MONTREAL, Nov. 8, 2023
/CNW/ - PRO Real Estate Investment Trust ("PROREIT" or the "REIT")
(TSX: PRV.UN) today reported its financial and operating results
for the three-month period ("Q3" or "third quarter") ended
September 30, 2023.
Third Quarter of Fiscal 2023 Highlights
- Property revenue remained relatively flat in Q3
year-over-year
- Same Property NOI* down 1.2% in Q3 year-over-year, but up 1.7%
excluding a temporary vacancy (see Table 4)
- Net income and comprehensive income of $11.3 million in Q3, compared to $19.5 million in the same quarter last year
- Net operating income ("NOI") of $14.1
million in the third quarter, a decrease of 5.1%
year-over-year, mainly driven by sales of non-core properties and
ownership changes
- $46.0 million in available credit
facility and $11.4 million in cash at
September 30, 2023
- Pay down of debt and credit facility of $14.4 million from Q2 2023
- Occupancy rate of 98.2% at September 30,
2023
- Approximately 88.8% of gross leasable area ("GLA") maturing in
2023 has been renewed at 43.9% average spread and approximately
17.9% of GLA maturing in 2024 has been renewed at 29.7% average
spread
"While the real estate market continues to face certain
macro-economic challenges, we maintained our operating momentum in
the third quarter of 2023, a testament to our properties and
platform" said Gordon Lawlor,
President and Chief Executive Officer of PROREIT.
"As we execute on our strategy to focus on the industrial
sector, we have successfully sold four non-core properties for
total proceeds of approximately $13.4
million, to date this year, and have entered into binding
agreements to sell two additional non-strategic retail properties
for total proceeds of approximately $10.9
million, expected to close in the fourth quarter of 2023,
subject to standard closing conditions. At September 30, 2023, our industrial segment
accounted for 81.3% of our portfolio's GLA.
"With a persistent high occupancy rate and high renewals at
favourable spreads across all asset classes, our portfolio remains
resilient. In addition, we are well-positioned to capitalize on
future growth in markets where we have a strong presence, like
Halifax, which is experiencing
rapid population growth and is poised to receive major investment
as a result of that surge. We also look forward to
incremental cash flows resulting from our organic growth and GLA
renewal.
"Previously, we announced a temporary 102,000 square foot
vacancy would impact our industrial asset class this quarter, but
the property has been fully leased since October 1, 2023, with the full benefits to be
reflected in the fourth quarter of 2023, more specifically on our
NOI, AFFO Payout Ratio *, and Same Property NOI*.
"We continue to manage our balance sheet prudently, having
reduced our debt level by $14.4
million in the current quarter, while maintaining our
Adjusted Debt to Gross Book Value* to 50.0% at
September 30, 2023. Our mortgage maturity exposure is
limited, with approximately $25
million and $27 million
respectively, for each of the remainder of 2023 and all of
2024.
"Our primary focus remains the sound execution of our strategy,
including the optimization of capital allocation, in order to
maximize long-term value for the benefit of all our stakeholders,"
concluded Mr. Lawlor.
* Measures followed by
the suffix "*" in this press release are non-IFRS measures. See
"Non-IFRS Measures".
