MONTREAL, March 12, 2025 /CNW/ - PRO Real Estate Investment Trust ("PROREIT" or the "REIT") (TSX: PRV.UN) today reported its financial and operating results for the three-month period ("fourth quarter" or "Q4") and fiscal year ("Fiscal 2024") ended December 31, 2024.
Fourth Quarter and Fiscal 2024 Highlights
- Net operating income (NOI) remained stable in Q4 and for Fiscal 2024 year-over-year, despite owning eight fewer properties at December 31, 2024 compared to the same date last year
- Same Property NOI* up 3.9% in Q4 year-over-year; up 7.7% for Fiscal 2024 year-over-year or up 5.4% excluding the impact of a one-time revenue adjustment, one temporary industrial vacancy, and a vacant 50% co-owned industrial property (see Table 4)
- Sale of 9 non-strategic 100%-owned properties for gross proceeds of $71.2 million and acquisition of one 100%-owned industrial property for $32.7 million in Fiscal 2024
- Subsequent to year-end, sale of one 50%-owned property for gross proceeds of $5.4 million (PROREIT's share), sale of one 100%-owned non-core property for gross proceeds of $5.9 million, and entered into a binding agreement for the sale of a 100%-owned non-core property for gross proceeds of $1.1 million
- 90.9% of 2024 gross leasable area ("GLA") renewed at average spread of 39.1%; 47.3% of GLA maturing in 2025 renewed at average spread of 31.8%; 45.0% of GLA maturing in 2026 renewed at 38.0% average spread
- Occupancy rate at 97.8% at December 31, 2024 (including committed space and excluding a 50%-owned property sold subsequent to year-end)
- Total debt to total asset of 50.0% at December 31, 2024, compared to 49.8% at the same date last year
- Total debt (current and non-current) of $498.6 million at December 31, 2024, a $16.7 million decrease compared to last year
- Adjusted Debt to Annualized Adjusted EBITDA Ratio* of 9.2x at December 31, 2024, compared to 9.6x at the same date last year
- Adjusted Debt to Gross Book Value* of 50.3% at December 31, 2024, compared to 50.2% at the same date last year
"Our Fiscal 2024 performance once again highlights the strength and resilience of our industrial-focused portfolio in generating stable net operating income across market conditions, while demonstrating our ability to soundly manage our leverage profile and capital allocation in a high-interest-rate environment, despite some relief during the year," said Gordon Lawlor,
"We are pleased with our continued leasing success, driven by strong rent lifts on renewals and new leases, as well as contractual rent escalations. This momentum resulted in Same Property NOI* growth of 7.7% in Fiscal 2024, a notable improvement over 1.7% growth in Fiscal 2023, with additional upside anticipated in Fiscal 2025.
"With 90.9% of our total GLA for 2024 renewed at an average spread of 39.1%, our industrial portfolio achieved an impressive rental spread of 50.5% for the year, and we have already secured not less than 45% of leasing renewals for both 2025 and 2026.
"In 2024, we remained focused on expanding our industrial exposure as planned. We successfully executed our capital recycling strategy, selling nine non-core properties for gross proceeds of over $71.2 million, while acquiring 100% of a strategically-located industrial property for $32.7 million. By year-end, our portfolio comprised 115 properties, with over 86% of GLA in the industrial sector.
"Our focus on small and mid-bay industrial properties has proven effective as demonstrated by low vacancy rates of 2.9% for small-bay and 3.6% for mid-bay, both below the overall Canadian industrial vacancy rate of 4.5% in Q4 2024 (1). Additionally, we continue to benefit from our strong foothold in the Halifax industrial market, with 52.6% of our base rent derived from Atlantic provinces at year end.
"Throughout the year, we managed our balance sheet prudently, maintaining Debt to Gross Book Value* at approximately 50% and reducing our Adjusted Debt to Annualized Adjusted EBITDA Ratio* to 9.2x at year-end 2024, down from 9.6x at previous year-end. We will continue to prioritize further leverage reduction over time.
"Looking ahead, our financial flexibility positions us well to capitalize on growth opportunities, while the significant embedded value within our portfolio provides support for continued rental rate growth and organic net operating income expansion. We will also remain committed to disciplined capital allocation and prudent balance sheet management to generate long-term value for our stakeholders," concluded Mr. Lawlor.
