TORONTO, Feb. 15,
2023 /CNW/ - Summit Industrial Income REIT
("Summit" or the "REIT") (TSX: SMU.UN) announced today continued
growth and strong operating performance for the three months and
year ended December 31, 2022.
2022 HIGHLIGHTS
FINANCIAL:
- Revenue from investment properties increased by 15.8% in Q4
2022 and 15.4% in 2022.
- Net rental income increased by 19.3% in Q4 2022 and 15.4% in
2022.
- FFO1 increased 20.6% to $37.7
million ($0.199 per Unit) in
Q4 2022 and 18.5% to $142.3 million
($0.761 per Unit), excluding the
non-recurring secured mortgage prepayment costs incurred in
2021.
- Completed a bought-deal equity offering of REIT Units for net
proceeds of $220.2 million on
March 31, 2022.
- On April 19, 2022, the REIT
increased the total size of its Green Unsecured Development Credit
Facility by $100 million to
$200 million ($150 million green tranche and $50 million conventional tranche).
- On May 4, 2022, the REIT
increased the total size of its $300
million unsecured revolving credit facility by $100 million to $400
million and extended the term by one year to March 23, 2025.
- In May 2022, the REIT 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.
- Repaid $86.2 million of secured
term mortgages at maturity during 2022.
- Subsequent to year end, the REIT repaid an additional
$17.9 million of secured term
mortgages at maturity.
- On September 14, 2022, DBRS
Limited upgraded the REIT's issuer rating and senior unsecured
debentures rating to BBB with positive trends.
- Approximately $1.7 billion of
available liquidity1 and $4.1
billion of unencumbered assets at December 31, 2022.
OPERATIONS:
- Near-full occupancy at 99.2% at December
31, 2022 with an average lease term of 5.4 years and 3.2%
average annual contractual rent steps.
- Same property NOI1 increased 6.2% in Q4 2022 and
5.7% in 2022, with Ontario and
Quebec each contributing 8.4% and
6.5%, respectively, for Q4 2022 and 9.1% and 4.5%, respectively, in
2022
- Completed over 2.6 million sq. ft. of lease renewals and new
lease deals year-to-date generating a 53.2% overall increase in
rents, including 90.6% in Ontario
and 54.0% in Quebec (excluding
contractual renewals).
- Completed construction on approximately 928,000 sq. ft. of GLA
in 2022 and transferred to income-producing properties.
____________________
|
1
Non-GAAP measure. Refer to "Non-GAAP Measures" section in this
press release for further information.
|
PROPERTY PORTFOLIO:
- Acquired six income-producing properties during the year for a
total of 699,000 sq. ft. for a purchase price of $196.0 million.
- Acquired interests in three development properties during the
year, totalling 87 acres for a purchase price of $114.2 million, with the potential to add 1.7
million sq. ft. of GLA to the REIT's portfolio.
- Acquired the remaining 50% interest in one industrial property
under development that was nearing completion in Guelph, Ontario totalling 91,782 sq. ft. from
the REIT's joint venture partner for a total acquisition cost of
$12.8 million.
- Acquired a 12-acre parcel of land with the potential to develop
approximately 180,000 sq. ft. of industrial space, located at the
intersection of Appleby Line and
Highway 407 in Burlington,
Ontario, for a purchase price of $27.5 million.
- Disposed of a 32,000 sq. ft. non-core investment property for
gross proceeds of $4.2 million.
OTHER:
- 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. On
February 7, 2023, the REIT announced
that it had received approval under the Investment Canada
Act in respect of the Transaction that was approved by the
Ontario Superior Court (Commercial List) on December 20, 2022, and anticipates that closing
of the Transaction will occur on or about February 17, 2023, subject to the satisfaction or
waiver of all of the remaining customary closing conditions, all of
which have been or are expected to be satisfied by or on such
date.
This press release should be read in conjunction with Summit's
Consolidated Financial Statements for the years ended
December 31, 2022 and 2021, and Management's Discussion and
Analysis for the year ended December 31, 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
months and year ended December 31, 2022 are as follows:
|
|
|
|
|
Annual
|
(in thousands of
Canadian dollars, except per Unit amounts)
|
Q4
2022
|
|
Q4 2021
|
|
2022
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Portfolio
Performance
|
|
|
|
|
|
|
|
|
|
Occupancy
|
99.2 %
|
|
99.2 %
|
|
99.2 %
|
|
99.2 %
|
|
98.0 %
|
Revenue from investment
properties
|
$
65,905
|
|
$
56,911
|
|
$
250,328
|
|
$
216,971
|
|
$
190,906
|
Property operating
expenses
|
$
16,675
|
|
$
15,649
|
|
$
64,019
|
|
$
55,544
|
|
$
50,796
|
Net rental
income
|
$
49,230
|
|
$
41,262
|
|
$
186,309
|
|
$
161,427
|
|
$
140,110
|
Finance
costs(2)
|
$
10,404
|
|
$
8,948
|
|
$
39,403
|
|
$
57,210
|
|
$
41,535
|
Fair value adjustments
to investment properties
|
$
427,420
|
|
$
97,967
|
|
$
686,604
|
|
$
1,031,385
|
|
$
90,762
|
Net income
|
$
457,663
|
|
$
128,240
|
|
$
822,056
|
|
$
1,131,994
|
|
$
206,502
|
|
|
|
|
|
|
|
|
|
|
Operating
Performance
|
|
|
|
|
|
|
|
|
|
FFO(1)(2)
|
$
37,724
|
|
$
31,277
|
|
$
142,268
|
|
$
100,040
|
|
$
94,389
|
FFO per
Unit(1)(2)
|
$
0.199
|
|
$
0.178
|
|
$
0.761
|
|
$
0.587
|
|
$
0.651
|
Net income per Unit -
basic
|
$
2.409
|
|
$
0.729
|
|
$
4.399
|
|
$
6.644
|
|
$
1.423
|
Same property
NOI(1)
|
$
41,556
|
|
$
39,115
|
|
$
153,526
|
|
$
145,305
|
|
$
89,435
|
Same property
NOI(1) growth
|
6.2 %
|
|
4.1 %
|
|
5.7 %
|
|
4.8 %
|
|
3.8 %
|
|
|
|
|
|
|
|
|
|
|
Distributions
|
|
|
|
|
|
|
|
|
|
Distributions declared
to Unitholders(3)
|
$
9,195
|
|
$
24,841
|
|
$
89,635
|
|
$
95,024
|
|
$
79,252
|
Distributions per Unit
declared to Unitholders(3)
|
$
0.048
|
|
$
0.141
|
|
$
0.478
|
|
$
0.556
|
|
$
0.540
|
|
|
|
|
|
|
|
|
|
|
FFO payout ratio
without DRIP benefit(1)(2)(3)
|
24.4 %
|
|
79.3 %
|
|
62.8 %
|
|
94.7 %
|
|
83.0 %
|
FFO payout ratio with
DRIP benefit(1)(2)(3)
|
48.7 %
|
|
60.3 %
|
|
60.2 %
|
|
73.8 %
|
|
67.6 %
|
|
|
|
|
|
|
|
|
|
|
Weighted average Units
outstanding (in thousands)
|
189,977
|
|
175,909
|
|
186,880
|
|
170,390
|
|
145,089
|
|
|
|
|
|
|
|
|
|
|
Liquidity and
Leverage
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
5,718,120
|
|
$
4,542,994
|
|
$
5,718,120
|
|
$
4,542,994
|
|
$
3,172,213
|
Total unencumbered
assets
|
$
4,124,541
|
|
$
2,996,333
|
|
$
4,124,541
|
|
$
2,996,333
|
|
$
1,054,481
|
Total debt
|
$
1,437,200
|
|
$
1,293,573
|
|
$
1,437,200
|
|
$
1,293,573
|
|
$
1,186,572
|
|
|
|
|
|
|
|
|
|
|
Weighted average
effective interest rate
|
2.93 %
|
|
2.51 %
|
|
2.93 %
|
|
2.51 %
|
|
2.99 %
|
Weighted average term
to maturity (years)
|
4.5
|
|
4.7
|
|
4.5
|
|
4.7
|
|
4.5
|
|
|
|
|
|
|
|
|
|
|
Leverage(1)
|
25.1 %
|
|
28.5 %
|
|
25.1 %
|
|
28.5 %
|
|
37.4 %
|
Interest
coverage(1)
|
4.5x
|
|
4.3x
|
|
4.5x
|
|
4.1x
|
|
3.2x
|
Debt service
coverage(1)
|
3.6x
|
|
3.3x
|
|
3.5x
|
|
2.9x
|
|
2.1x
|
Debt-to-adjusted
EBITDA(1)
|
7.8x
|
|
8.3x
|
|
8.2x
|
|
8.5x
|
|
8.8x
|
|
|
|
|
|
|
|
|
|
|
DBRS Issuer
Rating
|
BBB
|
|
BBB (low)
|
|
BBB
|
|
BBB (low)
|
|
BBB (low)
|
|
|
|
|
|
|
|
|
|
|
Income-Producing
Investment Properties
|
|
|
|
|
|
|
|
|
|
Number of properties
acquired
|
—
|
|
2
|
|
6
|
|
5
|
|
23
|
Number of properties
disposed
|
—
|
|
1
|
|
1
|
|
7
|
|
2
|
Total number of
properties
|
165
|
|
156
|
|
165
|
|
156
|
|
156
|
Total GLA
|
22,252
|
|
20,651
|
|
22,252
|
|
20,651
|
|
19,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $20.0 million ($0.118 per Unit) for 2021. Excluding the
prepayment costs, FFO per Unit was $0.705 per Unit for 2021. FFO
payout ratio without DRIP benefit excluding the prepayment costs
was 78.9% (61.5% including DRIP benefit) for 2021.
