Record occupancy, significant deleveraging, and solid
operational and financial performance
NEW
GLASGOW, NS, Nov. 9, 2022
/CNW/ - Crombie Real Estate Investment Trust ("Crombie") (TSX:
CRR.UN) today announced results for its third quarter ended
September 30, 2022. Management will
host a conference call to discuss the results at 11:00 a.m. (EST), November
10, 2022.
"Crombie's record occupancy and solid third quarter operational
and financial performance is the result of steadfast focus on our
long-term strategy in the face of significant external
macroeconomic pressures," said Don
Clow, President & CEO. "The overall quality of our
portfolio has improved through intentional curation, investment in
Empire-related initiatives, and several major development project
completions. I am proud that we have advanced these key strategic
priorities while at the same time prudently improving our balance
sheet and responsibly allocating capital, which have resulted in
notable deleveraging, ample liquidity and significant unencumbered
assets."
THIRD QUARTER SUMMARY
(In thousands of Canadian
dollars, except per unit amounts and as otherwise noted)
Operational Highlights
- Record committed and economic occupancy of 96.8% and 96.2%,
respectively; a 30 and 40 basis point increase compared to the
third quarter of 2021
- Renewals of 152,000 square feet at rents 3.7% above expiring
rates (5.2% at weighted average rent during the renewal term)
- Disposition of five retail assets to third parties and a parcel
of development land to a joint venture for gross proceeds of
$52,126
- Acquisition of one investment property adding 4,000 square feet
of GLA for a total purchase price of $1,350
Financial Highlights
- Property revenue of $103,642, a
2.1% increase from $101,517 in the
third quarter of 2021
- Operating income of $26,410, a
10.7% increase compared to the third quarter of 2021 at
$23,851
- Net property income of $71,574, a
0.4% increase from $71,301 in the
third quarter of 2021
- FFO(1) $52,665 or
$0.30 per unit compared to
$47,830 or $0.29 per unit in the third quarter of 2021
- FFO(1) payout ratio of 75.0% compared to 76.5% in
the same period last year
- AFFO(1) $46,787 or
$0.26 per unit compared to
$41,052 or $0.25 per unit in the third quarter of 2021
- AFFO(1) payout ratio of 84.5% compared to 89.1% in
the same period last year
- Same-asset property cash NOI(1) increased 2.1%
- Record high unencumbered investment properties of $2,200,890, a 50.6% increase from $1,461,775 in the same period last year
- Debt to gross fair value(1)(2) of 42.0%, an
improvement from 47.3% in the same period last year
- Debt to trailing 12 months adjusted EBITDA(1)(2) of
8.50x compared to the third quarter of 2021 at 9.61x
- Available liquidity of $445,372,
a 13.0% decrease from $512,168 in the
third quarter of 2021
(1)
Non-GAAP financial measures used by management to evaluate
Crombie's business performance. See "Cautionary Statements and
Non-GAAP Measures" below for a reconciliation of FFO, FFO payout
ratio, AFFO, AFFO payout ratio, same-asset property cash NOI, debt
to gross fair value, and debt to trailing 12 months adjusted
EBITDA.
|
(2) At
Crombie's proportionate share including joint ventures.
|
Information in this press release is a select summary of results.
This press release should be read in conjunction with Crombie's
Management's Discussion and Analysis for the quarter ended
September 30, 2022 and Consolidated
Financial Statements and Notes for the quarters ended September 30, 2022, and September 30, 2021. Full details on our results
can be found at www.crombie.ca and www.sedar.com.
Financial Results
Crombie's key financial metrics for the three months ended
September 30, 2022 are as
follows:
|
Three months ended
September 30,
|
(In thousands of
Canadian dollars, except per unit amounts and as otherwise
noted)
|
2022
|
2021
|
Variance
|
%
|
Property
revenue
|
$
103,642
|
$
101,517
|
$
2,125
|
2.1 %
|
Property operating
expenses
|
32,068
|
30,216
|
(1,852)
|
(6.1) %
|
Net property
income
|
$
71,574
|
$
71,301
|
$
273
|
0.4 %
|
Operating income
attributable to Unitholders
|
$
26,410
|
$
23,851
|
$
2,559
|
10.7 %
|
Same-asset property
cash NOI (1)
|
$
68,251
|
$
66,819
|
$
1,432
|
2.1 %
|
Funds from operations
("FFO") (1)
|
|
|
|
|
Basic
|
$
52,665
|
$
47,830
|
$
4,835
|
10.1 %
|
Per unit -
Basic
|
$
0.30
|
$
0.29
|
$
0.01
|
3.4 %
|
Payout
ratio(1)
|
75.0 %
|
76.5 %
|
|
(1.5) %
|
Adjusted funds from
operations ("AFFO") (1)
|
|
|
|
|
Basic
|
$
46,787
|
$
41,052
|
$
5,735
|
14.0 %
|
Per unit -
Basic
|
$
0.26
|
$
0.25
|
$
0.01
|
4.0 %
|
Payout
ratio(1)
|
84.5 %
|
89.1 %
|
|
(4.6) %
|
(1)
Same-asset property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO
payout ratio are non-GAAP financial measures used by management to
evaluate Crombie's business performance. See "Cautionary Statements
and Non-GAAP Measures" below for a reconciliation of same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio.
