Ravelin Properties REIT Reports Fourth Quarter and Year End 2024 Results

TORONTO, March 27, 2025 /CNW/ - Ravelin Properties REIT (TSX: RPR.UN) ("Ravelin" or the "REIT"), an internally managed global owner and operator of well-located commercial real estate, announces financial results for the three months and year ended December 31, 2024.

The REIT's annual audited financial statements, Management's Discussion and Analysis for the year ended December 31, 2024 and Annual Information Form for the year ended December 31, 2024 are available under the REIT's issuer profile on SEDAR+ and can also be found on the REIT's website at ravelinreit.com.

Highlights

• A total of 149,202 square feet of total leasing commenced in the fourth quarter of 2024.
  
  
• 65,166 square feet of new deals and renewals were completed during the fourth quarter of 2024.
  
  
• The REIT's current leasing pipeline exceeds 650,000 square feet of renewals and new leases. Tenant demand for space has meaningfully improved from pandemic induced depressed levels.
  
  
• Active lease negotiations are either underway or completed across all markets that the REIT operates in, including spaces that have been vacant for a prolonged period of time.
  
  
• During 2024, the REIT completed $114.1 million in dispositions. The following dispositions closed in the fourth quarter:
  
  
  • In October 2024, the REIT completed the sale of 114 Garry in Winnipeg, Manitoba for a gross purchase price of $14.3 million.
    
    
  • In November 2024, the REIT completed the sale of the Woodbine Complex in Toronto, Ontario, for a gross purchase price of approximately $39.0 million for the REIT's 75% co-ownership share. The REIT also completed the sale of 365 Hargrave in Winnipeg, Manitoba for a gross purchase price of $11.0 million.
    
    
• Subsequent to December 31, 2024, the REIT is working to complete the sale of a property in Oshawa, Ontario to an institutional purchaser. The gross purchase price is $16.5 million and the REIT anticipates the sale will close during the second quarter of 2025.
  
  
• The REIT revalued its property portfolio as at December 31, 2024, which resulted in a $97.2 million negative fair value adjustment in the fourth quarter as a result of the recent property sales and the REIT's own estimates. Leasing activity post year-end is not captured in the International Financial Reporting Standards ("IFRS") valuation and will be reflected in future quarters.
  
  
• Unrestricted cash as at December 31, 2024 stood at $13.6 million, compared to $11.3 million as at December 31, 2023. The REIT continues to prudently manage its liquidity while negotiations with its lenders are underway.
  
  
• On a trailing twelve-month basis, the REIT generated $83.2 million of Adjusted EBITDA, resulting in a net debt to Adjusted EBITDA ratio of 12.9x, inclusive of the REIT's convertible debentures, or 11.0x excluding convertible debentures.
  
  
• As at December 31, 2024, and as previously reported, the REIT exceeded the financial leverage and debt service coverage covenants on its revolving credit facility and certain other mortgages, resulting in other mortgages being in breach due to cross-default clauses. The REIT's convertible debentures are also in default due to restrictions imposed by default of the debt from senior lenders. The REIT is in active discussions with its lenders to resolve current defaults and to amend, renew or consider alternate arrangements on its debt to reach amendable terms on conditions that are acceptable to the REIT.
  
  
• During the year ended December 31, 2024, and with the assistance of professional restructuring advisors, the REIT continued to seek a restructuring of a majority of its outstanding indebtedness and to raise additional capital (collectively, the "Recapitalization Plan"). Although the REIT is currently in discussions with certain of its lenders and related parties regarding the terms of an acceptable potential Recapitalization Plan, there can be no assurance that the REIT will be successful in negotiating a potential Recapitalization Plan, or in raising the additional funding needed for the REIT to continue as a going concern. If the REIT is unsuccessful in negotiating a potential Recapitalization Plan and raising additional capital in the near term, the REIT will be unable to continue as a going concern.
  
  
• On October 2, 2024, Slate Management ULC, the former manager of the REIT, provided the REIT with 180 days' notice of termination of its external management agreement with the REIT (the "Management Agreement"). On December 24, 2024, the REIT amended the Management Agreement to, among other things, accelerate the termination of the Management Agreement and internalize the REIT's management (the "Internalization"), effective December 31, 2024. In connection with the Internalization, the REIT changed its name from Slate Office REIT to Ravelin Properties REIT.
  
  
• Management anticipates that the Internalization will result in cost savings beginning January 1, 2025, with estimated annualized run-rate cost savings of at least $10 million in 2025 resulting from the elimination of management fees and greater focus on overhead expense management. Further information regarding the various fee and expense recoveries pertaining to the former Management Agreement are contained in the related party note disclosure in the REIT's audited financial statements.

