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CT REIT Announces Distribution Increase and Reports Strong Third Quarter Results


News provided by

CT Real Estate Investment Trust (CT REIT)

Nov 06, 2017, 17:00 ET

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  • Increases annual distribution by 4.0% beginning January 2018
  • Announces four new investments, totalling $27 million

TORONTO, Nov. 6, 2017 /CNW/ - CT Real Estate Investment Trust ("CT REIT") (TSX: CRT.UN) today reported its consolidated financial results for the third quarter ended September 30, 2017.

"Focused execution of our strategy continues to deliver attractive growth and reliability," said Ken Silver, President and Chief Executive Officer, CT REIT. "We are very pleased to announce our fourth consecutive increase in the annual rate of distribution to $0.728 per unit, an increase of 4.0%, commencing with the January 2018 payment date."

CT REIT Announces Distribution Increase and Reports Strong Third Quarter Results (CNW Group/CT Real Estate Investment Trust (CT REIT))
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CT REIT Announces Distribution Increase and Reports Strong Third Quarter Results (CNW Group/CT Real Estate Investment Trust (CT REIT))

New Investment Activity

Today, CT REIT announced four additional investments, which will require an estimated total investment of $27 million. The investments are, in the aggregate, expected to earn a weighted average cap rate of 6.9% when completed and represent approximately 195,000 square feet of incremental gross leasable area ("GLA"). CT REIT is funding these investments through the issuance of Class B LP Units and/or Class C LP Units to Canadian Tire Corporation, Limited ("CTC"), cash, and/or draws on its credit facility or any combination thereof. The table below summarizes the new investments and anticipated completion dates:

Property

Type

GLA (sf.)

Timing

Activity

Grande Prairie, AB

Vend-in/development

149,000

Q4 2018

Development of new
Canadian Tire store

Sherwood Park North, AB

Intensification

20,000

Q4 2018

Development of new
Mark's store

Winkler, MB

Intensification

23,000

Q4 2018

Expansion of existing
Canadian Tire store

St. Thomas, ON

Intensification

3,000

Q4 2018

Expansion of existing
Canadian Tire store

Update on Previously Announced Investments

In the third quarter, CT REIT completed the vend-in of land in Sherwood Park North, AB, and the vend-in of a redundant Canadian Tire store in Sudbury, ON. CT REIT also completed the acquisition of a national portfolio of CIBC branches from a third party. 

The table below provides activity updates on the previously announced investments.

Property

Type

GLA (sf.)

Timing

Activity

Sherwood Park North, AB

Vend-in/development

93,000

Lands vended-in Q3 2017; development to be completed by Q4 2018

Development of new Canadian Tire store

Sudbury, ON

Redundant vend-in/development

84,000

Property acquired in Q3 2017; development to be completed by Q2 2018

Redevelopment of redundant Canadian Tire store

CIBC Branch Portfolio

Third party purchase

89,000

Completed Q3 2017

Acquisition of national portfolio of CIBC branches

Financial and Operational Summary

Summary of Selected Information







(in thousands of Canadian dollars, except unit, per unit and square
footage amounts)

Three Months Ended September 30,

Nine Months Ended September 30,


2017

2016

Change

2017

2016

Change

Property revenue

$

109,290

$

102,932

6.2 %

$

332,039

$

302,935

9.6 %

Net operating income 1

$

80,928

$

72,812

11.1 %

$

240,345

$

213,414

12.6 %

Net income

$

70,562

$

72,124

(2.2)%

$

220,183

$

193,624

13.7 %

Net income per unit (basic) 2

$

0.330

$

0.349

(5.4)%

$

1.046

$

0.976

7.2 %

Net income per unit (diluted) 4

$

0.275

$

0.290

(5.2)%

$

0.854

$

0.811

5.3 %

Funds from operations1

$

59,691

$

56,486

5.7 %

$

177,176

$

158,112

12.1 %

Funds from operations per unit (diluted, non-GAAP) 1,2,3

$

0.279

$

0.273

2.2 %

$

0.841

$

0.797

5.5 %

Adjusted funds from operations 1

$

48,884

$

45,889

6.5 %

$

144,735

$

126,788

14.2 %

Adjusted funds from operations per unit (diluted, non-GAAP)1,2,3

$

0.229

$

0.222

3.2 %

$

0.687

$

0.639

7.5 %

Distributions per unit - paid 2

$

0.175

$

0.170

2.9 %

$

0.525

$

0.510

2.9 %

AFFO payout ratio1

76 %

77 %

(1.3)%

76 %

80 %

(5.0)%

Adjusted cashflow from operations1,6

$

48,408

$

46,326

4.5 %

$

142,604

$

129,116

10.4 %

Weighted average number of units outstanding 2








Basic                                                                                      

213,551,876

206,793,551

3.3 %

210,498,977

198,294,662

6.2 %


Diluted 4

318,825,160

308,370,794

3.4 %

318,578,987

306,412,920

4.0 %


Diluted (non-GAAP)1,3                                                         

213,706,652

206,925,409

3.3 %

210,639,855

198,412,568

6.2 %

Indebtedness ratio7




45.5 %

46.6 %

NM

Interest coverage (times)7

3.45

3.78

NM

3.46

3.41

NM

Gross leasable area (square feet)5




25,201,449

22,865,231

10.2 %

Occupancy rate 5,7




99.6 %

99.7 %

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 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.

4

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.

5

Refers to retail, mixed-use and distribution centre properties and excludes properties under development.

6

New non-GAAP measure adopted in 2017. Refer to section 10.0 of the MD&A for further information.

7

NM - not meaningful.

Financial Highlights

Net Income – Net income was $70.6 million for the quarter, down 2.2% over the prior year, primarily due to a decrease in the fair market value adjustment on investment properties and an increase in interest expense.

Net Operating Income (NOI)* –  In the third quarter, NOI increased $8.1 million or 11.1% over the same period last year, primarily from investment activity completed in 2017 and 2016. These acquisitions contributed a total of $6.7 million to NOI growth. Same store NOI and same property NOI for the quarter increased $1.2 million or 1.7% and $1.4 million or 1.9%, respectively, primarily due to the contractual rent escalations built into the property leases, recovery of capital expenditures and intensifications completed in 2017 and 2016. 

Funds from Operations (FFO)* – FFO for the quarter was $59.7 million or $0.279 per unit (diluted non-GAAP), $3.2 million or 5.7% higher than the same period in 2016 primarily due to the impact of NOI variances, partially offset by higher interest expense.

Adjusted Funds from Operations (AFFO)* – AFFO for the third quarter amounted to $48.9 million or $0.229 per unit (diluted non-GAAP) which was $3.0 million or 6.5% and $0.007 or 3.2%, respectively, higher than the same period in 2016 primarily due to the impact of NOI variances, partially offset by higher interest expense.

Adjusted Cash Flow From Operations (ACFO)* – ACFO for the third quarter amounted to $48.4 million, $2.1 million or 4.5% higher than the same period in 2016, primarily  due to the impact of NOI variances partially offset by higher interest expense.

Distributions – Distributions per unit in the quarter amounted to $0.175, 2.9% higher than the same period in 2016 due to the increase in the annual rate of distributions effective with the first distribution paid in 2017.

*NOI, FFO, AFFO and ACFO are non-GAAP measures. Refer to Non-GAAP section 10.0 in the Q3 2017 Management's Discussion & Analysis, which is available on SEDAR and at newswire.ca.

Operating Results

Leasing – CTC is CT REIT's largest tenant. At September 30, 2017, CTC represented 93.7% of total GLA and 93.2% of annualized base minimum rent.

Occupancy – At September 30, 2017, CT REIT's portfolio occupancy rate remained unchanged from the prior quarter at 99.6%.

Management Discussion and Analysis (MD&A) and Unaudited Condensed 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 September 30, 2017 ("the Q3 MD&A") and Unaudited Condensed Consolidated Financial Statements and Notes for the period ended September 30, 2017, which are available on SEDAR at www.sedar.com and at www.ctreit.com.  

To view a PDF version of CT REIT's 2017 third quarter results please see: http://files.newswire.ca/1307/Q32017CTREITFS.pdf

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 the REIT's ability to complete any of the investments in acquisitions and property intensifications or development under the heading "New Investment Activity," the timing and terms of any such investments and the benefits expected to result from such investments  and other statements concerning developments, 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 2016, and to Section 11 "Enterprise Risk Management" and all subsections thereunder of our  Management's Discussion and Analysis for the year ended December 31, 2016, 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 November 7, 2017. 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 1-866-225-0198 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 300 properties totalling approximately 25 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)

For further information: Media: Jane Shaw, 416-480-8581, [email protected]; Investors: Marina Davies, 416-544-6134, [email protected]

Modal title

Organization Profile

CT Real Estate Investment Trust (CT REIT)

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