CALGARY, May 5 /CNW/ - Northern Property REIT (NPR.UN) announced its
financial results for the three months ended March 31, 2005.
Highlights:
- acquisition of 1106 units during the quarter
- completion of $40.1 million follow-on offering
- quarterly rental property revenue increases 28.9%
- winter heating season and high fuel costs reduce NOI margins
- portfolio interest rates continue to drop
Total rental property revenue in the first quarter of 2005 increased
28.9% to $14.23 million compared to $11.04 million in the first quarter of
2004. The increase in revenues is primarily due to accretive purchasing by the
REIT. The Trust acquired 300 residential units in the northern Alberta center
of Grande Prairie, 29 units in Inuvik, Northwest Territories and 777 units in
St. John's and Gander, Newfoundland during the quarter.
Northern Property REIT concluded a $40.1 million follow-on offering on
January 6, 2005. A total of 2,490,000 trust units were issued at $16.10 per
unit. Leverage is significantly lower than in 2004 with Debt to Gross Book
Value at 53.5% compared to 57.01% at March 31, 2004.
Vacancy loss in the portfolio totalled 4.2% in the portfolio for the
quarter, 3.4% being as a result of market conditions (up from 1.6% for the
same quarter a year ago) and 0.8% associated with units held off the market
for renovation. Significant renovation activity is underway in the
Newfoundland, Northern Alberta and NWT markets. Same door revenue was 1.1%
higher than Q1, 2004. Rental property operating costs increased from 32.2% of
rental revenue in Q1, 2004 to 36.9% of revenue in Q4, 2005. The increase
reflects the impact of winter season heating costs and various management
costs associated with preparing for the absorption of the 1106 units which
closed during the quarter.
The weighted average interest rate on NPREIT's debt continued to decline
reaching the 6.0% level during the quarter, down from 6.13% at December 31,
2004 and from 6.59% at March 31, 2004. A continuing special effort is planned
by NPREIT during the remainder of 2005 to extend and blend and otherwise
capture the remaining opportunities which exist to lower the interest rates on
its borrowings.
"We had a very busy and productive first quarter," commented Jim Britton,
President and CEO. "As a result of deals that closed during the quarter we
have secured a reasonably efficient operating size in our key markets. Our
focus now will be to respond to the challenges to our margins caused by high
utility costs and vacancy conditions."
<<
NORTHERN PROPERTY REAL ESTATE INVESTMENT TRUST
Consolidated Balance Sheets
(Thousands of dollars)
-------------------------------------------------------------------------
March December
31, 2005 31, 2004
$ $
Unaudited Audited
--------------------
ASSETS
Rental properties and other capital assets (Note 3) 378,391 326,837
Capital assets under development 4,559 3,529
Loans receivable 2,441 2,535
Prepaid expenses and other assets 5,200 4,827
Accounts receivable 5,235 5,036
Tenant security deposits 1,661 1,565
--------------------
397,487 344,329
--------------------
--------------------
LIABILITIES
Mortgages payable (Note 4) 172,453 156,947
Accounts payable and accrued liabilities 6,943 6,499
Distributions payable 1,672 1,407
Long-term incentive plan obligation (Note 5) 1,003 1,065
Income taxes payable 125 20
Future income tax liability 11,872 11,974
Bank indebtedness (Note 6) 36,896 36,713
--------------------
230,964 214,625
UNITHOLDERS' EQUITY 166,523 129,704
--------------------
397,487 344,329
--------------------
--------------------
NORTHERN PROPERTY REAL ESTATE INVESTMENT TRUST
Consolidated Statements of Earnings (Unaudited)
Three Month Period Ended March 31
(Columnar amounts expressed in thousands of dollars, except for per unit
amounts)
-------------------------------------------------------------------------
2005 2004
$ $
--------------------
REVENUE
Rental properties revenue 14,130 11,037
Laundry and other income 102 45
Rental properties operating expenses (5,225) (3,552)
--------------------
Net operating income 9,007 7,530
--------------------
EXPENSES
Interest on mortgages 2,496 2,188
Interest on operating facility 262 230
Amortization 2,848 2,226
--------------------
5,606 4,644
--------------------
INCOME FROM OPERATIONS 3,401 2,886
--------------------
OTHER ITEMS
Interest and other income 167 135
