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HUNTINGDON REIT ANNOUNCES 2010 ANNUAL AND Q4 2010 RESULTS

^{Published on 2011-03-30 18:40:17 - Market Wire}
 

RICHMOND, BC, March 30 /CNW/ - Huntingdon Real Estate Investment Trust (the "Trust" or "HREIT") (TSX: HNT.UN) today announced annual and fourth quarter 2010 results.

HIGHLIGHTS:

Strengthening operations:

• Sequential quarterly improvement in occupancy to 85.2% from 84.6%
• Net operating income ("NOI") improves over previous quarter by 7.4% and 4.8% over Q4 2009
• Strong improvement in FFO compared to prior quarter while significant investments into the portfolio are reflected in lower AFFO compared to prior quarter and year

Healthy financial position:

• Quarterly interest coverage declines to 1.3x from 1.7x in prior quarter due to one-time charges taken in Q4 2010
• Relative debt-to-gross book value remains unchanged at approximately 65% compared to the prior quarter while year over year improves as ratio decreases from 73.2% to 64.9%
• Normal course issuer bid ("NCIB") reaches approximately $9.3 million in purchases of units and debentures to date. To date, 1.4 million units have been repurchased at an average cost of $6.33

The annual improvement in NOI, FFO and AFFO is reflective of the benefits of the management internalization and merger with IAT Air Cargo Facilities Income Fund ("IAT"). The quarterly change in NOI and FFO is also reflective of the merits of merger offset by various one-time items. AFFO for the fourth quarter in 2010 was negatively impacted by $7.5 million in capital expenditures in regards to improvements management has made to the portfolio during that quarter.

The merger with IAT at the beginning of 2010 resulted in HREIT acquiring IAT's 18 property portfolio as well as moving to an internalized management team. With the integration of the two companies completed in the year, both the flexibility and the savings from a merged entity were demonstrated in the annual results.

"Our annual results confirm the merits of the merger with IAT and mark the beginning of the turnaround of HREIT. As we look to 2011, we are working very hard to continue past successes with improved occupancy and optimal capital structure," said Zachary George, Chief Executive Officer.

Operating Highlights

Portfolio occupancy improving

The overall occupancy at December 31, 2010 improved to 85.2% since the previous quarter and the prior year end, reflecting the positive contribution from HREIT's leasing strategies. An isolated vacancy in the Ontario industrial segment in the fourth quarter of 2009 contributed to the lower 2009 occupancy rate. Management has directed more resources to its leasing and marketing teams and expects further positive results in 2011 and beyond.

NOI growth

Net operating income has increased by 4.8% for the quarter ended December 31, 2010 compared to the same period in the prior year. The driver for this growth is the merger with IAT and the acquisition of its 18 property portfolio. Net operating income increased 7.4% for the quarter ended December 31, 2010 compared to the previous quarter as a result of adjustments that were made to operating cost recoveries.

Non-recurring items in Trust Expense

There were several non-recurring items included in Trust expense which resulted in an increase for the quarter ended December 31, 2010 compared to the same period in 2009. Specifically, these items include a $1.4 million accrual in respect of a legal action against HREIT and its previous asset manager, Shelter Canadian Properties Limited ("SCPL"). The claim arose from a tenant for a loss incurred in 2007. The judgement was received in the third quarter and accrued for in the fourth quarter of 2010 when the amount of the liability became reasonably estimable. HREIT has filed an appeal to the judgement. Additional one-time items include transitional costs from SCPL to an internalized management team of $1.1 million.  Also, transaction costs relating to tax structuring and professional fees in respect of the investment in Fisher Communications, Inc. are approximately $250,000.

Financial Resources Highlights

Ongoing normal course issuer bid

In April 2010, HREIT initiated a NCIB to purchase the Trust's outstanding units and debentures reflecting management's belief that HREIT was undervalued. To date, the Trust has purchased approximately $9.0 million of units and $0.3 million of debentures. The average cost of the purchases of units and debentures since April is $6.33 per unit and $98.10 per debenture, respectively.  Management continues to believe that HREIT units are undervalued and continues with the NCIB.

Improving capital structure

HREIT's overall weighted average interest rate fell to 5.34% from 5.64% and its interest coverage ratio was 1.3 times in the fourth quarter of 2010 compared to the same period in 2009. Further, the Trust reduced its level of debt-to-gross book value to 64.9% from 73.2% during the same period. Together, these ratios reflect the improving quality of the balance sheet and credit quality of HREIT. Information appearing in this press release is a select summary of results. The financial statements and management's discussion and analysis for HREIT are available at [ www.hreit.ca ] and on [ www.sedar.com ]

Footnotes

NOI, FFO, AFFO and Debt to GBV ratio are not recognized as appropriate earning measures under Canadian generally accepted accounting principles ("GAAP"), and are not construed as an alternative to earnings determined in accordance with GAAP, but are considered a useful supplemental indicator of HREIT's performance. Detailed definition of NOI and FFO and explanations as to why management believes they are useful performance measures are provided in the annual and interim financial statements and management's discussion and analysis of financial position and results of operations filed by the HREIT on SEDAR at [ www.sedar.com ].

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, directly or indirectly, 78 income producing office, industrial, retail and standalone parking lot properties, including the aviation-related facilities at five of Canada's leading international airports that have a total gross leasable area of 5.5 million square feet; and two land parcels held for development, with other development and expansion opportunities within the portfolio.

Forward-Looking Information:

Certain statements contained in this press release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include , but are not limited to, general and local economic and business conditions; the financial condition of our tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and rate fluctuations. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations including, but not limited to, the risks detailed from time to time in HREIT's filings with Canadian provincial securities regulators, including its most recent annual information form and management's discussion and analysis. HREIT cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and HREIT does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as required by applicable law.

The Toronto Stock Exchange has not reviewed nor approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.