Plan includes Redirecting Monthly
Distributions to Maximize Buyback under the NCIB and Unit
Consolidation
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S.
NEWSWIRES/
"This news release constitutes a "designated news release" for
the purposes of the REIT's prospectus supplement dated April 21, 2022 to its short form base shelf
prospectus dated February 17,
2022."
TORONTO, Nov. 13,
2023 /CNW/ - True North Commercial Real Estate
Investment Trust (TSX: TNT.UN) (the "REIT") today announced
its financial results for the three and nine months ended
September 30, 2023. The REIT also announced the next
steps in its strategy to increase unitholder ("Unitholder")
value which includes: (i) effective with the November 2023 distribution payable on
December 15, 2023 to unitholders of
the REIT ("Unitholders") of record on November 30, 2023, the redirection and
reallocation of substantially all distribution amounts to purchase
trust units of the REIT ("Units") under the REIT's normal
course issuer bid ("NCIB") or through other acquisition
programs, for approximately six months or earlier if appropriate;
and (ii) a consolidation (the "Consolidation") of the Units,
the special voting units of the REIT (the "SV Units"
together with the Units, the "Voting Units") and the class B
limited partnership units ("Class B LP Units") of True North
Commercial Limited Partnership on the basis of 5.75:1.
"The next logical step in the REIT's strategy involves the
reallocation of substantially all distributions to purchase the
maximum number of Units available under the NCIB which will be
immediately accretive to Unitholders, with the intention to revisit
the reallocation in approximately six months, or earlier if
appropriate, to reinstate a sustainable distribution to
Unitholders. At the end of the quarter, the REIT's IFRS NAV per
Unit was approximately $4.97
resulting in the current Unit price trading at a significant
discount to intrinsic value and supporting the buyback of Units
under the NCIB as a very attractive use of the REIT's capital. The
REIT remains focused on delivering long-term value for our
unitholders by allocating available capital to generate the highest
potential return, while pro-actively managing risk", stated
Daniel Drimmer, the REIT's Chief
Executive Officer. "We are also pleased with the continued strong
leasing momentum resulting in a weighted average lease term of 7.7
years on new lease deals and renewals completed in the third
quarter, while continuing to build strong relationships with the
REIT's tenants to maintain high occupancy levels".
Third Quarter 2023 Highlights
- Maintained strong portfolio occupancy of 93% with an average
remaining lease term of 4.4 years (91% and 4.4 years including
investment properties held for sale).
- Completed the sale of 360 Laurier Avenue West, Ottawa, Ontario ("the Laurier
Property") totaling 107,100 square feet on July 10, 2023 for a sale price of $17.5 million.
- Completed the sale of 32071 South Fraser Way, Abbotsford, BC (the "Abbotsford
Property") totaling 52,300 square feet on July 31, 2023 for a sale price of $24.0 million.
- Contractually leased and renewed approximately 86,900 square
feet with a weighted average lease term of 7.7 years and a 1.5%
increase over expiring base rents.
- Excluding termination income and investment properties held for
sale, revenue and net operating income ("NOI") decreased 1%
and 4%, respectively, compared to Q3-2022. Due to significant
termination income included in 2022 and lower same property NOI
("Same Property NOI"), revenue and NOI decreased 11% and
18%, respectively, compared to Q3-2022.
- Same Property NOI decreased 1.6% excluding investment
properties held for sale and termination fees.
- During 2022, the REIT received termination income from one
tenant at 6925 Century Avenue, Mississauga, Ontario that downsized a portion
of their space effective Q4-2022. To date, 60% of this vacancy has
been contractually re-leased with rents commencing in the latter
half of 2023. Q3-2023 FFO and AFFO basic and diluted per Unit
decreased $0.04 to $0.11 which is consistent and in line with
Q2-2023. Excluding termination fees, Q3-2023 FFO and AFFO basic and
diluted per Unit were lower by $0.02
and $0.03 respectively compared to
Q3-2022 due to the loss of rental revenue from the above
vacancy.
- Excluding investment properties held for sale only, Q3-2023
Same Property NOI decreased 8.8% as a result of the significant
termination fee income recorded in the prior year period.
- $48.3 million of Available Funds
at the end of Q3-2023.
- The REIT repurchased 83,500 Units for $0.2 million under the NCIB.
YTD Highlights
- Completed the sale of 400 Carlingview Drive, Toronto, Ontario (the "Carlingview
Property") on March 10, 2023 for
a sale price of $7.25 million.
- Contractually leased and renewed approximately 512,800 square
feet with a weighted average lease term of 5.0 years and a 11%
increase over expiring base rents.
- The REIT repurchased 208,400 Units for $0.5 million under the NCIB.
- 50% reduction to the monthly cash dividend from $0.0495 per Unit to $0.02475 per Unit or $0.297 per Unit on an annualized basis
("Distribution Reduction"). The new declared distribution
was paid on April 17, 2023 to
Unitholders of record on March 31,
2023. The Distribution Reduction is expected to provide an
additional $25 million in cash
annually that will be used to improve the REIT's capital
profile.
- Effective June 30, 2023,
Tracy Sherren, the REIT's President
and Chief Financial Officer and President, Canadian Commercial,
Starlight Investments, retired from her executive positions at the
REIT and Starlight Investments. Ms. Sherren will remain as a
trustee of the REIT. Martin Liddell,
the current Chief Financial Officer at Starlight, was appointed as
Chief Financial Officer of the REIT in addition to his positions at
Starlight.
Subsequent Events
- The REIT refinanced a $3,834
mortgage for a three year term.
The REIT's presentation currency is the Canadian dollar. Unless
otherwise stated, dollar amounts expressed in this press release
are in thousands of dollars.
Key Performance Indicators
|
Three months ended
|
Nine months ended
|
|
September 30
|
September 30
|
|
2023
|
2022
|
2023
|
2022
|
Number of
properties
|
|
|
44
|
47
|
Portfolio
GLA
|
|
|
4,791,500 sf
|
4,975,200 sf
|
Occupancy
(1)
|
|
|
93 %
|
95 %
|
Remaining weighted
average lease term (1)
|
|
|
4.4 years
|
4.4 years
|
Revenue from
government and credit rated tenants
|
|
78 %
|
80 %
|
Revenue
|
$
32,789
|
$
36,677
|
$
99,337
|
$
108,124
|
NOI
(2)
|
18,082
|
21,976
|
55,202
|
65,855
|
Net income and
comprehensive income
|
(42,472)
|
8,046
|
(34,684)
|
16,241
|
Same Property NOI
(2)
|
20,142
|
22,974
|
60,145
|
69,289
|
FFO
(2)
|
$
10,351
|
$
14,436
|
$
31,770
|
$
43,635
|
FFO per Unit - basic
(2)
|
0.11
|
0.15
|
0.34
|
0.47
|
FFO per Unit - diluted
(2)
|
0.11
|
0.15
|
0.34
|
0.47
|
AFFO
(2)
|
$
10,101
|
$
14,290
|
$
31,148
|
$
43,248
|
AFFO per Unit - basic
(2)
|
0.11
|
0.15
|
0.33
|
0.47
|
AFFO per Unit -
diluted (2)
|
0.11
|
0.15
|
0.33
|
0.47
|
AFFO payout ratio -
diluted (2)
|
69 %
|
97 %
|
83 %
|
95 %
|
Distributions
declared
|
$
7,012
|
$
13,900
|
$
25,731
|
$
41,300
|
(1)
Excludes investment properties held for sale.
(2) This is a non-IFRS financial measure, refer to
"Non-IFRS Financial Measures".
|
Operating Results
Excluding termination income and investment properties held for
sale, revenue and NOI decreased 1% and 4%, respectively, in Q3-2023
while revenue remained flat and NOI decreased 5% YTD-2023.
Revenue and NOI decreased 11% and 18%, respectively, in Q3-2023
and YTD-2023 when compared to the same periods in 2022. The
decrease in revenue and NOI was largely a result of the decrease in
termination income and lower revenue from a tenant in the REIT's
greater Toronto area portfolio
that downsized a portion of their space effective Q4-2022, combined
with a 101,200 square foot lease expiry in Q1-2023 at the Laurier
Property and 115,000 square foot lease expiry in Q2-2023 at 3650
Victoria Park Avenue, Toronto,
Ontario (the "Victoria Park Property"), together with
the dispositions in Q1-2023 and Q3-2023 (the "Primary Variance
Drivers"). This decrease was partially offset by termination
income received from the tenant at the Carlingview Property and NOI
from an acquisition completed in Q3-2022.
