TORONTO--(BUSINESS WIRE)--AGELLAN COMMERCIAL REAL ESTATE INVESTMENT TRUST (the “REIT”) (TSX:ACR.UN) is pleased to report its financial results for the three month period and year ended December 31, 2014.
| FINANCIAL AND OPERATIONAL HIGHLIGHTS | December 31, 2014 | December 31, 2013 | |||||||
| (all dollar amounts in 000's, except per Unit amounts) | |||||||||
| Summary of Operational Information | |||||||||
| Number of Properties | 26 | 26 | |||||||
| Gross Leasable Area ("GLA") (in 000's) | 4,349 | 4,575 | |||||||
| Occupancy %(1) | 93.1% | 92.5% | |||||||
| Average lease term to maturity (years) | 3.9 | 4.3 | |||||||
| Summary of Financial Information | |||||||||
| Gross Book Value(2) | $597,461 | $555,558 | |||||||
| Debt (face value) | $316,546 | $301,991 | |||||||
| Debt to Gross Book Value(2) | 53% | 54% | |||||||
| Interest Coverage Ratio(2) | 3.3x | 3.4x | |||||||
| Weighted average interest rate | 3.9% | 3.8% | |||||||
| For the three month period ended | |||||||||
| December 31, 2014 | December 31, 2013 | Variance | |||||||
| Total property and property related revenue | $19,907 | $17,474 | $2,433 | ||||||
| Adjusted net operating income(2)(3) | $10,910 | $10,242 | $668 | ||||||
| Funds from operations ("FFO")(2) | $6,531 | $6,511 | $20 | ||||||
| Adjusted funds from operations ("AFFO")(2) | $4,856 | $4,616 | $240 | ||||||
| Basic and Diluted FFO per Unit(2) | $0.28 | $0.29 | ($0.01) | ||||||
| Basic and Diluted AFFO per Unit(2) | $0.21 | $0.20 | $0.01 | ||||||
| Distributions per Unit | $0.194 | $0.197 | ($0.03) | ||||||
| Payout Ratio(2) | 94% | 97% | |||||||
| Units outstanding at period-end | 23,494,687 | 23,269,796 | |||||||
| Weighted average Units outstanding | 23,475,452 | 22,765,730 | |||||||
(1)Occupancy is measured as at January 1, 2015 and January 1, 2014,
respectively.
(2) This is a non-IFRS measure. Please see “Non-IFRS
supplemental measures” below.
(3)Adjusted for the application of
IFRIC 21. Please refer to the REIT’s Management Discussion and Analysis
for the three month period and year ended December 31, 2014 for
discussion of IFRIC 21.
Significant Events of the Quarter:
- In the fourth quarter of 2014 the REIT achieved FFO per Unit of $0.28 and AFFO per Unit of $0.21, which was generally consistent with FFO per Unit and AFFO per Unit of $0.29 and $0.20, respectively, during the fourth quarter of 2013.
- Net Operating Income, FFO and AFFO have been slightly behind management’s expectations, due to operating fundamentals, such as occupancy and market rent growth, slightly lagging management’s predictions. However, improved operating fundamentals were evident during the fourth quarter of 2014 as the REIT has experienced significant leasing activity throughout its portfolio in both Canada and the United States.
-
As at January 1, 2015 the REIT’s occupancy was 93.1%, up approximately
2% from the previously reported occupancy of 91.1% as of October 1,
2014.
- During the year the REIT had four tenants who vacated approximately 95,000 square feet in 3 Houston properties which was a major factor in the reduced occupancy. By the end of the year, the REIT leased over 100,000 square feet in the 3 aforementioned properties, replacing the lost occupancy.
- The increased occupancy has been supported by growth from the REIT’s Texas assets, which experienced occupancy growth of 4% during the period ended December 31, 2014.
- On November 19, 2014 the REIT entered into a 20-year lease agreement with Porsche Cars Canada Limited to lease approximately 60,000 square feet of space at a newly constructed dealership on existing lands. The REIT will contribute approximately 3.3 acres of land, currently being used for parking. The transaction remains subject to certain governmental approvals.
- In addition to construction of the Porsche dealership under a build to suit agreement, the REIT intends to construct a retail and parking facility that will address the reduction of surface parking due to the newly constructed dealership and bring additional retail amenities to the Consumers Road complex and the surrounding area.
- Subsequent to year end the REIT’s Board of Trustees approved a new U.S.-focused investment strategy that was recommended by the REIT’s external asset manager pursuant to which the REIT intends to seek to dispose of all or substantially all of its existing Canadian real estate assets and reinvest the related proceeds of disposition into real estate assets in the United States. The REIT believes acquiring additional assets located in the United States will be in the best interest of the REIT and its unitholders as valuations, financing and operating fundamentals in the United States are currently more attractive than in Canada. The disposition of all of the REITs existing Canadian real estate assets would increase the taxable portion of the REIT’s distribution to its Unitholders in the year of disposition.
- On February 2, 2015, the REIT completed the renewal of 103,645 square feet of the expiring 117,437 square feet in Austin, Texas to Life Technologies Corporation, a wholly-owned subsidiary of Thermo Fisher Scientific Inc., for a term of 5 years ending June 2020. The lease includes an increase in net rent per square foot of approximately 27% versus the tenant’s in-place net rent per square foot. As well, the renewal accounts for approximately 33% of the REIT’s total 2015 Texas lease expiries.
- On February 5, 2015, the REIT completed the sale of 20 Valleywood Drive in Markham, Ontario to a third party purchaser for approximately $8.2 million before closing costs, representing an in-place capitalization rate of approximately 5.9%.
- On February 9, 2015, the REIT completed the acquisition of 6 industrial properties (the “Oakbrook Technology Center”) located in Atlanta, Georgia for an aggregate purchase price of approximately US$12.9 million before closing costs. The purchase price represents a going-in capitalization rate of approximately 8.4%. The Oakbrook Technology Center consists of approximately 299,000 square feet in a park-like setting, and is 95% occupied with 28 tenants.
- On March 2, 2015, the REIT obtained additional debt financing on three office properties located in Houston, Texas totalling US$10 million. These funds will be used to temporarily reduce the amount drawn from the REIT’s credit facility.
- On March 6, 2015 the REIT announced that Anthony Messina was appointed as a new independent trustee of the REIT. In addition, the REIT announced that Richard Dansereau, an independent trustee of the REIT and former Interim Chair of the Board of Trustees of the REIT, was appointed as Chair of the Board of Trustees.
“We are excited about the leasing activity our portfolio experienced in the fourth quarter and are looking forward to keeping this momentum throughout 2015,” says Frank Camenzuli, Chief Executive Officer of the REIT. “We are strong believers in U.S. commercial real estate market, and will be investing in specific areas where we can maximize the growth potential of the assets.”
Other information:
Information appearing in this news release is a select summary of results. The REIT’s consolidated financial statements along with management’s discussion and analysis for the three month period and year ended December 31, 2014 (“MD&A”) are available electronically on the REIT’s website at www.agellanreit.com and under the REIT’s issuer profile at www.sedar.com.
The REIT 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 created for the purpose of acquiring and owning industrial, office and retail properties in select major urban markets in the United States and Canada.
The REIT's current portfolio comprises approximately 4.6 million square feet of gross leasable area in 31 properties. The properties are primarily located in major urban markets in the United States and Canada.
Non-IFRS supplemental measures:
Certain terms used in this news release are not recognized under International Financial Reporting Standards (“IFRS”), and therefore these terms should not be construed as alternatives to IFRS measures, such as, net income or cash flow from operating activities, nor are these terms necessarily comparable to similar measures presented by other reporting issuers. These terms are used by management to measure, compare and explain the operating results and financial performance of the REIT. Management believes that these terms are relevant measures in comparing the REIT’s performance to industry data and the REIT’s ability to earn and distribute cash to holders of the REIT’s units. These Non-IFRS measures, including net operating income, FFO, AFFO, Payout Ratio, Cash Payout Ratio, Gross Book Value, Interest Coverage Ratio, Adjusted net operating income, and related per unit amounts are defined and reconciled to net income in the REIT’s MD&A.
Forward-looking information:
This press release contains forward-looking information within the meaning of applicable securities legislation. Forward-looking information can be identified by words or expressions including, but not limited to, “plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “predicts”, ”projects”, “believes”, or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “should”, “might”, “occur”, “be achieved” or “continue” or similar expressions. Forward-looking information is necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are beyond the REIT’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: the REIT’s future growth potential; results of operations; future prospects for additional investment opportunities in Canada and the U.S., including access to debt and equity capital at acceptable costs and the ability to obtain necessary approvals and to minimize any unexpected costs or liabilities, environmental or otherwise, relating to any acquisitions or dispositions; demographic and industry trends remaining unchanged, including occupancy levels, lease renewals, rental increases and retailer competition; future levels of the REIT’s indebtedness remaining at acceptable levels, including its credit rating; tax laws as currently in effect remaining unchanged, including applicable SIFT rules; and current economic conditions remaining unchanged, including interest rates and applicable foreign exchange rates. Readers, therefore, should not place undue reliance on any such forward-looking statements. All forward-looking information in this press release speaks only as of the date of this press release. The REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities laws. All forward-looking statements in this press release are qualified by these cautionary statements. Additional information about these assumptions and risks and uncertainties is contained in the REIT’s filings with securities regulators, including its latest annual information form and MD&A.