Automotive Properties REIT Reports Financial Results for First Quarter of 2019

TORONTO, May 14, 2019 /CNW/ - Automotive Properties Real Estate Investment Trust (TSX: APR.UN) ("Automotive Properties REIT" or the "REIT") today announced its financial results for the three-month period ended March 31, 2019 ("Q1 2019").

Q1 2019 Highlights

• Property rental revenue was $15.7 million, an increase of 38.7% from the first quarter of 2018 ("Q1 2018");
• Net Operating Income¹ ("NOI") was $13.6 million, an increase of 41.4% from Q1 2018;
• Total and Same Property Cash NOI¹ were $12.7 million and $9.0 million, respectively, representing increases of 43.0% and 1.7%, respectively, from Q1 2018;   
• Net Loss was $17.9 million, compared to Net Income of $14.5 million in Q1 2018, primarily attributable to the  fair value adjustments for Class B LP Units, in addition to interest rate swaps, and higher interest expense and other financing charges netted with the growth in NOI¹;
• Funds from Operations¹ ("FFO") increased 28.7% to $8.6 million, from $6.7 million in Q1 2018. FFO¹ per unit of the REIT ("Unit") was $0.269 (diluted), compared to $0.254 (diluted) in Q1 2018;
• Adjusted Funds from Operations¹ ("AFFO") increased 32.2% to $7.8 million, from $5.9 million in Q1 2018. AFFO¹ per Unit increased 8.5% to $0.243 (diluted), compared to $0.224 (diluted) in Q1 2018; 
• Acquisition of the McNaught Cadillac Buick GMC and St. James Volkswagen dealership properties in Winnipeg from AutoCanada Inc. for a purchase price of approximately $23.95 million;
• The REIT's former development property in Kitchener-Waterloo, Ontario is now an income producing property. The tenant, Tesla Motors Canada ULC, has opened a service centre at the premises; and
• The REIT paid monthly cash distributions of $0.067 per Unit, resulting in total distributions declared and paid of approximately $6.4 million, representing an AFFO payout ratio of approximately 82.7%.

"Our first quarter results demonstrate that our acquisition program is generating significant growth in our key performance measures, including accretion to AFFO per unit, one of our primary objectives," said Milton Lamb, CEO of Automotive Properties REIT. "Looking ahead, we will maintain our focus on major markets, high-quality properties and accretive growth as we continue to expand our portfolio."

¹ NOI, Cash NOI, Same Property Cash NOI, FFO, AFFO, Debt to GBV, FFO Payout Ratio, AFFO Payout Ratio, and ACFO (as defined below) are non-IFRS financial measures. See "Non-IFRS Financial Measures" in this news release. References to "Same Property" correspond to properties that the REIT owned in Q1 2018, thus removing the impact of acquisitions.

Financial Results Summary

	Three months ended March 31,
($000s, except per Unit amounts)	2019	2018	Change
Rental revenue ^(1)	$15,684	$11,306	38.7%
NOI	13,571	9,600	41.4%
Cash NOI	12,653	8,846	43.0%
Same Property Cash NOI ^(1)	8,994	8,846	1.7%
Net Income (Loss) ^(2)	(17,882)	14,492	-  ^(2)
FFO	8,581	6,667	28.7%
AFFO	7,758	5,868	32.2%
Distributions per Unit	$0.201	$0.201	-
FFO per Unit – basic ^(3)	0.270	0.255	0.015
FFO per Unit - diluted ^(4)	0.269	0.254	0.015
AFFO per Unit - basic ^(3)	0.245	0.224	0.021
AFFO per Unit - diluted ^(4)	0.243	0.224	0.019
Ratios (%)
FFO payout ratio	74.7%	79.1%	-4.4%
AFFO payout ratio	82.7%	89.7%	-7.0%
Debt to GBV	56.3%	48.7%	7.6%

(1)	Rental revenue is based on rents from leases entered into with tenants, 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 Net Loss for Q1 2019 includes changes in fair value adjustments of $18.2 million for Class B limited partnership units of Automotive Properties Limited Partnership ("Class B LP Units") and $6.7 million for interest rate swaps. Please refer to the consolidated financial statements of the REIT 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 LP Units. The total weighted average number of Units outstanding (including Class B LP Units) - basic for Q1 2019 was 31,729,805.
(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 2019 was 31,898,661.