|
Financial Results
Table 1- Financial
Highlights
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Financial
data
|
|
|
|
|
Property
revenue
|
$
24,052
|
$
24,086
|
$
74,275
|
$
72,140
|
Net operating income
(NOI)
|
$
14,054
|
$
14,808
|
$
43,044
|
$
43,158
|
Same Property NOI
(1)
|
$
11,893
|
$
12,041
|
$
35,612
|
$
35,371
|
Net income and
comprehensive income
|
$
11,265
|
$
19,547
|
$
26,055
|
$
78,038
|
Net income and
comprehensive income per Unit - Basic (2)
|
$
0.1861
|
$
0.3234
|
$
0.4308
|
$
1.2910
|
Net income and
comprehensive income per Unit - Diluted (2)
|
$
0.1836
|
$
0.3172
|
$
0.4243
|
$
1.2679
|
Total assets
|
$
1,047,114
|
$
1,040,368
|
$
1,047,114
|
$
1,040,368
|
Total
liabilities
|
$ 552,267
|
$ 552,561
|
$ 552,267
|
$ 552,561
|
Debt (current and
non-current)
|
$ 474,492
|
$ 489,849
|
$ 474,492
|
$ 489,849
|
Adjusted Debt to Gross
Book Value (1)
|
50.0 %
|
49.8 %
|
50.0 %
|
49.8 %
|
Interest Coverage Ratio
(1)
|
2.4x
|
2.7x
|
2.5x
|
2.8x
|
Debt Service Coverage
Ratio (1)
|
1.5x
|
1.6x
|
1.5x
|
1.6x
|
Debt to Annualized
Adjusted EBITDA Ratio (1)
|
9.8x
|
9.5x
|
9.8x
|
9.8x
|
Weighted average
interest rate on mortgage debt
|
3.76 %
|
3.69 %
|
3.76 %
|
3.69 %
|
Net cash flows provided
from operating activities
|
$
11,036
|
$
10,975
|
$
22,237
|
$
19,904
|
Funds from Operations
(FFO) (1)
|
$
6,531
|
$
6,845
|
$
18,749
|
$
22,790
|
Basic FFO per unit
(1)(2)
|
$
0.1079
|
$
0.1132
|
$
0.3100
|
$
0.3770
|
Diluted FFO per unit
(1)(2)
|
$
0.1064
|
$
0.1111
|
$
0.3053
|
$
0.3703
|
Adjusted Funds from
Operations (AFFO) (1)
|
$
7,030
|
$
7,931
|
$
21,834
|
$
23,606
|
Basic AFFO per unit
(1)(2)
|
$
0.1161
|
$
0.1312
|
$
0.3610
|
$
0.3905
|
Diluted AFFO per unit
(1)(2)
|
$
0.1146
|
$
0.1287
|
$
0.3556
|
$
0.3835
|
AFFO Payout Ratio –
Basic (1)
|
96.9 %
|
85.7 %
|
93.5 %
|
86.4 %
|
AFFO Payout Ratio –
Diluted (1)
|
98.2 %
|
87.4 %
|
94.9 %
|
88.0 %
|
(1) Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2) Total basic units consist
of trust units of the REIT and Class B LP Units (as defined
herein). Total diluted units also includes deferred trust units and
restricted trust units issued under the REIT's long-term incentive
plan.
|
At September 30, 2023, PROREIT
owned 126 investment properties (including a 50% ownership interest
in 42 investment properties), compared to 132 investment properties
(including a 50% ownership interest in 42 investment properties) at
September 30, 2022. Total assets
amounted to $1.05 billion as at
September 30, 2023, compared to
$1.04 billion as at September 30, 2022, an increase of $10.0 million or 1.0%.
For the three-month period ended September 30, 2023:
- Property revenue amounted to $24.1
million, which was relatively flat compared to the same
period last year, mainly resulting from the decrease in number of
properties, the change in the related ownership percentages of the
42 properties purchased and sold in August
2022 and the nine properties sold in September 2022, offset by contractual increase in
rent and higher rental rates on lease renewals.
- NOI amounted to $14.1 million,
compared to $14.8 million in the same
period in 2022, a decrease of 5.1%, mainly driven by the impact of
the net decrease in properties owned and related ownership
percentages over the last twelve-month period.
- Same Property NOI* was $11.9
million, down $0.1 million or
1.2%, compared to the same prior year period, primarily
attributable to a temporary vacancy at one Montreal 102,000 square foot industrial
property, which was fully leased as of October 1, 2023, and a transitional vacancy of
90,400 square feet in the industrial segment, offset by contractual
increases and higher rental rates across all classes; excluding the
impact of the 102,000 square foot temporary vacancy, overall Same
Property NOI* for the three-month period ended September 30, 2023 increased by $0.2 million or 1.7%.
- Net cash flows provided from operating activities was
$11.0 million, which was relatively
flat compared to the third quarter of 2022, largely because of the
timing of cash receipts and settlement of payables.
- AFFO* totaled $7.0 million,
compared to $7.9 million in the same
period last year, a decrease of 11.3%, mainly resulting from the
above-mentioned temporary vacancy, a decrease in properties owned
and related ownership percentages and an increase in variable
interest rates on the credit facility, as well as increased
weighted average interest rates on mortgage debt, offset by
contractual increase in rent and higher rental rates on lease
renewals.
- AFFO Payout Ratio – Basic* was 96.9%, compared to 85.7% for the
same period in the prior year, primarily resulting from the
above-mentioned AFFO variance explanations.
For the nine-month period ended September
30, 2023:
- Property revenue amounted to $74.3
million, an increase of $2.1
million or 3.0%, compared to $72.1
million for the same period last year, mainly resulting from
the decrease in number of properties, the change in the related
ownership percentages of the 42 properties purchased and sold in
August 2022 and the nine properties
sold in September 2022, offset by
contractual increase in rent and higher rental rates on lease
renewals.
