NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
TORONTO -- (Business Wire)
AGELLAN COMMERCIAL REAL ESTATE INVESTMENT TRUST (the “REIT”)
(TSX:ACR.UN) is pleased to report its financial results for the
three month period ended March 31, 2015. All dollar amounts (except per
Unit amounts) are in thousands of Canadian dollars (“CAD”), unless
otherwise stated.
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FINANCIAL AND OPERATIONAL HIGHLIGHTS |
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| March 31, 2015 |
| December 31, 2014 |
(all dollar amounts in 000s, except per Unit amounts)
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Summary of Operational Information | | | | | | | | |
Number of Properties
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32
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27
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Gross Leasable Area ("GLA") (in 000's)
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4,613
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4,349
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Occupancy % (at period end)
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93.7%
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92.6%
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Average lease term to maturity (years)
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3.8
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3.9
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Summary of Financial Information | | | | | | | | |
Gross Book Value(1) | | | | | |
$634,229
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$597,461
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Debt (face value)
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$335,056
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$316,546
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Debt to Gross Book Value(1) | | | | | |
53%
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53%
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Interest Coverage(1) | | | | | |
3.9x
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3.3x
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Weighted average annual interest rate
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4.0%
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3.9%
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| | | | For the three month period ended |
| | | | March 31, 2015 | | March 31, 2014 | | Variance |
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Total property and property related revenue
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$20,663
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$18,868
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$1,795
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Adjusted net operating income(1)(2) | | | |
$12,091
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$10,995
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$1,096
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Funds from operations ("FFO")(1) | | | |
$7,283
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$6,894
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$389
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Adjusted funds from operations ("AFFO")(1) | | | |
$5,565
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$5,014
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$551
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Basic and Diluted FFO per Unit(1) | | | |
$0.31
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$0.30
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$0.01
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Basic and Diluted AFFO per Unit(1) | | | |
$0.24
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$0.22
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$0.02
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Distributions per Unit
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$0.194
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$0.194
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$0.00
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Payout Ratio(1) | | | |
82%
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Units outstanding at period-end:
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23,537,359
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Weighted average Units outstanding
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23,521,585
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(1) This is a non-IFRS measure. Please see “Non-IFRS
supplemental measures” below.
(2) Adjusted for the
application of IFRIC 21. Please refer to the REIT’s Management’s
Discussion and Analysis for the three month period ended March 31, 2015
for discussion of IFRIC 21.
Summary of Significant Events:
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For the three month period ended March 31, 2015, the REIT achieved FFO
per Unit of $0.310 and AFFO per Unit of $0.237. For the three month
period ended March 31, 2014, the REIT reported FFO and AFFO per Unit
of $0.296 and $0.215, respectively. The increases in FFO and AFFO
represent FFO and AFFO growth of 5.6% and 10.4%, respectively.
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The REIT’s payout ratio for the three month period ended March 31,
2015 decreased to 82% from the payout ratio of 90% for the three month
period ended March 31, 2014.
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During the three month period ended March 31, 2015, the REIT’s Board
of Trustees approved a new U.S.-focused investment strategy that was
recommended by the REIT’s external asset manager pursuant to which the
REIT intends to seek to dispose of all or substantially all of its
existing Canadian real estate assets and reinvest the related proceeds
of disposition in real estate assets in the United States. The REIT
believes that acquiring additional assets located in the United States
will be in the best interest of the REIT and its Unitholders as
valuations, financing and operating fundamentals in the United States
are currently more attractive than in Canada. The disposition of all
or substantially of the REITs existing Canadian real estate assets
would increase the taxable portion of the REIT’s distribution to its
Unitholders in the year of disposition.
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The REIT has experienced strong NOI, FFO and AFFO growth during the
first quarter of 2015 primarily as a result of occupancy gains from
the REIT’s U.S. assets, and strength in the U.S. economy displayed
through the increased value in the United States Dollar (“USD” or
“US$”) compared to the CAD.
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As at January 1, 2015, the occupancy rate of the REIT’s U.S. assets
was 93.4%, and increased during the first quarter of 2015. As at April
1, 2015, the comparable occupancy rate of the REIT’s U.S. assets was
94.0%, excluding the Oakbrook Technology Center (as defined below),
which was acquired on February 9, 2015.
