MONTREAL, Aug. 9 /CNW/ - Homburg Canada Real Estate Investment Trust (TSX: HCR.UN) (the "REIT") today reported its financial results for the abbreviated second quarter, being the 37 day period from May 25, 2010 to June 30, 2010, following the successful closing of the REIT's initial public offering ("IPO") on May 25, 2010.
"We are pleased with our initial results, which are in line with forecast," said Jim Beckerleg, President and Chief Executive Officer. "Our diversified portfolio, anchored by key properties like the CN Central Station Complex and Place Alexis Nihon in Montreal, generates significant and stable net operating income that provides a solid foundation for current distributions and for future growth."
The REIT's management team will be holding a conference call today at 10:00 a.m. (EDT) to discuss the results. To access the conference call, please dial 1-800-926-7358. A taped replay of the call will be available until September 8, 2010 by dialling 1-416-626-4100 or 1-800-558-5253 and entering the playback code 21477764. An audio replay of the conference call will also be available in podcast format in the Information section of the REIT's website at www.homburgcanadareit.com.
Second quarter (37 days) ended June 30, 2010 (versus IPO forecast)
37 day Pro-rated
period ended 2010
June 30, 2010 Forecast
(in thousands, except per unit items)
Property revenue $ 15,508 $ 15,466
Net operating income $ 8,234 $ 8,106
Adjusted funds from operations ("AFFO") $ 3,758 $ 3,635
AFFO per unit (basic and fully diluted) $0.11029 $0.10668
Net earnings $ 2,766 $ 2,497
Basic and fully diluted earnings per unit $ 0.09 $ 0.08
Total distributions per unit declared during the
quarter (paid July 15, 2010 subsequent to the
end of the quarter) $0.09705 $0.09705
AFFO payout ratio 88.00% 90.97%
All figures in the above table are for the 37 day period ended June 30, 2010, unless otherwise indicated. As this is the first quarter during which the REIT has been a publicly traded real estate investment trust, the comparison is made with the REIT's forecast provided in its IPO prospectus dated May 14, 2010 (the "IPO Prospectus") prorated to correspond with the 37 day period. The 37 day period results reflect the fact that the REIT completed its IPO on May 25, 2010. A copy of the IPO Prospectus is available on SEDAR at www.sedar.com.
Full financial statements and management's discussion and analysis of results will be posted on SEDAR at www.sedar.com and on the REIT's website at www.homburgcanadareit.com.
- The REIT successfully concluded its IPO during the quarter, raising
$166.5 million in total proceeds, including the REIT's share of the
- On May 25, 2010, the REIT acquired an initial portfolio of 84 income-
producing properties from Homburg Invest Inc. and an initial
portfolio of 35 income-producing properties from Homburg Canada
Incorporated, along with the property and asset management activities
carried on by Homburg Canada Incorporated in respect of such
properties for a total of $975 million.
- Occupancy rates for the REIT's 76 commercial properties stood at
95.2% on June 30, 2010, slightly above forecast. The residential
portfolio occupancy rate increased to 98.5% at June 30th, consistent
with forecasted seasonality at Place Alexis Nihon's Plaza Tower.
- Average lease term to maturity on the REIT's commercial properties is
- Long-term debt as a percentage of gross book value is at 58%, within
the REIT's target range of 55% to 60%.
- On July 15, 2010, subsequent to the end of the second quarter, the
REIT paid its first distribution of $0.09705 per unit to unitholders.
The REIT intends to make subsequent monthly distributions at the rate
of $0.07917 per unit, commencing on August 15, 2010, as previously
"Our team is focused on building value and increasing distributions for unitholders over time. We will do that by developing opportunities within the existing portfolio and by looking for new opportunities in those areas of Canada where our management platforms are strong," concluded Mr. Beckerleg.
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 that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in the IPO Prospectus.
The REIT's objectives and forward-looking statements are based on certain assumptions, including that (i) the REIT will receive financing on favourable terms; (ii) the future level of indebtedness of the REIT and its future growth potential will remain consistent with the REIT's current expectations; (iii) there will be no changes to tax laws adversely affecting the REIT's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on the REIT's operations, including its financing capacity, and asset value, will remain consistent with the REIT's current expectations; (v) the performance of the REIT's investments in Canada will proceed on a basis consistent with the REIT's current expectations; and (vi) capital markets will provide the REIT with readily available access to equity and/or debt.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. The REIT, except as required by applicable securities legislation, 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 regulatory authorities, which are available on SEDAR at www.sedar.com.
About Homburg Canada Real Estate Investment Trust
Homburg Canada Real Estate Investment Trust is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Quebec. Managed internally, the REIT owns a portfolio of Canadian income-producing commercial properties, comprised mainly of retail and office properties with certain industrial properties, as well as certain income-producing multi-family residential properties. The properties comprise approximately 6.6 million square feet of commercial gross leasable area and 1,725 multi-family residential units located in Québec, Atlantic Canada, Western Canada and Ontario.
Note regarding Non-GAAP Financial Measures
Funds from operations ("FFO"), adjusted funds from operations ("AFFO") and net operating income ("NOI") are not measures recognized under Canadian generally accepted accounting principles ("Canadian GAAP") and do not have standardized meanings prescribed by Canadian GAAP. FFO, AFFO and NOI are supplemental measures of a Canadian real estate investment trust's performance and the REIT believes that FFO, AFFO and NOI are relevant measures of its ability to earn and distribute cash returns to its unitholders. The Canadian GAAP measurement most directly comparable to FFO, AFFO and NOI are cash flow from operating activities and net income.
"FFO" is defined as net income in accordance with Canadian GAAP, excluding gains (or losses) from sales of income-producing properties, long-term investments and extraordinary items, plus depreciation and amortization, plus impairment provisions, plus future income tax expense and after adjustments for equity accounted entities, joint ventures and non-controlling interests calculated to reflect FFO on the same basis as consolidated properties.
"AFFO" is defined as FFO subject to certain adjustments, including: (i) net amortization of above and below market leases, amortization of fair value mark-to-market adjustments on mortgages acquired, amortization of deferred financing and leasing costs, and compensation expense related to unit option plans; (ii) adjusting for any differences resulting from recognizing property revenues on a straight-line basis; and (iii) deducting maintenance capital expenditures and leasing costs, as determined by the REIT, net of the allocation of cash from reserves for capital expenditure programs. Other adjustments may be made to AFFO as determined by the trustees of the REIT in their discretion.
"NOI" is defined as income from properties after operating expenses have been deducted, prepared in accordance with Canadian GAAP, but before deducting income taxes, depreciation of income-producing properties and other assets and amortization of leasehold improvement and leasing costs, interest on borrowings, the REIT's administrative expenses and adjusting for the NOI on the non-controlling interest.
FFO, AFFO and NOI should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with Canadian GAAP as indicators of the REIT's performance. The REIT's method of calculating FFO, AFFO and NOI may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers.
SOURCE HOMBURG CANADA REAL ESTATE INVESTMENT TRUST
For further information: For further information: James W. Beckerleg, President and Chief Executive Officer, Homburg Canada Real Estate Investment Trust, 514-841-9725 ext. 358; Gordon G. Lawlor, CA, Executive Vice-President, Chief Financial Officer and Secretary, Homburg Canada Real Estate Investment Trust, 514-841-9725 ext. 313; Anne-Marie Durand, NATIONAL Public Relations, 514-843-2319