ARTIS REAL ESTATE INVESTMENT TRUST RELEASES SECOND QUARTER RESULTS
WINNIPEG, ON, Aug. 7, 2025 /CNW/ - Artis Real Estate Investment Trust ("Artis" or the "REIT") (TSX: AX.UN) (TSX: AX.PR.E) (TSX: AX.PR.I) announced today its financial results for the three and six months ended June 30, 2025. The second quarter results in this press release should be read in conjunction with the REIT's consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2025. All amounts are in thousands of Canadian dollars, except per unit amounts or as otherwise noted.
"Leasing activity remained steady across all of Artis's asset classes during the second quarter," said Samir Manji, President and Chief Executive Officer of Artis. "Occupancy improved to 87.8% as of June 30, 2025, up from 87.1% at the end of Q1, driven by the commencement of a significant 80,600 square foot lease at a U.S. industrial property. We delivered solid rental rate growth of 3.6% on 210,643 square feet of renewals, reflecting the strength of our portfolio and leasing strategy. We continue to maintain a disciplined approach to capital management, with a conservative debt-to-gross book value ratio of 41.1% at quarter-end. With additional dispositions underway, we expect further improvement in this metric, enhancing our liquidity and positioning us to capitalize on high-quality opportunities that drive long-term value for our unitholders. Our focus remains clear: maximizing value for our owners."
SECOND QUARTER HIGHLIGHTS
Portfolio Activity
- Disposed of one retail property located in Canada for a sale price of $4.8 million.
Balance Sheet and Liquidity
- Repaid the Series E senior unsecured debentures upon maturity in the amount of $200.0 million.
- Utilized the NCIB to purchase 1,771,089 common units at a weighted-average price of $7.28 and 58,900 preferred units at a weighted-average price of $20.04.
- Reported Total Debt to GBV (1) of 41.1% at June 30, 2025, compared to 40.2% at December 31, 2024.
- Improved Adjusted EBITDA Interest Coverage Ratio (1) to 2.29 for the second quarter of 2025, compared to 2.05 for the second quarter of 2024.
Financial and Operational
- Reported portfolio occupancy of 87.8% (89.0% including commitments) at June 30, 2025, improved from 87.1% at March 31, 2025.
- Renewals totalling 210,643 square feet and new leases totalling 126,306 square feet commenced during the second quarter of 2025.
- Weighted-average rental rate on renewals that commenced during the second quarter of 2025 increased 3.6%.
BALANCE SHEET AND LIQUIDITY
The REIT's balance sheet metrics are as follows:
June 30, |
December 31, |
||||
2025 |
2024 |
||||
Total investment properties |
$ 2,258,583 |
$ 2,372,878 |
|||
NAV per unit (1) |
12.98 |
13.75 |
|||
Total Debt to GBV (1) |
41.1 % |
40.2 % |
|||
Total Debt to Adjusted EBITDA (1) |
7.4 |
6.2 |
|||
Adjusted EBITDA interest coverage ratio (1) |
2.29 |
2.47 |
|||
(1) |
Represents a non-GAAP measure, ratio or other supplementary financial measure. Refer to the Notice with Respect to Non-GAAP & Supplementary Financial Measures Disclosure. |
At June 30, 2025, Artis had $16.6 million of cash on hand and $78.4 million available on its revolving credit facilities. Under the terms of the secured credit facilities, the REIT must maintain certain financial covenants which limit the total borrowing capacity of the credit facilities. At June 30, 2025, the total borrowing capacity of the secured credit facilities was limited to $514.5 million.
Liquidity and capital resources may be impacted by financing activities, portfolio acquisition, disposition and development activities or debt repayments occurring subsequent to June 30, 2025.
