QUEBEC CITY, Aug. 7 /CNW Telbec/ - Cominar Real Estate Investment Trust ("Cominar" or the "REIT") announces solid results for its second quarter ended June 30, 2008.
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Financial Highlights
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For the periods ended June 30, Quarter
(in thousands of dollars %
except per unit amounts) 2008 2007 Change
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Operating revenues(1) 59,086 41,476 42.5
Net operating income(1)(2) 34,398 24,750 39.0
Net income 6,690 8,690 (23.0)
Distributable income(2) 18,592 15,436 20.4
Recurring distributable income (2)(3) 18,592 15,014 23.8
Recurring funds from operations(2)(3) 21,553 17,290 24.7
Recurring adjusted funds from
operations(2)(3) 18,615 15,014 24.0
Distributions 16,095 13,206 21.9
Per unit (fully diluted)
Recurring distributable income(2)(3) 0.40 0.37 8.1
Recurring funds from operations(2)(3) 0.45 0.42 7.1
Recurring adjusted funds from
operations(2)(3) 0.40 0.37 8.1
Distributions (basic) 0.353 0.312 13.1
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For the periods ended June 30, Cumulative (six months)
(in thousands of dollars %
except per unit amounts) 2008 2007 Change
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Operating revenues(1) 116,492 75,747 53.8
Net operating income(1)(2) 65,784 43,902 49.8
Net income 10,704 16,014 (33.2)
Distributable income(2) 34,275 27,044 26.7
Recurring distributable income (2)(3) 34,275 26,622 28.7
Recurring funds from operations(2)(3) 40,260 30,962 30.0
Recurring adjusted funds from
operations(2)(3) 34,320 26,622 28.9
Distributions 31,464 24,584 28.0
Per unit (fully diluted)
Recurring distributable income(2)(3) 0.74 0.68 8.8
Recurring funds from operations(2)(3) 0.85 0.79 7.6
Recurring adjusted funds from
operations(2)(3) 0.75 0.68 10.3
Distributions (basic) 0.692 0.618 12.0
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(1) Certain figures for the first semester of 2007 have been reclassified
as discontinued operations in conformity with GAAP.
(2) See the note "Non-GAAP Financial Measures".
(3) Excluding non-recurring interest income of $0.4 million realized
during the second quarter of 2007 in connection with a public
offering of subscription receipts.
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"We are very pleased with our second-quarter results, strong same property
performance and financial position as at June 30, 2008. Our occupancy rate is
stable, our rental rates are increasing and our fundamentals remain solid
despite the tightening of credit markets and volatility in stock prices,"
indicated Michel Dallaire, President and Chief Executive Officer of Cominar.
"Since the beginning of the year, we have repaid all the mortgages maturing in
2008 and contracted $113.1 million in new mortgages at a lower average
interest rate than the repaid debt. Finally, our development program, which
represents a total investment of $133.4 million over the next few years,
should offer unitholders an attractive value-added potential," he added.
Operating revenues totaled $59.1 million for the second quarter ended June
30, 2008, up 42.5%. This significant increase is due mainly to the
contribution of the properties acquired in 2007, as well as the other
acquisitions and developments completed in 2007 and
the beginning of 2008.
Net operating income ("NOI") amounted to $34.4 million, up 39.0% over the
second quarter of 2007. Same property NOI, which provides an indication of the
operating profitability of the existing portfolio, was up by 6% over the
previous corresponding quarter, and 4% year-to-date.
Net income amounted to $6.7 million, down 23.0% from the corresponding
period of 2007. It should be noted that the comparison of 2008 net income with
that of 2007 is not meaningful, primarily because of the significant increase
in amortization attributable to the income properties acquired in 2007 and
2008.
Recurring distributable income ("RDI") grew to $18.6 million for the
quarter, up 23.8% over the same period of 2007. RDI per fully diluted unit
amounted to $0.40, compared with $0.37 for the second quarter of 2007, an
increase of 8.1%.
Recurring funds from operations ("FFO") increased by 24.7% to
$21.6 million due to the contribution of the acquisitions and developments
completed in 2007 and the beginning of 2008 as well as strong organic growth.
Recurring FFO per fully diluted unit amounted to $0.45, compared with
$0.42 for the second quarter of 2007, up 7.1%.
Recurring adjusted funds from operations ("AFFO") totaled $18.6 million,
compared with $15.0 million for the second quarter of 2007. Recurring AFFO per
fully diluted unit grew 8.1%.
Distributions to unitholders totaled $16.1 million for the second quarter
of 2008, compared with $13.2 million in the second quarter of 2007, an
increase of 21.9%. Distributions per unit amounted to $0.353, up from $0.312
in the second quarter of 2007.
As at June 30, 2008, Cominar maintained a debt ratio of 58.1%, which is
less than the maximum debt ratio of 65.0% allowed by its Contract of Trust
when convertible debentures are outstanding. This ratio enables the REIT to
incur up to $322 million in additional debt, if need be, to finance its future
acquisitions and development program.
