CT REIT Announces 2014 Third Quarter Results in Line with Forecast

• Increases annual distribution by 2% beginning January 2015
• Completed acquisitions add over 1.2 million square feet of GLA as of September 30, 2014

TORONTO, Nov. 3, 2014 /CNW/ - CT Real Estate Investment Trust (CT REIT), (TSX: CRT.UN) today reported its condensed consolidated financial results for the period July 1, 2014 to September 30, 2014.

"We have just marked the first anniversary of our initial public offering and I am very proud of what we've already accomplished in that time," said Ken Silver, CEO, CT REIT. "We have executed against our growth strategy as planned and the 2015 acquisitions we have in the pipeline will kick-start another year of growth at CT REIT."

New Acquisitions

Today, CT REIT also announced its intention to make a further 13 investments in acquisitions or property intensifications over the next year, all of which are properties with existing Canadian Tire stores and will require an estimated investment of $77 million. They are expected to earn a 6.62% weighted average going in cap rate and represent 400,000 square feet of incremental gross leasable area. CT REIT expects to fund these investments from a combination of Class B LP Units, Class C LP Units and draws on its credit facility.

The table below summarizes the new investments and anticipated completion dates.

Property	Type	Anticipated Closing
Shawinigan, QC	Intensification	Q4 2014
Hull, QC	Intensification	Q4 2014
Miramichi, NB	Intensification	Q1 2015
Aylmer, ON	Intensification	Q1 2015
St. Paul, AB	Intensification	Q1 2015
Edmonton, AB	Intensification	Q2 2015
Kamloops, BC	Intensification	Q2 2015
Waterdown, ON	Intensification	Q3 2015
Prescott, ON	Vend-in	Q1 2015
Chambly, QC	Vend-in	Q1 2015
Val D'Or, QC	Vend-in	Q1 2015
London, ON	Vend-in	Q1 2015
Strathmore, AB	Vend-in	Q1 2015

Update on Previously Announced Acquisitions

On September 26, CT REIT purchased three properties located in Ontario from Partners REIT for $34.9 million, excluding transaction costs. The properties, located in Brockville, Strathroy and Wasaga Beach have a weighted average going-in cap rate of 6.53%. Each is comprised of a single building leased to Canadian Tire Corporation, Limited (CTC), comprising a total of 192,295 square feet and were originally built by CTC. 

The purchase was funded by the assumption of three mortgages totaling $19.2 million and by a draw on CT REIT's credit facility. The mortgages bear interest at 3.4% and mature January 1, 2018.

In addition to the Partners transaction, CT REIT completed two previously announced acquisitions in the quarter. On July 17, CT REIT and Oxford Properties closed a transaction that saw each acquire a one-third leasehold interest in Canada Square, a 844,000 square foot mixed-use commercial development (281,000 square feet at share) in Toronto, Ontario and on July 30, CT REIT acquired a 201,000 square foot distribution centre located in the south east quadrant of Calgary, Alberta. The cost of these two transactions totaled $88.4 million, $48.8 million of which was paid in cash and $39.6 million of which was satisfied through the assumption of mortgages.

CT REIT has committed to expansion and development expenditures representing approximately $31.4 million in payments, primarily to CTC, the majority of which are expected to be incurred in the fourth quarter of 2014.

Acquisition Summary

Year-to-date, CT REIT completed 13 acquisitions at a total cost of $232.4 million, of which $106.4 million was paid in cash (of which $44.0 million was funded by advances on its credit facility), $19.5 million was satisfied with the issuance of Class B LP Units to CTC, $47.3 million was satisfied with the issuance of Class C LP Units to CTC and the remaining $59.2 million through the assumption of mortgages.

Financial and Operational Summary

(in thousands of Canadian dollars, except per Unit, Unit and square footage amounts)		Q3 2014			Q3 2014 Forecast		Variance		YTD 2014		YTD 2014 Forecast		Variance
Property revenue		$	89,535	$	83,962	$	5,573	$	255,579	$	250,400	$	5,179
Net operating income ^1		$	60,803	$	58,274	$	2,529	$	177,533	$	173,293	$	4,240
Net income		$	49,197	$	42,666	$	6,531	$	264,550	$	127,130	$	137,420
Net income/Unit (basic) ^2		$	0.271	$	0.243	$	0.028	$	1.467	$	0.724	$	0.743
Net income/Unit (diluted) ^4		$	0.202	$	0.177	$	0.025	$	0.951	$	0.528	$	0.423
Funds from operations ^1		$	44,736	$	42,666	$	2,070	$	130,270	$	127,130	$	3,140
Funds from operations/Unit (diluted) (non-GAAP)^1, 2, 3		$	0.247	$	0.243	$	0.004	$	0.722	$	0.724	$	(0.002)
Adjusted funds from operations ^1		$	33,664	$	32,027	$	1,637	$	98,210	$	95,180	$	3,030
Adjusted funds from operations/Unit (diluted) (non-GAAP) ^1, 2, 3		$	0.185	$	0.182	$	0.003	$	0.545	$	0.542	$	0.003
Distributions/Unit ^2		$	0.162	$	0.162	$	-	$	0.487	$	0.487	$	-
AFFO payout ratio			87%		90%		3%		89%		90%		1%
Weighted average number of Units outstanding ^2
	Basic		181,431,586		175,620,865		5,810,721		180,306,206		175,620,865		4,685,341
	Diluted ^4		345,446,555		355,620,865		(10,174,310)		342,307,814		355,620,865		(13,313,051)
	Diluted (non-GAAP) ^1 3		181,479,601		175,620,865		5,858,736		180,346,826		175,620,865		4,725,961
Indebtedness ratio ^1			49.1%		50.2%		1.1%		49.1%		50.2%		1.1%
Interest coverage (times) ^1			3.15		3.07		0.08		3.12		3.08		0.04
Debt / enterprise value ratio ^1			49.4%		50.6%		1.2%		49.4%		50.6%		1.2%
Rentable square footage ^5			20,122,113		18,887,158		1,234,955		20,122,113		18,887,158		1,234,955
Occupancy rate ^6			99.9%		99.9%		-		99.9%		99.9%		-
^1Non-GAAP key performance indicators.
^2Total Units consists of both REIT Units and Class B LP Units outstanding.
^3Diluted Units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units.
^4Diluted Units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units.
^5Rentable square footage refers to retail, mixed-use and distribution properties and excludes development lands.
^6Refers to retail, mixed-use and distribution properties and excludes development lands.

Financial Highlights

Net Operating Income* – For the third quarter, NOI including adjustments for straight line rent and land lease expenses amounted to $60.8 million which is $2.5 million higher than the Financial Forecast for the quarter ("the Forecast"). This positive difference is principally the result of acquisition activity.

Net Income - Net income of $49.2 million was $6.5 million higher than the Forecast due, primarily to fair market value adjustments of $4.1 million recorded on investment properties during the quarter and due to higher revenue from property acquisitions that were not assumed in the original forecast.

Funds from Operations* - FFO for the period was $44.7 million or $0.247 per unit, $2.1 million higher than Forecast, largely due to the impact of NOI variances, including different timing assumptions for recognizing property taxes than is reflected in the Forecast; an improved rate of recovery of operating expenses as compared to the Forecast; acquisitions made to-date as the Forecast did not assume any acquisitions in 2014; and differing assumptions in the Forecast for general and administrative expenses.

Adjusted Funds From Operations* - AFFO for the third quarter ended September 30, 2014 amounted to $33.7 million or $0.185 per unit, $1.6 million higher than Forecast. AFFO per unit was higher than Forecast largely due to the reasons noted above.

Distributions – Distributions declared during the quarter totalled $0.1625 per unit for an AFFO payout ratio of 87% which is largely in line with CT REIT's Forecast of 90%.

CT REIT has also announced today an increase in its monthly distributions, effective in January 2015. This new rate of distributions represents a 2% increase and a new annualized rate of $0.663.

*AFFO, FFO and NOI are non-GAAP measures. Refer to Non-GAAP section in the Q3 2014 Management's Discussion & Analysis which is available on the Company's website and on SEDAR.

Operating Results

Leasing - CTC is CT REIT's largest tenant. At September 30, 2014, CTC represented 97.9% of total GLA and 96.6% of annual base minimum rent.

Occupancy – At September 30, 2014, CT REIT's portfolio occupancy rate was 99.9%, unchanged from the close of the IPO.

Management Discussion and Analysis (MD&A) and Unaudited Consolidated Financial Statements and Notes
Information in this press release is a select summary of results.  This press release should be read in conjunction with CT REIT's MD&A for the period ended September 30, 2014 ("the Q3  MD&A") and Unaudited Consolidated Financial Statements and Notes for the period ended September 30, 2014, which are available on CT REIT's website at: www.ctreit.com and on SEDAR at www.sedar.com.

To view a PDF version of CT REIT’s 2014 third quarter results please see: http://files.newswire.ca/1307/Q3MDAFSupdated.pdf

Forward–Looking Statements

This document contains forward-looking information that reflects management's current expectations related to matters such as increases in distribution, future financial performance and operating results of CT REIT. Forward-looking statements are provided for the purposes of providing information about CT REIT's future outlook and anticipated events or results. Readers are cautioned that such information may not be appropriate for other purposes.

All statements other than statements of historical facts included in this document may constitute forward–looking information, including but not limited to, statements concerning future acquisitions under the heading "New Acquisitions", capital expenditures under the heading "Update on Previously Announced Acquisitions", distributions under the heading "Distributions" and other statements concerning expansions, intensifications, results, performance, achievements, prospects or opportunities for CT REIT or the real estate industry. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.

By its very nature forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the REIT's assumptions, estimates, analyses, beliefs and opinions may not be correct and that the REIT's expectations and plans will not be achieved. Although the forward looking information contained in this press release is based on information, assumptions and beliefs which are reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information.

For more information on the risks, uncertainties and assumptions that could cause the REIT's actual results to differ from current expectations, refer to the "Risk Factors" section of our Annual Information Form for fiscal 2013, and to Part X (Enterprise Risk Management) and all subsections thereunder of our Q3, 2014 Management's Discussion and Analysis, as well as the REIT's other public filings, available at www.sedar.com and at www.ctreit.com. 

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.

Information contained in or otherwise accessible through the websites referenced in this press release (other than CT REIT's profile on SEDAR at www.sedar.com) does not form part of this press release and is not incorporated by reference into this press release. All references to such websites are inactive textual references and are for information only.

Additional information about the REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available online at www.sedar.com.   

Conference Call

CT REIT will conduct a conference call to discuss information included in this news release and related matters at 9:00 a.m. ET on November 4, 2014. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://ctreit.com/en/investors/financial-reporting, and will be available through replay at this website for 12 months.

About CT Real Estate Investment Trust

CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed end real estate investment trust formed to own income producing commercial properties primarily located in Canada. Its portfolio is comprised of more than 260 properties totaling approximately 20 million square feet of GLA, consisting primarily of retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit ctreit.com.

SOURCE: CT REIT

Media: Jane Shaw, 416-480-8581, [email protected]; Investors: Andrea Orzech, 416-480-3195, [email protected]