Edgefront Real Estate Investment Trust (the “REIT”) (TSX VENTURE:ED.UN) results for the three and nine months ended September 30, 2016 and the declaration of November and December distributions:
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- AFFO per unit of $0.054 for the quarter, increase of 3.3% over Q3 2015; year to date Normalized AFFO of $0.161 per unit, increase of 4.2% over nine months ended September 30, 2015.
- AFFO payout ratio of 74.8% for the quarter, down from the AFFO payout ratio of 79.1% in the same quarter of the prior year.
- Conservative debt to total assets ratio of 50.4%.
- Attractive yield of 9.2% based on September 30th closing price of $1.74 per unit and $0.16 annual distributions.
- Industry leading 100% occupancy.
- Completed previously announced $8.4 million acquisition.
- Earnings call scheduled for November 14, 2016 at 1PM Eastern Standard Time.
“Our portfolio continues to deliver solid results without any significant tenant credit risk, driving year over year AFFO per unit growth and a year over year reduction in our AFFO payout ratio, stated Kelly Hanczyk, the REIT’s Chief Executive Officer. “Many of our leases contain annual rental rate increases which will take effect January 1, 2017, and will continue to contribute to AFFO per unit growth”.
Summary of Results
Included in the table that follows 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
|Nine months ended
|FFO (1) (4)||1,965,936||1,574,607||6,057,121||4,091,582|
|AFFO (1) (4)||2,200,108||1,808,064||6,762,393||4,785,503|
|Distributions declared (2) declared (2)||1,645,203||1,429,433||4,854,085||3,750,684|
|Weighted average units outstanding – basic and diluted (3)||40,846,738||34,690,473||40,333,633||30,904,435|
|Distributions per unit (2)||0.040||0.041||0.120||0.121|
|FFO per unit, basic and diluted (1) (4)||0.048||0.045||0.150||0.132|
|AFFO per unit, basic and diluted (1) (4)||0.054||0.052||0.168||0.155|
|AFFO payout ratio, basic (1) (2) (4)||74.8%||79.1%||71.8%||78.4%|
|Debt to total assets ratio||50.4%||50.1%||50.4%||50.1%|
- See Non-IFRS Measures
- Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the consolidated financial statements.
- Weighted average number of units includes the Class B LP Units.
- For the nine months ended September 30, 2016, FFO and AFFO include $256,528 of other income relating to the release in the first quarter of 2016 of funds previously held in an environmental escrow in connection with the acquisition ten industrial properties on January 14, 2014. This is a one-time item which is excluded from normalized FFO and normalized AFFO of $5,800,593 and $6,505,865, respectively for the nine months ended September 30, 2016. Normalized FFO per unit, normalized AFFO per unit and the normalized AFFO payout ratio for the nine months ended September 30, 2016 are $0.144, $0.161, and 74.6%, respectively.
|Three months ended September 30,||Nine months ended September 30,|
|Net operating income||3,191,969||2,570,519||9,480,771||6,974,863|
Revenues and Results from Operations in Line with Expectations
Property revenue increased to $3,882,500 in the quarter as compared to $2,987,548 in the same quarter of 2015. Net operating income grew to $3,191,969 in the quarter as compared to $2,570,519 in same quarter of 2015. The growth in property revenue and net operating income is primarily attributable to the impact of acquisitions completed in the second half of 2015. The acquisition completed on August 22, 2016 contributed approximately $70,000 to property revenue and net operating income in the quarter. Contractual rent increases added $34,000 of operating income in the quarter as compared to the same quarter of 2015.
Balance Sheet and Liquidity
The REIT’s debt to total assets ratio was 50.4% at September 30, 2016, up from 49.2% at June 30, 2016. The increase in debt to total assets was related to borrowings made to complete the acquisition of the Cambridge Ontario property in the quarter. The REIT intends to maintain a debt to total assets ratio of less than 55%.
Kelly Hanczyk, President and Chief Executive Officer of the REIT, and Robert Chiasson, Chief Financial Officer, will host a conference call at 1:00 PM Eastern Standard Time on Monday November 14, 2016 to review the financial results and operations.
To participate in the conference call, please dial 416-340-2218 or 1-866-225-0198 (toll free in Canada and the US) and ask to join the Edgefront REIT conference call.
A recording of the conference call will be available until November 28, 2016. To access the recording, please dial 905-694-9451 or 1-800-408-3053 (toll free in Canada and the US) and enter passcode 6924927.
November and December 2016 Distributions
The REIT will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 on an annualized basis, payable December 15, 2016 to unitholders of record as of November 30, 2016.
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 January 16, 2017 to unitholders of record as of December 30, 2016.
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 the REIT
Edgefront REIT is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 20 properties comprising approximately 1,180,000 square feet of rentable area. The REIT has approximately 35,733,686 units issued and outstanding. Additionally, there are 5,962,565 Class B LP units of subsidiary limited partnerships of the REIT issued and outstanding.
FORWARD LOOKING STATEMENTS
Certain statements contained in this new 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 Edgefront Real Estate Investment Trust