Mr. Milton Lamb reports

AUTOMOTIVE PROPERTIES REIT REPORTS 2023 FOURTH QUARTER AND YEAR-END RESULTS

Automotive Properties Real Estate Investment Trust has released its financial results for the fourth quarter (Q4 2023) and year ended Dec. 31, 2023.

"We continued to generate strong financial performance with growth in rental revenue, cash NOI, same-property cash NOI and AFFO per unit for both the fourth quarter and full year," said Milton Lamb, chief executive officer of Automotive Properties REIT. "Given the combination of fixed and CPI-linked annual rent increases built into our triple-net leases, our property portfolio is well positioned to continue generating solid returns for unitholders."

Q4 2023 highlights:

• The REIT generated AFFO (adjusted funds from operations) per unit (1) of 23.0 cents (diluted) and paid total cash distributions of 20.1 cents per unit (as defined below) in Q4 2023, representing an AFFO payout ratio (1) of approximately 87.4 per cent. For the comparable three-month period ended Dec. 31, 2022 (Q4 2022), the REIT generated AFFO per unit of 21.3 cents (diluted) and paid cash distributions of 20.1 cents per unit, representing an AFFO payout ratio of approximately 94.4 per cent.
• The REIT had a debt to gross book value (debt to GBV) (2) ratio of 45.0 per cent as at Dec. 31, 2023, and $57.2-million of undrawn capacity under its revolving credit facilities, $300,000 of cash on hand and five unencumbered properties with an aggregate value of approximately $70.6-million.
• The REIT's valuation of its investment properties decreased nominally in Q4 2023 compared with the prior quarter to reflect current market conditions, resulting in a fair value loss of $800,000. The capitalization rate applicable to the REIT's entire portfolio increased to 6.59 per cent as at Dec. 31, 2023, compared with 6.56 per cent as at Sept. 30, 2023, and 6.42 per cent as at Dec. 31, 2022.

(1) AFFO per unit and AFFO payout ratio are non-IFRS (international financial reporting standards) measures and non-IFRS ratios, respectively.

(2) Debt to GBV is a supplementary financial measure.

Rental revenue was $23.3-million in Q4 2023 and $92.5-million in 2023, representing increases of 11.4 per cent and 11.6 per cent, respectively, from Q4 2022 and the year ended Dec. 31, 2022. Increased rental revenue in Q4 2023 and 2023 reflects growth from properties acquired subsequent to Q4 2022 and during and subsequent to 2022, respectively, and contractual annual rent increases.

The REIT generated total cash NOI (net operating income) of $19.3-million in Q4 2023 and $76.4-million in 2023, representing increases of 11.9 per cent and 11.4 per cent, respectively, from Q4 2022 and 2022. The increases were primarily attributable to the properties acquired subsequent to Q4 2022 and during and subsequent to 2022, respectively, as well as contractual rent increases. Same-property cash NOI was $17.3-million in Q4 2023 and $67.6-million in 2023, representing increases of 2.4 per cent compared with each of the corresponding prior-year periods. The increases were primarily attributable to contractual rent increases.

The REIT recorded a net loss of $15.2-million in Q4 2023, compared with a net income of $13.6-million in Q4 2022. Net income was $51.0-million in 2023, compared with $83.4-million in 2022. The variances were primarily due to changes in non-cash fair value adjustments for interest rate swaps, investment properties, and Class B LP units and unit-based compensation, partially offset by higher NOI. The impact of the movement in the traded value of the REIT units resulted in a decrease in fair value adjustment for Class B LP units and unit-based compensation in Q4 2023 of $3.6-million (2023 -- increase of $22.2-million), compared with an increase of $2.8-million in Q4 2022 (2022 -- increase of $20.2-million).

FFO (funds from operations) was $11.9-million, or 23.8 cents per unit (diluted), in Q4 2023 and $48.0-million, or 95.9 cents per unit (diluted), in 2023. That compares with FFO of $11.0-million, or 22.1 cents per unit (diluted), in Q4 2022 and $46.7-million, or 93.9 cents per unit (diluted), in 2022. The increases in FFO in Q4 2023 and 2023 were primarily attributable to the impact of the properties acquired subsequent to Q4 2022 and during and subsequent to 2022, respectively, and contractual rent increases.

AFFO was $11.5-million, or 23.0 cents per unit (diluted), in Q4 2023 and $45.9-million, or 91.8 cents per unit (diluted), in 2023. That compares with AFFO of $10.6-million, or 21.3 cents per unit (diluted), in Q4 2022 and $44.7-million, or 89.8 cents per unit (diluted), in 2022. The increases in AFFO in Q4 2023 and 2023 were primarily attributable to the impact of the properties acquired subsequent to Q4 2022 and during and subsequent to 2022, respectively, and contractual rent increases.

