Firm Capital Apartment REIT Reports Q1/2022 Results and USD $10.04 (CAD $12.54) NAV Per Unit
May 18 2022 - 04:01PM
Firm Capital Apartment Real Estate Investment Trust (“the
“
Trust”), (TSXV: FCA.U), (TSXV: FCA.UN) is pleased
to report its financial results for the three months ended March
31, 2022:
- NAV AT $10.04 PER TRUST
UNIT ($CAD $12.54): Since Q3/2017, the Trust has increased
NAV from $7.85 (CAD $9.80) per Trust Unit to $10.04 (CAD $12.54)
per Trust Unit for a +10.1% Compounded Annual Growth Rate
(“CAGR”);
- AVERAGE RENT INCREASES
ACROSS INVESTMENT PORTOFLIO: For the three months ended
March 31, 2022, average rents increased by 5% to $1,255 per unit
from the $1,192 per unit reported for the three months ended
December 31, 2021;
- SECOND DISTRIBUTION
INCREASE: On February 8, 2022, the Trust announced a 4.2%
increase in quarterly distributions from $0.059 per Trust Unit to
$0.0615 per Trust Unit commencing with the Q2/2022 Distributions.
In addition, the Trust declared and approved quarterly
distributions of $0.0615 per unit for unitholders of record on June
30, 2022, payable on or about July 15, 2022;
- 100% RETURN OF CAPITAL ON
2021 DISTRIBUTIONS: The Trust’s distributions for 2021
were tax efficient for unitholders as it delivered a 100% return of
capital;
- CAD $13 MILLION BRIDGE
LOAN: On April 18, 2022, the Trust entered into an
agreement with an entity related with the Asset manager of the
Trust, to borrow CAD$13 million to be used for the Houston, TX
Transaction and Preferred Capital Investment. Summarized terms of
the Bridge Loan are (i) interest rate the greater of 6.0% per annum
or the Canadian Chartered Bank Prime Rate plus a spread; (ii) two
year term; (iii) fully open for repayment at any time prior to
maturity; (iv) 1% commitment fee; (v) undertaking to pledge all net
excess cash flow generated from any and all mortgage refinancings
and capital raises completed by the Trust until such time as the
Bridge Loan is repaid in full and (vi) general security
agreement;
- $3.5 MILLION, 12% PREFERRED
CAPITAL INVESTMENT: On April 22, 2022, The Trust provided
$3.5 million of preferred equity to an unrelated third party for
the recapitalization of a multi-residential portfolio located in
Sioux Falls, South Dakota. The preferred equity earns 12% interest
during the initial three year term; and
- HOUSTON, TX
ACQUISITION: On April 29, 2022, the Trust acquired the
remaining 50% interest in the Houston, TX Equity Accounted and
Preferred Investment for $5.3 million. The Trust now owns 100% of
this investment and will report it going forward as an investment
property on the Trust’s financial statements.
FIRST QUARTER HIGHLIGHTS Key
highlights for the three months ended March 31, 2022 are as
follows:
- Net loss was approximately $0.3
million, in comparison to the $2.9 million net loss reported for
the three months ended March 31, 2021;
- Excluding non-cash fair value
adjustments, net income was $0.5 million; and
- AFFO was approximately $0.4
million.
|
Three Months Ended |
|
|
Mar 31,2022 |
|
Dec 31,2021 |
|
Mar 31,2021 |
|
Net Income/(Loss) |
$ |
(345,345 |
) |
$ |
3,478,939 |
|
$ |
(2,945,917 |
) |
Net
Income Before Fair Value Adjustments |
$ |
532,100 |
|
$ |
497,949 |
|
$ |
508,948 |
|
FFO |
$ |
290,189 |
|
$ |
244,667 |
|
$ |
(2,114,359 |
) |
AFFO |
$ |
446,352 |
|
$ |
497,684 |
|
$ |
507,952 |
|
Distributions |
$ |
448,658 |
|
$ |
448,658 |
|
$ |
455,166 |
|
AFFO
Per Unit |
$ |
0.06 |
|
$ |
0.07 |
|
$ |
0.07 |
|
Distributions Per Unit |
$ |
0.06 |
|
$ |
0.06 |
|
$ |
0.06 |
|
AFFO
Payout Ratio |
|
101% |
|
|
90% |
|
|
90% |
|
For the complete financial statements including
Management’s Discussion & Analysis, please visit www.sedar.com
or the Trust’s website at www.firmcapital.com
INVESTMENT STRUCTURE
The Trust’s portfolio consists of (i) Wholly
Owned Real Estate Investments (ii) Joint Venture Real Estate
Investments and (iii) Preferred Capital Investments
(i) Wholly Owned Real Estate Investments: The
Trust opportunistically acquires wholly owned multi-family
residential real estate assets in large core markets on an
accretive basis and when the Trust’s cost of equity is compelling.