|
(3)
Concurrent with the announcement of the Transaction on November 7,
2022, the REIT suspended its normal monthly distributions through
closing, effective following the payment of the previously-declared
monthly distribution for October 2022 that was paid on November 15,
2022.
|
PORTFOLIO GROWTH
During 2022, the REIT
acquired six income-producing properties totalling
699,000 sq. ft. for a purchase price of $196.0 million and a 12-acre parcel of
land with the potential to develop approximately
180,000 sq. ft. of industrial space, located at the
intersection of Appleby Line and Highway 407 in
Burlington, Ontario, for a
purchase price of $27.5 million.
The REIT also acquired a 50% interest in three
development sites during the year through joint venture
partnerships, totalling 87 acres. The development sites were
acquired by the joint ventures for an aggregate purchase price of
$114.2 million with the potential to
add 1.7 million sq. ft. of GLA to
the REIT's portfolio, as well as the remaining 50%
interest in one industrial property under development that was
nearing completion in Guelph, Ontario totalling 91,782 sq. ft.
from the REIT's joint venture partner for a total
acquisition cost of $12.8
million.
During 2022, the REIT completed the development of approximately
928,000 sq. ft. of industrial properties in Ontario and Quebec and transferred them to
income-producing properties. These properties were all pre-leased
and included 65 & 75 Quarterman Road and 54 Phelan Court in
Guelph, 4225 North Service Road in
Burlington, 2445 Surveyor Road in Mississauga, as well as the 7800 Trans-Canada
Highway expansion premises in Montreal,
Quebec.
At December 31, 2022, the REIT's portfolio totaled 165
properties aggregating 22.3 million sq. ft., with an additional 12
buildings under development aggregating 2.6 million sq. ft. of
potential GLA, for a total net book value of approximately
$5.5 billion. During Q4 2022 and
2022, the REIT recognized fair value gains on its investment
properties of $427.4 million and
$686.6 million,
respectively.
CONTINUED STRONG OPERATING PERFORMANCE
Revenue from
investment properties for Q4 2022 and 2022 rose 15.8% and 15.4%
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 December 31, 2022 at
99.2% with an average lease term of 5.4 years and 3.2% annual
contractual rent steps.
Net rental income for Q4 2022 and 2022 increased 19.3% and 15.4%
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.
FFO1 for Q4 2022 increased 20.6% to $37.7 million ($0.199 per Unit). Excluding the non-recurring
secured mortgage prepayment costs of $20.0
million ($0.118 per Unit)
incurred in 2021, FFO1 increased 18.5% in 2022.
Excluding the mortgage prepayment costs discussed above, FFO per
Unit1 for 2022 increased 8.0% compared to 2021 despite
9.7% increase in Units outstanding and further balance sheet
deleveraging that took place in 2022 resulting in
leverage1 of 25.1% at December 31, 2022. The REIT's
FFO payout ratio1 for Q4 2022 and 2022 was 24.4% and
62.8%, respectively, excluding the benefit of the REIT's DRIP
(48.7% and 60.2%, respectively, including the benefit of the REIT's
DRIP). The REIT's FFO payout ratio1 for Q4 2022 and 2022
was impacted by the suspension of monthly distribution, concurrent
with the announcement of the Transaction in November 2022.
