Huntingdon REIT reports 2009 third quarter results

WINNIPEG , Nov. 13 /CNW/ - Huntingdon Real Estate Investment Trust ("HREIT") (TSX: HNT.UN) today reported its operating results for the quarter ended September 30, 2009 . The following comments in regard to the financial position and operating results of HREIT should be read in conjunction with the September 30, 2009 Management Discussion and Analysis and the financial statements for the quarter ended September 30, 2009 , which may be obtained from the HREIT website at www.hreit.ca or the SEDAR website at www.sedar.com.

During the third quarter of 2009 HREIT and IAT Air Cargo Facilities Income Fund ("IAT") announced agreement to merge subject to Unitholder approval. A meeting of the Unitholders has been convened for November 26, 2009 by both HREIT and IAT to consider resolutions to approve the proposed merger.

HREIT continued its selective divestiture program during 2009, with the objective of creating funds for the repayment of higher cost debt, the retirement of the Series A and Series B convertible debentures in 2010, the funding of committed leasehold improvements, property improvements and the reduction of ongoing cash flow deficits.

During the third quarter of 2009, HREIT completed the sale of three properties under the divestiture program, resulting in net cash proceeds of approximately $4.4 million after the repayment of approximately $8.0 million of mortgage loan debt. The net cash proceeds from the divestiture program, for the nine-month period ended September 30, 2009 , amount to approximately $8.4 million , after the repayment of approximately $69.0 million of mortgage loan debt and $23.9 million of interim loans. After accounting for the additional mortgage loan debt which has been repaid from the net cash proceeds from property sales, the weighted average interest rate of the entire mortgage loan portfolio of HREIT decreased from 6.28%, as of December 31, 2008 , to 5.78% as of September 30, 2009 . The ratio of the total mortgage and debenture debt to the gross book value of the continuing property portfolio has been reduced from 70% at December 31, 2008 to 64% at September 30, 2009 . As of September 30, 2009 , all of the higher cost interim mortgage debt of HREIT has been repaid.

During the third quarter of 2009, HREIT expended $2.8 million on lease acquisition costs and property renovations and upgrades, resulting in a nine month total for 2009 of $5.1 million .

In comparison to the third quarter of 2008, the operating results for the third quarter of 2009 reflect a $0.36 million (18%) increase in cash from operating activities and a $1.05 million (44%) decrease in the loss from continuing operations, before taxes. The positive results were achieved despite a decrease in the occupancy level to 89% that resulted from tenant bankruptcies at two properties.

The sale of selected properties under the divestiture program and the emphasis on debt reduction has resulted in an improvement in the overall financial position of HREIT.

    
    FINANCIAL AND OPERATING SUMMARY

                             Three Months Ended        Nine Months Ended
                          ---------------------------------------------------
                            September    September    September    September
                             30, 2009     30, 2008     30, 2009     30, 2008
                          ------------ ------------ ------------ ------------

    KEY PERFORMANCE
     INDICATORS

    Operating results
      Total revenue        15,790,181   15,517,280   46,746,815   46,853,851
      Net operating
       income               9,157,016    9,046,098   25,156,665   26,713,335
      Income (loss) from
       continuing
       operations before
       taxes               (1,352,147)  (2,405,238)  (7,191,612)  (7,042,692)
      Income (loss) from
       continuing
       operations          (1,858,099)  (1,848,227)  (7,282,602)  (4,118,392)
      Income (loss) for
       the period            (455,574)  (1,900,457)  (3,522,537)  (5,835,063)

    Cash flows
      Cash inflow
       (outflow) from
       operating
       activities           2,247,918    1,892,887    3,826,783    4,876,608
      Funds from
       Operations (FFO)     2,869,373    2,366,821    5,703,721    8,059,390
      Adjusted Funds
       from Operations
       (AFFO)               2,395,715    1,812,055    4,620,440    6,198,629
      Distributable
       income               3,020,762    2,283,460    7,267,972    8,970,320

    Operations
      Quarter end
       occupancy rate                                       89%          93%
      Increase (decrease)
       in same property
       operating income            1%          (1%)         (5%)         (5%)

