Starlight U.S. Multi-Family (No. 2) Core Fund Reports Strong 2016 Q1 Results and a 38.9% AFFO Payout Ratio in First Quarter of 2016

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

TORONTO, May 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 March 31, 2016 (the "First 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.

First Quarter Highlights

  • Same property rents grew 5.4% from $1,029 to $1,085 when comparing the First Quarter to the first quarter of 2015. Property rents have increased by 5.3% on an annualized basis since the Fund's inception.
  • Portfolio occupancy was 93.9% during the First Quarter, compared to 94.6% during the same period last year, and is within the Fund's targeted occupancy range.
  • Revenue and same property revenue for the First Quarter were $4,392 and $3,018, respectively, representing increases of $1,111 or 33.9% and $129 or 4.5% when compared to the same period in 2015.
  • Net operating income ("NOI") and same property NOI for the First Quarter were $2,454 and $1,651, respectively, representing increases of $624 or 34.1% and $32 and 2.0% when compared to the same period in 2015.
  • Adjusted funds from operations ("AFFO") per unit increased by 21.4% to $0.34 reflecting same property NOI growth and strong contributions from Soho Parkway.
  • AFFO payout ratio was a conservative 38.9% for the First Quarter, significantly lower than the 52.2% for the first quarter of 2015.
  • Interest coverage ratio and indebtedness coverage ratio remained strong at 3.00 times during the First Quarter and consistent with the first quarter of 2015.
  • The Fund's weighted average interest rate of mortgages payable was 2.29% as of March 31, 2016 and the weighted average term to maturity was 5.25 years.
  • Indebtedness to gross book value was 61.5% as at March 31, 2016, a reduction from 71.4% as at March 31, 2015 and at the lower end of the Fund's targeted leverage range of 60-70%.

Operating Results

Property revenues for the First Quarter were $4,392, $1,111 or 33.9% higher when compared to $3,281 in 2015. NOI of $2,454 was $624 or 34.1% higher when compared to $1,830 in 2015. Same property revenue growth for the First Quarter was $129 or 4.5% and same property NOI growth for the First Quarter was $32 or 2.0%.

Portfolio occupancy was 93.9% during the First Quarter compared to 94.6% during the three months ended March 31, 2015, within the Fund's targeted occupancy range. Same property rents grew from $1,029 to $1,085 compared to the first quarter of 2015, representing an increase of 5.4% and have increased by 5.3% on annualized basis since the Fund's inception.

Financial Position

As of March 31, 2016, the Fund's gross book value was $188.0 million and indebtedness was $115.7 million or 61.5% of gross book value, which was at the lower end of the Fund's targeted range of 60%-70%. The interest coverage ratio and indebtedness coverage ratio for the First Quarter were each 3.02 times and consistent with the last quarter of 2015. The weighted average interest rate on the Fund's mortgage portfolio was 2.29% and the weighted average term to maturity on mortgages was 5.25 years as at March 31, 2016. 

Subsequent Events

On April 13, 2016, the Fund repaid $750 of the mezzanine loan associated with Travesia Apartments. The loan is a Canadian dollar denominated loan and the Fund realized a foreign exchange gain of $14.

On April 29, 2016, the Fund refinanced Travesia Apartments and obtained net proceeds of $7,202 after paying off the existing mortgage payable. The proceeds were used to repay the remaining balance of mezzanine loan associated with Travesia Apartments. The refinancing and mortgage repayment reduced the Fund's weighted average interest rate on all loans payable to 2.29% from 2.72% as at March 31, 2016, and increased the weighted average term to maturity on all loans payable from 4.92 years as at March 31, 2016 to 5.54 years.

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 May 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: To learn more 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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