Q3-2023 FFO and AFFO decreased $4,085 (YTD 2023 - $11,865), and $4,189 (YTD 2023 - $12,100), respectively compared to the same
period in 2022. FFO and AFFO were negatively impacted by the
Primary Variance Drivers, combined with higher financing costs as a
result of higher interest rates on mortgage refinancing and higher
interest expense on the Credit Facility. FFO and AFFO benefited
from NOI on the acquisition completed in Q3-2022 and termination
income.
Q3-2023 FFO and AFFO basic and diluted per Unit decreased
$0.04 to $0.11. YTD-2023 FFO and AFFO basic and diluted
per Unit decreased $0.13 and
$0.14 to $0.34 and $0.33,
respectively. Excluding termination fees, Q3-2023 FFO and AFFO
basic and diluted per Unit were lower by $0.02 and $0.03,
and YTD-2023 FFO and AFFO basic and diluted per Unit were lower by
$0.07 and $0.08 compared to 2022.
Same Property NOI(1)
|
As at September 30
|
|
|
Occupancy
(2)
|
2023
|
2022
|
|
NOI
|
Q3
2023
|
Q3
2022
|
|
Variance
|
Variance
%
|
|
|
|
|
|
|
|
|
|
|
Alberta
|
94.8 %
|
95.7 %
|
|
Alberta
|
$
3,514
|
$
3,541
|
|
$
(27)
|
(0.8) %
|
British
Columbia
|
100.0 %
|
98.7 %
|
|
British
Columbia
|
1,284
|
1,256
|
|
28
|
2.2 %
|
New
Brunswick
|
85.8 %
|
83.8 %
|
|
New
Brunswick
|
1,297
|
1,015
|
|
282
|
27.8 %
|
Nova Scotia
|
89.5 %
|
96.9 %
|
|
Nova Scotia
|
1,776
|
1,752
|
|
24
|
1.4 %
|
Ontario
|
94.2 %
|
96.5 %
|
|
Ontario
|
12,503
|
14,778
|
|
(2,275)
|
(15.4) %
|
Total
|
93.2 %
|
95.2 %
|
|
|
$ 20,374
|
$ 22,342
|
|
$
(1,968) (1,968)
|
(8.8) %
|
Q3-2023 Same Property NOI decreased 1.6% (YTD-2023 - 3.6%)
excluding termination fees and investment properties held for
sale. Excluding investment properties held for sale only,
Q3-2023 Same Property NOI decreased 8.8% (YTD-2023 - 11.8%) as a
result of the significant termination fee income recorded in the
prior year periods.
British Columbia Same Property NOI increased due to contractual
rent increases. New Brunswick Same Property NOI increased as a
result of a new lease that commenced in June
2023 coupled with 141,000 square feet of government renewals
across three properties at higher rental rates. Same Property NOI
in Nova Scotia increased due to
new lease commencements and contractual rent step ups, partly
offset by certain tenants that downsized on renewal.
Ontario Same Property NOI decreased mainly due to termination
fees received in Q3-2022 relating to a tenant in the REIT's GTA
portfolio that downsized a portion of their space effective
December 2022, of which 60% has been
contractually re-leased with rents commencing in the latter half of
2023. The decrease in NOI generated from investment properties held
for sale was due to the lead tenant vacating the property on
expiry.
Debt and Liquidity
|
September 30,
2023
|
December 31,
2022
|
|
|
|
Indebtedness to GBV
ratio (1)
|
61.4 %
|
59.3 %
|
Interest coverage
ratio (1)
|
2.43 x
|
3.00 x
|
Indebtedness
(1) - weighted average fixed interest rate
|
4.03 %
|
3.54 %
|
Indebtedness
(1) - weighted average term to maturity
|
2.99 years
|
3.27 years
|
At the end of Q3-2023, the REIT had access to Available Funds of
approximately $48,283, and a weighted
average term to maturity of 2.99 years in its mortgage portfolio
with a weighted average fixed interest rate of 4.03%. During the
quarter, the REIT refinanced $36,452
of mortgages with a weighted average fixed interest rate of 6.05%
for five and seven year terms. YTD-2023, the REIT refinanced
$67,573 of mortgages with a weighted
average fixed interest rate of 5.65% (excluding one with a variable
interest rate at prime plus 1.5%) and a weighted average term to
maturity of 4.5 years, providing the REIT with additional liquidity
of approximately $5,700.
Subsequent to September 30, 2023,
the REIT refinanced a $3,834 mortgage
with a fixed interest rate of 6.62% for a three year term.
