Total and Same Store Revenue 8.1% and 3.5% Higher than IPO Forecast, Respectively
Entered Denver Market by Completing a $40.5 Million Accretive Acquisition
TORONTO/DALLAS, Nov. 6, 2013 /CNW/ - Milestone Apartments REIT (TSX: MST.UN) ("Milestone" or the "REIT") today announced its financial results for the third quarter ("Q3 2013") and year-to-date ("YTD") periods ended September 30, 2013. The third quarter is the second full quarter of operations for the REIT, as it completed an Initial Public Offering ("IPO") and commenced trading on the Toronto Stock Exchange on March 6, 2013. The YTD period covers March 6, 2013 (the IPO of the REIT) to September 30, 2013.
The following summary of the REIT's financial results for the quarter and YTD periods is presented in comparison to the financial forecast presented in the REIT's prospectus dated February 27, 2013. All dollar amounts are in U.S. currency unless otherwise noted. Full Financial Statements and Management's Discussion and Analysis are available on the REIT's website at www.milestonereit.com and at www.SEDAR.com.
Third Quarter Highlights
- Total and same store revenue were 8.1% and 3.5% higher than forecast, respectively
- Total average occupancy of 95.2%, up 110 basis points from the prior quarter
- Total average monthly in-place rent of $726, up from $712 in the prior quarter
- FFO and AFFO Payout Ratios of 66% and 82%, exceeding forecast of 72% and 90%, respectively
- Declared monthly distributions of C$0.05417 per Unit resulting in total cash distributions declared for the quarter of $7.8 million
- Completed a $40.5 million accretive acquisition of Canyon Chase, a 358-suite multifamily apartment community in Denver, Colorado
Commenting on the results, Robert Landin, CEO, stated: "In our second full quarter since the IPO, we continued our solid performance, exceeding forecasted Revenue, NOI, FFO and AFFO. Our strong financial performance was supported by higher occupancy and rents across our initial portfolio, and the acquisition of two complementary multifamily assets year-to-date, including a 358-suite property in Denver, Colorado during the quarter. Our entry in the Denver market further diversifies our market presence and demonstrates our commitment to grow our portfolio through accretive acquisitions in target markets."
Mr. Landin concluded, "We continue to see promising demographic and employment growth trends in our current markets. We remain committed to maximizing long-term unitholder value through organic revenue growth, disciplined expense management and accretive acquisitions."
Third Quarter and YTD1 Financial Summary
|($ amounts in thousands)|| Three months
ended Sept. 30,
| Three months
ended Sept. 30,
| YTD period
ended Sept 30,
| YTD period
ended Sept 30,
|Property Operating Expenses||20,127||18,595||43,315||42,580|
|Net Operating Income (NOI)||20,234||18,699||45,927||42,055|
|Funds From Operations (FFO)||11,873||11,291||27,654||25,123|
|Adjusted Funds From Operations (AFFO)||9,544||8,929||22,573||19,725|
|Total Cash Distributions2||7,801||n/a||17,935||n/a|
|AFFO Per Unit||$0.19||$0.18||$0.45||$0.40|
|AFFO Payout Ratio3||82%||90%||80%||93%|
(1) Year-to-date (YTD) period is March 6, 2013 (the IPO of the REIT) to September 30, 2013.
(2) Represents total cash distributions declared to REIT unitholders and Class B unitholders for the period.
(3) The AFFO payout ratio is calculated by dividing total cash distributions declared to REIT unitholders and Class B unitholders by AFFO for the period.
Third Quarter Results
For the quarter ended September 30, 2013, revenues totalled $42.1 million, 8.1% higher than the $38.9 million forecast. The favorable variance is primarily attributable to the acquisitions of the Preston Pointe at Windermere and Canyon Chase properties, completed on June 21, 2013 and July 31, 2013, respectively, and actual occupancy and rental rates for the entire portfolio being higher than forecasted due to better than anticipated market conditions. Same store revenue was $40.3 million, 3.5% higher than forecast.
Property operating expenses totalled $20.1 million, 8.2% higher than the $18.6 million forecast. The variance is primarily attributable to expenses relating to the acquisitions of the Preston Pointe at Windermere and Canyon Chase properties, and increased real estate tax expenses.
NOI totalled $20.2 million, 8.2% higher than the $18.7 million forecast, primarily attributable to increased occupancy and higher rents across our portfolio and acquisitions completed following the IPO, as stated above.