ACFO (adjusted cash flow from operations) (3) for 2023 was $49.3-million, an increase of 6.7 per cent compared with $46.2-million in 2022. The increase was primarily attributable to the properties acquired during and subsequent to 2022 and contractual rent increases.

(3) ACFO is a non-IFRS measure.

Cash distributions

The REIT is currently paying monthly cash distributions of 6.7 cents per unit, representing 80.4 cents per unit on an annualized basis. For Q4 2023, the REIT declared and paid total distributions of $9.86-million, or 20.1 cents per unit, representing an AFFO payout ratio of 87.4 per cent. The AFFO payout ratio was lower in Q4 2023 compared with the 94.4 per cent AFFO payout ratio in Q4 2022, primarily due to the positive impact of acquisitions completed subsequent to Q4 2022 and contractual rent increases, partially offset by increased interest expense, short- and long-term performance awards, and the vesting of long-term unit-based compensation.

For 2023, the REIT declared and paid total distributions of $39.44-million, or 80.4 cents per unit, representing an AFFO payout ratio of 87.6 per cent. The AFFO payout ratio was lower in 2023 compared with the 89.5 per cent AFFO payout ratio in 2022, primarily due to the impact of the properties acquired during and subsequent to 2022 and contractual rent increases.

Liquidity and capital resources

As at Dec. 31, 2023, the REIT had a debt to GBV ratio of 45.0 per cent, $57.2-million of undrawn capacity under its revolving credit facilities, $300,000 of cash on hand and five unencumbered properties with an aggregate value of approximately $70.6-million. As of the date of this news release, the REIT has approximately $63.2-million of undrawn capacity under its revolving credit facilities and five unencumbered properties with an aggregate value of approximately $70.6-million.

As at Dec. 31, 2023, 95 per cent of the REIT's debt was fixed with a weighted average interest rate of 4.25 per cent, a weighted average interest rate swap term and mortgages remaining of 4.8 years and a weighted average term to maturity of debt of 2.9 years.

Units outstanding

As at Dec. 31, 2023, there were 39,727,346 REIT units and 9,327,487 Class B LP units outstanding.

Outlook

The REIT is subject to risks associated with inflation, interest rates and availability of capital. The REIT anticipates that elevated interest rates and inflation may have an adverse effect on consumer demand and the overall economy. The fluctuation in the interest rate environment, inflation and credit environment impacts rental growth and capitalization rates over all in the real estate industry, which, in turn, could provide attractive buying opportunities for the REIT.

The Canadian automotive dealership industry remains highly fragmented and the REIT expects continued consolidation over the midterm to the long term due to increased industry sophistication and growing capital requirements for owner operators, which encourages them to pursue increased economies of scale.

Financial statements

The REIT's audited consolidated financial statements and related management's discussion and analysis (MD&A) for the year ended Dec. 31, 2023, are available on the REIT's website and on SEDAR+.

Conference call

Management of the REIT will host a conference call for analysts and investors on Friday, March 8, 2024, at 9 a.m. ET. To join the conference call without operator assistance, participants can register and enter their phone number on-line to receive an instant automated callback. Alternatively, they can dial 416-764-8688 or 888-390-0546 to reach a live operator who will join them into the call. A live and archived webcast of the call will be accessible via the REIT's website.

To access a replay of the conference call, dial 416-764-8677 or 888-390-0541, passcode 647702 followed by the pound key. The replay will be available until March 15, 2024.

About Automotive Properties Real Estate Investment Trust

Automotive Properties REIT is an internally managed, unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT's portfolio currently consists of 77 income-producing commercial properties, representing approximately 2.9 million square feet of gross leasable area, in metropolitan markets across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties.

Non-IFRS financial measures

This news release contains certain financial measures and ratios that are not defined under IFRS and may not be comparable with similar measures presented by other real estate investment trusts or enterprises. FFO, AFFO, FFO payout ratio, AFFO payout ratio, NOI, cash NOI, same-property cash NOI and ACFO are key measures of performance used by the REIT's management and real estate businesses. Debt to GBV, a supplementary financial measure, is a measure of financial position defined by the REIT's declaration of trust. These measures, as well as any associated per-unit amounts, are not defined by IFRS and do not have standardized meanings prescribed by IFRS, and therefore should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. The REIT believes that AFFO is an important measure of economic earnings performance and is indicative of the REIT's ability to pay distributions from earnings, while FFO, NOI, cash NOI and same-property cash NOI are important measures of operating performance of real estate businesses and properties. The IFRS measurement most directly comparable with FFO, AFFO, NOI, cash NOI and same-property cash NOI is net income. ACFO is a supplementary measure used by management to improve the understanding of the operating cash flow of the REIT. The IFRS measurement most directly comparable with ACFO is cash flow from operating activities. For reconciliations of NOI, FFO, AFFO and cash NOI to net income and comprehensive income, and ACFO to cash flow from operating activities, please see the attached tables.

We seek Safe Harbor.