TORONTO, Aug. 13, 2018 /CNW/ – Automotive Properties Real Estate Investment Trust (TSX: APR.UN) (“Automotive Properties REIT” or the “REIT”) today announced its financial results for the three-month (“Q2 2018”) and six-month (“YTD 2018”) periods ended June 30, 2018. The REIT’s unaudited condensed consolidated financial statements and the related Management’s Discussion & Analysis (“MD&A”) for Q2 2018 / YTD 2018 are available on the REIT’s website at www.automotivepropertiesreit.ca and on SEDAR at www.sedar.com.
Q2 2018 Highlights
- Property rental revenue was $11.4 million, an increase of 8.7% from the second quarter of 2017 (“Q2 2017”);
- Net Operating Income1 (“NOI”) was $9.7 million, an increase of 7.5% from Q2 2017;
- Total and Same Property Cash NOI1 were $8.9 million and $7.8 million, respectively, representing increases of 8.7% and 1.4%, respectively, from Q2 2017;
- Net Income was $5.3 million, compared to $5.8 million in Q2 2017;
- Funds from Operations1 (“FFO”) increased 1.7% to $6.6 million, from $6.5 million in Q2 2017. FFO per unit of the REIT (“Unit”) was $0.252 (diluted), up from $0.249 (diluted) in Q2 2017;
- Adjusted Funds from Operations1 (“AFFO”) increased 3.4% to $6.0 million, from $5.8 million in Q2 2017. AFFO per Unit was $0.229 (diluted), up from $0.223 (diluted) in Q2 2017;
- The REIT acquired the Country Hills Volkswagen dealership property in Calgary, Alberta for a purchase price of $18 million;
- The REIT increased one of its largest credit facilities to $151.2 million and extended the term to maturity to June 2023;
- The REIT declared monthly cash distributions of $0.067 per Unit, resulting in total distributions declared and paid of approximately $5.3 million, representing an AFFO payout ratio1 of approximately 87.8%; and
- The REIT’s debt to gross book value (“Debt to GBV”)1 was 49.1% as at June 30, 2018, compared to 48.5% as at December 31, 2017.
“We continue to generate reliable distributions for our unitholders supported by our long-term, triple-net leases and contractual annual rent increases, as well as continued growth from our property acquisition program,” said Milton Lamb, CEO of Automotive Properties REIT. “We remain focused on taking advantage of the dealership consolidation trend and expanding our property portfolio in strategic markets across Canada.”
1 NOI, Cash NOI, Same Property Cash NOI, FFO, AFFO, and Debt to GBV are non-IFRS financial measures. See “Non-IFRS Financial Measures” in this news release. Reference to “Same Property” correspond to properties that the REIT owned in Q2 2017, thus removing the impact of acquisitions.
Financial Results Summary ($000s, except per Unit amounts)
|
Three months ended |
Six months ended |
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|
June 30, |
June 30, |
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|
($000s, except per Unit amounts) |
2018 |
2017 |
Change |
2018 |
2017 |
Change |
|
Rental revenue (1) |
$11,373 |
$10,467 |
8.7% |
$22,679 |
$20,348 |
11.5% |
|
NOI |
9,659 |
8,988 |
7.5% |
19,259 |
17,247 |
11.7% |
|
Cash NOI |
8,906 |
8,195 |
8.7% |
17,752 |
15,754 |
12.7% |
|
Same Property Cash NOI (1) |
7,790 |
7,683 |
1.4% |
15,438 |
15,226 |
1.4% |
|
Net Income(2) |
5,317 |
5,793 |
-8.2% |
19,809 |
6,926 |
186% |
|
FFO |
6,640 |
6,531 |
1.7% |
13,307 |
12,477 |
6.7% |
|
AFFO |
6,048 |
5,849 |
3.4% |
12,115 |
11,204 |
8.1% |
|
Distributions per Unit |
$0.201 |
$0.201 |
– |
$0.402 |
$0.402 |
– |
|
FFO per Unit – basic (3) |
0.253 |
0.250 |
0.003 |
0.508 |
0.494 |
0.014 |
|
FFO per Unit – diluted (4) |
0.252 |
0.249 |
0.003 |
0.506 |
0.493 |
0.013 |
|
AFFO per Unit – basic (3) |
0.231 |
0.224 |
0.007 |
0.463 |
0.443 |
0.020 |
|
AFFO per Unit – diluted (4) |
0.229 |
0.223 |
0.006 |
0.461 |
0.443 |
0.018 |
|
Ratios (%) |
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|
FFO payout ratio |
79.8% |
80.7% |
-0.9% |
79.4% |
81.5% |
-2.1% |
|
AFFO payout ratio |
87.8% |
90.1% |
-2.3% |
87.2% |
90.7% |
-3.5% |
|
Debt to GBV |
49.1% |
46.5% |
2.6% |
49.1% |
46.5% |
2.6% |
|
(1) |
Rental revenue is based on rents from leases entered into with tenants on closing of the applicable acquisitions, all of which are triple-net leases and include recoverable realty taxes and straight-line adjustments. Same Property Cash NOI is based on rental revenue for the same asset base having consistent gross leasable area in both periods. |
|
(2) |
The decrease in net income for Q2 2018 is primarily due to changes in the fair value adjustments for the Class B LP Units limited partnership units of Automotive Properties Limited Partnership (“Class B LP Units”), please refer to financial statements and notes thereto. |
|
(3) |
FFO per Unit and AFFO per Unit â basic is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding Units and Class B LP Units The total weighted average number of Units outstanding (including Class B LP Units) – basic for Q2 2018 was 26,212,622. |
|
(4) |
FFO per Unit and AFFO per Unit â diluted is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding Units, Class B LP Units, deferred units (“DUs”) and income deferred units (“IDUs”) granted to certain independent trustees and management of the REIT. The total weighted average number of Units outstanding (including Class B LP Units, DUs and IDUs) on a fully diluted basis for Q2 2018 was 26,355,338. |
Rental revenue increased 8.7% to $11.4 million in Q2 2018, compared to $10.5 million in Q2 2017. The increase reflects growth from properties acquired subsequent to Q2 2017 and contractual annual rent increases across a significant portion of the portfolio.
