TORONTO, Nov. 11, 2020 (GLOBE NEWSWIRE) — WPT Industrial Real Estate Investment Trust (the âREITâ) (TSX: WIR.U; WIR.UN; OTCQX: WPTIF) announced today its results for the three and nine months ended September 30, 2020. All dollar amounts are stated in U.S. funds.
Highlights for the three months ended September 30, 2020:
- Collected 99.6% of billed rent for the quarter, continuing the REITâs record of strong rent collections
- Investment properties revenue and net operating income (âNOIâ)(1) increased 55.5% and 52.2%, respectively, over the same period last year
- Funds from operations (âFFOâ)(1) and adjusted funds from operations (âAFFOâ)(1) increased 48.7% and 43.5%, respectively, over the same period last year
- Occupancy increased to 98.3% from 97.4% in the second quarter
- Weighted average cash and straight-line rent re-leasing spreads of 15.9% and 21.3%, respectively, for lease renewals signed in the quarter
âThe REIT continued its strong operating performance with Q3 representing another quarter of nearly 100% rent collection and positive momentum on the leasing front, including increased occupancy and favorable re-leasing spreads on renewals. We also expanded our proprietary development pipeline and third-party assets under management during the quarter and look forward to building on that momentum and growth in the quarters to come,â commented Scott Frederiksen, Chief Executive Officer.
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 September 30, | Nine months ended September 30, | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Operating Results: | |||||||||||||
| Investment properties revenue | $ | 45,621 | $ | 29,335 | $ | 122,938 | $ | 83,247 | |||||
| Management fee revenue | $ | 916 | $ | 2,237 | $ | 1,285 | $ | 3,086 | |||||
| NOI (1) | $ | 33,151 | $ | 21,788 | $ | 88,575 | $ | 61,093 | |||||
| Net income and comprehensive income | $ | 78,419 | $ | 21,342 | $ | 175,871 | $ | 71,619 | |||||
| Net income and comprehensive income per Unit (basic) (2)(3) | $ | 0.922 | $ | 0.362 | $ | 2.069 | $ | 1.257 | |||||
| Net income and comprehensive income per Unit (diluted) (2)(4) | $ | 0.900 | $ | 0.351 | $ | 2.019 | $ | 1.218 | |||||
| FFO (1) | $ | 22,020 | $ | 14,807 | $ | 53,162 | $ | 37,382 | |||||
| FFO per Unit (diluted) (1)(2)(4) | $ | 0.253 | $ | 0.243 | $ | 0.636 | $ | 0.636 | |||||
| AFFO (1) (5) | $ | 17,192 | $ | 11,980 | $ | 40,803 | $ | 28,437 | |||||
| AFFO per Unit (diluted) (1)(2)(4) | $ | 0.197 | $ | 0.197 | $ | 0.491 | $ | 0.484 | |||||
| Cash flows from operations | $ | 33,227 | $ | 20,246 | $ | 83,625 | $ | 53,278 | |||||
| Adjusted Cash Flows from Operations (âACFOâ) (1) | $ | 20,148 | $ | 12,577 | $ | 49,564 | $ | 33,534 | |||||
| Book value per Unit (1) | $ | 13.72 | $ | 13.09 | $ | 13.72 | $ | 13.09 | |||||
| Distributions: | |||||||||||||
| Distributions per Unit (2)(5) | $ | 0.190 | $ | 0.190 | $ | 0.570 | $ | 0.570 | |||||
| Distributions declared (3)(5) | $ | 16,304 | $ | 11,353 | $ | 47,696 | $ | 33,385 | |||||
| ACFO payout ratio (1)(5) | 80.9 | % | 90.3 | % | 96.2 | % | 99.6 | % | |||||
| Weighted average number of Units (basic) (2)(3) | 84,980 | 59,014 | 81,048 | 56,954 | |||||||||
| Weighted average number of Units (diluted) (2)(4) | 87,076 | 60,875 | 83,051 | 58,789 | |||||||||
| As at | September 30, 2020 | December 31, 2019 | |||||||
| Operational Information: | |||||||||
| Number of investment properties | 99 | 74 | |||||||
| Number of investment properties under development (PUD) | 1 | – | |||||||
| GLA | 31,653,999 | 22,870,482 | |||||||
| Occupancy | 98.3 | % | 99.0 | % | |||||
| Average remaining lease term (years) | 4.5 | 4.9 | |||||||
| Fair value of investment properties | $ | 2,359,318 | $ | 1,573,077 | |||||
| Debt Metrics: | |||||||||
| Weighted average effective interest rate (6) | 3.0 | % | 3.8 | % | |||||
| Variable interest rate debt as percentage of total debt (7) | 12.4 | % | 24.7 | % | |||||
| Debt-to-assets (1) | 47.4 | % | 41.2 | % | |||||
| Interest coverage ratio (1) | 3.0x | 3.1x | |||||||
| Fixed charge coverage ratio (1) | 2.8x | 2.7x | |||||||
| Debt to Adjusted EBITDA (1) | 9.0x | 8.2x | |||||||
| (1) NOI, same properties NOI, FFO, FFO per Unit (diluted), AFFO, AFFO per Unit (diluted), ACFO, Book value per Unit, ACFO payout ratio, cash re-leasing spread, straight-line rent re-leasing spread, debt-to-assets, interest coverage ratio, fixed charge coverage ratio, capitalization rate and debt to Adjusted EBITDA (âAdjusted EBITDAâ is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) are key measures of operating results and financial performance used by real estate operating companies, however, they are not defined by International Financial Reporting Standards (âIFRSâ), do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the âNon-IFRS Measuresâ section of the REITâs MD&A. | |||||||||
