MONTREAL, Aug. 9, 2023
/CNW/ - PRO Real Estate Investment Trust ("PROREIT" or the "REIT")
(TSX: PRV.UN) today reported its financial and operating results
for the three-month period ("Q2" or "second quarter") and six-month
period ended June 30, 2023.
Second Quarter of Fiscal 2023 Highlights
- Property revenue increased by 5.1% in Q2 year-over-year
- Net operating income (NOI)* up 1.3% in Q2
year-over-year
- Same Property NOI* up 0.8% in Q2 year-over-year; up 3.9%
excluding a temporary vacancy (see Table 4)
- Net income and comprehensive income of $1.7 million in Q2, compared to $12.0 million in the same quarter last year
- $42.0 million available on
undrawn credit facility, in addition to $15.8 million in cash, at June 30, 2023
- AFFO Payout Ratio – Basic* of 97.3%, up from 86.5% in Q2
2022
- Debt to Gross Book Value* of 50.9% at June 30, 2023, compared to 51.3% at same date
last year
- Occupancy rate of 99.0%, including committed occupancy, at
June 30, 2023
- Approximately 85.0% of gross leasable area ("GLA") maturing in
2023 has been renewed at 43.2% average spread
"Our results for the second quarter of 2023 reflect both our
solid operating environment and the strength of our balance sheet,"
said Gordon Lawlor, President and Chief Executive Officer of
PROREIT.
"With a 99% occupancy rate, we continue to benefit from very
favorable leasing activity, including 85% of 2023 maturing GLA
renewed at 43.2% positive average rental rate spread. Without the
temporary vacancy of a 102,000 square foot industrial
property, which has been fully re-leased at an average positive
spread of 55%, Same Property NOI (Adjusted for One Temporary
Vacancy)* growth amounted to 3.9% in the second quarter of 2023,
compared to the same prior year period. The full impact of this
compelling lease-up will be reflected in our fourth quarter results
for this fiscal year.
"During the second quarter, we significantly increased our
Available Liquidity* to approximately $57.8
million, as we successfully closed a $35 million
convertible debentures offering and received a new $10 million
term loan. We also continued to strengthen our portfolio, selling
one non-core office property during the quarter for gross proceeds
of $2.1 million and entering
into a binding agreement on June 29,
2023, to sell two other non-core office properties for gross
proceeds of $9.1 million,
subject to customary closing conditions.
"We remain committed to increasing our footprint in the light
industrial sector, mindful that current macro-economic factors,
including the high-interest rate environment, present certain
challenges. Guided by a clear strategy for growth and sound capital
allocation, we intend to further maximize long-term value to
benefit all our stakeholders," concluded Mr. Lawlor.
*
|
Measures followed by
the suffix "*" in this release are non-IFRS measures. See "Non-IFRS
Measures".
|
===
Financial Results
Table 1 - Financial
Highlights
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Financial
data
|
|
|
|
|
Property
revenue
|
$
24,945
|
$
23,724
|
$
50,223
|
$
48,054
|
Net operating income
(NOI) (1)
|
$
14,450
|
$
14,270
|
$
28,990
|
$
28,350
|
Same Property NOI
(1)
|
$
11,939
|
$
11,847
|
$
24,209
|
$
23,519
|
Net income and
comprehensive income
|
$
1,742
|
$
11,969
|
$
14,790
|
$
58,491
|
Total assets
|
$
1,057,548
|
$
1,041,296
|
$
1,057,548
|
$
1,041,296
|
Debt to Gross Book
Value (1)
|
50.90 %
|
51.26 %
|
50.90 %
|
51.26 %
|
Interest Coverage Ratio
(1)
|
2.5x
|
2.9x
|
2.6x
|
2.9x
|
Debt Service Coverage
Ratio (1)
|
1.5x
|
1.6x
|
1.6x
|
1.6x
|
Debt to Annualized
Adjusted EBITDA Ratio (1)
|
10.3x
|
10.2x
|
10.1x
|
10.2x
|
Weighted average
interest rate on mortgage debt
|
3.75 %
|
3.40 %
|
3.75 %
|
3.40 %
|
Net cash flows provided
from operating activities
|
$
619
|
$
2,200
|
$
11,201
|
$
8,929
|
Funds from Operations
(FFO) (1)
|
$
7,270
|
$
7,836
|
$
12,218
|
$
15,945
|
Basic FFO per unit
(1)(2)
|
$
0.1203
|
$
0.1296
|
$
0.2022
|
$
0.2638
|
Diluted FFO per unit
