Huntingdon Capital Corp. announces Q3 2014 results

RICHMOND, BC, Nov. 4, 2014 /CNW/ - Huntingdon Capital Corp. (the "Corporation" or "Huntingdon") (TSX: HNT) (TSX: HNT.DB) (TSX: HNT.WT) announced its third quarter 2014 results.

KEY HIGHLIGHTS:

• On October 16, 2014, Huntingdon announced that its warrant and shareholders had voted to approve the arrangement agreement ("Arrangement Agreement") with Slate Capital Corporation, an affiliate of Slate Properties Inc. ("Slate"). Pursuant to the Arrangement Agreement, Slate will acquire all the issued and outstanding common shares of Huntingdon for $13.25 per share in exchange for cash (the "Arrangement").  The Arrangement is expected to close on November 4, 2014.
• From August to October, Huntingdon announced the following asset sales:
  • Completed the sale of 11 ground-leased properties located at the Vancouver International Airport (the "Vancouver Air Cargo Portfolio") for gross proceeds to Huntingdon of $37.3 million.
  • Completed the sale of Cumbria Centre, a strip retail centre located in Spruce Grove, Alberta for gross proceeds of $1.9 million.
  • Completed the sale of 650 Riverview Drive, an industrial property located in Chatham, Ontario for gross proceeds of $1.3 million.

SELECTED FINANCIAL INFORMATION		For the three months ended
(stated in $000s unless otherwise noted)		Sept 30, 2014	Jun 30, 2014	Sept  30, 2013
Asset Management
Management fee revenue		$981	$911	$1,277
Gross margin		37%	35%	68%
Investment Portfolio (Same-property metrics)
Occupancy rate (period end)		67.6%	67.8%	72.3%
Revenue from investment properties		$4,993	$5,505	$5,290
Net operating income ("NOI")		1,932	2,373	2,087
Consolidated operating results
Net operating income ("NOI")		2,748	4,117	3,663
Funds from operations ("FFO")		174	3,084	1,179
Financing
Weighted average mortgage interest rate  (period end)		5.08%	5.09%	5.32%
Weighted average term to maturity (years) (period end)		7.62	7.61	6.19
Interest coverage ratio^1		1.7x	3.2x	1.9x
Debt to total assets ratio^2		32.9%	38.1%	39.2%
Debt to EBITDA ratio^3		5.17x	6.10x	5.97x
Net debt to EBITDA ratio^4		1.60x	3.83x	3.5x
FFO per share amounts
	Basic	$0.02	$0.31	$0.11
	Diluted	$0.02	$0.30	$0.11

FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE INDICATORS

• General and administration costs: Savings in general and administrative expenses, which declined from $3.0 million in the third quarter of 2013 to $1.6 million in the third quarter of 2014 arising from lower transaction-driven costs. In addition, the third quarter of 2013 included a non-recurring share-based compensation expense associated with the early settlement of previously granted deferred shares.
• Same-property analysis: On a same-property basis, NOI was $1.9 million in the third quarter of 2014 compared to $2.1 million in the third quarter of 2013. NOI decreased due to lower occupancy, slightly offset by lower common area maintenance costs.
• FFO: FFO decreased to $0.2 million ($0.02 per share) in the current quarter from $1.2 million ($0.11 per share) in the third quarter of 2013. The decrease in FFO compared to the third quarter of 2013 is primarily due to lower operating income due to the sale of 11 properties, higher strategic review expenses, and lower finance income as vendor take-back loans were repaid. These items were partially offset by lower general administration expenses.
• Leverage:  Improved leverage with debt to total assets ratio of 32.9% and net debt to EBITDA ratio of 1.60x.

OPERATIONS:

• Sale of Vancouver Air Cargo Portfolio: On August 12, 2014, Huntingdon completed the sale of its interests in the Vancouver Air Cargo Portfolio, which included 10 investment properties wholly owned by Huntingdon, and an investment property held in a 50% joint venture to the Vancouver Airport Authority. Total gross sale proceeds to Huntingdon amount to $35.1 million for the wholly owned investment properties and $2.2 million for the investment property held in a 50% joint venture. This transaction also involved the repayment of $19.9 million of mortgage debt that had a weighted average annual interest rate of 5.60%. Total transaction costs including defeasance and legal fees amount to $1.2 million.
• Sale of Alberta retail property: On September 25, 2014, the Corporation announced that it completed the sale of Cumbria Centre, a two-level 21,886 sf strip retail centre located in Spruce Grove, Alberta. The gross sale proceeds were $1.9 million, before closing costs. After closing costs and the repayment of mortgage debt, the net cash proceeds are estimated to be $1.2 million.
• Sale of Ontario industrial property: On October 21, 2014, the Corporation announced that it completed the sale of 650 Riverview Drive, a 282,203 sf industrial property in Chatham, Ontario. The gross sale proceeds were $1.3 million, before closing costs. After closing costs, the net proceeds were $1.2 million. The sale of this property decreases the Ontario leasing risk, as it has struggled historically with low occupancy.

STRATEGIC UPDATE:

• Arrangement Agreement with Slate: On October 16, 2014, Huntingdon announced that its warrant and shareholders had voted to approve the Arrangement Agreement with Slate. Pursuant to the Arrangement Agreement, Slate will acquire all the issued and outstanding common shares of Huntingdon at an effective price of $13.40 per share in exchange for cash. The transaction is expected to be effective on or about November 4, 2014. Upon completion of the Arrangement, Huntingdon's common shares and warrants will cease to be publicly listed.
• Offer to purchase debentures: On October 6, 2014, the Corporation announced that it has sent Huntingdon debentureholders notice of change of control, and an offer to purchase the 7.5% secured debentures of Huntingdon due on December 31, 2016. The offer to purchase the secured debentures closed on October 28, 2014. Subject to the completion of the Arrangement, Huntingdon will repurchase 27,860 debentures for a total consideration of $28.9 million under the offer.

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	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.
2	Computed as total mortgages including mortgages related to assets held for sale adjusted for transaction costs plus secured debentures divided by total assets.
3	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, dilution loss from investment in FAM REIT, adjustments to equity investees and joint ventures, 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 .
4	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 #3.

NOI and FFO are not recognized as appropriate earnings 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: HNT.WT). Huntingdon owns and manages a portfolio of 22 industrial, office, retail and aviation-related properties throughout Canada that have a total gross leasable area of 1.6 million square feet. In addition, Huntingdon owns a 30.5% interest in FAM REIT (TSX: F.UN, F.WT) and manages, on behalf of FAM REIT, a portfolio of 28 industrial, office, and retail properties throughout Canada that have a gross leasable area of 1.8 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.

Sandeep Manak, Director, President and Chief Executive Officer, Tel: [phone], Fax: [phone], Email: [email protected]