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NEXUS Real Estate Investment Trust announces Q2 results and September distribution

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TORONTO and MONTREAL, Aug. 25, 2017 /CNW/ - NEXUS Real Estate Investment Trust (the "REIT") (TSXV: NXR.UN) announced today its results for the three and six months ended June 30, 2017 and the declaration of the September 2017 distribution.

Highlights

  • Completed $55 million bought deal equity financing and $15 million private placement on June 30th; proceeds used to complete approximately $147 million acquisition of 26 properties on July 7th.
  • Completed Nobel REIT merger on April 3, 2017; added 16 properties with approximately 875,000 square feet of GLA.
  • Portfolio high graded with the addition of quality urban Montreal properties.
  • External management contract terminated and management internalized effective April 3, 2017.
  • AFFO per unit for the quarter of $0.048 is 5.4% higher than AFFO per unit of the previous quarter of $0.045 (restated to conform with the Realpac whitepaper definition of AFFO adopted in the quarter) with further accretion to be realized in future quarters with the completion of the Sandalwood acquisition and the redevelopment project at the downtown Montreal office property acquired in the Nobel REIT transaction.
  • Management of the REIT will host a conference call on Monday August 28th at 1PM EST to review results and operations.

"Q2 has been a transformative quarter for the REIT. We successfully internalized management, integrated the former Edgefront and Nobel REIT platforms, completed an equity financing and closed on the $147 million acquisition of the Sandalwood portfolio shortly after the quarter end." stated Kelly Hanczyk, the REIT's Co-Chief Executive Officer. "We will see improvements to our payout ratio and AFFO per unit in the third quarter as we realize the immediate benefits of the accretive Sandalwood transaction and further benefits in early 2018 with the commencement of leases in our downtown Montreal redevelopment project. Our success in the first half of the year combined with our off-market acquisition pipeline, lays the groundwork for continued growth in 2017 and beyond."

Summary of Results

Included in the tables that follow and elsewhere in this news release are non-IFRS measures that should not be construed as an alternative to net income / loss, cash from operating activities or other measures of financial performance calculated in accordance with IFRS, and may not be comparable to similar measures as reported by other issuers. Readers are encouraged to refer to the REIT's MD&A for further discussion of the non-IFRS measures presented.





Three months ended

 June 30,

Six months ended

 June 30,


2017

2016

2017

2016

Financial Results

$

$

$

$

Property revenue

6,856,900

3,810,928

10,867,036

7,535,469

Net operating income

5,233,242

3,138,447

8,552,228

6,288,802

Net income

13,559

592,806

26,848

2,919,558

Net income excluding transaction costs, fair value adjustments, bargain purchase gain and other income

2,949,069

1,737,445

4,727,899

3,384,658

 

On June 30, 2017, the REIT issued 33,350,000 REIT units in connection with a bought deal equity financing and private placement. Net of equity issuance costs, approximately $66,225,000 of net proceeds were received. Holders of the 33,350,000 REIT units issued on June 30, 2017 were entitled to receive the June distribution declared payable to unitholders of record as of June 30, 2017. The funds generated from the bought deal and private placement were deployed on July 7, 2017 to complete a previously announced $147,000,000 acquisition of 26 properties. As a result of the timing of the issuance of the 33,350,000 units on the last day of the quarter and with the holders of these units being entitled to receive the June distribution, the AFFO payout ratio for the quarter was distorted. Also impacted were the weighted average number of units outstanding and the total assets at June 30, 2017, distorting metrics including debt to total assets and per unit measures. In the table that follows, certain metrics are normalized to reverse these impacts. In the quarter, the REIT adopted the definition of AFFO contained in the whitepaper issued by Realpac in February 2017. Year to date 2017 and prior period comparative figures have been restated to conform with the definition of AFFO adopted in the quarter ended June 30, 2017. For reference, AFFO per unit and the AFFO payout ratio for the previous quarter ended March 31, 2017, when calculated consistently with the definition adopted from the Realpac whitepaper, were $0.045 and 88.7%, respectively.   





Three months ended

 June 30,

Six months ended

 June 30,


2017

2016

2017

2016

Financial Highlights

$

$

$

$

FFO (1)

3,059,159

1,958,865

5,079,932

4,091,185

Normalized FFO (1) (4)

3,059,159

1,958,865

5,079,932

3,834,657

AFFO (1)

2,842,217

1,876,809

4,734,471

3,927,074

Normalized AFFO (1) (4)

2,842,217

1,876,809

4,734,471

3,670,546

Distributions declared (2)

2,833,890

1,609,305

4,511,535

3,208,882

Distributions declared on units issued June 30, 2017 on the closing of the bought deal and private placement (5)

444,556

-

444,556

-

Normalized distributions declared (5)

2,389,335

1,609,305

4,066,980

3,208,882

Weighted average units outstanding - basic (3)

59,670,062

40,193,668

50,826,902

40,074,261

Weighted average units outstanding - diluted (3)

59,851,912

40,193,668

50,925,074

40,074,261

Distributions per unit, basic (2) (3)

0.047

0.040

0.089

0.080

FFO per unit, basic (1) (3)

0.051

0.049

0.100

0.102

Normalized FFO per unit, basic (1) (3) (4)

0.051

0.049

0.100

0.096

AFFO per unit, basic and diluted (1) (3)

0.048

0.047

0.093

0.098

Normalized AFFO per unit, basic (1) (3) (4)

0.048

0.047

0.093

0.092

Normalized AFFO per unit, diluted (1) (3) (4)

0.047

0.047

0.093

0.092

Normalized AFFO payout ratio, basic, adjusted (1) (2) (4) (5) (6)

84.1%

85.7%

85.9%

87.4%

Debt to total assets ratio (7)

44.8%

49.2%

44.8%

49.2%

(1)

Non-IFRS Measure

(2)

Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the consolidated financial statements.

(3)

Weighted average number of units includes the Class B LP Units.

(4)

For the six months ended June 30, 2016, FFO and AFFO include $256,528 of other income relating to the release in the first quarter of 2016 of funds previously held in an environmental escrow in connection with the acquisition of ten industrial properties on January 14, 2014. This is a one-time item which is excluded from normalized FFO and normalized AFFO for the three months ended March 31, 2016. 

(5)

33,350,000 REIT units were issued on June 30, 2017 on the closing of an equity financing and private placement. These units were eligible to receive distributions for the month of June. Normalized distributions declared and Normalized AFFO payout ratio, basic, calculated with normalized distributions declared each exclude distributions declared on these units which were outstanding for only 1 day in the quarter.

(6)

Calculated based on normalized distributions declared as presented in the table above. Normalized AFFO Payout Ratio for the quarter is 99.7% when unadjusted for distributions paid on units issued on June 30, 2017.

(7)

Net proceeds from the closing of the bought deal financing and private placement of approximately $66,225,000 increased total assets temporarily at quarter end.  Net of this amount, debt to total assets would have been approximately 55.1%.

 

Revenues and Results from Operations in Line with Expectations

For the three months ended June 30, 2017, net operating income of $5,233,242 was $2,094,795 higher than NOI in the same period of 2016 of $3,138,447 primarily due to the impact of the Nobel transaction, which accounted for approximately $1,871,000 of net operating income in the quarter, as compared to $nil in the same quarter of 2016. The Cambridge Property, acquired August 22, 2016, contributed approximately $158,000 of NOI. Concurrent with the Nobel transaction, the contract with Edgefront REIT's external manager, Edgefront Realty Advisors (the "Manager"), was terminated, and the property management fees totalling approximately $16,000 which were earned by the Manager in past quarters were earned by the REIT in the quarter.  Contractual rent increases based on CPI generated approximately $32,000 of additional NOI in the quarter as compared to the same period of 2016.

Earnings Call

Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Monday August 28, 2017 to review the financial results and operations.

To participate in the conference call, please dial 416-915-3239 or 1-800-319-4610 (toll free in Canada and the US) at least five minutes prior to the start time and ask to join the Nexus REIT conference call. 

A recording of the conference call will be available until September 8, 2017. To access the recording, please dial 604-674-8052 or 1-855-669-9658 (toll free in Canada and the US) and enter access code 1637.

September Distribution

The REIT will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 per unit on an annualized basis, payable October 16, 2017 to unitholders of record as of September 29, 2017.

The REIT's current distribution per unit continues to be $0.01333 per month. The REIT's distribution reinvestment program ("DRIP") entitles eligible unitholders to elect to receive all, or a portion of the cash distributions of the REIT reinvested in units of the REIT. Eligible unitholders who so elect will receive a bonus distribution of units equal to 4% of each distribution that was reinvested by them under the DRIP.

About Nexus REIT

Nexus is a growth oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of industrial, office and retail properties located in primary and secondary markets in North America. The REIT currently owns a portfolio of 62 properties comprising approximately 3.5 million square feet of rentable area. The REIT has approximately 88,090,000 units issued and outstanding. Additionally, there are approximately 6,006,000 Class B LP units of subsidiary limited partnerships of the REIT issued and outstanding.

Forward Looking Statements

Certain statements contained in this news release constitute forward-looking statements which reflect the REIT's current expectations and projections about future results. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors 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 by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect.

While the REIT anticipates that subsequent events and developments may cause its views to change, the REIT specifically disclaims any obligation to update these forward-looking statements except as required by applicable law. These forward-looking statements should not be relied upon as representing the REIT's views as of any date subsequent to the date of this news release. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect the REIT.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

SOURCE Nexus Real Estate Investment Trust

View original content: http://www.newswire.ca/en/releases/archive/August2017/25/c6816.html

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