(1)(2)
|
$
0.1187
|
$
0.1272
|
$
0.1989
|
$
0.2592
|
Adjusted Funds from
Operations (AFFO) (1)
|
$
6,990
|
$
7,862
|
$
14,804
|
$
15,675
|
Basic AFFO per unit
(1)(2)
|
$
0.1156
|
$
0.1301
|
$
0.2450
|
$
0.2593
|
Diluted AFFO per unit
(1)(2)
|
$
0.1142
|
$
0.1276
|
$
0.2410
|
$
0.2548
|
AFFO Payout Ratio –
Basic (1)
|
97.3 %
|
86.5 %
|
91.8 %
|
86.8 %
|
AFFO Payout Ratio –
Diluted (1)
|
98.5 %
|
88.2 %
|
93.4 %
|
88.3 %
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
(2)
|
Total basic units
consist of trust units of the REIT and Class B LP Units (as defined
herein). Total diluted units also includes deferred trust units and
restricted trust units issued under the REIT's long-term incentive
plan.
|
PROREIT owned 129 investment properties (including a 50%
ownership interest in 42 investment properties) at
June 30, 2023, compared to 120 investment properties
owned at 100% at June 30, 2022. Total assets amounted to
$1.06 billion as at
June 30, 2023, compared to $1.04 billion as at June 30, 2022,
an increase of $16.2 million or
1.6%. During the twelve-month period ended June 30, 2023,
PROREIT acquired a 50% interest in 21 investment properties,
sold a 50% interest in 21 other investment properties and sold
a 100% interest in 12 investment properties.
For the three-month period ended June 30, 2023:
- Property revenue amounted to $24.9
million, an increase of $1.2
million or 5.1%, compared to $23.7
million for the same prior year period, mainly resulting
from the change to the number of properties in the portfolio and
their related ownership percentages during the twelve-month period
ended June 30, 2023.
- Same Property NOI* reached $11.9
million, an increase of $0.1
million or 0.8%, compared to the same prior year period,
primarily attributable to an increase in occupancy in both the
office and retail asset classes and higher rents, partially offset
by a decrease in occupancy in the industrial asset class resulting
from a temporary vacancy at one Montreal 102,000 square foot property, which
has been fully re-leased. Excluding the impact of this temporary
vacancy, overall Same Property NOI (Adjusted for One Temporary
Vacancy)* for the three-month period ended June 30, 2023 increased $0.5 million or 3.9%.
- NOI* amounted to $14.5 million,
compared to $14.3 million in the same
period in 2022, an increase of 1.3% mainly driven by the impact of
the net property acquisitions and related ownership percentages
over the last twelve-month period.
- Net cash flows provided from operating activities reached
$0.6 million, compared to
$2.2 million in the second quarter of
2022, a decrease of 71.9%, largely as a result of the timing of
cash receipts and settlement of payables.
- AFFO* totaled $7.0
million, compared to $7.9
million in the same period last year, a decrease of
11.1%.
- AFFO Payout Ratio – Basic* was 97.3%, compared to 86.5%
for the same period in the prior year, primarily resulting from the
above-mentioned temporary vacancy, and increased interest
costs.
For the six-month period ended June 30, 2023:
- Property revenue amounted to $50.2
million, an increase of $2.2
million or 4.5%, compared to $48.1
million for the same prior year period, mainly resulting
from the change to the number of properties in the portfolio and
their related ownership percentages during the twelve-month period
ended June 30, 2023.
- Same Property NOI* reached $24.2
million, an increase of $0.7
million or 2.9%, compared to the same prior year period, as
a result of the same factors as the three-month Same Property NOI*.
Excluding the impact of the temporary vacancy, overall Same
Property NOI (Adjusted for One Temporary Vacancy)* for the
six-month period ended June 30, 2023
increased $1.1 million or 4.6%.
- NOI* amounted to $29.0 million,
compared to $28.4 million in the same
period in 2022, an increase of 2.3% mainly driven by the impact of
the net property acquisitions and related ownership percentages
over the last twelve-month period.
