Milestone Apartments REIT Reports 2014 First Quarter Results
- Fourth Consecutive Quarterly Increase in Rents and NOI since IPO -
TORONTO AND DALLAS, May 7, 2014 /CNW/ - Milestone Apartments REIT (TSX: MST.UN) ("Milestone" or the "REIT") today announced its financial results for the first quarter ended March 31, 2014 ("Q1 2014"). Most financial comparisons provided herein are to the fourth quarter ended December 31, 2013 ("Q4 2013"), as the REIT's first quarter period in 2013 ("Q1 2013") was a partial reporting period comprising the 26 days ended March 31, 2013. The REIT completed an initial public offering ("IPO") and commenced trading on the Toronto Stock Exchange on March 6, 2013 and had no operations prior to that date. References to "samestore" results do not take into account acquisitions completed following the IPO.
A more detailed analysis is included in Management's Discussion and Analysis and the Consolidated Financial Statements, which have been filed on SEDAR and can be viewed at www.sedar.com or on the REIT's website at www.milestonereit.com. All dollar amounts are in U.S. currency unless otherwise noted.
First Quarter 2014 Highlights
- Total and samestore average monthly in-place rents were $738 and $729, up from $732 and $723 in Q4 2013, respectively, and compared to $695 in Q1 2013;
- Total and samestore occupancy remained within the REIT's targeted range of 94% to 96%, ending the quarter at 95.2%, up 70 basis points from 94.5% in Q4 2013, and flat compared to Q1 2013;
- Total and samestore revenue were each 0.1% higher than Q4 2013;
- Total and samestore net operating income ("NOI") were 0.6% and 0.4% higher than Q4 2013, respectively;
- Funds from operations ("FFO") and adjusted funds from operations ("AFFO") per unit were $0.26 and $0.22, respectively, up from $0.25 and $0.21 in Q4 2013;
- FFO and AFFO payout ratios were 57% and 67%, respectively, compared to 61% and 75% in Q4 2013, respectively; and
- Declared monthly distributions of C$0.05417 per unit resulting in total distributions declared for the quarter of $7.3 million.
Recent Business Highlights
- Closed bought deal equity financing for gross proceeds of C$69.1 million (including exercise in full of over-allotment option);
- Refinanced $228.6 million mortgage debt facility, extending the facility's weighted average debt maturity from 2015 to 2022 and the REIT's total debt maturity from 5 to 7 years and providing approximately $50.0 million of proceeds to be used for future acquisitions and general business purposes; and
- Announced acquisitions of Legacy Heights and Harbor Creek multifamily apartment communities for a combined purchase price of $78.3 million and totaling 700 units. These acquisitions will increase Milestone's presence in Denver and Atlanta, further diversifying the REIT's portfolio.
"We are pleased with the continued strength of our financial performance in the first quarter of 2014, which follows last quarter's higher than forecasted financial results. We have successfully increased rents and NOI each quarter since our IPO, while maintaining our occupancy levels within our targeted range of 94 to 96%," said Robert Landin, CEO of Milestone Apartments REIT. "Our performance over the past year has supported our ability to access additional capital and strengthen our financial position. Subsequent to the end of the first quarter, we closed a bought deal equity financing and refinanced and extended the maturities on our senior mortgage facility. These developments have enhanced our financial flexibility and ability to pursue value creation opportunities. Our recent acquisition agreements for the Legacy Heights and Harbor Creek properties demonstrate our commitment to effectively deploy capital in our target markets to grow the REIT and build unitholder value."
| First Quarter 2014 Financial Summary | |||
| ($000, except per unit amounts) | Three months ended Mar. 31, 2014 |
Three months ended Dec. 31, 2013 |
% Change |
| Revenue, Total | $ 43,061 | $ 43,012 | 0.1% |
| Revenue, Samestore | $ 40,874 | $ 40,820 | 0.1% |
| Operating Expenses, Total(1) | $ 33,550 | $ 21,009 | 59.7% |
| Operating Expenses, Samestore(1) | $ 32,429 | $ 20,258 | 60.1% |
| Property Revenue, Total(2) | $ 41,479 | $ 41,307 | 0.4% |
| Property Revenue, Samestore(2) | $ 39,292 | $ 39,115 | 0.5% |
| Property Operating Expenses(2,3) | $ 19,558 | $ 19,508 | 0.3% |
| Property Operating Expenses, Samestore(2,3) | $ 18,860 | $ 18,757 | 0.5% |
| NOI | $ 21,921 | $ 21,799 | 0.6% |
| NOI, Samestore | $ 20,432 | $ 20,358 | 0.4% |
| FFO | $ 12,889 | $ 12,624 | 2.1% |
| FFO Per Unit | $ 0.26 | $ 0.25 | 4.0% |
| FFO Payout Ratio(4) | 57% | 61% | |
| AFFO | $ 10,957 | $ 10,277 | 6.6% |
| AFFO Per Unit | $ 0.22 | $ 0.21 | 4.8% |
| AFFO Payout Ratio(4) | 67% | 75% | |
| Total Distributions Declared(5) | $ 7,345 | $ 7,717 | |
| (1) | Includes $12,600 of real estate tax adjustments related to IFRIC 21. |
| (2) | Excludes party property management revenue and related expenses. |
| (3) | Excludes $12,600 of real estate tax adjustments related to IFRIC 21. |
| (4) | Payout ratios are calculated by dividing the amount of REIT and Class B unitholder distributions by actual FFO and AFFO for the period. Distributions on Class A and Class B units for Q1 2014 were translated based on an average CAD to USD exchange rate of 1.10, consistent with IFRS guidance. |
| (5) | Represents total distributions declared to REIT unitholders and Class B unitholders for the period. |
Q1 2014 Financial Results
Property revenue totaled $41.5 million, a 0.4% increase from $41.3 million in Q4 2013, reflecting continued high occupancy and incremental rent growth.
