News Column

Huntingdon Capital Corp. Announces Q2 2014 Results

August 14, 2014

RICHMOND, BC, Aug. 14, 2014 /CNW/ - Huntingdon Capital Corp. (the "Corporation" or "Huntingdon") (TSX: HNT) (TSX: HNT.DB) (TSX: HNT.WT) announced its second quarter 2014 results.

KEY HIGHLIGHTS:

•On August 12, 2014, Huntingdon announced that it has entered into an arrangement agreement with Slate Capital Corporation, an affiliate of Slate Properties Inc. ("Slate") at an effective price of $13.40 per share in cash in exchange for all of the issued and outstanding common shares of Huntingdon. •On August 12, 2014, completed the sale of 11 properties representing 742,000 sf of gross leasable area (Huntingdon share of 716,000 sf) located at the Vancouver International Airport (the "Vancouver Air Cargo Portfolio") for $39.5 million (Huntingdon share $37.3 million). Huntingdon realized net cash proceeds of approximately $16.3 million after taking into account mortgage repayments and transaction costs. •Invested $7.4 million in a recent FAM REIT equity financing, to fund FAM REIT's investment in a data centre development in Winnipeg. Huntingdon signed a 15 year agreement to manage the data centre, which will generate $0.1 million in annual recurring management fees.





SELECTED FINANCIAL INFORMATION

For the three months ended

(stated in $000s unless otherwise noted)

Jun 30, 2014

Mar  31, 2014

Jun  30, 2013

Asset Management







Management fee revenue

$911

$823

$1,105

Gross margin

35%

28%

76%

Investment Portfolio (Same-property metrics)







Occupancy rate (period end)

72.9%

74.2%

75.4%

Revenue from investment properties

$8,722

$8,502

$8,363

Net operating income ("NOI")

3,915

3,347

3,454

Consolidated operating results







Net operating income ("NOI")

4,117

3,363

3,479

Funds from operations ("FFO")

3,084

1,173

2,531

Financing







Weighted average mortgage interest rate  (period end)

5.09%

5.26%

5.34%

Weighted average term to maturity (years) (period end)

7.61

6.01

5.93

Interest coverage ratio1

3.2x

2.3x

2.5x

Debt to total assets ratio2

38.1%

38.4%

38.3%

Debt to EBITDA ratio3

6.10x

6.51x

5.11x

Net debt to EBITDA ratio4

3.83x

3.84x

2.24x

FFO per share amounts







      Basic

$0.31

$0.12

$0.23

      Diluted

$0.30

$0.11

$0.22



 

FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE INDICATORS

General and administration costs: Savings in general and administrative expenses, which declined from $2.1 million in the second quarter of 2013 to $0.7 million in the second quarter of 2014 arising from recent management changes and lower transactional-driven costs. •Same-property analysis: On a same-property basis, NOI was $3.9 million in the second quarter of 2014 compared to $3.5 million in the second quarter of 2013. NOI increased as a result of an early termination fee of $0.3 million, as well as lower common area maintenance costs and bad debt expense, slightly offset by higher ground lease rent. •FFO: FFO increased to $3.1 million ($0.31 per share) in the current quarter from $2.5 million ($0.23 per share) in the second quarter of 2013. The increase in FFO relative to the second quarter of 2013 is due to higher net operating income, as well as lower general and administration costs. These items were partially offset by lower finance income as vendor take-back loans were repaid, higher property management expenses, and a decrease in the share of FFO from investments in FAM REIT and joint venture. •Interest coverage:  Strong improvement in interest coverage from 2.5x to 3.2x due to improvement in EBITDA of almost $1.0 million and decreasing interest costs as mortgages are repaid.

OPERATIONS:

Management fees platform: Management platform generated $0.9 million in the second quarter of 2014 compared to $1.1 million in the second quarter of 2013. Management fee revenue included acquisition-related fees of $0.1 million for the second quarter of 2014 and $0.4 million for the second quarter of 2013. Excluding acquisition-related fees, management fee revenue increased by $0.1 million in the current quarter as a result of the growth in the FAM REIT portfolio. •Leasing activity: During the quarter, management has received leasing commitments for 13,000 sf that have a weighted average lease term of seven years, which represent $0.1 million in incremental annual net operating income.  Year to date, total leasing commitments amount to 136,000 sf that have a weighted average lease term of 13 years, which represent $0.8 million in incremental annual net operating income.

STRATEGIC UPDATE:

•On August 12, 2014, Huntingdon announced that it has entered into an arrangement agreement ("Arrangement Agreement") with Slate. Pursuant to the Arrangement Agreement, Slate will acquire all of the issued and outstanding common shares of Huntingdon for consideration of $13.25 in cash per common share and a one-time $0.15 per common share special dividend. Slate will also acquire all unexercised common share purchase warrants of Huntingdon for consideration equal to $13.25 in cash less the exercise price for the common share purchase warrants. The transaction is expected to close on or before October 22, 2014, subject to customary conditions. These conditions include approval by greater than two-thirds of the holders of Huntingdon common shares and warrants, voting together as a class, minority shareholder approval, and the receipt of court and necessary regulatory approvals. •On August 12, 2014, Huntingdon also announced that it has declared a special cash distribution of $0.15 per common share. The record date for this special dividend will be August 22, 2014, with a payment date of August 29, 2014. The dividend will be considered an eligible dividend for tax purposes. Upon payment of the $0.15 per common share special cash distribution and the September 2014 dividend of $0.02 per Common Share that was previously declared, Huntingdon's regular monthly dividend payments will cease. •On August 12, 2014, Huntingdon sold the Vancouver Air Cargo Portfolio to the Vancouver Airport Authority ("VAA"). Gross sale proceeds are $39.5 million based on the terms of the agreements. Gross sale proceeds to Huntingdon amount to $37.3 million after accounting for the 50% managing interest in one of the properties. Huntingdon realized net cash proceeds of approximately $16.3 million after taking into account mortgage repayments of $19.9 million and estimated transaction costs of $1.1 million. Following closing of the transaction, Huntingdon will be retained as a manager of the Vancouver Air Cargo Portfolio on a transitionary basis to assist the VAA with internalizing management. •With the sale of the Air Cargo Portfolio, Huntingdon has approximately $52.3 million in cash.

OUTLOOK:

Sandeep Manak, President and CEO noted, "The two recent major transactions have affirmed the compelling value of Huntingdon's management platform and dedicated team. I am privileged to have the opportunity to work with a talented and hard-working committed team, who embodies an entrepreneurial spirit and the drive to grow shareholder value. The stabilization outlook for the investment property portfolio continues at a steady pace. Management is focused on assets that can be re-positioned and where there is sufficient market liquidity such that attractive valuations can be realized.  Leasing momentum across the Corporation was strong with year-to-date leasing commitments of 136,000 sf that have a weighted average lease term of 13 years, which represent $0.8 million in incremental annual net operating income."

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 24 industrial, office, retail and aviation-related properties throughout Canada that have a total gross leasable area of 1.9 million square feet. In addition, Huntingdon owns a 30.2% 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.


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