WPT Industrial REIT announces fourth quarter and year end 2017 results
TORONTO, March 7, 2018 /CNW/ - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U - OTCQX: WPTIF) announced today its results for the three months and year ended December 31, 2017. All dollar amounts are stated in US funds.
2017 HIGHLIGHTS:
- Revenue and net operating income ("NOI") were up 15.0% and 13.6% for the year
- Funds from operations ("FFO") and adjusted funds from operations ("AFFO") increased 19.1% and 17.4% over last year
- Net income and comprehensive income, excluding all fair value adjustments, was up 25.8% over last year
- Same properties NOI was up 2.1% and 1.9% for the fourth quarter and year, respectively
- 99.9% of occupied space with leases set to expire in 2017 (totaling approximately 3.2 million square feet) was renewed or leased to new tenants
- Completed a successful equity offering in July, raising approximately $86.6 million in gross proceeds
- Acquired four properties during the second half of 2017 for a combined $177.0 million representing approximately 1.9 million square feet
- Completed construction and partially leased a 171,600-square foot warehouse property
- Increased the capacity of the REIT's senior secured revolving credit facility (the "Revolving Facility") from $100 million to $150 million
"2017 was another great year for the REIT. We expanded the portfolio with almost two million square feet of properties in four new markets while also producing strong leasing and same properties NOI on the existing portfolio," commented Scott Frederiksen, Chief Executive Officer. "As we look to 2018 and beyond, we remain committed to building unitholder value by enhancing the scale and diversity of the REIT."
SOLID OPERATING PERFORMANCE
For the three months and year ended December 31, 2017, investment properties revenue was $22.4 million and $81.8 million, respectively, compared to $18.7 million and $71.1 million, respectively, in the same periods last year. The increase in revenue is primarily due to the contribution from acquisitions completed in 2016 and 2017, increases in base rent and higher recoveries of operating expenses in existing properties, and partially offset by the sale of two non-core properties. Net income and comprehensive income for the three months and year ended December 31, 2017 was $8.1 million ($0.167 per trust unit of the REIT and class B partnership unit of WPT Industrial, LP) (trust units of the REIT and class B partnership units of WPT Industrial, LP are each referred to herein as a "Unit" and collectively as, "Units") and $52.5 million ($1.181 per Unit), respectively, compared to $1.6 million ($0.038 per Unit) and $34.0 million ($0.914 per Unit) in the same period last year. Excluding all fair value adjustments, net income and comprehensive income for the three months and year ended December 31, 2017 was $10.0 million and $35.6 million, respectively, compared to $7.7 million and $28.3 million, in the same periods last year.
NOI for the three months and year ended December 31, 2017 was $16.5 million and $59.8 million, respectively, compared to $13.6 million and $52.7 million in the same periods last year. Same properties NOI was up 2.1% and 1.9% for the three months and year ended December 31, 2017 compared to the same periods last year.
AFFO for the three months and year ended December 31, 2017 was $9.4 million ($0.195 per Unit) and $34.5 million ($0.775 per Unit), respectively, compared to $7.9 million ($0.191 per Unit) and $29.3 million ($0.789 per Unit) in the same periods last year.
For the three months ended December 31, 2017, cash flow from operations and adjusted cash flow from operations ("ACFO") were $13.9 million and $10.2 million, respectively, compared to $13.1 million and $8.5 million in the same period last year. For the year ended December 31, 2017, cash flow from operations and ACFO were $54.7 million and $37.2 million, respectively, compared to $48.6 million and $31.1 million in the same period last year. The REIT's ACFO payout ratio for the three months and year ended December 31, 2017 was 89.7% and 91.4%, respectively, compared to 92.4% and 91.6% in the same periods last year.
STRONG FINANCIAL & LIQUIDITY POSITION
As at December 31, 2017, the REIT's debt-to-gross-book-value ratio was 42.1% with an interest coverage ratio of 3.8 times, a debt-to-Adjusted EBITDA ("Adjusted EBITDA" is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) ratio of 7.1 times, and a fixed charge coverage ratio of 3.2 times, all consistent with or improved from last year. The weighted average effective interest rate on outstanding debt was 3.7% at December 31, 2017, down from 3.8% at the same time last year. The weighted average term to maturity on the REIT's mortgages payable was 3.6 years as at December 31, 2017, with a weighted average remaining lease term of 4.0 years.
As at December 31, 2017, the REIT had approximately $60.8 million available to be drawn on the Revolving Facility, in addition to cash on hand and unencumbered investment properties totaling approximately $58.9 million.
RECENT EVENTS
On November 29, 2017, the REIT indirectly acquired from a third party, a 100% occupied warehouse property located in Reno, Nevada totaling 98,270 square feet for a purchase price of approximately $6.4 million (exclusive of closing and transaction costs). The purchase price was satisfied with cash on hand and funds from the Revolving Facility.
