TORONTO, Aug. 11, 2021 (GLOBE NEWSWIRE) — WPT Industrial Real Estate Investment Trust (the “REIT”) (TSX: WIR.U; WIR.UN; OTCQX: WPTIF) announced today its results for the three and six months ended June 30, 2021. All dollar amounts are stated in U.S. funds.
Highlights for the three months ended June 30, 2021:
- FFO per Unit and AFFO per Unit increased 17.5% and 28.8% over the same period last year
- Generated $1.2 million of private capital fee revenue
- Collected 99.8% of billed rent for the quarter
- Same properties NOI increased 3.5%
- Contributed an industrial land parcel in Southern California into a joint venture for net cash proceeds of $15.5 million and acquired a $10.1 million property in Charlotte, North Carolina which the REIT intends to contribute into a joint venture
- Leverage, measured as Debt-to-assets, decreased to 39.1% and 40.4% including the REIT’s proportionate share of joint venture debt
RECENT DEVELOPMENTS
On August 9, 2021, the REIT announced that it entered into an arrangement agreement with Blackstone Real Estate Income Trust, Inc. (“BREIT”), pursuant to which BREIT will acquire all of the outstanding REIT Units (the “Transaction”) through a series of transactions that will result in Unitholders receiving US$22.00 per REIT Unit in an all-cash transaction valued at US$3.1 billion including the assumption of debt. The Transaction is structured as a statutory plan of arrangement under the Business Corporations Act (British Columbia). Completion of the Transaction is subject to customary conditions including approval of at least 66 2/3% of the votes cast by Unitholders at a special meeting of Unitholders, approval of at least a majority of the votes cast by Unitholders, excluding votes held by certain Unitholders who also hold Class B Units at such meeting, and court approval. The Transaction is expected to close in the fourth quarter of 2021. As part of the Transaction, the REIT has agreed that distributions for the months of August 2021, September 2021, October 2021 and the first half of November 2021 will be suspended. If the Transaction has not closed by November 15, 2021, the REIT intends to reinstate the monthly distribution for periods commencing November 16, 2021 and to pay a distribution in respect of November pro rated for the number of days following November 15, 2021 up to the date prior to closing or to the end of the month in the event closing does not occur in November and for subsequent months pro rated for the number of days in the month up to the date prior to closing.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
(all figures in thousands of US dollars, except per Unit amounts, ratios, percentages, number of investment properties, amounts related to remaining lease term and GLA)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 |
2020 | |||||||||||||
| Operating Results: | ||||||||||||||||
| Investment properties revenue | $ | 41,407 | $ | 44,836 | $ | 88,803 | $ | 77,317 | ||||||||
| Management fee revenue | 1,209 | 96 | 9,684 | 369 | ||||||||||||
| NOI (1) | 29,435 | 31,990 | 62,640 | 55,371 | ||||||||||||
| Net income and comprehensive income | 197,398 | 11,827 | 271,705 | 98,195 | ||||||||||||
| Net income and comprehensive income per Unit (basic) (2)(3) | 2.295 | 0.139 | 3.164 | 1.242 | ||||||||||||
| Net income and comprehensive income per Unit (diluted) (2)(4) | 2.235 | 0.136 | 3.080 | 1.212 | ||||||||||||
| FFO (1) | 20,767 | 17,393 | 46,963 | 31,142 | ||||||||||||
| FFO per Unit (diluted) (1)(2)(4) | 0.235 | 0.200 | 0.532 | 0.384 | ||||||||||||
| AFFO (1) (5) | 17,432 | 13,327 | 39,992 | 23,611 | ||||||||||||
| AFFO per Unit (diluted) (1)(2)(4) | 0.197 | 0.153 | 0.453 | 0.291 | ||||||||||||
| Cash flows from operations | 27,826 | 34,009 | 47,535 | 50,398 | ||||||||||||
| Adjusted Cash Flows from Operations (“ACFO”) (1) | 19,865 | 15,398 | 43,507 | 29,416 | ||||||||||||
| Book value per Unit (1) | 17.01 | 12.99 | 17.01 | 12.99 | ||||||||||||
| Distributions: | ||||||||||||||||
| Distributions per Unit (2)(5) | $ | 0.190 | $ | 0.190 | $ | 0.380 | $ | 0.380 | ||||||||
| Distributions declared (3)(5) | 16,535 | 16,305 | 32,989 | 31,392 | ||||||||||||
| ACFO payout ratio (1)(5) | 83.2 | % | 105.9 | % | 75.8 | % | 106.7 | % | ||||||||
| Weighted average number of Units (basic) (2)(3) | 86,001 | 84,978 | 85,887 | 79,060 | ||||||||||||
| Weighted average number of Units (diluted) (2)(4) | 88,326 | 87,078 | 88,204 | 81,017 | ||||||||||||
| As at | June 30, 2021 | December 31, 2020 | |||
| Consolidated properties | Consolidated properties and proportionate share basis (5) | Consolidated properties | Consolidated properties and proportionate share basis (5) | ||