FINANCIAL AND OPERATIONAL RESULTS
Three months ended June 30, |
Six months ended June 30, |
||||||||
$000's, except per unit amounts |
2025 |
2024 |
% Change |
2025 |
2024 |
% Change |
|||
Revenue |
$ 59,082 |
$ 84,729 |
(30.3) % |
$ 121,384 |
$ 165,149 |
(26.5) % |
|||
Net operating income |
30,729 |
47,888 |
(35.8) % |
61,896 |
91,445 |
(32.3) % |
|||
Net (loss) income |
(23,492) |
765 |
(3170.8) % |
(12,065) |
(6,356) |
89.8 % |
|||
Total comprehensive (loss) income |
(70,300) |
12,298 |
(671.6) % |
(59,662) |
34,240 |
(274.2) % |
|||
Distributions per common unit |
0.15 |
0.15 |
— % |
0.30 |
0.30 |
— % |
|||
FFO (1) |
$ 16,956 |
$ 28,698 |
(40.9) % |
$ 34,491 |
$ 55,165 |
(37.5) % |
|||
FFO per unit - diluted (1) |
0.17 |
0.27 |
(37.0) % |
0.34 |
0.51 |
(33.3) % |
|||
FFO payout ratio (1) |
88.2 % |
55.6 % |
32.6 % |
88.2 % |
58.8 % |
29.4 % |
|||
AFFO (1) |
$ 8,204 |
$ 17,063 |
(51.9) % |
$ 16,939 |
$ 31,641 |
(46.5) % |
|||
AFFO per unit - diluted (1) |
0.08 |
0.16 |
(50.0) % |
0.17 |
0.29 |
(41.4) % |
|||
AFFO payout ratio (1) |
187.5 % |
93.8 % |
93.7 % |
176.5 % |
103.4 % |
73.1 % |
|||
(1) |
Represents a non-GAAP measure, ratio or other supplementary financial measure. Refer to the Notice with Respect to Non-GAAP & Supplementary Financial Measures Disclosure. |
Artis reported portfolio occupancy of 87.8% (89.0% including commitments) at June 30, 2025, compared to 87.1% at March 31, 2025. Weighted-average rental rate on renewals that commenced during the second quarter of 2025 increased 3.6%.
Artis's portfolio has a stable lease expiry profile with 47.0% of gross leasable area expiring in 2029 or later. Information about Artis's lease expiry profile is as follows:
Current |
Monthly |
2025 |
2026 |
2027 |
2028 |
2029 & later |
Total |
||||||||
Expiring square footage |
12.2 % |
0.1 % |
7.7 % |
13.5 % |
8.8 % |
10.7 % |
47.0 % |
100.0 % |
|||||||
In-place rents |
N/A |
N/A |
$ 18.28 |
$ 16.37 |
$ 16.00 |
$ 16.76 |
$ 17.05 |
$ 16.91 |
|||||||
Market rents |
N/A |
N/A |
$ 17.45 |
$ 16.08 |
$ 15.67 |
$ 15.39 |
$ 16.22 |
$ 16.15 |
UPCOMING WEBCAST AND CONFERENCE CALL
A conference call with management will be held on Friday, August 8, 2025, at 12:00 p.m. CT (1:00 p.m. ET). In order to participate, please dial 1-437-900-0527 or 1-888-510-2154. You will be required to identify yourself and the organization on whose behalf you are participating.
Alternatively, you may access the simultaneous webcast by following the link from our website at https://www.artisreit.com/investor-link/conference-calls/. Prior to the webcast, you may follow the link to confirm you have the right software and system requirements.
If you cannot participate on Friday, August 8, 2025, a replay of the conference call will be available by dialing 1-289-819-1450 or 1-888-660-6345 and entering passcode 26907#. The replay will be available until Monday, September 8, 2025. The webcast will be archived 24 hours after the end of the conference call and will be accessible for 90 days.
CAUTIONARY STATEMENTS
This press release contains forward-looking statements within the meaning of applicable Canadian securities laws. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements include, among others, statements regarding the timing and amount of distributions and the future financial position, business strategy, potential acquisitions and dispositions, plans and objectives of Artis. Without limiting the foregoing, the words "outlook", "objective", "expects", "anticipates", "intends", "estimates", "projects", and similar expressions or variations of such words and phrases suggesting future outcomes or events, or which state that certain actions, events or results ''may'', ''would'', "should" or ''will'' occur or be achieved are intended to identify forward-looking statements. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.
Forward-looking statements are based on a number of factors and assumptions which are subject to numerous risks and uncertainties, which have been used to develop such statements, but which may prove to be incorrect. Although Artis believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Assumptions have been made regarding, among other things: the general stability of the economic and political environment in which Artis operates, treatment under governmental regulatory regimes, securities laws and tax laws, the ability of Artis and its service providers to obtain and retain qualified staff, equipment and services in a timely and cost efficient manner, currency, exchange and interest rates, global economics and financial markets.
Artis is subject to significant risks and uncertainties which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied in these forward-looking statements. Such risk factors include, but are not limited to risks related to the strategy, real property ownership, overall investment portfolio, geographic concentration, current economic conditions, strategic initiatives, pandemics and other public health events, debt financing, interest rate fluctuations, foreign currency, tenants, specified investment flow-through rules, other tax-related factors, illiquidity, competition, reliance on key personnel, future property transactions, general uninsured losses, dependence on information technology systems, cyber security, environmental matters and climate change, land and air rights leases, public market, market price of common units, changes in legislation and investment eligibility, availability of cash flow, fluctuations in cash distributions, nature of units and legal rights attaching to units, preferred units, debentures, dilution, unitholder liability, failure to obtain additional financing, potential conflicts of interest, developments and trustees.
For more information on the risks, uncertainties and assumptions that could cause Artis's actual results to materially differ from current expectations, refer to the section entitled "Risk Factors" of Artis's 2024 Annual Information Form for the year ended December 31, 2024, the section entitled "Risk and Uncertainties" of Artis's Q2-25 MD&A, as well as Artis's other public filings, available on SEDAR+ at www.sedarplus.ca.
Artis cannot assure investors that actual results will be consistent with any forward-looking statements and Artis assumes no obligation to update or revise such forward-looking statements to reflect actual events or new circumstances other than as required by applicable securities laws. All forward-looking statements contained in this press release are qualified by this cautionary statement.
NOTICE WITH RESPECT TO NON-GAAP & SUPPLEMENTARY FINANCIAL MEASURES DISCLOSURE
Unless otherwise noted, all amounts in this Press Release are based on the consolidated financial statements prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards" or "GAAP"). In addition, certain non-GAAP and supplementary financial measures are commonly used by Canadian real estate investment trusts as an indicator of financial performance.
Non-GAAP measures and ratios include Funds From Operations ("FFO"), Adjusted Funds from Operations ("AFFO"), FFO per Unit, AFFO per Unit, FFO Payout Ratio, AFFO Payout Ratio, NAV per Unit, Total Debt to GBV, Adjusted EBITDA Interest Coverage Ratio and Total Debt to Adjusted EBITDA.
Management believes that these measures are helpful to investors because they are widely recognized measures of Artis's performance and provide a relevant basis for comparison among real estate entities.
These non-GAAP and supplementary financial measures are not defined under IFRS Accounting Standards and are not intended to represent financial performance, financial position or cash flows for the period, nor should any of these measures be viewed as an alternative to net income, cash flow from operations or other measures of financial performance calculated in accordance with IFRS Accounting Standards.
The above measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of Artis. Readers should be further cautioned that the above measures as calculated by Artis may not be comparable to similar measures presented by other issuers. Refer to the Notice With Respect to Non-GAAP & Supplementary Financial Measures Disclosure of Artis's Q2-25 MD&A, which is incorporated by reference herein, for further information (available on SEDAR+ at www.sedarplus.ca or Artis's website at www.artisreit.com).
The reconciliation for each non-GAAP measure or ratio and other supplementary financial measures included in this Press Release is outlined below.
