Subjects: ERN, DIV
CT REIT Announces Strong First Quarter 2021 Results
- Delivers 7.5% growth in AFFO per unit for the first quarter
- Announces six new investments totalling $40.2 million
TORONTO, May 10, 2021 /CNW/ - CT Real Estate Investment Trust ("CT REIT" or "the REIT") (TSX: CRT.UN) today reported its consolidated financial results for the first quarter ending March 31, 2021.
"CT REIT's growth and resilience drove strong results in Q1, again demonstrating the core attributes of our strategy and business model," said Ken Silver, CEO of CT REIT. "As we navigate the pandemic's third wave, we continue to manage the ongoing impacts of the crisis, while investing in our future growth."
New Investment Activity
Today, CT REIT announced six new investments, which will require an estimated $40.2 million to complete. The investments are, in aggregate, expected to earn a weighted average cap rate of 6.40% when completed and represent approximately 162,000 square feet of incremental gross leasable area ("GLA"). CT REIT is funding these investments through the issuance of Class B LP Units and/or Class C LP Units to Canadian Tire Corporation ("CTC"), cash and/or draws on its credit facilities or any combination thereof.
The table below summarizes the new investments and their anticipated completion dates:
Property | Type | GLA (sf.) | Timing | Activity |
Cochrane, ON | Intensification | 11,000 | Q4 2021 | Expansion of an existing Canadian Tire store |
Lethbridge South, AB | Intensification | 28,000 | Q4 2022 | Expansion of an existing Canadian Tire store |
Charlottetown, PEI | Intensification | 28,000 | Q4 2022 | Expansion of an existing Canadian Tire store |
Casselman, ON | Intensification | 24,000 | Q3 2023 | Expansion of an existing Canadian Tire store |
Milton, ON | Intensification | 43,000 | Q3 2023 | Expansion of an existing Canadian Tire store |
Summerside, PEI | Intensification | 28,000 | Q4 2023 | Expansion of an existing Canadian Tire store |
Update on Previously Announced Investment and Disposition Activity
In the first quarter, CT REIT invested $10 million in the previously disclosed investment shown in the table below.
Property | Type | GLA (sf.) | Timing | Activity |
Lower Sackville, NS | Vend-in | 53,000 | Q1 2021 | Vend-in of an existing Canadian Tire store |
CT REIT also sold its Arnprior Mall property in Arnprior, Ontario, for $21 million in the first quarter.
Business Update Related to the Pandemic
The REIT has considered the impact of the coronavirus (COVID-19) disease ( the "Pandemic") on the likelihood of collection of current receivables. Rental collections remain strong and approximately in line with the REIT's pre-Pandemic historical average. This, however, may not be indicative of the REIT's ability to continue collecting rent at these levels, in the future, due to the ongoing uncertainty surrounding the Pandemic, including the uncertainty related to the nature of governmental measures that may continue to be imposed to combat the impact of the Pandemic. In addition, the continuation of some of the existing governmental programs and/or the implementation of future programs to mitigate the economic impact of the Pandemic is also not known at this time.
The federal government's primary measure currently in place to support small and medium-sized businesses significantly impacted by the Pandemic with their fixed costs, including rent, is the Canada Emergency Rent Subsidy ("CERS"), announced in late 2020 with a current end date of June 2021 which was recently amended and extended to September 2021 in the 2021 Federal Budget, subject to official enactment and implementation.
For the three months ended March 31, 2021, the REIT incurred $0.4 million (Q1 2020 - nil) of expected credit losses related to tenants who had been significantly impacted by the Pandemic.