|
Operating income attributable to Unitholders increased by
$2,559, or 10.7%, compared to the
third quarter of 2021 primarily due to higher gain on disposal of
investment properties of $10,738 in
the third quarter of 2022 and lower finance costs from operations
of $2,186, resulting primarily from
lower mortgage interest expense due to mortgage repayments and
dispositions since the third quarter of 2021. General and
administrative expenses decreased by $2,022 due primarily to a reduction in Unit-based
compensation costs resulting from a decrease in Crombie's Unit
price. Additionally, gain on distribution from equity-accounted
investments of $1,000 in the third
quarter of 2022 resulted from cash distributions received from 1600
Davie Limited Partnership in excess of our investment in the joint
venture. The growth in operating income was partially offset by an
increase of $9,161 in impairments and
higher depreciation and amortization of $3,635 compared to the same quarter in 2021 due
to accelerated depreciation recorded on a property scheduled for
demolition in the fourth quarter of 2022. An increase in net
property income of $273 was primarily
due to income of $1,983 from
acquisitions, higher percentage rent of $943 as a result of lease conversions and new
tenants, and increased parking revenue of $425 compared to the same quarter in 2021. This
is offset in part by a decrease of $2,426 in net property income from dispositions
and increased tenant incentive amortization of $608 resulting primarily from new leasing.
Same-asset property cash NOI increased by $1,432, or 2.1%, compared to the third quarter of
2021 primarily due to strong occupancy, higher percentage rent from
increased sales, and increased parking revenue of $425, offset in part by a decrease in lease
termination income of $373, primarily
in the office portfolio. Same-asset property cash NOI adjusted for
the removal of lease termination income increased by 2.7% compared
to the same period in 2021.
The increase in FFO of $4,835 is
primarily due to lower finance costs from operations of
$2,186, driven by lower mortgage
interest expense of $2,741 as a
result of mortgage repayments and dispositions since the third
quarter of 2021, and a decrease in general and administrative
expenses of $2,022 due primarily to a
$1,640 reduction in Unit-based
compensation costs resulting from a decrease in Crombie's Unit
price from September 30, 2021.
Additional increases in income are due to $1,983 from acquisitions since January 1, 2021, higher percentage rent of
$943 resulting from lease conversions and new tenants, and
increased parking revenue of $425.
FFO growth is offset in part by a decrease of $2,426 in net property income from
dispositions.
The improvement in AFFO is primarily due to the same factors
impacting FFO as described above. This is offset in part by the
impact of the increase in the maintenance capital expenditure
charge in the first quarter of 2022 from $0.90 to $1.00 per
square foot of weighted average GLA.
Crombie's key financial metrics for the nine months ended
September 30, 2022 are as
follows:
|
Nine months ended
September 30,
|
(In thousands of
Canadian dollars, except per unit amounts and as otherwise
noted)
|
2022
|
2021
|
Variance
|
%
|
Property
revenue
|
$
311,652
|
$
305,060
|
$
6,592
|
2.2 %
|
Property operating
expenses
|
100,650
|
93,431
|
(7,219)
|
(7.7) %
|
Net property
income
|
$
211,002
|
$
211,629
|
$
(627)
|
(0.3) %
|
Operating income
attributable to Unitholders
|
$
80,082
|
$
76,671
|
$
3,411
|
4.4 %
|
Same-asset property
cash NOI (1)
|
$
202,341
|
$
198,799
|
$
3,542
|
1.8 %
|
Funds from operations
("FFO") (1)
|
|
|
|
|
Basic
|
$
151,633
|
$
138,084
|
$
13,549
|
9.8 %
|
Per unit -
Basic
|
$
0.86
|
$
0.86
|
$
—
|
— %
|
Payout
ratio(1)
|
77.9 %
|
78.2 %
|
|
(0.3) %
|
Adjusted funds from
operations ("AFFO") (1)
|
|
|
|
|
Basic
|
$
132,236
|
$
117,064
|
$
15,172
|
13.0 %
|
Per unit -
Basic
|
$
0.75
|
$
0.73
|
$
0.02
|
2.7 %
|
Payout
ratio(1)
|
89.3 %
|
92.2 %
|
|
(2.9) %
|
(1)
Same-asset property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO
payout ratio are non-GAAP financial measures used by management to
evaluate Crombie's business performance. See "Cautionary Statements
and Non-GAAP Measures" below for a reconciliation of same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio.
