RioCan Real Estate Investment Trust Announces 12% Growth in
Operating Funds From Operations in 2013
TORONTO, ONTARIO--(Marketwired - Feb 13, 2014) - RioCan Real
Estate Investment Trust (TSX:REI.UN) -
HIGHLIGHTS for the year ended December 31, 2013:
All figures in Canadian dollars unless otherwise noted. RioCan's
results are prepared in accordance with International Financial
Reporting Standards ("IFRS").
- RioCan's Operating FFO increased by 12% to $492 million for the
year ended December 31, 2013 compared to $440 million for the same
period in 2012. On a per unit basis, Operating FFO increased 7% to
$1.63 per unit from $1.52 per unit for the same period in
2012;
- RioCan's Operating FFO increased by 7% to $124 million for the
three months ending December 31, 2013 ("Fourth Quarter") compared
to $116 million in the fourth quarter of 2012. On a per unit basis,
Operating FFO increased 5% to $0.41 per unit from $0.39 per unit in
the same period of 2012;
- RioCan's concentration in Canada's six major markets has
increased to 71.7% at December 31, 2013 from 67.5% at December 31,
2012;
- During 2013, RioCan consolidated its ownership of virtually all
of the US properties that were previously owned through joint
venture arrangements. RioCan has opened regional offices in Mount
Laurel, New Jersey and Dallas, Texas which are supported by
RioCan's headquarters in Toronto, Canada, to manage RioCan's
American portfolio;
- On January 29, 2014, RioCan and its partners, Allied Properties
REIT and Diamond Corporation, announced The Well. This mixed use
development project, located at the corner of Front Street and
Spadina Avenue in close proximity to downtown Toronto on a 7.7 acre
site, is expected to comprise of up to 3.2 million square feet of
retail, office and residential properties;
- As at December 31, 2013, RioCan had ownership interests in 16
properties under development that will, upon completion, comprise
approximately 5 million square feet at RioCan's interest;
- For the year, RioCan acquired interests in 32 income properties
in Canada and the US aggregating to 3.0 million square feet at an
aggregate purchase price of approximately $849 million at RioCan's
interest at a weighted average capitalization rate of 5.7%;
- For the year, RioCan completed the sale of 18 properties with a
total net leaseable area of approximately 3.3 million square feet.
In Canada, RioCan sold 13 properties at a total sale price of $616
million at a weighted average capitalization rate of 5.9%. The
total debt associated with these assets was $160 million. In the
US, RioCan sold five properties as part of its US joint venture
dissolutions at a total sale price of US$103 million at a weighted
average capitalization rate of 6.8%. The total debt associated with
these assets was $54 million;
- Overall occupancy was 96.9% at December 31, 2013, compared to
97.4% at December 31, 2012;
- RioCan renewed 3.9 million square feet in the Canadian
portfolio during the twelve months ended December 31, 2013 at an
average rent increase of $1.80 per square foot, representing an
increase of 11.0%. The renewal retention rate in Canada and the US
for the quarter was 97.0% and 98.2% respectively;
- During 2013, RioCan completed the offering of two series of
debentures, $250 million Series S which carries a coupon of 2.87%
and matures March 2018 as well as $200 million Series T, which
carries a coupon of 3.73% and matures April 2023. Subsequent to the
year end, RioCan completed the offering of $150 million Series U
debentures, which carry a coupon of 3.62% and mature June 2020;
and
- In the fourth quarter of 2013 and to date, RioCan renegotiated
the terms of its operating lines by increasing the capacity of the
facilities, extending the maturity dates, and reducing the interest
rate spreads associated with these facilities.
RioCan Real Estate Investment Trust ("RioCan") today announced
its financial results for the year ended December 31, 2013.
"I am very pleased with RioCan's results this past year, in
which RioCan celebrated the milestone of twenty years of operation.
The Trust assumed the operations of nearly all of our US properties
and RioCan opened its first two offices outside of Canada, in New
Jersey and Texas," said Edward Sonshine, Chief Executive Officer of
RioCan. "RioCan's portfolio has been streamlined and enhanced
through the disposition of many of our lower growth assets. The
Trust's development pipeline, which we expect will be a significant
driver of future growth, has expanded and contains a number of high
profile projects across Canada including, Urban Retail, Mixed Use,
Outlet Shopping Centres and New Format Retail Centre developments.
