WPT Industrial REIT announces results for second quarter 2013

TORONTO, Aug. 12, 2013 /CNW/ -  WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U - OTCQX: WPTIF) announced today its financial and operating results for the sixty-six day period ended June 30, 2013. This sixty-six day period reflects the REIT's operations commencing after completion of its Initial Public Offering ("IPO") on April 26, 2013 compared to the REIT's financial forecast provided in its IPO Prospectus dated April 18, 2013, prorated to correspond with the sixty-six day period from April 26, 2013 to June 30, 2013 (the "Forecast"). The REIT had no material operations prior to April 26, 2013. All dollar amounts are stated in US funds.

HIGHLIGHTS:

  • Completed $100 million Initial Public Offering ("IPO") in April 2013
  • Subsequently exercised underwriters' over-allotment option for gross proceeds of $14.3 million
  • Solid operating results in first reported quarter since IPO
  • Revenues, Net Operating Income ("NOI") and Adjusted Funds from Operations ("AFFO") all exceed Forecast
  • Strong liquidity position with 51.3% debt-to-gross book value ratio

"We are very pleased to present our first operating results following the completion of our IPO in April," stated Scott Frederiksen, Chief Executive Officer. "Our portfolio continues to perform very well, ahead of Forecast, and we look for further growth in the quarters ahead."

"Our results going forward will be enhanced by the contribution from our first property purchase completed on July 15," Mr. Frederiksen added. "The acquisition of this 1.3 million square foot distribution facility in Illinois will be immediately accretive to our adjusted funds from operations, and we look to complete additional property purchases in the quarters ahead that meet our objective of acquiring stabilized, high quality industrial properties in attractive U.S. markets that will further diversify our portfolio, increase our cash flows and create value for our Unitholders."

SOLID OPERATING PERFORMANCE
Investment properties revenues were higher than Forecast primarily due to differences in timing of certain tenant renewals when compared to the assumptions in the financial forecast, as well as favorable differences in actual recoverable expenses compared to amounts assumed in the financial forecast.

Operating expenses were lower than Forecast primarily due to differences in actual recoverable expenses compared to amounts assumed in the financial forecast, partially offset by differences in timing of certain repair costs when compared to the financial forecast.

NOI was higher than Forecast due to the favorable variances in both revenue and operating expenses as outlined above.

General and administrative expenses were higher than Forecast due primarily to the timing of expenses. In particular, professional fees are not incurred evenly throughout the period and are therefore not comparable to the pro-rated Forecast.  Management anticipates that annual levels of professional fees will be comparable to those Forecasted.

AFFO was higher than Forecast due primarily to the higher operating revenues and lower operating expenses as outlined above. The REIT's AFFO payout ratio, including the underwriters' over-allotment completed after its IPO, was 96.0%. Not including the over-allotment units, the AFFO payout ratio was 90.7%, in line with expectations.

STRONG FINANCIAL & LIQUIDITY POSITION
As at June 30, 2013 the REIT's debt-to-gross-book-value ratio was a conservative 51.3% with an interest coverage ratio of 3.25 times. The weighted average effective interest rate on its outstanding debt was 4.3% with a weighted average term to maturity of 7.0 years on its mortgages payable, well matched by the weighted average remaining lease term of 4.7 years. As at June 30, 2013 the REIT had approximately $25 million available on its $75.0 million revolving credit facility.

SUBSEQUENT EVENT
On July 15, 2013, the REIT completed the acquisition of a fully leased, single-tenant property located in Illinois totaling approximately 1.3 million square feet of gross leasable area.  The property was purchased for a gross purchase price of $53.0 million, exclusive of closing and transaction costs, satisfied by (i) the assumption of a senior secured promissory note in the principal amount of $31.8 million bearing an interest rate of 2.25% plus the one-month LIBOR rate with a 90-day maturity and (ii) the issuance of 2,192,347 Class B Units.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

  (US $,000 except where noted)   Sixty-Six Days
Ended June 30,
2013
Pro-Rated
Forecast
Operational Information:      
  Number of properties   37 37
  GLA (square feet)   8,617,313 8,617,313
  Occupancy   96.3% 96.3%
  Average remaining lease term (years)   4.7 -
Operating Results:      
  Investment properties revenue $                    8,433 8,293
  NOI (1), (2) $               6,263 6,112
  FFO (1), (3) $                   3,988 4,006
  AFFO (1), (4) $                    2,957 2,912
  Fair value adjustment to investment properties $                        589 -
Distributions:      
  Distributions declared $                     2,838 -
  Distributions paid in cash $                     1,538 -
  Units outstanding at period end                     11,430 11,430
  Class B Units outstanding at period end                     10,867 10,867
Financing:      
  Weighted-average effective interest rate (5)   4.3% -
  Variable rate debt as a percentage of total debt (6))   17.0% -
  Interest coverage ratio (times) (7))                         3.25 -
  Debt-to-gross book value   51.3% -
  Debt to EBITDA (times) (8)   7.11 -
Per unit amounts: (9))      
  Basic      
  FFO (1) $                       0.18 -
  AFFO (1) $                      0.14 -
  Distributions per unit $                       0.13 -

(1) NOI, FFO and AFFO 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
(2) NOI is defined as investment properties revenue, less investment properties expenses.
(3) The reconciliation of FFO to net income can be found in the REIT's MD&A for the period.
(4) The reconciliation of AFFO to FFO can be found in the REIT's MD&A for the period
(5) Includes market adjustments and financing costs.
(6) Includes $38,000,000 outstanding under the Revolving Facility, subject to an interest rate cap.
(7) Calculated as EBITDA divided by interest expense on mortgages and bank indebtedness
(8) EBITDA is defined as NOI, less G&A.
(9) A description of the determination of per unit amounts can be found in the REIT's MD&A for the period.
   

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 under the laws of the Province of Ontario. The REIT has been formed to own and operate an institutional-quality portfolio of primarily industrial properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 9.9 million square feet of gross leasable area, comprised of 36 industrial properties and two office properties located in 12 states in the United States. Welsh Property Trust, LLC is the external asset manager and property manager of the REIT. The REIT pays monthly cash distributions, currently at $0.0583 per Trust Unit, or approximately $0.70 per Trust 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 final prospectus dated April 18, 2013, 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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