Summit (SMU.UN)...Q-2Have a great day all....Gary.Please note distributible income.
Summit REIT Announces Second Quarter 2005 Results
Distributions for August, September, October 2005 Also Announced
TORONTO, Aug. 3, 2005 (Canada NewsWire via COMTEX) --
The Trustees of Summit REIT (TSX: SMU.UN) announced today the financial results for the three and six months ended June 30, 2005.
Second Quarter Highlights: - Accretive acquisitions and expansion activities generate 11.8% increase in revenues from income properties - Canadian industrial portfolio same property net operating income rises 1.5% due to higher occupancies and average rents - Funds from operations up 14.4% - Distributable income up 13.8% - Income from our mortgage-backed mezzanine financing program increases 38.0% to $1.0 million
Total revenues in the second quarter of 2005 increased 12.1% to $69.9 million compared to $62.3 million in the second quarter of 2004. For the six months ended June 30, 2005 revenues rose 15.5% to $143.8 million from $124.5 million last year. The increase in revenues is primarily due to accretive acquisitions completed over the prior twelve months, higher occupancies, increased average rents and lease termination payments received compared to last year.
Included in total revenues in the second quarter and first six months of 2005 was approximately $1.0 million and $1.7 million respectively in interest income from mortgages receivable and fees related to mezzanine financing extended to Summit's third party developer. Through the first six months of 2005 Summit has extended approximately $15.2 million in mezzanine financing and as of June 30, 2005 had approximately $22.4 million in mezzanine loans outstanding. In addition, revenues for the first six months of 2005 included lease termination income of $1.3 million, the majority of which was recognized in the first quarter of the year.
"With the significant increase in competition for Canadian industrial properties, we have accelerated our mortgage-backed mezzanine financing programs with our third-party developer to continue growing the size and scale of our property portfolio," commented Lou Maroun, President and CEO. "Currently we have seven development projects underway that will add approximately 1.5 million square feet of fully occupied space to the portfolio over the next twelve months. While we continue to seek out accretive acquisitions in our chosen markets, our development programs will generate solid growth while mitigating risk for our Unitholders."
Net operating income ("NOI") in the second quarter and first six months of 2005 rose 12.5% and 17.3% respectively compared to the same periods last year. For the 388 properties owned since the beginning of 2004, second quarter NOI increased 1.6% for the total portfolio and 1.5% for Summit's Canadian light industrial portfolio. For the six months ended June 30, 2005 "same property" NOI rose 2.0% and 2.3% for Summit's total portfolio and its Canadian light industrial portfolio respectively. The increase in "same property" NOI is due to higher occupancies, increased average rents and enhanced cost efficiencies and synergies generated by the increase in Summit's property portfolio. Occupancy for Summit's total portfolio rose to 95.3% from 94.8% at the end of last year's second quarter and 95.2% at the end of the first quarter of 2005. For the Canadian industrial portfolio, occupancy increased to 95.2% compared to 94.7% at the end of the same quarter last year and 95.2% at the end of the first quarter of 2005.
"The Canadian light industrial market remains very strong with demand for new space continuing to outpace supply. Our third-party development projects and acquisition activities will help us grow our portfolio and meet this demand, while our property expansion programs continue to meet the needs of our current tenants," Mr. Maroun added.
Funds from operations ("FFO") in the second quarter of 2005 were $29.2 million ($0.470 per Unit) compared to $25.5 million ($0.447 per Unit) for the same quarter last year. For the first six months of 2005, FFO was $59.3 million ($0.955 per Unit) compared to $49.7 million ($0.871 per Unit) for the same period in 2004. Summit's determination of FFO is in accordance with the Real Property Association of Canada's ("RealPac") recommendations.
Distributable income for the second quarter of 2005 rose 13.8% to $26.7 million ($0.429 per Unit) from $23.4 million ($0.410 per Unit) last year. For the six months ended June 30, 2005 distributable income increased 18.4% to $54.1 million ($0.871 per Unit) from $45.7 million ($0.801 per Unit) last year. Distributable income does not include gains or losses on real estate transactions, realized foreign exchange gains or losses, amortization of income properties or reductions of the value of income properties to fair value. As at June 30, 2005 the weighted average number of Units outstanding had increased by 8.9% compared to the end of the second quarter of 2004.