On March 7, 2018, the independent members of the REIT's Board of Trustees unanimously approved the acquisition of a newly-constructed, 224,000 square foot distribution property in Louisville, Kentucky from Alberta Investment Management Corporation and an affiliate of WPT Capital Advisors, LLC for a total purchase price of approximately $17.9 million (exclusive of closing and transaction costs) (the "Louisville Acquisition"). Closing of the Louisville Acquisition is subject to due diligence results satisfactory to such members of the REIT's Board of Trustees and other customary closing conditions and is expected to occur in the second quarter of 2018. The purchase price for the Louisville Acquisition is expected to be satisfied with cash on hand and funds drawn from the Revolving Facility and will represent a going-in capitalization rate of approximately 6.2%. The property is 100% leased to one tenant with a lease expiring on April 30, 2026, and upon closing, is expected to be immediately accretive to the REIT's AFFO.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
(all figures in thousands of US dollars, except per Unit amounts, ratios, percentages, number of investment properties, amounts related to remaining lease term and GLA)
| Three months ended December 31, |
Year ended December 31, |
||||||||
| 2017 |
2016 |
2017 |
2016 |
||||||
| Operating Results: |
|||||||||
| Investment properties revenue |
$ |
22,409 |
$ |
18,662 |
$ |
81,786 |
$ |
71,110 |
|
| NOI (1) |
$ |
16,470 |
$ |
13,620 |
$ |
59,812 |
$ |
52,660 |
|
| Net income and comprehensive income |
$ |
8,059 |
$ |
1,559 |
$ |
52,506 |
$ |
33,984 |
|
| Net income and comprehensive income per Unit (basic) (2) (3) |
$ |
0.167 |
$ |
0.038 |
$ |
1.181 |
$ |
0.914 |
|
| Net income and comprehensive income per Unit (diluted) (2) (4) |
$ |
0.164 |
$ |
0.037 |
$ |
1.161 |
$ |
0.903 |
|
| FFO (1) (5) |
$ |
11,027 |
$ |
9,256 |
$ |
40,758 |
$ |
34,220 |
|
| FFO per Unit (basic) (1) (2) (3) (5) |
$ |
0.229 |
$ |
0.224 |
$ |
0.917 |
$ |
0.920 |
|
| FFO per Unit (diluted) (1) (2) (4) (5) |
$ |
0.225 |
$ |
0.220 |
$ |
0.901 |
$ |
0.909 |
|
| AFFO (1) (5) |
$ |
9,413 |
$ |
7,881 |
$ |
34,465 |
$ |
29,345 |
|
| AFFO per Unit (basic) (1) (2) (3) (5) |
$ |
0.195 |
$ |
0.191 |
$ |
0.775 |
$ |
0.789 |
|
| AFFO per Unit (diluted) (1) (2) (4) (5) |
$ |
0.192 |
$ |
0.188 |
$ |
0.762 |
$ |
0.780 |
|
| Cash flows from operations |
$ |
13,863 |
$ |
13,127 |
$ |
54,665 |
$ |
48,611 |
|
| ACFO (1) |
$ |
10,201 |
$ |
8,501 |
$ |
37,227 |
$ |
31,149 |
|
| Distributions: |
|||||||||
| Distributions per Unit (2) (6) |
$ |
0.19 |
$ |
0.19 |
$ |
0.76 |
$ |
0.76 |
|
| Distributions declared (3) (3) |
$ |
9,145 |
$ |
7,856 |
$ |
34,010 |
$ |
28,533 |
|
| ACFO payout ratio (1) (6) |
89.7% |
92.4% |
91.4% |
91.6% |
|||||
| Weighted average number of Units (basic) (2) (3) |
48,158 |
41,375 |
44,467 |
37,176 |
|||||
| Weighted average number of Units (diluted) (2) (4) |
48,989 |
41,994 |
45,241 |
37,628 |
|||||
| As at |
December 31, 2017 |
December 31, 2016 |
|||
| Operational Information: |
|||||
| Number of investment properties |
53 |
49 |
|||
| GLA |
17,629,627 |
15,632,184 |
|||
| Occupancy |
97.9% |
98.7% |
|||
| Average remaining lease term (years) |
4.0 |
4.1 |
|||
| Fair value of investment properties |
$ |
1,009,582 |
$ |
806,431 |
|
| Ratios: |
|||||
| Weighted average effective interest rate (7) |
3.7% |
3.8% |
|||
| Variable interest rate debt as percentage of total debt (8) |
18.2% |
5.9% |
|||
| Debt-to-gross book value (1) |
42.1% |
41.8% |
|||
| Interest coverage ratio (1) |
3.8x |
3.5x |
|||
| Fixed charge coverage ratio (1) |
3.2x |
3.0x |
|||
| Debt to Adjusted EBITDA (1) |
7.1x |
7.5x |
|||
| (1) |
NOI, FFO, AFFO, ACFO, FFO per Unit (basic and diluted), AFFO per Unit (basic and diluted), ACFO payout ratio, Adjusted EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to Adjusted EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the "Non-IFRS Measures" section of the REIT's MD&A. |
||||||
| (2) |
Includes REIT Units and Class B Units (collectively, the "Units"). |
||||||
| (3) |
Excludes all options and DTUs outstanding under the REIT's equity compensation plans. |
||||||
| (4) |
Includes all options and DTUs outstanding under the REIT's equity compensation plans. |
||||||
| (5) |
FFO, AFFO, FFO per Unit (basic and diluted) and AFFO per Unit (basic and diluted) for all periods presented has been adjusted to align with the definition presented by REALPAC. Refer to page 1 of the REIT's interim MD&A for the period ending March 31, 2017 for a description of the changes. |
||||||
| (6) |
Includes distributions on Units. |
||||||
| (7) |
Includes mortgages payable, a construction loan, the Revolving Facility, mark-to-market adjustments and financing costs. |
||||||
| (8) |
Includes amounts outstanding under the Revolving Facility. |
||||||
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, March 8, 2018 at 9:00 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the "Investors" page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10115641#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.
About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT was formed for the purpose of acquiring and owning primarily industrial investment properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 17.6 million square feet of gross leasable area, comprised of 52 industrial properties and one office property located in 15 states in the United States. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.
Forward-Looking Statements
This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "projects", "believes" or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include the various assumptions set forth herein, including, but not limited to, the REIT's and the property's future growth potential, anticipated amounts of expenses, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. 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 or referenced under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2016, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be made as of the date of this press 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 WPT Industrial Real Estate Investment Trust
Scott Frederiksen, Chief Executive Officer, WPT Industrial Real Estate Investment Trust, Tel: (612) 800-8501, Fax: (612) 800-8535
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