Starlight U.S. Multi-Family (No. 2) Core Fund Reports Same Property Rental Growth Of 4.9% During the Second Quarter of 2016

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

TORONTO, Aug. 25, 2016 /CNW/ - Starlight U.S. Multi-Family (No. 2) Core Fund (TSX.V: SUD.A, SUD.U) (the "Fund") today announced its results of operations and financial condition for the three months ended June 30, 2016 (the "Second Quarter"). All amounts in this news release are in thousands of United States dollars, unless otherwise stated, and include the Fund's share of the revenues, expenses, assets and liabilities of its equity investment in the Falls at Eagle Creek and joint venture interest in Soho Parkway Apartments.

Second Quarter Highlights

  • Same property rents grew 4.9% from $1,045 as at June 30, 2015 to $1,096 as at June 30, 2016. Since the Fund's inception, property rents have increased by 5.4% on an annualized basis.
  • Portfolio occupancy was 94.9% during the three months ended June 30, 2016 compared to 95.7% during the three months ended June 30, 2015, within the Fund's targeted occupancy range.
  • Revenue for the three and six months ended June 30, 2016 was $4,466 and $8,858, respectively, representing increases of $173 or 4.0% and $1,284 or 17.0% when compared to the same periods in 2015. The increase for the three months ended June 30, 2016 represents same property revenue improvements.
  • NOI for the three and six months ended June 30, 2016 was $2,503 and $4,957, representing increases of $99 or 4.1% and $722 or 17.0% when compared to the same periods in 2015. The increase for the three months ended June 30, 2016 represents a same property NOI increase.
  • AFFO per Unit at $0.41 for the three months ended June 30, 2016, represented a 36.7% increase over the three months ended June 30, 2015.
  • AFFO payout ratio for the three and six months ended June 30, 2016 were 34.2% and 36.4%, respectively, both significantly lower than 47.4% and 45.8% for the corresponding periods in 2015.
  • The Fund recognized a fair value increase on its investment properties during the three months ended June 30, 2016 of $1.6 million. The Fund's investment properties including its joint venture interest and equity investment were valued at $190.0 million as of June 30, 2016.
  • Interest Coverage Ratio and Indebtedness Coverage Ratio strengthened to 3.06 times and 3.03 times, respectively, during the three and six months ended June 30, 2016, respectively, compared with 2.61 times and 2.99 times for the same periods in 2015.
  • The Fund's weighted average interest rate on mortgages payable was 2.33% as of June 30, 2016 and the weighted average term to maturity was 5.29 years.
  • Indebtedness to Gross Book Value was 60.7% as at June 30, 2016, a reduction from 68.8% as at June 30, 2015 and at the lower end of the Fund's targeted range of 60-70%.

Operating Results

Same property revenues for the Second Quarter were $4,466, $173 or 4.0% higher than the second quarter of 2015. Rental rates increased to $1,096 as of June 30, 2016 from $1,045 as of June 30, 2015, representing an increase of 4.9%.  Rents since the Fund's inception have increased 5.4% on an annualized basis.  Portfolio occupancy was 94.9% during the Second Quarter compared to 95.7% during the three months ended June 30, 2015, at the higher end of the Fund's targeted occupancy range. Same property NOI for the Second Quarter of $2,503 was $99 or 4.1% higher when compared to $2,404 in the second quarter of 2015.  

AFFO per Unit for the Second Quarter increased by 36.7% to $0.41 and the AFFO payout ratio reduced from 47.4% to 34.2% in comparison to the second quarter of 2015.  The improvement is attributable to same property NOI growth as well as reduced interest on loans payable during the three months ended June 30, 2016 as a result of refinancing Travesia Apartments on April 29, 2016 to lower the Fund's cost of capital by eliminating the mezzanine loan.

Financial Position

As of June 30, 2016, the Fund's gross book value was $190.0 million and indebtedness was $115.3 million or 60.7% of gross book value, which is at the lower end of the Fund's targeted range of 60%-70%. The interest coverage ratio and indebtedness coverage ratio continued to strengthen during the Second Quarter and were each 3.06 times.  The weighted average interest rate on the Fund's mortgage portfolio was 2.33% and the weighted average term to maturity on mortgages was 5.29 years as at June 30, 2016. 

About Starlight U.S. Multi-Family (No. 2) Core Fund

The Fund is a limited partnership formed under the Limited Partnerships Act (Ontario) for the primary purpose of indirectly acquiring, owning and operating a portfolio of diversified income producing rental properties in the U.S. multi-family real estate market.

For complete consolidated financial statements and management's discussion and analysis for the period, and any other information relating to the Fund, please visit www.sedar.com. Further details regarding the Fund's unit performance and distributions, market conditions where the Fund's properties are located, performance by the Fund's properties and a capital investment update are also available in the Fund's August 2016 Newsletter which is available on the Fund's profile at www.starlightus.com.

Non-IFRS Financial Measures
Certain terms used in this news release including NOI, AFFO, gross book value, indebtedness, indebtedness to gross book value and interest coverage ratio are not measures defined under International Financial Reporting Standards ("IFRS") as prescribed by the International Accounting Standard Board. Details on non-IFRS financial measures are set out in the Fund's management's discussion and analysis for the period available on the Fund's profile at www.sedar.com.

Neither the 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 Starlight U.S. Multi-Family (No. 2) Core Fund

For further information: about Starlight U.S. Multi-Family (No. 2) Core Fund, visit www.starlightus.com or contact: Evan Kirsh, President, Starlight U.S. Multi-Family (No. 2) Core Fund, 647-725-0417, ekirsh@starlightus.com; Martin Liddell, Chief Financial Officer, Starlight U.S. Multi-Family (No. 2) Core Fund, 647-729-2588, mliddell@starlightus.com


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