Part V – Results of Operations." In the MD&A
  6. Calculated on a rolling four quarter basis.
  7. Represents the weighted average effective interest rate for secured debt excluding the bank credit facility, which has a floating rate of interest.

For the complete financial statements and Management's Discussion and Analysis, please visit www.sedar.com or the REIT's web site at www.partnersreit.com.

About Partners REIT

Partners REIT is a growth-oriented real estate investment trust, which currently owns (directly or indirectly) 18 retail properties located in Ontario, Quebec, Manitoba and British Columbia aggregating approximately 1.3 million square feet of leaseable 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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Partners Real Estate Investment Trust
    Patrick Miniutti
    President and Chief Operating Officer
    (250) 940-5500
    www.partnersreit.com