TORONTO and MONTREAL, Aug. 25,
2017 /CNW/ - NEXUS Real Estate Investment Trust (the "REIT")
(TSXV: NXR.UN) announced today its results for the three and six
months ended June 30, 2017 and the
declaration of the September 2017
distribution.
Highlights
- Completed $55 million bought deal
equity financing and $15 million
private placement on June
30th; proceeds used to complete approximately
$147 million acquisition of 26
properties on July
7th.
- Completed Nobel REIT merger on April 3,
2017; added 16 properties with approximately 875,000 square
feet of GLA.
- Portfolio high graded with the addition of quality urban
Montreal properties.
- External management contract terminated and management
internalized effective April 3,
2017.
- AFFO per unit for the quarter of $0.048 is 5.4% higher than AFFO per unit of the
previous quarter of $0.045 (restated
to conform with the Realpac whitepaper definition of AFFO adopted
in the quarter) with further accretion to be realized in future
quarters with the completion of the Sandalwood acquisition and the
redevelopment project at the downtown Montreal office property acquired in the Nobel
REIT transaction.
- Management of the REIT will host a conference call on
Monday August 28th at
1PM EST to review results and
operations.
"Q2 has been a transformative quarter for the REIT. We
successfully internalized management, integrated the former
Edgefront and Nobel REIT platforms, completed an equity financing
and closed on the $147 million
acquisition of the Sandalwood portfolio shortly after the quarter
end." stated Kelly Hanczyk, the
REIT's Co-Chief Executive Officer. "We will see improvements to our
payout ratio and AFFO per unit in the third quarter as we realize
the immediate benefits of the accretive Sandalwood transaction and
further benefits in early 2018 with the commencement of leases in
our downtown Montreal
redevelopment project. Our success in the first half of the year
combined with our off-market acquisition pipeline, lays the
groundwork for continued growth in 2017 and beyond."
Summary of Results
Included in the tables that follow and elsewhere in this news
release are non-IFRS measures that should not be construed as an
alternative to net income / loss, cash from operating activities or
other measures of financial performance calculated in accordance
with IFRS, and may not be comparable to similar measures as
reported by other issuers. Readers are encouraged to refer to the
REIT's MD&A for further discussion of the non-IFRS measures
presented.
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Three months
ended
June
30,
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Six months
ended
June
30,
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2017
|
2016
|
2017
|
2016
|
|
Financial
Results
|
$
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$
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$
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$
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Property
revenue
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6,856,900
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3,810,928
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10,867,036
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7,535,469
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Net operating
income
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5,233,242
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3,138,447
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8,552,228
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6,288,802
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Net income
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13,559
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592,806
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26,848
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2,919,558
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Net income excluding
transaction costs, fair value adjustments, bargain purchase gain
and other income
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2,949,069
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1,737,445
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4,727,899
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3,384,658
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On June 30, 2017, the REIT issued
33,350,000 REIT units in connection with a bought deal equity
financing and private placement. Net of equity issuance costs,
approximately $66,225,000 of net
proceeds were received. Holders of the 33,350,000 REIT units issued
on June 30, 2017 were entitled to
receive the June distribution declared payable to unitholders of
record as of June 30, 2017. The funds
generated from the bought deal and private placement were deployed
on July 7, 2017 to complete a
previously announced $147,000,000
acquisition of 26 properties. As a result of the timing of the
issuance of the 33,350,000 units on the last day of the quarter and
with the holders of these units being entitled to receive the June
distribution, the AFFO payout ratio for the quarter was distorted.
Also impacted were the weighted average number of units outstanding
and the total assets at June 30,
2017, distorting metrics including debt to total assets and
per unit measures. In the table that follows, certain metrics are
normalized to reverse these impacts. In the quarter, the REIT
adopted the definition of AFFO contained in the whitepaper issued
by Realpac in February 2017. Year to
date 2017 and prior period comparative figures have been restated
to conform with the definition of AFFO adopted in the quarter ended
June 30, 2017. For reference, AFFO
per unit and the AFFO payout ratio for the previous quarter ended
March 31, 2017, when calculated
consistently with the definition adopted from the Realpac
whitepaper, were $0.045 and 88.7%,
respectively.
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Three months
ended
June
30,
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Six months
ended
June
30,
|
|
2017
|
2016
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2017
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2016
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Financial
Highlights
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$
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$
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$
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$
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FFO
(1)
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3,059,159
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1,958,865
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5,079,932
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4,091,185
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Normalized FFO
(1) (4)
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3,059,159
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1,958,865
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5,079,932
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3,834,657
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AFFO
(1)
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2,842,217
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1,876,809
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4,734,471
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3,927,074
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Normalized AFFO
(1) (4)
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2,842,217
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1,876,809
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4,734,471
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3,670,546
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Distributions
declared (2)
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2,833,890
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1,609,305
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4,511,535
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3,208,882
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Distributions
declared on units issued June 30, 2017 on the closing of the bought
deal and private placement (5)
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444,556
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-
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444,556
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-
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Normalized
distributions declared (5)
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2,389,335
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1,609,305
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4,066,980
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3,208,882
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Weighted average
units outstanding - basic (3)
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59,670,062
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40,193,668
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50,826,902
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40,074,261
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Weighted average
units outstanding - diluted (3)
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59,851,912
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40,193,668
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50,925,074
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40,074,261
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Distributions per
unit, basic (2) (3)
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0.047
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0.040
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0.089
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0.080
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FFO per unit, basic
(1) (3)
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0.051
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0.049
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0.100
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0.102
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Normalized FFO per
unit, basic (1) (3) (4)
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0.051
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0.049
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0.100
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0.096
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AFFO per unit, basic
and diluted (1) (3)
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0.048
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0.047
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0.093
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0.098
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Normalized AFFO per
unit, basic (1) (3) (4)
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0.048
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0.047
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0.093
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0.092
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Normalized AFFO per
unit, diluted (1) (3) (4)
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0.047
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0.047
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0.093
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0.092
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Normalized AFFO
payout ratio, basic, adjusted (1) (2) (4) (5)
(6)
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84.1%
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85.7%
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85.9%
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87.4%
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Debt to total assets
ratio (7)
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44.8%
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49.2%
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44.8%
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49.2%
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(1)
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Non-IFRS
Measure
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(2)
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Includes
distributions payable to holders of Class B LP Units which are
accounted for as interest expense in the consolidated financial
statements.
