Parkbridge announces third quarter FFO per share increase of 16%
CALGARY, Aug. 4 /CNW/ - Parkbridge Lifestyle Communities Inc. ("Parkbridge" or the "Corporation"), (TSX: PRK) today announced its results for the three and nine months ended June 30, 2010.
Financial Highlights ($000's except share and per share amounts) ------------------------------------------------------------------------- June 30 September 30 Balance Sheet Data 2010 2009 ------------------ ------------- ------------- Income properties 433,796 400,120 Development properties 63,114 67,559 ------------- ------------- 496,910 467,679 Secured debt 289,715 279,495 Number of shares issued and outstanding (000's) 66,975 66,769 Three Months Nine Months Ended June 30 Ended June 30 ------------------------- --------------------------- Income Summary Data 2010 2009 2010 2009 ------------------- ----------- ------------- ------------- ------------- Revenues from all operations 39,791 33,092 89,112 77,193 Income from property operations 11,905 10,604 33,222 29,965 Home Sales income 1,486 817 2,428 1,633 Income from operations 13,391 11,421 35,650 31,598 Net income 3,773 3,285 7,148 7,251 Net income per share - diluted 0.055 0.053 0.104 0.117 Funds from operations (FFO)(1) 7,926 6,117 18,903 15,980 FFO per share - diluted 0.115 0.099 0.275 0.259 Adjusted Funds from operations (AFFO)(1) 7,373 5,470 17,490 14,423 AFFO per share - diluted 0.107 0.089 0.255 0.233 Dividends per share(2) 0.0375 - 0.0375 - Weighted average no. of shares - diluted (000's) 68,936 61,769 68,664 61,769 Nine Months Ended June 30 --------------------------- Operational Highlights 2010 2009 ---------------------- ------------- ------------- Occupancy % Communities 99 99 Resorts(3) 95 95 Sites leased 183 143 Home Sales volume 183 130 Home Sales backlog(4) 162 166 Operational Sites - end of period 17,532 15,926 Developed Sites - end of period 722 936 Expansion Sites - end of period 4,615 3,952 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Management utilizes measures called Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO") to assess and evaluate the Corporation's ability to generate cash, its return on each of its projects, as well as the performance of the enterprise as a whole. FFO and AFFO do not have standardized meanings prescribed by Canadian generally accepted accounting principles ("GAAP"), and therefore may not be comparable to similar measures presented by other issuers. Users should be cautioned that these performance measures should not be construed as an alternative to net income and that the Corporation's definition of FFO differs from the Real Property Association of Canada's ("REALpac") definition of FFO. REALpac has not recognized a definition for AFFO. Parkbridge defines FFO as being net income for the period before depreciation and amortization on capital assets, certain defeasance costs, stock-based compensation expense, internalization costs, future income tax expense and deferred credits in income tax expense. Parkbridge defines AFFO as being FFO for the period, adjusted for maintenance capital expenditures. (2) On May 5, 2010 the Corporation's Board of Directors authorized the commencement of a quarterly dividend program and approved the first dividend payment for the quarter ended March 31, 2010. On August 4, 2010, the Board of Directors authorized the payment of a dividend for the quarter ended June 30, 2010, payable August 31, 2010 to shareholders of record on August 16, 2010. (3) The percentage occupancy for Cottage and RV Resorts represents the average annual occupancy level of seasonal Sites and overnight Sites within a particular Resort. In general, overnight Sites comprise 10% or less of the total Sites within a particular Resort. Typically, the average occupancy achievable in respect of overnight Sites is 45 to 75 days out of the total of the approximately 120 days the Resort is open in a given season. Consequently, the total occupancy level for a particular Resort property will generally be less than 100%. (4) Includes 81 firm and 81 conditional sales contracts at July 31, 2010 compared to 117 firm and 49 conditional sales contracts at July 31, 2009.