- Net cash flows provided from operating activities reached
$11.2 million, compared to
$8.9 million in the first half of
2022, an increase of 25.4%, largely as a result of the timing of
cash receipts and settlement of payables.
- AFFO* totaled $14.8
million, compared to $15.7
million in the same period last year, a decrease of
5.6%.
- AFFO Payout Ratio – Basic* was 91.8%, compared to 86.8%
for the same period in the prior year, primarily resulting from the
above-mentioned temporary vacancy, and increased interest
costs.
TABLE 2 - Reconciliation of net operating income to net
income and comprehensive income
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Net operating
income(1)
|
14,450
|
14,270
|
28,990
|
28,350
|
|
|
|
|
|
General and
administrative expenses
|
1,278
|
1,324
|
4,796
|
2,526
|
Long-term incentive
plan expense
|
395
|
(1,201)
|
976
|
(276)
|
Depreciation of
property and equipment
|
108
|
99
|
213
|
188
|
Amortization of
intangible assets
|
93
|
93
|
186
|
186
|
Interest and financing
costs
|
5,473
|
4,804
|
10,604
|
9,516
|
Distributions - Class B
LP Units
|
157
|
159
|
314
|
318
|
Fair value adjustment -
Class B LP Units
|
(964)
|
(1,807)
|
(992)
|
(861)
|
Fair value adjustment -
investment properties
|
6,250
|
(833)
|
(1,401)
|
(41,134)
|
Fair value adjustment -
derivative financial instrument
|
21
|
–
|
21
|
–
|
Other income
|
(748)
|
(677)
|
(1,583)
|
(1,139)
|
Other
expenses
|
398
|
340
|
819
|
535
|
Debt settlement
costs
|
53
|
–
|
53
|
–
|
Transaction
costs
|
194
|
–
|
194
|
–
|
Net income and
comprehensive income
|
$
1,742
|
$
11,969
|
$
14,790
|
$
58,491
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
For the three months ended June 30, 2023, net income and
comprehensive income amounted to $1.7 million, compared to $12.0 million during the same prior year
period last year. The $10.2 million variance is mainly due to the
$7.1 million impact of the
non-cash fair market value adjustment on investment properties, as
well as the $1.6 million
variance in long-term incentive plan expense.
For the six months ended June 30, 2023, net income and
comprehensive income amounted to $14.8 million, compared to $58.5 million during the same prior year
period last year. The $43.7 million variance mainly relates to the
$39.7 million impact of the
non-cash fair market value adjustment on investment properties, as
well as one-time CEO retirement costs of about $2.2 million, included in general and
administrative expenses.
Solid Balance Sheet
PROREIT had $42.0 million
available on its credit facility, in addition to $15.8 million in cash, at June 30, 2023.
With $33.8 million of maturing
mortgages remaining for 2023, PROREIT continues to benefit from a
well-staggered debt profile with limited material maturities until
2026. The weighted average interest rate on mortgage debt was 3.75%
at June 30, 2023, compared to 3.40% at the same date last
year.
Debt to Gross Book Value* was 50.90% at June 30, 2023,
down from 51.26% at the same date last year. Debt to Gross Book
Value* was negatively impacted at June 30, 2023 by the
temporary excess cash position, annual property tax payments, in
addition to the non-cash impact of the fair market value
adjustments, mainly in the office portfolio.
During the quarter, PROREIT strengthened its Available
Liquidity* to approximately $57.8
million through the issuance of $35.0 million of unsecured subordinated
debentures and with a new $10.0 million three-year term loan at a rate
of 6.79%. The debentures, which bear interest at the rate of 8.00%
per annum payable semi-annually in arrears, are convertible at the
holder's option at any time before they mature in June 2028,
at a conversion price of $7.00 per
trust unit. The proceeds of these transactions were used to
partially repay PROREIT's credit facility, with the balance of the
proceeds used for general corporate purposes.
During the quarter, PROREIT also refinanced six industrial
properties located in Winnipeg,
Manitoba with a new seven year mortgage with a 5.07%
interest rate, for $20.5 million
with most of the proceeds used to repay approximately $16.6 million of mortgages maturing in
July 2023.
