TORONTO, Aug. 06, 2019 (GLOBE NEWSWIRE) — European Residential Real Estate Investment Trust (âERESâ or the âREITâ) (TSX-V: ERE.UN) announced today its results for the three and six months ended June 30, 2019.
SECOND QUARTER 2019 HIGHLIGHTS
- During the three months ended June 30, 2019, the REIT acquired from CAPREIT two portfolios of properties (the âAcquisitionsâ):
- On May 31, ERES acquired a portfolio comprising 26 properties representing 1,257 residential suites and certain other ancillary commercial space and parking facilities located in 24 cities and towns across the Netherlands; and
- On June 30, ERES acquired a second portfolio of 21 properties comprised of 511 residential suites in six urban centres in the Netherlands
- As at June 30, 2019, the value of the REITâs property portfolio increased to â¬881 million, consisting of â¬790 million of multi-residential properties located in the Netherlands and â¬91 million of commercial properties located in Germany and Belgium
- NOI increased by 53% for the six months ended June 30, 2019 compared to last year, primarily due to contribution from the Acquisitions during the quarter, a full quarter of commercial NOI, higher monthly rents, reduced property operating costs driven by lower property management fees and timing of expenses
- High, stable occupancy rate of 97.6% for residential properties and 99.8% for commercial properties as at June 30, 2019
- During the six months ended June 30, 2019, a one-time special distribution of â¬0.33 (C$0.50) was paid on April 24th to REIT Unitholders (excluding CAPREIT) of record as at April 5, 2019, and a quarterly distribution of â¬0.02625 (equivalent to â¬0.105 per Unit annualized) was paid on July 15, 2019 to REIT and Class B LP Unitholders of record as at June 28, 2019
- On July 29, 2019, the REIT filed a preliminary base shelf prospectus in connection with the qualification of up to C$750 million of securities
âDuring the second quarter of 2019, we continued to expand our presence within the European multi-residential sector. Our partnership with CAPREIT has allowed us to take advantage of accretive acquisition opportunities in order to to generate long-term value for our Unitholdersâ commented Phillip Burns, Chief Executive Officer of ERES. âOur target geographic markets, particularly the Netherlands, remain strong and stable, and we are confident that our operating performance will increase as we continue to leverage CAPREITâs proven management platform.â
ADDITION OF NEW RESIDENTIAL PROPERTIES TO ACCELERATE GROWTH
For the three months ended June 30, 2019, property revenues were â¬8.5 million, up from â¬5.2 million in the three months ended June 30, 2018. For the six months ended June 30, 2019, property revenues were â¬14.0 million, up from â¬10.2 million in the six months ended June 30, 2018. The increases are primarily due to the Acquisitions as well as an increase in average monthly rents in the stabilized portfolio. Stabilized net average monthly rents (âAMRâ) for the multi-residential portfolio increased by 3.5% to â¬835 at June 30, 2019 from â¬807 at the same time last year.
Net Operating Income (âNOIâ) was â¬6.7 million for the three months ended June 30, 2019, up from â¬3.6 million for the three months ended June 30, 2018. NOI was â¬10.7 million for the six months ended June 30, 2019, up from â¬7.0 million in the six months ended June 30, 2018. The increases were due primarily to increased revenues coupled with reduced operating expenses. NOI margin strengthened to 78.7% for the three months ended June 30, 2019 from 68.9% in the quarter ended June 30, 2018, and 76.7% for the six months ended June 30, 2019 from 68.7% for the comparative period last year.
Funds from Operations (âFFOâ) for the three and six months ended June 30, 2019 were â¬4.5 million (â¬0.039 per Unit) and â¬7.3 million (â¬0.073 per Unit), respectively, compared to â¬2.5 million (â¬0.031 per Unit) and â¬4.5 million (â¬0.055 per Unit) in the prior year periods. Adjusted Funds from Operations (âAFFOâ) for the three and six months ended June 30, 2019 were â¬4.0 million (â¬0.035 per Unit) and â¬6.5 million (â¬0.066 per Unit), respectively, compared to â¬2.5 million (â¬0.030 per Unit) and â¬4.5 million (â¬0.055 per Unit) in the same prior year periods. The increases were primarily due to higher rental revenue and stabilized NOI in 2019 as well as the Acquisitions. FFO and AFFO are calculated by excluding the effects of certain non-recurring items such as property management company net losses and interest on related party loans incurred in 2018, and general and administrative expenses related to structuring.
STRONG AND CONSERVATIVE FINANCIAL POSITION
As at June 30, 2019, ERESâ leverage (total debt to gross book value) stood at 46.6%, an improvement from 51.9% at June 30, 2018. The weighted average all-in interest rate on total property debt was 1.95%, with a weighted average debt term to maturity of 5.1 years.
âOur Pipeline Agreement with CAPREIT continues to provide us with access to funding to act quickly and efficiently on accretive acquisition opportunities,â added Scott Cryer, Chief Financial Officer. âOur balance sheet continues to strengthen, and we are confident in our ability to exceed our previously published financial forecast.â
SUBSEQUENT EVENT
On July 8, 2019, the REIT entered into a â¬50 million (approximately C$73 million based on an exchange rate of 1.4671 as at July 8, 2019) revolving credit facility (the âNew Revolving Credit Facilityâ) with two Canadian chartered banks. The maturity date of the New Revolving Credit Facility is July 8, 2021, which may be extended by ERES for an additional one year period upon satisfaction of certain conditions. Draws under the New Revolving Credit Facility are permitted in Canadian dollars, Euros or British pounds at a floating interest rate based on CDOR, EURIBOR and LIBOR, respectively, and the New Revolving Credit Facility is fully secured against the assets of ERES and ERES LP (other than certain European intercompany loans).
On July 10, 2019, the REIT drew â¬22.5 million on the New Revolving Credit Facility to pay CAPREIT and certain of its subsidiaries the remaining outstanding consideration in connection with its most recent acquisition of a portfolio of properties located in the Netherlands.
On July 15, 2019, the REIT declared its first monthly distribution in respect of July 2019 of â¬0.00875 per Unit and Class B LP Unit, being equivalent to â¬0.105 per Unit annualized. The distribution is payable to holders of the Units and Class B LP Units of record on July 31, 2019, with payment on August 15, 2019.
On July 29, 2019, the REIT filed a preliminary base shelf prospectus in connection with the qualification of up to C$750 million of securities.
DISTRIBUTIONS
At a Special Meeting of Unitholders held on March 21, 2019, Unitholders approved a Special Distribution of â¬0.33 (C$0.50) per Unit to Unitholders of record on April 5, 2019, which was paid on April 24, 2019. For the second quarter of 2019, the REIT declared a distribution of â¬0.02625 per Unit and Class B LP Unit, being equivalent to â¬0.105 per Unit annualized. The distribution was paid to holders of the Units and Class B LP Units of record on June 28, 2019, which was paid on July 15, 2019. Going forward, the REIT intends to make monthly distributions with a target AFFO payout ratio in the range of 80% to 90%.
CONFERENCE CALL
A conference call hosted by Phillip Burns, Chief Executive Officer, and Scott Cryer, Chief Financial Officer, will be held Wednesday, August 7th, 2019 at 9:30 am EST. The telephone numbers for the conference call are: Local/International: (416) 340-2216, North American Toll Free: (800) 273-9672.
A slide presentation to accompany Managementâs comments during the conference call will be available 30 minutes prior to the conference call. To view the slides, access the ERES REIT website at www.eresreit.com, click on âInvestor Relations,â and follow the link at the top of the page. Please log on at least 15 minutes before the call commences.
The telephone numbers to listen to the call after it is completed (Instant Replay) are local/international (905) 694-9451 or North American toll free (800) 408-3053. The Passcode for the Instant Replay is 1590093#. The Instant Replay will be available until midnight, September 7th, 2019. The call and accompanying slides will also be archived on the ERES REIT website at www.eresreit.com.
FINANCIAL AND OPERATING HIGHLIGHTS
| Three Months Ended | Six Months Ended | ||||||||
| June 30, | June 30, | ||||||||
| 2019(1) | 2018(1) | 2019(1) | 2018(1) | ||||||
| Portfolio Performance | |||||||||
| Residential Properties | |||||||||
| Residential Occupancy(2) | 97.6% | 97.8% | |||||||
| Residential Net AMR(2) | ⬠| 803 | ⬠| 807 | |||||
| Number of residential units(2) | 3,859 | 2,091 | |||||||
| Commercial Properties | |||||||||
| Commercial Occupancy(2) | 99.8% | N/A | |||||||
| Commercial Net ABR(2) | ⬠| 16.7 | N/A | ||||||
| GLA of commercial properties (sqf)(2) | 400,309 | N/A | |||||||
| Operating Revenues (000s) | ⬠| 8,519 | ⬠| 5,181 | ⬠| 13,957 | ⬠| 10,158 | |
| NOI (000s) | ⬠| 6,704 | ⬠| 3,570 | ⬠| 10,703 | ⬠| 6,976 | |
| NOI Margin | 78.7% | 68.9% | 76.7% | 68.7% | |||||
| Financial Performance | |||||||||
| FFO per Unit â Basic(3)(4) | ⬠| 0.039 | ⬠| 0.031 | ⬠| 0.073 | ⬠| 0.055 | |
| AFFO per Unit â Basic(3)(4) | ⬠| 0.035 | ⬠| 0.030 | ⬠| 0.066 | ⬠| 0.055 | |
| Liquidity and Leverage | |||||||||
| Total Debt to Gross Book Value(2)(5) | 46.6% | 51.9% | |||||||
| Weighted Average Mortgage Effective Interest Rate(2)(6) | 1.95% | 2.02% | |||||||
| Weighted Average Mortgage Term (years)(2) | 5.13 | 5.81 | |||||||
| Debt Service Coverage (times)(7) | 3.36 | 3.12 | |||||||
| (1) | Prepared as a continuation of Holding BV, which was not publicly traded prior to March 29, 2019. | ||||||||
| (2) | As at June 30. | ||||||||
| (3) | These measures are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or companies. | ||||||||
| (4) | Includes Class B LP Units. | ||||||||
| (5) | Gross book value is defined as the gross book value of ERES’s assets as per ERES’s financial statements, determined on a fair value basis for investment properties. | ||||||||
| (6) | Includes impact of deferred financing costs and interest rate swaps. | ||||||||
| (7) | Based on trailing four quarters. | ||||||||
| Other | Three Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | ||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||
| Weighted Average Number of Units – Basic(1) (000s) | 115,844 | 81,641 | 99,025 | 81,641 | |||||
| Closing Price of REIT Units(2)(3) | ⬠| 2.92 | N/A | ||||||
| Closing Price of REIT Units (in C$)(2)(3) | $ | 4.35 | N/A | ||||||
| Market Capitalization (millions)(2) | ⬠| 462 | N/A | ||||||
| Market Capitalization (millions in C$)(2)(3) | $ | 688 | N/A | ||||||
| (1) | Includes Class B LP Units. | ||||||||
| (2) | As at June 30. | ||||||||
| (3) | Based on the foreign exchange rate of 1.4887 on June 30, 2019. | ||||||||
ERES REITâs Management Discussion and Analysis and Unaudited Financial Statements can be found at www.eresreit.com or www.sedar.com.
About European Residential Real Estate Investment Trust
ERES is an unincorporated, open-ended real estate investment trust. ERES is Canada’s first European-focused multi-residential REIT, with a focus on investing in high-quality multi-residential real estate properties in Europe. ERES currently owns a portfolio of multi-residential properties located in the Netherlands, two office properties in Germany and one office property in Belgium. ERESâ Units are listed on the TSXV under the symbol ERE.UN. For more information please visit our web site at www.eresreit.com.
For more information please contact:
Phillip Burns
Chief Executive Officer
Email: p.burns@eresreit.com
Scott Cryer
Chief Financial Officer
Email: s.cryer@eresreit.com
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect ERESâs current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as âoutlookâ, âobjectiveâ, âmayâ, âwillâ, âexpectâ, âintentâ, âestimateâ, âanticipateâ, âbelieveâ, âconsiderâ, âshouldâ, âplansâ, âpredictâ, âestimateâ, âforwardâ, âpotentialâ, âcouldâ, âlikelyâ, âapproximatelyâ, âscheduledâ, âforecastâ, âvariationâ or âcontinueâ, or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although ERES REIT believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect. Accordingly, readers should not place undue reliance on forward-looking statements.
Except as specifically required by applicable Canadian securities law, ERES does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing ERESâs views as of any date subsequent to the date of this press release.
Completion of the proposed acquisitions is subject to a number of conditions, including but not limited to, acceptance by TSX Venture Exchange Inc. There can be no assurance that the proposed acquisitions will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in ERESâs management information circular dated April 23, 2019, any information released or received with respect to the proposed acquisitions may not be accurate or complete and should not be relied upon.
ERES uses financial measures regarding itself, such as adjusted funds from operations, that do not have standardized meaning under the International Financial Reporting Standards (âIFRSâ) and may not be comparable to similar measures presented by other entities (ânon-IFRS measuresâ). Further information relating to non-IFRS measures, is set out in ERESâs management information circular dated April 23, 2019 under the heading âNon-IFRS Measuresâ and in ERESâs MD&A under the heading âNon-IFRS Financial Measures.â
Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.