Firm Capital Property Trust announces solid Q2/2014 and year-to-date results

TORONTO, Aug. 12, 2014 /CNW/ - Firm Capital Property Trust ("FCPT" or the "Trust"), (TSXV : FCD.UN) reported today its consolidated financial results for the three and six  months ended June 30, 2014.

SECOND QUARTER AND YEAR-TO-DATE ("YTD") HIGHLIGHTS

  • Q2/2014 Stabilized FFO and AFFO of $0.684 million and $0.693 million. YTD Stabilized FFO and AFFO of $1.5 million and $1.4 million;

  • Q2/2014 Stabilized FFO and AFFO per Unit of $0.098 and $0.099 per Unit. YTD Stabilized FFO and AFFO per Unit of $0.213 and $0.198 per Unit;

  • Q2/2014 Stabilized FFO and AFFO payout ratios of 95% and 94%;

  • Q2/2014 Net Operating Income ("NOI") of $1.2 million, a 2.2% increase over Q1/2014. YTD NOI of $2.4 million a 108.1% increase over the six month period ended June 30, 2013;

  • Strong 93% occupancy is a 110 basis point sequential increase over the 91.9% reported at Q1/2014 and an 80 basis point increase over the 92.2% reported at Q4/2013; and

  • Announced the completion of the Centre Ice Retail Portfolio acquisition for $23.5 million which increased the Trust's portfolio from 30 to 55 properties and the overall GLA of the Trust's portfolio by 24%, while improving the overall credit quality of the Trust's entire portfolio. On a pro forma basis, the Trust expects the Centre Ice Retail Portfolio acquisition to reduce the AFFO payout ratio to approximately 75% on an annualized basis, well below the Trust's targeted AFFO payout ratio of 85%.

FINANCIAL HIGHLIGHTS

Rental revenue for the three months ended June 30, 2014 was $2,005,213 in comparison to the $2,015,208 reported for the three months ended March 31, 2014 and the $929,668 reported for the three months ended June 30, 2013. Rental revenue for the six months ended June 30, 2014 was $4,020,421 in comparison to the $1,744,130 reported for the six months ended June 30, 2013.

On a cash basis (i.e. excluding straight-line rent which is a non-cash item), NOI for the three months ended June 30, 2014 was $1,224,475, a 2.2% increase over the $1,198,624 reported for the three months ended March 31, 2014 and a 91.1% increase over the $640,917 reported for the three months ended June 30, 2013. On a cash basis, NOI for the six months ended June 30, 2014 was $2,423,099, a 108.1% increase in comparison to the $1,164,123 reported for the six months ended June 30, 2013.

For the three months ended June 30, 2014, Stabilized FFO was $0.098 per Unit while Stabilized AFFO was $0.099 per Unit. Stabilized FFO and AFFO payout ratios are 95% and 94%, respectively. For the six months ended June 30, 2014, Stabilized FFO was $0.213 per Unit while Stabilized AFFO was $0.198 per Unit. Stabilized FFO and AFFO payout ratios are 87% and 94%, respectively.


Three Months Ended


Six Months Ended


June 30,

2014

March 31,

2014

June 30,

2013


June 30,

2014

June 30,

2013

Rental Revenue

$ 2,005,213

$ 2,015,208

$      929,668


$   4,020,421

$   1,744,130

Net Operating Income (NOI) - IFRS 

$ 1,243,669

$ 1,219,538

$      640,917


$   2,463,207

$   1,164,123

Net Operating Income (NOI) - Cash 

$ 1,224,475

$ 1,198,624

$      640,917


$   2,423,099

$   1,164,123

EBITDA

$    968,785

$ 1,088,328

$      540,611


$   2,057,113

$   1,058,991








Stabilized FFO

$    684,339

$    801,756

$      433,555


$   1,486,095

$      796,062

Stabilized AFFO

$    692,656

$    689,491

$      405,989


$   1,382,147

$      735,023








Stabilized FFO Per Unit

$         0.098

$         0.115

$          0.099


$          0.213

$          0.182

Stabilized AFFO Per Unit

$         0.099

$         0.099

$          0.093


$          0.198

$          0.168

Distributions Per Unit

$         0.092

$         0.092

$          0.088


$          0.185

$          0.175








Stabilized FFO Payout Ratio

95%

80%

89%


87%

96%

Stabilized AFFO Payout Ratio

94%

93%

95%


94%

104%








Occupancy by Property Type







Net Lease Convenience Retail

96.9%

96.5%

96.5%




Core Service Provider Office

96.6%

96.6%

99.4%




Industrial Portfolio 

90.4%

90.6%





Total Occupancy

93.0%

91.9%

97.2%











Net Rent PSF by Property Type







Net Lease Convenience Retail

$         15.66

$         19.12





Core Service Provider Office

$         13.97

$         13.96





Industrial Portfolio 

$           4.67

$           4.54





Weighted Average Net Rent PSF

$           8.94

$           7.74





The sequential variance in the Stabilized AFFO per unit and the Stabilized AFFO payout ratio in comparing the three months ended June 30, 2014 over the three months ended March 31, 2014 is largely due to higher G&A and finance costs, offset by higher NOI and interest income as well as marginal dilution from the $7.3 million issuance of trust units issued previously. On June 25, 2014, the Trust closed on the Centre Ice Retail Portfolio acquisition and as such, only received marginal accretive benefit from the acquisition for Q2/2014. On a pro forma basis, the Trust expects the Centre Ice Retail Portfolio acquisition to reduce the AFFO payout ratio to approximately 75% on an annualized basis, well below the Trust's targeted AFFO payout ratio of 85%.

