Resilient portfolio with strong financial condition poised
for sustainable growth
NEW
GLASGOW, NS, August 10, 2022 /CNW/ - Crombie Real
Estate Investment Trust ("Crombie") (TSX: CRR.UN) today announced
results for its second quarter ended June
30, 2022. Management will host a conference call to discuss
the results at 11:30 a.m. (EDT),
August 11, 2022.
"Crombie's strategy continues to deliver stability and growth
despite the uncertainty and volatility of the global economy,
geopolitics and the capital markets. Our grocery-anchored,
retail-related industrial, and residential portfolio continues to
deliver consistent operating and financial performance including
strong occupancy and healthy renewal growth, enabled by one of the
longest weighted average lease terms in the real estate industry.
Crombie actively de-levered its balance sheet while maintaining
strong liquidity which enables us to not only manage significant
volatility but responsibly grow our business," said Don Clow, President and CEO. "Looking forward,
Crombie is well positioned to advance our focused and balanced
strategic priorities of investment in Empire-related initiatives
and development to drive long-term sustainable growth while
maintaining a strong financial condition."
SECOND QUARTER SUMMARY
(In thousands of Canadian dollars, except per unit amounts and
as otherwise noted)
Operational Highlights
- Committed and economic occupancy of 96.3% and 95.9%,
respectively; a 10 and 30 basis point increase compared to the
second quarter of 2021
- Renewals of 275,000 square feet at rents 6.4% above expiring
rates (7.5% at weighted average rent during the renewal term)
- Acquisition of one investment property adding 67,000 square
feet of GLA and one development property for a total aggregate
purchase price of $15,939
- Disposition of one 19,000 square foot investment property for
gross proceeds of $10,250
Financial Highlights
- Property revenue of $103,064, a
3.1% increase from $100,006 in the
second quarter of 2021
- Operating income of $28,424, a
45.0% increase from $19,605 in the
second quarter of 2021
- Net property income of 70,097, a 0.1% decrease from 70,192 in
the second quarter of 2021
- FFO(1) $49,877 or
$0.28 per unit compared to
$44,201 or $0.27 per unit in the second quarter of 2021
- FFO(1) payout ratio of 79.0% compared to 81.7% in
the second quarter of 2021
- AFFO(1) $43,551 or
$0.25 per unit compared to
$37,109 or $0.23 per unit in the second quarter of 2021
- AFFO(1) payout ratio of 90.5% compared to 97.3% in
the second quarter of 2021
- Same-asset property cash NOI(1) increase of 1.9%
over the second quarter of 2021
- Record high unencumbered investment properties of $2,155,326, a 49.1% increase from $1,445,423 in the second quarter of 2021
- Debt to gross fair value(1)(2) of 42.6%, an
improvement from 47.4% in the second quarter of 2021
- Debt to trailing 12 months adjusted EBITDA(1)(2) of
8.73x compared to 9.70x in the second quarter of 2021
- Available liquidity of $444,262,
a 20.6% increase from $368,483 in the
second quarter of 2021
|
(1)
|
Non-GAAP financial
measures used by management to evaluate Crombie's business
performance. See "Cautionary Statements and Non-GAAP Measures"
below for a reconciliation of FFO, FFO payout ratio, AFFO, AFFO
payout ratio, same-asset property cash NOI, debt to gross fair
value, and debt to trailing 12 months adjusted EBITDA.
|
|
(2)
|
At Crombie's
proportionate share including joint ventures.
|
Information in this press release is a select summary of
results. This press release should be read in conjunction with
Crombie's Management's Discussion and Analysis for the quarter
ended June 30, 2022 and Consolidated
Financial Statements and Notes for the quarters ended June 30, 2022, and June
30, 2021. Full details on our results can be found at
www.crombie.ca and www.sedar.com.
