Agellan Commercial Real Estate Investment Trust Releases Third Quarter Results

TORONTO, Oct. 28, 2013 /CNW/ - AGELLAN COMMERCIAL Real Estate Investment Trust (the "REIT") (TSX:ACR.UN) is pleased to report its financial results for the three and nine month periods ended September 30, 2013. For 2013 the REIT will be comparing its results to the 2013 Forecast of Financial Information ("Forecast") disclosed in the REIT's offering prospectus dated January 17, 2013 ("IPO Prospectus") which is available on the SEDAR website at www.sedar.com.

Summary of Financial Information:

       
FINANCIAL AND OPERATIONAL HIGHLIGHTS (in 000's)   January 25, 2013 September 30, 2013
       
Summary of Operational Information      
Number of Properties                             23                        24
Gross Leasable Area ("GLA") (in 000's)   4,210 4,313
Occupancy % (Current)   91% 93%
Average lease term to maturity (years)                           4.4                       4.5
       
Summary of Financial Information      
Gross Book Value   $430,984 $478,802
Debt   $243,695 $262,835
Debt to Gross Book Value   57% 55%
Interest Coverage   N/A                       3.3
Weighted average interest rate   4.0% 3.8%
       
  For the year to date period ending September 30, 2013
  Actual Forecast Variance
       
Total property and property related revenue $40,772 $39,489 $1,283
Net Operating Income ("NOI") $24,449 $23,472 $977
Funds from Operations ("FFO") $15,918 $15,051 $867
Adjusted Funds from Operations ("AFFO") $11,511 $11,179 $332
       
Basic and Diluted FFO per unit $0.822 $0.777 $0.045
Basic and Diluted AFFO per unit $0.594 $0.577 $0.017
Distributions per unit $0.533 $0.533 $0.00
       
Payout Ratio 90%    
Units outstanding at period-end: 19,415,629    
Weighted average Units outstanding 19,363,244    

(1) Forecast figures have been prorated to reflect the REIT's actual operational period to date, being January 25, 2013 to September 30, 2013.

Highlights of the Quarter:

  • Operating results for the three month period ended September 30, 2013 were generally in line with management's expectations and assumptions used in the REIT's Forecast included in the IPO Prospectus, with consistent occupancy throughout the quarter.
  • AFFO for the three month period ended September 30, 2013 was $4,312, against forecasted AFFO of $4,260, favourable by $52, or 1.2%, due primarily to higher than anticipated NOI.
  • On July 1, 2013, the REIT entered into two new leases at Parkway Place for a combined 36,289 square feet, resulting in a reduction of approximately 36% of the original 101,000 square feet of vendor lease space at Parkway Place.
  • On July 8, 2013, the REIT completed an early lease renewal with CH2M Hill Canada for one additional year at market rates.  CH2M Hill Canada occupies 57,713 square feet at Parkway Place.  CH2M Hill Canada's lease now matures in March 2018.
  • During the third quarter, the REIT entered into an option agreement with a prestigious European car manufacturer to locate their corporate head office and corporate dealership on a portion of the excess lands on a 20 year lease basis at $3.5 million per acre. The agreement is subject to certain conditions that have yet to be met.
  • During the three month period ended September 30, 2013, the REIT declared distributions of $0.06458 per Unit on July 12, 2013, August 19, 2013 and September 18, 2013 consistent with its annualized target of $0.775 per Unit.
  • On September 3, 2013 Daniel Millett, CPA, CA was appointed Chief Financial Officer, succeeding Interim CFO, who remains with Agellan Capital Partners Inc. ("ACPI").
  • On September 30, 2013 the REIT agreed to reinstate an agreement that was initially entered into on July 12, 2013 to acquire Beltway 8 Corporate Centre III & IV, two adjacent two-story commercial office facilities located in Houston, Texas for a total purchase price, excluding transaction costs, of US$45 million.
  • In order to partially fund the anticipated acquisition of Beltway 8 Corporate Centre III & IV, the REIT on October 9, 2013 closed a public offering of 3.4 million units at a price of $8.70 per Unit for aggregate gross proceeds of approximately $30.0 million (the "October 2013 Public Offering").  The REIT has also granted the underwriters to the October 2013 Public Offering an over-allotment option to purchase an additional 345,000 units on the same terms and conditions anytime, in whole or in part, up to 30 days after the closing.
  • Subsequent to quarter end, the REIT entered into a lease for approximately 15,000 square feet at Parkway Place commencing January 1, 2014 resulting in further reduction of the vendor lease space at Parkway Place.

"For the third consecutive quarter, our results demonstrate our ability to drive leasing and deliver both internal and external growth in our portfolio.  We are particularly excited with the leasing activity in our core assets, and the economic growth shown in core markets such as Texas" says Frank Camenzuli, Chief Executive Officer of the REIT. "Moving forward, we will continue to focus on leasing in both Canada and the US, as well as, enhance internal value from select development opportunities.  We will also maintain our work towards the long term goals of decreasing our payout and leverage ratios."

The REIT ended its third quarter with a debt ratio of 55%, comprised of a combination of fixed and floating rate debt. The weighted average interest rate on the REIT's debt is 3.8%. Refinancing is not a primary focus of 2013, with no mortgages maturing during the year, and no debt scheduled to mature until 2015.  The REIT has approximately $12 million undrawn on its credit facility.

Senior management will host a conference call to discuss the results on Tuesday, October 29, 2013 at 3:00 p.m. EST. In order to participate, please dial 1-416-340-2217 or 1-866-696-5910 and enter participant pass code: 4526238. You will be required to identify yourself and the organization on whose behalf you are participating. For operator assistance during the call, please press *0.

If you cannot participate on October 29, 2013 a replay of the conference call will be available by dialing 1-905-694-9451 or 1-800-408-3053 and entering participant pass code: 3880896. The replay will be available until November 12, 2013.

Other information:

Information appearing in this news release is a select summary of results. The consolidated financial statements along with management's discussion and analysis for the REIT are available at www.agellancommercialreit.com and on www.sedar.com.

The REIT is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been created for the purpose of acquiring and owning industrial, office and retail properties in select major urban markets in the United States and Canada.

The REIT's current portfolio aggregates approximately 4.3 million square feet of gross leasable area in 24 properties. The properties are primarily located in Texas, Ontario and the U.S. Midwest. The REIT's portfolio is well diversified by geographic location, asset class and tenant mix.

Non-IFRS supplemental measures:

NOI, FFO and AFFO are key measures of performance used by real estate operating companies; however, they are not defined by International Financial Reporting Standards ("IFRS"), do not have standard meanings and may not be comparable with other industries or income trusts. These Non-IFRS measures are more fully defined and discussed in the REIT's Management Discussion and Analysis for the period ended September 30, 2013, which is available on SEDAR at www.sedar.com.

Forward looking information:

This press 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, which could cause actual results 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; the REIT's ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate functions. The REIT's objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the 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: Agellan Commercial Real Estate Investment Trust

For further information:

Derek Dermott
President
(416) 593-6800 ext 269
ddermott@agellancapital.com

Frank Camenzuli
Chief Executive Officer
(416) 593-6800 ext 226
fcamenzuli@agellancapital.com

Organization Profile

Agellan Commercial Real Estate Investment Trust

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