    Capital reinvestment
      Additions to
       building and
       equipment            1,807,406      568,622    2,083,590    2,224,592
      Additions to
       properties under
       development             18,665    3,380,901       36,862    9,292,666
      Lease acquisition
       costs                  966,196      578,423    3,023,807    2,922,346

    Financing
      Mortgage loan debt
       to gross book
       value ratio                                          51%          59%
      Weighted average
       interest rate
       of mortgage debt                                   5.78%        6.44%



    PER UNIT AMOUNTS

                                           Three Months Ended September 30
                                          ----------------------------------
                                               2009              2008
                                          ----------------  ----------------
                                          Basic   Diluted    Basic   Diluted
                                         -------- --------  -------- --------
    Operating income                     $ 0.124  $ 0.124   $ 0.125  $ 0.125
    Income (loss) from continuing
     operations before taxes             $(0.018) $(0.018)  $(0.033) $(0.033)
    Income (loss) from continuing
     operations                          $(0.025) $(0.025)  $ 0.026  $ 0.026
    Income (loss) for the period         $(0.006) $(0.006)  $(0.026) $(0.026)
    FFO                                  $ 0.039  $ 0.039   $ 0.033  $ 0.033
    AFFO                                 $ 0.032  $ 0.032   $ 0.025  $ 0.025
    Distributable income                 $ 0.041  $ 0.041   $ 0.032  $ 0.032


                                            Nine Months Ended September 30
                                          ----------------------------------
                                               2009              2008
                                          ----------------  ----------------
                                          Basic   Diluted    Basic   Diluted
                                         -------- --------  -------- --------
    Operating income                     $ 0.343  $ 0.343   $ 0.369  $ 0.369
    Income (loss) from continuing
     operations before taxes             $(0.098) $(0.098)  $(0.097) $(0.097)
    Income (loss) from continuing
     operations                          $(0.099) $(0.099)  $(0.057) $(0.057)
    Income (loss) for the period         $(0.048) $(0.048)  $(0.081) $(0.081)
    FFO                                  $ 0.078  $ 0.078   $ 0.111  $ 0.111
    AFFO                                 $ 0.063  $ 0.063   $ 0.086  $ 0.086
    Distributable income                 $ 0.099  $ 0.099   $ 0.124  $ 0.124


    Third Quarter 2009 Compared to Third Quarter 2008

    -   NOI increased by approximately $0.11 million or 1.2%.

    -   Loss from continuing operations, before taxes, decreased by
        approximately $1.05 million or 43.8% primarily due to a decrease in
        trust expenses and strategic review costs.

    -   Income from discontinued operations amounted to $1.40 million,
        compared to a loss from discontinued operations of approximately
        $0.05 million during the third quarter of 2008. The Q3-09 income
        includes a gain on sale of properties of $1.14 million.

    -   After considering future income tax expense, the second quarter loss
        was approximately $0.46 million, compared to a net loss of $1.90
        million in the third quarter of 2009.

    -   Cash provided by operating activities, before changes in non-cash
        operating items, increased by approximately $1.03 million. The
        increase is primarily the result of the increase in the cash
        component of operating income of $0.38 million and decreased trust
        and strategic review expenses of approximately $1.17 million,
        partially offset by an increase of $0.39 million in lease acquisition
        costs.

    -   FFO increased by $0.50 million or 21.2% during the third quarter of
        2009, compared to the third quarter of 2008, while AFFO increased by
        $0.58 million or 32.2%. On a per unit basis, FFO increased by $0.006
        per unit, while AFFO increased by $0.007 per unit.

