FAM REIT Announces Q1 2013 Results
TORONTO, May 10, 2013 /CNW/ - FAM Real Estate Investment Trust ("FAM REIT") (TSX: F.UN, F.WT) announced today its financial results for the three months ended March 31, 2013.
KEY HIGHLIGHTS
- 97.4% occupancy rate at March 31, 2013 compared to 96.5% IPO forecast
- 3.3% same property NOI growth on a sequential quarterly basis
- FFO per diluted unit of $0.30 ($0.26 ex-items) for the three months ended March 31, 2013 compared to $0.26 IPO forecast
- AFFO per diluted unit of $0.23 ($0.24 ex-items) for the three months ended March 31, 2013 compared to $0.23 IPO forecast
- IFRS based equity value per diluted unit increased 6.1% to $11.28 at March 31, 2013 compared to $10.63 at December 31, 2012
- AFFO payout ratio of 82% for three months ended March 31, 2013 (77% ex-items)
- Strong credit metrics with FAM REIT's leverage declining to 52.1% at March 31, 2013 from 54.5% at December 31, 2012. Interest coverage and debt to EBITDA at 2.8x and 8.1x respectively for the three months ended March 31, 2013
Shant Poladian, Chief Executive Officer of FAM REIT, commented, "Our results provide an early glimpse of FAM REIT's capacity to execute on the operational front. As we look ahead to the balance of the year, we continue to see leasing and tenant retention as sources of strength, and the positive performance of our existing portfolio will be complemented by the accretive capital redeployment activity we closed in the second quarter."
Financial Highlights and Key Performance Indicators
| Three months | Forecast - Three | |||||||||
| ended March 31, | months ended | |||||||||
| ($000s unless otherwise noted and except per unit amounts) | 2013 | March 31, 2013(1) |
||||||||
| Revenue from investment properties | $ | 6,081 | $ | 6,075 | ||||||
| Net operating income | 3,886 | 3,764 | ||||||||
| Funds from operations | 2,489 | 2,193 | ||||||||
| FFO per unit - diluted | $ | 0 .30 | $ | 0 .26 | ||||||
| Adjusted funds from operations | 1,910 | 1,917 | ||||||||
| AFFO per unit - diluted | $ | 0 .23 | $ | 0 .23 | ||||||
| Distributions per unit(2) | $ | 0.19 | $ | 0.19 | ||||||
| Pay-out ratio(2) | 82.4% | 82.1% | ||||||||
| Net operating income by asset class | ||||||||||
| Industrial | $ | 1,449 | $ | 1,415 | ||||||
| Office | 2,040 | 1,974 | ||||||||
| Retail | 397 | 375 | ||||||||
| $ | 3,886 | $ | 3,764 | |||||||
| Net operating income by geographic location | ||||||||||
| Manitoba | $ | 2,100 | $ | 2,025 | ||||||
| Ontario | 811 | 803 | ||||||||
| Saskatchewan | 348 | 326 | ||||||||
| Alberta | 493 | 480 | ||||||||
| Northwest Territories | 134 | 130 | ||||||||
| $ | 3,886 | $ | 3,764 | |||||||
| Interest coverage ratio (times) | 2.8x | 2.9x | ||||||||
| Indebtedness ratio (%)* | 52.1% | NF | ||||||||
| Leverage ratio (times)(3)* | 8.1x | NF | ||||||||
| Weighted average mortgage interest rate* | 5.1% | NF | ||||||||
| Occupancy* | ||||||||||
| Industrial | 100.0% | 100.0% | ||||||||
| Office | 96.5% | 96.5% | ||||||||
| Retail | 90.4% | 82.9% | ||||||||
| 97.4% | 96.5% |
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| * at period - end | |
| NF = Not forecasted |
|
| (1) | For information purposes only, selected budget financial information for the three months ended March 31, 2013, based on the forecast in the initial public offering documents, has been included in this MD&A. |
| (2) | Excludes distributions related to the four-day stub period from December 28, 2012 to December 31, 2012, which were paid during the three months ended March 31, 2013. |
| (3) | Calculated based on annualized EBITDA. |
FINANCIAL
- Funds From Operations. FFO for the three months ended March 31, 2013 was $0.30 per diluted trust unit, which included a $0.05 per diluted trust unit gain associated with the release of the mark-to-market adjustment on mortgages that were refinanced during the quarter. This was partially offset by $0.01 per diluted trust unit of unbudgeted professional, legal and trustee expenses that were associated with transactional activity (sale of 220 Portage Ave and purchase of 4211 Yonge St) and IPO related set-up costs. Excluding these items, FFO per diluted trust unit was $0.26, which is consistent with the forecasted FFO per diluted trust unit of $0.26.
