2021 THIRD QUARTER - HIGHLIGHTS
- FFO1 per unit of
$0.28 for the quarter compared to$0.25 for the same period in 2020. Excluding$1.1 million of consulting fees spent on the strategic review process, FFO adjusted per unit was$0.29 . FFO per unit includes the positive impact of a partial reversal of last quarter and last year credit losses provisions in the amount of$2.5 million - AFFO1 per unit of
$0.19 for the quarter compared to$0.17 for the same period in 2020. Excluding$1.1 million of consulting fees spent on the strategic review process, AFFO adjusted per unit was$0.20 . AFFO per unit includes the positive impact of a partial reversal of last quarter and last year credit losses provisions in the amount of$2.5 million - AFFO payout ratio1 of 47.4% for the quarter compared to 70.6% for the same period in 2020
- Same property NOI1 increase of 6.2% for the quarter, including a decrease of (5.3)% for the office segment, an increase of 19.6% for the retail segment and an increase of 10.5% for the industrial and flex segment
- Rent collection of 97.1% for the quarter (including amounts to be received from government agencies), slightly better than the 2021 second quarter rent collection of 96.3% after the same number of days post quarter end. As an indication, as of today, rent collection for the second quarter of 2021 now stands at 98.5%.
- Expected credit losses of
$(0.9) million or (0.6)% of operating revenues for the quarter, mainly due to partial reversals of prior periods, of which$(0.2) million for office ($0.9 million in 2020),$(0.2) million for retail ($7.0 million in 2020) and$(0.5) million for industrial and flex ($0.2 million in 2020) - In-place occupancy rate decreased slightly from 91.7% as at
December 31, 2020 to 91.4% at quarter end - New and renewal leasing represented 101.3% of 2021 lease maturities
- Growth in the average net rent of renewed leases during the third quarter stood at 9.5%, driven by a 28.1% increase in the industrial segment, a 8.3% increase in the office segment and a (1.4)% decrease in the retail segment. Growth in the average net rent of renewed leases for the year ending
December 31, 2021 stood at 8.3% - As at
September 30, 2021 , available liquidity of$341.0 million consisted of$325.7 million of availability under our credit facilities and$15.3 million of cash and cash equivalents - Debt ratio was 55.1% as at
September 30, 2021 , down from 55.3% as atDecember 31, 2020 - On
October 24, 2021 , Cominar announced that it has entered into an arrangement agreement to be acquired byIris Acquisition II LP , an entity created by a consortium led byCanderel Real Estate Property Inc. and includingFrontFour Capital Group LLC , Artis REIT and partnerships managed by theSandpiper Group , for a consideration of$11.75 in cash per unit. The transaction will become effective only, among other, if it is approved by at least 66 2/3% of the votes cast by unitholders at a special meeting of unitholders called to consider the transaction. Closing of the transaction is expected to occur during the first quarter of 2022
"Following the extensive Strategic Review Process, and based on the recommendation of the independent Trustees of the Board, we are pleased to have reached an outcome that provides full and fair value to our unitholders," said
FINANCIAL AND OPERATING HIGHLIGHTS
Cominar's third quarter of 2021 financial performance has been negatively impacted by the COVID-19 pandemic.
Net Income : Net income for the quarter ended
Same Property NOI1 ("SPNOI"): 2021 third quarter SPNOI increased by
When compared to corresponding period of 2020, the contribution of our office portfolio as a percentage of SPNOI for the quarter ended
Expected credit losses: For the quarter ended
FFO1: FFO for the quarter ended
AFFO1: AFFO for the quarter ended
Occupancy: As at
Leasing activity: The retention rate for 2021 was 69.2% at the end of the third quarter compared to 65.1% for previous year's comparable period. Average net rent on 3.7 million square feet of lease renewals for the year ending
BALANCE SHEET AND LIQUIDITY HIGHLIGHTS
Debt ratio: The debt ratio was 55.1% as at
Debt to EBITDA1 : As at
Unencumbered asset to unsecured debt ratio: As at
Secured debt to gross book value: Was 38.3% as at
As at
INVESTMENT HIGHLIGHTS
For the nine-month period ended
COVID-19 PANDEMIC UPDATE
Our collection rate for the third quarter of 2021 was 97.1% including amounts to be collected from government agencies, slightly better than the second quarter of 2021 rent collection rate of 96.3% after the same number of days post quarter end. As an indication, as of today, rent collection for the second quarter of 2021 stands at 98.5%.