* Measures followed by the suffix "*" in this press release are non-IFRS measures. See "Non-IFRS Measures". |
(1) Information from JLL Canada's survey of industrial vacancies across Canada for all space sizes for Q4 2024. |
Financial Results
Table 1- Financial Highlights
(CAD $ thousands except unit, per unit amounts and unless otherwise stated) |
3 Months Ended December 31 2024 |
3 Months Ended December 31 2023 |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Financial data |
||||
Property revenue |
$24,883 |
$25,618 |
$99,213 |
$99,893 |
Net operating income (NOI) |
$14,653 |
$14,897 |
$58,523 |
$57,941 |
Same Property NOI (1) |
$13,885 |
$13,361 |
$54,775 |
$50,858 |
Net income (loss) and comprehensive income (loss) |
$1,879 |
$(149) |
$2,376 |
$25,906 |
Net income (loss) and comprehensive income (loss) per Unit - Basic (2) |
$0.0310 |
$(0.0025) |
$0.0392 |
$0.4281 |
Net income (loss) and comprehensive income (loss) per Unit - Diluted (2) |
$0.0307 |
$(0.0024) |
$0.0388 |
$0.4220 |
Total assets |
$997,762 |
$1,034,591 |
$997,762 |
$1,034,591 |
Total debt |
$498,571 |
$515,257 |
$498,571 |
$515,257 |
Total debt to total assets |
49.97 % |
49.80 % |
49.97 % |
49.80 % |
Adjusted Debt to Gross Book Value (1) |
50.25 % |
50.18 % |
50.25 % |
50.18 % |
Interest Coverage Ratio (1) |
2.5x |
2.5x |
2.5x |
2.5x |
Debt Service Coverage Ratio (1) |
1.6x |
1.6x |
1.6x |
1.6x |
Adjusted Debt to Annualized Adjusted EBITDA Ratio (1) |
9.3x |
9.3x |
9.2x |
9.6x |
Weighted average interest rate on mortgage debt |
3.90 % |
3.88 % |
3.90 % |
3.88 % |
Net cash flows provided from operating activities |
$11,650 |
$9,462 |
$31,098 |
$31,699 |
Funds from Operations (FFO) (1) |
$6,819 |
$7,557 |
$28,433 |
$26,306 |
Basic FFO per unit (1)(2) |
$0.1125 |
$0.1247 |
$0.4690 |
$0.4347 |
Diluted FFO per unit (1)(2) |
$0.1113 |
$0.1232 |
$0.4646 |
$0.4285 |
Adjusted Funds from Operations (AFFO) (1) |
$7,098 |
$7,595 |
$28,845 |
$29,429 |
Basic AFFO per unit (1)(2) |
$0.1171 |
$0.1253 |
$0.4758 |
$0.4863 |
Diluted AFFO per unit (1)(2) |
$0.1159 |
$0.1239 |
$0.4713 |
$0.4794 |
AFFO Payout Ratio – Basic (1) |
96.1 % |
89.8 % |
94.6 % |
92.5 % |
AFFO Payout Ratio – Diluted (1) |
97.1 % |
90.8 % |
95.5 % |
93.9 % |
(1) |
Represents a non-IFRS measure. See "Non-IFRS Measures". |
(2) |
Total basic units consist of trust units and Class B LP Units (as defined herein). Total diluted units also include deferred trust units and restricted trust units issued under the REIT's long-term incentive plan. |
At December 31, 2024 PROREIT owned 115 investment properties (including a 50% ownership interest in 42 investment properties), compared to 123 investment properties (including a 50% ownership interest in 42 investment properties) at December 31, 2023. The year-over-year net decrease in total properties is a result of the sale of a 100% interest in nine investment properties and the acquisition of a 100% interest in one investment property. At December 31, 2024, total assets amounted to $997.8 million, compared to $1.035 billion as at December 31, 2023.
For the fourth quarter ended December 31, 2024:
- Property revenue amounted to $24.9 million, a decrease of $0.7 million or 2.9%, compared to $25.6 million for the same prior year period. This change was mainly due to the net
- decrease in the number of properties in the portfolio, partially offset by contractual increases in rent and higher rental rates on lease renewals and new leases.
- Net operating income (NOI) amounted to $14.7 million, compared to $14.9 million in Q4 2023, a decrease of $0.2 million or 1.6%. The decrease was mainly driven by the same factors impacting property revenue described above.
- Same Property NOI*, which represented 114 properties out of the 115 properties in the portfolio, reached $13.9 million, an increase of $0.5 million or 3.9%, compared to the same quarter last year. The increase was largely a result of contractual increases in rent and higher rental rates on lease renewals and new leases, predominantly in the industrial asset class.
- Net cash flows provided from operating activities was $11.7 million, compared to $9.5 million for Q4 2023, an increase of $2.2 million or 23%.
- FFO* was $6.8 million, a decrease of $0.8 million or 9.8%, compared to $7.6 million in the same quarter last year. The change was mainly driven by an increase in debt settlement costs related to the sale of properties, as well as a slight increase in vacancy, offset by general increases in contractual base rent, higher rental rates on lease renewals and new leases, despite owning eight fewer properties compared to the same period last year.
- AFFO Payout Ratio – Basic* stood at 96.1%, compared to 89.8% for Q4 2023, primarily due to an increase in stabilized leasing costs, partially offset by the acquisition of an investment property in Q3 2024, general increases in contractual base rent, and higher rental rates on lease renewals and new leases, despite owning eight fewer properties in our portfolio compared to December 31, 2023.
