TORONTO, Nov. 9, 2022
/CNW/ - Summit Industrial Income REIT ("Summit" or the "REIT")
(TSX: SMU.UN) announced today continued growth and strong operating
performance for the three and nine months ended September 30,
2022.
Q3 2022 HIGHLIGHTS
FINANCIAL:
- Revenue from investment properties increased by 19.8% to
$63.0 million.
- Net rental income increased by 17.1% to $47.1 million.
- FFO1 increased 16.8% to $35.7
million ($0.188 per Unit),
excluding the non-recurring secured mortgage prepayment costs
incurred in Q3 2021.
- On September 14, 2022, DBRS
Limited upgraded the REIT's issuer rating and senior unsecured
debentures rating to BBB with positive trends.
- Subsequent to quarter end, the REIT repaid $25.3 million of secured term mortgages at
maturity.
- Approximately $1.4 billion of
available liquidity1 and $3.5
billion of unencumbered assets at September 30,
2022.
OPERATIONS:
- Near-full occupancy at 99.6% with an average lease term of 5.5
years and 2.4% average annual contractual rent steps.
- Future lease commitments on 22,212 sq. ft. (or 24.2% of
vacancy) as at September 30, 2022.
- Same property NOI1 increased 6.3% with Ontario and Quebec contributing 8.8% and 4.9%,
respectively.
- Completed over 2.4 million sq. ft. of lease renewals and new
lease deals year-to-date generating a 56.0% overall increase in
rents, including 89.9% in Ontario
and 66.8% in Quebec (excluding
contractual renewals).
- Pre-leasing completed on approximately 395,000 sq. ft. (100%)
of GLA under construction for development properties that are
expected to be completed and transferred to income-producing
properties in 2022.
- Completed construction on approximately 534,000 sq. ft. of GLA
in 2022 YTD and transferred to income-producing properties, with an
additional 395,000 sq. ft. of GLA expected to be completed before
the end of 2022.
______________________________________
|
1 Non-GAAP
measure. Refer to "Non-GAAP Measures" section in this press release
for further information.
|
PROPERTY PORTFOLIO:
- Acquired two industrial properties totalling 174,790 sq. ft. in
Mississauga, Ontario, for a
purchase price of $59.3 million at a
going-in capitalization rate of 4.9%.
- Completed construction on one property under development
totalling 91,782 sq. ft. in Guelph,
Ontario and transferred it from investment properties under
development to income-producing investment properties.
- Subsequent to quarter end, the REIT acquired a 50% interest in
a 26.8-acre development site in Kitchener, Ontario, through a joint venture
partnership. The development site was acquired by the joint venture
partnership for an aggregate purchase price of $26.2 million and has the potential to develop
two industrial properties totalling approximately 483,000 square
feet.
OTHER:
- Insider ownership fully aligned with 6.9% of REIT Units
outstanding held by management and Trustees at September 30,
2022.
- On November 7, 2022, the REIT
announced that it had entered into an agreement with GIC and Dream
Industrial REIT, pursuant to which a joint venture between GIC and
Dream Industrial REIT will acquire all of the assets and assume all
of the liabilities of the REIT in an all-cash transaction, and the
REIT will pay a special distribution and redeem all of its units
for $23.50 per unit in cash. Closing
of the transaction is expected to occur during the first quarter of
2023, subject to customary conditions, including REIT Unitholder,
court and regulatory approvals. REIT Unitholders of record as of
October 31, 2022 will receive the
previously-declared monthly distribution for October that will be
paid on November 15, 2022, following
which the REIT has agreed to suspend its monthly distribution
through closing.
This press release should be read in conjunction with Summit's
Unaudited Condensed Consolidated Interim Financial Statements for
the three and nine months ended September 30, 2022 and 2021,
and Management's Discussion and Analysis for the three and nine
months ended September 30, 2022, which are available on the
REIT's website at www.summitiireit.com and on SEDAR at
www.sedar.com.
