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Partners Real Estate Investment Trust

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Partners Announces Results for the First Quarter of 2018

TORONTO, May 09, 2018 (GLOBE NEWSWIRE) -- Partners Real Estate Investment Trust (the “REIT,” or “Partners”) (TSX: PAR.UN) today announced its results for the three month period ended March 31, 2018 (the “first quarter”).

FIRST QUARTER 2018 HIGHLIGHTS

  • Net loss of $2.3 million, a reduction to earnings of $4.4 million when compared to the first quarter of 2017. The first quarter net loss is the result of unrealized fair value losses on the REIT’s property portfolio.
  • Revenues from income producing properties of $13.0 million, a reduction of $0.9 million when compared to the first quarter of 2017. This reduction in revenue is the result of a property sold during June 2017.
  • Same property NOI for the quarter of $7.7 million, an improvement of $0.3 million when compared to the first quarter of 2017, due to new leasing, renewals and the impact from development activity.
  • All property NOI of $7.7 million, a reduction of $0.4 million when compared with the first quarter of 2017 due to the sale of a property during June 2017, partially offset by increases to same property NOI as discussed above.
  • FFO and AFFO per unit of $0.07 and $0.05, compared to $0.08 and $0.06, respectively, for the first quarter of 2017.
  • ACFO payout ratio of 118.5%, compared to 95.6% for the first quarter of 2017.  Excluding the impact of $0.5 million in restructuring costs, the REIT’s first quarter proforma ACFO payout ratio would have been 98.5%.
  • Occupancy of 90.8% as at March 31, 2018, compared to a level of 95.3% as at December 31, 2017. The reduction to the REIT’s occupancy is due to the departure of a Sears’ tenancy at a property in Ontario.
  • As at March 31, 2018, the REIT had renewed a total of 115,387 square feet, or 65%, of leases that were originally set to expire during 2018.
  • Debt to gross book value was 59.8% as at March 31, 2018, a slight increase from 59.4% at the end of 2017.
  • During the first quarter, the REIT announced that it is offering for sale up to 11 of its 34 properties, all located in western Canada.  The Board of Trustees have determined that successful execution of this strategy would enable the REIT to raise capital on an efficient basis, and at the same time afford the opportunity to simplify the operations of the enterprise.  If completed as planned, this strategy will have sourced capital at approximately those properties’ Net Asset Value, rather than at the discounted levels at which the REIT's equity units presently trade.  It will also permit management to align its operations to serve a more geographically concentrated portfolio.
       
       
     As at and for the three months ended
      Mar 31, 2018  Mar 31, 2017 
 Revenues from income producing properties       $   12,975,362  $  13,871,283 
 Net income (loss)          (2,283,886)   2,147,990 
 Net income (loss) per unit - basic          (0.05)   0.06 
 NOI - same properties(1)          7,724,602     7,464,712 
 NOI - all properties(1)          7,724,602     8,153,916 
 FFO(1)(9)          3,236,302     2,810,703 
 FFO per unit(1)          0.07     0.08 
 AFFO(1) (9)          2,317,612     2,001,444 
 AFFO per unit(1)          0.05     0.06 
 ACFO(1)          2,431,240     2,246,099 
 Distributions(2)          2,887,053     2,147,370 
 Distributions per unit(2)          0.06     0.06 
 ACFO distribution payout ratio(3)        118.7% 95.6%
 Cash distributions(4)          2,640,883     1,578,328 
 Cash distributions per unit(4)          0.06     0.05 
       
 As at   Mar 31, 2018 Dec 31, 2017Dec 31, 2016
 Total assets  $   465,653,438  $  475,045,178 $  514,700,205 
 Total debt(5)     280,031,069     283,331,535    354,556,805 
 Total equity     178,405,701     183,347,418    151,508,380 
 Weighted average units outstanding - basic     45,871,307     39,435,646    33,690,649 
 Weighted average units outstanding - diluted     46,078,000     39,559,729    33,690,649 
 Debt-to-gross book value including debentures(5)   59.8% 59.4% 68.6%
 Debt-to-gross book value excluding debentures(5)   59.8% 57.8% 57.5%
 Interest coverage ratio(6)     2.15     2.02    1.75 
 Debt service coverage ratio(6)     1.30     1.25    1.14 
 Mortgages weighted average effective interest rate(7)  4.08% 4.10% 4.41%
 Portfolio occupancy(8)   90.8% 95.3% 95.1%
       