For the fiscal year ended December 31, 2024:
- Property revenue was $99.2 million, a decrease of $0.7 million or 0.7%, compared to $99.9 million for Fiscal 2023. The decrease was mainly due to the decrease in the number of properties in the portfolio, partially offset by contractual increases in rent and higher rental rates on lease renewals and new leases.
- Net operating income (NOI) was $58.5 million, an increase of $0.6 million, compared to $57.9 million for Fiscal 2023. The increase was mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases, despite owning fewer properties.
- Same Property NOI*, which represented 114 properties out of the 115 properties in the portfolio, was $54.8 million, an increase of $4.0 million or 7.7% over last year, which includes the impact of a $0.1 million one-time revenue adjustment in the Q2 2024, a $1.2 million net impact of a temporary vacancy of a 102,000 square foot industrial building which was fully leased in 2024, as well as the $0.1 million impact of a vacant 50% co-owned industrial property. Excluding these impacts, Same Property NOI* increased by 5.4% in Fiscal 2024. The factors impacting the increase are mainly attributable to contractual increases in rent, higher rental rates on lease renewals and higher rental rates on new leases, predominately in the industrial asset class.
- Net cash flows provided from operating activities were $31.1 million, compared to $31.7 million for the previous year.
- FFO* was $28.4 million, an increase of $2.1 million or 8.1%, compared to Fiscal 2023. The increase is primarily driven by general increases in contractual base rent, higher rates on lease renewals and new leases despite owning fewer properties compared to the same period last year, and a reduction of one-time costs which included CEO succession plan costs of $2.2 million in Fiscal 2023, partially offset by an increase in interest expense and debt settlement costs in connection with the sale of properties.
- AFFO Payout Ratio – Basic* was 94.6%, compared to 92.5% for Fiscal 2023, primarily due to the same factors impacting the quarterly results as described above.
Sustained Operating Environment
As of December 31, 2024, PROREIT's portfolio comprised 115 investment properties, totalling 6.1 million square feet of GLA, with a weighted average lease term to maturity (WALT) of 3.8 years.
On a pro forma basis, factoring in secured and renewed leases for 2025 and 2026, WALT extends to 4.6 years. The pro forma WALT increases to 6.6 years for the REIT's top 10 tenants.
The occupancy rate of the portfolio remains strong at 97.8% as at December 31, 2024 (including committed space and excluding a 50%-owned vacant industrial property sold subsequent to year-end).
As of the date of this press release, approximately 90.9% of our overall GLA maturing in 2024 has been renewed at 39.1% positive average spread, and at 50.5% rental spread for the industrial sector; approximately 47.3% of GLA maturing in 2025 has been renewed at 31.8% positive average spread and approximately 45.0% of GLA maturing in 2026 has been renewed at 38.0% positive average spread.
The industrial segment accounted for 85.8% of GLA and 80.8% of base rent at December 31, 2024.
2025 Leasing Renewals
PROREIT entered into a 128,000-square-foot industrial lease with a new quality international tenant for a 15-year term with base rent in excess of 30% over the expiring rent with annual rent steps, replacing a tenant expiry which occurred in January 2025.
In June 2024, PROREIT renewed an industrial lease with a single credit quality tenant expiring in 2025, for a five-year term starting from the date of expiry. The renewed base rent is in excess of 40% over the expiring rent with annual rent steps and represents approximately 42,000 square feet of GLA.
In December 2024, PROREIT renewed an industrial lease with a single credit quality tenant expiring in 2025, for a seven-year term starting from the date of expiry. The renewed base rent is in excess of 20% over the expiring rent with annual rent steps and represents approximately 95,000 square feet of GLA.
PROREIT also entered into a 21,000-square-foot industrial lease with a new quality national tenant for a 10-year term commencing April 2025 with base rent in excess of 120% over the previous tenant's expiring base rent with annual rent steps. As of July 2023, this property had 29,000 square feet vacant, and PROREIT secured the remaining vacant 8,000 square feet with the current tenant expanding into this space. The expansion is for a seven-year term with base rent at current market rates with annual rent steps commencing in April 2025.
2026 Leasing Renewals
In November 2024, PROREIT renewed a retail lease with a single credit quality tenant expiring in 2026, for a 10-year term starting from the date of expiry. The renewed base rent remains the same as the expiring rent with a one-time rent step to commence in year 6 of the renewal term and represents approximately 42,000 square feet of GLA.
In December 2024, the REIT renewed an industrial lease with a single tenant expiring in 2026, for a three-year term starting from the date of expiry. The renewed base rent is in excess of 40% over the expiring rent with annual rent steps and represents approximately 155,000 square feet of GLA.
In February 2025, the REIT renewed four industrial leases with a credit quality tenant expiring in 2026, each for a five-year term starting from the date of expiry. The renewed base rent is in excess of 45% over the expiring rent with annual rent steps and represents approximately 325,000 square feet of GLA.
