- Delivers 4.3% growth in AFFO per unit over the same period last year
- Announces four new investments, totalling $24 million
TORONTO, Aug. 1, 2018 /CNW/ - CT Real Estate Investment Trust ("CT REIT") (TSX: CRT.UN) today reported its consolidated financial results for the second quarter ended June 30, 2018.
"Our strong results in the second quarter underscore the ongoing and uniquely attractive features of CT REIT," said Ken Silver, President and CEO, CT REIT. "Our continued strategic focus is to build on our competitive advantages to deliver a balance of growth and security for our unitholders."
New Investment Activity
Today, CT REIT announced four new investments, which will require an estimated total investment of $24 million. The investments are, in the aggregate, expected to earn a weighted average cap rate of 6.57% when completed and represent approximately 120,000 square feet of incremental gross leasable area ("GLA"). CT REIT is funding these investments through any combination of 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.
The table below summarizes the new investments and anticipated completion dates:
|
Property
|
Type
|
GLA (sf.)
|
Timing
|
Activity
|
|
Mt. Forest, ON
|
Vend-in/Development
|
34,000
|
Q2 2019
|
Vend-in of land and
development of a new
Canadian Tire store
|
|
Val-d'Or, QC
|
Third Party
Acquisition/
Intensification
|
26,000
|
Q4 2019
|
Third party purchase of
land and an expansion
of an existing Canadian
Tire store
|
|
Kincardine, ON
|
Intensification
|
29,000
|
Q2 2020
|
Expansion of an
existing Canadian Tire
store
|
|
Midland, ON
|
Intensification
|
31,000
|
Q2 2020
|
Expansion of an
existing Canadian Tire
store
|
Update on Previously Announced Investments
CT REIT invested $20.6 million in the second quarter of 2018, which included the development of a Canadian Tire store and Canadian Tire Gas+ gas bar in Amos, QC and the expansion of an existing Canadian Tire store in Listowel, ON.
Subsequent to quarter end, CT REIT completed four previously announced vend-ins from Canadian Tire, including two vend-ins of Canadian Tire stores and Canadian Tire Gas+ gas bars in Belleville and Gananoque, ON, the vend-in of a redeveloped Canadian Tire store in Picton, ON located on land previously acquired by CT REIT and the vend-in of development land in Grande Prairie, AB, upon which a Canadian Tire store will be completed by the fourth quarter of 2019. These vend-ins, once completed, will add approximately 300,000 in incremental GLA.
The table below provides activity updates on the previously announced investments:
|
Property
|
Type
|
GLA (sf.)
|
Timing
|
Activity
|
|
Amos, QC
|
Development
|
48,000
|
Completed Q2 2018
|
Development of a
Canadian Tire store and
Canadian Tire Gas+ gas
bar
|
|
Listowel, ON
|
Intensification
|
19,000
|
Completed Q2 2018
|
Expansion of an existing
Canadian Tire store
|
|
Belleville, ON
|
Vend-in
|
87,000
|
Completed Q3 2018
|
Existing Canadian Tire
store and Canadian Tire
Gas+ gas bar
|
|
Gananoque, ON
|
Vend-in
|
29,000
|
Completed Q3 2018
|
Existing Canadian Tire
store and Canadian Tire
Gas+ gas bar
|
|
Picton, ON
|
Vend-in/Intensification
|
35,000
|
Completed Q3 2018
|
Redeveloped Canadian
Tire store
|
|
Grande Prairie, AB
|
Vend-in/Development
|
149,000
|
Land vended-in
Q3 2018;
Development to
be completed by
Q4 2019
|
Vend-in of land and
development of a new
Canadian Tire store
|
Financial and Operational Summary
|
Summary of Selected Information
|
|
|
|
|
|
|
|
(in thousands of Canadian dollars, except unit, per unit and square
footage amounts)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
Property revenue
|
$
|
118,880
|
$
|
111,609
|
6.5 %
|
$
|
235,499
|
$
|
222,749
|
5.7 %
|
|
Net operating income 1
|
$
|
86,315
|
$
|
80,246
|
7.6 %
|
$
|
170,693
|
$
|
159,417
|
7.1 %
|
|
Net income
|
$
|
74,744
|
$
|
74,299
|
0.6 %
|
$
|
147,258
|
$
|
149,621
|
(1.6)%
|
|
Net income per unit (basic) 2
|
$
|
0.350
|
$
|
0.354
|
(1.1)%
|
$
|
0.689
|
$
|
0.716
|
(3.8)%
|
|
Net income per unit (diluted) 4
|
$
|
0.282
|
$
|
0.292
|
(3.4)%
|
$
|
0.557
|
$
|
0.589
|
(5.4)%
|
|
Funds from operations1
|
$
|
62,501
|
$
|
59,422
|
5.2 %
|
$
|
121,824
|
$
|
117,485
|
3.7 %
|
|
Funds from operations per unit (diluted, non-GAAP) 1,2,3
|
$
|
0.292
|
$
|
0.283
|
3.2 %
|
$
|
0.569
|
$
|
0.562
|
1.2 %
|
|
Adjusted funds from operations 1
|
$
|
51,536
|
$
|
48,630
|
6.0 %
|
$
|
101,441
|
$
|
95,851
|
5.8 %
|
|
Adjusted funds from operations per unit (diluted, non-GAAP) 1,2,3
|
$
|
0.241
|
$
|
0.231
|
4.3 %
|
$
|
0.474
|
$
|
0.458
|
3.5 %
|
|
Distributions per unit - paid 2
|
$
|
0.182
|
$
|
0.175
|
4.0 %
|
$
|
0.364
|
$
|
0.350
|
4.0 %
|
|
AFFO payout ratio1
|