Our recently announced development plans for a visionary new
neighbourhood to be known as "The Well" have been filed with the
city, and we expect that this truly exciting development will be a
unique and welcoming gathering place in Toronto's rapidly expanding
city centre where people can live, work and shop well."
Financial
Highlights
In millions except percentages and per unit values
|
Three months ended December 31, |
Year ended December 31, |
|
2013 |
2012 |
% change |
2013 |
2012 |
% change |
Operating FFO |
$124 |
$116 |
7% |
$492 |
$440 |
12% |
Operating FFO per Unit |
$0.41 |
$0.39 |
5% |
$1.63 |
$1.52 |
7% |
|
|
|
In $ millions |
Three months ended December 31, |
Year ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
Net earnings attributable to common and preferred unit holders |
$265 |
$468 |
$709 |
$1,344 |
Net earnings before taxes and fair value adjustment |
$129 |
$146 |
$492 |
$490 |
|
|
|
In $ millions. As at |
December 31, 2013 |
December 31, 2012 |
Total enterprise value (1) |
$13,794 |
$14,274 |
Total assets - at RioCan's interest(1) |
$13,554 |
$12,888 |
Debt (mortgages and debentures payable - at RioCan's interest)
(1) |
$5,988 |
$5,717 |
|
|
|
(1) Based on RioCan's proportionate share including joint
ventures accounted for under the equity method of accounting. |
Operating FFO for the Fourth Quarter was $124 million ($0.41 per
unit) compared to $116 million ($0.39 per unit) in the Fourth
Quarter of 2012. The primary reason for this increase was a $10
million increase in net operating income ("NOI"), which was due to
acquisitions net of dispositions, same store growth of 2.7% in
Canada and 1.7% in the US, and the completion of greenfield
developments, partially offset by lower lease cancelation fees.
Operating FFO for the year ended December 31, 2013 was $492
million ($1.63 per unit) compared to $440 million ($1.52 per unit)
in 2012. The primary reasons for this increase were: a $54 million
increase in net operating income ("NOI"), which was due to same
store growth of 1.7% in Canada and 1.2% in the US, acquisitions net
of dispositions and the completion of greenfield developments,
partly offset by lower lease cancellation fees. Operating FFO also
benefited from $3 million of increased other revenue due to higher
fees related to increases in development activity. These gains were
partially offset by higher general and administrative costs of $5
million mainly due to higher unit-based compensation and a
favourable sales tax recovery in 2012 that did not recur in the
current period. Same Store and Same Property NOI
Canada |
Three months ended December 31, 2013 Year over Year |
Year ended December 31, 2013 Year over Year |
Sequential quarter over quarter |
Same Store Growth |
2.7% |
1.7% |
1.9% |
Same Property Growth |
2.2% |
1.3% |
1.8% |
United States |
|
|
|
Same Store & Property Growth |
1.7% |
1.2% |
0.4% |
Overview of Development
Activities
As at December 31, 2013, RioCan had ownership interests in 16
properties under development that will, upon completion, comprise
approximately 11 million square feet (5 million square feet at
RioCan's interest). In addition to its development projects, RioCan
continues its urban intensification activities, primarily in the
Toronto, Ontario market. Going forward, substantial activity and
growth will be seen through a variety of formats in development and
redevelopment of existing properties. Overall development spending,
at RioCan's interest, in the next five to seven years will range
from $100 to $200 million per year.
On January 29, 2014 RioCan and its partners, Allied Properties
REIT and Diamond Corporation, announced The Well development
project located on the lands previously referred to as the Downtown
West Lands. The combined 7.74-acre site is currently the home of
The Globe & Mail newspaper and is located on part of a large
city block bounded by Spadina Avenue, Front Street, Draper Street
and Wellington Street in downtown Toronto. The site is in close
proximity to Toronto's downtown office corridor and adjacent to a
large and growing residential population.
On February 11, 2014, RioCan and its partners have submitted an
application for rezoning with the City of Toronto. The property
will be redeveloped as a mixed-use development that will include
approximately 570,000 square feet of retail space, 1.1 million
square feet of office space and 1.5 million square feet of
residential space that will become a landmark destination to live,
work and shop in Toronto. It is expected that the residential
portion of the development will include both rental and condominium
units.
The Well will be a new neighbourhood that will be one of the few
truly integrated mixed use projects under review by the city
offering a meaningful mix of residential, retail and office space.
The Well will extend the revitalization of Toronto's Downtown West,
south of King Street and west of Spadina Avenue.
