TORONTO, ONTARIO--(Marketwire - Nov. 5, 2012) -
This news release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.
DUNDEE REIT (TSX:D.UN) today announced its financial results for the three and nine months ended September 30, 2012, posting gains across its key metrics, including per unit funds from operations and adjusted funds from operations as well as comparative property growth.
HIGHLIGHTS
SELECTED FINANCIAL INFORMATION | |||||||||||||
(unaudited) | Three Months Ended | Nine Months Ended | |||||||||||
($000's except unit and per unit amounts) | September 30, 2012 |
June 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2011 |
||||||||
Investment properties revenue (1) | $ | 187,327 | $ | 168,008 | $ | 109,150 | $ | 494,565 | $ | 277,862 | |||
Net operating income ("NOI") (1)(2) | 105,367 | 95,846 | 62,579 | 279,968 | 159,372 | ||||||||
Funds from operations ("FFO") (3) | 72,879 | 66,633 | 42,832 | 194,583 | 111,187 | ||||||||
Adjusted funds from operations ("AFFO") (4) | 61,286 | 55,961 | 36,580 | 163,900 | 96,628 | ||||||||
Investment properties value (1) | 6,895,755 | 6,939,138 | |||||||||||
Debt (1) | 3,580,610 | 3,648,702 | |||||||||||
Per unit data (basic) | |||||||||||||
FFO | $ | 0.72 | $ | 0.72 | $ | 0.68 | $ | 2.18 | $ | 1.95 | |||
AFFO | 0.61 | 0.61 | 0.58 | 1.84 | 1.70 | ||||||||
Distributions | 0.55 | 0.55 | 1.65 | 1.65 | |||||||||
Units (period end) | |||||||||||||
REIT Units, Series A | 96,984,321 | 96,587,015 | 61,574,976 | ||||||||||
REIT Units, Series B | 16,316 | 16,316 | 16,316 | ||||||||||
LP Class B Units, Series 1 | 3,522,835 | 3,517,370 | 3,499,953 | ||||||||||
Total number of units | 100,523,472 | 100,120,701 | 65,091,245 | ||||||||||
Portfolio gross leasable area (square feet) (5) | 22,365,500 | 27,582,915 | 18,844,422 | ||||||||||
Occupied and committed space (5) | 95.1 | % | 95.6 | % | 95.8 | % | |||||||
See footnotes on page 3. |
"This was a remarkable quarter for Dundee REIT," said Michael Cooper, CEO. "With the sale our industrial portfolio, our strategic transition into a pure-play office REIT is now complete. And with another quarter of AFFO and comparative property NOI growth, our results clearly demonstrate the performance capabilities of our portfolio."
Senior management will host a conference call to discuss the results tomorrow, November 6, 2012 at 9:00 a.m. (ET). To access the call, please dial: 416-849-5525 or toll free at 1-866-200-6965 and using passcode 77440651#. A taped replay of the call will be available for 30 days by dialling 646-216-7204 or 1-866-206-0173 and using passcode 276890#. To access the conference call via webcast, please go to Dundee REIT's website at www.dundeereit.com and click on the link for News & Events, then click on Calendar of Events. The webcast will be archived for 30 days.
FINANCIAL HIGHLIGHTS
PORTFOLIO ACTIVITY
During the quarter, the Trust completed the disposition of five non-strategic properties for total gross proceeds of approximately $70.9 million. The Trust did not complete any acquisitions during the third quarter.
Three months ended September 30, 2012 | Property type |
Disposed GLA (sq. ft.) |
Gross Proceeds ($000) (1) |
Mortgages discharged ($000) |
Date disposed |
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West Chambers, Edmonton | office | 92,560 | 24,200 | 6,786 | August 15, 2012 | |||
4250 Albert Street, Regina | retail | 41,238 | 9,600 | 5,126 | August 15, 2012 | |||
885 Don Mills, Toronto | office | 59,449 | 8,975 | 4,547 | August 30, 2012 | |||
12804 137th Avenue, Edmonton | retail | 54,514 | 18,900 | 12,633 | September 14, 2012 | |||
Bisma Centre, Calgary | office | 27,496 | 9,200 | - | September 19, 2012 | |||
Total | 275,257 | $ | 70,875 | $ | 29,092 |
(1) | Gross proceeds before transaction costs. |
Subsequent to quarter-end, the Trust essentially completed its transition into a pure-play office REIT with the sale of 77 industrial properties to Dundee Industrial REIT for total consideration of approximately $575.9 million, including approximately $136.3 million in cash, the assumption of debt and a 44.1% retained interest in Dundee Industrial REIT. The Trust also completed the sale of three other non-core assets for total gross proceeds of approximately $16.1 million.