Property costs were $1.7 million in Q2 2018, compared to $1.5 million in Q2 2017. The increase is attributable to the properties acquired subsequent to Q2 2017. Property costs as a percentage of revenue were 15.1% in Q2 2018 compared to 14.1% in Q2 2017, primarily due to a timing difference in realty tax payments. These costs are recoverable from the applicable tenants pursuant to the terms of the applicable triple-net leases.
Total and Same Property Cash NOI generated during Q2 2018 totaled $8.9 million and $7.8 million, respectively, representing increases of 8.7% and 1.4%, respectively, compared to Q2 2017. The increase in Cash NOI was attributable to the properties acquired subsequent to Q2 2017 and annual contractual rent increases across a significant portion of the portfolio. Growth in Same Property Cash NOI reflects contractual rent increases.
Net Income was $5.3 million in Q2 2018, compared to $5.8 million in Q2 2017. The decrease was primarily attributable to the change in the fair value adjustments for the Class B LP Units and investment properties, partially offset by the growth in NOI.
FFO in Q2 2018 was $6.6 million, or $0.252 per Unit (diluted), compared to $6.5 million, or $0.249 per Unit diluted, in Q2 2017. The increase was primarily due to the impact of the properties acquired subsequent to Q2 2017.
AFFO in Q2 2018 was $6.0 million, or $0.229 per Unit (diluted), compared to $5.8 million, or $0.223 per Unit diluted, in Q2 2017. The increase was primarily due to the impact of the properties acquired subsequent to Q2 2017.
Adjusted Cash Flow from Operations (“ACFO”) in Q2 2018 was $6.2 million, representing an increase of 8.4% from $5.7 million in Q2 2017. The ACFO payout ratio was 85.0% in the quarter, compared to 91.5% in Q2 2017.
Cash Distributions
The REIT is currently paying monthly cash distributions of $0.067 per Unit, representing $0.804 per Unit on an annualized basis. The REIT declared and paid total distributions of $5.3 million to unitholders in Q2 2018, or $0.201 per Unit, representing an AFFO payout ratio of 87.8%. The lower AFFO payout ratio for Q2 2018 relative to Q2 2017 was primarily attributable to the impact of the properties acquired subsequent to Q2 2017.
Units Outstanding
As at June 30, 2018, there were 16,696,552 REIT Units and 9,933,253 Class B LP Units outstanding.
Conference Call
Management of the REIT will host a conference call for analysts and investors on Tuesday, August 14, 2018 at 10:00 a.m. (ET). The dial-in numbers for the conference call are (416) 764-8609 or (888) 390-0605. A live and archived webcast of the call will be accessible via the REIT’s website www.automotivepropertiesreit.ca.
To access a replay of the conference call, dial (416) 764-8677 or (888) 390-0541, passcode: 546285. The replay will be available August 21, 2018.
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 currently consists of 40 income-producing commercial properties, representing approximately 1.5 million square feet of gross leasable area, and one development property, in metropolitan markets across Ontario, Saskatchewan, Alberta, British Columbia and Québec. 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 includes the REIT’s future acquisition capacity. 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 MD&A for the year ended December 31, 2017 and in the REIT’s current annual information form, both of which are available 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. This forward-looking information speaks only as of the date of this news release.
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. FFO, AFFO, FFO payout ratio, AFFO payout ratio, NOI, Same Property NOI, Cash NOI, and Same Property Cash NOI are key measures of performance used by the REIT’s management and real estate businesses. Debt to GBV is a measure of financial position defined by the 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 earnings performance and is indicative of the REIT’s ability to pay distributions from earnings, while FFO, NOI, Cash NOI and Same Property 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. ACFO is a supplementary measure used by management to improve the understanding of the operating cash flow of the REIT. The IFRS measurement most directly comparable to ACFO is cash flow from operating activities. See the REIT’s Q2 2018 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 ACFO to cash flow from operating activities.
SOURCE Automotive Properties Real Estate Investment Trust
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