- NOI amounted to $43.0 million,
which was relatively flat compared to $43.2
million in the same period in 2022, mainly due to the net
decrease in properties owned and related ownership percentages over
the last twelve-month period.
- Same Property NOI* reached $35.6
million, up $0.2 million or
0.7%, compared to the same prior year period, for the same reasons
as the three-month Same Property NOI*; excluding the impact of the
102,000 square foot temporary vacancy, overall Same Property NOI*
for the nine-month period ended September
30, 2023 increased by $1.0
million or 2.8%.
- Net cash flows provided from operating activities was
$22.2 million, up from $19.9 million in the first nine months of 2022,
an increase of 11.7%, largely as a result of the timing of cash
receipts and settlement of payables.
- AFFO* totaled $21.8 million,
compared to $23.6 million in the same
period last year, a decrease of 7.5%, mainly resulting from the
above-mentioned temporary vacancy, a decrease in properties owned
and related ownership percentages and an increase in variable
interest rates on the credit facility, as well as increased
weighted average interest rates on mortgage deb, offset by
contractual increase in rent and higher rental rates on lease
renewals.
- AFFO Payout Ratio – Basic* was 93.5%, compared to 86.4% for the
same period in the prior year, primarily resulting from the
above-mentioned AFFO variance explanations.
TABLE 2- Reconciliation of net operating income to net income
and comprehensive income
(CAD $
thousands)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
|
|
|
|
|
Property
revenue
|
$
24,052
|
$
24,086
|
$
74,275
|
$
72,140
|
Property operating
expenses
|
9,998
|
9,278
|
31,231
|
28,982
|
Net operating
income
|
14,054
|
14,808
|
43,044
|
43,158
|
|
|
|
|
|
General and
administrative expenses
|
1,210
|
1,274
|
6,006
|
3,800
|
Long-term incentive
plan expense
|
(409)
|
(75)
|
567
|
(351)
|
Depreciation of
property and equipment
|
108
|
103
|
321
|
291
|
Amortization of
intangible assets
|
62
|
93
|
248
|
279
|
Interest and financing
costs
|
5,980
|
5,843
|
16,584
|
15,359
|
Distributions - Class B
LP Units
|
152
|
159
|
466
|
477
|
Fair value adjustment -
Class B LP Units
|
(1,310)
|
(650)
|
(2,302)
|
(1,511)
|
Fair value adjustment -
investment properties
|
(1,567)
|
(11,573)
|
(2,968)
|
(52,707)
|
Fair value adjustment -
derivative financial instrument
|
(1,148)
|
–
|
(1,127)
|
–
|
Other income
|
(852)
|
(382)
|
(2,435)
|
(1,521)
|
Other
expenses
|
485
|
195
|
1,304
|
730
|
Debt settlement
costs
|
73
|
274
|
126
|
274
|
Transaction
costs
|
5
|
–
|
199
|
–
|
Net income and
comprehensive income
|
$
11,265
|
$
19,547
|
$
26,055
|
$
78,038
|
For the three months ended September 30,
2023, net income and comprehensive income amounted to
$11.3 million, compared to
$19.5 million during the same prior
year period. The $8.3 million
variance is primarily due to the $10.0
million impact of the non-cash fair market value adjustment
on investment properties.
For the nine months ended September 30,
2023, net income and comprehensive income amounted to
$26.1 million, compared to
$78.0 million during the same prior
year period. The $52.0 million
variance largely relates to the $49.7
million impact of the non-cash fair market value adjustment
on investment properties.
Managing our Balance Sheet
As at September 30, 2023, PROREIT
had $46.0 million available on its
credit facility, in addition to $11.4
million in cash.
With approximately $25.0 million
of maturing mortgages remaining for 2023 and approximately
$27 million for 2024, PROREIT
continues to benefit from a well-staggered debt profile with
limited material maturities until 2026. In addition, only 2.7% of
total debt is at a variable rate.
The weighted average interest rate on mortgage debt was 3.76% at
September 30, 2023, compared to 3.69%
at the same date last year.
Total debt (current and non-current) was $474.5 million at September 30, 2023. Adjusted Debt to Gross Book
Value* was 50.0% at September 30,
2023.
Sustained Operating Environment
At September 30, 2023, PROREIT's
portfolio totaled 126 properties aggregating 6.4 million square
feet of GLA with a weighted average lease term of 4.0 years.
