Two major development completions, record
committed occupancy, and prudent capital management drive annual
results.
NEW
GLASGOW, NS, Feb. 22,
2023 /CNW/ - Crombie Real Estate Investment Trust
("Crombie") (TSX: CRR.UN) today announced results for its fourth
quarter and year ended December 31,
2022. Management will host a conference call to discuss the
results at 12:00 p.m. (EST),
February 23, 2023.
"Crombie continued its commitment in 2022 to maintaining a
strong balance sheet, solid AFFO growth, prudent capital
allocation, advancing our sustainability program, and continuously
improving our award-winning culture," said Don Clow, President and CEO. "Our team delivered
solid results driven by strong fundamentals and a focus on future
growth initiatives. We continue to benefit from accretive
investments with our strategic partner, Empire, and capitalize on
opportunities within our robust development pipeline. We are
particularly proud of two milestones achieved in the fourth quarter
of 2022. Substantial completion was reached at our second Voilà
Customer Fulfillment Centre, located in Calgary, Alberta, strengthening our
retail-related industrial portfolio and the sale of our
King George development property in
Surrey, British Columbia which
represents one of the many value creation options at Crombie."
FOURTH QUARTER SUMMARY
(In thousands of
Canadian dollars, except per unit amounts and square feet and as
otherwise noted)
Operational Highlights
- Substantial completion achieved at retail-related industrial
development, Voilà CFC 3, in Calgary,
Alberta
- Record committed occupancy of 96.9% and economic occupancy of
94.8%; a 70 basis point increase and 80 basis point decrease,
respectively, compared to the fourth quarter of 2021 (the addition
of approximately 304,000 square feet of development GLA at Voilà
CFC 3 negatively impacts economic occupancy. Adjusting for this
impact, economic occupancy would be 96.4%)
- Renewals of 374,000 square feet at rents 12.9% above expiring
rates (15.0% at weighted average rent during the renewal term)
- Disposition of two retail assets for gross proceeds of
$113,418
Financial Highlights
- Property revenue of $107,939, a
4.0% increase from $103,832 in the
fourth quarter of 2021
- Operating income of $87,718, an
11.4% increase compared to the fourth quarter of 2021 at
$78,730
- Net property income of $70,816, a
0.8% decrease from $71,402 in the
fourth quarter of 2021
- FFO(1) of $52,104 or
$0.29 per unit compared to
$46,948 or $0.29 per unit in the fourth quarter of 2021
- FFO(1) payout ratio of 76.2% for the fourth quarter
of 2022 compared to 78.0% in the same period last year
- AFFO(1) of $45,061 or
$0.25 per unit compared to
$40,468 or $0.25 per unit in the fourth quarter of 2021
- AFFO(1) payout ratio of 88.1% for the fourth quarter
of 2022 compared to 90.5% in the same period last year
- Same-asset property cash NOI(1) increased 0.9%
compared to the fourth quarter of 2021
- Debt to gross fair value(1)(2) of 41.8%, an
improvement from 45.3% in the same period last year
- Debt to trailing 12 months adjusted EBITDA(1)(2) of
8.02x compared to the fourth quarter of 2021 at 8.99x
- Unencumbered investment properties of $2,154,468, a 22.9% increase from $1,752,927 in the same period last year
- Available liquidity of $583,003,
a 14.8% increase from $507,777 in the
fourth quarter of 2021
(1) Non-GAAP
financial measures used by management to evaluate Crombie's
business performance. See "Cautionary Statements and Non-GAAP
Measures" below for a reconciliation of FFO, FFO payout ratio,
AFFO, AFFO payout ratio, same-asset property cash NOI, debt to
gross fair value, and debt to trailing 12 months adjusted
EBITDA.
|
(2) At Crombie's
proportionate share including joint ventures.
|
Information in this press release is a select summary of results.
This press release should be read in conjunction with Crombie's
Management's Discussion and Analysis for the year ended
December 31, 2022 and Consolidated
Financial Statements and Notes for the years ended December 31, 2022, and December 31, 2021. Full details on our results
can be found at www.crombie.ca and www.sedar.com.
