TORONTO, Aug. 13, 2014 /CNW/ - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U - OTCQX: WPTIF) announced today its financial and operating results for the three and six months ended June 30, 2014. All dollar amounts are stated in US funds.
Q2 2014 HIGHLIGHTS:
- Completed bought-deal equity offering raising $32.3 million in gross proceeds, including exercise in full of underwriters' over-allotment option
- Acquired four modern, 100% leased industrial properties totaling 2.9 million square feet of GLA for $115.7 million
- Occupancy rises to 97.0% from 96.4% at December 31, 2013
- Portfolio growth and solid operating performance generate strong growth in revenues, NOI, FFO and AFFO compared to Q1 2014
- Conservative liquidity position provides resources and flexibility for future portfolio growth
"Going forward, we expect the four acquisitions completed in the second quarter of 2014 to make a meaningful and accretive contribution to our AFFO per unit," stated Scott Frederiksen, Chief Executive Officer. "With the US economic recovery gaining momentum, and a strong pipeline of potential acquisition opportunities currently being evaluated, we also anticipate continued portfolio growth and enhanced financial and operating performance in the quarters ahead."
SOLID OPERATING PERFORMANCE
For the three months ended June 30, 2014, investment properties revenue was $13.8 million, representing a 7.8% increase compared to the first quarter of 2014 due primarily to the contribution from acquisitions made during the second quarter.
Net Operating Income ("NOI") for the second quarter of 2014 was $10.5 million, representing an 11.1% increase compared to the first quarter of 2014 due primarily to the contribution from acquisitions completed during the second quarter.
Funds from Operations ("FFO") for the three months ended June 30, 2014 were $6.5 million ($0.238 per Unit), representing a 10.3% increase compared to the first quarter of 2014 due primarily to the contribution from acquisitions completed in the second quarter. Adjusted Funds from Operations ("AFFO") for the three months ended June 30, 2014 were $5.2 million ($0.188 per Unit), up 7.0% from $4.8 million ($0.202 per Unit) for the first quarter of 2014. Per Unit amounts in the second quarter of 2014 were impacted by the 15.3% increase in the weighted average number of Units outstanding in the period due to the successful equity offering completed in the period, and the fact that acquisitions financed by the offering were completed late in the quarter. The REIT's AFFO payout ratio was 95.0% and 90.8% for the three and six months ended June 30, 2014, respectively.
STRONG PORTFOLIO GROWTH
On April 4, 2014, the REIT issued 3,478,200 REIT Units (including Units issued pursuant to the exercise in full of the over-allotment option granted to the underwriters) at a price of $9.30 per Unit to a syndicate of underwriters on a bought deal basis for gross proceeds of approximately $32.3 million. The net proceeds were used to complete the following acquisitions:
On April 4, 2014, the REIT indirectly acquired a 100% leased 300,000 square foot industrial property located in Hebron, Kentucky for a purchase price of $13.3 million (exclusive of closing costs and acquisition fee). The purchase price was satisfied in cash using a portion of the proceeds from the $32.3 million equity offering completed on April 4, 2014.
On April 29, 2014, the REIT indirectly acquired a 100% leased 1,512,552 square foot industrial property located in Atlanta, Georgia for a purchase price of $51.5 million (exclusive of closing costs and acquisition fee). The purchase price was satisfied with $19 million in cash from the proceeds of the equity offering completed on April 4, 2014, $4.1 million in cash from the REIT's revolving credit facility, and a new $28.3 million 5-year mortgage bearing a fixed interest rate of 3.41%.
On June 18, 2014, the REIT indirectly acquired a 100% leased 936,000 square foot industrial property located in Shepherdsville, Kentucky for a purchase price of $45.4 million (exclusive of closing costs). The purchase price was satisfied by the issuance of $20.4 million in Class B Units (2,165,605 Class B Units) to the REIT's external asset and property manager, Welsh Property Trust, LLC, and a new $24.9 million 8-year mortgage bearing a fixed interest rate of 3.77%.
On June 27, 2014, the REIT indirectly acquired a 100% leased 127,800 square foot industrial property located in Hebron, Kentucky for a purchase price of $5.5 million (exclusive of closing costs and acquisition fee) satisfied with cash on hand and proceeds from the REIT's revolving credit facility.
With the completion of these transactions, the REIT's property portfolio grew to 42 properties in 12 States totaling 12.7 million square feet of gross leasable area with occupancy of 97.0% as at June 30, 2014.
STRONG FINANCIAL & LIQUIDITY POSITION
As at June 30, 2014 the REIT's debt-to-gross-book-value ratio was a conservative 52.7% with an interest coverage ratio of 3.2 times, a debt-to-EBITDA ratio of 8.0 times, and a fixed charge coverage ratio of 2.7 times, all relatively unchanged from December 31, 2013. The weighted average effective interest rate on its outstanding debt was 3.9%, down from 4.0% at the prior year end, with a weighted average term to maturity on its mortgages payable of 5.9 years compared to 6.2 years at December 31, 2013. The weighted average remaining lease term at June 30, 2014 was 5.0 years, unchanged from the prior year end.
As at June 30, 2014 the REIT had approximately $4.6 million available on its $64.5 million revolving credit facility.
SUBSEQUENT EVENTS
On July 10, 2014, the REIT obtained an $11.0 million mortgage payable with a per annum fixed interest rate of 4.03% and a maturity of September 1, 2024. The REIT used the proceeds, in addition to cash on hand, to pay off an existing mortgage payable with an outstanding balance of $11.2 million and an annual interest rate of 5.69% maturing on July 10, 2014.
