99% contractual rent collection, 40% Increase in NOI and 100% of YTD 2020 lease expirations renewed or re-leased
/NOT FOR DISTRIBUTION IN THE
"The REIT delivered another productive quarter and further proved our resilience in spite of COVID-19. We continue to work closely with our tenants, which has translated into successful lease renewals and rent collections." stated
Q3 Highlights
- Collected on average approximately 99% of contractual rent in Q3 2020
- Contractually leased and renewed approximately 53,000 square feet with an average increase of approximately 2% (YTD - 6.1%) over expiring rates
- Portfolio occupancy currently at 98% with an average remaining lease term of 4.8 years
- Revenue and NOI increased 32% and 40%, respectively compared to Q3 2019. The majority of which can be attributed to acquisitions totaling
$395.8 million in Q4 2019 - Same Property NOI experienced an overall decline of 4.0%, the majority of which can be attributed to vacancy in the REIT's sole asset in
Edmonton, Alberta (2.3%), as well as the REIT's participation in theCanada Emergency Commercial Rent Assistance ("CECRA") program and lower non-recurring termination payments and project management fees. Excluding the above, Same Property NOI increased 2.8% for the quarter - FFO per Unit on both a basic and diluted basis remained stable compared to Q3 2019 at
$0.15 . AFFO per Unit on both a basic and diluted basis decreased$0.004 and$0.001 to$0.14 in Q3 2020 - Refinanced the remaining 2020 mortgage maturities totaling
$23.4 million with a weighted average fixed interest rate of 2.80% for five-year terms - On
September 30, 2020 , the REIT disposed of534 Queens Avenue located inLondon, ON totaling 19,000 square feet for a sale price of$2.3 million
COVID-19
- To date the REIT has received on average approximately 99% of Q2 2020, Q3 2020 and 99% of October contractual rent, a direct result of its credit and government tenant roster
- A total of 19 tenants participated in the CECRA program which came to an end on
September 30, 2020 . The REIT's 25% rental contribution resulted in a$0.12 million expense recognized in property operating costs in Q3 2020 ($0.19 million - YTD 2020) - The REIT agreed to defer approximately
$0.43 million of YTD 2020 rental payments for certain tenants the majority of which will be repaid by the end of 2020. As of the date hereof,$0.18 million has been received in accordance with those deferral agreements
On
In late
With a close to fully occupied portfolio of predominantly government and credit-rated tenants, the REIT is well positioned to maintain stability through these times of uncertainty. The REIT is confident the strategic measures implemented to date will help to ensure its continued success and its ability to provide value to Unitholders.
Key Performance Indicators
Three months ended | Nine months ended | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Number of properties | 48 | 45 | ||||||||||
Portfolio GLA | 4,818,500 | sf | 3,687,400 | sf | ||||||||
Occupancy rate | 98 | % | 97 | % | ||||||||
Remaining weighted average lease term | 4.8 years | 4.1 years | ||||||||||
Revenue from government and credit rated tenants | 76 | % | 79 | % | ||||||||
Revenue | $ | 33,914 | $ | 25,668 | $ | 103,242 | $ | 76,924 | ||||
NOI | 20,901 | 14,972 | 63,001 | 44,943 | ||||||||
Net income and comprehensive income | 9,381 | 9,145 | 31,453 | 22,753 | ||||||||
Same Property NOI | 15,364 | 16,000 | 44,899 | 45,778 | ||||||||
Same Property NOI growth | (4.0) | % | 2.6 | % | (1.9) | % | 1.3 | % | ||||
FFO | $ | 13,364 | $ | 9,600 | $ | 39,994 | $ | 28,012 | ||||
FFO per Unit - basic | 0.15 | 0.15 | 0.45 | 0.45 | ||||||||
FFO per Unit - diluted | 0.15 | 0.15 | 0.45 | 0.44 | ||||||||
AFFO | $ | 12,852 | $ | 9,530 | $ | 38,346 | $ | 27,328 | ||||
AFFO per Unit - basic | 0.14 | 0.15 | 0.43 | 0.44 | ||||||||
AFFO per Unit - diluted | 0.14 | 0.15 | 0.43 | 0.43 | ||||||||
AFFO payout ratio - diluted | 104 | % | 102 | % | 104 | % | 104 | % | ||||
Distributions declared | $ | 13,319 | $ | 9,824 | $ | 39,757 | $ | 28,160 |
Operating Results
During the past twelve months, the REIT has increased its portfolio by approximately 1.1 million square feet. Q3 2020 occupancy was 98% with an average remaining lease term of 4.8 years. 76% of revenue is generated from Government and credit rated tenants.
Acquisitions totaling
Same Property Results
As at | ||||||||||||||||||
Occupancy | 2020 | 2019 | NOI | Q3 2020 | Q3 2019 | Variance | Variance % | |||||||||||
93.3 | % | 98.3 | % | $ | 1,592 | $ | 2,189 | $ | (597) | (27.3) | % | |||||||
100.0 | % | 100.0 | % | 1,259 | 1,210 | 49 | 4.0 | % | ||||||||||
93.5 | % | 90.0 | % | 1,339 | 1,159 | 180 | 15.5 | % | ||||||||||
93.4 | % | 91.9 | % | 1,587 | 1,546 | 41 | 2.7 | % | ||||||||||
98.4 | % | 98.4 | % | 9,587 | 9,896 | (309) | (3.1) | % | ||||||||||
Total | 96.7 | % | 96.7 | % | $ | 15,364 | $ | 16,000 | $ | (636) | (4.0) | % |
Q3 2020 Same Property NOI decreased 4.0% and 1.9% YTD 2020.
A reduction in parking revenue due to lower foot traffic at certain buildings, costs associated with the REIT's participation in the CECRA program, lower one-time termination payments and project management fees along with the continued vacancy at
The vacancy at
Increased revenue from contractual rent step ups have been the main driver of Same Property NOI growth in
Ontario Same Property NOI declined due to a reduction in parking revenue at certain properties and downtime associated with a lease expiration which has been subsequently released at significantly higher market rents.
Debt
Indebtedness to GBV ratio | 58.0 % | 57.6 % | ||
Interest coverage ratio | 2.99 x | 3.01x | ||
Indebtedness - weighted average fixed interest rate | 3.37 % | 3.38 % | ||
Indebtedness - weighted average term to maturity | 4.31 years | 3.87 years |
As at
During the nine months ended
About the REIT
The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of
The REIT is focused on growing its portfolio principally through acquisitions across
Non-IFRS measures
Certain terms used in this press release such as funds from operations ("FFO"), adjusted funds from operations ("AFFO"), net operating income ("NOI"), same property net operating income ("Same Property NOI"), indebtedness ("Indebtedness"), gross book value ("GBV"), Indebtedness to GBV ratio, net earnings before interest, tax, depreciation and amortization and fair value gain (loss) on financial instruments and investment properties ("Adjusted EBITDA"), interest coverage ratio, and adjusted cash provided by operating activities are not measures defined by International Financial Reporting Standards ("IFRS") as prescribed by the
Forward-looking Statements
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are 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. Readers are cautioned 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 financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. In some cases, forward-looking information can be identified by such terms as "may", "might", "will", "could", "should", "would", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", or the negative thereof or other similar expressions suggesting future outcomes or events.
Forward-looking statements involve known and unknown risks and uncertainties, which 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, assumptions may not be correct and objectives, strategic goals and priorities may 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, risks and uncertainties related to the trust units of the REIT, risks related to the REIT and its business, and any risks related to the uncertainties surrounding the duration and the direct or indirect impacts of the COVID-19 pandemic on the business, operations and financial condition of the REIT and its tenants, as well as on consumer behaviours and the economy in general, including the ability to enforce leases, perform capital expenditure work, increase rent and obtain mortgage financings. The foregoing is not an exhaustive list of factors that may affect the REIT's forward-looking statements. Other risks and uncertainties not presently know to the REIT could also cause actual results or events to differ materially from those expressed in its forward-looking statements. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements.
Information contained in forward-looking statements is based upon certain material assumptions applied in drawing a conclusion or making a forecast or projection, including management's perception of historical trends, current conditions and expected future developments, as well as other considerations believed to be appropriate in the circumstances. There can be no assurance regarding: (a) the breadth of impact of COVID-19 on the REIT's business, operations and performance, including performance of the Units; (b) the REIT's ability to mitigate any impacts related to COVID-19; (c) credit, market, operational, and liquidity risks generally; (d)
The forward-looking statements made relate only to events or information as of the date on which the statements are made in this press release. Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, 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
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