Approximately 88.8% of leases maturing in 2023 have been renewed at
a positive average spread of 43.9% and approximately 17.9% of GLA
maturing in 2024 has been renewed at 29.7% average spread .
Occupancy rate remained strong at 98.2% as at September 30, 2023, up from 97.9% a year earlier.
As previously announced, a 102,000 square foot industrial property
located in Montreal, Quebec, which
had a temporary vacancy in Q2 2023, has been fully occupied as of
October 1, 2023 and was leased at an
average positive spread of 55% under long-term leases with annual
rent steps.
The industrial segment accounted for 81.3% of GLA and 71.7% of
base rent at September 30, 2023.
Portfolio Transactions
On August 31, 2023, PROREIT sold
two non-core office properties totaling approximately 60,000 square
feet for gross proceeds of $9.1
million, excluding closing costs. Proceeds of the sale were
used to repay approximately $5.7
million of related mortgages and the balance was used for
general business purposes including a repayment of approximately
$1.0 million under the REIT's credit
facility.
On September 28, 2023, PROREIT
sold a 3,000 square foot non-core retail property for gross
proceeds of approximately $2.2
million, excluding closing costs. Proceeds of the sale were
used to repay approximately $1.5
million of a related mortgage and the balance was used for
general business purposes.
Subsequent to quarter-end, on October 20,
2023, PROREIT entered into a binding agreement with a
third-party purchaser to sell one non-core retail property totaling
approximately 45,000 square feet for gross proceeds of $8.7 million, excluding closing costs. The
purchaser will assume a $4.4 million
mortgage with respect to the property that was to mature in
September 2027, with the balance of
the proceeds to be used for general business purposes. The closing
of the sale is scheduled for Q4 2023 and is subject to standard
closing conditions.
Subsequent to quarter-end, on October 31,
2023, PROREIT entered into a binding agreement with a
third-party purchaser to sell one non-core retail property totaling
approximately 4,500 square feet for gross proceeds of approximately
$2.2 million, excluding closing
costs. Proceeds of the sale (net of a $0.5
million vendor take-back mortgage) will be used for general
business purposes.The closing of the sale is scheduled for Q4 2023
and is subject to standard closing conditions.
Distributions
Distributions to unitholders of $0.0375 per trust unit of the REIT were declared
monthly during the three months ended September 30, 2023, representing distributions of
$0.45 per unit on an annual basis.
Equivalent distributions are paid on the Class B limited
partnership units of PRO REIT Limited Partnership ("Class B LP
Units"), a subsidiary of the REIT.
On October 20, 2023, PROREIT
announced a cash distribution of $0.0375 per trust unit for the month of
October 2023. The distribution is
payable on November 15, 2023 to
unitholders of record as at October 31,
2023.
Strategy
While focusing on high-quality light industrial real estate in
Canada, PROREIT's strategy is to
create value by growing its quality portfolio organically and
through disciplined acquisitions, while optimizing its balance
sheet and capital allocation. With this clear strategy for growth
and value creation, PROREIT's continued focus is on achieving its
medium-term goals of reaching $2
billion in assets, 90% industrial base rent and 45% Adjusted
Debt to Gross Book Value* in the next three to five years. These
medium-term goals are based on the REIT's current business plan and
strategies and are not intended to be a forecast of future results.
See "Forward-Looking Statements".
Investor Conference Call and Webcast Details
PROREIT will hold a conference call to discuss its third quarter
2023 results on November 9, 2023, at
9:00 a.m. ET. There will be a
question period reserved for financial analysts. To access the
conference call, please dial 888-664-6383 or 416-764-8650. A
recording of the call will be available until November 16, 2023 by dialing 888-390-0541 or
416-764-8677 and using access code: 637054#.
The conference call will also be accessible via live webcast on
PROREIT's website at www.proreit.com or at
https://app.webinar.net/AjraQXaeOy7
About PROREIT
PROREIT (TSX:PRV.UN) is an unincorporated open-ended real estate
investment trust established pursuant to a declaration of trust
under the laws of the Province of Ontario. Founded in 2013, PROREIT owns a
portfolio of high-quality commercial real estate properties in
Canada, with a strong industrial
focus in robust secondary markets.
For more information on PROREIT, please visit the website at:
https://proreit.com.
