TORONTO, March 12, 2020 (GLOBE NEWSWIRE) — WPT Industrial Real Estate Investment Trust (the âREITâ) (TSX: WIR.U; WIR.UN; WIR.R – OTCQX: WPTIF) announced today the original press release below, included errors within the Ratios section of the Financial and Operational Highlights table as of December 31, 2019 that have been corrected:
(i) Variable interest rate debt as percentage of total debt should have been 24.7% and
(ii) Debt-to-gross book value should have been 43.6%.
WPT INDUSTRIAL REIT ANNOUNCES FOURTH QUARTER AND YEAR END 2019 RESULTS
TORONTO, Ontario â March 11, 2020 â WPT Industrial Real Estate Investment Trust (the âREITâ) (TSX: WIR.U; WIR.UN; WIR.R – OTCQX: WPTIF) announced today its results for the three months and year ended December 31, 2019. All dollar amounts are stated in U.S. funds.
Highlights for the Year:
- Investment properties revenue and net operating income (âNOIâ)(1) increased 24.5% and 24.2%, respectively, for the year
- Funds from operations (âFFOâ)(1) and adjusted funds from operations (âAFFOâ)(1) increased 16.1% and 4.5%, respectively, for the year
- Same properties NOI(1) was up 3.1% and 3.7% for the fourth quarter and year, respectively
- Occupancy remained strong at 99.0% and average remaining lease term rose to 4.9 years at December 31, 2019
- Generated approximately $3.6 million management fee revenue for the year
- Completed an equity offering in October 2019, raising approximately $97.8 million in gross proceeds
Highlights Subsequent to Year-End:
- Acquired a 126,303 square foot distribution property in Portland, Oregon for $16.2 million in January 2020
- Sold the REITâs only office property and adjacent land parcel for net proceeds of approximately $29.4 million in January 2020
- Acquired two land parcels for future development for approximately $13.8 million in the first quarter 2020
- Completed a subscription receipts offering in February 2020, raising approximately $271 million in gross proceeds
- Announced the expected acquisition of a portfolio of 26 distribution buildings and one land parcel located in multiple markets across the U.S. totaling approximately 9.0 million square feet of gross leasable area (âGLAâ) for $730 million (exclusive of credits, closing and transaction costs)
â2019 shaped up to be a tremendous year of growth and consistent operating performance. During the year, we increased the size of our portfolio by 23%, adding newly-developed properties from our proprietary development pipeline and increasing our concentration in high-growth coastal markets. Operationally, the REIT also achieved annual same properties NOI growth of 3.7%, while re-leasing approximately 5.4 million square feet of existing leases with maturities in 2019 and beyond,â commented Scott Frederiksen, Chief Executive Officer. âAnd we have continued our momentum in 2020 with the announcement the REITâs largest acquisition and equity offering, to date, which will provide meaningful scale to the portfolio and deliver immediate accretion to FFO and AFFO. As the year progresses, we remain focused on enhancing the scale and quality of the portfolio through our development and capital recycling initiatives.â
FINANCIAL AND OPERATIONAL HIGHLIGHTS
(all figures in thousands of US dollars, except per Unit amounts, ratios, percentages, number of investment properties, amounts related to remaining lease term and GLA)
Three months ended December 31,
Year ended December 31,
|Investment properties revenue||$||31,882||$||24,494||$||115,129||$||92,454|
|Management fee revenue||$||501||$||1,703||$||3,587||$||2,790|
|Net income and comprehensive income||$||27,327||$||15,262||$||98,946||$||50,646|
|Net income and comprehensive income per Unit (basic) (2)(3)||$||0.429||$||0.312||$||1.663||$||1.045|
|Net income and comprehensive income per Unit (diluted) (2)(4)||$||0.417||$||0.301||$||1.614||$||1.019|
|FFO per Unit (diluted) (1)(2)(4)||$||0.216||$||0.216||$||0.853||$||0.893|
|AFFO (1) (5)||$||11,069||$||9,023||$||39,506||$||37,803|
|AFFO per Unit (diluted) (1)(2)(4)||$||0.169||$||0.178||$||0.654||$||0.761|
|Cash flows from operations||$||18,308||$||14,817||$||71,586||$||55,505|
|Adjusted Cash Flow from Operations (âACFOâ) (1)||$||12,943||$||9,984||$||46,477||$||40,690|
|Book value per Unit (1)||$||13.31||$||12.26||$||13.31||$||12.26|