Financial Results
Crombie's key financial metrics for the three months ended
December 31, 2022 are as follows:
|
Three months ended
December 31,
|
(In thousands of
Canadian dollars, except per unit amounts and as otherwise
noted)
|
2022
|
2021
|
Variance
|
%
|
Property
revenue
|
$
107,939
|
$
103,832
|
$
4,107
|
4.0 %
|
Property operating
expenses
|
37,123
|
32,430
|
(4,693)
|
(14.5) %
|
Net property
income
|
$
70,816
|
$
71,402
|
$
(586)
|
(0.8) %
|
Operating income
attributable to Unitholders
|
$
87,718
|
$
78,730
|
$
8,988
|
11.4 %
|
Same-asset property
cash NOI (1)
|
$
67,704
|
$
67,103
|
$
601
|
0.9 %
|
Funds from operations
("FFO") (1)
|
|
|
|
|
Basic
|
$
52,104
|
$
46,948
|
$
5,156
|
11.0 %
|
Per unit -
Basic
|
$
0.29
|
$
0.29
|
$
—
|
— %
|
Payout
ratio(1)
|
76.2 %
|
78.0 %
|
|
(1.8) %
|
Adjusted funds from
operations ("AFFO") (1)
|
|
|
|
|
Basic
|
$
45,061
|
$
40,468
|
$
4,593
|
11.3 %
|
Per unit -
Basic
|
$
0.25
|
$
0.25
|
$
—
|
— %
|
Payout
ratio(1)
|
88.1 %
|
90.5 %
|
|
(2.4) %
|
(1) Same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio are non-GAAP financial measures used by management to
evaluate Crombie's business performance. See "Cautionary Statements
and Non-GAAP Measures" below for a reconciliation of same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio.
|
Operating income attributable to Unitholders increased by
$8,988, or 11.4%, compared to the
fourth quarter of 2021 primarily due to higher gain on disposal of
investment properties of $19,822 in
the fourth quarter of 2022 and lower finance costs from operations
of $2,016 resulting primarily from
reduced mortgage interest expense due to mortgage repayments and
dispositions, and the redemption of Series D senior unsecured notes
in the fourth quarter of 2022. The growth in operating income was
partially offset by a lower gain on distribution from
equity-accounted investments of $15,525 compared to the fourth quarter of 2021
resulting from cash distributions received from 1600 Davie Limited
Partnership in excess of our investment in the joint venture.
Same-asset property cash NOI increased by $601, or 0.9%, compared to the fourth quarter of
2021 primarily due to strong occupancy, higher supplemental rent of
$813 from modernizations and capital
improvements, as well as increased parking revenue of $429. This is offset in part by a decrease in
lease termination income of $1,006
resulting from tenant surrenders in 2021. Same-asset property cash
NOI adjusted for the removal of lease termination income increased
by 2.4% compared to the same period in 2021.
The increase in FFO of $5,156 is
primarily due to lower finance costs from operations driven by
reduced mortgage interest expense of $2,436 as a result of mortgage repayments and
dispositions since the fourth quarter of 2021. Additional increases
in income are due to increased property tax recoveries of
$3,155, $2,013 from acquisitions since January 1, 2022, increased operating cost
recoveries of $1,588, and
$885 in supplemental rent from
modernization investments compared to the same quarter in 2021. A
decrease in general and administrative expenses of $1,304 is due primarily to a $1,129 reduction in Unit-based compensation costs
resulting from a decrease in Crombie's Unit price from the same
period in 2021. A reduction in loss from equity-accounted
investments of $684, with increased
FFO adjustments for equity-accounted investments of $585, also contributed to the increase in FFO in
the quarter. FFO growth is offset in part by an increase of
$3,423 in recoverable property tax
expense resulting primarily from development, lease conversions,
acquisitions, and higher assessments. Rental revenue decreased by
$2,616 due to dispositions and
interest on floating rate debt increased by $1,521 due to higher interest rates and higher
average loan balances compared to the same period in 2021.
Additionally, recoverable operating expenses increased $965 as a result of higher repair costs and lease
termination income decreased by $926.
The improvement in AFFO is primarily due to the same factors
impacting FFO as described above. This is offset in part by the
impact of the increase in the maintenance capital expenditure
charge in the first quarter of 2022 from $0.90 to $1.00 per
square foot of weighted average GLA.
