99.5% of contractual rent collection and stable occupancy of 97%, both reflective of high quality government and credit rated tenant base
213,800 sq ft leased/renewed with portfolio WALT of 4.7 years
/NOT FOR DISTRIBUTION IN THE
"The first half of 2021 has seen our positive operating results continue as our portfolio showed its resiliency through the ongoing pandemic given our high concentration of government and credit rated tenants." stated
Q2 Highlights
- Collected approximately 99.5% of contractual rent.
- Contractually leased and renewed approximately 213,800 square feet with a weighted average lease term of 3.6 years and a 3.8% increase over expiring base rents.
- Portfolio occupancy remained at 97% with an average remaining lease term of 4.7 years.
- The REIT had access to
$62.47 million of cash and undrawn credit facilities at the end of Q2 2021. - Revenue and NOI experienced a small decline due to the sale of four properties during the last 12 months coupled with a decline in Same Property NOI of 0.3%.
- FFO and AFFO per Unit on both a basic and diluted basis remained stable compared to Q2 2020 at
$0.15 and$0.14 , respectively. - On
April 12, 2021 , the REIT disposed of529-533 Exmouth Street located inSarnia, Ontario totaling 15,400 square feet for a sale price of$1.85 million . - On
May 5, 2021 , the REIT filed a prospectus supplement to establish an at-the-market equity program (the "ATM Program") that allows the REIT to issue and sell up to$50 million of Units to the public, from time to time, at the REIT's discretion. - On
June 1, 2021 , the REIT disposed of5900 Explorer Drive ,Mississauga, Ontario totaling 40,000 square feet for a sale price of$11.9 million which was above both the original purchase price and IFRS value.
COVID-19
- Collections remain strong with approximately 99.5% of contractual rents collected for the six months ended
June 30 . - The
Canada Emergency Rent Subsidy ("CERS") program was established to assist businesses experiencing a significant drop in revenue as a result of the COVID-19 pandemic. Currently six tenants are participating in the CERS program and the REIT recognized a$0.03 million and$0.05 million expense in property operating costs representing its rental provision granted to tenants for the three and six months endedJune 30, 2021 , respectively. - The REIT has deferred a total of
$0.45 million of rental payments for certain tenants since the start of the pandemic. As ofJune 30, 2021 , all deferred rental payments had been received.
While vaccination programs continue throughout
It continues to be difficult to predict the duration and extent of the impact of COVID-19 on the REIT's business and operations, both in the short and long-term. Certain aspects of the REIT's business and operations that could potentially be impacted include, without limitation, rental income, occupancy, tenant inducements, future demand for space and market rents, all of which ultimately may impact the underlying valuation of the REIT's investment properties and its ability to maintain its distributions to Unitholders.
Key Performance Indicators
Three months ended | Six months ended | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Number of properties | 45 | 49 | ||||||||||
Portfolio GLA | 4,744,700 sf | 4,836,600 sf | ||||||||||
Occupancy | 97% | 97% | ||||||||||
Remaining weighted average lease term | 4.7 years | 5.0 years | ||||||||||
Revenue from government and credit rated tenants | 76.0% | 76.0% | ||||||||||
Revenue | $ | 33,896 | $ | 33,999 | $ | 68,840 | $ | 69,328 | ||||
NOI | 20,531 | 20,991 | 41,621 | 42,100 | ||||||||
Net income and comprehensive income | 6,521 | 4,462 | 16,241 | 22,072 | ||||||||
Same Property NOI | 21,996 | 22,061 | 44,084 | 44,001 | ||||||||
Same Property NOI growth | (0.3)% | (1.9)% | 0.2% | (1.1)% | ||||||||
FFO | $ | 13,436 | $ | 13,456 | $ | 26,947 | $ | 26,629 | ||||
FFO per Unit - basic | 0.15 | 0.15 | 0.30 | 0.30 | ||||||||
FFO per Unit - diluted | 0.15 | 0.15 | 0.29 | 0.30 | ||||||||
AFFO | $ | 12,816 | $ | 12,906 | $ | 25,602 | $ | 25,493 | ||||
AFFO per Unit - basic | 0.14 | 0.14 | 0.28 | 0.29 | ||||||||
AFFO per Unit - diluted | 0.14 | 0.14 | 0.28 | 0.29 | ||||||||
AFFO payout ratio - diluted | 106% | 103% | 106% | 104% | ||||||||
Distributions declared | $ | 13,467 | $ | 13,250 | $ | 26,888 | $ | 26,438 |
Operating Results
Revenue and NOI have remained stable with a small decline of 0.3% (YTD - 1%) and 2% (YTD - 1%), respectively, due to the sale of four properties during the last twelve months coupled with a slight decline in Same Property NOI of 0.3%. Three of the dispositions were located in smaller tertiary markets and reflect the REIT's strategy to focus on office properties in larger urban markets. The fourth disposition totaling 40,000 square feet was an opportunistic sale of a smaller asset and the sale price was above both original purchase price and IFRS value. Q2 2021 occupancy remained stable comparing to same period in 2020 at 97% with an average remaining lease term of 4.7 years compared to 5.0 years at the end of Q2 2020.
