Subjects: ERN, DIV
Nexus REIT Announces Q2 2018 Results and September 2018 Distribution
TORONTO and MONTREAL, Aug. 21, 2018 /CNW/ - Nexus Real Estate Investment Trust (the "REIT") (TSXV: NXR.UN) announced today its results for the quarter and six months ended June 30, 2018 and the declaration of the September 2018 distribution.
Highlights
- Q2 2018 property revenue increases to $13,121,925 from $6,856,900 for the same quarter of the prior year.
- Q2 2018 net rental income of $8,235,670 compared to $7,929,927 for Q1 2018 and $5,233,242 for Q2 2017.
- Normalized AFFO per unit of $0.048 for Q2 2018 increased 2.4% as compared to Q2 2017 AFFO per unit of $0.047, and increased 3.7% as compared to Q1 2018 AFFO per unit of $0.046.
- Adjusted normalized AFFO payout ratio for Q2 2018 of 83.4% is down from 85.2% for Q2 2017.
- Completed three acquisitions for an aggregate $76.0 million contractual purchase price; two dispositions for aggregate proceeds of $11.3 million.
- Units valued at $2.10 per REIT unit were issued to three vendors satisfying a total of $27.9 million of the aggregate purchase price.
- Completed a $6.6 million acquisition subsequent to the quarter end, with the vendor receiving 100% of the purchase price in units valued at the equivalent of $2.10 per REIT unit.
- Management of the REIT will host a conference call on Wednesday August 22nd at 1PM EST to review results and operations.
"We had yet another quarter of strong, consistent operational results while growing the REIT's portfolio and market capitalization through acquisitions which are accretive to the REIT's AFFO per unit" commented Kelly Hanczyk, the REIT's Chief Executive Officer. "To date in 2018 we have acquired $83 million in properties, increasing our market capitalization by $35 million without raising public equity. We anticipate work will begin at our Richmond, BC property shortly which will create significant value for our unitholders. We continue to see both stable cash flow acquisition opportunities and value-add acquisition opportunities similar to our Richmond asset, and we anticipate completing additional acquisitions in the near future".
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 | ||||||
|
2018 |
2017 |
2018 |
2017 | ||||
|
$ |
$ |
$ |
$ | ||||
|
Financial Results |
|||||||
|
Property revenue |
13,121,925 |
6,856,900 |
26,425,486 |
10,867,036 | |||
|
Net operating income |
8,235,670 |
5,233,242 |
16,165,597 |
8,552,228 | |||
|
Net income |
4,498,873 |
13,559 |
10,923,827 |
26,848 | |||
|
Net income excluding transaction costs, fair value adjustments, loss on disposal of investment properties and gain from bargain purchase |
4,520,380 |
2,949,069 |
9,382,808 |
4,727,899 | |||
|
Three months ended |
Six months ended | ||||||
|
2018 |
2017 |
2018 |
2017 | ||||
|
$ |
$ |
$ |
$ | ||||
|
Financial highlights |
|||||||
|
Funds from operations (FFO) (1) |
5,078,502 |
3,020,352 |
10,043,755 |
5,002,318 | |||
|
Normalized FFO (1) (8) |
5,531,606 |
3,020,352 |
10,496,859 |
5,002,318 | |||
|
Adjusted funds from operations (AFFO) (1) |
4,445,326 |
2,803,410 |
8,822,693 |
4,734,471 | |||
|
Normalized AFFO (1) (8) |
4,898,430 |
2,803,410 |
9,275,797 |
4,734,471 | |||
|
Distributions declared (2) |
4,212,990 |
2,833,890 |
7,986,095 |
4,511,535 | |||
|
Distributions declared on units issued June 30, 2017 on the closing of the bought deal and private placement (4) |
- |
444,556 |
- |
444,556 | |||
|
Distributions declared on units issued April 30, 2018 on the closing of an acquisition (5) |
128,857 |
- |
128,857 |
- | |||
|
Normalized distributions declared (4) (5) |
4,084,133 |
2,389,335 |
7,857,238 |
4,066,979 | |||
|
Weighted average units outstanding ? basic (3) |
101,829,119 |
59,670,062 |
98,070,079 |
50,826,902 | |||
|
Weighted average units outstanding ? diluted (3) |
101,888,051 |
59,851,912 |
