TORONTO, March 10, 2021 (GLOBE NEWSWIRE) — WPT Industrial Real Estate Investment Trust (the âREITâ) (TSX: WIR.U; WIR.UN; OTCQX: WPTIF) announced today its results for the three months and year ended December 31, 2020. All dollar amounts are stated in U.S. funds.
Highlights:
- Collected 99.8% of billed rent for the quarter, continuing the REITâs record of strong rent collections
- FFO/unit increased 17.6% and AFFO/unit increased 25.4% over the same period last year
- Same properties NOI(1) increased 3.1%
- Occupancy of 98.2%
- Generated $1.8 million of private capital fee revenue
- Increased 2021 annual private capital fee guidance to a range of $10 million to $14 million
- Completed six off-market acquisitions during the quarter and following quarter end, including two distribution properties totaling 348,918 square feet in Northern New Jersey and four land sites â two in Southern California and one in Phoenix â expected to be developed into approximately 2.6 million combined square feet of distribution and logistics space
- Published the REITâs inaugural ESG Report
âDespite the many unforeseen challenges experienced globally in 2020, the pandemic provided a remarkable opportunity for the REIT to showcase the depth and experience of our team, and the strength of our portfolio. We delivered record portfolio growth through $746 million of off-market accretive acquisitions, strong rent collections and positive releasing spreads. We also enhanced future growth potential by expanding our private capital funding resources and commenced a record $357 million of development projects during the year. I am thankful for the hard work and dedication of our team and am extremely optimistic about what we can achieve in 2021,â commented Scott Frederiksen, Chief Executive Officer.
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, | |||||||||||||
| 2020 |
2019 | 2020 |
2019 | |||||||||||
| Operating Results: | ||||||||||||||
| Investment properties revenue | $ | 45,384 | $ | 31,882 | $ | 168,322 | $ | 115,129 | ||||||
| Management fee revenue | $ | 1,814 | $ | 501 | $ | 3,099 | $ | 3,587 | ||||||
| NOI (1) | $ | 32,604 | $ | 23,145 | $ | 121,179 | $ | 84,238 | ||||||
| Net income and comprehensive income | $ | 42,768 | $ | 27,327 | $ | 218,639 | $ | 98,946 | ||||||
| Net income and comprehensive income per Unit (basic) (2)(3) | $ | 0.503 | $ | 0.429 | $ | 2.722 | $ | 1.663 | ||||||
| Net income and comprehensive income per Unit (diluted) (2)(4) | $ | 0.491 | $ | 0.417 | $ | 2.599 | $ | 1.614 | ||||||
| FFO (1) | $ | 22,153 | $ | 14,176 | $ | 75,315 | $ | 51,558 | ||||||
| FFO per Unit (diluted) (1)(2)(4) | $ | 0.254 | $ | 0.216 | $ | 0.895 | $ | 0.853 | ||||||
| AFFO (1) (5) | $ | 18,492 | $ | 11,069 | $ | 59,295 | $ | 39,506 | ||||||
| AFFO per Unit (diluted) (1)(2)(4) | $ | 0.212 | $ | 0.169 | $ | 0.705 | $ | 0.654 | ||||||
| Cash flows from operations | $ | 29,608 | $ | 18,308 | $ | 113,233 | $ | 71,586 | ||||||
| Adjusted Cash Flows from Operations (âACFOâ) (1) | $ | 21,623 | $ | 12,943 | $ | 71,187 | $ | 46,477 | ||||||
| Book value per Unit (1) | $ | 14.08 | $ | 13.31 | $ | 14.08 | $ | 13.31 | ||||||
| Distributions: | ||||||||||||||
| Distributions per Unit (2)(5) | $ | 0.190 | $ | 0.190 | $ | 0.760 | $ | 0.760 | ||||||
| Distributions declared (3)(5) | $ | 16,354 | $ | 12,640 | $ | 64,050 | $ | 46,025 | ||||||
| ACFO payout ratio (1)(5) | 75.6 | % | 97.7 | % | 90.0 | % | 99.0 | % | ||||||
| Weighted average number of Units (basic) (2)(3) | 85,009 | 63,650 | 82,044 | 58,642 | ||||||||||
| Weighted average number of Units (diluted) (2)(4) | 87,185 | 65,474 | 84,127 | 60,428 | ||||||||||
| As at | December 31, 2020 |
December 31, 2019 |
||||||
| Operational Information: | ||||||||
| Number of investment properties | 100 | 74 | ||||||
| Number of investment properties under development (PUD) | 1 | – | ||||||
| Number of investment properties held in equity-accounted joint ventures | 2 | 1 | ||||||
| Number of investment properties under development held in equity-accounted joint ventures | 4 | 1 | ||||||
| Other assets under management | 2 | 3 | ||||||
| Total GLA (8) | 37,241,479 | 24,623,410 | ||||||
| Occupancy | 98.2 | % | 99.0 | % | ||||
| Average remaining lease term (years) | 4.4 | 4.9 | ||||||
| Fair value of investment properties | $ | 2,408,849 | $ | 1,573,077 | ||||
| Debt Metrics: | ||||||||
| Weighted average effective interest rate (6) | 2.9 | % | 3.8 | % | ||||
| Variable interest rate debt as percentage of total debt (7) | 13.6 | % | 24.7 | % | ||||
| Debt-to-assets (1) | 47.0 | % | 41.7 | % | ||||
| Interest coverage ratio (1) | 3.2x | 3.1x | ||||||
| Fixed charge coverage ratio (1) | 2.9x | 2.7x | ||||||
| Debt to Adjusted EBITDA (1) | 9.3x | 8.2x | ||||||
| (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-assets, 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 and Subscription Receipts (defined herein). | ||||||||
| (6) Includes mortgages payable, credit facility, mark-to-market adjustments and financing costs. | ||||||||
| (7) Includes amounts outstanding under the REITâs credit facility. | ||||||||
| (8) Includes consolidated investment properties, equity-account joint venture properties, other assets under management, and GLA under development | ||||||||
RENT COLLECTION UPDATE
As of March 10, 2021, the REIT has received over 99% of contractual rents for January, February, and March 2021.