Financial Results
Crombie's key financial metrics for the three months ended
June 30, 2022 are as follows:
|
Three months ended June
30,
|
|
(In thousands of
Canadian dollars, except per unit amounts and as otherwise
noted)
|
2022
|
2021
|
Variance
|
%
|
|
Property
revenue
|
$
103,064
|
$
100,006
|
$
3,058
|
3.1 %
|
|
Property operating
expenses
|
32,967
|
29,814
|
(3,153)
|
(10.6) %
|
|
Net property
income
|
$
70,097
|
$
70,192
|
$
(95)
|
(0.1) %
|
|
Operating income
attributable to Unitholders
|
$
28,424
|
$
19,605
|
$
8,819
|
45.0 %
|
|
Same-asset property
cash NOI (1)
|
$
67,441
|
$
66,157
|
$
1,284
|
1.9 %
|
|
Funds from operations
("FFO") (1)
|
|
|
|
|
|
Basic
|
$
49,877
|
$
44,201
|
$
5,676
|
12.8 %
|
|
Per unit -
Basic
|
$
0.28
|
$
0.27
|
$
0.01
|
3.7 %
|
|
Payout
ratio(1)
|
79.0 %
|
81.7 %
|
|
(2.7) %
|
|
Adjusted funds from
operations ("AFFO") (1)
|
|
|
|
|
|
Basic
|
$
43,551
|
$
37,109
|
$
6,442
|
17.4 %
|
|
Per unit -
Basic
|
$
0.25
|
$
0.23
|
$
0.02
|
8.7 %
|
|
Payout
ratio(1)
|
90.5 %
|
97.3 %
|
|
(6.8) %
|
|
(1)
|
Same-asset property
cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout ratio are
non-GAAP financial measures used by management to evaluate
Crombie's business performance. See "Cautionary Statements and
Non-GAAP Measures" below for a reconciliation of same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio.
|
Operating income attributable to Unitholders increased by
$8,819, or 45.0%, compared to the
second quarter of 2021 primarily due to a gain on disposal of
investment properties of $4,863 in
the second quarter of 2022 and lower finance costs from operations
of $2,856, resulting primarily from
deleveraging, lower mortgage interest due to mortgage repayments
and dispositions since the second quarter of 2021. Additionally,
general and administrative expenses decreased by $2,428 due primarily to a reduction in Unit-based
compensation costs resulting from a decrease in Crombie's Unit
price, offset in part by a one-time payment in respect of an
executive retirement arrangement of $1,211. The growth in operating income was
further offset by the increased loss from equity-accounted
investments of $1,065 compared to the
second quarter of 2021, as residential development projects
achieved substantial completion and move toward revenue
stabilization, when revenue earned will exceed expenses. A slight
reduction in net property income of $95 was primarily due to increased tenant
incentive amortization of $850
resulting primarily from new leasing, a reduction in lease
termination income of $662, and a
decrease of $1,800 from dispositions
since the second quarter of 2021. This is offset in part by income
of $2,026 from acquisitions since the
second quarter of 2021.
Same-asset property cash NOI (SANOI) increased by $1,284, or 1.9%, compared to the second quarter
of 2021 primarily due to strong occupancy and increased parking
revenue of $658, offset in part by a
decrease in lease termination income of $652, primarily in our office portfolio.
Same-asset property cash NOI adjusted for the removal of lease
termination income increased by 3.0% compared to the same period in
2021.
The increase in FFO of $5,676 is
primarily due to lower finance costs from operations of
$2,856, driven by lower mortgage
interest of $2,593 as a result of
mortgage repayments and dispositions since the second quarter of
2021, and a decrease in general and administrative expenses of
$2,428 due primarily to a
$2,368 reduction in Unit-based
compensation costs resulting from a decrease in Crombie's Unit
price from June 30, 2021. Additional
increases in income are due to $2,026
from acquisitions since the second quarter of 2021. FFO growth is
offset in part by a reduction in lease termination income of
$662 and a decrease of $1,800 from dispositions since the second
quarter of 2021.
The increase in AFFO is largely due to the impacts on FFO as
described above. This is offset in part by the impact of the
increase in the maintenance capital expenditure charge in the first
quarter of 2022 from $0.90 to
$1.00 per square foot of weighted
average GLA.
Crombie's key financial metrics for the six months ended
June 30, 2022 are as follows:
|
Six months ended June
30,
|
|
(In thousands of
Canadian dollars, except per unit amounts and as otherwise
noted)
|
2022
|
2021
|
Variance
|
%
|
|
Property
revenue
|
$
208,010
|
$
203,543
|
$
4,467
|
2.2 %
|
|
Property operating
expenses
|
68,582
|
63,215
|
(5,367)
|
(8.5) %
|
|
Net property
income
|
$
139,428
|
$
140,328
|
$
(900)
|
(0.6) %
|
|
Operating income
attributable to Unitholders
|
$
53,672
|
$
52,820
|
$
852
|
1.6 %
|
|
Same-asset property
cash NOI (1)
|
$
134,090
|
$
131,980
|
$
2,110
|
1.6 %
|
|
Funds from operations
("FFO") (1)
|
|
|
|
|
|
Basic
|
$
98,968
|
$
90,304
|
$
8,664
|
9.6 %
|
|
Per unit -
Basic
|
$
0.57
|
$
0.57
|
$
—
|
— %
|
|
Payout
ratio(1)
|
79.5 %
|
79.0 %
|
|
0.5 %
|
|
Adjusted funds from
operations ("AFFO") (1)
|
|
|
|
|
|
Basic
|
$
85,449
|
$
75,888
|
$
9,561
|
12.6 %
|
|
Per unit -
Basic
|
$
0.49
|
$
0.48
|
$
0.01
|
2.1 %
|
|
Payout
ratio(1)
|
92.0 %
|
94.0 %
|
|
(2.0) %
|
|
(1)
|
Same-asset property
cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout ratio are
non-GAAP financial measures used by management to evaluate
Crombie's business performance. See "Cautionary Statements and
Non-GAAP Measures" below for a reconciliation of same-asset
property cash NOI, FFO, FFO payout ratio, AFFO, and AFFO payout
ratio.
