Highlights for the Quarter
- Completed over 200,000 square feet of leasing transactions
- Core - FFO per unit increased 4.5% compared to same period in
prior year
- Rental rates for new leases increased 2.0% above portfolio-wide
in-place rent
- Rental rates for renewed leases increased 11.6%
- 74,248 square foot lease completed with Province of
Manitoba
- Corporate governance enhancements with appointments of
John O'Bryan and Al Mawani as independent trustees
- Lease commencement of MTS Data Center remains on schedule for
Q2 2015
TORONTO, May 7, 2015 /CNW/ - Slate Office REIT (the
"REIT") (TSX: SOT.UN) (TSX: SOT.WT) today announced its financial
results for the three months ended March 31,
2015.
Scott Antoniak, Chief Executive
Officer of the REIT, said:
"The first quarter was immensely positive for the
REIT in terms of both its operational achievements and several
milestones that were reached as management carries out its
strategic objectives. Considerable progress was made with respect
to leasing strategy with over 200,000 square feet of executed
leasing transactions at meaningful rental rate increases.
"In keeping with Slate's commitment to strong
corporate governance, significant enhancements were made to the
REIT's Board of Trustees including the appointment of two highly
experienced independent trustees and modifications to the
composition of the audit and investment committees." added Mr.
Antoniak.
Key Performance Indicators
Compared
with the three months ended March 31,
2014,
- Net Operating Income ("NOI") increased $2.9 million or 60.1%
- Core - Funds from Operations ("Core - FFO") increased by
$2.1 million or 79.3%
- Adjusted Funds from Operations ("AFFO") increased by
$1.5 million or 73.5%
- Balance sheet remains strong with debt to gross book value
ratio of 59.2% and 2.8x interest coverage ratio
(Thousands of
Canadian dollars excluding ratios, per unit values)
|
Three months
ended
March 31,
2015
|
Three months
ended
March 31,
2014
|
|
|
|
Revenue from
investment properties
|
$
|
14,082
|
$
|
8,207
|
Net operating income
(1)
|
7,628
|
4,765
|
Weighted average
number of units outstanding
|
20,016
|
11,993
|
Funds from operations
(1)
|
2,943
|
1,189
|
Core Funds from
Operations ("Core - FFO") (1)
|
4,659
|
2,598
|
Adjusted funds from
operations (1)
|
3,566
|
2,055
|
|
|
|
FFO per unit
(1)
|
0.15
|
0.10
|
Core - FFO per unit
(1)
|
0.23
|
0.22
|
AFFO per unit
(1)
|
0.18
|
0.17
|
|
|
|
Portfolio
occupancy
|
91.7%
|
97.9%
|
AFFO payout ratio
(1)
|
105%
|
110%
|
Debt/GBV
ratio
|
59.2%
|
52.6%
|
Interest coverage
ratio
|
2.8x
|
2.7x
|
(1) see Non-IFRS Measures below
Operations
On a quarter-over-quarter
basis, portfolio in-place occupancy decreased by 60 basis points to
91.7% resulting from 36,460 square feet of additional vacancy and
17,703 square feet of new deals commencing during the quarter,
creating a net reduction of 18,757 square feet to the overall
occupancy.
During the quarter, the REIT completed over
200,000 square feet of leasing activity resulting in a 92.4%
committed occupancy rate at quarter end. This occupancy rate
includes completed lease transactions with commencement dates
subsequent to the period ending March 31,
2015.
48,349 square feet of new lease deals were signed
in the first quarter with rental rates that average 2.0% above
current in-place rents.
152,394 square feet of renewals were completed in
the first quarter with an average increase of 44.9% over the
previous contractual rental rates. This includes a 74,248 square
foot renewal with the Province of Manitoba at 114 Garry Street in Winnipeg where rents increased to an average
of $19.54 per square foot compared
with the prior in-place rent of $10.25 per square foot. All other renewals had a
weighted average increase of 11.6% above previous rents.
Update on the MTS Data Centre
The MTS
Data Centre (the "Data Centre") is a fully pre-leased development
in Winnipeg, Manitoba. In 2014,
the REIT acquired a 50% equity ownership interest in a limited
partnership that will own the Data Centre through a $9.5 million investment. The 15-year lease with
MTS is on a quadruple net basis and is slated to commence in Q2
2015. The Data Centre is expected to have a significant positive
impact on the REIT's financial performance. On an annualized basis,
the incremental year one contribution to Funds from Operations will
be approximately $2.3 million, or
$0.12 per unit.
Distributions and Distribution Reinvestment
Plan
The REIT pays a monthly distribution of $0.0625 per unit of the REIT, representing
$0.75 per unit on an annualized
basis.