|
Operating income attributable to Unitholders increased by
$3,411, or 4.4%, on a year to date
basis primarily driven by lower finance costs from operations of
$7,758 due to lower mortgage interest
expense resulting from mortgage repayments and dispositions since
the third quarter of 2021. A reduction in general and
administrative expenses of $4,635 was
primarily due to a decrease in Unit price and its impact on
Unit-based compensation plans. Additionally, gain on disposal of
investment properties increased by $4,457 over the same period in 2021 and gain on
distribution from equity-accounted investments of $2,933 in 2022 resulted from cash distributions
received from 1600 Davie Limited Partnership in excess of our
investment in the joint venture. The growth in operating income was
offset in part by recognizing an additional $9,161 in impairments than in 2021 and an
increase in depreciation and amortization of $3,887 compared to the same period in 2021 due to
accelerated depreciation recorded on a property scheduled for
demolition in the fourth quarter of 2022. An increase of
$2,697 in loss from equity-accounted
investments, as residential development projects achieved
substantial completion and move toward revenue stabilization, when
revenue earned should exceed expenses, further offset the growth in
operating income. A decrease in net property income of $627 compared to the same period in 2021 is
primarily due to a decrease of $6,800
in net property income from dispositions, a reduction in lease
termination income of $2,547, and
increased tenant incentive amortization of $2,487 as a result of new leasing. This is
partially offset by income of $5,881
from acquisitions, $1,389 in
supplementary income from modernization investments, higher
percentage rent of $1,355 as a result
of lease conversions and new tenants, increased parking revenue of
$1,205, and $1,200 from renewals and new leasing.
On a year to date basis, same-asset property cash NOI increased
by $3,542, or 1.8%, compared to 2021
primarily due to strong occupancy, increased parking revenue of
$1,205, and an increase in
supplemental rents of $1,152 from
modernizations and capital improvements. This is offset in part by
a decrease in lease termination income of $1,759, primarily in our office portfolio.
Same-asset property cash NOI adjusted for the removal of lease
termination income increased by 2.7% compared to the same period in
2021.
Year to date, FFO increased $13,549 primarily driven by lower finance costs
from operations of $7,758, due to
lower mortgage interest expense of $7,550 resulting from mortgage repayments and
dispositions since the third quarter of 2021, and reduced general
and administrative expenses of $4,635, resulting primarily from a decrease in
Unit price and its impact on Unit-based compensation plans of
$4,520. Additional increases in
income are due to $5,881 from
acquisitions, $1,389 in supplementary
income from modernization investments, higher percentage rent of
$1,355 as a result of lease
conversions and new tenants, increased parking revenue of
$1,205, and $1,200 from renewals and new leasing. The
improvement in FFO is offset in part by a decrease of $6,800 in net property income from dispositions
and a reduction in lease termination income of $2,547.
The improvement in AFFO is primarily due to the same factors
impacting FFO as described above. This is offset in part by the
impact of the increase in the maintenance capital expenditure
charge in the first quarter of 2022 from $0.90 to $1.00 per
square foot of weighted average GLA.
