Partners Real Estate Investment Trust (TSX VENTURE: PAR.UN)
announced today results for the three and six months ended June 30,
2011. Effective November 3, 2010, the name of Charter Real Estate
Investment Trust was changed to Partners Real Estate Investment
Trust. All references to "Partners Real Estate Investment Trust",
"Partners REIT", the "REIT" and similar references in this press
release refer to Charter Real Estate Investment Trust prior to the
name change. In addition, effective January 1, 2011 the REIT
adopted International Financial Reporting Standards ("IFRS").
Please refer to the REIT's Management Discussion and Analysis and
the consolidated interim financial statements for the three and six
months ended June 30, 2011 for a comprehensive description of the
changes arising from the transition.
2011 HIGHLIGHTS:
-- Q2 NOI up 51% from prior year
-- Q2 same property NOI up 3.3% over prior year
-- Acquisitions make solid contribution to second quarter and year-to-date
results
-- Occupancies improve to 98.3% at June 30, 2011 from 95.1% last year
-- Strong leasing activities continue with renewals and new leasing
-- Acquisition of Centuria Urban Village in Kelowna B.C. in May extends
geographic diversification
-- Acquisitions of Place Desomoreaux in Longueuil, Quebec and Evergreen
Mall in Sooke, B.C. subsequent to quarter-end to further strengthen
portfolio and accelerate growth
-- Focus on growing Unitholder value through accretive acquisitions and
enhanced property performance continues
Solid Operating Performance
Occupancy levels as at June 30, 2011 rose to 98.3% from 97.6% at
March 31, 2011 and 95.1% at June 30, 2010 due primarily to the
acquisition of Centuria Urban Village in May 2011, which was 100%
occupied, the purchase of the Wellington Southdale property in
December 2010 and the six Shoppers Drug Mart properties in March
2011, as well as successful initiatives to enhance occupancies at
other REIT properties.
Net Operating Income ("NOI") increased to $3.7 million in the
second quarter of 2011 from $2.4 million in the same quarter last
year, and rose to $6.7 million for the six months ended June 30,
2011 from $4.8 million for the same prior-year period. The
increases are due to the contribution from the above-mentioned
acquisitions, as well as growth in same property NOI, which rose
3.3% in the second quarter of 2011 and 1.2% for the six months
ended June 30, 2011 compared to the same periods last year.
Funds from Operations ("FFO") increased to $1.2 million ($0.04
per unit) in the second quarter of 2011 from $0.8 million ($0.04
per unit) in the same quarter last year, and rose to $2.3 million
($0.07 per unit) for the six months ended June 30, 2011 compared to
$1.7 million ($0.09 per unit) for the same prior-year period. The
increases in the gross amounts were due primarily to the
contribution from acquisitions completed over the prior twelve
months. The per unit amounts were impacted by the 67% increase in
the weighted average number of units outstanding for the three and
six months ended June 30, 2011 due to equity offerings completed in
July 2010 and December 2010. Management believes per unit amounts
will improve over time as recent acquisitions make a full
contribution to FFO.
"Our focus on expanding the size, quality and diversity of our
property portfolio continues to generate solid growth in cash
flows, and as our proven leasing and property management programs
generate higher occupancies and enhanced NOI, we believe our
performance will only accelerate in the quarters ahead," commented
Adam Gant, Chief Executive Officer.
Strong Leasing Activity
Management remains committed to actively pursuing new leases and
lease renewals with the objective of increasing occupancy and
weighted average rental income per square foot of gross leasable
area. One of the REIT's goals is to generate organic growth through
redevelopment and lease renewal activities at its existing centres.
As of August 8, 2011, the REIT had renewed or signed new leases
representing 69,000 square feet as compared to 59,000 square feet
of anticipated lease expiries for 2011. Management expects the
portfolio's occupancy rate to improve over the remainder of 2011
and going forward from property acquisitions and further new or
renewed leases.
