C2C Industrial Properties Inc. reports continued strong growth in second quarter 2012
TORONTO, Aug. 29, 2012 /CNW/ - C2C Industrial Properties Inc. ("C2C" or the "Company") (TSXV: CCH) announced today continued strong growth for the three months ended June 30, 2012. Effective December 31, 2011 the Company changed its reporting year-end to December 31 from July 31. As a result, the financial statements present the results of operations and financial condition of the Company for the period January 1, 2012 to June 30, 2012, with comparative figures restated for the period January 1, 2011 to June 30, 2011. The prior year comparative period, January 1, 2011 to June 30, 2011, was a start-up period for the Company, and comparisons to that period are not meaningful. Thus variances to the prior quarter ending March 31, 2012 have been given to provide a more meaningful discussion of the Company's progress.
HIGHLIGHTS:
- Portfolio increases to 14 light industrial properties aggregating 1.2 million sq. ft. of GLA as at June 30, 2012
- Acquisition of seven properties subsequent to quarter-end increases the portfolio to 21 light industrial properties totalling 2.0 million sq. ft. of GLA and enhances geographic diversification
- Q2 2012 rental revenue rises 30.4% from Q1 2012 on contribution from acquisitions and improved occupancies
- Q2 2012 NOI up 28.3% from Q1 2012
- Q2 2012 AFFO increases to $0.8 million ($0.06 per share) on improved NOI, lower interest and administration costs
- Balance sheet and liquidity position remain strong at quarter end
- Company pays first quarterly dividend of $0.0265 per common share on July 16, 2012
- $22.0 million private placement offering of 4.8 million common shares completed on July 31, 2012. Net proceeds used to reduce higher-cost short-term debt incurred to complete acquisitions
"We continue to successfully execute our growth strategies aimed at rapidly increasing the size and scope of our property portfolio and capturing all available cost synergies and economies of scale in our chosen markets," commented Chris Ross, President.
"We believe light industrial properties offer generally higher income returns than most other segments within the Canadian real estate industry due to lower market rent volatility, lower operating costs, and more generic-use space that is highly marketable. In addition, the scale and diversity of our growing tenant base is substantial, reducing risk and providing more predictable and consistent cash flows. Finally, capital expenditure and maintenance requirements, leasehold improvement and tenant inducement costs are generally lower with light industrial properties compared to other types of real estate," stated David Wright, Chief Executive Officer.
Strong Operating and Financial Performance
Both rental income and Net Operating Income ("NOI"), for the three months ending June 30, 2012 increased significantly compared to the prior three month period ending March 31, 2011. Rental income increased to $3.2 million from $2.5 million, while NOI increased to $1.9 million from $1.5 million, primarily due to acquisitions completed over the prior few months and higher occupancies of 97.2% at June 30, 2012 compared to 95.8% at March 31, 2012.
Funds from Operations ("FFO") for the three months ended June 30, 2012 were $890,821 or $0.07 per diluted common share compared to $51,665 or $0.01 per diluted common share in the first quarter of 2012. The significant increase was due primarily to the higher NOI in the period, reduced interest expense, and lower administration costs. The Company reduced interest expense by repaying, without penalty, high interest rate mezzanine financing used for acquisitions with capital raised in a successful $35.7 million common share equity offering on March 22, 2012.
Adjusted Funds from Operations ("AFFO") for the second quarter of 2012 were $822,494, up from $16,465 in the prior quarter due to the increase in NOI in the period, reduced interest expense, and lower administration costs.
The Company maintained a conservative debt to gross book value ratio of 52.7% at June 30, 2012, down from 54.5% at March 31, 2012, with its mortgage portfolio incurring a weighted average effective interest rate of 4.8%, an improvement from 5.2% as at March 31, 2012.
Subsequent to quarter end, on July 18, 2012 the Company completed the acquisition of a portfolio of seven income producing industrial properties located in Montreal, Mississauga and Edmonton (the "MME portfolio") totalling 792,648 square feet of GLA for approximately $69.2 million, excluding closing costs. The Company financed the purchase with the assumption of an existing first mortgage of approximately $10.0 million (at 3.25% for a term of 2 years), new mortgage financing of approximately $34.8 million (at prime + 2.0% for a term of 3 years), and mezzanine financing of $21.5 million (at 9.25% for a term of 1.5 years). On August 3, 2012 the Company repaid the mezzanine loan using proceeds of a private placement equity offering discussed below.