As at June 30, 2014, there was one remaining variable rate mortgage payable outstanding totaling $31.8 million with a per annum variable interest rate of 2.25% plus the one-month LIBOR rate. On August 12, 2014, this mortgage payable was refinanced to a fixed-rate mortgage payable with a per annum interest rate of 3.40% and a maturity of August 1, 2020.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
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Three months ended
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(In thousands of USD, except
where noted)
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June 30,
2014
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March 31,
2014
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December 31,
2013
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September 30,
2013
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Operating Results:
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Investment properties revenue
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$
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13,846
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$
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12,847
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$
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12,649
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$
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12,577
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NOI (1), (2)
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$
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10,480
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$
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9,432
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$
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9,370
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$
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9,370
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FFO (1), (3)
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$
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6,541
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$
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5,928
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$
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5,731
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$
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5,686
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AFFO (1), (4)
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$
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5,155
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$
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4,816
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$
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4,680
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$
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4,264
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FFO per Unit (1)
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$
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0.238
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$
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0.249
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$
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0.241
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$
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0.236
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AFFO per Unit (1)
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$
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0.188
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$
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0.202
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$
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0.197
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$
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0.177
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Distributions:
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Distributions per Unit
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$
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0.175
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$
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0.175
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$
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0.175
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$
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0.175
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Distributions declared
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$
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4,896
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$
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4,161
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$
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4,161
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$
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4,234
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AFFO payout ratio (1)
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95.0%
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86.4%
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88.9%
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99.3%
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Weighted-average number of Units (5)
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27,441,017
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23,791,909
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23,797,779
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24,069,551
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As at
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June 30,
2014
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December 31,
2013
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Operational Information:
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Number of investment properties
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42
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38
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GLA
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12,756,313
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9,879,961
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Occupancy
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97.0%
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96.4%
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Average remaining lease term (years)
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5.0
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5.0
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Ratios:
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Weighted-average effective interest rate (6)
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3.9%
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4.0%
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Variable rate debt as percentage
of total debt
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28.0%
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29.1%
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Variable rate debt as a percentage
of total debt adjusted for interest rate cap (7)
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12.6%
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9.9%
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Debt-to-gross book value
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52.7%
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52.9%
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Interest coverage ratio
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3.2x
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3.2x
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Fixed charge coverage ratio
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2.7x
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2.8x
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Debt to EBITDA (1,8)
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8.0x
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8.0x
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Unit Information:
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REIT Units outstanding at period end
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14,210,400
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10,732,200
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Class B Units outstanding at period end
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15,225,314
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13,059,709
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Welsh Retained Interest at period end
(assuming all Class B Units held are
redeemed for REIT Units)
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54.3%
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54.9%
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(1)
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NOI, FFO, AFFO, AFFO payout ratio and EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by
IFRS, do not have standard meanings and may not be comparable with other industries or trusts. This data should be read in conjunction with the "Non-IFRS
Measures" section of the REIT's MD&A for the three and six months ended June 30, 2014.
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(2)
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NOI is defined as investment properties revenue, less investment properties operating expenses, less fair value adjustment to investment properties – IFRIC 21.
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(3)
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The reconciliation of FFO to net income (loss) can be found on pages 18 and 23 of the REIT's MD&A. The reconciliations of FFO to net income (loss) for the three
months ended December 31, 2013 and September 30, 2013 can be found in the REIT's annual audited financial statements for the period from March 4, 2013 to
December 31, 2013 and the REIT's condensed consolidated interim financial statements for the three months ended September 30, 2013, respectively.
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(4)
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The reconciliation of AFFO to FFO can be found on pages 18 and 23 of the REIT's MD&A. The reconciliations of AFFO to FFO for the three months ended December
31, 2013 and September 30, 2013 can be found in the REIT's annual audited financial statements for the period from March 4, 2013 to December 31, 2013 and the
REIT's condensed consolidated interim financial statements for the three months ended September 30, 2013, respectively.
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(5)
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Includes REIT Units and Class B Units (collectively, the "Units").
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(6)
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Includes mortgages payable, bank indebtedness, mark-to-market adjustments and financing costs.
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(7)
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Includes $59.0 million outstanding under the Revolving Facility and $31.8 million in mortgages payable, adjusted for interest rate cap covering a principal amount
of $50.0 million.
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(8)
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EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Debt to EBITDA is defined as the average rolling twelve month consolidated
debt balance divided by a rolling twelve month EBITDA.
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INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, August 14, 2014 at 10:00 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the "Investors" page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10048655#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.
About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been formed to own and operate an institutional-quality portfolio of primarily industrial properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 12.7 million square feet of gross leasable area, comprised of 40 industrial properties and two office properties located in 12 states in the United States. Welsh Property Trust, LLC is the external asset manager and property manager of the REIT. The REIT pays monthly cash distributions, currently at $0.0583 per Trust Unit, or approximately $0.70 per Trust Unit on an annualized basis, in US funds.
Forward-Looking Statements
This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "does not expect", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The REIT's estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forth herein, including, but not limited to, the REIT's and the property's future growth potential, anticipated amounts of expenses, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under "Risk Factors" in the REIT's annual information form for the period ended December 31, 2013, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE WPT Industrial Real Estate Investment Trust
Scott Frederiksen, Chief Executive Officer, WPT Industrial Real Estate Investment Trust, Tel: (952) 897-7737, Fax: (952) 842-7737Copyright CNW Group 2014