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04.11.2019 23:35:00
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CT REIT Announces Sixth Consecutive Annual Distribution Increase and Record Third Quarter 2019 Results
- Delivers 8.3% growth in AFFO per unit for the third quarter
- Announces annual distribution increase of 4%
- Announces seven new investments, totalling $66 million
TORONTO, Nov. 4, 2019/CNW/ - CT Real Estate Investment Trust (CT REIT) (TSX: CRT.UN) today reported its consolidated financial results for the third quarter ended September 30, 2019.
"Our record growth in AFFO per unit in the third quarter reflects our predictable and attractive operating results, combined with the resolution of an outstanding matter related to our successful investment in the former Sears Canada industrial property in Calgary," said Ken Silver, President and CEO, CT REIT. "Another highlight of the quarter was the completion of a joint equity offering with Canadian Tire Corporation, Limited, which increases our public float and now positions the REIT for likely inclusion in a number of market indices. We continue to pursue our successful growth strategies with new CTC investments and the completion of a sale-leaseback transaction with the Bank of Montreal for a national portfolio of bank branches, which complements our core portfolio of high-quality net lease assets on long-term leases."
"Six years after our IPO, we can confidently point to the success and resilience of our business model, marked by our track record of attractive growth, conservative financial management, and with today's announcement, our sixth consecutive annual distribution increase, beginning in January 2020. With the significant growth in our portfolio over that time frame, driven by our active acquisition, development, leasing and asset management programs, I am also delighted to announce the promotion of Kevin Salsberg to Chief Operating Officer of the REIT," added Silver.
New Investment Activity
Today, CT REIT announced seven new investments, which will require an estimated total investment of $66 million. The investments are, in the aggregate, expected to earn a weighted average cap rate of 6.5% when completed and represent approximately 281,000 square feet of incremental gross leasable area ("GLA"). CT REIT is funding these investments through the issuance of Class B LP Units and/or Class C LP Units to Canadian Tire Corporation, Limited ("CTC"), cash and/or draws on its credit facility or any combination thereof.
The table below summarizes the new investments and anticipated completion dates:
Property | Type | GLA | Timing | Activity
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BMO Bank Branch Portfolio | Third Party Purchase | 82,000 | Q4 2019 | Acquisition of a national |
Thetford Mines, QC | Vend-in | 58,000 | Q4 2019 | Vend-in of an existing |
Welland, ON | Vend-in/Intensification | 79,000 | Q4 2019/Q4 2021 | Vend-in of adjacent land |
Mission, BC | Intensification | 7,000 | Q4 2020 | Expansion of an |
Brampton Trinity | Intensification | 16,000 | Q2 2021 | Expansion of an |
La Plaine, QC | Intensification | 21,000 | Q4 2021 | Expansion of an existing |
Sept-Iles, QC | Intensification | 18,000 | Q4 2021 | Expansion of an existing |
Update on Previously Announced Investments
CT REIT invested $4.2 million in previously disclosed investments that were completed in the third quarter. These projects include the intensification of a Canadian Tire store in Brampton, Ontario, the development of Canadian Tire Gas+ gas bar in Innisfil, Ontario, and the development of a Canadian Tire Gas+ gas bar and car wash in Hamilton, Ontario.
The table below provides activity updates on the previously announced investments.