Portfolio Transactions
In Fiscal 2024, PROREIT sold nine 100%-owned properties for gross proceeds of more than $71.2 million, and acquired one 100%-owned industrial property for a purchase price of $32.7 million, as follows:
2024 Dispositions |
Use of Proceeds |
|||||
Date |
Sector |
Address |
GLA (sq. ft.) |
Gross |
Mortgage |
General |
February 2, 2024 |
Retail |
5110 St. Margaret's Bay Road, Upper Tantallon, NS |
59,000 |
$13.5M |
$8.8M |
$4.7M |
February 9, 2024 |
Industrial |
5655 de Marseille Street, Montreal, QC |
65,000 |
$7.2M |
$7.2M |
- |
March 15, 2024 |
Retail |
1604 Cliffe Avenue, Courtenay, BC |
11,000 |
$5.4M |
$5.4M |
- |
May 15, 2024 |
Retail |
420 Albert Street, Regina, SK |
11,000 |
$4.8M |
- |
$4.8M |
May 27, 2024 |
Retail |
789 Main Street, Pincher Creek, AB |
8,500 |
$2.2M |
- |
$2.2M |
June 7, 2024 |
Industrial |
61-85 Muir Road, Winnipeg, MB |
38,000 |
$6.5M |
$5.9M |
$0.6M |
September 5, 2024 |
Office |
1335 Carling Road, Ottawa, ON |
69,000 |
$11.3M |
$8.2M |
$3.1M |
September 13, 2024 |
Office |
2 Gurdwara Road, Ottawa, ON |
94,000 |
$15.3M |
$10.5M |
$4.8M |
October 17, 2024 |
Retail |
5010 53rd Street, Lacombe, AB |
11,000 |
$5.0M |
$3.4M |
$1.6M |
Total |
366,500 |
$71.2M |
$49.4M |
$21.8M |
||
(1) Excludes closing costs |
||||||
On September 17, 2024, PROREIT completed the acquisition of a 100% interest in an industrial property located in Dorval, Quebec, totalling approximately 134,000 square feet for a purchase price of $32.7 million (excluding closing costs). The purchase price was financed through a new $21.2 million mortgage with the balance funded by proceeds of previous non-core property sales and a draw on available operating facilities.
Subsequent to year-end on February 7, 2025, PROREIT completed the sale of a 50% co-ownership industrial property totalling approximately 62,000 square feet for gross proceeds of $10.8 million (excluding closing costs). The REIT's 50% share of the gross proceeds was $5.4 million (excluding closing costs). The net proceeds of the sale were used to repay approximately $2.4 million of a related mortgage, with the balance used for general business and working capital purposes.
Subsequent to year-end on February 14, 2025, PROREIT entered into a binding agreement with a third-party purchaser to sell a non-core retail property located in Creston, British Columbia, totalling approximately 5,200 square feet for gross proceeds of $1.1 million (excluding closing costs). Proceeds from the sale will be used to partially repay approximately $0.7 million in a related mortgage maturing in January 2033. The balance will be used for general business and working capital purposes. The closing of the sale is scheduled for the first quarter of 2025 and is subject to standard closing conditions.
On March 6, 2025, the REIT completed the sale a non-core retail property located in New Minas, Nova Scotia totalling approximately 52,000 square feet for gross proceeds of $5.9 million (excluding closing costs). The net proceeds of the sale were used to partially repay approximately $4.0 million in a related mortgage maturing in July 2028, with the balance used for general business and working capital purposes.
In March 2025, the REIT received a commitment for approximately $12.0 million in incremental financing with respect to an Ontario industrial property from its current lender at market rates. The financing is expected to be funded in the coming weeks and will mature in September 2026, consistent with the original financing.
Financial Position
Total debt (current and non-current) was $498.6 million at December 31, 2024, a decrease of $16.7 million compared to the same date last year.
Adjusted Debt to Gross Book Value* was 50.3% at December 31, 2024, compared to 50.2% at the same date last year.
Adjusted Debt to Annualized Adjusted EBITDA Ratio* was 9.2x at December 31, 2024, compared to 9.6x at the same date last year.
The weighted average interest rate (WAIR) on mortgage debt was 3.90% as of December 31, 2024, compared to 3.88% at year-end 2023 and 3.39% at year-end 2021. Despite a higher interest rate environment over the last few years, PROREIT has effectively managed its interest rate exposure, limiting the increase in WAIR to just 51 basis points over this period.
Distributions
Distributions to unitholders of $0.0375 per trust unit of the REIT were declared monthly during the three months ended December 31, 2024, representing distributions of $0.45 per unit on an annual basis. Equivalent distributions are paid on the Class B limited partnership units of PRO REIT Limited Partnership ("Class B LP Units").
On January 21, 2025, PROREIT announced a cash distribution of $0.0375 per trust unit for the month of January 2025. The distribution was paid February 18, 2025, to unitholders of record as at January 31, 2025.
