CANMARC reports strong growth in operating results in third quarter 2011

President and CEO Appointed to the Board of Trustees

MONTREAL, Nov. 3, 2011 /CNW Telbec/ - CANMARC Real Estate Investment Trust (TSX: CMQ.UN) ("CANMARC" or the "REIT") today reported strong growth in its financial and operating results for the third quarter of 2011.

The REIT also announced that Mr. James W. Beckerleg, President and Chief Executive Officer of the REIT, has been appointed to the Board of Trustees, effective November 2, 2011.  As founding CEO and leader of the management team, Mr. Beckerleg will sit as a related Trustee.

"We are pleased to have Jim Beckerleg join us on the Board of Trustees," said Karen A. Prentice, Chair of the Board of Trustees. "Mr. Beckerleg's appointment reaffirms the REIT's commitment to strong governance and strategic leadership in the real estate sector", declared Mrs. Prentice. "Jim brings to the Board a wide array of expertise with a depth of experience in real-estate corporate finance and acquisitions, having served as an executive and director of several public companies."

Financial Results

"Our third-quarter results reflect the full benefit of our acquisitions over the past year. The investment properties we acquired are accretive to the REIT'S net operating income, "said Jim Beckerleg, President and Chief Executive Officer. "During the quarter, we became CANMARC, a brand that reflects our mission of building and operating a Canadian commercial real estate portfolio with landmark and other quality properties.  We continue to build an active pipeline of potential acquisitions and look forward to adding properties in both the office and retail sectors."

  Three-months ended
September 30, 2011
Three-months ended
September 30, 2010
Variance
  (in thousands, except per unit items)   
Property income $49,405 $37,043 33%
Net operating income ("NOI") $26,884 $19,585 37%
Funds from operations ("FFO") $14,450 $10,402 39%
Adjusted funds from operations ("AFFO") $13,431 $8,725 54%
Basic AFFO per unit  $0.2582 $0.2515 3%
Diluted AFFO per unit $0.2575 $0.2515 2%
Net income $18,831 $1,755 973%
Total distributions per unit declared during the quarter  $0.23751 $0.23751 0%
AFFO payout ratio * 92.2% 94.5% 2%

* : A decrease in the AFFO payout ratio (distributions per Unit and Class B LP Unit divided by diluted AFFO per unit) compared to the previous year represents a positive variance.

Full financial statements and management's discussion and analysis of results will be posted on SEDAR at www.sedar.com and on the REIT's website at www.canmarc.ca.

Highlights

  • NOI was $26.9 million for the third quarter, a 37.3% increase compared to the same period in 2010. The increase is mainly due to the impact of several acquisitions made during the past year.  The acquisitions increased the REIT's commercial gross leasable area (GLA) by 21.4% from approximately 6.6 million square feet at July 1, 2010 to approximately 8.0 million square feet at September 30, 2011.

  • The AFFO payout ratio of 92.2% represents a 6.6% improvement over the 98.8% payout ratio recorded in the second quarter of 2011. The improvement is due to the acquisitions completed in the second quarter of 2011, which contributed fully to the REIT's operating results during the third quarter this year.

  • On September 13, 2011, the REIT closed a bought-deal equity financing for net proceeds of approximately $36.6 million.  The net proceeds were used to repay debt, fund acquisitions and for general purposes of the REIT. Units were sold at a price of $11.50 per Unit, resulting in a total of 3,325,000 Units being issued. The proceeds from the equity issue had a minimal impact on the REIT's operating results in the quarter.

  • Occupancy rates for the REIT's 83 commercial income properties were relatively stable during the third quarter, increasing slightly to 95.9% at September 30, 2011 from 95.5% at June 30, 2011. However, there is a 1% increase in occupancy rate at September 30, 2011 compared to the 94.9% registered at September 30, 2010.

  • The average lease term to maturity on the REIT's commercial properties was approximately 8.6 years at September 30, 2011, consistent with the previous quarter.

  • Debt as a percentage of gross book value is at 49.5%, which remains below the REIT's target range of 55% to 60%.

  • On August 2, 2011, the REIT announced that it had discontinued the position of Executive Chairman. The Board of Trustees further announced that Karen A. Prentice had been appointed as the first non-executive Chair of the REIT.

  • On September 27, 2011 the REIT announced that it had changed its name to CANMARC Real Estate Investment Trust.

Subsequent events

  • On October 5, 2011, the REIT closed a transaction to acquire a 100 percent interest in a portfolio of 29 neighborhood shopping centres, of which 24 are leased and anchored by the Jean Coutu Group, for a gross purchase price of $114.9 million excluding closing and transaction costs.

  • On October 18, 2011, the REIT closed a transaction to sell its non-strategic Atlantic-Provinces-based multi- family residential portfolio for approximately $65 million.