(1) This is
a non-IFRS financial measure. Refer to the Non-IFRS financial
measures section below.
(2) Excludes investment properties held for
sale.
|
Distribution Reallocation
After careful consideration, the Board has determined that the
most effective use of available capital is to reallocate
substantially all distributions paid to Unitholders
("Distribution Amounts") for the month commencing
November 1, 2023 and ending
April 30, 2024 to purchase the
maximum number of Units available under the NCIB or through other
acquisition programs, with the intention of revisiting the
reallocation in approximately six months to reinstate a sustainable
distribution to Unitholders. The Board believes that reallocating
the Distribution Amounts to the NCIB, given the dislocation between
the Unit price and the intrinsic value of the business will be
immediately accretive to Unitholders and is the most compelling
near term opportunity to increase Unitholder value and per unit
growth. At September 30, 2023,
the REIT's NAV per Unit was $4.97
resulting in the REIT's Unit price trading at a significant
discount to intrinsic value
Unit Consolidation
The REIT announced that it intends to affect a Consolidation of
its Voting Units and Class B LP Units on the basis of 5.75:1 Voting
Units and Class B LP Units (together, the "Consolidated
Units"). The Consolidation will become effective on or about
November 22, 2023 and is primarily
intended to increase the REIT's per Unit trading price. As a result
of the Consolidation, every 5.75 Voting Units and Class B LP Units
will be converted automatically into one issued and outstanding
Consolidated Unit. Unitholders holding Consolidated Units through a
brokerage account will have their Consolidated Units automatically
adjusted to reflect the Consolidation.
The Consolidation will affect all Unitholders uniformly and will
not alter any Unitholder's percentage interest in the REIT's
equity, except to the extent that the Consolidation would result in
a Unitholder owning fractional Consolidated Units. Any fractional
Consolidated Units of a Unitholder resulting from the Consolidation
will be rounded down to the nearest whole number of Consolidated
Units. The Consolidation will reduce the number of the REIT's Units
total issued and outstanding from 92,020,251 Units to approximately
16,003,521 Units and 2,420,164 Class B LP Units and SV Units to
approximately 420,891 Class B LP Units and SV Units respectively.
Proportional adjustments will be made to the number of the REIT's
Units issuable upon exercise or conversion of the Class B LP
Units.
Holders of Consolidated Units held in book-entry form or through
a bank, broker or other nominee will have their positions
automatically adjusted to reflect the Consolidation, subject to a
broker's particular processes, and do not need to take any action
in connection with the Consolidation. Unitholders of record will be
receiving information from TSX Trust Company, the REIT's transfer
agent, regarding their Consolidated Unit ownership
post-Consolidation. Unitholders who hold Consolidated Units in
brokerage accounts should direct any questions concerning the
Consolidation to their brokers; all other Unitholders may direct
questions to the transfer agent, TSX Trust Company, who can be
reached at telephone number 1-866-600-5869 and facsimile
number (416) 361-0470.
The Units will commence trading on the Toronto Stock Exchange on
a post-Consolidation basis effective at market opening on or about
November 24, 2023 The trading symbol
for the Units will remain "TNT.UN." The new CUSIP number for the
Units following the Consolidation will be 89784Y407.
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 44 commercial properties consisting of approximately
4.8 million square feet in urban and select strategic secondary
markets across Canada focusing on
long term leases with government and credit rated tenants.
The REIT is focused on growing its portfolio principally through
acquisitions across Canada and
such other jurisdictions where opportunities exist. Additional
information concerning the REIT is available at www.sedarplus.ca or
the REIT's website at www.truenorthreit.com.
Non-IFRS measures
Certain terms used in this press release such as FFO, AFFO, FFO
and AFFO payout ratios, NOI, Same Property NOI, indebtedness
("Indebtedness"), gross book value ("GBV"),
Indebtedness to GBV ratio, net earnings before interest, tax,
depreciation and amortization and fair value gain (loss) on
financial instruments and investment properties ("Adjusted
EBITDA"), interest coverage ratio, net asset value
("NAV") per Unit, Total Equity and Available Funds are not
measures defined by 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, FFO and AFFO payout ratios, NOI, Same Property NOI,
Indebtedness, GBV, Indebtedness to GBV ratio, Adjusted EBITDA,
interest coverage ratio, adjusted cash provided by operating
activities, NAV per Unit, Total Equity and Available Funds 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 three and nine months ended
September 30, 2023 ("MD&A") and the Annual
Information Form ("AIF") are available on the REIT's profile
at www.sedarplus.ca.
