Mr. Bruce Wigle reports
AUTOMOTIVE PROPERTIES REIT REPORTS FINANCIAL RESULTS FOR FIRST QUARTER OF 2018
Automotive Properties Real Estate Investment Trust has released its financial results for the three-month period ended March 31, 2018 (Q1 2018). The REIT's unaudited condensed consolidated financial statements and the related management's discussion and analysis (MD&A) for Q1 2018 are available on the REIT's website and on SEDAR.
Q1 2018 highlights:
- Property rental revenue was $11.3-million, an increase of 14.4 per cent from the first quarter of 2017 (Q1 2017).
- Net operating income (1) (NOI) was $9.6-million, up 16.2 per cent from Q1 2017.
- Total cash NOI and same-property cash NOI (1) were $8.9-million and $7.6-million, respectively, representing increases of 17.0 per cent and 1.4 per cent, respectively, from Q1 2017.
- Net income was $14.5-million, compared with $1.1-million in Q1 2017.
- Funds from operations (1) (FFO) increased 12.2 per cent to $6.7-million, from $5.9-million in Q1 2017. FFO per unit of the REIT was 25.4 cents (diluted), up from 24.4 cents (diluted) in Q1 2017.
- Adjusted funds from operations (1) (AFFO) increased 13.3 per cent to $6.1-million, from $5.4-million in Q1 2017. AFFO per unit was 23.1 cents (diluted), up from 21.9 cents (diluted) in Q1 2017.
- On Feb. 13, 2018, the REIT acquired an automotive dealership property in Kitchener-Waterloo in Ontario that will be redeveloped for a luxury, high-end car company that will occupy the premises.
- The REIT declared monthly cash distributions of 6.7 cents per unit, resulting in total distributions declared and paid of approximately $5.3-million, representing an AFFO payout ratio (1) of approximately 87.0 per cent.
- The REIT's debt to gross book value (GBV) (1) was 48.7 per cent as at March 31, 2018, compared with 48.5 per cent as at Dec. 31, 2017.
"Our financial results for the quarter reflect the positive impact of our acquisition program and steady organic growth from the contractual annual rent increases across most of the leases in our property portfolio," said Milton Lamb, chief executive officer of Automotive Properties REIT. "With a sound balance sheet, we remain focused on building unitholder value and scaling our portfolio in our target markets across Canada through the continued execution of our growth strategy."
(1) NOI, cash NOI, same-property cash NOI, FFO, AFFO and debt to GBV are non-IFRS (international financial reporting standards) measures. See non-IFRS financial measures in this news release. Reference to same property correspond with properties that the REIT owned in Q1 2017, thus removing the impact of acquisitions.
Q1 2018 FINANCIAL RESULTS SUMMARY
(in thousands of dollars, except per-unit amounts)
Three months ended March 31
Rental revenue (1) $11,306 $ 9,881
NOI 9,600 8,259
Cash NOI 8,846 7,559
Same-property cash NOI (1) 7,648 7,543
Net income (2) 14,492 1,132
FFO 6,667 5,945
AFFO 6,067 5,354
Distributions per unit $ 0.201 $ 0.201
FFO per unit, basic (3) $ 0.255 $ 0.244
FFO per unit, diluted (4) $ 0.254 $ 0.244
AFFO per unit, basic (3) $ 0.232 $ 0.219
AFFO per unit, diluted (4) $ 0.231 $ 0.219
Payout ratios (%)
FFO 79.1% 82.4%
AFFO 87.0% 91.8%
Debt to GBV 48.7% 43.9%
(1) Rental revenue is based on rents from leases
entered into with tenants on closing of the
applicable acquisitions, all of which are
triple net leases and include recoverable realty
taxes and straight-line adjustments. Same-
property cash NOI is based on rental revenue for
the same asset base having consistent gross
leasable area in both periods.
(2) The increase in net income for Q1 2018
includes changes in the fair value adjustments
for Class B LP units, investment properties and
interest rate swaps. Please refer to financial
statements and notes thereto.
(3) FFO per unit and AFFO per unit, basic, is
calculated by dividing the total FFO and AFFO
by the amount of the total weighted average
number of outstanding units and Class B
limited partnership units of Automotive
Properties LP (Class B limited partnership (LP)
units). The total weighted average number of
units outstanding (including Class B LP units),
basic, for Q1 2018 was 26,149,253.