Any growth of the scale as outlined above will require the Trust to
raise additional capital through either the private and/or public
debt and equity capital markets.
(ii) Joint Venture Real Estate Investments:
The Trust has successfully utilized a joint venture strategy with
partners who bring strong, local expertise in its core and non-core
markets. The Trust strives to have a minimum 50% ownership
interest and will fund the equity in a combined preferred/common
equity investment structure. The preferred equity provides a fixed
rate of return resulting in a secured structure ahead of the
partner’s ownership interest, while the common equity provides
investors an upside return for investors as the investment meets
its targeted objectives. The joint venture strategy de-risks the
Trust’s investment.
(iii) Preferred Capital Investments: The
Trust, using Firm Capital’s plus 30-year experience as a leader in
the mortgage lending industry, provides preferred capital secured
by multi-family residential real estate properties. Preferred
capital investments continue to provide attractive, risk adjusted
returns for the Trust. Preferred capital ranks ahead of common
shares, and behind first mortgage debt in the capital structure of
a real estate investment. These types of investments typically
generate a higher yield and an overall better risk-adjusted return
for the Trust than the underlying real estate when real estate
valuations are at a premium. In the near term, the Trust expects to
continue to increase this investment class.
STRATEGIC DIRECTION
The Trust’s strategy and primary objective is to
use the proven industry experience of management, board of
trustees, and joint venture partners to acquire and own, U.S.
Multi-Family Residential Real Estate Properties to grow the NAV per
unit, generate attractive distributions and total unitholder
returns.
Over the short and medium-term, the Trust
expects to grow its wholly owned real estate investment portfolio
by exercising its first offer to acquire the interest of co-owners
on some of its existing joint ventures. Over the medium to
long-term, the Trust’s target is to maintain a 1:1 ratio of wholly
owned vs. joint venture partner ownership, while continuing to grow
its Preferred Capital Investments that provide enhanced returns
secured by asset classes we own.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "intend" and similar expressions.
Forward-looking statements necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse factors
affecting the U.S. real estate market generally or those specific
markets in which the Trust holds properties; volatility of real
estate prices; inability to access sufficient capital from internal
and external sources, and/or inability to access sufficient capital
on favourable terms; industry and government regulation; changes in
legislation, income tax and regulatory matters; the ability of the
Trust to implement its business strategies; competition; currency
and interest rate fluctuations and other risks. Additional risk
factors that may impact the Trust or cause actual results and
performance to differ from the forward-looking statements contained
herein are set forth in the Trust's Annual Information form under
the heading Risk Factors (a copy of which can be obtained under the
Trust's profile on www.sedar.com).
Readers are cautioned that the foregoing list is
not exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement. Except as
required by applicable law, the Trust undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise
Certain financial information presented in this
press release reflect certain non-International Financial Reporting
Standards (“IFRS”) financial measures, which
include, but not limited to NOI, FFO and AFFO. These measures are
commonly used by real estate investment companies as useful metrics
for measuring performance, however, they do not have standardized
meaning prescribed by IFRS and are not necessarily comparable to
similar measures presented by other real estate investment
companies. These terms are defined in the Trust’s Management
Discussion and Analysis for the three months ended March 31, 2022
filed on www.sedar.com.
Neither the Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
For further information, please contact: |
Sandy
Poklar |
Mark
Goldreich |
President & Chief Executive Officer |
Chief Financial Officer |
(416) 635-0221 |
(416) 635-0221 |
|
|
For Investor Relations information, please
contact: |
Victoria Moayedi |
|
Director, Investor Relations |
|
(416) 635-0221 |
|
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