Crombie REIT reports second quarter fiscal 2016 results

NEW GLASGOW, NS, Aug. 3, 2016

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

• Portfolio fair value of $4.7 billion.
• Completed acquisitions totalling 2,537,000 square feet for $508,183 before closing and transaction costs, including 35 retail properties; 50% interest in three distribution centres; and, two parcels of development land adjacent to existing Crombie properties and invested $58,823 in the renovation and expansion of 10 existing Sobeys anchored properties.  
• Completed dispositions of 12 retail properties totalling 846,000 square feet for proceeds of approximately $151,700 before closing and transaction costs.
• Funds From Operations ("FFO"):
  • FFO, as adjusted, for the six months ended June 30, 2016 increased 0.5% to $75,216; or $0.56 per unit Diluted, a decrease of $0.01 per unit from the six months ended June 30, 2015.
  • FFO, as adjusted, for the three months ended June 30, 2016 decreased 4.7% to $37,256; or $0.28 per unit Diluted, a decrease of $0.02 per unit from the three months ended June 30, 2015.
  • FFO, as adjusted, payout ratio of 79.6% for the six months ended June 30, 2016 compared to 77.7% for the same period in 2015.
  • FFO, as adjusted, payout ratio of 82.0% for the three months ended June 30, 2016 compared to 74.5% for the same period in 2015.
• Adjusted Funds From Operations ("AFFO"):
  • AFFO for the six months ended June 30, 2016 increased 1.3% to $63,479; or $0.48 per unit Diluted, unchanged from the AFFO per unit for the six months ended June 30, 2015.
  • AFFO for the three months ended June 30, 2016 decreased 4.0% to $31,432; or $0.24 per unit Diluted, a decrease of $0.01 per unit from the three months ended June 30, 2015.
  • AFFO payout ratio of 94.3% for the six months ended June 30, 2016 compared to 92.9% for the same period in 2015.
  • AFFO payout ratio of 97.2% for the three months ended June 30, 2016 compared to 88.9% for the same period in 2015.
• Same-asset property cash NOI for the six months ended June 30, 2016 increased by 1.9% or $2,174 ($115,728 compared to $113,554 for the six months ended June 30, 2015). Increase in same-asset property cash NOI for the three months ended June 30, 2016 of 0.5% or $289 ($57,693 compared to $57,404 for the three months ended June 30, 2015).
• Property revenue for the six months ended June 30, 2016 of $195,975, an increase of $8,567 or 4.6% over the six months ended June 30, 2015. Second quarter property revenue of $101,031, increased $6,124, or 6.5% over second quarter 2015.
• Occupancy, on a committed basis, was 94.1% at June 30, 2016 compared with 93.6% at December 31, 2015 and 92.4% at June 30, 2015.
• Crombie's renewal activity during the six months ended June 30, 2016 included:
  • Renewals on 357,000 square feet of 2016 expiring leases at an average rate of $15.02 per square foot, an increase of 7.5% over the expiring lease rate.
  • Renewals on 59,000 square feet of 2017 and later expiring leases at an average rate of $26.85 per square foot, an increase of 9.0% over the expiring lease rate.
• New leases and expansions increased occupancy by 102,000 square feet at June 30, 2016 at an average first year rate of $16.31 per square foot. 182,000 square feet of space was committed at June 30, 2016 at an average first year rate of $12.19 per square foot.
• Debt to gross book value (fair value basis) was 50.6% at June 30, 2016, compared to 52.1% at June 30, 2015.
• Strong 2.89 times EBITDA interest coverage for the six months ended June 30, 2016. Weighted average interest rate on mortgages reduced to 4.57% from 4.76% at June 30, 2015.
• Recognized $10,344 in property revenue related to settlement proceeds from Target Canada for three leases vacated in May 2015.

Donald E. Clow, FCPA, FCA, President and CEO commented: "We are delighted with the significant progress achieved toward our long term strategic plan during the first six months of the year. We successfully acquired over $560 million in new properties and completed investments in expansions and improvements of existing properties, including $418 million through our strategic relationship with Sobeys and Empire. We also disposed of 12 retail properties for proceeds in excess of $150 million. These acquisitions and dispositions increased our urban footprint and further strengthen what is already one of Canada's strongest retail portfolios. We have enhanced our major development property pipeline to 19 properties by acquiring five more in Q2 with estimated investment of approximately $2-3 billion over the next decade. Lastly, we are pleased to have accomplished the above while improving our financial condition and lowering our debt to GBV (Fair value) to 50.6%."

Financial Highlights

Crombie's key financial metrics for the three and six months ended June 30, 2016 are as follows: