TORONTO, Nov. 7 /CNW/ - Allied Properties REIT (TSX:AP.UN) today
announced results for the third quarter ended September 30, 2005. "This was a
successful and transformative quarter for Allied Properties REIT," said
Michael Emory, President and CEO. "We internalized the property management
function at a time when appropriate economies of scale were in place and
increased our Distributable Income per unit going forward. For the first three
quarters of this year, our Distributable Income per unit was up 3.7%, despite
operating at a 45% debt ratio in the second quarter and a 48% debt ratio in
the third."
Third-Quarter Highlights
In the third quarter of 2005, the REIT
- increased Distributable Income to $5 million, up 42% from the
comparable quarter in 2004, bringing the Distributable Income for the
nine months ended September 30, 2005, to $13.8 million, up 64% from
the comparable period in 2004,
- increased Distributable Income per unit to $0.347, up slightly from
the comparable quarter in 2004, bringing the Distributable Income per
unit for the nine months ended September 30, 2005, to $1.018, up 3.7%
from the comparable period in 2004,
- achieved a pay-out ratio of 86% of Distributable Income, bringing the
pay-out ratio for the nine months ended September 30, 2005, to 88.3%,
- completed the acquisition of the property management business of
Allied Canadian Corporation,
- completed the acquisition of 602-606 King Street West, Toronto, the
third acquisition through the REIT's development pipeline with Allied
Canadian Corporation,
- maintained a very conservative debt ratio, ending the quarter at 48%,
well below the 60% permitted under its Declaration of Trust and the
52% at the end of the comparable quarter in 2004 and
- maintained a high level of occupancy, with leased area of 97.4% of the
total gross leasable area in its portfolio at the end of the quarter.
Financial Results
The REIT's financial results for the third quarter ended September 30,
2005, are summarized below and compared to the third quarter ended
September 30, 2004:
<<
(In thousands except for
per unit and % amounts) Q3 2005 Q3 2004 Change %Change
-------------------------------------------------------------------------
Revenue from rental properties $ 12,822 $ 9,734 $ 3,088 31.7%
Rental property operating cost 4,442 3,369 1,073 31.8%
-------------------------------------------------------------------------
Net rental income 8,380 6,365 2,015 31.7%
Real estate service income 84 - 84
Financing expense
Interest 2,505 2,070 435 21.0%
Amortization - Mortgage premium (145) (113) (32) 28.3%
Depreciation and amortization
Rental properties 1,549 1,175 374 31.8%
Deferred leasing costs 186 81 105 129.6%
Origination cost and acquired
tenant relationships 1,256 558 698 125.1%
Acquired contracts and customer
relationships 24 - 24
Deferred financing cost 54 41 13 31.7%
Computer and office equipment 6 - 6
-------------------------------------------------------------------------
Income from operations 3,029 2,553 476 18.6%
Trust expense 404 305 99 32.5%
Property management
internalization expense 7,877 - 7,877
-------------------------------------------------------------------------
Net income (loss) (5,252) 2,248 (7,500) (333.6%)
Amortization
Rental properties 1,549 1,175 374 31.8%
Mortgage premium (145) (113) (32) 28.3%
Acquired leases 535 266 269 101.1%
M-T-M acquired leases - 38 (38) (100.0%)
Acquired tenant relationships 720 291 429 147.4%
Acquired contracts and customer
relationships 24 - -
Step-rent adjustments (287) (375) 88 (23.5%)
Property management internalization
expense 7,877 - 7,877
LTIP compensation expense - - -
-------------------------------------------------------------------------
Distributable Income(1) $ 5,021 $ 3,530 $ 1,491 42.2%
-------------------------------------------------------------------------
Weighted average units
outstanding (basic) 14,471 10,200 4,271 41.9%
Weighted average units outstanding
(diluted) 14,727 10,348 4,379 42.3%
Distributable Income per unit
(basic) $ 0.347 $ 0.346 0.001 0.3%
Distributable Income per unit
(diluted) $ 0.341 $ 0.341 - -
-------------------------------------------------------------------------
(1) Distributable Income, which is not defined within Canadian generally
accepted accounting principles, has been calculated in accordance
with the terms of the Declaration.
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 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
quarter.
The REIT's financial results for the nine months ended September 30,
2005, are summarized below and compared to the nine months ended
September 30, 2004:
(In thousands except for per
unit and % amounts) Period Period Change % Change
-------------------------------------------------------------------------
Revenue from rental properties $ 36,879 $ 24,446 $ 12,433 50.9%
Rental property operating cost 13,119 8,364 4,755 56.9%
-------------------------------------------------------------------------
Net rental income 23,760 16,082 7,678 47.7%
Real estate service income 84 - 84
Financing expense
Interest 7,195 5,221 1,974 37.8%
Amortization - Mortgage premium (348) (341) (7) 2.1%
Depreciation and amortization
Rental properties 4,379 3,015 1,364 45.2%
Deferred leasing cost 438 133 305 229.3%
Origination cost and acquired
tenant relationships 3,324 920 2,404 261.3%
Acquired contracts and customer
relationships 24 - 24
Deferred financing cost 150 82 68 82.9%
Computer and office equipment 6 - 6
-------------------------------------------------------------------------
Income from operations 8,676 7,052 1,624 22.3%
Trust expense 1,370 1,183 187 15.8%
Property management
internalization expense 7,877 - 7,877
-------------------------------------------------------------------------
Net income (loss) (571) 5,869 (6,440) (109.7%)
Amortization
Rental properties 4,379 3,015 1,364 45.2%
Mortgage premium (348) (341) (7) 2.1%
Acquired leases 1,449 512 937 183.0%
M-T-M acquired leases 48 (49) 97 (198.0%)
Acquired tenant relationships 1,874 408 1,466 359.3%
Acquired contracts and customer
relationships 24 - -
Step-rent adjustments (1,042) (1,049) 7 (0.7%)
Property management
internalization expense 7,877 - 7,877
LTIP compensation expense 109 63 46 73.0%
-------------------------------------------------------------------------
Distributable Income(1) $ 13,799 $ 8,428 $ 5,371 63.7%
-------------------------------------------------------------------------
Weighted average units outstanding
(basic) 13,550 8,584 4,966 57.9%
Weighted average units outstanding
(diluted) 13,786 8,661 5,125 59.2%
Distributable Income per unit
(basic) $ 1.018 $ 0.982 0.037 3.7%
Distributable Income per unit
(diluted) $ 1.001 $ 0.973 0.028 2.9%
-------------------------------------------------------------------------
(1) Distributable Income, which is not defined within Canadian generally
accepted accounting principles, has been calculated in accordance
with the terms of the Declaration.
Outlook
The REIT's target markets are stable. 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 and in the REIT's ability to sustain a manageable
rate of growth.
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. On November 1, 2005, the REIT completed the
acquisition of a 285,434 square foot, Class I office portfolio in downtown
Toronto. This acquisition significantly bolstered the REIT's position as the
leading provider of Class I office space in Toronto, increasing the size of
its portfolio in King West Central by 12%, in the Entertainment District by
33% and in Downtown East by 22%.
Additional Financial Information
The financial statements with accompanying notes and MD&A will be filed
on SEDAR and available on the REIT's web-site at www.alliedpropertiesreit.com.
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.
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, including that the transaction contemplated herein is completed.
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 their behalf. Unless
otherwise stated, all forward-looking statements speak only as of the date of
this press release and the parties have no obligation to update such
statements.
>>