(1)  NOI – same properties and all properties, FFO, AFFO and ACFO are non-IFRS financial measures widely used in the real estate industry.  See “Part II – Performance Measurement” for further details and advisories.
(2)  Represents distributions to unitholders on an accrual basis.  Distributions are payable as at the end of the period in which they are declared by the Board of Trustees and are paid on or around the 15th day of the following month.  Distributions per unit exclude the 5% bonus units, or 3% bonus units for distributions with a record date after March 1, 2016, given to participants in the Distribution Reinvestment and Optional Unit Purchase Plan.
(3)  ACFO distribution payout ratio is a non-IFRS financial measure that has a standardized meaning under RealPac.  It is calculated as total distributions as a percentage of ACFO (a new measure standardized by RealPac – see Part II Performance Measurement).  There is no directly comparable IFRS measure.
(4)  Represents distributions on a cash basis, and as such, excludes the non-cash distributions of units issued under the Distribution Reinvestment and Optional Unit Purchase Plan.
(5)  Debt-to-gross book value is a non-IFRS financial measure widely used in the real estate industry.  See calculation under “Debt-to-Gross Book Value” in “Part IV – Results of Operations”. Management considers debt-to-gross book value to be a valuable metric in assessing the REIT’s overall leverage. Non-IFRS measures do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other issuers. There is no directly comparable IFRS measure.
(6)  Interest coverage ratio and debt service coverage ratio are non-IFRS financial measures widely used in the real estate industry, calculated on a rolling four-quarter basis. See definition under “Mortgages and Other Financing” in “Part IV – Results of Operations”. Management considers the interest coverage and debt service coverage ratios to be valuable metrics in assessing the REIT’s ability to make contractual payments on debt. Non-IFRS measures do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other issuers. There are no directly comparable IFRS measures.
(7)  Represents the weighted average effective interest rate for secured debt excluding debentures and credit facilities.
(8)  Portfolio occupancy is calculated as economic occupancy, not physical occupancy. A unit is considered occupied once it is committed to a lease with a minimum one-year term.

“The same property NOI shows improvement of $0.3 million when compared to the first quarter of 2017 and is due to the positive leasing in Quebec and Western Canada through continued active asset management.” stated Jane Domenico, the REIT’s CEO. “The most significant real estate change this quarter is the termination of Sears’ tenancy at our Cornwall Square property in Ontario. This tenancy represented 4.4% of our total portfolio GLA. Excluding Cornwall Square, Partners’ occupancy results remain strong at 96.6%.  Finally, the entire team is focused on the marketing and sale of the western Canada assets.”

Further Information

A more detailed analysis of the REIT's financial results for the first quarter are included in the REIT's Management Discussion and Analysis and Condensed Consolidated Financial Statements, which have been filed on SEDAR and can be viewed at www.sedar.com or on the REITs' website at www.partnersreit.com.

Conference Call

Partners will host a conference call at 8:30 AM Eastern on Thursday, May 10, 2018, at which time Partners’ management will both review the financial results and discuss the REIT’s strategic outlook.

Conference Dial-In Details

Toll Free (North America): (800) 377-0758
Local: (416) 340-2216

Instant Replay Details (Available until May 17, 2018)

Toll Free (North America): 800-408-3053
Passcode: 5135685#

A recording of the conference call will also be available via Partners’ website.

About Partners REIT

Partners REIT is a real estate investment trust focused on the management of a portfolio of 34 retail and mixed-use community and neighbourhood shopping centres. These properties are located in both primary and secondary markets across British Columbia, Alberta, Manitoba, Ontario, and Quebec, and comprise a total of approximately 2.3 million square feet of leasable space.

Disclaimer

Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect," "will" and similar expressions to the extent they relate to Partners REIT. The forward- looking statements are not historical facts but reflect Partners REIT's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including access to capital, regulatory approvals, intended acquisitions and general economic and industry conditions. Although Partners REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.

For further information please contact:
Partners REIT Investor Relations
1 (844) 474-9620 ext. 401
investor.relations@partnersreit.com

Partners REIT
Jane Domenico Chief Executive Officer
(416) 855-3313 ext. 401

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