CALGARY, Aug. 9, 2011 /CNW/ - Northern Property REIT and NorSerCo Inc. (TSX: NPR.UN ) announced its results for the 3 and 6 months ended June 30, 2011. The Financial Statements and MDA for the entities are reported on a condensed combined basis at SEDAR.com under Northern Property Real Estate Investment Trust.
- Overall vacancy loss 5% compared to 6.3% same quarter last year.
- FFO per unit improves to $1.125 year to date.
- Strategic processes underway respecting seniors' portfolio.
- Feds attack stapled unit structure.
Financial Performance at a Glance
|(Thousands of dollars except per unit amounts)||
Ended June 30
Ended June 30
|Net operating income ("NOI")||25,531||23,320||48,686||43,816|
|Net and comprehensive earnings (loss)||28,846||(20,320)||40,846||(83,533)|
|Net earnings (loss) per stapled unit, basic *||$1.022||($0.814)||$1.467||($3.326)|
|Funds from operations ("FFO")||16,655||14,455||31,337||26,524|
|FFO per stapled unit, basic *||$0.590||$0.574||$1.125||$1.055|
|FFO payout ratio||63.1%||64.4%||67.1%||70.2%|
* Per unit calculations are based on the weighted average number of Stapled Units outstanding for the periods ended June 30, 2011 and 2010.
NPR's property portfolio was stable in Q2 with vacancy increasing in some areas, declining in others but flat overall. Financial results tended to track this with same door growth of 0.7% compared with the same quarter last year. FFO per unit was up modestly to $0.59 from $0.574 measured on an IFRS basis. FFO was effected to an extent by equity dilution, higher maintenance costs and some residual SIFT costs, all felt to be temporary.
NPR President and CEO, Jim Britton said, "Most areas of our portfolio performed reasonably well during the quarter. However, vacancy in Fort McMurray remains stubbornly high for us and some of the properties we are acquiring in Nanaimo are experiencing higher than anticipated vacancy during the ownership transition." Overall apartment vacancy for the REIT increased slightly from 4.9% in Q1 to 5.0% for Q2 of 2011. Vacancy in Q2 of 2010 was 6.3%.
On the acquisition front, the $71 million portfolio of buildings in Iqaluit being acquired have all closed except the $12.7 million office building which is expected to close September 1. The REIT added 65,200 square feet in three buildings of multi-tenant industrial space for $4.7 million in St. John's during the quarter as part of a plan to increase its commercial presence in the burgeoning Newfoundland capitol city.
Construction will be completed on NPR's $8.5 million development of luxury 8 plexes in Iqaluit in late August and leasing is underway. Construction will start this month on 79 units in two adjacent buildings in Iqaluit. Development approval is being sought for 63 units on lands owned by the REIT in Yellowknife. NPR has ramped up its internal construction and development capabilities recognizing that new apartment construction is becoming competitive in some markets with the high costs of buying and improving older product.
"Our strategic process is underway respecting our senior citizens portfolios," said Mr. Britton. "Brookfield Financial has been engaged to assist us with the western homes and we have direct discussions underway with operators in Newfoundland. While the rents are all in order, some of our seniors' properties are known to be doing very well commercially and others appear to be struggling. We are examining all of our options respecting the porfolio and will be announcing decisions to unitholders as they are made."
"Minister Flaherty's July 20, 2011 announcement respecting special taxation measures for stapled unit structures, to say the very least, surprised and disappointed us," Mr. Britton noted. "NPR will wait for a few months to see if the Minister's promised 10% non-qualifying income measure is enacted before finalizing plans to deal with the stapled unit issue."
To view the full MDA and Financial Statements for Q2 2011, visit www.sedar.com, or www.npreit.com.