|
Operating income attributable to Unitholders increased by
$852, or 1.6%, on a year to date
basis primarily driven by lower finance costs from operations of
$5,572 due to deleveraging, lower
mortgage interest resulting from mortgage repayments and
dispositions since the second quarter of 2021. A reduction in
general and administrative expenses of $2,613 was primarily due to a decrease in Unit
price and its impact on Unit-based compensation plans, partially
offset by a one-time payment in respect of an executive retirement
arrangement of $1,211 in the second
quarter of 2022. The growth in operating income was offset in part
by a $6,281 decrease in gain on
disposal of investment properties due to three dispositions in the
first quarter of 2021 compared to just one disposition in the
second quarter of 2022. Additionally, net property income decreased
by $900 compared to the same period
in 2021 primarily due to a reduction in lease termination income of
$2,176, increased tenant incentive
amortization of $1,879, and a
decrease of $3,100 from dispositions.
This is partially offset by income of $3,191 from acquisitions, $1,400 from renewals and new leasing, and
reduction of $1,152 in bad debt
expense.
On a year to date basis, same-asset property cash NOI (SANOI)
increased 1.6% compared to 2021 primarily due to strong occupancy,
increased parking revenue of $780,
and an increase in supplemental rents of $760 from modernizations and capital
improvements. This is offset in part by a decrease in lease
termination income of $1,386,
primarily in our office portfolio. Same-asset property cash NOI
adjusted for the removal of lease termination income increased by
2.7% compared to the same period in 2021.
On a year to date basis, FFO increased $8,664 primarily driven by lower finance costs
from operations of $5,572, due to
lower mortgage interest of $4,809
resulting from mortgage repayments and dispositions since the
second quarter of 2021, and reduced general and administrative
expenses of $2,613, resulting
primarily from a decrease in Unit price and its impact on
Unit-based compensation plans of $2,880. Increased income of $3,191 from acquisitions and $1,400 from renewals and new leasing, and a
reduction of $1,152 in bad debt
expense contributed to FFO growth. The improvement in FFO is offset
in part by a reduction in lease termination income of $2,176, increased tenant incentive amortization
of $1,879, and a decrease of
$3,100 from dispositions.
The improvement in AFFO is primarily due to the same factors
impacting FFO as described above. This is offset in part by the
impact of the increase in the maintenance capital expenditure
charge in the first quarter of 2022 from $0.90 to $1.00 per
square foot of weighted average GLA.
Operating Results
|
June
30,
2022
|
March
31,
2022
|
December 31,
2021
|
September 30,
2021
|
June
30,
2021
|
|
Number of investment
properties (1)
|
294
|
294
|
284
|
287
|
287
|
|
Gross leasable area
(2)
|
18,500,000
|
18,488,000
|
17,861,000
|
18,232,000
|
18,235,000
|
|
Economic occupancy
(3)
|
95.9 %
|
95.5 %
|
95.6 %
|
95.8 %
|
95.6 %
|
|
Committed occupancy
(4)
|
96.3 %
|
96.4 %
|
96.2 %
|
96.5 %
|
96.2 %
|
|
(1)
|
This includes
properties owned at full and partial interests excluding joint
ventures.
|
|
(2)
|
Gross leasable area is
adjusted to reflect Crombie's proportionate interest in partially
owned properties, excluding joint ventures.
|
|
(3)
|
Represents space
currently under lease contract and rent has commenced.
|
|
(4)
|
Represents current
economic occupancy plus completed lease contracts for future
occupancy of currently available space.
