- CT REIT announces seven new investments totalling $43.1 million
- AFFO per unit grows by 3%
TORONTO, May 10, 2016 /CNW/ - CT Real Estate Investment Trust
("CT REIT") (TSX: CRT.UN) today reported its consolidated financial results for the first quarter ended March 31, 2016.
"In the first quarter, we continued to execute on our growth strategy," said Ken Silver,
President and Chief Executive Officer, CT REIT. "We are pleased to see a wide range of value creation opportunities that are strong
additions to our portfolio."
New Investment Activity
Today, CT REIT announces seven additional investments, including the acquisition of one property from Canadian Tire Corporation
("CTC"), two third party purchases and four property intensifications. All of these investments are properties that include a
Canadian Tire store and will require an estimated total investment of $43.1 million. The investments
are, in the aggregate, expected to earn an 8.3% weighted average cap rate when completed and represent approximately 410,000 square
feet of incremental GLA. CT REIT is funding these investments with Class B LP Units, Class C LP Units, cash, and/or draws on its
credit facility or any combination thereof. The table below summarizes the new investments and anticipated completion dates:
|
Property
|
Type
|
GLA (sf.)
|
Timing
|
Activity
|
|
Edson, AB
|
Vend-in
|
39,000
|
Q2 2016
|
Existing Canadian Tire store and gas bar
|
|
Southland Mall, Winkler, MB
|
Acquisition
|
181,000
|
Q2 2016
|
Acquisition of enclosed mall anchored by Canadian Tire
|
|
Antigonish Mall, Antigonish, NS
|
Acquisition/Development
|
179,000¹
|
Q2 2016/Q4 2017
|
Acquisition and redevelopment of enclosed mall
to include expanded Canadian Tire and Mark's stores
|
|
Smithers, BC
|
Intensification
|
4,000
|
Q4 2016
|
Expansion of existing Canadian Tire store
|
|
Blenheim, ON
|
Intensification
|
2,000
|
Q4 2016
|
Expansion of existing Canadian Tire store
|
|
Exeter, ON
|
Intensification
|
2,000
|
Q4 2016
|
Expansion of existing Canadian Tire store
|
|
Wallaceburg, ON
|
Intensification
|
3,000
|
Q4 2016
|
Expansion of existing Canadian Tire store
|
¹Once redeveloped
Update on Previously Announced Investments
In the first quarter, CT REIT completed the previously announced vend-ins of existing Canadian Tire stores in Hanover, ON, Delson, QC, and a Canadian Tire anchored plaza in Kitchener, ON, and an intensification project in Repentigny, QC, adding
247,000 square feet of GLA for a total investment of $46.1 million.
Subsequent to quarter end, CT REIT completed the previously announced sale and leaseback transaction with Sears Canada Inc. CT
REIT also completed the previously announced acquisition of land for the development of a Canadian Tire store and four vend-ins
from CTC. All together, these investments will add 893,000 square feet of GLA to the portfolio once complete, totalling
$123.3 million. The investments will be fully satisfied with the issuance of Class B LP Units, Class
C LP Units, cash and/or draws on its credit facility or a combination thereof.
The table below provides activity updates on the previously announced investments.
|
Property
|
Type
|
GLA (sf.)
|
Timing
|
Activity
|
|
Calgary, AB
|
Acquisition
|
660,000¹
|
Completed in Q2 2016
|
Sale and leaseback of Sears Canada Inc. distribution centre
|
|
Hamilton, ON
|
Development
|
61,000²
|
Land purchase
completed in Q2 2016, construction
to be completed in Q4 2016
|
Development of new Canadian Tire store
|
|
Squamish, BC
|
Vend-in
|
35,000
|
Completed in Q2 2016
|
Vend-in of existing Canadian Tire store
|
|
Leamington, ON
|
Vend-in
|
54,000
|
Completed in Q2 2016
|
Vend-in of existing Canadian Tire store
|
|
Alma, QC
|
Vend-in
|
44,000
|
Completed in Q2 2016
|
Vend-in of existing Canadian Tire store
|
|
Rothesay, NB
|
Vend-in
|
39,000
|
Completed in Q2 2016
|
Vend-in of existing Canadian Tire store and Gas Bar
|
¹Acquisition includes seven acres of vacant land for development
²Once development is complete
CT REIT continues to be on track to close on a recently announced sale and leaseback transaction with CTC for its Distribution
Centre under construction in Bolton, ON. At an investment of $325
million, this transaction is expected to close in the second quarter of 2016, with a rent commencement in January 2017, and add an additional 1,400,000 square feet of GLA to the portfolio once complete.
