CT REIT Announces Strong Fourth Quarter and Year End 2019 Results
- Delivers 5.4% growth in AFFO per unit for the fourth quarter
- Announces two new investments, totalling $19 million
- Adds over 800,000 sq. ft. of GLA to portfolio in 2019
TORONTO, Feb. 10, 2020 /CNW/ - CT Real Estate Investment Trust (CT REIT) (TSX: CRT.UN) today reported its consolidated financial results for the fourth quarter and year ended December 31, 2019.
"In 2019, CT REIT delivered another year of attractive growth and prudent financial management. We added over 800,000 square feet of GLA to the portfolio and increased AFFO per unit by 5.4% in the fourth quarter and by 5.6% for the full year, while strengthening our balance sheet and credit metrics," said Ken Silver, President and CEO, CT REIT.
"We also marked other important milestones, such as our inclusion in the S&P/TSX Composite Index and Capped REIT Index, and, subsequent to quarter-end, were pleased to qualify for inclusion in the S&P/TSX Canadian Dividend Aristocrats Index. In addition, we announced our sixth consecutive distribution increase – all of which contributed to another very successful year for CT REIT," added Silver.
New Investment Activity
CT REIT today announced two new investments, which will require an estimated total of $19 million to complete. The investments are, in the aggregate, expected to earn a stabilized average cap rate of 6.60%.
The table below summarizes the new investments and anticipated completion dates:
Property | Type | GLA (sf.) | Timing | Activity |
Courtenay, BC | Redundant vend | 48,000 | Q2 2020 / Q2 2021 | Vend-in and |
Brampton McLaughlin, | Intensification | 28,000 | Q4 2021 | Expansion of existing |
Update on Previously Announced Investments
CT REIT invested $78 million in previously disclosed investments that were completed in the fourth quarter. CT REIT completed the acquisition of a portfolio of 11 BMO retail bank branches across Canada; the vend-in of two Canadian Tire stores in Thetford Mines, QC and North Battleford, SK; the vend-in of land adjacent to an existing CT REIT owned property in Welland, ON; the intensification of existing Canadian Tire stores in Atholville, NB and Val d'Or, QC; the development of third-party pads at five existing properties and the redevelopment of the Antigonish Mall in Antigonish, NS.
The table below provides activity updates on the previously announced investments.
Property | Type | GLA (sf.) | Activity |
BMO Bank Branch | Third Party Purchase | 82,000 | Acquisition of a national portfolio |
Thetford Mines, QC | Vend-in | 58,000 | Vend-in of an existing Canadian |
North Battleford, SK | Vend-in | 38,000 | Vend-in of an existing Canadian |
Welland, ON | Vend-in | NA | Vend-in of adjacent land |
Atholville, NB | Intensification | 21,000 | Expansion of an existing |
Val d'Or, QC | Intensification | 26,000 | Expansion of an existing |
Various | Intensifications | 3,000 | Development of third-party pads |
Antigonish, NS | Redevelopment | 192,000 | Redevelopment of an enclosed |
Update on Full Year 2019 Investment Activity
In 2019, CT REIT grew its portfolio by over 800,000 square feet of GLA, representing a total investment in completed projects of $209 million.
Update on Canada Square
Subsequent to quarter-end, CT REIT and Oxford Properties increased their respective ownership interests in the Toronto (Canada Square), ON property from 33% to 50%.