Gain on sale of capital assets 28 -
Trust administration costs (907) (790)
--------------------
(712) (655)
--------------------
EARNINGS BEFORE INCOME TAXES 2,689 2,231
--------------------
INCOME TAXES
Current (96) (103)
Future recovery 103 54
--------------------
7 (49)
--------------------
NET EARNINGS 2,696 2,182
--------------------
--------------------
Net earnings per unit (Note 8)
Basic 0.17 0.17
--------------------
--------------------
Diluted 0.17 0.17
--------------------
--------------------
NORTHERN PROPERTY REAL ESTATE INVESTMENT TRUST
Consolidated Statements of Unitholders' Equity (Unaudited)
At March 31
(Thousands of dollars)
-------------------------------------------------------------------------
Cumu- Cumu- Cumu-
lative lative lative
Capital Net Distri-
(Note 7) Income butions Total
-------------------------------------------------------------------------
Unitholders' Equity
- December 31, 2004 137,803 27,773 (35,872) 129,704
Net income - 2,696 - 2,696
Distributions to unitholders - - (5,006) (5,006)
New units issued 40,879 - - 40,879
Issuance costs (1,937) - - (1,937)
Long term incentive plan units
issued 187 - - 187
-------------------------------------------------------------------------
Unitholders' Equity - March 31,
2005 176,932 30,469 (40,878) 166,523
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cumu- Cumu- Cumu-
lative lative lative
Capital Net Distri-
(Note 7) Income butions Total
-------------------------------------------------------------------------
Unitholders' Equity
- December 31, 2003 130,734 17,924 (20,035) 128,623
Net income - 2,182 - 2,182
Distributions to unitholders - - (3,861) (3,861)
New units issued 1,953 - - 1,953
Issuance costs (15) - - (15)
Long term incentive plan units
issued 130 - - 130
-------------------------------------------------------------------------
Unitholders' Equity - March 31,
2004 132,802 20,106 (23,896) 129,012
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NORTHERN PROPERTY REAL ESTATE INVESTMENT TRUST
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31
(Thousands of dollars)
-------------------------------------------------------------------------
2005 2004
$ $
--------------------
CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:
OPERATING
Net earnings 2,696 2,182
Adjustments for:
Amortization 2,848 2,226
Gain on sale of assets (28) -
Future income taxes (recovery) (103) (54)
Long-term incentive plan 125 125
--------------------
5,538 4,479
Changes in non-cash working capital (24) (12,701)
--------------------
5,514 (8,222)
--------------------
--------------------
FINANCING
Proceeds of public offering (net of issue costs) 38,152 (15)
Proceeds of mortgages 13,118 -
Proceeds from sale of assets 226 -
Repayment of mortgages and interim facilities (1,759) (1,532)
Distributions to unitholders (4,741) (3,848)
--------------------
44,996 (5,395)
--------------------
INVESTING
Acquisition of properties and other assets (49,474) (258)
Capital assets under development (1,030) (1,836)
Building capital maintenance (189) (293)
--------------------
(50,693) (2,387)
--------------------
NET INCREASE IN BANK INDEBTEDNESS (183) (16,004)
BANK INDEBTEDNESS, BEGINNING OF PERIOD (36,713) (16,945)
--------------------
BANK INDEBTEDNESS, END OF PERIOD (36,896) (32,949)
--------------------
--------------------
SUPPLEMENTARY INFORMATION
Interest paid 2,689 2,418
--------------------
--------------------
Interest received 169 5
--------------------
--------------------
Income taxes paid - -
--------------------
--------------------
NORTHERN PROPERTY REAL ESTATE INVESTMENT TRUST
Notes to the Consolidated Financial Statements (Unaudited)
Three Months Ended March 31, 2005 and March 31, 2004
(Columnar amounts expressed in thousands of dollars except where
indicated)
-------------------------------------------------------------------------
1. ORGANIZATION OF TRUST
Northern Property Real Estate Investment Trust ("NPREIT") is an
unincorporated "open-end" real estate investment trust created for
the benefit of the unitholders pursuant to the Declaration of Trust
dated January 2, 2002 under the laws of the Province of Alberta.
NPREIT was created to invest in a portfolio of income-producing
residential and commercial rental properties located primarily in the
Northwest Territories, Nunavut and the Province of Alberta.