Distributions per Unit rose in the second quarter and first six months of 2005 due to the $0.02 per Unit increase in annual cash distributions to $1.55 per Unit effective with the May 2005 distribution. Despite this increase, Summit's distributable income payout ratio for the second quarter of 2005 improved to 90.0% from 93.3% in the second quarter last year and to 88.2% for the six months ended June 30, 2005 from 95.5% for the same period last year.
During the second quarter of 2005, Summit incurred a loss of $3.3 million on real estate transactions, including the reduction in value of income properties to fair value and related realized foreign exchange compared to losses of $0.9 million last year. For the first six months of 2005, real estate transaction losses including the reduction in value of income properties to fair value and related foreign exchange losses totalled $3.5 million in total compared to losses of $0.9 million for the same period last year. Net income for the second quarter was $12.8 million ($0.205 per Unit) compared to $13.9 million ($0.242 per Unit) in last year's second quarter. For the first six months of 2005 net income was $29.5 million ($0.475 per Unit) compared to $27.5 million ($0.482 per Unit) for the same period last year.
"We have continued to reposition our portfolio through the first half of 2005, disposing of non-core US industrial and Canadian office properties and replacing them with accretive acquisitions in our target light industrial sector," Mr. Maroun commented. "As of the end of the second quarter, 84% of our annualized NOI and approximately 92% of total gross leaseable area was in our targeted light industrial sector."
The changes to Summit's balance sheet as at June 30, 2005 compared to the prior year-end reflect property acquisitions, dispositions, mortgage-backed mezzanine financings and mortgage repayments completed through the first six months of 2005. During the period, Summit acquired approximately 237,000 square feet of light industrial space in the Greater Toronto Area, strengthening its position as one of the region's largest industrial landlords.
Summit's overall leverage was 53.9% at June 30, 2005, well within its target range and down from 54.4% at December 31, 2004 and 54.2% at March 31, 2005. As at the quarter end, Summit had the capacity to acquire approximately $300 million in new properties if leverage was increased to the maximum 60% allowed under its Declaration of Trust.
"We generated solid performance in the second quarter, again demonstrating the strength of the Canadian light industrial sector and our ability to generate increasing returns for our Unitholders through our sophisticated property management programs and the economies of scale and operating synergies resulting from the size and scale of our portfolio," Mr. Maroun concluded.
<< Financial Highlights (financial statements attached): ----------------------------------------------------- ------------------------------------------------------------------------- Period Ended June 30, Three Months Six Months ------------------------------------------------------------------------- (in $,000 except per Unit amounts) 2005 2004 2005 2004 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenues 69,902 62,336 143,794 124,450 ------------------------------------------------------------------------- Net Operating Income 44,924 39,935 91,506 78,041 ------------------------------------------------------------------------- Loss on Real Estate Transactions, Realized Foreign Exchange Loss and Reduction of Income Properties to Fair Value (3,329) (911) (3,505) (911) ------------------------------------------------------------------------- Net Income 12,756 13,855 29,517 27,514 ------------------------------------------------------------------------- Net Income per Unit (basic and diluted) $0.205 $0.242 $0.475 $0.482 ------------------------------------------------------------------------- Funds from Operations 29,177 25,499 59,320 49,672 ------------------------------------------------------------------------- Funds from Operations per Unit $0.470 $0.447 $0.955 $0.871 ------------------------------------------------------------------------- Distributable Income 26,661 23,418 54,091 45,701 ------------------------------------------------------------------------- Distributable Income per Unit $0.429 $0.410 $0.871 $0.801 ------------------------------------------------------------------------- Distributions per Unit $0.3859 $0.3825 $0.7684 $0.7650 ------------------------------------------------------------------------- Real Estate Assets 1,860,239 1,643,332 ------------------------------------------------------------------------- Weighted Average Units Outstanding 62,091 57,042 -------------------------------------------------------------------------
The full financial statements for the period, including Management's Discussion and Analysis about the period's results and Summit's property portfolio can be obtained from Summit's web site at www.summitreit.com.