Solid Financial Position
As at June 30, 2011 the REIT's ratio of debt to gross book value
was 67.6% compared to 59.8% at December 31, 2010 and 63.8% at June
30, 2010. Interest coverage and debt service coverage ratios
remained a conservative 1.7 times and 1.4 times respectively.
During the six months ended June 30, 2011 the REIT assumed first
mortgages on the six Shoppers Drug Mart properties acquired in
March aggregating $17.2 million with a weighted average interest
rate of 4.9% maturing between 2015 and 2012.
Overall, the REIT's mortgage portfolio incurs a weighted average
effective interest rate of 5.24% as at June 30, 2010, down from
5.88% at the same time last year. The weighted average term to
maturity of 5 years compared to a weighted average term to maturity
for existing property leases of approximately seven years.
Recent Events
On May 16, 2011, the REIT completed the acquisition of the
majority of the retail units in Centuria Urban Village, a food and
drug store anchored mixed-use retail and high-rise residential
property located in Kelowna, British Columbia, for an aggregate
purchase price of $8.9 million. The purchase was funded by cash
raised from the March 2011 debenture offering and the REIT's credit
facilities as discussed below.
On May 16, 2011, the REIT renewed its revolving operating and
acquisition facility for an amount of $5.8 million, with upward
expansion, replacing the prior facility. The new facility bears
interest at a rate equal to the Bank's prime rate plus 2.25%
(previosuly 3.50%) per annum or the Banker's Acceptance stamping
fee plus 3.25% (previously 4.50%) per annum. On May 16, 2011, $2.25
million was drawn on this facility to partially fund the purchase
of Centruria Urban Village. As at July 19, 2011, the facility was
completely paid down using a portion of the mortgage proceeds from
Mortgage Fund # 3 described below.
On July 14, 2011, the REIT acquired a second mortgage with
Mortgage Fund Three in the amount of $4 million. This mortgage is
secured by the SDM properties located in Manitoba. It is an
interest only loan maturing April 30, 2013 and bears interest at a
floating rate equal to the prime rate plus 4%.
On July 18, 2011, the REIT announced that it will be acquiring
Place Desormeaux, a 250,000 square foot enclosed shopping centre in
Longueuil, Quebec. The property is anchored by a Super C grocery
store, Pharmaprix, Zellers, Dollarama, the SAAQ, National Bank and
Bank of Montreal. The REIT paid approximately $32.2 million for the
property and will incur approximately $3.6 million in acquistion
and capital improvement costs. The aggregate outlay of funds was
satisfied by the placement of a $23.0 million mortgage bearing
interest at 4.25% with a 58 month term to maturity. The balance of
the purchase price was funded from the REIT's lines of credit. The
closing of this transaction is expected to be on or before August
8, 2011.
On August 3, 2011, the REIT announced that it will be acquiring
Evergreen Mall, a combined 88,180 square foot plaza located in
Sooke, British Columbia. The property is a free-standing building,
comprised of office and retail space. The aggregate purchase price
of the property is $15.9 million and will be funded by the
assumption of a $10.5 million mortgage bearing interest at 175
basis points over the Bank of Canada prime rate maturing in five
years. The remainder of the purchase will be financed from the
REIT's lines of credit.
"With these acquisitions we have significantly strengthened the
portfolio and extended our geographic presence in strong and
growing urban markets across Canada," Mr. Gant added. "Looking
ahead, we will continue to evaluate growth opportunities that add
value to our asset base and accretively grow our Funds from
Operations."
Investor Conference Call
A conference call to discuss the recent operating and financial
results will be hosted by Adam Gant, Chief Executive Officer and
Patrick Miniutti, President and Chief Operating Officer, on
Thursday August 11, 2011 at 4.00 pm ET. The telephone numbers for
the conference call are: Local: (416) 915-8110 and North American
Toll Free: (866) 838-1265.
The telephone numbers to listen to the call after it is
completed (Instant Replay) are local (416) 915-1035 or North
American toll free (866) 245-6755. The Passcode for the Instant
Replay is 392805#. A recording of the call will also be archived on
the REIT's website at www.partnersreit.com.
