Huntingdon Capital Corp. announces Q2 2013 results

RICHMOND, BC, Aug. 12, 2013 /CNW/ - Huntingdon Capital Corp. (the "Corporation" or "Huntingdon") (TSX: HNT, HNT.DB and HNT.WT) announced its second quarter 2013 results.

KEY HIGHLIGHTS:

• Adjusted funds from operations increased to $2.6 million ($0.23 per share) compared to $1.9 million ($0.16 per share) in the previous quarter driven by increasing management fee revenue and lower capital expenditures;
• $10.0 million substantial issuer bid ("SIB") for the purchase and cancellation of 800,000 common shares at $12.50 per share closed on August 9, 2013. Represents net book value accretion of $0.29 per share or 1.9% and AFFO accretion of $0.02 per share or 7.8% for the quarter;
• Interest coverage ratio continues to be very strong at 2.5x; and
• Significant liquidity with approximately $47 million of available cash.
  
  

SELECTED FINANCIAL INFORMATION		For the three months ended
(stated in $000s unless otherwise noted)		Jun 30, 2013	Mar 31, 2013	Jun 30, 2012^1
Management fee revenue		$1,105	$491	$41
Same-property metrics
Occupancy rate (period end)		75.5%	76.6%	76.4%
Revenue from investment properties		8,493	9,102	8,592
Net operating income ("NOI")		3,530	4,157	4,139
Consolidated operating metrics
Funds from operations ("FFO")		2,531	3,053	4,168
Adjusted funds from operations ("AFFO")		2,604	1,852	4,130
Dividend/AFFO payout ratio		25.3%	36.5%	18.6%
Financing
Weighted average mortgage interest rate(period end)		5.34%	5.46%	5.55%
Weighted average term to maturity (years) (period end)		5.93	6.51	5.09
Interest coverage ratio^2		2.5x	2.0x	2.3x
Debt to total assets ratio^3		38.3%	37.8%	49.1%
Debt to EBITDA ratio^4		5.11x	4.35x	6.86x
Net debt to EBITDA ratio^5		2.19x	2.55x	6.07x
Per share amounts
FFO
Basic		$0.23	$0.27	$0.32
Diluted		$0.22	$0.25	$0.31
AFFO
Basic		$0.23	$0.16	$0.32
Diluted		$0.22	$0.15	$0.31

OPERATIONS:

• Investment in FAM REIT generated $0.5 million in distributions and management fee revenue of $1.1 million during the quarter, compared to management fee revenue of $0.5 million in the first quarter. The increase was largely due to the $0.4 million acquisition fee related to FAM REIT's purchase of an Ontario office property in May 2013.
• On a same-property basis, NOI decreased by $0.6 million when compared to 2012 primarily due to lower occupancy associated with the consolidation of tenant operations at ground-leased properties and property specific non-renewals at two Manitoba properties.
• On a sequential basis, FFO decreased to $2.5 million from $3.1 million. The three months ended March 31, 2013 included a $1.5 million fair value gain on the Corporation's investment in KEYreit, which increased FFO for the previous period. Excluding the $1.5 million fair value gain, FFO for the three months ended June 30, 2013 has improved as a result of lower general and administration costs and the growth in FAM REIT.
• Quarterly AFFO has increased to $2.6 million from $1.9 million on a sequential basis, driven by lower general and administration costs and higher management fee revenue.

CAPITAL STRUCTURE:

• Interest coverage ratio remains robust at 2.5 times coverage for the current quarter.
• Conservative and flexible capital structure with debt to total assets ratio declining to 38.3%.
• Significant liquidity with approximately $47 million of available cash.

STRATEGIC UPDATE:

• $10.0 million SIB for the purchase and cancellation of 800,000 common shares at $12.50 per share closed on August 9, 2013. SIB was accretive for remaining shareholders as the net book value per common share as at June 30, 2013 increased by 1.9% or $0.29 per share.
• During the quarter, the Corporation realized the majority of its investment in KEYreit from the take-over bid from Plazacorp Retail Properties Ltd.

OUTLOOK:

Management continues to focus on maximizing the value of its remaining portfolio of 36 properties. This will require the re-positioning of certain properties and selective longer-term capital investment. The turnaround of certain properties is also dependent upon local economic factors. In light of this, Huntingdon has implemented incentive programs to attract tenants.

Huntingdon's leasing and marketing team continues to work with various third party leasing agents to lease-up portfolio vacancies. In respect of the ground-leased properties, management has renewed two large tenants representing approximately 50,000 sf on multi-year terms at escalating lease rates.

With significant cash on hand and a strong management team in place, Huntingdon is positioned to make accretive investments and maximize shareholder value. On August 2, 2013, Huntingdon subscribed for 425,532 trust units of FAM REIT, for a total investment of $4.0 million. Huntingdon now holds an approximate 26% interest in FAM. In August 2013, FAM REIT waived conditions on a $39.0 million acquisition of an office property in Mississauga, Ontario, which will result in annual recurring fees of $0.4 million and non-recurring transaction fees of $0.5 million.

Information appearing in this press release is a select summary of results.  The financial statements and management's discussion and analysis for the Corporation are available at www.huntingdoncapital.com and on www.sedar.com

Footnotes

1	The results for the three months ended June 30, 2012 were retrospectively restated as a result of the adoption of IFRS 11, Joint Arrangements.
2	Interest coverage ratio does not have a standard meaning prescribed under IFRS and as such may not be comparable to similarly titled measures presented by other publicly traded entities.
3	Computed as total mortgages including mortgages related to assets held for sale adjusted for transaction costs plus secured debentures divided by total assets.
4	Earnings before interest, taxes, depreciation and amortization ("EBITDA") is defined as net income adjusted for income taxes, fair value adjustments to investments and investment properties, realized gains or losses on disposal of investment properties and finance costs. The amount is calculated on a trailing twelve-month basis. EBITDA is a supplemental non-IFRS financial measure of operating performance and is not defined under IFRS.  EBITDA as computed by the Corporation may differ from computations reported by other similar organizations and, accordingly, the ratio calculated above may not be comparable.
5	Net debt to EBITDA is computed as total mortgages and secured debentures as per footnote #3 less cash and cash equivalents divided by EBITDA as per footnote #4.

NOI, FFO and AFFO are not recognized as appropriate earning measures under IFRS, and are not construed as an alternative to earnings determined in accordance with IFRS, but are considered a useful supplemental indicator of the Corporation's performance.

Huntingdon is a real estate operating company listed on the TSX (Common Shares: HNT; Debentures: HNT.DB; Warrants). Huntingdon owns and manages a portfolio of 36 industrial, office, retail and aviation-related properties throughout Canada that have a total gross leasable area of 2.7 million square feet. In addition, Huntingdon owns a 26% interest in FAM REIT (TSX: F.UN, F.WT) and manages, on behalf of FAM REIT, a portfolio of 27 industrial, office, and retail properties throughout Canada that have a gross leasable area of 1.7 million square feet.

Forward-Looking Information:

Certain statements contained in this press release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of our tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations including, but not limited to, the risks detailed from time to time in Huntingdon's filings with Canadian provincial securities regulators, including its most recent annual information form and management's discussion and analysis. Huntingdon cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and Huntingdon does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as required by applicable law.

The Toronto Stock Exchange has not reviewed nor approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release. 

SOURCE: Huntingdon Capital Corp.

Zachary R. George, Director, President and Chief Executive Officer
Tel: [phone]
Fax: [phone]
Email: [email protected]