|Distributions per Unit (2)(5)||$||0.190||$||0.190||$||0.760||$||0.760|
|Distributions declared (3)(5)||$||12,640||$||9,417||$||46,025||$||37,079|
|ACFO payout ratio (1)(5)||97.7||%||94.3||%||99.0||%||91.1||%|
|Weighted average number of Units (basic) (2)(3)||63,650||48,891||58,642||48,464|
|Weighted average number of Units (diluted) (2)(4)||65,474||50,688||60,428||49,707|
|As at||December 31, 2019||December 31, 2018|
|Number of investment properties||74||57|
|Average remaining lease term (years)||4.9||4.7|
|Fair value of investment properties||$||1,573,076||$||1,117,672|
|Weighted average effective interest rate (6)||3.8||%||3.9||%|
|Variable interest rate debt as percentage of total debt (7)||24.7||%||9.8||%|
|Debt-to-gross book value (1)||43.6||%||46.5||%|
|Interest coverage ratio (1)||3.1x||3.5x|
|Fixed charge coverage ratio (1)||2.7x||2.9x|
|Debt to Adjusted EBITDA (1)||8.2x||7.6x|
|(1) NOI, same properties NOI, FFO, FFO per Unit (diluted), AFFO, AFFO per Unit (diluted), ACFO, Book value per Unit, ACFO payout ratio, cash re-leasing spread, straight-line rent re-leasing spread, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio, capitalization rate and debt to Adjusted EBITDA (âAdjusted EBITDAâ is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) are key measures of operating results and financial performance used by real estate operating companies, however, they are not defined by International Financial Reporting Standards (âIFRSâ), do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the âNon-IFRS Measuresâ section of the REITâs MD&A.|
|(2) Includes trust units of the REIT (âREIT Unitsâ) and class B partnership units of WPT Industrial, LP (the âPartnershipâ) (âClass B Unitsâ) (collectively, the “Units“).|
|(3) Excludes all options, deferred trust units (âDTUsâ), and deferred limited partnership units (âDPUsâ) outstanding under the REITâs deferred compensation plans.|
|(4) Includes all options, DTUs, and DPUs outstanding under the REITâs deferred compensation plans.|
|(5) Includes distributions on the Units.|
|(6) Includes mortgages payable, the REITâs unsecured credit facility (âCredit Facilityâ), mark-to-market adjustments and financing costs.|
|(7) Includes amounts outstanding under the Credit Facility.|
SOLID OPERATING PERFORMANCE
For the three months and year ended December 31, 2019, investment properties revenue increased 30.2% and 24.5%, respectively, compared to the same periods last year. The increase was primarily due to the contribution from 2018 and 2019 acquisitions, an increase in base rent in existing properties and higher recoveries of operating expenses. Net income and comprehensive income for the three months and year ended December 31, 2019 increased 79.1% and 95.4%, respectively, compared to the same periods last year. The increase in net income is mainly due to fair value adjustments to investment properties of $11.7 million and $63.2 million in the three months and year ended December 31, 2019, respectively.
NOI for the three months and year ended December 31, 2019 was up 31.2% and 24.2%, respectively, compared to the same periods last year. Same properties NOI increased 3.1% and 3.7% for the three months and year ended December 31, 2019, respectively, primarily due to increases in contractual base rent and higher recoveries of operating expenses.
FFO for the three months and year ended December 31, 2019 was up 29.3% and 16.1%, respectively, compared to the same periods last year. AFFO for the three months and year ended December 31, 2019 was up 22.7% and 4.5%, respectively, compared to the same periods last year. FFO per Unit for the three months and year ended December 31, 2019 was flat and down $0.040 per Unit (4.5%), respectively. AFFO per Unit for the three months and year ended December 31, 2019 was down $0.009 per Unit (5.1%) and $0.107 per Unit (14.1%), respectively.
AFFO for the year was mainly impacted by free rent of approximately $3.1 million ($0.051 per Unit (diluted)), and for the year both FFO and AFFO were impacted by one-time severance costs of $1.5 million ($0.025 per Unit (diluted)) in the first quarter. FFO per Unit and AFFO per Unit were also impacted by a 29.1% and 21.6% increase in the weighted average number of Units outstanding for the three months and year ended December 31, 2019, respectively.
