Accretive acquisitions drive 13% growth in
AFFO per unit
and reduce AFFO payout ratio to 88%
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S.
NEWSWIRES/
TORONTO, Nov. 11, 2015 /CNW/ -True North Commercial Real
Estate Investment Trust (TSX: TNT.UN) (the "REIT") today
announced its financial results for the third quarter ended
September 30, 2015.
Third Quarter Highlights
- Completed acquisition of accretive four-property office
portfolio in Fredericton, NB for
approximately $35 million;
- Industry-leading portfolio occupancy of 98.3% with government
and credit-rated tenants representing 89.0% of revenue at
September 30, 2015;
- Basic and diluted Funds from Operations ("FFO") of $0.17 per trust unit ("Unit"), compared to
$0.15 per Unit in Q3 2014;
- Diluted Adjusted Funds From Operations ("AFFO") of $0.17 per Unit, resulting in a Q3 2015 AFFO
payout ratio of 88% compared to $0.15
per Unit and a payout ratio of 105% in Q3 2014;
- Revenue from property operations for Q3 2015 totaling
$9.5 million, compared with
$5.6 million in Q3 2014;
- Net Operating Income ("NOI") for Q3 2015 of $5.9 million, compared with $3.4 million in Q3 2014;
- Debt to gross book value ratio of 59.81% at September 30, 2015 compared to 59.22% at
December 31, 2014;
- Weighted average fixed interest rate of 3.34%, compared to
3.44% at December 31, 2014; and
- Paid distributions of $3,179 or
$0.594 per unit on an annualized
basis.
"The momentum generated during the first half of the year
continued throughout the third quarter," said the REIT's President
and Chief Executive Officer, Daniel
Drimmer. "The benefits of our acquisition program over
the last twelve months are clear and have generated substantial
growth in both revenue and NOI which has, in turn, translated into
per Unit growth in AFFO and a significant reduction in our payout
ratio. Our recent acquisition of the four-property Kingswood
office portfolio in Fredericton, New
Brunswick underscores our ability to continually identify
accretive acquisition opportunities in strategic secondary
markets."
"The acquisition also contributes to the ongoing development of
scale in our portfolio," added Mr. Drimmer. "The REIT is
increasingly recognized as a preferred buyer of properties that
meet our unique investment criteria. As equity market conditions
improve and result in an improved cost of capital, we are well
positioned to continue to execute on our growth plans."
Operating Results and Financial Position
|
|
|
Three months
ended
September
30
|
Nine months
ended September 30
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Revenue
|
|
$9,519
|
$5,606
|
$27,291
|
$16,521
|
NOI
|
|
$5,881
|
$3,439
|
$16,870
|
$9,928
|
Income and
comprehensive income
|
|
$7,519
|
$4,668
|
$10,729
|
$12,241
|
FFO
|
|
$3,668
|
$2,019
|
$10,173
|
$5,668
|
FFO per Unit - basic
(1)
|
|
$0.17
|
$0.15
|
$0.49
|
$0.45
|
FFO per Unit -
diluted (1)
|
|
$0.17
|
$0.15
|
$0.49
|
$0.44
|
AFFO
|
|
$3,578
|
$1,957
|
$9,973
|
$5,449
|
AFFO per Unit - basic
(1)
|
|
$0.17
|
$0.15
|
$0.48
|
$0.43
|
AFFO per Unit -
diluted(1)
|
|
$0.17
|
$0.14
|
$0.48
|
$0.42
|
AFFO payout ratio -
basic
|
|
88%
|
103%
|
92%
|
104%
|
AFFO payout ratio -
diluted
|
|
88%
|
104%
|
93%
|
105%
|
AFFO - Normalized
(2)
|
|
$3,592
|
$2,044
|
$10,018
|
$5,885
|
AFFO Normalized per
Unit - basic(1)
|
|
$0.17
|
$0.15
|
$0.49
|
$0.46
|
AFFO Normalized per
Unit - diluted (1)
|
|
$0.17
|
$0.15
|
$0.48
|
$0.46
|
AFFO Normalized
payout ratio - basic
|
|
88%
|
98%
|
92%
|
96%
|
AFFO Normalized
payout ratio - diluted
|
|
88%
|
100%
|
92%
|
98%
|
Units outstanding for
FFO, AFFO and AFFO Normalized per Unit:
|
|
|
|
|
Weighted average
(000s) – basic(1)
|
|
21,167
|
13,437
|
20,600
|
12,728
|
|
Add:
Unexercised unit options
|
|
112
|
185
|
125
|
188
|
|
|
Weighted average
(000s) – diluted (1)
|
|
21,279
|
13,622
|
20,725
|
12,916
|
Notes:
|
(1)
|
For purposes of
calculating FFO and AFFO per Unit, Class B LP Units are included as
Units outstanding on both a basic and diluted basis. Diluted
amounts assume the conversion of any unexercised in the money Unit
Options.
