Edgefront Real Estate Investment Trust announces Q2 2015 results, completion of accretive acquisitions, and August distribution
CALGARY, Aug. 19, 2015 /CNW/ - Edgefront Real Estate Investment Trust (the "REIT") (TSXV: ED.UN) announced today its results for the three and six months ended June 30, 2015, the completion of accretive acquisitions and the August Distribution.
Highlights
- Deployed cash generated from sale of non-core office building in Miramichi, NB to acquire higher cap rate industrial properties in July and August.
- The REIT acquired 2 industrial properties subsequent to the quarter end for $16,000,000, adding approximately 204,000 square feet of gross leasable area; issuing 6,470,985 Units valued at $1.90 per unit as purchase consideration.
- The REIT expects that within approximately two weeks it will complete the acquisition of a third industrial property for $22,000,000 issuing 1,052,632 units at $1.90 as purchase consideration.
- Completion of these three acquisitions will increase total units outstanding to 36,751,869 and will increase market capitalization to $64,315,771, based on the closing price of the REIT's units on August 18, 2015.
- The REIT continues to derive rental revenues from stable tenants with a weighted average 10.5 year remaining lease term.
- Conservative AFFO payout Ratio of 78.1% for the three months and 78.0% for the six months ended June 30, 2015; debt to total assets ratio of 46.8%.
- AFFO per unit of $0.051; distributions per unit of $0.04 for the quarter.
Summary of Results
Included in the table that follows and elsewhere in this news release are non-IFRS measures that should not be construed as an alternative to net income / loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS, and may not be comparable to similar measures as reported by other issuers. Readers are encouraged to refer to the REIT's MD&A for further discussion of the non-IFRS measures presented.
Three months ended June 30, |
Six months ended June 30, |
||||
2015 |
2014 |
2015 |
2014 |
||
Financial Highlights |
$ |
$ |
$ |
$ |
|
Funds from operations (FFO) |
1,258,375 |
839,761 |
2,516,975 |
1,477,455 |
|
Adjusted funds from operations (AFFO) |
1,489,895 |
1,007,831 |
2,977,439 |
1,793,471 |
|
Distributions declared (1) |
1,163,412 |
792,763 |
2,321,251 |
1,465,846 |
|
Weighted average units outstanding – basic (2) |
29,049,258 |
19,810,711 |
28,980,040 |
18,559,549 |
|
Weighted average units outstanding – diluted (2) |
29,049,258 |
19,827,219 |
28,980,040 |
18,559,549 |
|
Distributions per unit (1) (2) |
0.040 |
0.040 |
0.080 |
0.079 |
|
FFO per unit (2) |
|||||
Basic |
0.043 |
0.042 |
0.087 |
0.080 |
|
Diluted |
0.043 |
0.042 |
0.087 |
0.080 |
|
AFFO per unit (2) |
|||||
Basic |
0.051 |
0.051 |
0.103 |
0.097 |
|
Diluted |
0.051 |
0.051 |
0.103 |
0.097 |
|
AFFO payout ratio (1) |
78.1% |
78.7% |
78.0% |
81.7% |
|
Debt to total assets ratio |
46.8% |
46.6% |
46.8% |
46.6% |
(1) |
Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the audited consolidated financial statements. |
(2) |
Weighted average number of units includes the Class B LP Units. |
Three months ended June 30, |
Six months ended June 30, |
|||
2015 |
2014 |
2015 |
2014 |
|
Financial Results |
$ |
$ |
$ |
$ |
Rental revenue |
2,697,831 |
1,771,095 |
5,412,206 |
3,299,566 |
Net rental income |
2,201,251 |
1,460,724 |
4,404,344 |
2,725,163 |
Net income |
856,688 |
699,765 |
2,076,024 |
410,844 |
Net income for the three and six months ended June 30, 2015 was reduced by a fair value adjustment of investment properties of $340,000 (2014 - $ nil) and $340,000 (2014 - $915,346), respectively. Excluding this item, which for 2015 related to the Miramichi property disposed of during the quarter, and for 2014 related to acquisition costs in connection with the RTL Westcan acquisition, net income for the three and six months ended June 30, 2015 would have been $1,196,688 (2014 - $699,765), and $2,416,024 (2014 - $1,326,190), respectively. |
"We are pleased with the stability of our cash flow and excited to grow our portfolio with quality properties acquired from vendors who are taking back REIT units as purchase price consideration" stated Kelly Hanczyk CEO. "With the completion of our three acquisitions subsequent to quarter end, we will have added approximately $14.3 million of market capitalization without the need to raise funds in the public markets. We continue to see attractive purchase opportunities and will continue to creatively grow the REIT's AFFO per unit in the second half of the year."