2. BASIS OF PRESENTATION
These unaudited interim consolidated financial statements of NPREIT
have been prepared in accordance with the recommendations of the
handbook of the Canadian Institute of Chartered Accountants ("CICA")
and are consistent with those used in the audited consolidated
financial statements as at and for the period ended December 31,
2004. These unaudited interim consolidated financial statements do
not include all of the disclosures required by Canadian generally
accepted accounting principles ("Canadian GAAP") applicable to annual
financial statements; therefore, they should be read in conjunction
with the December 31, 2004 audited consolidated financial statements.
The preparation of financial statements in accordance with Canadian
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and to make
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and
expenses during the reported period. Actual results may differ from
those estimates.
3. RENTAL PROPERTIES AND OTHER CAPITAL ASSETS
-----------------------------------------------------------
March 31, 2005 December 31, 2004
-----------------------------------------------------------
Accumu- Accumu-
lated Net lated Net
Amorti- Book Amorti- Book
Cost zation Value Cost zation Value
$ $ $ $ $ $
-----------------------------------------------------------
Land 26,756 - 26,756 18,951 - 18,951
Buildings 360,765 15,586 345,179 316,082 13,066 303,016
Furniture,
fixtures
and
equipment 3,062 686 2,376 1,473 620 853
Vehicles 565 158 407 469 140 329
Capital and
leasehold
improve-
ments 5,113 1,440 3,673 4,915 1,227 3,688
-----------------------------------------------------------
396,261 17,870 378,391 341,890 15,053 326,837
-----------------------------------------------------------
-----------------------------------------------------------
NPREIT acquired buildings in 2005 for a total purchase price of
$52.72 million (2004 - $3.48 million). The acquisitions were financed
as follows:
--------------------
Three Months Ended
March 31
--------------------
2005 2004
$ $
--------------------
Building acquisitions
Mortgages and debt assumed 4,147 1,346
Units issued 790 1,953
Cash paid 47,625 181
--------------------
52,562 3,480
Fair value adjustments to debt 155 -
Total purchase price of building acquisitions 52,717 3,480
--------------------
--------------------
Residential units acquired 1,106 95
--------------------
--------------------
4. MORTGAGES PAYABLE
Mortgages payable bear interest at rates ranging from 4.00% to 13.5%
(weighted average rate of 6.00% as at March 31, 2005 (6.13% -
December 31, 2004)) per annum, payable in principal and interest
instalments of $1.5 million monthly during 2005, and maturing between
2005 and 2017. All mortgages are secured by specific charges against
specific properties.
5. LONG-TERM INCENTIVE PLAN
The Board of Trustees approved a long-term incentive plan ("LTIP")
for the executives of NPREIT, based on the results of the each fiscal
year. Units were granted under the long-term incentive plan (LTIP) as
follows:
---------------------------------------------------------------------
Total
Grant Cost
Grant Date Units Price ($000's)
---------------------------------------------------------------------
TOTAL - December 31, 2003 40,745 - 621
December 31, 2004 32,752 $16.26 533
Units vested and issued - January, 2004 (8,518) - (130)
Prior years units granted re-valued to
December 31, 2004 price - - 41
---------------------------------------------------------------------
TOTAL - December 31, 2004 64,979 - 1,065
Accrual for 2005 LTIP grants - - 125
Units vested and issued - January, 2005 (11,360) - (187)
---------------------------------------------------------------------
TOTAL - March 31, 2005 53,619 - 1,003
---------------------------------------------------------------------
---------------------------------------------------------------------
The actual amount of the LTIP award is determined at the end of the
year by the Board of Trustees based on an assessment of the
performance of the Trust and the individual performance of the
executives. The number of units issued is based on the trading price
on December 31st of each year. One third of the units vest over each
12, 24 and 36 month period following their initial grant. For the
year ended March 31, 2005, a total of 11,360 LTIP units have vested
and been issued (March 31, 2004 - 8,518).
6. BANK INDEBTEDNESS
NPREIT has a revolving line of credit in the amount of $40 million
for acquisition and operating purposes, bearing interest at prime
plus 0.5% or bankers acceptance rate with a maturity of May 31, 2005.
Specific properties have been pledged as collateral security for the
line of credit.
At March 31, 2005, NPREIT has utilized $36,896,000 (December 31, 2004
- $36,713,000).