|
(2)
|
AFFO Normalized is
adjusted for non-recurring items such as due diligence acquisition
costs related to property acquisitions the REIT is no longer
pursuing and rental income recognized as purchase price adjustments
under IFRS.
|
Occupancy for the portfolio, as at September 30, 2015, remains very strong at
98.3%.
Revenue from property operations in the third quarter of 2015
was $9.5 million compared with
$5.6 million in Q3 2014. NOI in Q3
2015 was $5.9 million compared with
$3.4 million in the corresponding
period of 2014.The year-over-year increases in revenue and NOI are
primarily attributable to the REIT's acquisitions, offset by the
strategic sale of Coronation Mall at the end of Q2 2015. On a same
property basis, Q3 2015 NOI of 3.0 million represents a 1.2%
increase compared to Q3 2014.
For the third quarter of 2015, AFFO (basic and diluted) was
$0.17 per Unit. This compares with
$0.15 and $0.14 per Unit (basic and diluted) in Q3 2014 and
$0.16 and $0.16 per Unit respectively in Q2 2015. The
REIT's AFFO (basic and diluted) payout ratio in the third quarter
of 2015 was 88%, compared with basic and diluted AFFO payout ratios
of 103% and 104%, respectively in Q3 2014 and 92% and 93%,
respectively in Q2 2015. On a year-over-year basis, the
improvement in the REIT's normalized AFFO payout ratio is the
result of strong growth in revenue, NOI, FFO and AFFO during Q3
2015, which is primarily attributable to the 14 properties acquired
in the second half of 2014 and during 2015. The REIT's AFFO
payout ratio improved from the Q2 2015 level, primarily the result
of the accretive acquisition of the four-property office portfolio
in Fredericton NB, supported by
improved operating results from certain of the REIT's
properties.
Liquidity and Capital Resources
As at September 30, 2015, the
REIT's indebtedness to gross book value ratio was 59.81%.
While this figure is slightly above the REIT's year-end 2014 ratio
of 59.22%, it is a level well within the 75% limit set out in the
REIT's declaration of trust. The weighted average interest rate on
the REIT's mortgage portfolio was 3.34%, and the weighted average
term to maturity was 3.82 years. The REIT has minimal mortgage
maturities until 2018, and all interest rates are fixed for the
terms of their respective mortgages.
Tenant Profile
The REIT's portfolio has a stable lease expiry profile.
As at September 30, 2015, the
weighted-average term to maturity of leases at the REIT's
properties was 4.1 years. Government and credit rated tenants
account for 63.6% and 25.4%, respectively, or 89.0% combined, of
the REIT's annualized gross revenue.
About the REIT
The REIT is an unincorporated, open-ended real estate investment
trust established under the laws of the Province of Ontario. The REIT currently owns and operates
a portfolio of 25 commercial properties consisting of approximately
1.4 million square feet in secondary markets across Canada.