Robust Operating Environment
At June 30, 2023, PROREIT's portfolio totaled
129 properties aggregating 6.5 million square feet of GLA
with a weighted average lease term of 4.1 years. Approximately
85.0% of leases maturing in 2023 have been renewed at a positive
average spread of 43.2%.
Occupancy (including committed occupancy) remained strong at
99.0% at June 30, 2023, up from 98.3% a year earlier. On
April 1, 2023, a 102,000 square foot industrial property
located in Montreal, Quebec became
vacant. The space has since been fully leased with occupancy
committed for the third quarter of 2023 to two tenants with
10-year lease terms at an average spread of 55% above the previous
tenants.
The industrial segment accounted for 80.5% of GLA and 70.6% of
base rent at June 30, 2023.
Portfolio Transactions
On April 21, 2023, PROREIT sold a 50,000 square
foot non-core office property for gross proceeds of $2.1 million (excluding closing costs), with
the proceeds used for general corporate purposes.
On June 29, 2023, PROREIT entered into a binding
agreement with a third-party purchaser to sell two non-core office
properties totalling approximately 60,000 square feet for
gross proceeds of $9.1 million (excluding closing costs).
Proceeds of the sale will be used to repay approximately
$5.7 million in related
mortgages maturing in December 2023, with the balance of the
proceeds to be used for general corporate purposes. The closing of
the sale is scheduled for the third quarter of 2023, subject
to standard closing conditions.
CEO Succession
Effective April 1, 2023, as part of PROREIT's
succession plan, Gordon G. Lawlor succeeded
James W. Beckerleg as President and Chief Executive
Officer of the REIT and joined PROREIT's Board of Trustees.
Simultaneously, Mr. Beckerleg was named Vice Chair of the
Board and Co-Founder. In June he was appointed Chair of the Board.
Mr. Beckerleg had been President and Chief Executive Officer
and a Trustee of PROREIT since 2013. Concurrently with these
changes, Alison Schafer was
appointed Chief Financial Officer and Secretary of the REIT.
Sustainability
On May 10, 2023, PROREIT released
its 2022 ESG report outlining its priorities, initiatives and
goals, along with the progress made to achieve those goals.
PROREIT's ESG report is available on the Sustainability page of its
website.
Distributions
Distributions to unitholders of $0.0375 per trust unit of the REIT were declared
monthly during the three months ended June 30, 2023,
representing distributions of $0.45 per unit on an annual basis.
Equivalent distributions are paid on the Class B limited
partnership units of PRO REIT Limited Partnership ("Class B LP
Units"), a subsidiary of the REIT.
On July 19, 2023, PROREIT announced a cash
distribution of $0.0375 per trust
unit for the month of July 2023. The distribution is payable
on August 15, 2023 to unitholders of record as at
July 31, 2023.
Strategy
While focusing on high-quality light industrial real estate in
Canada, PROREIT's strategy is to
create value by growing its quality portfolio organically and
through disciplined acquisitions, while optimizing its balance
sheet and capital allocation. With this clear strategy for growth
and value creation, PROREIT's continued focus is on achieving its
medium-term goals of reaching $2 billion in assets, 90%
industrial base rent and 45% Debt to Gross Book Value* in the next
three to five years.
Investor Conference Call and Webcast Details
PROREIT will hold a conference call to discuss its second
quarter 2023 results on August 10, 2023, at
9:00 a.m. EDT. There will be a question period reserved for
financial analysts. To access the conference call, please dial
888-664-6383 or 416-764-8650. A recording of the call will be
available until August 17, 2023 by
dialing 888-390-0541 or 416-764-8677 and using access code:
885350#.
The conference call will also be accessible via live webcast on
PROREIT's website at www.proreit.com or
at https://app.webinar.net/3bKp1kNX4ZG.
About PROREIT
PROREIT (TSX:PRV.UN) is an unincorporated open-ended real
estate investment trust established pursuant to a declaration of
trust under the laws of the Province of Ontario. Founded in 2013, PROREIT owns a
portfolio of high-quality commercial real estate properties in
Canada, with a strong industrial
focus in robust secondary markets.
For more information on PROREIT, please visit the website
at: https://proreit.com.