    -   Distributable Income increased by $0.74 million or 32.2%, during the
        third quarter of 2009, compared to the third quarter of 2008


    COMPARISON TO PRECEDING QUARTER
    -------------------------------------------------------------------------
                                      Three Months Ended           Effect on
                                -----------------------------        Income
                                  September 30,    June 30,         Increase
                                      2009           2009          (Decrease)
                                ---------------------------------------------
    Total revenues                $ 15,790,181   $ 15,553,732  $     236,449
    Total operating and
     property management costs       6,633,165      7,197,478        564,313
                                --------------- -------------- --------------
    Net operating income             9,157,016      8,356,254        800,762
    Trust expenses                   1,035,810        829,866       (205,944)
                                --------------- -------------- --------------
    Income before financing
     expense, amortization,
     discontinued operations
     and taxes                       8,121,206      7,526,388        594,818
    Financing expense                5,387,823      5,786,706        398,883
                                --------------- -------------- --------------
    Income before amortization,
     discontinued operations
     and taxes                       2,733,383      1,739,682        993,701
    Amortization                     4,085,530      4,165,910         80,380
                                --------------- -------------- --------------
    Loss from continuing
     operations before income
     tax recoveries/expense         (1,352,147)    (2,426,228)     1,074,081
    Income tax (expense)
     recovery                         (505,952)      (204,644)      (301,308)
                                --------------- -------------- --------------
    Loss from continuing
     operations                     (1,858,099)    (2,630,872)       772,773
    Income from discontinued
     operations                      1,402,525      2,292,872       (890,347)
                                --------------- -------------- --------------
                                  $   (455,574)  $   (338,000)   $  (117,574)
                                --------------- -------------- --------------
                                --------------- -------------- --------------


    -   NOI increased by $0.80 million or 10%.

    -   Loss from continuing operations, before taxes decreased by $1.07
        million or 44% primarily due to the increase in NOI.

    -   Income from discontinued operations amounted to $1.40 million,
        including a gain on sale of properties of $1.14 million.

    -   After considering future income tax expense of $0.51 million, the
        third quarter loss was $0.46 million, compared to a net loss of $0.34
        million in the third quarter of 2009.

    -   Cash provided by operating activities increased by $0.55 million. The
        increase mainly reflects the increase in NOI.
    

OUTLOOK

Subsequent to September 30, 2009 , HREIT generated net cash proceeds of approximately $1.2 million from the sale of " Marion Street Business Park". HREIT has also entered into an unconditional sale contract for a 62,099 square foot retail property in Calgary , with estimated net cash proceeds of approximately $8.3 million and a scheduled closing date of April 1, 2010 .

As previously mentioned, during the third quarter HREIT announced that it has agreed to merge with IAT Air Cargo Facilities Income Fund ("IAT"), subject to Unitholder approval. The proposed merger of HREIT and IAT will be considered at the respective meeting of the unitholders of each entity on November 26, 2009 .

IAT is an unincorporated, open-ended mutual fund trust governed under the laws of British Columbia. IAT is listed on the Toronto Stock Exchange under the symbol ACF.UN. IAT owns all of the shares of International Aviation Terminals Inc. ("IAT Inc.") and IAT Management Limited Partnership ("IAT Management LP"). IAT, IAT Inc. and IAT Management LP, specialize in the ownership, construction, management and marketing of aviation-related facilities. IAT currently owns, leases and manages approximately 1.1 million square feet of air cargo and aviation related facilities, on ground-leased land at five of Canada's leading international airports. Approximately 65% of IAT's holdings are located at Vancouver International Airport, Canada's second largest airport, with the balance of the facilities located in Calgary , Edmonton , Saskatoon and Winnipeg . IAT Management LP provides management, operation and administrative services to IAT.

ABOUT HREIT

-----------

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 68 income producing office, industrial, retail and standalone parking lot properties that have a total gross leaseable owned area of 4.7 million square feet; two land parcels held for development; and other development and expansion opportunities within the existing portfolio. The properties are located in Manitoba, Ontario, Saskatchewan, Alberta, British Columbia and Northwest Territories. HREIT also owns CRESI Inc., a property management business. For further information on HREIT, please visit its website at www.hreit.ca.

This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements. The Toronto Stock Exchange has not reviewed or approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.

For further information: Arni Thorsteinson, President & Chief Executive Officer, or Gino Romagnoli, Investor Relations, Tel: [phone], Fax: [phone], Email: [email protected]