Summary of Q4 2024 Results

		Three months ended December 31,
(thousands of dollars, except per unit amounts)		2024		2023	Change %
Rental revenue	$	46,968	$	48,787	(3.7) %
Net operating income ("NOI")	$	20,827	$	24,085	(13.5) %
Net loss	$	(101,839)	$	(61,360)	66.0 %
Weighted average diluted number of trust units (000s)		86,092		85,792	0.3 %
Funds from operations ("FFO")	$	(1,900)	$	4,805	(139.5) %
FFO per unit	$	(0.02)	$	0.06	(133.3) %
FFO payout ratio		— %		17.8 %	(17.8) %
Core-FFO	$	(924)	$	5,721	(116.2) %
Core-FFO per unit	$	(0.01)	$	0.07	(114.3) %
Core-FFO payout ratio		— %		14.9 %	(14.9) %
Adjusted FFO ("AFFO")	$	(2,252)	$	5,521	(140.8) %
AFFO per unit	$	(0.03)	$	0.06	(150.0) %
AFFO payout ratio		— %		15.5 %	(15.5) %
		December 31, 2024		December 31, 2023	Change %
Total assets	$	1,229,711	$	1,742,255	(29.4) %
Total debt	$	1,090,024	$	1,178,734	(7.5) %
Portfolio occupancy		76.8 %		79.0 %	(2.2) %
Loan-to-value ("LTV") ratio		89.4 %		67.9 %	21.5 %
Net debt to adjusted EBITDA ^1		12.9x		12.9x	—x
Interest coverage ratio ^1		1.2x		1.5x	(0.3)x

¹ EBITDA is calculated using trailing twelve month actuals, as defined below.

Restatement of financial information for the year ended December 31, 2023

The financial information for the year ended December 31, 2023, has been restated to correct an error that resulted in a $6.7 million understatement of the change in fair value of investment properties and a corresponding overstatement of assets held for sale. As a result, an additional $105 million of debt has been reclassified to current liabilities as of December 31, 2023, due to a covenant breach. Please refer to Note 3(xvii) of the audited consolidated financial statements for further details.

Investor Information

The REIT's financial results and supplemental materials have been filed under the REIT's issuer profile on SEDAR+ and are also available on the REIT's website at ravelinreit.com under the Investors page. For any questions related to the REIT's financial results or ongoing business initiatives, please contact the REIT's investor relations team at [email protected] or [phone].

About Ravelin Properties REIT (TSX: RPR.UN)

The REIT owns and operates a portfolio of well-located commercial real estate assets in North America and Europe. The majority of the REIT's portfolio is comprised of government and high-quality credit tenants. Visit ravelinreit.com to learn more.

Forward Looking Statements

Certain information herein constitutes "forward-looking information" as defined under Canadian securities laws 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 contained herein include, but are not limited to, statements relating to: the REIT's current leasing pipeline and anticipated future leasing activity; the status of active lease negotiations; the anticipated completion and timing of the sale of the REIT's property in Oshawa, Ontario; the REIT's continued management of liquidity; the state of discussions with the REIT's lenders and any resolution of current defaults and arrangements on its existing debt; the ability of the REIT to reach an agreement regarding terms of the proposed Recapitalization Plan; the ability for the REIT to raise additional funding and continue as a going concern; the anticipated cost savings of the Internalization; and greater focus on overhead expense management. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. 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 and 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, possibly materially, from the results discussed in the forward-looking statements. Additional information about risks and uncertainties is contained in the REIT's Annual Information Form for the year ended December 31, 2024, available under the REIT's issuer profile on SEDAR+ and on the REIT's website at ravelinreit.com.

Non-IFRS Measures

We disclose a number of financial measures in this news release that are not measures used under IFRS, including NOI, same property NOI, FFO, Core-FFO, AFFO, FFO payout ratio, Core-FFO payout ratio, AFFO payout ratio, NAV, adjusted EBITDA, net debt to adjusted EBITDA ratio, interest coverage ratio, debt service coverage ratio and LTV ratio, in addition to certain measures on a fully-diluted per unit basis.

• NOI is defined as rental revenue, excluding non-cash straight-line rent and leasing costs amortized to revenue, less property operating costs prior to International Financial Reporting Interpretations Committee 21, Levies ("IFRIC 21") adjustments. Rental revenue for purposes of measuring NOI excludes revenue recorded as a result of determining rent on a straight-line basis and the amortization of leasing costs in revenue for IFRS. Same-property NOI includes those properties owned by the REIT for each of the current period and the relevant comparative period.
  
  
• FFO is defined as net income adjusted for certain items including transaction costs, change in fair value of properties, change in fair value of financial instruments, change in fair value of Class B LP units, deferred income taxes, tax on gains on disposals of investment properties, distributions to Class B unitholders, depreciation and IFRIC 21 property tax adjustments.
  
  
• Core-FFO is defined as FFO adjusted for the REIT's share of lease payments received for a data centre in Winnipeg, Manitoba (the "Data Centre"), which for IFRS purposes is accounted for as a finance lease.
  
  
• AFFO is defined as FFO adjusted for amortization of deferred transaction costs; de-recognition and amortization of mark-to-market ("MTM") adjustments on mortgages refinanced or discharged; adjustments for interest rate subsidies received; recognition of the REIT's share of lease payments received for the Data Centre, which for IFRS purposes, is accounted for as a finance lease; amortization of straight-line rent; and normalized direct leasing and capital costs.
  
  
• FFO payout ratio, Core-FFO payout ratio and AFFO payout ratio are defined as aggregate distributions made in respect of units of the REIT and Class B LP units divided by FFO, Core-FFO and AFFO, respectively.
  
  
• FFO per unit, Core-FFO per unit and AFFO per unit are defined as FFO, Core-FFO and AFFO divided by the weighted average diluted number of units outstanding, respectively.
  
  
• NAV is defined as the aggregate of the carrying value of the REIT's equity, Class B LP units, deferred units, and deferred tax liability.
  
  
• Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, fair value gains (losses) from both financial instruments and investment properties, while also excluding non-recurring items such as transaction costs from dispositions, acquisitions or other events.
  
  
• Net debt to adjusted EBITDA is defined as the aggregate amount of debt outstanding, less cash on hand, divided by the trailing twelve-month adjusted EBITDA.
  
  
• Interest coverage ratio is defined as adjusted EBITDA divided by the REIT's interest expense for the period.
  
  
• Debt service coverage ratio is defined as adjusted EBITDA divided by the debt service requirements for the period, whereby the debt service requirements reflects amortizing principal repayments and interest expensed during the period. Payments related to defeasance, prepayment penalties, or payments upon discharge of a mortgage are excluded from the calculation.
  
  
• LTV ratio is defined as total indebtedness divided by total assets less restricted cash.

We use these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in the Management's Discussion and Analysis for the year ended December 31, 2024, which readers should read when evaluating the measures included herein. We believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others.

Calculation and Reconciliation of Non-IFRS Measures

The tables below summarize a calculation of non-IFRS measures based on IFRS financial information.

The calculation of NOI is as follows:

	Three months ended December 31,
(thousands of dollars, except per unit amounts)	2024	2023
Revenue	$                  46,968	$                  48,787
Property operating expenses	(24,224)	(24,150)
IFRIC 21 property tax adjustment ^1	(3,429)	(3,479)
Straight-line rents and other changes	1,512	2,927
Net operating income	$                  20,827	$                  24,085
The reconciliation of net income to FFO, Core-FFO and AFFO is as follows:
	Three months ended December 31,
(thousands of dollars, except per unit amounts)	2024	2023
Net loss	$              (101,839)	$               (61,360)
Add (deduct):
Leasing costs amortized to revenue	2,404	2,593
Change in fair value of properties	97,172	52,115
IFRIC 21 property tax adjustment ^1	(3,429)	(3,479)
Change in fair value of financial instruments	1,431	10,576
Transaction costs	2,030	—
Depreciation of hotel asset	250	242
Deferred income tax expense	(342)	42
Change in fair value of Class B LP units	423	(2,643)
Distributions to Class B LP unitholders	—	53
FFO^2	$                 (1,900)	$                    4,805
Finance income on finance lease receivable	(629)	(689)
Finance lease payments received	1,605	1,605
Core-FFO ^2	$                    (924)	$                    5,721
Amortization of deferred transaction costs	1,505	1,592
Amortization of debt mark-to-market adjustments	(9)	(10)
Amortization of straight-line rent	(892)	334
Normalized direct leasing and capital costs	(1,932)	(2,116)
AFFO ^2	$                 (2,252)	$                    5,521
Weighted average number of diluted units outstanding (000s)	86,092	85,792
FFO per unit ^2	$                   (0.02)	$                     0.06
Core-FFO per unit ^2	$                   (0.01)	$                     0.07
AFFO per unit ^2	$                   (0.03)	$                     0.06
FFO payout ratio ^2	— %	17.8 %
Core-FFO payout ratio ^2	— %	14.9 %
AFFO payout ratio ^2	— %	15.5 %

¹ In accordance with IFRIC 21, the REIT recognizes property tax liability and expense on its existing U.S. properties as at January 1 of each year, rather than progressively, i.e. ratably throughout the year. The recognition of property taxes as a result of IFRIC 21 has no impact on NOI, FFO or AFFO.
² Refer to "Non-IFRS measures" section above.

The reconciliation of cash flow from operating activities to FFO, Core-FFO and AFFO is as follows:

	Three months ended December 31,
(thousands of dollars)	2024	2023
Cash flow from operating activities	$                  11,209	$                  15,915
Add (deduct):
Leasing costs amortized to revenue	2,404	2,593
Transaction costs	2,030	—
Working capital changes	(11,865)	(9,300)
Straight-line rent and other changes	(1,512)	(2,927)
Interest and finance costs	(18,435)	(17,244)
Interest paid	14,269	15,662
Distributions paid to Class B LP unitholders	—	106
FFO^1	$                 (1,900)	$                    4,805
Finance income on finance lease receivable	(629)	(689)
Finance lease payments received	1,605	1,605
Core-FFO^1	$                    (924)	$                    5,721
Amortization of deferred transaction costs	1,505	1,592
Amortization of debt mark-to-market adjustments	(9)	(10)
Amortization of straight-line rent	(892)	334
Normalized direct leasing and capital costs	(1,932)	(2,116)
AFFO ^1	$                 (2,252)	$                    5,521

¹ Refer to "Non-IFRS measures" section above.

The calculation of trailing twelve month adjusted EBITDA is as follows:

	Twelve months ended December 31,
(thousands of dollars)	2024	2023
Net loss	$              (456,526)	$              (119,783)
Straight-line rent and other changes	7,266	11,366
Interest income	(380)	(562)
Interest and finance costs	75,079	64,831
Change in fair value of properties	437,770	138,217
Change in fair value of financial instruments	14,062	9,068
Distributions to Class B shareholders	—	899
Transaction costs	3,322	—
Depreciation of hotel asset	998	966
Change in fair value of Class B LP units	(1,427)	(18,551)
Costs related to the Internalization	501	—
Strategic review costs	—	2,591
Deferred income tax expense (recovery)	(257)	(204)
Current income tax expense	2,755	1,358
Adjusted EBITDA^1	$                  83,163	$                  90,196

¹ Adjusted EBITDA is based on actuals for the twelve months preceding the balance sheet date.

The calculation of net debt is as follows:

(thousands of dollars)	December 31, 2024	December 31, 2023
Debt, non-current	$                154,666	$                536,578
Debt, current	935,358	642,156
Debt	$             1,090,024	$             1,178,734
Less: cash on hand	13,590	11,270
Net debt	$             1,076,434	$             1,167,464

The calculation of net debt to adjusted EBITDA is as follows:

	Twelve months ended December 31,
(thousands of dollars)	2024	2023
Debt	$             1,090,024	$             1,178,734
Less: cash on hand	13,590	11,270
Net debt	$             1,076,434	$             1,167,464
Adjusted EBITDA ^1 2	83,163	90,196
Net debt to adjusted EBITDA ^2	12.9x	12.9x

¹ Adjusted EBITDA is based on actuals for the twelve months preceding the balance sheet date.

² Refer to "Non-IFRS measures" section above.

The interest coverage ratio is calculated as follows:

	Twelve months ended December 31,
(thousands of dollars)	2024	2023
Adjusted EBITDA ^1 2	$                  83,163	$                  90,196
Interest expense	68,805	59,535
Interest coverage ratio ^2	1.2x	1.5x

¹ Adjusted EBITDA is based on actuals for the twelve months preceding the balance sheet date.

² Refer to "Non-IFRS measures" section above.

The following is the calculation of IFRS NAV on a total and per unit basis at December 31, 2024 and December 31, 2023:

(thousands of dollars, except per unit amounts)	December 31, 2024	December 31, 2023
Equity	$                  59,810	$                508,704
Class B LP units	2,854	4,281
Deferred unit liability	193	489
Deferred tax liability	—	254
IFRS net asset value	$                  62,857	$                513,728
Diluted number of units outstanding (000s) ^1	86,146	85,937
IFRS net asset value per unit	$                     0.73	$                     5.98

¹ Represents the fully diluted number of units outstanding and includes outstanding REIT units, DUP units and Class B LP units.

SOURCE Ravelin Properties REIT

For Further Information: Investor Relations, Tel: [phone], E-mail: [email protected]