In addition, subsequent to quarter-end, the Trust acquired a co-owner's interest in nine suburban properties in Edmonton for $72.7 million.
OPERATIONAL HIGHLIGHTS
Portfolio occupancy remains ahead of national industry average at 95.1% - The overall percentage of occupied and committed space across the Trust's comparative property portfolio and its total portfolio remained strong at 95.1%, consistent with that of Q2 2012 and remaining well above the national industry average of 91.7%.
Leasing activity - During the quarter, leasing activity included 298,600 square feet of new leasing and 569,200 square feet of renewals. And, while vacancy at period-end had increased by 19,500 square feet, this was more than offset by 189,300 square feet of future commitments.
Average in-place net rents 12% below market rents - The portfolio average in-place rent was $17.18 per square foot, up from $17.04 at June 30, 2012, reflecting increases across all markets. In addition, portfolio average in-place rents remain approximately 12% below estimated market rents.
CAPITAL INITIATIVES
September 30, 2012 |
December 31, 2011 |
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Financing activities | ||||
Average effective interest rate(1) | 4.48 | % | 4.96 | % |
Level of debt (debt-to-gross book value)(2) | 50.5 | % | 49.0 | % |
Interest coverage ratio(3) | 2.8 times | 2.6 times | ||
Proportion of total debt due in current year | 1.7 | % | 7.5 | % |
Debt - average term to maturity (years) | 5.3 | 5.2 | ||
Variable rate debt as percentage of total debt | 2.1 | % | 1.3 | % |
(1) | Average effective interest rate is calculated as the weighted average interest rate of all interest bearing debt, including debt related to equity accounted investments. |
(2) | Level of debt is determined as total debt, including debt related to equity accounted investments, divided by total assets (including total assets of equity accounted investments and adjusted for accumulated amortization on property and equipment). |
(3) | The interest coverage ratio for the period, including results from equity accounted investments, is calculated as net rental income plus interest and fee income, less general and administrative expenses, all divided by interest expense on debt. |
Other information
Information appearing in this news release is a select summary of results. The condensed consolidated financial statements and management's discussion and analysis for the Trust, as well as its Supplementary Information Package are available at www.dundeereit.com and on www.sedar.com.
Dundee REIT is an unincorporated, open-ended real estate investment trust. Dundee REIT is focused on owning, acquiring, leasing and managing well-located, high-quality central business district and suburban office properties. Its portfolio currently comprises approximately 22.4 million square feet of gross leasable area in major urban centres across Canada. Dundee REIT's portfolio is well diversified by geographic location and tenant mix. For more information, please visit www.dundeereit.com.
FOOTNOTES
(1) | Metrics include results and balances of equity accounted investments and exclude discontinued operations. |
(2) | NOI - net rental income, excluding net rental income from properties held for sale and discontinued operations. |
(3) | FFO - net income, adjusted for items including fair value adjustments on investment properties and financial instruments, gains on sale, and amortization of equipment. |
(4) | AFFO - FFO adjusted for amortization of debt costs, deferred unit compensation expense, straight line rent and the Trust's estimates of normalized leasing costs and normalized non-recoverable recurring capital expenditures. |
(5) | Excludes development and redevelopment properties and properties held for sale, and the current period also excludes discontinued operations - industrial properties. |
Non-IFRS supplemental measures
NOI, FFO and AFFO are key measures of performance used by real estate operating companies; however, they are not defined by International Financial Reporting Standards ("IFRS"), do not have standard meanings and may not be comparable with other industries or income trusts.
Forward-looking information
This press release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dundee REIT's control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate functions. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dundee REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in Dundee REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dundee REIT's website at www.dundeereit.com.
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