TORONTO, May 14, 2014 /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 ended March 31, 2014.
The REIT had no material operations from the date of inception, March 4, 2013, to the completion of its IPO on April 26, 2013. The REIT's actual financial results for the three months ended March 31, 2014 are compared to the REIT's financial forecast provided in its Initial Public Offering ("IPO") Prospectus dated April 18, 2013 (the "Forecast"). All dollar amounts are stated in US funds.
Q1 2014 HIGHLIGHTS:
- Revenues, NOI and AFFO once again all exceed Forecast
- AFFO payout ratio improves further to 86.4%
- Occupancy remains strong at 96.1% as at March 31, 2014
- July 15, 2013 property acquisition makes strong and accretive contribution
- Strong and flexible liquidity position with 52.4% debt-to-gross book value ratio
- Three accretive acquisitions announced subsequent to quarter end expected to generate strong future growth.
"Our solid operating and financial performance continued in the first quarter of 2014, and once again we exceeded the key benchmarks in the Forecast published with our IPO," stated Scott Frederiksen, Chief Executive Officer. "I'm also pleased to report that our payout ratio strengthened further in the quarter to 86.4% from 88.9% in the fourth quarter of last year."
"Prior to the quarter end we announced the purchase of three key distribution properties which will add approximately 2.7 million square feet of fully leased institutional quality distribution space to our growing property portfolio," Mr. Frederiksen added. "In addition to further strengthening and diversifying our asset base, these acquisitions are expected to be immediately accretive to our AFFO on a per unit basis."
SOLID OPERATING PERFORMANCE
Investment properties revenue was higher for the three months ended March 31, 2014 than the Forecast due primarily to the contribution from an acquisition completed on July 15, 2013, favorable straight-line rent adjustments, vacancy loss factors assumed in the Forecast that were unrealized during the period, and favorable differences in actual recoverable expenses compared to amounts assumed in the Forecast.
Net Operating Income ("NOI") for the three months ended March 31, 2014 was higher than the Forecast due to the contribution from the July 15, 2013 acquisition as well as favorable straight-line rent adjustments and vacancy loss factors assumed in the Forecast that were unrealized during the period.
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") for the three months ended March 31, 2014 were higher than the Forecast due primarily to the higher investment properties revenue and NOI as outlined above. The REIT's AFFO payout ratio continued to improve in the first quarter of 2014 to 86.4% from 88.9% in the fourth quarter of 2013.
STRONG FINANCIAL & LIQUIDITY POSITION
As at March 31, 2014 the REIT's debt-to-gross-book-value ratio was a conservative 52.4% with an interest coverage ratio of 3.2 times and a fixed charge coverage ratio of 2.7 times. The weighted average effective interest rate on its outstanding debt was 4.0% with a weighted average term to maturity of 6.0 years on its mortgages payable, well matched by the weighted average remaining lease term of 4.9 years. As at March 31, 2014 the REIT had approximately $16.0 million available on its $75.0 million revolving credit facility.
On August 12, 2013 the Toronto Stock Exchange approved the REIT's notice of intention to purchase and cancel its REIT Units pursuant to a Normal Course Issuer Bid ("NCIB"). As of December 31, 2013 the REIT had purchased and cancelled 697,800 REIT Units under its NCIB at a weighted average price of $8.14 per REIT Unit. During the three months ended March 31, 2014, the REIT did not purchase any REIT Units for cancellation under the NCIB.
On April 4, 2014, the REIT issued 3,478,200 REIT Units (including REIT Units issued pursuant to the exercise in full of the over-allotment option granted to the underwriters by the REIT) at a price of $9.30 per REIT Unit to a syndicate of underwriters on a bought deal basis for gross proceeds to the REIT of approximately $32.3 million (the "Offering"). As part of the Offering, Welsh Property Trust, LLC ("Welsh"), the REIT's external manager, purchased approximately $7.0 million of the REIT Units being offered, being 752,700 REIT Units, at the offering price of $9.30 per REIT Unit, pursuant to the exercise of its pre-emptive right under the agreement of limited partnership governing the Partnership. After closing of the Offering, Welsh now holds, directly or indirectly, an approximate 50.7% effective interest in the REIT.
The REIT Units were offered in Canada pursuant to a short form prospectus filed on March 28, 2014 with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada.