| (2) Includes trust units of the REIT (âREIT Unitsâ) and class B partnership units of WPT Industrial, LP (the âPartnershipâ) (âClass B Unitsâ) (collectively, the âUnitsâ). | |||||||||
| (3) Excludes all options, deferred trust units (âDTUsâ), and deferred limited partnership units (âDPUsâ) outstanding under the REITâs deferred compensation plans. | |||||||||
| (4) Includes all options, DTUs, and DPUs outstanding under the REITâs deferred compensation plans. | |||||||||
| (5) Includes distributions on the Units and Subscription Receipts (defined herein). | |||||||||
| (6) Includes mortgages payable, the Credit Facility, mark-to-market adjustments and financing costs. | |||||||||
| (7) Includes amounts outstanding under the Credit Facility. | |||||||||
OPERATING PERFORMANCE
For the three and nine months ended September 30, 2020, investment properties revenue increased $16.3 million or 55.5% and $39.7 million or 47.7%, respectively, compared to the same period last year. The increase was primarily due to the contribution from 2019 and 2020 acquisitions and an increase in base rent in existing properties. Net income and comprehensive income for the nine months ended September 30, 2020 was $175.9 million compared to $71.6 million in the same period last year. Net income and comprehensive income for the three months ended September 30, 2020 was $78.4 million compared to $21.3 million in the same period last year. The increase in net income is mainly due to fair value adjustments to investment properties of $53.6 million and $55.5 million for the three and nine months ended September 30, 2020, respectively, in addition to a non-cash fair value adjustment of $103.3 million in the first quarter related to the exchange of Subscription Receipts for REIT Units.
NOI for the three and nine months ended September 30, 2020 was up 52.2% and 45.0%, respectively, compared to the same period last year. Same properties NOI increased 1.7% and 1.8% for the three and nine months ended September 30, 2020, respectively, primarily due to increases in contractual base rent partially offset by reductions in occupancy in properties held in both periods.
FFO for the three and nine months ended September 30, 2020 was up 48.7% and 42.2%, respectively, compared to the same period last year. AFFO for the three and nine months ended September 30, 2020 was up 43.5% and 43.5%, respectively, compared to the same period last year. Both FFO and AFFO were mainly impacted by increased properties revenue due to acquisitions, increases in base rent, and a reduction in general and administrative expenses compared to the prior period. FFO per Unit for the three months ended September 30, 2020 was up $0.010 per Unit or 4.1% compared to the same period last year. FFO per Unit for the nine months ended September 30, 2020 was flat compared to the same period last year. AFFO per Unit for the three months ended September 30, 2020 was flat compared to the same period last year. AFFO per Unit for the nine months ended September 30, 2020 was up $0.007 per Unit or 1.4%, compared to the same period last year. FFO per Unit and AFFO per Unit were also impacted by a 43.0% and 41.3% increase in the weighted average number of Units outstanding compared to the same three and nine month period last year.
Cash flows from operations and ACFO were up 64.1% and 60.2%, respectively, for the quarter and 56.9% and 47.8%, respectively, year-to-date compared to the same periods last year. The REITâs ACFO payout ratio for the three and nine months ended September 30, 2020 was 80.9% and 96.2%. The ACFO payout ratio for the nine months was directly affected by the timing of equity financings in October 2019 and February 2020 relative to the timing of deployment of such proceeds and early repayment of secured indebtedness. Cash flows from operations and ACFO were higher compared to the same period last year, primarily due to increased NOI from 2019 and 2020 acquisition activity and a decrease in free rent.
LEASING ACTIVITY
The REIT had 260,500 square feet of new leases and 1,427,500 square feet of lease renewals commence in the third quarter. Lease renewals commencing in the quarter had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 12.2% and 20.1%, respectively. Lease renewals signed in the third quarter had a weighted average cash re-leasing spread and straight-line rent re-leasing spread of 15.9% and 21.3%, respectively.