FINANCIAL AND OPERATING HIGHLIGHTS
Summit's key
financial and operating metrics for the three and nine months ended
September 30, 2022 are as follows:
|
|
|
|
|
Q3 2022
|
|
Q3 2021
|
(in thousands of
Canadian dollars, except per Unit amounts)
|
Q3 2022
|
|
Q3 2021
|
|
YTD
|
|
YTD
|
|
|
|
|
|
|
|
|
Portfolio
Performance
|
|
|
|
|
|
|
|
Occupancy
|
99.6 %
|
|
99.2 %
|
|
99.6 %
|
|
99.2 %
|
Revenue from investment
properties
|
$
63,048
|
|
$
52,636
|
|
$
184,423
|
|
$
160,060
|
Property operating
expenses
|
$
15,942
|
|
$
12,412
|
|
$
47,344
|
|
$
39,895
|
Net rental
income
|
$
47,106
|
|
$
40,224
|
|
$
137,079
|
|
$
120,165
|
Finance
costs(2)
|
$
10,459
|
|
$
24,887
|
|
$
28,999
|
|
$
48,263
|
Fair value adjustments
to investment properties
|
$
4,081
|
|
$
239,773
|
|
$
259,184
|
|
$
933,418
|
Net income
|
$
39,427
|
|
$
253,028
|
|
$
364,393
|
|
$
1,003,754
|
|
|
|
|
|
|
|
|
Operating
Performance
|
|
|
|
|
|
|
|
FFO(1)(2)
|
$
35,701
|
|
$
14,506
|
|
$
104,543
|
|
$
68,763
|
FFO per
Unit(1)(2)
|
$
0.188
|
|
$
0.086
|
|
$
0.563
|
|
$
0.408
|
Net income per Unit -
basic
|
$
0.208
|
|
$
1.492
|
|
$
1.961
|
|
$
5.956
|
Same property NOI
(1)
|
$
41,592
|
|
$
39,141
|
|
$
114,540
|
|
$
108,558
|
Same property
NOI(1) growth
|
6.3 %
|
|
5.4 %
|
|
5.5 %
|
|
4.9 %
|
|
|
|
|
|
|
|
|
Distributions
|
|
|
|
|
|
|
|
Distributions declared
to Unitholders
|
$
27,583
|
|
$
24,141
|
|
$
80,440
|
|
$
70,183
|
Distributions per Unit
declared to Unitholders
|
$
0.145
|
|
$
0.141
|
|
$
0.430
|
|
$
0.415
|
|
|
|
|
|
|
|
|
FFO payout ratio
without DRIP benefit(1)(2)
|
77.3 %
|
|
164.9 %
|
|
76.4 %
|
|
101.7 %
|
FFO payout ratio with
DRIP benefit(1)(2)
|
73.1 %
|
|
127.2 %
|
|
64.3 %
|
|
80.0 %
|
|
|
|
|
|
|
|
|
Weighted average Units
outstanding (in thousands)
|
189,942
|
|
169,599
|
|
185,837
|
|
168,530
|
|
|
|
|
|
|
|
|
Liquidity and
Leverage
|
|
|
|
|
|
|
|
Total assets
|
$
5,219,015
|
|
$
4,393,410
|
|
$
5,219,015
|
|
$
4,393,410
|
Total unencumbered
assets
|
$
3,451,958
|
|
$
2,809,100
|
|
$
3,451,958
|
|
$
2,809,100
|
Total debt
|
$
1,384,770
|
|
$
1,286,456
|
|
$
1,384,770
|
|
$
1,286,456
|
|
|
|
|
|
|
|
|
Weighted average
effective interest rate
|
2.72 %
|
|
2.51 %
|
|
2.72 %
|
|
2.51 %
|
Weighted average term
to maturity (years)
|
4.8
|
|
4.9
|
|
4.8
|
|
4.9
|
|
|
|
|
|
|
|
|
Leverage(1)
|
26.5 %
|
|
29.3 %
|
|
26.5 %
|
|
29.3 %
|
Interest
coverage(1)
|
4.3x
|
|
4.3x
|
|
4.5x
|
|
4.0x
|
Debt service
coverage(1)
|
3.5x
|
|
3.2x
|
|
3.5x
|
|
2.8x
|
Debt-to-adjusted
EBITDA(1)
|
7.8x
|
|
8.4x
|
|
8.0x
|
|
8.6x
|
|
|
|
|
|
|
|
|
DBRS Issuer
Rating
|
BBB
Positive
|
|
BBB Positive
|
|
BBB Positive
|
|
BBB Positive
|
|
|
|
|
|
|
|
|
Income-Producing
Investment Properties
|
|
|
|
|
|
|
|
Number of properties
acquired
|
2
|
|
—
|
|
6
|
|
3
|
Number of properties
disposed
|
—
|
|
—
|
|
1
|
|
6
|
Total number of
properties
|
162
|
|
154
|
|
162
|
|
154
|
Total GLA
|
21,806
|
|
20,129
|
|
21,806
|
|
20,129
|
|
|
|
|
|
|
|
|
(1) Non-GAAP Measure.