Financial and Operational Summary
Summary of Selected Information | |||||
(in thousands of Canadian dollars, except unit, per unit and square footage amounts) | Three Months Ended March 31, | ||||
2021 | 2020 | Change | |||
Property revenue | $ | 129,903 | $ | 126,845 | 2.4% |
Net operating income 1 | $ | 99,024 | $ | 95,319 | 3.9% |
Net income | $ | 74,558 | $ | 43,196 | 72.6% |
Net income per Unit - basic 2 | $ | 0.323 | $ | 0.189 | 70.9% |
Net income per Unit - diluted 3 | $ | 0.281 | $ | 0.173 | 62.4% |
Funds from operations 1 | $ | 71,163 | $ | 66,885 | 6.4% |
Funds from operations per Unit - diluted (non-GAAP) 1,2,4 | $ | 0.308 | $ | 0.293 | 5.1% |
Adjusted funds from operations 1 | $ | 63,221 | $ | 58,174 | 8.7% |
Adjusted funds from operations per Unit - diluted (non-GAAP) 1,2,4 | $ | 0.273 | $ | 0.254 | 7.5% |
Distributions per Unit - paid 2 | $ | 0.201 | $ | 0.197 | 2.0% |
AFFO payout ratio 1 | 73.6% | 77.6% | (5.2)% | ||
Cash generated from operating activities | $ | 95,140 | $ | 98,817 | (3.7)% |
Adjusted cashflow from operations 1 | $ | 56,733 | $ | 55,118 | 2.9% |
Weighted average number of units outstanding 2 | |||||
Basic | 231,126,631 | 228,350,645 | 1.2% | ||
Diluted 3 | 321,699,476 | 348,948,514 | (7.8)% | ||
Diluted (non-GAAP) 1,4 | 231,421,655 | 228,596,901 | 1.2% | ||
Indebtedness ratio | 42.5% | 42.7% | (0.5)% | ||
Interest coverage (times) | 3.68 | 3.43 | 7.3% | ||
Gross leasable area (square feet) 5 | 28,659,093 | 27,711,965 | 3.4% | ||
Occupancy rate 5,6 | 99.3% | 99.4% | (0.1)% | ||
1 Non-GAAP measure. Refer to section 11.0 of the MD&A for further information. | ||||||||
2 Total units means Units and Class B LP Units outstanding. | ||||||||
3 Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 8.0 of the MD&A. | ||||||||
4 Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 8.0 of the MD&A. | ||||||||
5 Refers to retail, mixed-use commercial and industrial properties and excludes Properties Under Development. | ||||||||
6 Occupancy and other leasing key performance measures have been prepared on a committed basis which includes the impact of existing lease agreements contracted on or before March 31, 2021 and March 31, 2020. |
Financial Highlights
Net Income - Net income was $74.6 million for the quarter, an increase of 72.6%, compared to the same period in the prior year, primarily due to an increase in NOI* and an increase in the fair value adjustment on investment properties.
Net Operating Income (NOI)* - In the first quarter, NOI was $99 million, which was $3.7 million or 3.9% higher compared to the same period in the prior year, primarily due to rent escalations in CTC banner leases which contributed $1.6 million and the acquisition of income-producing properties completed in 2021 and 2020, which contributed a further $1.3 million to NOI growth. Same store NOI was $95.3 million and same property NOI was $96.1 million for the quarter, which were $1.6 million or 1.7% and $2.3 million or 2.5%, respectively, higher when compared to the prior year, primarily due to increased revenue derived from contractual rent escalations, offset by Pandemic-related impacts.
Funds from Operations (FFO)* - FFO for the quarter was $71.2 million or $0.308 per unit - diluted (non-GAAP), which was 5.1% or $0.015 per unit - diluted (non-GAAP), higher than the same period in 2020, primarily due to the impact of NOI variances, lower interest expense and timing of general and administrative costs.
Adjusted Funds from Operations (AFFO)* - AFFO for the quarter was $63.2 million or $0.273 per unit - diluted (non-GAAP), 7.5% or $0.019 per unit - diluted (non-GAAP) higher than the same period in 2020, primarily due to the impact of NOI variances, lower interest expense and timing of general and administrative costs.
Distributions - Distributions per unit in the quarter amounted to $0.201, 2.0% higher than the same period in 2020 due to the increase in the annual rate of distributions which became effective as of the monthly distribution paid in September 2020.
*NOI, FFO and AFFO are non-GAAP measures. Refer to Non-GAAP section 11.0 "Non-GAAP Measures" in CT REIT's Q1 2021 MD&A, which is available on SEDAR at www.sedar.com and at www.ctreit.com.
Operating Results
Leasing - CTC is CT REIT's most significant tenant. At March 31, 2021, CTC represented 92.5% of total GLA and 91.8% of annualized base minimum rent.
Occupancy - At March 31, 2021, CT REIT's portfolio occupancy rate, on a committed basis, was 99.3%.
