Cominar Announces Solid Q2 2008 Results



    
    TSX - CUF.UN

    - Increases of 42.5% in operating revenues and 39.0% in net operating
      income
    - 6% increase in same property net operating income
    - Recurring distributable income of $18.6 million, up 23.8%, and
      recurring funds from operations of $21.6 million, up 24.7%
    - Year-to-date investments of $55.4 million in property acquisitions and
      completed developments
    - Development program representing a total investment of $133.4 million
      over the next few years for an additional leasable area of
      approximately 1 million sq.ft.

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    QUEBEC CITY, Aug. 7 /CNW Telbec/ - Cominar Real Estate Investment Trust
("Cominar" or the "REIT") announces solid results for its second quarter ended
June 30, 2008.

    
    Financial Highlights
    --------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    For the periods ended June 30,                        Quarter
    (in thousands of dollars                                               %
     except per unit amounts)                   2008        2007      Change
    -------------------------------------------------------------------------
    Operating revenues(1)                     59,086      41,476        42.5
    Net operating income(1)(2)                34,398      24,750        39.0
    Net income                                 6,690       8,690       (23.0)
    Distributable income(2)                   18,592      15,436        20.4
    Recurring distributable income (2)(3)     18,592      15,014        23.8
    Recurring funds from operations(2)(3)     21,553      17,290        24.7
    Recurring adjusted funds from
     operations(2)(3)                         18,615      15,014        24.0
    Distributions                             16,095      13,206        21.9

    Per unit (fully diluted)
    Recurring distributable income(2)(3)        0.40        0.37         8.1
    Recurring funds from operations(2)(3)       0.45        0.42         7.1
    Recurring adjusted funds from
     operations(2)(3)                           0.40        0.37         8.1
    Distributions (basic)                      0.353       0.312        13.1
    -------------------------------------------------------------------------
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    -------------------------------------------------------------------------
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    For the periods ended June 30,                 Cumulative (six months)
    (in thousands of dollars                                               %
     except per unit amounts)                   2008        2007      Change
    -------------------------------------------------------------------------
    Operating revenues(1)                    116,492      75,747        53.8
    Net operating income(1)(2)                65,784      43,902        49.8
    Net income                                10,704      16,014       (33.2)
    Distributable income(2)                   34,275      27,044        26.7
    Recurring distributable income (2)(3)     34,275      26,622        28.7
    Recurring funds from operations(2)(3)     40,260      30,962        30.0
    Recurring adjusted funds from
     operations(2)(3)                         34,320      26,622        28.9
    Distributions                             31,464      24,584        28.0

    Per unit (fully diluted)
    Recurring distributable income(2)(3)        0.74        0.68         8.8
    Recurring funds from operations(2)(3)       0.85        0.79         7.6
    Recurring adjusted funds from
     operations(2)(3)                           0.75        0.68        10.3
    Distributions (basic)                      0.692       0.618        12.0
    -------------------------------------------------------------------------
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    (1) Certain figures for the first semester of 2007 have been reclassified
        as discontinued operations in conformity with GAAP.
    (2) See the note "Non-GAAP Financial Measures".
    (3) Excluding non-recurring interest income of $0.4 million realized
        during the second quarter of 2007 in connection with a public
        offering of subscription receipts.
    -------------------------------------------------------------------------

    "We are very pleased with our second-quarter results, strong same property
performance and financial position as at June 30, 2008. Our occupancy rate is
stable, our rental rates are increasing and our fundamentals remain solid
despite the tightening of credit markets and volatility in stock prices,"
indicated Michel Dallaire, President and Chief Executive Officer of Cominar.
"Since the beginning of the year, we have repaid all the mortgages maturing in
2008 and contracted $113.1 million in new mortgages at a lower average
interest rate than the repaid debt. Finally, our development program, which
represents a total investment of $133.4 million over the next few years,
should offer unitholders an attractive value-added potential," he added.

    Operating revenues totaled $59.1 million for the second quarter ended June
30, 2008, up 42.5%. This significant increase is due mainly to the
contribution of the properties acquired in 2007, as well as the other         
                         acquisitions and developments completed in 2007 and
the beginning of 2008.

    Net operating income ("NOI") amounted to $34.4 million, up 39.0% over the
second quarter of 2007. Same property NOI, which provides an indication of the
operating profitability of the existing portfolio, was up by 6% over the
previous corresponding quarter, and 4% year-to-date.

    Net income amounted to $6.7 million, down 23.0% from the corresponding
period of 2007. It should be noted that the comparison of 2008 net income with
that of 2007 is not meaningful, primarily because of the significant increase
in amortization attributable to the income properties acquired in 2007 and
2008.

