Alexis Nihon REIT Announces First Quarter Results.MONTREAL Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. -- Alexis Nihon Alexis Louis Nihon, O.B.E. (May 15 1902 – April 8 1980) was a Belgium born Canadian inventor and businessman. He was the inventor of the tubeless tire. Born in Liège, Belgium, the son of Alexis Laurent Nihon and Marie Florentine Thiry, he moved to Canada when he was 18. Real Estate Investment Trust (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :AN.UN) today announced results for the first quarter ended March 31, 2005. First Quarter Highlights (percentages compare 1Q05 with 1Q04) - Total revenues increased 39.4% to $29.0 million - Net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rose 48.7% to $14.6 million - Net Income decreased to $0.4 million from $2.4 million due to: - Accounting changes that increased amortization by $1.9 million; and - A one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. expense of $1.6 million for the acquisition cost of A.N.C. Construction Inc. - Distributable income gained 46.5% to $7.0 million - Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. moved up 47.3% to $8.0 million - Distributable income payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. improved to 99.9% from 115.1% - Debt(a) to gross book value ratio of 56.6%, below REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). limit of 65.0% - Ended quarter with $165 million capacity for acquisitions & investments (a) Including convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. "The REIT's growth since the first quarter of 2004 has had a very positive effect on our financial results," said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. J. Massicotte, President and Chief Executive Officer. "The 18 properties acquired since March 31, 2004 have dramatically increased the REIT's scale of operations, improved our results and added to unitholder value." "During the first quarter, Alexis Nihon achieved new highs in virtually all key metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. ," said Guy Charron Guy Joseph Jean Charron (born January 24, 1949, in Verdun, Quebec) was a professional ice hockey centre. He played in the NHL from 1969 - 1981. He also coached on and off from 1990 - 2003. , Executive Vice President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "In addition, the improvement of the REIT's payout ratio indicates the accretive nature of our property acquisitions on a year-over-year basis and underlines the sustainability of distributions to unitholders." Rene RENE Recycling Network Europe RENE Rocket Engine Nozzle Ejector Fortin Fort´in n. 1. A little fort; a fortlet. , Senior Vice President and Chief Financial Officer, noted a significant increase in funds from operations per unit and pointed out it is the most representative measure of the REIT's operating performance. Mr. Fortin also noted if accounting changes and the one-time acquisition cost of A.N.C. Construction Inc. are added back to the income statement, net income would have totalled $3.9 million, representing a 62.5% increase over 2004. The REIT completed two acquisitions during the first quarter. The first was a 225,600-square-foot industrial property in Boucherville Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. . The south shore municipality MUNICIPALITY. The body of officers, taken collectively, belonging to a city, who are appointed to manage its affairs and defend its interests. adjoins Longueuil Longueuil, city (1991 pop. 129,874), S Que., Canada, on the St. Lawrence River opposite Montreal. It is a residential and industrial suburb of Montreal. It annexed Montreal South in 1961, and merged with the city of Jacques-Cartier in 1969. , where the REIT acquired another industrial property during 2004. The second acquisition was the construction management business of A.N.C. Construction Inc., which performed renovations and leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. on the REIT's properties. The purchase effectively internalizes this function within the REIT.
Financial Highlights
(thousands of dollars except per unit amounts)
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Three months ended Three months ended
March 31, 2005 March 31, 2004
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Revenues from rental operations $28,988 $20,790
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Net operating income $14,585 $9,807
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Net income $415 $2,364
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Distributable income $7,041 $4,806
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DI per unit (diluted) $0.267 $0.237
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Funds from operations $7,991 $5,425
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FFO per unit $0.313 $0.270
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Additional Financial Information The financial statements are attached to this press release. The financial statements with accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes, Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial and Supplemental Information package will be filed on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review and made available at www.alexisnihon.com. Conference Call and Webcast Management will also hold a conference call and live audio webcast on Monday Monday: see week. , May 9, 2005 at 2 p.m. (ET) to discuss the REIT's first quarter performance. The call may be accessed by dialing 1-800-814-4859 or 416-640-4127. NOTE: The webcast is accessible at www.alexisnihon.com, and will be archived for seven days. About Alexis Nihon REIT The REIT currently owns interests in 51 office, retail and industrial properties, including a 426-unit, multi-family residential Multi-family residential is a classification of housing where multiple separate housing units are contained within one building. The most common form is an apartment building. Many intentional communities incorporate multi-family residences, such as in cohousing projects. property, located in the greater Montreal area and the National Capital region. The REIT's portfolio has an aggregate of 7.3 million square feet of leasable area, of which 0.4 million square feet is co-owned. Readers are cautioned distributable income and distributable income per unit are non Generally Accepted Accounting Policy ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") measures and should not be construed as an alternative to net earnings and earnings per share determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the REIT's performance. The REIT's methods of calculating these measures may differ from other issuers' methods and accordingly, they may not be comparable to measures used by other issuers. This document may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Alexis Nihon REIT's operations or to the environment in which it operates, which are based on Alexis Nihon REIT's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. are beyond Alexis Nihon REIT's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in other public filings. In addition, these forward-looking statements relate to the date on which they are made. Alexis Nihon REIT disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Alexis Nihon Real Estate Investment Trust
Consolidated Financial Statements
March 31, 2005
(unaudited)
Alexis Nihon Real Estate Investment Trust
Consolidated Balance Sheets
(in thousands of dollars)
March 31, December 31,
2005 2004
(unaudited)
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Assets
Income-producing properties (note 5) $ 608,753 $ 603,689
Intangible assets (note 6) 31,552 31,904
Land held for development 964 964
Cash and cash equivalents (note 7) 263 10,000
Other assets (note 8) 19,490 16,319
Due from companies under common control
of certain trustees of the REIT 46 250
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$ 661,068 $ 663,126
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Liabilities
Debts on income-producing
properties (note 9) $ 330,257 $ 334,674
Convertible debentures -
liability component 53,369 53,338
Intangible liabilities (note 10) 3,201 3,214
Bank indebtedness (note 11) 6,621 808
Accounts payable and accrued liabilities 11,866 10,555
Distributions payable 2,231 2,281
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407,545 404,870
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Equity
Unitholders' equity 253,523 258,256
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$ 661,068 $ 663,126
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See accompanying notes
Consolidated Statements of Unitholders' Equity
For the Three Months Ended March 31
(in thousands of dollars)
(unaudited)
Other
Units Net Equity
in $ Income Components Distributions Total
---------------------------------------------------------------------
---------------------------------------------------------------------
Unitholders'
Equity -
December
31, 2004 $ 267,234 $ 34,170 $ 2,852 $ (46,000) $ 258,256
Net income - 415 - - 415
Units issued
(note 12) 1,885 - - - 1,885
Distributions - - - (7,033) (7,033)
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Unitholders'
Equity -
March 31,
2005 $ 269,119 $ 34,585 $ 2,852 $ (53,033) $ 253,523
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Unitholders'
Equity -
December
31, 2003 $ 198,107 $ 22,822 $ 1,148 $ (19,527) $ 202,550
Net income - 2,364 - - 2,364
Units issued
(note 12) 333 - - - 333
Distributions - - - (5,530) (5,530)
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Unitholders'
Equity -
March 31,
2004 $ 198,440 $ 25,186 $ 1,148 $ (25,057) $ 199,717
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See accompanying notes
Consolidated Statements of Income
For the Three Months Ended March 31
(in thousands of dollars, except per unit amounts)
(unaudited)
2005 2004
(restated
note 2)
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Revenues from Rental Operations (note 13) $ 28,988 $ 20,790
Rental Property Operating Costs 14,403 10,983
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Net Operating Income 14,585 9,807
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Expenses
Interest (note 14) 6,137 4,122
Amortization of buildings 3,623 2,710
Other amortization (note 15) 2,383 198
Internalization of construction management
company (note 3) 1,613 -
General and administrative 276 306
Trust expenses 138 107
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14,170 7,443
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Net Income $ 415 $ 2,364
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Basic Net Income Per Unit (note 16) $ 0.016 $ 0.118
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Diluted Net Income Per Unit (note 16) $ 0.016 $ 0.118
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See accompanying notes
Consolidated Statements of Cash Flows
For the Three Months Ended March 31
(in thousands of dollars)
(unaudited)
2005 2004
(restated
note 2)
---------------------------------------------------------------------
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Cash Flows generated from (used for) -
Operating Activities
Net income $ 415 $ 2,364
Items not affecting cash:
Amortization of buildings 3,623 2,710
Other amortization 2,383 198
Amortization of above and below
market in-place leases (58) -
Amortization of deferred
financing costs 151 38
Interest on convertible
debentures paid by units - 197
Accrued rental revenue (462) (268)
Internalization of construction
management company (note 3) 1,613 -
Tenant improvements and leasing costs (2,060) (1,938)
Changes in:
Other assets (2,851) (1,637)
Accounts payable and accrued
liabilities 1,311 (700)
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Cash Flows generated from
Operating Activities 4,065 964
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Financing Activities
Repayment of debts on
income-producing properties (4,384) (1,557)
Amortization of fair value debt
adjustment (33) -
Accretion on liability
component of convertible
debentures 31 -
Additions to deferred financing
costs (42) (50)
Bank indebtedness 5,813 11,113
Distributions (6,836) (5,399)
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Cash Flows (used in) generated
from Financing Activities (5,451) 4,107
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Investing Activities
Acquisition of rental property
(note 4) (8,200) -
Additions to buildings (320) (5,145)
Additions to furniture,
fixtures and computers (35) (80)
Due from companies under common
control of certain trustees of the REIT 204 154
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Cash Flows used for Investing
Activities (8,351) (5,071)
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Decrease in Cash and Cash
Equivalents (9,737) -
Cash and Cash Equivalents -
Beginning of Period 10,000 -
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Cash and Cash Equivalents - End
of Period $ 263 $ -
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See accompanying notes
Notes to Consolidated Financial Statements
March 31, 2005
(dollar amounts are in thousands, except per unit amounts)
(unaudited)
1. Description of the REIT Alexis Nihon Real Estate Investment Trust (the "REIT") is an unincorporated Adj. 1. unincorporated - not organized and maintained as a legal corporation unorganised, unorganized - not having or belonging to a structured whole; "unorganized territories lack a formal government" closed-ended Closed-ended may refer to:
v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated as of December December: see month. 13, 2002. The REIT was established under, and is governed gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. by, the laws of the Province of Quebec. The accompanying unaudited interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge are prepared in accordance with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP"). These consolidated financial statements are prepared using the same accounting policies and application thereof as the consolidated financial statements for the year ended December 31, 2004. They do not include all the information and disclosure required by Canadian GAAP for annual financial statements, and should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the December 31, 2004 consolidated financial statements. Certain prior period figures have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current period's presentation. 2. Change in Accounting Policy Convertible Debentures Effective July July: see month. 1, 2004, the REIT early adopted the amendment to the recommendations of Section 3860 of the CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
This article is about reference works. For the subnotebook computer, see .
adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin . As a result, the REIT has reclassified the 2002 convertible debenture from equity to liability (the value ascribed to the holder's option to convert as well as issue costs were immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. ) and the related interest expense amounting to $197 for the three month period ending March 31, 2004 has been reclassified from unitholders' equity to the statement of income. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per unit are unaffected by this change. 3. Business Acquisition On January January: see month. 1, 2005, the REIT acquired the assets of a construction management company owned by certain trustees of the REIT for a consideration of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1,638 paid by the issuance of 132,743 units of the REIT. Substantially all of the purchase price has been expensed as an internalization Internalization A decision by a brokerage to fill an order with the firm's own inventory of stock. Notes: When a brokerage receives an order they have numerous choices as to how it should be filled. of construction management services by the REIT in accordance with EIC-138 "Internalization of the management function in a royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. or income trust". The acquisition has been recorded at the exchange amount, which is the amount of the consideration established and agreed to by the related parties. The purchase price has been allocated as follows: --------------------------------------------------------------------- Furniture and fixtures $ 25 Internalization of construction management expense 1,613 --------------------------------------------------------------------- Consideration paid $ 1,638 --------------------------------------------------------------------- --------------------------------------------------------------------- The net income of the acquired company has been included in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statement of net income for the period ended March 31, 2005. 4. Acquisition of Rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. Property On February February: see month. 1, 2005 the REIT acquired an industrial rental property.The following summarizes the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. acquired:
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Land $ 1,097
Building 5,670
Intangible assets and liabilities:
Lease origination costs for in-place leases 1,647
Below market in-place leases (164)
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Cash consideration paid for the
assets acquired $ 8,250
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Consideration paid, funded by:
Cash and bank indebtedness $ 8,250
less deposit (50)
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$ 8,200
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The results of operations of income-producing properties are included in the consolidated financial statements from their date of acquisition. 5. Income-Producing Properties
March 31, December 31,
2005 2004
---------------------------------------------------------------------
Accumulated Net Carrying Net Carrying
Cost Amortization Amount Amount
---------------------------------------------------------------------
Land $ 114,049 $ - $ 114,049 $ 112,952
Building and
tenant
improvements 515,250 24,277 490,973 487,295
Leasing costs 3,210 544 2,666 2,345
Tenant improvement
recorded on
acquisitions 1,139 74 1,065 1,097
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$ 633,648 $ 24,895 $ 608,753 $ 603,689
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6. Intangible Assets
March 31, December 31,
2005 2004
---------------------------------------------------------------------
Accumulated Net Carrying Net Carrying
Cost Amortization Amount Amount
---------------------------------------------------------------------
---------------------------------------------------------------------
Lease origination
costs for
in-place
leases $ 35,077 $ 5,002 $ 30,075 $ 30,308
Above market
in-place leases 1,780 303 1,477 1,596
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$ 36,857 $ 5,305 $ 31,552 $ 31,904
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7. Cash and Cash Equivalents At March 31, 2005 cash and cash equivalents consists of term deposits bearing interest at a weighted average of 1.47% and maturing no later than June June: see month. 30, 2005. 8. Other Assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately.
March 31, December 31,
2005 2004
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Accounts receivable $ 3,318 $ 2,824
Deferred rent receivable 2,361 1,899
Prepaids 5,711 1,412
Unit bonus plan 117 -
Deposits on potential acquisitions 549 755
Restricted funds 3,690 5,593
Deferred financing costs 3,013 3,122
Furniture, fixtures and computers 731 714
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$ 19,490 $ 16,319
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9. Debts on Income-Producing Properties
March 31, December 31,
2005 2004
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Loans secured by mortgages on
income-producing properties, bearing
interest at a weighted average annual
rate of 6.3%, repayable in
blended monthly instalments of $2,502
maturing at various dates
no later than July 1, 2019 $ 328,295 $ 332,675
Accrued interest 1,735 1,739
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330,030 334,414
Fair value debt adjustment 227 260
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$ 330,257 $ 334,674
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Principal repayments of debt on income-producing properties are
due as follows:
Instalments Due on
payments maturity Total
---------------------------------------------------------------------
2005 $ 7,096 $ 18,022 $ 25,118
2006 9,122 3,913 13,035
2007 8,530 79,326 87,856
2008 6,240 50,034 56,274
2009 4,588 40,300 44,888
Subsequent to 2009 38,506 62,618 101,124
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74,082 254,213 328,295
Accrued interest 1,735
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$ 330,030
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10. Intangible Liabilities
March 31, December 31,
2005 2004
---------------------------------------------------------------------
Accumulated Net Carrying Net Carrying
Cost Amortization Amount Amount
Below market
in-place leases $ 3,814 $ 613 $ 3,201 $ 3,214
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11. Bank Indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. The REIT has a $50,000 credit facility which consists of a general operating loan, banker's acceptance Banker's Acceptance A short-term credit investment created by a non-financial firm and guaranteed by a bank. Notes: Acceptances are traded at a discount from face value on the secondary market. and letters of credit. Borrowings under the general operating loan bear interest at prime plus 0.5% per annum Per annum Yearly. . Borrowings under the bankers' acceptance A bankers' acceptance, or BA, is a time draft drawn on and accepted by a bank. Before acceptance, the draft is not an obligation of the bank; it is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the bear interest at the bankers' acceptance rate plus 2.25% per annum. The letter of credit facility is limited to $5,000. The credit facility is secured by a first ranking hypothec Hy`poth´ec n. 1. (Scot. Law) A landlord's right, independently of stipulation, over the stocking (cattle, implements, etc.), and crops of his tenant, as security for payment of rent. on three income-producing properties having a net carrying amount of $45,121 and a second ranking hypothec on two income-producing properties having a net carrying amount of $237,291. 12. Units Issued and Outstanding The interests in the REIT are represented by a single class of units which are unlimited in number. Each unit entitles the holder to a single vote and carries the right to participate in all distributions. Changes to the balance of units issued and outstanding were as follows:
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
---------------------------------------------------------------------
Number Number
of units Amounts of units Amounts
---------------------------------------------------------------------
Balance - beginning
of period 25,515,935 $ 267,234 20,091,900 $ 198,107
Issuance of units:
Internalization of
construction
management
company (note 3) 132,743 1,638 - -
Distribution
reinvestment plan 19,628 247 10,853 136
Interest on convertible
debenture - - 16,061 197
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Balance -
end of period 25,668,306 $ 269,119 20,118,814 $ 198,440
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Unit Bonus Plan The Unit Bonus Plan (the "Plan") provides for the grant of Trust Units to the chief executive officer, executive vice president and chief operating officer, senior vice presidents, vice presidents and any other employee designated by the board of directors of the REIT, up to a maximum of 40% of their overall bonus. Annually, the REIT contributes the amount of the bonus to be rendered under the Unit Bonus Plan to the trust administering TO ADMINISTER, ADMINISTERING. The stat. 9 G. IV. c. 31, S. 11, enacts "that if any person unlawfully and maliciously shall administer, or attempt to administer to any person, or shall cause to be taken by any person any poison or other destructive things," &c. every such offender, &c. the plan, which in turn purchases units of the REIT on the open market. The employees become entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to the units and the income from the distributions over a three-year period of continuous employment. The REIT's contributions are recorded as deferred compensation expense (included in other assets) and is amortized over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period. During the period ended March 31, 2005, the REIT contributed $128 to the Plan. An expense of $11 was recognized during the period ending March 31, 2005.