Refer to "Non-GAAP Measures" section in this press release for
further information.
|
(2) Finance costs and
FFO includes strategic non-recurring mortgage prepayment costs of
$16.1 million ($0.095 per Unit) and $20.0 million ($0.119 per
Unit), respectively, for Q3 2021 and 2021 YTD. Excluding the
prepayment costs, FFO per Unit was $0.180 per Unit and $0.527 per
Unit for Q3 2021 and 2021 YTD, respectively. FFO payout ratio
without DRIP benefit excluding the prepayment costs was 78.2%
(60.4% including DRIP benefit) and 78.8% (62.0% including DRIP
benefit), respectively, for Q3 2021 and 2021 YTD.
|
PORTFOLIO GROWTH
During Q3 2022, the REIT acquired two
industrial properties totalling 174,790 sq. ft. located in
Mississauga, Ontario, for a
purchase price of $59.3 million. The
REIT also completed construction on one property under development
totalling 91,782 sq. ft. in Guelph,
Ontario and transferred it from investment properties under
development to income-producing investment properties.
To date in 2022, the REIT acquired six income-producing
properties totalling 698,820 sq. ft., and five development
properties totalling approximately 75 acres with the potential to
add approximately 1.4 million sq. ft. of GLA to the portfolio,
including the 91,782 sq. ft. property in Guelph, Ontario, mentioned above, that has
since been completed.
At September 30, 2022, the REIT's portfolio totaled 162
properties aggregating 21.8 million sq. ft., with an additional 14
buildings under development aggregating 2.5 million sq. ft. of
potential GLA, for a total net book value of approximately
$5.1 billion. During the Q3 2022 and
2022 YTD, the REIT recognized fair value gains on its investment
properties of $4.1 million and
$259.2 million (0.1% and 5.1% of
investment property fair value, respectively).
CONTINUED STRONG OPERATING PERFORMANCE
Revenue from
investment properties for Q3 2022 and 2022 YTD rose 19.8% and 15.2%
compared to the same prior year periods due primarily to
acquisitions completed over the prior twelve months, continuing
strong occupancy and higher overall rental rates on leasing
activities. Occupancy remained strong at September 30, 2022 at
99.6% with an average lease term of 5.5 years and 2.4% annual
contractual rent steps.
Net rental income for Q3 2022 and 2022 YTD increased 17.1% and
14.1% compared to the same prior year periods due primarily to
continuing strong occupancy, higher overall rental rates on leasing
activities and acquisitions completed over the prior twelve
months.
Excluding the non-recurring secured mortgage prepayment costs of
$16.1 million ($0.095 per Unit) and $20.0
million ($0.119 per Unit)
incurred in Q3 2021 and 2021 YTD, respectively, FFO1
increased 16.8% and 17.7%, respectively. Excluding the mortgage
prepayment costs discussed above, FFO per Unit1 for Q3
2022 and 2022 YTD increased 4.4% and 6.7%, respectively, compared
to the same period year periods, despite a 12.0% and 10.3% increase
in Units outstanding and further balance sheet deleveraging that
took place in 2022 resulting in leverage1 of 26.5% at
September 30, 2022. The REIT's FFO
payout ratio1 for Q3 2022 and 2022 YTD was 77.3% and
76.4%, respectively, excluding the benefit of the REIT's DRIP
(73.1% and 64.3%, respectively, including the benefit of the REIT's
DRIP).