Financial Highlights
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As at and for the three As at and for the six
months ended months ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
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NOI(1) $ 3,658,055 $ 2,421,024 $ 6,664,552 $ 4,820,759
NOI same property(1) 2,501,168 2,421,024 4,879,058 4,820,759
FFO(1) 1,196,381 790,450 2,304,213 1,662,125
FFO per unit(1) 0.04 0.04 0.07 0.09
Net income 1,011,425 (1,024,268) 2,079,363 (399,240)
Net income per unit 0.04 (0.05) 0.07 (0.02)
Distributions(2) 1,240,553 743,173 2,479,196 1,484,300
Distributions per
unit(2) 0.04 0.04 0.08 0.08
Cash
distributions(3) 1,185,279 679,494 2,363,355 1,358,409
Cash distributions
per unit(3) 0.04 0.04 0.08 0.07
Total assets 202,447,135 131,883,398 202,447,135 131,883,398
Total debt(4) 145,279,730 93,048,556 145,279,730 93,048,556
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Debt-to-gross book
value(5) 67.6% 63.8% 67.6% 63.8%
Interest coverage
ratio(6) 1.70 1.71 1.70 1.71
Debt service
coverage ratio(6) 1.31 1.40 1.31 1.40
Weighted average
interest rate(7) 5.24% 5.88% 5.24% 5.88%
Portfolio occupancy 98.3% 95.1% 98.3% 95.1%
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1. Net operating income or "NOI" and funds from operations or "FFO" are
non-IFRS financial measures widely used in the real estate industry. See
"Part III - Performance Measurement" of the MD&A for further details and
advisories.
2. Represents distributions to unitholders on an accrual basis.
Distributions are payable as at the end of the period in which they are
declared by the Board of Trustees, and are paid on or around the 15th
day of the following month. Distributions per unit exclude the 5% bonus
units given to participants in the Distribution Reinvestment and
Optional Unit Purchase Plan.
3. Represents distributions on a cash basis, and as such excludes the non-
cash distributions of units issued under the Distribution Reinvestment
and Optional Unit Purchase Plan.
4. Includes secured debt, unsecured debt and bank credit facility.
5. See calculation under "Debt-to-Gross Book Value" in "Part V - Results of
Operations." In the MD&A
6. Calculated on a rolling four quarter basis.
7. Represents the weighted average effective interest rate for secured debt
excluding the bank credit facility, which has a floating rate of
interest.
For the complete financial statements and Management's
Discussion and Analysis, please visit www.sedar.com or the REIT's
web site at www.partnersreit.com.
About Partners REIT
Partners REIT is a growth-oriented real estate investment trust,
which currently owns (directly or indirectly) 18 retail properties
located in Ontario, Quebec, Manitoba and British Columbia
aggregating approximately 1.3 million square feet of leaseable
space. Partners REIT focuses on expanding and managing a portfolio
of retail and mixed-use community and neighbourhood shopping
centres located in both primary and secondary markets across
Canada.
Certain statements included in this press release constitute
forward-looking statements, including, but not limited to, those
identified by the expressions "expect", "will" and similar
expressions to the extent they relate to Partners REIT. The
forward-looking statements are not historical facts but reflect
Partners REIT's current expectations regarding future results or
events. These forward looking statements are subject to a number of
risks and uncertainties that could cause actual results or events
to differ materially from current expectations, including the
timing of the offering, success of the offering, listing of the
units, use of proceeds of the Offering, access to capital,
regulatory approvals, intended acquisitions and general economic
and industry conditions. Although Partners REIT believes that the
assumptions inherent in the forward-looking statements are
reasonable, forward-looking statements are not guarantees of future
performance and, accordingly, readers are cautioned not to place
undue reliance on such statements due to the inherent uncertainty
therein.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Contacts: Partners Real Estate Investment Trust Patrick Miniutti
President and Chief Operating Officer (250) 940-5500
www.partnersreit.com
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