Property | Type | GLA | Timing | Activity |
Brampton | Intensification | 6,000 | Q3 2019 | Expansion of an existing |
Innisfil, ON | Development | Ground | Q3 2019 | Development of a |
Hamilton Rymal, | Development | Ground | Q3 2019 | Development of a |
Financial and Operational Summary
Summary of Selected Information | ||||||||||||||
(in thousands of Canadian dollars, except unit, per unit and square footage amounts) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2019 | 2018 | Change7 | 2019 | 2018 | Change7 | |||||||||
Property revenue | $ | 121,763 | $ | 117,662 | 3.5 % | $ | 365,321 | $ | 353,161 | 3.4 % | ||||
Net operating income 1 | $ | 93,939 | $ | 87,758 | 7.0 % | $ | 275,351 | $ | 260,342 | 5.8 % | ||||
Net income | $ | 80,138 | $ | 79,147 | 1.3 % | $ | 230,303 | $ | 226,405 | 1.7 % | ||||
Net income per unit - basic 2 | $ | 0.362 | $ | 0.369 | (1.9)% | $ | 1.043 | $ | 1.058 | (1.4)% | ||||
Net income per unit - diluted 3 | $ | 0.301 | $ | 0.296 | 1.7 % | $ | 0.875 | $ | 0.855 | 2.3 % | ||||
Funds from operations1 | $ | 67,345 | $ | 62,171 | 8.3 % | $ | 195,064 | $ | 183,995 | 6.0 % | ||||
Funds from operations per unit - diluted (non-GAAP) 1,2,4 | $ | 0.303 | $ | 0.289 | 4.8 % | $ | 0.882 | $ | 0.859 | 2.7 % | ||||
Adjusted funds from operations 1 | $ | 57,855 | $ | 51,884 | 11.5 % | $ | 166,902 | $ | 153,325 | 8.9 % | ||||
Adjusted funds from operations per unit - diluted (non-GAAP) 1,2,4 | $ | 0.261 | $ | 0.241 | 8.3 % | $ | 0.755 | $ | 0.716 | 5.4 % | ||||
Distributions per unit - paid 2 | $ | 0.189 | $ | 0.182 | 4.0 % | $ | 0.568 | $ | 0.546 | 4.0 % | ||||
AFFO payout ratio1 | 72 % | 76 % | (5.3)% | 75 % | 76 % | (1.3)% | ||||||||
Cash generated from operating activities | $ | 98,035 | $ | 82,836 | 18.3 % | $ | 268,342 | $ | 247,835 | 8.3 % | ||||
Adjusted cashflow from operations 1 | $ | 59,440 | $ | 55,227 | 7.6 % | $ | 167,943 | $ | 153,081 | 9.7 % | ||||
Weighted average number of units outstanding 2 | ||||||||||||||
Basic | 221,677,555 | 214,654,925 | 3.3 % | 220,845,368 | 214,086,218 | 3.2 % | ||||||||
Diluted 3 | 322,629,585 | 325,372,565 | (0.8)% | 321,791,812 | 324,794,910 | (0.9)% | ||||||||
Diluted (non-GAAP) 1,4 | 221,912,113 | 214,842,060 | 3.3 % | 221,074,340 | 214,264,405 | 3.2 % | ||||||||
Indebtedness ratio | 42.8 % | 45.7 % | NM | |||||||||||
Interest coverage (times) | 3.45 | 3.36 | NM | 3.38 | 3.35 | NM | ||||||||
Gross leasable area (square feet) 5 | 27,142,110 | 26,423,801 | 2.7 % | |||||||||||
Occupancy rate 5,6 | 98.8 % | 98.7 % | NM | |||||||||||
1Non-GAAP measure. Refer to section 10.0 of the MD&A for further information. | ||||||
2Total units means Units and Class B LP Units outstanding. | ||||||
3Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 7.0 of the MD&A. | ||||||
4Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 7.0 of the MD&A. | ||||||
5Refers to retail, mixed-use commercial and distribution centre properties and excludes Properties Under Development. | ||||||
6 Occupancy and other leasing key performance measures have been prepared on a committed basis which includes the impact of existing lease agreements contracted on or before September 30, 2019 and September 30, 2018. | ||||||
7 NM - not meaningful. |
Financial Highlights
Net Income – Net income was $80.1 million for the quarter, an increase of 1.3% compared to the same period in the prior year primarily due to increased NOI resulting from investment activity, partially offset by an increase in net interest and other financing charges.
Net Operating Income (NOI)* – NOI was $93.9 million for the quarter, which was $6.2 million or 7.0% higher compared to the same period in the prior year (after excluding expenses related to ground rent which are no longer included in NOI as a result of the adoption of IFRS 16 – Leases), in part due to the acquisition of income-producing properties and Properties Under Development completed in 2019 and 2018, which contributed $1.7 million to NOI growth. Same store NOI and same property NOI for the quarter increased $3.8 million or 4.4% and $4.4 million or 5.1%, respectively, when compared to the prior year primarily due to contractual rent escalations, the proceeds from the assignment to a third party of the REIT's claim against Sears Canada Inc. under the Companies Creditors' Arrangement Act. , recovery of capital expenditures and interest earned, and the intensifications completed in 2019.
