Agellan Commercial Real Estate Investment Trust Releases Fourth Quarter 2015 Results

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TORONTO, March 7, 2016 /CNW/ - AGELLAN COMMERCIAL Real Estate Investment Trust (the "REIT") (TSX:ACR.UN) is pleased to report its financial results for the three month period and year ended December 31, 2015.






FINANCIAL AND OPERATIONAL HIGHLIGHTS


December 31, 2015

December 31, 2014

(all dollar amounts in 000's, except per Unit amounts)








Summary of Operational Information




Number of Properties


32

27

Gross Leasable Area ("GLA") (in 000's)


4,711

4,349

Occupancy % (at period end)


92.6%

92.6%

Average lease term to maturity (years)


3.4

3.9





Summary of Financial Information




Gross Book Value(1)


$678,211

$597,461

Debt (face value)


$354,757

$316,546

Debt to Gross Book Value(1)


52%

53%

Interest Coverage (annual)(1)


3.2x

3.3x

Weighted average interest rate


4.0%

3.9%






For the three month period ended


December 31, 2015

December 31, 2014

Variance





Total Property and Property Related Revenue

$22,533

$19,907

$2,626

Net Operating Income ("NOI")(1)

$12,538

$10,910

$1,628

Funds From Operations ("FFO")(1)

$7,416

$6,531

$885

Adjusted Funds From Operations ("AFFO")(1)

$5,923

$4,856

$1,067





Basic and Diluted FFO per Unit

$0.32

$0.28

$0.04

Basic and Diluted AFFO per Unit

$0.25

$0.21

$0.04

Distributions per Unit

$0.194

$0.194

$0.00





Payout Ratio(1)

76%

94%


Units Outstanding at Period-end:

23,395,139

23,494,687


Weighted Average Units Outstanding

23,407,174

23,475,452


 (1)

This is a non-IFRS measure. Please see "Non-IFRS supplemental measures" below.

Summary of Significant Events:

  • For the three month period ended December 31, 2015, the REIT achieved FFO per Unit of $0.317 and AFFO per Unit of $0.253.  For the three month period ended December 31, 2014, the REIT reported FFO and AFFO per Unit of $0.278 and $0.207, respectively.  The increases in FFO and AFFO represent FFO and AFFO growth of 14.0% and 22.2%, respectively.
  • For the year ended December 31, 2015, the REIT achieved FFO per Unit of $1.229 and AFFO per Unit of $0.965.  For the year ended December 31, 2014, the REIT reported FFO and AFFO per Unit of $1.146 and $0.855, respectively.  The increases in FFO and AFFO represent FFO and AFFO growth of 7.2% and 12.9%, respectively.
  • The REIT's annual payout ratio for the year ended December 31, 2015 decreased to 80% from 91% for the year ended December 31, 2014.
  • During the three month period and year ended December 31, 2015, the REIT experienced NOI, FFO and AFFO growth as a result of improved operating fundamentals, such as increased leasing activity and rental rate growth arising from the REIT's U.S. assets. 
  • In addition, the REIT benefited from income generated from its U.S. assets due to the increase in the valuation of the United States Dollar ("USD" or "US$") relative to the Canadian dollar ("CAD") year-over-year.  The average value of the USD in relation to the CAD increased 17.6% and 15.8%, respectively, during the three month period and year ended December 31, 2015, compared to the average values for the three month period and year ended December 31, 2014, which increased the CAD net income the REIT generated from its U.S. assets during these periods.  For the year ended December 31, 2015, the REIT generated approximately 72% of its NOI from assets located in the United States.
  • As at January 1, 2016, the occupancy of the REIT's Same Store U.S. assets was 93.6%, which is an increase of approximately 0.3% from January 1, 2015. However, Same Store U.S. occupancy was impacted by a single industrial tenant which vacated approximately 100,000 sqft at the REIT's Plainfield, Indiana property on October 31, 2015.  Adjusting for this vacancy, the Same Store U.S. occupancy increased 3.5% year-over-year.
  • As at January 1, 2016, the occupancy of the REIT's Same Store Canadian assets was 85.6%, which is a decrease of 6.1% from January 1, 2015.  During the fourth quarter of 2015, and subsequent to December 31, 2015, the REIT executed new leases totalling 60,000 sqft and 8,000 sqft at the REIT's Consumers Road complex in Toronto, Ontario and Rue Bellehumeur property in Gatineau, Quebec, respectively.  These leases begin throughout 2016 and during the first quarter of 2017, and bring the current committed occupancy of the REIT's Canadian assets to 93.1%.  The REIT has approximately 43,000 sqft of lease expiries occurring in Canada during 2016.
  • For the three month period and year ended December 31, 2015, the REIT's NOI increased 14.9% and 11.9%, respectively, compared to the three month period and year ended December 31, 2014. 
  • On November 9, 2015, the REIT extended the maturity of its credit facility for an additional year with the current lenders.  The credit facility now matures on January 25, 2018.
  • On December 9, 2015, the REIT successfully rezoned certain land at its Consumers Road complex in Toronto, Ontario in order to develop part of the land as a car dealership.  The REIT is currently working with the City of Toronto for the remaining site approvals relating to proposed development and expects to begin construction towards the end of the first quarter of 2016.
  • Subsequent to the year ended December 31, 2015, the REIT entered into two significant leases. The first represents approximately 43,000 sqft at the REIT's Consumers Road complex in Toronto, Ontario.  The term of the lease is 10 years beginning in the first quarter of 2017 and reflects prevailing market rents.  Additionally, a major tenant at the REIT's Woodward Street property in Austin, Texas has extended its lease for an additional 7 years.  This lease was the REIT's single most significant lease expiry during 2016 and represented approximately 11.5% of the REIT's total 2016 lease expirations.