Non-IFRS Measures
PROREIT's consolidated financial statements are prepared in
accordance with International Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board. In addition
to reported IFRS measures, industry practice is to evaluate real
estate entities giving consideration, in part, to certain non-IFRS
financial measures, non-IFRS ratios and other specified financial
measures (collectively, "non-IFRS measures"). Without limitation,
measures followed by the suffix "*" in this press release are
non-IFRS measures.
As a complement to results provided in accordance with IFRS,
PROREIT discloses and discusses in this press release (i) certain
non-IFRS financial measures, including: Adjusted Debt, adjusted
earnings before interest, tax, depreciation and amortization
("Adjusted EBITDA"); adjusted funds from operations ("AFFO");
annualized adjusted earnings before interest, tax, depreciation and
amortization ("Annualized Adjusted EBITDA"); Available Liquidity;
funds from operations ("FFO"); gross book value ("Gross Book
Value"); Same Property NOI and (ii) certain non-IFRS ratios,
including: Adjusted Debt to Annualized Adjusted EBITDA Ratio;
Adjusted Debt to Gross Book Value; AFFO Payout Ratio – Basic; AFFO
Payout Ratio – Diluted; Basic AFFO per Unit; Diluted AFFO per Unit;
Basic FFO per Unit; Diluted FFO per Unit; Debt Service Coverage
Ratio; and Interest Coverage Ratio. These non-IFRS measures are not
defined by IFRS and do not have a standardized meaning under IFRS.
PROREIT's method of calculating these non-IFRS measures may differ
from other issuers and may not be comparable with similar measures
presented by other income trusts or issuers. PROREIT has presented
such non-IFRS measures and ratios as management believes they are
relevant measures of PROREIT's underlying operating and financial
performance. For information on the most directly comparable
financial measure disclosed in the primary financial statements of
the REIT, composition of the non-IFRS measures, a description of
how PROREIT uses these measures and an explanation of how these
measures provide useful information to investors, refer to the
"Non-IFRS Measures" section of PROREIT's management's discussion
and analysis for the three and nine months ended September 30, 2023, dated November 8, 2023, available on PROREIT's SEDAR+
profile at www.sedarplus.ca, which is incorporated by reference
into this press release. As applicable, the reconciliations for
each non-IFRS measure are outlined below. Non-IFRS measures should
not be considered as alternatives to net income, cash flows
provided by operating activities, cash and cash equivalents, total
assets, total equity, or comparable metrics determined in
accordance with IFRS as indicators of PROREIT's performance,
liquidity, cash flow and profitability.
Table 3 - Reconciliation of Same Property NOI to net
operating income (as reported in the consolidated financial
statements)
(CAD $
thousands)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Property
revenue
|
$
24,052
|
$
24,086
|
$
74,275
|
$
72,140
|
Property operating
expenses
|
9,998
|
9,278
|
31,231
|
28,982
|
NOI (net operating
income) as reported in the financial statements
|
14,054
|
14,808
|
43,044
|
43,158
|
Straight-line rent
adjustment
|
226
|
(21)
|
(352)
|
(244)
|
NOI after straight-line
rent adjustment
|
14,280
|
14,787
|
42,692
|
42,914
|
|
|
|
|
|
NOI sourced
from:
|
|
|
|
|
Acquisitions
|
(2,103)
|
(1,936)
|
(6,250)
|
(5,269)
|
Dispositions
|
(284)
|
(810)
|
(830)
|
(2,274)
|
Same Property NOI
(1)
|
$
11,893
|
$
12,041
|
$
35,612
|
$
35,371
|
Number of same
properties
|
102 (2)
|
102 (2)
|
102 (2)
|
102 (2)
|
(1) Represents a
non-IFRS measure. See "Non-IFRS Measures".
|
(2) Includes 21
properties 50% owned at September 30, 2023 (50% owned at September
30, 2022 but 100% owned prior to August 4, 2022). The comparative
period has been updated to reflect 50% ownership.