Strategy
With a focus on high-quality light industrial real estate in Canada, PROREIT's strategy for growth and value creation is to expand its quality portfolio organically and through disciplined acquisitions, while optimizing its balance sheet and capital allocation. In line with this strategy, PROREIT is focused on achieving its medium-term goals of reaching $2 billion in assets, 90% industrial base rent and 45% Adjusted Debt to Gross Book Value* in the next three to five years. These medium-term goals are based on the REIT's current business plan and strategies and are not intended to be a forecast of future results. See "Forward-Looking Statements".
Investor Conference Call and Webcast Details
PROREIT will hold a conference call to discuss its fourth quarter and Fiscal 2024 results on March 13, 2025 at 9:00 a.m. ET. There will be a question period reserved for financial analysts. To access the conference call, please dial 1-800-990-4777 or 1-514-400-3794 (conference: 26203) A recording of the call will be available until March 20, 2025 by dialing 1-888-660-6345 or 1-289-819-1450 and using access code: 262203#.
The conference call will also be accessible via live webcast on PROREIT's website at www.proreit.com or at https://app.webinar.net/BXgvmy7DOKj.
Annual Meeting of Unitholders
PROREIT will host its annual meeting on June 3, 2025 at 11:00am (ET) in Montreal, Quebec. Additional information regarding the meeting will be contained in the REIT's information circular, which will be prepared in connection with the meeting and available on PROREIT's website in the Investors section under Annual Meeting and at www.sedarplus.ca.
About PROREIT
PROREIT (TSX:PRV.UN) is an unincorporated open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. Founded in 2013, PROREIT owns a portfolio of high-quality commercial real estate properties in Canada, with a strong industrial focus in robust secondary markets.
For more information on PROREIT, please visit the website at: https://proreit.com.
Non-IFRS Measures
PROREIT's consolidated financial statements are prepared in accordance with International Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. In addition to reported IFRS measures, industry practice is to evaluate real estate entities giving consideration, in part, to certain non-IFRS financial measures, non-IFRS ratios and other specified financial measures (collectively, "non-IFRS measures"). Without limitation, measures followed by the suffix "*" in this press release are non-IFRS measures.
As a complement to results provided in accordance with IFRS, PROREIT discloses and discusses in this press release (i) certain non-IFRS financial measures, including: Adjusted Debt, adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA"); adjusted funds from operations ("AFFO"); annualized adjusted earnings before interest, tax, depreciation and amortization ("Annualized Adjusted EBITDA"); funds from operations ("FFO"); gross book value ("Gross Book Value"); and Same Property NOI and (ii) certain non-IFRS ratios, including: Adjusted Debt to Annualized Adjusted EBITDA Ratio; Adjusted Debt to Gross Book Value; AFFO Payout Ratio – Basic; AFFO Payout Ratio – Diluted; Basic AFFO per Unit; Diluted AFFO per Unit; Basic FFO per Unit; Diluted FFO per Unit; Debt Service Coverage Ratio; and Interest Coverage Ratio. These non-IFRS measures are not defined by IFRS and do not have a standardized meaning under IFRS. PROREIT's method of calculating these non-IFRS measures may differ from other issuers and may not be comparable with similar measures presented by other income trusts or issuers. PROREIT has presented such non-IFRS measures and ratios as management believes they are relevant measures of PROREIT's underlying operating and financial performance. For information on the most directly comparable financial measure disclosed in the primary financial statements of the REIT, composition of the non-IFRS measures, a description of how PROREIT uses these measures and an explanation of how these measures provide useful information to investors, refer to the "Non-IFRS Measures" section of PROREIT's management's discussion and analysis for the three and twelve months ended December 31, 2024, dated March 12, 2025, available on PROREIT's SEDAR+ profile at www.sedarplus.ca, which is incorporated by reference into this press release. As applicable, the reconciliations for each non-IFRS measure are outlined below. Non-IFRS measures should not be considered as alternatives to net income, cash flows provided by operating activities, cash and cash equivalents, total assets, total equity, or comparable metrics determined in accordance with IFRS as indicators of PROREIT's performance, liquidity, cash flow and profitability.
