WPT Industrial REIT announces strong growth and operating performance in 2014

TORONTO, March 12, 2015 /CNW/ - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U - OTCQX: WPTIF) announced today its financial and operating results for the three months and year ended December 31, 2014. All dollar amounts are stated in US funds.

HIGHLIGHTS:

  • Strong portfolio growth and operating performance drive continued consistent increases in Revenues, NOI, FFO and AFFO throughout the year
  • Growth remains accretive as AFFO per unit rises 9.6% in Q4 2014 despite a 23.7% increase in the weighted average number of Units outstanding compared to last year
  • AFFO payout ratio remains conservative at 80.9% and 85.7% for three months and year ended December 31, 2014, respectively
  • Occupancy rose to 99.1% at December 31, 2014 from 96.4% at December 31, 2013
  • Conservative liquidity position of 50.8% debt-to-gross book value at December 31, 2014
  • Completed successful $46.6 million bought-deal equity offering on January 21, 2015
  • Acquired six distribution facilities in Memphis, Tennessee totaling 2.3 million square feet for $86.3 million on February 20, 2015

"We are pleased with our results in 2014, the first full year of operations following our IPO in April 2013," stated Scott Frederiksen, Chief Executive Officer. "We significantly expanded the size and scale of our property portfolio, generated very strong operating performance, and continued to capitalize on the strong fundamentals in the US industrial real estate market. Our growth was accretive to the REIT's AFFO per unit, and our Unitholders continue to benefit from solid yields as our cash distributions are paid in a strengthening US currency."

SOLID OPERATING PERFORMANCE
For the three months ended December 31, 2014, investment properties revenue was $15.4 million, representing a 22.0% increase compared to the fourth quarter of 2013 due primarily to the contribution from acquisitions completed over the last twelve months and increased occupancy. For the year ended December 31, 2014 investment properties revenue was $57.4 million.

With the strong increase in revenue, Net Operating Income ("NOI") for the fourth quarter of 2014 was $11.8 million, representing a 25.9% increase compared to the fourth quarter of 2013. For the year ended December 31, 2014 NOI was $43.3 million.

Funds from Operations ("FFO") for the three months ended December 31, 2014 were $7.6 million ($0.259 per unit), representing a 33.0% increase compared to $5.7 million ($0.241 per unit) in the fourth quarter of 2013. Adjusted Funds from Operations ("AFFO") for the three months ended December 31, 2014 were $6.4 million ($0.216 per unit), up 36.0% from $4.7 million ($0.197 per unit) in the fourth quarter of 2013. For the year ended December 31, 2014, FFO and AFFO were $27.5 million ($1.000 per unit) and $22.6 million ($0.820 per unit), respectively. The per unit amounts listed above for the three months and year ended December 31, 2014 were impacted by the 23.7% and 17.8% increase in the weighted average number of units outstanding, respectively, compared to the same periods last year mainly due to the REIT's successful April 2014 equity offering. Despite the significant increase in the number of units outstanding, the REIT's AFFO payout ratio improved to 80.9% and 85.7% for the three months and year ended December 31, 2014, respectively, compared to 88.9% and 94.4%, respectively, in the same periods last year.

STRONG FINANCIAL & LIQUIDITY POSITION
As at December 31, 2014, the REIT's debt-to-gross-book-value ratio was a conservative 50.8% with an interest coverage ratio of 3.3 times, a debt-to-EBITDA ratio of 7.6 times, and a fixed charge coverage ratio of 2.8 times. The weighted average effective interest rate on its outstanding debt was 3.9% with a weighted average term to maturity on its mortgages payable of 6.1 years. The weighted average remaining lease term as at December 31, 2014 was 4.6 years.

SUBSEQUENT EVENTS
On January 28, 2015, the REIT completed a successful bought-deal offering of approximately 4.3 million trust units (including full exercise of the over-allotment option granted to the underwriters) at a price of $10.80 per trust unit to a syndicate of underwriters on a bought-deal basis for gross proceeds of approximately $46.6 million. Issue costs were approximately $1.9 million. As at March 12, 2015, the total number of trust units and Class B partnership units issued and outstanding was 33,748,433, of which Welsh Property Trust, LLC's retained interest was 47.3%.

