TORONTO and MONTREAL, April 2,
2019 /CNW/ - Nexus Real Estate Investment Trust (the "REIT")
(TSXV: NXR.UN) announced today its results for the fourth quarter
and year ended December 31, 2018, the
completion of an acquisition and the declaration of the April and
May 2019 distributions.
Highlights
- Net income for the year of $38,834,266 was up 150% as compared to 2017 net
income of $15,688,792.
- Total assets increased $98,949,167 or 22% as compared to December 31, 2017, primarily as a result of
accretive acquisitions completed in the year, and fair value
increases of investment properties.
- Normalized AFFO per unit for the quarter of $0.049 increased 2% as compared to Q4 2017
normalized AFFO per unit of $0.048.
- Normalized AFFO payout ratio for the year of 83.3% is down from
83.6% for the year ended December 31,
2017.
- Q4 2018 normalized AFFO per unit of $0.049 increased 1.4% as compared to Q3 2018
normalized AFFO per unit of $0.048.
- Q4 2018 normalized AFFO payout ratio of 81.6% decreased from
82.6% for Q3 2018.
- Conservative debt to total assets ratio of 51.7%.
- Management of the REIT will host a conference call on
Wednesday April 3rd at 1PM EST to review results and operations.
"2018 was an exceptional year for the REIT. Accretive
acquisitions grew our asset base approximately $91 million, with $35
million of REIT units being issued as purchase consideration
at a premium to trading values." commented Kelly Hanczyk, the REIT's Chief Executive
Officer. "Our core fundamentals continue to be strong with debt to
GBV at a conservative 51.7% and an AFFO payout ratio of 83% for the
year. Subsequent to year end we announced a highly accretive
acquisition that we completed today, which will further add to our
AFFO per unit. We hope to build on our success of 2018 in
2019."
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.
|
Three months
ended December
31,
|
Year
ended December
31,
|
|
2018
|
2017
|
2018
|
2017
|
Financial
Results
|
$
|
$
|
$
|
$
|
Property
revenue
|
14,221,166
|
13,135,686
|
54,097,493
|
36,999,083
|
Net operating
income
|
9,004,890
|
8,161,266
|
33,765,529
|
25,139,568
|
Net income
|
23,753,407
|
12,302,915
|
38,834,266
|
15,688,792
|
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
|
|
$
|
|
$
|
|
$
|
Financial
highlights
|
|
|
|
|
|
|
|
Funds from operations
(FFO) (1)
|
5,574,014
|
|
5,339,619
|
|
20,909,100
|
|
15,961,115
|
Normalized FFO
(1) (7)
|
6,244,514
|
|
5,339,619
|
|
22,703,205
|
|
15,961,115
|
Adjusted funds from
operations (AFFO) (1)
|
4,840,327
|
|
4,534,756
|
|
18,318,672
|
|
14,062,927
|
Normalized AFFO
(1) (7)
|
5,510,827
|
|
4,534,756
|
|
20,112,777
|
|
14,062,927
|
Distributions
declared (2)
|
4,494,971
|
|
3,768,425
|
|
16,879,656
|
|
12,203,008
|
Distributions
declared on units issued June 30, 2017
on the closing of the
bought deal and private
placement
(4)
|
-
|
|
-
|
|
-
|
|
444,556
|
Distributions
declared on units issued April 30, 2018
on the closing of an
acquisition (5)
|
-
|
|
-
|
|
128,857
|
|
-
|
Normalized
distributions declared (4) (5)
|
4,494,971
|
|
3,768,425
|
|
16,750,799
|
|
11,758,452
|
Weighted average
units outstanding – basic (3)
|
112,169,870
|
|
94,213,235
|
|
104,620,008
|
|
72,657,067
|
Weighted average
units outstanding – diluted (3)
|
112,216,160
|
|
94,277,656
|
|
104,677,571
|
|
72,739,276
|
Distributions per
unit, basic and diluted (2) (3)
|
0.040
|
|
0.040
|
|
0.161
|
|
0.168
|
Adjusted
distributions per unit, basic and diluted (2) (3) (4)
(5)
|
0.040
|
|
0.040
|
|
0.160
|
|
0.162
|
FFO per unit, basic
(1) (3)
|
0.050
|
|
0.057
|
|
0.200
|
|
0.220
|
Normalized FFO per
unit, basic (1) (3) (7)
|
0.056
|
|
0.057
|
|
0.217
|
|
0.220
|
AFFO per unit, basic
(1) (3)
|
0.043
|
|
0.048
|
|
0.175
|
|
0.194
|
Normalized AFFO per
unit, basic (1) (3) (7)
|
0.049
|
|
0.048
|
|
0.192
|
|
0.194
|
Normalized AFFO payout
ratio, basic, adjusted (1)
(2) (4) (5) (6) (7)
|
81.6%
|
|
83.1%
|
|
83.3%
|
|
83.6%
|
Debt to total assets
ratio
|
51.7%
|
|
54.0%
|
|
51.7%
|
|
54.0%
|
|
|
(1)
|
Non-IFRS
Measure
|
(2)
|
Includes
distributions payable to holders of Class B LP Units which are
accounted for as interest expense in the consolidated financial
statements.
