Canada NewsWire
QUÉBEC CITY, Aug. 8, 2019
QUÉBEC CITY, Aug. 8, 2019 /CNW Telbec/ - Cominar Real Estate Investment Trust ("Cominar" or the "REIT") (TSX: CUF.UN) is pleased to announce its results for the second quarter ended June 30, 2019.
2019 SECOND QUARTER – HIGHLIGHTS
"During the second quarter of 2019 several of our key metrics showed strong improvement, including in-place occupancy which increased to 89.9%, rent increases on renewals of 2.8% and growth in same property NOI of 2.2%," said Sylvain Cossette, President and Chief Executive Officer of Cominar. "We have started to implement a number of organizational and strategic initiatives with the goal of unlocking value. We are committed to optimizing our portfolio, further growing our NOI and strengthening our balance sheet as we create a new paradigm for how we work to create value. The enthusiasm of our senior management team about our strategic initiatives and the future growth potential of Cominar is an important catalyst for delivering stronger operating results and driving our net asset value" added Mr. Cossette.
"Our second quarter results demonstrate our ability to accelerate NOI growth, de-risk the balance sheet, and proceed with selective dispositions in order to drive performance and enhance portfolio quality", stated Heather C. Kirk, Executive Vice President and Chief Financial Officer. "The financing initiatives that we have taken in 2019 put us in a strong liquidity position and provide ample flexibility to refinance our debt maturities. Year to date, we have refinanced our credit facility giving us immediate access to up to $400 million of liquidity, we have completed $382 million of new mortgage financings including those closed post quarter and issued $200 million of unsecured debentures. We are also finalizing the terms of an additional $300 million secured credit facility expected to close during the third quarter. We are also pleased that our operating performance has exceeded our forecasts, allowing for an increase in our 2019 SPNOI guidance range to 1.5% to 2.5%. In addition, we are confident our strategic initiatives will position us to continue to accelerate our organic growth and maximize the value of our portfolio" added Ms. Kirk.
FINANCIAL AND OPERATING HIGHLIGHTS
(1) Non-IFRS financial measure. See the reconciliation to closest IFRS measure. |
BALANCE SHEET AND LIQUIDITY HIGHLIGHTS
INVESTMENT HIGHLIGHTS
STRATEGIC INITIATIVES
We have completed our strategic assessment announced in earlier in 2019 and have begun to implement numerous initiatives to accelerate our NOI and AFFO growth, create value in our portfolio and create a culture of real estate investing excellence.
Our plan is the result of a comprehensive review of our business undertaken over the last several months to better understand the reasons for our past underperformance and to identify how core issues can be rectified in order to unlock unitholder value. We have created a transformation plan structured to deliver operating efficiencies, accelerate NOI growth and crystallize untapped portfolio value in order to generate short term and long-term value for unitholders.
The plan includes:
In connection with our strategic initiatives we have taken a $3.9 million provision in Q2 2019 consisting primarily of severance payments related to the reduction of our workforce by 67 employees since the beginning of the year.
In order to de-risk the execution of our transformation we also have undertaken a number of steps to ensure seamless implementation of the plan:
The plan is already being executed, we are building momentum through quick wins and our team of seasoned leaders is committed to our new strategic direction.
In recent weeks, we have added two more experienced and highly qualified executives with a demonstrated ability to effect change and create value: Mélanie Vallée as Vice-President Data and Technology and Alexandra Faciu as Executive Director Asset Management. Over the past twelve months, we have transformed our senior management team to put the right talent in the right roles in order to create a culture of excellence, improve capital allocation, drive operating performance and create value for unitholders. The result is a dynamic and talented management team that brings a wealth of industry experience, new perspectives and a commitment to excellence.
Communication with our stakeholders is an important component of our plan and we look forward to presenting the full extent of our strategic initiatives at our investor day in Toronto on September 26th, 2019.