Rental revenue increased 38.7% in Q1 2019 to $15.7 million, as compared to $11.3 million in Q1 2018. The increase in rental revenue reflects growth from properties acquired subsequent to Q1 2018 and contractual annual rent increases across a significant portion of the REIT's portfolio.

Property costs were $2.1 million in Q1 2019, as compared to $1.7 million in Q1 2018. The increase is attributable to the increase in realty tax payment for properties acquired subsequent to Q1 2018. These costs are recoverable from the applicable tenants pursuant to the terms of the applicable triple-net leases.

Total Cash NOI generated during Q1 2019 totaled $12.7 million, representing an increase of 43.0% compared to Q1 2018. The increase was primarily attributable to the properties acquired subsequent to Q1 2019.

Same Property Cash NOI generated during Q1 2019 totaled $9.0 million, representing an increase of 1.7% compared to Q1 2018. This increase is primarily a result of contractual rent increases and a rent escalation of 10% which occurred in August 2018 on three investment properties.

Net Loss was $17.9 million in Q1 2019, compared to Net Income of $14.5 million in Q1 2018. The variance is primarily attributable to the change in fair value adjustments for Class B LP Units and interest rate swaps, as well as higher interest expense and other financing charges netted with the growth in NOI.

FFO in Q1 2019 was $8.6 million, or $0.269 per Unit (diluted), as compared to $6.7 million, or $0.254 per Unit diluted, in Q1 2018. The increase was primarily due to the impact of the properties acquired subsequent to Q1 2018.

AFFO in Q1 2019 was $7.8 million, or $0.243 per Unit (diluted), as compared to $5.9 million, or $0.224 per Unit diluted, in Q1 2018. The increase was primarily due to the impact of the properties acquired subsequent to Q1 2018.

Adjusted Cash Flow from Operations¹ ("ACFO") for Q1 2019 was $7.9 million, representing an increase of 33.8% from $5.9 million in Q1 2018. The increase was primarily due to the impact of the properties acquired subsequent to Q1 2018.

Cash Distributions
The REIT is currently paying monthly cash distributions of $0.067 per Unit, representing $0.804 per Unit on an annualized basis. For Q1 2019, the REIT declared and paid total distributions of $6.4 million to unitholders, or $0.201 per Unit, representing an AFFO payout ratio of 82.7%. The lower AFFO payout ratio for Q1 2019 relative to Q1 2018 was primarily attributable to the impact of the properties acquired subsequent to Q1 2018.

Units Outstanding
As at March 31, 2019, there were 21,796,552 Units and 9,933,253 Class B LP Units outstanding.

Financial Statements
The REIT's unaudited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for Q1 2019 are available on the REIT's website at www.automotivepropertiesreit.ca and on SEDAR at www.sedar.com.

Conference Call
Management of the REIT will host a conference call for analysts and investors on Wednesday, May 15, 2019 at 9:00 a.m. (ET). The dial-in numbers for the conference call are [phone] or [phone]. A live and archived webcast of the call will be accessible via the REIT's website www.automotivepropertiesreit.ca.

To access a replay of the conference call, dial [phone] or [phone], passcode: 429654 #. The replay will be available until May 22, 2019.

About Automotive Properties REIT
Automotive Properties REIT is an 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 57 income-producing commercial properties, representing more than two million square feet of gross leasable area, in metropolitan markets across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Québec. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties. For more information, please visit: www.automotivepropertiesreit.ca.

Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expected". Forward-looking information includes the REIT's future acquisition capacity. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risks and Uncertainties" in the REIT's MD&A for the year ended December 31, 2018 and in the REIT's annual information form dated March 21, 2019, both of which are available on SEDAR (www.sedar.com). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

Non-IFRS Financial Measures
This news release contains certain financial measures which are not defined under IFRS and may not be comparable to 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 to 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 to ACFO is cash flow from operating activities. See the REIT's Q1 2019 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.

SOURCE Automotive Properties Real Estate Investment Trust

Bruce Wigle, Investor Relations, Bay Street Communications, Tel: [phone]; Milton Lamb, President & CEO, Automotive Properties REIT, Tel: [phone]; Andrew Kalra, CFO & Corporate Secretary, Automotive Properties REIT, Tel: [phone]

Related Links

www.automotivepropertiesreit.ca