Development acquisitions completed during the Fourth
Quarter
During the three months ended December 31, 2013, RioCan did not
acquire any development properties.
Subsequent to year end RioCan purchased a 100% interest in 1860
Bayview Avenue in Toronto, Ontario. 1860 Bayview Avenue is a
development site located at the northwest corner of Bayview Avenue
and Broadway Avenue in the Leaside area of Toronto. KingSett
Capital and Trinity Development Group are currently developing a
grocery-anchored centre on the site. RioCan acquired the site on a
forward purchase basis in phases for a purchase price on completion
of approximately $58 million, which equates to a capitalization
rate of 5.4% with the remaining portion to be paid on an earn-out
basis upon completion of the project. Once completed, the centre
will consist of approximately 83,000 square feet of retail space
and will be anchored by a 52,500 square foot Whole Foods grocery
store.
Development Property Acquisitions under Contract
RioCan currently has two development sites in Canada under firm
contract where conditions have been waived that, if completed,
represent acquisitions of $20 million at RioCan's interest.
- The acquisition of lands adjacent to Calaway Park, a 35 acre
parcel of land located approximately 25 kilometers west of Calgary,
Alberta. The site is to be acquired on a 50/50 joint venture basis
between RioCan and Tanger at a purchase price of $28 million ($14
million at RioCan's interest). The site would be acquired free and
clear of financing and RioCan would acquire a managing interest in
the development property. The site represents an opportunity for
the RioCan/Tanger joint venture to enter the Calgary market with
the intention to develop the land into an outlet centre of
approximately 350,000 square feet. The acquisition of the land,
which is subject to certain conditions, is expected to close in the
second quarter of 2014.
- The acquisition of a 50% interest in the site where TD Bank is
currently located at the North East corner of Yonge and Eglinton in
Toronto, Ontario, at a purchase price of $6 million at RioCan's
interest ($12 million at 100%). The acquisition is expected to
close in the second quarter of 2014 and will form part of the
existing North East Yonge Eglinton land assembly, acquired in 2011
with Metropia and Bazis. The properties within this land assembly
are slated to be developed beginning in 2014 into a mixed-use
retail and residential property.
RioCan is currently in discussions with Trinity to acquire their
25% interest in each of Stockyards, Toronto and McCall Landing,
Calgary, as well as Trinity's 10% interest in East Hills, Calgary.
If completed, these transactions are targeted to close during Q1
2014. It is also the Trust's intention, pending certain approvals,
to take over as development manager for each of these development
sites over the remainder of 2014.
Additionally, RioCan has $10 million of development sites in
Canada (at RioCan's interest) under contract where conditions have
not yet been waived. Included in these development sites is a
parcel that, if acquired, will expand the footprint of the northern
portion of the development located at the North East corner of
Yonge and Eglinton, which will be used for additional rental
residential development. These transactions are in various stages
of due diligence and while efforts will be made to complete these
transactions, no assurance can be given.
Leasing and Operational
Highlights:
Various operating and leasing metrics over the last
eight quarters are as follows: |
|
|
|
2013 |
|
|
|
2012 |
|
|
|
|
(thousands of square feet, millions of dollars except PSF
amounts) |
Fourth quarter |
Third quarter |
Second quarter |
First quarter |
Fourth quarter |
Third quarter |
|
Second quarter |
First quarter |
|
Committed occupancy |
96.9% |
97.0% |
96.7% |
97.0% |
97.4% |
97.3% |
|
97.4% |
96.9% |
|
Economic occupancy |
95.8% |
95.5% |
95.4% |
95.8% |
95.9% |
95.5% |
|
95.5% |
95.7% |
|
NLA leased but not paying rent |
542 |
716 |
642 |
615 |
711 |
855 |
|
871 |
542 |
|
Annualized rental impact |
$14 |
$17 |
$15 |
$15 |
$15 |
$18 |
|
$18 |
$12 |
|
Retention rate - Canada (i) |
97.0% |
91.1% |
95.9% |
68.3% |
94.3% |
84.8% |
|
89.9% |
91.2% |
|
%
increase in average net rent per sq ft - Canada |
8.8% |
11.2% |
12.0% |
13.4% |
18.4% |
12.9% |
|
13.4% |
10.0% |
|
Retention rate - US |
98.2% |
98.4% |
92.0% |
98.8% |
87.6% |
96.3% |
|
84.2% |
83.1% |
|
%
increase in average net rent per sq ft - US |
