Agellan Commercial Real Estate Investment Trust Releases Second Quarter Results

TORONTO, Aug. 2, 2013 /CNW/ - AGELLAN COMMERCIAL REAL ESTATE INVESTMENT TRUST (the "REIT") (TSX:ACR.UN) is pleased to report its financial results for the three and six month periods ended June 30, 2013. For 2013 the REIT will be comparing its results to the 2013 Forecast of Financial Information ("Forecast") disclosed in the REIT's offering prospectus dated January 17, 2013 ("Prospectus") which is available on the SEDAR website at www.sedar.com.

Summary of Financial Information:



FINANCIAL AND OPERATIONAL HIGHLIGHTS (in 000's)   January 25, 2013 June 30, 2013
       
Summary of Operational Information      
Number of Properties                             23                        24
Gross Leasable Area ("GLA") (in 000's)   4,210 4,310
Occupancy % (Current)   91% 92%
Average lease term to maturity (years)                            4.4                       4.5
       
Summary of Financial Information      
Gross Book Value   $430,984 $480,674
Debt   $243,695 $267,037
Debt to Gross Book Value   57% 56%
Interest Coverage   N/A                       3.3
Weighted average mortgage interest rate   4.0% 3.8%
       
  For the year to date period ending June 30, 2013
  Actual Forecast Variance
Total property and property related revenue $25,102 $24,865 $237
Net Operating Income ("NOI") $15,152 $14,719 $433
Funds from Operations ("FFO") $9,853 $9,374 $479
Adjusted Funds from Operations ("AFFO") $7,135 $6,920 $215
       
Basic FFO per unit $0.51 $0.48 $0.03
Basic AFFO per unit $0.37 $0.35 $0.02
Distributions per unit $0.34 $0.34 $0.00
       
Payout Ratio 92%    
Units outstanding at period-end: 19,403,536    
Weighted average Units outstanding 19,334,978    

(1) Forecast figures have been prorated to reflect the REIT's actual operational period to date, being January 25, 2013 to June 30, 2013.

Highlights of the Quarter:

  • On June 12, 2013, the REIT acquired 11000 Corporate Centre Drive, Houston, Texas ("Beltway 8 Corporate Centre II") for a total purchase price of USD $18.25 million excluding acquisition costs, representing an implied capitalization rate of 8.16%. The property is a two-storey commercial office facility located in the fast growing Techway and Energy Corridor in Houston, Texas. The property has approximately 101,000 square feet of gross leasable area, and is 100% occupied by three tenants.  Constructed in 2003, the building is part of a larger corporate office park which has attracted many investment grade tenants. The lead tenant, National Oilwell Varco, is S&P rated "A", and will occupy approximately 75% of the property until 2020.
  • On June 28, 2013, the REIT completed an early lease renewal of IBM Canada's premises comprising 102,099 square feet at Parkway Place for an additional ten years at market rates.  IBM Canada's renewal premises comprises both office and data centre space.  This space does not include approximately 22,000 square feet of additional space outside of the building's GLA which is used to support IBM's data centre space.  The early renewal extends the life of the lease until 2025.  In addition, the REIT has reduced the scope of the prior restrictive covenant in favour of IBM Canada, which allows for greater leasing flexibility moving forward.
  • On July 8, 2013, subsequent to the end of the second quarter, the REIT completed an early lease renewal with CH2M Hill Canada for one additional year at market rates. CH2M Hill Canada occupies 57,713 square feet at Parkway Place. CH2M Hill Canada's lease now matures in March 2018.
  • Subsequent to the end of the second quarter, the REIT entered into two new leases at Parkway Place for a combined 36,289 square feet, resulting in a reduction of approximately 36% of the original 101,000 square feet of vendor lease space at Parkway Place.
  • Operating results for the three month period ended June 30, 2013 were generally in line with management's expectations and assumptions used in the REIT's Forecast included in the Prospectus, with occupancy increasing from 90.7% to 92.3%.
  • AFFO for the three month period ended June 30, 2013 was $4,212, against forecasted AFFO of $4,112, favourable by $100, or 2.4%, due primarily to higher than anticipated revenue and interest savings.
  • During the three month period ended June 30, 2013, the REIT declared distributions of $0.06458 per Unit on April 15, 2013, May 22, 2013 and June 18, 2013 consistent with its annualized target of $0.775 per Unit.

"For the second consecutive quarter, our results demonstrate our ability to drive leasing and deliver both internal and external growth in our portfolio" says Frank Camenzuli, Chief Executive Officer of the REIT. "Moving forward, we will continue to focus on leasing in both Canada and the US to drive AFFO growth, and work towards our long term goals of decreasing our payout and leverage ratios."

The REIT ended its second quarter with a debt ratio of 56%, comprised of a combination of fixed and floating rate debt. The weighted average interest rate on the REIT's debt is 3.8%. Refinancing is not a primary focus of 2013, with no mortgages maturing during the year, and no debt scheduled to mature until 2015.  The REIT has approximately $10 million undrawn on its credit facility.

Senior management will host a conference call to discuss the results on Wednesday, August 7, 2013 at 3:00 p.m. EST. In order to participate, please dial 1-416-340-2217 or 1-866-696-5910 and enter participant pass code: 4526238. You will be required to identify yourself and the organization on whose behalf you are participating. For operator assistance during the call, please press *0.

If you cannot participate on August 7, 2013, a replay of the conference call will be available by dialing 1-905-694-9451 or 800-408-3053 and entering participant pass code: 3880896. The replay will be available until August 21, 2013.

Other information:

Information appearing in this news release is a select summary of results. The consolidated financial statements along with management's discussion and analysis for the REIT are available at www.agellancommercialreit.com and on www.sedar.com.

The REIT is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been created for the purpose of acquiring and owning industrial, office and retail properties in select major urban markets in the United States and Canada.

The REIT's current portfolio aggregates approximately 4.3 million square feet of gross leasable area in 24 properties. The properties are primarily located in Texas, Ontario and the U.S. Midwest. The REIT's portfolio is well diversified by geographic location, asset class and tenant mix.

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. These Non-IFRS measures are more fully defined and discussed in the REIT's Management Discussion and Analysis for the period ended June 30, 2013, which is available on SEDAR at www.sedar.com.

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 the 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; the REIT's ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate functions. The REIT's 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. The 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 the REIT's filings with securities regulators, including its latest annual information form and MD&A.

SOURCE Agellan Commercial Real Estate Investment Trust




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