13. Revenues From Rental Operations
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
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Rental revenue contractually
due under the leases $ 28,468 $ 20,522
Accrued rental revenue 462 268
Amortization of above market
in-place leases (119) -
Amortization of below market
in-place leases 177 -
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$ 28,988 $ 20,790
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14. Interest
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Interest on debts on income-producing
properties, at stated rate $ 5,162 $ 3,783
Interest on convertible debentures,
at stated rate 841 197
Accretion on liability
component of convertible debentures 31 -
Other interest (15) 104
Amortization of deferred financing costs 151 38
Amortization of fair value debt adjustment (33) -
---------------------------------------------------------------------
$ 6,137 $ 4,122
---------------------------------------------------------------------
---------------------------------------------------------------------
Interest paid during the three months ended March 31, 2005 was $5,922
(three months ended March 31, 2004 - $3,823).
15. Other Amortization
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Amortization of tenant improvements and
leasing costs incurred through leasing
activities $ 428 $ 154
Amortization of furniture, fixtures and
computers 43 44
Amortization of lease origination costs
for in-place leases incurred through
acquisitions 1,880 -
Amortization of tenant improvements
incurred through acquisitions 32 -
---------------------------------------------------------------------
$ 2,383 $ 198
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16. Net Income Per Unit Calculations
Basic and diluted per unit amounts are based on the
following:
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
Basic Diluted Basic Diluted
---------------------------------------------------------------------
Net income $ 415 $ 415 $ 2,364 $ 2,364
add: interest on
convertible debentures - - - -
---------------------------------------------------------------------
Net income available to
unitholders $ 415 $ 415 $ 2,364 $ 2,364
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average number
of units outstanding 25,520,625 25,520,625 20,096,970 20,096,970
add: incremental
units from
assumed
conversion
of convertible
debentures - - - -
---------------------------------------------------------------------
Weighted average
number of units
used in calculation 25,520,625 25,520,625 20,096,970 20,096,970
---------------------------------------------------------------------
---------------------------------------------------------------------
The convertible debenture has been excluded from the calculation of the diluted net income per unit for the period ended March 31, 2005 as it is anti-dilutive. 17. Distributable Income Distributable income is presented because the REIT believes this measure is a relevant measure of its ability to earn and distribute cash returns to unitholders. Distributable income, which is not defined within Canadian generally accepted accounting principles, has been calculated in accordance with the terms of the Contract of Trust as follows:
Three Months Ended
March 31
2005 2004
---------------------------------------------------------------------
Net income $ 415 $ 2,364
Add (deduct)
Internalization of construction management
company 1,613 -
Amortization of buildings 3,623 2,710
Amortization of amounts recorded on acquisitions:
Tenant improvements 32 -
Lease origination costs for in-place leases 1,880 -
Above and below market in-place leases (58) -
Accretion on liability component of convertible
debentures 31 -
Amortization of fair value debt adjustments (33) -
Accrued rental revenue recognized on a
straight-line basis (462) (268)
---------------------------------------------------------------------
Distributable income $ 7,041 $ 4,806
---------------------------------------------------------------------
---------------------------------------------------------------------
18. Segmented Information
Three Months
Ended
March 31, Multi-family
2005 Office Retail Industrial residential Total
---------------------------------------------------------------------
Revenues from
rental
operations $ 14,458 $ 8,478 $ 4,752 $ 1,300 $ 28,988
Rental
property
operating
costs $ 7,792 $ 3,850 $ 1,949 $ 812 $ 14,403
---------------------------------------------------------------------
Net operating
income $ 6,666 $ 4,628 $ 2,803 $ 488 $ 14,585
---------------------------------------------------------------------
Income-
producing
properties $ 291,216 $ 173,942 $ 110,620 $ 32,975 $ 608,753
---------------------------------------------------------------------
Intangible
assets $ 12,534 $ 6,398 $ 12,620 $ - $ 31,552
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months
Ended
March 31,
2004
---------------------------------------------------------------------
Revenues from
rental
operations $ 11,660 $ 5,689 $ 2,160 $ 1,281 $ 20,790
Rental
property
operating
costs $ 6,184 $ 3,008 $ 887 $ 904 $ 10,983
---------------------------------------------------------------------
Net operating
income $ 5,476 $ 2,681 $ 1,273 $ 377 $ 9,807
---------------------------------------------------------------------
Income-
producing
properties $ 235,408 $ 140,025 $ 54,706 $ 33,603 $ 463,742
---------------------------------------------------------------------
Intangible
assets $ - $ - $ - $ - $ -
---------------------------------------------------------------------
---------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2005
The following discussion describes the business, the business environment, and management's expectations as at April 25, 2005. It should be read in conjunction with the consolidated financial statements of the Alexis Nihon Real Estate Investment Trust ("the REIT") for the three months ended March 31, 2005 and the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. , as well as the management's discussion and analysis for the year ended December 31, 2004. This discussion contains forward-looking statements relating to the REIT's operations and/or to the environment in which it operates, which are based on the REIT's expectations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond the REIT's control. A number of important factors may cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in other public filings of the REIT. Therefore, readers should not place undue reliance on any such forward-looking statements. In addition, these forward-looking statements speak only as of the date on which they are made and the REIT disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or otherwise. All amounts reflected in this discussion are in thousands of dollars except for per unit and square foot amounts. BUSINESS 2005 OVERVIEW AND OBJECTIVES The REIT is an unincorporated closed-end closed-end adj. Issuing a fixed number of shares that can be traded publicly but are not redeemable by the issuer: a closed-end investment company. real estate investment trust created pursuant to the Declaration of Trust dated October 18, 2002, as amended and restated as of December 13, 2002. The REIT is governed by the laws of the Province of Quebec and began operations on December 20, 2002. The REIT units and convertible debenture are publicly traded and listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSX) under the symbols AN.UN and AN.DB respectively. Additional information relating to the REIT is also available on the REIT's website at www.alexisnihon.com and on SEDAR at www.sedar.com. As at March 31, 2005 the REIT owned interests in 51 office, retail and industrial properties, including a 426-unit multi-family residential property. The properties are located in the Greater Montreal Area (49) and the National Capital Region (2). The REIT's portfolio has an aggregate of 7.3 million square feet of leasable area, of which 0.4 million square feet is co-owned. The portfolio has a mix of over 860 non-residential tenancies, including many high quality, national tenants with strong covenants. The objectives of the REIT are: i. To provide unitholders with stable and growing cash distributions, payable monthly and, to the maximum extent practicable practicable adj. when something can be done or performed. , income tax deferred; and ii. To improve and maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. unit value through future acquisitions of additional income-producing properties and the ongoing active management or redevelopment of the REIT's properties. DISTRIBUTION REINVESTMENT PLAN reinvestment plan See dividend reinvestment plan (DRIP). The REIT has a Unitholder Distribution Reinvestment Plan ("DRIP") providing unitholders with the option of reinvesting their total monthly cash distributions in additional units of the REIT, thereby allowing them to steadily increase their ownership without incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. any commission or other transaction cost. To encourage participation, unitholders registered in the DRIP will also receive additional units equal in value to 3% of the monthly distribution otherwise payable. The Plan is administered by National Bank Trust Inc., the REIT's transfer agent. Please visit our website to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. our DRIP brochure A brochure or pamphlet is a leaflet advertisement. Brochures may advertise locations, events, hotels, products, services, etc. They are usually succinct in language and eye-catching in design. . SELECTED QUARTERLY FINANCIAL INFORMATION The following table sets forth certain selected information concerning the REIT:
In thousands of dollars, Quarter ended March 31
Except per unit amounts 2005 2004
---------------------------------------------------------------------
Total revenues $28,988 $20,790
Net operating income $14,585 $9,807
Net income $415 $2,364
---------------------------------------------------------------------
Net income per unit:
Basic $0.016 $0.118
Diluted (1) $0.016 $0.118
---------------------------------------------------------------------
Distributable income (2) $7,041 $4,806
Distributable income per unit:
Basic $0.276 $0.239
Diluted $0.267 $0.237
---------------------------------------------------------------------
Distributions $7,033 $5,530
Distributions per unit: $0.2751 $0.2751
---------------------------------------------------------------------