NAV per Unit
June 30, |
December 31, |
||
Unitholders' equity |
$ 1,455,983 |
$ 1,580,975 |
|
Less: face value of preferred equity |
(178,987) |
(181,594) |
|
NAV attributable to common unitholders |
1,276,996 |
1,399,381 |
|
Total number of diluted units outstanding: |
|||
Common units |
97,138,932 |
100,733,768 |
|
Restricted units |
721,108 |
585,230 |
|
Deferred units |
527,280 |
465,779 |
|
98,387,320 |
101,784,777 |
||
NAV per unit |
$ 12.98 |
$ 13.75 |
Total Debt to GBV
June 30, |
December 31, |
||
Total assets |
$ 2,611,435 |
$ 2,803,161 |
|
Add: accumulated depreciation |
13,837 |
13,080 |
|
Gross book value |
2,625,272 |
2,816,241 |
|
Secured mortgages and loans |
641,422 |
681,650 |
|
Preferred shares liability |
956 |
1,009 |
|
Carrying value of debentures |
— |
199,907 |
|
Credit facilities |
437,590 |
250,480 |
|
Total debt |
$ 1,079,968 |
$ 1,133,046 |
|
Total debt to GBV |
41.1 % |
40.2 % |
Adjusted EBITDA Interest Coverage Ratio
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
||||||
2025 |
2024 |
2025 |
2024 |
||||
Net (loss) income |
$ (23,492) |
$ 765 |
$ (12,065) |
$ (6,356) |
|||
Add (deduct): |
|||||||
Tenant inducements amortized to revenue |
5,688 |
6,620 |
11,321 |
13,009 |
|||
Straight-line rent adjustments |
64 |
(452) |
123 |
(795) |
|||
Depreciation of property and equipment |
408 |
290 |
827 |
592 |
|||
Net (income) loss from equity accounted investments |
(1,270) |
31,433 |
(3,214) |
53,939 |
|||
Distributions from equity accounted investments |
733 |
828 |
3,511 |
1,645 |
|||
Interest expense |
16,937 |
31,145 |
34,367 |
63,265 |
|||
Corporate strategy expenses |
1,138 |
545 |
1,138 |
895 |
|||
Expected credit loss on preferred investments |
26,000 |
— |
34,184 |
— |
|||
Fair value loss (gain) on investment properties |
7,958 |
(13,437) |
862 |
(12,437) |
|||
Fair value loss on financial instruments |
1,961 |
3,672 |
3,149 |
4,694 |
|||
Foreign currency translation (gain) loss |
(310) |
1,987 |
(327) |
6,425 |
|||
Income tax expense (recovery) |
731 |
(1,245) |
985 |
(2,677) |
|||
Adjusted EBITDA |
36,546 |
62,151 |
74,861 |
122,199 |
|||
Interest expense |
16,937 |
31,145 |
34,367 |
63,265 |
|||
Add (deduct): |
|||||||
Amortization of financing costs |
(992) |
(825) |
(1,991) |
(1,638) |
|||
Adjusted interest expense |
$ 15,945 |
$ 30,320 |
$ 32,376 |
$ 61,627 |
|||
Adjusted EBITDA interest coverage ratio |
2.29 |
2.05 |
2.31 |
1.98 |
|||
Total Debt to Adjusted EBITDA
June 30, |
December 31, |
||
Secured mortgages and loans |
$ 641,422 |
$ 681,650 |
|
Preferred shares liability |
956 |
1,009 |
|
Carrying value of debentures |
— |
199,907 |
|
Credit facilities |
437,590 |
250,480 |
|
Total debt |
1,079,968 |
1,133,046 |
|
Quarterly Adjusted EBITDA |
36,546 |
45,516 |
|
Annualized Adjusted EBITDA |
146,184 |
182,064 |
|
Total Debt to Adjusted EBITDA |
7.4 |
6.2 |
FFO and AFFO
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
||||||
2025 |
2024 |
2025 |
2024 |
||||
Net (loss) income |
$ (23,492) |
$ 765 |
$ (12,065) |
$ (6,356) |
|||
Add (deduct): |
|||||||
Tenant inducements amortized to revenue |
5,688 |
6,620 |
11,321 |
13,009 |
|||
Incremental leasing costs |
432 |
583 |
770 |
1,044 |
|||
Distributions on preferred shares treated as interest expense |
64 |
63 |
130 |
125 |
|||
Remeasurement component of unit-based compensation |
(37) |