Non-IFRS Measures
PROREIT's consolidated financial statements are prepared in
accordance with International Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board. In addition
to reported IFRS measures, industry practice is to evaluate real
estate entities giving consideration, in part, to certain non-IFRS
financial measures, non-IFRS ratios and other specified financial
measures (collectively, "non-IFRS measures"). Without
limitation, measures followed by the suffix "*" in this press
release are non-IFRS measures.
As a complement to results provided in accordance with IFRS,
PROREIT discloses and discusses in this press release
(i) certain non-IFRS financial measures, including: adjusted
earnings before interest, tax, depreciation and
amortization ("Adjusted EBITDA"); annualized adjusted earnings
before interest, tax, depreciation and
amortization ("Annualized Adjusted EBITDA"); adjusted funds
from operations ("AFFO"); Available Liquidity; funds from
operations ("FFO"); gross book value ("Gross Book
Value"); net operating income ("NOI"); Same Property NOI; Same
Property NOI (Adjusted for One Temporary Vacancy); and
(ii) certain non-IFRS ratios, including: AFFO Payout Ratio –
Basic; AFFO Payout Ratio – Diluted; Basic AFFO per Unit; Diluted
AFFO per Unit; Basic FFO per Unit; Diluted FFO per Unit; Debt to
Gross Book Value; Debt Service Coverage Ratio; Interest Coverage
Ratio; Debt to Annualized Adjusted EBITDA Ratio. These non-IFRS
measures are not defined by IFRS and do not have a standardized
meaning under IFRS. PROREIT's method of calculating these non-IFRS
measures may differ from other issuers and may not be comparable
with similar measures presented by other income trusts. PROREIT has
presented such non-IFRS measures and ratios as management believes
they are relevant measures of PROREIT's underlying operating and
financial performance. For information on the most directly
comparable IFRS measures, composition of the non-IFRS measures, a
description of how PROREIT uses these measures and an explanation
of how these measures provide useful information to investors,
refer to the "Non-IFRS Measures" section of PROREIT's management's
discussion and analysis for the three and six months ended
June 30, 2023, dated August 9, 2023, available
on PROREIT's SEDAR+ profile at www.sedarplus.ca, which is
incorporated by reference into this press release. As applicable,
the reconciliations for each non-IFRS measure are outlined below.
Non-IFRS measures should not be considered as alternatives to net
income, cash flows provided by operating activities, cash and cash
equivalents, total assets, total equity, or comparable metrics
determined in accordance with IFRS as indicators of PROREIT's
performance, liquidity, cash flow and profitability.
TABLE 3 - Reconciliation of Same Property NOI to net
operating income (as reported in the consolidated financial
statements)
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Property
revenue
|
$
24,945
|
$
23,724
|
$
50,223
|
$
48,054
|
Property operating
expenses
|
10,495
|
9,454
|
21,233
|
19,704
|
NOI (net operating
income) as reported in the financial statements
(1)
|
14,450
|
14,270
|
28,990
|
28,350
|
Straight-line rent
adjustment
|
(457)
|
(105)
|
(578)
|
(223)
|
NOI after straight-line
rent adjustment (1)
|
13,993
|
14,165
|
28,412
|
28,127
|
|
|
|
|
|
NOI (1)
sourced from:
|
|
|
|
|
Acquisitions
|
(2,066)
|
(287)
|
(4,147)
|
(572)
|
Dispositions
|
12
|
(2,031)
|
(56)
|
(4,036)
|
Same Property NOI
(1)
|
$
11,939
|
$
11,847
|
$
24,209
|
$
23,519
|
Number of same
properties
|
105
|
105
|
105(2)
|
105(2)
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
(2)
|
Includes 21 properties
50% owned at June 30, 2023 (100% owned at June 30, 2022). The
comparative period has been updated to reflect 50%
ownership.