Operating Results
|
September 30,
2022
|
June 30,
2022
|
March 31,
2022
|
December 31,
2021
|
September 30,
2021
|
Number of investment
properties (1)
|
290
|
294
|
294
|
284
|
287
|
Gross leasable area
(2)
|
18,331,000
|
18,500,000
|
18,488,000
|
17,861,000
|
18,232,000
|
Economic occupancy
(3)
|
96.2 %
|
95.9 %
|
95.5 %
|
95.6 %
|
95.8 %
|
Committed occupancy
(4)
|
96.8 %
|
96.3 %
|
96.4 %
|
96.2 %
|
96.5 %
|
(1) This
includes properties owned at full and partial interests excluding
joint ventures.
|
(2) Gross
leasable area is adjusted to reflect Crombie's proportionate
interest in partially owned properties, excluding joint
ventures.
|
(3)
Represents space currently under lease contract and rent has
commenced.
|
(4)
Represents current economic occupancy plus completed lease
contracts for future occupancy of currently available
space.
|
|
September 30,
2022
|
June 30,
2022
|
March 31,
2022
|
December 31,
2021
|
September 30,
2021
|
Investment properties,
fair value
|
$ 5,265,000
|
$ 5,273,000
|
$ 5,199,000
|
$ 5,026,000
|
$ 5,096,000
|
Unencumbered investment
properties (1)
|
$ 2,200,890
|
$ 2,155,326
|
$ 2,009,252
|
$ 1,752,927
|
$ 1,461,775
|
Available liquidity
(2)
|
$
445,372
|
$
444,262
|
$
523,159
|
$
507,777
|
$
512,168
|
Debt to gross book
value - cost basis (3)(4)
|
46.2 %
|
46.8 %
|
46.5 %
|
48.9 %
|
51.2 %
|
Debt to gross fair
value (4)(5)(6)
|
42.0 %
|
42.7 %
|
42.5 %
|
45.3 %
|
47.3 %
|
Weighted average
interest rate (7)
|
3.8 %
|
3.8 %
|
3.8 %
|
3.8 %
|
3.8 %
|
Debt to trailing 12
months adjusted EBITDA(4)(5)(6)(8)
|
8.50x
|
8.75x
|
8.72x
|
8.99x
|
9.61x
|
Interest coverage ratio
(5)(6)(8)
|
3.32x
|
3.26x
|
3.27x
|
3.06x
|
3.07x
|
(1)
Represents fair value of unencumbered properties.
|
(2)
Represents the undrawn portion on the credit facilities, excluding
joint facilities with joint operation partners.
|
(3) See
Capital Management note in the Financial Statements.
|
(4)
Calculations for comparative quarters have been restated to include
Crombie's share of debt and assets held in joint
ventures.
|
(5)
Non-GAAP financial measures used by management to evaluate
Crombie's business performance. See "Cautionary Statements and
Non-GAAP Measures" below for a reconciliation of debt to gross fair
value, debt to trailing 12 months adjusted EBITDA, and interest
coverage ratio.
|
(6) See
Debt Metrics section in the Management's Discussion and
Analysis.
|
(7)
Weighted average interest rate is calculated based on interest
rates for all outstanding fixed rate debt.
|
(8) The
2021 calculations have been restated to include Crombie's share of
revenue and expenses in joint ventures.
|
Operations and Leasing
During the quarter, Crombie achieved record economic occupancy
and committed occupancy of 96.2% and 96.8%, respectively. Crombie
renewed 152,000 square feet with an increase of 3.7% over expiring
rents during the quarter. Year to date, new leases increased
occupancy by 286,000 square feet at an average first year rate of
$21.39 per square foot.
Development
Crombie segregates its development pipeline by expected timing.
Near-term projects are financially committed or expected to be
committed within the next two years. Currently, Crombie has five
developments classified as near-term projects. Upon completion,
these projects will total approximately 1,255,000 square feet of
residential GLA (1,730 residential units), 112,000 square feet of
commercial GLA, and 300,000 square feet of retail-related
industrial GLA. The geographical breakdown of GLA in square feet is
as follows: 684,000 in Vancouver;
145,000 in Victoria; 300,000 in
Calgary and 538,000 in
Halifax.
Voilà CFC 3, in Calgary, is
under active construction with the base building work nearing
completion. Building handover to the tenant occurred in late
September 2022, allowing Ocado to
commence their building of the interior grid, including the robotic
grid platform.
Timing estimates are subject to change, as well as other
development risks described in Crombie's third quarter Management's
Discussion and Analysis under "Development" and "Risk
Management".
GRESB Submission
As part of the organization's commitment to sustainability,
Crombie is pleased to have completed its second submission to
GRESB, to the Standing Investments and Development benchmarks.
GRESB awarded Crombie a Green Star for excellence in development.
In 2021, Crombie formalized a Sustainable Development policy to
ensure that properties are designed, developed, and operated with
sustainability in mind. The policy outlines our approach to energy
efficiency, resource conservation, climate action, water
conservation, waste management, green building certification, and
sustainable procurement.