Reconciliation of Non-IFRS financial measures
The following tables reconcile the non-IFRS financial measures
to the comparable IFRS measures for the three and nine months ended
September 30, 2023 and 2022. These non-IFRS financial measures
do not have any standardized meanings prescribed by IFRS and may
not be comparable to similar measures presented by other
issuers.
NOI
The following table calculates the REIT's net operating income,
a non-IFRS financial measure:
|
Three months ended
September 30
|
|
Nine months
ended
September 30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
|
32,789
|
$
|
36,677
|
$
|
99,337
|
$
|
108,124
|
Expenses:
|
|
|
|
|
|
|
|
|
Property operating
costs
|
|
(9,699)
|
|
(9,526)
|
|
(28,800)
|
|
(27,048)
|
Realty
taxes
|
|
(5,008)
|
|
(5,175)
|
|
(15,335)
|
|
(15,221)
|
NOI
|
$
|
18,082
|
$
|
21,976
|
$
|
55,202
|
$
|
65,855
|
Same Property NOI
Same Property NOI is measured as the net operating income for
the properties owned and operated by the REIT for the current and
comparative period. The following table reconciles the REIT's Same
Property NOI to NOI:
|
Three months
ended
September 30
|
Nine months
ended
September 30
|
|
|
2023
|
|
2022
|
2023
|
|
2022
|
Number of
properties
|
|
43
|
|
43
|
43
|
|
43
|
Revenue
|
$
|
31,319
|
$
|
34,839
|
93,990
|
$
|
103,698
|
Expenses:
|
|
|
|
|
|
|
|
Property
operating
|
|
(9,203)
|
|
(9,153)
|
(27,350)
|
|
(26,190)
|
Realty
taxes
|
|
(4,795)
|
|
(4,858)
|
(14,356)
|
|
(14,473)
|
|
$
|
17,321
|
$
|
20,828
|
52,284
|
$
|
63,035
|
Add:
|
|
|
|
|
|
|
|
Amortization of
leasing costs and tenant inducements
|
|
2,429
|
|
1,569
|
6,726
|
|
4,729
|
Straight-line
rent
|
|
392
|
|
577
|
1,135
|
|
1,525
|
Same Property
NOI
|
$
|
20,142
|
$
|
22,974
|
60,145
|
$
|
69,289
|
|
|
|
|
|
|
|
|
Less: Investment
properties held for sale
|
|
(232)
|
|
632
|
812
|
|
1,987
|
Same Property NOI
excluding investment properties held for sale
|
|
20,374
|
|
22,342
|
59,333
|
|
67,302
|
|
|
|
|
|
|
|
|
Reconciliation to
condensed consolidated interim financial statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions and
dispositions
|
|
(90)
|
|
1,799
|
1,894
|
|
4,862
|
Amortization of
leasing costs and tenant inducements
|
|
(2,428)
|
|
(1,584)
|
(6,735)
|
|
(4,772)
|
Straight-line
rent
|
|
226
|
|
(581)
|
710
|
|
(1,537)
|
NOI
|
$
|
18,082
|
$
|
21,976
|
55,202
|
$
|
65,855
|
FFO and AFFO
The following table reconciles the REIT's FFO and AFFO to net
income and comprehensive income, for the three and nine months
ended September 30, 2023 and 2022:
|
Three months
ended
September 30
|
Nine months
ended
September 30
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income and
comprehensive income
|
$
|
(42,472)
|
$
|
8,046
|
$
|
(34,684)
|
$
|
38,437
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Fair value adjustment
of Unit-based compensation
|
|
(54)
|
|
(105)
|
|
(486)
|
|
(587)
|
Fair value adjustment
of investment properties
|
|
50,087
|
|
6,842
|
|
68,391
|
|
10,122
|
Fair value adjustment
of Class B LP Units
|
|
(584)
|
|
(1,629)
|
|
(9,179)
|
|
(5,045)
|
Transaction costs on
sale of investment property
|
|
1,131
|
|
—
|
|
1,375
|
|
—
|
Distributions on Class
B LP Units
|
|
181
|
|
400
|
|
679
|
|
1,298
|
Unrealized gain on
change in fair value of derivative instruments
|
|
(366)
|
|
(702)
