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Name | Symbol | Market | Type |
---|---|---|---|
RioCan Real Estate Investment Trust | TSX:REI.UN | Toronto | Trust |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.08 | 0.46% | 17.63 | 17.55 | 17.67 | 17.71 | 17.51 | 17.56 | 632,222 | 21:12:41 |
TORONTO, ONTARIO--(Marketwired - May 13, 2014) - RioCan's (TSX:REI.UN) HIGHLIGHTS for the three months ended March 31, 2014 were:
RioCan Real Estate Investment Trust ("RioCan") today announced its financial results for the three months ended March 31, 2014.
"We are quite satisfied with RioCan's first quarter results. RioCan's portfolio continued to generate positive Operating FFO per unit growth in the first quarter in spite of a smaller portfolio on a comparative basis, and notwithstanding significant investment in our development program and management information technology, both of which are part of our focus on the future," said Edward Sonshine, Chief Executive Officer of RioCan. "The portfolio of development, redevelopment and intensification assets that RioCan has assembled will be an impressive engine for RioCan's continued growth. This portfolio that will generate long term returns that will be completed in a staggered manner. When considering the potential opportunities within this portfolio, we expect to be able to add new projects as others are completed to maintain this growth profile and to reposition certain assets in our core markets, while at all times managing risk and exposure in a responsible manner."
Financial Highlights
All figures in Canadian dollars unless otherwise noted. RioCan's results are prepared in accordance with International Financial Reporting Standards ("IFRS"). Consistent with RioCan's management framework, management uses certain financial measures to assess RioCan's financial performance, which are not generally accepted accounting principles (GAAP) under IFRS. For a full definition of these measures, please refer to the "Use of Non-GAAP Measures" in RioCan's first quarter 2014 Management Discussion and Analysis.
In millions except percentages and per unit values | Three months ended March 31, | ||
2014 | 2013 | % change | |
Operating FFO | $127 | $124 | 2% |
Operating FFO per Unit | $0.42 | $0.41 | 2% |
In $millions | Three months ended March 31, | |
2014 | 2013 | |
Net earnings attributable to common and preferred unitholders | $171 | $163 |
Net earnings before taxes and fair value adjustment | $105 | $114 |
In $millions. As at | March 31, 2014 | March 31, 2013 |
Total enterprise value (1) | 14,549 | 14,411 |
Total assets - at RioCan's interest(1) | 13,820 | 12,993 |
Debt(1) (mortgages and debentures payable - at RioCan's interest) | 6,124 | 5,748 |
(1) Based on RioCan's proportionate share including joint ventures accounted for under the equity method of accounting |
Operating FFO for the first quarter was $127 million ($0.42 per unit) compared to $124 million ($0.41 per unit) in the first quarter of 2013. The primary reasons for this increase were an increase in NOI from rental properties of $6 million, which includes the impact of the following items: higher rental income as a result of acquisitions, net of dispositions, same store growth of 3.1% for Canada and 3.0% for the US portfolio and the benefit of $3.2 million in favourable foreign currency gains from US operations offset by lower lease cancellation fees and straight line rent of $2.4 million, and a decrease in interest expense of $3 million (including $1 million unfavourable impact of foreign exchange). These increases to Operating FFO were partially offset by a decrease in other revenue of $5 million due to lower development fees generated on joint venture projects. Operating FFO was also impacted by an increase in general and administrative costs of $2 million due primarily to increased information technology costs associated with the Trust's implementation of a new ERP and financial reporting system during the quarter as well as certain related one-time costs.