98,134,567 |
50,925,074 | |||
|
Distributions per unit, basic and diluted (2) (3) |
0.041 |
0.047 |
0.081 |
0.089 | |||
|
Adjusted distributions per unit, basic and diluted (2) (3) (4) (5) |
0.040 |
0.040 |
0.080 |
0.080 | |||
|
FFO per unit, basic (1) (3) |
0.050 |
0.051 |
0.102 |
0.098 | |||
|
Normalized FFO per unit, basic (1) (3) (8) |
0.054 |
0.051 |
0.107 |
0.098 | |||
|
AFFO per unit, basic (1) (3) |
0.044 |
0.047 |
0.090 |
0.092 | |||
|
Normalized AFFO per unit, basic (1) (3) (8) |
0.048 |
0.047 |
0.095 |
0.092 | |||
|
Normalized AFFO payout ratio, basic, adjusted (1) (2) (4) (5) (6) (8) |
83.4% |
85.2% |
84.7% |
87.3% | |||
|
Debt to total assets ratio (7) |
54.3% |
44.8% |
54.3% |
44.8% | |||
|
(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) |
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, adjusted each exclude distributions declared on these units which were outstanding for only 1 day in the quarter. |
|
(5) |
9,666,667 units were issued on April 30, 2018 on the closing of an acquisition. These units were eligible to receive distributions for the month of April. Normalized distributions declared and Normalized AFFO payout ratio, basic, adjusted each exclude distributions declared on these units for the month of April 2018. |
|
(6) |
Calculated based on normalized distributions declared as presented in the table above. |
|
(7) |
Net proceeds from the closing of the bought deal financing and private placement of approximately $66,225,000 increased total assets temporarily at June 30, 2017. Net of this amount, debt to total assets would have been approximately 55.1%. |
|
(8) |
Normalized FFO and Normalized AFFO include a vendor rent obligation amount related to the Richmond Property which is received in cash from the vendor of the Richmond Property until the property build out is complete and all tenants are occupying and paying rent. The vendor rent obligation amount is not included in NOI for IFRS accounting purposes. |
Revenues and Results from Operations
Q2 2018 revenue and net operating income were up significantly as compared to Q2 2017 primarily due to the impact of the Sandalwood transaction completed July 7, 2017, and in part due to the impact of acquisitions completed during the quarter.
Net operating income of $8,235,670 for Q2 2018 was $305,743 or 3.9% higher than net operating income of $7,929,927 reported for the Q1 2018, primarily due to a decrease of the seasonal expenses, with lower utilities and snow removal costs in Q2 2018 and due to the April 30, 2018 acquisition of a property located in Richmond, BC. Acquisitions completed June 7, 2018 and June 27, 2018 also contributed to increased net operating income.
General and administrative expense for the quarter of $724,397 was $27,582 lower than Q1 2018 general and administrative expense of $751,979. Interest expense increased from $2,161,600 in Q1 2018 to $2,419,693 for Q2 2018 primarily due to the impact of new mortgage financing placed on properties acquired during the quarter.
Earnings Call
Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Wednesday August 22nd, 2018 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 22, 2018. 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 2418.
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 14, 2018 to unitholders of record as of September 28, 2018.
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 65 properties comprising approximately 3.7 million square feet of rentable area. The REIT has approximately 90,169,827 units issued and outstanding. Additionally, there are Class B LP units of subsidiary limited partnerships of Nexus REIT issued and outstanding, which are convertible into approximately 20,827,000 REIT units.
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
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