Same property NOI1 rose 6.2% for Q4 2022 (5.7% for
2022), including a 8.4% increase in Ontario and 6.5% increase in Quebec (9.1% and 4.5% in Ontario and Quebec, respectively, for 2022). Growth in
same property NOI1 in the fourth quarter of 2022 was
driven primarily by rental rate growth from 2021 and 2022 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 88.4% and
37.1% increase over expiring rents in Ontario and Quebec, respectively, in 2022, in addition to
an increase in other income in Ontario in 2022. Growth in same property
NOI1 for 2022 was partially muted by lower bad debt
recoveries ($0.1 million in 2022 and
$1.1 million in 2021). Same property
NOI1 for Q4 2022 represented approximately 84.4% of
total portfolio NOI1 and 87.9% of total GLA at
December 31, 2022 (82.4% of total portfolio NOI and 82.9% of
total GLA for 2022).
STRATEGIC LEASING PROGRAM
The REIT completed over 2.6
million sq. ft. of lease renewals and new lease deals in 2022,
generating an average increase in monthly rents of 53.2% over the
expiring rent with a significant 90.6% increase over expiring rents
in Ontario, 54.0% in Quebec and 6.5% in Alberta (excluding contractual renewals).
The REIT maintained near-full 99.2% occupancy in Q4 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.
STRONG BALANCE SHEET AND LIQUIDITY
Total assets
increased to $5.7 billion at
December 31, 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 December 31, 2022 compared to $1.3 billion at December 31, 2021. At
December 31, 2022, the REIT's unsecured debt represented 70%
of total debt outstanding with approximately $4.1 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
December 31, 2022, $29.0 million was drawn on the unsecured
revolving credit facility and $51.0 million was drawn from the green
unsecured development credit facility.
During 2022, the REIT repaid $86.2 million in maturing secured term
mortgages that carried a weighted average interest rate of 3.09%.
Subsequent to year end, the REIT repaid an additional $17.9 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 fourth
quarter of 2022. At December 31, 2022, the REIT's leverage
ratio1 was 25.1% compared to 28.5% at December 31,
2021. Debt service coverage1, and interest
coverage1 were 3.6x and 4.5x, respectively, for Q4 2022
compared to 3.3x and 4.3x, respectively, for the same prior year
periods.
Debt-to-adjusted EBITDA was 7.8x and 8.2x for the three months
and year ended December 31, 2022, respectively, a decrease
from 8.3x and 8.5x for the same prior year periods.
At December 31, 2022, the REIT's liquidity position
remained strong at approximately $1.7
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 $4.1 billion of unencumbered
assets.
ARRANGEMENT AGREEMENT TO ACQUIRE THE REIT
On
November 7, 2022, the REIT announced
that it had entered into an agreement (the "Arrangement Agreement")
with GIC and Dream Industrial REIT, pursuant to which a joint
venture (the "Joint Venture") between GIC and Dream Industrial REIT
would acquire all of the assets and assume all of the liabilities
of the REIT in an all-cash transaction via a plan of arrangement
under the Canada Business Corporations Act, and the REIT
will pay a special distribution and redeem all of its units for
$23.50 per unit in cash (the
"Transaction"). The Arrangement Agreement contains customary terms
and conditions, including deal protections.
On February 7, 2023, the REIT
announced receipt of approval under the Investment Canada
Act in respect of the Transaction that was approved by the
Ontario Superior Court of Justice (Commercial List) on December 20, 2022. The REIT anticipates that
closing of the Transaction will occur on or about February 17, 2023, subject to the satisfaction or
waiver of all of the remaining customary closing conditions, all of
which have been or are expected to be satisfied by or on such date.
Following completion of the Transaction, the REIT's Units will be
delisted from the TSX.
As a result of the Transaction, Summit will not host a
conference call and webcast to discuss the financial results and
operations for the fourth 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
year ended December 31, 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 months and year ended
December 31, 2022.
