2021 SECOND QUARTER - HIGHLIGHTS
- FFO1 per unit of
$0.25 for the quarter compared to$0.19 for the same period in 2020. Excluding$2.5 million of consulting fees spent on the strategic review process and$0.9 million of retroactive interest charges adjustments, FFO adjusted per unit was$0.27 . FFO per unit includes the positive impact of a partial reversal of last quarters credit losses provisions in the amount of$2.2 million and early termination fees in the amount of$1.7 million - AFFO1 per unit of
$0.16 for the quarter compared to$0.12 for the same period in 2020. Excluding$2.5 million of consulting fees spent on the strategic review process and$0.9 million of retroactive interest charges adjustments, AFFO adjusted per unit was$0.18 . AFFO per unit includes the positive impact of a partial reversal of last quarters credit losses provisions in the amount of$2.2 million and early termination fees in the amount of$1.7 million - AFFO payout ratio1 of 56.3% for the quarter compared to 150.0% for the same period in 2020
- Same property NOI1 increase of 15.1% for the quarter, including a decrease of (4.0)% for the office segment, an increase of 54.4% for the retail segment and an increase of 13.1% for the industrial and flex segment
- Rent collection of 96.3% for the quarter (including amounts to be received from government agencies), slightly better than the 2021 first quarter rent collection of 94.7% after the same number of days post quarter end. As an indication, as of today, rent collection for the first quarter of 2021 now stands at 98.1%.
- Expected credit losses of
$1.1 million or 0.7% of operating revenues for the quarter, mainly due to COVID-19, of which$(0.1) million for office ($1.6 million in Q2 2020),$1.4 million for retail ($14.6 million in Q2 2020) and$(0.2) million for industrial and flex ($2.1 million in Q2 2020) - Investment properties negative change in fair value of
$136.4 million for the quarter on a proportionate basis1 - In-place occupancy rate decreased slightly from 91.7% as at
December 31, 2020 to 91.0% at quarter end - New and renewal leasing represented 89.7% of 2021 lease maturities
- Growth in the average net rent of renewed leases during the second quarter stood at 13.3%, driven by a 24.8% increase in the industrial segment, a 7.3% increase in the office segment and a 5.3% increase in the retail segment. Growth in the average net rent of renewed leases for the year ending
December 31, 2021 stood at 8.9% - As at
June 30, 2021 , available liquidity of$354.9 million consisted of$343.3 million of availability under our credit facilities and$11.5 million of cash and cash equivalents - Debt ratio was 55.6% as at
June 30, 2021 , up from 55.3% as atDecember 31, 2020 , which reflects the decrease in the fair value of investment properties - Conversion of the
$400.0 million unsecured revolving credit facility which was maturing inJuly 2021 into a$250.0 million unsecured revolving credit facility maturing inApril 2022 and a$150.0 million secured revolving credit facility maturing inApril 2023 - The formal strategic review process to identify, review and evaluate a broad range of potential strategic alternatives with a view to continuing to enhance unitholder value announced on
September 15, 2020 is ongoing
"Despite the challenges brought by the pandemic on the real estate industry in our markets, Cominar's operating and financial results further demonstrate the resilience of our portfolio with a strong growth in the average net rent of renewed leases of 8.9% for our portfolio, coupled with a retention rate of 62%, ahead of the three previous years" said
"Operating results are pursuing their recovery despite the challenges brought by the pandemic on the real estate industry, as evidenced by the SPNOI growth of 15.1% in the second quarter of 2021 compared to the same period in 2020. Expected credit losses further reduced to 0.7% of operating revenues this quarter" stated Antoine Tronquoy, Executive Vice-President and Chief Financial Officer. "During the quarter, we closed a new credit facility agreement to replace the in-place facility maturing in July with the unanimous support from the seven Canadian banks that have been participating in our banking syndicate. As at
1 Refer to section "Non-IFRS financial measures" in this press release. |
FINANCIAL AND OPERATING HIGHLIGHTS
Cominar's second quarter of 2021 financial performance has been negatively impacted by the COVID-19 pandemic.
