True North Apartment REIT announces 2014 third quarter results
/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/
TORONTO, Nov. 5, 2014 /CNW/ - True North Apartment Real Estate Investment Trust (TSX: TN.UN, TN.DB) (the "REIT") today announced its results of operations and financial condition for the three and nine month periods ended September 30, 2014 (the "third quarter").
THIRD QUARTER HIGHLIGHTS
- Net Operating Income ("NOI") of $12.2 million, a 58.8% increase from the third quarter of 2013, primarily reflecting the impact of acquisitions.
- Average Monthly Rent ("AMR") increased to $804, a 6.5% increase from $755 at September 30, 2013 and 0.9% above the June 30, 2014 level of $797.
- Same property AMR growth of 2.0%, including 4.7% in the GTA market.
- Portfolio occupancy at 96.3%, a 1.0% increase from occupancy of 95.3% as at September 30, 2013.
- Occupancy at the Montréal complex increased 3.2% on a year-over-year basis, reflecting ongoing improvements following implementation of key property management initiatives.
- Secured timely access to debt and equity markets through filing a $500 million base shelf prospectus.
- Basic and diluted funds from operations ("FFO") of $0.20 per trust unit ("Unit"), consistent with $0.20 per Unit in the third quarter of 2013.
- Basic and diluted adjusted funds from operations ("AFFO") of $0.18 per Unit, compared with $0.19 (Basic) and $0.18 (Diluted) per Unit in the third quarter of 2013.
- Third quarter FFO and AFFO payout ratios of 87% and 98%, respectively.
"The REIT's results for the third quarter of 2014 were generally in line with management expectations," stated Leslie Veiner, Chief Executive Officer of True North Apartment REIT. "Overall, we have achieved positive year-over-year results, with increases in both portfolio occupancy and average monthly rent. These increases are the result of the REIT's building infrastructure improvement programs, coupled with sustained demand for mid-market accommodations in our markets."
"Looking ahead, we remain committed to our growth objectives and will continue to apply a disciplined approach to operations. Internally, we intend to continue to focus on maximizing occupancy and average monthly rent through high return initiatives including suite upgrades, new suite creations and ancillary revenue generation. In addition, we remain focused on continuing with our energy conservation initiatives which will further optimise our operating margins. Externally, the REIT continues to carefully consider acquisition opportunities. Over the course of the third quarter, we filed a base shelf prospectus, providing the REIT with the flexibility to access debt and equity markets when such opportunities arise."
Operating Results
Property revenues for the three and nine months ended September 30, 2014 were $21.2 million and $48.9 million, respectively, an increase of $8.1 million, or 62.1%, and $12.1 million, or 33.0% when compared to $13.1 million and $36.8 million, respectively, for the three and nine month periods ended September 30, 2013. The third quarter increase was primarily due to the impact of acquisitions, net of two property dispositions, completed during 2013 and the nine months ended September 30, 2014. Rental revenue growth across the portfolio also contributed to the increase, though increases realized during the nine months ended September 30, 2014 were partly offset by lower average occupancy at the Montréal complex.
NOI for the three and nine months ended September 30, 2014 was $12.2 million and $26.4 million, respectively, an increase of $4.5 million, or 58.8%, and $6.1 million, or 30.1% when compared to 2013. On a year-over-year basis, the NOI increase in the quarter reflects the positive impact of acquisitions, net of two property dispositions, completed during and subsequent to the three months ended September 30, 2013. On a year-over-year basis, same property NOI for the three and nine months ended September 30, 2014 increased by 0.4% and 1.4%, respectively. While rental revenue growth was realized across the portfolio, it was partially offset by increases in operating expenses. Excluding the Montréal complex, same property NOI growth was 2.4% for the nine months ended September 30, 2014.
On a sequential basis, the NOI margin for the third quarter increased from 55.0% to 57.7%, reflecting both revenue growth and lower utility expenses.
As at September 30, 2014, the REIT's AMR was $804, an improvement of $49, or 6.5%, when compared to $755 at September 30, 2013. Sequentially, AMR increased 0.9% from $797 at June 30, 2014. The year-over-year increase in AMR was partly driven by an increase in AMR at properties owned prior to September 30, 2013 from $755 to $770, or 2.0%. In addition to this, AMR increased as a result of properties acquired subsequent to September 30, 2013 which had average monthly rents of $871.
