- CT REIT announces five new investments totalling $24 million
- 5.5% increase in AFFO per unit
TORONTO, Aug. 2, 2016 /CNW/ – CT Real Estate Investment Trust (“CT REIT”) (TSX: CRT.UN) today reported its consolidated financial results for the second quarter ended June 30, 2016.
“In the second quarter, we closed on properties adding 1.1 million square feet of GLA to our income producing properties and raised $350 million of public unsecured debt at record low interest rates,” said Ken Silver, President and Chief Executive Officer, CT REIT. “We continue to execute on our growth strategy and delivered growth in AFFO per unit of 5.5% year over year.”
New Investment Activity
Today, CT REIT announces five additional investments, including two developments and three property intensifications. All of these investments are properties that include a Canadian Tire store and will require an estimated total investment of $24 million. The investments are, in the aggregate, expected to earn a weighted average 6.76% cap rate when completed and represent approximately 133,000 square feet of incremental GLA. CT REIT is funding these investments with Class B LP Units, Class C LP Units, cash, and/or draws on its credit facility or any combination thereof. The table below summarizes the new investments and anticipated completion dates:
|
Property |
Type |
GLA (sf.) |
Timing |
Activity
|
|
Elmira, ON |
Development |
35,000 |
Q2 2017 |
Development of a new |
|
Edmundston, NB
|
Intensification |
3,000 |
Q2 2017 |
Expansion of existing |
|
Athabasca, AB
|
Intensification |
7,000 |
Q2 2017 |
Expansion of existing |
|
Bradford, ON |
Intensification |
15,000 |
Q3 2017 |
Expansion of existing |
|
Amos, QC |
Development |
73,000 |
Q1 2018 |
Canadian Tire anchored |
Update on Previously Announced Investments
In the second quarter, CT REIT completed the acquisition of an enclosed mall anchored by a Canadian Tire store in Winkler, MB, the vend-in of an existing Canadian Tire store in Edson, AB, the development of a Canadian Tire store in Innisfil, ON, and the intensification (expansion) of a Canadian Tire store in Sherwood Park, AB.
The table below provides activity updates on the previously announced investments which were completed subsequent to CT REIT’s last update.
|
Property |
Type |
GLA (sf.) |
Timing |
Activity
|
|
Southland Mall, |
Acquisition |
181,567 |
Completed in Q2 |
Acquisition of |
|
Edson, AB |
Vend-in |
39,481 |
Completed in Q2 |
Vend-in of |
|
Innisfil, ON |
Development |
48,618 |
Completed in Q2 |
Development of a |
|
Sherwood Park, |
Intensification |
4,075 |
Completed in Q2 |
Expansion of an |
Update on Previously Announced Development Activity
The following table provides updates on CT REIT’s previously announced development activity. In the second quarter of 2016, 17 investment properties were under development representing a total GLA of 1.9 million square feet and a total investment of $397.7 million once complete. Commitments are in place and construction commenced on 1.8 million square feet, and a total of $315.0 million has been expended to date with a balance of $76.1 million required to complete this space.
|
Property |
Type |
GLA (sf.) |
Timing |
|
La Sarre, QC |
Intensification |
4,000 |
To be completed in Q3 2016 |
|
Martensville, SK |
Development |
19,000 |
Committed to lease 11,000 |
|
Bolton, ON |
Vend-in/Development |
1,400,000 |
Vend-in of the development
Construction to be completed in |
|
Antigonish Mall, |
Acquisition/Development |
179,000 |
Enclosed mall acquisition
Redevelopment of enclosed mall |
Financial and Operational Summary
|
Summary of Selected Quarterly Information |
|||||||||||
|
(in thousands of Canadian dollars, except per Unit, Unit |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||
|
For the periods ended June 30, |
2016 |
2015 |
Change |
2016 |
2015 |
Change |
|||||
|
Property revenue |
$ |
101,507 |
$ |
93,217 |
8.9 % |
$ |
200,003 |
$ |
185,665 |
7.7 % |
|
|
Net operating income 1 |
$ |
71,471 |
$ |
65,258 |
9.5 % |
$ |
140,602 |
$ |
129,742 |
8.4 % |
|
|
Net income |
$ |
60,347 |
$ |
57,205 |
5.5 % |
$ |
121,500 |
$ |
112,771 |
7.7 % |
|
|
Net income/Unit (basic) 2 |
$ |
0.306 |
$ |
0.306 |
â% |
$ |
0.626 |
$ |
0.608 |
3.0 % |
|
|
Net income/Unit (diluted) 4 |
$ |
0.256 |
$ |
0.233 |
9.9 % |
$ |
0.519 |
$ |
0.464 |
11.9 % |
|
|
Funds from operations1 |
$ |
52,000 |
$ |
47,867 |
8.6 % |
$ |
101,626 |
$ |
95,315 |
6.6 % |
|
|
Funds from operations/Unit (diluted, non-GAAP) 1,2,3 |
$ |
0.263 |
$ |
0.256 |
2.7 % |
$ |
0.524 |
$ |
0.514 |
1.9 % |
|
|
Adjusted funds from operations 1 |
$ |
41,517 |
$ |
37,241 |
11.5 % |
$ |
80,899 |
$ |
74,117 |
9.2 % |
|
|
Adjusted funds from operations/Unit (diluted, non-GAAP)1,2,3 |
$ |
0.210 |
$ |
0.199 |
5.5 % |
$ |
0.417 |
$ |
0.400 |
4.3 % |
|
|
Distributions/Unit – paid 2, 6 |
$ |
0.170 |
$ |
0.166 |
2.6 % |
$ |
0.340 |
$ |
0.332 |
2.6 % |
|
|
AFFO payout ratio1 |
81 % |
83 % |
(2.4)% |
82 % |
83 % |
(1.2)% |
|||||
|
Weighted average number of Units outstanding 2 |
|||||||||||
|
Basic |
197,295,136 |
186,826,727 |
5.6 % |
193,998,520 |
185,426,795 |
4.6 % |
|||||
|
Diluted 4 |
308,094,139 |
334,434,146 |
(7.9)% |
306,611,027 |
335,491,246 |
(8.6)% |
|||||
|
Diluted (non-GAAP) 1,3 |
197,418,458 |
186,907,810 |
5.6 % |
194,109,074 |
185,498,850 |
4.6 % |
|||||
|
Indebtedness ratio 1 |
46.9 % |
48.3 % |
(2.9)% |
||||||||
|
Interest coverage (times) 1 |
3.29 |
3.23 |
1.9 % |
3.24 |
3.21 |
0.9 % |
|||||
|
Debt / enterprise value ratio 1 |
42.8 % |
47.5 % |
(9.9)% |
||||||||
|
Gross leaseable area 5 |
22,864,841 |
21,266,437 |
7.5 % |
||||||||
|
Occupancy rate 5 |
99.7 % |
99.9 % |
(0.2)% |
||||||||
|
1 Non-GAAP key performance indicators. Refer to section 9.0 of the MD&A for further information. |
|||||||||||
|
2 Total Units consists of REIT Units and Class B LP Units outstanding. |
|||||||||||
|
3 Diluted Units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all of the |
|||||||||||
|
4 Diluted Units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP |
|||||||||||
|
5 Refers to retail, mixed-use and distribution properties and excludes properties under development. |
|||||||||||
|
6 Period-over-period percentage change is calculated based on exact fractional amounts rather than rounded fractional amounts. |
|||||||||||
Financial Highlights
Net Operating Income (NOI)* â In the second quarter, NOI increased $6.2 million or 9.5% over the same period last year primarily due to acquisitions completed in 2016 and 2015. These acquisitions contributed a total of $4.6 million to NOI growth. Same store NOI and same property NOI increased $1.3 million or 2.0% and $1.7 million or 2.5%, respectively, primarily due to the contractual rent escalations built into the property leases, intensifications completed in 2016 and 2015, the recovery of capital expenditures, and the increase in the recovery of operating expenses.
Net Income â Net income was $60.3 million for the quarter, up 5.5% primarily due to the impact of NOI variances discussed earlier, partially offset by an increase in interest and other financing charges of $1.3 million and a decrease in the fair value adjustment of $1.0 million over the same period last year.
Funds from Operations (FFO)* â FFO for the second quarter was $52.0 million or $0.263 per unit (diluted non-GAAP) as compared to $47.9 million or $0.256 per unit for the second quarter of 2015. This is $4.1 million (8.6%) or $0.007 per unit (2.7%) higher than the same period last year. This is largely due to the impact of NOI variances discussed earlier.
Adjusted Funds from Operations (AFFO)* â In the second quarter, AFFO increased $4.3 million or 11.5% to $41.5 million. AFFO per unit increased to $0.210 per unit (diluted non-GAAP), 5.5% or $0.011 per unit over the same period last year. This is largely due to the impact of NOI variances discussed earlier.
Distributions â Distributions per unit in the quarter amounted to $0.170, 2.6% higher than the same period in 2015 due to the increase in the annual rate of distributions effective with the first distribution paid in 2016.
*AFFO, FFO and NOI are non-GAAP measures. Refer to Non-GAAP section in the Q2 2016 Management’s Discussion & Analysis which is available on SEDAR and at newswire.ca.
Operating Results
Leasing â CTC is CT REIT’s largest tenant. At June 30, 2016, CTC represented 94.7% of total GLA and 94.5% of annualized base minimum rent.
Occupancy â At June 30, 2016, CT REIT’s portfolio occupancy rate decreased 0.2% to 99.7% from the prior quarter due to a higher than average vacancy rate in properties acquired during the second quarter of 2016.
Management Discussion and Analysis (MD&A) and Unaudited Consolidated Financial Statements and Notes
Information in this press release is a select summary of results. This press release should be read in conjunction with CT REIT’s MD&A for the period ended June 30, 2016 (“the Q2 MD&A”) and Condensed Consolidated Financial Statements and Notes for the period ended June 30, 2016, which are available on SEDAR at www.sedar.com and at www.ctreit.com.
To view a PDF version of CT REIT’s 2016 second quarter results please see: http://files.newswire.ca/1307/CT_REIT_FS_and_MDA.PDF
ForwardâLooking Statements
This document contains forward-looking information that reflects management’s current expectations related to matters such as future financial performance and operating results of CT REIT. Forward-looking statements are provided for the purposes of providing information about CT REIT’s future outlook and anticipated events or results. Readers are cautioned that such information may not be appropriate for other purposes.
All statements other than statements of historical facts included in this document may constitute forwardâlooking information, including but not limited to, statements concerning the REIT’s ability to complete any of the investments in acquisitions and property intensifications under the heading “New Investment Activity,” the timing and terms of any such investments and the benefits expected to result from such investments and other statements concerning developments, intensifications, results, performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.
By its very nature forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the REIT’s assumptions, estimates, analyses, beliefs and opinions may not be correct and that the REIT’s expectations and plans will not be achieved. Although the forward looking information contained in this press release is based on information, assumptions and beliefs which are reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management’s expectations and plans as set forth in such forward-looking information.
For more information on the risks, uncertainties and assumptions that could cause the REIT’s actual results to differ from current expectations, refer to the “Risk Factors” section of our Annual Information Form for fiscal 2015, and to Section 10 (Enterprise Risk Management) and all subsections thereunder of our 2015 Management’s Discussion and Analysis, as well as the REIT’s other public filings, available at www.sedar.com and at www.ctreit.com.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.
Information contained in or otherwise accessible through the websites referenced in this press release (other than CT REIT’s profile on SEDAR at www.sedar.com) does not form part of this press release and is not incorporated by reference into this press release. All references to such websites are inactive textual references and are for information only.
Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available online at www.sedar.com and at www.ctreit.com.
Conference Call
CT REIT will conduct a conference call to discuss information included in this news release and related matters at 11:00 a.m. ET on August 3, 2016. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://ctreit.com/en/investors/financial-reporting, and will be available through replay for 12 months.
About CT Real Estate Investment Trust
CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed end real estate investment trust formed to own income producing commercial properties primarily located in Canada. Its portfolio is comprised of 301 properties totalling over 22.9 million square feet of GLA, consisting primarily of retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT’s most significant tenant. For more information, visit www.ctreit.com.
SOURCE CT Real Estate Investment Trust (CT REIT)