Management's Discussion and Analysis (MD&A) and Interim Condensed Consolidated Financial Statements (Unaudited) and Notes
Information in this press release is a select summary of results. This press release should be read in conjunction with CT REIT's management's discussion and analysis for the period ended March 31, 2021 (Q1 2021 MD&A) and Interim Condensed Consolidated Financial Statements (Unaudited) and Notes which are available on SEDAR at www.sedar.com and at www.ctreit.com.
Note: Unless otherwise indicated, all figures in this press release are as of March 31, 2021 and are presented in Canadian dollars.
Forward-Looking Statements
This press release contains forward-looking statements and information that reflects management's current expectations related to matters such as future financial performance, operating results and the effect of the Pandemic on CT REIT's business and operations and the REIT's tenants' respective businesses and operations, including the operations of Canadian Tire stores, and discussions between the REIT and its tenants with respect to future rent obligations. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our future outlook, anticipated events or results and our operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
Certain statements other than statements of historical facts included in this document may constitute forward-looking information, including, but not limited to, statements concerning the REIT's ability to complete the investments in the acquisitions under the headings "New Investment Activity", "Update on Previously Announced Investment and Disposition Activity", the timing and terms of any such investment and/or agreements and the benefits expected to result from such investment, the effects of the Pandemic on the REIT's business under the heading "Business Update Related to the Pandemic" and statements concerning developments, redevelopments, intensifications, results, performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.
By its very nature forward-looking information, requires the use of estimates and assumptions and is subject to inherent risks and uncertainties. It is possible that the REIT's assumptions, estimates, analyses, beliefs and opinions are not correct, and that the REIT's expectations and plans will not be achieved. Although the forward-looking information contained in this press release is based on information, assumptions and beliefs which are reasonable in the opinion of management and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information. Without limiting the generality of the foregoing, given the continued evolving circumstances surrounding the Pandemic, including the uncertainty of the present and future waves, it is difficult to predict with certainty the nature, duration and extent of the adverse impact of the Pandemic on, among others: the global and domestic economy; the business, operations and financial position of the REIT's tenants, including CTC; the expected benefits from the investments described under the heading "New Investment Activity" and "Update on Previously Announced Investment and Disposition Activity", including the timing of the acquisitions; and the business, operations, financial position, results, prospects or opportunities of CT REIT.
For more information on the risks, uncertainties and assumptions that could cause the REIT's actual results to differ from current expectations, refer to Section 4 "Risk Factors" of our Annual Information Form for fiscal 2020, and to Section 12.0 "Enterprise Risk Management" and section 14.0 "Forward-Looking Information" of CT REIT's MD&A for fiscal 2020 as well as the REIT's other public filings available at www.sedar.com and at www.ctreit.com.
In addition, for further factors related to the Pandemic impacting the REIT, refer to Section 2.0 "Factors Affecting the REIT as a Result of the Covid-19 Pandemic", Section 12.0, "Enterprise Risk Management" and Section 14.0 "Forward-looking Information" of our MD&A, available at www.sedar.com and at www.ctreit.com.
The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.
Information contained in or otherwise accessible through the websites referenced in this press release does not form part of this press release and is not incorporated by reference into this press release.
Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available at www.sedar.com and at www.ctreit.com.
Annual Meeting
As previously announced, CT REIT's Annual Meeting of Unitholders will take place on Tuesday, May 11, 2021 at 10:00 a.m. ET. This year's annual meeting will be held in a virtual format only, by way of live audio webcast and teleconference. Please refer to www.ctreitagm.com for additional details on the annual meeting.
Conference Call
CT REIT will conduct a conference call to discuss information included in this news release and related matters at 8:00 a.m. ET on May 11, 2021. The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2217 (Participant passcode: 1809153#) or 1-800-898-3989 or through a webcast at https://www.ctreit.com/English/news-and-events/events-and-webcasts/default.aspx and will be available through replay for 12 months.
About CT Real Estate Investment Trust
CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed-end real estate investment trust formed to own income-producing commercial properties primarily located in Canada. Its portfolio is comprised of over 350 properties totaling approximately 29 million square feet of GLA, consisting primarily of net leased single-tenant retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit www.ctreit.com.
SOURCE CT Real Estate Investment Trust (CT REIT)
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