Expected credit losses for the third quarter of 2021 amounted to
STRATEGIC REVIEW PROCESS
On
NON-IFRS FINANCIAL MEASURES
Cominar's consolidated financial statements are prepared in accordance with IFRS. Management uses a number of measures, which are not standardized under IFRS and should not be construed as an alternative to financial measures calculated in accordance with IFRS. Cominar uses those measures to better assess its performance. Cominar's proportionate share, same property net operating income, funds from operations (FFO), adjusted funds from operations (AFFO), debt ratio and debt to EBITDA 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. These non-IFRS financial measures are more fully defined and discussed in Cominar's interim management's discussion and analysis for the three and nine-month periods ended
RESULTS OF OPERATIONS
Quarter | Year-to-date (nine months) | ||||||
Periods ended | 2021 ¹ | 2020 ¹ | 2021 ² | 2020 ² | |||
$ | $ | $ | $ | ||||
Operating revenues | 161,684 | 162,505 | 495,683 | 495,164 | |||
Operating expenses | (74,231) | (81,589) | (236,321) | (255,933) | |||
Net operating income | 87,453 | 80,916 | 259,362 | 239,231 | |||
Finance charges | (33,358) | (33,575) | (99,577) | (109,739) | |||
Trust administrative expenses | (4,617) | (4,579) | (17,470) | (12,761) | |||
Change in fair value of investment properties | (506) | (45) | (130,136) | (319,468) | |||
Share of joint ventures' net income (loss) | 1,256 | 1,588 | (2,867) | (5,310) | |||
Transaction costs | (127) | (161) | (337) | (5,298) | |||
Impairment of goodwill | — | — | — | (15,721) | |||
Net income (loss) before income taxes | 50,101 | 44,144 | 8,975 | (229,066) | |||
Current income taxes | — | 1 | — | 66 | |||
Net income (loss) and comprehensive income (loss) | 50,101 | 44,145 | 8,975 | (229,000) | |||
Office Portfolio | 23,505 | 26,093 | (10,601) | 28,260 | |||
Retail Portfolio | 19,749 | 13,795 | (217,902) | (208,960) | |||
Industrial and Flex Portfolio | 23,300 | 20,076 | 292,679 | 7,117 | |||
Corporate | (16,453) | (15,819) | (55,201) | (55,417) | |||
Net income (loss) and comprehensive loss | 50,101 | 44,145 | 8,975 | (229,000) |
1 | Quarter ended |
2 | In addition to the quarter events explained above, nine-month period ended |
The decrease in operating revenues according to the condensed interim consolidated financial statements in the third quarter of 2021 compared with the corresponding quarter of 2020 resulted mainly from a decrease in the in-place occupancy rate and a decrease in project management revenues in our office portfolio and a decrease in the average net rent of renewed leases in our retail portfolio, partly offset by an increase in the average net rent of renewed leases and an increase in the in-place occupancy rate in our industrial and flex portfolio.
