CROMBIE REIT REPORTS IMPROVED FIRST QUARTER 2011 RESULTS

STELLARTON, NS, May 4 /CNW/ - Crombie Real Estate Investment Trust ("Crombie") (TSX: CRR.UN) is pleased to report its results for the first quarter ended March 31, 2011.

    <<
    2011 Highlights


    - Property revenue for the quarter ended March 31, 2011 of $56.3 million
      an increase of $50.0 million, or 9.7% over the $51.3 million for the
      quarter ended March 31, 2010.

    - Same-asset cash net operating income ("NOI") for the quarter ended
      March 31, 2011 of $30.3 million; an increase of $0.8 million or 2.9%,
      compared to $29.5 million for the quarter ended March 31, 2010.

    - Property occupancy was 95.3% at March 31, 2011 compared with 95.8% at
      December 31, 2010, and 95.0% at March 31, 2010.

    - Average net rent per square foot from leasing activity for the quarter
      increased to $16.69 compared to average expiring net rent per square
      foot of $14.15, an increase of 18.0%.

    - Crombie completed leasing activity on 456,000 square feet of GLA during
      the quarter ended March 31, 2011, which represents approximately 41.8%
      of its 2011 expiring leases.

    - Funds from operations ("FFO") for the quarter ended March 31, 2011 was
      $0.26 per unit (payout ratio 86.9%)compared to $0.25 per unit
      (payout ratio 88.7%)for the same period in 2010.

    - Adjusted funds from operations ("AFFO") for the quarter ended March
      31, 2011 was $0.23 per unit (payout ratio 96.7%)compared to $0.22
      per unit (payout ratio 103.7%) for the same period in 2010.
    >>

Commenting on the quarterly results, Donald E. Clow, FCA, President and Chief Executive Officer stated: "We are encouraged by the improved year-over- year FFO and AFFO per unit results and the payout ratios achieved in the first quarter of 2011. The contribution from our acquisition and redevelopment programs continues to pay dividends. The strong 2.9% growth in same asset cash NOI continues to show the resiliency in Crombie's portfolio.

Although the required activity to transition to IFRS this quarter has been substantial, we are pleased to note that most operating metrics for Crombie have seen no material change.

On May 2, 2011 we completed the acquisition of a 73,807 square foot retail property in Red Deer, Alberta from a third party. The acquisition price was $21.9 million, which represents a capitalization rate of 7.26%. The property, built in 2008 and 2009 is 100% leased to primarily national retailers with a weighted average remaining lease term of 14.7 years. Crombie assumed a mortgage of $11.7 million upon closing with the balance of the purchase price being initially satisfied through our revolving credit facility.

We have also signed purchase and sale agreements on two properties through our relationship with Empire Company Limited totalling 137,644 square feet of gross leaseable area and we expect these transactions to close during the second quarter. The purchase price is expected to be $27.5 million, which represents a weighted average capitalization rate of 7.33%. The properties are located in Dartmouth, Nova Scotia and Orangeville, Ontario and are 100% leased. The property in Nova Scotia is a Sobeys anchored retail plaza and the Ontario property is a freestanding Sobeys store. The purchase price will be initially satisfied through a combination of mortgage debt and our revolving credit facility.

While we are pleased to announce these new acquisitions, we will continue to seek out further accretive acquisitions through both our relationship with Empire Company Limited, Sobeys Inc. and third parties."

The table below presents a summary of financial performance for the quarter ended March 31, 2011 compared to the same period in fiscal 2010. All amounts are presented in accordance with International Financial Reporting Standards ("IFRS") as transition was required effective January 1, 2011.

    <<
    -------------------------------------------------------------------------
                                                Three months    Three months
    (In millions of CAD dollars, except                ended           ended
     per unit amounts)                         Mar. 31, 2011   Mar. 31, 2010
    -------------------------------------------------------------------------
    Property revenue                                 $56.318         $51.358
    Property expenses                                 21.424          20.008
    -------------------------------------------------------------------------
    Property NOI                                      34.894          31.350
    -------------------------------------------------------------------------
    NOI margin percentage                               62.0%           61.0%
    -------------------------------------------------------------------------
    Expenses:
      Depreciation and amortization                   (7.757)         (8.122)
      General and administrative                      (2.500)         (2.523)
    -------------------------------------------------------------------------
    Operating income before financing costs
     and income taxes                                 24.637          20.705
    Finance costs - operations                       (15.411)        (13.530)
    -------------------------------------------------------------------------
    Operating income before income taxes               9.226           7.175
    Income taxes - deferred                            0.100              --
    -------------------------------------------------------------------------
    Operating income attributable to Unitholders       9.326           7.175
    Finance costs - distributions to Unitholders     (14.751)        (13.568)
    -------------------------------------------------------------------------
    Increase (decrease) in net assets
     attributable to Unitholders                     $(5.425)        $(6.393)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Operating income attributable to Unitholders,
     Basic and diluted                                 $0.14           $0.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    >>

Property NOI - Cash Basis

    <<
    -------------------------------------------------------------------------
                                                Three months    Three months
                                                       ended           ended
    (In millions of CAD dollars)               Mar. 31, 2011   Mar. 31, 2010
    -------------------------------------------------------------------------
    Property NOI                                     $34.894         $31.350
    Non-cash tenant incentive amortization             1.346           1.026
    Non-cash straight-line rent                       (0.828)         (0.958)
    -------------------------------------------------------------------------
    Property cash NOI                                 35.412          31.418
    Acquisition and redevelopment property
     cash NOI                                          5.086           1.954
    -------------------------------------------------------------------------
    Same-asset property cash NOI                     $30.326         $29.464
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Property NOI, on a cash basis, excludes straight-line rent recognition and tenant incentive amortization amounts. The 2.9% growth in same-asset cash NOI for the quarter ended March 31, 2011 is primarily the result of increased occupancy since March 31, 2010 and increased average net rent per square foot resulting from 2011 leasing activity.

Cash NOI is a better measure of AFFO sustainability and same-asset property performance.

Same-Asset Property NOI

    <<
    -------------------------------------------------------------------------
                                                Three months    Three months
                                                       ended           ended
    (In millions of CAD dollars)               Mar. 31, 2011   Mar. 31, 2010
    -------------------------------------------------------------------------
    Same-asset property revenue                      $48.974         $47.764
    Same-asset property expenses                      19.119          18.334
    -------------------------------------------------------------------------
    Same-asset property NOI                          $29.855         $29.430
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Same-asset NOI margin %                             61.0%           61.6%
    -------------------------------------------------------------------------
    >>

Same property NOI grew 1.4% over Q1 of 2010. Same-asset property revenue for the first quarter ended March 31, 2011 of $49.0 million was 2.5% higher than the same period in 2010, due to increased base rent and recoveries as a result of higher above average renewal rates and higher recoverable property expenses.

Same-asset property expenses of $19.1 million for the quarter ended March 31, 2011 were $0.8 million or 4.3% higher than the quarter ended March 31, 2010 due primarily to increased recoverable property taxes and snow clearing costs, offset in part by reduced non-shareable costs.

Acquisition and Redevelopment Property NOI

    <<
    -------------------------------------------------------------------------
                                                Three months    Three months
                                                       ended           ended
    (In millions of CAD dollars)               Mar. 31, 2011   Mar. 31, 2010
    -------------------------------------------------------------------------
    Acquisition and redevelopment property
     revenue                                          $7.344          $3.594
    Acquisition and redevelopment property
     expenses                                          2.305           1.674
    -------------------------------------------------------------------------
    Acquisition and redevelopment property NOI        $5.039          $1.920
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Acquisition and redevelopment NOI margin %          68.6%           53.4%
    -------------------------------------------------------------------------
    >>

For the quarter ended March 31, 2011, the acquisition and redevelopment property results include the retail properties acquired in February, March, September, October and November 2010 as well as the operating results of the six properties that were under redevelopment. This 2010 activity level resulted in significant NOI growth.

General and Administrative Expenses

General and administrative expenses for the quarter ended March 31, 2011 decreased by 0.5% as a percentage of property revenue, when compared to the same period in 2010. Salaries and benefits decreased as a result of the finalization of costs in the first quarter of 2010 associated with the 2009 retirement of Crombie's Chief Executive Officer.

Finance Costs - Operations

    <<
    -------------------------------------------------------------------------
                                                Three months    Three months
                                                       ended           ended
    (In millions of CAD dollars)               Mar. 31, 2011   Mar. 31, 2010
    -------------------------------------------------------------------------
    Same-asset finance costs - operations            $11.659         $11.471
    Acquisition and redevelopment finance
     costs - operations                                2.013           0.675
    Amortization of effective swaps and
     deferred financing charges                        1.739           1.384
    -------------------------------------------------------------------------
    Interest expense                                 $15.411         $13.530
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Same-asset finance costs - operations for the quarter ended March 31, 2011 have increased by $0.189 or 1.6%. Growth in acquisition and redevelopment finance costs - operations is consistent with Crombie's significant acquisition activity in 2010.

