QUÉBEC, Aug. 3, 2017 /CNW Telbec/
- Cominar Real Estate Investment Trust ("Cominar" or the
"REIT") (TSX: CUF.UN) announced today its results for
the second quarter of fiscal 2017.
Highlights for the Quarter Ended June
30, 2017
- Suspension of the distribution reinvestment plan
- Decreased monthly distribution from $0.1225 per unit to $0.095 per unit
"Although the distribution reinvestment plan is a useful
financing tool for our development projects, the temporary
suspension of the distribution reinvestment plan, beginning with
the distribution of August 2017
payable in September 2017, is the
result of the market value of units not reflecting the intrinsic
value of Cominar", said Gilles
Hamel, Executive Vice President and Chief Financial Officer
of Cominar.
"We have adjusted our monthly distribution to $0.095 per unit to give back to Cominar all the
flexibility in our operations and growth, and reduce our payout
ratio below 90%", added Mr. Dallaire, Chief Executive Officer
of Cominar.
PRESENTATION OF RESULTS
For the quarter ended June 30, 2017,
operating revenues were $210.0 million compared to $217.3 million for the corresponding period
of 2016.
Net operating income(1) was $109.5 million compared to $116.1 million for the corresponding period
of 2016, up $3.6 million from
the previous quarter.
Net income for the second quarter of 2017 was
$65.8 million compared to
$69.8 million for the
corresponding period of 2016, up $6.1 million from the previous quarter.
Recurring funds from operations(1) for the
second quarter of 2017 were $64.9 million, while they were $71.4 million for the corresponding period of
2016 and $61.0 million for the
previous quarter. Fully diluted recurring funds from operations
per unit(1) amounted to $0.35 for the second quarter of 2017, up
$0.02 from the previous quarter.
Recurring adjusted funds from operations(1)
for the second quarter of 2017 were $56,3 million compared to $62,9 million for the corresponding period
of 2016, up $3.8 million from
the previous quarter. Fully diluted per unit, they amounted to
$0.31 for the second quarter of 2017,
up $0.02 from the previous
quarter.
Recurring adjusted cash flows from
operations(1) for the second quarter of 2017
were $57.1 million, compared to
$63.5 million for the
corresponding period of 2016, up $3.8 million from the previous quarter.
Fully diluted per unit, they amounted to $0.31 for the second quarter of 2017, up
$0.02 from the previous quarter.
For the second quarter of 2017, operating revenues, net
operating income, recurring funds from operations, recurring
adjusted funds from operations as well as recurring adjusted cash
flows from operations decreased compared to the corresponding
period of 2016, due to the dispositions of properties completed in
2016 and 2017 and to a decrease in the physical occupancy rate for
the office segment.
(1) Non-IFRS
financial measure. See the reconciliation to closest IFRS
measure.
|
FINANCIAL SITUATION
As at June
30, 2017, Cominar's debt ratio stood at 52.7%,
compared to 52.4% as at December 31, 2016. At the end of the
second quarter of 2017, total assets reached $8.4 billion and the unencumbered income
properties amounted to $3.6 billion.
LEASING ACTIVITY
During the first half of 2017, our
leasing efforts allowed us to renew 49.8% of the total leasable
area expiring during fiscal 2017. This situation resulted from a
more aggressive leasing policy that allowed Cominar to sign new
leases for 2.3 million square feet and to renew
4.0 million square feet, together representing 78.2% of the
spaces maturing in 2017.
Growth in the average net rent of renewed leases was 0.6% for
the first half of 2017.
Occupancy rate was 92.4% as at June 30,
2017, stable from 92.4% as at December 31, 2016.
SUBSEQUENT EVENTS
On July 13, 2017, Cominar completed
the sale of an industrial and mixed-use property located in the
Québec area for a total of $2.2 million.
On August 3, 2017, Cominar
temporarily suspended the distribution reinvestment plan, beginning
with the distribution of August 2017
payable in September 2017. If Cominar
decides to resume the plan in the future, the unitholders who were
registered in the plan at the time of its suspension and who are
still registered at the time of its resumption shall automatically
resume their participation in the plan.
On August 3, 2017, Cominar
decreased the monthly distribution from $0.1225 per unit to $0.095 per unit, beginning with the
distribution of August 2017 payable
in September 2017.