Operational Highlights
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Cominar consistently strives to maximize its property occupancy rates and
has successfully maintained a 95.0% average since its inception. Leasing
activities continued to progress at a steady pace across its portfolio
throughout the second quarter. As at June 30, 2008, its portfolio occupancy
rate was stable at 95.2%. Satisfactory occupancy rates were achieved in all
three sectors of activity and renewal rates are up by an average of
8.2% year-to-date.
Acquisitions and Developments Completed in 2008
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Since the beginning of the year, Cominar has acquired 10 income properties
representing a total investment of $44.6 million. In addition, the REIT has
completed the development of two industrial and mixed-use properties in the
Montreal area for $10.8 million.
Ongoing and Upcoming Developments
---------------------------------
As at June 30, 2008, ongoing and upcoming developments in the Quebec City
and Montreal regions represented an additional leasable area of approximately
one million square feet and a total estimated investment of approximately
$133.4 million over the next few years. Their average capitalization rate is
estimated at 9.4%, which is much higher than current market rates for similar
properties.
Increase in Monthly Distributions (previously announced)
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Considering the excellent results arising from the expected benefits of
the acquisitions and developments completed in 2007 and beginning of 2008, as
well as the solid same property performance, and as real estate market
conditions remain favourable for growth, the Board of Trustees has raised the
monthly distributions to unitholders from 11.3 cents per unit to 12.0 cents
per unit ($1.44 annualized), representing an increase of 6.2%. This increase
was effective for the May 2008 distribution payable in June 2008.
Outlook
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"Our primary objective is to continue creating value through optimal
organic growth and the completion of acquisitions and development projects
matching our criteria of profitability and growth over the long term.
Considering the high rental demand in our markets and the quality of our
properties, we remain confident we can renew a large proportion of 2008
expiring leases at a higher rate per square foot. Despite more uncertain
economic conditions, we are confident we will achieve a solid performance in
upcoming months," concluded Michel Dallaire.
Additional Financial Information
--------------------------------
Cominar's interim consolidated financial statements and the management's
discussion and analysis for the second quarter ended June 30, 2008 will be
filed with SEDAR at www.sedar.com and are available on Cominar's website at
www.cominar.com.
August 7, 2008 Conference Call
------------------------------
On Thursday, August 7, 2008, at 11:30 a.m. (EDT), Cominar's management
will hold a conference call to discuss the results for the second quarter of
2008. Anyone who is interested may take part in this call by dialing
1-800-732-9303. A presentation of the second quarter 2008 results will be
available before the conference call on the REIT's website at www.cominar.com
under the title "Conference Call". The event will also be simultaneously
webcast on its website and archived for 90 days.
PROFILE as at August 7, 2008
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Cominar is the largest commercial property owner and manager in the
Province of Quebec. The REIT owns a real estate portfolio of 212 high-quality
properties, consisting of 36 office, 39 retail and 137 industrial and
mixed-use buildings that cover a total area of over 17.6 million square feet
in the Greater Quebec City, Montreal and Ottawa areas. Cominar's objectives
are to deliver growing cash distributions to its unitholders and to maximize
unitholder value through proactive management and the growth of its portfolio.
Distribution Reinvestment Plan
------------------------------
The REIT has a distribution reinvestment plan for its unitholders that
allows participants to reinvest their monthly distributions in additional
Trust units. Participants will be given the right to receive an effective
discount of 5% of distributions to which they are entitled in the form of
additional units. Additional information and enrolment forms are available at
www.cominar.com.
Forward-Looking Statements
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This press release may contain forward-looking statements with respect to
Cominar and its operations, strategy, financial performance and financial
condition. 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. 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 the Annual Information Form of Cominar. 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.
Non-GAAP Financial Measures
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Net operating income ("NOI"), distributable income ("DI"), funds from
operations ("FFO") and adjusted funds from operations ("AFFO") are not
measures recognized under Canadian generally accepted accounting principles
("GAAP") and do not have standardized meanings prescribed by GAAP. NOI, DI,
FFO and AFFO computed by Cominar may differ from similar computations as
reported by other similar organizations and, accordingly, may not be
comparable to similar measures reported by such organizations.
Complete interim consolidated financial statements, including accompanying
notes, are available on Cominar's website at www.cominar.com under "Investor
Relations - Quarterly Reports".