|
Table 4 - Same Property NOI and Same Property NOI by asset
class, adjusted to exclude the NOI of the temporary vacancy of one
industrial property
|
3 Months
Ended
|
|
9 Months
Ended
|
(CAD $
thousands)
|
Number of same
properties
|
September
30
2023
|
September 30
2022
|
|
Number of same
properties
|
September
30
2023
|
September 30
2022
|
Same Property NOI
(1)
|
102
|
$
11,893
|
$
12,041
|
|
102
|
$
35,612
|
$
35,371
|
NOI of the temporary
vacancy of 1 industrial property
|
(1)
|
65
|
(286)
|
|
(1)
|
(15)
|
(728)
|
Same Property NOI
(Adjusted for One Temporary Vacancy) (1)
|
101
|
$
11,958
|
$
11,755
|
|
101
|
$
35,597
|
$
34,643
|
|
|
|
|
|
|
|
|
Industrial (excluding 1
temporary vacant property) (2)
|
64
|
$
8,155
|
$ 7,984
|
|
64
|
$
24,339
|
$
23,607
|
Retail
|
32
|
2,791
|
2,814
|
|
32
|
8,302
|
8,206
|
Office
|
5
|
1,012
|
957
|
|
5
|
2,956
|
2,830
|
Same Property NOI
(adjusted for one temporary vacancy) (1)
|
101
|
$
11,958
|
$
11,755
|
|
101
|
$
35,597
|
$
34,643
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2)
|
Includes 21 properties
50% owned at September 30, 2023 (50% owned at September 30, 2022
but 100% owned prior to August 4, 2022). The comparative period has
been updated to reflect 50% ownership throughout the
period.
|
Table 5 - Calculation of Available Liquidity
(CAD $
thousands)
|
September
30
2023
|
December 31
2022
|
September 30
2022
|
Cash per condensed
consolidated interim financial statements
|
$
11,403
|
$
7,531
|
$
6,148
|
Undrawn revolving
credit facility
|
46,000
|
23,000
|
22,500
|
Available Liquidity
(1)
|
$
57,403
|
$
30,531
|
$
28,648
|
(1)
Represents a non-IFRS measure. See "Non-IFRS
Measures".
|
Table 6 - Reconciliation of AFFO and FFO to net income and
comprehensive income
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Net income and
comprehensive income for the period
|
$
11,265
|
$
19,547
|
$
26,055
|
$
78,038
|
Add:
|
|
|
|
|
Long-term incentive
plan
|
(923)
|
(731)
|
(1,623)
|
(1,786)
|
Distributions - Class
B LP Units
|
152
|
159
|
466
|
477
|
Fair value adjustment
- investment properties
|
(1,567)
|
(11,573)
|
(2,968)
|
(52,707)
|
Fair value adjustment
- Class B LP Units
|
(1,310)
|
(650)
|
(2,302)
|
(1,511)
|
Fair value adjustment
- derivative financial instrument
|
(1,148)
|
–
|
(1,127)
|
–
|
Amortization of
intangible assets
|
62
|
93
|
248
|
279
|
FFO
(1)
|
$
6,531
|
$
6,845
|
$
18,749
|
$
22,790
|
Deduct:
|
|
|
|
|
Straight-line rent
adjustment
|
$
226
|
$
(21)
|
$
(352)
|
$
(244)
|
Maintenance capital
expenditures
|
(126)
|
(282)
|
(485)
|
(793)
|
Stabilized leasing
costs
|
(665)
|
(387)
|
(1,763)
|
(1,225)
|
Add:
|
|
|
|
|
Long-term incentive
plan
|
514
|
656
|
2,190
|
1,435
|
Amortization of
financing costs
|
367
|
846
|
806
|
1,369
|
Accretion expense -
Convertible Debentures
|
105
|
–
|
124
|
–
|
Debt settlement
costs
|
73
|
274
|
126
|
274
|
Transaction
costs
|
5
|
–
|
199
|
–
|
CEO Succession plan
costs
|
–
|
–
|
2,240
|
–
|
AFFO
(1)
|
$
7,030
|
$
7,931
|
$
21,834
|
$
23,606
|
Basic FFO per unit
(1)(2)
|
$
0.1079
|
$
0.1132
|
$
0.3100
|
$
0.3770
|
Diluted FFO per unit
(1)(2)
|
$
0.1064
|
$
0.1111
|
$
0.3053
|
$
0.3703
|
Basic AFFO per unit
(1)(2)
|
$
0.1161
|
$
0.1312
|
$
0.3610
|
$
0.3905
|
Diluted AFFO per
unit (1)(2)
|
$
0.1146
|
$
0.1287
|
$
0.3556
|
$
0.3835
|
Distributions
declared per Unit and Class B LP unit
|
$
0.1125
|
$
0.1125
|
$
0.3375
|
$
0.3375
|
AFFO Payout Ratio –
Basic (1)
|
96.9 %
|
85.7 %
|
93.5 %
|
86.4 %
|
AFFO Payout Ratio –
Diluted (1)
|
98.2 %
|
87.4 %
|
94.9 %
|
88.0 %
|
Basic weighted
average number of units (2)(3)
|
60,534,125
|
60,447,230
|
60,479,465
|
60,447,230
|
Diluted weighted
average number of units (2)(3)
|
61,366,430
|
61,625,646
|
61,408,491
|
61,549,406
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2)
|
FFO and AFFO per unit
is calculated as FFO or AFFO, as the case may be, divided by the
total of the weighted average number of basic or diluted units, as
applicable, added to the weighted average number of Class B LP
Units outstanding during the period.