As at September 30, 2014, portfolio occupancy was 96.3%, higher than the portfolio occupancy of 95.3% at September 30, 2013. Year-over-year occupancy growth is largely attributable to a 2.2% increase in Québec occupancy and the impact of properties acquired subsequent to September 30, 2013. On a sequential basis, the portfolio occupancy of 96.3% at September 30, 2014 is slightly lower than the 96.5% occupancy at June 30, 2014. This decrease is primarily attributable to lower occupancy in Nova Scotia and New Brunswick as well as a seasonal reduction in occupancy at the Montréal complex, partly offset by occupancy increases in the third quarter in the Ontario and Alberta regions. Management expects continued improvements at the Montréal complex, with occupancy at this property continuing to rise steadily.
Three months ended |
Three months ended |
% Change |
Nine months ended |
Nine months ended |
% Change |
||||||||
September 30, 2014 |
September 30, 2013 |
September 30, 2014 |
September 30, 2013 |
||||||||||
Revenue |
$ |
21,193 |
$ |
13,070 |
62.1% |
$ |
48,888 |
$ |
36,758 |
33.0% |
|||
Expenses: |
|||||||||||||
Operating costs |
6,246 |
3,796 |
64.5% |
16,463 |
12,144 |
35.6% |
|||||||
Property taxes |
2,711 |
1,568 |
72.9% |
6,002 |
4,309 |
39.3% |
|||||||
8,957 |
5,364 |
67.0% |
22,465 |
16,453 |
36.5% |
||||||||
NOI |
$ |
12,236 |
$ |
7,706 |
58.8% |
$ |
26,423 |
$ |
20,305 |
30.1% |
|||
NOI margin |
57.7% |
59.0% |
54.0% |
55.2% |
|||||||||
As at September 30, 2014 |
As at December 31, 2013 |
As at September 30, 2013 |
||||
Operational Information |
||||||
Number of properties |
83 |
54 |
53 |
|||
Total suites |
8,826 |
5,996 |
5,877 |
|||
Occupancy % |
96.3% |
95.4% |
95.3% |
|||
AMR (in actual dollars) |
$804 |
$760 |
$755 |
For the third quarter ended September 30, 2014, basic and diluted FFO was $0.20 per Unit. The FFO payout ratios for the third quarter and nine months ended September 30, 2014 were 87% and 101%, respectively. Excluding non-cash distributions made under the REIT's distribution reinvestment plan ("DRIP"), these effective FFO payout ratios were 78% and 86%, respectively. Basic and diluted AFFO in the third quarter of 2014 was $0.18 per Unit. The AFFO payout ratios for the third quarter and nine months ended September 30, 2014 were 98% and 114% respectively, and 88% and 97%, respectively, when excluding non-cash distributions made under the REIT's DRIP.