Net Loss : Net loss for the quarter ended
Same Property NOI1 ("SPNOI"): 2021 second quarter SPNOI increased by
When compared to corresponding period of 2020, the contribution of our office portfolio as a percentage of SPNOI for the quarter ended
Expected credit losses: For the quarter ended
FFO1: FFO for the quarter ended
AFFO1: AFFO for the quarter ended
Occupancy: As at
Leasing activity: The retention rate for 2021 was 62.5% at the end of the second quarter compared to 51.7% for previous year's comparable period. Average net rent on 3.4 million square feet of lease renewals for the year ending
1 Refer to section "Non-IFRS financial measures" in this press release. |
BALANCE SHEET AND LIQUIDITY HIGHLIGHTS
Investment properties fair value: During the first six months of 2021, management revalued the entire real estate portfolio and determined that a net decrease of
Debt ratio: The debt ratio was 55.6% as at
Debt to EBITDA1 : As at
Unencumbered asset to unsecured debt ratio: As at
Secured debt to gross book value: Was 37.9% as at
As at
INVESTMENT HIGHLIGHTS
For the six-month period ended
COVID-19 PANDEMIC UPDATE
Our collection rate for the second quarter of 2021 was 96.3% including amounts to be collected from government agencies, slightly better than the first quarter of 2021 rent collection rate of 94.7% after the same number of days post quarter end. As an indication, as of today, rent collection for the first quarter of 2021 now stands at 98.1%.
Expected credit losses for the second quarter of 2021 amounted to
STRATEGIC REVIEW PROCESS
On
NON-IFRS FINANCIAL MEASURES
Cominar's consolidated financial statements are prepared in accordance with IFRS. Management uses a number of measures, which are not standardized under IFRS and should not be construed as an alternative to financial measures calculated in accordance with IFRS. Cominar uses those measures to better assess its performance. Cominar's proportionate share, same property net operating income, funds from operations (FFO), adjusted funds from operations (AFFO), debt ratio and debt to EBITDA are not measures recognized by International Financial Reporting Standards (IFRS) and do not have standardized meanings prescribed by IFRS. Such measures may differ from similar computations as reported by similar entities and, accordingly, may not be comparable to similar measures reported by such other entities. These non-IFRS financial measures are more fully defined and discussed in Cominar's interim management's discussion and analysis for the three and six-month periods ended
1 Refer to section "Non-IFRS financial measures" in this press release. |
RESULTS OF OPERATIONS
Quarter | Year-to-date (six months) | |||||||
Periods ended | 2021 ¹ | 2020 ¹ | 2021 ² | 2020 ² | ||||
$ | $ | $ | $ | |||||
Operating revenues | 164,278 | 160,550 | 333,999 | 332,659 | ||||
Operating expenses | (78,840) | (87,960) | (162,090) | (174,344) | ||||
Net operating income | 85,438 | 72,590 | 171,909 | 158,315 | ||||
Finance charges | (34,399) | (36,912) | (66,219) | (76,164) | ||||
Trust administrative expenses | (7,310) | (4,038) | (12,853) | (8,182) | ||||
Change in fair value of investment properties | (129,565) | (320,631) | (129,630) | (319,423) | ||||
Share of joint ventures' net loss | (5,488) | (8,481) | (4,123) | (6,898) | ||||
Transaction costs | (66) | (4,991) | (210) | (5,137) | ||||
Impairment of goodwill | — | (15,721) | — | (15,721) | ||||
Net loss before income taxes | (91,390) | (318,184) | (41,126) | (273,210) | ||||
Current income taxes | — | 65 | — | 65 | ||||
Net loss and comprehensive loss | (91,390) | (318,119) | (41,126) | (273,145) | ||||
Office Portfolio | (60,987) | (24,491) | (34,106) | 2,165 | ||||
Retail Portfolio | (258,172) | (244,004) | (237,652) | (222,754) | ||||
Industrial and Flex Portfolio | 248,483 | (32,051) | 269,377 | (12,959) | ||||
Corporate | (20,714) | (17,573) | (38,745) | (39,597) | ||||
Net loss and comprehensive loss | (91,390) | (318,119) | (41,126) | (273,145) |
|
The increase in operating revenues according to the condensed interim consolidated financial statements in the second quarter of 2021 compared with the corresponding quarter of 2020 resulted mainly from a better performance in 2021 of our global portfolio which was severely impacted by COVID-19 in 2020. Despite the fact that vacancies weighed on our results following a slight decrease in our in-place occupancy rates when compared to the pre-COVID-19 occupancy level, rents and revenues from recoveries increased compared to the second quarter of 2020.
