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Huntingdon REIT reports 2009 second quarter results

^{Published on 2009-08-11 14:12:28, Last Modified on 2009-08-11 14:12:36 - Market Wire}
 

 WINNIPEG, Aug. 11 /CNW/ - Huntingdon Real Estate Investment Trust ("HREIT") (TSX: HNT.UN) today reported its operating results for the quarter ended June 30, 2009. The following comments in regard to the financial position and operating results of HREIT should be read in conjunction with the June 30, 2009 Management Discussion and Analysis and the financial statements for the quarter ended June 30, 2009, which may be obtained from the HREIT website at [ www.hreit.ca ] or the SEDAR website at [ www.sedar.com ]. HREIT's primary objective during 2009 is to complete a selective divestiture program in order to create funds for the pay down of higher cost debt, the retirement of the Series A and B convertible debentures, which mature in 2010, and the funding of committed leasehold and property improvements. HREIT is also striving to attain improved NOI results from its overall real estate portfolio. During the second quarter of 2009, HREIT achieved its primary objective for the year, as a result of completing the sale of three properties for gross proceeds of $90.6 million, encompassing approximately 520,000 square feet of leaseable space and representing approximately 10% of the total leaseable space of HREIT's property portfolio. In total, the three property sales generated net cash proceeds of $5.8 Million, after the repayment of $61.4 million of mortgage loan debt, and $22.1 million of interim mortgage loan financing. As a result of the debt repayment, the weighted average interest rate of mortgage loans payable decreased from 6.28% as of December 31, 2008 to 5.82% as of June 30, 2009 and the mortgage loan to gross book value ratio decreased from 60% to 53%. Since June 30, 2009, HREIT generated net cash proceeds of approximately $600,000 from the sale of a fourth property and the interim mortgage loans were paid in full. In addition, another two properties are under an unconditional sale contract with an expected closing date of September 1, 2009 and will generate projected net cash receipts of approximately $3.9 million. The net cash proceeds will assist in the retirement of the Series "A" convertible debentures in March 2010. During the second quarter of 2009, NOI increased by 9%, compared to the first quarter of 2009, while cash from operating activities, before non-cash operating items, decreased by 12%. The decrease in cash from operating activities is mainly due to increased lease acquisition costs. During the first six months of 2009, HREIT expended $2.5 million on lease acquisition costs and property renovations and upgrades, representing 50% of the total amount which is expected to be incurred for 2009. Expenditures for the second quarter of 2009 amounted to $1.9 million. FINANCIAL AND OPERATING SUMMARY Three Months Ended Six Months Ended ------------------------- ------------------------- June 30, June 30, June 30, June 30, --------- --------- --------- --------- 2009 2008 2009 2008 ------ ------ ------ ------ KEY PERFORMANCE INDICATORS Operating results Total revenue 16,243,978 15,663,903 32,124,494 32,309,798 Net operating income 8,797,515 8,758,655 16,856,913 18,182,477 Income (loss) from continuing operations before income tax recovery (2,345,888) (3,647,275) (5,715,344) (5,344,790) Income (loss) from continuing operations (2,550,532) (2,010,550) (5,300,382) (2,977,501) Income (loss) for the period (257,660) (2,775,365) (3,066,963) (4,740,710) Cash flows Cash inflow (outflow) from operating activities 1,702,009 1,297,731 2,480,134 3,067,711 Funds from Operations (FFO) 1,927,935 2,120,311 2,834,347 4,936,322 Adjusted Funds from Operations (AFFO) 924,514 1,727,374 2,152,192 3,120,759 Distributable income 2,423,219 2,694,797 4,169,517 5,739,025 Operations Quarter end occupancy rate 92% 94% Increase (decrease) in same property operating income (245,949) (1,059,490) Capital reinvestment Additions to building and equipment 347,599 698,823 401,504 1,225,596 Additions to properties under development - 3,332,893 - 5,911,765 Lease acquisition costs 1,572,327 871,153 2,130,144 2,361,744 DISTRIBUTIONS Amount - total - 5,067,476 - 10,128,516 - per unit - 0.07 - 0.14 Financing Mortgage loan debt to gross book value ratio 53% 59% Weighted average interest rate of long-term debt 5.82% 6.41% PER UNIT AMOUNTS Three Months Ended June 30 ---------------------------------------------- 2009 2008 ----------------- ---------------- Basic Diluted Basic Diluted ------- ------- ------- ------- Operating income 0.120 0.120 0.121 0.122 Income (loss) from continuing operations before income tax recovery expense (0.032) (0.032) (0.050) (0.050) Income (loss) from continuing operations (0.035) (0.035) (0.028) (0.028) Income (loss) for the period (0.004) (0.004) (0.038) (0.038) FFO 0.026 0.026 0.029 0.029 AFFO 0.013 0.013 0.024 0.024 Distributable income 0.033 0.033 0.037 0.037 Six Months Ended June 30 --------------------------------------------- 2009 2008 ----------------- ---------------- Basic Diluted Basic Diluted ------- ------- ------- ------- Operating income 0.230 0.23 0.251 0.251 Income (loss) from continuing operations before income tax recovery expense (0.078) (0.078) (0.074) (0.074) Income (loss) from continuing operations (0.072) (0.072) (0.041) (0.041) Income (loss) for the period (0.042) (0.042) (0.066) (0.066) FFO 0.039 0.039 0.068 0.068 AFFO 0.029 0.029 0.043 0.043 Distributable income 0.057 0.057 0.079 0.079 Second Quarter 2009 Compared to Second Quarter 2008 - NOI was relatively unchanged, increasing by approximately $39,000. - Loss from continuing operations, before taxes, decreased by approximately $1.3 million or 36% primarily due to decreased