    "We are proud of the achievements made during 2015 and in the early part of 2016.  We expect our hard work to translate into future organic growth for the REIT both North and South of the border," said Frank Camenzuli, Chief Executive Officer of the REIT. "Our U.S. focused investment strategy remains a positive characteristic for the REIT and we continue to investigate the best way to further grow in our preferred markets."  

The REIT will hold a conference call to discuss the REIT's financial performance for the period ended December 31, 2015 on Tuesday, March 8, 2016 at 2:00 p.m. EST. To access the call, please dial 1-416-340-2217 or 1-866-696-5910 and enter the participant pass code: 8704321. For operator assistance during the call, please press *0.

A replay of the conference call will be available from 5:00 p.m. EST on March 8, 2016 until midnight EST, March 22, 2016. To access the replay, call 1-905-694-9451 or 1-800-408-3053 and enter participant pass code: 7156138.

Other information:

Information appearing in this news release is a select summary of results. The REIT's consolidated financial statements along with management's discussion and analysis for the three month period and year ended December 31, 2015 ("MD&A") are available electronically on the REIT's website at www.agellanreit.com and under the REIT's issuer profile at www.sedar.com.

The REIT 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 created for the purpose of acquiring and owning industrial, office and retail properties in select major urban markets in the United States and Canada.

The REIT's current portfolio comprises approximately 4.7 million square feet of gross leasable area in 32 properties. The properties are primarily located in major urban markets in the United States and Canada.

Non-IFRS supplemental measures:

Certain terms used in this news release are not recognized under International Financial Reporting Standards ("IFRS") and therefore these terms should not be construed as alternatives to IFRS measures, such as net income or cash flow from operating activities, nor are these terms necessarily comparable to similar measures presented by other reporting issuers. These terms are used by management to measure, compare and explain the operating results and financial performance of the REIT. Management believes that these terms are relevant measures in comparing the REIT's performance to industry data and the REIT's ability to earn and distribute cash to holders of the REIT's units. These non-IFRS measures, including FFO, AFFO, Payout Ratio, Gross Book Value, NOI, and related per Unit amounts are defined, and FFO and AFFO are reconciled to net income, in the REIT's MD&A, which should be read in conjunction with this news release.

Forward-looking information:

This press release contains forward-looking information within the meaning of applicable securities legislation.  Forward-looking information can be identified by words or expressions including, but not limited to, "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "predicts", "projects", "believes", or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "should", "might", "occur", "be achieved" or "continue" or similar expressions. Forward-looking information is necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are beyond the REIT's control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: the REIT's future growth potential; results of operations; future prospects for additional investment opportunities in Canada and the U.S., including access to debt and equity capital at acceptable costs and the ability to obtain necessary approvals and to minimize any unexpected costs or liabilities, environmental or otherwise, relating to any acquisitions or dispositions; demographic and industry trends remaining unchanged, including occupancy levels, lease renewals, rental increases and retailer competition; future levels of the REIT's indebtedness remaining at acceptable levels, including its credit rating; tax laws as currently in effect remaining unchanged, including applicable SIFT rules; and current economic conditions remaining unchanged, including interest rates and applicable foreign exchange rates. Readers, therefore, should not place undue reliance on any such forward-looking statements. All forward-looking information in this press release speaks only as of the date of this press release. The REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities laws. All forward-looking statements in this press release are qualified by these cautionary statements. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulators, including its latest annual information form and MD&A.

SOURCE Agellan Commercial Real Estate Investment Trust

For further information: Frank Camenzuli, Chief Executive Officer, (416) 593-6800, ext. 226, fcamenzuli@agellancapital.com


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