As at September 30, 2020, the REITâs occupancy increased to 98.3%.
FINANCIAL & LIQUIDITY POSITION
As at September 30, 2020, the REITâs debt-to-asset ratio was 47.4% with interest and fixed charge coverage ratios of 3.0 and 2.8 times, respectively, and a debt-to-Adjusted EBITDA ratio of 9.0 times. The weighted average effective interest rate on outstanding debt was 3.0% at September 30, 2020 with a weighted average term to maturity on the REITâs mortgages payable and total debt of 3.6 years and 3.6 years, respectively. Weighted average remaining lease term was 4.5 years.
As at September 30, 2020, the REIT had approximately $156.5 million available to be drawn on the Credit Facility and cash on hand of $19.5 million, for total liquidity of approximately $176.0 million. The REIT has no mortgages maturing in 2020 and only one mortgage loan, with a balance of $6.3 million, maturing in 2021.
The REIT will continue to focus on capital recycling initiatives in the remainder of 2020 and early 2021 in an effort to further strengthen the REITâs balance sheet and create additional flexibility to allocate capital to the REITâs growing development pipeline.
PRIVATE CAPITAL AND DEVELOPMENT ACTIVITY
The REIT generated $0.9 and $1.3 million of management fee revenue during the three and nine months ended September 30, 2020, consisting of recurring management fees.
The REIT has eleven projects representing a total of approximately 4.6 million square feet of modern distribution and logistics real estate in its private capital development pipeline, including new projects in the Phoenix, New York and Los Angeles markets. The REIT expects these eleven projects to include approximately $228 million of total contributed equity, with $195 million funded by third-party partners.
RECENT EVENTS
On July 31, 2020, the REIT acquired a land parcel located in Mansfield, New Jersey through a development joint venture for a purchase price of $39.0 million (exclusive of closing and transaction costs). The REIT is developing approximately 772,000 square feet of modern distribution and logistics space on the site and funding 10% of the required equity for the project, with the remaining 90% of required project equity funded by third-party partners.
On August 28, 2020, the REIT sold the investment property located at 1370 Discovery Industrial Court, Mableton, Georgia to a third-party purchaser for net cash proceeds of approximately $10.0 million. The proceeds from the sale were used to repay indebtedness.
On August 28, 2020, the REIT contributed a land parcel in Eagan, Minnesota into a private capital joint venture for a combination of cash and equity interests in the joint venture. The REIT is developing a distribution building on the property on behalf of the joint venture totaling approximately 206,000 square feet of GLA.
On September 3, 2020, the REIT contributed a land parcel in Houston, Texas into a private capital joint venture for a combination of cash and equity interests in the joint venture. The REIT is developing one or more industrial buildings on the property on behalf of the joint venture totaling approximately 500,000 square feet.
RENT COLLECTION UPDATE
As of November 11, 2020, the REIT has received over 99% of contractual rents for August, September, October and November 2020.
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REITâs management team on Thursday, November 12, 2020 at 10:00 am Eastern Time. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the âInvestorsâ page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10148510#. A recording of the call will also be archived on the REITâs web site at www.wptreit.com.
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 REITâs operating subsidiary) indirectly owns or manages a portfolio of properties across 20 U.S. states consisting of approximately 35.6 million square feet of GLA and 108 properties. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.
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 âforward-looking informationâ as defined under applicable Canadian securities law (âforward-looking statementsâ) which reflect managementâs expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT, including statements concerning (i) expected growth opportunities and the availability of acquisition opportunities from its private capital pipeline, (ii) expectations regarding debt refinancing, capital recycling and associated impacts on the REITâs liquidity position and (iii) the impact on the REIT of the occurrence of and response to the coronavirus disease 2019 (COVID-2019) pandemic. The words âplansâ, âexpectsâ, âscheduledâ, âestimatesâ, âintendsâ, âanticipatesâ, âprojectsâ, âbelievesâ or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results âmayâ, âwillâ, âcouldâ, âwouldâ, âmightâ, âoccurâ, âbe achievedâ or âcontinueâ 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 REITâs ability to complete due diligence and entitlements on private capital development pipeline opportunities, the REITâs ability to complete development and investment transactions, the REITâs ability to undertake capital recycling through asset sales, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, 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 REITâs properties are located, and anticipated and potential adverse impacts resulting from the COVID-19 pandemic.
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 factors discussed or referenced under âRisk Factorsâ in the REITâs most recently filed annual information form and managementâs discussion and analysis, each of which are available under the REITâs 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 REITâs 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 REITâs business is highly uncertain and impossible to accurately predict at this time.