Crombie Real Estate Investment Trust (CRR.UN) Q4 2018 earnings summary

Executive summary

• 2018 AFFO per unit rose 2.8% to $1.03; same-asset cash NOI grew 2.7%, and year-end committed occupancy reached 96.0%.

• Strategy prioritized grocery-anchored assets, mixed-use development and recycling lower-growth assets; the 23-property pipeline represents $3.0B–$4.5B of potential investment over 10–15 years.

Financial highlights

• FY property revenue was $414.649M, up 0.7% YoY; property NOI was $293.343M, up 0.9%, with a 70.7% NOI margin versus 70.6%.

• FY FFO was $184.034M, up 1.6%; basic FFO/unit was $1.22. AFFO was $155.794M, up 4.0%, and AFFO/unit rose 2.8% to $1.03.

• Q4 revenue was $104.296M, down 1.3% YoY; NOI was $73.479M, down 0.8%. Q4 FFO/unit was $0.31 and AFFO/unit was $0.26.

• FY net assets attributable to Unitholders decreased $26.920M versus a $30.582M increase in 2017; Q4 decrease was $13.416M versus $6.445M a year earlier.

Outlook and guidance

• Portfolio upkeep investment is expected at 3%–5% of property revenue annually; management intends to maintain reasonable leverage and strengthen investment-grade access.

• Five major developments are projected to create $1–$2 of NAV per unit over the next one to two years; the estimate assumes projected stabilized values and costs.

• Active and potential development pipeline totals 23 locations and $3.0B–$4.5B in projected investment; first Belmont phases began generating income in Q4 2018, with further 2019 income expected.

• Expected yields on cost for active major developments generally range from 5.0% to 6.3%; project timing and returns depend on approvals, costs, leasing and market conditions.