Pure Multi-Family REIT LP Announces Release of Third Quarter Financial Results and Conference Call

VANCOUVER, Nov. 15, 2017 /CNW/ - Pure Multi-Family REIT LP ("Pure Multi-Family") (TSXV: RUF.U, RUF.UN, RUF.DB.U; OTCQX: PMULF) is pleased to announce the release of its financial results for the three and nine months ended September 30, 2017.

The results, consisting of Pure Multi-Family's condensed interim consolidated financial statements for the three and nine months ended September 30, 2017, and management's discussion and analysis ("MD&A") of results of operations and financial condition dated November 15, 2017, are available on SEDAR at www.sedar.com and www.puremultifamily.com. All metrics are stated at Pure Multi-Family's interest, which adjusts for any real estate taxes related to IFRIC 21.

Stephen Evans, CEO of Pure Multi-Family, stated, "We are pleased to announce our third quarter results for 2017.  During the quarter, our primary focus was to improve occupancy across our portfolio and to complete the internalization of property management.  I am proud to announce that we achieved success on both objectives as our portfolio physical occupancy increased from 93.7% to 95.0% and all investment properties were successfully transitioned in-house from third party property management during the quarter.

"Our properties continued to deliver positive same property rental rate growth, however this was partially tempered by an increase in rent concessions in order to improve the occupancy across the portfolio.  We believe these concessions are short-term in nature and will provide long-term stability to the portfolio.  We are confident that our strategy of acquiring high-quality newer assets in growth markets will serve our investors very well over the long-term as we continue to work our way through these short-term issues.

"We anticipate our vertically-integrated property management platform will be able to generate market, operational and financial data in real time, improve some of our leasing processes, achieve cost savings over the coming quarters, and provide a scalable platform for future growth."

Financial Results

Using a base portfolio of investment properties owned as of January 1, 2016 and throughout the comparative periods, for the three months ended September 30, 2017, Pure Multi-Family achieved same property revenue growth of 1.8%, while same property net rental income ("NOI") decreased by 0.2%, compared to the same period in the prior year.  For the nine months ended September 30, 2017, Pure Multi-Family achieved same property revenue growth of 2.9% and same property NOI growth of 0.3% compared to the same period in the prior year.  For the three and nine months ended September 30, 2017, the same property revenue growth was primarily driven by an increase in same property average rent per occupied unit, which was partially offset by a slight decrease in same property average physical occupancy and an increase in concessions.  Same property NOI, over these same periods, was primarily impacted by the quarter-over-quarter fluctuations in property tax expense, coupled with increases in property expenditures related to the stabilization of occupancy.

On a per unit basis, Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") were both negatively impacted during the three and nine months ended September 30, 2017 primarily due to the bought deal equity offerings completed during the prior quarters, the timing of the deployment of the net proceeds therefrom for acquisitions, the additional general and administrative ("G&A") expense incurred due to the internalization of property management and asset management functions, and the lowering of the overall leverage of Pure Multi-Family's statement of financial position.

Pure Multi-Family incurred G&A expense of $1,645,725 for the three months ended September 30, 2017, and $3,685,612 for the nine months ended September 30, 2017.  G&A expense as a percentage of revenues for the three and nine months ended September 30, 2017 was 6.8% and 5.5%, respectively.  Included in G&A expense for the three and nine months ended September 30, 2017 were non-recurring expenditures resulting from the internalization of the property management function of $489,486 and $701,990, respectively.  Removing these non-recurring expenditures results in an adjusted G&A expense as a percentage of revenue for the three and nine months ended September 30, 2017 of 4.8% and 4.5%, respectively.

Property Management Internalization

Non-recurring initial costs were incurred during the quarter relating to establishing our property management platform and our new Dallas Fort-Worth office. Although there was some duplication of costs during the transition phase, all investment properties were successfully transitioned in-house from third party property management during the quarter.

As of October 1, 2017, all external third-party property management fees have ceased to be paid by Pure Multi-Family, and we believe this will be accretive to all unitholders and drive per unit cash flow growth over the long term. 

