NPR reports third quarter 2012 financial results
CALGARY, Nov. 7, 2012 /CNW/ - Northern Property REIT and NorSerCo Inc. (NPR.UN - TSX) announced its financial results for the three and nine months ended September 30, 2012. The Financial Statements and MD&A for the entities are reported on a combined basis at SEDAR.com under Northern Property Real Estate Investment Trust.
|Financial Performance at a Glance|
(Thousands of dollars except per unit
|Three Months Ended Sep. 30||Nine Months Ended Sep. 30|
|Net Operating income ("NOI")||25,635||28,198||79,546||76,884|
|Net and comprehensive income (loss)||7,158||12,997||(137,919)||52,908|
|FFO excluding SIFT current income taxes|
|FFO from operations||17,767||18,519||54,195||49,885|
|FFO per stapled unit, basic||$||0.55||$||0.63||$||1.74||$||1.75|
|Distributions per stapled unit||$||0.383||$||0.383||$||1.148||$||1.148|
|FFO payout ratio||68.9%||60.7%||65.6%||64.7%|
President and CEO, Jim Britton commented, "NPR is pleased with its Q3 financial performance especially given the significant impact related to the sale of our seniors' properties which for the most part took place in Q2. Robust activity in our acquisition and development programs and solid property results have been contributing factors. The REIT has been able to sustain a solid payout ratio."
The Board of Trustees anticipates declaring a special distribution related to taxable income from the sale of the seniors' portfolio in the first half of 2012. Management expects the special distribution to be between $0.45 and $0.55 per unit range subject to further verification to be completed over the next few weeks.
Funds from Operations ("FFO") from combined operations was $0.55 per unit excluding SIFT current income taxes for the three months ended September 30, 2012 compared to $0.63 for the three months ended September 30, 2011, a decrease of $0.08. FFO per unit excluding SIFT current income taxes from combined operations for the nine months ended September 30, 2012 was $1.74 compared to $1.75 for same period of 2011.
The decrease in FFO for the third quarter is the result of Q3 being the first full quarter of financial results after completing the sale of most its seniors' properties in the first half of 2012. The decrease was offset in part by the results of acquisitions and developments completed in 2012 totaling $127.6 million.
Also contributing to the financial results was same door NOI growth of 2.9% for the third quarter and 4.4% year to date compared to 3.6% and 4.3%, respectively, for the same periods of 2011.
The third quarter continued to be the strongest quarter for the execusuite and hotel properties with revenue of $4.3 million, consistent with the prior year.
|Three months ended Sep. 30||Nine months ended Sep. 30|
Vacancy loss for the three months ended September 30, 2012 was 4.7%, compared to 4.8% for the same period of 2011 and 3.6% for the second quarter of 2012. The increase is due to a number of factors including vacancy associated with bringing 83 units on-line in Iqaluit which are approximately 56% leased at September 30, 2012, higher vacancy in Inuvik, NWT and Fort Nelson, BC and acquisitions in Abbotsford and Campbell River which have higher vacancy levels than our existing portfolio.
Vacancy loss for the first nine months of 2012 was 4.0%, compared to 4.9% for the first nine months of 2011. Vacancy increases of 0.8% in the Northwest Territories and 1.1% in Nunavut were offset by decreases in Alberta, Newfoundland and British Columbia.
At September 30, 2012, NPR has recorded tax liabilities totaling $191.2 million, including $14.4 million in current taxes relating to NPR not qualifying for the REIT Exemption under existing tax laws.
On October 24, 2012, the Government of Canada tabled in the House of Commons, a detailed Notice of Ways and Means Motion to implement outstanding technical tax amendments, including the previously proposed rules related to real estate investment trusts, originally announced on December 16, 2010. As a result, NPR will record a reversal of the income tax liability of $191.2 million in the fourth quarter of 2012.
The Stapled Securities Proposals, when enacted, will apply to NorSerCo and the REIT on January 17, 2012, the day after Stapled Units were issued under the REIT's long term incentive plan. Under the Stapled Securities Proposals, NorSerCo will not be entitled to deduct payments that it makes to the REIT under the master lease between them. It is estimated that NorSerCo will record current tax expense $1.0 million relating to 2012 when the proposals are enacted.
