MONTREAL, Feb. 17 /CNW Telbec/ - Homburg Canada Real Estate Investment
Trust (TSX: HCR.UN) (the "REIT") today reported its financial results
for the fourth quarter ended December 31, 2010, and for the period from
May 25, 2010, to December 31, 2010. The REIT also announced that it has
entered into a binding agreement to acquire three properties in the
retail segment of the market for a gross purchase price of $96 million
excluding closing and transaction costs.
"Our financial and operating results for the fourth quarter and 2010
fiscal year are generally in line with management's expectations as
well as our IPO forecast," said Jim Beckerleg, President and Chief
Executive Officer. "During the fourth quarter, we began delivering on
our growth objectives with the acquisition of Complex Papineau-Levesque
and the Place Bathurst Mall. We are continuing along this path in 2011.
Today, we are announcing three pending acquisitions that are expected
to be accretive to our adjusted funds from operations results and that
fit perfectly within our strategy of expanding our holdings of office
and retail properties. Upon closing of these acquisitions, we will have
substantially invested the proceeds of the REIT's recent $85.5 million
bought-deal transaction," Mr. Beckerleg added.
The pending acquisitions announced today include two shopping centres in
the Greater Montreal area and one shopping centre in Quebec City. The
$96 million gross purchase price represents a weighted average going-in
capitalization rate of approximately 7.7%. Together, the three
acquisitions add approximately 8.27%, or 573,388 square feet, of new
assets to the REIT's portfolio, bringing the total portfolio to
approximately 7.5 million square feet. The REIT will assume the debt in
place on these assets of $52.55 million. These purchases will be
accretive to the REIT's current adjusted funds from operations.
FOURTH-QUARTER AND YEAR-END RESULTS
Fourth quarter ended December 31, 2010, and period from May 25, 2010, to
December 31, 2010
(versus initial public offering forecast)
May 25, 2010, to
May 25, 2010, to
(in thousands, except per unit items)
Net operating income
Adjusted funds from operations ("AFFO")
AFFO per unit - basic and fully diluted
Earnings per unit - basic and fully diluted
Total distributions per unit declared
during the quarter
AFFO payout ratio
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.homburgcanadareit.com.
The three-month period ended December 31, 2010, and abbreviated fiscal
year consisting of the 221 days from May 25, 2010, to December 31,
2010, resulted in property revenues, net operating income and net
earnings that generally met management's expectations and were largely
in line with its initial public offering ("IPO") forecast. Variances
are attributable to higher general and administrative expenses than
forecasted, mainly due to the occurrence of certain annual costs
expensed during the 221-day period ended December 31, 2010, to one-time
set up costs and executive performance-based compensation expenses
which were not included in the IPO forecast as well as to property
management fees and interest and financing costs, which were higher
than forecasted. AFFO per unit, both basic and fully diluted, was
affected by the temporary, dilutive impact of the second public
offering (the "Second Offering") closed on October 27, 2010.
Occupancy rates for the REIT's 77 commercial income properties stood at
95.1% at December 31, 2010, consistent with forecast. The residential
portfolio occupancy rate decreased from 98.2% at September 30, 2010, to
96.5% at December 31, 2010, which remains 3.2% above forecast.
Average lease term to maturity on the REIT's commercial properties was
9.5 years at December 31, 2010.
On October 27, 2010, the REIT closed its Second Offering of 7,772,100
units at $11.00 per unit, which was 10% above its IPO issue price. The
Second Offering was completed on a bought-deal basis, raising
approximately $85.5 million in gross proceeds.
During the fourth quarter ended December 31, 2010, the REIT used part of
the proceeds from the Second Offering to repay certain long-term debt,
including the second mortgage demand loan on Centre Laval and other
debt, thereby reducing its total debt by approximately $23 million. As
a result, long-term debt as a percentage of gross book value stood at
52.68% at December 31, 2010, below the REIT's target range of 55% to
On December 14, 2010, the REIT announced that it had acquired the
remaining 94.37% equity interest in the limited partnership that owns
Place Bathurst Mall, a 216,923-square-foot retail shopping centre in
which the REIT already held a 5.63% interest. The transaction was
effective October 1, 2010. The gross purchase price of the additional
94.37% interest was approximately $14 million, which was satisfied
through the payment of approximately $6.7 million of cash on hand, the
assumption of a $6.7 million 5.83% first mortgage maturing in August
2012 and miscellaneous working capital adjustments of $0.6 million.