The decrease in operating expenses according to the condensed interim consolidated financial statements in the second quarter of 2021 compared with the corresponding quarter of 2020 resulted mainly from a decrease of
Finance charges were down
Finally, Trust administrative expenses increased by
SAME PROPERTY NET OPERATING INCOME
Same property NOI is a non-IFRS measure used by Cominar to provide an indication of the period-over-period operating profitability of the same property portfolio, that is, Cominar's ability to increase revenues, manage costs, and generate organic growth. The same property NOI includes the results of properties owned by Cominar as at
Quarter | Year-to-date (six months) | |||||||||
Periods ended | 2021 ² | 2020 | 2021 ² | 2020 | ||||||
$ | $ | % Δ | $ | $ | % Δ | |||||
Property type | ||||||||||
Office | 33,257 | 34,653 | (4.0) | 67,513 | 68,655 | (1.7) | ||||
Retail | 27,779 | 17,987 | 54.4 | 55,881 | 47,597 | 17.4 | ||||
Industrial and flex | 25,114 | 22,214 | 13.1 | 49,997 | 45,518 | 9.8 | ||||
Same property NOI — Cominar's proportionate | 86,150 | 74,854 | 15.1 | 173,391 | 161,770 | 7.2 | ||||
Properties sold, acquired and under | 1,560 | 223 | 599.6 | 3,104 | 1,588 | 95.5 | ||||
NOI — Cominar's proportionate share 1 | 87,710 | 75,077 | 16.8 | 176,495 | 163,358 | 8.0 | ||||
NOI — Financial statements | 85,438 | 72,590 | 17.7 | 171,909 | 158,315 | 8.6 | ||||
NOI — Joint ventures | 2,272 | 2,487 | (8.6) | 4,586 | 5,043 | (9.1) |
1 Refer to section "Non-IFRS financial measures" in this press release. |
2 The quarter and six-month periods ended |
Second quarter of 2021 SPNOI increased 15.1% when compared with the corresponding quarter of 2020 mainly due to the financial impact of the complete lock down in the second quarter of 2020 compared to less restrictive government pandemic guidelines in the second quarter of 2021 and the decrease of expected credit losses.
FUNDS FROM OPERATIONS (FFO) AND ADJUSTED FUNDS FROM OPERATIONS (AFFO)
FFO is a non-IFRS measure which represents a standard real estate benchmark used to measure an entity's performance, and is calculated by Cominar as defined by REALpac as net income (calculated in accordance with IFRS) adjusted for, among other things, changes in the fair value of investment properties, deferred taxes and income taxes related to a disposition of properties, derecognition and impairment of goodwill, initial and re-leasing salary costs, adjustments relating to the accounting of joint ventures and transaction costs incurred upon a business combination or a disposition of properties. Management believes FFO to be a useful earnings measure as it adjusts net income for items that are not related to the trend in occupancy levels, rental rates and property operating costs.
AFFO is a non-IFRS measure which, by excluding from the calculation of FFO the rental income arising from the recognition of leases on a straight-line basis, the investments needed to maintain the property portfolio's capacity to generate rental income and a provision for leasing costs is calculated as defined by REALpac. Management believes AFFO provides a meaningful measure of Cominar's capacity to generate steady profits.