On April 4, 2014, the REIT indirectly, through the Partnership, acquired from Welsh, a 100% leased 300,000 square foot industrial investment property located in Hebron, Kentucky (the "Kentucky Property"), for a purchase price of $13.3 million (exclusive of closing and transaction costs and an acquisition fee). The purchase price was paid in cash using a portion of the net proceeds of the Offering. The Kentucky Property was acquired by an affiliate of Welsh from a third-party vendor on March 3, 2014. Pursuant to a call right granted to the REIT in respect of the Kentucky Property, the REIT delivered notice to Welsh requiring Welsh to sell the Kentucky Property to the REIT for a purchase price equal to Welsh's cost of acquisition plus certain expenses incurred by Welsh in connection with its acquisition of the Kentucky Property.
On April 14, 2014, the REIT entered into an agreement to indirectly, through the Partnership, acquire from Welsh, a 100% leased 936,000 square foot industrial investment property located in Shepherdsville, Kentucky (the "Louisville Property") for a purchase price of approximately $45.4 million (exclusive of closing and transaction costs). The purchase price will be satisfied by (i) the issuance of approximately $20.4 million Class B Units (2,165,605 Class B Units) to Welsh; and (ii) $25.0 million in cash, to be funded by a new, fixed rate mortgage payable to be placed on the Louisville Property at closing of the acquisition. Subject to certain closing conditions, including receipt of REIT unitholder approval on a disinterested basis, the acquisition is expected to close in June 2014.
On April 29, 2014, the REIT indirectly, through the Partnership, purchased from a third party vendor, a 100% leased 1,512,552 square foot industrial investment property located in Atlanta, Georgia (the "Atlanta Property") for a purchase price of $51.5 million (exclusive of closing and transaction costs and an acquisition fee). The Atlanta Property acquisition was financed with the net proceeds from the Offering and a new property-level mortgage.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
|(In thousands of USD, except where noted)|| Three months
| Three months
| Three months
| Period from
March 4, 2013
to June 30,
|Investment properties revenue||$||12,847||$||12,649||$||12,577||$||8,433|
|NOI (1), (2)||$||9,432||$||9,370||$||9,370||$||6,263|
|FFO (1), (3)||$||5,928||$||5,731||$||5,686||$||3,988|
|AFFO (1), (4)||$||4,816||$||4,680||$||4,264||$||2,957|
|FFO per Unit (1)||$||0.249||$||0.241||$||0.236||$||0.180|
|AFFO per Unit (1)||$||0.202||$||0.197||$||0.177||$||0.140|
|Distributions per Unit||$||0.175||$||0.175||$||0.175||$||0.127|
|AFFO payout ratio (1)||86.4%||88.9%||99.3%||96.0%|
| Weighted-average number of
|As at|| March 31,
| December 31,
| Number of real estate investment
| Average remaining lease term
| Weighted-average effective
interest rate (6)
| Variable rate debt as percentage
of total debt
| Variable rate debt as a
percentage of total debt
adjusted for interest rate cap (7)
|Debt-to-gross book value||52.4%||52.9%|
|Interest coverage ratio (9)||3.2x||3.2x|
|Fixed charge coverage ratio (9)||2.7x||2.8x|
|Debt to EBITDA (1,8, 9)||7.6x||8.0x|
| REIT Units outstanding at
| Class B Units outstanding at
| Welsh Retained Interest at period
end (on fully-diluted basis
assuming all Class B Units held
are redeemed for REIT Units)
|(1)||NOI, FFO, AFFO, AFFO payout ratio and 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 period.|
|(2)||NOI is defined as investment properties revenue, less investment properties operating expenses, adjusted for property taxes accounted for under IFRIC 21.|
|(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 REIT Units and Class B Units (collectively, the "Units").|
|(6)||Includes mortgages payable, bank indebtedness, mark-to-market adjustments and financing costs.|
|(7)||Includes $44,000 outstanding under the Revolving Facility and $31,800 in mortgages payable, adjusted for interest rate cap covering a principal amount of $50,000.|
|(8)|| EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for property taxes accounted for under IFRIC 21 and is
annualized for purposes of this metric.
||(9) Excludes adjustments for property taxes accounted for under IFRIC 21.|
Actual Results Compared to Forecast
| For the three months ended
March 31, 2014
|Investment properties revenue||$||12,847||$||11,309||$||1,538|
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, May 15, 2014 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) 317-6016 and International: (412) 317-6016. 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 10043811#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.
ANNUAL MEETING OF UNITHOLDERS
The REIT's first Annual Meeting of Unitholders will be held on Thursday, May 15, 2014 at 1.00 pm ET at the offices of Goodmans LLP, 333 Bay Street, Suite 3400, Toronto, Ontario. Management invites all Unitholders and interested investors to attend.
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 11.7 million square feet of gross leasable area, comprised of 38 industrial properties and 2 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.
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, 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
Scott Frederiksen, Chief Executive Officer
WPT Industrial Real Estate Investment Trust
Tel: (952) 897-7737
Fax: (952) 842-7737