True North Apartment REIT Announces Fourth Quarter 2012 Results

/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES/

TORONTO, March 7, 2013 /CNW/ - True North Apartment Real Estate Investment Trust (TSXV: TN.UN) (the "REIT") today announced its financial and operating results for both the three months ended December 31, 2012 for the period from January 12, 2012 to December 31, 2012.

FOURTH QUARTER 2012 HIGHLIGHTS

  • Portfolio size increased by 111% with the acquisition on October 1, 2012, of a portfolio of 26 properties from Starlight Investments Ltd. ("Starlight") located in Ontario, New Brunswick, and Nova Scotia, comprising a total of 2,076 suites, for a purchase price of approximately $139.0 million
  • Net Operating Income ("NOI") increased 108% from the third quarter of 2012 as a result of the continued execution of the REIT's accretive acquisition strategy
  • Maintained portfolio occupancy of 95.4% and average monthly rents of $710

SUBSEQUENT EVENTS

  • Completed the acquisition of 17 properties from Starlight located in Ontario, Québec, British Columbia, and Alberta, comprising a total of 1,570 suites (including 510 suites in the Greater Toronto Area), for a purchase price of $152.8 million and closed an associated equity offering for aggregate gross proceeds of $63.8 million
  • Completed the acquisition of five properties, located in Ontario, in off-market transactions with third parties comprising a total of 305 suites, for a combined purchase price of approximately $28.0 million

"We are pleased with the performance of our growing property portfolio during the fourth quarter of 2012," stated Leslie Veiner, the REIT's Chief Executive Officer. "We have continued to expand during the early months of 2013, significantly increasing our size, geographic diversity, and opportunities for organic growth. Since the commencement of operations in June 2012, the REIT has assembled a property portfolio that encompasses nearly 6,000 suites across six provinces. I am confident in the strength of our existing portfolio and also our prospects for the year ahead."

Operating Results

The REIT's operating results for the fourth quarter of 2012 include a full quarter's contribution from all properties acquired up to and including October 1, 2012. For the fourth quarter of 2012, property revenues and NOI were $8.3 million and $4.6 million, respectively. For properties owned as of December 31, 2012, average monthly rents were $710 and portfolio occupancy was 95.4%.

For the period from January 12, 2012 to December 31, 2012, property revenues and NOI were $11.7 million and $6.9 million, respectively.

             
(In thousands of dollars)   Three
months
ended
December 31,
2012 
  For the period
from January
12, 2012 to
December 31,
2012
             
Revenue and NOI Highlights            
Revenue   $ 8,324   $ 11,678
             
Expenses:            
   Operating costs     2,755     3,533
   Property taxes     931     1,227
      3,686     4,760
Net operating income   $ 4,638   $ 6,918
             
NOI margin     55.7%     59.2%
Number of suites     3,953     3,953
             
    As at December 31, 2012
Operational Information            
Number of properties           32
Total suites           3,953
Occupancy %           95.4%
Average monthly rent         $ 710
             

For the fourth quarter of 2012, basic and diluted Funds from Operations ("FFO") per trust unit of the REIT ("Unit") was $0.07. The FFO payout ratio was 99.5% and declines to 94.9% when adjusting for the impact of undeployed cash resulting from the issuance of Units on the exercise of the over-allotment option on the equity offering during the fourth quarter of 2012.

Fourth quarter basic and diluted Adjusted Funds from Operations ("AFFO") per Unit was $0.06. The AFFO payout ratio was 110.5% and declines to 105.3% when adjusting for the impact of undeployed cash.

               
        Three
months
ended 
December 31,
2012
  For the period
from January
12, 2012 to
December 31,
2012
(In thousands of dollars)        
Summary of Financial Information              
Interest coverage         2.99 x   3.02 x
Indebtedness coverage ratio         1.80 x   1.83 x
Revenue         $8,324   $11,678
NOI           $4,638   $6,918
Net income (loss) and comprehensive income (loss)         $4,264   ($15,695)
FFO - basic and diluted         $2,623   n/a
FFO per Unit - basic and diluted         $0.07   n/a
AFFO - basic and diluted         $2,362   n/a
AFFO per Unit - basic and diluted         $0.06   n/a
Distributions per Unit (annualized) - basic         $0.28   n/a
Units outstanding at period-end for FFO and AFFO per Unit:              
  Weighted average (000s) - basic         37,329   n/a
  Add: Unexercised Unit Options         1,639   n/a
  Weighted average (000s) - diluted         38,968   n/a
               

Financial Position

The REIT's debt to Gross Book Value ("GBV") was 58.2% as at December 31, 2012.  The interest coverage ratio for the fourth quarter of 2012 was 2.99 times. Both these metrics fall within the REIT's stated targets. The weighted average interest rate on the REIT's mortgage portfolio was 3.11%, and the weighted average term to maturity was 4.3 years. Following the closing of the acquisition of four properties on March 1, 2013 (see "Subsequent Events"), the REIT's debt to GBV increased to approximately 60%, while the weighted average term to maturity decreased to approximately 3.6 years.