|
|
(1,061)
|
|
(5,362)
|
Amortization of
leasing costs and tenant inducements
|
|
2,428
|
|
1,584
|
|
6,735
|
|
4,772
|
FFO
|
$
|
10,351
|
$
|
14,436
|
$
|
31,770
|
$
|
43,635
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Unit-based
compensation expense
|
|
114
|
|
93
|
|
446
|
|
541
|
Amortization of
financing costs
|
|
329
|
|
405
|
|
1,071
|
|
1,133
|
Rent
Supplement
|
|
743
|
|
—
|
|
2,228
|
|
—
|
Amortization of
mortgage discounts
|
|
(8)
|
|
(11)
|
|
(25)
|
|
(36)
|
Instalment note
receipts
|
|
13
|
|
15
|
|
41
|
|
47
|
Straight-line
rent
|
|
(226)
|
|
581
|
|
(710)
|
|
1,537
|
Capital
reserve
|
|
(1,215)
|
|
(1,229)
|
|
(3,673)
|
|
(3,609)
|
AFFO
|
$
|
10,101
|
$
|
14,290
|
$
|
31,148
|
$
|
43,248
|
|
|
|
|
|
|
|
|
|
FFO per
Unit:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
$
|
0.15
|
$
|
0.34
|
$
|
0.47
|
Diluted
|
$
|
0.11
|
$
|
0.15
|
$
|
0.34
|
$
|
0.47
|
AFFO per
Unit:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
$
|
0.15
|
$
|
0.33
|
$
|
0.47
|
Diluted
|
$
|
0.11
|
$
|
0.15
|
$
|
0.33
|
$
|
0.47
|
AFFO payout
ratio:
|
|
|
|
|
|
|
|
|
Basic
|
|
69 %
|
|
97 %
|
|
83 %
|
|
95 %
|
Diluted
|
|
69 %
|
|
97 %
|
|
83 %
|
|
95 %
|
Distributions
declared
|
$
|
7,012
|
$
|
13,900
|
$
|
25,731
|
$
|
41,300
|
Weighted average
Units outstanding (000s):
|
|
|
|
|
|
|
|
|
Basic
|
|
94,469
|
|
93,408
|
|
94,525
|
|
92,604
|
Add:
|
|
|
|
|
|
|
|
|
Unit options and
Incentive Units
|
|
34
|
|
26
|
|
28
|
|
95
|
Diluted
|
|
94,503
|
|
93,434
|
|
94,553
|
|
92,699
|
Indebtedness to GBV Ratio
The table below calculates the REIT's Indebtedness to GBV ratio
as at September 30, 2023 and December
31, 2022. The Indebtedness to GBV ratio is calculated by
dividing the indebtedness by GBV:
|
September 30,
2023
|
December 31,
2022
|
Total assets
|
$
|
1,336,568
|
$
|
1,450,315
|
Deferred financing
costs
|
|
6,777
|
|
7,070
|
GBV (1)
|
$
|
1,343,345
|
$
|
1,457,385
|
Mortgages
payable
|
|
804,120
|
|
846,689
|
Credit
Facility
|
|
18,100
|
|
14,400
|
Unamortized financing
costs and mark to market mortgage adjustments
|
|
3,044
|
|
3,745
|
Indebtedness
(1)
|
$
|
825,264
|
$
|
864,834
|
Indebtedness to GBV
(1)
|
|
61.4 %
|
|
59.3 %
|
Adjusted EBITDA
The table below reconciles the REIT's adjusted EBITDA to net
income and comprehensive income for twelve month period ended
September 30, 2023 and 2022:
|
Nine months
ended
September 30
|
|
2023
|
|
2022
|
|
Net income and
comprehensive income
|
$
|
(56,589)
|
$
|
57,353
|
|
|
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
Interest
expense
|
|
32,055
|
|
27,978
|
|
Fair value adjustment
of Unit-based compensation
|
|
(479)
|
|
(479)
|
|
Transaction costs on
sale of investment property
|
|
1,375
|
|
—
|
|
Fair value adjustment
of investment properties
|
|
100,194
|
|
2,761
|
|
Fair value adjustment
of Class B LP Units
|
|
(8,724)
|
|
(4,531)
|
|
Distributions on Class
B LP Units
|
|
1,054
|
|
1,747
|
|
Unrealized loss on
change in fair value of
derivative
instruments
|
|
(1,143)
|
|
(6,331)
|
|
Amortization of leasing
costs, tenant inducements,
mortgage premium and
financing costs
|
|
10,175
|
|
7,910
|
|
Adjusted EBITDA
(1)
|
$
|
77,918
|
$
|
86,408
|
|
Interest Coverage Ratio
The table below calculates the REIT's interest coverage ratio
for the twelve month period ended September 30, 2023 and 2022.
