Partners Real Estate Investment Trust (TSX VENTURE: PAR.UN)
announced today results for the three months and year ended
December 31, 2010. 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.
FOURTH QUARTER HIGHLIGHTS:
-- Same property NOI up 4.2% over third quarter of 2010
-- Occupancies improve to 95.7%
-- Strong leasing activities continue during and subsequent to quarter
-- Acquisition of Wellington Southdale Plaza for $21 million strengthens
portfolio
-- Successful $8 million equity issue completed on December 30, 2010
-- New $25 million 8% unsecured subordinated debentures offering, closed
March 8, 2011
-- Six additional properties to be acquired in March 2011for $31 million to
make solid contribution
-- Focus on growing Unitholder value through accretive acquisitions and
enhanced property performance continues
Solid Operating Performance
Occupancy levels as at December 31, 2010 were higher at 95.7%
compared to 95.2% at the end of the third quarter of 2010 and 95.1%
at the end of last year. The movement in leasing and renewals in
the fourth quarter and year ended December 31, 2010 offset lease
expiries during the period. Overall occupancy was also positively
impacted by the acquisition of Wellington Southdale Plaza on
December 22, 2010 with occupancy of 97.2%. Management continues to
focus on pursuing and closing new leases and renewals.
Net Operating Income ("NOI") increased to $2.7 million in the
fourth quarter of 2010 from $2.5 million in the same prior-year
period due primarily to a 31% increase at the REIT's Chateauguay
property. For the year ended December 31, 2010 NOI declined to
$10.0 million from $10.7 million in 2009 due to decreases at the
REIT's Mega Centre, Cornwall Square and Place Val Est
properties.
Funds from Operations ("FFO") in 2010 include non-recurring
other transaction costs consisting of non-capital expenses
resulting from a strategic review process that occurred in the
second quarter of the year, as well as expenses incurred on
property acquisitions no longer pursued in the fourth quarter. FFO
excluding non-recurring other transaction costs were $0.9 million
($0.04 per unit) in the fourth quarter of 2010, consistent with the
fourth quarter of the prior year. FFO excluding non-recurring other
transaction costs in 2010 was $3.4 million ($0.16 per unit)
compared to $4.2 million ($0.23 per unit) last year. The decline is
due primarily to a $170,000 decrease in revenue from the property
portfolio, a $528,000 increase in operating costs, and a $211,000
increase in interest expense. The change in per unit amounts is due
to the significant 40% and 18% increase in the weighted average
number of units outstanding in the fourth quarter and year ended
December 31, 2010 respectively.
"We were pleased with our performance in the fourth quarter as
we continued to make solid progress with our leasing and renewal
activities," commented Adam Gant, Chief Executive Officer. "Looking
ahead, we expect to see occupancies continue to improve while our
active acquisition program adds to our cash flows and strengthens
our portfolio."
Strong Leasing Activity
For the year ended December 31, 2010, the portfolio had lease
expiries of 89,000 square feet, while new or renewed leases of
105,000 square feet were entered into during the year. The average
annual rental rate on the new leases is slightly lower than the
expired leases due primarily to new leases for short-term tenants
put in place until negotiations with longer-term national tenants
were completed.
The average occupancy rate for the portfolio was 95.7% at
December 31, 2010 compared with 95.1% at December 31, 2009 and
95.2% at September 30, 2010. The improved occupancy over the
previous quarter was mainly due to the acquisition of Wellington
Southdale Plaza as well as a new short-term tenant at
Chateauguay.
Solid Financial Position
As at December 31, 2010 the REIT's ratio of debt to gross book
value improved to 59.8% from 62.7% at the prior year end. Interest
coverage and debt service coverage ratios remained a conservative
1.7 times and 1.4 times respectively.
In December 2010 the REIT assumed a first mortgage loan in the
amount of $9.7 million on the acquisition of Wellington Southdale
Plaza. The loan matures in 2016 and bears an interest at a rate of
6.0%. The amortization period of the loan from the date of
acquisition was 18.9 years. The REIT also acquired a second
mortgage on the property in the amount of $2.3 million maturing in
2016 bearing an interest rate of 4.57%. The amortization period of
the loan from the date of acquisition (December 22, 2010) was 25
years. In addition, the REIT acquired a first mortgage loan in
December 2010 in the amount of $25.5 million secured by a mortgage
on the Cornwall property. The loan matures in 2015, has a 25 year
amortization period, and bears an interest rate of 4.90%.
Overall, the REIT's mortgage portfolio incurs a weighted average
interest rate of 5.59% with a weighted average term to maturity of
4.9 years compared to a weighted average term to maturity for
existing property leases of seven years.