4.8% |
3.8% |
4.3% |
2.3% |
5.1% |
6.0% |
|
7.3% |
7.2% |
|
Average in place rent (PSF) |
$16.08 |
$16.07 |
$15.77 |
$15.77 |
$15.70 |
$15.85 |
|
$15.33 |
$15.37 |
|
Same store growth (ii) - Canada |
2.7% |
2.2% |
0.6% |
0.1% |
0.2% |
0.0% |
|
1.5% |
1.5% |
|
Same store growth (ii) - US |
1.7% |
0.9% |
1.4% |
1.4% |
1.9% |
(0.3% |
) |
1.3% |
(0.6% |
) |
|
|
(i) - The first quarter of 2013 includes impact of
the vacancy of Zellers totalling 188,000 sq ft at 100% (100,500 sq
ft at RioCan's interest) during the quarter. The first quarter of
2013 retention rate excluding Zellers was 81.1%. |
|
(ii) - Refers to the growth in same store on a
year over year basis. |
|
|
|
Highlights:
- RioCan's Canadian portfolio is concentrated in Canada's six
high growth markets (consisting of Calgary, Edmonton, Montreal,
Ottawa, Toronto and Vancouver). Assets in these markets contribute
about 71.7% of RioCan's Canadian annualized rental revenue (67.5%
at December 31, 2012). The increase in the past year was
accomplished through a combination of the sale of certain assets in
secondary markets and the acquisition of two large enclosed
shopping centres in the Greater Toronto Area;
- National and anchor tenants represented about 86.2% of RioCan's
total annualized rental revenue at December 31, 2013, a slight
increase compared to 86.1% at December 31, 2012; and
- No individual tenant comprised more than 3.7% of annualized
rental revenue. At December 31, 2013, Walmart was RioCan's largest
revenue source. Loblaws will become RioCan's largest tenant upon
completion of its purchase of Shoppers Drug Mart.
Portfolio Activity -
Acquisition and Disposition Pipeline
During the Fourth Quarter, RioCan completed acquisitions of
interests in 16 income producing properties (two in Canada and 14
in the U.S.) at an aggregate purchase price of $274 million, at
RioCan's interest (calculated taking into account the U.S. dollar
transactions at an average exchange rate of 1.035), with a weighted
average capitalization rate of 6.5%. Canada
- On November 22, 2013, RioCan completed its acquisition of a
100% interest in Eagles Landing Shopping Centre in Vaughan,
Ontario. Eagles Landing is a 177,031 square foot unenclosed grocery
anchored shopping centre located at the corner of Dufferin Street
and Major Mackenzie Drive. It is anchored by Yummy Market Grocery
(sublet from Metro), and includes other tenants such as The Beer
Store, TD Bank and Starbucks. The purchase price for the property
was $56 million, which equates to a capitalization rate of 6.2%.
The property was acquired free and clear of financing.
- On December 20, 2013, RioCan completed its acquisition of a 50%
interest in 491 College Street West in Toronto, Ontario. This
acquisition was completed as part of RioCan's joint venture with
Allied Properties Real Estate Investment Trust ("Allied"). 491
College Street West is a 15,170 square foot urban retail building
and is not currently tenanted. RioCan paid $4 million for its 50%
interest in the property. The joint venture between RioCan and
Allied plans to develop 491 College Street West into a three storey
commercial building with retail and office space. The property was
acquired free and clear of financing.
United States
- On October 1, 2013, RioCan completed its previously announced
dissolution of its joint venture with Retail Properties of America
Inc. ("RPAI"). As previously disclosed, pursuant to this
transaction, RPAI conveyed its 20% managing interest in eight
properties located in Texas to RioCan, for an aggregate purchase
price of US$96.6 million. These properties consist of 1890 Ranch,
Austin; Southpark Meadows Phase I and II, Austin; Great Southwest
Crossing, Dallas; Suntree Square, Dallas; Bear Creek Shopping
Center, Houston; Riverpark Shopping Center, Houston; Bird Creek
Crossing, Temple; and Alamo Ranch, San Antonio. RioCan assumed
RPAI's share of the existing mortgage financing on five of the
properties aggregating US$41.8 million. Also pursuant to this
transaction, RioCan conveyed its 80% interest in the remaining five
properties to RPAI for a purchase price of $102.8 million. RPAI
assumed RioCan's portion of the mortgage financing on these five
properties of US$54.3 million. With the completion of these
transactions, RioCan has now assumed management of all of the
assets in which it has acquired a 100% interest, which total 2.6
million square feet. The properties are managed by RioCan (America)
Management Incorporated.