Property operating expenses totaled $19.6 million, a 0.3% increase from $19.5 million in Q4 2013. Samestore property operating expenses were $18.9 million, a 0.5% increase from $18.8 million in the prior quarter. The slight increase in total and samestore property operating expenses is attributable to higher real estate tax estimates.
NOI totaled $21.9 million, up 0.6% from $21.8 million in Q4 2013. Samestore NOI was $20.4 million, a 0.4% increase from the prior quarter. The slight favorable variances are primarily attributable to higher revenue, slightly offset by higher operating expenses.
FFO totaled $12.9 million, or $0.26 per unit, up from $12.6 million, or $0.25 per unit, in Q4 2013. AFFO totaled $11.0 million, or $0.22 per unit, up from $10.3 million, or $0.21 per unit, in the prior quarter. The favorable variances resulted from increased revenue and NOI during the quarter.
Fair Value on Investment Properties
As of March 31, 2014, the properties were valued using an overall weighted capitalization rate of 6.5%. There were $14.6 million of fair value gains recognized in Q1 2014. This $14.6 million property adjustment primarily resulted from higher NOI in the period. Fair value adjustments are determined based on the movement of various parameters, including changes in stabilized NOI and capitalization rates. There was also a $12.6 million property value adjustment related to IFRIC 21.
Distributions
Distributions declared to REIT unitholders and Class B unitholders totaled $7.3 million in Q1 2014 representing an AFFO payout ratio of 67%, compared to 75% in Q4 2013. Management expects that 100% of the REIT's distributions for the first quarter of 2014 will be return of capital.
Liquidity and Capital Structure
As of March 31, 2014, the REIT had cash and cash equivalents of $5.5 million and a $50.0 million revolving credit facility. The REIT's revolving credit facility was paid in full as of April 30, 2014.
The REIT ended the period with a mortgage notes payable balance of $684.7 million with a weighted average interest rate of 3.75%. Debt to gross book value was 55%, with debt consisting of mortgage notes payable and the outstanding balance on the revolving credit facility.
Units Outstanding
As of March 31, 2014, the total number of REIT units outstanding was 36,850,000. In addition, there are currently 12,864,265 Class B units of the partnership. Subsequent to the completion of the bought deal equity financing on April 11, 2014, the total number of REIT units outstanding increased to 43,497,000, with Class B units remaining unchanged.
Conference Call
Robert Landin, CEO, Steve Lamberti, COO, and Ryan Newberry, CFO, will host a conference call for the investment community on Thursday, May 8, 2014 at 11:00 a.m. (ET). The call-in numbers for participants are 416-764-8688 or 888-390-0546. A webcast of the call will be accessible via Milestone's website at www.milestonereit.com/investor-relations/events-presentations.
A replay of the call will be available until Thursday, May 15, 2014. To access the replay, dial 416-764-8677 or 888-390-0541 (PIN: 847591). The webcast will be archived on Milestone's website.
Annual General Meeting
Milestone will host its 2014 Annual General Meeting on Thursday, May 8, 2014, at 2:00 p.m. (ET) at the offices of Goodmans LLP, which are located at 333 Bay Street, Suite 3400, in Toronto.
About Milestone Apartments REIT
Milestone Apartments REIT is an unincorporated, open-ended real estate investment trust that is governed under the laws of Ontario. The REIT's portfolio consists of 54 multifamily garden-style residential properties, comprising 17,648 units that are located in 11 major metropolitan markets throughout the Southeast and Southwest United States. Milestone Apartments REIT is the largest REIT listed on the TSX focused solely on the U.S. multifamily sector. The REIT operates its portfolio through its internal property management company, Milestone Management, with more than 900 employees across the U.S. Based in Dallas, TX, TMG Partners, L.P., an affiliate of The Milestone Group, is the external asset manager of the REIT. For more information, please visit www.milestonereit.com.
About The Milestone Group
The Milestone Group is a privately-held real estate investment management company with expertise and presence in major metropolitan markets throughout the United States. The firm has corporate offices in Dallas, TX and New York, NY with regional acquisition and management offices across the United States. Founded in 2004, The Milestone Group has a strong track record of investing in the U.S. multifamily sector, including completion of more than US$4.5 billion in multifamily transactions. For more information, please visit www.milestonegp.com.
Non-IFRS Financial Measures
This press release also contains certain non-IFRS financial measures including FFO, AFFO, NOI, average in-place rents, average occupancy, samestore measures, acquisitions, FFO payout ratio, AFFO payout ratio and any related per unit amount to measure, compare and explain the operating results and financial performance of the REIT. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance. However, they do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other publicly traded entities. These measures should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. Please refer to the REIT's Management's Discussion and Analysis for the first quarter ended March 31, 2014 for a reconciliation of NOI, FFO and AFFO to standardized IFRS measures.
Forward-looking information
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the REIT and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to the REIT's financial performance, access to capital, financial flexibility, the ability to pursue value creation opportunities, the and the ability to create long-term unitholder value. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risk Factors" in the REIT's annual information form available at www.sedar.com. The forward-looking statements in this news release are based on certain assumptions. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further,these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE: Milestone Apartments REIT
Robert Debs, Investor Relations
Milestone Apartments REIT
Tel: 214.561.1215
Bruce Wigle, Investor Relations
Bryan Mills Iradesso (BMIR)
Tel: 416.447.4740, x 232
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