TORONTO, March 3, 2021 /CNW/ - True North Commercial Real Estate Investment Trust (TSX: TNT.UN) (the "REIT") today announced its financial results and provides a COVID-19 update for the three months and year ended December 31, 2020.
"The fourth quarter brought 2020 to a successful conclusion with continued strong rent collections and positive operating results despite the COVID-19 pandemic" stated Daniel Drimmer, the REIT's President and Chief Executive Officer. "Contractual rent collection of 99%, increased liquidity, positive leasing spreads and high tenant retention has positioned the REIT to effectively navigate through these times of uncertainty."
Q4 Highlights
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Collected approximately 99% of contractual rent in Q4 2020
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Contractually leased and renewed approximately 60,300 square feet with an average increase of approximately 8.3% over expiring rates, including 32,500 square feet with the Federal Government of Canada
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Portfolio occupancy of 98% with an average remaining lease term of 4.7 years
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On December 11, 2020, the REIT entered into a new $60 million floating rate revolving credit facility for a two-year term maturing on December 1, 2022 resulting in up to $85 million in cash and undrawn credit facilities at the end of Q4 2020
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Revenue and NOI increased 23% and 21%, respectively compared to Q4 2019. The majority of which can be attributed to acquisitions totaling $395.8 million in Q4 2019, offset by Same Property NOI decrease of 2.3%
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Same Property NOI experienced an overall decline of 2.3%, the majority of which can be attributed to the REIT's only asset in Edmonton, Alberta and lower parking revenue due to reduced foot traffic at certain properties due to COVID-19. Excluding the above, Same Property NOI increased 2.7% for the quarter
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FFO per Unit and AFFO per Unit on both a basic and diluted basis increased $0.01 compared to Q4 2019 to $0.15 and $0.14, respectively
YTD Highlights
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Collected approximately 99% of contractual rent during 2020
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Contractually leased and renewed approximately 545,600 square feet with a weighted average lease term of 7.8 years and an average increase of approximately 6.4% over expiring rates. 368,000 square feet of 2020 leasing activity was with Federal government tenants
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Revenue and NOI increased 31% and 35%, respectively compared to YTD 2019.
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Same Property NOI decreased by 1.9%. A reduction in parking revenue due to lower utilization at certain properties, rent concessions associated with the Canada Emergency Commercial Rent Assistance ("CECRA") program, lower one-time termination payments and project management fees along with vacancy and lower rental rates in the REIT's Edmonton, Alberta property were the main contributors to the decline in Same Property NOI. Excluding the impact of the above, Same Property NOI increased 2.4% for 2020
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FFO per Unit on both a basic and diluted basis increased $0.02 compared to YTD 2019 to $0.60 and $0.59, respectively
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AFFO basic per Unit remained stable at $0.57 and AFFO diluted per Unit increased $0.01 to $0.57
COVID-19
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Since the beginning of the pandemic, the REIT has received approximately 99% of its 2020 contractual rent, a trend which continues in the first two months of 2021 and is a direct result of its credit and government tenant roster.
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A total of 19 tenants (46,000 square feet) participated in the CECRA program which came to an end on September 30, 2020. The REIT's 25% rental contribution resulted in a $0.19 million expense recognized in property operating costs in 2020.
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On October 9, 2020, the Federal Government announced a new Canada Emergency Rent Subsidy program ("CERS") to assist businesses experiencing a significant drop in revenue as a result of the COVID-19 pandemic. Currently 5 tenants have applied to CERS and the REIT recognized a $0.02 million expense in property operating costs representing a 35% rental provision granted to tenants in Q4 2020.
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The REIT agreed to defer approximately $0.44 million of YTD 2020 rental payments for certain tenants. As of March 3, 2021, $0.42 million of rent deferrals have been received in accordance with those deferral agreements.
While vaccination programs have begun to be implemented throughout Canada, industries, including retail and commercial real estate, continue to be affected in varying degrees by COVD-19. It continues to be difficult to predict the duration and extent of the impact of COVID-19 on the REIT's business and operations, both in the short and long-term. Certain aspects of the REIT's business and operations that could potentially be impacted include, without limitation, rental income, occupancy, future demand for space and market rents, all of which ultimately impact the underlying valuation of the REIT's investment properties and its ability to maintain its distributions.
With a close to fully occupied portfolio of predominantly government and credit-rated tenants, the REIT is well positioned to maintain stability through these times of uncertainty.
Key Performance Indicators
| | Three months ended
December 31 | Years ended
December 31 |
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| | 2020 | | 2019 | | 2020 | | 2019 | |
| Number of properties | | | | | | | | 47 | | 49 | |
| Portfolio GLA | | | | | | | | 4,798,300 | sf | 4,836,400 | sf |
| Occupancy | | | | | | | | 98 | % | | 97 | % |
| Remaining weighted average lease term | | | | | | | | 4.7 years | | | 4.7 years | |
| Revenue from government and credit rated tenants | | | | | | | | 75 | % | | 76 | % |
| Revenue | $ | 36,189 | | $ | 29,533 | | $ | 139,431 | | $ | 106,457 | |
| NOI | | 20,741 | | | 17,122 | | | 83,742 | | | 62,065 | |
| Net income and comprehensive income | | 8,299 | | | 1,425 | | | 39,752 | | | 24,178 | |
| Same Property NOI | | 15,314 | | | 15,670 | | | 59,756 | | | 60,935 | |
| Same Property NOI growth | | (2.3) | % | | 1.9 | % | | (1.9) | % | | 1.2 | % |
| FFO | $ | 13,213 | | $ | 11,110 | | $ | 53,207 | | $ | 39,122 | |
| FFO per Unit - basic | | 0.15 | | | 0.14 | | | 0.60 | | | 0.58 | |
| FFO per Unit - diluted | | 0.15 | | | 0.14 | | | 0.59 | | | 0.57 | |
| AFFO | $ | 12,743 | | $ | 10,886 | | $ | 51,089 | | $ | 38,214 | |
| AFFO per Unit - basic | | 0.14 | | | 0.13 | | | 0.57 | | | 0.57 | |
| AFFO per Unit - diluted | | 0.14 | | | 0.13 | | | 0.57 | | | 0.56 | |
| AFFO payout ratio - diluted | | 105 | % | | 112 | % | | 104 | % | | 106 | % |
| Distributions declared | $ | 13,382 | | $ | 12,449 | | $ | 53,139 | | $ | 40,609 | |