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(3)
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Weighted average
number of units includes the Class B LP Units.
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(4)
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For the six months
ended June 30, 2016, FFO and AFFO include $256,528 of other income
relating to the release in the first quarter of 2016 of funds
previously held in an environmental escrow in connection with the
acquisition of ten industrial properties on January 14, 2014. This
is a one-time item which is excluded from normalized FFO and
normalized AFFO for the three months ended March 31,
2016.
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(5)
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33,350,000 REIT units
were issued on June 30, 2017 on the closing of an equity financing
and private placement. These units were eligible to receive
distributions for the month of June. Normalized distributions
declared and Normalized AFFO payout ratio, basic, calculated with
normalized distributions declared each exclude distributions
declared on these units which were outstanding for only 1 day in
the quarter.
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(6)
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Calculated based on
normalized distributions declared as presented in the table above.
Normalized AFFO Payout Ratio for the quarter is 99.7% when
unadjusted for distributions paid on units issued on June 30,
2017.
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(7)
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Net proceeds from the
closing of the bought deal financing and private placement of
approximately $66,225,000 increased total assets temporarily at
quarter end. Net of this amount, debt to total assets would
have been approximately 55.1%.
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Revenues and Results from Operations in Line with
Expectations
For the three months ended June 30,
2017, net operating income of $5,233,242 was $2,094,795 higher than NOI in the same period of
2016 of $3,138,447 primarily due to
the impact of the Nobel transaction, which accounted for
approximately $1,871,000 of net
operating income in the quarter, as compared to $nil in the same
quarter of 2016. The Cambridge Property, acquired August 22, 2016, contributed approximately
$158,000 of NOI. Concurrent with the
Nobel transaction, the contract with Edgefront REIT's external
manager, Edgefront Realty Advisors (the "Manager"), was terminated,
and the property management fees totalling approximately
$16,000 which were earned by the
Manager in past quarters were earned by the REIT in the
quarter. Contractual rent increases based on CPI generated
approximately $32,000 of additional
NOI in the quarter as compared to the same period of 2016.
Earnings Call
Management of the REIT will host a conference call at
1:00 PM Eastern Standard Time on
Monday August 28, 2017 to review the
financial results and operations.
To participate in the conference call, please dial 416-915-3239
or 1-800-319-4610 (toll free in Canada and the US) at least five minutes prior
to the start time and ask to join the Nexus REIT conference
call.
A recording of the conference call will be available until
September 8, 2017. To access the
recording, please dial 604-674-8052 or 1-855-669-9658 (toll free in
Canada and the US) and enter
access code 1637.
September Distribution
The REIT will make a cash distribution in the amount of
$0.01333 per unit, representing
$0.16 per unit on an annualized
basis, payable October 16, 2017 to
unitholders of record as of September 29,
2017.
The REIT's current distribution per unit continues to be
$0.01333 per month. The REIT's
distribution reinvestment program ("DRIP") entitles eligible
unitholders to elect to receive all, or a portion of the cash
distributions of the REIT reinvested in units of the REIT. Eligible
unitholders who so elect will receive a bonus distribution of units
equal to 4% of each distribution that was reinvested by them under
the DRIP.
About Nexus REIT
Nexus is a growth oriented real estate investment trust focused
on increasing unitholder value through the acquisition, ownership
and management of industrial, office and retail properties located
in primary and secondary markets in North
America. The REIT currently owns a portfolio of 62
properties comprising approximately 3.5 million square feet of
rentable area. The REIT has approximately 88,090,000 units issued
and outstanding. Additionally, there are approximately 6,006,000
Class B LP units of subsidiary limited partnerships of the REIT
issued and outstanding.
Forward Looking Statements
Certain statements contained in this news release constitute
forward-looking statements which reflect the REIT's current
expectations and projections about future results. Often, but not
always, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the REIT to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Actual results and
developments are likely to differ, and may differ materially, from
those expressed or implied by the forward-looking statements
contained in this news release. Such forward-looking statements are
based on a number of assumptions that may prove to be
incorrect.
While the REIT anticipates that subsequent events and
developments may cause its views to change, the REIT specifically
disclaims any obligation to update these forward-looking statements
except as required by applicable law. These forward-looking
statements should not be relied upon as representing the REIT's
views as of any date subsequent to the date of this news release.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. The factors identified above are not
intended to represent a complete list of the factors that could
affect the REIT.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
SOURCE Nexus Real Estate Investment Trust