|
|
|
|
June
30,
2022
|
March
31,
2022
|
December 31,
2021
|
September 30,
2021
|
June
30,
2021
|
|
Investment properties,
fair value
|
$ 5,273,000
|
$ 5,199,000
|
$ 5,026,000
|
$ 5,096,000
|
$ 5,053,000
|
|
Unencumbered investment
properties (1)
|
$ 2,155,326
|
$ 2,009,252
|
$ 1,752,927
|
$ 1,461,775
|
$ 1,445,423
|
|
Available liquidity
(2)
|
$
444,262
|
$
523,159
|
$
507,777
|
$
512,168
|
$
368,483
|
|
Debt to gross book
value - cost basis (3)(7)
|
46.7 %
|
46.4 %
|
48.8 %
|
51.1 %
|
50.8 %
|
|
Debt to gross fair
value (4)(5)(7)
|
42.6 %
|
42.4 %
|
45.2 %
|
47.2 %
|
47.4 %
|
|
Weighted average
interest rate (6)
|
3.8 %
|
3.8 %
|
3.8 %
|
3.8 %
|
3.9 %
|
|
Debt to trailing 12
months adjusted EBITDA(4)(5)(7)(8)
|
8.73x
|
8.70x
|
8.96x
|
9.59x
|
9.70x
|
|
Interest coverage ratio
(4)(5)(8)
|
3.26x
|
3.27x
|
3.06x
|
3.07x
|
2.91x
|
|
(1)
|
Represents fair value
of unencumbered properties.
|
|
(2)
|
Represents the undrawn
portion on the credit facilities, excluding joint facilities with
joint operation partners.
|
|
(3)
|
See Capital Management
note in the Financial Statements.
|
|
(4)
|
Non-GAAP financial
measures used by management to evaluate Crombie's business
performance. See "Cautionary Statements and Non-GAAP Measures"
below for a reconciliation of debt to gross fair value, debt to
trailing 12 months adjusted EBITDA, and interest coverage
ratio.
|
|
(5)
|
See Debt Metrics
section in the Management's Discussion and Analysis.
|
|
(6)
|
Weighted average
interest rate is calculated based on interest rates for all
outstanding fixed rate debt.
|
|
(7)
|
The 2021 calculations
have been restated to include Crombie's share of debt and assets
held in joint ventures.
|
|
(8)
|
The 2021 calculations
have been restated to include Crombie's share of revenue and
expenses in joint ventures.
|
Operations and Leasing
During the quarter, Crombie maintained strong economic occupancy
and committed occupancy of 95.9% and 96.3%, respectively. Crombie
renewed 275,000 square feet with an increase of 6.4% over expiring
rents during the quarter. New leases increased occupancy by 256,000
square feet at an average first year rate of $20.72 per square foot.
Development
Crombie segregates its development pipeline by expected timing.
Near-term projects are financially committed or expected to be
committed within the next two years. Currently, Crombie has five
developments classified as near-term projects. Upon completion,
these projects will total approximately 1,103,000 square feet of
residential GLA and 1,490 residential units, 115,000 square feet of
commercial GLA, and 300,000 square feet of retail-related
industrial GLA. The geographical breakdown of GLA in square feet is
as follows: 535,000 in Vancouver;
145,000 in Victoria; 300,000 in
Calgary and 538,000 in
Halifax.
Voilà CFC3, in Calgary, is
under active construction with the base building work nearing
completion and full handover to the tenant is scheduled for the end
of September 2022, allowing Ocado to
commence their building of the interior grid, which includes the
robotic grid platform.
These timing and cost estimates are subject to changes, as well
as other development risks described in Crombie's second quarter
Management's Discussion and Analysis under "Development" and "Risk
Management".
Changes to Board of
Trustees
Pursuant to Section 3.8 of Crombie's Amended and Restated
Declaration of Trust, ECL Development Limited ("ECL") has the right
to appoint up to five trustees to Crombie's Board of Trustees.
Effective June 8, 2022, Jana Sobey, an ECL appointed trustee, resigned
from the Board of Trustees. Ms. Sobey was recently promoted at
Empire, and to allow her to focus on her new role, Empire agreed to
have her step down from the Board of Trustees. ECL retains the
right to name a replacement at a future date.
Highlighted Subsequent
Events
On July 7, 2022, Crombie acquired
a 100% interest in one retail property totalling 4,300 square feet
for $1,350, excluding closing and
transaction costs.
On August 8, 2022, Crombie
disposed of a 100% interest in a retail property totalling 74,000
square feet. Total proceeds, before closing and transaction costs,
were approximately $26,500.
