Post by
incomedreamer11 on Nov 15, 2023 8:06am
TD comments
H&R REIT (HR.UN-T) C$8.93 Q3/23
First Look: Results In Line; SPNOI Growth +10% Sam Damiani, CFA Jaz Cumberbatch, CFA (Associate)
Event Q3/23 Results. Conference call/webcast (link) at 9:30 a.m. (1-888-886-7786).
Impact: NEUTRAL
Our Initial Take: FFO/unit (f.d.) of $0.419 included $0.11 from a gain on disposal of a purchase option on Las Vegas industrial land, and $0.01/unit for lease termination fees and a BDE recovery. Ex-items, FFO/unit (f.d) met consensus at $0.30, was flat y/y and a penny below our estimate. Importantly, our preliminary AFFO/unit calculation of $0.27 (+6% y/y) was in-line due to lower straight-line rent. Operational Results (Exhibit) SPNOI growth remained strong at +12.6% (10.0% constant currency) and was slightly ahead of Q2/23's 11.7% (7.6%) pace, driven by strong fundamentals and aided by strength in the U.S. dollar.
Residential SPNOI growth of +19.5% (+15.2% in USD) was driven by continued rent growth.
Industrial property SPNOI increased 11.1% on strong rent growth and higher y/ y occupancy.
Retail was +8.8% due to y/y occupancy gains at River Landing in Miami, FL, while office SPNOI was +9.9%, largely driven by a $2.5mm lease termination payment and a BDE recovery. Both Retail and SPNOIG also benefited from a strong USD.
Acquisitions and Dispositions During Q3/23, H&R disposed four Quebec retail properties for $68.0mm. Newly announced dispositions consisted of an ~86,000sf single-tenant office property in Temple Terrace, FL for US$13.3mm (US$155/sf) and a ~13,500sf retail property in Roswell, GA for US$3.6mm (US$266/sf). H&R has now sold or contracted to sell $432mm of non-core assets YTD (last quarter: $387mm) and management reiterated its $600mm (sold/under contract) disposition target for 2023.
Balance Sheet: H&R recorded a $140mm (proportionate) fair value loss due a 8bps increase in the overall cap rate to 5.59%. Residential and Industrial cap rates were unchanged q/q, while Retail was +12bps to 6.47% and Office +29bps to 6.87%. IFRS NAV/unit increased +2% q/q to $21.49 on USD strength. D/GBV (proportionate share) was 90bps lower q/q to 43.9%, while liquidity exceeded $1bln. Q3/23 unit repurchases were 1.3mm ($10.38/unit or 51.7% below IFRS NAV) bringing the YTD total to 4.1mm units.
No Increase to Cash Distributions. Last year at this time, H&R announced its first increase (at +9%) post the Primaris spin-off.
Comment by
Frankie10 on Nov 15, 2023 11:45am
Incorrect regarding asset dispositions. How embarrassing. You have one job.