Parkbridge's strong performance in the third quarter of 2010 continued to underscore the sound fundamentals underlying all areas of its core business. Quarterly Funds from Operations ("FFO") and FFO per share increased by 30% and 16% respectively relative to the same period in the prior year. The per share results were particularly strong given the 8% dilutive effect of the $20 million equity raise completed just nine months ago on September 30, 2009.
"Our renewed focus on acquisitions will see the addition of several high quality properties and an increase in Parkbridge's site count by 21%. These acquisitions will be strong contributors to our earnings growth in fiscal 2011 and beyond, and help set a new milestone for Parkbridge, as its property portfolio will soon exceed 20,000 sites," commented Mr. David Rozycki, President Eastern Operations and Co-Chief Executive Officer.
Quarterly Results
Income from property operations rose 12% to $11.9 million for the three months ended June 30, 2010 as compared to $10.6 million for the comparable period in 2009 (an 11% increase to $33.2 million for the nine months ended June 30, 2010 as compared to $30.0 million for the six months ended June 30, 2009). The majority of this increase (approximately 75%) was generated internally and reflects contributions from rent increases, the lease-up of Developed Sites and operational improvements. The remainder of the increase was attributable to contributions from properties acquired within fiscal 2010 and 2009.
Income from Home Sales operations increased $0.7 million to $1.5 million in the third quarter as compared to $0.8 million generated in the same quarter last year (increase of $0.8 million to $2.4 million for the nine months ended June 30, 2010 from $1.6 million for the nine months ended June 30, 2009). The improved performance in Home sales operations is encouraging, particularly since it is broadly based across most of Parkbridge's sales centers with only a few exceptions.
FFO for the three months ended June 30, 2010 rose 30% to $7.9 million as compared to the $6.1 million achieved during the same three month period a year earlier (an 18% increase to $18.9 million for the nine months ended June 30, 2010 as compared to $16.0 million for the nine months ended June 30, 2009). The Corporation's FFO per share growth is starting to absorb the dilutive effect of the $20 million equity raise completed on September 30, 2009, as reflected in quarterly and year-to-date FFO per share increases of 16% and 6% respectively. FFO per share increased to $0.115 for the current quarter compared to $0.099 in the prior year's quarter (FFO per share increased to $0.275 for the nine months ended June 30, 2010 from $0.259 for the nine months ended June 30, 2009).
Net income for the three months ended June 30, 2010 amounted to $3.8 million ($0.055 per share) as compared to income of $3.3 million ($0.053 per share) for the same three month period a year earlier ($7.1 million ($0.104 per share) for the nine months ended June 30, 2010 as compared to $7.3 million ($0.117 per share) for the nine months ended June 30, 2009). The year to date net income result was impacted by the recognition of $2.3 million of tax provision (expense), in the second quarter of 2010, related to the one time reclassification of temporary differences between book and tax carrying values, and a $0.8 million tax provision recovery resulting from changes in enacted tax rates, recognized in the first quarter of 2010. These changes in the income tax provision did not give rise to a current tax liability, nor did they impact Parkbridge's cash flows from operating activities.