Highlighted Subsequent Events
On November 1, 2022, Crombie
disposed of a 100% interest in a retail property totalling 62,000
square feet. Total proceeds, before closing and transaction costs,
were approximately $108,500. As a
result of this transaction, Crombie expects to realize net proceeds
of approximately $84,000 in the
fourth quarter of 2022.
Conference Call Invitation
Crombie will provide additional details concerning its period
ended September 30, 2022 results on a
conference call to be held Thursday, November 10, 2022,
beginning at 11:00 a.m. (EST).
Accompanying the conference call will be a presentation that will
be available on Crombie's website. To join this conference call,
you may dial (416) 764-8688 or (888) 390-0546. You may also listen
to a live audio webcast of the conference call by visiting the
Investor section of Crombie's website located at www.crombie.ca.
Replay will be available until midnight November 17, 2022 by dialing (416) 764-8677 or
(888) 390-0541 and entering passcode 848660 #, or on the Crombie
website for 90 days after the meeting.
Cautionary Statements and Non-GAAP Measures
Same-asset property cash NOI (SANOI), FFO, AFFO, FFO payout
ratio, AFFO payout ratio, debt to trailing 12 months adjusted
EBITDA, debt to gross fair value, and interest coverage ratio are
non-GAAP financial measures that do not have a standardized meaning
under International Financial Reporting Standards ("IFRS"). These
measures as computed by Crombie may differ from similar
computations as reported by other entities and, accordingly, may
not be comparable to other such entities. Management includes these
measures as they represent key performance indicators to
management, and it believes certain investors use these measures as
a means of assessing Crombie's financial performance. For
additional information on these non-GAAP measures see our
Management's Discussion and Analysis for the three and nine months
ended September 30, 2022.
The reconciliations for each non-GAAP measure included in this
press release are outlined as follows:
Same-Asset Property Cash NOI
Crombie measures certain performance and operating metrics on a
same-asset basis to evaluate the period-over-period performance of
those properties owned and operated by Crombie. "Same-asset" refers
to those properties that were owned and operated by Crombie for the
current and comparative reporting periods. Properties that will be
undergoing a redevelopment in a future period, including adjacent
parcels of land, and those having planning activities underway are
also in this category until such development activities commence
and/or tenant leasing/renewal activity is suspended. Same‐asset
property cash NOI reflects Crombie's proportionate ownership of
jointly operated properties (and excludes any properties held in
joint ventures).
Management uses net property income on a cash basis (property
cash NOI) as a measure of performance as it reflects the cash
generated by properties period-over-period.
Net property income on a cash basis, which excludes non-cash
straight-line rent recognition and amortization of tenant incentive
amounts, is as follows:
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
Net property
income
|
$ 71,574
|
$ 71,301
|
$
273
|
$
211,002
|
$
211,629
|
$
(627)
|
Non-cash straight-line
rent
|
(572)
|
(2,326)
|
1,754
|
(3,784)
|
(7,488)
|
3,704
|
Non-cash tenant
incentive amortization
|
5,795
|
5,187
|
608
|
17,049
|
14,562
|
2,487
|
Property cash
NOI
|
76,797
|
74,162
|
2,635
|
224,267
|
218,703
|
5,564
|
Acquisitions and
dispositions property cash NOI
|
1,916
|
2,214
|
(298)
|
5,502
|
5,982
|
(480)
|
Development property
cash NOI
|
6,630
|
5,129
|
1,501
|
16,424
|
13,922
|
2,502
|
Acquisitions,
dispositions and development property cash NOI
|
8,546
|
7,343
|
1,203
|
21,926
|
19,904
|
2,022
|
Same-asset property
cash NOI
|
$ 68,251
|
$ 66,819
|
$
1,432
|
$
202,341
|
$
198,799
|
$
3,542
|
Funds from Operations (FFO)
Crombie follows the recommendations of the January 2022 guidance of the Real Property
Association of Canada
("REALPAC") in calculating FFO.