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The aforementioned occupancy gains and strength in the USD compared to
the CAD were positively reflected in the REIT’s Same Store Adjusted
NOI, which grew $977, or 9.5%, quarter over quarter, including the
impact of foreign exchange.
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On February 2, 2015, the REIT completed the lease renewal of 103,645
square feet of the expiring 117,437 square feet in Austin, Texas to
Life Technologies Corporation, a wholly-owned subsidiary of Thermo
Fisher Scientific Inc., for a term of 5 years ending June 2020. The
lease includes an increase in net rent per square foot of
approximately 27% versus the tenant’s in-place net rent per square
foot. As well, the lease renewal represented approximately 33% of all
of the REIT’s Texas lease expiries during 2015.
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On February 5, 2015, consistent with the REIT’s strategy of disposing
all or substantially all of its existing Canadian real estate assets,
the REIT completed the sale of 20 Valleywood Drive in Markham, Ontario
to a third party purchaser for approximately $8.2 million before
closing costs, which represented an in-place capitalization rate of
approximately 5.9%.
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On February 9, 2015, the REIT completed the acquisition of 6
industrial properties (the “Oakbrook Technology Center”) located in
Atlanta, Georgia for an aggregate purchase price of approximately
US$12.9 million before closing costs. The purchase price represented a
going-in capitalization rate of approximately 8.4%. The Oakbrook
Technology Centre consists of approximately 299,000 square feet in a
park-like setting, and is 95% occupied with 28 tenants.
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On March 2, 2015, the REIT obtained US$10 million of additional debt
financing on three office properties located in Houston, Texas. The
interest rate on this additional debt was effectively fixed by the
REIT by entering into an interest rate swap agreement, at a weighted
average interest rate of approximately 3.5% per annum. These funds
were used to temporarily reduce the amount drawn from the REIT’s
credit facility.
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On March 6, 2015, the REIT announced that Anthony Messina was
appointed by the Board of Trustees of the REIT to serve as a new
independent trustee of the REIT. In addition, the REIT announced that
Richard Dansereau, an independent trustee of the REIT and former
Interim Chair of the Board of Trustees of the REIT, was appointed as
Chair of the Board of Trustees of the REIT.
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On April 21, 2015, the REIT disposed of a 70,000 square foot
single-tenant industrial building located at 8271 Anderson Court in
Odenton, Maryland. The sale price for this non-core asset of the REIT
was approximately US$11.3 million before closing costs, which
represented an in-place capitalization rate of approximately 6.5%. A
US$3.7 million mortgage of the REIT that was previously secured by the
property is now secured by cash until a replacement property is
acquired by the REIT and secured under the mortgage.
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Subsequent to March 31, 2015, the occupancy rate of the REIT’s
Consumers Road complex decreased by 7% due to the impact of IBM
Canada’s early renewal that was completed during the second quarter of
2013. IBM Canada’s renewal premises comprises both office and data
centre space, as well as approximately 20,000 square feet of enclosed
space outside the building’s BOMA GLA that is used to support IBM’s
data centre space. The lease renewal consisted of IBM renewing
approximately 102,000 square feet (which commenced on April 1, 2015)
compared to approximately 168,000 square feet that was previously
occupied. IBM’s lease term, however, was extended for an additional 10
years until March 31, 2025, and reflected an increase in the net rent
per square foot paid by IBM. The reduction in occupancy was partially
offset by approximately 10,000 square feet of new leasing that was
completed at the Consumers Road complex within the three month period
ended March 31, 2015. The result of this renewal and new leasing
represents a decrease of approximately $0.0125 of AFFO per Unit per
quarter assuming no other changes at the Consumers Road Complex.
“As evidenced by the leasing activity that our portfolio experienced
during the first quarter of 2015, the U.S. commercial real estate market
has continued to gain momentum,” said Frank Camenzuli, Chief Executive
Officer of the REIT. “We continue to be strong believers in the U.S.
commercial real estate market and intend to invest in specific areas
where we can maximize the growth potential of the assets.”
