Retrocom Real Estate Investment Trust
TSX : RMM.UN

Retrocom Real Estate Investment Trust

November 06, 2014 17:39 ET

Retrocom REIT Announces Third Quarter 2014 Results

TORONTO, ONTARIO--(Marketwired - Nov. 6, 2014) -

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

Retrocom Real Estate Investment Trust (the "REIT") (TSX:RMM.UN) today announced results for the third quarter ended September 30, 2014, and subsequent activities to the period.

Subsequent to quarter end:

  • On October 30, 2014, the REIT acquired seven shopping centres with approximately 638,000 square feet of gross leasable area ("GLA") for approximately $111 million. The shopping centres are located in Ontario (3 properties), Quebec (1 property), Nova Scotia (2 properties), and Newfoundland & Labrador (1 property) bringing the REIT's total portfolio to approximately 7.5 million square feet of GLA.
  • As a result of the acquisition the minimum voting entitlement in favour of Mitchell Goldhar and entities controlled by Mr. Goldhar has been extended to July 8, 2018.

Highlights for the quarter:

  • The REIT raised $51.9 million through a public offering of Trust units in August 2014.
  • The REIT acquired two Walmart anchored shopping centres with approximately 371,000 square feet of GLA for approximately $68 million in September 2014.
  • Net operating income ("NOI") increased 4.6% and 18.1%, respectively for the three and nine months ended September 30, 2014, compared with the comparative periods in 2013.
  • Funds from Operations, adjusted ("FFO, adjusted") increased by 5.7% to $8.3 million for the three months ended September 30, 2014, and by 10.3% to $24 million for the nine months ending September 30, 2014, compared with the comparative periods in 2013.
  • Debt to gross book value ratio (excluding convertible debentures) as at September 30, 2014 was 44.7% compared to 45.4% at December 31, 2013 and debt to gross book value ratio (including convertible debentures) as at September 30, 2014 was 52.6% compared to 53.7% at December 31, 2013.
  • Weighted average cost of mortgage debt at September 30, 2014 was 4.87%, compared to 5.11% at September 30, 2013.

Richard Michaeloff, President and CEO of the REIT, said "We are pleased with Retrocom's continuing progress in repositioning and growing our portfolio. The recent acquisitions of nine high quality shopping centres strengthens Retrocom's cash flow with additional rental income from Walmart, Canadian Tire and Dollarama and contributes to further our geographic diversification. Our top five tenants are leading Canadian retailers with strong covenants. We remain focused on our goal of enhancing the quality of our cash flow and improving the quality of our assets."

Financial Highlights

Three months ended
September 30
Nine months ended
September 30
(all amounts in $000's, except per unit amounts and ratios) 2014 2013 2014 2013
Rental revenue and other income 27,151 26,462 82,461 71,090
Property operating expenses 11,289 11,180 35,328 30,948
Property operating income 15,862 15,282 47,133 40,142
Share of joint venture net operating income 462 317 1,394 949
Net operating income (1) 16,324 15,599 48,527 41,091
Trust expenses 1,137 1,100 3,592 3,508
Finance costs - joint venture operations 203 63 615 179
Finance costs - operations 6,714 6,628 20,351 16,746
Transaction costs on convertible debentures - - - 1,502
Finance costs - subscription receipts - - - 411
Finance costs - distributions on Class B Units 1,161 1,073 3,371 3,123
Income before fair value gains (losses) and other income 7,109 6,735 20,598 15,622
Fair value gains (losses) associated with financial instrument 3,800 4,634 (2,462 ) 12,737
Fair value (losses) on investment property (5,101 ) (3,191 ) (8,135 ) (8,669 )
Fair value gains on participant's rights under LTIP 13 53 23 129
Fair value gains on joint venture property 322 466 699 1,219
Loss from sale of investment property - (293 ) - (293 )
Other income - - - 1,048
Income for the period 6,143 8,404 10,723 21,793
FFO, adjusted (2) 8,292 7,844 24,048 21,793
FFO, adjusted per unit $ 0.104 $ 0.111 $ 0.324 $ 0.342
FFO, adjusted payout ratio 108.2 % 101.4 % 104.2 % 98.7 %
Distributions per unit $ 0.1125 $ 0.1125 $ 0.3375 $ 0.3375

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 property operating expenses.
(2) The reconciliations from net income 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, November 7, 2014 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 416-204-9702 or 1-800-524-8850. A recording of this call will be made available Friday, November 7, 2014 beginning at 4:00 pm (ET) through to Friday, November 21, 2014. To access the recording, please call 647-436-0148 or 1-888-203-1112 and use the reservation number 8995371#.

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 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 exemption from the registration requirements of U.S. securities laws.

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