TABLE 2- Reconciliation of net operating income (loss) to net income and comprehensive income (loss)
(CAD $ thousands) |
3 Months Ended December 31 2024 |
3 Months Ended December 31 2023 |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Net operating income |
14,653 |
14,897 |
58,523 |
57,941 |
General and administrative expenses |
1,408 |
1,263 |
5,350 |
7,269 |
Long-term incentive plan expense |
(14) |
1,117 |
2,824 |
1,684 |
Depreciation of property and equipment |
82 |
156 |
590 |
477 |
Amortization of intangible assets |
61 |
61 |
245 |
309 |
Interest and financing costs |
5,826 |
5,841 |
23,173 |
22,425 |
Distributions - Class B LP Units |
134 |
153 |
568 |
619 |
Fair value adjustment - Class B LP Units |
(742) |
664 |
619 |
(1,638) |
Fair value adjustment - investment properties |
6,665 |
5,785 |
24,519 |
2,817 |
Fair value adjustment - derivative financial instrument |
(509) |
540 |
(839) |
(587) |
Other income |
(1,123) |
(1,025) |
(4,407) |
(3,460) |
Other expenses |
654 |
491 |
2,379 |
1,795 |
Debt settlement costs |
332 |
– |
1,126 |
126 |
Transaction costs |
– |
– |
– |
199 |
Net income (loss) and comprehensive income (loss) |
$1,879 |
$(149) |
$2,376 |
$25,906 |
Table 3 - Reconciliation of Same Property NOI to net operating income (as reported in the consolidated financial statements)
(CAD $ thousands) |
3 Months Ended December 31 2024 |
3 Months Ended December 31 2023 |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Property revenue |
$24,883 |
$25,618 |
$99,213 |
$99,893 |
Property operating expenses |
10,230 |
10,721 |
40,690 |
41,952 |
Net operating income (NOI) as reported in the financial statements |
14,653 |
14,897 |
58,523 |
57,941 |
Straight-line rent adjustment |
(139) |
(116) |
(477) |
(468) |
NOI after straight-line rent adjustment |
14,514 |
14,781 |
58,046 |
57,473 |
NOI sourced from: |
||||
Acquisitions |
(561) |
– |
(647) |
– |
Dispositions |
(68) |
(1,420) |
(2,624) |
(6,615) |
Same Property NOI (1) |
$13,885 |
$13,361 |
$54,775 |
50,858 |
Number of same properties |
114 |
114 |
114 |
114 |
(1) Represents a non-IFRS measure. See "Non-IFRS Measures". |
Table 4 - Same Property NOI and Same Property NOI by asset class, adjusted to exclude a one-time revenue adjustment, one 2023 vacancy impact fully leased in 2024, and a vacant 50% co-owned industrial property
3 Months Ended |
Year Ended |
||||||
(CAD $ thousands) |
Number of same |
December 31 |
December 31 |
Number of same |
December 31 |
December 31 |
|
Same Property NOI(1) |
114 |
$13,885 |
$13,361 |
114 |
$54,775 |
$50,858 |
|
NOI of the temporary vacancy of one industrial property |
– |
– |
– |
(1) |
(1,608) |
(429) |
|
One-time revenue adjustment of one industrial property |
– |
– |
(100) |
– |
|||
NOI of the vacant 50% co-owned industrial property |
(1) |
17 |
(48) |
(1) |
(136) |
(192) |
|
Same Property NOI (adjusted for one temporary vacancy, one-time |
113 |
$13,902 |
$13,313 |
112 |
$52,931 |
$50,237 |
|
Industrial (adjusted for one temporary vacancy, one-time revenue adjustment, and a vacant 50% co-owned industrial property) |
83 |
$11,199 |
$10,670 |
82 |
$42,326 |
$40,067 |
|
Retail |
26 |
2,138 |
2,060 |
26 |
8,431 |
8,025 |
|
Office |
4 |
565 |
583 |
4 |
2,174 |
2,145 |
|
Same Property NOI (adjusted for one temporary vacancy, one-time |
113 |
$13,902 |
$13,313 |
112 |
$52,931 |
$50,237 |
|
(1) Non-IFRS measure. See "Non-IFRS Measures". |
Table 5 - Reconciliation of AFFO and FFO to net income and comprehensive income
(CAD $ thousands except unit, per unit amounts and unless otherwise stated) |
3 Months Ended December 31 2024 |
3 Months Ended December 31 2023 |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Net income (loss) and comprehensive income (loss) for the period |
$1,879 |
$(149) |
$2,376 |
$25,906 |
Add: |
||||
Long-term incentive plan |
(669) |
503 |
945 |
(1,120) |
Distributions - Class B LP Units |
134 |
153 |
568 |
619 |
Fair value adjustment - investment properties |
6,665 |
5,785 |
24,519 |
2,817 |
Fair value adjustment - Class B LP Units |
(742) |
664 |
619 |
(1,638) |
Fair value adjustment - derivative financial instrument |
(509) |
540 |
(839) |
(587) |
Amortization of intangible assets |
61 |
61 |
245 |
309 |
FFO (1) |
$6,819 |
$7,557 |
$28,433 |
$26,306 |
Deduct: |
||||
Straight-line rent adjustment |
$(139) |
$(116) |
$(477) |
$(468) |
Maintenance capital expenditures |
(87) |
(130) |
(353) |
(615) |
Stabilized leasing costs |
(922) |
(801) |
(3,570) |
(2,564) |
Add: |
||||
Long-term incentive plan |
655 |
614 |
1,879 |
2,804 |