|
(3)
|
Total basic units
consist of Units and Class B LP Units. Total diluted units also
includes deferred trust units and restricted trust units issued
under the REIT's long-term incentive plan.
|
Table 7 - Reconciliation of Adjusted EBITDA to net income and
comprehensive income
(CAD $
thousands)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Net income and
comprehensive income
|
$
11,265
|
$
19,547
|
$
26,055
|
$
78,038
|
Interest and financing
costs
|
5,980
|
5,843
|
16,584
|
15,359
|
Depreciation of
property and equipment
|
108
|
103
|
321
|
291
|
Amortization of
intangible assets
|
62
|
93
|
248
|
279
|
Fair value adjustment -
Class B LP Units
|
(1,310)
|
(650)
|
(2,302)
|
(1,511)
|
Fair value adjustment -
investment properties
|
(1,567)
|
(11,573)
|
(2,968)
|
(52,707)
|
Fair value adjustment -
derivative financial instrument
|
(1,148)
|
–
|
(1,127)
|
–
|
Distributions - Class B
LP Units
|
152
|
159
|
466
|
477
|
Straight-line
rent
|
226
|
(21)
|
(352)
|
(244)
|
Long-term incentive
plan expense
|
(409)
|
(75)
|
567
|
(351)
|
CEO succession plan
costs
|
–
|
–
|
2,240
|
–
|
Transaction
costs
|
73
|
–
|
126
|
–
|
Debt settlement
costs
|
5
|
274
|
199
|
274
|
Adjusted EBITDA
(1)
|
$
13,437
|
$
13,700
|
$
40,057
|
$
39,905
|
Annualized Adjusted
EBITDA (1)
|
$
53,748
|
$
54,800
|
$
53,409
|
$
53,207
|
(1)
Represents a non-IFRS measure. See "Non-IFRS Measures".
|
Table 8 - Calculation of Adjusted Debt to Annualized Adjusted
EBITDA Ratio
(CAD $
thousands)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Adjusted Debt
(1)
|
$ 525,508
|
$ 519,725
|
$ 525,508
|
$ 519,725
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
$
13,437
|
$
13,700
|
$
40,057
|
$
39,905
|
Annualized Adjusted
EBITDA (1)
|
$
53,748
|
$
54,800
|
$
53,409
|
$
53,207
|
Adjusted Debt to
Annualized Adjusted EBITDA Ratio (1)
|
9.8x
|
9.5x
|
9.8x
|
9.8x
|
(1)
Represents a non-IFRS measure. See "Non-IFRS
Measures".
|
Table 9 - Calculation of the Interest Coverage Ratio
(CAD $
thousands)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Adjusted EBITDA
(1)
|
$
13,437
|
$
13,700
|
$
40,057
|
$
39,905
|
Interest
expense
|
$
5,612
|
$
5,020
|
$
15,926
|
$
14,006
|
Interest Coverage
Ratio (1)
|
2.4x
|
2.7x
|
2.5x
|
2.8x
|
(1)
Represents a non-IFRS measure. See "Non-IFRS Measures".
