TORONTO, Nov. 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 ("Q3 2018") and nine-month ("YTD 2018") periods ended
September 30, 2018.
Q3 2018 Highlights
- Property rental revenue was $11.8
million, an increase of 11.7% from the third quarter of 2017
("Q3 2017");
- Net Operating Income1 ("NOI") was $10.0 million, an increase of 10.8% from Q3
2017;
- Total and Same Property Cash NOI1 were $9.3 million and $8.4
million, respectively, representing increases of 11.9% and
1.4%, respectively, from Q3 2017;
- Net Income was $5.7 million,
compared to $12.7 million in Q3
2017;
- Funds from Operations1 ("FFO") increased 4.1% to
$6.7 million, from $6.4 million in Q3 2017. FFO per unit of the REIT
("Unit") was $0.249 (diluted), up
from $0.244 (diluted) in Q3
2017;
- Adjusted Funds from Operations1 ("AFFO") increased
5.3% to $6.1 million, from
$5.8 million in Q3 2017. AFFO per
Unit was $0.228 (diluted), up from
$0.222 (diluted) in Q3 2017;
- The REIT acquired the BMW Laval and Sherwood Park Volkswagen
dealership properties from AutoCanada Inc. for a purchase price of
$55.5 million;
- The REIT declared monthly cash distributions of $0.067 per Unit, resulting in total distributions
declared and paid of approximately $5.4
million, representing an AFFO payout ratio1 of
approximately 88.2%; and
- The REIT's debt to gross book value1 ("Debt to
GBV") was 53.1% as at September 30,
2018, compared to 48.5% as at December 31, 2017.
Subsequent Event
- On October 16, 2018, the REIT
closed a bought deal equity offering of 5,100,000 Units at a price
of $10.80 per Unit, resulting in
gross proceeds of approximately $55.1
million.
"Our property acquisition program, combined with our contractual
rent increases, continues to drive growth in revenue, NOI, FFO and
AFFO. Through our acquisitions we have continued to diversify our
tenant base while continuing our focus on metropolitan markets,"
said Milton Lamb, CEO of Automotive
Properties REIT. "With our acquisition of the BMW Laval and
Sherwood Park Volkswagen properties from AutoCanada Inc. in the
quarter, our portfolio now includes four of the top automotive
dealership groups in Canada.
Looking ahead, with the recent completion of our $55.1 million equity offering, we will continue
to strengthen our portfolio, grow cash flow and drive long-term
value for our unitholders by capitalizing on accretive
consolidation opportunities."
1
NOI, Cash NOI, Same Property Cash NOI, FFO, AFFO, Debt to GBV
and ACFO (as defined below) are non-IFRS financial
measures. See "Non-IFRS Financial Measures" in this news
release. References to "Same Property" correspond to properties
that the REIT owned in Q3 2017, thus removing the impact of
acquisitions.
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Financial Results Summary
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Three months
ended
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Nine months
ended
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September
30,
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September
30,
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|
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($000s, except per
Unit amounts)
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2018
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2017
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Change
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2018
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2017
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Change
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Rental revenue
(1)
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$11,834
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$10,599
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11.7%
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$34,513
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$30,947
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11.5%
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NOI
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9,993
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9,017
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10.8%
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29,252
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26,264
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11.4%
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Cash NOI
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9,278
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8,293
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11.9%
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27,030
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24,047
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12.4%
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Same Property Cash
NOI (1)
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8,410
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8,294
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1.4%
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23,006
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22,690
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1.4%
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Net Income
(2)
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5,675
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12,729
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-55.4%
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25,484
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19,655
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29.7%
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FFO
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6,666
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6,405
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4.1%
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19,973
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18,882
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5.8%
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AFFO
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6,117
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5,811
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5.3%
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18,232
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17,015
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7.2%
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Distributions per
Unit
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$0.201
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$0.201
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-
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$0.603
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$0.603
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-
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FFO per Unit – basic
(3)
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0.250
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0.245
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0.005
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0.758
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0.738
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0.020
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FFO per Unit -
diluted (4)
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0.249
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0.244
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0.005
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0.755
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0.737
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0.018
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AFFO per Unit - basic
(3)
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0.230
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0.222
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0.008
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0.692
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0.665
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0.027
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AFFO per Unit -
diluted (4)
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0.228
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0.222
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0.006
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0.689
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0.664
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0.025
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Ratios
(%)
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FFO payout
ratio
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80.7%
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82.4%
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-1.7%
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79.9%
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81.8%
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-1.9%
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AFFO payout
ratio
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88.2%
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90.5%
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-2.3%
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87.5%
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90.8%
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-3.3%
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Debt to
GBV
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53.1%
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45.8%
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7.3%
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53.1%
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45.8%
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7.3%
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(1)
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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.
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(2)
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The decrease in net
income for Q3 2018 is primarily due to changes in the fair value
adjustments for interest rate swaps, the Class B limited
partnership units of Automotive Properties Limited Partnership
("Class B LP Units"), and investment properties. Please refer to
the consolidated financial statements of the REIT and notes
thereto.
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(3)
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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 Q3 2018
was 26,629,805.
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(4)
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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 Q3 2018 was 26,780,847.
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Rental revenue increased 11.7% to $11.8
million in Q3 2018, as compared to $10.6 million in Q3 2017. The increase in rental
revenue reflects growth from properties acquired subsequent to Q3
2017 and contractual annual rent increases across a significant
portion of the portfolio.
Property costs were $1.8 million
in Q3 2018, as compared to $1.6
million in Q3 2017. The increase is attributable to the
properties acquired subsequent to Q3 2017. Property costs as a
percentage of revenue were 15.6% in Q3 2018 as compared to 14.9% in
Q3 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 Q3 2018
totaled $9.3 million and $8.4 million, respectively, representing
increases of 11.9% and 1.4%, respectively, as compared to Q3 2017.
The increase in Cash NOI was attributable to the properties
acquired subsequent to Q3 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 $5.7 million in Q3
2018, as compared to $12.7 million in
Q3 2017. The decrease was primarily attributable to the change in
the fair value adjustment for Class B LP Units, partially offset by
the growth in NOI, changes in the fair value adjustment for
interest rate swaps and investment properties.
FFO in Q3 2018 was $6.7 million,
or $0.249 per Unit (diluted), as
compared to $6.4 million, or
$0.244 per Unit diluted, in Q3 2017.
The increase was primarily due to the impact of the properties
acquired subsequent to Q3 2017.
AFFO in Q3 2018 was $6.1 million,
or $0.228 per Unit (diluted), as
compared to $5.8 million, or
$0.222 per Unit diluted, in Q3 2017.
The increase was primarily due to the impact of the properties
acquired subsequent to Q3 2017.
Adjusted Cash Flow from Operations1 ("ACFO") in Q3
2018 was $7.5 million, representing
an increase of 32.2% from $5.7
million in Q3 2017. The ACFO payout ratio was 71.5% in Q3
2018, compared to 92.7% in Q3 2017. The lower ACFO payout ratio for
Q3 2018 reflects the adjustment for the timing of non-cash working
capital related to non-sustainable cash flow activities, which was
primarily a result of acquisition costs related to the purchase of
the BMW Laval and Sherwood Park Volkswagen dealership
properties.
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 $5.4 million to
unitholders in Q3 2018, or $0.201 per
Unit, representing an AFFO payout ratio of 88.2%. The lower AFFO
payout ratio for Q3 2018 relative to Q3 2017 was primarily
attributable to the impact of the properties acquired subsequent to
Q3 2017.
Units Outstanding
As at September 30, 2018, there were 16,696,552 Units
and 9,933,253 Class B LP Units outstanding (21,796,552 Units
following completion of the Equity offering on October 16, 2018).
Financial Statements
The REIT's unaudited condensed
consolidated interim financial statements and related Management's
Discussion & Analysis ("MD&A") for Q3 2018 / YTD 2018 are
available on the REIT's website at www.automotivepropertiesreit.ca
and on SEDAR at www.sedar.com.
Conference Call
Management of the REIT will host a
conference call for analysts and investors on Wednesday, November 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: 120257. The replay will be available
November 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 42 income-producing commercial properties,
representing approximately 1.7 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 Q3 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