Crombie's key financial metrics for the year ended December 31, 2022 are as follows:
|
Year ended December
31,
|
(In thousands of
Canadian dollars, except per unit amounts and as otherwise
noted)
|
2022
|
2021
|
Variance
|
%
|
Property
revenue
|
$
419,591
|
$
408,892
|
$
10,699
|
2.6 %
|
Property operating
expenses
|
137,773
|
125,861
|
(11,912)
|
(9.5) %
|
Net property
income
|
$
281,818
|
$
283,031
|
$
(1,213)
|
(0.4) %
|
Operating income
attributable to Unitholders
|
$
167,800
|
$
155,401
|
$
12,399
|
8.0 %
|
Same-asset property
cash NOI (1)
|
$
270,045
|
$
265,900
|
$
4,145
|
1.6 %
|
Funds from operations
("FFO") (1)
|
|
|
|
|
Basic
|
$
203,737
|
$
185,032
|
$
18,705
|
10.1 %
|
Per unit -
Basic
|
$
1.16
|
$
1.14
|
$
0.02
|
1.8 %
|
Payout
ratio(1)
|
77.5 %
|
78.1 %
|
|
(0.6) %
|
Adjusted funds from
operations ("AFFO") (1)
|
|
|
|
|
Basic
|
$
177,297
|
$
157,532
|
$
19,765
|
12.5 %
|
Per unit -
Basic
|
$
1.01
|
$
0.97
|
$
0.04
|
4.1 %
|
Payout
ratio(1)
|
89.0 %
|
91.8 %
|
|
(2.8) %
|
(1) Same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio are non-GAAP financial measures used by management to
evaluate Crombie's business performance. See "Cautionary Statements
and Non-GAAP Measures" below for a reconciliation of same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio.
|
Operating income attributable to Unitholders increased by
$12,399, or 8.0%, on an annual basis
primarily driven by higher gain on disposal of investment
properties of $24,279 compared to
2021. Finance costs from operations decreased $9,774 due primarily to lower mortgage interest
expense resulting from mortgage repayments and dispositions. The
growth in operating income was offset in part by reduced gain on
distribution from equity-accounted investments of $12,592 resulting from cash distributions
received from 1600 Davie Limited Partnership in excess of our
investment in the joint venture in the fourth quarter of 2021. An
additional $7,861 in impairments was
recognized in 2022 compared to 2021. The impairments on three
properties in the third quarter of 2022 were the result of
continuing high vacancy at one property, the demolition of a vacant
building, and a recent redevelopment that included a partial
demolition.
On an annual basis, same-asset property cash NOI increased by
$4,145, or 1.6%, compared to 2021
primarily due to strong occupancy, an increase in supplemental rent
of $1,859 from modernizations and
capital improvements, and increased parking revenue of $1,634. This is offset in part by a decrease in
lease termination income of $2,765
resulting from tenant surrenders in 2021. Same-asset property cash
NOI adjusted for the removal of lease termination income increased
by 2.6% compared to 2021.
The increase in FFO of $18,705 is
primarily driven by lower finance costs from operations due to
reduced mortgage interest expense of $9,986 resulting from mortgage repayments and
dispositions since January 1, 2021
and higher capitalized interest of $1,671 as a result of development activity in the
current year. Income increased $7,831
from acquisitions, $6,281 from
increased property tax recoveries, $5,836 from increased operating cost recoveries,
$2,273 from supplemental rent from
modernization investments, $1,634 in
parking revenue, and $1,500 from
renewals and new leasing. A reduction in general and administrative
expenses of $5,937 resulted primarily
from a decrease in Unit price and its impact on Unit-based
compensation plans of $5,649. The
improvement in FFO is offset in part by a decrease of $10,900 in rental revenue from dispositions, an
increase of $6,263 in recoverable
property tax expense resulting primarily from development, lease
conversions, acquisitions, and higher assessments. Recoverable
operating expenses increased $5,285
due to higher repair costs, lease termination income decreased by
$3,473, and interest expense on
floating rate debt increased by $2,379 as a result of higher interest rates and
higher average loan balances during the year.
The improvement in AFFO is primarily due to the same factors
impacting FFO as described above. This is offset in part by the
impact of the increase in the maintenance capital expenditure
charge in the first quarter of 2022 from $0.90 to $1.00 per
square foot of weighted average GLA.