Three months ended |
Three months ended |
Nine months ended |
Nine months ended |
|||||
September 30, 2014 |
September 30, 2013 |
September 30, 2014 |
September 30, 2013 |
|||||
Summary of Financial Information |
||||||||
Interest coverage ratio |
2.51 x |
3.33 x |
2.56 x |
3.05 x |
||||
Indebtedness coverage ratio |
1.61 x |
1.90 x |
1.55 x |
1.78 x |
||||
Revenue |
$21,193 |
$13,070 |
$48,888 |
$36,758 |
||||
NOI |
$12,236 |
$7,706 |
$26,423 |
$20,305 |
||||
Net income (loss) and comprehensive income (loss) |
$359 |
($2,475) |
$7,866 |
$44,174 |
||||
FFO - basic |
$6,492 |
$4,648 |
$13,703 |
$11,617 |
||||
FFO - diluted |
$6,825 |
$4,648 |
$14,089 |
$11,617 |
||||
FFO per Unit - basic and diluted |
$0.20 |
$0.20 |
$0.51 |
$0.53 |
||||
AFFO - basic |
$5,795 |
$4,235 |
$12,129 |
$10,494 |
||||
AFFO - diluted |
$6,128 |
$4,235 |
$12,515 |
$10,494 |
||||
AFFO per Unit - basic |
$0.18 |
$0.19 |
$0.45 |
$0.49 |
||||
AFFO per Unit - diluted |
$0.18 |
$0.18 |
$0.45 |
$0.48 |
||||
Distributions per Unit - basic |
$0.175 |
$0.175 |
$0.52 |
$0.52 |
||||
FFO payout ratio |
87% |
86% |
101% |
98% |
||||
AFFO payout ratio |
98% |
94% |
114% |
107% |
||||
Weighted average Units outstanding: |
||||||||
Basic - (000s) |
32,361 |
22,880 |
26,471 |
21,396 |
||||
Add: unexercised unit options (000s) |
135 |
265 |
162 |
272 |
||||
Add: 2019 Debentures |
2,473 |
- |
966 |
- |
||||
Diluted - (000s) |
34,969 |
23,145 |
27,599 |
21,668 |
Financial Position
At the conclusion of the third quarter, the REIT's debt to gross book value was 63.0% and its interest coverage ratio was 2.51 times. Both metrics fall within the REIT's stated targets. The weighted average interest rate on the REIT's portfolio was 3.15%, and the weighted average term to maturity was 3.81 years. CMHC-insured debt accounted for approximately 44% of the REIT's overall mortgage portfolio, a ratio that is expected to increase in the coming periods.
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT focuses on a long-term strategy to generate stable cash distributions on a tax-efficient basis for unitholders. The REIT intends to actively look for opportunities to expand its asset base and increase its distributable cash flow through acquisitions of additional multi-suite residential rental properties across Canada, the United States, and other jurisdictions where opportunities may arise.
For complete financial statements and management's discussion and analysis for the period, and any other information relating to the REIT, please visit either www.sedar.com or the REIT's website, www.truenorthreit.com.
Non-IFRS measures
The REIT's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures, NOI, AMR, FFO, AFFO, Same Property operating results, indebtedness to gross book value ratio, gross book value, indebtedness, interest coverage ratio, cash provided by operating activities - adjusted as well as other measures discussed elsewhere in this news release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. The REIT uses these measures to better assess the REIT's underlying performance and financial position and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for the period ended September 30, 2014 and available on the REIT's profile on SEDAR at www.sedar.com.
Forward-looking Statements
Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information is provided for the purposes of assisting the reader in understanding the REIT's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, performance, achievements, events, prospects or opportunities for the REIT or the real estate industry and may include statements regarding: the REIT's financial position; business strategy; budgets; litigation; projected costs; capital expenditures; financial results; occupancy levels; average monthly rents; taxes; the REIT's intention with respect to, and ability to execute, its internal and external growth strategies; the REIT's distribution policy and the distributions to be paid to holders of Units; the distributions to be paid to holders of Class B LP Units; the REIT's debt strategy; plans and policies regarding capital expenditures; the REIT's payout ratio; the REIT's use of its normal course issuer bid; and the ability of the REIT to qualify as a "real estate investment trust and a mutual fund trust", as defined in the Income Tax Act (Canada). Particularly, statements regarding future geographic diversification, determinations of investment property fair values, per suite repair and maintenance expenditures, the REIT's ability to meet its obligations and the REIT's use of CMHC insured debt are forward-looking information. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts.
Forward-looking information necessarily involves known and unknown risks and uncertainties, that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the REIT's control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the risks discussed in the REIT's materials filed with Canadian securities regulatory authorities from time to time. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information as there can be no assurance that actual results will be consistent with such forward-looking information.
Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian economy will remain stable over the next twelve months; inflation will remain relatively low; interest rates will remain stable; conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate; the Canadian capital markets will provide the REIT with access to equity and/or debt at reasonable rates when required; and that the risks referenced above, collectively, will not have a material impact on the REIT. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.
The forward-looking information included in this press release relate only to events or information as of the date hereof. Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking information, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
SOURCE: True North Apartment Real Estate Investment Trust
Leslie Veiner, Chief Executive Officer, (416) 234-8444; Martin Liddell, Chief Financial Officer, (416) 234-8444
Share this article