Revenues and Results from Operations In Line with Expectations
Rental revenue increased to $2,697,831 in the quarter as compared to $1,771,095 in the same quarter of 2014. Net rental income grew to $2,201,251 in the quarter as compared to $1,460,724 in same quarter of 2014.
The REIT generated FFO and AFFO of $1,258,375 and $1,489,895 respectively, in the quarter ended June 30, 2015, with FFO and AFFO per unit of $0.043 and $0.051 respectively.
Distributions of $0.04 per unit were declared for the quarter. The AFFO payout ratio for the quarter was 78.1%.
Balance Sheet and Liquidity
The REIT's debt to total assets ratio was 46.8% at June 30, 2015. The REIT intends to maintain a debt to total assets ratio of less than 55%.
Update on Previously Announced Acquisitions
As previously announced on July 20, 2015, the REIT completed the acquisition of a property in Barrie, Ontario on July 17, 2015. The property has 109.470 square feet of rentable area and was acquired for a purchase price of $8.5 million, satisfied through the issuance of 1,000,000 REIT Units and 3,470,985 LP Units of a subsidiary limited partnership of the REIT, at an issue price of $1.90 per unit.
On August 4, 2015, the REIT completed the previously announced acquisition of a fully leased multi-tenant industrial property located in Kelowna, British Columbia with 109,470 square feet of rentable area. The property was acquired for a purchase price of $7.5 million, satisfied through the issuance to the unrelated vendor of $3,800,000 of REIT Units at $1.90 per unit and from available cash.
The REIT has received TSXV approval to complete the previously announced acquisition of a fully leased single-tenant industrial property in Calgary, Alberta with 29,471 square feet of rentable area on 13.54 acres. The property will be acquired for a purchase price of $22 million, satisfied by the issuance to the unrelated vendor of $2,000,000 of REIT units at an issue price of $1.90 per unit, the assumption of mortgage debt on the property with a principal amount owing of approximately $11,500,000 and the balance from available cash. The REIT expects to complete this acquisition in the next two weeks.
Distribution Reinvestment Program
The REIT's current distribution per unit continues to be $0.01333 per month. The REIT's distribution reinvestment program ("DRIP") entitles eligible unitholders to elect to receive all, or a portion of the cash distributions of the REIT reinvested in units of the REIT. Eligible unitholders who so elect will receive a bonus distribution of units equal to 4% of each distribution that was reinvested by them under the DRIP.
August 2015 Distribution
The REIT will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 on an annualized basis, payable September 15, 2015 to unitholders of record as of August 31, 2015.
About the REIT
Edgefront REIT is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 16 properties comprising approximately 922,500 square feet of rentable area. The REIT has approximately 31,868,252 units issued and outstanding. Additionally, there are 3,830,985 Class B LP units of subsidiary limited partnerships of the REIT issued and outstanding.
FORWARD LOOKING STATEMENTS
Certain statements contained in this new release constitute forward-looking statements which reflect the REIT's current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.
While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT's views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Edgefront Real Estate Investment Trust
Please contact Kelly C. Hanczyk, President and CEO at (403) 817-9497 or Rob Chiasson, CFO at (403) 817-9496.
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