The following table presents a reconciliation of net loss, as determined in accordance with IFRS, and funds from operations and adjusted funds from operations:
Quarter | Year-to-date (six months) | ||||||||
Periods ended | 2021 ¹ | 2020 ¹ | 2021 ² | 2020 ² | |||||
$ | $ | $ | $ | ||||||
Net loss | (91,390) | (318,119) | (41,126) | (273,145) | |||||
Initial and re-leasing salary costs | 300 | 854 | 1,290 | 1,846 | |||||
Change in fair value of investment properties 3 | 136,382 | 330,634 | 136,447 | 329,426 | |||||
Capitalizable interest on properties under development — joint ventures | 48 | 136 | 96 | 273 | |||||
Transaction costs | 66 | 4,991 | 210 | 5,137 | |||||
Impairment of goodwill | — | 15,721 | — | 15,721 | |||||
FFO 3,4 | 45,406 | 34,217 | 96,917 | 79,258 | |||||
Provision for leasing costs | (8,400) | (7,500) | (16,433) | (14,429) | |||||
Recognition of leases on a straight-line basis 3 | (425) | 445 | (599) | (26) | |||||
Capital expenditures — maintenance of rental income generating | (7,000) | (6,045) | (13,250) | (10,905) | |||||
AFFO 3,4 | 29,581 | 21,117 | 66,635 | 53,898 | |||||
Per unit information: | |||||||||
FFO (FD) 4, 5 | 0.25 | 0.19 | 0.53 | 0.43 | |||||
AFFO (FD) 4, 5 | 0.16 | 0.12 | 0.36 | 0.29 | |||||
Weighted average number of units outstanding (FD) 5 | 182,967,372 | 182,802,565 | 182,951,612 | 182,883,814 | |||||
Payout ratio of AFFO 4, 5 | 56.3 | % | 150.0 | % | 50.0 | % | 124.1 | % | |
FFO - Office portfolio | 20,567 | 20,628 | 48,037 | 46,398 | |||||
FFO - Retail portfolio | 18,040 | 3,976 | 38,974 | 25,848 | |||||
FFO - Industrial and flex portfolio | 20,647 | 17,045 | 41,740 | 36,336 | |||||
FFO - Corporate | (13,848) | (7,432) | (31,834) | (29,324) | |||||
FFO | 45,406 | 34,217 | 96,917 | 79,258 | |||||
AFFO - Office portfolio | 12,653 | 13,340 | 37,172 | 33,128 | |||||
AFFO - Retail portfolio | 13,131 | 993 | 30,238 | 18,709 | |||||
AFFO - Industrial and flex portfolio | 17,645 | 14,200 | 37,279 | 31,417 | |||||
AFFO - Corporate | (13,848) | (7,416) | (38,054) | (29,356) | |||||
AFFO | 29,581 | 21,117 | 66,635 | 53,898 |
|
FFO and AFFO for quarter ended
For the quarters ended
OCCUPANCY RATES
Total | |||||||||||||||||||
Committed | In-Place | Committed | In-Place | Committed | In-Place | Committed | In-Place | ||||||||||||
Property type | |||||||||||||||||||
Office | 88.8 | % | 86.2 | % | 95.9 | % | 95.4 | % | 88.8 | % | 88.2 | % | 90.4 | % | 88.6 | % | |||
Retail | 89.8 | % | 86.8 | % | 90.1 | % | 85.3 | % | 89.0 | % | 72.8 | % | 89.9 | % | 85.7 | % | |||
Industrial and flex | 97.3 | % | 96.1 | % | 96.5 | % | 95.7 | % | — | — | 97.1 | % | 96.0 | % | |||||
Portfolio total | 93.3 | % | 91.3 | % | 93.9 | % | 91.5 | % | 88.5 | % | 85.9 | % | 93.2 | % | 91.0 | % |
SUBSEQUENT EVENT
On
ADDITIONAL FINANCIAL INFORMATION
Cominar's condensed interim consolidated financial statements and interim management's discussion and analysis for the second quarter of 2021 are filed with SEDAR at sedar.com and are available on Cominar's website at cominar.com.
CONFERENCE CALL ON
On
PROFILE AS AT
Cominar is one of the largest diversified real estate investment trusts in
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements with respect to Cominar and its operations, strategy, financial performance and financial position. These statements generally can be identified by the use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intend", "believe" or "continue" or the negative thereof or similar variations and the use of conditional and future tenses. The actual results and performance of Cominar discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulation and the factors described under "Risk Factors" in Cominar's Annual Information Form. The cautionary statements qualify all forward-looking statements attributable to Cominar and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. Cominar does not assume any obligation to update the aforementioned forward-looking statements, except as required by applicable laws.
SOURCE
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