Same Store and Same Property NOI | ||
Canada | Three months ended March 31, 2014 year over year | |
Same Store Growth | 3.1% | |
Same Property Growth | 2.6% | |
United States | ||
Same Store & Property Growth | 3.0% |
Leasing and Operational Highlights: | ||||||||
2014 | 2013 | 2012 | ||||||
(thousands of square feet, millions of dollars) | First quarter | Fourth quarter | Third quarter | Second quarter | First quarter | Fourth quarter | Third quarter | Second quarter |
Committed occupancy | 96.8% | 96.9% | 97.0% | 96.7% | 97.0% | 97.4% | 97.3% | 97.4% |
Economic occupancy | 95.7% | 95.8% | 95.5% | 95.4% | 95.8% | 95.9% | 95.5% | 95.5% |
NLA leased but not paying rent | 519 | 542 | 716 | 642 | 615 | 711 | 855 | 871 |
Annualized rental impact | $13.0 | $14.0 | $17.0 | $15.0 | $15.0 | $15.0 | $18.0 | $ 18.0 |
Retention rate - Canada (i) | 91.2% | 97.0% | 91.1% | 95.9% | 68.3% | 94.3% | 84.8% | 89.9% |
% increase in average net rent per sq ft - Canada | 7.0% | 8.8% | 11.2% | 12.0% | 13.4% | 18.4% | 12.9% | 13.4% |
Retention rate - US | 86.4% | 98.2% | 98.4% | 92.0% | 98.8% | 87.6% | 96.3% | 84.2% |
% increase in average net rent per sq ft - US | 8.3% | 4.8% | 3.8% | 4.3% | 2.3% | 5.1% | 6% | 7.3% |
Average in place rent | $16.01 | $16.08 | $16.07 | $15.77 | $15.77 | $15.70 | $15.85 | $15.33 |
Same store growth (ii) - Canada | 3.1% | 2.7% | 2.2% | 0.6% | 0.1% | 0.2% | 0.0% | 1.5% |
Same store growth (ii) - US | 3.0% | 1.7% | 0.9% | 1.4% | 1.4% | 1.9% | (0.3)% | 1.3% |
(i) - Includes impact of the vacancy of Zellers totalling 188,000 sq ft at 100% (100,500 sq ft at RioCan's interest) during the quarter. Retention excluding Zellers is 81.1%. |
(ii) - Refers to the growth in same store on a year over year basis |
Highlights:
Portfolio Activity and Acquisition Pipeline
During the first quarter, RioCan completed two acquisitions of interests in income producing properties for a total purchase price of $21 million in Canada and the US with a weighted average capitalization rate of 6.7%.
Acquisitions Completed in the First Quarter
Canada
United States
Acquisitions Under Contract (Firm)
RioCan has one income property under firm contract in Canada that would represent an acquisition of $22 million, at a capitalization rate of 6.8%.
Canada
Acquisitions Under Contract (Conditional)
RioCan has income property acquisitions under contract in Canada where conditions have not yet been waived that, if completed, will represent acquisitions of $31 million, at RioCan's interest. These transactions are undergoing due diligence procedures and while efforts will be made to complete the transactions, no assurance can be given.
Acquisition Pipeline
RioCan is currently in negotiations regarding property acquisitions in Canada that, if completed, represent approximately $100 million of additional acquisitions at RioCan's interest. These transactions are in various stages of negotiations and while efforts will be made to complete these negotiations, no assurance can be given.
Disposition Pipeline
During the first quarter, RioCan had dispositions of $51 million during the three months ended March 31, 2014, as follows:
Development Portfolio
As at March 31, 2014, RioCan had ownership interests in 16 greenfield development projects that will, upon completion, comprise about 11 million square feet (6 million square feet at RioCan's interest). In addition to its development projects, RioCan continued its urban intensification activities, primarily in the Toronto, Ontario market.
Development acquisitions completed during the First Quarter
During the three months ended March 31, 2014, RioCan acquired interests in six development properties at an aggregate purchase price of $138 million, at RioCan's interest.
Details of the current quarter development site acquisitions are as follows.
Development Property Acquisitions Subsequent to Quarter End
Development Property Acquisitions under Contract
RioCan currently has two development sites in Canada under firm contract where conditions have been waived that, if completed, represent acquisitions of $20 million at RioCan's interest.
Additionally, RioCan has $4 million of development sites in Canada (at RioCan's interest) under contract where conditions have not yet been waived. These transactions are in various stages of due diligence and while efforts will be made to complete these transactions, no assurance can be given.
Liquidity and Capital
Quarter Ended (i) | Rolling 12 months ended (ii) | ||
March 31, 2014 | March 31, 2014 | December 31, 2013 | |
Interest coverage ratio - RioCan's interest | 3.20x | 2.85x | 2.83x |
Debt service coverage ratio - RioCan's interest | 2.34x | 2.12x | 2.10x |
Fixed charge coverage ratio - RioCan's interest | 1.12x | 1.06x | 1.06x |
Net debt to Adjusted EBITDA ratio - RioCan's interest | 7.91x | 7.86x | 7.56x |
Net Operating debt to Operating EBITDA - RioCan's interest | 7.53x | 7.49x | 7.24x |
Unencumbered assets (millions) | $2,278 | $2,068 | |
Unencumbered assets to unsecured debt | 141% | 142% |
(i) Excludes capitalized interest |
(ii) Includes capitalized interest |
Financing Highlights for the First Quarter
Unencumbered Assets
As at March 31, 2014, RioCan's unencumbered asset pool was comprised of 108 assets with an aggregate fair value of $2.3 billion.