Same property NOI1 rose 6.3% for Q3 2022 (5.5% for
2022 YTD), including a 8.8% increase in Ontario and 4.9% increase in Quebec (9.2% and 3.2% in Ontario and Quebec, respectively, for 2022 YTD). Growth in
same property NOI1 in the third quarter of 2022 was
driven primarily by rental rate growth from 2021 and 2022
year-to-date lease renewals and new lease deals, which generated an
average of 53.8% and 29.5% increase over expiring rents in
Ontario and Quebec, respectively, in 2021, and 87.7% and
42.3% increase over expiring rents in Ontario and Quebec, respectively, year-to-date in 2022, in
addition to an increase in other income in Ontario. Growth in same property
NOI1 for 2022 YTD was partially muted by lower bad debt
recoveries ($0.3 million in 2022 YTD
and $1.0 million in 2021 YTD). Same
property NOI1 for Q3 2022 represented approximately
88.3% of total portfolio NOI1 and 89.4% of total GLA at
September 30, 2022 (83.6% of total portfolio NOI and 84.4% of
total GLA for 2022 YTD).
STRATEGIC LEASING PROGRAM
The REIT completed
over 2.4 million sq. ft. of lease renewals and new lease deals 2022
YTD with a retention rate of 54.0%, generating an average increase
in monthly rents of 56.0% over the expiring rent with a significant
89.9% increase over expiring rents in Ontario, 66.8% in Quebec and 6.6% in Alberta (excluding contractual renewals).
The REIT maintained near-full 99.6% occupancy in Q3 2022 with
limited to no downtime, while also taking advantage of
significantly higher market rents on turnover of the space, with
some re-leasing at rental rates in excess of 100% of the expiring
rent.
Furthermore, the REIT secured future lease commitments on 22,212
sq. ft. (or 24.2% of vacancy) as at September 30, 2022.
STRONG BALANCE SHEET AND LIQUIDITY
Total assets
increased to $5.2 billion at
September 30, 2022, up from $4.5
billion at December 31, 2021 due primarily to property
acquisitions during the period and fair value gains on investment
properties. Total debt was $1.4
billion at September 30, 2022 compared to $1.3 billion at December 31, 2021. At
September 30, 2022, the REIT's unsecured debt represented 67%
of total debt outstanding with approximately $3.5 billion in unencumbered assets.
On April 19, 2022, the REIT
amended its green unsecured development credit facility to increase
the commitment by $100 million.
Following the amendment, the total credit facility size is
$200 million, including a
$150 million green tranche and a
$50 million conventional tranche On
May 4, 2022, the REIT amended its
unsecured revolving credit facility to increase the commitment by
$100 million to $400 million and to extend the term by one year
to March 23, 2025. At
September 30, 2022, nothing was drawn on the REIT's credit
facilities.
During 2022 YTD, the REIT repaid $37.4 million of maturing secured term
mortgages that carried a weighted average interest rate of 2.82%.
To date in 2022, the REIT repaid $60.9 million in maturing secured term
mortgages that carried a weighted average interest rate of 2.92%.
Subsequent to quarter end, the REIT repaid an additional
$25.3 million of secured term
mortgages at maturity. The REIT also entered into $169.7 million of new 10-year secured term
mortgage financing at an effective interest rate of 4.43%, a
significant portion of which is interest-only.
The REIT's debt metrics remained strong during the third quarter
of 2022. At September 30, 2022, the REIT's leverage
ratio1 was 26.5% compared to 29.3% at September 30,
2021. Debt service coverage, interest coverage and debt-to-adjusted
EBITDA ratios1 were 3.5x, 4.3x and 7.8x, respectively,
for Q3 2022 compared to 3.2x, 4.3x and 8.4x, respectively, for the
same prior year period.