- On October 1, 2013, RioCan acquired the remaining 15% of
Louetta Central Shopping Center in Houston, Texas, a 179,995 square
foot non-grocery anchored retail centre. Following completion of
the acquisition, RioCan now owns 100% of the asset. The acquisition
was the fourth in the series of six transactions contemplated
pursuant to RioCan's previously announced dissolution of its joint
venture with Dunhill Partners, Inc. ("Dunhill"). The purchase price
for the additional 15% interest in this property was US$5 million,
which equates to a capitalization rate of 6.4%. In connection with
the acquisition, RioCan assumed Dunhill's share of mortgage
financing of US$2.5 million, bearing interest at 3.67% and maturing
in November 2022. The property is managed by RioCan (America)
Management Inc.
- On October 2, 2013, RioCan acquired the managing and remaining
interest of Las Palmas Marketplace in El Paso, Texas, a 637,272
square foot open-air regional shopping centre. RioCan acquired a
36.6% managing interest from Dunhill and a 31.7% interest from
Kimco Realty Corporation ("Kimco"), resulting in RioCan owning 100%
of the asset. The acquisition was the fifth in the series of six
transactions contemplated pursuant to RioCan's previously announced
dissolution of its joint venture with Dunhill. RioCan paid US$37
million and US$32 million for Dunhill and Kimco's interests,
respectively, with both interests acquired at a capitalization rate
of 6.4%. In connection with the acquisitions, RioCan assumed
Dunhill and Kimco's share of the existing mortgages: US$18 million
from Dunhill and US$15 million from Kimco, bearing interest at
5.40% and maturing in April 2022. The property is managed by RioCan
(America) Management Inc.
- On October 8, 2013, RioCan acquired a 100% interest in 1328
Beekman Road in Hopewell Junction, New York, which is a 40,416
square foot property tenanted by a stand-alone Stop and Shop
Supermarket (Royal Ahold). The property was acquired for a purchase
price of US$16 million, which equates to a capitalization rate of
6.2% and was acquired free and clear of financing. The property is
managed by RioCan (America) Management Inc.
- On October 9, 2013, RioCan acquired the remaining 18.12%
managing interest of Lincoln Square Shopping Center in Arlington
(Dallas), Texas, a 471,597 square foot new format retail shopping
centre. The acquisition results in RioCan now owning a 100%
managing interest in the property. This represented the sixth and
final transaction in RioCan's overall joint venture dissolution
with Dunhill. The purchase price for the additional interest was
US$15 million, which equates to a capitalization rate of 6.9%. In
connection with the acquisition, RioCan assumed Dunhill's share of
mortgage financing of US$7 million, bearing interest at 5.05% and
maturing in July 2021. The property is managed by RioCan (America)
Management Inc.
- On December 10, 2013, RioCan acquired the remaining 10%
interest in Ingram Hills Shopping Center from partner Sterling
Organization LLC ("Sterling"), bringing RioCan's ownership interest
in the property to 100%. The purchase price for the remaining 10%
interest was US$0.8 million, which equates to a capitalization rate
of 7.8%. Ingram Hills Shopping Center is an 80,397 square foot
infill grocery anchored neighbourhood retail centre located in San
Antonio, Texas. RioCan assumed Sterling's share of the mortgage
financing in the amount of US$0.4 million, bearing interest at
6.10% and maturing in August 2017.
- On December 11, 2013, RioCan acquired the remaining 20%
interest in Cinco Ranch from Sterling, bringing RioCan's ownership
interest in the property to 100%. The purchase price for the
remaining 20% interest was US$5 million, which equates to a
capitalization rate of 6.0%. Cinco Ranch is a 97,761 square foot
retail power centre located in Katy (Houston), Texas. In connection
with the acquisition, RioCan assumed Sterling's share of the
mortgage financing in the amount of US$2 million, bearing interest
at 7.30% and maturing in May 2019.