Eligible unitholders (which includes holders of
Class B limited partnership units that are exchangeable into trust
units of the REIT) that elect to participate in the Distribution
Reinvestment Plan (the "DRIP") will have their cash distributions
used to purchase trust units of the REIT and will also receive a
"bonus distribution" of units equal in value to 3% of each
distribution. Unitholders wishing to participate should contact
their investment advisors to enroll in the DRIP. Additional details
and information can be found on the REIT's website at
www.slateofficereit.com.
The REIT may issue up to 1,045,000 trust units of
the REIT under the DRIP. The REIT may increase the number of trust
units available to be issued under the DRIP at any time at its
discretion subject to (a) the approval of the Board of Trustees,
(b) the approval of any stock exchange upon which the trust units
trade, and (c) public disclosure of such an increase.
Slate Asset Management L.P. is the REIT's
manager.
Forward-Looking Statements
Certain
information herein constitutes "forward-looking statements" within
the meaning of applicable securities legislation. Forward-looking
statements include statements about management's expectations
regarding objectives, plans, goals, strategies, future growth,
operating results and performance, business prospects and
opportunities of the REIT. Forward-looking statements can be
identified by the use of forward-looking terminology such as
"believes", "expects", "may", "might", "should", "seeks",
"intends", "plans", "pro-forma", "estimates" or "anticipates"; or
variations of such words; and phrases or statements that certain
actions, events or results "may", "could" or "might" occur or be
achieved; or the negative connotation thereof. Forward-looking
statements are made based on reasonable assumptions, however, there
is no assurance that the events or circumstances reflected in
forward-looking statements will occur or be achieved.
Forward-looking statements are based on numerous assumptions of
factors that if untrue, could cause actual results to differ
materially from those that are implied by such forward-looking
statements. These factors include but are not limited to: general
and local economic and real estate business conditions; the
financial condition of tenants; occupancy rates; rental rates; the
ability of the REIT to refinance maturing debt; the REIT's ability
to source and complete accretive acquisitions; changes in
government, environmental and tax regulations; inflation and
interest rate fluctuations; the REIT's ability to obtain equity or
debt financing for additional funding requirements; and adequacy of
insurance.
Forward-looking statements are subject to risks
and uncertainties, many of which are beyond the REIT's control.
These risks and uncertainties include, but are not limited to:
risks related to general and local financial conditions including
available equity and debt financing at reasonable costs and
interest rate fluctuations; operational risks including timely
leasing of vacant space and re-leasing of occupied space on
expiration of current leases on terms at current or anticipated
rental rates; tenant defaults and bankruptcies; uncertainties of
acquisition activities including availability of suitable property
acquisitions and integration of acquisitions; competition including
development of properties in close proximity to the REIT's
properties; loss of key management and employees; governmental,
environmental, taxation and other regulatory risks; litigation
risks and other risks and factors described from time to time in
the documents filed by the REIT with the securities regulators.
The REIT has attempted to identify important
factors that could cause actual results to differ materially from
those contained in forward-looking statements. However, there may
be other factors that could cause results to not be as anticipated,
estimated or intended. Forward-looking statements are provided to
inform readers about management's current expectations and plans
and allow investors and others to better understand the REIT's
operating environment. However, readers should not place undue
reliance on forward-looking statements, as forward-looking
statements involve significant risks and uncertainties and should
not be read as guarantees of future performance or results, or of
the timing that such performance or results will be achieved.
Additional information about risks and uncertainties is contained
in Slate Office REIT's annual information form for the year ended
December 31, 2014 available on SEDAR
at www.sedar.com.
Non-IFRS Financial Measures
The REIT
has employed certain non-IFRS financial measures. Management
believes that in addition to conventional measures prepared in
accordance with IFRS, investors in the real estate industry use
these non-IFRS financial measures to evaluate the REIT's
performance and ability to generate cash flows. Accordingly, these
non-IFRS financial measures are intended to provide additional
information and should not be considered in isolation or as a
substitute for performance measures prepared in accordance with
IFRS. In addition, they do not have standardized meanings and may
not be comparable to measures used by other issuers in the real
estate industry or other industries.
About Slate Office REIT
Slate Office
REIT is an open-ended real estate investment trust. The REIT's
portfolio comprises 35 strategic and well-located real estate
assets located primarily across Canada's major population centres. The REIT is
focused on maximizing value through internal organic rental and
occupancy growth and strategic acquisitions. More information is
available at www.slateofficereit.com.
About Slate
Slate Asset Management L.P.
is a leading real estate investment platform with over $2.5 billion in assets under management. Slate is
a value-oriented company and a significant sponsor of all its
private and publicly-traded investment vehicles, which are tailored
to the unique goals and objectives of its investors. The firm's
careful and selective investment approach creates long term value
with an emphasis on capital preservation and outsized returns.
Slate is supported by exceptional people, flexible capital and a
proven ability to originate and execute on a wide range of
compelling investment opportunities. More information is available
at www.slateam.com.
SOURCE Slate Office REIT