Conference Call

The REIT's management team will hold a conference call today at 11 a.m. (EDT) to discuss the results for the third quarter. To access the conference call, please call 1-800-704-5375. A taped replay of the call will be available until December 3, 2011 by dialling 1-416-626-4100 or 1-800-558-5253 and entering the playback code 21544038. An audio replay of the conference call will also be available in podcast format in the Investors section of the REIT's website at www.canmarc.ca.

About CANMARC Real Estate Investment Trust

CANMARC (www.canmarc.ca) is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Quebec. Managed internally, CANMARC owns a portfolio of Canadian income-producing commercial properties, consisting of retail and office properties with certain industrial properties. In total, CANMARC properties comprise approximately 8.7 million square feet of commercial gross leasable area and 464 multi-family residential units located in Quebec, Atlantic Canada, Western Canada and Ontario.

Forward-looking Statements

This news release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in the REIT's latest annual information form.

The REIT's objectives and forward-looking statements are based on certain assumptions, including that (i) the REIT will receive financing on favourable terms; (ii) the future level of indebtedness of the REIT and its future growth potential will remain consistent with the REIT's current expectations; (iii) there will be no changes to tax laws adversely affecting the REIT's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on the REIT's operations, including its financing capacity and asset value, will remain consistent with the REIT's current expectations; (v) the performance of the REIT's investments in Canada will proceed on a basis consistent with the REIT's current expectations; and (vi) capital markets will provide the REIT with readily available access to equity and/or debt.

The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. The REIT, except as required by applicable securities legislation, does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulatory authorities, including its latest annual information form, which are available on SEDAR at www.sedar.com.

Note regarding Non-IFRS Financial Measures

Funds from operations ("FFO"), adjusted funds from operations ("AFFO") and net operating income ("NOI") are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. FFO, AFFO and NOI are supplemental measures of a Canadian real estate investment trust's performance and the REIT believes that FFO, AFFO and NOI are relevant measures of its ability to earn and distribute cash returns to the unitholders. The IFRS measurement most directly comparable to FFO, AFFO and NOI are cash flow from operating activities and net income.

FFO is defined as net income in accordance with IFRS, excluding distributions on Class B LP Units, fair value adjustments relating to Class B LP Units, investment property and long-term investments, bargain purchase gain, expenses associated with business combinations, sales of investment property, and extraordinary items, plus depreciation and amortization, impairment provisions and after adjustments for equity accounted entities, joint ventures and non-controlling interests, if any, calculated to reflect FFO on the same basis as consolidated properties.

FFO calculated from net income in accordance with IFRS differs from FFO calculated from net income in accordance with Canadian GAAP as reported in prior MD&A's. FFO, as currently presented, no longer includes net amortization of above and below market leases. In-place leases are included in the value of investment property in accordance with IFRS and are not separately recorded and amortized. Additionally, depreciation expense associated with property, plant and equipment is now added back to calculate FFO based on IFRS, and was previously excluded from the calculation based on Canadian GAAP.

AFFO is defined as FFO subject to certain adjustments, including: (i) amortization of fair value mark-to-market adjustments on mortgages acquired, amortization of deferred financing and leasing costs, and compensation expense related to unit plans; (ii) adjusting for any differences resulting from recognizing property incomes on a straight line basis; (iii) adjusting for non-recurring costs associated with the IFRS conversion, termination of the executive chairman position and rebranding costs; and (iv) deducting maintenance capital expenditures and leasing costs, as determined by the REIT, net of the allocation of cash from reserves for capital expenditure programs. Other adjustments may be made to AFFO as determined by the Trustees of the REIT in their discretion. There has been no significant change in calculated AFFO after adoption of IFRS, other than the exclusion of non-recurring costs associated with the IFRS conversion, and depreciation expense associated with property, plant and equipment which is now added back to calculate AFFO based on IFRS, and was previously excluded from the calculation based on Canadian GAAP.

"NOI" is defined as property income, which includes rental income plus service charge income, less directly attributable property operating expenses. There has been no significant change in calculated NOI after adoption of IFRS, other than that NOI no longer includes net amortization of above and below market leases, as these items are included in the fair value of investment property in accordance with IFRS, and are not separately recorded and amortized.

FFO, AFFO and NOI should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS as indicators of the REIT's performance. The REIT's method of calculating FFO, AFFO and NOI may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers.

 

 

SOURCE CANMARC REAL ESTATE INVESTMENT TRUST

For further information:

Investors:

James W. Beckerleg
President and Chief Executive Officer
CANMARC REIT
514-931-2591

Gordon G. Lawlor, CA
Executive Vice President, Chief Financial
Officer and Secretary
CANMARC REIT
514-931-2591

Media:

Mélanie Tardif, CMA
NATIONAL Public Relations
514-843-2060

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CANMARC REAL ESTATE INVESTMENT TRUST

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