Financial and Operational Summary
Summary of Selected Information | |||||||||||
(in thousands of Canadian dollars, except unit, per unit and square footage | Three Months Ended December 31, | Year Ended December 31, | |||||||||
2019 | 2018 | Change7 | 2019 | 2018 | Change7 | ||||||
Property revenue | $ | 123,692 | $ | 119,322 | 3.7 % | $ | 489,013 | $ | 472,483 | 3.5 % | |
Net operating income 1 | $ | 93,444 | $ | 88,943 | 5.1 % | $ | 368,795 | $ | 349,283 | 5.6 % | |
Net income | $ | 76,890 | $ | 74,501 | 3.2 % | $ | 307,193 | $ | 300,906 | 2.1 % | |
Net income per unit - basic 2 | $ | 0.338 | $ | 0.343 | (1.5)% | $ | 1.380 | $ | 1.401 | (1.5)% | |
Net income per unit - diluted 3 | $ | 0.294 | $ | 0.271 | 8.5 % | $ | 1.193 | $ | 1.098 | 8.7 % | |
Funds from operations1 | $ | 66,797 | $ | 62,037 | 7.7 % | $ | 261,861 | $ | 246,032 | 6.4 % | |
Funds from operations per unit - diluted (non-GAAP) 1,2,4 | $ | 0.293 | $ | 0.286 | 2.4 % | $ | 1.175 | $ | 1.144 | 2.7 % | |
Adjusted funds from operations 1 | $ | 57,397 | $ | 51,848 | 10.7 % | $ | 224,300 | $ | 205,173 | 9.3 % | |
Adjusted funds from operations per unit - diluted (non-GAAP) 1,2,4 | $ | 0.252 | $ | 0.239 | 5.4 % | $ | 1.007 | $ | 0.954 | 5.6 % | |
Distributions per unit - paid 2 | $ | 0.189 | $ | 0.182 | 4.0 % | $ | 0.757 | $ | 0.728 | 4.0 % | |
AFFO payout ratio1 | 75.0 % | 76.2 % | (1.6)% | 75.2 % | 76.3 % | (1.4)% | |||||
Cash generated from operating activities | $ | 93,986 | $ | 83,887 | 12.0 % | $ | 362,328 | $ | 331,722 | 9.2 % | |
Adjusted cashflow from operations 1 | $ | 60,422 | $ | 52,975 | 14.1 % | $ | 228,366 | $ | 206,056 | 10.8 % | |
Weighted average number of units outstanding 2 | |||||||||||
Basic | 227,646,716 | 216,940,471 | 4.9 % | 222,559,681 | 214,805,646 | 3.6 % | |||||
Diluted 3 | 319,710,729 | 338,209,745 | (5.5)% | 314,615,032 | 336,142,459 | (6.4)% | |||||
Diluted (non-GAAP) 1,4 | 227,887,268 | 217,107,359 | 5.0 % | 222,791,571 | 215,040,074 | 3.6 % | |||||
Indebtedness ratio | 42.7 % | 45.1 % | NM | ||||||||
Interest coverage (times) | 3.44 | 3.37 | NM | 3.40 | 3.35 | NM | |||||
Gross leasable area (square feet) 5 | 27,556,341 | 26,537,359 | 3.8 % | ||||||||
Occupancy rate 5,6 | 99.1 % | 98.7 % | NM | ||||||||
1 | Non-GAAP measure. Refer to section 10.0 of the MD&A for further information. | |||||
2 | Total units means Units and Class B LP Units outstanding. | |||||
3 | Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 7.0 of the MD&A. | |||||
4 | Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 7.0 of the MD&A. | |||||
5 | Refers to retail, mixed-use commercial and distribution centre properties and excludes Properties Under Development. | |||||
6 | Occupancy and other leasing key performance measures have been prepared on a committed basis which includes the impact of existing lease agreements contracted on or before December 31, 2019 and December 31, 2018. | |||||
7 | NM - not meaningful. | |||||
Financial Highlights
Net Income - Net income was $76.9 million for the quarter and $307.2 million for the year, up 3.2% and 2.1%, respectively, compared to the same periods in the prior year primarily due to an increase in NOI, partially offset by an increase in net interest and other financing charges and a smaller increase in fair value adjustment on investment properties.
Net Operating Income (NOI)* - In the fourth quarter, NOI was $93.4 million, which was $4.5 million or 5.1% higher compared to the same period in the prior year, primarily due to the acquisition of income-producing properties and properties under development completed in 2019 and 2018. Same store NOI was $90.2 million and same property NOI was $91.0 million for the quarter, which were $2.2 million or 2.4% and $2.9 million or 3.2%, respectively, higher when compared to the prior year, primarily due to contractual rent escalations, intensifications completed in 2019 and 2018, recovery of capital expenditures and interest earned on the unrecovered balance, the reduction in property management service expenses, pursuant to Property Management Agreement and the impact of tenancies at 11 Dufferin Place SE and 25 Dufferin Place SE Calgary, AB. NOI for the full year amounted to $368.8 million.
Funds from Operations (FFO)* - FFO for the quarter was $66.8 million or $0.293 per unit - diluted (non-GAAP), which was 2.4% or $0.007 per unit - diluted (non-GAAP), higher than the same period in 2018, primarily due to the impact of NOI variances, partially offset by higher interest expense. FFO for the year was $261.9 million or $1.175 per unit - diluted (non-GAAP), which was 2.7% or $0.031 per unit - diluted (non-GAAP), higher than the same period in 2018, primarily due to the impact of NOI variances discussed earlier and partially offset by higher interest expense.
Adjusted Funds from Operations (AFFO)* - AFFO for the quarter was $57.4 million or $0.252 per unit - diluted (non-GAAP), which was 5.4% or $0.013 per unit - diluted (non-GAAP) higher than the same period in 2018, primarily due to the impact of NOI variances, partially offset by higher interest expense. AFFO for the full year was $224.3 million or $1.007 per unit - diluted (non-GAAP), which was 5.6% or $0.053 per unit - diluted (non-GAAP) higher than the same period in 2018, primarily due to the impact of NOI variances, partially offset by higher interest expense.
Distributions - Distributions per unit in the quarter amounted to $0.189, 4.0% higher than the same period in 2018 due to the increase in the annual rate of distributions effective with the first distribution paid in 2019. For the full year, distributions per unit amounted to $0.757, 4.0% higher than the same period in 2018.
On November 4, 2019 CT REIT announced its sixth consecutive increase in the annual rate of distribution to $0.787 per unit, an increase of 4.0% commencing with the January 2020 payment date.
*NOI, FFO and AFFO are non-GAAP measures. Refer to Non-GAAP section in the Q4 and Year End 2019 Management's Discussion & Analysis, which is available on SEDAR at www.sedar.com and at www.ctreit.com.
Operating Results
Leasing - CTC is CT REIT's most significant tenant. At December 31, 2019, CTC represented 92.5% of total GLA and 91.7% of annualized base minimum rent.
Occupancy - At December 31, 2019, CT REIT's portfolio occupancy rate, on a committed basis, was 99.1%, an increase from 98.7% on December 31, 2018.
Management Discussion and Analysis (MD&A) and Audited Consolidated Financial Statements and Notes
Information in this press release is a select summary of results. This press release should be read in conjunction with CT REIT's MD&A for the period ended December 31, 2019 ("the Q4 and Year End MD&A") and Audited Consolidated Financial Statements and Notes for the period ended December 31, 2019, which are available on SEDAR at www.sedar.com and at www.ctreit.com.
Forward-Looking Statements
This document contains forward-looking information that reflects management's current expectations related to matters such as future financial performance and operating results of CT REIT. Forward-looking statements are provided for the purposes of providing information about CT REIT's future outlook and anticipated events or results. Readers are cautioned that such information may not be appropriate for other purposes.
All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements concerning, its ability to complete any of the investments in acquisitions and property intensifications and redevelopments under the headings "New Investment Activity" and "Update on Previously Announced Development Activity", the timing and terms of any such investments and the benefits expected to result from such investments and other statements concerning developments, redevelopments, intensifications, results, performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.
By its very nature forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the REIT's assumptions, estimates, analyses, beliefs and opinions may not be correct and that the REIT's expectations and plans will not be achieved. Although the forward-looking information contained in this press release is based on information, assumptions and beliefs which are reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information.
For more information on the risks, uncertainties and assumptions that could cause the REIT's actual results to differ from current expectations, refer to Section 4 "Risk Factors" of our Annual Information Form for fiscal 2019, and to Section 11 "Enterprise Risk Management" and all subsections thereunder of our 2019 Management's Discussion and Analysis, as well as the REIT's other public filings, available at www.sedar.com and at www.ctreit.com.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.
Information contained in or otherwise accessible through the websites referenced in this press release (other than CT REIT's profile on SEDAR at www.sedar.com) does not form part of this press release and is not incorporated by reference into this press release. All references to such websites are inactive textual references and are for information only.
Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available at www.sedar.com and at www.ctreit.com.
Conference Call
CT REIT will conduct a conference call to discuss information included in this news release and related matters at 9:00 a.m. ET on February 11, 2020. The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2216 or 1-800-478-9326 or through a webcast at https://www.ctreit.com/English/news-and-events/events-and-webcasts/default.aspx, and will be available through replay for 12 months.
About CT Real Estate Investment Trust
CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed-end real estate investment trust formed to own income-producing commercial properties primarily located in Canada. Its portfolio is comprised of over 350 properties totalling approximately 28 million square feet of GLA, consisting primarily of retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit www.ctreit.com.
SOURCE CT Real Estate Investment Trust (CT REIT)
Media: Jane Shaw, 416-480-8581, [email protected]; Investors: Marina Davies, 416-544-6134, [email protected]
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