FFO and AFFO

Crombie's FFO and AFFO had the following results for the quarter ended March 31st:

    <<
    -------------------------------------------------------------------------
                                   Quarter ended Mar. 31,          Variance
    (In millions of CAD dollars,  -------------------------------------------
     except per unit amounts)             2011      2010         $         %
    -------------------------------------------------------------------------
    FFO                                $16.983   $15.297    $1.686      11.0%
    FFO Per Unit - basic                 $0.26     $0.25     $0.01       4.0%
    FFO Per Unit - diluted               $0.25     $0.24     $0.01       4.2%
    FFO Payout ratio                      86.9%     88.7%                1.8%
    -------------------------------------------------------------------------

    AFFO                               $15.259   $13.087    $2.172      16.6%
    AFFO Per Unit - basic                $0.23     $0.22     $0.01       4.5%
    AFFO Per Unit - diluted              $0.22     $0.21     $0.01       4.8%
    AFFO Payout ratio                     96.7%    103.7%                7.0%
    -------------------------------------------------------------------------
    >>

The increase in FFO for the quarter ended March 31, 2011 of $1.7 million was primarily due to: increased NOI attributable to the acquisition and redevelopment properties offset in part by higher finance costs - operations associated with same properties.

AFFO for the quarter ended March 31, 2011 of $15.3 million was an increase of $2.2 million over the same period in 2010 due primarily to the increase in FFO.

The following tables outline the change in FFO and AFFO as calculated under IFRS as compared to pre-IFRS rules. All calculations are shown on a basic-units basis.

    <<
    -------------------------------------------------------------------------
    (In millions of CAD dollars,           Quarter ended       Quarter ended
     except per unit amounts)              Mar. 31, 2011       Mar. 31, 2010
    -------------------------------------------------------------------------
                                                   $ Per               $ Per
                                             $      Unit         $      Unit
    -------------------------------------------------------------------------
    FFO IFRS                           $16.983     $0.26   $15.297     $0.25
    Tenant improvement amortization      1.346      0.02     1.026      0.02
    Above- and below- market
     amortization (pre - IFRS)           0.725      0.01     0.838      0.01
    Accretion of notes receivable       (0.081)        -    (0.105)        -
    -------------------------------------------------------------------------
    FFO pre-IFRS                       $18.973     $0.29   $17.056     $0.28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (In millions of CAD dollars,           Quarter ended       Quarter ended
     except per unit amounts)              Mar. 31, 2011       Mar. 31, 2010
                                       --------------------------------------
                                                   $ Per               $ Per
                                             $      Unit         $      Unit
    -------------------------------------------------------------------------
    AFFO IFRS                          $15.259     $0.23   $13.087     $0.22
    Accretion of notes receivable       (0.081)        -    (0.105)        -
    -------------------------------------------------------------------------
    AFFO pre-IFRS                      $15.178     $0.23   $12.982     $0.22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Liquidity and Financings

Crombie's objectives when managing its capital structure are to optimize weighted average cost of capital; maintain financial flexibility and access to long-term debt and equity markets; and maintain ample liquidity. In pursuit of these objectives, Crombie utilizes staggered debt maturities, optimizes its ongoing exposure to floating rate debt and maintains sustainable payout ratios. Crombie has an authorized floating rate revolving credit facility of up to $150 million, of which $50.0 million was drawn as at March 31, 2011, and an additional $15.1 million encumbered by outstanding letters of credit and negative mark-to-market positions on interest rate swap agreements resulting in significant available liquidity.

Debt to gross book value is 56.0% at March 31, 2011 compared to 56.5% at December 31, 2010 and 56.8% at March 31, 2010. On a comparable pre-IFRS basis, debt to gross book value was 54.6% at December 31, 2010 and 54.8% at March 31, 2010. This leverage ratio is below the maximum 60%, or 65% including convertible debentures, permitted pursuant to Crombie's Declaration of Trust. On a long-term basis, Crombie intends to maintain overall indebtedness, including convertible debentures, in the range of 50% to 60% of gross book value, depending upon Crombie's future acquisitions and financing opportunities.

