Crombie Reit reports fourth quarter and fiscal 2016 results

NEW GLASGOW, NS, Feb. 22, 2017

Fourth quarter 2016 Highlights (In thousands of CAD dollars, except per unit amounts and as otherwise noted).

• Funds From Operations ("FFO"):
  • FFO, as adjusted, for the year ended December 31, 2016 increased 11.2% to $166,235; or $1.17 per unit diluted, an increase of $0.04 per unit or 3.9% from the year ended December 31, 2015.
  • FFO for the three months ended December 31, 2016 increased 18.6% to $45,452; or $0.30 per unit diluted, an increase of $0.01 per unit or 5.1% from the three months ended December 31, 2015.
  • FFO, as adjusted, payout ratio of 75.6% for the year ended December 31, 2016 compared to 78.0% for the same period in 2015.
  • FFO payout ratio of 72.6% for the three months ended December 31, 2016 compared to 76.3% for the same period in 2015.
• Adjusted Funds From Operations ("AFFO"):
  • AFFO for the year ended December 31, 2016 increased 12.0% to $140,739; or $1.00 per unit diluted, an increase of $0.04 per unit or 4.6% from the year ended December 31, 2015.
  • AFFO for the three months ended December 31, 2016 increased 19.0% to $38,452; or $0.26 per unit diluted, an increase of $0.01 per unit or 5.3% from the three months ended December 31, 2015.
  • AFFO payout ratio of 89.3% for the year ended December 31, 2016 compared to 92.8% for the same period in 2015.
  • AFFO payout ratio of 85.8% for the three months ended December 31, 2016 compared to 90.5% for the same period in 2015.
• Same-asset property cash NOI for the year ended December 31, 2016 increased 4.2% or $9,393 ($234,710 compared to $225,317 for the year ended December 31, 2015). Increase in same-asset property cash NOI for the three months ended December 31, 2016 of 9.2% or $5,203 ($61,785 compared to $56,582 for the three months ended December 31, 2015).
• Portfolio fair value of $4.8 billion, an increase of $800 million over 2015.
• Completed acquisitions totalling 2,652,000 square feet for $573,833 before closing and transaction costs, including 38 retail properties; a 50% interest in three distribution centres; two parcels of development land adjacent to existing Crombie properties and a 50% interest in an additional development property; and, invested $58,823 in the renovation and expansion of 10 existing Sobeys anchored properties.
• Completed dispositions of 19 retail properties totalling 1,211,000 square feet for proceeds of approximately $195,550 before closing and transaction costs.
• Property revenue for the year ended December 31, 2016 of $400,001, an increase of $30,135 or 8.1% over the year ended December 31, 2015. Fourth quarter property revenue of $105,269 increased $12,422, or 13.4%, over fourth quarter 2015.
• Occupancy, on a committed basis, was 94.4% at December 31, 2016 compared with 94.2% at September 30, 2016 and 93.6% at December 31, 2015.
• Crombie's renewal activity during the year ended December 31, 2016 included:
  • Renewals on 499,000 square feet of 2016 expiring leases at an average rate of $16.96 per square foot, an increase of 9.9% over the expiring lease rate.
  • Renewals on 222,000 square feet of 2017 and later expiring leases at an average rate of $17.05 per square foot, an increase of 5.3% over the expiring lease rate.
• New leases and expansions increased occupancy by 290,000 square feet at December 31, 2016 at an average first year rate of $15.05 per square foot. 132,000 square feet of space was committed at December 31, 2016 at an average first year rate of $12.51 per square foot.
• Debt to gross book value (fair value basis) was 50.3% at December 31, 2016, compared to 52.5% at December 31, 2015.
• Interest service coverage for the year ended December 31, 2016 was 2.97 times EBITDA. Weighted average interest rate on mortgages reduced to 4.46% from 4.62% at December 31, 2015.
• Recognized $14,172 in property revenue during the year ended December 31, 2016 related to settlement proceeds from Target Canada for three leases vacated in May 2015 and from Best Buy/Future Shop related to one vacated lease. These amounts have been adjusted out of FFO for the year ended December 31, 2016.

Donald E. Clow, FCPA, FCA, President and CEO commented: "2016 was a breakout year for Crombie as we improved the quality of our portfolio by investing over $600 million in urban and suburban growth and divested almost $200 million of non-core assets. We achieved record AFFO of $1.00 per unit and strong FFO and AFFO per unit growth of 3.9% and 4.6% respectively. Our AFFO payout ratio finished the year at 89.3% with Q4 improving to 85.8%.

Occupancy finished the year at 94.4% with strong leasing momentum and healthy renewal rents (+9.9%) achieved on 2016 renewals. Same-asset cash NOI grew 4.2% during 2016 and our financial condition improved with year-end leverage at 50.3%. Significant recent mortgage financings will deliver long-term interest savings and substantial liquidity to fund future growth. We are very excited by the extraordinary quality of our mixed use development pipeline with 2017 being the launching point to further diversify, urbanize and drive AFFO growth and net asset value."

Financial Highlights

Crombie's key financial metrics for the three months and year ended December 31, 2016 are as follows: