TORONTO and MONTREAL, April 2, 2019 /CNW/ – Nexus Real Estate Investment Trust (the “REIT”) (TSXV: NXR.UN) announced today its results for the fourth quarter and year ended December 31, 2018, the completion of an acquisition and the declaration of the April and May 2019 distributions.
Highlights
- Net income for the year of $38,834,266 was up 150% as compared to 2017 net income of $15,688,792.
- Total assets increased $98,949,167 or 22% as compared to December 31, 2017, primarily as a result of accretive acquisitions completed in the year, and fair value increases of investment properties.
- Normalized AFFO per unit for the quarter of $0.049 increased 2% as compared to Q4 2017 normalized AFFO per unit of $0.048.
- Normalized AFFO payout ratio for the year of 83.3% is down from 83.6% for the year ended December 31, 2017.
- Q4 2018 normalized AFFO per unit of $0.049 increased 1.4% as compared to Q3 2018 normalized AFFO per unit of $0.048.
- Q4 2018 normalized AFFO payout ratio of 81.6% decreased from 82.6% for Q3 2018.
- Conservative debt to total assets ratio of 51.7%.
- Management of the REIT will host a conference call on Wednesday April 3rd at 1PM EST to review results and operations.
“2018 was an exceptional year for the REIT. Accretive acquisitions grew our asset base approximately $91 million, with $35 million of REIT units being issued as purchase consideration at a premium to trading values.” commented Kelly Hanczyk, the REIT’s Chief Executive Officer. “Our core fundamentals continue to be strong with debt to GBV at a conservative 51.7% and an AFFO payout ratio of 83% for the year. Subsequent to year end we announced a highly accretive acquisition that we completed today, which will further add to our AFFO per unit. We hope to build on our success of 2018 in 2019.”
Summary of Results
Included in the tables that follow and elsewhere in this news release are non-IFRS measures that should not be construed as an alternative to net income / loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS and may not be comparable to similar measures as reported by other issuers. Readers are encouraged to refer to the REIT’s MD&A for further discussion of the non-IFRS measures presented.
|
Three months ended |
Year ended |
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|
2018 |
2017 |
2018 |
2017 |
|
|
Financial Results |
$ |
$ |
$ |
$ |
|
Property revenue |
14,221,166 |
13,135,686 |
54,097,493 |
36,999,083 |
|
Net operating income |
9,004,890 |
8,161,266 |
33,765,529 |
25,139,568 |
|
Net income |
23,753,407 |
12,302,915 |
38,834,266 |
15,688,792 |
|
Three months ended |
Year ended |
||||||
|
2018 |
2017 |
2018 |
2017 |
||||
|
$ |
$ |
$ |
$ |
||||
|
Financial highlights |
|||||||
|
Funds from operations (FFO) (1) |
5,574,014 |
5,339,619 |
20,909,100 |
15,961,115 |
|||
|
Normalized FFO (1) (7) |
6,244,514 |
5,339,619 |
22,703,205 |
15,961,115 |
|||
|
Adjusted funds from operations (AFFO) (1) |
4,840,327 |
4,534,756 |
18,318,672 |
14,062,927 |
|||
|
Normalized AFFO (1) (7) |
5,510,827 |
4,534,756 |
20,112,777 |
14,062,927 |
|||
|
Distributions declared (2) |
4,494,971 |
3,768,425 |
16,879,656 |
12,203,008 |
|||
|
Distributions declared on units issued June 30, 2017 on the closing of the bought deal and private placement (4) |
– |
– |
– |
444,556 |
|||
|
Distributions declared on units issued April 30, 2018 on the closing of an acquisition (5) |
– |
– |
128,857 |
– |
|||
|
Normalized distributions declared (4) (5) |
4,494,971 |
3,768,425 |
16,750,799 |
11,758,452 |
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|
Weighted average units outstanding â basic (3) |
112,169,870 |
94,213,235 |
104,620,008 |
72,657,067 |
|||
|
Weighted average units outstanding â diluted (3) |
112,216,160 |
94,277,656 |
104,677,571 |
72,739,276 |
|||
|
Distributions per unit, basic and diluted (2) (3) |
0.040 |
0.040 |
0.161 |
0.168 |
|||
|
Adjusted distributions per unit, basic and diluted (2) (3) (4) (5) |
0.040 |
0.040 |
0.160 |
0.162 |
|||
|
FFO per unit, basic (1) (3) |
0.050 |
0.057 |
0.200 |
0.220 |
|||
|
Normalized FFO per unit, basic (1) (3) (7) |
0.056 |
0.057 |
0.217 |
0.220 |
|||
|
AFFO per unit, basic (1) (3) |
0.043 |
0.048 |
0.175 |
0.194 |
|||
|
Normalized AFFO per unit, basic (1) (3) (7) |
0.049 |
0.048 |
0.192 |
0.194 |
|||
|
Normalized AFFO payout ratio, basic, adjusted (1) (2) (4) (5) (6) (7) |
81.6% |
83.1% |
83.3% |
83.6% |
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|
Debt to total assets ratio |
51.7% |
54.0% |
51.7% |
54.0% |
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|
(1) |
Non-IFRS Measure |
|
(2) |
Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the consolidated financial statements. |
|
(3) |
Weighted average number of units includes the Class B LP Units. |
|
(4) |
33,350,000 REIT units were issued on June 30, 2017 on the closing of an equity financing and private placement. These units were eligible to receive distributions for the month of June. Normalized distributions declared and Normalized AFFO payout ratio, basic, adjusted each exclude distributions declared on these units which were outstanding for only 1 day in the quarter. |
|
(5) |