Operating Results
|
December 31,
2022
|
September
30,
2022
|
June 30,
2022
|
March 31,
2022
|
December 31,
2021
|
Number of investment
properties (1)
|
289
|
290
|
294
|
294
|
284
|
Gross leasable area
(2)
|
18,445,000
|
18,331,000
|
18,500,000
|
18,488,000
|
17,861,000
|
Economic occupancy
(3)
|
94.8 %
|
96.2 %
|
95.9 %
|
95.5 %
|
95.6 %
|
Committed occupancy
(4)
|
96.9 %
|
96.8 %
|
96.3 %
|
96.4 %
|
96.2 %
|
(1) This includes
properties owned at full and partial interests, excluding joint
ventures.
|
(2) Gross
leasable area is adjusted to reflect Crombie's proportionate
interest in partially owned properties, excluding joint
ventures.
|
(3) Represents
space currently under lease contract and rent has
commenced.
|
(4) Represents
current economic occupancy plus completed lease contracts for
future occupancy of currently available space.
|
|
December 31,
2022
|
September
30,
2022
|
June 30,
2022
|
March 31,
2022
|
December 31,
2021
|
Investment properties,
fair value
|
$ 5,050,000
|
$ 5,265,000
|
$ 5,273,000
|
$ 5,199,000
|
$ 5,026,000
|
Unencumbered investment
properties (1)
|
$ 2,154,468
|
$ 2,200,890
|
$ 2,155,326
|
$ 2,009,252
|
$ 1,752,927
|
Available liquidity
(2)
|
$
583,003
|
$
445,372
|
$
444,262
|
$
523,159
|
$
507,777
|
Debt to gross book
value - cost basis (3)(4)
|
44.6 %
|
46.2 %
|
46.8 %
|
46.5 %
|
48.9 %
|
Debt to gross fair
value (4)(5)(6)
|
41.8 %
|
42.0 %
|
42.7 %
|
42.5 %
|
45.3 %
|
Weighted average
interest rate (7)
|
3.8 %
|
3.8 %
|
3.8 %
|
3.8 %
|
3.8 %
|
Debt to trailing 12
months adjusted EBITDA(4)(5)(6)(8)
|
8.02x
|
8.50x
|
8.75x
|
8.72x
|
8.99x
|
Interest coverage ratio
(5)(6)(8)
|
3.26x
|
3.32x
|
3.26x
|
3.27x
|
3.06x
|
(1) Represents
fair value of unencumbered properties.
|
(2) Represents
the undrawn portion on the credit facilities, excluding joint
facilities with joint operation partners.
|
(3) See Capital
Management note in the Financial Statements.
|
(4) The 2021
calculation has been restated to include Crombie's share of debt
and assets held in joint ventures.
|
(5) Non-GAAP
financial measures used by management to evaluate Crombie's
business performance. See "Cautionary Statements and Non-GAAP
Measures" below for a reconciliation of debt to gross fair value,
debt to trailing 12 months adjusted EBITDA, and interest coverage
ratio.
|
(6) See Debt
Metrics section in the Management's Discussion and
Analysis.
|
(7) Weighted
average interest rate is calculated based on interest rates for all
outstanding fixed rate debt.
|
(8) The 2021
calculation has been restated to include Crombie's share of revenue
and expenses in joint ventures.
|
Operations and Leasing
During the quarter, Crombie achieved economic occupancy of 94.8%
and record committed occupancy of 96.9%. Economic occupancy was
negatively impacted by the addition of approximately 304,000 square
feet of development GLA at the Voilà CFC 3 in Calgary, Alberta, with economic occupancy
expected in mid 2023. Excluding the impact of Voilà CFC 3, economic
occupancy would be 96.4%. Crombie renewed 374,000 square feet with
an increase of 12.9% over expiring rents during the quarter. Year
to date, new leases increased occupancy by 349,000 square feet at
an average first year rate of $21.59
per square foot.
Development
During the fourth quarter of 2022, Crombie achieved substantial
completion at its retail-related industrial development, Voilà CFC
3, in Calgary, Alberta. Voilà CFC
3 is Crombie's wholly owned state-of-the-art Empire grocery
fulfillment hub powered by Ocado's industry leading technology. The
304,000 square foot industrial building is fully leased as of
December 31, 2022, with rent expected
to commence in mid 2023.
Crombie segregates its development pipeline by expected timing.
Near-term projects are financially committed or expected to be
committed within the next two years. Currently, Crombie has three
developments classified as near-term projects. Upon completion,
these projects will total approximately 905,000 square feet of
residential GLA (1,380 residential units) and 112,000 square feet
of commercial GLA. The geographical breakdown of GLA in square feet
is as follows: 684,000 in Vancouver; 145,000 in Victoria and 188,000 in Halifax.
Timing estimates are subject to change, as well as other
development risks described in Crombie's fourth quarter
Management's Discussion and Analysis under "Development" and "Risk
Management".
Highlighted Subsequent Events
On January 19, 2023, Crombie
acquired a 100% interest in a retail property from a subsidiary of
Empire totalling 21,000 square feet for $2,122, excluding closing and transaction
costs.