The REIT is focused on growing its portfolio principally through
acquisitions across Canada and
such other jurisdictions where opportunities exist. For complete
financial statements and management's discussion and analysis for
the period, and any other information relating to the REIT, please
visit www.sedar.com or the REIT's website at
www.truenorthreit.com.
Non-IFRS measures
The REIT's financial statements are prepared in accordance with
International Financial Reporting Standards ("IFRS"). NOI, FFO,
AFFO, AFFO Normalized, indebtedness, gross book value and
indebtedness to gross book value ratio, as well as other measures
discussed elsewhere in this news release, do not have a
standardized definition prescribed by IFRS and are, therefore,
unlikely to be comparable to similar measures presented by other
reporting issuers. The REIT uses non-IFRS measures to better assess
the REIT's underlying performance and financial position and
provides these additional measures so that investors may do the
same. Details on non-IFRS measures are set out in the REIT's
Management's Discussion and Analysis for the period ended
September 30, 2015 and available on
the REIT's profile at www.sedar.com.
Forward-looking Statements
Certain statements contained in this news release constitute
forward-looking information within the meaning of Canadian
securities laws. Forward-looking statements are provided for the
purposes of assisting the reader in understanding the REIT's
financial position and results of operations as at and for the
periods ended on certain dates and to present information about
management's current expectations and plans relating to the future
and readers are cautioned such statements may not be appropriate
for other purposes. Forward-looking information may relate to the
REIT's future outlook and anticipated events or results, including
the number and type of securities that may be sold under the short
form base shelf prospectus dated December
16, 2013, and may include statements regarding the financial
position, business strategy, budgets, projected costs, capital
expenditures, financing rates and costs, taxes and plans and
objectives of or involving the REIT. Particularly, statements
regarding future results, performance, achievements, prospects or
opportunities for the REIT or the real estate industry are
forward-looking statements. In some cases, forward-looking
information can be identified by terms such as "may", "might",
"will", "could", "should", "would", "occur", "expect", "plan",
"anticipate", "believe", "intend", "seek", "aim", "estimate",
"target", "project", "predict", "forecast", "potential",
"continue", "likely", "schedule", or the negative thereof or other
similar expressions concerning matters that are not historical
facts.
Forward-looking statements necessarily involve known and unknown
risks and uncertainties, that may be general or specific and which
give rise to the possibility expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate,
assumptions may not be correct and objectives, strategic goals and
priorities will not be achieved. A variety of factors, many of
which are beyond the REIT's control, affect the operations,
performance and results of the REIT and its business, and could
cause actual results to differ materially from current expectations
of estimated or anticipated events or results. These factors
include, but are not limited to; the risks discussed in the REIT's
materials filed with Canadian securities regulatory authorities
from time to time on www.sedar.com. The reader is cautioned to
consider these and other factors, uncertainties and potential
events carefully and not to put undue reliance on forward-looking
statements as there can be no assurance actual results will be
consistent with such forward-looking statements.
Information contained in forward-looking statements is based
upon certain material assumptions, including management's
perceptions of historical trends, current conditions and expected
future developments, as well as other considerations that are
believed to be appropriate in the circumstances, such as: the
Canadian economy will remain stable over the next 12 months;
inflation will remain relatively low; interest rates will remain
stable; conditions within the real estate market, including
competition for acquisitions, will be consistent with the current
climate; the Canadian capital markets will continue to provide the
REIT with access to equity and/or debt at reasonable rates when
required; Starlight Investments Ltd. will continue its involvement
as asset manager of the REIT in accordance with its current asset
management agreement; and the risks identified or referenced above,
collectively, will not have a material impact on the REIT. While
management considers these assumptions to be reasonable based on
currently available information, they may prove to be
incorrect.
The forward-looking statements made in this news release are
dated, and relate only to events or information, as of the date of
this news release. Except as specifically required by law, the REIT
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date on which the statements
are made or to reflect the occurrence of unanticipated events.
SOURCE True North Commercial Real Estate Investment Trust