Huntingdon Capital Corp. Announces Q4 2013 Results

RICHMOND, BC, March 17, 2014 /CNW/ - Huntingdon Capital Corp. (the "Corporation" or "Huntingdon") (TSX: HNT) (TSX: HNT.DB) (TSX: HNT.WT) announced its fourth quarter 2013 results.

KEY HIGHLIGHTS:

• Management fee platform generated $3.8 million in annual revenue exceeding forecast by $1.6 million; gross margin on fees was 46.5%.
• Stabilized two properties in Winnipeg, with a 10 year lease term commitment with the Government of Canada at 365 Hargrave and a 15 year lease term commitment with a local government agency at Charleswood Square, both at market lease rates.
• Core investment portfolio continues transformation with improving funds from operations ("FFO") of $3.2 million ($0.32 per share) compared to $1.2 million ($0.11 per share) for the previous quarter and adjusted funds from operations ("AFFO") of $2.5 million ($0.25 per share) compared to $1.3 million ($0.12 per share) for the previous quarter, with increases being driven by lower costs and one-time lease termination income of $0.6 million.
• Strong balance sheet with $45 million of available cash and leverage of 38.8%.
• Sold a Manitoba office property to FAM REIT in exchange for 466,094 Class B LP units at $8.58 per unit, for total proceeds of $4.0 million.

FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE INDICATORS:

• Same-property improvements: On a same-property basis, NOI increased to $4.0 million in the fourth quarter from $3.6 million due to one-time lease termination income of $0.6 million attributable to Zellers exposure at Northgate Shopping Centre, partially offset by lower occupancy and higher operating costs in the ground-lease and retail property portfolio.
• FFO: FFO increased to $3.2 million in the fourth quarter from $1.2 million in the prior quarter. Non-recurring items in the prior quarter included $1.1 million of share-based compensation expenses associated with the early settlement of previously granted deferred shares and non-recurring transactional items of $0.8 million.
• AFFO: AFFO increased to $2.5 million from $1.3 million on a sequential basis due to higher FFO in the current quarter, adjusted for the impact of share-based compensation expense.
  
  

SELECTED FINANCIAL INFORMATION	For the three months ended
(stated in $000s unless otherwise noted)	Dec 31, 2013	Sept  30, 2013	Dec 31, 2012^1
Same-property metrics
Occupancy rate (period end)	73.6%	75.5%	77.9%
Revenue from investment properties	$9,220	$8,374	$9,015
Net operating income ("NOI")	4,037	3,611	4,772
Consolidated operating metrics
Management fee revenue	936	1,277	63
Funds from operations ("FFO")	3,257	1,179	3,776
Adjusted funds from operations ("AFFO")	2,540	1,282	3,303
Dividend/AFFO payout ratio	23.7%	49.0%	20.9%
Financing
Weighted average mortgage interest rate (period end)	5.25%	5.32%	5.52%
Weighted average term to maturity (years) (period end)	6.22	6.19	6.61
Interest coverage ratio^2	3.1x	1.9x	2.2x
Debt to total assets ratio^3	38.8%	39.2%	37.3%
Debt to EBITDA ratio^4	6.65x	5.97x	3.80x
Net debt to EBITDA ratio^5	3.88x	3.50x	1.79x
Per share amounts
FFO
Basic	$0.32	$0.11	$0.32
Diluted	$0.31	$0.11	$0.31
AFFO
Basic	$0.25	$0.12	$0.28
Diluted	$0.24	$0.12	$0.27

OPERATIONS:

• Management fees platform: Scalable management platform demonstrating potential with $3.8 million in management fee revenue generated in 2013; increased fee-generating assets by $68.0 million in challenging market conditions.
• Leasing activity: During the quarter, Huntingdon was awarded a commitment for a new lease of 14,000 sf to a government agency for 15 years at Charleswood Square, a retail strip center in Winnipeg. In addition, another commitment was awarded to renew a 65,000 sf lease at 365 Hargrave in Winnipeg for a 10 year term with the Government of Canada at market rents. Overall, tenant retention rate of 85.0% of expiring leases in the quarter. The renewal success rate was affected by the renewal of 92,000 sf of tenancies at Vancouver and Edmonton Airport properties. A tenant loss of 56,000 sf (Huntingdon share of 14,000 sf) at an externally managed, partially owned industrial building in Winnipeg adversely impacted the renewal success rate.

CAPITAL STRUCTURE:

• Liquidity: Huntingdon continues to build liquidity with $45 million of cash-on-hand to fund opportunistic transactions to grow its management platform or pursue other accretive transactions.

STRATEGIC UPDATE:

• On February 19, 2014, Huntingdon announced that the Board of Directors (the "Board") approved a strategic review process aimed at enhancing shareholder value. This process was initiated to address the persistent discrepancy between the market price of Huntingdon's shares and the Board's view of the Corporation's intrinsic value. Management continues to carry on normal operations during this process.
• Management remains committed to supporting the accretive growth in FAM REIT, which is expected to generate incremental management fees and distribution income for Huntingdon. In December 2013, Huntingdon sold 1700 Ellice Avenue, Winnipeg, Manitoba to FAM REIT in exchange for 466,094 Class B LP units at a price of $8.58 per unit, for total proceeds of $4.0 million, equal to the IFRS value of the property.

OUTLOOK:

Sandeep Manak, President and CEO noted, "Despite a challenging rate environment and broader real estate market headwinds in 2013, we continue to see significant opportunities to drive shareholder value at Huntingdon. Our capital recycling program supports stabilization initiatives across our portfolio, leading to portfolio optimization via third-party asset sales or potential vend-in candidates for FAM REIT. Our team continues to work hard on identifying leasing prospects and repositioning properties to maximize risk-adjusted returns for our shareholders."

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 December 31, 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, dilution loss from investment in FAM REIT, adjustments to equity investees, 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 35 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 30% 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, President and Chief Executive Officer
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