Retrocom Real Estate Investment Trust
TSX : RMM.UN

Retrocom Real Estate Investment Trust

August 09, 2012 17:00 ET

Retrocom REIT Announces Second Quarter 2012 Results

TORONTO, ONTARIO--(Marketwire - Aug. 9, 2012) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY NON-CANADIAN SOURCE

Retrocom Mid-Market Real Estate Investment Trust (TSX:RMM.UN)(the "REIT") today announced results for the second quarter ended June 30, 2012.

Highlights

  • FFO, adjusted per unit increased by 16.3% to $0.114 per unit for the three months ended June 30, 2012 and by 29.6% to $0.219 per unit for the six months ended June 30, 2012.

  • Net operating income increased 11.6% and 12.3%, respectively for the three months and six months ended June 30, 2012 compared with same periods in 2011.

  • Funds from Operations, adjusted ("FFO, adjusted") increased by 33% to $5.7 million for the three months ending June 30, 2012 and by 47% to $10.7 million for the six months ending June 30, 2012, compared with same periods in 2011.

  • Debt to Gross Book Value ratio as at June 30, 2012 has decreased to 53.3% from 56.2% at December 31, 2011.

  • At Southland Mall, the REIT entered into a conditional agreement with Canadian Tire to lease 135,000 square feet representing 2.6% of the portfolio GLA.

  • In place occupancy on June 30, 2012 was 88.2% and committed occupancy was 89.2%.

  • On June 8, 2012, the REIT increased its operating line of credit to $28 million, maturing on June 30, 2014.

Operational and Financial Summary

  • Net operating income ("NOI") for Q2, 2012 was $11.4 million, an increase of $1.2 million or 11.6% over the same period last year. For the six months ended June 30, 2012, NOI increased by $2.4 million or 12.3% over the same period last year.

  • FFO, adjusted for Q2, 2012 was $5.7 million ($0.114 per unit), as compared to $4.3 million ($0.098 per unit) for the same period in 2011. FFO, adjusted increased by $1.4 million, or 33%. FFO, adjusted for the six months ended June 30, 2012 increased by $3.4 million or 47% over the same period last year.

  • The REIT's average cost of mortgage debt was 5.48% at the end of Q2, 2012 as compared to 5.58% at the end of 2011 and at the end of Q2, 2011.

  • The portfolio occupancy rate was 88.2% as at June 30, 2012, compared to 85.2% as at June 30, 2011.

  • The REIT retains a solid liquidity position with approximately $19.4 million cash on hand.

Richard Michaeloff, President and CEO of the REIT, said, "The financial results for the second quarter continue to trend positively. We continue to improve occupancy and achieve rental rate growth on new and renewal leasing activity."

Financial Highlights
Three months ended Three months ended Six months ended Six months ended
June 30 June 30 June 30 June 30
(all amounts in $000's, except per unit amounts and ratios) 2012 2011 2012 2011
Rental revenue and other income 19,716 19,114 39,698 37,851
Property operating expenses 8,514 8,876 18,034 18,211
Property operating income 11,202 10,238 21,664 19,640
Share of joint venture net operating income 222 - 393 -
Net operating income(1) 11,424 10,238 22,057 19,640
Trust expenses 1,074 1,194 1,993 2,278
Transaction costs on issuance of convertible debentures - 1,957 - 1,957
Finance costs-operations 4,721 4,853 9,470 10,113
Finance costs-distributions on Class B Units 1,025 1,025 2,050 2,050
Income before income taxes and fair value gains (losses) 4,604 1,209 8,544 3,242
Fair value losses associated with finance costs (804 ) (1,047 ) (2,486 ) (8,515 )
Fair value gain (losses) on investment property 8,433 (3,158 ) 7,516 (3,412 )
Fair value gains (losses) on participant's rights under LTIP 13 33 22 (23 )
Fair value loss on joint venture property (362 ) - (471 ) -
Loss from sale of investment property - - (105 ) -
Income (loss) for the period 11,884 (2,963 ) 13,020 (8,708 )
FFO, adjusted(2) 5,663 4,258 10,669 7,283
FFO, adjusted per unit 0.114 0.098 0.219 0.169
FFO, adjusted payout ratio 98.7 % 114.8 % 102.7 % 133.1 %
Distributions per unit 0.1125 0.1125 0.2250 0.2250

Full Financial Results and MD&A will be available on SEDAR (www.sedar.com) as well as the Investors Relations section of the REIT's website (www.rmmreit.com).

(1)A non-IFRS measurement, calculated by the REIT as rental revenue (net rents, property tax and operating cost recoveries, as well as other miscellaneous income from tenants) less operating expenses for properties.

(2)The reconciliations from net income (loss) to Funds from Operations, adjusted are included in the REIT's MD&A.

The REIT's management considers Net Operating Income, Funds from Operations, Funds from Operations, adjusted, and Debt to Gross Book Value ratio to be indicative measures in evaluating the REIT's performance. The table above includes non-IFRS information that should not be construed as an alternative to net income or cash flows from operations and may not be comparable to similar measures presented by other issuers as there is no standardized meaning prescribed by IFRS.

Conference Call

Retrocom REIT will hold a conference call on Friday, August 10, 2012 at 12:00 noon (ET). Participating on the call will be members of the REIT's senior management.

Investors are invited to access the call by dialling 416-644-3417 or 1-877-974-0446. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available Friday, August 10, 2012 beginning around 2:00 pm (ET) through to Friday, August 24, 2012. To access the recording, please call 416-640-1917 or 1-877-289-8525 and use the reservation number 4551398#.

About Retrocom REIT

Retrocom REIT is an unincorporated, open-end real estate investment trust which focuses on owning and acquiring retail properties across Canada with the goal of enhancing long-term Unitholder value.

Forward-Looking Information

This press release may contain forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", and by discussions of strategies that involve risks and uncertainties. The forward-looking statements are based on certain key expectations and assumptions made by the REIT. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Although management of the REIT believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance or achievements will occur as anticipated. Neither the REIT nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements, and no one has any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or such other factors which affect this information, except as required by law.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of a prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under securities laws of any such state, province or other jurisdiction. The Units of the Retrocom Mid-Market REIT have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered in the United States absent registration or an application for exemption from the registration requirements of U.S. securities laws.

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