WPT Industrial REIT announces fourth quarter & year end 2015 results

TORONTO, March 23, 2016 /CNW/ - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U - OTCQX: WPTIF) announced today its results for the three months and year ended December 31, 2015. All dollar amounts are stated in US funds.

2015 HIGHLIGHTS:

  • Revenues, NOI, FFO and AFFO reflect strong portfolio growth and operating performance throughout the year
  • Occupancy remains strong at 98.6% at December 31, 2015
  • Growth continues to be accretive as AFFO per Unit rose 4.5% for the year
  • AFFO payout ratio remains strong at 84.8% for the year
  • 8.6% increase in the annualized distribution rate effective with the distribution paid on October 15, 2015
  • Conservative liquidity position of 48.6% debt-to-gross book value at December 31, 2015
  • Completed successful $46.6 million bought-deal equity offering on January 21, 2015
  • Acquired six property portfolio in Memphis, TN totaling 2.3 million sq. ft. of GLA for $86.7 million on February 20, 2015
  • Completed strategic review process with new investment by Alberta Investment Management Corporation and affiliates ("AIMCo") on January 20, 2016

"Our portfolio growth early in 2015 clearly demonstrated the significant and positive benefits our acquisitions and strong operating performance bring to our Unitholders," commented Scott Frederiksen, Chief Executive Officer. "Now, with the Board of Trustee's strategic review process completed, and a new strategic investor in the REIT, we look forward to continuing our track record of strong accretive growth and building long-term value for our Unitholders." 

SOLID OPERATING PERFORMANCE
For the year ended December 31, 2015, investment properties revenue was $67.4 million compared to $57.4 million last year. Investment properties revenue, increased 17.4% for the year ended December 31, 2015, due primarily to the contribution from property acquisitions completed in 2015 and 2014, increased average occupancy and higher base rents in 2015 compared to the prior year.

Adjusted Funds from Operations ("AFFO") for the three months and year ended December 31, 2015 was $7.4 million ($0.220 per unit) and $28.6 million ($0.857 per unit), an increase of 16.7% and 26.7%, respectively, compared to the same periods in 2014. The REIT's AFFO payout ratio remained strong at 84.8% for the year compared to 85.7% last year.

STRONG FINANCIAL & LIQUIDITY POSITION
As at December 31, 2015 the REIT's debt-to-gross-book-value ratio was a conservative 48.6% with an interest coverage ratio of 3.2 times, a debt-to-EBITDA ratio of 8.1 times, and a fixed charge coverage ratio of 2.8 times. The weighted average effective interest rate on its outstanding debt was 3.8% as at December 31, 2015, down from 3.9% as at December 31, 2014, with a weighted average term to maturity on its mortgages payable of 4.9 years.

As at December 31, 2015, availability on the REIT's revolving credit facility was $75.0 million, of which the REIT had drawn $46.7 million, leaving remaining availability of $28.3 million.

RECENT EVENTS
On August 12, 2015, the Board of Trustees approved an increase to the REIT's annualized distribution rate from $0.70 per unit to $0.76 per unit (from $0.0583 to $0.0633 on a monthly basis), representing an 8.6% increase in the annualized distribution rate.  The increase was effective beginning with the distribution paid on October 15, 2015.

On January 20, 2016, AIMCo purchased 4,783,122 REIT Units from Welsh Property Trust, LLC ("Welsh"), resulting in AIMCo owning approximately 19.9% of the issued and outstanding REIT Units. 

In connection with the AIMCo REIT Unit purchase, senior management of Welsh formed a new entity, WPT Capital Advisors, LLC, to assume the rights and obligations of Welsh under the asset management and property management agreements with the REIT. The REIT also amended and restated the non-competition and non-solicitation agreement to allow WPT Capital, to establish, invest in and/or manage private investment funds and to provide the REIT with certain rights to invest in, and purchase assets from, such funds.

FINANCIAL AND OPERATIONAL HIGHLIGHTS
(in thousands of USD, except where noted)

As at and for the quarter ended

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

Operating Results:










Investment properties revenue (1)

$      15,769

$      17,705

$      17,563

$      16,386

$      15,431

$      15,227

$      13,846

$      12,847


NOI (1) (2)

11,372

13,420

13,358

12,452

11,796

11,610

10,480

9,432


Net income (loss) and











comprehensive income











(loss)

(2,560)

33,999

3,860

(13,739)

(9,497)

18,285

(2,146)

(4,396)


FFO (1) (2) (3)

6,121

8,617

8,143

7,990

7,623

7,431

6,541

5,928


AFFO (2) (4)

7,423

7,361

7,156

6,697

6,363

6,234

5,155

4,816


FFO per Unit (1) (2) (5) (6)

0.181

0.255

0.241

0.247

0.259

0.252

0.238

0.249


AFFO per Unit (2) (5) (6)

0.220

0.218

0.212

0.207

0.216

0.212

0.188

0.202

Distributions:









Distributions per Unit (6) (7)

