45% revenue growth in Fourth Quarter generated
AFFO growth of 53%
and improved AFFO payout ratio to 88%
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S.
NEWSWIRES/
TORONTO, March 10, 2016 /CNW/ - True North Commercial Real
Estate Investment Trust (TSX: TNT.UN) (the "REIT") today
announced strong financial results for the fourth quarter and year
ended December 31, 2015.
"Our results for 2015 reflect our ongoing commitment to grow the
REIT through accretive acquisitions in strong secondary markets,"
said Daniel Drimmer, the REIT's
President and Chief Executive Officer. "Over the course of
2015, the REIT benefitted from the transformative acquisition of 11
properties completed during December 2014. Building on that
momentum, the REIT successfully acquired five properties in 2015,
while disposing of one non-core retail property and redeploying the
net proceeds in a manner consistent with our strategic plan.
These transactions have resulted in significant increases in the
REIT's revenue and NOI, which have in turn increased AFFO per Unit
while improving our payout ratio. In addition to their strong
contribution to our financial results, the successful execution of
these transactions has further established the REIT as a preferred
buyer of similarly tenanted properties."
"Looking ahead," continued Mr. Drimmer, "the increased scale the
REIT has achieved as a result of the successful execution of our
ongoing acquisition program, coupled with the recognition as a
preferred buyer, positions the REIT well for continued growth."
2015 Annual Highlights
- Acquired five office properties in Fredericton, New Brunswick for approximately
$40.9 million, with a portion of the
purchase price satisfied from the redeployment of proceeds from the
disposition of Coronation Mall, a non-core retail property
- Industry-leading portfolio occupancy of 98.0%, with government
and credit-rated tenants representing 88.9% of revenue at
December 31, 2015
- Increased revenue from property operations by 59% to
$37.1 million compared to 2014
- Increased Net Operating Income ("NOI") by 63%
year-over-year
- Basic and diluted Funds from Operations ("FFO") of $0.67 per Unit, an increase of 12% and 14%,
respectively
- Basic and diluted Adjusted Funds from Operations ("AFFO") of
$0.65 per Unit, an increase of 12%
and 14%, respectively
- Improved year-over-year basic and diluted AFFO payout ratios to
91% and 92%, respectively, compared to 102% and 104%
- Decreased weighted average fixed interest rate to 3.34%
- Paid distributions of $12.4
million, representing $0.594
per Unit
Fourth Quarter Highlights
- Revenue from property operations increased by 45% totaling
$9.8 million, compared to Q4
2014
- NOI increased 48% to $6.1 million
compared to Q4 2014
- Basic and diluted FFO per Unit increased 6% and 13%,
respectively, to $0.17 compared to
the same period last year
- Basic and diluted AFFO per Unit increased 13% to $0.17 compared to the same period last year
- Improved year-over-year basic and diluted AFFO payout ratio to
88%, compared to 99% and 100%, respectively, for Q4 2014
- Improved indebtedness to gross book value ratio to 59.53% at
December 31, 2015 compared to 59.81%
at September 30, 2015
- Paid distributions of $3.2
million or $0.1485 per
Unit
Operating Results and Financial Position
|
Three months
ended
December 31
|
Year ended
December 31
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
Revenue
|
|
$9,827
|
$6,800
|
$37,118
|
$23,321
|
NOI
|
|
$6,074
|
$4,114
|
$22,944
|
$14,042
|
Income and
comprehensive income
|
|
$5,742
|
$740
|
$16,471
|
$12,981
|
FFO
|
|
$3,751
|
$2,436
|
$13,924
|
$8,104
|
FFO per Unit -
basic
|
|
$0.17
|
$0.16
|
$0.67
|
$0.60
|
FFO per Unit -
diluted
|
|
$0.17
|
$0.15
|
$0.67
|
$0.59
|
AFFO
|
|
$3,620
|
$2,368
|
$13,593
|
$7,817
|
AFFO per Unit -
basic
|
|
$0.17
|
$0.15
|
$0.65
|
$0.58
|
AFFO per Unit -
diluted
|
|
$0.17
|
$0.15
|
$0.65
|
$0.57
|
AFFO payout ratio -
basic
|
|
88%
|
99%
|
91%
|
102%
|
AFFO payout ratio -
diluted
|
|
88%
|
100%
|
92%
|
104%
|
Units outstanding for
FFO and AFFO per Unit:
|
|
|
|
|
|
|
|
Weighted average
(000s) – basic
|
|
21,476
|
15,677
|
20,821
|
13,471
|
|
Add:
Unexercised unit options
|
|
79
|
131
|
113
|
175
|
|
|
Weighted average
(000s) – diluted
|
|
21,555
|
15,808
|
20,934
|
13,646
|
Occupancy for the portfolio, as at December 31, 2015, remained strong at 98.0%.
