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WPT Industrial REIT Announces Second Quarter Results

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TORONTO, Aug. 08, 2018 (GLOBE NEWSWIRE) -- WPT Industrial Real Estate Investment Trust (the "REIT") (TSX:WIR, OTCQX:WPTIF) announced today its results for the three and six months ended June 30, 2018. All dollar amounts are stated in US funds.

2018 HIGHLIGHTS:

  • Fully internalized REIT management functions and acquired the private capital business of WPT Capital Advisors, LLC
  • Formed new U.S. industrial venture with Canada Pension Plan Investment Board ("CPPIB") and Alberta Investment Management Corporation and affiliates ("AIMCo"), which together with the REIT, are targeting to invest an aggregate $1.0 billion in equity to pursue value-add and development investments, creating an enhanced, proprietary acquisition pipeline for the REIT with a right of first opportunity to acquire managed assets on an off-market basis
  • Announced three accretive acquisitions totaling 684,200 sq. ft. for approximately $46.5 million (exclusive of closing and transaction costs)
  • Revenue and net operating income ("NOI") were up 16.1% and 16.9%, respectively, over the same period last year
  • Funds from operations ("FFO") and adjusted funds from operations ("AFFO") were up 14.6% and 16.0% year-to-date, respectively, over the same period last year
  • Net income and comprehensive income, excluding all fair value adjustments, was up 23.2% year-to-date over the same period last year
  • Same Property NOI ("SPNOI") was up 2.9% year-to-date over the same period last year
  • 100% of leases set to expire through June 30, 2018 were renewed
  • Closed on a $300 million unsecured credit facility (the "Credit Facility") comprised of a $175 million unsecured revolving credit facility (the "Revolving Facility") and a $125 million unsecured delayed draw term loan (the "Delayed Draw Term Loan")

"For the first six months of 2018, the REIT continued to generate solid operating and financial results while also completing a number of meaningful transactions," commented Scott Frederiksen, Chief Executive Officer. "With a fully-internalized and aligned management platform and a newly-formed private capital venture with CPPIB and AIMCo, we believe the REIT is better positioned than ever to expand the scale and diversity of our portfolio and enhance unitholder value over the long term."

SOLID OPERATING PERFORMANCE
For the three and six months ended June 30, 2018, investment properties revenue was $22.3 million and $44.9 million, respectively, compared to $19.2 million and $38.7 million, respectively, in the same periods last year.  The increase in revenue is primarily due to the contribution from 2017 acquisitions, an increase in base rent in existing properties and higher recoveries of operating expenses, partially offset by the sale of a non-core property in July 2017.  Net income and comprehensive income for the three and six months ended June 30, 2018 was $12.7 million ($0.263 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 $20.4 million ($0.424 per Unit), respectively, compared to $18.5 million ($0.448 per Unit) and $37.5 million ($0.906 per Unit) in the same period last year. Excluding all fair value adjustments, net income and comprehensive income for the three and six months ended June 30, 2018 was $9.8 million and $19.9 million, respectively, compared to $7.9 million and $16.1 million, in the same periods last year.

NOI for the three and six months ended June 30, 2018 was $16.6 million and $33.0 million, respectively, compared to $13.9 million and $28.2 million in the same periods last year. SPNOI, was up 3.0% and 2.9% for the three and six months ended June 30, 2018 compared to the same periods last year.

AFFO for the three and six months ended June 30, 2018 was $9.4 million ($0.195 per Unit) and $18.9 million ($0.392 per Unit), respectively, compared to $7.8 million ($0.188 per Unit) and $16.3 million ($0.393 per Unit) in the same periods last year.

For the three months ended June 30, 2018, cash flow from operations and adjusted cash flow from operations ("ACFO") were $16.8 million and $9.8 million, respectively, compared to $12.8 million and $8.5 million in the same period last year. For the six months ended June 30, 2018, cash flow from operations and ACFO were $32.3 million and $19.8 million, respectively, compared to $27.2 million and $17.5 million in the same period last year. The REIT's ACFO payout ratio for the three and six months ended June 30, 2018 was 93.1% and 92.3%, respectively, compared to 92.4% and 89.7% in the same periods last year.

STRONG FINANCIAL & LIQUIDITY POSITION
As at June 30, 2018, the REIT's debt-to-gross-book-value ratio was 43.4% with an interest coverage ratio of 3.7 times, a debt-to-Adjusted EBITDA ("Adjusted EBITDA" is defined as earnings before fair value adjustments to investment properties and deferred compensation, interest (inclusive of finance costs), taxes, depreciation and amortization) ratio of 7.1 times, and a fixed charge coverage ratio of 3.1 times, all consistent with last year. The weighted average effective interest rate on outstanding debt was 3.7% at June 30, 2018, consistent with the prior year. The weighted average term to maturity on the REIT's mortgages payable was 3.1 years as at June 30, 2018, with a weighted average remaining lease term of 3.8 years. 

On June 26, 2018, the REIT entered into the Credit Facility, comprised of the Unsecured Revolving Facility and the Delayed Draw Term Loan with availability to borrow up to $175 million and $125 million, respectively (subject to requisite unencumbered collateral).  At the time of closing, the REIT drew $75 million on the Delayed Draw Term Loan (the "Term Loan I") and $13 million on the Unsecured Revolving Facility, using the proceeds to pay closing costs and repay the $86 million balance of the prior senior secured revolving facility in full.

As at June 30, 2018, in addition to cash on hand, the REIT had $75.8 million available to be drawn on the Credit Facility.

RECENT EVENTS
On June 20, 2018, the REIT indirectly acquired a 100% occupied investment property located in St. Paul, Minnesota.  The REIT paid $8.3 million (exclusive of closing and transaction costs) for the 124,800 square foot building and excess land to accommodate a 75,000 square foot building expansion, representing a capitalization rate of approximately 6.0%.  The purchase price was satisfied with cash on hand and funds from the REIT's credit facility and the acquisition is expected to be immediately accretive to the REIT's AFFO per Unit. 

On June 29, 2018, the REIT indirectly acquired a 100% occupied investment property located in Rogers, Minnesota.  The REIT paid $20.4 million (exclusive of closing and transaction costs) for the 335,400 square foot building and excess land to accommodate a 141,000 square foot building expansion, representing a capitalization rate of approximately 6.1%. The purchase price was satisfied with cash on hand and funds from the Unsecured Revolving Facility and the acquisition is expected to be immediately accretive to the REIT's AFFO per Unit.

The REIT expects to close later this month on the previously announced acquisition of a 100% occupied investment property located in Louisville, Kentucky totaling 224,000 square feet for a purchase price of approximately $17.9 million (exclusive of closing and transaction costs), representing a capitalization rate of approximately 6.2%. The Louisville property will be acquired through the exercise of the REIT's right of first opportunity to acquire assets managed by WPT Capital Advisors, LLC, and the acquisition is expected to be immediately accretive to the REIT's AFFO per Unit.  The purchase price will be satisfied with funds from the Unsecured 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 June 30,     Six months ended June 30,
    2018     2017     2018     2017
Operating Results:                      
  Investment properties revenue $ 22,344   $ 19,174   $ 44,882   $ 38,668
  NOI (1) $ 16,591   $ 13,919   $ 32,993   $ 28,216
  Net income and comprehensive income $ 12,654   $ 18,539   $ 20,412   $ 37,474
  Net income and comprehensive income per Unit (basic) (2) (3) $ 0.263   $ 0.448   $ 0.424   $ 0.906
  Net income and comprehensive income per Unit (diluted) (2) (4) $ 0.258   $ 0.439   $ 0.416   $ 0.889
  FFO (1) $ 10,939   $ 9,456   $ 22,067   $ 19,263
  FFO per Unit (basic) (1) (2) (3) $ 0.227   $ 0.228   $ 0.458   $ 0.465
  FFO per Unit (diluted) (1) (2) (4) $ 0.223   $ 0.224   $ 0.450   $ 0.457
  AFFO (1) (5) $ 9,396   $ 7,788   $ 18,877   $ 16,278
  AFFO per Unit (basic) (1) (2) (3) $ 0.195   $ 0.188   $ 0.392   $ 0.393
  AFFO per Unit (diluted) (1) (2) (4) $ 0.191   $ 0.184   $ 0.385   $ 0.386
  Cash flows from operations $ 16,801   $ 12,816   $ 32,299   $ 27,245
  ACFO (1) $ 9,827   $ 8,514   $ 19,823   $ 17,523
Distributions:                      
  Distributions per Unit (2) (5) $ 0.190   $ 0.190   $ 0.380   $ 0.380
  Distributions declared (3) (5) $ 9,145   $ 7,864   $ 18,290   $ 15,720
  ACFO payout ratio (1) (5)   93.1%     92.4%     92.3%     89.7%
  Weighted average number of Units (basic) (2) (3)   48,158     41,393     48,158     41,384
  Weighted average number of Units (diluted) (2) (4)   49,021     42,216     49,066     42,137


As at   June 30, 2018     December 31, 2017
Operational Information:          
  Number of investment properties   55     53
  GLA     18,089,827       17,629,627
  Occupancy   98.2%     97.9%
  Average remaining lease term (years)   3.8     4.0
  Fair value of investment properties $ 1,046,966   $ 1,009,582
Ratios:          
  Weighted average effective interest rate (6)   3.7%     3.7%
  Variable interest rate debt as percentage of total debt (7)   23.8%     18.2%
  Debt-to-gross book value (1)   43.4%     42.1%
  Interest coverage ratio (1)   3.7x     3.8x
  Fixed charge coverage ratio (1)   3.1x     3.2x
  Debt to Adjusted EBITDA (1)   7.1x     7.1x
(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) Includes distributions on Units.
(6) Includes mortgages payable, Term Loan I, the Unsecured Revolving Facility, the Secured Revolving Facility, mark-to-market adjustments and financing costs.
(7) Includes amounts outstanding under the Secured Revolving Facility.

INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, August 9, 2018 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 10121780#. 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 has been formed for the purpose of acquiring, developing, managing 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 18.1 million square feet of gross leasable area, comprised of 54 industrial properties and one office property located in 15 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

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, 2017, 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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