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Partners Announces Results for the Fourth Quarter and Full Year 2018

GlobeNewswire - Mon Mar 18, 7:23PM CDT

Partners Real Estate Investment Trust (the "REIT," or "Partners") (TSX:PAR-UN.TO) today announced its results for the three and twelve month periods ended December 31, 2018 (the "fourth quarter" and "full year 2018", respectively).

FULL YEAR 2018 HIGHLIGHTS

-- Comprehensive loss of $32.9 million, a reduction to income of $38.2 million when compared to 2017. This reduction was due to an increase in fair value loss adjustments and lower all property NOI resulting from property dispositions.

-- Revenues from income producing properties of $48.8 million, a reduction of $4.1 million when compared to 2017. This reduction in revenue is primarily the result of the eleven properties sold during 2018.

-- Same property NOI for the year of $21.3 million, an improvement of $0.4 million when compared to 2017, due to positive leasing activity, higher minimum rent, and contributions from development projects.

-- All property NOI of $29.5 million, a reduction of $3.3 million when compared with 2017 due to the eleven properties sold during 2018, partially offset by increases to same property NOI.

-- FFO and AFFO per unit of $0.32 and $0.25, compared to $0.34 and $0.26, respectively, for 2017.

-- ACFO payout ratio of 92.8%, compared to 96.3% for 2017.

-- Occupancy of 96.9% as at December 31, 2018, an improvement when compared to a level of 95.3% as at December 31, 2017.

-- As at December 31, 2018, the REIT had renewed a total of 156,612 square feet of leases that were set to expire during 2018, representing a renewal rate of approximately 82% for 2018.

-- Debt to gross book value of 62.1%, an increase from 59.4% at the end of 2017.

FOURTH QUARTER 2018 HIGHLIGHTS

-- Comprehensive loss of $31.4 million, a decrease to income of $33.4 million when compared to the fourth quarter of 2017. Fair value losses on income producing properties totaled $33.5 million in the quarter.

-- Revenues from income producing properties of $10.5 million, a reduction of $2.4 million when compared to the fourth quarter of 2017. This reduction in revenue is primarily the result of ten properties sold during the quarter.

-- Same property NOI for the quarter of $5.4 million, an improvement of $0.3 million when compared with the fourth quarter of 2017. The increase was due to positive leasing activity and contributions from new developments.

-- All property NOI of $6.1 million, a reduction of $1.8 million when compared with the fourth quarter of 2017. The decrease was due to properties sold during September 2018, October 2018, and December 2018, partially offset by increases to same property NOI as discussed previously.

-- FFO and AFFO per unit of $0.09 and $0.08 compared to $0.08 and $0.07, respectively, for the fourth quarter of 2017.

-- ACFO payout ratio of 64.3%, compared to 97.4% for the fourth quarter of 2017.

UPDATE OF QUEBEC SALE PROCESS AND REIT STRATEGY

-- On March 11, 2019, the purchaser of the eleven Quebec properties waived its due diligence conditions; however, completion of the sale remains subject to a number of closing conditions. The Quebec properties' carrying value and disposition price are $178 million and this will result in net cash proceeds of approximately $63 million, after payment of related mortgages and transaction expenses. The REIT anticipates closing the sale during April 2019.

-- In the event that the Quebec Sale Transaction is completed, the board of trustees of the REIT ("the Board") expects to consider the payment of a special cash distribution to all unitholders of a portion of the net cash proceeds from such sale transaction. The Board will meet after the closing of the sale transaction and decide on the amount of the special cash distribution based upon, amongst other things, the ongoing cash requirements of the REIT.

-- In the event that the Quebec Sale Transaction is completed, the REIT will then own 11 retail properties in Ontario and one property in Manitoba, aggregating approximately 623,000 square feet of leasable space.

-- In these circumstances, the Board intends to review the REIT's strategic alternatives, taking into account a variety of factors, including, among others, general industry, retailer and economic conditions in the markets in which the REIT then operates, and the anticipated impact of those conditions on the REIT and its remaining properties. Those alternatives will likely include a possible sale of either the REIT itself or its then remaining properties, together with other options that are in the best interests of the REIT and its unitholders.

-- During 2018, the REIT disposed of substantially all its properties in western Canada. The sale of the western properties generated approximately $50 million in net cash proceeds of which approximately $40 million was returned to unitholders through a special distribution payment of $0.87 per unit. As a consequence of these dispositions and the special distribution to unitholders, the REIT reduced its regular monthly distribution from the annualized rate of $0.25 per unit to $0.18 per unit.

-- In the event that the Quebec Sale Transaction is completed, the Board will review the appropriateness of Partners' current normal monthly distribution of $0.015 per unit ($0.18 per unit annually), including whether such distribution should be reduced or discontinued in light of the smaller size of the remaining portfolio and other relevant factors.