Revenue in the fourth quarter of 2015 increased to $9.8 million, compared with $6.8 million in Q4 2014. NOI during Q4 2015 was
$6.1 million, an increase from
$4.1 million in the corresponding
period of 2014. The quarter-over-quarter and year-over-year
increases in revenue and NOI are primarily attributable to the
REIT's acquisitions, offset by the strategic sale of Coronation
Mall.
On a same property basis, Q4 2015 revenue and NOI was
$6.0 million and $3.8 million, compared to $6.2 million and $3.7
million, in the corresponding period in 2014. The
decrease in quarter-over-quarter same property revenue was
attributable to a reduction in recovery revenue which corresponds
to a decrease in property operating expenses. Quarterly NOI has
increased as a result of lower utility costs, increased capital
expenditure recoveries and new tenancies at certain properties.
For the fourth quarter of 2015, basic and diluted FFO was
$0.17 per Unit. This compares with
basic and diluted FFO per Unit of $0.16 and $0.15,
respectively in Q4 2014. The REIT's basic and diluted AFFO payout
ratio in the fourth quarter of 2015 was 88%, compared with basic
and diluted AFFO payout ratios of 99% and 100%, respectively in Q4
2014. On a year-over-year basis, the improvement in the
REIT's AFFO payout ratio is the result of strong growth in revenue,
NOI, FFO and AFFO, which is primarily attributable to acquisitions
completed subsequent to Q3 2014.
Liquidity and Capital Resources
As at December 31, 2015, the
REIT's indebtedness ("Indebtedness") to gross book value ("GBV")
ratio was 59.53%, a level well within the 75% limit set out in the
REIT's amended and restated 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 3.57 years. The
REIT has minimal mortgage maturities until 2018, and all interest
rates are fixed for the terms of their respective mortgages.
Tenant Profile
As at December 31, 2015, the
weighted-average term to maturity of leases at the REIT's
properties was 3.9 years. Government and credit rated tenants
account for 63.5% and 25.4%, respectively, or 88.9% 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
Certain terms used in this press release such as FFO, AFFO, NOI,
Indebtedness, GBV and Indebtedness to GBV Ratio are not measures
defined under International Financial Reporting Standards ("IFRS")
as prescribed by the International Accounting Standards Board, do
not have standardized meanings prescribed by IFRS and should not be
compared to or construed as alternatives to profit/loss, cash flow
from operating activities or other measures of financial
performance calculated in accordance with IFRS. FFO, AFFO, NOI,
Indebtedness, GBV, Indebtedness to GBV Ratio as computed by the
REIT may not be comparable to similar measures presented by other
issuers. The REIT uses these measures to better assess the REIT's
underlying performance 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
year ended December 31, 2015
("MD&A") and the Annual Information Form ("AIF") are available
on the REIT's profile at www.sedar.com.
Forward-looking Statements
Certain statements contained in this press 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 performance, financial position and cash flows 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 future results, performance, achievements, events,
prospects or opportunities for the REIT or the real estate industry
and may include statements regarding the financial position,
business strategy, budgets, projected costs, capital expenditures,
financial results, taxes, plans and objectives of or involving the
REIT. In some cases, forward-looking information can be
identified by such terms as "may", "might", "will", "could",
"should", "would", "expect", "plan", "anticipate", "believe",
"intend", "seek", "aim", "estimate", "target", "goal", "project",
"predict", "forecast", "potential", "continue", "likely", or
the negative thereof or other similar expressions concerning
matters that are not historical facts.
Forward-looking statements involve known and unknown risks and
uncertainties, which may be general or specific and which give rise
to the possibility that 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, risks related to the Units and
risks related to the REIT 's AIF and MD&A at "Risks and
Uncertainties". 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 that were applied in drawing a
conclusion or making a forecast or projection, including
management's perceptions of historical trends, current conditions
and expected future developments, as well as other considerations
believed to be appropriate in the circumstances, including the
following: 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 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 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 relate only to events or
information as of the date on which the statements are made in this
press release. Except as specifically required by applicable
Canadian 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