76 %
|
76 %
|
—%
|
77 %
|
76 %
|
1.3 %
|
|
Cash generated from operating activities
|
$
|
84,286
|
$
|
77,293
|
9.0 %
|
$
|
164,999
|
$
|
159,455
|
3.5 %
|
|
Adjusted cashflow from operations 1
|
$
|
52,964
|
$
|
49,656
|
6.7 %
|
$
|
97,854
|
$
|
94,196
|
3.9 %
|
|
Weighted average number of units outstanding 2
|
|
|
|
|
|
|
|
Basic
|
213,829,341
|
210,072,423
|
1.8 %
|
213,797,151
|
208,947,227
|
2.3 %
|
|
Diluted 4
|
325,446,368
|
313,482,816
|
3.8 %
|
325,408,860
|
313,139,150
|
3.9 %
|
|
Diluted (non-GAAP) 1,3
|
214,008,265
|
210,220,411
|
1.8 %
|
213,970,757
|
209,081,429
|
2.3 %
|
|
Indebtedness ratio 6
|
|
|
|
46.2 %
|
45.7 %
|
NM
|
|
Interest coverage (times)6
|
3.39
|
3.50
|
NM
|
3.35
|
3.47
|
NM
|
|
Gross leasable area (square feet) 5
|
|
|
|
26,271,296
|
25,111,458
|
4.6 %
|
|
Occupancy rate 5,6,7
|
|
|
|
98.7 %
|
99.6 %
|
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 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.
|
|
4Diluted 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.
|
|
5Refers to retail, mixed-use commercial and distribution centre properties and excludes properties under development.
|
|
6 NM - not meaningful.
|
|
|
|
|
|
|
|
7 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 June 30, 2018, June 30, 2017.
|
Financial Highlights
Net Income – Net income was $74.7 million for the quarter, up 0.6% over the prior year, primarily due to increased NOI resulting from investment activity, partially offset by a smaller adjustment in the fair market value adjustment on investment properties and an increase in net interest and other financing charges.
Net Operating Income (NOI)* – In the second quarter, NOI increased $6.1 million or 7.6% over the same period last year, primarily from investment activity completed in 2018 and 2017. These acquisitions contributed a total of $4.5 million to NOI growth. Same store NOI and same property NOI for the quarter increased $1.4 million or 1.8% and $1.6 million or 2.0%, respectively, primarily due to the contractual rent escalations built into the property leases, recovery of capital expenditures and intensifications completed in 2018 and 2017.
Funds from Operations (FFO)* – FFO for the second quarter amounted to $62.5 million or $0.292 per unit (diluted non-GAAP), which was $3.1 million (5.2%) or $0.009 per unit (3.2%) higher than the same period in 2017 due to the impact of NOI variances, partially offset by higher interest expense.
Adjusted Funds from Operations (AFFO)* – AFFO for the second quarter amounted to $51.5 million or $0.241 per unit (diluted non-GAAP), which was $2.9 million (6.0%) or $0.010 per unit (4.3%) higher than the same period in 2017 primarily due to the impact of NOI variances, partially offset by higher interest expense.
Adjusted Cash Flow From Operations (ACFO)* – ACFO for the second quarter amounted to $53.0 million, $3.3 million or 6.7% higher than the same period in 2017, primarily due to the impact of NOI variances, partially offset by higher interest expense.
Distributions – Distributions in the quarter amounted to $0.182 per unit, 4.0% higher than the same period in 2017 due to the increase in the annual rate of distributions effective with the first distribution paid in 2018.
*NOI, FFO, AFFO and ACFO are non-GAAP measures. Refer to Non-GAAP section 10.0 in the Q2 2018 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 largest tenant. At June 30, 2018, CTC represented 94.5% of total GLA and 92.5% of annualized base minimum rent.
Occupancy – At June 30, 2018, CT REIT's portfolio occupancy rate remained unchanged from the prior quarter at 98.7%.
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 June 30, 2018 ("the Q2 MD&A") and Unaudited Condensed Consolidated Financial Statements and Notes for the period ended June 30, 2018, which are available on SEDAR at www.sedar.com and at www.ctreit.com.
To view a PDF version of CT REIT's 2018 second quarter results please see: http://files.newswire.ca/1307/CT_REIT_Q2.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 Development Activity", the timing and terms of any such investments and the benefits expected to result from such investments and other statements concerning developments, 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 2017, and to Section 11 "Enterprise Risk Management" and all subsections thereunder of our 2017 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 8:00 a.m. ET on August 2, 2018. The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2218 or 1-800-478-9326 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 325 properties totaling approximately 26 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)