    Recurring distributable income ("RDI") grew to $18.6 million for the
quarter, up 23.8% over the same period of 2007. RDI per fully diluted unit
amounted to $0.40, compared with $0.37 for the second quarter of 2007, an
increase of 8.1%.

    Recurring funds from operations ("FFO") increased by 24.7% to
$21.6 million due to the contribution of the acquisitions and developments
completed in 2007 and the beginning of 2008 as well as strong organic growth.
Recurring FFO per fully diluted unit amounted to $0.45, compared with
$0.42 for the second quarter of 2007, up 7.1%.

    Recurring adjusted funds from operations ("AFFO") totaled $18.6 million,
compared with $15.0 million for the second quarter of 2007. Recurring AFFO per
fully diluted unit grew 8.1%.

    Distributions to unitholders totaled $16.1 million for the second quarter
of 2008, compared with $13.2 million in the second quarter of 2007, an
increase of 21.9%. Distributions per unit amounted to $0.353, up from $0.312
in the second quarter of 2007.

    As at June 30, 2008, Cominar maintained a debt ratio of 58.1%, which is
less than the maximum debt ratio of 65.0% allowed by its Contract of Trust
when convertible debentures are outstanding. This ratio enables the REIT to
incur up to $322 million in additional debt, if need be, to finance its future
acquisitions and development program.

    Operational Highlights
    ----------------------

    Cominar consistently strives to maximize its property occupancy rates and
has successfully maintained a 95.0% average since its inception. Leasing
activities continued to progress at a steady pace across its portfolio
throughout the second quarter. As at June 30, 2008, its portfolio occupancy
rate was stable at 95.2%. Satisfactory occupancy rates were achieved in all
three sectors of activity and renewal rates are up by an average of
8.2% year-to-date.

    Acquisitions and Developments Completed in 2008
    -----------------------------------------------

    Since the beginning of the year, Cominar has acquired 10 income properties
representing a total investment of $44.6 million. In addition, the REIT has
completed the development of two industrial and mixed-use properties in the
Montreal area for $10.8 million.

    Ongoing and Upcoming Developments
    ---------------------------------

    As at June 30, 2008, ongoing and upcoming developments in the Quebec City
and Montreal regions represented an additional leasable area of approximately
one million square feet and a total estimated investment of approximately
$133.4 million over the next few years. Their average capitalization rate is
estimated at 9.4%, which is much higher than current market rates for similar
properties.

    Increase in Monthly Distributions (previously announced)
    --------------------------------------------------------

    Considering the excellent results arising from the expected benefits of
the acquisitions and developments completed in 2007 and beginning of 2008, as
well as the solid same property performance, and as real estate market
conditions remain favourable for growth, the Board of Trustees has raised the
monthly distributions to unitholders from 11.3 cents per unit to 12.0 cents
per unit ($1.44 annualized), representing an increase of 6.2%. This increase
was effective for the May 2008 distribution payable in June 2008.

    Outlook
    -------

    "Our primary objective is to continue creating value through optimal
organic growth and the completion of acquisitions and development projects
matching our criteria of profitability and growth over the long term.
Considering the high rental demand in our markets and the quality of our
properties, we remain confident we can renew a large proportion of 2008
expiring leases at a higher rate per square foot. Despite more uncertain
economic conditions, we are confident we will achieve a solid performance in
upcoming months," concluded Michel Dallaire.

    Additional Financial Information
    --------------------------------

    Cominar's interim consolidated financial statements and the management's
discussion and analysis for the second quarter ended June 30, 2008 will be
filed with SEDAR at www.sedar.com and are available on Cominar's website at
www.cominar.com.

    August 7, 2008 Conference Call
    ------------------------------

    On Thursday, August 7, 2008, at 11:30 a.m. (EDT), Cominar's management
will hold a conference call to discuss the results for the second quarter of
2008. Anyone who is interested may take part in this call by dialing
1-800-732-9303. A presentation of the second quarter 2008 results will be
available before the conference call on the REIT's website at www.cominar.com
under the title "Conference Call". The event will also be simultaneously
webcast on its website and archived for 90 days.

    PROFILE as at August 7, 2008
    ----------------------------

    Cominar is the largest commercial property owner and manager in the
Province of Quebec. The REIT owns a real estate portfolio of 212 high-quality
properties, consisting of 36 office, 39 retail and 137 industrial and
mixed-use buildings that cover a total area of over 17.6 million square feet
in the Greater Quebec City, Montreal and Ottawa areas. Cominar's objectives
are to deliver growing cash distributions to its unitholders and to maximize
unitholder value through proactive management and the growth of its portfolio.

