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Partners Announces Results for the Fourth Quarter and Full Year 2017

TORONTO, March 28, 2018 (GLOBE NEWSWIRE) -- Partners Real Estate Investment Trust (the “REIT,” or “Partners”) (TSX:PAR.UN) today announced its results for the three and twelve month periods ended December 31, 2017 (the “fourth quarter” and “full year 2017”, respectively).

FOURTH QUARTER 2017 HIGHLIGHTS

  • Net income of $2.0 million, an improvement of $2.0 million when compared to the fourth quarter of 2016.
  • Revenues from income producing properties of $12.9 million, a reduction of $1.5 million when compared to the fourth quarter of 2016. This reduction in revenue is primarily the result of properties sold during December 2016 and June 2017.
  • Same property NOI for the quarter of $7.9 million, an improvement of $0.2 million when compared with the fourth quarter of 2016, due to higher minimum rent and recovery of bad debt.
  • All property NOI of $7.9 million, a reduction of $0.7 million when compared with the fourth quarter of 2016 due to properties sold during December 2016 and June 2017, partially offset by increases to same property NOI as discussed above.
  • FFO and AFFO per unit of $0.08 and $0.07, compared to $0.10 and $0.07, respectively, for the fourth quarter of 2016.
  • ACFO payout ratio of 97.4%, compared to 97.3% for the fourth quarter of 2016.
  • Occupancy of 95.3% as at December 31, 2017, an improvement when compared to a level of 95.1% as at December 31, 2016.
  • As at December 31, 2017, the REIT had renewed a total of 236,712 square feet of leases that were originally set to expire during 2017, representing a renewal rate of approximately 84% for 2017.
  • Debt to gross book value of 59.4%, a reduction from 68.6% at the end of 2016.
  • Subsequent to the year end, the REIT announced that it is considering the sale of up to 11 of its 34 properties. 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 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.

FULL YEAR 2017 HIGHLIGHTS

  • Net income of $5.3 million, a reduction of $3.8 million when compared to 2016. This reduction was due to an increase in non-cash fair value loss adjustments.
  • Revenues from income producing properties of $52.9 million, a reduction of $3.9 million when compared to 2016. This reduction in revenue is primarily the result of properties sold during December 2016 and June 2017.
  • Same property NOI for the year of $31.5 million, an improvement of $1.2 million when compared to 2016, due to higher minimum rent, recovery of bad debt and savings from internalization of property management at the REIT’s non-Quebec properties.
  • All property NOI of $32.9 million, a reduction of $0.9 million when compared with 2016 due to properties sold during December 2016 and June 2017, partially offset by increases to same property NOI as discussed above.
  • FFO and AFFO per unit of $0.34 and $0.26, compared to $0.34 and $0.23, respectively, for the 2016.
  • ACFO payout ratio of 96.3%, compared to 118.6% for 2016.

As at and for the three months endedAs at and for the year ended
Dec 31, 2017 Dec 31, 2016 Dec 31, 2017 Dec 31, 2016
Revenues from income producing properties $ 12,908,715 $ 14,391,853 $ 52,904,430 $ 56,778,859
Net income 1,977,343 (11,467) 5,280,177 9,050,438
Net income per unit - basic 0.05 (0.00) 0.13 0.27
NOI - same properties(1) 7,943,296 7,783,229 31,482,664 30,287,816
NOI - all properties(1) 7,943,296 8,643,556 32,864,502 33,811,701
FFO(1)(9) 3,858,612 3,229,425 13,544,809 11,615,728
FFO per unit(1)(9) 0.08 0.10 0.34 0.34
AFFO(1) (9) 3,049,086 2,378,667 10,290,518 7,828,676
AFFO per unit(1)(9) 0.07 0.07 0.26 0.23
ACFO(1) 2,957,679 2,196,135 10,443,764 7,163,819
Distributions(2) 2,881,814 2,135,983 10,061,301 8,494,169
Distributions per unit(2) 0.06 0.06 0.25 0.25
ACFO distribution payout ratio(3) 97.4% 97.3% 96.3% 118.6%
Cash distributions(4) 2,635,002 1,601,932 8,332,078 6,403,881
Cash distributions per unit(4) 0.06 0.05 0.21 0.20
As at Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total assets $ 475,045,178 $ 514,700,205 $ 520,970,422
Total debt(5) 283,331,535 354,556,805 364,550,117
Total equity 183,347,418 151,508,380 148,888,084
Weighted average units outstanding - basic 39,435,646 33,690,649 27,831,288
Weighted average units outstanding - diluted 39,559,729 33,690,649 27,831,288
Debt-to-gross book value including debentures(5) 59.4% 68.6% 69.5%
Debt-to-gross book value excluding debentures(5) 57.8% 57.5% 58.6%
Interest coverage ratio(6) 2.02 1.75 1.59
Debt service coverage ratio(6) 1.25 1.14 1.07
Mortgages weighted average effective interest rate(7) 4.10% 4.41% 4.57%
Portfolio occupancy(8) 95.3% 95.1% 94.6%

  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.
  9. Comparative figures have been reclassified to conform with the current year’s presentation and calculation methodologies.

“Partners’ results for year ending 2017 reflect the dual strategy with the first being improvement of the company’s real estate operations and the second being improvement of the corporation’s debt structure. In 2017, the REIT’s year ending same property NOI is higher by approximately $1.2 million dollars due to base rent increases and reduction in the property management expenses. Also, in 2017, the majority of the remaining two series of convertible debt were retired by a combination of Rights Offering, strategic property disposition, and accretive mortgage re-financings. This approach has been part and parcel of the REIT’s strategies since 2015.” stated Jane Domenico, the REIT’s CEO. “The 2018 strategy recognizes that the most efficient way to raise capital is through property sales and to operate in a more efficient organizational format. The announced potential sale of the Western Portfolio is an opportunity for a potential purchaser to acquire a 99.7% occupied portfolio with pad opportunity. The re-organization announced in February 2018 was an important step to streamlining operations.”

Further Information

A more detailed analysis of the REIT's financial results for the fourth quarter and full year 2017 are included in the REIT's Management Discussion and Analysis and 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, March 29, 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 April 5, 2018)

Toll Free (North America): 800-408-3053
Passcode: 6100082#

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

Source: Partners Real Estate Investment Trust