FAM REIT announces year end financial results for 2012

TORONTO, March 8, 2013 /CNW/ - FAM Real Estate Investment ("FAM REIT") (TSX: F.UN, F.WT) announced today its financial results for the four-day period of operations following its initial public offering ("IPO") on December 28 to December 31, 2012. We believe these results are neither meaningful nor indicative of a full quarter's operational and financial results.

To better assist investors gain insight into our performance on a full quarterly basis, we have included historical results for the three months ended December 31, 2012 along with the IPO forecast for the three months ended March 2013 for comparison purposes.

Results for the four operational day period ended December 31, 2012

The results of operations included in the REIT's consolidated financial statements for the period from August 27, 2012 to December 31, 2012 represent four days of operations of the portfolio of 27 income-producing properties comprised of industrial, office and retail properties acquired on December 28, 2012 (the "Initial Properties").

During the four operational days with the period from August 27, 2012 to December 31, 2012, the REIT achieved net income of $12.3 million and net operating income of $0.2 million. Included in net income is a $12.8 million unrealized fair value gain on investment properties and a $0.4 million unrealized fair value loss on financial instruments. Funds from Operations ("FFO") was $0.005 per diluted trust unit, for the four days of operations during the period from August 27, 2012 to December 31, 2012. Adjusted Funds from Operations ("AFFO") was $0.001 per diluted trust unit for the same period.

Historical results for the three month period ended December 31, 2012

Diluted net income per trust unit was $1.58 for the three months ended December 31, 2012. FFO for the three months ended December 31, 2012 was $0.26 per diluted trust unit. FFO for the three months ended December 31, 2012 is in line with forecasted results for the three months ending March 31, 2013.

AFFO for the three months ended December 31, 2012 was $0.23 for diluted AFFO per trust unit. AFFO for the three months ended December 31, 2012 is in line with forecasted results for the three months ending March 31, 2013.

Financial Highlights and Key Performance Indicators  

                   
($000s unless otherwise noted and except per unit amounts)     Period from
August 27, 2012
to December
31, 2012 (1)
    Unaudited
Historical -
Three Months
Ended December
31, 2012 (2)
    Forecast -
Three Months
Ending March
31, 2013 (3)
Revenue from investment properties   $               234   $              6,054   $              6,075
Net operating income     150     3,742     3,764
                   
Funds from operations     38     2,206     2,193
FFO per trust unit (4)                  
  Diluted     0.005     0.26     0.26
                   
Adjusted funds from operations     5     1,924     1,917
AFFO per trust unit (4)                  
  Diluted     0.001     0.23     0.23
                   
Net operating income by asset class                  
  Industrial     57     1,433      
  Office     79     1,999      
  Retail     14     310      
      150     3,742      
Net operating income by geographic location                  
  Manitoba     74     2,036      
  Ontario     35     861      
  Saskatchewan     14     283      
  Alberta     21     445      
  Northwest Territories     6     117      
      150     3,742      
Interest coverage ratio (times)     NMF     2.6x      
Indebtedness ratio (%) *     54%     54%      
Leverage ratio (times) (5)*     NMF     7.7x      
Weighted average mortgage interest rate (%) *     5.3%     5.3%      
Occupancy (%) *                  
  Industrial     100.0%     100.0%      
  Office     96.3%     96.3%      
  Retail     90.1%     90.1%      
      97.4%     97.4%      
* at period-end
NMF = Not meaningful
(1) Includes the results of operations of the Initial Properties for the period from December 28, 2012, the date of acquisition. The REIT had no operations prior to December 28, 2012.
(2) For information purposes only, the historical results of operations of the Initial Properties for the three months ended December 31, 2012 have been included in this press release. The results of operations prior to December 28, 2012 are excluded from the consolidated financial statements of the REIT.
(3) For information purposes only, selected forecast financial information for the three months ending March 31, 2013 has been included in this press release.
(4) The weighted average number of trust units for a period calculated under IFRS requires a weighting of the units outstanding for the entire period. There were no trust units outstanding prior to the completion of the REIT's initial public offering on December 28, 2012. For the purpose of calculating per unit amounts, the weighted average number of trust units outstanding for the period from August 27, 2012 to December 31, 2012 under IFRS has been adjusted to reflect the weighted average number of trust units outstanding since the closing of the initial public offering. The same adjustment is reflected in per unit amounts presented for the three months ended December 31, 2012. Management considers this information more relevant and comparable to 2013 forecast information presented above.
(5) Calculated based on annualized EBITDA.

 

Outlook

At December 31, 2012, the REIT's properties had an occupancy rate of 97.4%, which is one of the highest in the diversified Canadian commercial REIT sector. Based on our current pipeline of leasing activity, we expect to maintain portfolio occupancy at or above 96%, with a tenant retention rate in the 95% range throughout fiscal 2013 (assuming no changes to the portfolio through acquisitions or dispositions).

Shant Poladian, Chief Executive  Officer of FAM REIT, commented, "Our historical results for the three months ended December 31, 2012 are consistent with the quarterly performance we currently expect to achieve throughout fiscal 2013. Accordingly, it is our current expectation that our 2013 AFFO payout ratio will be lower than 90% (assuming no acquisitions, dispositions or changes to capital structure) based on the current $0.75 annualized distribution level."

Other information

Information appearing in this press release is a select summary of results. The consolidated financial statements and management's discussion and analysis for the REIT are available at www.sedar.com and our website at www.famreit.com.

About FAM Real Estate Investment Trust

The REIT is a diversified commercial real estate investment trust focused on owning and acquiring strategically well-located industrial, office and retail real estate located primarily across Canada. The REIT's current portfolio aggregates approximately 1.7 million square feet of gross leasable area. The properties are located in Manitoba (eighteen properties), Alberta (four properties), Saskatchewan (two properties), Ontario (two properties) and the Northwest Territories (one property). 84% of the portfolio's gross leasable area is concentrated in large population centres, including Winnipeg, the Greater Toronto Area, Calgary and Regina.

Forward looking information

This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events. 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. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. The REIT 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 regulators, including its latest annual information form and MD&A.

SOURCE: FAM Real Estate Investment Trust

For further information:

Zachary R. George, Chairman
FAM Real Estate Investment Trust
Telephone: (604) 249-5119
Email: zgeorge@famreit.com

Shant Poladian, Chief Executive Officer
FAM Real Estate Investment Trust
Telephone: (647) 256-5002
Email: spoladian@famreit.com

Sandeep Manak, Chief Financial Officer
FAM Real Estate Investment Trust
Telephone: (604) 249-5113
Email: smanak@famreit.com

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FAM Real Estate Investment Trust

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