Deleveraging the Statement of Financial Position

The Debt to Gross Book Value Ratio across our portfolio was 50.8% as at September 30, 2017. We have made a conscious effort to decrease our leverage ratios on new acquisitions to improve our overall portfolio leverage ratios as we continue to pursue growth. Of the five acquisitions made through the third quarter of 2017, total debt of $99.5 million was obtained, representing a leverage ratio of 48.3%.

Although deleveraging can create a negative impact on payout ratios in the near term, we believe it is the right thing to do for long term success.

Property Tax Appeals

Five property tax appeals relating to the prior year remain outstanding as of September 30, 2017.  We believe there is a high probability of such appeals being resolved before the end of 2017 and are working diligently on finalizing the current year property tax assessments.

Acquisitions

In July, we acquired PURE at La Villita ("La Villita"), a 306 Unit Class A multi-family apartment community located in the prestigious Las Colinas submarket of Dallas, Texas, for US$48.8 million. We funded the purchase of La Villita with cash on hand and new first mortgage financing in the amount of US$24.4 million, bearing a fixed interest rate of 3.81% per annum for a term of 15 years.

Houston Property Update

In late August, the devastating Tropical Storm Harvey hit landfall in Southeast Texas and delivered tremendous rainfall to the city of Houston over four days. We were fortunate to report only minor damage to our two Houston apartment communities.  Pure Multi-Family incurred approximately $61,500 in damages during the quarter related to Tropical Storm Harvey.  While there are still some minor repairs ongoing, both properties continue to operate at full capacity.

AFFO Payout ratio

The primary reasons for the increased FFO and AFFO payout ratios in Q3 were due to excess cash on the balance sheet, resulting from the two equity offerings completed during Q2 2017, deployment of net proceeds therefrom for acquisitions, increase in property tax expenses and the additional G&A expenses incurred as a result of the internalization of the property management and asset management functions.

Q3 2017 Financial Highlights

				As at September 30, 2017	As at December 31, 2016	Change
Debt to Gross Book Value Ratio				50.8%	55.2%	(440bps)
Fair Value of Investment Properties (US$000's)				1,013,652	778,547	30.2%
Weighted Average Fair Value IFRS Capitalization Rate				5.18%	5.41%	(23bps)
Total Portfolio Leased Occupancy				97.1%	94.9%	220bps
Total Number of Investment Properties				20	15	33.3%
Total Number of Residential Units				6,515	5,229	24.6%
Portfolio Weighted Average Year of Construction				2006	2006	-
	For the nine months ended September 30,			For the three months ended September 30,
(US$000's, except per unit amounts)	2017	2016	Change	2017	2016	Change
Weighted Average Class A Units Outstanding - Basic	66,297,478	50,255,692		76,729,771	52,660,126
Weighted Average Class A Units Outstanding - Diluted	70,329,336	54,889,804		76,729,771	58,368,104
Rental Revenue – Same Property^(1)	46,140	44,863	2.9%	15,568	15,294	1.8%
Rental Revenue – Non-Same Property	20,758	11,435	81.5%	8,689	4,570	90.1%
Rental Revenue – Total	66,898	56,298	18.8%	24,257	19,864	22.1%
Net Rental Income – Same Property ^(1)	25,485	25,417	0.3%	8,457	8,471	(0.2%)
Net Rental Income – Non-Same Property	9,297	6,003	54.9%	3,912	2,235	75.0%
Net Rental Income – Total	34,782	31,420	10.7%	12,369	10,706	15.5%
FFO ^(2)	15,157	15,624	(3.0%)	4,938	4,409	12.0%
FFO Per Class A Unit – Basic	0.22	0.30	(25.6%)	0.06	0.08	(21.9%)
FFO Per Class A Unit – Diluted	0.22	0.30	(25.6%)	0.06	0.08	(21.9%)
FFO Payout Ratio	130.3%	96.1%	3,420bps	150.7%	121.1%	2,960bps
AFFO ^(2)	14,073	14,720	(4.4%)	4,557	4,093	11.4%
AFFO Per Class A Unit – Basic	0.20	0.28	(26.7%)	0.06	0.07	(22.4%)
AFFO Per Class A Unit – Diluted	0.20	0.28	(26.2%)	0.06	0.07	(21.9%)
AFFO Payout Ratio	140.3%	102.0%	3,830bps	163.3%	130.4%	3,290bps
Average Rent Per Occupied Residential Unit – Same Property ^(1)	1,212	1,163	4.2%	1,222	1,182	3.4%
Average Physical Occupancy – Same Property ^(1)	95.4%	96.3%	(90bps)	95.7%	96.3%	(60bps)

(1)	Same Property – represents properties owned as at January 1, 2016 and throughout the comparative periods.
(2)	Restated FFO and AFFO amounts for the three and nine months ended September 30, 2016 to remove amortization of transaction costs and mortgage prepayment expense.

