4.3a
AGENDA ITEM NO._ __
THE UNIVERSITY OF BRITISH COLUMBIA
FOR INFORMATION ONLY
FORWARDED TO:
BOARD OF GOVERNORS ON
RECOMMENDATION
OF PRESIDENT STEPHEN J. TOOPE
APPROVED FOR SUBMISSION:
DATE
PRESENTED BY:
Pierre Ouillet, Vice President, Finance, Resources & Operations
AI Poettcker, President & CEO, UBC Properties Trust
DATE OF MEETING:
November 22, 2011
SUBJECT:
UBC Properties Investments Ltd. Financial Statements
March 31,2011
DECISION REQUESTED:
For information only
EXECUTIVE SUMMARY:
UBC Properties Trust and UBC Properties
Investments Ltd. comprise a very material business
enterprise and as such the Board has requested
annual reporting.
DISCUSSION SUMMARY:
UBC Properties Trust (UBCPT) is a private trust created on June 9, 1999 (its predecessor
was UBC Properties, a wholly owned subsidiary formed in 1988) under the laws of the
Province of British Columbia to carry out real estate development activities on behalf of
the University of British Columbia (UBC). The mandate of UBCPT, as approved by the
UBC Board of Governors, is to:
1. Service and lease market-oriented sites on a prepaid basis for 99 years,
2. Manage and/or dispose of off-campus real estate properties acquired by UBC,
usually through donations,
~
3. Undertake the planning and/or development of UBC institutional projects
including infrastructure when requested by UBC, and
4. Advise UBC, where appropriate, on its management and development of
institutional land holdings.
The trustee of UBCPT is UBC Properties Investments Ltd. (UBCPIL) which operates
with a Board of Directors comprising the President & CEO, seven external directors,
three members of the UBC administration including the President of UBC, and a member
of the UBC Board of Governors. The company reports to UBC through the Vice
President Finance, Resources and Operations.
During the year, UBCPT leased two market housing sites- Lot 30 in Wesbrook Place
and Lot 1 in East Campus for gross proceeds of $34.8 million. In addition, UBCPT
partnered with Adera Development to build and lease individual condominium units in
Wesbrook Place. A total of 149 units were leased in the year generating gross proceeds
of $85.7 million. This transaction was particularly significant as the developer could not
obtain financing due to the credit crisis in late 2008. By deferring the land proceeds in
exchange for an interest in the project, UBCPT was able to realize greater proceeds while
maintaining UBC's reputation as an excellent place to build housing.
Fiscal 2011 recognized the first full year of operations associated with Faculty and Staff
F as well as the Technology Enterprise Facility 3 building. Gross rental revenues
increased from $11.4 million to $17.6 million. The rental portfolio consists of 266
faculty and staff units, 203 market rental units, 219 student residences and 8
retail/commercial units. The Mews (72 residences above 18 retail units) and Tapestry (6
retail units) have recently been completed and will be reflected in the 2012 fiscal year.
On a consolidated basis, there was net income of $66 million in fiscal 2011. All short
term borrowings from UBC were repaid ($36 million) as well as the construction loans
associated with the condominium projects. In order to capitalize on enhanced leasing
activity, the TEF3 loan of $12.2 million (assumed on acquisition) was refmanced with an
$18 million loan thus allowing for UBC's equity loan of $10 million to be repaid. At
year end, the weighted average cost of fixed rate debt was 5.3% with an average term to
maturity of 13.2 years (note that the has been further improved with the Mews financing
subsequent to March 2011 which lowers the fixed rate debt to 5.12% and extends the
average term to 15.4 years). In addition to the debt repayments, UBCPT distributed $11
million to UBC leaving a balance owing of $62 million.
ATTACHMENTS:
UBC Properties Investments Ltd. Consolidated Financial Statements for the year ended
March 31, 2011
Consolidated Financial statements of
UBC PROPERTIES TRUST
Year ended March 31,2011
KPMGLLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone
Fax
Internet
(604) 691-3000
(604) 691-3031
www.kpmg.ca
INDEPENDENT AUDITORS' REPORT
To the Trustee of UBC Properties Trust
We have audited the accompanying consolidated financial statements of UBC Properties Trust which
comprise the consolidated balance sheet as at March 31, 2011, the consolidated stat~ments of
earnings, trust equity, and cash flows for the year then ended, and notes, comprising a summary of
significant accounting policies and other explanatory information.