Acquisitions Under
Contract (Firm)
In the United States, RioCan has waived conditions pursuant to a
purchase and sale agreement with respect to one U.S. property, as
follows:
- The acquisition of a 100% interest in a 64,329 square foot
single-tenant building at Riverpark Shopping Center in SugarLand
(Houston), Texas. The purchase price for the building, which is
tenanted by Gander Mountain, is US$9 million, which equates to a
capitalization rate of 8.0%. The building will be acquired free and
clear of financing and the acquisition is expected to close in the
first half of 2014. Previously, in 2010, RioCan acquired an 80%
interest in the Riverpark Shopping Center, which was later
increased to a 100% interest as part of the RPAI dissolution on
October 1, 2013, referred to above. Riverpark Shopping Center is a
375,599 square foot new format retail centre.
Acquisitions
Pipeline
RioCan is currently in discussions regarding a property
acquisition in Canada that, if completed, represent approximately
$3 million of additional acquisitions at RioCan's interest. This
transaction is under negotiation and while efforts will be made to
conclude these discussions, no assurance can be given.
Disposition
Pipeline
As referenced above under the heading "Portfolio Activity and
AcquisitionPipeline", on October 1, 2013, RioCan completed its
previously announced dissolution of its joint venture with RPAI.
Pursuant to this transaction, RioCan conveyed its 80% interest in
the following five properties located in Texas to RPAI for a
purchase price of $103 million: Coppell Town Centre, Southlake
Corners, Cypress Mill, Sawyer Heights, and New Forest Crossing.
RPAI assumed RioCan's portion of the mortgage financing on these
five properties of US$54 million.
As a further means of raising capital and optimizing capital
utilization, RioCan evaluates the sale of selected assets as part
of a process of actively managing the portfolio and a means of
increasing the portfolio weighting to urban markets in Canada.
During the Fourth Quarter, RioCan completed five dispositions in
Canada at an aggregate sale price of $226 million, as follows:
- On October 28, 2013, RioCan sold its 100% interest in a single
tenant unit (The Beer Store) located at 1199 Oxford Street in
London, Ontario. The property forms part of RioCan's Oakridge
Centre and was conveyed to Loblaws pursuant to a pre-existing
option agreement. The sale price was $1 million, which equates to a
capitalization rate of 9.5%. The property was sold free and clear
of financing.
- On November 5, 2013, RioCan sold its 100% interest in Centre de
la Concorde in Montreal, Quebec, a 109,449 square foot new format
retail centre. The sale price was $9 million, which equates to a
capitalization rate of 8.3%. The property was sold free and clear
of financing.
- On November 15, 2013, RioCan sold its 100% interest in Coulters
Mill, a 73,667 square foot non-grocery anchored retail centre in
Thornhill, Ontario. The sale price was $21 million, which equates
to a capitalization rate of 5.6%. The property was sold free and
clear of financing.
- On December 2, 2013, RioCan sold its 100% interest in The Brick
Plaza, a 49,079 square foot non-grocery anchored retail centre in
Windsor, Ontario. The sale price was $2 million, which equates to a
capitalization rate of 6.1%. The property was sold free and clear
of financing.
- On December 17, 2013, RioCan completed the sale of its 50%
interest in Quartiers DIX 30, a 1.2 million square foot new format
retail property in Brossard, Quebec, to a group of buyers led by
its partner Devimco Inc. ("Devimco") at a sale price of $193
million, which equates to a capitalization rate of 5.4%. Devimco
assumed RioCan's share of the outstanding debt on the property,
which amounted to $93 million and carried a weighted average
interest rate of 4.8%. The outstanding debt had a weighted average
term to maturity of approximately 3.7 years.
- Subsequent to the year-end, on January 28, 2014, RioCan sold
its 100% interest in Madawaska Centre, located in Edmundston, New
Brunswick for $1 million. Madawaska Centre is a 271,924 square foot
enclosed mall.
- Subsequent to the year-end, on January 31, 2014, RioCan sold
its 100% interest in Mega Centre Beauport located in Quebec City
for $47 million, which equates to a capitalization rate of 6.0%.
Mega Centre Beauport is a 181,000 square foot new format retail
centre and tenanted by Cineplex, Sports Experts and Future
Shop.
Dispositions Under
Contract (Firm)
RioCan currently has one property in Canada under contract to
sell where conditions have been waived that, if completed,
represents a disposition of $5 million, as follows:
- On March 18, 2013, Canadian Tire, as tenant under an existing
lease, exercised its option to purchase the property occupied by
Canadian Tire located at 2000 Appleby Line in Burlington, Ontario.
The property forms part of RioCan's Millcroft Shopping Centre. The
sale price is $5 million and the sale is expected to occur in the
first quarter of 2014.
