QUÉBEC, Nov. 10, 2017 /CNW Telbec/
- Cominar Real Estate Investment Trust ("Cominar" or
the "REIT") (TSX: CUF.UN) announced today its results
for the third quarter of fiscal 2017.
Highlights for the Quarter Ended September 30, 2017
- Reduction in the target debt ratio to 48%
- Announcement of the plan to sell $1.2
billion in assets
"We are pleased by the appointment of Sylvain Cossette, effective January 1, 2018, as the new CEO of Cominar; his
extensive experience in real estate and with Cominar makes him the
best person to ensure the continuity of our company", said
Michel Dallaire, Chairman of the
Board of Trustees and outgoing Chief Executive Officer of
Cominar.
"We have decided to refocus our activities on our core
markets being the Province of Quebec and the Ottawa region. The disposition of $1.2 billion in assets outside these markets
will allow us to reduce our debt ratio and to finance our
repurchase of units under a normal course issuer bid program",
added Mr. Dallaire.
"To complete our asset disposition program, we have retained
RBC Capital Markets Realty and CBRE, two reputable firms that will
work together to achieve the best possible value for these
assets", added Sylvain Cossette,
President and Chief Operating Officer of Cominar.
PRESENTATION OF RESULTS
Net operating
income(1) was $110.2 million compared to $124.6 million for the corresponding period
of 2016, up $0.7 million from
the previous quarter.
Net income for the third quarter of 2017 was $64.0 million compared to $77.5 million for the corresponding period
of 2016.
The decrease in net operating income and in net income for the
quarter compared to the corresponding period of 2016 is primarily
due to the non-recurring net proceeds of $10.7 million obtained in 2016 from the
settlement of the claim against Target and to the disposition of
income properties completed in 2016 and 2017.
Recurring funds from operations(1) for the
third quarter of 2017 was $65.3 million, compared to $68.5 million for the corresponding period
of 2016 and $64.9 million for
the previous quarter. Fully diluted recurring funds from operations
per unit(1) amounted to $0.35 for the third quarter of 2017 and remained
stable compared to the previous quarter.
Recurring adjusted funds from operations(1)
for the third quarter of 2017 was $55.4 million compared to $58.8 million for the corresponding period
of 2016. Fully diluted per unit, it amounted to $0.30 for the third quarter of 2017.
Recurring adjusted cash flows from
operations(1) for the third quarter of 2017
was $54.9 million, up
$0.7 million compared to
$54.2 million for the
corresponding period of 2016. Fully diluted per unit, they amounted
to $0.30 for the third quarter of
2017.
For the third quarter of 2017, recurring funds from operations
as well as recurring adjusted funds from operations decreased
compared to the corresponding period of 2016, due to the
dispositions of income properties completed in 2016 and 2017.
FINANCIAL SITUATION
As at September 30, 2017,
Cominar's debt ratio stood at 52.6%, compared to 52.4% as at
December 31, 2016. At the end of the third quarter of 2017,
total assets reached $8.4 billion and unencumbered income
properties amounted to $3.6 billion.
LEASING ACTIVITY
During the first nine months of 2017,
our leasing efforts allowed us to renew 59.2% of the total leasable
area expiring during fiscal 2017, totalling 4.8 million square
feet, and to sign new leases for 2.8 million square feet,
overall representing 93.5% of the total leasable area maturing in
2017.
Occupancy rate was 92.2% as at September 30, 2017, compared
to 92.4% as at December 31, 2016.
(1) Non-IFRS financial measure.
See the reconciliation to closest IFRS measure.
