TORONTO, Nov. 08, 2017 (GLOBE NEWSWIRE) -- WPT Industrial Real Estate Investment Trust (the "REIT") WIR WPTIF announced today its results for the three and nine months ended September 30, 2017. All dollar amounts are stated in US funds.
2017 HIGHLIGHTS:
- Revenue, net operating income ("NOI"), funds from operations ("FFO") and adjusted funds from operations ("AFFO") were up 13.2%, 11.0%, 19.1% and 16.7% year-to-date, respectively, over the same period last year
- Net income and comprehensive income, excluding all fair value adjustments, was up 24.6% year-to-date over the same period last year
- Same properties average occupancy increased to 99.0% from 98.5% year-to-date over the same period last year
- 99.8% of occupied space, with leases set to expire up through September 30, 2017 (totaling approximately 2.9 million square feet), has been renewed or leased to new tenants
- Completed successful equity offering in July, raising $86.6 million in gross proceeds
- Acquired three properties totaling 1,838,694 square feet during the third quarter of 2017 for $170.6 million
- Increased the capacity of the REIT's senior secured revolving credit facility (the "Revolving Facility") from $100 million to $150 million
"With the acquisition of three high-quality distribution properties in three new target markets, a successful equity offering in July, the disposal of a non-core asset in August, and renewals of all expiring leases during the quarter, the REIT continues to generate solid operating and financial results," commented Scott Frederiksen, Chief Executive Officer. "We are pleased with the REIT's results to date and will continue our commitment to enhancing the scale and diversity of the REIT's portfolio."
SOLID OPERATING PERFORMANCE
For the three and nine months ended September 30, 2017, investment properties revenue was $20.7 million and $59.4 million, respectively, compared to $17.3 million and $52.4 million, respectively, in the same periods last year. The increase in revenue is primarily due to the contribution from the acquisitions completed in November 2016 and the third quarter of 2017, an increase in base rent and higher recoveries of operating expenses in existing properties, partially offset by the sale of two non-core properties in July 2016 and August 2017, and a tenant receivable write-off in the second quarter of 2017. Net income and comprehensive income for the three and nine months ended September 30, 2017 was $7.0 million ($0.149 per trust unit of the REIT and class B partnership unit of WPT Industrial, LP) (trust units of the REIT and class B partnership units of WPT Industrial, LP are each referred to herein as a "Unit" and collectively as, "Units") and $44.4 million ($1.055 per Unit), respectively, compared to $4.1 million ($0.104 per Unit) and $32.4 million ($0.943 per Unit) in the same period last year. Excluding all fair value adjustments, net income and comprehensive income for the three and nine months ended September 30, 2017 was $9.4 million and $25.6 million, respectively, compared to $7.3 million and $20.5 million, in the same periods last year.
NOI for the three and nine months ended September 30, 2017 was $15.1 million and $43.3 million, respectively, compared to $13.0 million and $39.0 million in the same periods last year. Same properties NOI was up 2.2% and 1.8% for the three and nine months ended September 30, 2017 compared to the same periods last year. Excluding a one-time tenant receivable write off from the second quarter of 2017, same properties NOI was up 2.6% for the nine months ended September 30, 2017, compared to the same period last year.
AFFO for the three and nine months ended September 30, 2017 was $8.8 million ($0.187 per Unit) and $25.1 million ($0.580 per Unit), respectively, compared to $7.5 million ($0.190 per Unit) and $21.5 million ($0.603 per Unit) in the same periods last year.
For the three months ended September 30, 2017, cash flow from operations and adjusted cash flow from operations ("ACFO") were $13.6 million and $9.5 million, respectively, compared to $11.7 million and $7.9 million in the same period last year. For the nine months ended September 30, 2017, cash flow from operations and ACFO were $40.8 million and $27.0 million, respectively, compared to $35.5 million and $22.6 million in the same period last year. The REIT's ACFO payout ratio for the three and nine months ended September 30, 2017 was 96.2% and 92.0%, respectively, compared to 99.5% and 91.3% in the same periods last year.