On October 1, 2012, the REIT entered into a new credit agreement with a Canadian chartered bank to obtain a $15.0 million floating rate revolving credit facility in conjunction with the closing of the acquisition of the below-noted property portfolio.  The credit facility bears interest at Prime plus 125 basis points or Bankers' Acceptances plus 225 basis points, and is secured by a pool of both first and second mortgages. On December 31, 2012, these mortgages provided for a borrowing base of $10.4 million under the credit facility.

                   
(In thoursands of dollars)         As at December 31, 2012
Summary of Financial Information              
Gross Book Value             $300,801
Indebtedness             $175,040
Indebtedness to Gross Book Value             58.19%
Weighted average mortgage interest rate             3.11%
Weighted average mortgage term to maturity             4.30 years
               

Summary of Fourth Quarter Transactions

On October 1, 2012, the REIT completed the acquisition of a portfolio of 26 properties comprising a total 2,076 suites. These properties are located in Ontario, New Brunswick and Nova Scotia. The REIT acquired these properties by acquiring control of Blue-Starlight LP, an entity that was controlled by Daniel Drimmer, a significant unitholder and a trustee of the REIT. The purchase price for this acquisition was approximately $139.0 million, which the REIT satisfied by a combination of $52.1 million in cash, the assumption of approximately $58.6 million of mortgage debt,  $12.4 million of new mortgage debt, a $0.9 million vendor take-back mortgage, and the issuance of 3,512,878 Class B limited partnership units of Blue-Starlight LP. These Class B limited partnership units were both economically equivalent to and exchangeable for Units of the REIT on a one for one basis, and were accompanied by special voting units that provide their holder with equivalent voting rights to holders of Units of the REIT.

Subsequent Events

On January 23, 2013, the REIT indirectly acquired one residential property in Tillsonburg, Ontario, comprised of 40 residential suites for a purchase price of approximately $2.4 million satisfied by a combination of cash and new mortgage debt.

On February 20, 2013, the REIT completed the acquisition of a portfolio of 17 properties comprising a total of 1,570 suites. These properties are located in Ontario, Québec, British Columbia, and Alberta. The REIT acquired these properties by acquiring control of Rocky (2013) Limited Partnership ("Rocky LP"), an entity previously controlled by Daniel Drimmer. The purchase price for this acquisition was $152.8 million (inclusive of an associated installment note and net of the issue price premium of $0.9 million on the Class B limited partnership units of Rocky LP) which was satisfied by a combination of $37.7 million in cash, the assumption of $68 million of existing mortgage debt, $33 million of new mortgage debt (including $5 million represented by a vendor take-back mortgage from an entity related to Daniel Drimmer), and the issuance to D.D. Acquisitions Partnership (an affiliate of Daniel Drimmer) of 3,512,878 Class B limited partnership units of Rocky LP. These Class B limited partnership units were both economically equivalent to and exchangeable for Units on a one for one basis, and were accompanied by special voting units that provide their holder with equivalent voting rights to holders of Units of the REIT.

In order to finance the cash payment component of the purchase price and the costs of the above-noted acquisition, the REIT completed a "bought deal" public offering of 15,950,500 subscription receipts on January 30, 2013. Each subscription receipt was sold at a price of $4.00, for aggregate gross proceeds of approximately $63.8 million, and entitled the holder thereof to receive one Unit of the REIT without payment of any additional consideration. On February 20, 2013, one Unit was issued in exchange for each outstanding Subscription Receipt, resulting in the issuance of an aggregate of 15,950,500 Units.

On February 20, 2013, the REIT granted 85,000 Unit options to a trustee of the REIT, exercisable for a period of up to five years from the date of grant at an exercise price of $4.00 per Unit, expiring on February 20, 2018. These options vest over a three-year period beginning one year from the date of grant.

On March 1, 2013, the REIT completed the acquisition of four properties comprising a total of 265 suites. These properties are located in Ontario. The purchase price for this acquisition was approximately $25.7 million, inclusive of an associated installment note. This price was satisfied through a combination of cash and the assumption of $12.7 million of existing mortgage debt.

For complete details of the REIT's financial and operating results, please refer to the REIT's Management's Discussion & Analysis for the period from January 12, 2012 to December 31, 2012, which is available at both www.truenorthreit.com and www.sedar.com.

About the REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. Additional information concerning the REIT is available at www.sedar.com.

The REIT focuses on a long-term strategy to generate stable cash distributions on a tax-efficient basis for unitholders. The REIT intends to actively look for opportunities to expand its asset base and increase its distributable cash flow through acquisitions of additional multi-suite residential rental properties across Canada, the United States and other jurisdictions where opportunities may arise.

Forward-looking Information

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives. Statements regarding future results, performance, achievements, prospects or opportunities for the REIT or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the anticipated future growth of the REIT in 2013.

Although the forward-looking statements contained in this press release are based upon assumptions that management of the REIT believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the REIT's control, which may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

The forward-looking statements made in this press release relate only to events or information as of the date hereof. Except as required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

The TSX Venture Exchange ("TSXV") has neither approved nor disapproved the contents of this press release.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

 

 

 

 

 

SOURCE: True North Apartment Real Estate Investment Trust

For further information:

Mr. Leslie Veiner
Chief Executive Officer
(416) 234-8444

or

Mr. Martin Liddell
Chief Financial Officer
(416) 234-8444

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True North Apartment Real Estate Investment Trust

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