Managemenrs Responsibility for the Consolidated Financial Statements
Management Is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Canadian generally accepted accounting principles, and for such
internal control as management determines is necessary to enable the preparation of consoDdated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit We conducted our audit in accordance with Canadian generally accepted auditing standards.
Those standards require that we comply with ethical requirements and plan and perform an audit to
obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on our judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant
to the entity's preparation and fair presentation of the consolidated financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness ~f the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of UBC Properties Trust as at March 31, 2011, and the consolidated results of its
operations and its consolidated cash flows for the year then ended in accordance with Canadian
generally accepted accounting principles.
Chartered Accountants
June9, 2011
Vancouver, Canada
KPMG LLP is a Canad1an limited lability partnership and a member firm ol111e ICPMG
netwOrk o1 inclepandant member films affiliated with KPMG lntema~onal Cooporatiw
I'ICPMG lntemalional"l. a Swiss .,tity.
KPMG Canada pnMdas I8IVices to KPMG LLP.
UBC PROPERTIES TRUST
Consolidated Balance Sheet
March 31, 2011, with comparative figures for 201 0
2010
2011
Assets
Properties under development {note 4)
$
Property held for sale
66,948,214
$
76,538,056
811,395
144,870,790
Revenue producing properties (note 5)
148,234,868
566,039
849,058
Deferred development costs
3,846,728
4,389,765
Cash and cash equivalents
5,104,403
8,900,261
Intangible assets
Amounts receivable
Due from related parties (note 6)
3,046,686
2,098,461
63,086,018
46,876,143
Funds held in trust
6,328,604
4,433,440
Deposits held In trust (note 11 (d))
2,572,500
14,084,058
Short-term Investments
2,150,000
5,150,000
230,537
305,056
$
299,561,914
$ 311,859,166
$
171,997,122
$ 236,768,756
Accounts payable and accrued liabilities
24,904,984
17,102,886
Holdbacks payable
14,192,684
7,954,433
3,072,500
14,084,058
62,291,770
18,261,300
Equipment and leasehold (note 7)
Liabilities and Trust Equity
Loans payable (note 8)
Deposits on real estate sales (note 11 (d))
Distributions payable to University of British Columbia
Due to related parties (note 9)
556,790
Non-controlling interest
1,753,017
7,586,598
Trust equity
277,015,850
303,511,048
22,546,064
8,348,118
299,561,914
$ 311,859,166
Commitments (note 11)
$
See accompanying notes to consolidated financial statements.
Approved on behalf of the Trustee:
----··===)
.
c ..
Director
.4
1
Director
UBC PROPERTIES TRUST
Consolidated Statement of Earnings
Year ended March 31, 2011, with comparative figures for 2010
2011
Land sale revenue:
Revenue
Cost of sales
$
Condominium sale revenue:
Revenue
Cost of sales
Rental operations:
Revenue
Oeerating exeenses
Mortgage interest
Amortization
Other revenue:
Management fees (note 10(b) ·(e))
Interest
Earnings before the undernoted
General and administration expenses
General and administration expenses capitalized to
properties under development
34,848,308
(10.506.583}
24,341,725
2010
$
85,763,694
(42,213.078}
43,550,616
3,044,365
{771.97§)
2,272,390
17,617,507
(4.485.633l
13,131,874
(7,544,821)
(4.696.048}
891,005
11,398,167
(2,846.359)
6,199,037
650,390
4,132,997
313,780
6 849,427
4,446,777
75,632,773
7,165,734
5,224,752
4,697,460
8,551,808
(5,148,451)
{2.9561 790)
446,567
(167,125)
(225,742)
5,057,627
4,471,718
Earnings before non-controlling interest
70,575,146
2,694,016
Non-controlling interest
(3,939,506)
$
Net earnings
See accompanying notes to consolidated financial statements.
2
66,635,640
13,442
$
2,707,458
UBC PROPERTIES TRUST
Consolidated Statement of Trust Equity
Year ended March 31,2011, with comparative figures for2010
2010
2011
$
Trust equity, beginning of year
8,348,118
$
9,092,951
Net earnings
66,635,640
2,707,458
Distributions to University of British Columbia
(52,437,694)
(3,452,291)
$
Trust equity, end of year
See accompanying notes to consolidated financial statements.