Funds from operations ("FFO") (2) $7,991 $5,425
FFO per unit $0.313 $0.270
---------------------------------------------------------------------
Total assets $661,068 $663,126
Total debt (3) $390,247 $388,820
---------------------------------------------------------------------
Weighted average number of units:
Basic 25,520,625 20,096,970
Diluted (for net income) 25,520,625 20,096,970
Diluted (for distributable income) 29,549,931 21,153,413
---------------------------------------------------------------------
1. Convertible debentures have been excluded from the calculations of diluted net income per unit since they are anti-dilutive. 2. Distributable income and FFO FFO See: Funds from operations are not Generally Accepted Accounting Principal ("GAAP") measures, see definitions on pages 6 and 11. 3.Total debt comprises debts secured by mortgages, bank indebtedness, and the liability component of convertible debentures. Year over year ("YOY YOY Year Over Year YOY Year On Year YOY Young of the Year YOY Yield on Year ") factors that have caused variations between the March 2005 and 2004 three month periods result primarily from acquisitions completed in 2004 and in the first three months of 2005. The increase in the weighted average number of units (basic and diluted) results from units issued via: i) the REIT's DRIP, ii) the payment of interest on the 2002 Convertible Debenture, iii) a new issue of units in April 2004, and iv) the conversion of the 2002 Convertible Debenture in May 2004. 2005 OVERVIEW On January 1st, 2005, the REIT acquired the operations of ANC ANC abbr. African National Congress ANC African National Congress: South African political movement instrumental in bringing an end to apartheid ANC n abbr (= Construction Inc., the REIT's construction management business for renovations and leasehold improvements, principally in respect to properties owned by the REIT. ANC Construction Inc. is a company indirectly controlled by Paul J. Massicotte, the REIT's president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , and Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. A. Nihon, chairman of the REIT's Board of Trustees board of trustees Politics The posse of thugs who oversee an institution's administration. See Board of directors. . The purchase price of $1,638 was paid through the issuance of 132,743 units of the REIT on March 31, 2005. On February 2nd, 2005, the REIT announced the acquisition of a 225,600 square foot, 98% leased, industrial property in Boucherville, Quebec for $8,400 representing an initial capitalization rate Capitalization Rate According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. of approximately 11.1%. As of March 31, 2005, the REIT's portfolio consisted of 51 properties aggregating 7.3 million square feet of leasable area of which 0.4 million square feet is co-owned. The chart below outlines the REIT's portfolio of properties and square footage:
Property # of properties Leasable area (square feet)
------------------------------------------------------
Type Wholly owned Co-owned Wholly owned Co-owned
---------------------------------------------------------------------
Office 19 - 2,813,741 -
Retail 4 - 1,434,400 -
Industrial 21 7 (2) 2,347,118 410,417
Residential - (1) - 300,321 -
---------------------------------------------------------------------
Totals 44 7 6,895,580 410,417
---------------------------------------------------------------------
---------------------------------------------------------------------
1. With respect to the "# of properties", Place Alexis Nihon Place Alexis Nihon is a 2.4 million square foot (222,967.3 m²) complex in downtown Montreal, Canada (on the border with Westmount), consisting of a shopping centre, two office towers, and a residential building. has been included as one property in the office category. It includes two office towers, a retail concourse and a multi-family residential component. 2. The REIT owns 25% of 102,032 square feet (3 properties), and 50% of 308,385 square feet (4 properties). FINANCIAL PERFORMANCE The financial results of the REIT for the recently completed eight quarters are summarized in the following table:
FINANCIAL PERFORMANCE
The financial results of the REIT for the recently completed eight
quarters are summarized in the following table:
2003 2004 2005
---------------------------------------------------------------------
June Sept. Dec. March June Sept. Dec. March
Revenues
from
rental
opera-
tions
$16,993 $24,161 $17,197 $20,790 $23,281 $25,425 $29,254 $28,988
Rental
prope-
rty
opera-
ting
costs
8,167 7,922 8,741 10,983 11,073 11,266 13,838 14,403
---------------------------------------------------------------------
Net
opera-
ting
income
8,826 16,239 8,456 9,807 12,208 14,159 15,416 14,585
Interest
3,470 3,522 3,702 4,122 4,347 5,458 6,257 6,137
Amorti-
zation
of
build-
ings
798 846 885 2,710 3,134 3,373 3,632 3,623
Other
amorti-
zation
66 79 194 198 741 1,509 2,532 2,383
Internal-
ization
of const-
ruction
management
- - - - - - - 1,613
General and
adminis-
trative
382 300 459 306 463 606 312 276
Trust 165 134 108 107 248 138 49 138
---------------------------------------------------------------------
4,881 4,881 5,348 7,443 8,933 11,084 12,782 14,170
---------------------------------------------------------------------
Net Income
3,945 11,358 3,108 2,364 3,275 3,075 2,634 415
Add/(Deduct):
Income
Subsidy
295 292 264 - - - - -
Cancel-
lation
fee
received
- (7,825) - - - - - -
Amortiz-
ation
of
buildings
798 846 885 2,710 3,134 3,373 3,632 3,623
Internali-
zation
of
construction
management
- - - - - - - 1,613
Amortization
of amounts
recorded on
acquisi-
tions:
Tenant
improv-
ements
- - - - - 35 7 32
Lease
origi-
nation
costs for
in-place
leases
- - - - 514 866 1,742 1,880
Above and
below
market
in-place
leases
- - - - (40) (59) (153) (58)
Accretion
on
liability
component
of
convertible
debentures
- - - - - - 42 31
Amortization
of fair
value debt
adjustments
- - - - - (22) (33) (33)
Accrued
rental
revenue
recognized
on a
straight-
line
basis - - - (268) (616) (507) (508) (462)
---------------------------------------------------------------------
Distributable
Income (1)
$5,038 $4,671 $4,257 $4,806 $6,267 $6,761 $7,363 $7,041
---------------------------------------------------------------------
---------------------------------------------------------------------
Funds
from
operations
(1)
$5,246 $4,800 $4,580 $5,425 $7,105 $7,910 $8,730 $7,991
Funds
from
operations
per unit
$0.310 $0.283 $0.269 $0.270 $0.288 $0.310 $0.342 $0.313
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income
per unit:
Basic
$0.233 $0.670 $0.179 $0.118 $0.133 $0.121 $0.103 $0.016
Diluted
(2)
$0.230 $0.642 $0.179 $0.118 $0.133 $0.121 $0.103 $0.016
---------------------------------------------------------------------
---------------------------------------------------------------------
Distributable
income per
unit:
Basic
$0.298 $0.276 $0.245 $0.239 $0.254 $0.265 $0.289 $0.276
Diluted
$0.291 $0.271 $0.241 $0.237 $0.253 $0.263 $0.280 $0.267
---------------------------------------------------------------------
---------------------------------------------------------------------
1. Distributable income and Funds from operations are non-GAAP measure, see definition on pages 6 and 11. 2. Convertible debentures have been excluded from the calculations of the diluted net income per unit in 2004 and in 2005 since they are anti-dilutive. NET OPERATING INCOME The quarterly analysis by sector of the net operating income ("NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ") is explained in greater detail in the segmented analysis section. In summary, for the quarter ended March 31, 2005, NOI totaled $14,585 which was an increase of $4,778 or 48.7% over the same quarter last year. Of the increase, $3,962 is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the NOI generated from the acquisition of 18 properties acquired since March 2004, as mentioned previously. In total, 4 office, 2 retail, and 12 industrial properties were acquired representing 2,326,180 square feet. Had these properties been excluded, the same property YOY NOI for the quarter would have totaled $10,623, reflecting a positive variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality of $816 or 8.3% and results from: - Increase in straight-lining of rents associated with leasing and acquisitions $194 - Increase in above and below market in-place leases (re: EIC-140) 58 - Net positive variance associated with occupancies 821 - Increase in bad debt expense (295) - Increase in non-recoverable expenses (191) - Positive variance in other income 118 - Net increase in the residential sector NOI 111 --------------------------------------------------------------------- Net variance $816 --------------------------------------------------------------------- --------------------------------------------------------------------- Excluding the impact of YOY accounting changes (i.e.: straight-lining of rents and EIC-140) the same property portfolio reflected an increase of $564 or 5.8%. INTEREST EXPENSE Interest expense consists of interest paid on secured mortgages on the income-producing properties as well as interest on the REIT's general bank indebtedness, interest on convertible debentures, accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of the liability component of the convertible debenture, amortization of the fair value debt adjustments on mortgages assumed on acquisitions, and amortization of deferred financing costs. As at March 31, 2005, interest expense totaled $6,137 compared with $4,122 in 2004. The YOY variance results from: - Interest on secured mortgages on income producing properties acquired $1,790 - Increase in interest on convertible debentures 644 - Increase on interest accretion on convertible debentures 31 - Decrease in interest on general bank indebtedness (52) - Interest savings on secured mortgages repaid upon maturity (261) - Amortization of the fair value debt adjustments relating to mortgages assumed on the acquisition of certain properties (33) - Other, net (104) --------------------------------------------------------------------- Net variance $2,015 --------------------------------------------------------------------- --------------------------------------------------------------------- The table below reflects the weighted-average interest rate on existing mortgages by quarter and YOY as well as the weighted-average term to maturity.