Cash flow from operations and ACFO were up 23.6% and 29.6%, respectively, for the quarter, and 29.0% and 14.2%, respectively, for the year. The REITâs ACFO payout ratio for the three months and year ended December 31, 2019 was 97.7% and 99.0%, an increase of 3.4% and 8.7%, respectively, compared to last year. Cash flow from operations and ACFO were both up mainly due to 2018 and 2019 acquisition activity but were offset by free rent. Cash flow from operations was up mainly due to changes resulting from the 2018 internalization of management. ACFO Payout ratio was up due to increased free rent and the timing difference between additional distributions on Units issued in the REITâs February and October 2019 equity raises and the closing of various investment property acquisitions.
As at December 31, 2019, the REIT had renewed or leased to new or existing tenants approximately 3.8 million square feet of GLA or 93.1% of the 2019 lease expirations. Lease renewals commencing in the year had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 2.6% and 9.6%, respectively.
During 2019, the REIT also renewed approximately 1,587,500 square feet of leases with renewal terms set to commence after December 31, 2019. These lease renewals had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 10.5% and 15.7%, respectively.
So far in 2020, the REIT has entered into an additional 474,404 square feet of lease transactions, including a five-year renewal of the 283,756 square foot lease with the tenant located at 6190 Freeport Avenue, Memphis, Tennessee, which includes a contractual rent increase of 8.6% beginning July 1, 2020 and annual escalations of 2.5% thereafter.
This recent leasing activity reduces the REITâs remaining 2020 lease expirations to approximately 299,000 square feet or 1.3% of the portfolioâs GLA.
STRONG FINANCIAL & LIQUIDITY POSITION
As at December 31, 2019, the REITâs debt-to-gross-book-value ratio was 42.3% with interest and fixed charge coverage ratios of 3.1 and 2.7 times, respectively, and a debt-to-Adjusted EBITDA ratio of 8.2 times. The weighted average effective interest rate on outstanding debt was 3.8% at December 31, 2019 with a weighted average term to maturity on the REITâs mortgages payable and total debt of 2.3 years and 3.2 years, respectively, with a weighted average remaining lease term of 4.9 years.
As at December 31, 2019, the REIT had approximately $106.8 million available to be drawn on the Credit Facility, in addition to cash on hand of $18.4 million. The REIT also generated $29.4 million of additional liquidity through the sale of property and expects to ramp up capital recycling in 2020 in an effort to further strengthen the REITâs balance sheet and create additional flexibility to invest in the REITâs growing private capital development pipeline.
The REIT generated $3.6 million of management fee revenue during year consisting of approximately $2.0 million of ongoing management fees and approximately $1.6 million of transaction related fees.
The REIT has seven development projects currently underway in its private capital platform, comprising approximately 2.4 million square feet, at various stages of construction and lease-up, inclusive of the two land parcels acquired subsequent to year end (see additional disclosures below). The REIT also has additional projects in its private capital development pipeline in various stages of due diligence or entitlement in the Southern New Jersey, Dallas, Phoenix and Seattle markets and continues to actively pursue other value-add and development opportunities alongside private capital partners.
On January 8, 2020, the REIT acquired a 100% occupied distribution property located in Portland, Oregon totaling 126,303 square feet for a purchase price of $16.2 million (exclusive of closing and transaction costs), representing a capitalization rate(1) of 5.6%. The purchase price was satisfied with funds from the Credit Facility and cash on hand.
On January 16, 2020, the REIT acquired a land parcel located in Eagan (Minneapolis), Minnesota, (the âMinneapolis Development Propertyâ) for a purchase price of approximately $5.1 million (exclusive of closing and transaction costs). The REIT intends to contribute the Minneapolis Development Property into a joint venture with one or more private capital partners and develop a distribution building totaling 206,384 square feet of GLA on the property.
On January 27, 2020, the REIT sold the its only office property and adjacent land parcel located at 4350 and 4400 Baker Road, Minnetonka, Minnesota for net cash proceeds of $29.4 million (inclusive of closing and working capital adjustments).
On February 3, 2020, the REIT entered into an agreement to economically fix the interest for a $125 million term loan under the Credit Facility using an interest rate swap at LIBOR of 1.31% plus an applicable margin based on leverage.
On February 5, 2020, the REIT acquired a land parcel located in Katy (Houston), Texas, (the âHouston Development Propertyâ) for a purchase price of approximately $8.7 million (exclusive of closing and transaction costs). The REIT intends to contribute the Houston Development Property into a joint venture with one or more private capital partners and develop an industrial building totaling 494,550 square feet of GLA on the property.