Debt-to-adjusted EBITDA was 7.8x and 8.0x for the three and nine
months ended September 30, 2022, respectively, a decrease from
8.4x and 8.6x for the same prior year periods.
At September 30, 2022, the REIT's liquidity position
remained strong at approximately $1.4
billion of available liquidity1 including cash,
available borrowing capacity on its credit facilities, and
potential for new financing that could be placed on a portion of
its $3.5 billion of unencumbered
assets.
ARRANGEMENT AGREEMENT TO ACQUIRE THE REIT
On
November 7, 2022, the REIT announced
that it had entered into an Arrangement Agreement with GIC and
Dream Industrial REIT, pursuant to which a joint venture (the
"Joint Venture") between GIC and Dream Industrial REIT will acquire
all of the assets and assume all of the liabilities of the REIT in
an all-cash transaction (the "Transaction").
The Transaction, expected to close in the first quarter of 2023,
is subject to customary conditions, including REIT Unitholder,
court and regulatory approvals, and is expected to occur via a plan
of arrangement under the Canada Business Corporations Act,
pursuant to which the Joint Venture will acquire all of the assets
and assume all of the liabilities of the REIT, and the REIT will
pay a special distribution and redeem all of its units for
$23.50 per unit in cash. The
Arrangement Agreement contains customary terms and conditions,
including deal protections. REIT Unitholders of record as of
October 31, 2022 will receive the
previously-declared monthly distribution for October that will be
paid on November 15, 2022, following
which the REIT has agreed to suspend its monthly distribution
through closing.
As a result of the announcement of the Transaction, Summit
will not host a conference call and webcast to discuss the
financial results and operations for the third quarter.
NON-GAAP MEASURES
The REIT prepares and
releases consolidated financial statements prepared in accordance
with IFRS (GAAP). In this release, the REIT discloses and discusses
certain non-GAAP measures, including FFO, FFO per Unit, FFO payout
ratio, NOI, same property NOI, leverage ratio, interest coverage
ratio, debt service coverage ratio, debt-to-adjusted EBITDA and
available liquidity. The non-GAAP measures are further defined and
discussed in Appendix A | Non-GAAP Measures in the MD&A
for the three and nine months ended September 30, 2022 and
filed on SEDAR (www.sedar.com), which is incorporated by reference
and should be read in conjunction with this release. Since these
measures are not determined by IFRS, such measures may not be
comparable to similar measures reported by other issuers. The REIT
has presented such non-GAAP measures as management believes the
measures are a relevant measure of the ability of the REIT to earn
and distribute cash returns to Unitholders and to evaluate the
REIT's performance. These non-GAAP measures should not be
construed as alternatives to net income or cash flow from operating
activities determined in accordance with IFRS as an indicator of
the REIT's performance.
Reconciliation of Non-GAAP Measures
The
following tables reconcile the REIT's non-GAAP measures to the most
comparable IFRS measures for the three and nine months ended
September 30, 2022 and 2021.
Available Liquidity
The REIT's available
liquidity is calculated as follows:
|
September
30
|
December 31
|
|
2022
|
2021
|
|
|
|
Unencumbered
assets
|
$
3,451,958
|
$
2,996,333
|
Assets required to
be reserved under unsecured debt agreements:
|
|
|
Senior unsecured
debentures(1)
|
(1,202,500)
|
(1,202,500)
|
Unsecured revolving
credit facility(2)
|
(520,000)
|
(390,000)
|
Green Unsecured
Development Credit Facility(3)
|
(260,000)
|
(130,000)
|
Unencumbered assets
available to be encumbered
|
1,469,458
|
1,273,833
|
Borrowing Capacity
on Unencumbered Assets(4)
|
$
808,202
|
$
700,608
|
|
|
|
Cash
|
31,375
|
16,052
|
Undrawn portion of
unsecured revolving credit facility(5)
|
400,000
|
300,000
|
Undrawn portion of
Green Unsecured Development Credit
Facility(5)
|
189,000
|
90,000
|
Borrowing capacity on
unencumbered assets (per above)
|
808,202
|
700,608
|
Available
Liquidity
|
$
1,428,577
|
$
1,106,660
|
|
|
|
(1)
Calculated as 1.3 times $925 million in aggregate senior unsecured
debentures outstanding.
