TORONTO, Aug. 13, 2018 /CNW/ - Automotive Properties Real
Estate Investment Trust (TSX: APR.UN) ("Automotive Properties REIT"
or the "REIT") today announced its financial results for the
three-month ("Q2 2018") and six-month ("YTD 2018") periods ended
June 30, 2018. The REIT's unaudited
condensed consolidated financial statements and the related
Management's Discussion & Analysis ("MD&A") for Q2 2018 /
YTD 2018 are available on the REIT's website at
www.automotivepropertiesreit.ca and on SEDAR at www.sedar.com.
Q2 2018 Highlights
- Property rental revenue was $11.4
million, an increase of 8.7% from the second quarter of 2017
("Q2 2017");
- Net Operating Income1 ("NOI") was $9.7 million, an increase of 7.5% from Q2
2017;
- Total and Same Property Cash NOI1 were $8.9 million and $7.8
million, respectively, representing increases of 8.7% and
1.4%, respectively, from Q2 2017;
- Net Income was $5.3 million,
compared to $5.8 million in Q2
2017;
- Funds from Operations1 ("FFO") increased 1.7% to
$6.6 million, from $6.5 million in Q2 2017. FFO per unit of the REIT
("Unit") was $0.252 (diluted), up
from $0.249 (diluted) in Q2
2017;
- Adjusted Funds from Operations1 ("AFFO") increased
3.4% to $6.0 million, from
$5.8 million in Q2 2017. AFFO per
Unit was $0.229 (diluted), up from
$0.223 (diluted) in Q2 2017;
- The REIT acquired the Country Hills Volkswagen dealership
property in Calgary, Alberta for a
purchase price of $18 million;
- The REIT increased one of its largest credit facilities to
$151.2 million and extended the term
to maturity to June 2023;
- The REIT declared monthly cash distributions of $0.067 per Unit, resulting in total distributions
declared and paid of approximately $5.3
million, representing an AFFO payout ratio1 of
approximately 87.8%; and
- The REIT's debt to gross book value ("Debt to
GBV")1 was 49.1% as at June
30, 2018, compared to 48.5% as at December 31, 2017.
"We continue to generate reliable distributions for our
unitholders supported by our long-term, triple-net leases and
contractual annual rent increases, as well as continued growth from
our property acquisition program," said Milton Lamb, CEO of Automotive Properties REIT.
"We remain focused on taking advantage of the dealership
consolidation trend and expanding our property portfolio in
strategic markets across Canada."
1 NOI, Cash NOI, Same Property Cash NOI,
FFO, AFFO, and Debt to GBV are non-IFRS financial
measures. See "Non-IFRS Financial Measures" in this news
release. Reference to "Same Property" correspond to properties that
the REIT owned in Q2 2017, thus removing the impact of
acquisitions.
Financial Results Summary ($000s, except per Unit
amounts)
|
|
|
|
|
|
Three months
ended
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|
Six months
ended
|
|
|
|
June
30,
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|
June
30,
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|
($000s, except
per Unit amounts)
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
Rental revenue
(1)
|
$11,373
|
$10,467
|
8.7%
|
$22,679
|
$20,348
|
11.5%
|
|
|
|
|
|
|
|
NOI
|
9,659
|
8,988
|
7.5%
|
19,259
|
17,247
|
11.7%
|
|
|
|
|
|
|
|
Cash NOI
|
8,906
|
8,195
|
8.7%
|
17,752
|
15,754
|
12.7%
|
|
|
|
|
|
|
|
Same Property Cash
NOI (1)
|
7,790
|
7,683
|
1.4%
|
15,438
|
15,226
|
1.4%
|
|
|
|
|
|
|
|
Net
Income(2)
|
5,317
|
5,793
|
-8.2%
|
19,809
|
6,926
|
186%
|
|
|
|
|
|
|
|
FFO
|
6,640
|
6,531
|
1.7%
|
13,307
|
12,477
|
6.7%
|
|
|
|
|
|
|
|
AFFO
|
6,048
|
5,849
|
3.4%
|
12,115
|
11,204
|
8.1%
|
|
|
|
|
|
|
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Distributions per
Unit
|
$0.201
|
$0.201
|
-
|
$0.402
|
$0.402
|
-
|
|
|
|
|
|
|
|
FFO per Unit - basic
(3)
|
0.253
|
0.250
|
0.003
|
0.508
|
0.494
|
0.014
|
FFO per Unit -
diluted (4)
|
0.252
|
0.249
|
0.003
|
0.506
|
0.493
|
0.013
|
|
|
|
|
|
|
|
AFFO per Unit - basic
(3)
|
0.231
|
0.224
|
0.007
|
0.463
|
0.443
|
0.020
|
AFFO per Unit -
diluted (4)
|
0.229
|
0.223
|
0.006
|
0.461
|
0.443
|
0.018
|
|
|
|
|
|
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Ratios
(%)
|
|
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|
|
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|
FFO payout
ratio
|
79.8%
|
80.7%
|
-0.9%
|
79.4%
|
81.5%
|
-2.1%
|
AFFO payout
ratio
|
87.8%
|
90.1%
|
-2.3%
|
87.2%
|
90.7%
|
-3.5%
|
Debt to
GBV
|
49.1%
|
46.5%
|
2.6%
|
49.1%
|
46.5%
|
2.6%
|
|
|
(1)
|
Rental revenue is
based on rents from leases entered into with tenants on closing of
the applicable acquisitions, all of which are triple-net leases and
include recoverable realty taxes and straight-line adjustments.