2004 2005
---------------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31
---------------------------------------------------------------------
Weighted-average
interest rate 6.4% 6.3% 6.3% 6.3% 6.3%
-------------------------------------------------
-------------------------------------------------
Weighted-average
term to
maturity (years) 3.54 5.30 6.07 5.83 5.61
-------------------------------------------------
-------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses, which consist of the REIT's net overhead costs overhead costs see fixed costs. , totaled $276 for the first quarter of 2005 compared to $306 in 2004. The YOY decrease is primarily attributable to the internalization of the REIT's construction management division which resulted in the inclusion of $25 of fee income from third party contracts. The REIT's construction management division became part of the REIT effective January 1, 2005 (see "2005 Overview" in previous pages). AMORTIZATION EXPENSE For the quarter ended March 31, 2005, total amortization (buildings and other) was $6,006 compared to $2,908 in 2004. The REIT recorded approximately $1,912 of amortization of lease origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real costs for in-place leases and tenant improvements incurred through acquisitions. The YOY increase also reflects approximately $913 of amortization of buildings principally for properties acquired, as well as $273 of amortization on tenant improvements. INTERNALIZATION OF CONSTRUCTION MANAGEMENT The CICA's abstract (EIC-138) concerning the accounting for the internalization of the management function in royalty and income trusts, requires that the consideration paid for early termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of a management contract should be charged to expense in the same period as the management internalization transaction is consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. . As a result of the acquisition and internalization of the REIT's construction management company on January 1st, 2005 (see "2005 Overview" in previous pages), substantially all of the purchase price ($1,613 of the $1,638) has been expensed by the REIT in accordance with EIC-138 with the exception of $25 for acquiring the fair value of the furniture, fixtures and computers. TRUST EXPENSES Trust expenses in the first quarter of 2005 totaled $138 versus $107 for the same period in 2004. The YOY increase primarily results from higher fees associated with annual filings. DISTRIBUTABLE INCOME Distributable income and distributable income per unit are non-GAAP measures and should not be construed as an alternative to net earnings and earnings per unit determined in accordance with GAAP as an indicator of the REIT's performance. The REIT's methods of calculating these measures may differ from other issuers' methods and accordingly, they may not be comparable to measures used by other issuers. Distributable income represents net income determined in accordance with Canadian GAAP, subject to certain adjustments as set out in the Declaration of Trust. These adjustments include adding back amortization (but not amortization of tenant inducements and other leasing costs), income tax expense, amounts received under the AN Income Subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. , and excluding any gains or losses on the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of assets. Also excluded are any amounts that the Trustees in their discretion determine to be appropriate, including the impact of the change in accounting policy for the straight-lining of contractual rent increases, the full impact of EIC-140, as well as the internalization of the REIT's construction management function which was fully expensed in accordance with EIC-138. Distributable income for the quarter and YOY is as follows:
Three months ended
March 31
2005 2004
---------------------
Distributable Income $7,041 $4,806
Per unit:
Basic $0.276 $0.239
Diluted $0.267 $0.237
Distributions paid $7,033 $5,530
Distributable income payout ratio 99.9% 115.1%
Increases in distributions paid reflects distributions made on 4.3 million new units issued on April 8, 2004 resulting from a new issue; 1.1 million new units issued on the conversion of the 2002 Convertible Debenture on May 10, 2004; units issued on the REIT's DRIP (19,628 units in 2005); as well as 132,743 new units issued in payment of the acquisition of the REIT's construction management division. LEASING DATA In 2005, leases for 151,085 square feet of space expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. at a weighted average net rental rate of $10.34 per square foot. Of this amount, 73,132 square feet having a weighted average net rental rate of $11.68 was renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. at a weighted average net rental rate of $12.72. During the same period, 101,500 square feet of vacant space was leased at a weighted average net rental rate of $8.32 per square foot. The following table reflects the REIT's weighted average occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and net rental rates:
As at March 31, 2004
-------------------------------------------
Segment Area (sq.ft) Occupancy Net rental rate
--------------------------------------------------------------------
Office 2,256,953 87.0% $10.74
Retail 1,040,988 96.9% (1) 12.95
Industrial 1,358,120 93.2% 5.15
Residential (2) 300,321 95.9% 994.26
--------------------------------------------------------------------
Overall 4,956,382 91.3% (1) $10.05
--------------------------------------------------------------------
--------------------------------------------------------------------
As at December 31, 2004
-----------------------------------------------
Segment Area (sq.ft) Occupancy Net rental rate
--------------------------------------------------------------------
Office 2,813,741 87.1% $11.03
Retail 1,432,100 96.6% 13.07
Industrial 2,531,925 89.9% 5.38
Residential (2) 300,321 95.8% 1,030.14
--------------------------------------------------------------------
Overall 7,078,087 90.4% $9.70
--------------------------------------------------------------------
--------------------------------------------------------------------
As at March 31, 2005
-------------------------------------------
Segment Area (sq.ft) Occupancy Net rental rate
--------------------------------------------------------------------
Office 2,813,741 88.0% $11.19
Retail 1,434,400 94.7% 12.92
Industrial 2,757,535 87.1% 5.28
Residential (2) 300,321 96.0% $1,006.23
--------------------------------------------------------------------
Overall 7,305,997 89.3% $9.54
--------------------------------------------------------------------
--------------------------------------------------------------------
1. Excludes areas affected by the Centre Laval
The Centre Laval is a shopping mall located in Laval, QC Canada corner St. Martin blvd. and Le Corbusier blvd. (near the Montmorency metro station). and Place Alexis Nihon Winners redevelopment. 2. The residential sector sets forth the average monthly gross rent per unit. The REIT'S YOY occupancy levels and net rental rates have been affected by acquisitions of properties having lower occupancy levels and net rental rates than the existing portfolio averages. Excluding acquired properties the YOY same portfolio occupancy levels and net rental rates reflect the following:
Mar. 2004
-------------------------------
Area Net rental
Segment (sq. ft.) Occupancy rate
---------------------------------------------------------------------
Office 2,256,953 87.0% $10.74
Retail 1,040,988 96.9% (1) 12.95
Industrial 1,358,120 93.2% 5.15
Residential (2) 300,321 95.9% 994.26
---------------------------------------------------------------------
Overall 4,956,382 91.3% (1) $10.05
---------------------------------------------------------------------
---------------------------------------------------------------------
Dec. 2004 Mar 2005
---------------------------------------
Net Net
Area rental rental
Segment (sq. ft.) Occupancy rate Occupancy rate
---------------------------------------------------------------------
Office 2,256,953 85.9% $10.68 86.6% $10.85
Retail 1,040,988 97.2% 13.18 97.9% 13.18
Industrial 1,358,120 93.3% 5.16 90.4% 5.16
Residential (2) 300,321 95.8% 1,030.14 96.0% 1,006.23
---------------------------------------------------------------------
Overall 4,956,382 91.2% $10.08 90.6% $10.16
---------------------------------------------------------------------
---------------------------------------------------------------------
1 Excludes areas affected by the Centre Laval and Place Alexis Nihon Winners redevelopment. 2 The residential sector sets forth the average monthly gross rent per unit. The same portfolio occupancy levels in the retail and residential sectors show YOY favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. variances resulting from leasing activities. The YOY office sector unfavorable variance of 0.4%, which represents approximately 9,000 square feet of space, as well as the industrial sector unfavorable variance of 2.8%, representing approximately 38,000 square feet of space, is attributable principally to the expected move outs of tenants at lease expiry, as well as some tenant insolvencies. Since December 31, 2004, the overall portfolio occupancy level decreased by 110 basis points. The office and residential sectors reflected increases in occupancy levels of 90 basis points and 20 basis points respectively as a result of increased leasing activities. The industrial sector and retail sector reflect decreases of 280 and 190 basis points respectively and result primarily from anticipated move-outs of tenants at lease expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created as well as from certain tenant insolvencies. SEGMENTED ANALYSIS
