"I'm very pleased that we have been able to redeploy the cash proceeds from the sale of our industrial portfolio in a way that generates a high return and reduces our leverage," said Mario Barrafato, Chief Financial Officer of Dundee REIT.
The Trust remains focused on balance sheet management, redeploying excess cash received from asset sales in the fourth quarter to reduce its overall debt level. On December 31, 2012, $126.5 million was utilized by the Trust to redeem four series of its convertible debentures bearing interest at a weighted average face rate of 6% (6.8% effective rate factoring in costs); contributing to a reduction of debt-to-gross book value to 48.0% (September 30, 2012 - 50.5%, December 31, 2011 - 49.0%) and decreasing its weighted average interest rate.
December 31, December 31,Key performance metrics 2012 2011----------------------------------------------------------------------------Financing activities(6)Average effective interest rate(7) 4.33% 4.96%Level of debt (debt-to-gross book value)(8) 48.0% 49.0%Interest coverage ratio(9) 2.7 times 2.6 timesProportion of total debt due in current year 10.4% 7.5%Debt - average term to maturity (years) 5.1 years 5.2 yearsVariable rate debt as percentage of total debt 4.3% 1.3%----------------------------------------------------------------------------See footnotes on page 4
Information appearing in this news release is a select summary of results. The consolidated financial statements and management's discussion and analysis for the Trust, as well as its Supplementary Information Package are available at www.dundeereit.com and on www.sedar.com.
Dundee REIT is an unincorporated, open-ended real estate investment trust. Dundee REIT is focused on owning, acquiring, leasing and managing well-located, high-quality central business district and suburban office properties. Its portfolio currently comprises approximately 23.1 million square feet of gross leasable area in major urban centres across Canada. Dundee REIT's portfolio is well diversified by geographic location and tenant mix. For more information, please visit www.dundeereit.com.
(1) Metrics include results and balances of equity accounted investments and exclude discontinued operations.(2) NOI - net rental income, exclude net rental income from properties held for sale and discontinued operations.(3) FFO - net income, adjusted for items including fair value adjustments on investment properties and financial instruments, gains on sale, and amortization of equipment.(4) AFFO - FFO adjusted for amortization of debt costs, deferred unit compensation expense, straight line rent and the Trust's estimates of normalized leasing costs and normalized non-recoverable recurring capital expenditures.(5) Excludes development and redevelopment properties and properties held for sale, and the current period also excludes discontinued operations - industrial properties.(6) The key performance indicators for December 31, 2012, exclude the results of operations and the debt of discontinued operations.(7) Average effective interest rate is calculated as the weighted average interest rate of all interest bearing debt, including debt related to equity accounted investments.(8) Level of debt is determined as total debt, including debt related to equity accounted investments, divided by total assets (including total assets of equity accounted investments and adjusted for accumulated amortization on property and equipment).(9) The interest coverage ratio for the period, including results from equity accounted investments, is calculated as net rental income plus interest and fee income, less general and administrative expenses, all divided by interest expense on debt.
Non-IFRS supplemental measures
NOI, FFO and AFFO are key measures of performance used by real estate operating companies; however, they are not defined by International Financial Reporting Standards ("IFRS"), do not have standard meanings and may not be comparable with other industries or income trusts.
Forward looking information
This press release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dundee REIT's control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest and currency rate functions. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dundee REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in Dundee REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dundee REIT's website at www.dundeereit.com.
Michael J. Cooper
Vice Chairman and Chief Executive Officer
Senior Vice-President and Chief Financial Officer