N@N

HOMBURG CANADA REAL ESTATE INVESTMENT TRUST RELEASES THIRD QUARTER RESULTS

^{Published on 2010-11-05 04:41:12 - Market Wire}
 

MONTREAL, Nov. 5 /CNW/ - Homburg Canada Real Estate Investment Trust (TSX: HCR.UN) (the "REIT") today reported its financial results for the third quarter, being the period from July 1, 2010 to September 30, 2010. 

"We are pleased to report that our first full quarter of operations resulted in net operating income, adjusted funds from operations and net earnings that are substantially in line with management's expectations as well as our IPO forecast," said Jim Beckerleg, President and Chief Executive Officer. "We are now focused on our growth targets and we have an active pipeline of potential transactions that we feel confident will yield results in the coming quarter."

Financial Results

Third quarter ended September 30, 2010 (versus initial public offering forecast)

Full financial statements and management's discussion and analysis of results will be posted on SEDAR at [ www.sedar.com ] and on the REIT's website at [ www.homburgcanadareit.com ].

Highlights

• The first full quarter of operations has resulted in net operating income, adjusted funds from operations and net earnings that are substantially in line with management's expectations as well as its initial public offering ("IPO") forecast.
  
  
• Occupancy rates for the REIT's 76 commercial income properties stood at 94.9% on September 30, 2010, consistent with forecast. The residential portfolio occupancy rate increased to 98.2% at September 30, which is above forecast.
  
  
• Average lease term to maturity on the REIT's commercial properties is 9.0 years.
  
  
• Long-term debt as a percentage of Gross Book Value is at 58%, within the REIT's target range of 55% to 60%.

Subsequent Events

• On October 15, 2010, subsequent to the end of the third quarter, HCR paid a quarterly distribution of $0.07917 per unit to unitholders.  Future monthly distributions are expected to be paid at the rate of $0.07917 per unit, commencing on November 15, 2010, as previously reported.
  
  
• On October 27, 2010, subsequent to the end of the third quarter, the REIT closed a second public offering of 7,772,100 units at $11.00 per unit, which was 10% above the IPO issue price. It was completed on a bought deal basis, raising approximately $85.5 million in gross proceeds.
  
  
• On November 1, 2010, the REIT paid the balance on a $15.2 million second mortgage on the Centre Laval in Laval, Quebec, thereby reducing total debt to gross book value of the REIT by 1.5% and increasing the REIT's financial capacity to make acquisitions.

Conference Call

The REIT's management team will be holding a conference call today at 10:00 a.m. (EDT) to discuss the results. To access the conference call, please dial 1-800-768-3232. A taped replay of the call will be available until December 5, 2010 by dialling 1-416-626-4100 or 1-800-558-5253 and entering the playback code 21486571. An audio replay of the conference call will also be available in podcast format in the Information section of the REIT's website at [ www.homburgcanadareit.com ].

Forward-looking Statements

This press release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in its IPO prospectus dated May 14, 2010.

The REIT's objectives and forward-looking statements are based on certain assumptions, including that (i) the REIT will receive financing on favourable terms; (ii) the future level of indebtedness of the REIT and its future growth potential will remain consistent with the REIT's current expectations; (iii) there will be no changes to tax laws adversely affecting the REIT's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on the REIT's operations, including its financing capacity, and asset value, will remain consistent with the REIT's current expectations; (v) the performance of the REIT's investments in Canada will proceed on a basis consistent with the REIT's current expectations; and (vi) capital markets will provide the REIT with readily available access to equity and/or debt.

The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. The REIT, except as required by applicable securities legislation, does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulatory authorities, which are available on SEDAR at [ www.sedar.com ].

About Homburg Canada Real Estate Investment Trust

Homburg Canada Real Estate Investment Trust is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Quebec. Managed internally, the REIT owns a portfolio of Canadian income-producing commercial properties, comprised mainly of retail and office properties with certain industrial properties, as well as certain income-producing multi-family residential properties. The properties comprise approximately 6.6 million square feet of commercial gross leasable area and 1,725 multi-family residential units located in Québec, Atlantic Canada, Western Canada and Ontario.

Note regarding Non-GAAP Financial Measures

Funds from operations ("FFO"), adjusted funds from operations ("AFFO") and net operating income ("NOI") are not measures recognized under Canadian generally accepted accounting principles ("Canadian GAAP") and do not have standardized meanings prescribed by Canadian GAAP. FFO, AFFO and NOI are supplemental measures of a Canadian real estate investment trust's performance and the REIT believes that FFO, AFFO and NOI are relevant measures of its ability to earn and distribute cash returns to its unitholders. The Canadian GAAP measurement most directly comparable to FFO, AFFO and NOI are cash flow from operating activities and net income.

"FFO" is defined as net income in accordance with Canadian GAAP, excluding gains (or losses) from sales of income-producing properties, long-term investments and extraordinary items, plus depreciation and amortization, plus impairment provisions, plus future income tax expense and after adjustments for equity accounted entities, joint ventures and non-controlling interests calculated to reflect FFO on the same basis as consolidated properties.

"AFFO" is defined as FFO subject to certain adjustments, including: (i) net amortization of above and below market leases, amortization of fair value mark-to-market adjustments on mortgages acquired, amortization of deferred financing and leasing costs, and compensation expense related to unit option plans; (ii) adjusting for any differences resulting from recognizing property revenues on a straight-line basis; and (iii) deducting maintenance capital expenditures and leasing costs, as determined by the REIT, net of the allocation of cash from reserves for capital expenditure programs. Other adjustments may be made to AFFO as determined by the trustees of the REIT in their discretion.

"NOI" is defined as income from properties after operating expenses have been deducted, prepared in accordance with Canadian GAAP, but before deducting income taxes, depreciation of income-producing properties and other assets and amortization of leasehold improvement and leasing costs, interest on borrowings, the REIT's administrative expenses and adjusting for the NOI on the non-controlling interest.

FFO, AFFO and NOI should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with Canadian GAAP as indicators of the REIT's performance. The REIT's method of calculating FFO, AFFO and NOI may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers.