Crombie Real Estate Investment Trust (CRR.UN) Q4 2019 earnings summary

Executive summary

• 2019 delivered 35.9% total unitholder return; asset recycling, stronger occupancy and development progress supported NAV creation and lower leverage.

• Grocery- and drugstore-anchored portfolio: 285 properties, 17.6 million sq. ft., 96.1% committed occupancy and 3.5% annual same-asset cash NOI growth.

• Property sales diluted FFO and AFFO in 2019, while funding development and reducing debt; the active and potential development pipeline reached $4.0–$5.8 billion across 33 sites.

Financial highlights

• Q4 2019 property revenue was $96.8 million, down 7.2% YoY; property NOI was $67.0 million, down 8.9%, mainly reflecting dispositions.

• FY 2019 property revenue was $398.7 million, down 3.8% YoY; property NOI was $281.1 million, down 4.2%.

• Operating income attributable to unitholders was $44.1 million in Q4 and $161.9 million for FY 2019; included gains on property disposals of $30.2 million and $81.8 million, respectively.

• Net assets attributable to unitholders increased $10.4 million for FY 2019, versus a $26.9 million decrease in 2018; Q4 decreased $4.9 million, versus $13.4 million in Q4 2018.

• Q4 same-asset cash NOI was $59.8 million, up 3.0% YoY; FY was $236.6 million, up 3.5%, including a favorable IFRS 16 impact.

Outlook and guidance

• Approximately $600 million of development is expected to reach substantial completion in 2020–2021; projects were on time and on budget at report date, with estimated NAV creation of $1–$2 per unit, subject to market and cap-rate conditions.

• Planned annual development investment: $150–$200 million; the first six major projects are expected to yield 5.5%–6.0% on cost.

• Major development pipeline expanded to 33 sites, with projected costs of $4.0–$5.8 billion; projects remain subject to approvals, financing, cost and market conditions.

• At the time of writing, COVID-19 was a rapidly evolving pandemic; grocery- and drugstore-anchored assets primarily served essential services, while impacts remained uncertain.