Available Liquidity
The REIT's available liquidity is
calculated as follows:
|
December
31
|
December 31
|
|
2022
|
2021
|
|
|
|
Unencumbered
assets
|
$
4,124,541
|
$
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
|
2,142,041
|
1,273,833
|
Borrowing Capacity
on Unencumbered Assets(4)
|
$
1,178,122
|
$
700,608
|
|
|
|
Cash
|
47,732
|
16,052
|
Undrawn portion of
unsecured revolving credit facility(5)
|
370,472
|
300,000
|
Undrawn portion of
Green Unsecured Development Credit
Facility(5)
|
135,382
|
90,000
|
Borrowing capacity on
unencumbered assets (per above)
|
1,178,122
|
700,608
|
Available
Liquidity
|
$
1,731,709
|
$
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:
|
|
|
Q4
2022
|
Q4 2021
|
|
Q4
2022
|
Q4 2021
|
Annual
|
Annual
|
|
|
|
|
|
Net income
|
$
457,663
|
$
128,240
|
$
822,056
|
$ 1,131,994
|
Adjustments:
|
|
|
|
|
Free rent
amortization
|
391
|
311
|
1,428
|
1,231
|
Amortization of other
assets
|
96
|
91
|
466
|
326
|
Transaction
costs
|
4,748
|
—
|
4,748
|
—
|
Fair value adjustment
to deferred unit compensation
|
2,246
|
602
|
174
|
2,565
|
Fair value adjustment
to loans receivable
|
—
|
—
|
—
|
(4,691)
|
Fair value adjustment
to investment properties
|
(427,420)
|
(97,967)
|
(686,604)
|
(1,031,385)
|
FFO(1)
|
$
37,724
|
$
31,277
|
$
142,268
|
$
100,040
|
|
|
|
|
|
FFO per
Unit(1)
|
$
0.199
|
$
0.178
|
$
0.761
|
$
0.587
|
|
|
|
|
|
Distributions declared
to Unitholders(2)
|
$
9,195
|
$
24,841
|
$
89,635
|
$
95,024
|
Distributions per Unit
declared to Unitholders(2)
|
$
0.048
|
$
0.141
|
$
0.478
|
$
0.556
|
Cash Distributions
paid(2)
|
$
18,390
|
$
18,852
|
$
85,649
|
$
73,872
|
|
|
|
|
|
Regular FFO payout
ratio without DRIP benefit(1)(2)
|
24.4 %
|
79.3 %
|
62.8 %
|
94.7 %
|
Regular FFO payout
ratio with DRIP benefit(1)(2)
|
48.7 %
|
60.3 %
|
60.2 %
|
73.8 %
|
|
|
|
|
|
Weighted average number
of Units outstanding (in thousands)
|
189,977
|
175,909
|
186,880
|
170,390
|
Units issued and
outstanding at the end of the period (in thousands)
|
189,977
|
176,900
|
189,977
|
176,900
|
|
|
|
|
|
Other
items:
|
|
|
|
|
Straight-line rent
adjustment
|
$
(1,702)
|
$
(1,316)
|
$
(5,532)
|
$
(5,542)
|
Non-recoverable capital
expenditures
|
$
(326)
|
$
(366)
|
$
(3,106)
|
$
(1,154)
|
Leasing
costs
|
$
(6,545)
|
$
(1,294)
|
$
(19,390)
|
$
(8,534)
|
|
|
|
|
|
(1) FFO
includes strategic non-recurring mortgage prepayment costs of $20.0
million ($0.118 per Unit) for 2021. Excluding the prepayment
costs, FFO per Unit was $0.705 per Unit for 2021. FFO payout ratio
without DRIP benefit excluding the prepayment costs was 78.9%
(61.5% including DRIP benefit) for 2021.
|
(2)
Concurrent with the announcement of the Transaction on November 7,
2022, the REIT suspended its normal monthly distributions through
closing, effective following the payment of the previously-declared
monthly distribution for October 2022 that was paid on November 15,
2022.
|
Same Property NOI
In calculating same property NOI, the impacts from the
straight-lining of rents and amortization of free rent have been
excluded. Same property NOI excludes properties that would have had
changes due to acquisitions, dispositions and redevelopments, as
well as properties classified as held for sale.
