TORONTO--(BUSINESS WIRE)--AGELLAN COMMERCIAL REAL ESTATE INVESTMENT TRUST (the “REIT”) (TSX:ACR.UN) is pleased to report its financial results for the three and nine month periods ended September 30, 2017. All dollar amounts (except per Unit amounts) are in thousands of Canadian dollars (“CAD”), unless otherwise stated.
| FINANCIAL AND OPERATIONAL HIGHLIGHTS | September 30, 2017 | December 31, 2016 | ||||
| Summary of Operational Information | ||||||
| Number of Properties | 44 | 34 | ||||
| Gross Leasable Area ("GLA") (in 000's) | 6,661 | 5,896 | ||||
| Occupancy % (at period end) | 95.2% | 93.2% | ||||
| Average lease term to maturity (years) | 4.0 | 4.0 | ||||
| Summary of Financial Information | ||||||
| Gross Book Value(1) | $815,908 | $777,013 | ||||
| Debt (face value) | $386,838 | $412,902 | ||||
| Debt to Gross Book Value(1) | 47% | 53% | ||||
| Interest Coverage Ratio (annual)(1) | 3.1x | 3.2x | ||||
| Weighted average interest rate | 4.2% | 4.1% | ||||
| For the three month period ended | ||||||
| September 30, 2017 | September 30, 2016 | Variance | ||||
| Total Property and Property Related Revenue | $26,270 | $21,765 | $4,505 | |||
| Net Operating Income ("NOI")(1) | $15,439 | $12,585 | $2,854 | |||
| Net Income (Loss) | $18,412 | ($918) | $19,330 | |||
| Funds From Operations ("FFO")(1) | $9,848 | $7,920 | $1,928 | |||
| Adjusted Funds From Operations ("AFFO")(1) | $8,896 | $6,807 | $2,089 | |||
| Adjusted Cash Flow From Operations ("ACFO")(1) | $8,311 | $6,780 | $1,531 | |||
| Basic and Diluted FFO per Unit(1) | $0.30 | $0.30 | $0.00 | |||
| Basic and Diluted AFFO per Unit(1) | $0.27 | $0.26 | $0.01 | |||
| Basic and Diluted ACFO per Unit(1) | $0.25 | $0.26 | ($0.01) | |||
| Distributions per Unit | $0.194 | $0.195 | ($0.01) | |||
| Payout Ratio(1) | 77% | 76% | ||||
| Units Outstanding at Period-end: | 32,847,481 | 27,928,574 | ||||
| Weighted Average Units Outstanding (Basic) | 32,863,965 | 26,228,514 | ||||
| Weighted Average Units Outstanding (Diluted) | 32,863,965 | 26,228,514 | ||||
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(1) This is a non-IFRS measure. Please see “Non-IFRS supplemental measures” below. |
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Summary of Significant Events:
- For the three month period ended September 30, 2017, the REIT achieved net income of $18,412, compared to a net loss of $918 for the three month period ended September 30, 2016. This increase represents an increase in net income per unit of $0.595 per unit.
- For the three month period ended September 30, 2017, the REIT achieved FFO of $9,848, AFFO of $8,896 and ACFO of $8,311, compared to $7,920, $6,807, and $6,780, respectively, for the three month period ended September 30, 2016. This represents a 24.3% increase in FFO, a 30.7% increase in AFFO, and a 22.6% increase in ACFO.
- For the three month period ended September 30, 2017, the REIT achieved FFO per Unit of $0.300, AFFO per Unit of $0.271, and ACFO per Unit of $0.253, compared to $0.302, $0.260, and $0.258, respectively, for the three month period ended September 30, 2016. This represents a 0.7% decrease in FFO per Unit, a 4.2% increase in AFFO per Unit, and a 1.9% decrease in ACFO per Unit.
- For the three month period ended September 30, 2017, the REIT achieved NOI of $15,439 compared to $12,585 for the three month period ended September 30, 2016, representing growth of 22.7%.
- For the nine month period ended September 30, 2017, the REIT achieved net income of $36,290, compared to a net loss of $4,190 for the nine month period ended September 30, 2016. This increase represents an increase in net income per unit of $1.312 per unit.
- For the nine month period ended September 30, 2017, the REIT achieved FFO of $28,176, AFFO of $24,555 and ACFO of $23,472, compared to $23,594, $19,734, and $19,685, respectively, for the nine month period ended September 30, 2016. This represents a 19.4% increase in FFO, a 24.4% increase in AFFO, and a 19.2% increase in ACFO.
- For the nine month period ended September 30, 2017, the REIT achieved FFO per Unit of $0.885, AFFO per Unit of $0.772, and ACFO per Unit of $0.738, compared to $0.968, $0.810, and $0.808, respectively, for the nine month period ended September 30, 2016. This represents a 8.6% decrease in FFO per Unit, a 4.7% decrease in AFFO per Unit, and a 8.7% decrease in ACFO per Unit.