NON-IFRS FINANCIAL MEASURES
Net operating income, funds from operations (FFO), adjusted funds from operations (AFFO) and adjusted net income are not measures recognized by International Financial Reporting Standards (IFRS) and do not have standardized meanings prescribed by IFRS. Such measures may differ from similar computations as reported by similar entities and, accordingly, may not be comparable to similar measures reported by such other entities.
RESULTS OF OPERATIONS | |||||
Quarter | Year-to-date (six months) | ||||
For the periods ended June 30 | 2019 $ | 2018 $ | 2019 $ | 2018(1) $ | |
Operating revenues | 176,627 | 177,047 | 358,571 | 385,912 | |
Operating expenses | (87,644) | (87,234) | (182,903) | (195,553) | |
Net operating income(2) | 88,983 | 89,813 | 175,668 | 190,359 | |
Finance charges | (36,398) | (35,669) | (73,149) | (79,471) | |
Trust administrative expenses | (3,838) | (7,580) | (9,291) | (12,835) | |
Change in fair value of investment properties | 8,291 | — | 8,070 | (4,331) | |
Share of joint ventures' net income | 1,503 | 1,448 | 2,891 | 2,533 | |
Transaction costs | (3,151) | (1,427) | (4,490) | (19,981) | |
Restructuring costs | (3,916) | — | (3,916) | — | |
Net income before income taxes | 51,474 | 46,585 | 95,783 | 76,274 | |
Income taxes | |||||
Current | — | (140) | — | (6,391) | |
Deferred | — | — | — | 6,539 | |
— | (140) | — | 148 | ||
Net income and comprehensive income | 51,474 | 46,445 | 95,783 | 76,422 |
(1) | The six-month period ended June 30, 2018 includes results of 95 non-core properties sold to Slate for total consideration of $1.14 billion during the first quarter of 2018. |
(2) | Non-IFRS financial measure. |
SAME PROPERTY NET OPERATING INCOME | |||||||
Quarter | Year-to-date (six months) | ||||||
For the periods ended June 30 | 2019 $ | 2018 $ |
% Δ | 2019 $ | 2018 $ |
% Δ | |
Property type | |||||||
Office | 36,960 | 36,068 | 2.5 | 70,988 | 69,360 | 2.3 | |
Retail | 30,513 | 30,996 | (1.6) | 60,545 | 61,670 | (1.8) | |
Industrial and flex | 22,857 | 21,337 | 7.1 | 45,296 | 42,121 | 7.5 | |
Same property NOI – Cominar's proportionate share(1) | 90,330 | 88,401 | 2.2 | 176,829 | 173,151 | 2.1 | |
Distribution | |||||||
Same property portfolio – Financial statements | 87,922 | 85,939 | 172,062 | 168,576 | |||
Same property portfolio – Joint ventures | 2,408 | 2,462 | 4,767 | 4,575 | |||
Same property portfolio(1) – Cominar's proportionate share(2) | 90,330 | 88,401 | 176,829 | 173,151 |
(1) | The same property operating revenues includes the results of properties owned by Cominar as at December 31 2017, with the exception of results from the properties sold, acquired and under development in 2018 and 2019, as well as the rental income arising from the recognition of leases on a straight-line basis. |
(2) | Non-IFRS financial measure. |
FUNDS FROM OPERATIONS (FFO) AND ADJUSTED FUNDS FROM OPERATIONS (AFFO) | |||||
The following table presents a reconciliation of net income, as determined in accordance with IFRS, and funds from operations and adjusted funds from operations: | |||||
Quarter | Year-to-date (six months) | ||||
For the periods ended June 30 | 2019 $ | 2018 $ | 2019 $ | 2018(1) $ | |
Net income | 51,474 | 46,445 | 95,783 | 76,422 | |
Taxes on disposition of properties | — | 140 | — | 6,391 | |
Deferred income taxes | — | — | — | (6,539) | |
Initial and re-leasing salary costs | 758 | 897 | 1,602 | 1,906 | |
Change in fair value of investment properties(2) | (8,291) | — | (8,070) | 4,331 | |
Capitalizable interest on properties under development – joint ventures | 181 | 154 | 355 | 308 | |
Transaction costs | 3,151 | 1,427 | 4,490 | 19,981 | |
FFO(2)(3) | 47,273 | 49,063 | 94,160 | 102,800 | |