|
(2)
Calculated as 1.3 times $400 million committed amount of unsecured
revolving credit facility (December 31, 2021 - $300
million).
|
(3)
Calculated as 1.3 times $200 million committed amount of Green
Unsecured Development Credit Facility (December 31, 2021 - $100
million).
|
(4)
Borrowing capacity is calculated as unencumbered assets available
to be encumbered multiplied by 55% loan-to-value.
|
(5) Includes
amounts drawn and letters of credit issued under the credit
facility agreements.
|
FFO
The REIT's FFO, FFO per Unit and FFO payout ratio
are calculated as follows:
|
|
|
Q3 2022
|
Q3 2021
|
|
Q3 2022
|
Q3 2021
|
YTD
|
YTD
|
|
|
|
|
|
Net income
|
$
39,427
|
$
253,028
|
$
364,393
|
$ 1,003,754
|
Adjustments:
|
|
|
|
|
Free rent
amortization
|
367
|
300
|
1,037
|
920
|
Amortization of other
assets
|
74
|
88
|
369
|
235
|
Fair value adjustment
to deferred unit compensation
|
(86)
|
863
|
(2,072)
|
1,963
|
Fair value adjustment
to loans receivable
|
—
|
—
|
—
|
(4,691)
|
Fair value adjustment
to investment properties
|
(4,081)
|
(239,773)
|
(259,184)
|
(933,418)
|
FFO(1)
|
$
35,701
|
$
14,506
|
$
104,543
|
$
68,763
|
|
|
|
|
|
FFO per
Unit(1)
|
$
0.188
|
$
0.086
|
$
0.563
|
$
0.408
|
|
|
|
|
|
Distributions declared
to Unitholders
|
$
27,583
|
$
24,141
|
$
80,440
|
$
70,183
|
Distributions per Unit
declared to Unitholders
|
$
0.145
|
$
0.141
|
$
0.430
|
$
0.415
|
Cash Distributions
paid
|
$
26,114
|
$
18,448
|
$
67,259
|
$
55,020
|
|
|
|
|
|
Regular FFO payout
ratio without DRIP benefit(1)
|
77.3 %
|
164.9 %
|
76.4 %
|
101.7 %
|
Regular FFO payout
ratio with DRIP benefit(1)
|
73.1 %
|
127.2 %
|
64.3 %
|
80.0 %
|
|
|
|
|
|
Weighted average number
of Units outstanding (in thousands)
|
189,942
|
169,599
|
185,837
|
168,530
|
Units issued and
outstanding at the end of the period (in thousands)
|
189,977
|
175,446
|
189,977
|
175,446
|
|
|
|
|
|
Other
items:
|
|
|
|
|
Straight-line rent
adjustment
|
$
(1,412)
|
$
(1,080)
|
$
(3,830)
|
$
(4,226)
|
Non-recoverable capital
expenditures
|
$
(790)
|
$
(402)
|
$
(2,780)
|
$
(788)
|
Leasing
costs
|
$
(4,478)
|
$
(1,764)
|
$
(12,845)
|
$
(7,240)
|
|
|
|
|
|
(1) FFO
includes strategic non-recurring mortgage prepayment costs of $16.1
million ($0.095 per Unit) and $20.0 million ($0.119 per Unit),
respectively, for Q3 2021 and 2021 YTD. Excluding the prepayment
costs, FFO per Unit was $0.180 per Unit and $0.527 per Unit for Q3
2021 and 2021 YTD, respectively. FFO payout ratio without DRIP
benefit excluding the prepayment costs was 78.2% (60.4% including
DRIP benefit) and 78.8% (62.0% including DRIP benefit),
respectively, for Q3 2021 and 2021 YTD.
|
Same Property NOI
In calculating same property
NOI, the impacts from the straight-lining of rents and amortization
of free rent have been excluded. Same property NOI excludes
properties that would have had changes due to acquisitions,
dispositions and redevelopments, as well as properties classified
as held for sale.
