CT REIT Reports Strong First Quarter 2018 Results

• Delivers 2.6% growth in AFFO per unit over the same period last year
• CT REIT announces four new investments, totalling $35 million

TORONTO, May 8, 2018 /CNW/ – CT Real Estate Investment Trust (“CT REIT”) (TSX: CRT.UN) today reported its consolidated financial results for the first quarter ended March 31, 2018.

“CT REIT continues to deliver strong, predictable results,” said Ken Silver, President and Chief Executive Officer, CT REIT. “As demonstrated again this quarter, the combination of attractive investment opportunities and a conservative funding strategy provides growth and security for our unitholders.”

New Investment Activity

Today, CT REIT announced four additional investments, which will require an estimated total investment of $35 million. The investments are, in the aggregate, expected to earn a weighted average cap rate of 6.68% when completed and represent approximately 191,000 square feet of incremental gross leasable area (“GLA”). These investments will be funded with the issuance of Class B LP Units and/or Class C LP Units to Canadian Tire Corporation, Limited (“CTC”), cash, and/or draws on its credit facility or any combination thereof. The table below summarizes the new investments and anticipated completion dates:

 

Update on Previously Announced Investments

In the first quarter, CT REIT completed the acquisition of two Canadian Tire anchored properties located in Collingwood and St. Catharines, Ontario and the redevelopment of an existing Canadian Tire Gas+ gas bar in La Sarre, Quebec. In total, CT REIT invested $70.6 million in the first quarter of 2018.

The table below provides activity updates on the previously announced investments.

 

Update on Previously Announced Development Activity

The following table provides updates on CT REIT’s previously announced development activity. The REIT has changed the development plan for Sherwood Park from the previously announced combination of a 93,000 square foot Canadian Tire store and a 20,000 square foot Mark’s store to a 120,000 square foot Canadian Tire store. The timing of development has also been revised. In the first quarter of 2018, 13 investment properties were under development representing a total committed GLA of 747,500 square feet and a total committed investment of $150.8 million once completed. A total of $99.6 million has been expended to date with a balance of $51.2 million required to complete this space.

 

Financial and Operational Summary

Financial Highlights

Net Income – Net income was $72.5 million for the quarter, a decrease over the prior year of 3.7%, primarily due to increased NOI resulting from investment activity offset by a smaller adjustment in the fair market value adjustment on investment properties and an increase in interest expense.

Net Operating Income (NOI)* â€“ In the first quarter, NOI increased $5.2 million or 6.6% over the same period last year, primarily due to investment activity completed in 2018 and 2017. These acquisitions contributed a total of $3.9 million to NOI growth. Same store NOI and same property NOI for the quarter increased $1.2 million or 1.5% and $1.3 million or 1.7%, respectively, primarily due to the contractual rent escalations built into the property leases, adjustment of certain prior period rent charges and recovery of capital expenditures, partially offset by the impact of changes in tenancies at 25 Dufferin Place SE, Calgary, Alberta.

Funds from Operations (FFO)* – FFO for the quarter was $59.3 million, $1.3 million (2.2%) higher than the same period in 2017 due to the impact of NOI variances, partially offset by higher interest expense. FFO per unit amounted to $0.277 (diluted non-GAAP), which was $0.002 or 0.7% lower than the same period in 2017 primarily due to the dilutive impact of the increase in weighted average number of units outstanding-basic, partially offset by the increase in FFO, discussed above.

Adjusted Funds from Operations (AFFO)* – AFFO for the first quarter amounted to $49.9 million or $0.233 per unit (diluted non-GAAP), which was $2.7 million (5.7%) and $0.006 (2.6%), respectively, higher than the same period in 2017 primarily due to the impact of NOI variances, partially offset by higher interest expense and an increase in the normalized capital expenditure reserve.

Adjusted Cash Flow from Operations (ACFO)* – ACFO for the first quarter amounted to $44.9 million, $0.4 million or 0.8% higher than the same period in 2017, due to the impact of NOI variances, partially offset by higher interest expense.

Distributions – Distributions per unit in the quarter amounted to $0.182, 4.0% higher than the same period in 2017 due to the increase in the annual rate of distributions effective with the first distribution paid in 2018.

*NOI, FFO, AFFO and ACFO are non-GAAP measures. Refer to Non-GAAP section 10.0 in the Q1 2018 Management’s Discussion & Analysis, which is available on SEDAR and at newswire.ca.

Operating Results

Leasing – CTC is CT REIT’s most significant tenant. At March 31, 2018, CTC represented 94.5% of total GLA and 92.6% of annualized base minimum rent.

Occupancy – At March 31, 2018, CT REIT’s portfolio occupancy rate was 98.7%.

Management Discussion and Analysis (MD&A) and Condensed 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 March 31, 2018 (the “Q1 MD&A”) and the unaudited condensed consolidated financial statements and notes for the period ended March 31, 2018, which are available on SEDAR at www.sedar.com and at www.ctreit.com.  

To view a PDF version of CT REIT’s first quarter 2018 results, please see: http://files.newswire.ca/1307/CTREITQ1.pdf

Forward–Looking 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 forward–looking 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” and “Update on Previously Announced Development 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 Section 4 “Risk Factors” of our Annual Information Form for fiscal 2017, and to Section 11 “Enterprise Risk Management” and all subsections thereunder of our 2017 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 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 3:00 p.m. ET on May 8, 2018. The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2216 or 1-800-273-9672 or through a webcast at http://www.ctreit.com/content/microsites/ctreit/en/news-events/events-webcasts.html, 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 over 325 properties totaling approximately 26 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)

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