True North Apartment REIT Announces Second Quarter 2013 Results

/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/

TORONTO, Aug. 6, 2013 /CNW/ - True North Apartment Real Estate Investment Trust (TSX: TN.UN) (the "REIT") today announced its results of operations and financial condition for the three months ended June 30, 2013 (the "second quarter").

SECOND QUARTER HIGHLIGHTS

• Net Operating Income ("NOI") increased by 42.1% from the three months ended March 31, 2013 (the "first quarter") reflecting a full quarter's contribution from the 1,875 suites acquired during the first quarter.
• NOI margin in the second quarter was 55.9% up from 49.7% in the first quarter.
• Portfolio occupancy of 96.6% and Average Monthly Rents ("AMR") of $752 both increased from the first quarter.
• Interest coverage improved to 3.1 times for the second quarter from 2.6 times in the first quarter.
• Indebtedness to Gross Book Value decreased to 55.6% at the end of the second quarter from 58.0% at the end of the first quarter.
• Adjusted Funds from Operations ("AFFO") payout ratio continued to improve, decreasing to 90% on a cash basis when removing non-cash distributions made under the REIT's Distribution Reinvestment Plan (the "DRIP").
• The REIT's trust units ("Units") commenced trading on the Toronto Stock Exchange ("TSX") under the symbol "TN.UN" on May 3, 2013, having graduated from the TSX Venture Exchange.
• Subsequent to the quarter, the REIT announced, and the TSX accepted, a normal course issuer bid that will allow for the purchase and subsequent cancellation of up to a maximum of approximately 1.79 million Units.
• Subsequent to the second quarter, the REIT sold a non-core 57 suite property in Hanover, Ontario and the REIT expects to redeploy the net proceeds of approximately $3.4 million in the third quarter of this year.

"The REIT's second quarter results demonstrate the strength of our diverse property portfolio," stated Leslie Veiner, the REIT's Chief Executive Officer. "We continue to seek out opportunities to improve the performance of our portfolio through both organic and accretive external growth. Mr. Veiner added, "We will be disciplined in our consideration of potential acquisitions and this prudent philosophy served as the predominant driver for the recent implementation of our normal course issuer bid. The current disconnect between private and public market valuations does not result in the REIT's unit price reflecting the underlying value of our portfolio and until these conditions change, the normal course issuer bid offers us an alternative value creation option for our unitholders".

Operating Results

Property revenues and NOI for the second quarter were $13.2 million and $7.4 million, respectively.

AMR for the second quarter was $752, an improvement of $42 when compared to December 31, 2012 and $2 when compared to the first quarter. AMR increased in all regions during the second quarter, other than New Brunswick and Alberta, although these two regions benefitted from improvements in occupancy.

Portfolio occupancy for the second quarter was 96.6%, an improvement of 1.2% when compared to December 31, 2012, and 0.4% when compared to the first quarter. The overall occupancy in the second quarter is attributable to higher occupancies in all regions except for Ontario.

NOI margin for the second quarter was 55.9%, an improvement of 6.2% when compared to the first quarter.  This improvement was primarily due to a seasonal reduction in utility costs.

The 17 properties acquired on February 20, 2013, which accounted for 84% of the 1,875 suites acquired during the first quarter, created a positive impact on the REIT's second quarter results. These properties recorded occupancy rates that were consistent with the rest of the REIT's portfolio, as well as relatively greater NOI margins.

(in thousands of dollars)				Three months ended June 30, 2013			Three months ended June 30, 2012			Six months ended June 30, 2013			For the period from January 12, 2012 to June 30, 2012
Revenue				$	13,218		$	95		$	23,688		$	95
Expenses:
	Operating costs				4,287			29			8,348			29
	Property taxes				1,536			16			2,741			16
					5,823			45			11,089			45
Net operating income				$	7,395		$	50		$	12,599		$	50
NOI margin					55.9%			52.6%			53.2%			52.6%
							As at June 30, 2013			As at December 31, 2012			As at June 30, 2012
Operational Information
Number of properties							54			32			3
Total suites							5,830			3,953			129
Occupancy %							96.6%			95.4%			95.0%
Average monthly rent							$752			$710			$895

For the second quarter, basic and diluted Funds from Operations ("FFO") per Unit were $0.18.  When adjusted for the $0.2 million of one-time fees associated with the REIT's graduation to the TSX, basic and diluted FFO per Unit were $0.19 and $0.18, respectively. Accounting for this adjustment, the basic FFO payout ratio was 94% during the second quarter, or 82% when removing the non-cash distributions made under the DRIP.

For the second quarter, basic and diluted AFFO per Unit was $0.17. The basic AFFO payout ratio was 102%, or 90% when further adjusted for distributions made under the DRIP.

(in thousands of dollars)			Three months ended June 30,2013	Three months ended June 30, 2012	Six months ended June 30, 2013	For the period from January 12, 2012 to June 30, 2012
Summary of Financial Information
Interest coverage			3.13 x	n/a ^(1)	2.90 x	n/a ^(1)
Indebtedness coverage ratio			1.83 x	n/a ^(1)	1.72 x	n/a ^(1)
Revenue			$13,218	$95	$23,688	$95
NOI			$7,395	$50	$12,599	$50
Income (loss) and comprehensive income (loss)			$28,014	($13,513)	$46,649	($13,801)
FFO - basic and diluted			$4,064	n/a ^(1)	$6,771	n/a ^(1)
FFO per Unit - basic			$0.18	n/a ^(1)	$0.33	n/a ^(1)
FFO per unit - diluted			$0.18	n/a ^(1)	$0.32	n/a ^(1)
AFFO - basic and diluted			$3,909	n/a ^(1)	$6,259	n/a ^(1)
AFFO per Unit - basic and diluted			$0.17	n/a ^(1)	$0.30	n/a ^(1)
Distributions per Unit - basic			$0.175	n/a ^(1)	$0.35	n/a ^(1)
FFO payout ratio			98%	n/a ^(1)	107%	n/a ^(1)
AFFO payout ratio			102%	n/a ^(1)	115%	n/a ^(1)
Units outstanding at period-end for FFO and AFFO per Unit:
	Weighted average (000s) - basic		22,821	n/a ^(1)	20,641	n/a ^(1)
	Add: Unexercised Unit Options		275	n/a ^(1)	275	n/a ^(1)
	Weighted average (000s) - diluted		23,096	n/a ^(1)	20,916	n/a ^(1)
Notes:
(1)	The performance measures used by the REIT do not represent a useful comparable measure for the three months ended June 30, 2012 and the period from January 12, 2012 to June 30, 2012, given the REIT began property operations following the Qualifying Transaction on June 5, 2012.

Financial Position

At the conclusion of the second quarter, the REIT's debt to Gross Book Value was 55.6%. The interest coverage ratio was 3.1 times. Both metrics improved quarter over quarter and fall within the REIT's stated targets. The weighted average interest rate on the REIT's portfolio was 2.94%, and the weighted average term to maturity was 3.27 years.

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, FFO, AFFO, indebtedness to gross book value ratio, gross book value, indebtedness, indebtedness coverage ratio and interest coverage ratio as well as other measures discussed elsewhere in this 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 three months ended June 30, 2013 and available on the REIT's profile at www.sedar.com.

Forward-looking Statements

Certain statements contained in this press 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; AMR; 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 unitholders; 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; and the ability of the REIT to qualify as a "mutual fund trust", as defined in the Tax Act, and as a "real estate investment trust", as defined in the SIFT Rules.  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, including the risks discussed herein at "Risks and Uncertainties".  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 12 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
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or

Martin Liddell
Chief Financial Officer
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