Edgefront Real Estate Investment Trust Q3 2014 AFFO per unit growth driven by accretive acquisitions

CALGARY, Nov. 19, 2014 /CNW/ - Edgefront Real Estate Investment Trust (the "REIT") (TSXV: ED.UN) announced today its results for the three and nine months ending September 30, 2014 and November and December 2014 Distributions.

Highlights

  • July 15, 2014, completed $36,744,000 accretive acquisitions consisting of 3 high quality industrial properties in Alberta at a blended capitalization rate of 8.2%; adding 277,748 square feet of rentable area to the portfolio; acquisitions were immediately accretive to AFFO per unit by 6.5%
  • Closed offering issuing 8,750,000 units from treasury for gross proceeds to the REIT of $17,500,000; closed secondary offering by exercise in full of the underwriters' overallotment option of 875,000 units
  • Accretive acquisitions increase AFFO per unit for the three months ended September 30, 2014 to $0.052
  • Distributions per unit of $0.042 for the quarter as full distributions were paid for July on units issued in prospectus offering on July 15, 2014. AFFO payout Ratio of 80.3% for the quarter; 76.7% if the acquisitions and the offering had been completed July 1, 2014

Summary of Results

Included in the table that follows and elsewhere in this news release are non-IFRS measures that should not be construed as an alternative to net income / loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS, and may not be comparable to similar measures as reported by other issuers. Readers are encouraged to refer to the REIT's MD&A for further discussion of the non-IFRS measures presented.

         
    Three months ended
September 30,
  Nine months ended
September 30,
    2014   2013   2014   2013
Financial Highlights   $   $   $   $
Funds from operations (FFO)   1,204,193   39,814   2,681,648   (530,400)
Adjusted funds from operations (AFFO)   1,426,812   40,037   3,220,283   (529,556)
Distributions declared (1)   1,145,868   -   2,611,714   -
Weighted average units outstanding - basic (2)
  27,297,317   2,750,000   21,503,969   2,750,000
Weighted average units outstanding - diluted (2)   27,297,317   2,750,000   21,503,969   2,750,000
                 
Distributions per unit (1) (2)   0.042   N/A   0.121   N/A
FFO per unit (2)                
  Basic   0.044   0.014   0.125   (0.193)
  Diluted   0.044   0.014   0.125   (0.193)
AFFO per unit (2)                
  Basic   0.052   0.015   0.150   (0.193)
  Diluted   0.052   0.015   0.150   (0.193)
AFFO payout ratio (1)   80.3%   N/A   81.1%   N/A
Debt to total assets ratio   48.5%   40.3%   48.5%   40.3%
   
(1)      Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the unaudited condensed consolidated interim financial statements.
(2)      Weighted average number of units includes the Class B LP Units, and for September 30, 2013, has been adjusted to reflect the 20 for 1 exchange of shares of the Corporation for units of the REIT in connection with the plan of arrangement completed January 13, 2014.
   

         
    Three months ended
September 30,
  Nine months ended
September 30,
    2014   2013   2014   2013
Financial Results   $   $   $   $
Rental revenue   2,571,558   225,889   5,871,124   400,610
Net rental income   2,099,324   134,290   4,824,487   214,906
Net income   2,566,808   39,814   2,977,652   (91,500)
       
      Net income for the three and nine months ended September 30, 2014 was increased by a fair value adjustment of investment properties of $1,315,411 and $400,065, respectively. Excluding this item, net income for the three and nine months ended September 30, 2014 would have been $1,251,397 and $2,577,587, respectively.
       

"The highly accretive acquisitions completed in the quarter are driving AFFO per unit growth and demonstrate the value of our strategic relationship with TriWest Capital Partners. We are very pleased to add these high quality assets to our portfolio. We continue to see quality acquisition opportunities that can grow the REIT's AFFO per unit and will continue to only execute on acquisitions that can deliver enhanced unitholder value" said Kelly Hanczyk, the REIT's President and Chief Executive Officer.

Revenues and Results from Operations In Line with Expectations

Rental revenue increased to $2,571,558 in the quarter as compared to $225,889 in the same quarter of 2013 and $1,771,095 in the second quarter.

Net rental income grew to $2,099,324 in the quarter as compared to $134,290 in same quarter of 2013 and $1,460,724 in the second quarter.

The REIT generated FFO and AFFO of $1,204,193 and $1,426,812, respectively, in the quarter ended September 30, 2014, with FFO and AFFO per unit of $0.044 and $0.052 respectively.

Distributions of $0.042 per unit were declared for the quarter. Full distributions were paid for July on units issued in the prospectus offering on July 15, 2014. The AFFO payout Ratio of 80.3% for the quarter would have been 76.7% if the acquisitions and the offering had been completed July 1, 2014.

The REIT's current distribution per unit continues to be $0.01333 per month. The REIT's distribution reinvestment program ("DRIP") entitles eligible unitholders to elect to receive all, or a portion of the cash distributions of the REIT reinvested in units of the REIT. Eligible unitholders who so elect will receive a bonus distribution of units equal to 3% of each distribution that was reinvested by them under the DRIP.

Balance Sheet and Liquidity

The REIT's debt to total assets ratio was 48.5% at September 30, 2014. The REIT intends to maintain a debt to total assets ratio of less than 55%.

November and December 2014 Distributions

The REIT will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 on an annualized basis, payable December 15, 2014 to unitholders of record as of November 28, 2014.

The REIT will also make a cash distribution in the amount of $0.01333 per unit, representing $0.16 on an annualized basis, payable January 15, 2015 to unitholders of record as of December 31, 2014.

About the REIT

Edgefront REIT is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial properties located in primary and secondary markets in North America, with an initial focus on Western Canada. Edgefront REIT currently owns a portfolio of 15 properties comprising approximately 748,000 square feet of rentable area.

The REIT has approximately 28,422,658 units issued and outstanding. Additionally, there are 360,000 Class B LP units of Edgefront Limited Partnership issued and outstanding.

FORWARD LOOKING STATEMENTS

Certain statements contained in this new release constitute forward-looking statements which reflect the REIT's current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.

While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT's views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.

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

 

SOURCE: Edgefront Real Estate Investment Trust

For further information:

Please contact Kelly C. Hanczyk, President and CEO at (403) 817-9497 or Rob Chiasson, CFO at (403) 817-9496.

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Edgefront Real Estate Investment Trust

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