(142) |
251 |
(411) |
|||
Corporate strategy expenses |
1,138 |
545 |
1,138 |
895 |
|||
Expected credit loss on preferred investments |
26,000 |
— |
34,184 |
— |
|||
Adjustments for equity accounted investments |
103 |
32,854 |
(424) |
57,442 |
|||
Fair value loss (gain) on investment properties |
7,958 |
(13,437) |
862 |
(12,437) |
|||
Fair value loss on financial instruments |
1,961 |
3,672 |
3,149 |
4,694 |
|||
Realized gain on disposition of equity securities |
— |
— |
1,192 |
234 |
|||
Foreign currency translation (gain) loss |
(310) |
1,987 |
(327) |
6,425 |
|||
Deferred income tax (recovery) expense |
(28) |
(1,512) |
26 |
(2,955) |
|||
Current income tax expense on dispositions of investment properties |
644 |
— |
644 |
— |
|||
Preferred unit distributions |
(3,165) |
(3,300) |
(6,360) |
(6,544) |
|||
FFO |
$ 16,956 |
$ 28,698 |
$ 34,491 |
$ 55,165 |
|||
Add (deduct): |
|||||||
Amortization of recoverable capital expenditures |
$ (1,386) |
$ (1,687) |
$ (2,811) |
$ (3,406) |
|||
Straight-line rent adjustments |
64 |
(452) |
123 |
(795) |
|||
Non-recoverable property maintenance reserve |
(350) |
(400) |
(700) |
(800) |
|||
Leasing costs reserve |
(7,000) |
(7,500) |
(14,000) |
(15,000) |
|||
Adjustments for equity accounted investments |
(80) |
(1,596) |
(164) |
(3,523) |
|||
AFFO |
$ 8,204 |
$ 17,063 |
$ 16,939 |
$ 31,641 |
|||
FFO and AFFO Per Unit
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
||||||
2025 |
2024 |
2025 |
2024 |
||||
Basic units |
98,294,856 |
106,044,192 |
99,205,964 |
106,975,929 |
|||
Add: |
|||||||
Restricted units |
694,529 |
584,422 |
583,130 |
526,217 |
|||
Deferred units |
527,057 |
400,910 |
516,967 |
385,395 |
|||
Diluted units |
99,516,442 |
107,029,524 |
100,306,061 |
107,887,541 |
|||
FFO and AFFO per Unit
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
||||||
2025 |
2024 |
2025 |
2024 |
||||
FFO per unit: |
|||||||
Basic |
$ 0.17 |
$ 0.27 |
$ 0.35 |
$ 0.52 |
|||
Diluted |
0.17 |
0.27 |
0.34 |
0.51 |
|||
AFFO per unit: |
|||||||
Basic |
$ 0.08 |
$ 0.16 |
$ 0.17 |
$ 0.30 |
|||
Diluted |
0.08 |
0.16 |
0.17 |
0.29 |
|||
FFO and AFFO Payout Ratios
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
||||||
2025 |
2024 |
2025 |
2024 |
||||
Distributions per common unit |
$ 0.15 |
$ 0.15 |
$ 0.30 |
$ 0.30 |
|||
FFO per unit - diluted |
0.17 |
0.27 |
0.34 |
0.51 |
|||
FFO payout ratio |
88.2 % |
55.6 % |
88.2 % |
58.8 % |
|||
Distributions per common unit |
$ 0.15 |
$ 0.15 |
$ 0.30 |
$ 0.30 |
|||
AFFO per unit - diluted |
0.08 |
0.16 |
0.17 |
0.29 |
|||
AFFO payout ratio |
187.5 % |
93.8 % |
176.5 % |
103.4 % |
|||
ABOUT ARTIS REAL ESTATE INVESTMENT TRUST
Artis is a diversified Canadian real estate investment trust with a portfolio of industrial, office and retail properties in Canada and the United States. Artis's vision is to become a best-in-class real estate asset management and investment platform focused on value investing.
SOURCE Artis Real Estate Investment Trust
For further information please contact: Samir Manji, President & Chief Executive Officer, Jaclyn Koenig, Chief Financial Officer or Heather Nikkel, Senior Vice-President - Investor Relations and Sustainability of the REIT at 204-947-1250. 600 - 220 Portage Avenue, Winnipeg, MB R3C 0A5, T 204.947.1250 F 204.947.0453, www.artisreit.com, AX.UN on the TSX
Share this article