As at and for the three months ended  As at and for the year ended
                                                           Dec 31, 2018     Dec 31, 2017       Dec 31, 2018           Dec 31, 2017
 Revenues from income producing properties          $      10,509,699     $ 12,908,715    $    48,831,873        $    52,904,430
 Comprehensive income (loss)                               (31,445,786  )   1,977,343          (32,871,630  )         5,280,177
 Comprehensive income (loss) per unit - basic              (0.68        )   0.05               (0.71        )         0.13
 NOI - same properties                                     5,400,521        5,094,535          21,269,705             20,881,162
 NOI - all properties                                      6,136,135        7,943,296          29,540,534             32,864,502
 FFO                                                       4,294,564        3,858,612          14,858,843             13,544,809
 FFO per unit                                              0.09             0.08               0.32                   0.34
 AFFO                                                      3,606,832        3,049,086          11,382,350             10,290,518
 AFFO per unit                                             0.08             0.07               0.25                   0.26
 ACFO                                                      3,679,245        2,957,679          11,918,221             10,443,764
 Distributions                                             2,364,698        2,881,814          11,061,163             10,061,301
 Distributions per unit                                    0.06             0.06               0.24                   0.25
 ACFO distribution payout ratio                            64.3%            97.4%              92.8%                  96.3%
 Cash distributions                                        2,515,036        2,635,002          10,496,414             8,332,078
 Cash distributions per unit                               0.06             0.06               0.23                   0.21
 As at                                                                      Dec 31, 2018       Dec 31, 2017           Dec 31, 2016
 Total assets                                                             $ 288,694,169   $    475,045,178       $    514,700,205
 Total debt                                                                 180,009,332        283,331,535            354,556,805
 Total equity                                                               99,663,422         183,347,418            151,508,380
 Weighted average units outstanding - basic                                 45,977,087         39,435,646             33,690,649
 Weighted average units outstanding - diluted                               46,292,330         39,559,729             33,690,649
 Debt-to-gross book value including debentures                              62.1%              59.4%                  68.6%
 Debt-to-gross book value excluding debentures                              62.1%              57.8%                  57.5%
 Interest coverage ratio                                                    2.52               2.02                   1.75
 Debt service coverage ratio                                                1.44               1.25                   1.14
 Mortgages weighted average effective interest rate                         3.99%              4.10%                  4.41%
 Portfolio occupancy                                                        96.9%              95.3%                  95.1%

(1) NOI - same properties and all properties, FFO, AFFO and ACFO are non-IFRS financial measures widely used in the real estate industry.

(2) Represents distributions to unitholders on an accrual basis and excludes the special distribution of $0.87 per unit (declared October 2018 and paid November 2018). Distributions are payable as at the end of the period in which they are declared by the Board of Trustees, and are paid on or around the 15 day of the following month. Distributions per unit includes the 3% bonus units given to participants in the Distribution Reinvestment and the Deferred Unit Plan.

(3) ACFO distribution payout ratio is a non-IFRS financial measure that has a standardized meaning under RealPac. It is calculated as total distributions as a percentage of ACFO (a new measure standardized by RealPac). There is no directly comparable IFRS measure.

(4) Represents distributions on a cash basis, and as such, excludes the non-cash distributions of units issued under the Distribution Reinvestment and the Deferred Unit Plan.

(5) Debt-to-gross book value is a non-IFRS financial measure widely used in the real estate industry. Non-IFRS measures do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other issuers. There is no directly comparable IFRS measure.

(6) Interest coverage ratio and debt service coverage ratio are non-IFRS financial measures widely used in the real estate industry, calculated on a rolling four-quarter basis. Management considers the interest coverage and debt service coverage ratios to be valuable metrics in assessing the REIT's ability to make contractual payments on debt. Non-IFRS measures do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other issuers. There are no directly comparable IFRS measures.

(7) Represents the weighted average effective interest rate for secured debt excluding debentures and credit facilities.

(8) Portfolio occupancy is calculated as economic occupancy, not physical occupancy. A unit is considered occupied once it is committed to a lease with a minimum one-year term.

Further Information

A more detailed analysis of the REIT's financial results for the fourth quarter and full year 2018 are included in the REIT's Management Discussion and Analysis and Consolidated Financial Statements, which have been filed on SEDAR and can be viewed at www.sedar.com or on the REITs' website at www.partnersreit.com.

Conference Call

Partners will host a conference call at 8:30 AM Eastern on Tuesday, March 19, 2019, at which time Partners' management will both review the financial results and discuss the REIT's strategic outlook.

Conference Dial-In Details

Toll Free (North America): 1-800-377-0758

Local: 416-340-2216

Instant Replay Details (Available until March 26, 2019)

Toll Free (North America): 1-800-408-3053

Passcode: 2154894#

A recording of the conference call will also be available via Partners' website.

About Partners REIT

Partners REIT is a real estate investment trust focused on the management of a portfolio of 23 retail and mixed-use community and neighbourhood shopping centres. These properties are located in both primary and secondary markets across Manitoba, Ontario, and Quebec, and comprise a total of approximately 1.7 million square feet of leasable space.

Disclaimer

Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect," "will" and similar expressions to the extent they relate to Partners REIT. The forward- looking statements are not historical facts but reflect Partners REIT's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including access to capital, regulatory approvals, intended acquisitions and general economic and industry conditions. Although Partners REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.

For further information please contact:

Partners REIT Investor Relations

1 (844) 474-9620 ext. 401

investor.relations@partnersreit.com

Partners REIT

Jane Domenico Chief Executive Officer

(416) 855-3313 ext. 401

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