Same Property Cash NOI is based on rental revenue for the same
asset base having consistent gross leasable area in both
periods.
|
(2)
|
The decrease in net
income for Q2 2018 is primarily due to changes in the fair value
adjustments for the Class B LP Units limited partnership units of
Automotive Properties Limited Partnership ("Class B LP Units"),
please refer to financial statements and notes thereto.
|
(3)
|
FFO per Unit and AFFO
per Unit – basic is calculated by dividing the total FFO and AFFO
by the amount of the total weighted average number of outstanding
Units and Class B LP Units The total weighted average number of
Units outstanding (including Class B LP Units) - basic for Q2 2018
was 26,212,622.
|
(4)
|
FFO per Unit and AFFO
per Unit – diluted is calculated by dividing the total FFO and AFFO
by the amount of the total weighted average number of outstanding
Units, Class B LP Units, deferred units ("DUs") and income deferred
units ("IDUs") granted to certain independent trustees and
management of the REIT. The total weighted average number of Units
outstanding (including Class B LP Units, DUs and IDUs) on a fully
diluted basis for Q2 2018 was 26,355,338.
|
Rental revenue increased 8.7% to $11.4
million in Q2 2018, compared to $10.5
million in Q2 2017. The increase reflects growth from
properties acquired subsequent to Q2 2017 and contractual annual
rent increases across a significant portion of the portfolio.
Property costs were $1.7 million
in Q2 2018, compared to $1.5 million
in Q2 2017. The increase is attributable to the properties acquired
subsequent to Q2 2017. Property costs as a percentage of revenue
were 15.1% in Q2 2018 compared to 14.1% in Q2 2017, primarily due
to a timing difference in realty tax payments. These costs
are recoverable from the applicable tenants pursuant to the terms
of the applicable triple-net leases.
Total and Same Property Cash NOI generated during Q2 2018
totaled $8.9 million and $7.8 million, respectively, representing
increases of 8.7% and 1.4%, respectively, compared to Q2 2017. The
increase in Cash NOI was attributable to the properties acquired
subsequent to Q2 2017 and annual contractual rent increases across
a significant portion of the portfolio. Growth in Same Property
Cash NOI reflects contractual rent increases.
Net Income was $5.3 million in Q2
2018, compared to $5.8 million in Q2
2017. The decrease was primarily attributable to the change in the
fair value adjustments for the Class B LP Units and investment
properties, partially offset by the growth in NOI.
FFO in Q2 2018 was $6.6 million,
or $0.252 per Unit (diluted),
compared to $6.5 million, or
$0.249 per Unit diluted, in Q2 2017.
The increase was primarily due to the impact of the properties
acquired subsequent to Q2 2017.
AFFO in Q2 2018 was $6.0 million,
or $0.229 per Unit (diluted),
compared to $5.8 million, or
$0.223 per Unit diluted, in Q2 2017.
The increase was primarily due to the impact of the properties
acquired subsequent to Q2 2017.
