Market Overview

Dream Industrial REIT Delivers Strong Q3 2017 Results, 96.7% Occupancy and 81.8% Tenant Retention Ratio

Share:



Dream Industrial REIT Delivers Strong Q3 2017 Results, 96.7% Occupancy and 81.8% Tenant Retention Ratio

Dream Industrial REIT Delivers Strong Q3 2017 Results, 96.7% Occupancy and 81.8% Tenant Retention Ratio

TORONTO, ONTARIO--(Marketwired - Nov 7, 2017) -

This news release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.

DREAM INDUSTRIAL REIT (TSX:DIR) today announced its financial results for the three and nine months ended September 30, 2017.

HIGHLIGHTS

  • New CEO appointed to spearhead expansion into the U.S., grow Canadian portfolio and work with Dream Unlimited Corp to identify new development projects, including on lands owned by Dream, to generate new growth opportunities for the Trust and to expand the Trust's capital recycling program within Canada. As previously announced, Brian Pauls has been appointed CEO effective January 1, 2018.


  • Dream Unlimited Corp has entered into an arrangement with PAULS Corp LLC, a Denver-based real estate firm with strong U.S. relationships and 40-year history, to provide the Trust with access to the U.S. market and leverage PAULS Corp LLC's track record and platform at no additional cost to the Trust. PAULS Corp LLC has acquired and developed industrial properties throughout the U.S. including the development of the 1,200 acre Gateway Park in Denver as well as developing over five million square feet of industrial space in multiple projects in Denver, Las Vegas, Dallas, Atlanta, Toronto and Calgary and over two million square feet of office space in Denver, San Diego, Las Vegas, St. Louis, Kansas City, and Detroit.


  • Adjusted Funds from Operations ("AFFO") per unit was 20.8 cents for the quarter representing 2.5% growth over the same quarter of 2016, largely driven by comparative property growth of 1.4% and general and administrative expense savings of 7.2%.


  • Net income of $9.1 million Net income was $16.2 million higher compared to prior quarter due to higher positive fair value adjustments to investment properties, which are excluded from FFO and AFFO.


  • Solid tenant retention ratio and leasing momentum Tenant retention ratio during the quarter was 81.8% with 897,000 square feet of leasing taking occupancy in the quarter. On a year-to-date basis, the retention ratio of 81.1%, is the highest in the Trust's history. Net positive absorption of 116,350 square feet was realized across the portfolio during the quarter with approximately 46,000 square feet of positive absorption realized in Western Canada. To date, we have effectively addressed all of our 2017 expiries and terminations as we have obtained commitments exceeding the amount of space that expires or terminates this year.


  • Strong portfolio occupancy at 96.7% with Western Canada at 96.5%, Ontario at 99.7%, Québec at 95.4% and Eastern Canada at 93.5%. Strong leasing momentum continued in our portfolio during the third quarter and the Trust's in-place occupancy has continually increased over the past four quarters. The Trust's portfolio continues to outperform comparable occupancy stats in each of our core markets.


  • Level of debt (debt-to-total assets) decreased by 10 bps to 52.6% and interest coverage improved to 3.3 times compared to 52.7% and 3.1 times, respectively, as at September 30, 2016.


  • Completed first U.S. asset acquisition subsequent to the quarter. The Trust completed the purchase of the previously announced acquisition of the 717,000 sq. ft. Nissan distribution center in Nashville, Tennessee for $60.9 million. This represents a going in capitalization rate of 6.3% and an average capitalization rate of 6.5% over the remaining lease term of 8.5 years.


  • Completed Calgary industrial property acquisition subsequent to the quarter. The Trust purchased a 189,000 square foot multi-tenant property in Calgary, Alberta for $17 million, representing a going in capitalization rate of 6.5%. The acquisition was funded using the Trust's revolving credit facility. The property is 93% leased and is strategically located in close proximity to the Trust's existing properties, providing the Trust with stable cash flow with opportunity to increase NOI with in-place rents currently below market.


"Having completed our first U.S. asset acquisition, and with Brian Pauls joining us as CEO in the new year, we are making significant progress on our previously announced strategy of entering the United States industrial markets in a disciplined manner," said Vincenza Sera, Chair and Trustee of Dream Industrial REIT. "We expect our relationship with PAULS Corp LLC will help Dream Industrial REIT capitalize on unique and attractive industrial opportunities in the near term. In addition, we look forward to working with Brian to grow the Trusts' business in Canada, including identifying new development projects and increasing the scope of the asset recycling program to improve the overall quality of our portfolio."

SELECTED FINANCIAL INFORMATION
(unaudited) Three Months Ended Nine Months Ended
($000's except unit and per unit amounts) September 30, 2017 June 30,

2017
September 30, 2016 September 30, 2017 September 30, 2016
Net income 9,091 (7,108 ) 14,283 15,193 6,912
Net operating income ("NOI")(1) 29,037 28,936 29,426 86,479 88,611
Funds from operations ("FFO")(1) 18,708 18,502 18,191 54,969 54,632
Adjusted funds from operations ("AFFO")(1) 16,867 16,382 15,923 48,819 47,331
Investment properties value 1,625,681 1,617,098 1,659,015 1,625,681 1,659,015
Debt 883,941 861,777 878,862 883,941 878,862
Per unit data(1)(2)
FFO - diluted(1) $ 0.230 $ 0.230 $ 0.229 $ 0.681 $ 0.690
AFFO - diluted(1) 0.208
View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com