| Operational Information: | |||||
| Number of investment properties | 89 | 103 | 100 | 102 | |
| Number of investment properties under development (PUD) | 1 | 6 | 1 | 5 | |
| GLA | 27,634,235 | 30,269,171 | 32,674,589 | 33,080,567 | |
| Occupancy | 96.7% | 97.0% | 98.2% | 98.2% | |
| Average remaining lease term (years) | 3.9 | 4.1 | 4.4 | 4.4 | |
| Fair value of investment properties | $2,441,251 | $2,698,320 | $2,494,288 | $2,515,291 | |
| Debt Metrics: | |||||
| Weighted average effective interest rate (1) | 3.0% | 2.9% | 2.9% | 2.9% | |
| Weighted average effective interest rate on fixed rate debt (2) | 3.1% | 3.1% | 3.1% | 3.1% | |
| Weighted average effective interest rate on variable rate debt (3) | 1.6% | 1.5% | 1.7% | 1.7% | |
| Variable interest rate debt as percentage of total debt (3) (4) | 2.0% | 10.1% | 13.6% | 13.6% | |
| Debt-to-assets | 39.1% | 40.4% | 47.0% | 47.6% | |
| Interest coverage ratio (6) | 3.7x | 3.8x | 3.2x | 3.2x | |
| Fixed charge coverage ratio (6) | 3.3x | 3.5x | 2.9x | 3.6x | |
| Debt to Adjusted EBITDA (6) | 9.1x | 9.2x | 9.3x | 9.4x | |
(1) Includes mortgages payable, term loans, the unsecured revolving credit facility, derivative instruments, mark-to-market adjustments and financing costs.
(2) Includes mortgages payable, and the hedged portions of term loans.
(3) Variable interest rate debt includes unhedged mortgages payable and unhedged amounts outstanding under the REIT’s credit facility.
(4) Excludes variable rate debt which is effectively fixed using an interest rate swap.
(5) Number of investment properties and properties under development from joint ventures are included at 100%
(6) Interest coverage ratio, fixed charge coverage ratio and debt to Adjusted EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the “Non-IFRS Measures” section of the MD&A.
RENT COLLECTION UPDATE
As of August 11, 2021, the REIT has received over 99% of contractual rents for the second quarter and 99.8% for July 2021 and 97.5% as of August 11, 2021.
FINANCIAL UPDATE
FFO and AFFO for the three months ended June 30, 2021 were up 19.4% and 30.8%, respectively, compared to the same period last year. Growth in FFO and AFFO was positively impacted by increased properties revenue from acquisitions, higher management fee revenues, and increases in base rent.
FFO per Unit and AFFO per Unit for the three months ended June 30, 2021 were up 17.5% and 28.8%, respectively, compared to the same period last year. FFO per Unit and AFFO per Unit was positively impacted by the factors listed above, and partially offset by a 1.4% increase in the weighted average number of Units outstanding.
Same properties NOI increased 3.5% for the three ended June 30, 2021, primarily due to increases in contractual base rent, partially offset by reductions in occupancy in properties held in both periods.
Cash flows from operations for the three months ended June 30, 2021 were down 18.2% compared to the same period last year. ACFO for the three months ended June 30, 2021 was up 29.0% compared to the same period last year. The REIT’s ACFO payout ratio for the three months ended June 30, 2021 was 83.2% compared with 105.9% in the prior period. The ACFO payout ratio in the prior year was directly impacted by an early repayment of secured indebtedness.
OPERATING AND LEASING UPDATE
As at June 30, 2021, the REIT’s occupancy for its Consolidated Properties was 96.7% and 97.0% including the REIT’s proportionate share of investment properties held in joint ventures. As of August 11, 2021, leased occupancy for the REIT’s Consolidated Properties was 98.1%; 98.3% including the REIT’s proportionate share of investment properties held in joint ventures.
Leases commenced in the quarter
The REIT had 178,098 square feet of new and expansion leases and 465,512 square feet of lease renewals commence in the second quarter. Lease renewals commencing in the three months ended June 30, 2021 had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 18.6% and 23.2%, respectively.
Leases commenced in the year
The REIT had 245,742 square feet of new and expansion leases and 1,019,026 square feet of lease renewals commence in the second quarter. Lease renewals commencing in the six months ended June 30, 2021 had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 13.9% and 19.8%, respectively.
Leases signed in the quarter
During the three months ended June 30, 2021, the REIT signed 437,659 square feet of new leases and 385,020 square feet of lease renewals. These renewals had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 22.4% and 26.0%, respectively.