STRONG FINANCIAL & LIQUIDITY POSITION
As at September 30, 2017, the REIT's debt-to-gross-book-value ratio was 41.6% with an interest coverage ratio of 3.8 times, a debt-to-Adjusted EBITDA ("Adjusted EBITDA" is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) ratio of 7.1 times, and a fixed charge coverage ratio of 3.2 times, all consistent with or improved from last year. The weighted average effective interest rate on outstanding debt was 3.6% at September 30, 2017, down from 4.0% at the same time last year. The weighted average term to maturity on the REIT's mortgages payable was 3.9 years as at September 30, 2017, with a weighted average remaining lease term of 4.1 years.
On August 25, 2017, the REIT exercised the accordion feature provided by the Revolving Facility, which increased availability from $100 million to $150 million (subject to requisite borrowing base collateral). On September 13, 2017, the REIT added its Quakertown, Pennsylvania property as borrowing base collateral for the Revolving Facility.
On September 25, 2017, the REIT entered into a new, seven-year mortgage loan totaling $33.6 million, bearing a fixed interest rate of 3.36%, maturing on October 1, 2024, and secured by the REIT's Portland, Oregon property. The REIT used the loan proceeds to pay down the Revolving Facility.
As at September 30, 2017, in addition to cash on hand, the REIT had $68.6 million available to be drawn on the Revolving Facility.
RECENT EVENTS
On July 5, 2017, the REIT indirectly acquired from a third party, a 100% occupied investment property located in Portland, Oregon totaling 492,554 square feet for a purchase price of $56.0 million (exclusive of closing and transaction costs). The purchase price was satisfied with funds from the Revolving Facility.
On July 18, 2017, the REIT issued 6,735,500 trust units of the REIT (including trust units issued pursuant to the exercise in full of the over-allotment option granted to the underwriters by the REIT) at a price of $12.85 per REIT Unit to a syndicate of underwriters on a bought deal basis for net cash proceeds to the REIT of approximately $82.6 million (the "July 2017 Offering") (inclusive of underwriters' fees and issuance costs of approximately $3.9 million). The REIT used a portion of the funds from the July 2017 Offering to repay the outstanding balance on the Revolving Facility. In connection with the July 2017 Offering, Welsh Property Trust, LLC redeemed 3,110,888 class B partnership units in exchange for 3,110,888 trust units of the REIT and sold 3,115,000 trust units of the REIT as part of a secondary offering (the "Secondary Offering"). The REIT did not receive any funds from the Secondary Offering.
On August 3, 2017, the REIT acquired, an 86% occupied property located in Houston, Texas totaling 410,600 square feet for a purchase price of $40.3 million (exclusive of closing and transaction costs). The purchase price was satisfied with cash on hand and funds from the Revolving Facility.
On August 7, 2017, the REIT sold the office property located at 8085 Rivers Avenue, North Charleston, South Carolina for a sale price of $14.75 million (exclusive of closing and transaction costs).
On September 13, 2017, the REIT acquired a 100% occupied property located in Quakertown, Pennsylvania totaling 935,540 square feet for a purchase price of $74,300 (exclusive of closing and transaction costs). The purchase price was satisfied with cash on hand and funds from the Revolving Facility.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
| (all figures in thousands of US dollars, except per Unit amounts, ratios, percentages, number of investment properties, amounts related to remaining lease term and GLA) | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
| Operating Results: | |||||||||||||
| Investment properties revenue | $ | 20,709 | $ | 17,334 | $ | 59,377 | $ | 52,448 | |||||
| NOI (1) | $ | 15,126 | $ | 12,966 | $ | 43,342 | $ | 39,041 | |||||
| Net income and comprehensive income | $ | 6,973 | $ | 4,128 | $ | 44,447 | $ | 32,425 | |||||
| Net income and comprehensive income per Unit (basic) (2) (3) | $ | 0.149 | $ | 0.104 | $ | 1.055 | $ | 0.943 | |||||
| Net income and comprehensive income per Unit (diluted) (2) (4) | $ | 0.146 | $ | 0.102 | $ | 1.035 | $ | 0.932 | |||||
| FFO (1) (5) | $ | 10,468 | $ | 8,811 | $ | 29,731 | $ | 24,964 | |||||
| FFO per Unit (basic) (1) (2) (3) (5) | $ | 0.223 | $ | 0.222 | $ | 0.688 | $ | 0.701 | |||||
| FFO per Unit (diluted) (1) (2) (4) (5) | $ | 0.220 | $ | 0.219 | $ | 0.677 | $ | 0.693 | |||||
| AFFO (1) (5) | $ | 8,774 | $ | 7,547 | $ | 25,052 | $ | 21,464 | |||||
| AFFO per Unit (basic) (1) (2) (3) (5) | $ | 0.187 | $ | 0.190 | $ | 0.580 | $ | 0.603 | |||||
| AFFO per Unit (diluted) (1) (2) (4) (5) | $ | 0.184 | $ | 0.187 | $ | 0.570 | $ | 0.595 | |||||
| Cash flows from operations | $ | 13,557 | $ | 11,720 | $ | 40,802 | $ | 35,484 | |||||
| ACFO (1) | $ | 9,503 | $ | 7,898 | $ | 27,026 | $ | 22,649 | |||||
| Distributions: | |||||||||||||
| Distributions per Unit (2) (6) | $ | 0.19 | $ | 0.19 | $ | 0.57 | $ | 0.57 | |||||
| Distributions declared (3) (3) | $ | 9,145 | $ | 7,856 | $ | 24,865 | $ | 20,676 | |||||
| ACFO payout ratio (1) (6) | 96.2 | % | 99.5 | % | 92.0 | % | 91.3 | % | |||||
| Weighted average number of Units (basic) (2) (3) | 46,840 | 39,752 | 43,223 | 35,767 | |||||||||
| Weighted average number of Units (diluted) (2) (4) | 47,668 | 40,307 | 44,004 | 36,172 | |||||||||
| As at | September 30, 2017 | December 31, 2016 | |||||
| Operational Information: | |||||||
| Number of investment properties | 51 | 49 | |||||
| GLA | 17,312,507 | 15,632,184 | |||||
| Occupancy | 98.4% | 98.7% | |||||
| Average remaining lease term (years) | 4.1 | 4.1 | |||||
| Fair value of investment properties | $ | 1,004,406 | $ | 806,431 | |||
| Ratios: | |||||||
| Weighted average effective interest rate (7) | 3.6% | 3.8% | |||||
| Variable interest rate debt as percentage of total debt (8) | 16.7% | 5.9% | |||||
| Debt-to-gross book value (1) | 41.6% | 41.8% | |||||
| Interest coverage ratio (1) | 3.8x | 3.5x | |||||
| Fixed charge coverage ratio (1) | 3.2x | 3.0x | |||||
| Debt to Adjusted EBITDA (1) | 7.1x | 7.5x | |||||
| (1) NOI, FFO, AFFO, ACFO, FFO per Unit (basic and diluted), AFFO per Unit (basic and diluted), ACFO payout ratio, Adjusted EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to Adjusted 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 issuers. This data should be read in conjunction with the "Non-IFRS Measures" section of the REIT's MD&A. | |||||||
| (2) Includes REIT Units and Class B Units (collectively, the "Units"). | |||||||
| (3) Excludes all options and DTUs outstanding under the REIT's equity compensation plans. | |||||||
| (4) Includes all options and DTUs outstanding under the REIT's equity compensation plans. | |||||||
| (5) FFO, AFFO, FFO per Unit (basic and diluted) and AFFO per Unit (basic and diluted) for all periods presented has been adjusted to align with the definition presented by REALPAC. Refer to page 1 of the REIT's interim MD&A for the period ending March 31, 2017 for a description of the changes. | |||||||
| (6) Includes distributions on Units. | |||||||
| (7) Includes mortgages payable, a construction loan, the Revolving Facility, mark-to-market adjustments and financing costs. | |||||||
| (8) Includes amounts outstanding under the Revolving Facility and a construction loan. | |||||||
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, November 9, 2017 at 9:00 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. 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 10112674#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.
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 was formed for the purpose of acquiring and owning primarily industrial investment 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 17.3 million square feet of gross leasable area, comprised of 50 industrial properties and one office property located in 14 states in the United States. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.
For more information, please contact:
Scott Frederiksen, Chief Executive Officer
WPT Industrial Real Estate Investment Trust
Tel: (612) 800-8501
Fax: (612) 800-8535
Forward-Looking Statements
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", "scheduled", "estimates", "intends", "anticipates", "projects", "believes" or variations of such words and phrases (including negative variations) 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. Such estimates, beliefs and assumptions 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, if achieved at all. 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 or referenced under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2016, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be 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.
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