(4) FFO per unit and AFFO per unit, diluted, is
calculated by dividing the total FFO and AFFO
by the amount of the total weighted average
number of outstanding units, Class B LP units,
deferred units (DUs) and income deferred
units (IDUs) granted to certain independent
trustees and management of the REIT. The total
weighted average number of units outstanding
(including Class B LP units, DUs and IDUs) on
a fully diluted basis for Q1 2018 was
Rental revenue was $11.3-million in Q1 2018, an increase of 14.4 per cent compared with $9.9-million in Q1 2017. Increased rental revenue reflects growth from properties acquired subsequent to Q1 2017 and contractual annual rent increases across a significant portion of the portfolio.
Property costs were $1.7-million in Q1 2018, compared with $1.6-million in Q1 2017. The increase in property costs is attributable to the properties acquired subsequent to Q1 2017. Property costs as a percentage of revenue decreased from 16.4 per cent in Q1 2017 to 15.1 per cent in Q1 2018, primarily due to higher rental revenue from the properties acquired subsequent to Q1 2017.
Total and same-property cash NOI generated during Q1 2018 totalled $8.9-million and $7.6-million, respectively, representing increases of 17.0 per cent and 1.4 per cent, respectively, from Q1 2017. The year-over-year increases in total and same-property cash NOI were attributable to the properties acquired subsequent to Q1 2017 and the annual contractual rent increases across a significant portion of the portfolio.
Net income was $14.5-million in Q1 2018, compared with $1.1-million in Q1 2017. The increase was primarily attributable to the change in the fair value adjustments for Class B LP units, investment properties and interest rate swaps, as well as growth in NOI.
FFO in Q1 2018 was $6.7-million, or 25.4 cents per unit (diluted), compared with $5.9-million, or 24.4 cents per unit, in Q1 2017. The increase was primarily due to the impact of the properties acquired subsequent to Q1 2017.
AFFO in Q1 2018 was $6.1-million, or 23.1 cents per unit (diluted), compared with $5.4-million, or 21.9 cents per unit, in Q1 2017. The increase was primarily due to the impact of the properties acquired subsequent to Q1 2017.
Adjusted cash flow from operations (ACFO) in Q1 2018 was $5.9-million, representing an increase of 11.1 per cent from $5.3-million in Q1 2017. The ACFO payout ratio was 88.9 per cent in Q1 2018, compared with 93.5 per cent in Q1 2017. The lower ACFO payout ratio for Q1 2018 relative to Q1 2017 was primarily attributable to the impact of the properties acquired subsequent to Q1 2017.
The REIT is currently paying monthly cash distributions of 6.7 cents per unit, representing 80.4 cents per unit on an annualized basis. The REIT declared and paid total distributions of $5.3-million to unitholders in Q1 2018, or 20.1 cents per unit, representing an AFFO payout ratio of 87.0 per cent. The lower AFFO payout ratio for Q1 2018 relative to Q1 2017 was primarily attributable to the impact of the properties acquired subsequent to Q1 2017.
As at March 31, 2018, there were 16,216,000 REIT units and 9,933,253 Class B LP units outstanding.
Management of the REIT will host a conference call for analysts and investors on Wednesday, May 16, 2018, at 10 a.m. ET. The dial-in numbers for the conference call are 647-427-7450 or 888-231-8191. 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 416-849-0833 or 855-859-2056, passcode 9882439. The replay will be available until May 23, 2018.
About Automotive Properties Real Estate Investment Trust
Automotive Properties is an unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. Currently, the REIT's portfolio consists of 39 income-producing commercial properties, representing approximately 1.4 million square feet of gross leasable area, and one development property in metropolitan markets across Ontario, Saskatchewan, Alberta, British Columbia and Quebec.
Non-IFRS financial measures
This news release contains certain financial measures which 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, same-property NOI, cash NOI and same-property cash NOI are key measures of performance used by the REIT's management and real estate businesses. Debt to GBV 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 and 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. See the REIT's Q1 2018 MD&A for further discussion of these non-IFRS financial measures, and for a reconciliation of NOI, FFO, AFFO and cash NOI to net income and comprehensive income and ACFO to cash flow from operating activities.
We seek Safe Harbor.
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