Funds from Operations (FFO)* – FFO for the quarter was $67.3 million or $0.303 per unit - diluted (non-GAAP), which was $5.2 million (8.3%) higher or $0.014(4.8%) per unit - diluted (non-GAAP) higher than the same period in the prior year, primarily due to the impact of NOI variances, discussed earlier, partially offset by higher interest expense.
Adjusted Funds from Operations (AFFO)* – AFFO for the quarter was $57.9 million or $0.261 per unit - diluted (non-GAAP), which was $6.0 million (11.5%) or $0.020 (8.3%) per unit - diluted (non-GAAP) higher than the same period in the prior year, primarily due to the impact of NOI variances, discussed earlier, partially offset by higher interest expense.
Adjusted Cashflow From Operations (ACFO)* – ACFO for the quarter increased by $4.2 million or 7.6% over the same period in 2018 primarily due to the impact of NOI variances, discussed earlier, partially offset by higher interest expense.
Distributions – Distributions per unit in the quarter amounted to $0.189, 4.0% higher than the same period in the prior year due to the increase in the annual rate of distributions effective with the first distribution paid in 2019.
*NOI, FFO, AFFO and ACFO are non-GAAP measures. Refer to Section 10 in the Q3 2019 Management's Discussion & Analysis, which is available on SEDAR at www.sedar.com and at www.ctreit.com.
Operating Results
Leasing– CTC is CT REIT's most significant tenant. At September 30, 2019, CTC represented approximately 93.2% of total GLA and 92.5% of annualized base minimum rent.
Occupancy – At September 30, 2019, CT REIT's portfolio occupancy rate, on a committed basis, was 98.8%.
Management Discussion and Analysis (MD&A) and Unaudited Condensed Consolidated Financial Statements and Notes
Information in this press release is a select summary of results. This press release should be read in conjunction with CT REIT's MD&A for the period ended September 30, 2019 and Unaudited Condensed Consolidated Financial Statements and Notes for the period ended September 30, 2019, which are available on SEDAR at www.sedar.com and at www.ctreit.com.
To view a PDF version of CT REIT's quarterly results please see: https://mma.prnewswire.com/media/1022817/CT_Real_Estate_Investment_Trust__CT_REIT__CT_REIT_Announces_Sixt.pdf
Forward–Looking Statements
This document contains forward-looking information that reflects management's current expectations related to matters such as future financial performance and operating results of CT REIT. Forward-looking statements are provided for the purposes of providing information about CT REIT's future outlook and anticipated events or results. Readers are cautioned that such information may not be appropriate for other purposes.
All statements other than statements of historical facts included in this document may constitute forward–looking information, including but not limited to, statements concerning the REIT's ability to complete any of the investments in acquisitions and property intensifications under the headings "New Investment Activity" and "Update on Previously Announced Investments", the timing and terms of any such investments and/or agreements and the benefits expected to result from such investments and other statements concerning developments, redevelopments, intensifications, results, performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.
By its very nature forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the REIT's assumptions, estimates, analyses, beliefs and opinions may not be correct and that the REIT's expectations and plans will not be achieved. Although the forward-looking information contained in this press release is based on information, assumptions and beliefs which are reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information.
For more information on the risks, uncertainties and assumptions that could cause the REIT's actual results to differ from current expectations, refer to Section 4 "Risk Factors" of our Annual Information Form for fiscal 2018, and to Section 11 "Enterprise Risk Management" and all subsections thereunder of our 2018 Management's Discussion and Analysis, as well as the REIT's other public filings, available at www.sedar.com and at www.ctreit.com.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.
Information contained in or otherwise accessible through the websites referenced in this press release (other than CT REIT's profile on SEDAR at www.sedar.com) does not form part of this press release and is not incorporated by reference into this press release. All references to such websites are inactive textual references and are for information only.
Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available at www.sedar.com and at www.ctreit.com.
Conference Call
CT REIT will conduct a conference call to discuss information included in this news release and related matters at 9:00 a.m. ET on November 5, 2019. The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2216 or 1-800-377-0758 or through a webcast at https://www.ctreit.com/English/news-and-events/events-and-webcasts/default.aspx, and will be available through replay for 12 months.
About CT Real Estate Investment Trust
CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed-end real estate investment trust formed to own income-producing commercial properties primarily located in Canada. Its portfolio is comprised of over 350 properties totalling approximately 27 million square feet of GLA, consisting primarily of retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit www.ctreit.com.
SOURCE CT Real Estate Investment Trust (CT REIT)
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