True North Commercial REIT announces second quarter 2013 results

/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/

TORONTO, July 31, 2013 /CNW/ - True North Commercial Real Estate Investment Trust (TSX: TNT.UN) (the "REIT") today announced its financial and operating results for the three and six months ended June 30, 2013. All amounts are in thousands of Canadian dollars, unless otherwise noted.

"We are extremely pleased with True North Commercial's second quarter results, which represents the beginning of a solid track record of consistent performance," stated Daniel Drimmer, the REIT's Chief Executive Officer. "Our results include a full quarter's contribution from the acquisitions completed in February and demonstrates our ability to execute on our stated strategy as we continue to actively seek out diversified commercial real estate assets across Canada."

"There continues to be ample opportunity for us to grow our portfolio providing the REIT the luxury of selectivity. We intend on proceeding only with those opportunities which allow us to maintain the quality of our tenant profile and our conservative capital structure." continued Mr. Drimmer. "Our portfolio has an industry-leading occupancy of 99.4%, and our strong tenant profile is highlighted by government or credit-rated tenants generating 87% of our revenue."

"In addition to our strong financial results, the REIT's recent graduation to the Toronto Stock Exchange on June 19, 2013   was an important milestone for our organization and has served to increase awareness of the REIT, and broaden our investor base" Mr. Drimmer added.

2013 SECOND QUARTER HIGHLIGHTS

  • Revenue from property operations for the three and six months ended June 30, 2013 was $4,774 and $7,260 respectively.
  • Recognized a $16.3 million fair value gain on investment properties.
  • Industry-leading occupancy rate of 99.4% as at June 30, 2013.
  • Strong tenant profile with 86.9% of revenue derived from government or credit-rated tenants.
  • Indebtedness to Gross Book Value decreased to 56.8%, a decline from 63.1% at the end of the prior quarter.
  • On June 17, 2013 the REIT announced the approval of the listing of the REIT's Units on the Toronto Stock Exchange ("TSX"), and the Units commenced trading on the TSX under the symbol TNT.UN on June 19, 2013.
  • Contemporaneously with the listing on the TSX, the REIT's Units and Class B LP Units were consolidated on the basis of one (1) post consolidation unit for two (2) pre-consolidation units.

Operating Results and Financial Position

                   
                   
          As at June 30, 2013
                   
Summary of Financial Information              
Gross Book Value (1)             $173,673
Indebtedness (2)             $98,580
Indebtedness to Gross Book Value (3)             56.8%
Weighted average mortgage fixed interest rate             3.48%
Weighted average mortgage term to maturity             4.58 years
                   
        Three months
ended
June 30, 2013
  Six months
ended
June 30, 2013
         
                   
Summary of Financial Information              
Revenue from property operations         $4,774   $7,260
NOI           $2,988   $4,671
Net income and comprehensive income          $20,871   $17,445
             
Notes:                
(1) "Gross Book Value" is defined in the DOT and includes deferred financing costs of $803.
(2) "Indebtedness" is defined in the DOT and excludes unamortized financing costs of $738.
(3) Defined as the ratio of Indebtedness to Gross Book Value.

Portfolio Operational Results

Revenue from property operations includes all rental income earned from the properties, including rental income and all other miscellaneous income paid by the tenants under the terms of their existing leases, such as base rent, parking, operating cost and realty tax recoveries, as well as adjustments for the straight-lining of rents.

Operating costs includes costs relating to building maintenance, HVAC, elevator, insurance, utilities and management fees.

Revenue from property operations for the three and six months ended June 30, 2013 was $4,774 and $7,260 respectively.   Operating costs for the respective periods were $1,786 and $2,589.  The increases are due to the timing of the acquisition with the three months ended June 30, 2013 representing the first full quarter of operations of the six properties currently owned by the REIT.

Occupancy for the portfolio has remained stable at 99.4%.

At June 30, 2013, the REIT has minimal near term lease expirations.  Approximately 5% of the portfolio's gross leasable area is set to expire by the end of 2016 with the remainder in 2017 and thereafter.

Liquidity and Capital Resources

At June 30, 2013, the REIT had $1.4 million of cash and cash equivalents on hand and $5.0 million available on the REIT's operating credit facility.

At June 30, 2013, the REIT's indebtedness to Gross Book Value was 56.8% compared to 63.1% at March 31, 2013. The ratio is well within the 75% limit set out in the REIT's Amended and Restated Declaration of Trust.

The weighted average interest rate on the REIT's mortgage portfolio was 3.48%, and the weighted average term to maturity was 4.58 years. The REIT does not have any mortgages expiring in 2013.

Tenant Profile

The weighted-average term to maturity of leases at June 30, 2013 is 4.6 years.  Approximately 82.7% of the REIT's gross leaseable area is occupied by government and credit rated tenants which contribute 86.9% of REIT's annualized gross revenue. Federal and Provincial Governments alone account for 69.4% of the portfolio's annualized gross revenue.

About the REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT is focused on acquiring and operating commercial rental properties across Canada and such other jurisdictions where opportunities exist.

For complete financial statements and management's discussion and analysis for the period, and any other information relating to the REIT, please visit www.sedar.com or the REIT's website at www.truenorthreit.com.

Non-IFRS measures

The REIT's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures, Net Operating Income ("NOI"), Gross Book Value and Indebtedness as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. The REIT uses these measures to better assess the REIT's underlying performance and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for the period ended June 30, 2013 and available on the REIT's profile at www.sedar.com.

Forward-looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are provided for the purposes of assisting the reader in understanding the REIT's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned such statements may not be appropriate for other purposes. Forward-looking information may relate to the REIT's future outlook and anticipated events and may include statements regarding the financial position, business strategy, budgets, financing rates and costs, taxes and plans and objectives of or involving the REIT. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the REIT or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts.

Forward-looking statements necessarily involve known and unknown risks and uncertainties, that may be general or specific and which give rise to the possibility expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the REIT's control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to; the risks discussed in the REIT's materials filed with Canadian securities regulatory authorities from time to time on www.sedar.com. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements.

Information contained in forward-looking statements is based upon certain material assumptions, including management's perceptions of historical trends, current conditions expected future developments as well as other considerations that are believed to be appropriate in the circumstances, such as: the Canadian economy will remain stable over the next 12 months; inflation will remain relatively low; interest rates will remain stable; conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate; the Canadian capital markets will continue to provide the REIT with access to equity and/or debt at reasonable rates when required; Starlight Investments Ltd. will continue its involvement as asset manager of the REIT in accordance with its current asset management agreement; and the risks identified or referenced above, collectively, will not have a material impact on the REIT. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.

The forward-looking statements made in this press release are dated, and relate only to events or information, as of the date of this press release. Except as specifically required by law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

SOURCE: True North Commercial Real Estate Investment Trust

For further information:

Daniel Drimmer
Chief Executive Officer
(416) 234-8444

Tracy Sherren
Chief Financial Officer
(416) 234-8444


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