3
22,546,064
$
8,348,118
UBC PROPERTIES TRUST
Consofidated Statement of Cash Flows
Year ended March 31, 2011, with comparative figures for 2010
2011
2010
Cash provided by (used in):
Operations:
Neteamings
Items not involving cash:
Amortization of equipment and leasehold
Amortization of revenue producing properties
Amortization of intangible assets
Non-controlling interest
$
66,635,640
$
172,203
4,413,029
283,019
319391506
75,443,397
Changes in non-cash operating working capital:
Amounts receivable
Funds held in trust
Accounts payable and accrued liabilities
Holdbacks payable
Deeosits held in trust
Rnancing:
Distributions to University of British Columbia
Due from related parties
Due to related parties
Proceeds from loans payable
Repayment of loans payable
Deferred financing costs
Investments:
Expenditures on revenue producing properties
Proceeds from (purchase of) short-term investments
Purchase of equipment and leasehold
Contributions from (distributions to) non-controlling interest
Expenditures on intangible assets
Proceeds from mortgages receivable
Advances of mort~ge receivable
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of year
$
Cash and cash equivalents, end of year
Supplemental cash flow information:
$
Interest paid
Non-cash transactions:
Transfer of deferred development costs to property under development
Transfer of property under development to property held for sale
Transfer of property under development to revenue producing properties
Transfer of due from related parties to revenue producin~ properties
See accompanying notes to financial statements.
4
109,664
2,956,790
{131442)
5,760,470
(948,225)
(1 ,895, 164)
7,802,098
6,238,251
5001000
87,140,357
180,037
(307,711)
51,057,518
(41,608,360)
Recovery of deferred development costs through land sales
Additions to deferred development costs
Recovery of properties under development through land sales
Expenditures on properties under development
Recove!l: of eroee~ held for sale
2,707,458
826,224
1,164,709
(2,179,084)
(5,256,717)
{153,696)
161,906
(312,480)
96,461,841
(39,527,259)
11437,183
(38,240,650)
(8,407 ,224)
(16,209,875)
(1,196,227)
40,324,214
(1 05,159,621)
63l73
(90,584,960)
(8,570, 739)
(7,781,174)
1,164,687
109,314,727
(57,1 00,839)
(5671161)
36,459,501
(1,048,951)
3,000,000
(97,684)
(11,526,104)
{916721739}
(21,160,768)
(2,450,000)
(116,706)
7,600,040
(849,058)
3,062,550
{169,204)
{141083,146)
(3,795,858)
(15,864,295)
8,900,261
24,764,556
5,104,403
$
8,900,261
9,120,313
$
7,862,961
670,711
811,395
41,708,276
23,432,797
USC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31,2011
1.
Operations:
USC Properties Trust (the Trust) was created on June 9, 1999, under the laws of the Province of British
Columbia to carry out real estate development activities on behalf of the University of British Columbia
(USC).
The Trustee of the Trust is UBC Properties Investments Ltd. (the Trustee).
2.
Significant accounting policies:
(a} Principles of consolidation:
The consolidated financial statements include the accounts of the Trust and its subsidiaries Pacific
Spirit Co-Development (Wesbrook Place) Ltd., and Spirit Co-Development (Wesbrook Place) Ltd.
Non-controlling interest represents the co-developer's interest in Pacific Spirit Co-Development
(Wesbrook Place) Ltd., and Spirit Co-Development (Wesbrook Place) Ltd. All significant intercompany
balances and transactions have been eliminated.
(b) Properties under development:
(i)
Apportionment of costs:
Development, construction and other direct costs are capitalized to property under development.
Capitalized development expenditures are apportioned to each building according to the
percentage that its estimated buildable square feet bears to the total estimated buildable square
feet of the entire project. Construction expenditures are allocated to each building on a specific
identification basis.
(ii) Carrying amount:
Net revenues related to income producing property under development are treated as a reduction
of costs until such time as the project has achieved break even cash flow after debt service or the
expiration of a reasonable period of time following substantial completion.