The following tables reconcile same property NOI to net rental
income for the periods presented:
|
|
|
|
Change
|
Change
|
|
GLA
|
Q3 2022
|
Q3 2021
|
($)
|
( %)
|
|
|
|
|
|
|
Ontario
|
10,267
|
$
21,113
|
$
19,403
|
$
1,710
|
8.8 %
|
Quebec
|
4,019
|
7,889
|
7,520
|
369
|
4.9 %
|
Alberta
|
5,177
|
12,492
|
12,120
|
372
|
3.1 %
|
Other Canada
|
42
|
98
|
98
|
—
|
0.0 %
|
Same property NOI
|
19,505
|
$
41,592
|
$
39,141
|
$
2,451
|
6.3 %
|
|
|
|
|
|
|
Acquisitions/dispositions/redevelopments
|
2,301
|
4,469
|
303
|
4,166
|
|
Straight-line
rent
|
|
1,412
|
1,080
|
332
|
|
Free rent
amortization
|
|
(367)
|
(300)
|
(67)
|
|
Net rental
income
|
21,806
|
$
47,106
|
$
40,224
|
$
6,882
|
|
|
|
Q3 2022
|
Q3 2021
|
Change
|
Change
|
|
GLA
|
YTD
|
YTD
|
($)
|
( %)
|
|
|
|
|
|
|
Ontario
|
9,924
|
$
60,569
|
$
55,467
|
$
5,102
|
9.2 %
|
Quebec
|
3,254
|
16,928
|
16,411
|
517
|
3.2 %
|
Alberta
|
5,177
|
36,749
|
36,389
|
360
|
1.0 %
|
Other Canada
|
42
|
294
|
291
|
3
|
1.0 %
|
Same property NOI
|
18,397
|
$
114,540
|
$
108,558
|
$
5,982
|
5.5 %
|
|
|
|
|
|
|
Acquisitions/dispositions/redevelopments
|
3,409
|
19,746
|
8,301
|
11,445
|
|
Straight-line
rent
|
|
3,830
|
4,226
|
(396)
|
|
Free rent
amortization
|
|
(1,037)
|
(920)
|
(117)
|
|
Net rental income
|
21,806
|
$
137,079
|
$
120,165
|
$
16,914
|
|
Financial Ratios
The REIT's interest coverage
ratio, debt service coverage ratio and debt-to-adjusted EBITDA are
calculated as follows:
|
|
|
Q3 2022
|
Q3 2021
|
|
Q3 2022
|
Q3 2021
|
YTD
|
YTD
|
|
|
|
|
|
Net income
|
$
39,427
|
$
253,028
|
$
364,393
|
$
1,003,754
|
Adjustments:
|
|
|
|
|
Free rent
amortization
|
367
|
300
|
1,037
|
920
|
Amortization of other
assets
|
74
|
88
|
369
|
235
|
Straight-lining of
rents
|
(1,412)
|
(1,080)
|
(3,830)
|
(4,226)
|
Fair value adjustment
to deferred unit compensation
|
(86)
|
863
|
(2,072)
|
1,963
|
Fair value adjustment
to loans receivable
|
—
|
—
|
—
|
(4,691)
|
Fair value adjustment
to investment properties
|
(4,081)
|
(239,773)
|
(259,184)
|
(933,418)
|
Finance
costs(1)
|
10,459
|
24,887
|
28,999
|
48,263
|
Adjusted
EBITDA
|
$
44,748
|
$
38,313
|
$
129,712
|
$
112,800
|
|
|
|
|
|
Adjustments to
finance costs:
|
|
|
|
|
Non-recurring mortgage
prepayment costs(1)
|
—
|
(16,062)
|
—
|
(20,036)
|
Interest expense
(finance costs) excluding adjustments
|
$
10,459
|
$
8,825
|
$
28,999
|
$
28,227
|
Interest
Coverage
|
4.3x
|
4.3x
|
4.5x
|
4.0x
|
|
|
|
|
|
Principal repayments
(excluding mortgage payouts)
|
$
2,468
|
$
3,280
|
$
7,931
|
$
12,530
|
Principal and interest
payments
|
$
12,927
|
$
12,105
|
$
36,930
|
$
40,757
|
Debt Service
Coverage
|
3.5x
|
3.2x
|
3.5x
|
2.8x
|
|
|
|
|
|
Non-current loans and
borrowings
|
$
1,305,392
|
$
1,213,815
|
$
1,305,392
|
$
1,213,815
|
Current loans and
borrowings
|
79,378
|
72,641
|
79,378
|
72,641
|
Total loans and
borrowings
|
1,384,770
|
1,286,456
|
1,384,770
|
1,286,456
|
Adjustments:
|
|
|
|
|
Unamortized premium on
debt
|
(1,666)
|
(2,243)
|
(1,666)
|
(2,243)
|
Unamortized deferred
financing charges
|
4,679
|
5,685
|
4,679
|
5,685
|
Total loans and
borrowings (principal outstanding)
|
$
1,387,783
|
$
1,289,898
|
$
1,387,783
|
$
1,289,898
|
Adjusted EBITDA per
above, annualized
|
$
178,992
|
$
153,252
|
$
172,949
|
$
150,400
|
Debt-to-Adjusted
EBITDA
|
7.8x
|
8.4x
|
8.0x
|
8.6x
|
|
|
|
|
|
(1) The REIT