Q3 2017 Conference Call

Stephen Evans, CEO, Samantha Adams, VP, and Scott Shillington, CFO, of Pure Multi-Family, will host the conference call at 12:00pm (PST), 3:00pm (EST), on Thursday, November 16, 2017, to review the financial results and corporate developments for the quarter ended September 30, 2017.

To participate in this conference call, please dial one of the following numbers approximately 10 minutes prior to the commencement of the call, and ask to join the Pure Multi-Family REIT LP Conference Call.

Dial in numbers

• Toll free dial in number (from Canada and USA):	1-888-390-0546
•  International or Local Toronto:	1-416-764-8688

Conference Call Replay

If you cannot participate on November 16, 2017, a replay of the conference call will be available by dialing one of the following replay numbers. You will be able to dial in and listen to the conference 120 minutes after the meeting end time, and the replay will be available until November 23, 2017.

Please enter the Replay ID# 156247, followed by the # key.

Replay Dial in number

• Toll free (from Canada or the USA):	1-888-390-0541
• International or Local Toronto:	1-416-764-8677

About Pure Multi-Family REIT LP

Pure Multi-Family is a Canadian based, publically traded vehicle which offers investors exclusive exposure to attractive, institutional quality U.S. multi-family real estate assets.

Additional information about Pure Multi-Family is available at www.puremultifamily.com and www.sedar.com.

Non-IFRS Financial Measures

This news release contains certain non-IFRS financial measures, including Pure Multi's interest, FFO, AFFO, same property NOI, rental revenue-same property, rental revenue-non-same property, net rental income, net rental income-same property, net rental income-non-same property, same property revenue, same property average rent per occupied residential unit, average rent per occupied residential unit, same property average physical occupancy, total portfolio leased occupancy, FFO payout ratio, AFFO payout ratio and any related per Unit amounts to measure, compare and explain Pure Multi-Family's operating results and financial performance. 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 Pure Multi-Family's MD&A (available on SEDAR at www.sedar.com) for the three and nine months ended September 30, 2017 for a reconciliation of the non-IFRS financial measures used herein to standardized IFRS measures.

Forward-Looking Information

Certain statements contained in this news release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Forward looking statements in this news release include: (a) we believe these concessions are short-term in nature and will provide long-term stability to the portfolio; (b) we are confident that our strategy of acquiring high-quality newer assets in growth markets will serve our investors very well over the long-term as we continue to work our way through these short-term issues; (c) we anticipate our vertically-integrated property management platform will be able to generate market, operational and financial data in real time, improve some of our leasing processes, achieve cost savings over the coming quarters, and provide a scalable platform for future growth; (d) as of October 1, 2017, all external third-party property management fees have ceased to be paid by Pure Multi-Family, and we believe this will be accretive to all unitholders and drive per unit cash flow growth over the long term; and (e) although deleveraging can create a negative impact on payout ratios in the near term, we believe it is the right thing to do for long term success.

Although Pure Multi-Family believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Pure Multi-Family can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, competitive factors in the industries in which Pure Multi-Family operates, prevailing economic conditions, the failure to obtain necessary regulatory approvals or satisfy the conditions to closing any proposed acquisitions, and other factors, many of which are beyond the control of Pure Multi-Family.

The forward-looking statements contained in this news release represent Pure Multi-Family's expectations as of the date hereof, and are subject to change after such date. Pure Multi-Family disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

NEITHER THE 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 THE ACCURACY OF THIS RELEASE.

SOURCE Pure Multi-Family REIT LP

Andrew Greig, Director of Investor Relations, Pure Multi-Family REIT LP, Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2, Phone: [phone] or [phone], E-mail: [email protected]

Related Links

www.Puremultifamily.com