Highlights
- Parkbridge's properties continue to enjoy high occupancy levels (99% for Communities and 95% for Resorts) and fiscal 2010 rent increases averaging 4% have been implemented across the portfolio. - New Home Sales volumes increased to 101 sales for the three months ended June 30, 2010 compared to 71 sales in the prior year's quarter (increased to 183 sales for the nine months ended June 30, 2010, from 130 sales in the comparative nine month period). As of July 31, 2010, 162 lease and Home Sales contracts were in hand (81 firm and 81 conditional contracts). Overall increases in Home sales income and volumes have been achieved however, some weakness continues at certain sales locations. Prospective home buyers at Alberta All Age Communities remain cautious, particularly in Grande Prairie. The timeline to economic recovery in this area appears to be more prolonged than at the remainder of Parkbridge's sales operations. In contrast, the majority of Lifestyle and Cottage and RV Resort sales operations appear to be progressing back to levels achieved in a more balanced sales environment. - Parkbridge continues to actively pursue select property acquisitions. To date, Parkbridge completed the acquisition of 4 properties - one Community and three Cottage and RV Resorts (1,498 operational sites and 418 expansion sites) for a total cost of approximately $19.5 million. In addition, Parkbridge has four Cottage and RV Resorts under conditional purchase contracts which are anticipated to close later in calendar 2010 (total cost of approximately $16.4 million; 1,943 Operational Sites and 320 Expansion Sites). - As at June 30, 2010, $10.0 million has been invested in the 18 projects under active development. Parkbridge continues to be well positioned for growth with a current inventory of 722 Developed Sites available for lease-up and 4,615 Expansion Sites available for future development. For the remainder of the 2010 fiscal year, Parkbridge anticipates investing a further $7.8 million in development projects. - The Corporation's capital structure remains conservative and debt maturities are well spaced out. Fiscal 2010 debt maturities amounting to $5.7 million have been renewed or refinanced. Parkbridge is focusing its attention on maturities in 2011 and beyond. As of June 30, 2010, Parkbridge had cash and cash equivalents of $9.9 million on hand, $25.9 million available under the Operating Facility (net of outstanding letters of credit), and $25.0 million available under the Acquisition Facility. - Parkbridge continues to examine initiatives which may help surface additional value for shareholders, as well as continuing with its efforts to secure CMHC-backed financing.
Dividends
The Corporation's Board of Directors has authorized the payment of a dividend for the quarter ended June 30, 2010 to common shareholders at the rate of $0.0375 per Common Share. The Dividend will be paid August 31, 2010 to shareholders of record on August 16, 2010 and is designated as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act. An eligible dividend paid to a Canadian resident individual is entitled to the enhanced dividend tax credit.
Outlook
Over the balance of 2010, Parkbridge remains confident that the strong performance of its core business - the rental of Community and Resort sites - will continue. The principal elements of its fiscal 2010 outlook, pertaining to operating and acquisition activities, remain unchanged. Projected rent increases averaging 4% have been implemented across most properties and Parkbridge continues to actively pursue select and accretive acquisitions, in addition to those already completed in fiscal 2010. Due to the slow pace of economic recovery experienced at certain Alberta sales locations, and a current assessment of the timing of home sales closings in general, the Corporation is making some adjustment to its projected home sales volumes from the previous guidance. Parkbridge now expects sales of new Homes and Resort Units completed for the year to be in the range of 270 to 290 units, rather than the 300 units originally projected.
"As Parkbridge moves toward the start of the 2011 fiscal year, it expects to see consistent performance at its property operations, a continuation of the current positive trend in lease-ups and Home sales income, and contributions from recent acquisitions," commented Mr. Iain Stewart, President, Western Operations and Co-Chief Executive Officer.
For a complete discussion of the foregoing please refer to the filings of the Corporation's June 30, 2010 unaudited interim consolidated financial statements and Management's Discussion and Analysis, which have been concurrently filed on SEDAR.
Parkbridge Profile
Parkbridge is one of Canada's leading owners, operators and developers of lifestyle-oriented properties consisting of residential communities and seasonal recreational resorts. The portfolio is concentrated in the provinces of Ontario, Alberta, Quebec and British Columbia. Parkbridge now owns 81 properties containing approximately 18,200 sites with a capacity to add approximately 4,600 additional sites through expansion of current property holdings. Parkbridge is listed on the Toronto Stock Exchange and its head office is in Calgary, Alberta.