The following tables reconcile same property NOI to net rental
income for the periods presented:
|
|
|
|
Change
|
Change
|
|
GLA
|
Q4
2022
|
Q4 2021
|
($)
|
( %)
|
|
|
|
|
|
|
Ontario
|
10,267
|
$
20,955
|
$
19,331
|
$
1,624
|
8.4 %
|
Quebec
|
4,019
|
7,985
|
7,498
|
487
|
6.5 %
|
Alberta
|
5,229
|
12,519
|
12,189
|
330
|
2.7 %
|
Other Canada
|
42
|
97
|
97
|
—
|
0.0 %
|
Same property
NOI
|
19,557
|
$
41,556
|
$
39,115
|
$
2,441
|
6.2 %
|
|
|
|
|
|
|
Acquisitions/dispositions/redevelopments
|
2,695
|
6,363
|
1,142
|
5,221
|
|
Straight-line
rent
|
|
1,702
|
1,316
|
386
|
|
Free rent
amortization
|
|
(391)
|
(311)
|
(80)
|
|
Net rental
income
|
22,252
|
$
49,230
|
$
41,262
|
$
7,968
|
|
|
|
Q4 2022
|
Q4 2021
|
Change
|
Change
|
|
GLA
|
Annual
|
Annual
|
($)
|
( %)
|
|
|
|
|
|
|
Ontario
|
9,924
|
$
80,866
|
$
74,145
|
$
6,721
|
9.1 %
|
Quebec
|
3,254
|
22,878
|
21,883
|
995
|
4.5 %
|
Alberta
|
5,229
|
49,391
|
48,890
|
501
|
1.0 %
|
Other Canada
|
42
|
391
|
387
|
4
|
1.0 %
|
Same property
NOI
|
18,449
|
$
153,526
|
$
145,305
|
$
8,221
|
5.7 %
|
|
|
|
|
|
|
Acquisitions/dispositions/redevelopments
|
3,803
|
28,679
|
11,811
|
16,868
|
|
Straight-line
rent
|
|
5,532
|
5,542
|
(10)
|
|
Free rent
amortization
|
|
(1,428)
|
(1,231)
|
(197)
|
|
Net rental
income
|
22,252
|
$
186,309
|
$
161,427
|
$
24,882
|
|
Financial Ratios
The REIT's interest coverage ratio, debt service coverage ratio
and debt-to-adjusted EBITDA are calculated as follows:
|
|
|
Q4
2022
|
Q4 2021
|
|
Q4
2022
|
Q4 2021
|
Annual
|
Annual
|
|
|
|
|
|
Net income
|
$
457,663
|
$
128,240
|
$
822,056
|
$
1,131,994
|
Adjustments:
|
|
|
|
|
Transaction
costs
|
4,748
|
—
|
4,748
|
—
|
Free rent
amortization
|
391
|
311
|
1,428
|
1,231
|
Amortization of other
assets
|
96
|
91
|
466
|
326
|
Straight-lining of
rents
|
(1,702)
|
(1,316)
|
(5,532)
|
(5,542)
|
Fair value adjustment
to deferred unit compensation
|
2,246
|
602
|
174
|
2,565
|
Fair value adjustment
to loans receivable
|
—
|
—
|
—
|
(4,691)
|
Fair value adjustment
to investment properties
|
(427,420)
|
(97,967)
|
(686,604)
|
(1,031,385)
|
Finance
costs(1)
|
10,404
|
8,948
|
39,403
|
57,210
|
Adjusted
EBITDA
|
$
46,426
|
$
38,909
|
$
176,139
|
$
151,708
|
|
|
|
|
|
Adjustments to
finance costs:
|
|
|
|
|
Non-recurring mortgage
prepayment costs(1)
|
—
|
—
|
—
|
(20,036)
|
Interest expense
(finance costs) excluding adjustments
|
$
10,404
|
$
8,948
|
$
39,403
|
$
37,174
|
Interest
Coverage
|
4.5x
|
4.3x
|
4.5x
|
4.1x
|
|
|
|
|
|
Principal repayments
(excluding mortgage payouts)
|
$
2,340
|
$
3,014
|
$
10,270
|
$
15,543
|
Principal and interest
payments
|
$
12,744
|
$
11,962
|
$
49,673
|
$
52,717
|
Debt Service
Coverage
|
3.6x
|
3.3x
|
3.5x
|
2.9x
|
|
|
|
|
|
Non-current loans and
borrowings
|
$
1,383,593
|
$
1,199,376
|
$
1,383,593
|
$
1,199,376
|
Current loans and
borrowings
|
53,607
|
94,197
|
53,607
|
94,197
|
Total loans and
borrowings
|
1,437,200
|
1,293,573
|
1,437,200
|
1,293,573
|
Adjustments:
|
|
|
|
|
Unamortized premium on
debt
|
(1,533)
|
(2,085)
|
(1,533)
|
(2,085)
|
Unamortized deferred
financing charges
|
4,425
|
5,395
|
4,425
|
5,395
|
Total loans and
borrowings (principal outstanding)
|
$
1,440,092
|
$
1,296,883
|
$
1,440,092
|
$
1,296,883
|
Adjusted EBITDA per
above, annualized
|
$
185,704
|
$
155,636
|
$
176,139
|
$
151,708
|
Debt-to-Adjusted
EBITDA
|
7.8x
|
8.3x
|
8.2x
|
8.5x
|
|
|
|
|
|
(1) The REIT
incurred non-recurring mortgage prepayment costs of $20.0 million
during 2021 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. 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 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