On December 20, 2010, the REIT completed the acquisition of the Complex
Papineau-Levesque, a 168,947-square-foot office building in downtown
Montreal, for a purchase price of $30 million, satisfied using cash on
On January 21, 2011, subsequent to the end of the fourth quarter, the
REIT obtained a signed commitment letter with respect to a first
mortgage loan in respect of the Complex Papineau-Levesque acquisition.
The maximum principal amount to be advanced under the loan will be the
lesser of $18 million, 60% of the purchase price of the property or 60%
of the appraised value of the property.
On February 17, 2011, subsequent to the end of the fourth quarter and
simultaneously with the release of its fourth quarter and year-end
results, the REIT announced the pending acquisition of three properties
located in the Greater Montreal area and Quebec City, for an aggregate
purchase price of $96 million, excluding closing and transaction costs.
These three acquisitions are further detailed in this news release.
TERMS OF THE ACQUISITIONS AND PROPERTY DESCRIPTIONS
The REIT has entered into a binding agreement to acquire three retail
properties located in the province of Quebec for a total consideration
of $96 million, excluding closing and transaction costs. These
Place Longueuil is a 397,600-square-foot regional shopping centre
located in Longueuil, Quebec. The property will be acquired for a
purchase price of $78.64 million, which will be satisfied through the
assumption of a $43.48 million 5.28% mortgage maturing in April 2015
and the payment of approximately $35.16 million in cash.
Place Longueuil serves at a strategic high density entry point into the
growing and high-density South Shore of Montreal, the second largest
suburban region in the Greater Montreal area. A significant enclosed
shopping centre for the immediate and surrounding population, Place
Longueuil is located on 28.4 acres of land and comprises 397,600 square
feet of gross leasable area, including 67,112 square feet of second
floor office space, and 1,780 parking stalls. The centre is
strategically located on the South Shore of the St. Lawrence River, in
close proximity to the Jacques-Cartier Bridge and the Victoria Bridge,
highways 10, 15, 20, 116, 132 and 134 and the Longueuil metro station,
a main public transportation hub and the only metro station serving the
South Shore of Montreal. The Longueuil metro station complex is also
home to a University of Sherbrooke campus and an HEC Montréal campus.
Place Longueuil is 98.35% leased and the five major tenants, Revenu
Québec, Zellers, IGA, Sport Experts and Dollarama, account for
approximately 54% of the gross leasable area. The remaining gross
leasable area is occupied by 128 retail and service tenants. The
acquisition of this property is subject to receipt of the formal
consent of the lender under the existing mortgage registered on the
Les Halles de l'Île
Les Halles de l'Île is a 16,650-square-foot neighbourhood shopping
centre located on Nuns' Island in Montreal. The property will be
acquired for a purchase price of $5.71 million, which will be satisfied
through the assumption of a $2.79 million 6.23% mortgage maturing in
September 2013 and the payment of approximately $2.92 million in cash.
Located in the very affluent and growing residential neighbourhood of
Nuns' Island in Montreal, Les Halles de l'Île is a Class "A"
neighbourhood strip centre that services the everyday needs of the
island community. The two-storey centre comprises 16,650 square feet of
gross leasable area, 0.94 acres of land and 60 parking spaces. It is
advantageously situated on Place du Commerce, Nuns' Island's central
retail area, at the junction of the Champlain Bridge and Bonaventure
Highway, which respectively connect the island with Montreal's South
Shore and with downtown Montreal. It also benefits from convenient
access to highways 20, 10 and 15. The centre is 100% leased, with 56%
of the gross leasable area being occupied by major tenants Isola Salon
& Spa, Hogg Hardware and Second Cup.