The interest coverage ratio is calculated by dividing Adjusted
EBITDA by interest expense.
|
Nine months ended
September 30
|
|
2023
|
|
2022
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
77,918
|
$
|
86,408
|
Interest
expense
|
|
32,055
|
|
27,978
|
Interest coverage
ratio
|
|
2.43 x
|
|
3.09 x
|
Available Funds
The table below calculates the REIT's Available Funds as at
September 30, 2023 and December 31,
2022:
|
September
30,
2023
|
December 31,
2022
|
Cash
|
$
|
6,383
|
$
|
9,501
|
Undrawn Credit
Facility
|
|
41,900
|
|
53,600
|
Available
Funds
|
$
|
48,283
|
$
|
63,101
|
NAV per Unit
The table below calculates the REIT's NAV per Unit as at
September 30, 2023 and December 31,
2022:
|
September
30,
2023
|
December 31,
2022
|
|
Units
|
Amount
|
Units
|
Amount
|
Unitholders'
Equity
|
92,007,751
|
$ 463,787
|
91,813,073
|
$ 522,138
|
Add: Class B LP
Units
|
2,432,664
|
5,207
|
2,526,414
|
14,628
|
Total Equity (including
Class B LP Units)
|
94,440,415
|
$ 468,994
|
94,339,487
|
$ 536,766
|
NAV per
Unit
|
|
$4.97
|
|
$5.69
|
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. Readers are cautioned that 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, distributions, plans, the benefits of
reallocating the Distribution Amounts to the NCIB, or through other
acquisition programs, the impact of the Consolidation and the
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 suggesting future outcomes or events.
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 may 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 and uncertainties related to the Units; risks
related to the REIT and its business; fluctuating interest rates
and general economic conditions, including increased levels of
inflation; credit, market, operational and liquidity risks
generally; occupancy levels and defaults, including the failure to
fulfill contractual obligations by tenants; lease renewals and
rental increases; the ability to re-lease and find new tenants for
vacant space; the timing and ability of the REIT to acquire or sell
certain properties; the ongoing effects of COVID-19 and
work-from-home flexibility initiatives on the business, operations
and financial condition of the REIT and its tenants, as well as on
consumer behavior and the economy in general, including the ability
to enforce leases, perform capital expenditure work, increase
rents, raise capital through the issuance of Units or other
securities of the REIT; the benefits of reallocating the
Distribution Amounts to the NCIB, or through other acquisition
programs, the impact of the Consolidation; and obtain mortgage
financing on the REIT's properties (the "properties"). The
foregoing is not an exhaustive list of factors that may affect the
REIT's forward-looking statements. Other risks and uncertainties
not presently known to the REIT could also cause actual results or
events to differ materially from those expressed in its
forward-looking statements. 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 applied in drawing a conclusion
or making a forecast or projection, including management's
perception of historical trends, current conditions and expected
future developments, as well as other considerations believed to be
appropriate in the circumstances. There can be no assurance
regarding: (a) the ongoing effects of COVID-19 and work-from-home
initiatives on the REIT's business, operations and performance,
including the performance of its Units; (b) the REIT's ability to
mitigate any impacts related to fluctuating interest rates,
inflation and the after effects of COVID-19 including the shift to
hybrid working; (c) the factors, risks and uncertainties expressed
above in regards to the post COVID-19 environment on the commercial
real estate industry and property occupancy levels; (d) credit,
market, operational, and liquidity risks generally; (e) the
availability of investment opportunities for growth in Canada and
the timing and ability of the REIT to acquire or sell certain
properties; (f) repurchasing Units under the NCIB; (g) Starlight
Group Property Holdings Inc., or any of its affiliates
("Starlight"), continuing as asset manager of the REIT in
accordance with its current asset management agreement; (h) the
benefits of reallocating the Distribution Amounts to the NCIB, or
through other acquisition programs; (i) the impact of the
Consolidation; and (j) other risks inherent to the REIT's business
and/or factors beyond its control which could have a material
adverse effect on the REIT.
The forward-looking statements made relate only to events or
information as of the date on which the statements are made in this
MD&A. 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