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C2C Industrial Properties Inc. Reports Continued Strong Growth in Third Quarter 2012

Tuesday, November 20, 2012 4:38 PM


TORONTO, ONTARIO -- (Marketwire) -- 11/20/12 -- C2C Industrial Properties Inc. ("C2C" or the "Company") (TSX VENTURE:CCH) announced today continued acquisition growth for the three and nine months ended September 30, 2012.

THIRD QUARTER 2012 HIGHLIGHTS:                                              
--  As at November 20, 2012, C2C's portfolio consisted of 22 light
    industrial properties aggregating 2.1 million sq. ft. of gross leasable
--  Acquired portfolio of seven income producing industrial properties
    located in Montreal, Mississauga and Edmonton on July 18, 2012, 
--  Acquired income producing industrial property containing two buildings
    in Brampton Ontario, on November 2, 2012. 
--  Completed private placement equity offering of 4.8 million common shares
    for gross proceeds of approximately $22.0 million. 
--  Rental revenue up 41% from the previous quarter due to contribution from
--  Net operating income up 50% from the previous quarter due to
    contribution from acquisitions. 
--  Adjusted funds from operations increases to $1.2 million from $0.8
    million in Q2 2012. 
--  Accretive growth as AFFO rises to $0.07 per share from $0.06 per share
    in Q2 2012 even with a 25% increase in weighted average number of common
    shares outstanding. 
--  On October 15, 2012, paid quarterly dividend of $0.0265 per common share
    to the shareholders on record on September 28, 2012. 
--  $20.1 million bought-deal convertible unsecured subordinated debenture
    offering completed on October 24, 2012 with net proceeds of $18.8
    million to be used for portfolio growth. 

"The substantial growth in our property portfolio over the last few quarters is now contributing to strong and sustainable increases in our operational and financial performance. We expect to see further growth as we continue to prudently expand our presence in targeted light industrial markets," commented Chris Ross, President.

"Looking ahead, our focus remains on successfully executing a three-part strategic growth plan aimed at increasing AFFO through accretive acquisitions and capitalizing on the highly fragmented nature of the Canadian light industrial real estate sector. First, we expect to purchase properties with high initial capitalization rates that can contribute immediately to our cash flows. Second, we will examine opportunities where we believe we can add incremental value over time through our active asset and property management programs. Third, we will look at acquisitions where our proven property development and re-development expertise will generate enhanced value," stated David Wright, Chief Executive Officer.

Strong Operating and Financial Performance

Primarily as a result of recent acquisitions, rental income and Net Operating Income ("NOI") for the three months ending September 30, 2012 were significantly higher than the previous quarters. Rental income increased to $4.6 million in the third quarter from $3.2 million in the second quarter of the year while NOI increased to $2.9 million from $1.9 million in the previous quarter of the year.

Funds from Operations ("FFO") for the three months ended September 30, 2012 were $1.3 million, up from $0.9 million in the previous quarter. Adjusted Funds from Operations ("AFFO") for the third quarter of 2012 were $1.2 million, up from $0.8 million in the previous quarter. The Company's accretive acquisitions have resulted in AFFO in the third quarter of $0.07 per diluted common share, up from $0.06 per share in the second quarter, even with a 25.3% increase in the weighted average number of common shares outstanding compared to the prior quarter.

The Company had a debt to gross book value ratio of 56.1% at September 30, 2012, with its mortgage portfolio having a weighted average effective interest rate of 4.7%. The weighted average effective interest rate is reduced slightly from 4.8% as at the prior quarter-end and significantly reduced from 7.1% as at December 31, 2011, as the company manages its mortgage portfolio to diversify its lender base and spread out maturities between 5 year and 10 year terms.

On July 18, 2012 the Company completed the acquisition of a portfolio of seven income producing industrial properties located in Montreal, Mississauga and Edmonton (the "MME" acquisition). The portfolio is comprised of 792,658 square feet of gross leasable area, and was purchased for the aggregate purchase price of approximately $69.2 million, excluding closing costs. The Company financed the purchase with the assumption of an existing first mortgage in the approximate principal amount of $10.0 million (at 3.25% for a term of 2 years), new mortgage financing in the principal of $34.8 million (at prime + 2.0% for a term of 3 years), and mezzanine financing of $21.5 million (at 9.25% for a term of 1.5 years).

On July 31, 2012, the Company completed a private placement equity offering of 4.8 million common shares at a price of $4.55 per common share for gross proceeds of approximately $22.0 million. Proceeds of the equity offering were used to repay the mezzanine loan used for the MME acquisition.

