Summit (SMU.UN)...Q-3...strong numbersGreat day all...Gary
Summit REIT Announces Strong Third Quarter 2005 Results
Distributions for November and December 2005 Also Announced
TORONTO, Oct. 26, 2005 (Canada NewsWire via COMTEX) --
The Trustees of Summit REIT (TSX: SMU.UN) announced today the financial results for the three and nine months ended September 30, 2005.
Highlights as at and for the nine months ended September 30: - High occupancy, accretive investments and expansion activities generate 13.6% increase in revenues - Portfolio occupancy rises to 96.1% - Acquired 1.1 million sq. ft. of light industrial space - Canadian industrial portfolio same property net operating income up 1.9% - Funds from operations up 17.2% - Distributable income up 16.8% - Strong accretive growth per Unit despite 9.3% increase in weighted average Units outstanding since September 2004 - Successful equity offering generating $107.8 million in gross proceeds to facilitate future growth Strong Operating Performance:
Total revenues rose 9.8% for the three months and 13.6% for the nine months ended September 30, 2005, due primarily to accretive acquisitions, higher occupancies and increased average rents compared to last year. Occupancy for Summit's total portfolio rose to 96.1% from 95.2% at the end of last year's third quarter and 95.3% at the end of the second quarter of 2005. For the Canadian industrial portfolio, occupancy increased to 96.2% compared to 95.3% at September 30, 2004 and 95.2% at June 30, 2005.
Included in total revenues in the third quarter and first nine months of 2005 was approximately $1.1 million and $2.8 million respectively in income from mortgages receivable and fees related to mezzanine financing extended to Summit's third-party property developer. As at September 30, 2005 Summit committed approximately $33.8 million in mezzanine financing and advanced approximately $26.8 million.
Net operating income ("NOI") in the third quarter and first nine months of 2005 rose 8.1% and 14.1% respectively compared to the same periods last year. For the same properties owned in both the third quarters of 2005 and 2004 third quarter NOI increased 2.5% for the total portfolio and 2.4% for Summit's Canadian light industrial portfolio. For the nine months ended September 30, 2005 "same property" NOI rose 1.9% for both Summit's total portfolio and its Canadian light industrial portfolio. The increases are due to the higher occupancies and increased average rents, as well as enhanced cost efficiencies and synergies resulting from growth in Summit's property portfolio.
"We generated solid year-over-year increases in same property NOI, once again demonstrating the strength of the Canadian light industrial sector and the success of our fully internalized property management activities," commented Lou Maroun, President and CEO.
Funds from operations ("FFO") in the third quarter of 2005 were $29.8 million ($0.473 per Unit) compared to $26.4 million ($0.461 per Unit) for the same period last year. For the first nine months of 2005, FFO was $89.2 million ($1.429 per Unit) compared to $76.1 million ($1.332 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 third quarter of 2005 rose 13.9% to $27.4 million ($0.435 per Unit) from $24.0 million ($0.420 per Unit) for the same period last year. For the nine months ended September 30, 2005 distributable income increased 16.8% to $81.5 million ($1.306 per Unit) from $69.7 million ($1.221 per Unit) for the same period 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.
Net income for the third quarter of 2005 increased 18.5% to $14.6 million ($0.232 per Unit) from $12.3 million ($0.216 per Unit) for the same period last year. For the nine months ended September 30, 2005, net income increased 10.8% to $44.1 million ($0.707 per Unit) from $39.8 million ($0.698 per Unit) for the same period last year.
For the nine month period ended September 30, 2005, the weighted average number of Units outstanding had increased by 9.3% compared to the same period last year. On September 16, 2005 Summit completed a bought-deal offering of 4.7 million Units for total gross proceeds of approximately $107.8 million.
"We are very pleased that, despite the significant increase in Units outstanding, we generated solid accretive growth through the third quarter and first nine months of 2005," Mr. Maroun stated. "As we deploy the proceeds from our recent equity offering we are confident this accretive growth will continue."
Acquisitions and Developments Build Value
Through the first nine months of 2005 Summit has acquired approximately 1.1 million square feet of light industrial space located in the Edmonton, Calgary, Greater Toronto Area and Montreal markets for a total of $78.9 million. Subsequent to the end of the third quarter of 2005, Summit added approximately 451,000 square feet of light industrial space plus one parcel of land for future development, for a total cost of approximately $29.0 million.