Cash Distributions for August, September, October
Summit also announced today cash distributions of $0.1292 per Unit for each of the months of August, September and October 2005. The record dates and payable dates are as follows:
------------------------------------------------------------------------- Income Period Declaration Date Record Date Payable Date ------------------------------------------------------------------------- August 1-31, 2005 August 3, 2005 August 31, 2005 September 12, 2005 ------------------------------------------------------------------------- September 1-30, September 30, 2005 August 3, 2005 2005 October 11, 2005 ------------------------------------------------------------------------- October 1-31, 2005 August 3, 2005 October 31, 2005 November 10, 2005 -------------------------------------------------------------------------
As one of Canada's largest real estate investment trusts, Summit REIT owns a portfolio of high-quality properties containing approximately 32 million square feet of leaseable space. Focused primarily on the light industrial segment of the Canadian real estate market, Summit is dedicated to maximizing distributable income and the value of its property portfolio through active property management, accretive acquisitions, innovative financing and selective development opportunities. Summit REIT's Units and convertible debentures are listed on the Toronto Stock Exchange under the symbols SMU.UN and SMU.DB respectively. For more information on Summit REIT, visit our website at www.summitreit.com.
CONSOLIDATED BALANCE SHEETS As at As at June 30 December 31 2005 2004 ------------------------------------------------------------------------- (dollar amounts in thousands) (unaudited) (audited) ASSETS Real estate assets Income properties $ 1,774,491 $ 1,807,273 Properties under development 19,064 24,277 Deferred leasing costs 41,217 44,961 Mortgages receivable 25,467 10,512 ------------------------------------------------------------------------- 1,860,239 1,887,023 Cash and cash equivalents 1,853 10,420 Rents receivable 1,014 1,778 Other receivables 13,971 12,635 Prepaid expenses 11,006 5,003 Deferred financing costs 8,331 8,962 Intangible assets 752 705 Other assets 4,407 3,060 ------------------------------------------------------------------------- $ 1,901,573 $ 1,929,586 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES Mortgages payable $ 758,321 $ 825,069 Convertible debentures 100,000 100,000 Unsecured debentures 115,000 115,000 Bank loans 100,345 50,000 Accounts payable and accrued liabilities 32,014 37,087 Distributions in the normal course of payment 8,040 7,889 Security deposits 14,339 14,239 Intangible liabilities 9,491 9,784 ------------------------------------------------------------------------- 1,137,550 1,159,068 ------------------------------------------------------------------------- ------------------------------------------------------------------------- EQUITY Unitholders' equity 764,023 770,518 ------------------------------------------------------------------------- $ 1,901,573 $ 1,929,586 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME 3 months 3 months 6 months 6 months three and six months ended ended ended ended ended June 30, 2005 and 2004 June 30, June 30, June 30, June 30, (unaudited) 2005 2004 2005 2004 ------------------------------------------------------------------------- (dollar amounts in thousands, except per Unit amounts) INCOME Revenue from income properties $ 68,860 $ 61,581 $ 142,103 $ 123,406 Income from mortgages receivable 1,042 755 1,691 1,044 ------------------------------------------------------------------------- 69,902 62,336 143,794 124,450 EXPENSES Property operating expenses 23,936 21,646 50,597 45,365 Interest expense 16,012 14,518 32,363 28,053 Amortization of income properties 10,576 8,652 21,069 17,276 Amortization of deferred leasing costs 2,516 2,081 5,229 3,971 Amortization of deferred financing costs 377 240 744 518 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 53,417 47,137 110,002 95,183 ------------------------------------------------------------------------- ------------------------------------------------------------------------- INCOME FROM REAL ESTATE ASSETS 16,485 15,199 33,792 29,267 Trust expenses (400) (433) (770) (842) Realized foreign exchange loss (2,827) - (4,195) - Gain (loss) on real estate transactions 2,607 (911) 3,799 (911) Reduction of income properties to fair value (3,109) - (3,109) - ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET INCOME $ 12,756 $ 13,855 $ 29,517 $ 27,514 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted earnings per