Conference Call Invitation
Crombie will provide additional details concerning its period
ended December 31, 2022 results on a
conference call to be held Thursday, February 23, 2023,
beginning at 12:00 p.m. (EST).
Accompanying the conference call will be a presentation that will
be available on Crombie's website. To join this conference call,
you may dial (416) 764-8688 or (888) 390-0546. To join the
conference call without operator assistance, you may register and
enter your phone number at https://bit.ly/3QsLLT5 to receive an
instant automated call back. You may also listen to a live audio
webcast of the conference call by visiting the Investor section of
Crombie's website located at www.crombie.ca.
Replay will be available until midnight March 2, 2023 by dialing (416) 764-8677 or (888)
390-0541 and entering passcode 489972 #, or on the Crombie website
for 90 days following the conference call.
Cautionary Statements and Non-GAAP Measures
Same-asset property cash NOI (SANOI), FFO, AFFO, FFO payout
ratio, AFFO payout ratio, debt to trailing 12 months adjusted
EBITDA, debt to gross fair value, and interest coverage ratio are
non-GAAP financial measures that do not have a standardized meaning
under International Financial Reporting Standards ("IFRS"). These
measures as computed by Crombie may differ from similar
computations as reported by other entities and, accordingly, may
not be comparable to other such entities. Management includes these
measures as they represent key performance indicators to
management, and it believes certain investors use these measures as
a means of assessing Crombie's financial performance. For
additional information on these non-GAAP measures see our
Management's Discussion and Analysis for the three months and year
ended December 31, 2022.
The reconciliations for each non-GAAP measure included in this
press release are outlined as follows:
Same-Asset Property Cash NOI
Crombie measures certain performance and operating metrics on a
same-asset basis to evaluate the period-over-period performance of
those properties owned and operated by Crombie. "Same-asset" refers
to those properties that were owned and operated by Crombie for the
current and comparative reporting periods. Properties that will be
undergoing a redevelopment in a future period, including adjacent
parcels of land, and those having planning activities underway are
also in this category until such development activities commence
and/or tenant leasing/renewal activity is suspended. Same–asset
property cash NOI reflects Crombie's proportionate ownership of
jointly operated properties (and excludes any properties held in
joint ventures).
Management uses net property income on a cash basis (property
cash NOI) as a measure of performance as it reflects the cash
generated by properties period-over-period.
Net property income on a cash basis, which excludes non-cash
straight-line rent recognition and amortization of tenant incentive
amounts, is as follows:
|
Three months ended
December 31,
|
Year ended December
31,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
Net property
income
|
$ 70,816
|
$ 71,402
|
$
(586)
|
$
281,818
|
$
283,031
|
$
(1,213)
|
Non-cash straight-line
rent
|
(1,648)
|
(1,998)
|
350
|
(5,432)
|
(9,486)
|
4,054
|
Non-cash tenant
incentive amortization
|
5,940
|
5,249
|
691
|
22,989
|
19,811
|
3,178
|
Property cash
NOI
|
75,108
|
74,653
|
455
|
299,375
|
293,356
|
6,019
|
Acquisitions and
dispositions property cash NOI
|
2,116
|
2,649
|
(533)
|
7,640
|
9,206
|
(1,566)
|
Development property
cash NOI
|
5,288
|
4,901
|
387
|
21,690
|
18,250
|
3,440
|
Acquisitions,
dispositions and development property cash NOI
|
7,404
|
7,550
|
(146)
|
29,330
|
27,456
|
1,874
|
Same-asset property
cash NOI
|
$ 67,704
|
$ 67,103
|
$
601
|
$
270,045
|
$
265,900
|
$
4,145
|
Funds from Operations (FFO)
Crombie follows the recommendations of the January 2022 guidance of the Real Property
Association of Canada
("REALPAC") in calculating FFO.
The reconciliation of FFO for the three months and year ended
December 31, 2022 and 2021 is as
follows:
|
Three months ended
December 31,
|
Year ended December
31,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
Increase in net assets
attributable to Unitholders
|
$
46,317
|
$
41,075
|
$ 5,242
|
$
12,283
|
$ 7,870
|
$ 4,413
|
Add
(deduct):
|
|
|
|
|
|
|
Amortization of tenant
incentives
|
5,940
|
5,249
|
691
|
22,989
|
19,811
|
3,178
|
Gain on disposal of
investment properties
|
(62,584)
|
(42,762)
|
(19,822)
|
(80,804)
|
(56,525)
|
(24,279)
|
Gain on distribution
from equity accounted investments
|
—
|
(15,525)
|
15,525
|
(2,933)
|
(15,525)
|
12,592
|
Impairment of
investment properties
|
—
|
1,300
|
(1,300)
|
10,400
|
2,539
|
7,861
|
Depreciation and
amortization of investment properties
|
18,630
|
18,437
|
193
|
78,383
|
74,359
|
4,024
|
Adjustments for
equity-accounted investments
|
1,426
|
841
|
585
|
4,697
|
2,267
|
2,430
|
Principal payments on
right-of-use assets
|
59
|
58
|
1
|
230
|
225
|
5
|
Internal leasing
costs
|
915
|
620
|
295
|
2,975
|
2,480
|
495
|
Finance costs -
distributions to Unitholders
|
39,697
|
36,637
|
3,060
|
157,840
|
144,559
|
13,281
|
Finance costs (income)
- change in fair value of financial instruments
|
1,704
|
1,018
|
686
|
(2,323)
|
2,972
|
(5,295)
|
FFO as calculated based
on REALPAC recommendations
|
$
52,104
|
$
46,948
|
$ 5,156
|
$ 203,737
|
$ 185,032
|
$
18,705
|
Basic weighted average
Units (in 000's)
|
178,095
|
164,592
|
13,503
|
176,325
|
162,130
|
14,195
|
FFO per Unit -
basic
|
$ 0.29
|
$ 0.29
|
$
—
|
$ 1.16
|
$ 1.14
|
$ 0.02
|
FFO payout ratio
(%)
|
76.2 %
|
78.0 %
|
(1.8) %
|
77.5 %
|
78.1 %
|
(0.6) %
|
Adjusted Funds from Operations (AFFO)
Crombie follows the recommendations of REALPAC's January 2022 guidance in calculating AFFO and has
applied these recommendations to the AFFO amounts included in this
press release and Management's Discussion and Analysis.
The reconciliation of AFFO for the three months and year ended
December 31, 2022 and 2021 is as
follows:
|
Three months ended
December 31,
|
Year ended December
31,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
FFO as calculated based
on REALPAC recommendations
|
$
52,104
|
$
46,948
|
$
5,156
|
$
203,737
|
$
185,032
|
$ 18,705
|
Add
(deduct):
|
|
|
|
|
|
|
Straight-line rent
adjustment
|
(1,648)
|
(1,998)
|
350
|
(5,432)
|
(9,486)
|
4,054
|
Straight-line rent
adjustment included in loss from equity-accounted
investments
|
140
|
144
|
(4)
|
493
|
509
|
(16)
|
Internal leasing
costs
|
(915)
|
(620)
|
(295)
|
(2,975)
|
(2,480)
|
(495)
|
Maintenance
expenditures on a square footage basis
|
(4,620)
|
(4,006)
|
(614)
|
(18,526)
|
(16,043)
|
(2,483)
|
AFFO as calculated
based on REALPAC recommendations
|
$ 45,061
|
$ 40,468
|
$
4,593
|
$
177,297
|
$
157,532
|
$ 19,765
|
Basic weighted average
Units (in 000's)
|
178,095
|
164,592
|
13,503
|
176,325
|
162,130
|
14,195
|
AFFO per Unit -
basic
|
$ 0.25
|
$ 0.25
|
$
—
|
$
1.01
|
$ 0.97
|
$ 0.04
|
AFFO payout ratio
(%)
|
88.1 %
|
90.5 %
|
(2.4) %
|
89.0 %
|
91.8 %
|
(2.8) %
|
Debt Metrics
When calculating debt to gross fair value, debt is defined under
the terms of the Declaration of Trust as obligations for borrowed
money, including obligations incurred in connection with
acquisitions, excluding trade payables and accruals in the ordinary
course of business, and distributions payable. Debt includes
Crombie's share of debt held in equity-accounted joint
ventures.
Gross fair value includes investment properties measured at fair
value, including Crombie's share of those held within joint
ventures. All other components of gross fair value are measured at
the carrying value included in Crombie's financial statements.
Crombie's methodology for determining the fair value of investment
properties includes capitalization of trailing 12 months net
property income using biannual capitalization rates from external
property valuators. The majority of investment properties are also
subject to external, independent appraisals on a rotational basis
over a period of not more than four years. Valuation techniques are
more fully described in Crombie's year-end audited financial
statements.
The fair value included in this calculation reflects the fair
value of the properties as at December 31,
2022 and December 31, 2021
respectively, based on each property's current use as a
revenue-generating investment property. As at December 31, 2022, Crombie's weighted average
capitalization rate used in the determination of the fair value of
its investment properties was 5.94%, an increase of 29 basis points
from December 31, 2021. Crombie's
weighted average capitalization rate used in the determination of
the fair value of its share of investment properties held in
equity-accounted joint ventures was 3.47% as at December 31, 2022, an increase of 17 basis points
from December 31, 2021. For an
explanation of how Crombie determines capitalization rates, see the
"Other Disclosures" section of Crombie's fourth quarter
Management's Discussion and Analysis, under "Investment Property
Valuation" in the "Use of Estimates and Judgments" section, and the
"Risk Management" section of Crombie's fourth quarter Management's
Discussion and Analysis, under "Capitalization Rate Risk" in the
"Risk Factors Related to the Business of Crombie" section.
|
December 31,
2022
|
|
December 31,
2021
(1)
|
Fixed rate
mortgages
|
$
918,552
|
|
$
1,073,895
|
Senior unsecured
notes
|
975,000
|
|
1,125,000
|
Non-revolving credit
facility
|
150,000
|
|
—
|
Revolving credit
facility
|
—
|
|
9,220
|
Joint operation credit
facility
|
10,264
|
|
9,904
|
Bilateral credit
facility
|
—
|
|
10,000
|
Debt held in joint
ventures, at Crombie's share (2) (3)
|
270,642
|
|
254,074
|
Lease
liabilities
|
35,000
|
|
35,352
|
Total debt
outstanding
|
2,359,458
|
|
2,517,445
|
Less: Applicable fair
value debt adjustment
|
—
|
|
(53)
|
Adjusted
debt
|
$
2,359,458
|
|
$
2,517,392
|
|
|
|
|
Investment properties,
fair value
|
$
5,050,000
|
|
$
5,026,000
|
Investment properties
held in joint ventures, fair value, at Crombie's share
(3)
|
454,000
|
|
387,000
|
Other assets, cost
(4)
|
99,728
|
|
102,683
|
Other assets, cost,
held in joint ventures, at Crombie's share (3) (4)
(5)
|
26,974
|
|
18,370
|
Cash and cash
equivalents
|
6,117
|
|
3,915
|
Cash and cash
equivalents held in joint ventures, at Crombie's share
(3)
|
2,487
|
|
4,453
|
Deferred financing
charges
|
7,843
|
|
9,769
|
Interest rate
subsidy
|
—
|
|
(53)
|
Gross fair
value
|
$
5,647,149
|
|
$
5,552,137
|
Debt to gross fair
value
|
41.8 %
|
|
45.3 %
|
(1) Prior year
calculation has been restated to include Crombie's share of debt
and assets held in joint ventures.
|
(2) Includes
Crombie's share of fixed and floating rate mortgages, construction
loans, revolving credit facility, and lease liabilities held in
joint ventures.
|
(3) See the
"Joint Ventures" section in the Management's Discussion and
Analysis.
|
(4) Other assets
exclude tenant incentives and related accumulated amortization, and
accrued straight-line rent receivable.
|
(5) Other assets
held in joint ventures include deferred financing
charges.
|
The following table presents a reconciliation of property revenue
to adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure and
should not be considered an alternative to operating income
attributable to Unitholders, and may not be comparable to that used
by other entities.
As at December 31, 2022, Crombie
has completed a number of developments in joint ventures and, as a
result, in 2022, Crombie changed its methodology in calculating
adjusted EBITDA to include Crombie's share of revenue, operating
expenses, and general and administrative expenses in joint
ventures. The interest service coverage calculation now includes
Crombie's share of finance costs - operations in joint ventures.
Prior quarters have been restated to reflect this new
methodology.