FFO totalled $11.9 million, or $0.24 per unit, higher than the forecasts of $11.3 million and $0.23 per unit, respectively. AFFO totalled $9.5 million, or $0.19 per unit, higher than the forecasts of $8.9 million and $0.18 per unit, respectively. The favorable variance resulted from increased revenue and NOI. Cash distributions declared to REIT unitholders and Class B unitholders totalled $7.8 million for the quarter, representing an AFFO payout ratio of 82%, compared to the forecast of 90%.
For the YTD period ended September 30, 2013, revenues totalled $93.1 million, 5.0% higher than the $88.6 million forecast. The favorable variance is primarily attributable to actual occupancy and rental rates for the entire portfolio being higher than forecasted due to better than anticipated market conditions, and the acquisition of two new properties year-to-date. Same store revenue was $91.2 million, 2.9% higher than the forecast of $88.6 million.
Property operating expenses totalled $43.3 million, 1.7% higher than the $42.6 million forecast. The variance is primarily attributable to expenses relating to the acquisitions of the Preston Pointe at Windermere and Canyon Chase properties, and increased real estate tax expenses.
NOI totalled $45.9 million, 9.2% higher than the forecast of $42.1 million, primarily attributable to increased occupancy and higher rents across our portfolio and acquisitions completed following the IPO.
FFO was $27.7 million, or $0.56 per unit, compared to forecasts of $25.1 million and $0.51 per unit, respectively. AFFO was $22.6 million, or $0.45 per unit, compared to forecasts of $19.7 million and $0.40 per unit, respectively. The favorable variance resulted from increased revenue and NOI. Cash distributions declared to REIT unitholders and Class B unitholders totalled $17.9 million, representing an AFFO payout ratio of 80%, compared to the forecast of 93%.
As of September 30, 2013, the REIT had total mortgage notes payable of $691.7 million with a weighted average interest rate of 3.7%. Debt to Gross Book Value was 57.1%. As of September 30, 2013, the REIT had cash and cash equivalents of $6.3 million and a $50.0 million revolving credit facility. A total of $40.0 million has been drawn from this facility to partially finance the REIT's acquisitions of Preston Pointe at Windermere ($21.0 million) and Canyon Chase ($19.0 million).
As of September 30, 2013, the total number of REIT units outstanding was 36,850,000. In addition, there are currently 12,864,265 Class B Redeemable Units of Milestone Multifamily Investors LP outstanding, and 1,417,775 REIT unit options outstanding.
Quarterly Results Conference Call
Robert Landin, CEO, Steve Lamberti, COO, and Ryan Newberry, CFO, will host a conference call for the investment community on Thursday, November 7, 2013 at 11:00 a.m. (ET). The call-in numbers for participants are 416-764-8688 or 888-390-0546. A webcast of the call will be accessible via Milestone's website at www.milestonereit.com/investor-relations/events-presentations.
A replay of the call will be available until Thursday, November 14, 2013. To access the replay, dial 416-764-8677 or 888-390-0541 (PIN: 174255). The webcast will be archived on Milestone's website.
About Milestone Apartments REIT
Milestone Apartments REIT (the REIT) is an unincorporated, open-ended real estate investment trust that is governed under the laws of Ontario. The REIT's portfolio is made up of 54 multifamily garden-style residential properties, comprising 17,648 units that are located in 11 major metropolitan markets throughout the Southeast and Southwest United States. Milestone Apartments REIT is the largest REIT listed on the TSX focused solely on the U.S. multifamily sector. The Milestone Group, based in Dallas, Texas, is the external asset manager of the REIT. For more information, please visit www.milestonereit.com
About The Milestone Group
The Milestone Group is a privately-held real estate investment management company with expertise and presence in major metropolitan markets throughout the United States. Founded in 2004, The Milestone Group has a strong track record of investing in the U.S. multifamily sector, including completion of more than $4.5 billion in multifamily transactions.
Non-IFRS Financial Measures
NOI, FFO and AFFO are key measures of performance commonly used by real estate operating companies and real estate investment trusts. They are not measures recognized under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. NOI, FFO and AFFO as calculated by the REIT may not be comparable to similar measures presented by other issuers. Please refer to the REIT's Management's Discussion and Analysis for the third quarter ended September 30, 2013 for a reconciliation of NOI, FFO and AFFO to standardized IFRS measures.
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the REIT and the environment in which it operates. Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. These statements are based on the REIT's expectations, estimates, forecasts and projections. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. These risks and uncertainties are discussed in the REIT's prospectus dated February 27, 2013 available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The REIT undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances.
SOURCE: Milestone Apartments REIT
For further information:
Robert P. Landin, CEO
Milestone Apartments REIT
Tel: 416.447.4740, x 232