Update on Previously Announced Development Activity
The following table indicates the status of CT REIT's development pipeline. In the first quarter of 2016, ten investment
properties were under development representing a total GLA of 266,000 square feet and a total investment of $49.6 million once complete. Commitments are in place and construction commenced on 225,000 square feet, and a
total of $15.1 million has been expended to date with a balance of $25.8
million required to complete this space. The remaining space represents pad locations which are currently being
pre-leased.
|
Property
|
Type
|
GLA (sf.)
|
Timing
|
|
High River, AB
|
Development
|
10,000
|
Pad leasing underway
|
|
Martensville, SK
|
Development
|
19,000
|
Pad leasing underway
|
|
Innisfil, ON
|
Development
|
49,000
|
To be completed Q2 2016 (development of a new Canadian Tire store)
|
|
Arnprior Mall, Arnprior, ON
|
Acquisition/Development
|
133,000¹
|
To be completed Q4 2016 (redevelopment of an enclosed mall to include a
replacement Canadian Tire store)
|
|
La Sarre, QC
|
Intensification – Expansion
|
4,000
|
To be completed Q2 2016 (expansion of existing Canadian Tire
store)
|
|
Sherwood Park, AB
|
Intensification – Expansion
|
4,000
|
To be completed Q2 2016 (expansion of existing Canadian Tire
store)
|
|
Vaudreuil, QC
|
Intensification – Pad Development
|
12,000
|
To be completed Q4 2016 (construction of a new Mark's pad)
|
|
Hanover, ON
|
Intensification – Expansion
|
8,000
|
To be completed Q4 2016 (expansion of existing Canadian Tire
store)
|
|
Toronto, ON
|
Intensification – Pad Development
|
21,000
|
To be completed Q2 2017 (construction of a new Sport Chek pad)
|
|
Elliot Lake, ON
|
Intensification – Expansion
|
6,000
|
To be completed Q3 2017 (expansion of existing Canadian Tire
store)
|
¹Once developed
Reset/Redemption of Class C Units
Series 2 of the Class C LP Units of CT REIT are set to be redeemed/rate reset on May 31, 2016.
Both CT REIT and CTC have recently agreed that the redemption will be funded, subject to TSX approval, by the issuance to CTC of
$200 million of Class B LP Units.
Financial and Operational Summary
|
Summary of Selected Quarterly Information
|
|
|
|
|
(in thousands of Canadian dollars, except per Unit, Unit and square footage
amounts)
|
|
|
|
|
For the three months ended March 31,
|
2016
|
2015
|
Change
|
|
Property revenue
|
$
|
98,496
|
$
|
92,448
|
6.5 %
|
|
Net operating income 1
|
$
|
69,131
|
$
|
64,484
|
7.2 %
|
|
Net income
|
$
|
61,153
|
$
|
55,566
|
10.1 %
|
|
Net income/Unit (basic) 2
|
$
|
0.321
|
$
|
0.302
|
6.3 %
|
|
Net income/Unit (diluted) 4
|
$
|
0.260
|
$
|
0.226
|
15.0 %
|
|
Funds from operations1
|
$
|
49,626
|
$
|
47,448
|
4.6 %
|
|
Funds from operations/Unit (diluted, non-GAAP) 1,2,3
|
$
|
0.260
|
$
|
0.258
|
0.8 %
|
|
Adjusted funds from operations 1
|
$
|
39,382
|
$
|
36,876
|
6.8 %
|
|
Adjusted funds from operations/Unit (diluted,
non-GAAP)1,2,3
|
$
|
0.206
|
$
|
0.200
|
3.0 %
|
|
Distributions/Unit - paid 2, 6
|
$
|
0.170
|
$
|
0.166
|
2.6 %
|
|
AFFO payout ratio1
|
83 %
|
83 %
|
—%
|
|
Weighted average number of Units outstanding 2
|
|
|
|
|
Basic
|
190,701,904
|
184,011,307
|
3.6 %
|
|
Diluted 4
|
308,422,771
|
325,275,973
|
(5.2)%
|
|
Diluted (non-GAAP) 1,3
|
190,799,689
|
184,074,235
|
3.7 %
|
|
Indebtedness ratio 1
|
47.7 %
|
48.2 %
|
(1.0)%
|
|
Interest coverage (times) 1
|
3.20
|
3.19
|
0.3 %
|
|
Debt / enterprise value ratio 1
|
43.3 %
|
45.2 %
|
(4.2)%
|
|
Gross leaseable area 5
|
21,757,451
|
20,735,950
|
4.9 %
|
|
Occupancy rate 5
|
99.9 %
|
99.9 %
|
—%
|
|
|
1Non-GAAP key performance indicators. Refer to section 9.0 of the
MD&A for further information.
|
|
2Total Units consists of REIT Units and Class B LP Units
outstanding.
|
|
3Diluted Units used in calculating non-GAAP measures include
restricted and deferred units issued under various plans and exclude the effect of assuming that all of the Class C LP
Units will be settled with Class B LP Units.
|
|
4Diluted Units determined in accordance with IFRS includes
restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP Units will
be settled with Class B LP Units. Refer to section 6.0 of the MD&A.
|
|
5Refers to retail, mixed-use and distribution properties and
excludes properties under development.
|
|
6Period-over-period percentage change is calculated based on exact
fractional amounts rather than rounded fractional amounts.
|
Financial Highlights
Net Operating Income (NOI)* – In the first quarter, NOI increased $4.6 million or
7.2% over the same period last year primarily due to acquisitions completed in 2016 and 2015. These acquisitions contributed a
total of $3.2 million to NOI growth. Same store NOI and same property NOI increased $0.9 million or 1.3% and $1.4 million or 2.2%, respectively, primarily due to the
contractual rent escalations built into the property leases, intensifications completed in 2016 and 2015, and the recovery of
capital expenditures, all partially offset by a decrease in the recovery of operating expenses.