Office Three months ended March 31
-------------------------------------------------------------
2005 2004
---------------
Revenues from rental operations $14,458 $11,660
Rental property operating costs 7,792 6,184
-------------------------------------------------------------
Net operating income $6,666 $5,476
-------------------------------------------------------------
-------------------------------------------------------------
Net operating income from office rental operations totaled $6,666 for the quarter compared with $5,476 in 2004. The YOY positive variance of $1,190 (21.7%) is summarized as follows:
- NOI contribution from 4 office properties acquired $1,546
- Decrease in straight-lining of rents associated with
leasing and acquisitions (44)
- Increase in above and below market in-place
leases (re: EIC-140) 20
- Net negative variance associated with occupancies (15)
- Increase in bad debt expense (191)
- Increase in non-recoverable expenses (114)
- Negative variance in other income (12)
-----------------------------------------------------------------
Net positive variance $1,190
-----------------------------------------------------------------
-----------------------------------------------------------------
Retail Three months ended March 31
-----------------------------------------------------------------
2005 2004
---------------
Revenues from rental operations $8,478 $5,689
Rental property operating costs 3,850 3,008
-----------------------------------------------------------------
Net operating income $4,628 $2,681
-----------------------------------------------------------------
-----------------------------------------------------------------
For the quarter the retail sector net operating income totaled $4,628 in 2005 compared with $2,681 in 2004. The YOY positive variance of $1,947 (72.6%) is detailed as follows:
- NOI contribution from 2 retail properties acquired $1,017
- Increase in of straight-lining of rents associated
with leasing and acquisitions 190
- Increase in above and below market in-place
leases (re: EIC-140) 69
- Net positive variance associated with occupancies
and redevelopment 728
- Increase in bad debt expenses (104)
- Positive variance in other income 47
-----------------------------------------------------------------
Net positive variance $1,947
-----------------------------------------------------------------
-----------------------------------------------------------------
Industrial Three months ended March 31
-----------------------------------------------------------------
2005 2004
---------------
Revenues from rental operations $4,752 $2,160
Rental property operating costs 1,949 887
-----------------------------------------------------------------
Net operating income $2,803 $1,273
-----------------------------------------------------------------
-----------------------------------------------------------------
The industrial sector reflects a YOY positive variance of $1,530 (120.2%) for the quarter. Net operating income totaled $2,803 compared with the $1,273 in 2004. The contributing factors include:
- NOI contribution from 12 industrial properties
acquired $1,399
- Impact of straight-lining of rents associated with
leasing and acquisitions 48
- Decrease in above and below market in-place
leases (re: EIC-140) (31)
- Net positive variance associated with occupancies 108
- Increase in non-recoverable expenses (77)
- Positive variance in other income 83
-----------------------------------------------------------------
Net positive variance $1,530
-----------------------------------------------------------------
-----------------------------------------------------------------
Residential Three months ended March 31
-----------------------------------------------------------------
2005 2004
---------------
Revenues from rental operations $1,300 $1,2181
Rental property operating costs 812 904
-----------------------------------------------------------------
Net operating income $488 $377
-----------------------------------------------------------------
-----------------------------------------------------------------
Net operating income for the residential sector totaled $488 representing a YOY increase of $111 (29.4%). In summary, variances resulted from:
- Increase in revenues generated from rental increases
on regular apartments $27
- Increase in revenues generated from lower occupancy
of executive suites (9)
- Net positive variances in operating expenses 93
-----------------------------------------------------------------
Net positive variance $111
-----------------------------------------------------------------
-----------------------------------------------------------------
DEBT FINANCING AND CONTRACTUAL OBLIGATIONS
During the quarter the REIT repaid upon maturity the mortgages on:
Amount Rate
--------------------
.80 - 140 Lindsay, Dorval $835 8.4%
.8411 - 8453 Dalton, Mount-Royal $497 8.4%
.8459 - 8497 Dalton, Mount-Royal $692 8.4%
------
$2,024
------
------
As at March 31, 2005, the REIT's debt secured by income-producing properties was $336,878 representing 48.9% of gross book value (book value of the REIT's assets plus accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. amortization less intangible liabilities was $689,017), well below its 60% threshold The point at which a signal (voltage, current, etc.) is perceived as valid. limit. Including the convertible debentures, the percentage is 56.6% (limit 65%). Floating rate debt, which cannot exceed 15% of gross book value was $6,621 or 1.0%. The REIT's contractual obligations remained unchanged from December 2004. LIQUIDITY AND CAPITAL EXPENDITURES Funds from operations ("FFO") is a measure of the funds generated from the business before reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. in the business or provision for other capital needs. The REIT considers FFO to be an indicative indicative: see mood. measure of operating performance. FFO is not a measure defined by GAAP. FFO as presented is in accordance with the recommendations of the Real Property Association of Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ("REALPac"). It may not, however, be comparable to similar measures presented by other real estate investment trusts. The following is the calculation of FFO based on the industry's standard definition:
Three months ended March 31
----------------------------
FFO/Net Income Reconciliation: 2005 2004
--------------------------------------------------------------------
Net Income (per financial statements) $415 $2,364
Adjustments to reconcile net income to FFO:
Internalization of construction management
company 1,613 -
Amortization of buildings 3,623 2,710
Other amortization, excluding amortization
of furniture, fixtures & computers 2,340 154
Interest on the AN Convertible Debentures
paid by units - 197
--------------------------------------------------------------------
Funds from operations 7,991 5,425
--------------------------------------------------------------------
--------------------------------------------------------------------
Distribution paid 7,033 5,530
--------------------------------------------------------------------
--------------------------------------------------------------------
FFO payout ratio 88.0% 101.9%
--------------------------------------------------------------------
--------------------------------------------------------------------
FFO per unit $0.313 $0.270
--------------------------------------------------------------------
--------------------------------------------------------------------
Distributions per unit $0.275 $0.275
--------------------------------------------------------------------
--------------------------------------------------------------------
The cash generated from operating activities, conventional mortgage financing, as well as funds from operating and acquisition facilities, have been used to meet all of the REIT's liquidity requirements during the first quarter of 2005 and were principally utilized for funding property acquisitions, repayments of debts on income-producing properties, and distributions to unitholders. Management expects to be able to continue to meet all of the REIT's ongoing obligations and to finance future growth through the issuance of new equity as well as by using conventional real estate debt, short term financing from the REIT's credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities , and the REIT's stable cash flow. The REIT currently has an acquisition capacity of approximately $165 million for growth investments, while still meeting its debt covenants. CAPITAL EXPENDITURES, LEASING COMMISSIONS AND TENANT IMPROVEMENTS Capital expenditures, leasing commissions and tenant improvements totaled $2,380 in the first quarter of 2005. Details to the amounts incurred are as follows:
Additions to buildings:
Capital expenditures:
