TORONTO, March 15 /CNW/ - Allied Properties REIT (TSX:AP.UN) today
announced results for the fourth quarter and fiscal year ended December 31,
2005. The REIT also announced that its trustees have approved an increase in
monthly cash distributions from $0.09833 per unit ($1.18 per unit annualized)
to $0.10167 per unit ($1.22 per unit annualized) effective March, 2006. The
increased distribution will be payable on April 17, 2006, to unitholders of
record on March 31, 2006.
"In 2005, we completed $119 million in property acquisitions,
internalized the property management function, raised $122.5 million in new
capital, increased our same-asset net operating income by 4.8% and increased
our Distributable Income per unit by 2.8%, despite operating at an abnormally
low debt ratio for most of the year," said Michael Emory, President and CEO.
"These achievements laid the groundwork for the announcement today of our
third distribution increase in the last 24 months."
2005 Results
In 2005, the REIT
- increased same-asset net operating income by 4.8% year-over-year,
- increased Distributable Income to $19 million, up 60% from 2004,
- increased Distributable Income per unit to $1.363, up 2.8% from 2004,
- achieved a pay-out ratio of 87.9% of Distributable Income,
- internalized the property management function through the acquisition
of the property management business of Allied Canadian Development
Corporation,
- completed 15 property acquisitions for $119 million, 13 of which were
part of its consolidation strategy in its Toronto target market, one
of which strengthened its foothold in its Montreal target market and
one of which expanded its geographic focus to include a third target
market, the Exchange District in Winnipeg,
- raised $78.5 million in new equity capital, primarily through three
bought deals, one in January at $13.00 per unit, one in April at
$14.00 per unit and one in October at $15.50 per unit,
- raised $44 million in new mortgage financing, increasing the weighted
average term of its mortgages to 7.27 years (from 6.5 years at the end
of 2004) and reducing the weighted average interest rate on its
mortgages to 6.03% (from 6.53% at the end of 2004),
- maintained a very conservative debt ratio, ending the year at 51%,
well below the 60% permitted under its Declaration of Trust and the
56% at the end of 2004 and
- maintained a high level of occupancy, with leased area of 97% of the
total gross leasable area in its portfolio at the end of the year (not
including properties under development).
Third Distribution Increase
The increase in monthly cash distributions announced today is the third
distribution increase since the REIT's IPO in February of 2003. It reflects
the REIT's two-fold objective of increasing distributions periodically while
at the same time maintaining conservative pay-out ratios.
"Since our IPO, we have maintained year-end pay-out ratios between 85%
and 88% of annual Distributable Income," said Michael Emory. "In 2006, we will
remain focused on achieving conservative pay-out ratios."
Financial Summary
The REIT's financial results for the fiscal year ended December 31, 2005,
are summarized below and compared to the fiscal year ended December 31, 2004:
<<
(In thousands except for
per unit and % amounts) 2005 2004 Change % Change
-------------------------------------------------------------------------
Revenue from rental properties $51,170 $34,565 $16,605 48.0%
Rental property operating cost 18,264 12,028 6,236 51.8%
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Net rental income 32,906 22,537 10,369 46.0%
Real estate service income 162 - 162
Financing expense
Interest 10,088 7,441 2,647 35.6%
Amortization - Mortgage premium (530) (444) (86) 19.4%
Depreciation and amortization
Rental properties 6,071 4,209 1,862 44.2%
Deferred leasing cost 622 228 394 172.8%
Origination cost and acquired
tenant relationships 5,267 1,545 3,722 240.9%
Acquired contracts and
customer relationships 48 - 48
Deferred financing cost 216 126 90 71.4%
Computer and office equipment 16 - 16
-------------------------------------------------------------------------
Income from operations 11,270 9,432 1,838 19.5%
Trust expense 2,001 1,565 436 27.9%
Property management
internalization expense 7,877 - 7,877
-------------------------------------------------------------------------
Net income 1,392 7,867 (6,475) (82.3%)
Amortization
Rental properties 6,071 4,209 1,862 44.2%
Mortgage premium (530) (444) (86) 19.4%
Acquired leases 2,082 820 1,262 153.9%
M-T-M acquired leases 229 (18) 247 (1,372.2%)
Acquired tenant relationships 3,185 725 2,460 339.3%
Acquired contracts and
customer relationships 48 - 48
Step-rent adjustments (1,381) (1,325) (56) 4.2%
Property management
internalization expense 7,877 - 7,877
LTIP compensation expense 109 89 20 22.5%
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Distributable Income(1) $19,082 $11,923 $7,159 60.0%
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Weighted average units
outstanding (basic) 14,004 8,996 5,008 55.7%
Weighted average units
outstanding (diluted) 14,249 9,101 5,148 56.6%
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Distributable Income per unit
(basic) $1.363 $1.325 0.037 2.8%
Distributable Income per unit
(diluted) $1.339 $1.310 0.029 2.2%
-------------------------------------------------------------------------
(1) Distributable Income, which is not defined within Canadian generally
accepted accounting principles, has been calculated in accordance
with the terms of the REIT's Declaration of Trust.