Carrefour Les Saules
Carrefour Les Saules is a 159,138-square-foot community shopping centre
located in Quebec City that will be acquired for a purchase price
$11.65 million. The purchase price for Carrefour Les Saules will be
satisfied through the assumption of a $6.28 million 7.53% mortgage
maturing in July 2012 and the payment of approximately $5.37 million in
cash. The acquisition of this property is subject to receipt of the
formal consent of the lender under the existing mortgage registered on
The enclosed community shopping mall is located in the centre of Quebec
City, in an established community designated as "Les Rivières," near
the intersection of Highway 40 and Highway Henri IV. Located on 13.65
acres of land, the shopping centre comprises 159,138 square feet of
gross leasable area, including 36,952 square feet of office space, and
850 parking stalls. Carrefour Les Saules is 100% leased. Major tenants
include Provigo, Bell Canada, Hart Stores and Jean Coutu, and account
for 77% of the centre's gross leasable area.
The cash portion of the payment for the three above-mentioned properties
will be satisfied through the use of cash on hand from the proceeds of
the Second Offering, long-term financing on the recently acquired
Complex Papineau-Levesque in Montreal and/or a line of credit, to the
extent necessary. The closing of all three transactions is expected to
be completed by the end of February 2011 and is subject to standard
"These three quality assets fit perfectly within our diversified
portfolio of properties. With the addition of Place Longueuil, we will
have a strong corridor presence comprising downtown Montreal and its
two major suburban areas, Laval and the South Shore," said Mr.
Beckerleg. "Two of the properties are close to our strong existing
Montreal management platform, and we believe the Quebec City property,
which serves as a strategic entry point into the Quebec City retail
market, can also easily be absorbed by this same operating platform.
These portfolio additions augur well for growth in the rest of 2011. We
continue to cultivate an active pipeline of acquisitions that we hope
will augment our 2011 growth even further."
The REIT's management team will be holding a conference call today at 11
a.m. (EST) to discuss the results and the acquisitions announced today.
To access the conference call, please call 1-800-786-5706. A taped
replay of the call will be available until March 19, 2011, by calling
1-402-977-9140 or 1-800-633-8284 and entering the playback code
21510496. 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.homburgcanadareit.com.
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 its IPO prospectus,
dated May 14, 2010.
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, which are available on
SEDAR at www.sedar.com.
About Homburg Canada Real Estate Investment Trust
Homburg Canada Real Estate Investment Trust 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, the REIT owns a portfolio of Canadian income-producing
commercial properties, consisting mainly of retail and office
properties with certain industrial properties, as well as certain
income-producing multi-family residential properties. The properties
comprise approximately 6.9 million square feet of commercial gross
leasable area and 1,725 multi-family residential units located in
Quebec, Atlantic Canada, Western Canada and Ontario.
Note regarding Non-GAAP Financial Measures
Funds from operations ("FFO"), adjusted funds from operations ("AFFO")
and net operating income ("NOI") are not measures recognized under
Canadian generally accepted accounting principles ("Canadian GAAP") and
do not have standardized meanings prescribed by Canadian GAAP. 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 its unitholders. The Canadian GAAP measurements 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 Canadian GAAP,
excluding gains (or losses) from sales of income-producing properties,
long-term investments and extraordinary items, plus depreciation and
amortization, plus impairment provisions, plus future income tax
expense and after adjustments for equity accounted entities, joint
ventures and non-controlling interests calculated to reflect FFO on the
same basis as consolidated properties.
"AFFO" is defined as FFO subject to certain adjustments, including: (i)
net amortization of above and below market leases, amortization of fair
value mark-to-market adjustments on mortgages acquired, amortization of
deferred financing and leasing costs, and compensation expense related
to unit option plans; (ii) adjusting for any differences resulting from
recognizing property revenues on a straight-line basis; and (iii)
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.
"NOI" is defined as income from properties after operating expenses have
been deducted, prepared in accordance with Canadian GAAP, but before
deducting income taxes, depreciation of income-producing properties and
other assets, and amortization of leasehold improvement and leasing
costs, interest on borrowings, the REIT's administrative expenses and
adjusting for the NOI on the non-controlling interest.
FFO, AFFO and NOI should not be construed as alternatives to net income
or cash flow from operating activities determined in accordance with
Canadian GAAP 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
SOURCE Homburg Canada Real Estate Investment Trust
For further information:
|For further information, please contact:|
|James W. Beckerleg |
President and Chief Executive Officer
Homburg Canada Real Estate Investment Trust
|Gordon G. Lawlor, CA|
Executive Vice-President, Chief Financial
Officer and Secretary
Homburg Canada Real Estate Investment Trust
|Paul de la Plante|
NATIONAL Public Relations