The reconciliation of FFO for the three and nine months ended
September 30, 2022 and 2021 is as
follows:
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
Decrease in net assets
attributable to Unitholders
|
$
(11,321)
|
$
(12,436)
|
$ 1,115
|
$
(34,034)
|
$
(33,205)
|
$ (829)
|
Add
(deduct):
|
|
|
|
|
|
|
Amortization of tenant
incentives
|
5,795
|
5,187
|
608
|
17,049
|
14,562
|
2,487
|
Gain on disposal of
investment properties
|
(13,357)
|
(2,619)
|
(10,738)
|
(18,220)
|
(13,763)
|
(4,457)
|
Gain on distribution
from equity accounted investments
|
(1,000)
|
—
|
(1,000)
|
(2,933)
|
—
|
(2,933)
|
Impairment of
investment properties
|
10,400
|
1,239
|
9,161
|
10,400
|
1,239
|
9,161
|
Depreciation and
amortization of investment properties
|
22,387
|
18,758
|
3,629
|
59,753
|
55,922
|
3,831
|
Adjustments for
equity-accounted investments
|
1,248
|
737
|
511
|
3,271
|
1,426
|
1,845
|
Principal payments on
right-of-use assets
|
58
|
57
|
1
|
171
|
167
|
4
|
Internal leasing
costs
|
724
|
620
|
104
|
2,060
|
1,860
|
200
|
Finance costs -
distributions to Unitholders
|
39,513
|
36,578
|
2,935
|
118,143
|
107,922
|
10,221
|
Finance costs (income)
- change in fair value of financial instruments
|
(1,782)
|
(291)
|
(1,491)
|
(4,027)
|
1,954
|
(5,981)
|
FFO as calculated based
on REALPAC recommendations
|
$
52,665
|
$
47,830
|
$ 4,835
|
$ 151,633
|
$ 138,084
|
$
13,549
|
Basic weighted average
Units (in 000's)
|
177,491
|
164,382
|
13,109
|
175,728
|
161,300
|
14,428
|
FFO per Unit -
basic
|
$ 0.30
|
$ 0.29
|
$ 0.01
|
$ 0.86
|
$ 0.86
|
$
—
|
FFO payout ratio
(%)
|
75.0 %
|
76.5 %
|
(1.5) %
|
77.9 %
|
78.2 %
|
(0.3) %
|
Adjusted Funds from Operations (AFFO)
Crombie follows the recommendations of REALPAC's January 2022 guidance in calculating AFFO and has
applied these recommendations to the AFFO amounts included in this
press release and Management's Discussion and Analysis.
The reconciliation of AFFO for the three and nine months ended
September 30, 2022 and 2021 is as
follows:
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
FFO as calculated based
on REALPAC recommendations
|
$
52,665
|
$
47,830
|
$
4,835
|
$
151,633
|
$
138,084
|
$ 13,549
|
Add
(deduct):
|
|
|
|
|
|
|
Straight-line rent
adjustment
|
(572)
|
(2,326)
|
1,754
|
(3,784)
|
(7,488)
|
3,704
|
Straight-line rent
adjustment included in loss from equity-accounted
investments
|
80
|
191
|
(111)
|
353
|
365
|
(12)
|
Internal leasing
costs
|
(724)
|
(620)
|
(104)
|
(2,060)
|
(1,860)
|
(200)
|
Maintenance
expenditures on a square footage basis
|
(4,662)
|
(4,023)
|
(639)
|
(13,906)
|
(12,037)
|
(1,869)
|
AFFO as calculated
based on REALPAC recommendations
|
$ 46,787
|
$ 41,052
|
$
5,735
|
$
132,236
|
$
117,064
|
$ 15,172
|
Basic weighted average
Units (in 000's)
|
177,491
|
164,382
|
13,109
|
175,728
|
161,300
|
14,428
|
AFFO per Unit -
basic
|
$ 0.26
|
$ 0.25
|
$ 0.01
|
$ 0.75
|
$ 0.73
|
$ 0.02
|
AFFO payout ratio
(%)
|
84.5 %
|
89.1 %
|
(4.6) %
|
89.3 %
|
92.2 %
|
(2.9) %
|
Debt Metrics
When calculating debt to gross fair value, debt is defined under
the terms of the Declaration of Trust as obligations for borrowed
money, including obligations incurred in connection with
acquisitions, excluding specific deferred taxes payable, trade
payables, and accruals in the ordinary course of business and
distributions payable. Debt includes Crombie's share of debt held
in equity-accounted joint ventures.
Gross fair value includes investment properties measured at fair
value, including Crombie's share of those held within joint
ventures. All other components of gross fair value are measured at
the carrying value included in Crombie's financial statements.
Crombie's methodology for determining the fair value of investment
properties includes capitalization of trailing 12 months net
property income using biannual capitalization rates from external
property valuators. The majority of investment properties are also
subject to external, independent appraisals on a rotational basis
over a period of not more than four years. Valuation techniques are
more fully described in Crombie's year-end audited financial
statements.