Subsequent to quarter end, on October 24, 2012 the Company completed an offering of $20.1 million aggregate principal amount of convertible unsecured subordinated debentures (the "Debentures"), at a price of $1,000 per debenture. The offering was completed on a bought deal basis. Net proceeds from the offering are less underwriting fees and expenses of approximately $1.3 million. The Debentures mature on November 30, 2017 and bear interest of 6.75% per annum, payable semi-annually on May 31, and November 30 in each year. Subject to certain terms and conditions, the Debentures are convertible at the request of the holder at a conversion price of $5.55 per Common Share.

On November 2, 2012 the Company announced it had completed the acquisition of property comprised of two light industrial buildings aggregating approximately 82,000 square feet of GLA located in Brampton, Ontario. The property is well located, close to major highways and Pearson International Airport, and is 100% leased. The purchase price was approximately $8.5 million, excluding closing costs. The Company financed the acquisition with a new $5.53 million five-year mortgage bearing an interest rate of 3.75%, the issuance of $0.5 million in the Company's common shares to the vendor at $5.00 per share, with the balance in cash. The property is being acquired at a going-in capitalization rate of approximately 7.5%.

FINANCIAL & OPERATING HIGHLIGHTS                                            
                                                     For the periods ending 
                                       September      June 30,     December 
CDN $ Thousands                         30, 2012          2012     31, 2011 
Operations Information                                                      
Number of properties                          21            14           10 
Gross leasable area (square feet)      2,003,122     1,210,464      722,565 
Portfolio occupancy                        95.20%         97.2%        94.3%
In-place rental rates (per sq.                                              
 ft.)                                $      6.48   $      6.44   $     7.18 
Financial Information                                                       
Revenue producing properties         $   180,100   $   106,690   $   63,030 
Total assets                         $   188,938   $   117,033   $   66,591 
Mortgage payable                     $   105,959   $    60,880   $   60,828 
Weighted average effective                                                  
 interest rate                               4.7%          4.8%         7.1%
Debt to gross book value                    56.1%         52.0%        91.4%
Shareholders' equity                 $    77,704   $    53,390   $    4,136 
Shares outstanding(1)                 17,128,180    12,292,980    1,444,001 
                               3 months    9 months    3 months             
                                 ending      ending      ending  March 16 - 
                              September   September    June 30,    December 
$CDN Thousands                 30, 2012    31, 2012        2012    31, 2011 
Results of Operations                                                       
Rental income               $     4,575 $    10,314 $     3,248 $     1,222 
Net operating income (2)    $     2,889 $     6,324 $     1,930 $       808 
Net income (loss)           $     3,575 $     8,710 $     4,260 $    (1,298)
Diluted income (loss) per                                                   
 share                      $      0.22 $      0.80 $      0.33 $     (1.09)
Funds from operations(3)    $     1,347 $     2,291 $       891 $      (207)
FFO per diluted share       $      0.08 $      0.21 $      0.07 $     (0.17)
Adjusted funds from                                                         
 operations                 $     1,219 $     2,059 $       822 $      (129)
AFFO per diluted share      $      0.07 $      0.19 $      0.06 $     (0.11)
Share price                 $      4.10 $      4.10 $      5.35 $      4.50 
Weighted average diluted                                                    
 common shares - FFO and                                                    
 AFFO(1)                     16,241,334  10,933,143  12,970,761   1,196,106 
(1) On April 11, 2012, C2C did a 25 to 1 share consolidation reducing the   
    total December 31, 2012 outstanding shares to 1,444,001 from 36,100,025.
(2) Net operating income is property rental revenue, less property operating
    costs, property taxes and property management fees.                     
(3) The Company has revised it's definition of FFO to add back the          
    amortization of mortgage transaction and debt settlement costs,         
    previously treated as an add back to AFFO. The FFO values for the prior 
    periods have been restated for this change.                             

Forward Looking Statements

This document contains forward-looking statements relating to C2C and the industry in which it operates and its strategy, action plans and investments, which may involve 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 C2C's control. Consequently, readers should not place any undue reliance on such forward-looking statements. These forward-looking statements are made as of the date of this press release. C2C is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or other factors, unless otherwise required to do so by applicable law. All forward-looking statements attributable to C2C are expressly qualified by these cautionary statements.

About C2C Industrial Properties Inc.

C2C is a real estate investment corporation specializing in the acquisition, ownership and operation of light industrial properties across Canada. C2C currently owns 22 industrial assets totalling approximately 2.1 million square feet of gross leaseable area. More information about C2C (TSX VENTURE:CCH) is available at www.c2cip.com .

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

C2C Industrial Properties Inc.
Christopher Ross
(416) 646-7353

(Source: Market Wire )
(Source: Quotemedia)


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