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14.11.2016 16:30
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H&R REIT Announces Third Quarter 2016 Results and an Increase in Distributions to $1.38 Per Annum
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TORONTO, Nov. 14, 2016
TORONTO, Nov. 14, 2016 /CNW/ - H&R Real Estate Investment Trust ("H&R") and H&R Finance Trust (collectively, "the Trusts") (TSX: HR.UN; HR.DB.D; HR.DB.E and HR.DB.H) today announced their combined financial results for the three and nine months ended September 30, 2016.
Financial Highlights
| | 3 months ended September 30 | 9 months ended September 30 | ||||||
| 2016 | 2015 | 2016 ARIVA.DE Börsen-GeflüsterKurse
| 2015 | |||||
| Rentals from investment properties (millions) | $297.3 | $297.1 | $890.5 | $892.1 | ||||
| Property operating income (millions) | $198.7 | $200.8 | $562.4 | $571.4 | ||||
| Same-Asset property operating income (cash basis) (millions)(1) | $196.7 | $196.1 | $592.2 | $586.0 | ||||
| Net income before income taxes (millions) | $157.2 | $178.4 | $407.7 | $411.0 | ||||
| Funds from Operations ("FFO") (millions)(2) | $136.9 | $144.3 | $441.4 | $427.1 | ||||
| FFO per Stapled Unit (basic) | $0.46 | $0.49 | $1.48 | $1.46 | ||||
| FFO per Stapled Unit (diluted) | $0.45 | $0.49 | $1.46 | $1.44 | ||||
| Cash provided by operations (millions) | $226.1 | $184.2 | $535.2 | $537.4 | ||||
| Distributions per Stapled Unit | $0.33 | $0.33 | $1.01 | $1.01 | ||||
| Payout ratio per Stapled Unit (as a % of FFO) | 71.7% | 67.3% | 68.2% | 69.2% | ||||
| | |
| (1) | Per the Trusts' interests. |
| (2) | The Trusts' combined MD&A includes a reconciliation of FFO to net income. Readers are encouraged to review the reconciliation in the combined MD&A. |
Financial results have been effected by net asset dispositions of $431.7 million during the 21 months ended September 30, 2016 and the reduction of debt from 46.2% of total assets at December 31, 2015 to 44.8% at September 30, 2016. The decrease in net income before income taxes for the three and nine months ended September 30, 2016 as compared to the respective periods in 2015 is primarily due to the net asset dispositions, fair value adjustments on financial instruments and the gain on foreign exchange, partially offset by the fair value adjustment on real estate assets. FFO was $0.46 and $1.48 per Stapled Unit for the three and nine months ended September 30, 2016, respectively, compared to $0.49 and $1.46 per Stapled Unit for the three and nine months ended September 30, 2015, respectively. Excluding the income from lease termination settlements and other non-recurring items, FFO would have been $0.46 and $1.41 per Stapled Unit for the three and nine months ended September 30, 2016, respectively, compared to $0.47 and $1.44 per Stapled Unit for the three and nine months ended September 30, 2015, respectively.
Operating Highlights
Occupancy as at September 30, 2016 was 95.9% compared to 96.0% as at September 30, 2015. Leases representing only 5.0% of total rentable area will expire during the remainder of 2016 and 2017, excluding leases in Lantower Residential. H&R's average remaining lease term to maturity as at September 30, 2016 was 9.8 years.
Development Highlights
Construction is progressing on the development of 1,871 luxury residential rental units in Long Island City, NY ("LIC Project"), in which H&R has a 50% interest. The total budget at the 100% ownership level is expected to be approximately U.S. $1.2 billion with occupancy in the first tower scheduled to begin in late 2017. As at September 30, 2016, H&R's total equity investment in the LIC Project was U.S. $260.7 million. The remaining costs to complete the LIC Project are U.S. $593.2 million which will be funded through a U.S. $640.0 million construction financing facility. Approximately 99.3% of total hard costs and 88.1% of total project costs have been fixed. Upon completion and stabilized occupancy, the first year's contribution to FFO from the LIC Project at H&R's interest is expected to be U.S. $23.0 million which equates to an 8.8% return on investment.
In Q1 2016, H&R entered into two separate 15-year build-to-suit leases for industrial properties to be developed in the Airport Road Business Park in Brampton, ON for Sleep Country Canada and Solutions 2 Go Inc. The total net leasable area for these properties will be approximately 341,775 square feet with occupancy of both projects expected to occur in Q2 2017. Upon completion, the contribution to FFO from these two projects is expected to be $1.7 million.
In August 2016, H&R acquired a 31.7% non-managing interest in 38.4 acres of land, adjacent to the San Pablo Bay, in the northeast part of San Francisco, CA ("Hercules Project") for the future development of multi-family residential units. The initial investment to purchase the land was approximately U.S. $10.0 million (at H&R's interest).
Office Segment Highlights
Subsequent to September 30, 2016, H&R entered into an agreement to sell a non-managing 50% interest in the Transcanada Tower in Calgary, AB for gross proceeds of approximately $257.4 million. As at September 30, 2016, the IFRS property value was $500.0 million and the mortgage payable was $82.1 million. On closing, which is expected to be in November 2016, H&R will prepay the entire mortgage on the property. The prepayment penalty is expected to be $13.6 million. On closing of this transaction, H&R's unencumbered asset pool (excluding ECHO) is expected to be $2.6 billion.
Alberta Office Exposure:
The weighted average lease term remaining in H&R's Alberta office portfolio is 17.2 years. The leases expiring between October 1, 2016 and December 31, 2018 in H&R's Alberta office portfolio total 18,515 square feet. As at September 30, 2016, H&R's Alberta office portfolio had approximately 184,000 square feet of vacant space, at H&R's ownership share, all of which is in F1rst Tower (formerly Telus Tower). Of this vacant space, 12,667 square feet has been leased for a six-year term commencing January 1, 2017.
Target Update
Redevelopment of the former Target stores has commenced, however, the space has not been transferred to properties under development. For the three and nine months ended September 30, 2016, H&R has capitalized $0.8 million and $1.5 million, respectively, of the property operating and finance costs attributable to this space. The following table is a summary of our leasing progress on the former Target space:
| | Square Feet at 100% | Square Feet at H&R's Interest | Annual Base Rent at H&R's interest ($ Millions) |
| Former Target Canada space | 1,062,676 | 831,688 | $4.4 |
| Backfill progress: | | | |
| Committed space | 383,376 | 248,090 | 3.8 |
| Conditional agreements | 356,985 | 327,608 | 3.7 |
| Advanced discussions | 65,922 | 65,922 Werbung Mehr Nachrichten zur Anleihe kostenlos abonnieren
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