|
TABLE 4 - Same Property NOI and Same Property NOI by asset class,
adjusted to exclude the NOI of the temporary vacancy of one
industrial property:
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Same Property NOI
(1)
|
$
11,939
|
$
11,847
|
$
24,209
|
$
23,519
|
NOI of the temporary
vacancy of 1 industrial property
|
141
|
(218)
|
(81)
|
(442)
|
Same Property NOI
(Adjusted for One Temporary Vacancy)
(1)
|
$
12,080
|
$
11,629
|
$
24,128
|
$
23,077
|
|
|
|
|
|
Industrial (excluding 1
temporary vacant property) (2)
|
$
8,103
|
$
7,832
|
$
16,184
|
$
15,537
|
Retail
Office
|
2,798
|
2,740
|
5,595
|
5,471
|
Office
|
1,179
|
1,057
|
2,349
|
2,069
|
Same Property NOI
(Adjusted for One Temporary Vacancy)
(1)
|
$
12,080
|
$
11,629
|
$
24,128
|
$
23,077
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
(2)
|
Includes 21 properties
50% owned at June 30, 2023 (100% owned at June 30, 2022). The
comparative period has been updated to reflect 50%
ownership.
|
TABLE 5 - Reconciliation of AFFO and FFO to net income and
comprehensive income
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Net income and
comprehensive income for the period
|
$
1,742
|
$
11,969
|
$
14,790
|
$
58,491
|
Add:
|
|
|
|
|
Long-term incentive
plan
|
(29)
|
(1,745)
|
(700)
|
(1,055)
|
Distributions - Class
B LP Units
|
157
|
159
|
314
|
318
|
Fair value adjustment
- investment properties
|
6,250
|
(833)
|
(1,401)
|
(41,134)
|
Fair value adjustment
- Class B LP Units
|
(964)
|
(1,807)
|
(992)
|
(861)
|
Fair value adjustment
- derivative financial instrument
|
21
|
–
|
21
|
–
|
Amortization of
intangible assets
|
93
|
93
|
186
|
186
|
FFO
(1)
|
$
7,270
|
$
7,836
|
$
12,218
|
$
15,945
|
Deduct:
|
|
|
|
|
Straight-line rent
adjustment
|
$
(457)
|
$
(105)
|
$
(578)
|
$
(223)
|
Maintenance capital
expenditures
|
(174)
|
(232)
|
(359)
|
(511)
|
Stabilized leasing
costs
|
(592)
|
(446)
|
(1,098)
|
(838)
|
Add:
|
|
|
|
|
Long-term incentive
plan
|
424
|
544
|
1,676
|
779
|
Amortization of
financing costs
|
253
|
265
|
439
|
523
|
Accretion expense -
derivative financial instrument
|
19
|
–
|
19
|
–
|
Debt settlement
costs
|
53
|
–
|
53
|
–
|
Transaction
costs
|
194
|
–
|
194
|
–
|
CEO Succession plan
costs
|
–
|
–
|
2,240
|
–
|
AFFO
(1)
|
$
6,990
|
$
7,862
|
$
14,804
|
$
15,675
|
Basic FFO per unit
(1)(2)
|
$
0.1203
|
$
0.1296
|
$
0.2022
|
$
0.2638
|
Diluted FFO per unit
(1)(2)
|
$
0.1187
|
$
0.1272
|
$
0.1989
|
$
0.2592
|
Basic AFFO per unit
(1)(2)
|
$
0.1156
|
$
0.1301
|
$
0.2450
|
$
0.2593
|
Diluted AFFO per
unit (1)(2)
|
$
0.1142
|
$
0.1276
|
$
0.2410
|
$
0.2548
|
Distributions
declared per Unit and Class B LP unit
|
$
0.1125
|
$
0.1125
|
$
0.2250
|
$
0.2250
|
AFFO Payout Ratio –
Basic (1)
|
97.3 %
|
86.5 %
|
91.8 %
|
86.8 %
|
AFFO Payout Ratio –
Diluted (1)
|
98.5 %
|
88.2 %
|
93.4 %
|
88.3 %
|
Basic weighted
average number of units (2)(3)
|
60,447,230
|
60,447,230
|
60,429,395
|
60,447,230
|
Diluted weighted
average number of units (2)(3)
|
61,234,171
|
61,625,646
|
61,426,665
|
61,510,654
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
(2)
|
FFO and AFFO per unit
is calculated as FFO or AFFO, as the case may be, divided by the
total of the weighted average number of basic or diluted units, as
applicable, added to the weighted average number of Class B LP
Units outstanding during the period.
|
(3)
|
Total basic units
consist of trust units of the REIT and Class B LP Units. Total
diluted units also includes deferred trust units and restricted
trust units issued under the REIT's long-term incentive
plan.