Liquidity and
Capital
|
Quarter ended |
Rolling 12 months ended |
|
December 31, 2013 |
December 31, 2013 |
December 31, 2012 |
Interest Coverage - RioCan's interest |
3.10x |
2.83x |
2.69x |
Debt Service Coverage - RioCan's interest |
2.26x |
2.10x |
1.98x |
Fixed Charge Coverage - RioCan's interest |
1.10x |
1.06x |
1.04x |
Net debt to adjusted EBITDA - RioCan's interest |
7.85x |
7.56x |
7.29x |
Net operating debt to adjusted operating EBITDA - RioCan's
interest |
7.49x |
7.24x |
7.09x |
Unencumbered assets (millions) |
$2,068 |
|
$1,353 |
Unencumbered assets to unsecured debt |
142% |
|
104% |
Financing Highlights for the Fourth Quarter
Credit Facilities
In the fourth quarter of 2013 and to date, RioCan renegotiated
the terms of its operating lines by increasing the capacity of the
facilities, extending the maturity dates, and reducing the interest
rate spreads associated with these facilities. In addition, one new
operating line was added. As of the date hereof, RioCan's operating
lines are as follows:
Operating Line as of Sept. 30, 2013 (millions) |
Spread* |
Maturity |
Operating Line as of Feb. 12, 2014 (millions) |
Revised Spread* |
Revised Maturity |
$125 |
BA's/LIBOR +150 bps |
Dec. 2013 |
$185 |
BA's/LIBOR +125 bps |
Dec. 2016 |
$200 |
BA's/LIBOR +150 bps |
Nov. 2014 |
$250 |
BA's/LIBOR +125 bps |
Nov. 2016 |
$100 |
BA's/LIBOR +150 bps |
June 2014 |
$130 |
BA's/LIBOR +125 bps |
June 2017 |
$0 |
N/A |
- |
$75 |
BA's/LIBOR +125 bps |
June 2017 |
Total $425 |
|
|
Total $640 |
|
|
|
* Lines are available in Canadian or US Dollars. Canadian draws
are priced off of BA's and US draws are priced off of LIBOR. |
Unencumbered Assets
As at December 31, 2013, RioCan's unencumbered asset pool was
comprised of 103 assets with an aggregate fair value of $2.1
billion.
Trust Units
On July 25, 2013, RioCan announced the TSX approval of its
notice of intention to make a normal course issuer bid ("NCIB") for
a portion of its Units as appropriate opportunities arise from time
to time. During the Fourth Quarter RioCan did not acquire any
units. For the year ended December 31, 2013 RioCan acquired and
cancelled 917,700 units at an average price per unit of $24.03
through the NCIB program.
RioCan's Consolidated Financial Statements, Management's
Discussion and Analysis and a Supplemental Information Package for
the three months ended December 31, 2013 are available on RioCan's
website at www.riocan.com.
Conference Call and
Webcast
Interested parties are invited to participate in a conference
call with management on Thursday, February 13, 2014 at 9:00 a.m.
eastern time. You will be required to identify yourself and the
organization on whose behalf you are participating.
In order to participate, please dial 416-340-2218 or
1-866-226-1793. If you cannot participate in the live mode, a
replay will be available until March 13, 2014. To access the
replay, please dial 905-694-9451 or 1-800-408-3053 and enter
passcode 7545823#.
Scheduled speakers include Edward Sonshine, O.Ont. Q.C., Chief
Executive Officer, Fred Waks, President and Chief Operating Officer
and Rags Davloor, Executive Vice President and Chief Financial
Officer. Management's presentation will be followed by a question
and answer period. To ask a question, press "star 1" on a
touch-tone phone. The conference call operator will be notified of
all requests in the order in which they are made, and will
introduce each questioner.
Alternatively, to access the simultaneous webcast, go to the
following link on RioCan's website
http://investor.riocan.com/Investor-Relations/Events-Webcasts/default.aspx
and click on the link for the webcast. The webcast will be archived
24 hours after the end of the conference call and can be accessed
for 120 days.
About RioCan
RioCan is Canada's largest real estate investment trust with a
total capitalization of approximately $13.8 billion as at December
31, 2013. It owns and manages Canada's largest portfolio of
shopping centres with ownership interests in a portfolio of 340
retail properties containing approximately 82 million square feet,
including 47 grocery anchored and new format retail centres
containing 13 million square feet in the United States as at
December 31, 2013. RioCan's portfolio also includes 16 properties
under development in Canada. For further information, please refer
to RioCan's website at www.riocan.com.