Adjusted Cash Flow from Operations ("ACFO") in Q2 2018 was
$6.2 million, representing an
increase of 8.4% from $5.7 million in
Q2 2017. The ACFO payout ratio was 85.0% in the quarter, compared
to 91.5% in Q2 2017.
Cash Distributions
The REIT is currently paying
monthly cash distributions of $0.067
per Unit, representing $0.804 per
Unit on an annualized basis. The REIT declared and paid total
distributions of $5.3 million to
unitholders in Q2 2018, or $0.201 per
Unit, representing an AFFO payout ratio of 87.8%. The lower AFFO
payout ratio for Q2 2018 relative to Q2 2017 was primarily
attributable to the impact of the properties acquired subsequent to
Q2 2017.
Units Outstanding
As at June
30, 2018, there were 16,696,552 REIT Units and 9,933,253
Class B LP Units outstanding.
Conference Call
Management of the REIT will host a
conference call for analysts and investors on Tuesday, August 14, 2018 at 10:00 a.m. (ET). The dial-in numbers for the
conference call are (416) 764-8609 or (888) 390-0605. A live and
archived webcast of the call will be accessible via the REIT's
website www.automotivepropertiesreit.ca.
To access a replay of the conference call, dial (416) 764-8677
or (888) 390-0541, passcode: 546285. The replay will be available
August 21, 2018.
About Automotive Properties REIT
Automotive
Properties REIT is an unincorporated, open-ended real estate
investment trust focused on owning and acquiring primarily
income-producing automotive dealership properties located in
Canada. The REIT's portfolio
currently consists of 40 income-producing commercial properties,
representing approximately 1.5 million square feet of gross
leasable area, and one development property, in metropolitan
markets across Ontario,
Saskatchewan, Alberta, British
Columbia and Québec. Automotive Properties REIT is the only
public vehicle in Canada focused
on consolidating automotive dealership real estate properties. For
more information, please visit:
www.automotivepropertiesreit.ca.
Forward-Looking Information
This news release contains
forward-looking information within the meaning of applicable
securities legislation, which reflects the REIT's current
expectations regarding future events and in some cases can be
identified by such terms as "will" and "expected". Forward looking
information includes the REIT's future acquisition capacity.
Forward-looking information is based on a number of assumptions and
is subject to a number of risks and uncertainties, many of which
are beyond the REIT's control that could cause actual results and
events to differ materially from those that are disclosed in or
implied by such forward-looking information. Such risks and
uncertainties include, but are not limited to, the factors
discussed under "Risks and Uncertainties" in the REIT's MD&A
for the year ended December 31, 2017
and in the REIT's current annual information form, both of which
are available on SEDAR (www.sedar.com). The REIT does not undertake
any obligation to update such forward-looking information, whether
as a result of new information, future events or otherwise, except
as expressly required by applicable law. This forward-looking
information speaks only as of the date of this news release.
Non-IFRS Financial Measures
This news release contains
certain financial measures which are not defined under IFRS and may
not be comparable to similar measures presented by other real
estate investment trusts or enterprises. FFO, AFFO, FFO payout
ratio, AFFO payout ratio, NOI, Same Property NOI, Cash NOI, and
Same Property Cash NOI are key measures of performance used by the
REIT's management and real estate businesses. Debt to GBV is a
measure of financial position defined by the REIT's declaration of
trust. These measures, as well as any associated "per Unit"
amounts, are not defined by IFRS and do not have standardized
meanings prescribed by IFRS, and therefore should not be construed
as alternatives to net income or cash flow from operating
activities calculated in accordance with IFRS. The REIT believes
that AFFO is an important measure of economic earnings performance
and is indicative of the REIT's ability to pay distributions from
earnings, while FFO, NOI, Cash NOI and Same Property Cash NOI are
important measures of operating performance of real estate
businesses and properties. The IFRS measurement most directly
comparable to FFO, AFFO, NOI and Cash NOI is net income. ACFO is a
supplementary measure used by management to improve the
understanding of the operating cash flow of the REIT. The IFRS
measurement most directly comparable to ACFO is cash flow from
operating activities. See the REIT's Q2 2018 MD&A for further
discussion of these non-IFRS financial measures and for a
reconciliation of NOI, FFO, AFFO and Cash NOI to net income and
comprehensive income and ACFO to cash flow from operating
activities.
SOURCE Automotive Properties Real Estate Investment Trust