(c) Revenue producing properties:
Revenue producing properties are recorded at cost less accumulated amortization. Amortization is
provided over an estimated useful life of 40 years or the term of the lease, whichever is less.
(d) Intangible assets:
Intangible assets are recorded at cost and consist of in-place lease agreements with tenants. The cost
is amortized over the remaining term of the in-place lease.
5
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31,2011
2.
Significant accounting policies (continued):
(e) Impairment of long-Jived assets:
The Trust reviews the carrying values of long-Jived assets, including revenue producing properties
under development and revenue producing properties, for impairment whenever events or
circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-Jived
assets are tested and measured for impairment at the individual property level, the lowest level for
whic~
identifiable cash flows are largely Independent. Impairment losses are recognized when the
carrying amount of long-Jived assets exceed the sum of the undiscounted cash flows expected to result
from their use and eventual disposition. The impairment loss is determined as the amount by which
the long-lived assets carrying amount exceeds its fair value.
(f)
Deferred development costs:
The Trust defers development costs, which include professional fees and planning costs, incurred for
the Neighborhood and Comprehensive Community Plan. These costs are allocated to properties under
development under a buildable square footage basis.
(g) Cash and cash equivalents and short-term investments:
The Trust considers all highly liquid Investments and deposits with terms to maturity of three months or
Jess when acquired to be cash equivalents.
Deposits with terms in excess of three months are
classified as short-term investments.
{h) Funds held in trust
Certain of the Trust's projects operate under construction management agreements whereby the
contractor is responsible for collecting and distributing construction holdbacks. The hofdbacks are
funded by cash deposited Into joint bank accounts which are under the contractor's direct
management.
{I}
Deposits held in trust and deposits on real estate sales:
Deposits held In trust represent the initial cash deposit made by purchasers toward property
acquisitions. Such cash is held by a designated trustee and cannot be used to finance operations.
Deposits on real estate sales will be recognized as revenue in accordance with the Trusrs revenue
recognition policy.
(j)
Equipment and leasehold:
Equipment and leasehold is recorded at cost Jess accumulated amortization. Amortization is provided
over the estimated useful life on the declining-balance basis at a rate of 30% per annum for equipment
and straight-line over the lease term for leasehold.
(k) Revenue recognition:
(l)
Management fees:
The Trust eams a fee for managing the construction of projects on the UBC campus. The fees are
generally billed on a frxed percentage basis of costs incurred.
6
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31, 2011
2.
Significant accounting policies (continued):
(k) Revenue recognition (continued):
(ii) Land sales:
Sales of prepaid leases are recognized as revenue when the agreement for sale has been entered
into, an appropriate down payment has been received and all conditions of the agreement have
been met including the passage of the risks and rewards of ownership of the lease.
{iii) Condominium sales:
Revenue from the sale of condominiums is recognized when the collection of the sales proceeds is
reasonably assured and all other significant conditions are met.
{iv) Rental operations:
The Trust has retained substantially all of the risks and benefits of ownership of its revenue
producing properties and therefore accounts for leases with its tenants as operating leases.
Rental revenue is recorded when services are rendered.
(I)
Derivative financial instruments:
Derivative instruments are financial contracts whose value is derived from interest rates, foreign
exchange rates or other financial or commodity indices.
The Trust has entered into an interest rate swap contract (used to manage the exposure to market
risks from changing interest rates). This instrument is not recognized in the consolidated financial
statements on inception. Payments and receipts under the interest rate swap contract are recognized
as adjustments to interest expense on long-term debt. The carrying amounts of derivative financial
instruments, which comprise accrued gains and losses not yet realized, are included in interest
receivable in the case of contracts in a gain position and in interest payable in the case of contracts in
a loss position.
The Trust formally documents all relationships between hedging instruments and hedged items, as well
as its risk management objective and strategy for undertaking various hedge transactions. This
process includes linking all derivatives to specific assets and liabilities on the balance sheet or to
specific firm commitments or anticipated transactions. The Trust also formally assesses, both at the
hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Realized and unrealized gains or losses associated with derivative instruments, which have been
terminated or cease to be effective prior to maturity, are deferred under other assets or liabilities on the
balance sheet and recognized in income in the period in which the underlying hedged transaction is
recognized. In the event a designated hedged item is sold, extinguished or matures prior to the
termination of the related derivative instrument, any realized or unrealized gain or loss on such
derivative instrument is recognized in income.