On February 20, 2015, the REIT completed the acquisition of a 100% leased, 2.3 million square foot portfolio of six distribution facilities located in Memphis, Tennessee for a purchase price of approximately $86.3 million (exclusive of closing costs and acquisition fee). The purchase price was satisfied using a portion of the net proceeds from the bought-deal equity offering discussed above, and a new $51.8 million five-year mortgage loan bearing a fixed interest rate of 2.87%. With the completion of this acquisition, the REIT's total property portfolio grew to approximately 15.1 million square feet of gross leasable area in 46 industrial properties and two office properties located in 13 states in the United States.

With the completion of the above transactions, remaining availability on the REIT's $75.0 million revolving credit facility as at March 12, 2015 was $25.6 million.

FINANCIAL AND OPERATIONAL HIGHLIGHTS





Three months ended


Year ended


(In thousands of USD, except where noted)


December 31,
2014


September 30,
2014


June 30,
2014


March 31,
2014


December 31,
2014

Operating Results:












Investment properties revenue

$

15,431

$

15,227

$

13,846

$

12,847

$

57,351


NOI (1)

$

11,796

$

11,610

$

10,480

$

9,432

$

43,318


FFO (1), (2)

$

7,623

$

7,431

$

6,541

$

5,928

$

27,523


AFFO (1), (3)

$

6,363

$

6,234

$

5,155

$

4,816

$

22,568


FFO per Unit (1),(4), (7)

$

0.259

$

0.252

$

0.238

$

0.249

$

1.000


AFFO per Unit (1),(4), (7)

$

0.216

$

0.212

$

0.188

$

0.202

$

0.820

Distributions:












Distributions per Unit (7), (8)

$

0.175

$

0.175

$

0.175

$

0.175

$

0.70


Distributions declared (7), (8)

$

5,148

$

5,148

$

4,896

$

4,161

$

19,353


AFFO payout ratio (1)


80.9%


82.6%


95.0%


86.4%


85.7%


Weighted-average number of Units (7)


29,435,733


29,435,714


27,441,017


23,791,909


27,537,258

 

As at


December 31,
2014


December 31,
2013

Operational Information:






Number of investment properties


42


38


GLA


12,770,313


9,879,961


Occupancy


99.1%


96.4%


Average remaining lease term (years)


4.6


5.0


Fair value of investment properties

 

$

633,056

$

493,006

Ratios:






Weighted-average effective

interest rate (5)


3.9%


4.0%


Variable interest rate debt as percentage of total debt


17.7%


29.1%


Variable interest rate debt as a percentage of total debt adjusted for interest rate cap (6)


2.1%


9.9%


Debt-to-gross book value (1)


50.8%


52.9%


Interest coverage ratio (1)


3.3x


                 3.2x


Fixed charge coverage ratio (1)


2.8x


               2.8x


Debt to EBITDA (1)


7.6x


                8.0x

Unit Information:






REIT Units outstanding


14,210,619


10,732,200


Class B Units outstanding


15,225,314


13,059,709


Welsh Retained Interest (7) (assuming all Class B Units held are redeemed for REIT Units)


54.3%


54.9%


REIT Unit price

$

10.95

$

8.69

 

(1)

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 the REIT's MD&A for the year ended December 31, 2014.

(2)

Reconciliations of FFO to net income (loss) can be found on page 17 of the REIT's MD&A for the year ended December 31, 2014. The reconciliations of FFO to net income (loss) for the three months ended September 30, 2014, June 30, 2014 and March 31, 2014 can be found in the REIT's MD&A for the three months ended September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

(3)

Reconciliations of AFFO to FFO can be found on page 17 of the REIT's MD&A for the year ended December 31, 2014. The reconciliations of AFFO to FFO for the three months ended September 30, 2014, June 30, 2014 and March 31, 2014 can be found in the REIT's MD&A for the three months ended September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

(4)

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

(5)

Includes mortgages payable, bank indebtedness, mark-to-market adjustments and financing costs.

(6)

Includes $56,900 outstanding under the Revolving Facility, adjusted for interest rate cap covering a principal amount of $50,000.

(7)

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

(8)

Includes distributions on REIT Units and Class B Units.

INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Friday, March 13, 2015 at 10:00 am ET.  The telephone numbers to participate in the conference call are Canada Toll Free: (866) 605-3851, 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 10058258#. 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 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 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. 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 properties' 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, 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

RELATED LINKS
www.wptreit.com

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WPT Industrial Real Estate Investment Trust

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