|
(3)
|
Weighted average
number of units includes the Class B LP Units.
|
(4)
|
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, adjusted each
exclude distributions declared on these units which were
outstanding for only 1 day in the quarter.
|
(5)
|
9,666,667 units were
issued on April 30, 2018 on the closing of an acquisition. These
units were eligible to receive distributions for the month of
April. Normalized distributions declared and Normalized AFFO payout
ratio, basic, adjusted each exclude distributions declared on these
units for the month of April 2018.
|
(6)
|
Calculated based on
normalized distributions declared as presented in the table
above.
|
(7)
|
Normalized FFO and
Normalized AFFO include a vendor rent obligation amount related to
the Richmond Property which is received in cash from the vendor of
the Richmond Property until the property build out is complete and
all tenants are occupying and paying rent. The vendor rent
obligation amount is not included in NOI for IFRS accounting
purposes.
|
Revenues and Results from Operations
Net operating income for the fourth quarter of $9,004,890 was $843,624 higher than net operating income of
$8,161,266 for the same quarter of
2017, and was up $409,848 as compared
to net operating income for the third quarter of $8,595,042. 2018 acquisitions contributed
approximately $860,000 in incremental
net operating in the quarter as compared to the same period of
2017. Partially offsetting the incremental operating income from
acquisitions was a reduction in net operating income related to the
disposition of two properties in the second quarter of the
year.
For the year ended December 31,
2018, net operating income of $33,765,529 was $8,625,961 higher than 2017 net operating income
of $25,139,568 primarily due to the
Nobel transaction in April 2017 and
the Sandalwood transaction in July
2017, combined with incremental net operating income earned
from 2018 acquisitions.
General and administrative expense for the quarter of
$719,027 was $274,943 lower than general and administrative
expense of $993,970 in the same
quarter of the prior year primarily due to annual bonus accruals
recorded in the fourth quarter of the prior year. General and
administrative expense for the year ended December 31, 2018 was consistent with the 2017
expense.
Net income for the fourth quarter included fair value
adjustments of investment properties in the amount of $17,533,027 and fair value adjustments of Class B
LP Units, warrants and options in aggregate amount of $2,515,146. For the year ended December 2018, fair value adjustments totaled
$21,121,998.
Earnings Call
Management of the REIT will host a conference call at
1:00 PM Eastern Standard Time on
Wednesday April 3, 2019 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
May 3, 2019. 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 2919.
Completion of Acquisition
On April 2, 2019 the REIT
completed the previously announced acquisition of four
single-tenant industrial properties located in Fort St John, British Columbia; Blackfalds, Alberta; Medicine Hat, Alberta and Estevan, Saskatchewan for a purchase price of
$31,000,000 at a 9.3% capitalization
rate. In partial satisfaction of the purchase price, $14,763,390 of Class B LP units of a subsidiary
limited partnership of the REIT were issued to the vendor at
$2.10 per unit.
April and May Distributions
The REIT announced today that it will make a cash distribution
in the amount of $0.01333 per unit,
representing $0.16 per unit on an
annualized basis, payable May 15, 2019 to unitholders of
record as of April 30, 2019.
The REIT will also make a cash distribution in the amount of
$0.01333 per unit, representing
$0.16 per unit on an annualized
basis, payable June 14, 2019 to
unitholders of record as of May 31,
2019.
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 70
properties comprising approximately 3.8 million square feet of
rentable area. The REIT has approximately 99,790,000 units issued
and outstanding. Additionally, there are Class B LP units of
subsidiary limited partnerships of Nexus REIT issued and
outstanding, which are convertible into approximately 12,817,000
REIT units.
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