Key Acquisition
On December 22, 2010 the REIT completed the acquisition of the
Wellington Southdale Plaza located in London, Ontario, an 87,000
square foot open format, single-storey neighbourhood retail plaza
situated on 6.97 acres of land in the heart of London's Wellington
Road retail node. The centre consists of five separate structures
anchored by Empire Theatres and includes such strong national
tenants as Dollarama, Moxie's Grill, 2001 Audio Video, Harvey's,
Jones New York, Dairy Queen and Pizza Pizza. The centre has
undergone extensive renovations in 2000, 2004 and 2006, and
generates annual NOI of approximately $1.6 million. The purchase
price of approximately $20.3 million was satisfied by cash and the
assumption of an existing mortgage of approximately $9.7 million,
maturing in July 2016, with an effective interest rate of 4.4%.
Subsequent Events
On February 25, 2011, the REIT filed a final short form
prospectus to issue $25 million aggregate principal amount of 8.0%
extendible convertible unsecured subordinated debentures at a price
of $1,000 per $1,000 principal amount of debentures. The debentures
mature on March 31, 2016 and bear interest at an annual rate of
8.0% payable semi-annually, in arrears, on March 31 and September
30 in each year commencing on September 30, 2011. The offering was
completed on March 8, 2011.
The proceeds of the debentures will be used in part to purchase
a portfolio five properties in Manitoba and one in Quebec
aggregating approximately 104,000 square feet of gross leaseable
area. The properties are 100% occupied primarily by Shoppers Drug
Mart. The purchase price will be approximately $31.0 million to be
satisfied by the assumption of existing mortgages of approximately
$17.0 million with the balance in cash. The purchase is expected to
close on March 15, 2011. The properties currently generate NOI of
approximately $2.3 million on an annualized basis.
"We are clearly executing on our commitment to grow, strengthen
and further diversify our property portfolio," Mr. Gant concluded.
"We continue to seek out and evaluate strategic acquisitions that
meet our strict criteria and that will be accretive to our FFO. We
are confident our growth will continue, and that all our value
enhancing activities will generate strong returns for our
Unitholders over the long term."
Investor Conference Call
A conference call to discuss the recent operating and financial
results, as well as acquisitions to be completed on or before March
15, 2011, will be hosted by Adam Gant, Chief Executive Officer and
Patrick Miniutti, President and Chief Operating Officer, on
Tuesday, March 15, 2011 at 4.00 pm ET. The telephone numbers for
the conference call are: Local: (416) 915-8110 and North American
Toll Free: (866) 838-1265.
The telephone numbers to listen to the call after it is
completed (Instant Replay) are local (416) 915-1035 or North
American toll free (866) 245-6755. The Passcode for the Instant
Replay is 541967#. The Instant Replay will be available until
midnight, March 22, 2011. The call will also be archived on the
REIT's website at www.partnersreit.com.
Financial Highlights
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($ and units in 000s, except per unit amounts) Year ended
Dec. 31,
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Q4 2010 Q3 2010 Q4 2009 2010 2009
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Revenues 4,648 4,106 4,191 16,948 17,118
Portfolio Occupancy 95.7% 95.1% 95.1% 95.7% 95.1%
Net Operating Income (NOI) 2,672 2,512 2,544 10,043 10,740
Funds from Operations (FFO) 752 813 801 2,328 4,186
FFO per Unit (diluted) $0.03 $0.03 $0.04 $0.11 $0.23
FFO, adjusted (1) 924 875 801 3,365 4,186
FFO, adjusted (1) per Unit
(diluted) $0.04 $0.04 $0.04 $0.16 $0.23
Net Income (Loss) (681) (621) (608) (3,473) (1,772)
Net Income (Loss) per Unit
(diluted) ($0.03) ($0.03) ($0.03) ($0.16) ($0.10)
Distributions Declared 1,100 1,030 740 3,614 2,942
Distributions Declared per Unit
(diluted) $0.04 $0.044 $0.04 $0.16 $0.16
Cash Distributions (2) 952 868 675 3,178 2,436
Cash Distributions per Unit
(diluted) (2) $0.037 $0.037 $0.037 $0.14 $0.13
Weighted avg units outstanding
(diluted) 25,850 23,522 18,440 21,624 18,284
Debt to Gross Book Value 59.8% 62.7%
Interest Coverage Ratio 1.70 1.88
Debt Service Coverage Ratio 1.38 1.57
Weighted Average Interest Rate (3) 5.59% 5.87%
Weighted Average Term to Maturity 4.9 yrs 5.3 yrs
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(1) Excludes non-recurring other transaction costs.
(2) Represents distributions to unitholders net of the distribution
reinvestment plan.
(3) Represents the weighted average interest rate for secured debt excluding
the credit facility with a floating rate of interest.
For the complete fourth quarter 2010 financial statements and
Management's Discussion and Analysis, please visit www.sedar.com or
www.partnersreit.com.
About Partners REIT
Partners REIT is a growth-oriented real estate investment trust,
which currently owns (directly or indirectly) eleven retail
properties located in Ontario and Quebec, aggregating approximately
1.2 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) 595-9398
www.partnersreit.com
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