Subjects: ERN, DIV
Nexus REIT Announces Robust Q2 2019 Results, and August and September 2019 Distributions
TORONTO and MONTREAL, Aug. 15, 2019 /CNW/ - Nexus Real Estate Investment Trust (the "REIT") (TSXV: NXR.UN) announced today its results for the quarter and six months ended June 30, 2019, and the declaration of August and September 2019 distributions.
Highlights
- Completed a $31,000,000 accretive acquisition of industrial properties in the quarter at a 9.33% blended capitalization rate.
- Property revenues increased 14.3% to $15,003,425 as compared to $13,121,925 for Q2 2018 and 4.3% as compared to $14,386,438 for Q1 2019.
- Net operating income increased 18.3% to $9,745,459 as compared to $8,235,670 for Q2 2018 and 9.0% as compared to $8,936,821 for Q1 2019.
- Net income for the quarter of $4,041,737, compared to $4,498,873 for the same quarter of the prior year; net income excluding fair value adjustments, Class B LP Unit distributions and loss on disposal of investment properties for Q2 2019 was $5,287,016 as compared to $5,159,534 for Q2 2018.
- Normalized AFFO per unit for the quarter of $0.050 increased 3.2% as compared to Q2 2018 normalized AFFO per unit of $0.048; increased 1.3% as compared to Q1 2019 normalized AFFO per unit of $0.049.
- Normalized AFFO payout ratio for the quarter of 80.5% is down from 81.5% for Q1 2019 and 83.1% for the same quarter of 2018.
- Debt to total assets ratio remains conservative at 51.7%; weighted average term to maturity of mortgages increased from 2.59 years at March 31, 2019 to 3.66 years at June 30, 2019.
- Management of the REIT will host a conference call on Friday August 16th at 1PM EST to review results and operations.
"The REIT has consistently delivered stable results and the second quarter of 2019 saw the completion of a highly accretive acquisition that has further reduced our AFFO payout ratio to 80%" commented Kelly Hanczyk, the REIT's Chief Executive Officer. "We have been successful in leasing to date this year which, combined with favorable terms on debt renewals, will result in a continued strengthening of our results and financial position in future quarters. We are in late-stage discussions with respect to additional acquisition opportunities and we are very excited about the future growth of the REIT."
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 | Six months ended | |||
2019 | 2018 | 2019 | 2018 | |
Financial Results | $ | $ | $ | $ |
Property revenue | 15,003,425 | 13,121,925 | 29,389,863 | 26,425,486 |
Net operating income | 9,745,459 | 8,235,670 | 18,682,280 | 16,165,597 |
Net income | 4,041,737 | 4,498,873 | 8,642,714 | 10,923,827 |
Three months ended | Six months ended | ||||||
2019 | 2018 | 2019 | 2018 | ||||
$ | $ | $ | $ | ||||
Financial highlights | |||||||
Funds from operations (FFO) (1) | 5,433,978 | 5,095,446 | 13,521,065 | 10,064,581 | |||
Normalized FFO (1) (2) | 6,639,371 | 5,548,550 | 12,832,903 | 10,517,685 | |||
Adjusted funds from operations (AFFO) (1) | 4,740,759 | 4,462,270 | 12,151,163 | 8,843,519 | |||
Normalized AFFO (1) (2) | 5,946,152 | 4,915,374 | 11,463,001 | 9,296,623 | |||
Distributions declared (3) | 4,789,115 | 4,212,990 | 9,290,370 | 7,986,095 | |||
Distributions declared on units issued April 30, 2018 | |||||||
on the closing of an acquisition (4) | - | 128,857 | - | 128,857 | |||
Normalized distributions declared (3) (4) | 4,789,115 | 4,084,133 | 9,290,370 | 7,857,238 | |||
Weighted average units outstanding ? basic (5) | 119,729,985 | 101,829,119 | 116,150,950 | 98,070,079 | |||
Weighted average units outstanding ? diluted (5) | 119,798,205 | 101,888,051 | 116,190,308 | 98,134,567 | |||
Distributions per unit, basic and diluted (3) (5) | 0.040 | 0.041 | 0.080 | 0.081 | |||
Adjusted distributions per unit, basic and | |||||||
diluted (3) (4) (5) | 0.040 | 0.040 | 0.080 | 0.080 | |||
FFO per unit, basic (1) (5) | 0.045 | 0.050 | 0.116 | 0.103 | |||
Normalized FFO per unit, basic (1) (2) (5) | 0.055 | 0.054 | 0.110 | 0.107 | |||
AFFO per unit, basic (1) (5) | 0.040 | 0.044 | 0.105 | 0.090 | |||
Normalized AFFO per unit, basic (1) (2) (5) | 0.050 | 0.048 | 0.099 | 0.095 | |||
Normalized AFFO payout ratio, basic, | |||||||
adjusted (1) (2) (3) (4) (6) | 80.5% | 83.1% | 81.0% | 84.5% | |||
Debt to total assets ratio | 51.7% | 54.3% | 51.7% | 54.3% | |||
(1) | Non-IFRS Measure |
(2) | Normalized FFO and Normalized AFFO include adjustments for 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. Normalized FFO and Normalized AFFO also include adjustments for debt repayment fees included in interest expense in the three and six month periods ended June 30, 2019 of $578,399 which were due on repayment of debt assumed in acquisitions completed in July 2017. |
(3) | Includes distributions payable to holders of Class B LP Units which are accounted for as interest expense in the consolidated financial statements. |
(4) | 9,666,667 REIT 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, calculated with normalized distributions declared each exclude distributions declared on these units for the month of April 2018. |
(5) | Weighted average number of units includes the Class B LP Units. |
(6) | Calculated based on normalized distributions declared as presented in the table above. |
(7) | 2018 comparative period FFO, AFFO, Normalized FFO and Normalized AFFO have been restated to include an adjustment for amortization of tenant incentives and leasing costs, not adjusted in 2018. |
Revenues and Results from Operations
Net operating income for the quarter of $9,745,459 was $1,509,789 higher than net operating income of $8,235,670 for Q2 2018. Properties acquired in 2018 and in the Q2 2019 contributed approximately $1,484,000 in incremental net operating income in the quarter as compared to Q2 2018. Net operating income for the quarter was $808,638 higher than net operating income of $8,936,821 for Q1 2019 primarily due to the properties acquired in Q2 2019.
General and administrative expense for the quarter of $882,191 was $157,794 higher than general and administrative expense of $724,397 in Q2 2018 due to higher salaries and professional fees. Approximately $50,000 of recruiting costs were expensed in Q2 2019. Annual financial statement filing fees were also incurred and expensed in Q2 2019, whereas they were incurred and expensed in the first quarter of the prior year.
Net interest expense of $3,465,022 for the quarter includes a debt repayment fee in the amount of $578,339 which was due in April 2019 on maturity and repayment of debt assumed in acquisitions completed in July 2017.
Earnings Call
Management of the REIT will host a conference call at 1:00 PM Eastern Standard Time on Friday August 16, 2019 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 16, 2019. 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 3460.
August and September Distributions
The REIT announced today that it will make a cash distribution in the amount of $0.01333 per unit, representing $0.16 per unit on an annualized basis, payable September 13, 2019 to unitholders of record as of August 30, 2019.
The REIT will also make a cash distribution in the amount of $0.01333 per unit, representing $0.16 per unit on an annualized basis, payable October 15, 2019 to unitholders of record as of September 30, 2019.
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 70 properties comprising approximately 3.8 million square feet of rentable area. The REIT has approximately 101,670,000 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 18,236,000 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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