Amortization of financing costs |
346 |
378 |
1,432 |
1,184 |
Accretion expense - Convertible Debentures |
94 |
93 |
375 |
217 |
Debt settlement costs |
332 |
– |
1,126 |
126 |
Transaction costs |
– |
– |
– |
199 |
CEO Succession plan costs |
– |
– |
– |
2,240 |
AFFO (1) |
$7,098 |
$7,595 |
$28,845 |
$29,429 |
Basic FFO per unit (1)(2) |
$0.1125 |
$0.1247 |
$0.4690 |
$0.4347 |
Diluted FFO per unit (1)(2) |
$0.1113 |
$0.1232 |
$0.4646 |
$0.4285 |
Basic AFFO per unit (1)(2) |
$0.1171 |
$0.1253 |
$0.4758 |
$0.4863 |
Diluted AFFO per unit (1)(2) |
$0.1159 |
$0.1239 |
$0.4713 |
$0.4794 |
Distributions declared per Unit and Class B LP Unit |
$0.1125 |
$0.1125 |
$0.4500 |
$0.4500 |
AFFO Payout Ratio – Basic (1) |
96.1 % |
89.8 % |
94.6 % |
92.5 % |
AFFO Payout Ratio – Diluted (1) |
97.1 % |
90.8 % |
95.5 % |
93.9 % |
Basic weighted average number of units (2)(3) |
60,634,909 |
60,603,438 |
60,627,925 |
60,510,713 |
Diluted weighted average number of units (2)(3) |
61,251,790 |
61,316,451 |
61,197,011 |
61,385,565 |
(1) |
Represents a non-IFRS measure. See "Non-IFRS Measures". |
(2) |
FFO and AFFO per unit is calculated as FFO or AFFO, as the case may be, divided by the total of the weighted average number of basic or diluted units, as applicable, added to the weighted average number of Class B LP Units outstanding during the period. |
(3) |
Total basic units consist of trust units of the REIT and Class B LP Units. Total diluted units also includes deferred trust units and restricted trust units issued under the REIT's long-term incentive plan. |
Table 6 - Reconciliation of Adjusted EBITDA to net income (loss) and comprehensive income (loss)
(CAD $ thousands) |
3 Months Ended December 31 2024 |
3 Months Ended December 31 2023 |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Net income (loss) and comprehensive income (loss) |
$1,879 |
$(149) |
$2,376 |
$25,906 |
Interest and financing costs |
5,826 |
5,841 |
23,173 |
22,425 |
Depreciation of property and equipment |
82 |
156 |
590 |
477 |
Amortization of intangible assets |
61 |
61 |
245 |
309 |
Fair value adjustment - Class B LP Units |
(742) |
664 |
619 |
(1,638) |
Fair value adjustment - investment properties |
6,665 |
5,785 |
24,519 |
2,817 |
Fair value adjustment - derivative financial instrument |
(509) |
540 |
(839) |
(587) |
Distributions - Class B LP Units |
134 |
153 |
568 |
619 |
Straight-line rent |
(139) |
(116) |
(477) |
(468) |
Long-term incentive plan expense |
(14) |
1,117 |
2,824 |
1,684 |
Debt settlement costs |
332 |
– |
1,126 |
199 |
Transaction costs |
– |
– |
– |
126 |
CEO succession plan costs |
– |
– |
– |
2,240 |
Adjusted EBITDA (1) |
$13,575 |
$14,052 |
$54,724 |
$54,109 |
Annualized Adjusted EBITDA (1) |
$54,300 |
$56,208 |
$54,724 |
$54,109 |
(1) Represents a non-IFRS measure. See "Non-IFRS Measures". |
Table 7 - Calculation of Adjusted Debt
(CAD $ thousands) |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Year Ended December 31 2022 |
Debt (non-current and current portion) |
$498,571 |
$515,257 |
$514,325 |
Unamortized financing costs |
4,030 |
5,108 |
2,379 |
Accretion expense - Convertible Debentures |
(592) |
(217) |
– |
Fair value adjustment - derivative financial instrument |
1,426 |
587 |
– |
Adjusted Debt (1) |
$503,435 |
$520,735 |
$516,704 |
(1) See "Non-IFRS Measures". |
Table 8 - Calculation of Adjusted Debt to Annualized Adjusted EBITDA Ratio
(CAD $ thousands) |
3 Months Ended December 31 2024 |
3 Months Ended December 31 2023 |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Adjusted Debt (1) |
$503,436 |
$520,735 |
$503,436 |
$520,735 |
Adjusted EBITDA (1) |
$13,575 |
$14,052 |
$54,724 |
$54,109 |
Annualized Adjusted EBITDA (1) |
$54,300 |
$56,208 |
$54,724 |
$54,109 |
Adjusted Debt to Annualized Adjusted EBITDA Ratio (1) |
9.3x |
9.3x |
9.2x |
9.6x |
(1) Represents a non-IFRS measure. See "Non-IFRS Measures". |
Table 9 - Calculation of the Interest Coverage Ratio
(CAD $ thousands) |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Year Ended December 31 2022 |
Annualized Adjusted EBITDA (1) |
$54,724 |
$54,109 |
$53,316 |
|
$21,955 |
$21,609 |
$19,051 |
Interest Coverage Ratio (1) |
2.5x |
2.5x |
2.8x |
(1) Non-IFRS measure. See "Non-IFRS Measures". |
Table 10 - Calculation of the Debt Service Coverage Ratio
(CAD $ thousands) |
Year Ended December 31 2024 |
Year Ended December 31 2023 |
Year Ended December 31 2022 |
Annualized Adjusted EBITDA (1) |
$54,724 |
$54,109 |
$53,316 |
|
21,955 |
21,609 |
19,051 |
Principal repayments |
12,380 |
13,259 |
13,814 |
Debt Service Requirements |