Consolidated Balance Sheets
(in thousands of dollars)
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As at As at
June 30, December 31,
2008 2007
(unaudited) (audited)
$ $
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ASSETS
Income properties
Buildings 1,107,557 1,073,830
Land 182,949 174,657
Intangible assets 69,474 74,608
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1,359,980 1,323,095
Properties under development 49,674 31,401
Land held for future development 19,226 29,879
Deferred expenses and other assets 39,152 36,001
Prepaid expenses 16,705 2,758
Accounts receivable 23,376 19,660
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1,508,113 1,442,794
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LIABILITIES
Mortgages payable 592,427 619,755
Convertible debentures 204,060 203,852
Bank indebtedness 147,247 35,321
Accounts payable and accrued liabilities 32,451 35,924
Distributions payable to unitholders 5,470 6,246
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981,655 901,098
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UNITHOLDERS' EQUITY
Unitholders' equity 526,458 541,696
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1,508,113 1,442,794
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Consolidated Statements of Unitholders' Equity
For the periods ended June 30,
(unaudited, in thousands of dollars)
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Quarter Cumulative
(six months)
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2008 2007 2008 2007
$ $ $ $
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Unitholders' contributions
Balance, beginning
of period 592,304 412,707 591,172 400,698
Issue of units 4,151 173,828 5,283 185,837
Underwriters' fees and
offering expenses - (5,852) - (5,852)
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Balance, end of period 596,455 580,683 596,455 580,683
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Cumulative net income
Balance, beginning
of period 251,793 225,862 247,779 218,538
Net income 6,690 8,690 10,704 16,014
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Balance, end of period 258,483 234,552 258,483 234,552
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Cumulative distributions
Balance, beginning
of period (313,449) (254,004) (298,080) (242,626)
Distributions to
unitholders (16,095) (13,206) (31,464) (24,584)
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Balance, end of period (329,544) (267,210) (329,544) (267,210)
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Contributed surplus
Balance, beginning
of period 637 403 513 398
Unit option plan 115 4 239 9
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Balance, end of period 752 407 752 407
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Other equity component
Convertible debentures
equity component 312 - 312 -
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Unitholders' equity 526,458 548,432 526,458 548,432
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Consolidated Statements of Income and Comprehensive Income
For the periods ended June 30,
(unaudited, in thousands of dollars except per-unit amounts)
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Quarter Cumulative
(six months)
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2008 2007 2008 2007
$ $ $ $
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Operating revenues
Rental revenue from
income properties 59,086 41,476 116,492 75,747
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Operating expenses
Operating costs 10,388 7,344 22,472 14,924
Realty taxes and services 13,588 8,987 26,931 16,310
Property management
expenses 712 395 1,305 611
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24,688 16,726 50,708 31,845
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Operating income before
the undernoted 34,398 24,750 65,784 43,902
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Interest on borrowings 12,030 7,021 23,911 12,239
Depreciation of income
properties 12,634 6,975 25,104 11,363
Amortization of deferred
leasing costs 2,112 1,747 4,243 3,419
Amortization of other assets 72 52 134 102
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26,848 15,795 53,392 27,123
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Operating income from
real estate assets 7,550 8,955 12,392 16,779
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Trust administrative
expenses 984 831 1,863 1,452
Other revenues 124 83 175 175
Unusual item - 422 - 422
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Net income from
continuing operations 6,690 8,629 10,704 15,924
Net income from
discontinued operations - 61 - 90
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Net income and
comprehensive income 6,690 8,690 10,704 16,014
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Basic net income per unit 0.147 0.221 0.236 0.420
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Diluted net income per unit 0.146 0.217 0.234 0.413
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Consolidated Statements of Cash Flows
For the periods ended June 30,
(unaudited, in thousands of dollars)
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Quarter Cumulative
(six months)
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2008 2007 2008 2007
$ $ $ $
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OPERATING ACTIVITIES
Net income 6,690 8,690 10,704 16,014
Items not affecting cash
Depreciation of income
properties 12,634 7,207 25,104 11,827
Amortization of above-
(below-) market leases (126) (38) (253) (8)
Amortization of deferred
leasing costs 2,112 1,747 4,243 3,419
Amortization of deferred
financing costs and
other assets 660 237 1,226 482
Amortization of fair
value adjustments on
assumed indebtedness (32) - (63) -
Accretion of liability
component of convertible
debentures 9 - 18 -
Compensation costs related
to unit option plan 171 50 301 99
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22,118 17,893 41,280 31,833
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Change in non-cash operating
working capital items (4,298) (1,783) (18,888) (3,817)
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17,820 16,110 22,392 28,016
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INVESTING ACTIVITIES
Acquisitions of income
properties (33,250) (363,555) (56,370) (403,965)
Additions to properties
under development and
land held for future
development (5,090) (14,383) (10,997) (22,832)
Leasing costs (4,352) (3,062) (8,926) (4,818)
Other assets (1,239) (134) (1,920) (490)
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(43,931) (381,134) (78,213) (432,105)
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FINANCING ACTIVITIES
Mortgages payable 81,368 132,947 111,232 167,987
Repayments of mortgages
payable (84,635) (44,324) (139,863) (56,750)
Bank indebtedness 41,421 45,405 111,926 70,175
Net proceeds from issue
of units 2,850 165,503 3,422 168,580
Net proceeds from issue
of convertible debentures - 77,386 - 77,386
Distributions to
unitholders (14,893) (11,893) (30,896) (23,289)
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26,111 365,024 55,821 404,089
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Net change in cash and
cash equivalents - - - -
Cash and cash equivalents,
beginning of period - - - -
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Cash and cash equivalents,
end of period - - - -
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%SEDAR: 00010204EF
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