RESULTS OF OPERATIONS
|
Quarter
|
Year-to-date (six
months)
|
For the periods
ended June 30
|
2017
|
2016
|
% Δ
|
2017
|
2016
|
% Δ
|
|
($000)
|
($000)
|
|
($000)
|
($000)
|
|
|
|
|
|
|
|
|
Operating
revenues
|
209,955
|
217,262
|
(3.4)
|
423,911
|
438,686
|
(3.4)
|
Operating
expenses
|
(100,468)
|
(101,193)
|
(0.7)
|
(208,541)
|
(208,947)
|
(0.2)
|
Net operating income
(1)
|
109,487
|
116,069
|
(5.7)
|
215,370
|
229,739
|
(6.3)
|
Finance
charges
|
(41,755)
|
(42,710)
|
(2.2)
|
(84,053)
|
(84,920)
|
(1.0)
|
Trust administrative
expenses
|
(4,925)
|
(3,980)
|
23.7
|
(9,409)
|
(7,977)
|
18.0
|
Share of joint
ventures' net income
|
3,273
|
701
|
366.9
|
4,104
|
1,412
|
190.7
|
Income
taxes
|
(243)
|
(293)
|
(17.1)
|
(462)
|
(386)
|
19.7
|
Net income
|
65,837
|
69,787
|
(5.7)
|
125,550
|
137,868
|
(8.9)
|
|
(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 (six
months)
|
For the periods
ended June 30
|
2017
|
2016
|
|
2017
|
2016
|
|
($000)
|
($000)
|
|
($000)
|
($000)
|
|
|
|
|
|
|
Net income
|
65,837
|
69,787
|
|
125,550
|
137,868
|
+ Deferred income
taxes
|
243
|
293
|
|
462
|
386
|
+ Initial and
re-leasing salary costs
|
908
|
775
|
|
1,782
|
1,436
|
- Change in
fair value of investment properties – Cominar's proportionate
share
|
(2,284)
|
—
|
|
(2,284)
|
—
|
+ Capitalizable
interest on properties under development – joint
ventures
|
198
|
504
|
|
400
|
946
|
Recurring funds
from operations(1)(2)
|
64,902
|
71,359
|
|
125,910
|
140,636
|
|
|
|
|
|
|
- Provision for
leasing costs
|
(6,336)
|
(5,975)
|
|
(12,587)
|
(11,600)
|
- Recognition
of leases on a straight-line basis(1)
|
(648)
|
(455)
|
|
(1,375)
|
(1,655)
|
- Capital
expenditures – maintenance of rental income generating
capacity
|
(1,606)
|
(2,021)
|
|
(3,163)
|
(3,439)
|
|
|
|
|
|
|
Recurring adjusted
funds from operations(1)(2)
|
56,312
|
62,908
|
|
108,785
|
123,942
|
|
(1) Including
Cominar's proportionate share in joint ventures.
|
(2) Non-IFRS
financial measure.
|
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 (six
months)
|
For the periods
ended June 30
|
2017
|
2016
|
|
2017
|
2016
|
|
($000)
|
($000)
|
|
($000)
|
($000)
|
|
|
|
|
|
|
Cash flows
provided by operating activities as per the condensed interim
consolidated financial statements
|
11,546
|
23,214
|
|
47,299
|
61,846
|
+ Adjustments –
investments in joint ventures(1)
|
973
|
668
|
|
1,515
|
1,285
|
- Provision for
leasing costs
|
(6,336)
|
(5,975)
|
|
(12,587)
|
(11,600)
|
+ Initial and
re-leasing salary costs
|
908
|
775
|
|
1,782
|
1,436
|
+ Changes in non-cash
working capital items
|
50,802
|
45,440
|
|
73,858
|
72,645
|
- Capital
expenditures – maintenance of rental income generating
capacity
|
(1,606)
|
(2,021)
|
|
(3,163)
|
(3,439)
|
- Amortization
of deferred financing costs and others
|
(754)
|
(777)
|
|
(1,487)
|
(1,562)
|
+ Amortization of
fair value adjustments on assumed mortgages payable
|
1,389
|
1,682
|
|
2,809
|
3,486
|
+ Capitalizable
interest on properties under development – joint
ventures
|
198
|
504
|
|
400
|
946
|
Recurring adjusted
cash flows from operations(4)
|
57,120
|
63,510
|
|
110,426
|
125,043
|
|
|
|
|
|
|
Payout
ratio(2)
|
118.5%
|
96.7%
|
|
122.5%
|
99.3%
|
Cash flows payout
ratio(2)(3)
|
89.4%
|
96.7%
|
|
92.0%
|
99.3%
|
|
|
(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.
|
ADDITIONAL FINANCIAL INFORMATION
Cominar's condensed interim consolidated financial statements and
interim management's discussion and analysis for the second quarter
ended June 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 AUGUST 4,
2017
On Friday, August 4,
2017 at 11 a.m. (ET), Cominar's management will hold a
conference call to present the results for the second quarter ended
June 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, August 4, 2017 at 2 p.m. to Friday, August
18, 2017 at 11:59 p.m., by
dialing 1 888 390-0541 followed by this code:
186242#.
PROFILE AS AT AUGUST 3,
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 525 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