The decrease in operating expenses according to the condensed interim consolidated financial statements in the third quarter of 2021 compared with the corresponding quarter of 2020 resulted mainly from a decrease of
Finance charges were down
Finally, excluding strategic alternatives consulting fees, Trust administrative expenses decreased by
SAME PROPERTY NET OPERATING INCOME
Same property NOI is a non-IFRS measure used by Cominar to provide an indication of the period-over-period operating profitability of the same property portfolio, that is, Cominar's ability to increase revenues, manage costs, and generate organic growth. The same property NOI includes the results of properties owned by Cominar as at
Quarter | Year-to-date (nine months) | ||||||||||||
Periods ended | 2021 ² | 2020 | 2021 ² | 2020 | |||||||||
$ | $ | % Δ | $ | $ | % Δ | ||||||||
Property type | |||||||||||||
Office | 33,912 | 35,793 | (5.3) | 101,425 | 104,448 | (2.9) | |||||||
Retail | 27,706 | 23,162 | 19.6 | 83,581 | 70,758 | 18.1 | |||||||
Industrial and flex | 26,475 | 23,960 | 10.5 | 76,472 | 69,478 | 10.1 | |||||||
Same property NOI — Cominar's proportionate share 1 | 88,093 | 82,915 | 6.2 | 261,478 | 244,684 | 6.9 | |||||||
Properties sold, acquired and under development in 2020 and 2021 | 1,554 | 530 | 193.2 | 4,664 | 2,119 | 120.1 | |||||||
NOI — Cominar's proportionate share 1 | 89,647 | 83,445 | 7.4 | 266,142 | 246,803 | 7.8 | |||||||
NOI — Financial statements | 87,453 | 80,916 | 8.1 | 259,362 | 239,231 | 8.4 | |||||||
NOI — Joint ventures | 2,194 | 2,529 | (13.2) | 6,780 | 7,572 | (10.5) |
1 Refer to section "Non-IFRS financial measures" in this press release. |
2 Periods ended |
Third quarter of 2021 SPNOI increased 6.2% when compared with the corresponding quarter of 2020. This increase resulted mainly from the decrease of expected credit losses, partly offset by a decrease in operating revenues.
FUNDS FROM OPERATIONS (FFO) AND ADJUSTED FUNDS FROM OPERATIONS (AFFO)
FFO is a non-IFRS measure which represents a standard real estate benchmark used to measure an entity's performance, and is calculated by Cominar as defined by REALpac as net income (calculated in accordance with IFRS) adjusted for, among other things, changes in the fair value of investment properties, deferred taxes and income taxes related to a disposition of properties, derecognition and impairment of goodwill, initial and re-leasing salary costs, adjustments relating to the accounting of joint ventures and transaction costs incurred upon a business combination or a disposition of properties. Management believes FFO to be a useful earnings measure as it adjusts net income for items that are not related to the trend in occupancy levels, rental rates and property operating costs.
AFFO is a non-IFRS measure which, by excluding from the calculation of FFO the rental income arising from the recognition of leases on a straight-line basis, the investments needed to maintain the property portfolio's capacity to generate rental income and a provision for leasing costs is calculated as defined by REALpac. Management believes AFFO provides a meaningful measure of Cominar's capacity to generate steady profits.
The following table presents a reconciliation of net income (loss), as determined in accordance with IFRS, and funds from operations and adjusted funds from operations:
Quarter | Year-to-date (nine months) | ||||||||
Periods ended | 2021 ¹ | 2020 ¹ | 2021 ² | 2020 ² | |||||
$ | $ | $ | $ | ||||||
Net income (loss) | 50,101 | 44,145 | 8,975 | (229,000) | |||||
Initial and re-leasing salary costs | 450 | 990 | 1,740 | 2,836 | |||||
Change in fair value of investment properties 3 | 506 | 45 | 136,953 | 329,471 | |||||
Capitalizable interest on properties under development — joint ventures | 48 | 96 | 144 | 369 | |||||
Transaction costs | 127 | 161 | 337 | 5,298 | |||||
Impairment of goodwill | — | — | — | 15,721 | |||||
FFO 3,4 | 51,232 | 45,437 | 148,149 | 124,695 | |||||
