TORONTO, Nov. 9, 2015 /CNW/ – Automotive Properties Real Estate Investment Trust (TSX: APR.UN) (the “REIT”) today announced its financial results for the period from June 1, 2015 (the REIT’s date of formation) to September 30, 2015. The REIT completed its initial public offering (“IPO”) and commenced trading on the Toronto Stock Exchange on July 22, 2015. The REIT had no operations prior to July 22, 2015. The financial results reported are therefore for the 71-day period from July 22, 2015 to September 30, 2015 (the “71-day period”).
The following summary of the REIT’s financial results for the 71-day period are presented in comparison to the Adjusted Financial Forecast presented in the REIT’s Management’s Discussion and Analysis for the 71-day period (the “MD&A”). The Financial Forecast in the REIT’s IPO prospectus dated July 10, 2015 assumed a full three months of operations for the period ended September 30, 2015 and has therefore been adjusted to reflect the 71-day period (the “Adjusted Forecast”) in order to facilitate comparison with actual results. The REIT’s interim unaudited financial statements and related MD&A for the 71-day period are available on the REIT’s website at www.automotivepropertiesreit.ca and on SEDAR at www.SEDAR.com.
Period Highlights
- Completed an IPO of 7.5 million REIT units for gross proceeds of $75 million;
- In conjunction with the IPO, completed the acquisition of a portfolio of 26 retail automotive properties encompassing approximately 958,000 square feet of GLA located in the Greater Vancouver Area, Calgary, Regina and the Greater Toronto Area (the “Initial Properties”) for a purchase price of $357.7 million (including transaction costs);
- Issued an additional 620,000 REIT units for gross proceeds of $6.2 million, pursuant to the partial exercise of the over-allotment option granted to the underwriters in the IPO;
- Reported Net Operating Income (“NOI”), Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) for the 71-day period that were in-line with the Adjusted Forecast1;
- Paid an initial cash distribution of $0.089 per REIT unit and Class B limited partnership unit (collectively, “Units”) for the period from July 22, 2015 (the closing date of the IPO) to August 31, 2015;
- Declared a monthly distribution of $0.067 per Unit for September; and
- Completed an interest rate hedging program related to the REIT’s $193.8 million in Credit Facilities, securing an effective term to maturity of 6.1 years and an effective weighted average interest rate of 3.15%, lower than the 3.2% weighted average interest rate initially forecast.
“We believe the successful completion of our IPO and partial exercise of the over-allotment option during the volatile market conditions in early summer is a strong endorsement from the market of our strategy to own and invest in the real estate underlying high-quality automotive dealerships in strategic Canadian markets, and the stability of our cash flows to support unitholder distributions,” said Milton Lamb, CEO of Automotive Properties REIT. “As expected, the REIT’s financial performance in the quarter was in-line with our forecast.”
|
__________________________________ |
“We are now focused on building our acquisition pipeline,” continued Mr. Lamb. “We are targeting prime dealership properties with cash flow stability in strategic urban markets across Canada that can enhance our brand and geographic diversification. As the only Canadian REIT focused on automotive real estate, the REIT provides a unique opportunity for automotive dealership owners to monetize the real estate underlying their dealerships while retaining ownership and control of their core automotive dealership businesses. This provides them with liquidity to advance their individual strategic objectives, whether it be succession planning, directly investing in upgrading their dealerships, or redeploying capital to take advantage of the industry consolidation.”
|
Financial Highlights |
||
|
($000s, except per Unit amounts) |
Period from June 1 (date of |
Adjusted Forecast1 |
|
Property revenue |
$5,801 |
$5,783 |
|
NOI2 (including straightâline adjustments) |
5,047 |
5,028 |
|
FFO2 |
3,600 |
3,516 |
|
AFFO2 |
3,086 |
3,003 |
|
Cash NOI2 |
4,544 |
4,538 |
|
Number of Units outstanding (including Class B LP Units) |
18,053,253 |
18,053,253 |
|
FFO per Unit |
$0.199 |
$0.195 |
|
AFFO per Unit |
$0.171 |
$0.166 |
|
Distributions per Unit |
$0.156 |
$0.156 |
|
AFFO payout ratio2 |
91.3% |
93.9% |
|
1. The financial forecast included in the REIT’s IPO prospectus has been adjusted to reflect the start of operations occurring on July 22, 2015 in order to facilitate comparison with actual results for all line items. The adjusted property revenue was calculated as follows: total rent revenue of $23,951 for the twelve month period divided by 365 days and multiplied by 10 days in July, and including August and September monthly rental revenue. Also included is the prorated amounts for realty tax and straight-line rent adjustment. |
|
|
2. NOI, FFO, AFFO, Cash NOI and AFFO payout ratio are non-IFRS financial measures. See “Non-IFRS Financial Measures” in this press release. |
Financial Results
The REIT performed in line with the Adjusted Forecast and management’s expectations for the 71-day period.