Non-GAAP
measures
RioCan's consolidated financial statements are prepared in
accordance with IFRS. Consistent with RioCan's management
framework, management uses certain financial measures to assess
RioCan's financial performance, which are not generally accepted
accounting principles (GAAP) under IFRS. The following measures,
RioCan's Interest, Funds From Operations ("FFO"), Operating Funds
From Operations ("Operating FFO"), Net Operating Income ("NOI"),
Adjusted Earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA"), Adjusted Unit holders Equity,
Same Store NOI, and Same Property NOI, as well as other measures
discussed elsewhere in this release, do not have a standardized
definition prescribed by IFRS and are, therefore, unlikely to be
comparable to similar measures presented by other reporting
issuers. Non GAAP measures should not be considered as alternatives
to net earnings or comparable metrics determined in accordance with
IFRS as indicators of RioCan's performance, liquidity, cash flow,
and profitability. For a full definition of these measures, please
refer to the "Use of Non-GAAP Measures" in RioCan's fourth quarter
and year ended December 31, 2013. RioCan uses these measures to
better assess the Trust's underlying performance and provides these
additional measures so that investors may do the same.
Forward-Looking
Information
This news release contains forward-looking statements within the
meaning of applicable securities laws. These statements include,
but are not limited to, statements made in this News Release
(including the sections entitled "Highlights for 2013", "Financial
Highlights", "Overview of Development Activities" "Portfolio
Stability", "Portfolio Activity - Acquisition and Disposition
Pipeline", and "Liquidity and Capital"), and other statements
concerning RioCan's objectives, its strategies to achieve those
objectives, as well as statements with respect to management's
beliefs, plans, estimates, and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "outlook", "objective",
"may", "will", "would", "expect", "intend", "estimate",
"anticipate", "believe", "should", "plan", "continue", or similar
expressions suggesting future outcomes or events. Such
forward-looking statements reflect management's current beliefs and
are based on information currently available to management. All
forward-looking statements in this News Release are qualified by
these cautionary statements.
These forward-looking statements are not guarantees of future
events or performance and, by their nature, are based on RioCan's
current estimates and assumptions, which are subject to risks and
uncertainties, including those described under "Risks and
Uncertainties" in RioCan's Management's Discussion and Analysis for
the period ended December 31, 2013 and in RioCan's annual
information form dated March 28, 2013, which could cause actual
events or results to differ materially from the forward-looking
statements contained in this News Release. Those risks and
uncertainties include, but are not limited to, those related to:
liquidity and general market conditions, tenant concentrations,
occupancy levels and defaults, access to debt and equity capital,
interest rates, joint ventures/partnerships, the relative
illiquidity of real property, unexpected costs or liabilities
related to acquisitions, construction, environmental matters, legal
matters, reliance on key personnel, unitholder liability, income
taxes, United States of America ("US") investment and currency
risk, and RioCan's qualification as a real estate investment trust
for tax purposes. Material factors or assumptions that were applied
in drawing a conclusion or making an estimate set out in the
forward-looking information may include, but are not limited to: a
stable retail environment; relatively low and stable interest
costs; a continuing trend toward land use intensification in high
growth markets; access to equity and debt capital markets to fund,
at acceptable costs, the future growth program to enable the Trust
to refinance debts as they mature; the availability of purchase
opportunities for growth in Canada and the US; and the impact of
accounting principles adopted by the Trust effective January 1,
2012 under International Financial Reporting Standards ("IFRS").
Although the forward-looking information contained in this News
Release is based upon what management believes are reasonable
assumptions, there can be no assurance that actual results will be
consistent with these forward-looking statements. Certain
statements included in this News Release may be considered
"financial outlook" for purposes of applicable securities laws, and
such financial outlook may not be appropriate for purposes other
than this News Release.
The Income Tax Act (Canada) contains provisions which
potentially impose tax on publicly traded trusts (the "SIFT
Provisions"). However, the SIFT Provisions do not impose tax on a
publicly traded trust which qualifies as a real estate investment
trust ("REIT"). RioCan currently qualifies as a REIT and intends to
continue to qualify for future years. Should this not occur,
certain statements contained in this News Release may need to be
modified.
Except as required by applicable law, RioCan under takes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
RioCan Real Estate Investment TrustRags DavloorExecutive Vice
President & CFO(416) 642-3554
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