|
|
|
Three months
ended
|
|
|
December 31,
2022
|
September
30,
2022
|
June 30,
2022
|
March 31,
2022
|
December 31,
2021
|
|
Operating income
attributable to Unitholders
|
$
87,718
|
$
26,410
|
$
28,424
|
$
25,248
|
$
78,730
|
|
Amortization of tenant
incentives
|
5,940
|
5,795
|
5,690
|
5,564
|
5,249
|
|
Gain on disposal of
investment properties
|
(62,584)
|
(13,357)
|
(4,863)
|
—
|
(42,762)
|
|
Gain on distribution
from equity-accounted investments
|
—
|
(1,000)
|
—
|
(1,933)
|
(15,525)
|
|
Impairment of
investment properties
|
—
|
10,400
|
—
|
—
|
1,300
|
|
Depreciation and
amortization
|
18,991
|
22,744
|
19,222
|
18,879
|
18,805
|
|
Finance costs -
operations
|
20,623
|
20,884
|
20,762
|
20,745
|
22,639
|
|
Loss from
equity-accounted investments
|
1
|
1,787
|
1,627
|
1,539
|
685
|
|
Property revenue in
joint ventures, at Crombie's share
|
7,271
|
3,258
|
2,616
|
2,356
|
2,100
|
|
Property operating
expenses in joint ventures, at Crombie's share
|
(3,022)
|
(1,296)
|
(1,002)
|
(903)
|
(724)
|
|
General and
administrative expenses in joint ventures, at Crombie's
share
|
(77)
|
(31)
|
(21)
|
(150)
|
(32)
|
|
Taxes -
current
|
4
|
—
|
—
|
—
|
163
|
|
Adjusted EBITDA
[1]
|
$
74,865
|
$
75,594
|
$
72,455
|
$
71,345
|
$
70,628
|
|
Trailing 12 months
adjusted EBITDA [3]
|
$
294,259
|
$
290,022
|
$
286,024
|
$
281,626
|
$
280,057
|
|
|
|
|
|
|
|
|
Finance costs -
operations
|
$
20,623
|
$
20,884
|
$
20,762
|
$
20,745
|
$
22,639
|
|
Finance costs -
operations in joint ventures, at Crombie's share
|
2,961
|
2,564
|
2,157
|
1,776
|
1,157
|
|
Amortization of
deferred financing charges
|
(654)
|
(675)
|
(668)
|
(688)
|
(742)
|
|
Adjusted interest
expense [2]
|
$
22,930
|
$
22,773
|
$
22,251
|
$
21,833
|
$
23,054
|
|
|
|
|
|
|
|
|
Debt outstanding (see
Debt to Gross Fair Value)(1) [4]
|
$
2,359,458
|
$
2,463,882
|
$
2,502,845
|
$
2,456,686
|
$
2,517,392
|
|
|
|
|
|
|
|
|
Interest service
coverage ratio {[1]/[2]}
|
3.26x
|
3.32x
|
3.26x
|
3.27x
|
3.06x
|
|
Debt to trailing 12
months adjusted EBITDA {[4]/[3]}
|
8.02x
|
8.50x
|
8.75x
|
8.72x
|
8.99x
|
|
(1)
Includes debt held in joint ventures, at Crombie's
share.
|
This press release contains forward-looking statements that reflect
the current expectations of management of Crombie about Crombie's
future results, performance, achievements, prospects, and
opportunities. Wherever possible, words such as "may", "will",
"estimate", "anticipate", "believe", "expect", "intend", and
similar expressions have been used to identify these
forward-looking statements. These statements reflect current
beliefs and are based on information currently available to
management of Crombie. Forward-looking statements necessarily
involve known and unknown risks and uncertainties. A number of
factors, including those discussed in the 2022 annual Management's
Discussion and Analysis under "Risk Management" and the Annual
Information Form for the year ended December
31, 2021 under "Risks", could cause actual results,
performance, achievements, prospects, or opportunities to differ
materially from the results discussed or implied in the
forward-looking statements. These factors should be considered
carefully, and a reader should not place undue reliance on the
forward-looking statements. There can be no assurance that the
expectations of management of Crombie will prove to be correct, and
Crombie can give no assurance that actual results will be
consistent with these forward-looking statements.
Specifically, this document includes, but is not limited to,
forward-looking statements regarding expected timing of
development, each of which may be impacted by ordinary real estate
market cycles, the availability of labour, financing and the cost
of any such financing, capital resource allocation decisions and
general economic conditions, as well as development activities
undertaken by related parties not under the direct control of
Crombie.
About Crombie REIT
Crombie invests in real estate that enriches local communities
and enables long-term sustainable growth. As one of the country's
leading owners, operators, and developers of quality real estate,
Crombie's portfolio primarily includes grocery-anchored retail,
retail-related industrial, and mixed-used residential properties in
Canada's top urban and suburban
markets. As at December 31, 2022, our
portfolio contains 289 income-producing properties comprising
approximately 18.4 million square feet, and a significant pipeline
of future development projects. Learn more at www.crombie.ca.
SOURCE Crombie REIT