7
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31, 2011
2.
Significant accounting policies (continued):
(m) Use of estimates:
The preparation of the financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Significant areas requiring estimates Include the impairment of revenue
producing properties, properties under development, deferred development costs, and equipment and
leasehold, and determination of useful lives for amortization. Actual results could differ from those
estimates.
(n) Asset retirement obligation:
A liability for an asset retirement obligation is recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. This liability is initially recorded at its estimated fair
value, based on a discounted value of the expected costs to be paid when the assets are retired. The
associated retirement costs are capitalized as part of the carrying amount of the long-lived assets and
depredated over the life of the asset. The liablrrty increases each period as the amount of the discount
decreases over time. The resulting expense is referred to as accretion expense and is included in
operating expenses. As at March 31, 2011, the Company determined there were no significant asset
retirement obligations associated with its assets.
(o) Adoption of new accounting standards:
Effective April 1, 2010, the Trust adopted the Canadian Institute of Chartered Accountants (CICA)
Handbook Section 3064, Goodwill and Intangible Assets, and Section 1535, Capital Disclosures.
Section 3064 replaces Section 3062, Goodwill and Other Intangible Assets, and expands on the
standards for recognition, measurement, presentation, and disclosure of Intangible assets. Section
1535 requires disclosure of externally imposed capital requirements. The adoption of these standards
did not have a material impact on the Trust's financial statements.
(p) Future changes in accounting policy:
The Accounting Standards Board and the Public Sector Accounting Board have stated that government
business enterprises will be required to follow International Financial Reporting Standards OFRS) for
fiscal years beginning on or after January 1, 2011. As a result, the Trust will be converting to IFRS
effective April1, 2011 for its year ending March 31, 2012.
(q) Comparative figures:
Certain comparative figures for the prior year have been reclassified to conform to the financial
statement presentation adopted In the current year.
8
UBC PROPERTIES TRUST
Notes to Rnancial Statements
Year ended March 31,2011
3.
Land development agreement:
On October 26, 2006, the Trust entered into an agreement with UBC to lease certain lands for a term of 99
years. Payments of $900,000 per acre are payable to UBC on the closing of the sale of an individual lease.
During the· year. two Jots were leased. At March 31, 2011 conditions have been met to fully satisfy the
$47,001,257 commitment under this agreement.
4.
Properties under development:
During the year, the Trust capitalized interest of $1,077,758 (2010 - $2,256,441) and general and
administration expenses of $167,125 (201 0 - $225,742) to properties under development.
5.
Revenue producing properties:
The properties are all located within the UBC campus.
The Trust has a residential, mixed use and
commercial rental portfolio as follows:
2010
2011
Residential:
Faculty and staff housing
Fraser Hall
Greenwood Commons
$
Mixed use:
MBA House
Granite Terrace
Commercial:
David Strangway Building
Technolog:£ Ente!:Erise Facility 3
Accumulated amortization
6.
47,390,100
8,201,300
23,386,501
$
47,283,896
8,163,276
23,357,647
10,241,836
42,279,655
10,133,795
41,804,191
6,532,326
21,7261533
159,758,251
6,520,004
21,446,492
158,709,301
(14,887,461}
(10,474,433}
$ 144,870,790
$ 148,234,868
2011
2010
Due from related parties:
UBC
Village Gate Construction Ltd. (Village Gate Construction)
Village Gate Homes Ltd. (Village Gate Homes)
University Neighbourhood Association
Wesbrook Properties
9
(a)
(b)
(c)
(d)
(e)
$
60,266,354
1,455,306
1,195,017
157,027
12,314
$
44,534,247
1,160,306
991,000
108,074
82,516
$
63,086018
$
46876,143
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31,2011
6.
Due from related parties (continued):
(a) The amount due from UBC, the shareholder of the Trustee, is unsecured, non-interest bearing and has
no fixed terms of repayment.
(b) The amount due from VIllage Gate Construction, an entity related by common control, is unsecured,
non-interest bearing and has no fixed terms of repayment.
(c) The amount due from Village Gate Homes, an entity related by common control, is unsecured, nonInterest bearing and has no frxed terms of repayment.