FINANCIAL UPDATE
FFO for the three months and year ended December 31, 2020 was up 56.3% and 46.1%, respectively, compared to the same period last year. AFFO for the three months and year ended December 31, 2020 was up 67.1% and 50.1%, respectively, compared to the same period last year. Both FFO and AFFO were mainly impacted by increased properties revenue due to acquisitions, increases in base rent, and a reduction in general and administrative expenses (excluding fair value adjustments) compared to the prior period. FFO per Unit for the three months and year ended December 31, 2020 was up $0.038 per Unit or 17.6% and $0.042 or 4.9% compared to the same period last year. AFFO per Unit for the three months and year ended December 31, 2020 was up $0.043 per Unit or 25.4% and $0.051 or 7.8% compared to the same period last year. FFO per Unit and AFFO per Unit were also impacted by a 33.2% and 39.2% increase in the weighted average number of Units outstanding for the three months and year ended December 31, 2020, respectively, compared to the same period last year.
Same properties NOI increased 3.1% and 2.1% for the three months and year ended December 31, 2020, respectively, primarily due to increases in contractual base rent partially offset by reductions in occupancy in properties held in both periods.
Cash flows from operations and ACFO were up 61.7% and 67.1%, respectively, for the quarter and 58.2% and 53.2%, respectively, year-to-date compared to the same periods last year. The REITâs ACFO payout ratio for the three months and year ended December 31, 2020 was 75.6% and 90.0%. The ACFO payout ratio for the year was directly affected by the timing of equity financings in October 2019 and February 2020 relative to the timing of deployment of such proceeds and early repayment of secured indebtedness. Cash flows from operations and ACFO were higher compared to the same period last year, primarily due to increased NOI from 2019 and 2020 acquisition activity and a decrease in free rent.
OPERATING AND LEASING UPDATE
As at December 31, 2020, the REITâs occupancy was 98.2%.
The REIT had 18,016 square feet of new leases and 411,515 square feet of lease renewals commence in the fourth quarter. Lease renewals commencing in the quarter had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 5.0% and 6.7%, respectively. The REIT signed 52,005 square feet of new leases and 499,538 square feet of lease renewals in the fourth quarter at a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 1.4% and 13.0%, respectively.
During 2020, the REIT signed a total of 532,509 square feet of new leases and 2,200,253 square feet of lease renewals at a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 8.5% and 16.5%, respectively.
Subsequent to year-end, the REIT signed 40,513 square feet of new leases and 114,120 square feet of lease renewals at a weighted average cash re-leasing spread and straight-line re-leasing spread of 14.7% and 25.8%, respectively.
FINANCIAL & LIQUIDITY POSITION
As at December 31, 2020, the REIT had approximately $158.9 million available to be drawn on the REITâs credit facility and cash on hand of $13.0 million, for total liquidity of approximately $171.9 million. The REIT repaid a mortgage totaling approximately $6.3 million in December. The REIT has no mortgages maturing in 2021 and only one, $24.3 million mortgage, maturing in 2022.
The REIT will continue to focus on capital recycling initiatives throughout 2021 to further strengthen the REITâs balance sheet and create additional flexibility to allocate capital to the REITâs growing development pipeline. As a result of in-process capital recycling transactions, the REIT expects to increase liquidity by approximately $82 million prior to the end of the second quarter.
PRIVATE CAPITAL AND DEVELOPMENT ACTIVITY
The REIT generated $1.8 million and $3.1 million of management fee revenue during the three months and year ended December 31, 2020, consisting of recurring management fees throughout the year as well as a promote fee in the fourth quarter.
The REIT has twelve projects representing a total of approximately 6.3 million square feet of modern distribution and logistics real estate in its development pipeline. The REIT expects these twelve projects to include approximately $310.6 million of total contributed equity, with $253.3 million funded by third-party partners.