7. UNITHOLDERS' CAPITAL
Total NPREIT Trust units and Class B units issued, outstanding and
eligible for distributions at March 31, 2005 is 16,045,117
(December 31, 2004 - 13,498,757), representing net proceeds of
$176,932,863 (net of issue costs of $11,270,370) (December 31, 2004 -
$137,803,259 net of issue costs of $9,333,332). The number of units
issued and outstanding is as follows:
---------------------------------------------------------------------
Trust Issue Class B Issue
Date Description Units Price LP Units Price
---------------------------------------------------------------------
December 31, Opening
2003 balance 9,840,496 - 3,148,948 -
January 8, LTIP units
2004 issued 8,518 15.25 - -
March 1, Property
2004 acquisition - - 30,843 15.41
March 1, Property
2004 acquisition - - 95,872 15.41
March 1, Issue
2004 costs - - - -
May 1, 2004 Property
acquisition - - 60,836 13.15
May 31, 2004 Property
acquisition - - 193,918 12.85
June 30, Issue
2004 costs - - - -
July 1, 2004 Property
acquisition - - 45,326 13.58
November 30, Property
2004 acquisition - - 74,000 14.90
December 31, Issue
2004 costs - - - -
LP units
exchanged 550,106 - (550,106) -
---------------------------------------------------------------------
December 31,
2004 TOTAL 10,399,120 - 3,099,637 -
---------------------------------------------------------------------
January 6,
2005 Offering 2,490,000 16.10 - -
January 6, Issue
2005 costs - -
January 10, LTIP units
2005 issued 10,634 16.45 - -
January 14, LTIP units
2005 issued 726 17.25 - -
March 1, Property
2005 acquisition - - 45,000 $17.56
LP units
exchanged 494,166 - (494,166) -
---------------------------------------------------------------------
March 31,
2005 TOTAL 13,394,646 - 2,650,471 -
---------------------------------------------------------------------
---------------------------------------------------------------------
----------------------------------------------
TOTAL
--------------------
Date Description Units $(000's)
----------------------------------------------
December 31, Opening
2003 balance 12,989,444 130,734
January 8, LTIP units
2004 issued 8,518 130
March 1, Property
2004 acquisition 30,843 475
March 1, Property
2004 acquisition 95,872 1,478
March 1, Issue
2004 costs - (15)
May 1, 2004 Property
acquisition 60,836 800
May 31, 2004 Property
acquisition 193,918 2,491
June 30, Issue
2004 costs - (6)
July 1, 2004 Property
acquisition 45,326 616
November 30, Property
2004 acquisition 74,000 1,103
December 31, Issue
2004 costs - (3)
LP units
exchanged - -
----------------------------------------------
December 31,
2004 TOTAL 13,498,757 137,803
----------------------------------------------
January 6,
2005 Offering 2,490,000 40,089
January 6, Issue
2005 costs (1,937)
January 10, LTIP units
2005 issued 10,634 175
January 14, LTIP units
2005 issued 726 12
March 1, Property
2005 acquisition 45,000 790
LP units
exchanged - -
----------------------------------------------
March 31,
2005 TOTAL 16,045,117 176,932
----------------------------------------------
----------------------------------------------
Trust units
Total number of units outstanding at March 31, 2005 is 13,394,646
(December 31, 2004 - 10,399,120) representing a net book value of
$142,235,525 (December 31, 2004 - $103,804,854), net of issue costs.
Class B Exchangeable Limited Partnership Units and Special Voting
Units
As at March 31, 2005, NPREIT has 2,650,471 Class B Units
(December 31, 2004 - 3,099,637) of a controlled limited partnership
outstanding representing a value of $34,691,592 (December 31, 2004 -
$33,998,405).
8. INCOME AVAILABLE FOR DISTRIBUTION AND PER UNIT INFORMATION
The terms of the Trust Indenture state that Distributable Income is
defined as net income determined in accordance with Canadian
generally accepted accounting principles, subject to certain
adjustments. Other adjustments may be made to Distributable Income as
determined by the majority of the Trustees at their discretion.