Effective July 1, 2005, the REIT's wholly owned subsidiary, Allied
Properties Management Limited Partnership, completed the acquisition of the
property management business of the Allied Canadian Development Corporation.
This transaction was recorded using the guidance of the Emerging Issues
Committee of the Canadian Institute of Chartered Accountants in EIC-138,
"Internalization of the Management Function in Royalty and Income Trusts",
with the result that $7.9 million of the acquisition cost was expensed in the
year ended December 31, 2005.
The REIT's financial results for the fourth quarter ended December 31,
2005, are summarized below and compared to the fourth quarter ended
December 31, 2004:
(In thousands except for
per unit and % amounts) Q4 2005 Q4 2004 Change % Change
-------------------------------------------------------------------------
Revenue from rental properties $14,291 $10,119 $4,172 41.2%
Rental property operating cost 5,145 3,664 1,481 40.4%
-------------------------------------------------------------------------
Net rental income 9,146 6,455 2,691 41.7%
Real estate service income 78 - 78
Financing expense
Interest 2,893 2,220 673 30.3%
Amortization - Mortgage premium (182) (103) (79) 76.7%
Depreciation and amortization
Rental properties 1,692 1,194 498 41.7%
Deferred leasing costs 184 95 89 93.7%
Origination cost and acquired
tenant relationships 1,943 626 1,317 210.4%
Acquired contracts and
customer relationships 24 - 24
Deferred financing cost 66 43 23 53.5%
Computer and office equipment 10 - 10
-------------------------------------------------------------------------
Income from operations 2,594 2,380 214 9.0%
Trust expense 631 382 249 65.2%
Property management
internalization expense - - - -
-------------------------------------------------------------------------
Net income 1,963 1,998 (35) (1.8)%
Amortization
Rental properties 1,692 1,194 498 41.7%
Mortgage premium (182) (103) (79) 76.7%
Acquired leases 633 308 325 105.5%
M-T-M acquired leases 181 31 150 483.9%
Acquired tenant relationships 1,311 317 994 313.6%
Acquired contracts and
customer relationships 25 - 24
Step-rent adjustments (339) (276) (63) 22.8%
Property management
internalization expense - - -
LTIP compensation expense - 26 (26) (100.0%)
-------------------------------------------------------------------------
Distributable Income(1) $5,283 $3,495 $1,788 $51.2%
-------------------------------------------------------------------------
Weighted average units
outstanding (basic) 15,350 10,226 5,124 50.1%
Weighted average units
outstanding (diluted) 15,606 10,389 5,217 50.2%
Distributable Income per unit
(basic) $0.344 $0.342 0.002 0.7%
Distributable Income per unit
(diluted) $0.339 $0.336 0.003 0.6%
-------------------------------------------------------------------------
(1) Distributable Income, which is not defined within Canadian generally
accepted accounting principles, has been calculated in accordance
with the terms of the REIT's Declaration of Trust.
Outlook
The REIT's target markets are stable, with little new supply of office
space generally and Class I office space in particular. Combined with the
operating advantages stemming from the size and quality of the REIT's
portfolio, the stable markets afford Management a reasonable basis for
confidence in the REIT's near-term performance.
The REIT intends to continue the consolidation process in its Toronto
target market and to expand the foothold it has established in its Montreal
and Winnipeg target markets.
Additional Financial Information
The consolidated financial statements of the REIT for the year ended
December 31, 2005, together with accompanying notes and MD&A, have been filed
with SEDAR, www.sedar.com, and are available on the REIT's web-site,
www.alliedpropertiesreit.com.
Cautionary Statements
This press release may contain forward-looking statements with respect to
the REIT, its operations, strategy, financial performance and condition. These
statements generally can be identified by use of forward looking words such as
"may", "will", "expect", "estimate", "anticipate", intends", "believe" or
"continue" or the negative thereof or similar variations. The actual results
and performance of the REIT 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. 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 regulations and the factors
described under "Risk Factors" in the Annual Information Form of the REIT
which is available at www.sedar.com. The cautionary statements qualify all
forward-looking statements attributable to the REIT and persons acting on its
behalf. Unless otherwise stated, all forward-looking statements speak only as
of the date of this press release, and the parties undertake no obligation to
update such statements.
Allied Properties REIT owns a portfolio of predominantly Class I office
properties in downtown Toronto, downtown Montreal and downtown Winnipeg. The
objectives of the REIT are to provide stable and growing cash distributions to
its unitholders and to maximize unitholder value through the effective
management and accretive growth of its portfolio.
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