incurred non-recurring mortgage prepayment costs of $16.1 million
and $20.0 million during Q3 2021 and Q3 2021 YTD on the strategic
early repayment of $329.5 million of secured term mortgages, which
were recorded in finance costs.
|
About Summit Industrial Income REIT
Summit
Industrial Income REIT is an unincorporated open-ended trust
focused on growing and managing a portfolio of light industrial
properties in key markets across Canada. Summit's units are listed on the TSX
and trade under the symbol SMU.UN. For more information, please
visit the REIT's website at www.summitiireit.com.
Caution Regarding Forward Looking
Information
This news release contains forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends",
"goal" and similar expressions are intended to identify
forward-looking information or statements. More particularly and
without limitation, this news release contains forward looking
statements and information concerning the goal to build Summit's
property portfolio; the Transaction and the terms thereof; the
anticipated closing of the Transaction including the timing
thereof; the expected October monthly distribution and the
suspension of distribution thereof of Summit. There can be no
assurance that the proposed Transaction will be completed or that
it will be completed on the terms and conditions contemplated in
this news release. The proposed Transaction could be modified,
restructured or terminated in accordance with its terms. The
forward-looking statements and information are based on certain key
expectations and assumptions made by Summit, including general
economic conditions. Although Summit believes that the expectations
and assumptions on which such forward-looking statements and
information are based are reasonable, undue reliance should not be
placed on the forward-looking statements and information because
Summit can give no assurance that they will prove to be correct. By
its nature, such forward-looking information is subject to various
risks and uncertainties, which could cause the actual results and
expectations to differ materially from the anticipated results or
expectations expressed, and given the impact of the COVID-19
pandemic and government measures to contain it, as well as the
current geopolitical environment, there is inherently more
uncertainty associated with the REIT's assumptions as compared to
prior periods. These risks and uncertainties include, but are not
limited to, the anticipated benefits of the Transaction to
unitholders, the receipt in a timely manner of regulatory, court,
Unitholder and other approvals for the Transaction, the
availability of cash flow from operations to meet monthly
distributions, the ability to satisfy the conditions applicable to
the Transaction, tenant risks, current economic environment,
including disputes between nations, war and international
sanctions, environmental matters, general insured and uninsured
risks and Summit being unable to obtain any required financing and
approvals. Readers are cautioned not to place undue reliance on
this forward-looking information, which is given as of the date
hereof, and to not use such forward-looking information for
anything other than its intended purpose. Summit undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, except as required by law.
SOURCE Summit Industrial Income REIT