(d) The amount due from the University Neighbourhood Association, an entity related by common control,
Is unsecured, non-interest bearing and is due on or before June 30, 2011 .
(e) The amount due from Wesbrook Properties, an entity related by common control, is unsecured, noninterest bearing and has no fixed terms of repayment.
7.
Equipment and leasehold:
Cost
Computer equipment
Furniture and office equipment
leasehold
Website
8.
Accumulated
amortization
2011
2010
Net book
value
Net book
value
$
496,973
163,509
4,500
142,722
$
364,315
108,603
225
104,024
$
132,658
54,906
4,275
38,698
$
103,270
49,482
97,628
54,676
$
807,704
$
577,167
$
230,537
$
305,056
Loans payable:
2011
Secured by revenue producing property:
Mortgage, bearing interest at 6.64% per annum and due on
May 31, 2011. Blended monthly payments of interest and
principal of $49,931 are payable on the first day of each
month
$
5,723,778
2010
$
5,935,743
Mortgage, bearing interest at 5. 76% per annum and due on
February 28, 2013. Blended monthly payments of interest and
principal of $30,856 are payable on the third day of each
month
3,996,685
4,132,221
Mortgage, bearing interest at the one month Banker's
Acceptance rate and due on October 31, 2014. Pursuant to
an interest rate swap agreement, the interest rate has been
fixed at 6.23% per annum
7,530,000
7,737,000
17,250,463
17,804,964
Carried forward
10
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31, 2011
8.
Loans payable (continued}:
2011
2010
17,250,463
17,804,964
Mortgage, bearing interest at 5.62% per annum and due on
November 1, 2026. Blended monthly payments of interest and
principal of $77,174 are payable on the first day of each month
11,485,073
11,764,845
Mortgage, bearing interest at 4. 79% per annum and due on
June 1, 2016. Blended monthly payments of interest and
principal of $46,395 are payable on the first day of each month
7,235,928
7,444,087
Mortgage, bearing interest at 5.105% per annum and due on
January 9, 2018. Blended monthly payments of interest and
principal of $107,995 are payable on the ninth day of each
month
19,021,257
19,347,437
Mortgage, bearing interest at 5.085% per annum and due on
January 9, 2018. Blended monthly payments of interest and
principal of $18,309 are payable on the ninth day of each
month
3,231,490
3,286,967
Mortgage, bearing interest at 5.00% per annum and due on
April 1, 2015. Blended monthly payments of interest and
principal of $34,500, commencing May 1, 2010, are payable
on the first day of each month
5,105,328
5,250,000
Mortgage, bearing interest at 5.00% per annum and due on
February 1, 2020. Blended monthly payments of interest and
principal of $60,165 are payable on the first day of each month
11,091,203
11,259,763
Mortgage, bearing interest at 4. 75% per annum and due on
November 5, 2019. Blended monthly payments of Interest and
principal of $55,694 are payable on the first day of each month
10,132,059
10,295,609
Mortgage, bearing interest 5.33% per annum and due on
November 1, 2034. Blended monthly payments of interest and
principal of $215,141 are payable on the first day of each
month
38,169,887
38,724,396
Secured by revenue producing property:
Brought forward
Mortgage, bearing interest at the three month Banker's
Acceptance rate plus 1.25% and due on May 12,2010
($3,542,773) and May 13,2010 ($10,518,033)
Mortgage, bearing interest 5.28% per annum and due on
November 1, 2030. Blended monthly payments of interest and
principal of $107,576 are payable on the first day of each
month
14,060,806
17,877,822
Mortgage, bearing interest at 5.17% per annum and due on
January 1, 2011. Blended monthly payments of interest and
principal of $79,828 are payable on the first day of each month
Carried forward
12,257,596
140,600,510
11
151,496,470
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31, 2011
8.
