Crombie REIT - 2018 Earnings & Price Target Forecast
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Crombie REIT(CRR.UN) currently owns a portfolio of 288 income-producing properties across Canada, comprising approximately 18.9M sq. ft. They have 5 properties comprised of 255,000 sq. ft. of retail and 1,200 residential units with another 18 projects totaling 1.2M sq. ft. of commercial space and 9,000 residential units. Their strategy is to own, operate and develop a portfolio of high quality grocery and drug store anchored shopping centres, freestanding stores and mixed use developments primarily in Canada's top urban and suburban markets. Annual minimum rent by location consists of: Atlantic Canada 43%; Alberta – 21%, Ontario-15%, BC-11%, and Quebec at10%. The two primary sources of acquisitions are with the Empire Group (EMP.A) and from third parties. The average remaining lease term is 18 years due the property leases with Empire Group (Sobey's). Sobey's contributes 55% of annual rent, Shoppers Drugs – 5%.
Empire Company Ltd (EMP.A) formed Crombie REIT to hold their retail shopping centre properties in an IPO in Mar-2006, comprised of 44 properties. They have since grown to 287 properties (19.1M sq. ft.), almost all purchased from Empire Company Ltd. Sobeys headquarters in Stellarton, Nova Scotia is a wholly-owned subsidiary of Empire Company Limited (TSX: EMP.A), Sobeys owns or franchises more than 1,500 stores in all 10 provinces under retail banners that include Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, and Lawton's Drug Stores as well as 350 retail fuel locations. Empire Company Limited (EMP.A) holds a 41.5% interest as of Sept-30-2018 unchanged from 41.5% at Dec-31-2016.
The property portfolio value at Crombie has grown to $4B primarily from acquiring properties from Empire. Empire's strategy was to reduce their investment in real estate while still retaining control of these properties. In addition to acquiring properties from Empire, Crombie plans to diversify their portfolio geographically and to acquire properties from third parties. Crombie continues to diversify its geographic composition from its Atlantic Canadian holdings as evidenced by property acquisitions in British Columbia, Alberta, Manitoba and Saskatchewan since Crombie's 2006 IPO.
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