Property revenue for the 71-day period totaled $5.8 million and property costs were $0.8 million, both in-line with the Adjusted Forecast.
General and administrative expenses for the 71-day period were $0.3 million and were in-line with the Adjusted Forecast.
Net operating income (“NOI”) for the 71-day period was $5.0 million, in-line with the Adjusted Forecast. The REIT’s properties generated Cash NOI of $4.5 million for the 71-day period, in-line with the Adjusted Forecast.
FFO of $3.6 million, or $0.199 per Unit, and AFFO of $3.1 million, or $0.171 per Unit, for the 71-day period, were both also in-line with the Adjusted Forecast.
Cash Distributions
The REIT is currently paying monthly cash distributions of $0.067 per Unit, representing $0.80 per Unit on an annualized basis. The REIT declared and distributed a total of $2.8 million to holders of Units during the 71-day period, or $0.16 per Unit, representing an AFFO payout ratio of 91.3%. The REIT estimates that approximately 100% of monthly cash distributions to holders of Units will be tax-deferred in 2015.
Fair Value of Investment Properties
As part of the IPO, the Initial Properties were externally valued by an independent, nationally-recognized appraiser. At that time, the overall implied capitalization rate was 6.6%. As at September 30, 2015, the same independent appraiser undertook a valuation of the Initial Properties using an income approach whereby a current capitalization rate is applied to the net operating income which a property can reasonably be expected to produce over its remaining economic life. As at September 30, 2015, the overall implied capitalization rate is 6.5%, reflecting an increase of 20 basis points in the capitalization rates for Calgary (17% of Cash NOI) and a 10 basis point decrease in Toronto and Vancouver (69% of Cash NOI).
Liquidity and Capital Structure
As at September 30, 2015, the REIT had cash and cash equivalents of $7.5 million and access to $22.5 million in undrawn credit facilities. The REIT had $193.1 million outstanding on its credit facilities with an effective weighted average interest rate of 3.15% and an effective term of 6.1 years. The REIT’s debt to gross book value2 as at September 30, 2015 was 52.4%.
Units Outstanding
As at November 9, 2015, there were 8,120,000 REIT units and 9,933,253 Class B limited partnership units outstanding.
Conference Call
Senior management of the REIT will host a conference call for analysts and investors on Tuesday, November 10, 2015 at 10:00 a.m. (ET). The dial-in numbers for the conference call are (647) 427-7450 or (888) 231-8191. A live and archived webcast of the call will be accessible via the REIT’s website.
To access a replay of the conference call dial (416) 849-0833 or (855) 859-2056, passcode: 68006701. The replay will be available until November 17, 2015.
|
________________________________ |
About Automotive Properties REIT
Automotive Properties REIT is an unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT’s portfolio of 26 income producing commercial properties represents approximately 958,000 square feet of gross leasable area in Ontario, Saskatchewan, Alberta and British Columbia. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties. For more information, please visit: www.automotivepropertiesreit.ca.
Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT’s current expectations regarding future events and in some cases can be identified by such terms as “will” and “expected”. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risks and Uncertainties” in the REIT’s management’s discussion and analysis most recently filed on SEDAR (www.sedar.com). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Non-IFRS Financial Measures
This news release contains certain financial measures which are not defined under IFRS and may not be comparable to similar measures presented by other real estate investment trusts or enterprises. Funds from operations (“FFO”), adjusted funds from operations (“AFFO”), AFFO payout ratio, net operating income (“NOI”) and cash net operating income (“Cash NOI”), are key measures of performance used by real estate businesses. Debt to gross book value is a measure of financial position defined by REIT’s declaration of trust. These measures, as well as any associated “per Unit” amounts, are not defined by IFRS and do not have standardized meanings prescribed by IFRS, and therefore should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. The REIT believes that AFFO is an important measure of economic performance and is indicative of the REIT’s ability to pay distributions, while FFO, NOI and Cash NOI are important measures of operating performance of real estate businesses and properties. The IFRS measurement most directly comparable to FFO, AFFO, NOI and Cash NOI is net income. See the MD&A for further discussion of these non-IFRS financial measures and for a reconciliation of NOI, FFO, AFFO and Cash NOI to net income and comprehensive income and of AFFO to cash flow from operating activities.
SOURCE Automotive Properties Real Estate Investment Trust