ACQUISTIONS AND DEVELOPMENTS
During the nine months ended September 30, 2012, NPR has completed the acquisition of 1,229 residential units and 29,456 square feet of commercial properties for total cost of $107.1 million and the development of 83 residential units in Iqaluit at a cost of $20.5 million.
Management continued to increase the REIT's development capacity during 2012. In addition to the 83 residential units completed so far this this year in Iqaluit, NPR has 460 residential units and 30,900 sq. ft. in office and industrial projects in various stages of development. A 25,500 sq. ft. office project being developed in Iqaluit, NU on land acquired in 2011 has been 80% pre-leased to the Government of Canada.
|Sep. 30||Dec. 31|
|Debt to gross book value (fair value)||38.6%||47.8%|
|Interest coverage ratio||3.62||3.35|
Debt to Gross Book Value remains at historic lows at 38.6%. This is due, in part, to decisions made by Management to fund acquisitions and developments with cash from the sale of the seniors' portfolio. At September 30, 2012, NPR had $9.6 million in cash on the balance sheet.
NPR believes its balance sheet is one of the strongest in the REIT universe. The completion of a $65 million equity offering in March 2012, the sale of most of the seniors' portfolio in the first half of the years, $57.5 million of unused operating facilities and over $100 million in up-financing opportunities on the existing properties leaves NPR well situated to take advantage of acquisition and development opportunities as they arise.
NPR has used the cash balances from the sale of the seniors' portfolio for acquisitions and developments. Management started its up-financing in the third quarter to ensure NPR is able to take advantage of opportunities as they arise. With 10 year interest rates on CMHC mortgages under 3.0%, NPR continues to extend mortgage maturity terms.
Q3 CONFERENCE CALL
NPR's conference call will take place on November 8, 2012 at 11:00 a.m. Mountain Time, 1:00 p.m. Eastern Time. Participating on the call will be Mr. B. James Britton (Chair), President & C.E.O., and Mr. Todd Cook, Executive Vice President & interim Chief Financial Officer.
Investors and analysts are invited to participate in the call by calling 1-888-231-8191 or 647-427-7450. You will be required to provide the Conference Call Operator with the Conference ID #36730832 prior to being admitted to the call. A recorded playback of the call will be available from November 8, 2012 to November 15, 2012 by calling 416-849-0833 or 1-855-859-2056, passcode #36730832. The recording will also be available on our website on November 9, 2012.
Northern Property Real Estate Investment Trust ("NPR") owns and operates rental real estate in secondary markets in Canada. NPR has significant multi-family residential real estate investments in Alberta, a growing position in British Columbia, and is the largest multi-family residential landlord in each of the Northwest Territories, Nunavut and the Province of Newfoundland and Labrador. NPR has recently entered into the Saskatchewan market. NPR's income producing portfolio is primarily residential which includes multi-family apartment rental units and furnished execusuites. NPR also has a portfolio of commercial buildings focused on government tenancies predominantly located in Canada's far north.
CAUTIONARY/FORWARD LOOKING STATEMENTS
This news release contains forward‐looking statements relating to our growth strategy, purchasing activity, completion of apartments for which development approvals have been obtained, commencement of development of new buildings, and federal rules respecting the 10% qualifying exemption for REITs. These statements are not guarantees of future events, performance or results and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved.
Forward-looking statements are based on information available at the time they are made, underlying estimates and assumptions made by management and management's good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally which could cause actual results to differ materially from what is currently expected. Such risks and uncertainties include, but are not limited to risks associated with investment in and development of real property, competition, financing and refinancing risks, risks related to economic conditions, changes in taxation rules, reliance on key personnel, environmental matters, tenant risks, and other risk factors more particularly described in the our most recent Annual Information Form available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to NPR or that NPR currently believes to be less significant may also adversely affect NPR.
Readers are cautioned that the above list of factors is not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by NPR will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, NPR. Readers, therefore, should not place undue importance on forward-looking information. Further, forward‐looking statements speak only as of the date on which such statements are made. NPR disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
SOURCE: Northern Property Real Estate Investment TrustFor further information:
Contact Todd Cook, CFO, at 403-531-0720.