On August 10, 2022, Crombie
disposed of a 100% interest in a retail property totalling 6,000
square feet. Total proceeds, before closing and transaction costs,
were approximately $1,125.
Conference Call
Invitation
Crombie will provide additional details concerning its period
ended June 30, 2022 results on a
conference call to be held Thursday, August 11, 2022,
beginning at 11:30 a.m. (EDT).
Accompanying the conference call will be a presentation that will
be available on Crombie's website. To join this conference call,
you may dial (416) 764-8688 or (888) 390-0546. You may also listen
to a live audio webcast of the conference call by visiting the
Investor section of Crombie's website located at www.crombie.ca.
Replay will be available until midnight August 18, 2022 by dialing (416) 764-8677 or
(888) 390-0541 and entering passcode 847382 #, or on the Crombie
website for 90 days after the meeting.
Cautionary Statements and Non-GAAP
Measures
Same-asset property cash NOI (SANOI), FFO, AFFO, FFO payout
ratio, AFFO payout ratio, debt to trailing 12 months adjusted
EBITDA, debt to gross fair value, and interest coverage ratio are
non-GAAP financial measures that do not have a standardized meaning
under International Financial Reporting Standards ("IFRS"). These
measures as computed by Crombie may differ from similar
computations as reported by other entities and, accordingly, may
not be comparable to other such entities. Management includes these
measures as they represent key performance indicators to
management, and it believes certain investors use these measures as
a means of assessing Crombie's financial performance. For
additional information on these non-GAAP measures see our
Management's Discussion and Analysis for the three and six months
ended June 30, 2022.
The reconciliations for each non-GAAP measure included in this
news release are outlined as follows:
Same-Asset Property Cash NOI
Crombie measures certain performance and operating metrics on a
same-asset basis to evaluate the period-over-period performance of
those properties owned and operated by Crombie. "Same-asset" refers
to those properties that were owned and operated by Crombie for the
current and comparative reporting periods. Properties that will be
undergoing a redevelopment in a future period, including adjacent
parcels of land, and those having planning activities underway are
also in this category until such development activities commence
and/or tenant leasing/renewal activity is suspended. Same‐asset
property cash NOI reflects Crombie's proportionate ownership of
jointly operated properties (and excludes any properties held in
joint ventures).
Management uses net property income on a cash basis (property
cash NOI) as a measure of performance as it reflects the cash
generated by properties period-over-period.
Net property income on a cash basis, which excludes non-cash
straight-line rent recognition and amortization of tenant incentive
amounts, is as follows:
|
Three months ended June
30,
|
Six months ended June
30,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
|
Net property
income
|
$ 70,097
|
$ 70,192
|
$
(95)
|
$
139,428
|
$
140,328
|
$
(900)
|
|
Non-cash straight-line
rent
|
(1,133)
|
(2,448)
|
1,315
|
(3,212)
|
(5,162)
|
1,950
|
|
Non-cash tenant
incentive amortization
|
5,690
|
4,840
|
850
|
11,254
|
9,375
|
1,879
|
|
Property cash
NOI
|
74,654
|
72,584
|
2,070
|
147,470
|
144,541
|
2,929
|
|
Acquisitions and
dispositions property cash NOI
|
1,802
|
2,007
|
(205)
|
3,586
|
3,768
|
(182)
|
|
Development property
cash NOI
|
5,411
|
4,420
|
991
|
9,794
|
8,793
|
1,001
|
|
Acquisitions,
dispositions and development property cash NOI
|
7,213
|
6,427
|
786
|
13,380
|
12,561
|
819
|
|
Same-asset property
cash NOI
|
$ 67,441
|
$ 66,157
|
$
1,284
|
$
134,090
|
$
131,980
|
$
2,110
|
Funds from Operations (FFO)
Crombie follows the recommendations of the Real Property
Association of Canada
("REALPAC")'s January 2022 guidance
in calculating FFO.