|
Table 10 - Calculation of the Debt Service Coverage
Ratio
(CAD $
thousands)
|
3
Months
Ended
September
30
2023
|
3 Months
Ended
September 30
2022
|
9
Months
Ended
September
30
2023
|
9 Months
Ended
September 30
2022
|
Adjusted EBITDA
(1)
|
$
13,437
|
$
13,700
|
$
40,057
|
$
39,905
|
Interest expense
|
5,612
|
5,020
|
15,926
|
14,006
|
Principal
repayments
|
3,317
|
3,352
|
9,924
|
10,507
|
Debt Service
Requirements
|
$
8,929
|
$
8,372
|
$
25,850
|
$
24,513
|
Debt Service
Coverage Ratio (1)
|
1.5x
|
1.6x
|
1.5x
|
1.6x
|
(1) Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Table 11 - Calculation of Adjusted Debt
(CAD $
thousands)
|
September
30
2023
|
September 30
2022
|
Debt (non-current and
current portion)
|
$ 474,492
|
$ 489,849
|
|
|
|
Reconciling
items:
|
|
|
Unamortized financing
costs - debt
|
2,016
|
2,376
|
Debt, excluding
unamortized financing costs
|
$ 476,508
|
$ 492,225
|
|
|
|
Credit
facility
|
13,763
|
27,294
|
Unamortized financing
costs - credit facility
|
237
|
206
|
Credit facility,
excluding unamortized financing costs
|
$
14,000
|
$
27,500
|
|
|
|
Convertible
Debentures
|
30,008
|
–
|
Derivative financial
instrument
|
812
|
–
|
Unamortized financing
costs - convertible debentures
|
3,177
|
–
|
Accretion expense - for
the 9 months ended September 30, 2023 and 2022
|
(124)
|
–
|
Fair value adjustment -
derivative financial instrument for the 9 months ended September
30, 2023 and 2022
|
1,127
|
–
|
Convertible Debentures,
at face value
|
$
35,000
|
$
–
|
|
|
|
Adjusted Debt
(1)
|
$ 525,508
|
$ 519,725
|
(1)
Represents a non-IFRS measure. See "Non-IFRS
Measures".
|
Table 12 - Calculation of Gross Book Value and Adjusted Debt
to Gross Book Value
(CAD $ thousands
unless otherwise stated)
|
September
30
2023
|
September 30
2022
|
Total assets, including
investment properties stated at fair value
|
$
1,047,114
|
$
1,040,368
|
Accumulated
depreciation on property and equipment and intangible
assets
|
3,619
|
2,838
|
Gross Book Value
(1)
|
1,050,733
|
1,043,206
|
|
|
|
Adjusted Debt
(1)
|
$ 525,508
|
$ 519,725
|
Adjusted Debt to
Gross Book Value (1)
|
50.0 %
|
49.8 %
|
(1)
Represents a non-IFRS measure. See "Non-IFRS
Measures".
|
Forward-Looking Statements
This press release contains forward-looking statements and
forward-looking information (collectively, "forward-looking
statements") within the meaning of applicable securities
legislation, including statements relating to certain expectations,
projections, growth plans and other information related to REIT's
business strategy and future plans. Forward-looking statements are
based on a number of assumptions and are subject to a number of
risks and uncertainties, many of which are beyond PROREIT's
control, that could cause actual results and events to differ
materially from those that are disclosed in or implied by such
forward-looking statements.
Forward-looking statements contained in this press release
include, without limitation, statements pertaining to the execution
by PROREIT of its growth strategy, the future financial and
operating performance of PROREIT, and the proposed sale of two
non-strategic retail properties for total proceeds of approximately
$10.9 million and the timing thereof.
PROREIT's objectives and forward-looking statements are based on
certain assumptions, including that (i) PROREIT will receive
financing on favourable terms; (ii) the future level of
indebtedness of PROREIT and its future growth potential will remain
consistent with the REIT's current expectations; (iii) there will
be no changes to tax laws adversely affecting PROREIT's financing
capacity or operations; (iv) the impact of the current economic
climate and the current global financial conditions on PROREIT's
operations, including its financing capacity and asset value, will
remain consistent with PROREIT's current expectations; (v) the
performance of PROREIT's investments in Canada will proceed on a basis consistent with
PROREIT's current expectations; and (vi) capital markets will
provide PROREIT with readily available access to equity and/or
debt.
The medium-term goals of the REIT disclosed under "Strategy" are
based on the REIT's current business plan and strategies and are
not intended to be a forecast of future results. The medium-term
goals contemplate the REIT's historical growth and certain
assumptions including but not limited to (i) current global capital
market conditions, (ii) access to capital, (iii) interest rate
exposure, (iv) availability of high-quality industrial properties
for acquisitions, (v) dispositions of retail and office properties,
and (vi) capacity to finance acquisitions on an accretive
basis.
The forward-looking statements contained in this news release
are expressly qualified in their entirety by this cautionary
statement. All forward-looking statements in this press release are
made as of the date of this press release. PROREIT does not
undertake to update any such forward-looking information whether as
a result of new information, future events or otherwise, except as
required by law.
Additional information about these assumptions and risks and
uncertainties is contained under "Risk Factors" in PROREIT's latest
annual information form and "Risk and Uncertainties" in PROREIT's
management's discussion and analysis for the three and nine month
periods ended September 30, 2023,
which are available under PROREIT's profile on SEDAR+ at
www.sedarplus.ca.
SOURCE PROREIT