- Adjusted Funds From Operations. AFFO for the three months ended March 31, 2013 was $0.23 per diluted trust unit. Excluding the aforementioned expenses related to transactional activity and IPO related set-up costs of $0.01 per diluted trust unit, AFFO was $0.24 per diluted trust unit, which was slightly above forecasted AFFO of $0.23 per diluted trust unit.
OPERATIONAL
- Net Operating Income. During the three months ended March 31, 2013, the REIT achieved NOI of $3.9 million, which is 3.2% ahead of the forecasted NOI of $3.8 million on account of higher occupancy and lower non-recoverable operating costs.
- Same property NOI growth. On a sequential quarterly basis, NOI grew by 3.3% on a same property basis. This growth reflects the strength of the leasing activity within FAM REIT's portfolio as well as renewing or obtaining new tenants at higher rates than in-place leases.
- Occupancy. Overall portfolio occupancy was 97.4% as at March 31, 2013, which is ahead of the forecasted occupancy rate of 96.5% due to better than expected performance in our retail property in Saskatchewan.
- Leasing Profile. FAM REIT achieved a 100% tenant retention rate during the three months ended March 31, 2013.
- Debt Strategy. FAM REIT refinanced $18.7 million in mortgages for additional proceeds of $4.0 million. The mortgages were refinanced at fixed rates ranging from 4.29% to 4.91% for terms of five years.
OUTLOOK
At March 31, 2013, the REIT's properties had an occupancy rate of 97.4%, which is one of the highest in the diversified Canadian commercial REIT sector. Based on our current pipeline of leasing activity, we expect to maintain portfolio occupancy at or above 96%, with a tenant retention rate in the 95% range for the remainder of 2013 before taking into account acquisitions and dispositions.
As outlined in our press release dated May 1, 2013, FAM REIT sold its 50% non-managing interest in 220 Portage Ave on April 30, 2013 for $20.5 million and acquired a 100% interest 4211 Yonge St on May 1, 2013 for $43 million. We estimate these transactions are accretive to FAM REIT's run-rate AFFO per diluted unit by 4% on a leverage-neutral basis.
Shant Poladian further commented, "We remain committed to creating value for our unitholders on a leverage-neutral basis, reducing risk and strengthening the quality and reliability of our cash distributions. I look forward to updating you on our initiatives in due course."
Other information
Information appearing in this press release is a select summary of results. The consolidated financial statements and management's discussion and analysis for the REIT are available at www.sedar.com and our website at www.famreit.com.
About FAM Real Estate Investment Trust
The REIT is a diversified commercial real estate investment trust focused on owning and acquiring strategically well-located industrial, office and retail real estate located primarily across Canada. The REIT's current portfolio aggregates approximately 1.7 million square feet of gross leasable area. The properties are located in Manitoba (17 properties), Alberta (4 properties), Saskatchewan (2 properties), Ontario (3 properties) and the Northwest Territories (1 property).
Forward looking information
This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events. 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. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. The REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulators, including its latest annual information form and MD&A.
SOURCE: FAM Real Estate Investment Trust
Zachary R. George, Chairman
FAM Real Estate Investment Trust
Telephone: (604) 249-5119
Email: [email protected]
Shant Poladian, Chief Executive Officer
FAM Real Estate Investment Trust
Telephone: (647) 256-5002
Email: [email protected]
Sandeep Manak, Chief Financial Officer
FAM Real Estate Investment Trust
Telephone: (604) 249-5113
Email: [email protected]
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