The reconciliation of FFO for the three and six months ended
June 30, 2022 and 2021 is as
follows:
|
Three months ended June
30,
|
Six months ended June
30,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
|
Decrease in net assets
attributable to Unitholders
|
$
(8,936)
|
$
(17,738)
|
$ 8,802
|
$
(22,713)
|
$
(20,769)
|
$
(1,944)
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
Amortization of tenant
incentives
|
5,690
|
4,840
|
850
|
11,254
|
9,375
|
1,879
|
|
Gain on disposal of
investment properties
|
(4,863)
|
—
|
(4,863)
|
(4,863)
|
(11,144)
|
6,281
|
|
Gain on distribution
from equity accounted investments
|
—
|
—
|
—
|
(1,933)
|
—
|
(1,933)
|
|
Depreciation and
amortization of investment properties
|
18,842
|
18,710
|
132
|
37,366
|
37,164
|
202
|
|
Adjustments for
equity-accounted investments
|
1,081
|
370
|
711
|
2,023
|
739
|
1,284
|
|
Principal payments on
right-of-use assets
|
57
|
56
|
1
|
113
|
110
|
3
|
|
Internal leasing
costs
|
646
|
620
|
26
|
1,336
|
1,240
|
96
|
|
Finance costs -
distributions to Unitholders
|
39,394
|
36,124
|
3,270
|
78,630
|
71,344
|
7,286
|
|
Finance costs (income)
- change in fair value of financial instruments
|
(2,034)
|
1,219
|
(3,253)
|
(2,245)
|
2,245
|
(4,490)
|
|
FFO as calculated based
on REALPAC recommendations
|
$
49,877
|
$
44,201
|
$ 5,676
|
$
98,968
|
$
90,304
|
$ 8,664
|
|
Basic weighted average
Units (in 000's)
|
176,976
|
161,170
|
15,806
|
174,832
|
159,734
|
15,098
|
|
FFO per Unit -
basic
|
$ 0.28
|
$ 0.27
|
$ 0.01
|
$ 0.57
|
$ 0.57
|
$
—
|
|
FFO payout ratio
(%)
|
79.0 %
|
81.7 %
|
(2.7) %
|
79.5 %
|
79.0 %
|
0.5 %
|
Adjusted Funds from Operations (AFFO)
Crombie follows the recommendations of REALPAC's January 2022 guidance in calculating AFFO and has
applied these recommendations to the AFFO amounts included in this
news release and Management's Discussion and Analysis.
The reconciliation of AFFO for the three and six months ended
June 30, 2022 and 2021 is as
follows:
|
Three months ended June
30,
|
Six months ended June
30,
|
|
2022
|
2021
|
Variance
|
2022
|
2021
|
Variance
|
|
FFO as calculated based
on REALPAC recommendations
|
$
49,877
|
$
44,201
|
$
5,676
|
$ 98,968
|
$ 90,304
|
$
8,664
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
Straight-line rent
adjustment
|
(1,133)
|
(2,448)
|
1,315
|
(3,212)
|
(5,162)
|
1,950
|
|
Straight-line rent
adjustment included in loss from equity-accounted
investments
|
112
|
—
|
112
|
273
|
—
|
273
|
|
Internal leasing
costs
|
(646)
|
(620)
|
(26)
|
(1,336)
|
(1,240)
|
(96)
|
|
Maintenance
expenditures on a square footage basis
|
(4,659)
|
(4,024)
|
(635)
|
(9,244)
|
(8,014)
|
(1,230)
|
|
AFFO as calculated
based on REALPAC recommendations
|
$ 43,551
|
$ 37,109
|
$
6,442
|
$ 85,449
|
$ 75,888
|
$
9,561
|
|
Basic weighted average
Units (in 000's)
|
176,976
|
161,170
|
15,806
|
174,832
|
159,734
|
15,098
|
|
AFFO per Unit -
basic
|
$ 0.25
|
$ 0.23
|
$ 0.02
|
$ 0.49
|
$ 0.48
|
$ 0.01
|
|
AFFO payout ratio
(%)
|
90.5 %
|
97.3 %
|
(6.8) %
|
92.0 %
|
94.0 %
|
(2.0) %
|
Debt Metrics
When calculating debt to gross fair value, debt is defined under
the terms of the Declaration of Trust as obligations for borrowed
money, including obligations incurred in connection with
acquisitions, excluding specific deferred taxes payable, trade
payables, and accruals in the ordinary course of business and
distributions payable. Debt includes Crombie's share of debt held
in equity-accounted joint ventures.
Gross fair value includes investment properties measured at fair
value, including Crombie's share of those held within joint
ventures. All other components of gross fair value are measured at
the carrying value included in Crombie's financial statements.
Crombie's methodology for determining the fair value of investment
properties includes capitalization of trailing 12 months net
property income using biannual capitalization rates from external
property valuators. The majority of investment properties are also
subject to external, independent appraisals on a rotational basis
over a period of not more than four years. Valuation techniques are
more fully described in Crombie's year-end audited financial
statements.