Net Income – Net income was $61.2 million for the quarter, up 10.1% primarily due to the impact of NOI
variances discussed earlier and an increase in the fair value adjustment of $3.4 million over the
same period last year.
Funds from Operations (FFO)* – FFO for the first quarter was $49.6 million or
$0.26 per unit as compared to $47.4 million or $0.258 per unit for the first quarter of 2015. This is $2.2 million (4.6%) or
$0.002 per unit (0.8%) higher than the same period last year. This is largely due to the impact of
NOI variances discussed earlier.
Adjusted Funds From Operations (AFFO)* – In the first quarter, AFFO increased $2.5
million or 6.8% to $39.4 million. AFFO per unit increased to $0.206 per unit (diluted non-GAAP), 3.0% or $0.006 per unit over the same period
last year. This is largely due to the impact of NOI variances discussed earlier.
Distributions – Distributions per unit in the quarter amounted to $0.170, 2.6% higher
than the same period in 2015 due to the increase in the annual rate of distributions effective with the first distribution paid in
2016.
*AFFO, FFO and NOI are non-GAAP measures. Refer to Non-GAAP section in the Q1 2016 Management's Discussion & Analysis which
is available on SEDAR and at newswire.ca.
Operating Results
Leasing – CTC is CT REIT's largest tenant. At March 31, 2016, CTC represented 97.9% of
total GLA and 96.3% of annualized base minimum rent.
Occupancy – At March 31, 2016, CT REIT's portfolio occupancy rate was unchanged from the
prior quarter at 99.9%.
Management Discussion and Analysis (MD&A) and Unaudited Consolidated Financial Statements and Notes
Information in this press release is a select summary of results. This press release should be read in conjunction with CT
REIT's MD&A for the period ended March 31, 2016 ("the Q1 MD&A") and Condensed Consolidated
Financial Statements and Notes for the period ended March 31, 2016, which are available on SEDAR at
www.sedar.com and at www.ctreit.com.
To view a PDF version of CT REIT's 2016 first quarter results please see: http://files.newswire.ca/1307/CTREITQ12016.PDF
Forward–Looking Statements
This document contains forward-looking information that reflects management's current expectations related to matters such as
future financial performance and operating results of CT REIT. Forward-looking statements are provided for the purposes of
providing information about CT REIT's future outlook and anticipated events or results. Readers are cautioned that such information
may not be appropriate for other purposes.
All statements other than statements of historical facts included in this document may constitute forward–looking information,
including but not limited to, statements concerning the REIT's ability to complete any of the investments in acquisitions and
property intensifications under the heading "New Investment Activity," the timing and terms of any such investments and the
benefits expected to result from such investments and other statements concerning developments, intensifications, results,
performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions,
estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and
opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and
reasonable at the date such information is provided.
By its very nature forward-looking information requires us to make assumptions and is subject to inherent risks and
uncertainties, which give rise to the possibility that the REIT's assumptions, estimates, analyses, beliefs and opinions may not be
correct and that the REIT's expectations and plans will not be achieved. Although the forward looking information contained in this
press release is based on information, assumptions and beliefs which are reasonable and complete, this information is necessarily
subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set
forth in such forward-looking information.
For more information on the risks, uncertainties and assumptions that could cause the REIT's actual results to differ from
current expectations, refer to the "Risk Factors" section of our Annual Information Form for fiscal 2015, and to Section 10
(Enterprise Risk Management) and all subsections thereunder of our 2015 Management's Discussion and Analysis, as well as the REIT's
other public filings, available at www.sedar.com and at www.ctreit.com.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date
hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time
to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable
securities laws.
Information contained in or otherwise accessible through the websites referenced in this press release (other than CT REIT's
profile on SEDAR at www.sedar.com) does not form part of this
press release and is not incorporated by reference into this press release. All references to such websites are inactive textual
references and are for information only.
Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available online at www.sedar.com and at www.ctreit.com.
Conference Call
CT REIT will conduct a conference call to discuss information included in this news release and related matters at 3:00 p.m. ET on May 10, 2016. The conference call will be available simultaneously
and in its entirety to all interested investors and the news media through a webcast at http://ctreit.com/en/investors/financial-reporting, and will be available through replay for 12 months.
About CT Real Estate Investment Trust
CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed end real estate investment trust formed to own income
producing commercial properties primarily located in Canada. Its portfolio is comprised of over
290 properties totaling over 21.8 million square feet of GLA, consisting primarily of retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit
www.ctreit.com.
SOURCE CT Real Estate Investment Trust (CT REIT)
