Crombie REIT reports third quarter fiscal 2016 results

NEW GLASGOW, NS, Nov. 8, 2016

Third 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 2,617,000 square feet for $539,833 before closing and transaction costs, including 36 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 14 retail properties totalling 915,000 square feet for proceeds of approximately $163,050 before closing and transaction costs.
• Funds From Operations ("FFO"):
  • FFO, as adjusted, for the nine months ended September 30, 2016 increased 8.7% to $120,783; or $0.87 per unit diluted, an increase of $0.03 or 3.5% per unit from the nine months ended September 30, 2015.
  • FFO for the three months ended September 30, 2016 increased 25.5% to $45,567; or $0.31 per unit diluted, an increase of $0.03 or 10.9% per unit from the three months ended September 30, 2015.
  • FFO, as adjusted, payout ratio of 76.8% for the nine months ended September 30, 2016 compared to 78.6% for the same period in 2015.
  • FFO payout ratio of 72.2% for the three months ended September 30, 2016 compared to 80.3% for the same period in 2015.
• Adjusted Funds From Operations ("AFFO"):
  • AFFO for the nine months ended September 30, 2016 increased 9.6% to $102,287; or $0.74 per unit diluted, an increase of $0.03 or 4.3% per unit from the nine months ended September 30, 2015.
  • AFFO for the three months ended September 30, 2016 increased 26.4% to $38,808; or $0.26 per unit diluted, an increase of $0.03 or 11.7% per unit from the three months ended September 30, 2015.
  • AFFO payout ratio of 90.7% for the nine months ended September 30, 2016 compared to 93.6% for the same period in 2015.
  • AFFO payout ratio of 84.8% for the three months ended September 30, 2016 compared to 95.0% for the same period in 2015.
• Same-asset property cash NOI for the nine months ended September 30, 2016 increased by 2.5% or $4,280 ($174,739 compared to $170,459 for the nine months ended September 30, 2015). Increase in same-asset property cash NOI for the three months ended September 30, 2016 of 3.7% or $2,106 ($59,011 compared to $56,905 for the three months ended September 30, 2015).
• Property revenue for the nine months ended September 30, 2016 of $294,732, an increase of $17,713 or 6.4% over the nine months ended September 30, 2015. Third quarter property revenue of $98,757, increased $9,146, or 10.2% over third quarter 2015.
• Occupancy, on a committed basis, was 94.2% at September 30, 2016 compared with 93.6% at December 31, 2015 and 93.2% at September 30, 2015.
• Crombie's renewal activity during the nine months ended September 30, 2016 included:
  • Renewals on 400,000 square feet of 2016 expiring leases at an average rate of $16.56 per square foot, an increase of 8.8% over the expiring lease rate.
  • Renewals on 172,000 square feet of 2017 and later expiring leases at an average rate of $17.51 per square foot, an increase of 4.0% over the expiring lease rate.
• New leases and expansions increased occupancy by 223,000 square feet at September 30, 2016 at an average first year rate of $15.76 per square foot. 132,000 square feet of space was committed at September 30, 2016 at an average first year rate of $10.03 per square foot.
• Debt to gross book value (fair value basis) was 50.5% at September 30, 2016, compared to 52.3% at September 30, 2015.
• Interest service coverage for the nine months ended September 30, 2016 was 2.92 times EBITDA. Weighted average interest rate on mortgages reduced to 4.54% from 4.76% at September 30, 2015.
• Recognized $10,344 in property revenue during the second quarter of 2016 related to settlement proceeds from Target Canada for three leases vacated in May 2015. This amount has been adjusted out of FFO for the nine months ended September 30, 2016.

Donald E. Clow, FCPA, FCA, President and CEO commented: "Our third quarter results reflect improvements from all of our key strategic initiatives. To date in 2016, we have successfully completed the accretive acquisition of $600 million in new properties and investments in expansions and improvements of existing properties, including over $440 million through our strategic relationship with Sobeys and Empire. We also disposed 14 retail properties for approximately $160 million. This acquisition and disposition activity, along with strong leasing activity and continued land use intensification investments, helped deliver solid financial performance. Our operational improvements led to a reduction in our AFFO payout ratio to 84.8% in the quarter and 90.7% year to date. We are encouraged by our current momentum and excited to be commencing our first Major Development project in 2017. I would also like to take this opportunity to welcome Jason Shannon, President and Chief Operating Officer of Shannex Incorporated, as a valued recent appointee to our Board of Trustees."

Financial Highlights

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