|
TABLE 6 - Reconciliation of Adjusted EBITDA to net income and
comprehensive income
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Net income and
comprehensive income
|
$
1,742
|
$
11,969
|
$
14,790
|
$
58,491
|
Interest and financing
costs
|
5,473
|
4,804
|
10,604
|
9,516
|
Depreciation of
property and equipment
|
108
|
99
|
213
|
188
|
Amortization of
intangible assets
|
93
|
93
|
186
|
186
|
Fair value adjustment -
Class B LP Units
|
(964)
|
(1,807)
|
(992)
|
(861)
|
Fair value adjustment -
investment properties
|
6,250
|
(833)
|
(1,401)
|
(41,134)
|
Fair value adjustment -
derivative financial instrument
|
21
|
–
|
21
|
–
|
Distributions - Class B
LP Units
|
157
|
159
|
314
|
318
|
Straight-line
rent
|
(457)
|
(105)
|
(578)
|
(223)
|
Long-term incentive
plan expense
|
395
|
(1,201)
|
976
|
(276)
|
CEO succession plan
costs
|
–
|
–
|
2,240
|
–
|
Transaction
costs
|
53
|
–
|
53
|
–
|
Debt settlement
costs
|
194
|
–
|
194
|
–
|
Adjusted EBITDA
(1)
|
$
13,065
|
$
13,178
|
$
26,620
|
$
26,205
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
TABLE 7 - Calculation of Debt to Annualized Adjusted EBITDA
Ratio
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Debt(1)
|
$ 487,055
|
$ 503,135
|
$ 487,055
|
$ 503,135
|
Convertible Debentures,
face value
|
35,000
|
–
|
35,000
|
–
|
Credit
facility(1)
|
18,000
|
32,000
|
18,000
|
32,000
|
Total Debt
(1), Convertible Debentures, face value and credit
facility(1)
|
$ 540,055
|
$ 535,135
|
$ 540,055
|
$ 535,135
|
|
|
|
|
|
Adjusted EBITDA
(2)
|
$
13,065
|
$
13,178
|
$
26,620
|
$
26,205
|
Annualized Adjusted
EBITDA (2)
|
$
52,260
|
$
52,712
|
$
53,240
|
$
52,410
|
Debt to Annualized
Adjusted EBITDA Ratio (2)
|
10.3x
|
10.2x
|
10.1x
|
10.2x
|
(1)
|
Excluding unamortized
financing costs.
|
(2)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
TABLE 8 - Calculation of the Interest Coverage Ratio
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Adjusted EBITDA
(1)
|
$
13,065
|
$
13,178
|
$
26,620
|
$
26,205
|
Interest
expense
|
$
5,293
|
$
4,538
|
$
10,314
|
$
8,986
|
Interest Coverage
Ratio (1)
|
2.5x
|
2.9x
|
2.6x
|
2.9x
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
TABLE 9 - Calculation of the Debt Service Coverage Ratio
(CAD $
thousands)
|
3 Months
Ended
June 30
2023
|
3 Months
Ended
June 30
2022
|
6 Months
Ended
June 30
2023
|
6 Months
Ended
June 30
2022
|
Adjusted EBITDA
(1)
|
$
13,065
|
$ 13,178
|
$
26,620
|
$
26,205
|
Interest
expense
|
5,293
|
4,538
|
10,314
|
8,986
|
Principal
repayments
|
3,267
|
3,566
|
6,607
|
7,155
|
Debt Service
Requirements
|
$
8,560
|
$ 8,104
|
$
16,921
|
$
16,141
|
Debt Service
Coverage Ratio (1)
|
1.5x
|
1.6x
|
1.6x
|
1.6x
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
TABLE 10 - Calculation of Gross Book Value and Debt to Gross Book
Value
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
|
June 30
2023
|
June 30
2022
|
Total assets, including
investment properties stated at fair value
|
|
$ 1,057,548
|
$ 1,041,296
|
Accumulated
depreciation on property and equipment and intangible
assets
|
|
3,451
|
2,642
|
Gross Book Value
(1)
|
|
$ 1,060,999
|
$ 1,043,938
|
Debt
(2)
|
|
487,055
|
503,135
|
Convertible Debentures,
face value
|
|
35,000
|
-
|
Credit facility
(2)
|
|
18,000
|
32,000
|
Total
Debt(2), Convertible Debentures, face value and Credit
facility (2)
|
|
$
540,055
|
$
535,135
|
Debt to Gross Book
Value (1)
|
|
50.90 %
|
51.26 %
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
(2)
|
Excluding unamortized
financing costs.
|
TABLE 11- Calculation of Available Liquidity
(CAD $
thousands)
|
|
June 30
2023
|
March 31,
2023
|
June 30
2022
|
Cash per condensed
consolidated interim financial statements
|
|
$
15,795
|
$
10,827
|
$
3,802
|
Undrawn revolving
credit facility
|
|
42,000
|
23,000
|
28,000
|
Available Liquidity
(1)
|
|
$
57,795
|
$
33,827
|
$ 31,802
|
(1)
|
Non-IFRS measure. See
"Non-IFRS Measures".
|
Forward-Looking Statements
This press release contains forward-looking statements and
forward-looking information (collectively, "forward-looking
statements") within the meaning of applicable securities
legislation, including statements relating to certain expectations,
projections, growth plans and other information related to
PROREIT's business strategy and future plans. Forward-looking
statements are based on a number of assumptions and are subject to
a number of risks and uncertainties, many of which are beyond
PROREIT's control, that could cause actual results and events to
differ materially from those that are disclosed in or implied by
such forward-looking statements.
Forward-looking statements generally can be identified by the
use of forward-looking terminology such as "outlook", "objective",
"may", "will", "expect", "intent", "estimate", "anticipate",
"believe", "should", "plans", or "continue", or similar expressions
suggesting future outcomes or events. Forward-looking statements
contained in this press release include, without limitation,
statements pertaining to the execution by PROREIT of its growth
strategy, the future financial and operating performance of
PROREIT, the proposed increase of PROREIT's footprint in the light
industrial sector, the proposed sale of two non-core office
properties for gross proceeds of $9.1
million, the timing thereof and the use of the proceeds
thereof, and the medium-term goals of reaching $2 billion in assets, 90% industrial base rent
and 45% Debt to Gross Book Value* in the next three to five
years.
PROREIT's objectives and forward-looking statements are based on
its current assumptions about future events, including that
(i) PROREIT will receive financing on favourable terms;
(ii) the future level of indebtedness of PROREIT and its
future growth potential will remain consistent with PROREIT's
current expectations; (iii) there will be no changes to tax
laws adversely affecting PROREIT's financing capacity or
operations; (iv) the impact of the current economic climate
and the current global financial conditions on PROREIT's
operations, including its financing capacity and asset value, will
remain consistent with PROREIT's current expectations; (v) the
performance of PROREIT's investments in Canada will proceed on a basis consistent with
PROREIT's current expectations; and (vi) capital markets will
provide PROREIT with readily available access to equity and/or
debt.
Without limiting the foregoing, the medium-term targets of
PROREIT are based on PROREIT's current business plan and strategies
and are not intended to be a forecast of future results. The
medium-term targets contemplate the REIT's historical growth and
certain assumptions including but not limited to (i) current global
capital market conditions, (ii) access to capital, (iii) interest
rate exposure, (iv) availability of high-quality industrial
properties for acquisitions, (v) dispositions of retail and office
properties, and (vi) capacity to finance acquisitions on an
accretive basis.
Although PROREIT believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct,
and since forward-looking statements inherently involve risks and
uncertainties, undue reliance should not be placed on such
statements. Certain material factors or assumptions are applied in
making forward-looking statements, and actual results may differ
materially from those expressed or implied in such forward-looking
statements. The forward-looking statements contained in this news
release are expressly qualified in their entirety by this
cautionary statement. All forward-looking statements in this press
release are made as of the date of this press release. PROREIT 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 law.
Additional information about these assumptions and risks and
uncertainties is contained under "Risk Factors" in PROREIT's latest
annual information form and "Risk and Uncertainties" in PROREIT's
management's discussion and analysis for the three and six months
ended June 30, 2023, which are available under PROREIT's
profile on SEDAR+ at www.sedarplus.ca
SOURCE PROREIT