Credit Facilities
At March 31, 2014, RioCan has four revolving lines of credit in place with three Canadian chartered banks, having an aggregate capacity of $640 million.
Subsequent to the quarter, RioCan added a fifth operating line by converting an existing non-revolving term loan (that matured in 2014) into a revolving facility. The new facility has a capacity of $67.5 million with pricing similar to RioCan's other operating lines and a maturity date of December 2015. This facility brings RioCan's aggregate limit to $707.5 million.
Term Financing
Canada
US
Trust Units
On July 25, 2013, RioCan announced the TSX approval of its notice of intention to make a normal course issuer bid ("NCIB") for a portion of its Units as appropriate opportunities arise from time to time. During the first quarter RioCan did not make any purchases of Trust Units.
RioCan's Consolidated Financial Statements, Management's Discussion and Analysis for the three months ended March 31, 2014 is available on RioCan's website at www.riocan.com.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Tuesday, May 13, 2014 at 11:00 a.m. eastern time. You will be required to identify yourself and the organization on whose behalf you are participating.
In order to participate, please dial 416-340-2218 or 1-866-226-1793. If you cannot participate in the live mode, a replay will be available until June 10, 2014. To access the replay, please dial 905-694-9451 or 1-800-408-3053 and enter passcode 4629601#.
Scheduled speakers include Edward Sonshine, O.Ont. Q.C., Chief Executive Officer, Fred Waks, President and Chief Operating Officer and Rags Davloor, Executive Vice President and Chief Financial Officer. Management's presentation will be followed by a question and answer period. To ask a question, press "star 1" on a touch-tone phone. The conference call operator will be notified of all requests in the order in which they are made, and will introduce each questioner.
Alternatively, to access the simultaneous webcast, go to the following link on RioCan's website http://investor.riocan.com/Investor-Relations/Events-Webcasts/default.aspx and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 120 days.
About RioCan
RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $14.5 billion as at March 31, 2014. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 340 retail properties containing approximately 82 million square feet, including 47 grocery anchored and new format retail centres containing 13 million square feet in the United States as at March 31, 2014. RioCan's portfolio also includes 16 properties under development in Canada. For further information, please refer to RioCan's website at www.riocan.com.
Non-GAAP measures
RioCan's consolidated financial statements are prepared in accordance with IFRS. Consistent with RioCan's management framework, management uses certain financial measures to assess RioCan's financial performance, which are not generally accepted accounting principles (GAAP) under IFRS. The following measures, Funds From Operations ("FFO"), Operating Funds From Operations ("Operating FFO"), Adjusted Net Operating Income, and Adjusted Earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. RioCan uses these measures to better assess the Trust's underlying performance and provides these additional measures so that investors may do the same. Non GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan's performance, liquidity, cash flow, and profitability. For a full definition of these measures, please refer to the "Use of Non-GAAP Measures" in RioCan's first quarter 2014 Management Discussion and Analysis.
Forward-Looking Information
This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this News Release (including the sections entitled "Highlights for the three ended March 31, 2014", "Financial Highlights", "Leasing and Operational Highlights", "Portfolio Activity and Acquisition Pipeline", "Liquidity and Capital", and "Development Portfolio"), and other statements concerning RioCan's objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "would", "expect", "intend", "estimate", "anticipate", "believe", "should", "plan", "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. All forward-looking statements in this News Release are qualified by these cautionary statements.
These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on RioCan's current estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in RioCan's Management's Discussion and Analysis for the period ended March 31, 2014, which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplace associated with economic conditions, tenant concentrations, occupancy levels, access to debt and equity capital, interest rates, joint ventures/partnerships, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, unitholder liability, income taxes, the investment in the United States of America ("US"), fluctuations in the currency exchange rate between the Canadian and US dollar and RioCan's qualification as a real estate investment trust for tax purposes. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification in high growth markets; access to equity and debt capital markets to fund, at acceptable costs, the future growth program to enable the Trust to refinance debts as they mature; and the availability of purchase opportunities for growth in Canada and the US. Although the forward-looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this News Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release.
The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts (the "SIFT Provisions"). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a real estate investment trust ("REIT"). RioCan currently qualifies as a REIT and intends to continue to qualify for future years. Should this not occur, certain statements contained in this News Release may need to be modified.
Except as required by applicable law, RioCan under takes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
RioCan Real Estate Investment TrustRags DavloorExecutive Vice President & CFO(416) 642-3554
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