|
RESULTS OF
OPERATIONS
|
|
|
|
|
|
Quarter
|
|
Year-to-date (nine
months)
|
For the periods
ended September 30
|
2017
|
2016
|
% Δ
|
|
2017
|
2016
|
% Δ
|
|
($000)
|
($000)
|
|
|
($000)
|
($000)
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
204,160
|
217,946
|
(6.3)
|
|
628,071
|
656,632
|
(4.3)
|
Operating
expenses
|
(93,980)
|
(93,377)
|
0.6
|
|
(302,521)
|
(302,324)
|
0.1
|
Net operating income
(1)
|
110,180
|
124,569
|
(11.6)
|
|
325,550
|
354,308
|
(8.1)
|
Finance
charges
|
(41,860)
|
(43,243)
|
(3.2)
|
|
(125,913)
|
(128,163)
|
(1.8)
|
Trust administrative
expenses
|
(5,160)
|
(4,252)
|
21.4
|
|
(14,569)
|
(12,229)
|
19.1
|
Share of joint
ventures' net income
|
1,064
|
799
|
33.2
|
|
5,168
|
2,211
|
133.7
|
Income
taxes
|
(243)
|
(344)
|
(29.4)
|
|
(705)
|
(730)
|
(3.4)
|
Net income
|
63,981
|
77,529
|
(17.5)
|
|
189,531
|
215,397
|
(12.0)
|
|
(1)
Non-IFRS financial measure.
|
NON-IFRS FINANCIAL MEASURES
Net operating income,
funds from operations (FFO), adjusted funds from operations (AFFO)
and adjusted cash flows from operations (ACFO) are not measures
recognized by International Financial Reporting Standards ("IFRS")
and do not have standardized meanings prescribed by IFRS. Such
measures may differ from similar computations as reported by
similar entities and, accordingly, may not be comparable to similar
measures reported by such other entities.
FUNDS FROM OPERATIONS (FFO) AND ADJUSTED FUNDS FROM
OPERATIONS (AFFO)
The following table presents a
reconciliation of net income, as determined in accordance with
IFRS, and recurring funds from operations and recurring adjusted
funds from operations:
|
Quarter
|
|
Year-to-date (nine
months)
|
For the periods
ended September 30
|
2017
|
2016
|
|
2017
|
2016
|
|
($000)
|
($000)
|
|
($000)
|
($000)
|
|
|
|
|
|
|
Net
income
|
63,981
|
77,529
|
|
189,531
|
215,397
|
+ Deferred income
taxes
|
243
|
344
|
|
705
|
730
|
+ Initial and
re-leasing salary costs
|
868
|
862
|
|
2,650
|
2,298
|
- Change in
fair value of investment properties – Cominar's proportionate
share
|
-
|
-
|
|
(2,284)
|
-
|
+ Capitalizable
interest on properties under development – joint
ventures
|
195
|
500
|
|
595
|
1,446
|
Funds from
operations(1)(2)
|
65,287
|
79,235
|
|
191,197
|
219,871
|
|
|
|
|
|
|
Non-recurring
item
|
|
|
|
|
|
- Other income
– non-recurring(2)
|
-
|
(10,724)
|
|
-
|
(10,724)
|
Recurring funds
from operations (1)(2)
|
65,287
|
68,511
|
|
191,197
|
209,147
|
|
|
|
|
|
|
- Provision for
leasing costs
|
(6,650)
|
(6,100)
|
|
(19,237)
|
(17,700)
|
- Recognition
of leases on a straight-line basis(1)
|
(1,098)
|
(1,583)
|
|
(2,473)
|
(3,238)
|
- Capital
expenditures – maintenance of rental income generating
capacity
|
(2,125)
|
(2,045)
|
|
(5,288)
|
(5,484)
|
|
|
|
|
|
|
Recurring adjusted
funds from
operations (1)(2)
|
55,414
|
58,783
|
|
164,199
|
182,725
|
|
|
(1)
|
Including
Cominar's proportionate share in joint ventures.
|
(2)
|
Non-IFRS financial
measure.
|
(3)
|
In 2016, net
proceeds of $10.7 million were obtained in settlement of the claim
against Target Canada.