"Despite a competitive market for industrial properties, we have now exceeded our goal of completing $100 million in new acquisitions in 2005. These new properties will increase cash flows in the coming quarters, further diversify our portfolio, and enhance our position as Canada's largest industrial landlord," Mr. Maroun added. "In addition, our internal development and expansion programs and third-party development initiatives will add approximately 2.2 million square feet of brand new, high quality space to the portfolio once completed."
Mr. Maroun continued: "Two cold storage warehouse facilities were recently acquired in Toronto and Montreal. In addition to being accretive deals generating a strong cap rate of over 9.7%, the transaction positioned us to explore a new area of growth for Summit. Canadian public refrigerated warehouse capacity has grown significantly over the last few years, driven by increasing reliance on the outsourcing of warehousing and logistics requirements in the food industry."
Enhanced Pay-Out Ratio Despite Increase in Cash Distributions
Distributions per Unit rose in the third quarter and first nine months due to the $0.02 per Unit annual increase in cash distributions to $1.55 per Unit effective with the May 2005 distribution. Despite this increase, Summit's distributable income payout ratio improved to 89.1% in the third quarter from 91.1% last year and to 88.5% for the nine months ended September 30, 2005 from 94.0% last year.
Financing Activities Pave Way for Future Growth
Summit's overall leverage was 49.9% at September 30, 2005, down from 54.4% at December 31, 2004 and 57.3% at September 30, 2004. The reduction in leverage is primarily due to the decrease in debt resulting from the successful completion of the bought-deal equity offering on September 16, 2005. As at September 30, 2005, Summit had the capacity to acquire in excess of $0.5 billion in new properties if leverage was increased to the maximum 60% allowed under its Declaration of Trust.
NOI, FFO and distributable income are widely accepted supplemental measures of a Canadian real estate investment trust's performance and are not measures defined by Canadian generally accepted accounting principles ("GAAP"). Readers are directed to the Management's Discussion and Analysis for the three and nine months ended September 30, 2005 for a description of the measure and a reconciliation of the measure to net income. NOI, FFO and distributable income should not be construed as alternatives to net income or cash flow from operating activities that have been calculated in accordance with GAAP and these measures may not be comparable to similar measures presented by other issuers.
<< Financial Highlights: --------------------- ------------------------------------------------------------------------- For the period ended three months nine months September 30, 2005 2004 2005 2004 ------------------------------------------------------------------------- (dollar amounts in thousands, except per Unit amounts) Revenues from income properties $ 70,221 $ 64,252 $ 212,324 $ 187,658 Property operating expenses 24,972 22,390 75,569 67,755 Net operating income 45,249 41,862 136,755 119,903 Income from mortgages receivable 1,143 759 2,834 1,803 Interest expense 15,608 15,467 47,971 43,571 Trust expenses 570 412 1,340 1,254 Net loss on real estate dispositions including realized foreign exchange losses (2,385) (3,267) (5,890) (4,178) Net income 14,609 12,325 44,126 39,839 Basic net income per Unit 0.232 0.216 0.707 0.698 Funds from operations 29,836 26,410 89,156 76,082 Funds from operation per Unit 0.473 0.461 1.429 1.332 Distributable income 27,389 24,040 81,480 69,741 Distributable income per Unit 0.435 0.420 1.306 1.221 Cash distributions per Unit 0.3876 0.3825 1.1560 1.1475 Distributable income payout ratio 89.1% 91.1% 88.5% 94.0% Debt leverage ratio 49.9% 57.3% 49.9% 57.3% Floating rate debt 6.4% 15.4% 6.4% 15.4% -------------------------------------------------------------------------
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 November and December
Summit also announced today cash distributions of $0.1292 per Unit for each of the months of November and December 2005. The record dates and payable dates are as follows:
------------------------------------------------------------------------- Income Period Declaration Date Record Date Payable Date ------------------------------------------------------------------------- November 1 - 30, October 26, November 30, December 12, 2005 2005 2005 2005 ------------------------------------------------------------------------- December 1 - 31, October 26, December 30, January 10, 2005 2005 2005 2006 -------------------------------------------------------------------------
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.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements relating to our operations and the environment in which we operate, which are based on our expectations, estimates, forecasts and projections. These statements are not future guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. We undertake no obligation to publicly update any such statement, to reflect new information or the occurrence of future events or circumstances.
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SOURCE: Summit REIT
contact: Paul Dykeman, Executive Vice President & Chief Financial Officer, Toll-Free (866) 786-6481 and Fax Toll-Free (866) 786-1300, E-mail pdykeman@summitreit