TORONTO and MONTREAL, Aug. 15,
2019 /CNW/ - Nexus Real Estate Investment Trust (the "REIT")
(TSXV: NXR.UN) announced today its results for the quarter and six
months ended June 30, 2019, and the
declaration of August and September
2019 distributions.
Highlights
- Completed a $31,000,000 accretive
acquisition of industrial properties in the quarter at a 9.33%
blended capitalization rate.
- Property revenues increased 14.3% to $15,003,425 as compared to $13,121,925 for Q2 2018 and 4.3% as compared to
$14,386,438 for Q1 2019.
- Net operating income increased 18.3% to $9,745,459 as compared to $8,235,670 for Q2 2018 and 9.0% as compared to
$8,936,821 for Q1 2019.
- Net income for the quarter of $4,041,737, compared to $4,498,873 for the same quarter of the prior
year; net income excluding fair value adjustments, Class B LP Unit
distributions and loss on disposal of investment properties for Q2
2019 was $5,287,016 as compared to
$5,159,534 for Q2 2018.
- Normalized AFFO per unit for the quarter of $0.050 increased 3.2% as compared to Q2 2018
normalized AFFO per unit of $0.048;
increased 1.3% as compared to Q1 2019 normalized AFFO per unit of
$0.049.
- Normalized AFFO payout ratio for the quarter of 80.5% is down
from 81.5% for Q1 2019 and 83.1% for the same quarter of 2018.
- Debt to total assets ratio remains conservative at 51.7%;
weighted average term to maturity of mortgages increased from 2.59
years at March 31, 2019 to 3.66 years
at June 30, 2019.
- Management of the REIT will host a conference call on
Friday August 16th at
1PM EST to review results and
operations.
"The REIT has consistently delivered stable results and the
second quarter of 2019 saw the completion of a highly accretive
acquisition that has further reduced our AFFO payout ratio to 80%"
commented Kelly Hanczyk, the REIT's
Chief Executive Officer. "We have been successful in leasing to
date this year which, combined with favorable terms on debt
renewals, will result in a continued strengthening of our results
and financial position in future quarters. We are in late-stage
discussions with respect to additional acquisition opportunities
and we are very excited about the future growth of the REIT."
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
June
30,
|
Six months
ended
June
30,
|
|
2019
|
2018
|
2019
|
2018
|
|
Financial
Results
|
$
|
$
|
$
|
$
|
|
Property
revenue
|
15,003,425
|
13,121,925
|
29,389,863
|
26,425,486
|
|
Net operating
income
|
9,745,459
|
8,235,670
|
18,682,280
|
16,165,597
|
|
Net income
|
4,041,737
|
4,498,873
|
8,642,714
|
10,923,827
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Financial
highlights
|
|
|
|
|
|
|
|
|
Funds from operations
(FFO) (1)
|
5,433,978
|
|
5,095,446
|
|
13,521,065
|
|
10,064,581
|
|
Normalized FFO
(1) (2)
|
6,639,371
|
|
5,548,550
|
|
12,832,903
|
|
10,517,685
|
|
Adjusted funds from
operations (AFFO) (1)
|
4,740,759
|
|
4,462,270
|
|
12,151,163
|
|
8,843,519
|
|
Normalized AFFO
(1) (2)
|
5,946,152
|
|
4,915,374
|
|
11,463,001
|
|
9,296,623
|
|
Distributions
declared (3)
|
4,789,115
|
|
4,212,990
|
|
9,290,370
|
|
7,986,095
|
|
Distributions
declared on units issued April 30, 2018
|
|
|
|
|
|
|
|
|
on the closing of an
acquisition (4)
|
-
|
|
128,857
|
|
-
|
|
128,857
|
|
Normalized
distributions declared (3) (4)
|
4,789,115
|
|
4,084,133
|
|
9,290,370
|
|
7,857,238
|
|
Weighted average
units outstanding – basic (5)
|
119,729,985
|
|
101,829,119
|
|
116,150,950
|
|
98,070,079
|
|
Weighted average
units outstanding – diluted (5)
|
119,798,205
|
|
101,888,051
|
|
116,190,308
|
|
98,134,567
|
|
Distributions per
unit, basic and diluted (3) (5)