$34,335 |
$34,868 |
$32,865 |
Debt Service Coverage Ratio (1) |
1.6x |
1.6x |
1.6x |
(1) Non-IFRS measure. See "Non-IFRS Measures". |
Table 11 - Calculation of Gross Book Value and Adjusted Debt to Gross Book Value
(CAD $ thousands except unit, per unit amounts and unless otherwise stated) |
3 Months |
3 Months |
3 Months |
3 Months |
3 Months |
3 Months |
3 Months |
3 Months |
Total assets, including investment properties stated at fair value |
$997,762 |
$1,003,747 |
$990,199 |
$1,001,575 |
$1,034,591 |
$1,047,114 |
$1,057,548 |
$1,054,881 |
Accumulated depreciation on property and equipment and intangible assets |
4,011 |
3,867 |
3,649 |
3,409 |
3,201 |
3,619 |
3,451 |
3,251 |
Gross Book Value (1) |
$1,001,773 |
$1,007,614 |
$993,848 |
$1,004,984 |
$1,037,792 |
$1,050,733 |
$1,060,999 |
$1,058,132 |
Debt (non-current and current portion) |
498,571 |
501,064 |
486,646 |
493,624 |
515,257 |
519,075 |
534,394 |
518,668 |
Unamortized financing costs |
4,030 |
4,369 |
4,541 |
4,721 |
5,108 |
5,430 |
5,701 |
2,196 |
Cumulative accretion expense - Convertible Debentures |
(592) |
(498) |
(404) |
(310) |
(217) |
(124) |
(19) |
– |
Cumulative fair value adjustment - derivative financial instrument |
1,426 |
917 |
1,602 |
(918) |
587 |
1,127 |
(21) |
– |
Adjusted Debt (1) |
$503,435 |
$505,852 |
$492,385 |
$497,117 |
$520,735 |
$525,508 |
$540,055 |
$520,864 |
Adjusted Debt to Gross Book Value (1) |
50.25 % |
50.20 % |
49.54 % |
49.47 % |
50.18 % |
50.01 % |
50.90 % |
49.22 % |
(1) Represents a non-IFRS measure. See "Non-IFRS Measures". |
Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities legislation, including statements relating to certain expectations, projections, growth plans and other information related to REIT's business strategy and future plans. Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond PROREIT's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements.
Forward-looking statements contained in this press release include, without limitation, statements pertaining to the execution by PROREIT of its growth strategy, the future financial and operating performance of PROREIT, the medium-term goals of the REIT, and the expected closing of sale transactions and use of proceeds thereof. PROREIT's objectives and forward-looking statements are based on certain assumptions, including that (i) PROREIT will receive financing on favourable terms; (ii) the future level of indebtedness of PROREIT and its future growth potential will remain consistent with the REIT's current expectations; (iii) there will be no changes to tax laws adversely affecting PROREIT's financing capacity or operations; (iv) the impact of the current economic climate and the current global financial conditions on PROREIT's operations, including its financing capacity and asset value, will remain consistent with PROREIT's current expectations; (v) the performance of PROREIT's investments in Canada will proceed on a basis consistent with PROREIT's current expectations; and (vi) capital markets will provide PROREIT with readily available access to equity and/or debt.
The medium-term goals of the REIT disclosed under "Strategy" are based on the REIT's current business plan and strategies and are not intended to be a forecast of future results. The medium-term goals contemplate the REIT's historical growth and certain assumptions including but not limited to (i) current global capital market conditions, (ii) access to capital, (iii) interest rate exposure, (iv) availability of high-quality industrial properties for acquisitions, (v) dispositions of retail and office properties, and (vi) capacity to finance acquisitions on an accretive basis.
The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. PROREIT 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 law.
Additional information about these assumptions and risks and uncertainties is contained under "Risk Factors" in PROREIT's latest annual information form and "Risk and Uncertainties" in PROREIT's management's discussion and analysis for the three and twelve month periods ended December 31, 2024, which are available under PROREIT's profile on SEDAR+ at www.sedarplus.ca.
SOURCE Pro Real Estate Investment Trust
For further information: Investor Relations: PRO Real Estate Investment Trust, Gordon G. Lawlor, CPA, President and Chief Executive Officer, 514-933-9552; PRO Real Estate Investment Trust, Alison J. Schafer, CPA, Chief Financial Officer and Secretary, 514-933-9552
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