CONSOLIDATED BALANCE SHEETS (Unaudited) ------------------------------------------------------------------------- June 30 September 30 ($000's) 2010 2009 ------------- ------------- Assets Income properties 433,796 400,120 Development properties 63,114 67,559 Cash and cash equivalents 9,890 15,628 Accounts receivable 5,722 5,176 Inventory and other assets 27,332 24,298 Defeasance collateral 9,938 10,361 ------------- ------------- 549,792 523,142 ------------- ------------- ------------- ------------- Liabilities and Shareholders' Equity Secured debt 289,715 279,495 Accounts payable and other liabilities 27,891 23,463 Future income tax liability and deferred credit 22,781 16,747 ------------- ------------- 340,387 319,705 Shareholders' Equity 209,405 203,437 ------------- ------------- 549,792 523,142 ------------- ------------- ------------- ------------- INTERIM STATEMENT OF INCOME AND FUNDS FROM OPERATIONS Three Months Ended Nine Months Ended ($000's) June 30 (Unaudited) June 30 (Unaudited) --------------------------- --------------------------- 2010 2009 2010 2009 ------------- ------------- ------------- ------------- PROPERTY OPERATIONS Rental and other property revenues 21,489 18,700 55,912 50,275 Property operating expenses and taxes (10,259) (8,540) (23,424) (20,867) Brokerage and resale income (loss) (net) 675 444 734 557 ------------- ------------- ------------- ------------- Income from property operations 11,905 10,604 33,222 29,965 ------------- ------------- ------------- ------------- HOME SALES OPERATIONS Sales revenue 15,768 11,258 29,350 21,245 Cost of sales (13,854) (10,023) (25,807) (18,436) Operating expenses (428) (418) (1,115) (1,176) ------------- ------------- ------------- ------------- Income from home sales operations 1,486 817 2,428 1,633 ------------- ------------- ------------- ------------- INCOME FROM OPERATIONS BEFORE THE UNDERNOTED 13,391 11,421 35,650 31,598 ------------- ------------- ------------- ------------- Interest expense 4,481 3,988 12,900 11,642 Interest income (199) (115) (378) (368) General and administrative expenses 1,183 1,431 4,225 4,344 Depreciation and amortization 2,417 2,053 7,068 5,990 Stock-based compensation 241 180 656 1,121 ------------- ------------- ------------- ------------- 8,123 7,537 24,471 22,729 ------------- ------------- ------------- ------------- INCOME BEFORE INCOME TAXES 5,268 3,884 11,179 8,869 Future income taxes, net of deferred credit 1,495 599 4,031 1,618 ------------- ------------- ------------- ------------- NET INCOME (LOSS) 3,773 3,285 7,148 7,251 Add: Depreciation and amortization 2,417 2,053 7,068 5,990 Stock-based compensation 241 180 656 1,121 Future income taxes, net of deferred credit 1,495 599 4,031 1,618 ------------- ------------- ------------- ------------- FUNDS FROM OPERATIONS 7,926 6,117 18,903 15,980 Maintenance capital expenditures (553) (647) (1,413) (1,557) ------------- ------------- ------------- ------------- ADJUSTED FUNDS FROM OPERATIONS 7,373 5,470 17,490 14,423 ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
The TSX has not in any way passed upon the merits of these transactions, has not approved or disapproved the contents of this news release, nor does it accept any responsibility for the adequacy of this release.
This news release contains forward-looking statements concerning the Corporation's business and operations. The Corporation cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Corporation's results could differ materially from those expressed or implied in such statements. Reference should be made to the Corporation's June 30, 2010 Unaudited Interim Consolidated Financial Statements, the most recent Management's Discussion and Analysis in the interim report for the period ended June 30, 2010, the Annual Information Form dated November 19, 2009, and Management's Discussion and Analysis and Audited Consolidated Financial Statements for the year ended September 30, 2009. All reports may be viewed on Parkbridge's website www.parkbridge.ca or on the SEDAR website www.sedar.com.
For further information: Mr. Iain Stewart, President, Western Operations and Co-CEO, Telephone: (403) 215-2109, Email: [email protected]; Mr. Calvin Wilson, Chief Financial Officer, Telephone: (403) 215-2105, Email: [email protected]; Parkbridge Lifestyle Communities Inc., Telephone: (403) 215-2100, Facsimile: (403) 215-2115, 700, 505 - 3rd Street SW, Calgary, AB, T2P 3E6
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