Loans payable (continued):
Secured by property under development or property held for sale:
Brought forward
2011
2010
140,600,510
151,496,470
Credit facility, to a maximum borrowing of $14,506,000 bearing
interest at prime plus 0.35% per annum and due no later than
March 31,2011
2,631,589
Credit facility, to a maximum borrowing of $20,306,000 bearing
interest at prime plus 0.70% per annum and due no later than
September 30, 2010
16,504,858
Unsecured:
Promissory notes, payable to UBC, bearing interest at prime less
1% or a floor rate of 2.5%, whichever Is less, per annum and
due on dates ranging from September 30, 2011 to March 31,
2012
Financing costs
$
31,900,000
172,500,510
66,703,000
237,335,917
(503,388)
(567,161)
171,997,122
$
236,768,756
Principal repayments on loans payable for each of the next fwe years and thereafter are as follows:
2012
2013
2014
2015
2016
Thereafter
$
40,359,342
6,593,927
2,887,959
9,592,244
7,103,940
105,963,098
$
172,500,510
The Trust has available an operating overdraft facility, which bears Interest at the bank's prime rate plus
0.1% and is repayable on demand. No amounts are drawn on the overdraft facility at March 31, 2011
(2010- nil).
9.
Due to related parties:
The amount due to UBC, is unsecured, non-interest bearing and has no frxed terms of repayment.
12
UBC PROPERTIES TRUST
Notes to Rnancial Statements
Year ended March 31, 2011
10. Related party transactions:
In addition to transactions described elsewhere in the consolidated financial statements, the Trust had the
following related party transactions:
(a) The Trust paid $120,000 (2010- $120,000) in consulting fees to a company controlled by an officer of
the Trustee.
(b) The Trust earned project management fees of $6,077,079 (2010 - $3,742,247) from UBC for
development and project management seNices provided.
(c) The Trust earned management fees of $20,000 (2010- $40,000) for administrative and accounting
services provided to Village Gate Homes Ltd. and Wesbrook Properties Ltd. These companies are
related by common control.
(d) The Trust earned management fees of $80,000 (2010- $80,000) from the University Neighbourhood
Association, an entity related by common control, for property management seNices pertaining to
landscaping in the Hampton Place, Hawthorn Place, Chancellor Place, and Wesbrook neighbourhoods.
(e) The Trust earned management fees of nil (2010- $123,978) from Keenleyside, a Co-Development for
which the Trust acts as a project manager.
11. Commibnents:
(a) The Trust has a lease for its office premises. During the year, the Trust renewed its office lease for
another five year term. The lease expires on December 31, 2015 and $708,733 is payable over the
remaining term.
(b) In its capacity as development manager, the Trust has provided letters of guarantee totaling $177,000
(2010- $647,432).
(c) As at March 31, 2011, the Trust has committed to construction contracts totaling $204,105,340 (2010$146,201,132).
(d) On September 15, 2010 the Trust entered Into an Offer to Lease with Modem Investment Group
(Canada) Ltd. for $29,225,000. The transaction is anticipated to close in August 2011. At March 31,
2011, the Trust has received a deposit of $3,072,500, with $23,152,250 due on closing. The remaining
$3 million is due in three $1 million payments on December 1, 2011, 2012 and 2013.
13
UBC PROPERTIES TRUST
Notes to Financial Statements
Year ended March 31,2011
12. Financial instruments:
(a) Fair value:
The carrying values of cash and cash equivalents, funds held in trust, deposits held in trust. short-term
investments, amounts receivable, due from and due to related parties, distributions payable to UBC,
accounts payable and accrued liabilities, deposits on real estate sales, and holdbacks payable
approximate their fair values due to their short-term nature.
The Trusfs financial instruments of a long-term nature being loans payable, may be impacted by
changes in market yields, which can result in differences between their carrying values and their fair
values.
The fair values of loans payable included In the balance sheet are as follows:
2011
Carrying
amount
Loans payable
Fair value
$ 171,997,122 $ 171,214,496
2010
Carrying
amount
$ 236,768,756
Fair value
$ 236,199,676
The fair value of loans payable was estimated at the present value of contractual future payments of
principal and interest, discounted at the current market rates of interest available to the Trust for the
same or similar debt instruments.
The fair value of the interest rate swap, based on the mark-to-market price from a financial institution at
March 31, 2011, is a liability of $995,444 (2010- $933,351). The swap matures on October 29, 2014.
(b) Interest rate risk:
As desaibed in note 8, certain of the Trust's debt bears interest at floating rates. Fluctuations In
interest rates will impact the cost of.financing incurred in the future.
(c) Credit risk:
The Trust is not exposed to any significant concentrations of credit risk other than the amounts due
from related parties described in note 6.
14