FFO and AFFO decreased 0.2% and 1%, respectively when compared to Q2 2020. The decrease in FFO and AFFO was impacted by lower NOI primarily due to disposition activity over the last twelve months, slightly higher general and administration expenses and slightly lower same property NOI. FFO and AFFO per Unit on both a basic and diluted basis have remained stable when compared to Q2 2020 at
FFO and AFFO increased 1% and 0.4%, respectively in YTD 2021 over the comparable period. The increase in FFO and AFFO benefited from higher Same Property NOI and lower finance costs, partially offset by lower NOI from dispositions and higher general and administration expenses. FFO basic per Unit remained at
Same Property Results
As at | ||||||||||||||||||
Occupancy | 2021 | 2020 | NOI | Q2 2021 | Q2 2020 | Variance | Variance % | |||||||||||
96.6% | 93.0% | $ | 3,442 | $ | 3,594 | $ | (152) | (4.2)% | ||||||||||
100.0% | 100.0% | 1,251 | 1,260 | (9) | (0.7)% | |||||||||||||
91.4% | 93.5% | 1,263 | 1,249 | 14 | 1.1% | |||||||||||||
97.5% | 92.4% | 1,611 | 1,600 | 11 | 0.7% | |||||||||||||
97.8% | 99.2% | 14,429 | 14,358 | 71 | 0.5% | |||||||||||||
Total | 97.1% | 97.2% | $ | 21,996 | $ | 22,061 | $ | (65) | (0.3)% |
Same Property NOI decreased 0.3% for the quarter and increased 0.2% YTD 2021.
While occupancy has increased in the REIT's
Favourable Same Property NOI in
Same Property NOI in
Leasing Activity
In Q2 2021, the REIT completed 25,500 square feet of new lease deals (YTD-2021 - 31,000 square feet) with a weighted average lease term of 0.9 years (YTD-2021 - 1.5 years) in
Debt and Liquidity
Indebtedness to GBV ratio | 57.4 % | 57.8 % | ||
Interest coverage ratio | 2.98 x | 2.96 x | ||
Indebtedness - weighted average fixed interest rate | 3.37 % | 3.37 % | ||
Indebtedness - weighted average term to maturity | 3.59 years | 4.06 years |
As at
At the end of Q2 2021, the REIT had access to approximately
ATM Program
On
Officer and Board Appointments
On
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 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 financial position, business strategy, budgets, projected costs, capital expenditures, financial results, the REIT's ATM Program and the intended use of proceeds from such program, 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 a number of risks and uncertainties, including statements regarding the outlook for the REIT's business and results of operations and the effect of the coronavirus (SARS- CoV-2) ("COVID-19") pandemic on the REIT's business and operations. 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 ("Units"), risks related to the REIT and its business, and any risks related to the uncertainties surrounding the duration and the direct and indirect impact of the COVID-19 pandemic on the business, operations and financial condition of the REIT and its tenants, as well as on consumer behavior and the economy in general, including the ability to enforce leases, perform capital expenditure work, increase rents, raise capital through the issuance of Units or other securities of the REIT and obtain mortgage financing on the REIT's properties. The foregoing is not an exhaustive list of factors that may affect the REIT's forward-looking statements. Other risks and uncertainties not presently known 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 impact of COVID-19 on the REIT's business, operations and performance, including the performance of its Units; (b) the REIT's ability to mitigate any impacts related to COVID-19; (c) the effectiveness, acceptance and availability of vaccines, as well as the duration of associated immunity and efficacy of the vaccines against variants of COVID-19; which may prolong the impacts of COVID-19 on the Canadian economy, the retail and commercial real estate industries, occupancy levels and the REIT; (d) credit, market, operational, and liquidity risks generally; (e)
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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