Unit $ 0.21 $ 0.24 $ 0.48 $ 0.48 CONSOLIDATED STATEMENTS OF CASH FLOWS 3 months 3 months 6 months 6 months three and six months ended ended ended ended ended June 30, 2005 and 2004 June 30, June 30, June 30, June 30, (unaudited) 2005 2004 2005 2004 ------------------------------------------------------------------------- (dollar amounts in thousands) NET INFLOW (OUTFLOW) OF CASH AND CASH EQUIVALENTS RELATED TO THE FOLLOWING ACTIVITIES: OPERATING Net income $ 12,756 $ 13,855 $ 29,517 $ 27,514 Items not affecting cash: Amortization of income properties 10,576 8,652 21,069 17,276 Amortization of deferred leasing costs 2,155 2,081 4,476 3,971 Amortization of deferred leasing costs and lease origination costs on acquisition of properties 361 - 753 - Amortization of value of above and below-market rents (330) - (671) - Amortization of deferred financing costs 377 240 744 518 Amortization of other deferred costs 203 2 419 78 Deferred rent receivable (1,047) (1,149) (2,281) (2,197) Realized foreign exchange loss 2,827 - 4,195 - Reduction on income properties to fair value 3,109 - 3,109 - (Gain) loss on real estate transactions (2,607) 911 (3,799) 911 Deferred leasing costs (2,681) (6,359) (4,568) (10,576) Units acquired and issued in escrow to fund future Restricted Unit obligations - - (1,219) (1,049) Units delivered to settle vested Restricted Unit obligations - 184 - 1,398 Changes in non-cash operating items (4,567) (7,545) (13,161) (13,161) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flow from operating activities 21,132 10,872 38,583 24,683 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FINANCING Net proceeds of new mortgage financing - 5,344 - 176,639 Proceeds of convertible debenture offering - - - 100,000 Mortgage principal repayments (4,791) (3,825) (9,072) (7,640) Discharge of mortgages (24,580) (4,497) (36,269) (59,547) Bank loans advanced (repaid) 35,026 8,780 50,344 (143,316) Distributions, net of distributions reinvested (20,610) (20,065) (42,047) (39,582) Costs to issue Units from treasury - (4) - (132) Deferred financing costs - (286) (113) (5,138) ------------------------------------------------------------------------- Cash flow (to) from financing activities $ (14,955) $ (14,553) $ (37,157) $ 21,284 ------------------------------------------------------------------------- INVESTING Acquisition of real estate assets $ (9,841) $ - $ (26,741) $ (44,196) Development expenditures (4,969) (3,072) (11,303) (7,218) Recoverable capital expenditures (182) - (182) - Non-recoverable capital expenditures (1,621) (420) (2,152) (877) Mortgages receivable advanced (1,528) (13,507) (15,162) (13,507) Mortgages receivable repaid 1,673 - 1,673 - Net proceeds from disposition of income properties 10,046 21,062 45,350 21,062 Other deferred costs (1,186) (227) (1,476) (615) ------------------------------------------------------------------------- Cash flow (to) from investing activities (7,608) 3,836 (9,993) (45,351) ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET CASH AND CASH EQUIVALENTS (OUTFLOW) INFLOW (1,431) 155 (8,567) 616 CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 3,284 2,431 10,420 1,970 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 1,853 $ 2,586 $ 1,853 $ 2,586 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SUPPLEMENTAL CASH FLOW DISCLOSURE ACQUISITION OF REAL ESTATE ASSETS Acquisition of income properties $ 9,659 $ - $ 26,642 $ 56,780 Deferred leasing costs on acquisition of properties 182 - 431 - Intangible assets on acquisition of properties - - 130 - Intangible liabilities on acquisition of properties - - (462) - ------------------------------------------------------------------------- $ 9,841 $ - $ 26,741 $ 56,780 FUNDED THROUGH: Assumption of mortgages $ - $ - $ - $ 12,584 Bank loans 9,841 - 26,741 44,196 ------------------------------------------------------------------------- $ 9,841 $ - $ 26,741 $ 56,780 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DISPOSITION OF INCOME PROPERTIES $ 28,075 $ 21,200 $ 71,963 $ 21,200 Closing costs and mortgages assumed (18,029) (138) (26,613) (138) ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET PROCEEDS FROM DISPOSITION OF INCOME PROPERTIES $ 10,046 $ 21,062 $ 45,350 $ 21,062 ------------------------------------------------------------------------- ------------------------------------------------------------------------- INTEREST PAID $ 16,915 $ 15,651 $ 32,880 $ 28,742 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>
SOURCE: Summit REIT
Paul Dykeman, Executive Vice President & Chief Financial Officer, Toll-Free (866 786-6481 and Fax Toll-Free (866) 786-1300, E-mail pdykeman@summitreit.com