From the Wires
Summit Industrial Income REIT Announces Third Quarter 2012 Results
By: PR Newswire
Nov. 15, 2012 10:55 PM
HALIFAX, NS, Nov. 15, 2012 /CNW/ - Summit Industrial Income REIT ("Summit II" or the "REIT") (TSXV: SMU.UN) announced today its operating and financial results for the nine months ended September 30, 2012. Effective October 3, 2012 the REIT changed its name from Proventure Income Fund ("Proventure").
"We are very pleased with the progress made in starting to build the REIT's portfolio and establish its presence in the Canadian light industrial real estate business," commented Lou Maroun, Chairman. "Looking ahead, we will aggressively and accretively grow our property portfolio, capitalizing on the significant and proven expertise of our management team."
"We are executing a three-part strategy aimed at building substantial value for our unitholders," stated Paul Dykeman, CEO. "First, we will acquire properties at values at or below replacement cost that generate stable, consistent and increasing cash flows as we capture operating synergies and economies of scale through growth in our portfolio. Second, over time we will maximize all development and expansion opportunities on our existing properties to enhance returns. Third, we will prudently finance and undertake development projects with independent third parties to build properties designed to our exacting standards. Our team has proven successful in building value through this focused strategy in the past, and we are confident Summit II provides the vehicle for us to do it again."
Net income for the nine months ended September 30, 2012 was $0.863 million compared to $1.55 million in the prior year.
Revenue, operating expenses and net operating income for the nine months ended September 30, 2012 were lower than the prior year due to the sale of 14 non-core properties on January 5, 2012. The light industrial properties acquired on September 27, 2012 had minimal impact on the results for the period.
The reduction in Funds from Operations ("FFO") for the nine months ended September 30, 2012 was due to the smaller size of the portfolio compared to the prior year.
Cash distributions were $13.346 million in 2012 compared to $383,000 in the prior year. On January 23, 2012 a special distribution was paid from the proceeds of the above-mentioned property sale. The REIT did not pay any further distributions during the nine-month period ended September 30, 2012. Currently management's view is that the REIT intends to start distributions when the REIT has reached a minimum of $200 million in income producing properties or no later than sometime in 2013.
On September 27, 2012 the REIT closed a debt financing of $28.8 million secured by three properties. Subsequent to September 30, 2012 a fourth property was added to the facility, which increased the credit limit to $32 million. As of September 30, 2012 $17.0 million was drawn on the loan.
At September 30, 2012, the REIT's debt leverage ratio was 40.7%, down from 52.1% at December 31, 2011 due primarily to equity offerings completed during 2012. If the REIT increased its borrowing to the 65% maximum allowed under its Declaration of Trust, it would have the capacity to purchase approximately $43 million in new properties as at September 30, 2012.
About Summit II
Summit Industrial Income REIT is an open‐ended mutual fund trust focused on growing and managing a portfolio of light industrial properties across Canada. Summit II's units are listed on the TSX Venture Exchange and trade under the symbol SMU.UN.
Caution Regarding Forward Looking Information
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "goal" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning the goal to build Summit II's property portfolio and the start of distributions. The forward-looking statements and information are based on certain key expectations and assumptions made by Summit II, including general economic conditions. Although Summit II believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Summit II can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, tenant risks, current economic environment, environmental matters, general insured and uninsured risks and Summit II being unable to obtain any required financing and approvals. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward looking information for anything other than its intended purpose. Summit II undertake no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Summit Industrial Income REIT
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