Provision for leasing costs | (8,020) | (7,153) | (16,449) | (14,306) | |
Recognition of leases on a straight-line basis(2) | 37 | (234) | (126) | (857) | |
Capital expenditures – maintenance of rental income generating capacity | (5,849) | (4,100) | (10,617) | (7,782) | |
AFFO(2)(3) | 33,441 | 37,576 | 66,968 | 79,855 | |
Per unit information: | |||||
FFO (FD)(3)(4) | 0.26 | 0.27 | 0.52 | 0.56 | |
AFFO (FD)(3)(4) | 0.18 | 0.21 | 0.37 | 0.44 | |
Weighted average number of units outstanding (FD)(4) | 182,332,532 | 182,197,342 | 181,279,623 | 182,427,900 | |
Payout ratio of AFFO(3)(4) | 100.0% | 85.7% | 97.3% | 97.7% |
(1) | FFO and AFFO for the six-month period ended June 30, 2018 include results of 95 non-core properties sold for total consideration of $1.14 billion during the first quarter of 2018. |
(2) | Including Cominar's proportionate share in joint ventures. |
(3) | Non-IFRS financial measure. |
(4) | Fully diluted. |
Excluding 2019 restructuring costs of $3.9 million, FFO was $51.2 million and AFFO was $37.4 million, or $0.20 per unit, and AFFO payout ratio was 90.0%.
OCCUPANCY RATES | |||||||||||
Montreal | Québec City | Ottawa | Total | ||||||||
Committed | In-Place | Committed | In-Place | Committed | In-Place | Committed | In-Place | ||||
Property Type | |||||||||||
Office | 89.1% | 85.3% | 97.7% | 95.3% | 93.9% | 87.3% | 92.0% | 87.9% | |||
Retail | 94.4% | 86.7% | 92.2% | 85.6% | 84.9% | 55.0% | 93.1% | 85.0% | |||
Industrial and flex | 95.4% | 94.0% | 96.4% | 95.3% | N/A | N/A | 95.6% | 94.3% | |||
Portfolio total | 93.4% | 90.0% | 95.1% | 91.3% | 92.9% | 82.4% | 93.9% | 89.9% |
ADDITIONAL FINANCIAL INFORMATION
Cominar's condensed interim consolidated financial statements and interim management's discussion and analysis for the second quarter of 2019 are filed with SEDAR at sedar.com and are available on Cominar's website at cominar.com.
CONFERENCE CALL ON AUGUST 8, 2019
On Thursday, August 8, 2019 at 11 a.m. (ET), Cominar's management will hold a conference call to present the results for the second quarter of 2019. In order to participate please dial 1 888 390‑0546. A presentation will be available before the conference call on the REIT's website at cominar.com, under the Conference Call header. In addition, a replay of the conference call will be available from Thursday, August 8, 2019 at 2 p.m. to Thursday, August 15, 2019 at 11:59 p.m., by dialing 1 888 390-0541 and entering passcode: 141147#.
PROFILE AS AT AUGUST 8, 2019
Cominar is one of the largest diversified real estate investment trust in Canada and is the largest commercial property owner in the Province of Québec. The REIT owns a real estate portfolio of 333 properties in three different market segments, that is, office properties, retail properties and industrial and flex properties. Cominar's portfolio totals 36.5 million square feet located in the Montreal, Québec City and Ottawa areas. Cominar's primary objectives are to maximize unit value through the proactive management of its properties.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements with respect to Cominar and its operations, strategy, financial performance and financial position. 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 and the use of conditional and future tenses. 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 Cominar's Annual Information Form. 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. Cominar does not assume any obligation to update the aforementioned forward-looking statements, except as required by applicable laws.
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST
View original content: http://www.newswire.ca/en/releases/archive/August2019/08/c5455.html
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