Allied Properties REIT (TSX:AP.UN) today announced results for its
fourth quarter and year ended December 31, 2011.
The results for the fourth quarter are summarized below and
compared to the prior quarter and the same quarter in 2010:
(In thousands
except for per
unit and %
amounts) Q4 2011 Q3 2011 Change %Change Q4 2010(i) Change %Change
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Net income 19,073 15,491 3,582 23.1% 15,456 3,617 23.4%
Funds from
operations
("FFO") 20,706 17,559 3,147 17.9% 16,782 3,924 23.4%
FFO per unit
(diluted) $0.40 $0.36 $0.04 11.1% $0.40 $0.00 0.0%
FFO pay-out ratio 81.9% 93.2% (11.3%) 82.5% (0.6%)
Adjusted FFO
("AFFO") 16,594 13,152 3,442 26.2% 12,630 3,964 31.4%
AFFO per unit
(diluted) $0.33 $0.27 $0.06 22.2% $0.30 $0.03 10.0%
AFFO pay-out
ratio 102.1 124.4% (22.3%) 109.7% (7.6%)
Debt ratio (% of
fair value) 44.8% 44.7% 0.1% 44.6% 0.2%
Interest coverage
ratio 3.1:1 2.8:1 0.3:1 3.0:1 0.1:1
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(i) normalized by adding back one-time management restructuring costs
Allied's financial performance measures were up significantly
from the third quarter and generally up from the fourth quarter of
last year, reflecting return to a normal level of occupancy.
The results for 2011 are summarized below and compared to the prior year:
(In thousands except for per
unit and % amounts) 2011 2010(i) Change %Change
----------------------------------------------------------------------------
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Net income 59,949 61,015 (1,066) (1.7%)
Funds from operations ("FFO") 66,091 63,394 2,697 4.3%
FFO per unit (diluted) $1.39 $1.58 ($0.19) (12.0%)
FFO pay-out ratio 95.2% 83.3% 11.9%
Adjusted FFO ("AFFO") 51,083 49,338 1,745 3.5%
AFFO per unit (diluted) $1.07 $1.23 ($0.16) (13.0%)
AFFO pay-out ratio 123.2% 107.0% 16.2%
Debt ratio (% of fair value) 44.8% 44.6% 0.2%
Interest coverage ratio 2.8:1 3.1:1 (0.3:1)
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(i) normalized by adding back one-time management restructuring costs and
lease termination payment
Allied's financial performance measures for the year were down
from 2010 due to an unusually large amount of turnover vacancy at
Cite Multimedia in Montreal. With replacement tenants now in place,
Allied has returned to a normal level of occupancy.
Allied leased 1.42 million square feet in 2011, finishing the
year with leased area of 94.3% of its rental portfolio (excluding
upgrade properties), up 288 basis points from the end of last year.
By year- end, Allied had renewed or replaced 90.2% of its maturing
leases, resulting in an overall increase of 5.9% in net rental
income per square foot from the affected space. Allied also
addressed most of its large-scale lease maturities in the 2011 to
2015 timeframe, bringing its weighted average lease term to 5.1
years and reducing the average annual maturity over the next five
years to 9.1% of its rental portfolio. Allied strengthened other
key portfolio attributes in 2011. Its tenant-mix improved
considerably, particularly at Cite Multimedia in Montreal, which by
year-end was 93.5% leased to a diverse group of high-calibre
tenants for longer than normal lease-terms. Its exposure to its
top-10 tenants declined from 28% to 23% of gross revenue,
continuing a long-established trend in risk reduction. While the
risk of NOI volatility can never be eliminated, the material
improvement in Allied's key portfolio attributes certainly reduced
this risk going forward.
In addition, Allied acquired, or announced the acquisition of,
22 properties for $456 million in 2011, increasing its portfolio
area to 7.8 million square feet. By year-end, Allied had a national
portfolio of urban office properties with three clear attributes --
proximity to the core, distinctive internal and external
environments and lower overall occupancy costs. In addition to
enhancing geographic diversification and enabling it to participate
in Western Canada's economic growth, this will enable Allied to
serve its tenants better and to expand its universe of acquisition
and value-creation opportunities.
Allied financed its acquisitions in the proven manner, raising
$86 million in equity in March of 2011 at $22 per unit and another
$104 million in August of 2011 at $23.50 per unit, in each case
locking in an all-time low cost of equity. Allied also secured $300
million in first mortgage financing over the course of the year,
most for terms of eight years or longer, at a weighted average
interest rate of 4.8%. By year-end, its overall debt ratio was a
conservative 45%, the weighted average interest rate on its
mortgages had declined to 5.3% and the weighted average term of its
mortgages had stretched out to five years.
Finally, Allied accelerated its value-creation activity in 2011.
In addition to acquiring two sizeable upgrade properties and
working toward the completion of two redevelopment projects, Allied
continued the marketing of 250,000 square feet of approved
intensification potential in Toronto (Phase I of QRC West) and
began preparing another 750,000 square feet of approved
intensification potential for marketing (171 Front Street West).
Allied also put three potential new intensification projects
aggregating approximately 1.2 million square feet into the
municipal approval process.
"With a national urban office portfolio operating at a high
level of occupancy, we're very well positioned for 2012," said
Michael Emory, President and CEO. "We expect our AFFO per unit to
grow considerably and our value-creation activity to continue to
accelerate. We also believe that our clean and conservative balance
sheet, low debt ratio, moderate mortgage maturity schedule and
abundant liquidity will provide stability and facilitate growth
going forward."
FFO and AFFO are not financial measures defined by International
Financial Reporting Standards ("IFRS"). Please see Allied's
MD&A for a description of these measures and their
reconciliation to net income and comprehensive income under IFRS,
as presented in Allied's condensed consolidated financial
statements for the year ended December 31, 2011. These statements,
together with accompanying notes and MD&A, have been filed with
SEDAR, www.sedar.com, and are also available on Allied's web-site,
www.alliedpropertiesreit.com.
Net operating income ("NOI") is not a measure recognized under
IFRS and does not have any standardized meaning prescribed by IFRS.
NOI is presented in this press release because management of Allied
believes that this non-IFRS measure is an important financial
performance indicator. NOI, as computed by Allied, may differ from
similar computations as reported by other similar organizations
and, accordingly, may not be comparable to NOI reported by such
organizations.
This press release may contain forward-looking statements with
respect to Allied, its operations, strategy, financial performance
and condition. These statements generally can be identified by use
of forward looking words such as "may", "will", "expect",
"estimate", "anticipate", intends", "believe" or "continue" or the
negative thereof or similar variations. Allied's actual results and
performance 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. 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 regulations and the factors
described under "Risk Factors" in the Allied's Annual Information
Form which is available at www.sedar.com. The cautionary statements
qualify all forward-looking statements attributable to Allied and
persons acting on its behalf. Unless otherwise stated, all
forward-looking statements speak only as of the date of this press
release, and Allied has no obligation to update such
statements.
Allied Properties REIT is a leading owner, manager and developer
of urban office environments that enrich experience and enhance
profitability for business tenants operating in Canada's major
cities. Its objectives are to provide stable and growing cash
distributions to unitholders and to maximize unitholder value
through effective management and accretive portfolio growth.
Contacts: Allied Properties REIT Michael R. Emory President and
Chief Executive Officer (416)
977-9002memory@alliedpropertiesreit.com
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