Distributable income paid per unit
--------------------
Three Months Ended
--------------------
March March
31, 2005 31, 2004
$ $
--------------------
Net earnings 2,696 2,182
Add back:
Amortization expense 2,848 2,226
Gain on sale of capital assets (28) -
Future income taxes (recovery) (103) (54)
Long-term incentive plan 125 125
--------------------
Distributable income 5,538 4,479
Less: income not distributed 797 631
--------------------
Distributions paid to unitholders 4,741 3,848
--------------------
--------------------
Distributions per unit
For the period ended March 31, NPREIT made distributions to
unitholders as follows:
2005 2004
---------------------------------------------------------------------
Month Record date Payment date Distribution per unit
---------------------------------------------------------------------
January January 31 February 15 0.1042 0.0987
February February 28 March 15 0.1042 0.0987
March March 31 April 15 0.1042 0.0987
-------------------------
Total
distributions 0.3126 0.2961
-------------------------
-------------------------
Earnings per unit
-------------------------
Three Months Ended
March 31
-------------------------
2005 2004
$ $
-------------------------
Net earnings 2,696 2,182
Weighted average units for basic earnings
per unit 15,881,615 13,041,129
Effect of dilutive units to be issued in
respect of the long-term incentive plan 53,619 32,227
-------------------------
Weighted average units for diluted earnings
per unit 15,935,234 13,073,356
-------------------------
-------------------------
Basic and diluted earnings per unit 0.17 0.17
-------------------------
-------------------------
Diluted earnings per unit 0.17 0.17
-------------------------
-------------------------
9. GUARANTEES
Guarantees for equity accounted investments and proportionately
consolidated joint ventures total $0.9 million at March 31, 2005
(December 31, 2004 - $0.9 million). Of this amount $166,000 has been
included in the mortgage balance payable. The mortgages bear interest
at rates ranging from 6.41% to 7.50% and mature August, 2005. The
mortgages are secured by specific charges against the properties
owned by the corporations and joint ventures. NPREIT would be liable
in the event of a default of the corporation or joint venture.
10. RELATED PARTY TRANSACTIONS
A trustee leases space from NPREIT under normal commercial terms. The
amounts paid during the period for the space were $101,568 for the
three months ended March 31, 2005 (2004 - $101,813). Amounts
outstanding in accounts receivable pertaining to this lease were $Nil
at March 31, 2005 (2004 - $Nil).
A trustee of NPREIT is a senior partner of a law firm that provides
and continues to provide legal services to NPREIT in the ordinary
course of business. Fees paid during the three month period ended
March 31, 2005 were $119,521 (2004 - $11,529).
11. SUBSEQUENT EVENTS
Subsequent to March 31, 2005, NPREIT completed or entered into
agreements for the following acquisitions:
a) On April 1, 2005, NPREIT acquired a 50% interest in 63,549 square
feet of commercial space in five properties in Inuvik, Northwest
Territories for a total purchase price of $6.03 million. The
properties will be acquired by the Inuvik Commercial Properties
Zheh Gwizuh Limited Partnership ("CPLP") which is a partnership
jointly owned by Northern Property Limited Partnership and the
Zheh Gwizuh Limited Partnership. The acquisitions will be financed
by CPLP through cash of $6.03 million.
b) On April 1, 2005, NPREIT acquired a 50% interest in 24,959 square
feet of commercial space in three properties in Inuvik, Northwest
Territories for a total purchase price of $4.05 million. The
properties will be acquired by the Inuvik Commercial Properties
Zheh Gwizuh Limited Partnership. The acquisitions will be financed
by CPLP through cash of $2.55 million and a vendor take-back
mortgage in the amount of $1.50 million bearing interest at 5.25%
per annum.
c) On April 1, 2005, NPREIT acquired a 50% interest in 6,609 square
feet of commercial space in one property in Yellowknife, Northwest
Territories for a total cash purchase price of $450,000. The
property will be acquired by the Inuvik Commercial Properties Zheh
Gwizuh Limited Partnership.
Subsequent to March 31, 2005, NPREIT completed the following
financings:
a) On April 22, 2005, NPREIT completed financing of the three
properties in Inuvik, Northwest Territories in the amount of
$6.1 million maturing February 1, 2012, and bearing interest at
4.96% per annum.
b) On April 22, 2005, NPREIT completed financing of the Nijhaa
Apartments in Inuvik, Northwest Territories in the amount of
$0.4 million maturing May 1, 2008, and bearing interest at 4.43%
per annum.
12. COMPARATIVE FIGURES
Certain of the prior year's figures have been reclassified to confirm
with the current presentation.
>>
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Northern Property REIT Announces Q1 2005 Results
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