|
0.040
|
|
0.041
|
|
0.080
|
|
0.081
|
|
Adjusted
distributions per unit, basic and
|
|
|
|
|
|
|
|
|
diluted (3)
(4) (5)
|
0.040
|
|
0.040
|
|
0.080
|
|
0.080
|
|
FFO per unit, basic
(1) (5)
|
0.045
|
|
0.050
|
|
0.116
|
|
0.103
|
|
Normalized FFO per
unit, basic (1) (2) (5)
|
0.055
|
|
0.054
|
|
0.110
|
|
0.107
|
|
AFFO per unit, basic
(1) (5)
|
0.040
|
|
0.044
|
|
0.105
|
|
0.090
|
|
Normalized AFFO per
unit, basic (1) (2) (5)
|
0.050
|
|
0.048
|
|
0.099
|
|
0.095
|
|
Normalized AFFO
payout ratio, basic,
|
|
|
|
|
|
|
|
|
adjusted (1) (2)
(3) (4) (6)
|
80.5%
|
|
83.1%
|
|
81.0%
|
|
84.5%
|
|
Debt to total assets
ratio
|
51.7%
|
|
54.3%
|
|
51.7%
|
|
54.3%
|
|
(1)
|
Non-IFRS
Measure
|
|
(2)
|
Normalized FFO and
Normalized AFFO include adjustments for 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. Normalized FFO and Normalized AFFO also
include adjustments for debt repayment fees included in interest
expense in the three and six month periods ended June 30, 2019 of
$578,399 which were due on repayment of debt assumed in
acquisitions completed in July 2017.
|
|
(3)
|
Includes
distributions payable to holders of Class B LP Units which are
accounted for as interest expense in the consolidated financial
statements.
|
|
(4)
|
9,666,667 REIT 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, calculated with normalized distributions declared
each exclude distributions declared on these units for the month of
April 2018.
|
|
(5)
|
Weighted average
number of units includes the Class B LP Units.
|
|
(6)
|
Calculated based on
normalized distributions declared as presented in the table
above.
|
|
(7)
|
2018 comparative
period FFO, AFFO, Normalized FFO and Normalized AFFO have been
restated to include an adjustment for amortization of tenant
incentives and leasing costs, not adjusted in 2018.
|
Revenues and Results from Operations
Net operating income for the quarter of $9,745,459 was $1,509,789 higher than net operating income of
$8,235,670 for Q2 2018. Properties
acquired in 2018 and in the Q2 2019 contributed approximately
$1,484,000 in incremental net
operating income in the quarter as compared to Q2 2018. Net
operating income for the quarter was $808,638 higher than net operating income of
$8,936,821 for Q1 2019 primarily due
to the properties acquired in Q2 2019.
General and administrative expense for the quarter of
$882,191 was $157,794 higher than general and administrative
expense of $724,397 in Q2 2018 due to
higher salaries and professional fees. Approximately $50,000 of recruiting costs were expensed in Q2
2019. Annual financial statement filing fees were also incurred and
expensed in Q2 2019, whereas they were incurred and expensed in the
first quarter of the prior year.
Net interest expense of $3,465,022
for the quarter includes a debt repayment fee in the amount of
$578,339 which was due in
April 2019 on maturity and repayment
of debt assumed in acquisitions completed in July 2017.
Earnings Call
Management of the REIT will host a conference call at
1:00 PM Eastern Standard Time on
Friday August 16, 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
September 16, 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 3460.
August and September 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 September 13, 2019 to unitholders of
record as of August 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 October 15, 2019 to
unitholders of record as of September 30,
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 101,670,000 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 18,236,000
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