PROPERTY PORTFOLIO HIGHLIGHTS

The Trust's property portfolio consists of 55 properties with a total Gross Leasable Area ("GLA") of 833,373 square feet (830,315 square feet of Net Leasable Area). The portfolio is well diversified across geographies with 54% of the NOI generated from Ontario, 31% from Quebec, 16% from Nova Scotia and BC, Alberta, Manitoba and New Brunswick (cumulatively 5%). The portfolio is equally diversified across asset classes with 60% of NOI generated from Net Lease Convenience Retail, 31% from Industrial and 9% from Core Service Provider Office.

TENANT DIVERSIFICATION

The portfolio is well diversified by tenant profile with no tenant accounting for more than 9.6% of total net rent. Further, the top 10 tenants are largely comprised of credit worthy and large national tenants and account for 31.9% of total net rent and 20.1% of total NLA.

DURATION MATCHED DEBT & LEASE MATURITY PROFILE

The current portfolio has a weighted average lease term to maturity of 3.4 years, which is duration matched with mortgage debt with a weighted average term to maturity of 3.3 years.

OCCUPANCY & NET RENTS

For Q2/2014, occupancy was 93.0%, a 110 basis points ("bps") sequential increase over the 91.9% reported at Q1/2014 and an 80 bps increase over the 92.2% reported at Q4/2013. Net rent per square foot was $8.94 per square foot ("psf"), a 15.5% sequential increase over the $7.74 psf reported at Q1/2014 and a 15.8% increase over the $7.72 psf reported at Q4/2013.

CENTRE ICE RETAIL PORTFOLIO ACQUISITION

On June 25, 2014, the Trust acquired a 70% undivided interest in 25 retail buildings located across Canada (the "Centre Ice Retail Portfolio"). The total acquisition cost of the entire Centre Ice Retail Portfolio was $33.8 million (including transaction costs). The acquisition cost for the Trust's 70% interest was $23.5 million (including transaction costs). The Centre Ice Retail Portfolio is comprised of 230,822 square feet of GLA located across Canada with the majority of the portfolio being located in Ontario. The Centre Ice Retail Portfolio has a weighted average lease term of 3.3 years with the largest tenant being PPG Industries Inc.(PPG:NYSE) an investment grade rated entity accounting for 31% of NOI, operating predominantly under the Dulux Paints brand. The Centre Ice Retail Portfolio is approximately 97% occupied with no significant short term lease maturities. The remaining 30% of the Centre Ice Retail Portfolio was acquired by an entity that consists predominantly of senior management and certain trustees of FCPT.

DISTRIBUTION REINVESTMENT PLAN & UNIT PURCHASE PLAN

The Trust has in place a Distribution Reinvestment Plan ("DRIP") and Unit Purchase Plan (the "Plan"). Under the terms of the DRIP, FCPT's Unitholders may elect to automatically reinvest all or a portion of their regular monthly distributions in additional Units, without incurring brokerage fees or commissions. Under the terms of the Plan, FCPT's Unitholders may purchase a minimum of $1,000 of Units per month and maximum purchases of up to $12,000 per annum. Management and trustees have not participated in the DRIP or Plan to date and own approximately 10% of the issued and outstanding trust units of the Trust.

For the complete financial statements and Management's Discussion & Analysis for the period, please visit www.sedar.com or the Trust's website at www.firmcapital.com

ABOUT FIRM CAPITAL PROPERTY TRUST

Firm Capital Property Trust is focused on creating long-term value for Unitholders, through capital preservation and disciplined investing to achieve stable distributable income. In partnership with management and industry leaders, The Trust's plan is to co-own a diversified property portfolio of multi-residential, flex industrial, net lease convenience retail, and core service provider professional space. In addition to stand alone accretive acquisitions, the Trust will make joint acquisitions with strong financial partners and acquisitions of partial interests from existing ownership groups, in a manner that provides liquidity to those selling owners and professional management for those remaining as partners.  Firm Capital Realty Partners Inc., through a structure focused on an alignment of interests with the Trust, will source, syndicate and participate in investments.

FORWARD LOOKING INFORMATION

This press release may contain forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", and by discussions of strategies that involve risks and uncertainties. The forward-looking statements are based on certain key expectations and assumptions made by the Trust regarding, among other things, the use of the net proceeds from the Offering, the closing of the Offering, and the closing of the Acquisition. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Although management of the Trust believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that future results, levels of activity, performance or achievements will occur as anticipated. Neither the Trust nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements, and no one has any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or such other factors which affect this information, except as required by law.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of a prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under securities laws of any such state, province or other jurisdiction. The Units of the Firm Capital Property Trust have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold or delivered in the United States absent registration or an application for exemption from the registration requirements of U.S. securities laws.

SOURCE Firm Capital Property Trust

For further information: Robert McKee, President & Chief Executive Officer, (416) 635-0221; Sandy Poklar, Chief Financial Officer, (416) 635-0221