- For the nine month period ended September 30, 2017, the REIT achieved NOI of $44,297 compared to $37,788 for the nine month period ended September 30, 2016, representing growth of 17.2%.
- The REIT’s Payout Ratio for the three and nine month periods ended September 30, 2017 were 77% and 80%, respectively. This represents a 1% increase and 8% increase from the three and nine month periods ended September 30, 2016, respectively.
- As at October 1, 2017, the overall occupancy rate of the REIT’s portfolio was 95.9%, up from 95.4% as of July 1, 2017, which is the highest occupancy rate ever reported by the REIT.
- The REIT’s office portfolio is currently 91% occupied, an increase of 5% since January 1, 2017, and the REIT’s industrial portfolio is currently 98% occupied, an increase of 2% since January 1, 2017.
- During the three month period ended September 30, 2017 the REIT announced that it had entered into a lease amendment with Health Care Service Corporation (“HCSC”), a large tenant located at the REIT’s Naperville, Illinois office property. Pursuant to the amended lease, the lease term has been extended for an additional two years and will now expire in November 2025. HCSC has also agreed to waive its early termination option under the original lease. The amended lease provides for HCSC to surrender approximately 141,000 square feet of GLA in certain portions and at certain times between December 1, 2018 and December 1, 2020, and reduces HCSC’s base rent by approximately 6% from their in-place base rent effective December 1, 2018.
- On July 28, 2017, the REIT received an occupancy permit from the City of Toronto and Porsche Cars Canada Ltd. took occupancy of the newly constructed premises at the REIT’s Consumers Road complex.
- On September 18, 2017, the REIT entered into an asset purchase agreement with ACPI to internalize the REIT’s asset management function (the “Internalization”). Upon closing of the Internalization, a Canadian operating limited partnership of the REIT will acquire all requisite assets of ACPI to internalize the REIT’s asset management function, and all executives and other employees of ACPI are expected to become employees of the REIT or its subsidiaries.
- On September 28, 2017 the REIT disposed of its interest in 165 Yorkland LP, a limited partnership established by the REIT to own a car dealership and corporate head office at its Consumers Road complex pursuant to a lease agreement with Porsche Cars Canada Ltd. The REIT disposed of its partnership interest for approximately $42,276 before transaction costs, working capital adjustments and holdbacks. Certain proceeds from the disposition were used to repay the REIT’s construction facility in respect of the project and the remaining proceeds will be used by the REIT to complete the development of a retail and parking facility servicing the REIT’s Consumers Road complex.
- On November 13, 2017, subsequent to quarter end, the REIT closed the Internalization pursuant to an amendment to the asset purchase agreement in respect thereof dated the same date.
- Also on November 13, 2017, subsequent to quarter end, the REIT announced that it had agreed to a settlement agreement with ELAD Canada Inc. and Sandpiper Group and, as part of the agreement, Sandpiper Group withdrew its previously announced Unitholder meeting requisition.
The REIT will hold a conference call to discuss the REIT’s financial performance for the three and nine month periods ended September 30, 2017 on Tuesday, November 14, 2017 at 2:00 p.m. (Toronto time). To access the call, please dial 1-416-641-6150 or 1-888-739-6043 and enter the participant pass code: 2060305. For operator assistance during the call, please press *0.
A replay of the conference call will be available from 5:00 p.m. (Toronto time) on November 14, 2017 until midnight (Toronto time) on November 28, 2017. To access the replay, please call 1-905-694-9451 or 1-800-408-3053 and enter participant pass code: 9916515.
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 and nine month periods ended September 30, 2017 (“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 44 properties contain 7.0 million square feet of gross leasable area, with the REIT’s ownership interest at 6.7 million square feet. The properties are 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 Units. These non-IFRS measures, including FFO, AFFO, ACFO, Payout Ratio, Gross Book Value, Interest Coverage Ratio, NOI, and related per Unit amounts are defined, FFO, is reconciled to net income, and AFFO and ACFO is reconciled to cash flows from (used in) operating activities in the REIT’s MD&A, which should be read in conjunction with this news release.
Forward-looking information:
This news 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. As such, management can give no assurance that actual results will be consistent with the forward-looking information. While such assumptions are considered reasonable by management of the REIT based on the information currently available, any of these assumptions could prove to be inaccurate and, as a result, the forward-looking information based on those assumptions could be incorrect. 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 US, including access to debt and equity capital at acceptable costs, 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, the exercise of any early termination rights, 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 specified investment flow-through 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, as forward-looking information involves significant risks and uncertainties and 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. All forward-looking information in this news release speaks only as of the date of this news 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 news 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 current annual information form and MD&A.