On February 18, 2020, the REIT waived the due diligence conditions in its favor under a membership purchase agreement (the âAcquisition Agreementâ) to indirectly acquire 26 investment properties and one parcel of land (the âAcquisition Propertiesâ) totaling 8,980,578 square feet of GLA for an aggregate purchase price of $730 million, subject to closing adjustments as provided in the Acquisition Agreement (the âAcquisitionâ). The REIT anticipates that the closing of the Acquisition will occur on or about March 31, 2020.
On February 27, 2020, the REIT issued 16,272,500 subscription receipts of the REIT (including subscription receipts issued pursuant to the exercise in full of the over-allotment option granted by the REIT to the underwriters of the offering) (the âSubscription Receiptsâ) at a price of $14.35 per Subscription Receipt to a syndicate of underwriters on a bought deal basis for gross cash proceeds to the REIT of approximately $233.5 million (exclusive of underwritersâ fees of approximately $9.3 million and other issuance costs) (the âFebruary 2020 Public Offeringâ), and 2,578,000 Subscription Receipts at a price of $14.35 per Subscription Receipt to Alberta Investment Management Corporation and its affiliates (âAIMCoâ) for cash proceeds to the REIT of approximately $37.0 million (the âFebruary 2020 Private Offeringâ and together with the February 2020 Public Offering, the âFebruary 2020 Offeringâ). Each Subscription Receipt entitles the holder thereof to receive one REIT Unit upon completion of the Acquisition by the REIT without payment of any additional consideration or any further action on the part of the holder of the Subscription Receipt. The REIT intends to use the net proceeds from the February 2020 Offering to pay a portion of the purchase price of the Acquisition and related expenses in connection with the Acquisition. For additional information on the February 2020 Offering, see the REITâs prospectus supplement filed on February 20, 2020.
On February 29, 2020, the REIT entered into a forward agreement to economically fix the interest for $470 million of term loans using an average interest rate swap at LIBOR of 0.93% plus an applicable margin based on leverage. The REIT is expected to draw the $470 million from increased capacity on the three delayed draw term loans under the Credit Facility and use the proceeds to partially fund the Acquisition.
On March 2, 2020, the REIT repaid a mortgage payable bearing a fixed interest rate of 2.87% with a remaining principal balance of approximately $51.8 million, with funds from a term loan under the Credit Facility. The properties previously encumbered by the mortgage payable were added to the REITâs unencumbered asset pool, thereby increasing the availability on the Credit Facility.
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REITâs management team on Thursday, March 12, 2020 at 9:30 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the âInvestorsâ page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10138696#. A recording of the call will also be archived on the REITâs web site at www.wptreit.com.
About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT acquires, develops and manages industrial properties located in the United States, with a particular focus on warehouse and distribution properties. WPT Industrial, LP (the REITâs operating subsidiary) indirectly owns a portfolio of properties across 18 states in the United States consisting of approximately 23.1 million square feet of GLA, comprised of 76 industrial properties. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.
For more information, please contact:
Scott Frederiksen, Chief Executive Officer
WPT Industrial Real Estate Investment Trust
Tel: (612) 800-8501
This press release contains âforward-looking informationâ as defined under applicable Canadian securities law (âforward-looking statementsâ) which reflect managementâs expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT, including statements concerning expected growth opportunities and the availability of acquisition opportunities from its private capital pipeline. The words âplansâ, âexpectsâ, âscheduledâ, âestimatesâ, âintendsâ, âanticipatesâ, âprojectsâ, âbelievesâ or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results âmayâ, âwillâ, âcouldâ, âwouldâ, âmightâ, âoccurâ, âbe achievedâ or âcontinueâ and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include, but are not limited to, the REITâs ability to complete due diligence and entitlements on private capital development pipeline opportunities, the REITâs ability complete development and investment transactions, the REITâs ability to undertake capital recycling through asset sales, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, expected use of proceeds from the February 2020 Offering, the expected closing date for the Acquisition; and continued positive net absorption and declining vacancy rates in the markets in which the REITâs properties are located. Such estimates, beliefs and assumptions include that the conditions to closing of the Acquisition will be met or waived in a timely manner and that the Acquisition will be completed on the current agreed upon terms.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed or referenced under âRisk Factorsâ in the REITâs most recently filed annual information form, which is available under the REITâs profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.