Crombie's interest and debt service coverage for the quarter ended March 31, 2011 were 2.47 times EBITDA and 1.75 times EBITDA respectively. This compares to 2.46 times EBITDA and 1.74 times EBITDA respectively for the quarter ended March 31, 2010.

Definition of Non-IFRS Measures

Certain financial measures included in this news release do not have standardized meaning under IFRS and therefore may not be comparable to similarly titled measures used by other publicly traded entities. Crombie includes these measures because it believes certain investors use these measures as a means of assessing Crombie's financial performance.

    <<
    - Property NOI is property revenue less property expenses.
    - Property Cash NOI is Property NOI adjusted to remove non-cash straight-
      line rent and tenant improvement amortization.
    - Debt is defined as bank loans plus commercial property debt and
      convertible debentures.
    - Gross book value means, at any time, the book value of the assets of
      Crombie and its consolidated subsidiaries plus deferred financing
      charges, accumulated depreciation and amortization in respect of
      Crombie's properties (and related intangible assets) less (i) the
      amount of any receivable reflecting interest rate subsidies on any debt
      assumed by Crombie and (ii) the amount of deferred income tax liability
      arising out of the fair value adjustment in respect of the indirect
      acquisitions of certain properties.
    - EBITDA is calculated as property revenue, adjusted to remove the impact
      of amortization of tenant improvements, less property expenses and
      general and administrative expenses.
    - FFO is calculated as Increase (decrease) in net assets attributable to
      Unitholders (computed in accordance with IFRS), excluding gains (or
      losses) from sales of depreciable real estate and extraordinary items,
      plus depreciation and amortization expense, deferred income taxes,
      finance costs - distributions to Unitholders and after adjustments for
      equity accounted entities and non-controlling interests.
    - AFFO is defined as FFO adjusted for non-cash amounts affecting revenue,
      less maintenance capital expenditures, maintenance tenant improvements
      and leasing costs, and the settlement of effective interest rate swap
      agreements.
    >>

Interim Financial Reporting

While the financial figures included in this preliminary interim earnings announcement have been computed in accordance with IFRS applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as that term is defined in IFRS. The Trustees expect to publish an interim financial report that complies with International Accounting Standard 34, Interim Financial Reporting, on May 4, 2011.

About Crombie

Crombie is an open-ended real estate investment trust established under, and governed by, the laws of the Province of Ontario. The trust invests in income-producing retail, office and mixed-use properties in Canada, with a future growth strategy focused primarily on the acquisition of retail properties. Crombie currently owns a portfolio of 131 commercial properties in eight provinces, comprising approximately 12.1 million square feet of rentable space.

This news release contains forward-looking statements that reflect the current expectations of management of Crombie about Crombie's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "may", "will", "estimate", "anticipate", "believe", "expect", "intend" and similar expressions have been used to identify these forward-looking statements. These statements reflect current beliefs and are based on information currently available to management of Crombie. Forward-looking statements necessarily involve known and unknown risks and uncertainties. A number of factors, including those discussed in the 2010 annual Management Discussion and Analysis under "Risk Management", could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward-looking statements. There can be no assurance that the expectations of management of Crombie will prove to be correct.

In particular, certain statements in this document discuss Crombie's anticipated outlook of future events, including the accretive acquisition of properties and the anticipated extent of the accretion of any acquisitions, which could be impacted by due diligence matters or the demand for properties and the effect that demand has on acquisition capitalization rates and changes in interest rates. Readers are cautioned that such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Crombie can give no assurance that actual results will be consistent with these forward-looking statements.

Crombie's consolidated financial statements and management's discussion and analysis for the period ended March 31, 2011 can be found on Crombie's web site at www.crombiereit.com or on the SEDAR web site for Canadian regulatory filings at www.sedar.com.

Conference Call Invitation

Crombie will provide additional details concerning its first quarter ended March 31, 2011 results on a conference call to be held Thursday, May 5, 2011, at 1:00 p.m. Eastern time. To join this conference call you may dial (647) 427-7450 or (888) 231-8191. You may also listen to a live audio web cast of the conference call by visiting Crombie's website located at www.crombiereit.com. Replay will be available until midnight May 19, 2011, by dialling (416) 849-0833 or (800) 642-1687 and entering pass code 63284514, or on the Crombie website for 90 days after the meeting.

SOURCE CROMBIE REIT

For further information: Glenn Hynes, C.A., Chief Financial Officer and Secretary, Crombie REIT, (902) 755-8100

Profil de l'entreprise

CROMBIE REIT

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.