9,666,667 units were issued on April 30, 2018 on the closing of an acquisition. These units were eligible to receive distributions for the month of April. Normalized distributions declared and Normalized AFFO payout ratio, basic, adjusted each exclude distributions declared on these units for the month of April 2018. |
|
(6) |
Calculated based on normalized distributions declared as presented in the table above. |
|
(7) |
Normalized FFO and Normalized AFFO include a vendor rent obligation amount related to the Richmond Property which is received in cash from the vendor of the Richmond Property until the property build out is complete and all tenants are occupying and paying rent. The vendor rent obligation amount is not included in NOI for IFRS accounting purposes. |
Revenues and Results from Operations
Net operating income for the fourth quarter of $9,004,890 was $843,624 higher than net operating income of $8,161,266 for the same quarter of 2017, and was up $409,848 as compared to net operating income for the third quarter of $8,595,042. 2018 acquisitions contributed approximately $860,000 in incremental net operating in the quarter as compared to the same period of 2017. Partially offsetting the incremental operating income from acquisitions was a reduction in net operating income related to the disposition of two properties in the second quarter of the year.
For the year ended December 31, 2018, net operating income of $33,765,529 was $8,625,961 higher than 2017 net operating income of $25,139,568 primarily due to the Nobel transaction in April 2017 and the Sandalwood transaction in July 2017, combined with incremental net operating income earned from 2018 acquisitions.
General and administrative expense for the quarter of $719,027 was $274,943 lower than general and administrative expense of $993,970 in the same quarter of the prior year primarily due to annual bonus accruals recorded in the fourth quarter of the prior year. General and administrative expense for the year ended December 31, 2018 was consistent with the 2017 expense.
Net income for the fourth quarter included fair value adjustments of investment properties in the amount of $17,533,027 and fair value adjustments of Class B LP Units, warrants and options in aggregate amount of $2,515,146. For the year ended December 2018, fair value adjustments totaled $21,121,998.
Earnings Call
Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Wednesday April 3, 2019 to review the financial results and operations. To participate in the conference call, please dial 416-915-3239 or 1-800-319-4610 (toll free in Canada and the US) at least five minutes prior to the start time and ask to join the Nexus REIT conference call.
A recording of the conference call will be available until May 3, 2019. To access the recording, please dial 604-674-8052 or 1-855-669-9658 (toll free in Canada and the US) and enter access code 2919.
Completion of Acquisition
On April 2, 2019 the REIT completed the previously announced acquisition of four single-tenant industrial properties located in Fort St John, British Columbia; Blackfalds, Alberta; Medicine Hat, Alberta and Estevan, Saskatchewan for a purchase price of $31,000,000 at a 9.3% capitalization rate. In partial satisfaction of the purchase price, $14,763,390 of Class B LP units of a subsidiary limited partnership of the REIT were issued to the vendor at $2.10 per unit.
April and May Distributions
The REIT announced today that it will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 per unit on an annualized basis, payable May 15, 2019 to unitholders of record as of April 30, 2019.
The REIT will also make a cash distribution in the amount of $0.01333 per unit, representing $0.16 per unit on an annualized basis, payable June 14, 2019 to unitholders of record as of May 31, 2019.
The REIT’s current distribution per unit continues to be $0.01333 per month. The REIT’s distribution reinvestment program (“DRIP”) entitles eligible unitholders to elect to receive all, or a portion of the cash distributions of the REIT reinvested in units of the REIT. Eligible unitholders who so elect will receive a bonus distribution of units equal to 4% of each distribution that was reinvested by them under the DRIP.
About Nexus REIT
Nexus is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial, office and retail properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 70 properties comprising approximately 3.8 million square feet of rentable area. The REIT has approximately 99,790,000 units issued and outstanding. Additionally, there are Class B LP units of subsidiary limited partnerships of Nexus REIT issued and outstanding, which are convertible into approximately 12,817,000 REIT units.
Forward Looking Statements
Certain statements contained in this news release constitute forward-looking statements which reflect the REIT’s current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. 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 news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.
While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Nexus Real Estate Investment Trust
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