amortization charges and strategic review expenses offset by increased financing costs. - Income from discontinued operations amounted to $2.3 million, compared to a loss from discontinued operations of approximately $765,000 during the second quarter of 2008. The Q2-09 income includes a gain on sale of properties of $2.3 million. - After considering future income tax recoveries, the second quarter loss was approximately $258,000, compared to a net loss of $2.8 Million in the second quarter of 2009. - Cash provided by operating activities, excluding changes in non-cash operating items, decreased by $404,000. The decrease is primarily the result of increased leasing costs. - FFO decreased by $192,000 or 9% during the second quarter of 2009, compared to the second quarter of 2008, while AFFO decreased by $803,000 or 46%. On a per unit basis, FFO decreased by $0.003 per unit, while AFFO decreased by $0.011 per unit. - Distributable Income decreased by $271,000 or 10%, during the second quarter of 2009, compared to the second quarter of 2008 Comparison to Preceding Quarter ------------------------------------------------------------------------- Three Months Ended Effect on --------------------------- Income June 30, March 31, Increase 2009 2009 (Decrease) ----------------------------------------- Total revenues $ 16,243,978 $ 15,880,516 $ 363,462 Total operating and property management costs 7,446,463 7,821,118 374,655 ------------- ------------- ------------- Net operating income 8,797,515 8,059,398 738,117 Trust expenses 830.413 788,675 (41,738) ------------- ------------- ------------- Income before financing expense, amortization, discontinued operations and taxes 7,967,102 7,270,723 696,379 Financing expense 6,015,244 6,477,719 (462,475) ------------- ------------- ------------- Income before amortization, discontinued operations and taxes 1,951,858 793,004 1,158,854 Amortization 4,297,746 4,162,460 (135,286) ------------- ------------- ------------- Loss from continuing operations before income tax recoveries/expense (2,345,888) (3,369,456) 1,023,568 Income tax recoveries (204,644) 619,606 (824,250) ------------- ------------- ------------- Loss from continuing operations (2,660,532) (2,749,850) 199,318 Income from discontinued operations 2,292,872 (59,455) 2,352,327 ------------- ------------- ------------- Income (loss) for the period $ (257,660) $ (2,809,305) $ 2,551,645 ------------- ------------- ------------- ------------- ------------- ------------- Excluding income tax recoveries and discontinued operations, HREIT incurred a loss of approximately $2.9 million during the second quarter of 2009, compared to a loss of approximately $3.4 million in the first quarter of 2009, representing a decrease in the loss of approximately $500,000. The decrease in the loss mainly reflects an increase in net operating income of approximately $738,000, partially offset by an increase in financing and amortization costs. After including income tax recoveries and discontinued operations, HREIT completed the second quarter of 2009 with a loss of $258,000 compared to a loss of $2.8 million during the first quarter of 2009. Outlook for Second Half of 2009 HREIT has improved its overall financial position during the second quarter of 2009, as a result of the property sales and improved operating results. During the third quarter of 2009, the sale of additional properties, combined with the existing working capital, is expected to provide HREIT with sufficient resources to meet its projected funding commitments for the balance of the year. The following additional property sales have closed, or will close, subsequent to the end of the second quarter of 2009: - Southfort Square, a retail property located in Fort Saskatchewan, Alberta, was sold on July 1, 2009 at a gross selling price of $1,725,000. After accounting for expenses and the repayment of approximately $1.02 million of first mortgage debt, the sale resulted in net cash proceeds of approximately $600,000. - Willowcreek Centre, a retail property located in Peterborough, Ontario, was sold for for a price of $7.25 Million. The sale is expected to close on September 1, 2009 and will result in net cash receipts of approximately $2.6 million. - Douglasview Centre, a retail property located in Calgary, Alberta, was sold for a price of $3.9 million. The sale is expected to close on September 1, 2009 and will result in net cash receipts of approximately $1.2 million. HREIT has $37.3 million of mortgage loan debt maturing during the remainder of 2009. All of the maturing debt is expected to be renewed, upward re-financed or repaid from the proceeds arising from the sale of properties. About HREIT ----------- HREIT is a real estate investment trust, which is listed on the Toronto Stock Exchange under the symbols HNT.UN (Trust Units) and HNT.DB.C (Series C Convertible Debentures). HREIT owns 72 income producing office, industrial, retail and standalone parking lot properties that have a total gross leaseable owned area of 4.8 million square feet; two land parcels held for development; two properties held for sale; and other development and expansion opportunities within the existing portfolio. The properties are located in Manitoba, Ontario, Saskatchewan, Alberta, British Columbia and Northwest Territories. HREIT also owns CRESI Inc., a third party property management business. For further information on HREIT, please visit our website at [ www.hreit.ca ]. This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements. The Toronto Stock Exchange has not reviewed or approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release. 

For further information: Arni Thorsteinson, President & Chief Executive Officer, or Gino Romagnoli, Investor Relations, Tel: (204) 475-9090, Fax: (204) 452-5505, Email: [ info@hreit.ca ]