The fair value included in this calculation reflects the fair
value of the properties as at June 30,
2022 and December 31, 2021
respectively, based on each property's current use as a
revenue-generating investment property. During the six months ended
June 30, 2022, Crombie's weighted
average capitalization rate used in the determination of the fair
value of its investment properties decreased 0.02% to 5.63% from
5.65%. Crombie's weighted average capitalization rate used in the
determination of the fair value of its share of investment
properties held in equity-accounted joint ventures was 3.53% during
the six months ended June 30, 2022,
an increase of 0.23% from December 31,
2021. For an explanation of how Crombie determines
capitalization rates, see the "Other Disclosures" section of
Crombie's second quarter Management's Discussion and Analysis,
under "Investment Property Valuation" in the "Use of Estimates and
Judgments" section.
|
June
30,
2022
|
|
December
31,
2021
(1)
|
|
Fixed rate
mortgages
|
$
983,788
|
|
$
1,073,895
|
|
Senior unsecured
notes
|
1,125,000
|
|
1,125,000
|
|
Revolving credit
facility
|
2,525
|
|
9,220
|
|
Joint operation credit
facility
|
10,089
|
|
9,904
|
|
Bilateral credit
facility
|
80,000
|
|
10,000
|
|
Debt held in joint
ventures, at Crombie's share (2) (3)
|
261,236
|
|
246,308
|
|
Lease
liabilities
|
35,025
|
|
35,352
|
|
Total debt
outstanding
|
2,497,663
|
|
2,509,679
|
|
Less: Applicable fair
value debt adjustment
|
—
|
|
(53)
|
|
Adjusted
debt
|
$
2,497,663
|
|
$
2,509,626
|
|
|
|
|
|
Investment properties,
fair value
|
$
5,273,000
|
|
$
5,026,000
|
|
Investment properties
held in joint ventures, fair value, at Crombie's share
(3)
|
445,500
|
|
387,000
|
|
Other assets, cost
(4)
|
108,985
|
|
102,683
|
|
Other assets, cost,
held in joint ventures, at Crombie's share (3) (4)
(5)
|
25,744
|
|
18,370
|
|
Cash and cash
equivalents
|
1,522
|
|
3,915
|
|
Cash and cash
equivalents held in joint ventures, at Crombie's share
(3)
|
4,274
|
|
4,453
|
|
Deferred financing
charges
|
8,425
|
|
9,769
|
|
Interest rate
subsidy
|
—
|
|
(53)
|
|
Gross fair
value
|
$
5,867,450
|
|
$
5,552,137
|
|
Debt to gross fair
value
|
42.6 %
|
|
45.2 %
|
|
(1)
|
The December 31, 2021
calculation has been restated to include Crombie's share of debt
and assets held in joint ventures.
|
|
(2)
|
Includes Crombie's
share of fixed and floating rate mortgages, construction loans,
revolving credit facility, and lease liabilities held in joint
ventures.
|
|
(3)
|
See the "Joint
Ventures" section in the Management's Discussion and
Analysis.
|
|
(4)
|
Other assets exclude
tenant incentives and related accumulated amortization, and accrued
straight-line rent receivable.
|
|
(5)
|
Other assets held in
joint ventures include deferred financing charges.
|
The following table presents a reconciliation of property
revenue to adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure
and should not be considered an alternative to operating income
attributable to Unitholders, and may not be comparable to that used
by other entities.
As of June 30, 2022, Crombie has
completed a number of developments in joint ventures and, as a
result, in March 2022, Crombie
changed its methodology in calculating adjusted EBITDA to include
Crombie's share of revenue, operating expenses, and general and
administrative expenses in joint ventures. Interest service
coverage and debt service coverage calculations now include
Crombie's share of finance costs - operations and debt repayments
in joint ventures. Prior quarters have been restated to reflect
this new methodology.
|
|
|
Three months
ended
|
|
|
|
|
June
30,
2022
|
March
31,
2022
|
December 31,
2021
|
September 30,
2021
|
June
30,
2021
|
|
|
|
|
Operating income
attributable to Unitholders
|
$
28,424
|
$
25,248
|
$
78,730
|
$
23,851
|
$
19,605
|
|
|
|
|
Amortization of tenant
incentives
|
5,690
|
5,564
|
5,249
|
5,187
|
4,840
|
|
|
|
|
Gain on disposal of
investment properties
|
(4,863)
|
—
|
(42,762)
|
(2,619)
|
—
|
|
|
|
|
Gain on distribution
from equity-accounted investments
|
—
|
(1,933)
|
(15,525)
|
—
|
—
|
|
|
|
|
Impairment of
investment properties
|
—
|
—
|
1,300
|
1,239
|
—
|
|
|
|
|
Depreciation and
amortization
|
19,222
|
18,879
|
18,805
|
19,109
|
19,054
|
|
|
|
|
Finance costs -
operations
|
20,762
|
20,745
|
22,639
|
23,070
|
23,618
|
|
|
|
|
Loss (income) from
equity-accounted investments
|
1,627
|
1,539
|
685
|
923
|
562
|
|
|
|
|
Property revenue in
joint ventures, at Crombie's share
|
2,616
|
2,356
|
2,100
|
1,578
|
968
|
|
|
|
|
Property operating
expenses in joint ventures, at Crombie's share
|
(1,002)
|
(903)
|
(724)
|
(695)
|
(483)
|
|
|
|
|
General and
administrative expenses in joint ventures, at Crombie's
share
|
(21)
|
(150)
|
(32)
|
(47)
|
(110)
|
|
|
|
|
Taxes -
current
|
—
|
—
|
163
|
—
|
2
|
|
|
|
|
Adjusted EBITDA
[1]
|
$
72,455
|
$
71,345
|
$
70,628
|
$
71,596
|
$
68,056
|
|
|
|
|
Trailing 12 months
adjusted EBITDA [3]
|
$
286,024
|
$
281,626
|
$
280,057
|
$
276,643
|
$
270,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs -
operations
|
$
20,762
|
$
20,745
|
$
22,639
|
$
23,070
|
$
23,618
|
|
|
|
|
Finance costs -
operations in joint ventures, at Crombie's share
|
2,157
|
1,776
|
1,157
|
1,031
|
568
|
|
|
|
|
Amortization of
deferred financing charges
|
(668)
|
(688)
|
(742)
|
(759)
|
(764)
|
|
|
|
|
Adjusted interest
expense [2]
|
$
22,251
|
$
21,833
|
$
23,054
|
$
23,342
|
$
23,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt outstanding (see
Debt to Gross Fair Value)(1) [4]
|
$
2,497,663
|
$
2,451,504
|
$
2,509,626
|
$
2,651,936
|
$
2,621,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest service
coverage ratio {[1]/[2]}
|
3.26x
|
3.27x
|
3.06x
|
3.07x
|
2.91x
|
|
|
|
|
Debt to trailing 12
months adjusted EBITDA {[4]/[3]}
|
8.73x
|
8.70x
|
8.96x
|
9.59x
|
9.70x
|
|
|
|
|
(1)
|
Includes debt held in
joint ventures, at Crombie's share.
|
This news release contains forward-looking statements that
reflect the current expectations of management of Crombie about
Crombie's future results, performance, achievements, prospects, and
opportunities. Wherever possible, words such as "may", "will",
"estimate", "anticipate", "believe", "expect", "intend", and
similar expressions have been used to identify these
forward-looking statements. These statements reflect current
beliefs and are based on information currently available to
management of Crombie. Forward-looking statements necessarily
involve known and unknown risks and uncertainties. A number of
factors, including those discussed in the 2021 annual Management's
Discussion and Analysis under "Risk Management" and the Annual
Information Form for the year ended December
31, 2021 under "Risks", could cause actual results,
performance, achievements, prospects, or opportunities to differ
materially from the results discussed or implied in the
forward-looking statements. These factors should be considered
carefully, and a reader should not place undue reliance on the
forward-looking statements. There can be no assurance that the
expectations of management of Crombie will prove to be correct, and
Crombie can give no assurance that actual results will be
consistent with these forward-looking statements.
Specifically, this document includes, but is not limited to,
forward-looking statements regarding expected timing and costs of
development and expected impact on NAV and AFFO growth for projects
currently underway and planned into the future, each of which may
be impacted by ordinary real estate market cycles, the availability
of labour, financing and the cost of any such financing, capital
resource allocation decisions and general economic conditions, as
well as development activities undertaken by related parties not
under the direct control of Crombie.
About Crombie REIT
Crombie Real Estate Investment Trust ("Crombie") invests in real
estate that enriches local communities and enables long-term
sustainable growth. As one of the country's leading owners,
operators, and developers of quality real estate, Crombie's
portfolio primarily includes grocery-anchored retail,
retail-related industrial, and mixed-used residential properties in
Canada's top urban and suburban
markets. As at June 30, 2022, our
portfolio contains 294 income-producing properties comprising
approximately 18.5 million square feet, and a significant pipeline
of future development projects. Learn more at www.crombie.ca.
SOURCE Crombie REIT