RECENT INVESTMENT ACTIVITY
Phoenix
In November and December 2020, the REIT completed to two separate, off-market land parcel acquisitions in Glendale, Arizona (together, the âPhoenix Development Propertiesâ). The Phoenix Development Properties, which were acquired through a private capital development joint venture managed by the REIT, were purchased for a combined price of approximately $34.1 million. The combined site can accommodate approximately 2.2 million square feet of development, which the REIT expects to undertake on behalf of the joint venture in several phases. The first phase will include site work on the full site and development of an approximately 1,150,000 square foot modern distribution building. The REIT expects to fund 10% of the required equity for the project, with the remaining 90% of the required project equity funded by the REITâs third-party partners.
Southern California (Fontana)
On December 29, 2020, the REIT completed the off-market acquisition of a 9.24-acre industrial parcel located in Fontana, California (the âFontana Redevelopment Propertyâ), for total consideration of $14.2 million. The acquisition was structured as an UPREIT transaction, whereby the seller contributed the property to the REITâs operating partnership, WPT Industrial, LP (the âOperating Partnershipâ), in exchange for 785,000 Class B partnership units in the Operating Partnership (representing approximately $11.6 million in consideration) and the assumption of existing mortgage debt secured by the property (representing approximately $2.6 million in consideration), which the REIT subsequently paid off with cash on hand. The REIT intends to develop an approximately 200,000 square foot, modern distribution building on the site, which is expected to remain on the REITâs balance sheet during development. The Fontana Redevelopment Property also has two existing storage leases, which the REIT expects to remain in place through October 2021.
Northern New Jersey
On January 28, 2021, the REIT completed the indirect acquisition of two distribution buildings located at 99 and 105 Avenue A in Bayonne, New Jersey (the âBayonne Propertiesâ). The Bayonne Properties total 348,918 square feet and are 100% leased to two publicly traded tenants with a weighted average remaining lease term of approximately 8.5 years. The Bayonne Properties were originally developed by the REIT through a private capital joint venture, with the REIT owning an initial 10% interest in the joint venture. Through the exercise of the REITâs right of first opportunity to acquire additional joint venture equity interests in the projects, the REIT acquired the remaining 90% equity interest in the Bayonne Properties on an off-market basis for approximately $61.4 million, representing a going-in capitalization rate of approximately 4%. As part of the acquisition, the REIT also assumed a $36.0 million loan.
Including the promote fee earned in connection with the sale of the Bayonne Properties, the REIT has increased annual private capital fee guidance for 2021 to a range of $10 million to $14 million.
Southern California (Carson)
On February 25, 2021, the REIT completed the off-market acquisition of a 14.4-acre infill industrial parcel located in Carson, California (the âCarson Development Propertyâ) near the Port of Long Beach for approximately $30 million. The purchase price of the Carson Development Property was initially satisfied with cash on hand and proceeds from the REITâs credit facility. The REIT is in the process of contributing the Carson Development Property into a private capital development joint venture managed by the REIT, with the REIT retaining a 51% ownership interest in the joint venture and the remaining 49% interest held by one or more of the REITâs third-party partners. The REIT anticipates developing approximately 250,000 square feet of distribution space on the site.
ESG UPDATE
The REIT continues to enhance the integrity and competitiveness of its business through expanded environmental, social and governance (ESG) initiatives. During the fourth quarter, the REIT published its inaugural ESG Report and recently adopted an expanded set of ESG Principles and Policies.
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REITâs management team on Thursday, March 11, 2021 at 10:00 am Eastern Time. 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 10150909#. 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, manages and owns distribution and logistics properties located in the United States. WPT Industrial, LP (the REITâs operating subsidiary) indirectly owns or manages a portfolio of properties across 20 U.S. states consisting of approximately 37.2 million square feet of GLA and 109 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
Forward-Looking Statements
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, but not limited to, statements concerning: (i) expected growth opportunities and the availability of acquisition opportunities from its private capital pipeline, (ii) expectations regarding debt refinancing, capital recycling and associated impacts on the REITâs liquidity position and (iii) the REITâs development plans with respect to the Fontana Redevelopment Property, the Phoenix Development Properties and the Carson Development Property, the REITâs expectations regarding joint venture initiatives in respect of such properties and the REITâs expectations regarding the continuation of the existing storage leases at the Fontana Redevelopment Property. 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 to 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, future growth opportunities for the REIT and its properties, 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, continued positive net absorption and declining vacancy rates in the markets in which the REITâs properties are located, and the scope and duration of the COVID-19 pandemic and its impact on the REIT.
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 and managementâs discussion and analysis, each of which are 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.
The COVID-19 pandemic has cast additional uncertainty on the REITâs prior expectations, future outlook, anticipated events and projections. There can be no assurance that they will continue to be valid. Given the rapid pace of change with respect to the impact of the COVID-19 pandemic, it is premature to make further assumptions about these matters. The duration, extent and severity of the impact the COVID-19 pandemic, including measures to prevent its spread, will have on the REITâs business is highly uncertain and impossible to accurately predict at this time.
Certain statements included in this press release, including the increase to REITâs annual private capital fee guidance for 2021, may be considered a âfinancial outlookâ for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than to understand managementâs current expectations and plans relating to the future, as disclosed in this press release. These forward-looking statements have been approved by management to be made as at the date of this press release. 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. All forward-looking statements in this MD&A are qualified by these cautionary statements.