|
ADJUSTED CASH FLOWS FROM OPERATIONS (ACFO)
The following table presents a reconciliation between the cash
flows provided by operating activities as per the condensed interim
consolidated financial statements and the recurring adjusted cash
flows from operations:
|
Quarter
|
|
Year-to-date (nine
months)
|
For the periods
ended September 30
|
2017
|
2016
|
|
2017
|
2016
|
|
($000)
|
($000)
|
|
($000)
|
($000)
|
|
|
|
|
|
|
Cash flows
provided by operating activities as per the condensed interim
consolidated financial statements
|
100,702
|
120,213
|
|
151,754
|
182,059
|
+ Adjustments –
investments in joint ventures(1)
|
1,067
|
798
|
|
2,582
|
2,083
|
- Provision for
leasing costs
|
(6,650)
|
(6,100)
|
|
(19,237)
|
(17,700)
|
+ Initial and
re-leasing salary costs
|
868
|
862
|
|
2,650
|
2,298
|
+ Changes in non-cash
working capital items
|
(39,876)
|
(50,143)
|
|
29,458
|
28,663
|
- Capital
expenditures – maintenance of rental income generating
capacity
|
(2,125)
|
(2,045)
|
|
(5,288)
|
(5,484)
|
- Amortization
of deferred financing costs and others
|
(640)
|
(727)
|
|
(2,127)
|
(2,289)
|
+ Amortization of
fair value adjustments on assumed mortgages payable
|
1,383
|
1,547
|
|
4,192
|
5,033
|
+ Capitalizable
interest on properties under development – joint
ventures
|
195
|
500
|
|
595
|
1,446
|
Adjusted cash
flows from operations(4)
|
54,924
|
64,905
|
|
164,579
|
196,109
|
|
|
|
|
|
|
- Other income –
non-recurring (3)
|
-
|
(10,724)
|
|
-
|
(10,724)
|
Recurring adjusted
cash flows from operations (4)
|
54,924
|
54,181
|
|
164,579
|
185,385
|
|
|
|
|
|
|
Payout
ratio(2)
|
104.2%
|
114.8%
|
|
117.7%
|
101.1%
|
Cash flows payout
ratio(2)(3)
|
93.5%
|
106.9%
|
|
93.5%
|
98.8%
|
|
|
(1)
|
Including
Cominar's proportionate share in joint ventures.
|
(2)
|
Fully
diluted.
|
(3)
|
The cash flows
payout ratio corresponds to the cash distribution per unit divided
by the fully diluted recurring adjusted cash flows from operations
per unit.
|
(4)
|
Non-IFRS financial
measure.
|
(5)
|
In 2016, net
proceeds of $10.7 million were obtained in settlement of the claim
against Target Canada.
|
ADDITIONAL FINANCIAL INFORMATION
Cominar's condensed interim consolidated financial statements and
interim management's discussion and analysis for the third quarter
ended September 30, 2017, will be filed with SEDAR at
www.sedar.com and will be available on Cominar's website at
www.cominar.com.
CONFERENCE CALL ON NOVEMBER 10,
2017
On Friday, November 10, 2017 at 11
a.m. (ET), Cominar's management will hold a conference call to
present the results for the third quarter ended September 30,
2017. Anyone who is interested may take part in this call by
dialing 1 888 390-0546. A presentation regarding
these results will be available before the conference call on the
REIT's website at www.cominar.com, under the Conference Call
header. In addition, a taped rebroadcast of the conference call
will be available from Friday, November 10,
2017 at 2 p.m. to Friday,
November 24, 2017 at 11:59 p.m., by dialing
1 888 390-0541 followed by this code:
166684#.
PROFILE AS AT NOVEMBER 10,
2017
Cominar is the third largest diversified real estate investment
trust in Canada and currently
remains the largest commercial property owner in the Province of
Quebec. The REIT owns a real
estate portfolio of 523 properties in three different market
segments, that is, office properties, retail properties and
industrial and mixed-use properties. Cominar's portfolio totals
44.1 million square feet spread out across Quebec, Ontario, the Atlantic Provinces and
Western Canada. Cominar's
objectives are to pay growing cash distributions to unitholders and
to maximize unitholder value through proactive management and the
expansion of its portfolio.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements with
respect to Cominar and its operations, strategy, financial
performance and financial condition. These statements generally can
be identified by the use of forward-looking words such as "may",
"will", "expect", "estimate", "anticipate", "intend", "believe" or
"continue" or the negative thereof or similar variations. The
actual results and performance of Cominar 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.
Some 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
regulation and the factors described under "Risk Factors" in
Cominar's Annual Information Form. The cautionary statements
qualify all forward-looking statements attributable to Cominar and
persons acting on its behalf. Unless otherwise stated, all
forward-looking statements speak only as of the date of this press
release. Cominar does not assume any obligation to update the
aforementioned forward-looking statements, except as required by
applicable laws.
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST