True North Apartment REIT Announces 2014 First Quarter Results


TORONTO, May 14, 2014 /CNW/ - True North Apartment Real Estate Investment Trust (TSX: TN.UN) (the "REIT") today announced its results of operations and financial condition for the three months ended March 31, 2014 (the "first quarter").


  • Net Operating Income ("NOI") of $6.4 million, a $1.2 million increase from the first quarter of 2013, primarily reflecting the contribution from properties acquired during and subsequent to the three months ended March 31, 2013.
  • Average Monthly Rent ("AMR") increased to $762, a 1.9% increase from $748 at March 31, 2013 and increased from $760 at December 31, 2013.
  • Colder-than-average winter temperatures in the REIT's key markets resulted in a quarter-specific $0.01 impact on funds from operations ("FFO") and adjusted funds from operations ("AFFO") per trust unit ("Unit").
  • Occupancy at key Montréal complex increased to 91.7% from 90.6% at December 31, 2013, reflecting ongoing improvement following implementation of key initiatives.
  • Basic and diluted FFO of $0.13 per Unit, compared with $0.15 per Unit in the first quarter of 2013.
  • Basic and diluted AFFO of $0.12 per Unit compared with $0.13 in the first quarter of 2013.

"The first quarter of 2014 was characterized by severe winter conditions in most of the REIT's markets," stated Leslie Veiner, Chief Executive Officer of the REIT. "As a result, we experienced abnormally high heating costs. This quarter-specific expense, combined with lower year-over-year occupancy at the Montréal complex, together masked the strong quarterly performance of the REIT's portfolio. In particular, the Montréal complex continues to recover from the impact of the stabilization efforts undertaken in the third quarter of 2013, as occupancy increased sequentially for the second consecutive quarter."

"As we look to the balance of the year, we expect continued growth in AMR across the REIT's portfolio, as we benefit from increases as suites turnover during the key spring/summer rental period," continued Mr. Veiner. "In addition, we expect the Montréal complex to continue to produce improved occupancy numbers, reflecting the REIT's significant capital investment and the implementation of key property management initiatives. With normalized weather patterns and the continued success of our program to reposition suites with high-end renovations, we expect further cash flow growth and improved operating margins in the second quarter and beyond."

Operating Results

Property revenues for the first quarter were $13.6 million, an increase of $3.1 million, or 29.8%, when compared to the first quarter of 2013. This improvement is attributable to the impact of acquisitions completed during and subsequent to the three months ended March 31, 2013. Quarterly revenue increased modestly from December 31, 2013 on a sequential basis, reflecting the first quarter's seasonally low suite turnover rate, which is expected to increase during the spring/summer leasing season.

NOI for the first quarter was $6.4 million, an increase of $1.2 million, or 23.6%, when compared to the first quarter of 2013, which also reflected the impact of the properties acquired during and since March 31, 2013.  On a sequential basis, NOI declined in the first quarter, reflecting the unfavourable impact of severe winter weather on heating expenses. The NOI margin for the first quarter declined from 49.7% to 47.3%, primarily attributable to the weather conditions and lower occupancy at the Montréal complex.

As at March 31, 2014, the REIT's AMR was $762, an improvement of $14, or 1.9%, when compared to $748 at March 31, 2013 and $760 at December 31, 2013. The year-over-year increase was largely driven by an increase in AMR at properties owned prior to March 31, 2013 from $748 to $761, or 1.7%. In addition, AMR increased as two properties acquired subsequent to March 31, 2013 had higher average monthly rents. Sequentially, AMR increased $2 from December 31, 2013, reflecting the seasonality referenced above.

As at March 31, 2014, portfolio occupancy was 95.9%, 0.5% higher than the portfolio occupancy of 95.4% at December 31, 2013.  Occupancy growth in the first quarter was driven by improvements in Québec and Nova Scotia. The New Brunswick portfolio had a 0.3% reduction in occupancy caused by extremely poor winter conditions which negatively impacted leasing activity in the first quarter.

(In thousands of dollars)       Three months
March 31, 2014
Three months
March 31, 2013
Revenue       $ 13,593  $ 10,470
  Operating costs         5,512   4,061
  Property taxes         1,651   1,205
          7,163   5,266
NOI        $ 6,430  $ 5,204
NOI margin         47.3%   49.7%
        As at March 31,
As at March 31,
Operational Information              
Number of properties         54   54
Total suites         6,002   5,828
Occupancy %         95.9%   96.2%
AMR         $762   $748

For the first quarter of 2014, basic and diluted FFO was $0.13 per Unit. The FFO payout ratio for the quarter was 135% and 110% excluding non-cash distributions made under the REIT's distribution reinvestment plan ("DRIP"). Basic and diluted AFFO in the first quarter of 2014 was $0.12 per Unit. The AFFO payout ratio for the quarter was 150%, and 122% when excluding non-cash distributions made under the REIT's DRIP.

The REIT's payout ratios in the first quarter are typically higher than the annual payout ratio due to the impact of heating costs during the winter months, a trend that was further adversely impacted by the colder-than-average conditions.


(In thousands of dollars)

Three months
March 31, 2014
  Three months
March 31, 2013
Summary of Financial Information          
Interest coverage ratio     2.49 x   2.63 x
Indebtedness coverage ratio     1.41 x   1.58 x
Revenue     $13,593   $10,470
NOI     $6,430   $5,204
Net income and comprehensive income     $3,493   $18,635
FFO - basic and diluted     $3,012   $2,707
FFO per Unit - basic and diluted     $0.13   $0.15
AFFO - basic and diluted     $2,700   $2,350
AFFO per Unit - basic and diluted     $0.12   $0.13
Distributions per Unit - basic     $0.175   $0.175
FFO payout ratio     135%   118%
AFFO payout ratio     150%   136%
Weighted average Units outstanding:          
Basic - (000s)     23,207   18,348
  Add: unexercised unit options (000s)     195   275
Diluted - (000s)     23,402   18,623


Financial Position

At the conclusion of the first quarter, the REIT's debt to Gross Book Value was 57.3%. The interest coverage ratio was 2.49 times. Both metrics fall within the REIT's stated targets. The weighted average interest rate on the REIT's portfolio was 3.32%, and the weighted average term to maturity was 4.08 years. CMHC-insured debt accounted for approximately 33% of the REIT's overall mortgage portfolio.

About the REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT focuses on a long-term strategy to generate stable cash distributions on a tax-efficient basis for unitholders. The REIT intends to actively look for opportunities to expand its asset base and increase its distributable cash flow through acquisitions of additional multi-suite residential rental properties across Canada, the United States, and other jurisdictions where opportunities may arise.

For complete financial statements and Management's Discussion and Analysis for the first quarter, and any other information relating to the REIT, please visit either or the REIT's website,

Non-IFRS measures

The REIT's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following measures, NOI, FFO, AFFO, Same Property NOI, indebtedness to gross book value ratio, gross book value, indebtedness, and interest coverage ratio as well as other measures discussed elsewhere in this press release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. The REIT uses these measures to better assess the REIT's underlying performance and financial position and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for the period ended March 31, 2014 and available on the REIT's profile on SEDAR at

Forward-looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information is provided for the purposes of assisting the reader in understanding the REIT's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, performance, achievements, events, prospects or opportunities for the REIT or the real estate industry and may include statements regarding: the REIT's financial position; business strategy; budgets; litigation; projected costs; capital expenditures; financial results; occupancy levels; average monthly rents; taxes; the REIT's intention with respect to, and ability to execute, its internal and external growth strategies; the REIT's distribution policy and the distributions to be paid to holders of Units; the distributions to be paid to holders of Class B LP Units; the REIT's debt strategy; plans and policies regarding capital expenditures; the REIT's payout ratio; the REIT's use of its normal course issuer bid; and the ability of the REIT to qualify as a "mutual fund trust", as defined in the Income Tax Act (Canada), and as a "real estate investment trust", as defined in the SIFT Rules.  Particularly, statements regarding future geographic diversification, determinations of investment property fair values, per suite repair and maintenance expenditures, the REIT's ability to meet its obligations and the REIT's use of CMHC insured debt are forward-looking information. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts.

Forward-looking information necessarily involves known and unknown risks and uncertainties, that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the REIT's control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the risks discussed in the REIT's materials filed with Canadian securities regulatory authorities from time to time.  The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information as there can be no assurance that actual results will be consistent with such forward-looking information.

Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the Canadian economy will remain stable over the next twelve months; inflation will remain relatively low; interest rates will remain stable; conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate; the Canadian capital markets will provide the REIT with access to equity and/or debt at reasonable rates when required; and that the risks referenced above, collectively, will not have a material impact on the REIT. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.

The forward-looking information included in this press release relate only to events or information as of the date hereof.  Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking information, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

SOURCE: True North Apartment Real Estate Investment Trust

For further information:

Leslie Veiner
Chief Executive Officer
(416) 234-8444

Martin Liddell
Chief Financial Officer
(416) 234-8444

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True North Apartment Real Estate Investment Trust

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