The REIT will hold a conference call to discuss the REIT’s financial
performance for the period ended March 31, 2015 on Tuesday, May 5, 2015
at 4:00 p.m. EST. To access the call, please dial 1-416-695-7806 or
1-866-696-5910 and enter the participant pass code: 2232295. For
operator assistance during the call, please press *0. A replay of the
conference call will be available from 5:00 p.m. EST on May 5, 2015
until midnight EST, May 19, 2015. To access the replay, call
1-905-694-9451 or 1-800-408-3053 and enter participant pass code:
2288555.
Other information:
Information appearing in this news release is a select summary of
results. The REIT’s consolidated financial statements along with
management’s discussion and analysis for the three month period ended
March 31, 2015 (“MD&A”) are available electronically on the REIT’s
website at www.agellanreit.com
and under the REIT’s issuer profile at www.sedar.com.
The REIT 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 has been created for the purpose of
acquiring and owning industrial, office and retail properties in select
major urban markets in the United States and Canada.
The REIT's current portfolio comprises approximately 4.5 million square
feet of gross leasable area in 31 properties. The properties are
primarily located in major urban markets in the United States and Canada.
Non-IFRS supplemental measures:
Certain terms used in this news release are not recognized under
International Financial Reporting Standards (“IFRS”) and therefore these
terms should not be construed as alternatives to IFRS measures, such as
net income or cash flow from operating activities, nor are these terms
necessarily comparable to similar measures presented by other reporting
issuers. These terms are used by management to measure, compare and
explain the operating results and financial performance of the REIT.
Management believes that these terms are relevant measures in comparing
the REIT’s performance to industry data and the REIT’s ability to earn
and distribute cash to holders of the REIT’s units. These non-IFRS
measures, including FFO, AFFO, Payout Ratio, Gross Book Value, Adjusted
net operating income, and related per Unit amounts are defined and FFO
and AFFO are reconciled to net income in the REIT’s MD&A, which should
be read in conjunction with this news release.
Forward-looking information:
This press release contains forward-looking information within the
meaning of applicable securities legislation.Forward-looking
information can be identified by words or expressions including, but not
limited to, “plans”, “expects”, “scheduled”, “estimates”, “intends”,
“anticipates”, “predicts”, ”projects”, “believes”, or variations of such
words and phrases or statements to the effect that certain actions,
events or results “may”, “will”, “could”, “would”, “should”, “might”,
“occur”, “be achieved” or “continue” or similar expressions.
Forward-looking information is necessarily based on a number of
estimates and assumptions that are inherently subject to significant
business, economic and competitive risks, uncertainties and
contingencies, many of which are beyond the REIT’s control, which could
cause actual results to differ materially from those that are disclosed
in or implied by such forward-looking information. These risks and
uncertainties include, but are not limited to: the REIT’s future growth
potential; results of operations; future prospects for additional
investment opportunities in Canada and the U.S., including access to
debt and equity capital at acceptable costs and the ability to obtain
necessary approvals and to minimize any unexpected costs or liabilities,
environmental or otherwise, relating to any acquisitions or
dispositions; demographic and industry trends remaining unchanged,
including occupancy levels, lease renewals, rental increases and
retailer competition; future levels of the REIT’s indebtedness remaining
at acceptable levels, including its credit rating; tax laws as currently
in effect remaining unchanged, including applicable SIFT rules; and
current economic conditions remaining unchanged, including interest
rates and applicable foreign exchange rates. Readers, therefore, should
not place undue reliance on any such forward-looking statements. All
forward-looking information in this press release speaks only as of the
date of this press release. The REIT does not undertake to update any
such forward-looking information whether as a result of new information,
future events or otherwise, except as required by applicable securities
laws. All forward-looking statements in this press release are qualified
by these cautionary statements. Additional information about these
assumptions and risks and uncertainties is contained in the REIT’s
filings with securities regulators, including its latest annual
information form and MD&A.
Contacts:
Agellan Commercial Real Estate Investment Trust
Derek Dermott,
(416) 593-6800, ext. 269
President
ddermott@agellancapital.com
or
Frank
Camenzuli, (416) 593-6800, ext. 226
Chief Executive Officer
fcamenzuli@agellancapital.com
Source: Agellan Commercial Real Estate Investment Trust
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