0.190

0.180

0.175

0.175

0.175

0.175

0.175

0.175


Distributions declared (6) (7)

6,408

6,071

5,903

5,903

5,148

5,148

4,896

4,161


AFFO payout ratio (2) (7)

86.3%

82.5%

82.5%

88.1%

80.9%

82.6%

95.0%

86.4%


Weighted average number











of Units (5) (6)

33,748,433

33,748,433

33,748,433

32,406,766

29,435,733

29,435,714

27,441,017

23,791,909




As at


December 31, 2015


December 31, 2014

Operational Information:






Number of investment properties


48


42


GLA


15,097,471


12,770,313


Occupancy


98.6%


99.1%


Average remaining lease term (years)


3.9


4.6


Fair value of investment properties

$

742,592

$

633,056

Ratios:






Weighted average effective interest rate (8)


3.8%


3.9%


Variable interest rate debt as percentage of total debt (9)


12.9%


17.7%


Debt-to-gross book value (2)


48.6%


50.8%


Interest coverage ratio (1) (2)


3.2x


3.3x


Fixed charge coverage ratio (1) (2) 


2.8x


2.8x


Debt to EBITDA (1) (2)


8.1x


7.6x

Unit Information:






REIT Units outstanding


18,523,119


14,210,619


Class B Units outstanding


15,225,314


15,225,314


Welsh Retained Interest (5) (6) (assuming all Class
B Units held are redeemed for REIT Units)


47.3%


54.3%





(1)

During the quarter ended December 31, 2015, the REIT determined that straight-line rent was overstated and that the offsetting fair value adjustment to investment properties was understated by $305, $259, $235, $145, $206, $296, $142, $22, $24, and $18 for the three months ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, and the period from March 4, 2013 to June 30, 2013, respectively. The three months ended December 31, 2015 includes the cumulative non-recurring adjustment of $1,652, which reduced investment properties revenue, NOI, EBITDA, and FFO with an offsetting adjustment to fair value of investment properties. The preceding adjustment is a non-cash item and has no impact on AFFO. The following table illustrates the investment properties revenue, NOI, FFO and FFO per unit of the REIT had the cumulative non-recurring adjustment been recorded retroactively to the applicable reporting periods:




As at and for the quarter ended

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014


Investment properties revenue

$ 17,422

$ 17,400

$ 17,304

$ 16,151

$ 15,286

$ 15,021

$ 13,550

$ 12,705


NOI

13,024

13,115

13,099

12,217

11,651

11,404

10,184

9,290


FFO

7,774

8,312

7,884

7,755

7,478

7,225

6,245

5,786


FFO per Unit

0.230

0.246

0.234

0.239

0.254

0.245

0.228

0.243





(2)

NOI, FFO, AFFO, FFO per Unit, AFFO per Unit, AFFO payout ratio, EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or trusts. This data should be read in conjunction with the "Non-IFRS Measures" section of this MD&A.


(3)

Reconciliations of FFO to net income (loss) can be found in the MD&A for the three months and year ended December 31, 2015 and 2014. Refer to the REIT's respective interim MD&A as issued for a reconciliation of FFO to net income (loss) relating to all other periods.


(4)

Reconciliations of AFFO to FFO can be found in the MD&A for the three months and year ended December 31, 2015 and 2014. Refer to the REIT's respective interim MD&As issued for a reconciliation of AFFO to FFO relating to all other periods.


(5)

Includes REIT Units and Class B Units (collectively, the "Units").


(6)

Excludes options and DTUs outstanding under the REIT's equity compensation plans.


(7)

Includes distributions on REIT Units and Class B Units.


(8)

Includes mortgages payable, the Revolving Facility, mark-to-market adjustments and financing costs.


(9)

Includes amounts outstanding under the Revolving Facility.




 

INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, March 24, 2016 at 10:00 am ET.  The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153.  The live audio conference call will also be available as a webcast.  To access the live audio webcast please access the link on the "Investors" page on our web site at www.wptreit.com.  The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10078686#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.

About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust dated March 4, 2013, under the laws of the Province of Ontario, as amended and restated on April 26, 2013. The REIT was formed for the purpose of acquiring and owning primarily industrial investment properties located in the United States, with a particular focus on distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of investment properties consisting of approximately 15.1 million square feet of gross leasable area, comprised of 46 industrial properties and two office properties located in 13 states in the United States. The REIT pays monthly cash distributions, currently at $0.0633 per unit, or approximately $0.76 per unit on an annualized basis, in US funds.

Forward-Looking Statements
This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "does not expect", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The REIT's estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forth herein, including, but not limited to, the REIT's and the property's future growth potential, anticipated amounts of expenses, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.

When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under "Risk Factors" in the REIT's annual information form for the period ended December 31, 2015, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE WPT Industrial Real Estate Investment Trust

For further information: Scott Frederiksen, Chief Executive Officer, WPT Industrial Real Estate Investment Trust, Tel: (952) 897-7737, Fax: (952) 842-7737

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www.wptreit.com

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