The fair value included in this calculation reflects the fair
value of the properties as at September 30,
2022 and December 31, 2021
respectively, based on each property's current use as a
revenue-generating investment property. As at September 30, 2022, Crombie's weighted average
capitalization rate used in the determination of the fair value of
its investment properties was 5.71%, an increase of 0.06% from
December 31, 2021. Crombie's weighted
average capitalization rate used in the determination of the fair
value of its share of investment properties held in
equity-accounted joint ventures was 3.53% as at September 30, 2022, an increase of 0.23% from
December 31, 2021. For an explanation
of how Crombie determines capitalization rates, see the "Other
Disclosures" section of Crombie's third quarter Management's
Discussion and Analysis, under "Investment Property Valuation" in
the "Use of Estimates and Judgments" section, and the "Risk
Management section of this Management's Discussion and Analysis,
under "Capitalization Rate Risk" in the "Risk Factors Related to
the Business of Crombie" section.
|
September
30,
2022
|
|
December 31,
2021
(1)
|
Fixed rate
mortgages
|
$
940,882
|
|
$
1,073,895
|
Senior unsecured
notes
|
1,125,000
|
|
1,125,000
|
Revolving credit
facility
|
5,989
|
|
9,220
|
Joint operation credit
facility
|
10,176
|
|
9,904
|
Bilateral credit
facility
|
75,000
|
|
10,000
|
Debt held in joint
ventures, at Crombie's share (2) (3)
|
271,882
|
|
254,074
|
Lease
liabilities
|
34,953
|
|
35,352
|
Total debt
outstanding
|
2,463,882
|
|
2,517,445
|
Less: Applicable fair
value debt adjustment
|
—
|
|
(53)
|
Adjusted
debt
|
$
2,463,882
|
|
$
2,517,392
|
|
|
|
|
Investment properties,
fair value
|
$
5,265,000
|
|
$
5,026,000
|
Investment properties
held in joint ventures, fair value, at Crombie's share
(3)
|
453,000
|
|
387,000
|
Other assets, cost
(4)
|
113,052
|
|
102,683
|
Other assets, cost,
held in joint ventures, at Crombie's share (3) (4)
(5)
|
26,435
|
|
18,370
|
Cash and cash
equivalents
|
1,522
|
|
3,915
|
Cash and cash
equivalents held in joint ventures, at Crombie's share
(3)
|
3,904
|
|
4,453
|
Deferred financing
charges
|
8,022
|
|
9,769
|
Interest rate
subsidy
|
—
|
|
(53)
|
Gross fair
value
|
$
5,870,935
|
|
$
5,552,137
|
Debt to gross fair
value
|
42.0 %
|
|
45.3 %
|
(1) Prior
year calculation has been restated to include Crombie's share of
debt and assets held in joint ventures.
|
(2)
Includes Crombie's share of fixed and floating rate mortgages,
construction loans, revolving credit facility, and lease
liabilities held in joint ventures.
|
(3) See the
"Joint Ventures" section in the Management's Discussion and
Analysis.
|
(4) Other
assets exclude tenant incentives and related accumulated
amortization, and accrued straight-line rent receivable.
|
(5) Other
assets held in joint ventures include deferred financing
charges.
|
The following table presents a reconciliation of property revenue
to adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure and
should not be considered an alternative to operating income
attributable to Unitholders, and may not be comparable to that used
by other entities.
As of September 30, 2022, Crombie
has completed a number of developments in joint ventures and, as a
result, in 2022, Crombie changed its methodology in calculating
adjusted EBITDA to include Crombie's share of revenue, operating
expenses, and general and administrative expenses in joint
ventures. Interest service coverage calculations now include
Crombie's share of finance costs - operations in joint ventures.