Leases signed in the year
During the six months ended June 30, 2021, the REIT signed 524,690 square feet of new leases and 1,292,373 square feet of lease renewals. These renewals had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 13.5% and 18.5%, respectively. Excluding tenants exercising fixed rate renewal options, the REIT signed 524,690 square feet of new leases and 538,373 square feet of lease renewals. These renewals had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 19.2% and 24.5%, respectively.
Leases signed subsequent to the quarter
Between June 30, 2021 and August 11, 2021, the REIT signed 1,732,023 square feet of lease renewals at a 3.9% and 11.3% weighted average cash re-leasing spread and straight-line re-leasing spread, respectively.
FINANCIAL & LIQUIDITY POSITION
As at June 30, 2021, the REIT had approximately $244.3 million available to be drawn on its credit facility and cash on hand of $26.1 million, for total liquidity of approximately $270.4 million. During the quarter, the REIT paid down its revolving credit facility by $14.0 million. The REIT has no mortgages maturing in 2021, and only one, $23.5 million mortgage, maturing in 2022.
PRIVATE CAPITAL & DEVELOPMENT ACTIVITY
The REIT generated $1.2 million of management fee revenue during the three months ended June 30, 2021, consisting of asset and construction management fees.
RECENT INVESTMENT ACTIVITY
Charlotte, North Carolina
On June 30, 2021, the REIT completed the acquisition of an investment property on a 45.4 acre parcel located near Charlotte, North Carolina for approximately $10 million. The REIT intends to contribute the property into a joint venture with one or more of its third-party capital partners. The property has multiple tenants in place with expirations ranging from December 2021 to May 2022. The joint venture intends to develop approximately 630,000 square feet of modern logistics space on the site.
Carson, California
On June 30, 2021, the REIT contributed an industrial parcel located in Carson, California near the Port of Long Beach into a joint venture for net cash proceeds of approximately $15 million and 51% ownership in the venture. After completing entitlements on the site, the venture anticipates developing approximately 250,000 square feet of distribution space on the site.
About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT acquires, develops, manages and owns distribution and logistics properties located in the United States. WPT Industrial, LP (the REIT’s operating subsidiary) indirectly owns or manages a portfolio of properties across 19 U.S. states consisting of approximately 38.1 million square feet of GLA and 111 properties.
For more information, please contact:
Scott Frederiksen, Chief Executive Officer
WPT Industrial Real Estate Investment Trust
Tel: (612) 800-8501
Forward-Looking Statements
This press release contains “forward-looking information” as defined under applicable Canadian securities law (“forward-looking statements”) which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT, including, but not limited to, statements concerning: (i) the REIT’s intention to contribute the Charlotte, North Carolina property to a joint venture, (ii) the REIT’s expectations regarding equity contributions for its active development projects, (iii) the REIT’s expectations regarding joint venture initiatives in respect of the Charlotte, North Carolina property and the Carson, California industrial parcel, and (v) the REIT’s expectations with respect to the Transaction, including but not limited to the REIT’s expectations regarding timing for closing of the Transaction and the REIT’s expectations regarding distributions on a go forward basis. The words “plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “projects”, “believes” or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include, but are not limited to, the REIT’s ability to complete due diligence and entitlements on private capital development pipeline opportunities, the REIT’s ability to complete development and investment transactions, the REIT’s ability to undertake capital recycling through asset sales, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, future growth opportunities for the REIT and its properties, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, continued positive net absorption and declining vacancy rates in the markets in which the REIT’s properties are located, and the scope and duration of the COVID-19 pandemic and its impact on the REIT; expectations and assumptions concerning receipt of required approvals and the satisfaction of other conditions to the completion of the Transaction; that the arrangement agreement will not be amended or terminated; and that the proposed Transaction will be completed or that it will be completed on the terms and conditions contemplated in the arrangement agreement.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: the failure to obtain necessary approvals or satisfy (or obtain a waiver of) the conditions to closing the Transaction as contained in the arrangement agreement; the occurrence of any event, change or other circumstance that could give rise to the termination of the arrangement agreement; material adverse changes in the business or affairs of the REIT; and either party’s failure to consummate the Transaction when required or on the terms as originally negotiated; as well as to the factors discussed or referenced under “Risk Factors” in the REIT’s most recently filed annual information form and management’s discussion and analysis, each of which are available under the REIT’s profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
The COVID-19 pandemic has cast additional uncertainty on the REIT’s prior expectations, future outlook, anticipated events and projections. There can be no assurance that they will continue to be valid. Given the rapid pace of change with respect to the impact of the COVID-19 pandemic, it is premature to make further assumptions about these matters. The duration, extent and severity of the impact the COVID-19 pandemic, including measures to prevent its spread, will have on the REIT’s business is highly uncertain and impossible to accurately predict at this time.
Certain statements included in this press release may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than to understand management’s current expectations and plans relating to the future, as disclosed in this press release. These forward-looking statements have been approved by management to be made as at the date of this press release. Except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All forward-looking statements in this MD&A are qualified by these cautionary statements.