    Distribution Reinvestment Plan
    ------------------------------

    The REIT has a distribution reinvestment plan for its unitholders that
allows participants to reinvest their monthly distributions in additional
Trust units. Participants will be given the right to receive an effective
discount of 5% of distributions to which they are entitled in the form of
additional units. Additional information and enrolment forms are available at
www.cominar.com.

    Forward-Looking Statements
    --------------------------

    This press release may contain forward-looking statements with respect to
Cominar and its operations, strategy, financial performance and financial
condition. These statements generally can be identified by the use of
forward-looking words such as "may", "will", "expect", "estimate",
"anticipate", "intend", "believe" or "continue" or the negative thereof or
similar variations. The actual results and performance of Cominar discussed
herein could differ materially from those expressed or implied by such
statements. Such statements are qualified in their entirety by the inherent
risks and uncertainties surrounding future expectations. Some important
factors that could cause actual results to differ materially from expectations
include, among other things, general economic and market factors, competition,
changes in government regulation and the factors described under "Risk
Factors" in the Annual Information Form of Cominar. The cautionary statements
qualify all forward-looking statements attributable to Cominar and persons
acting on its behalf. Unless otherwise stated, all forward-looking statements
speak only as of the date of this press release.

    Non-GAAP Financial Measures
    ---------------------------

    Net operating income ("NOI"), distributable income ("DI"), funds from
operations ("FFO") and adjusted funds from operations ("AFFO") are not
measures recognized under Canadian generally accepted accounting principles
("GAAP") and do not have standardized meanings prescribed by GAAP. NOI, DI,
FFO and AFFO computed by Cominar may differ from similar computations as
reported by other similar organizations and, accordingly, may not be
comparable to similar measures reported by such organizations.


    Complete interim consolidated financial statements, including accompanying
notes, are available on Cominar's website at www.cominar.com under "Investor
Relations - Quarterly Reports".


