Huntingdon REIT Announces Strong Q3 2011 Results

RICHMOND, BC, Nov. 14, 2011 /CNW/ - Huntingdon Real Estate Investment Trust (the "Trust" or "HREIT") (TSX: HNT.UN) today announced strong third quarter 2011 results.

HIGHLIGHTS:

  • Occupancy increased by 120 basis points to 85.1% compared to the same period in 2010
  • Funds from operations ("FFO") increased by $2.1 million to $3.7 million ($0.26 per unit) compared to the same period in 2010
  • Invested $1.9 million during the quarter in investment properties to attract new tenants and improve building operations
  • Completed the purchase of $5.5 million of units under the previously announced substantial issuer bid
  • Secured unitholder approval to proceed with the conversion to a corporation on December 31, 2011
  • Completed the closing on a $46.0 million public offering of secured debt units to finance the redemption of the Series C convertible debentures set to mature in March 2012
  • Divested a smaller, non-core retail asset in Ontario for gross proceeds of $1.2 million
   
SELECTED FINANCIAL INFORMATION  
(unaudited) For the three months ended   For the nine months ended
(stated in $000s except per unit and % amounts) Sept 30, 2011 Sept 30, 2010   Sept 30, 2011 Sept 30, 2010
    Restated1     Restated1
Operations          
Occupancy rate (average) 85.1% 83.9%      
Operating results          
Revenue from investment property $18,116 $16,341   $53,888 $54,948
Net operating income ("NOI")2 10,007 8,189   29,617 28,244
Funds from operations ("FFO")3 3,708 1,569   9,476 10,492
Adjusted funds from operations ("AFFO")4 2,379 (3,258)   5,565 6,162
           
Financing          
Interest coverage ratio 2.1x 1.5x   2.1x 1.7x
Weighted average mortgage interest rate (period end) 5.37% 5.54%      
Debt to total assets ratio5 53.9% 59.9%      
           
Per unit amounts          
NOI          
  Basic $0.70 $0.53   $2.04 $1.80
  Diluted $0.69 $0.53   $2.02 $1.80
FFO          
  Basic $0.26 $0.10   $0.65 $0.67
  Diluted $0.26 $0.10   $0.65 $0.67
AFFO          
  Basic $0.17 ($0.21)   $0.38 $0.39
  Diluted $0.16 ($0.21)   $0.38 $0.39

Strengthening operations:

  • Occupancy improved by 120 basis points to 85.1% compared to Q3 2010 led by lower vacancies at the ground-leased and office properties
  • Net operating income ("NOI") for the quarter was $10.0 million compared to $8.2 million in the same quarter 2010.  The increase was due primarily to higher occupancy, higher cost recoveries and more triple net tenancies
  • Funds from operations ("FFO") increased by $2.1 million (or 136.3%) to $3.7 million ($0.26 per unit) compared to $1.6 million ($0.10 per unit) in the same period 2010.  The increase was primarily the result of fair value adjustments to investment properties, which was a loss of $1.9 million this quarter compared to a $3.5 million loss in the same quarter 2010.  This was offset by lower deferred tax recoveries in this quarter as a result of tax restructuring transactions undertaken in 2010
  • Adjusted funds from operations ("AFFO") per unit increased by $5.6 million to $2.4 million in the current quarter compared to the same period in 2010.  The increase can be attributed to improved operating results during the current quarter coupled with higher capital expenditures and leasing commissions during 2010.  AFFO per unit was $0.17 compared to a loss of $0.21 in the previous year
  • In September 2011, HREIT disposed of Harbourview Village, a smaller retail centre in Kenora, Ontario, for gross proceeds of $1.2 million reflecting a capitalization rate of 8.2%

Healthy financial position:

  • Quarterly interest coverage improved to 2.1 times compared to 1.5 times in the same period 2010 as a result of increased cash flow and repayment of higher cost debt
  • Weighted average interest rate for the quarter declined 17 basis points to 5.37% compared to 5.54% in the same period 2010

Financial Resources Highlights:

$46.0 Million New Debenture Issue Proceeds to Redeem Series C Convertible Debentures

  • On November 14, 2011, the Trust closed the offering of a $46.0 million secured debenture and trust warrant issue.  The net proceeds will be used to redeem the $38.0 million outstanding balance of the Series C convertible debentures on  December 5, 2011

Strategic Update:

Substantial Issuer Bid

  • On August 31, 2011 the Trust completed its previously announced substantial issuer bid. The Trust purchased 791,367 trust units at $6.95 per unit for aggregate consideration of $5.5 million

Corporate Conversion Update

  • On September 26, 2011 unitholders approved the proposed conversion of HREIT from an income trust to a corporation. As a result, the Trust will become a corporation effective December 31, 2011. The corporate structure is expected to improve the tax efficiency of the company and will provide greater flexibility to re-invest capital into the portfolio to enhance asset quality and shareholder value

Information appearing in this press release is a select summary of results.  The financial statements and management's discussion and analysis for HREIT are available at www.hreit.ca and on www.sedar.com

Footnotes

Restated for International Financial Reporting Standards ("IFRS").  See the Condensed Consolidated Interim Financial Statements and the Management Discussion and Analysis for the three months and nine months ended September 30, 2011 for a detailed explanation of the changes resulting from IFRS.
NOI is defined as revenue from investment properties less property operating expenses.
FFO is defined as net income, adjusted for deferred taxes, depreciation and amortization, realized gain or loss on sale and fair value adjustments on investment properties and financial instruments.
AFFO is defined as funds from operations adjusted for non-cash revenue, maintenance and growth capital expenditures, leasing expenditures and other non-cash operating expenses.
Debt to total assets is defined as mortgage debt and convertible debentures at their maturity value divided by total assets at their fair value.

NOI, FFO and AFFO are not recognized as appropriate earning measures under IFRS, and are not construed as an alternative to earnings determined in accordance with IFRS, but are considered a useful supplemental indicator of HREIT's performance.

HREIT is a real estate investment trust which is listed on the Toronto Stock Exchange under the symbols HNT.UN (Trust Units) and HNT.DB.C (Series C Convertible Debentures).  HREIT owns, directly or indirectly, 76 income producing office, industrial, retail and standalone parking lot properties, including aviation-related facilities at five of Canada's leading international airports that have a total gross leasable area of 5.5 million square feet; and two land parcels held for development, with other development and expansion opportunities within the portfolio.

Forward-Looking Information:

Certain statements contained in this press release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of our tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations including, but not limited to, the risks detailed from time to time in HREIT's filings with Canadian provincial securities regulators, including its most recent annual information form and management's discussion and analysis. HREIT cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and HREIT does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as required by applicable law.

The Toronto Stock Exchange has not reviewed nor approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.

 

SOURCE Huntingdon Real Estate Investment Trust

For further information:

Zachary R. George, Trustee, President and Chief Executive Officer
Tel: (604) 249-5119
Fax: (604) 249-5101
Email: zgeorge@hreit.ca

Organization Profile

Huntingdon Real Estate Investment Trust

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