Melcor REIT Announces First Quarter, Twelve Month Results Exceeding Forecast
09 Mai 2014 - 3:00PM
Marketwired Canada
Melcor REIT (TSX:MR.UN) -
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Quarter Highlights 12-Month Forecast Highlights
- Rental revenue of $10.65 million - Rental revenue of $40.28 million,
for growth of 10% over Q1-2013 exceeding revised forecast by 3%
- Net operating income of $6.73 - Net rental income of $23.85
million for growth of 6% over Q1-2013 million, exceeding revised forecast
by 5%
- Adjusted funds from operations - AFFO of $14.25 million or $0.76 per
(AFFO) of $3.78 million or $0.20 per unit, exceeding forecast by 3%
unit compared to $0.18 per unit in
Q1-2013
- Debt to Gross Book Value (GBV) - Distributions of $0.05625 per unit
ratio of 51%, within our target range were paid in each of the REIT's 11
of 50-55% months of operation (as forecast)
- Gross leasable area increased by We presented a 12-month forecast
12% since IPO through 3 property (April 2013 - March 2014) in the
acquisitions prospectus dated April 19, 2013. The
three months ended March 31, 2014 was
revised on March 10, 2014 to reflect
acquisitions completed throughout the
forecast period. The data presented
above is compared to the revised
forecast.
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Melcor REIT announced results for the first quarter of 2014, which ended March
31, 2014. These results are also compared to the financial forecast disclosed in
our prospectus dated April 19, 2013 and revised in our annual management's
discussion and analysis dated March 10, 2014, both of which are available on our
website at MelcorREIT.ca and on SEDAR.com.
Darin Rayburn, CEO of Melcor REIT commented: "As we conclude our forecast
period, I'm pleased to report results exceeding forecast on key performance
metrics. Throughout the past year, we've delivered as promised while at the same
time consistently and methodologically executing on our strategy. We have
initiated and completed specific actions on each element of our growth strategy
- acquiring both third party and Melcor properties and making improvements to
our overall portfolio through property management and asset enhancements.
Our team remains committed to executing our strategy and continuing to deliver
solid results."
Financial Highlights for the quarter include:
-- We continue to deliver as promised and exceeded IPO forecast with stable
and sustainable growth on key indicators through Q1-2014. We continued
to execute on our growth strategy of acquiring new properties and
improving our existing properties through both property management and
asset enhancement. Building on the momentum of our first eight months of
operations, we:
-- Achieved strong leasing activity. We completed 45,715 sq. ft. in new
leases during the period and have renewed 66% of the GLA expiring in
2014 as of March 31, 2014.
-- Grew through acquisition. We completed our third property
acquisition with the purchase of LC Industrial, a 67,610 sq. ft.
industrial warehouse in Lethbridge, Alberta, for $5.93 million
(excluding closing costs). GLA has grown by 12% since IPO.
-- The successful execution of these strategies contributed to:
-- Revenue growth of 10% over Q1-2013 as a result of our expanded
portfolio. Weighted average base rent (per sq. ft.) and occupancy
remained consistent with year end. NOI also grew by 6% over Q1-2013.
-- FFO and AFFO 4% and 3% ahead of our twelve-month forecast,
respectively.
-- Direct operating expenses were up by 13% over the comparative period as
a result of timing differences as well as differences in allocations in
the comparative period. Higher snow removal costs in 2014 also
contributed to the increase.
-- Distributions of $0.05625 per trust unit (in line with forecast) were
paid in January, February and March. Distributions made during each of
the eleven months of the REIT's operations represent a payout ratio of
88%.
-- We successfully completed a bought deal issuance of 1,900,000 trust
units at $10.65 for gross proceeds of $20.24 million subsequent to the
quarter. The funds are to be used to fund two property acquisitions from
Melcor, with the remainder intended to pay down our revolving credit
facility, and for future acquisitions and for general trust purposes.
The two pending property acquisitions demonstrate execution on our
growth strategy via our proprietary Melcor pipeline.