Non-recoverable maintenance $ 123
Recoverable maintenance 197
-------
Total additions to buildings 320
-------
Tenant improvements & leasing costs:
Tenant improvements:
Renewals & vacant space lease-ups 1,381
Value enhancing (1) 197
Redevelopment 45
Leasing commissions 437
-------
Total tenant improvements & leasing costs 2,060
-------
Total $ 2,380
-------
-------
1. Reflects amounts spent leasing-up vacant space on properties that have been acquired by the REIT. OUTSTANDING UNITS DATA As of March 31, 2005, the Nihon/Massicotte Group hold approximately 30.2% of the 25,668,306 outstanding units of the Alexis Nihon REIT. RISKS AND UNCERTAINTIES Like any real estate ownership, there are certain risk factors inherent in the normal course of business of the REIT. All immovable property In all the civil law systems, immovable property is the equivalent of "real property" in common law systems, i.e. it is land or any permanent feature or structure above or below the surface. investments are subject to elements of risk, including general economic conditions, local real estate markets, demand of leased premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person and competition from other available premises. The REIT is exposed to interest rate risk on its borrowings. It minimizes this risk by restricting re·strict tr.v. re·strict·ed, re·strict·ing, re·stricts To keep or confine within limits. See Synonyms at limit. [Latin restringere, restrict- : re-, total debt, excluding convertible debentures, to 60% of gross book value (65% including convertible debentures) and to 15% of gross book value on short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. floating rate borrowings. In addition, terms to maturity of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. are staggered over time and are closely matched to the remaining average lease terms. The REIT is exposed to credit risk as an owner of real estate in that tenants may become unable to pay the contracted rents. Management mitigates this risk by carrying out appropriate credit checks and related due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. on the significant tenants. Although diversified diversified (di·verˑ·s by asset class and property type, the REIT's portfolio is concentrated in the Greater Montreal Area and National Capital Region and will derive de·rive v. 1. To obtain or receive from a source. 2. To produce or obtain a chemical compound from another substance by chemical reaction. most of its income from properties located in those regions. Consequently, the market value of the properties and the income generated from them could be negatively affected by changes in local and regional economic conditions. The REIT has been structured to ensure that mandated investment guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. and operating criteria criteria (krītēr´ē  ),n. are strictly adhered to. These policies govern such matters as the type and location of properties that the REIT can acquire, the maximum leverage allowed, the requirement for appropriate insurance coverage as well as environmental policies. The REIT has maintained its ability to properly manage both operational and financial risks. The REIT's properties are leased under long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. arrangements to a diversified base of creditworthy cred·it·wor·thy adj. Having an acceptable credit rating. cred  it·wor tenants with strong covenants and are mainly financed with long-term
fixed rate mortgages.Other than as described above, no single tenant is critical to the REIT's ability to meet its financial obligations. The REIT's broad tenant base assists in attempting to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. its primary goal of maintaining a predictable cash flow. Risk is further minimized min·i·mize tr.v. min·i·mized, min·i·miz·ing, min·i·miz·es 1. a. To reduce to the smallest possible amount, extent, size, or degree. b. Usage Problem To reduce. See Usage Note at minimal. through a low vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. rate and relatively few short-to medium-term lease renewals. OUTLOOK As appropriate, the REIT intends to pursue accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. in current and adjacent markets that present favorable opportunities, with the goal of enhancing unitholder value. The current portfolio provides a strong base from which to achieve these objectives, and, with an experienced management team, the REIT is well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. opportunities. The top priority is to prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. manage and maximize the value of our current portfolio. At the same time, the REIT is equally focused on aggressively managing costs and increasing operating efficiencies. The REIT's quality, well-located properties are competitively positioned in the Greater Montreal Area and National Capital Region. Professional management and a focus on service position Alexis Nihon REIT particularly well to attract and retain long-term tenants. Barring any unanticipated events, distributions to unitholders in 2005 are expected to remain at the current level.
ALEXIS NIHON
REAL ESTATE INVESTMENT TRUST
Three Months Ended March 31, 2005
Supplemental Information Package
The Supplemental Information Package should be read in conjunction with the Annual Report for the year ended December 31, 2004, with the Quarterly Reports for the three months ended March 31, 2005 and 2004, June 30, 2004 and September September: see month. 30, 2004, as well as with the Prospectus' dated December 13, 2002, April 8, 2004 and August 19, 2004.
Corporate Information
Head Office
1 Place Alexis Nihon
3400 De Maisonneuve Blvd. West
Suite 1010
Montreal, Quebec
H3Z 3B8
Trading Symbol
Toronto Stock Exchange: AN.UN
Transfer Agent
National Bank Trust Inc.
1100 University Street
Montreal, Quebec
H3B 2G7
Toll-free number: 1-800-341-1419
Investor Relations Contact
Rene Fortin, CGA
Senior Vice President and Chief Financial Officer
Tel.: 514-737-3344
Fax: 514-931-1618
Email: rfortin.info@alexisnihon.com
Research Coverage:
Scotia Capital Himalaya Jain, CFA (416) 863-7218
National Bank Financial Michael Smith, CFA (416) 869-8022
RBC Securities Neil Downey, CA, CFA (416) 842-7835
Desjardins Securities Frank B. Mayer, MA (416) 867-3764
Marc Rothschild (416) 867-2051
CIBC World Markets Rossa O'Reilly, CFA (416) 594-7296
Nelson Mah, CA
TD Securities Sam Damiani, CFA (416) 983-9640
Canaccord Capital Shant Poladian (416) 869-6595
BMO Nesbitt Burns Karine MacIndoe (416) 359-4269
Quarter Distribution
---------------------------------------------
Q1/05 $ 0.275
Q4/04 $ 0.275
Q3/04 $ 0.275
Q2/04 $ 0.275
Q1/04 $ 0.275
---------------------------------------------
---------------------------------------------
Unit Trading Activity on the Toronto Stock Exchange
High Low Close Volume
Quarter $ $ $ (000)
---------------------------------------------------------------------
Q1/05 13.80 11.88 12.58 2,492
Q4/04 13.41 12.06 12.55 2,013
Q3/04 12.66 11.75 12.20 2,347
Q2/04 13.69 10.35 12.10 3,031
Q1/04 14.25 12.17 13.65 1,432
---------------------------------------------------------------------
---------------------------------------------------------------------
Source: Toronto Stock Exchange
Selected Quarterly Information
Quarter Ended
----------------------------------------------------
In thousands of March Dec Sept June March
dollars, except 31, 31, 30, 30, 31,
per unit amounts 2005 2004 2004 2004 2004
----------------------------------------------------
Revenues From
Rental
Operations 28,988 29,254 25,425 23,281 20,790
Net Operating
Income 14,585 15,416 14,159 12,208 9,807
Net Operating
Income Margin 50.3% 52.7% 55.7% 52.4% 47.2%
Net Income 415 2,634 3,075 3,275 2,364
Net Income per
unit:
Basic 0.016 0.103 0.121 0.133 0.118
Diluted (a) 0.016 0.103 0.121 0.133 0.118
Distributable
Income 7,041 7,363 6,761 6,267 4,806
Distributable
Income Per
Unit:
Basic 0.276 0.289 0.265 0.254 0.239
Diluted 0.267 0.280 0.263 0.253 0.237
Distributions 7,033 7,017 7,013 6,913 5,530
Distributions
Per Unit: 0.275 0.275 0.275 0.275 0.275
Payout ratio
(12-month
basis) 102.0% 105.1% 110.5% 110.3% 105.5%
Funds From
Operations 7,991 8,730 7,910 7,105 5,425
Funds from
Operations
Per Unit:
Basic 0.313 0.342 0.310 0.288 0.270
Payout ratio
(per quarter) 88.0% 80.4% 88.7% 97.3% 101.9%
Income-producing
properties 608,753 603,689 603,723 530,922 463,742
Total Assets 661,068 663,126 670,814 564,405 479,803
Debts on
income-producing
properties 330,257 334,674 339,331 284,268 240,340
Bank
indebtedness 6,621 808 - 3,746 16,050
Convertible
debentures -
liability
component 53,369 53,338 53,296 - 12,150
Unitholders'
Equity 253,523 258,256 262,463 264,555 199,717
Number of units
at end of
Period 25,668,306 25,515,935 25,501,890 25,490,022 20,118,544
Number of
options at
end of Period 4,029,306 4,029,306 4,029,306 - 1,056,443
Weighted Average
Number of
Units:
Basic 25,520,625 25,506,516 25,494,379 24,637,663 20,096,970
Diluted
(for net
income)(a) 25,520,625 25,506,516 25,494,379 24,637,663 20,096,970
Diluted
(for
distributable
income) 29,549,931 29,535,822 26,808,283 25,102,034 21,153,413
(a) Convertible debentures have been excluded from the calculations
of the diluted net income per unit for all the above mentioned
periods since they are anti-dilutive.
Segmented Information
Segmented Revenues From Rental Operations
(in thousands of dollars) Q1/05 Q1/04 Change
$ $ Vs Q1/04
------------------------------
Office 14,458 11,660 2,798
Retail 8,478 5,689 2,789
Industrial 4,752 2,160 2,592
Multi-family residential 1,300 1,281 19
------------------------------
Total 28,988 20,790 8,198
------------------------------
------------------------------
Segmented Net Operating Income
(in thousands of dollars) Q1/05 Q1/04 Change
$ $ Vs Q1/04
------------------------------
Office 6,666 5,476 1,190
Retail 4,628 2,681 1,947
Industrial 2,803 1,273 1,530
Multi-family residential 488 377 111
------------------------------
Total 14,585 9,807 4,778
------------------------------
------------------------------
Segmented Gross Book Value of Income-Producing Properties
(in thousands of dollars) Q1/05 Q1/04 Q4/04 Change Change
$ $ $ Vs Q1/04 Vs Q4/04
----------------------------------------------
Office 302,782 238,662 301,076 64,120 1,706
Retail 180,236 142,051 180,161 38,185 75
Industrial 116,284 55,482 106,381 60,802 9,903
Multi-family
residential 34,346 34,137 34,300 209 46
----------------------------------------------
Total 633,648 470,332 621,918 163,316 11,730
----------------------------------------------
----------------------------------------------
Segmented Net Book Value of Income-Producing Properties
(in thousands of dollars) Q1/05 Q1/04 Q4/04 Change Change
$ $ $ Vs Q1/04 Vs Q4/04
----------------------------------------------
Office 291,216 235,408 291,564 55,808 (348)
Retail 173,942 140,025 174,997 33,917 (1,055)
Industrial 110,620 54,706 103,991 55,914 6,629
Multi-family
residential 32,975 33,603 33,137 (628) (162)
----------------------------------------------
Total 608,753 463,742 603,689 145,011 5,064
----------------------------------------------
----------------------------------------------
Portfolio Summary
March 31, Dec 31, Sept 30, June 30, March 31,
2005 2004 2004 2004 2004
---------------------------------------------
Leasable Area (000
square feet)
Office 2,814 2,814 2,814 2,604 2,257
Retail 1,434 1,432 1,432 1,235 1,041
Industrial (a) 2,758 2,532 2,532 1,564 1,358
Multi-family residential 300 300 300 300 300
---------------------------------------------
Total 7,306 7,078 7,078 5,703 4,956
---------------------------------------------
---------------------------------------------
Number of Properties
Office 19 19 19 17 15
Retail 4 4 4 3 2
Industrial (a) 28 27 27 17 16
Multi-family
residential (b) N/A N/A N/A N/A N/A
---------------------------------------------
Total 51 50 50 37 33
---------------------------------------------
---------------------------------------------
Change of Leasable Area
Square feet (000) %
Vs Q4/04 Vs Q1/04 Vs Q4/04 Vs Q1/04
----------------- -----------------
Office - 557 0.0% 24.7%
Retail 2 393 0.1% 37.8%
Industrial 226 1,400 8.9% 103.1%
Multi-family residential - - 0.0% 0.0%
----------------- -----------------
Total 228 2,350 Total 3.2% 47.4%
----------------- -----------------
----------------- -----------------
Change of Number of Properties
No. of Properties %
Vs Q4/04 Vs Q1/04 Vs Q4/04 Vs Q1/04
----------------- -----------------
Office - 4 0.0% 26.7%
Retail - 2 0.0% 100.0%
Industrial 1 12 3.7% 75.0%
Multi-family residential - - 0.0% 0.0%
----------------- -----------------
Total 1 18 Total 2.0% 54.5%
----------------- -----------------
----------------- -----------------
(a) The REIT owns 25% of 102,032 square feet (3 properties) and 50% of 308,385 square feet (4 properties). (b) Place Alexis Nihon has been included in the office properties category. The office properties category includes 611,535 sq ft of office space at Place Alexis Nihon. The retail properties category includes 391,029 sq ft of retail space at Place Alexis Nihon. The multi-family residential properties category includes 300,321 sq ft of multi-family residential space at Place Alexis Nihon.
Leasing Activities
Lease Expirations and Renewals by Segment
Office Retail Industrial Total
Expiring Leases/2005
---------------------------------------------------------------------
Number of tenants 39 29 42 110
Area (Square feet) 130,191 41,713 350,705 522,609
Average net rent/square foot $ 13.61 $ 18.35 $ 5.22 $ 8.36
---------------------------------------------------------------------
Renewed Leases as at Q1
---------------------------------------------------------------------
Number of tenants 16 8 6 30
Area (Square feet) 35,452 6,759 30,921 73,132
Average net rent/square foot $ 16.09 $ 26.07 $ 5.93 $ 12.73
---------------------------------------------------------------------
New Leases as at Q1
---------------------------------------------------------------------
Number of tenants 15 2 10 27
Area (Square feet) 40,763 2,440 58,297 101,500
Average net rent/square foot $ 11.93 $ 23.52 $ 5.17 $ 8.33
---------------------------------------------------------------------
Lease Expirations
Office Retail Industrial Total
Number of tenants
---------------------------------------------------------------------
2006 54 29 56 139
2007 81 40 37 158
2008 61 34 30 125
2009 36 35 24 95
2010 41 35 13 89
After 56 68 11 135
---------------------------------------------------------------------
Area (square feet)
---------------------------------------------------------------------
2006 280,017 38,232 684,544 1,002,793
2007 523,493 78,555 424,109 1,026,157
2008 383,889 394,805 343,244 1,121,938
2009 168,568 141,325 262,421 572,314
2010 293,474 138,023 109,019 540,516
After 641,215 568,387 185,025 1,394,627
---------------------------------------------------------------------
Weighted Average Net Rent
(per square foot)
---------------------------------------------------------------------
2006 $ 10.40 $ 27.89 $ 5.32 $ 7.60
2007 $ 10.88 $ 19.51 $ 5.18 $ 9.18
2008 $ 11.63 $ 4.79 $ 5.08 $ 7.22
2009 $ 9.95 $ 12.82 $ 5.19 $ 8.48
2010 $ 10.94 $ 17.28 $ 7.27 $ 11.82
---------------------------------------------------------------------
Weighted Average Term to Maturity on Existing Leases 4.52 years
Leasing Activities
Occupancy rate
Change Change
Occupancy Q1/05 Q1/04 Q4/04 Vs Q1/04 Vs Q4/04
---------------------------------------------------------------------
Office 88.0% 87.0% 87.1% 1.0% 0.9%
Retail 94.7% 96.9%(a) 96.6% -2.2% -1.9%
Industrial 87.1% 93.2% 89.9% -6.1% -2.8%
Multi-family residential 96.0% 95.9% 95.8% 0.1% 0.2%
------- -------- ----- ----- -----
Total 89.3% 91.3%(a) 90.4% -2.0% -1.1%
------- -------- ----- ----- -----
------- -------- ----- ----- -----
(a) Excludes area affected by the Centre Laval redevelopment.
Top 10 Tenants
% of Total
Revenues
---------------------------------------------------------------------
---------------------------------------------------------------------
1 Travaux Publics 6.40%
2 Richter Management Ltd. 1.97%
3 Club Monaco 1.81%
4 ISM Information Management Corporation 1.77%
5 CP Ships (Canada) Agencies Ltd. 1.74%
6 KSH Solutions Inc. 1.10%
7 Sico 1.06%
8 The Brick 1.04%
9 Future Shop 1.03%
10 Rona 1.02%
---------------------------------------------------------------------
Total 18.94%
---------------------------------------------------------------------
---------------------------------------------------------------------
Debt Summary
Debt Maturities
Year Amount % of Total Debt Average
$ Outstanding Rate
---------------------------------------------------------------------
2005 18,574,412 5.66% 7.10%
2006 4,487,180 1.37% 7.30%
2007 84,660,684 25.79% 6.59%
2008 55,017,339 16.76% 6.44%
2009 45,452,535 13.85% 5.48%
After 120,102,729 36.58% 6.29%
---------------------------------------------------------------
328,294,879 100.00% 6.34%
---------------------------------------------------------------
---------------------------------------------------------------
Weighted average term: 5.61 years
Financing Activities There were repayments in January 2005 of three mortgages amounting to approximately $2,024,000. At current gross book value, the REIT's maximum borrowing capacity is $165,000,000. Financing Capacity As at March 31, 2005, debt (excluding convertible debentures) /gross book value ratio: 48.9% As at March 31, 2005, debt (including convertible debentures) /gross book value ratio: 56.6%
Ratio analysis
March 31, Dec 31, Sept 30, June 30, March 31,
2005 2004 2004 2004 2004
---------------------------------------------
Debt to gross book value
(excluding convertible
debentures) 48.9% 49.2% 49.7% 50.2% 52.7%
Debt to gross book value
(including convertible
debentures) 56.6% 57.0% 57.5% 50.2% 52.7%
Interest coverage ratio 2.31 2.41 2.46 2.64 2.28
Alexis Nihon Real Estate Investment Trust (TSX:AN.UN) |
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