On July 31, 2012 the Company issued 4.8 million common shares at a price of $4.55 per common share in a private placement equity offering for gross proceeds of approximately $22.0 million. The net proceeds of the offering were used to repay, without penalty, the $21.5 million 9.25% mezzanine loan incurred for the MME property acquisition discussed above.
FINANCIAL & OPERATING HIGHLIGHTS
| For the periods ending | ||||||||
| June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
||||||
| Operations Information | ||||||||
| Number of properties | 14 | 14 | 10 | |||||
| Gross leasable area (square feet) (1) | 1,210,464 | 1,210,393 | 722,565 | |||||
| Portfolio occupancy | 97.2% | 95.8% | 94.3% | |||||
| In-place rental rates (per sq. ft.) | $ | 6.44 | $ | 6.45 | $ | 7.18 | ||
| Financial Information | ||||||||
| Revenue producing properties | $ | 106,690,000 | $ | 102,310,000 | $ | 63,030,000 | ||
| Total assets | $ | 117,033,294 | $ | 113,826,603 | $ | 66,591,424 | ||
| Mortgage payable | $ | 60,879,871 | $ | 62,036,409 | $ | 60,828,146 | ||
| Weighted average effective interest rate | 4.8% | 5.2% | 7.1% | |||||
| Debt to gross book value | 52.7% | 54.5% | 91.4% | |||||
| Shareholders' equity | $ | 53,390,162 | $ | 49,409,498 | $ | 4,136,143 | ||
| Shares outstanding(2) | 12,292,980 | 12,292,980 | 1,444,001 | |||||
| 3 months ending June 30, 2012 |
3 months ending March 31, 2012 |
6 months ending June 30, 2012 |
March 16 - December 31, 2011 |
|||||
| Results of Operations | ||||||||
| Rental income | $ | 3,248,194 | $ | 2,491,213 | $ | 5,379,407 | $ | 1,221,619 |
| Net operating income (3) | $ | 1,930,088 | $ | 1,504,525 | $ | 3,434,613 | $ | 807,717 |
| Net income (loss) | $ | 4,259,670 | $ | 873,879 | $ | 5,133,549 | $ | (1,298,052) |
| Diluted income (loss) per share | $ | 0.33 | $ | 0.25 | $ | 0.62 | $ | (1.09) |
| Funds from operations ("FFO")(4) | $ | 890,821 | $ | 51,665 | $ | 942,486 | $ | (207,314) |
| FFO per diluted share | $ | 0.07 | $ | 0.01 | $ | 0.11 | $ | (0.17) |
| Adjusted funds from operations ("AFFO") | $ | 822,494 | $ | 16,465 | $ | 838,959 | $ | (129,209) |
| AFFO per diluted share | $ | 0.06 | $ | 0.00 | $ | 0.10 | $ | (0.11) |
| Share price | $ | 5.35 | $ | 5.13 | $ | 5.35 | $ | 4.50 |
| Weighted average diluted common shares - FFO and AFFO(2) | 12,970,761 | 3,537,828 | 8,249,881 | 1,196,106 | ||||
| (1) | Includes space re-measurement done in 2012, for 1,455 square feet |
| (2) | On April 11, 2012, C2C did a 25 to 1 share consolidation reducing the total December 31, 2012 outstanding shares to 1,444,001 from 36,100,025. |
| (3) | Net operating income is property rental revenue, less property operating costs, property taxes and property management fees. |
| (4) | The Company has revised it's definition of FFO to add back the amortization of mortgage transaction and debt settlement costs, previously treated as an add back to AFFO. The FFO values for the prior periods have been restated for this change. |
Forward Looking Statements
This document contains forward-looking statements relating to C2C and the industry in which it operates and its strategy, action plans and investments, which may involve estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond C2C's control. Consequently, readers should not place any undue reliance on such forward-looking statements. These forward-looking statements are made as of the date of this press release. C2C is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or other factors, unless otherwise required to do so by applicable law. All forward-looking statements attributable to C2C are expressly qualified by these cautionary statements.
The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
About C2C Industrial Properties Inc.
C2C is a real estate investment corporation specializing in the acquisition, ownership and operation of light industrial properties across Canada. C2C currently owns 21 industrial assets totalling approximately 2.0 million square feet of gross leaseable area. More information about C2C (CCH: TSX-V) is available at www.c2cip.com
SOURCE: C2C Industrial Properties Inc.
C2C Industrial Properties Inc.
Christopher Ross
President
(416) 646-7353
[email protected]
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