Provision for leasing costs | (8,400) | (8,057) | (24,833) | (22,486) | |||||
Recognition of leases on a straight-line basis 3 | (396) | 423 | (995) | 397 | |||||
Capital expenditures — maintenance of rental income generating capacity | (7,000) | (6,045) | (20,250) | (16,950) | |||||
AFFO 3,4 | 35,436 | 31,758 | 102,071 | 85,656 | |||||
Per unit information: | |||||||||
FFO (FD) 4, 5 | 0.28 | 0.25 | 0.81 | 0.68 | |||||
AFFO (FD) 4, 5 | 0.19 | 0.17 | 0.56 | 0.47 | |||||
Weighted average number of units outstanding (FD) 5 | 182,995,067 | 182,844,264 | 182,963,637 | 182,870,811 | |||||
Payout ratio of AFFO 4, 5 | 47.4 | % | 70.6 | % | 48.2 | % | 102.1 | % | |
FFO - Office portfolio | 24,270 | 26,902 | 72,306 | 73,300 | |||||
FFO - Retail portfolio | 19,871 | 13,989 | 58,845 | 39,837 | |||||
FFO - Industrial and flex portfolio | 23,497 | 20,268 | 65,237 | 56,604 | |||||
FFO - Corporate | (16,406) | (15,722) | (48,239) | (45,046) | |||||
FFO | 51,232 | 45,437 | 148,149 | 124,695 | |||||
AFFO - Office portfolio | 16,009 | 19,681 | 56,891 | 52,809 | |||||
AFFO - Retail portfolio | 15,230 | 10,316 | 47,358 | 29,025 | |||||
AFFO - Industrial and flex portfolio | 20,604 | 17,450 | 59,282 | 48,867 | |||||
AFFO - Corporate | (16,407) | (15,689) | (61,460) | (45,045) | |||||
AFFO | 35,436 | 31,758 | 102,071 | 85,656 |
1 | Quarter ended |
2 | In addition to the quarter events explained above, the nine month period ended |
3 | Including Cominar's proportionate share in joint ventures. |
4 | Refer to section "Non-IFRS financial measures" in this press release. |
5 | Fully diluted. |
FFO and AFFO for quarter ended
For the quarters ended
OCCUPANCY RATES
Total | |||||||||||||||||||
Committed | In-Place | Committed | In-Place | Committed | In-Place | Committed | In-Place | ||||||||||||
Property type | |||||||||||||||||||
Office | 88.2 | % | 85.3 | % | 96.3 | % | 95.4 | % | 89.8 | % | 88.5 | % | 90.3 | % | 88.2 | % | |||
Retail | 91.5 | % | 87.1 | % | 91.8 | % | 86.9 | % | 87.9 | % | 74.2 | % | 91.5 | % | 86.6 | % | |||
Industrial and flex | 97.3 | % | 96.6 | % | 97.3 | % | 96.6 | % | — | — | 97.3 | % | 96.6 | % | |||||
Portfolio total | 93.5 | % | 91.4 | % | 94.9 | % | 92.5 | % | 89.6 | % | 86.4 | % | 93.7 | % | 91.4 | % |
SUBSEQUENT EVENT
On
Under the terms of the Arrangement Agreement, subject to required approvals, the Purchaser will acquire, for a consideration of
The Transaction will become effective only, among other, if it is approved by at least 66 2/3% of the votes cast by unitholders at a special meeting of unitholders called to consider the Transaction on or about
As part of the Transaction, Cominar has agreed that distributions for October, November and December, 2021 will be suspended. If the Transaction has not closed by
The Arrangement Agreement includes customary provisions relating to non-solicitation, subject to customary "fiduciary out" provisions that entitle the Board to consider and, subject to certain conditions, accept a superior proposal if the Purchaser does not match the superior proposal. A termination fee of
As part of the financial advisory agreement between Cominar,
ADDITIONAL FINANCIAL INFORMATION
Cominar's condensed interim consolidated financial statements and interim management's discussion and analysis for the third quarter of 2021 are filed with SEDAR at sedar.com and are available on Cominar's website at cominar.com.
CONFERENCE CALL ON
On
PROFILE AS AT
Cominar is one of the largest diversified real estate investment trusts in
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements with respect to Cominar and its operations, strategy, financial performance and financial position. 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 and the use of conditional and future tenses. 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.
______________ |
1 Refer to section "Non-IFRS financial measures" in this press release. |
SOURCE
© Canada Newswire, source