    Consolidated Balance Sheets
    (in thousands of dollars)
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    -------------------------------------------------------------------------
                                                         As at         As at
                                                       June 30,  December 31,
                                                          2008          2007
                                                    (unaudited)     (audited)
                                                             $             $
    -------------------------------------------------------------------------
    ASSETS
    Income properties
      Buildings                                      1,107,557     1,073,830
      Land                                             182,949       174,657
      Intangible assets                                 69,474        74,608
                                                   ------------  ------------
                                                     1,359,980     1,323,095
    Properties under development                        49,674        31,401
    Land held for future development                    19,226        29,879
    Deferred expenses and other assets                  39,152        36,001
    Prepaid expenses                                    16,705         2,758
    Accounts receivable                                 23,376        19,660
    -------------------------------------------------------------------------
                                                     1,508,113     1,442,794
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Mortgages payable                                  592,427       619,755
    Convertible debentures                             204,060       203,852
    Bank indebtedness                                  147,247        35,321
    Accounts payable and accrued liabilities            32,451        35,924
    Distributions payable to unitholders                 5,470         6,246
    -------------------------------------------------------------------------
                                                       981,655       901,098
    -------------------------------------------------------------------------
    UNITHOLDERS' EQUITY
    Unitholders' equity                                526,458       541,696
    -------------------------------------------------------------------------
                                                     1,508,113     1,442,794
    -------------------------------------------------------------------------
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    Consolidated Statements of Unitholders' Equity
    For the periods ended June 30,
    (unaudited, in thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         Quarter               Cumulative
                                                              (six months)
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
                                       $           $           $           $
    -------------------------------------------------------------------------
    Unitholders' contributions
    Balance, beginning
     of period                   592,304     412,707     591,172     400,698
    Issue of units                 4,151     173,828       5,283     185,837
    Underwriters' fees and
     offering expenses                 -      (5,852)          -      (5,852)
    -------------------------------------------------------------------------
    Balance, end of period       596,455     580,683     596,455     580,683
    -------------------------------------------------------------------------
    Cumulative net income
    Balance, beginning
     of period                   251,793     225,862     247,779     218,538
    Net income                     6,690       8,690      10,704      16,014
    -------------------------------------------------------------------------
    Balance, end of period       258,483     234,552     258,483     234,552
    -------------------------------------------------------------------------
    Cumulative distributions
    Balance, beginning
     of period                  (313,449)   (254,004)   (298,080)   (242,626)
    Distributions to
     unitholders                 (16,095)    (13,206)    (31,464)    (24,584)
    -------------------------------------------------------------------------
    Balance, end of period      (329,544)   (267,210)   (329,544)   (267,210)
    -------------------------------------------------------------------------
    Contributed surplus
    Balance, beginning
     of period                       637         403         513         398
    Unit option plan                 115           4         239           9
    -------------------------------------------------------------------------
    Balance, end of period           752         407         752         407
    -------------------------------------------------------------------------
    Other equity component
    Convertible debentures
     equity component                312           -         312           -
    -------------------------------------------------------------------------
    Unitholders' equity          526,458     548,432     526,458     548,432
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Income and Comprehensive Income
    For the periods ended June 30,
    (unaudited, in thousands of dollars except per-unit amounts)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         Quarter               Cumulative
                                                              (six months)
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
                                       $           $           $           $
    -------------------------------------------------------------------------
    Operating revenues
    Rental revenue from
     income properties            59,086      41,476     116,492      75,747
    -------------------------------------------------------------------------
    Operating expenses
    Operating costs               10,388       7,344      22,472      14,924
    Realty taxes and services     13,588       8,987      26,931      16,310
    Property management
     expenses                        712         395       1,305         611
    -------------------------------------------------------------------------
                                  24,688      16,726      50,708      31,845
    -------------------------------------------------------------------------
    Operating income before
     the undernoted               34,398      24,750      65,784      43,902
    -------------------------------------------------------------------------
    Interest on borrowings        12,030       7,021      23,911      12,239
    Depreciation of income
     properties                   12,634       6,975      25,104      11,363
    Amortization of deferred
     leasing costs                 2,112       1,747       4,243       3,419
    Amortization of other assets      72          52         134         102
    -------------------------------------------------------------------------
                                  26,848      15,795      53,392      27,123
    -------------------------------------------------------------------------
    Operating income from
     real estate assets            7,550       8,955      12,392      16,779
    -------------------------------------------------------------------------
    Trust administrative
     expenses                        984         831       1,863       1,452
    Other revenues                   124          83         175         175
    Unusual item                       -         422           -         422
    -------------------------------------------------------------------------
    Net income from
     continuing operations         6,690       8,629      10,704      15,924
    Net income from
     discontinued operations           -          61           -          90
    -------------------------------------------------------------------------
    Net income and
     comprehensive income          6,690       8,690      10,704      16,014
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic net income per unit      0.147       0.221       0.236       0.420
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted net income per unit    0.146       0.217       0.234       0.413
    -------------------------------------------------------------------------
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    Consolidated Statements of Cash Flows
    For the periods ended June 30,
    (unaudited, in thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         Quarter               Cumulative
                                                              (six months)
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
                                       $           $           $           $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net income                     6,690       8,690      10,704      16,014
    Items not affecting cash
      Depreciation of income
       properties                 12,634       7,207      25,104      11,827
      Amortization of above-
       (below-) market leases       (126)        (38)       (253)         (8)
      Amortization of deferred
       leasing costs               2,112       1,747       4,243       3,419
      Amortization of deferred
       financing costs and
       other assets                  660         237       1,226         482
      Amortization of fair
       value adjustments on
       assumed indebtedness          (32)          -         (63)          -
      Accretion of liability
       component of convertible
       debentures                      9           -          18           -
      Compensation costs related
       to unit option plan           171          50         301          99
    -------------------------------------------------------------------------
                                  22,118      17,893      41,280      31,833
    -------------------------------------------------------------------------
    Change in non-cash operating
     working capital items        (4,298)     (1,783)    (18,888)     (3,817)
    -------------------------------------------------------------------------
                                  17,820      16,110      22,392      28,016
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Acquisitions of income
     properties                  (33,250)   (363,555)    (56,370)   (403,965)
    Additions to properties
     under development and
     land held for future
     development                  (5,090)    (14,383)    (10,997)    (22,832)
    Leasing costs                 (4,352)     (3,062)     (8,926)     (4,818)
    Other assets                  (1,239)       (134)     (1,920)       (490)
    -------------------------------------------------------------------------
                                 (43,931)   (381,134)    (78,213)   (432,105)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Mortgages payable             81,368     132,947     111,232     167,987
    Repayments of mortgages
     payable                     (84,635)    (44,324)   (139,863)    (56,750)
    Bank indebtedness             41,421      45,405     111,926      70,175
    Net proceeds from issue
     of units                      2,850     165,503       3,422     168,580
    Net proceeds from issue
     of convertible debentures         -      77,386           -      77,386
    Distributions to
     unitholders                 (14,893)    (11,893)    (30,896)    (23,289)
    -------------------------------------------------------------------------
                                  26,111     365,024      55,821     404,089
    -------------------------------------------------------------------------
    Net change in cash and
     cash equivalents                  -           -           -           -
    Cash and cash equivalents,
     beginning of period               -           -           -           -
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                     -           -           -           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    
    %SEDAR: 00010204EF




For further information:

For further information: Michel Dallaire, Eng., President and Chief
Executive Officer, (418) 681-8151, mdallaire@cominar.com; Michel Berthelot,
CA, Executive Vice President and Chief Financial Officer, (418) 681-8151,
mberthelot@cominar.com

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