Prior quarters have been restated to reflect this new
methodology.
|
|
|
Three months
ended
|
|
September 30,
2022
|
June 30,
2022
|
March 31,
2022
|
December 31,
2021
|
September 30,
2021
|
Operating income
attributable to Unitholders
|
$
26,410
|
$
28,424
|
$
25,248
|
$
78,730
|
$
23,851
|
Amortization of tenant
incentives
|
5,795
|
5,690
|
5,564
|
5,249
|
5,187
|
Gain on disposal of
investment properties
|
(13,357)
|
(4,863)
|
—
|
(42,762)
|
(2,619)
|
Gain on distribution
from equity-accounted investments
|
(1,000)
|
—
|
(1,933)
|
(15,525)
|
—
|
Impairment of
investment properties
|
10,400
|
—
|
—
|
1,300
|
1,239
|
Depreciation and
amortization
|
22,744
|
19,222
|
18,879
|
18,805
|
19,109
|
Finance costs -
operations
|
20,884
|
20,762
|
20,745
|
22,639
|
23,070
|
Loss from
equity-accounted investments
|
1,787
|
1,627
|
1,539
|
685
|
923
|
Property revenue in
joint ventures, at Crombie's share
|
3,258
|
2,616
|
2,356
|
2,100
|
1,578
|
Property operating
expenses in joint ventures, at Crombie's share
|
(1,296)
|
(1,002)
|
(903)
|
(724)
|
(695)
|
General and
administrative expenses in joint ventures, at Crombie's
share
|
(31)
|
(21)
|
(150)
|
(32)
|
(47)
|
Taxes -
current
|
—
|
—
|
—
|
163
|
—
|
Adjusted EBITDA
[1]
|
$
75,594
|
$
72,455
|
$
71,345
|
$
70,628
|
$
71,596
|
Trailing 12 months
adjusted EBITDA [3]
|
$
290,022
|
$
286,024
|
$
281,626
|
$
280,057
|
$
276,643
|
|
|
|
|
|
|
Finance costs -
operations
|
$
20,884
|
$
20,762
|
$
20,745
|
$
22,639
|
$
23,070
|
Finance costs -
operations in joint ventures, at Crombie's share
|
2,564
|
2,157
|
1,776
|
1,157
|
1,031
|
Amortization of
deferred financing charges
|
(675)
|
(668)
|
(688)
|
(742)
|
(759)
|
Adjusted interest
expense [2]
|
$
22,773
|
$
22,251
|
$
21,833
|
$
23,054
|
$
23,342
|
|
|
|
|
|
|
Debt outstanding (see
Debt to Gross Fair Value)(1) [4]
|
$
2,463,882
|
$
2,502,845
|
$
2,456,686
|
$
2,517,392
|
$
2,659,702
|
|
|
|
|
|
|
Interest service
coverage ratio {[1]/[2]}
|
3.32x
|
3.26x
|
3.27x
|
3.06x
|
3.07x
|
Debt to trailing 12
months adjusted EBITDA {[4]/[3]}
|
8.50x
|
8.75x
|
8.72x
|
8.99x
|
9.61x
|
(1)
Includes debt held in joint ventures, at Crombie's
share.
|
This press release contains forward-looking statements that reflect
the current expectations of management of Crombie about Crombie's
future results, performance, achievements, prospects, and
opportunities. Wherever possible, words such as "may", "will",
"estimate", "anticipate", "believe", "expect", "intend", and
similar expressions have been used to identify these
forward-looking statements. These statements reflect current
beliefs and are based on information currently available to
management of Crombie. Forward-looking statements necessarily
involve known and unknown risks and uncertainties. A number of
factors, including those discussed in the 2021 annual Management's
Discussion and Analysis under "Risk Management" and the Annual
Information Form for the year ended December
31, 2021 under "Risks", could cause actual results,
performance, achievements, prospects, or opportunities to differ
materially from the results discussed or implied in the
forward-looking statements. These factors should be considered
carefully, and a reader should not place undue reliance on the
forward-looking statements. There can be no assurance that the
expectations of management of Crombie will prove to be correct, and
Crombie can give no assurance that actual results will be
consistent with these forward-looking statements.
Specifically, this document includes, but is not limited to,
forward-looking statements regarding expected timing of
development, each of which may be impacted by ordinary real estate
market cycles, the availability of labour, financing and the cost
of any such financing, capital resource allocation decisions and
general economic conditions, as well as development activities
undertaken by related parties not under the direct control of
Crombie.
About Crombie REIT
Crombie invests in real estate that enriches local communities
and enables long-term sustainable growth. As one of the country's
leading owners, operators, and developers of quality real estate,
Crombie's portfolio primarily includes grocery-anchored retail,
retail-related industrial, and mixed-used residential properties in
Canada's top urban and suburban
markets. As at September 30, 2022,
our portfolio contains 290 income-producing properties comprising
approximately 18.3 million square feet, and a significant pipeline
of future development projects. Learn more at www.crombie.ca.
SOURCE Crombie REIT