Selected Quarter Highlights
Financial Highlights
Three months ended
March 31
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($000s) 2014 2013 % Change
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Non-standard KPIs
Net operating income (NOI) 6,734 6,342 6%
Funds from operations (FFO) 4,288 3,995 7%
Adjusted funds from operations (AFFO) 3,777 3,387 12%
Rental revenue 10,647 9,688 10%
Income before fair value adjustments and taxes 2,139 3,417 (37)%
Fair value adjustment on investment properties 169 2,594 (93)%
Distributions to unitholders 1,541 n/a
Cash flows from operations 2,296 7,036 (67)%
Per unit metrics(1)
Income - diluted 0.10 0.26 (62)%
FFO 0.23 0.21 10%
AFFO 0.20 0.18 11%
Distributions 0.17 n/a
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($000s) 31-Mar-14 31-Dec-13 % Change
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Total assets ($000s) 458,801 454,743 1%
Equity ($000s)(2) 186,608 186,608 -%
Debt ($000s)(3) 219,496 215,601 2%
Weighted average interest rate on debt 3.99% 3.98% -%
Debt to GBV ratio 51% 51% -%
Finance costs coverage ratio(4) 2.94 2.96 (1)%
Debt service coverage ratio(5) 2.85 2.72 5%
Operational Highlights
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($000s) 31-Mar-14 31-Dec-13 % Change
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Number of properties 30 29 3%
Gross leasable area (GLA) (sq. ft.) 1,759,761 1,691,920 4%
Occupancy % (weighted by GLA) 90.1% 90.6% (1)%
Retention % (weighted by GLA) 76.9% 75.5% 2%
Weighted average remaining lease term
(years) 4.52 4.75 (5)%
Weighted average base rent (per sq. ft.) $ 16.23 $ 16.63 (2)%
(1) Calculated as if the trust units and Class B LP Units were outstanding
during the entire current and comparative periods.
(2) Calculated as the sum of trust units and Class B LP Units at their book
value of $10.00.
(3) Calculated as the sum of total amount drawn on revolving credit facility,
mortgages payable and Class C LP Units, excluding unamortized fair value
adjustment on Class C LP Units, unamortized transaction costs and unamortized
discount on bankers acceptance.
(4) Calculated as the sum of FFO and finance costs; divided by finance costs,
excluding distributions on Class B LP Units.
(5) Calculated as FFO; divided by sum of contractual principal repayments on
mortgages payable and distributions of Class C LP Units, excluding amortization
of fair value adjustment on Class C LP Units.
MD&A and Financial Statements
Information included in this press release is a summary of results. This press
release should be read in conjunction with Melcor REIT's Q1-2014 report to
unitholders, including the consolidated financial statements and management's
discussion and analysis for the three-months ended March 31, 2014 which can be
found on the REIT's website at www.MelcorREIT.ca or on SEDAR (www.sedar.com).
About Melcor REIT
Melcor REIT is an unincorporated, open-ended real estate investment trust.
Melcor REIT owns, acquires, manages and leases quality retail, office and
industrial income-generating properties with exposure to high growth Canadian
markets. Its portfolio is currently made up of interests in 30 properties
representing approximately 1.76 million square feet of gross leasable area
located across Alberta and in Regina, Saskatchewan and Kelowna, British
Columbia. For more information, please visit www.melcorREIT.ca.
Non-Standard Measures
NOI, FFO and AFFO are key measures of performance used by real estate operating
companies; however, they are not defined by International Financial Reporting
Standards ("IFRS"), do not have standard meanings and may not be comparable with
other industries or income trusts. These non-IFRS measures are more fully
defined and reconciled in the REIT's Management Discussion and Analysis for the
period ended March 31, 2014, which is available on SEDAR at www.sedar.com.
Forward-Looking Statements
This press release may contain forward-looking information within the meaning of
applicable securities legislation, which reflects the REIT's current
expectations regarding future events. Forward-looking information is based on a
number of assumptions and is subject to a number of risks and uncertainties,
many of which are beyond the REIT's control, that could cause actual results and
events to differ materially from those that are disclosed in or implied by such
forward-looking information. Such risks and uncertainties include, but are not
limited to, general and local economic and business conditions; the financial
condition of tenants; the REIT's ability to refinance maturing debt; leasing
risks, including those associated with the ability to lease vacant space; and
interest rate fluctuations. The REIT's objectives and forward-looking statements
are based on certain assumptions, including that the general economy remains
stable, interest rates remain stable, conditions within the real estate market
remain consistent, competition for acquisitions remains consistent with the
current climate and that the capital markets continue to provide ready access to
equity and/or debt. All forward-looking information in this press release speaks
as of the date of this press release. The REIT does not undertake to update any
such forward-looking information whether as a result of new information, future
events or otherwise. Additional information about these assumptions and risks
and uncertainties is contained in the REIT's filings with securities regulators.
FOR FURTHER INFORMATION PLEASE CONTACT:
Business Contact
Melcor REIT
Darin Rayburn
Chief Executive Officer
780.423.6931
info@melcorREIT.ca
Investor Relations
Melcor REIT
Jonathan Chia, CA
Chief Financial Officer
1.855.673.6931
ir@melcorREIT.ca
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