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Automotive Properties REIT Reports Financial Results for Second Quarter of 2019

TORONTO , Aug. 14, 2019 /CNW/ - Automotive Properties Real Estate Investment Trust (APR-UN.TO) ("Automotive Properties REIT" or the "REIT") today announced its financial results for the three-month ("Q2 2019) and six-month ("YTD 2019") periods ended June 30, 2019 .

Q2 2019 Highlights

  • Property rental revenue was $16.4 million , an increase of 44.4% from the second quarter of 2018 ("Q2 2018");
  • Net Operating Income1 ("NOI") was $14.0 million , an increase of 44.7% from Q2 2018;
  • Total and Same Property Cash NOI1 were $13.1 million and $9.0 million , respectively, representing increases of 47.2% and 1.5%, respectively, from Q2 2018;   
  • Net Income was $8.4 million , compared to $5.3 million in Q2 2018;
  • Funds from Operations1 ("FFO") increased 31.8% to $8.8 million , from $6.6 million in Q2 2018. FFO1 per unit of the REIT ("Unit") was $0.272 (diluted), compared to $0.252 (diluted) in Q2 2018;
  • Adjusted Funds from Operations1 ("AFFO") increased 36.0% to $7.9 million , from $5.8 million in Q2 2018. AFFO1 per Unit increased 11.2% to $0.247 (diluted), compared to $0.222 (diluted) in Q2 2018;
  • The REIT acquired three automotive dealership properties for a total purchase price of approximately $30.4 million ;
  • The REIT completed a public offering of 8,000,000 Units at a price of $10.45 per Unit, resulting in gross proceeds of approximately $84 million ;
  • The REIT entered into a non-binding letter of intent with the Dilawri Group to acquire the Audi Queensway automotive dealership property for $36.5 million ; and
  • The REIT paid monthly cash distributions of $0.067 per Unit, resulting in total distributions paid of approximately $6.4 million , representing an AFFO payout ratio of approximately 81.4%.


"We continue to generate significant growth in our key operating metrics, driven by the continued execution of our acquisition program, as well as our contractual rent increases," said Milton Lamb , CEO of Automotive Properties REIT. "During the quarter, we completed a successful equity offering, acquired three high-quality dealership properties, and subsequently reduced our debt to gross book value, positioning us for further quality acquisitions."

1 NOI, Cash NOI, Same Property Cash NOI, FFO, AFFO, Debt to GBV, FFO Payout Ratio, AFFO Payout Ratio, and ACFO (as defined below) are non-IFRS financial measures. See "Non-IFRS Financial Measures" in this news release. References to "Same Property" correspond to properties that the REIT owned in Q2 2018, thus removing the impact of acquisitions.

Financial Results Summary







Three months ended
June 30,


Six months ended
June 30,







($000s, except per Unit amounts)

2019

2018

Change

2019

2018

     Change

Rental revenue (1)

$16,425

$11,373

44.4%

$32,109

$22,679

41.6%








NOI

13,972

9,659

44.7%

27,543

19,259

43.0%








Cash NOI

13,107

8,906

47.2%

25,761

17,752

45.1%








Same Property Cash NOI (1)

8,990

8,855

1.5%

17,986

17,701

1.6%








Net Income (Loss)(2)

8,436

5,317

58.7%

(9,446)

19,809

-147.7%








FFO

8,754

6,640

31.8%

17,335

13,307

30.3%








AFFO

7,948

5,842

36.0%

15,706

11,710

34.1%








Distributions per Unit

$0.201

$0.201

-

$0.402

$0.402

-








FFO per Unit - basic (3)

0.274

0.253

0.021

0.544

0.508

+0.036

FFO per Unit - diluted (4)

0.272

0.252

0.020

0.541

0.506

+0.035








AFFO per Unit - basic (3)

0.248

0.223

0.025

0.493

0.447

+0.046

AFFO per Unit - diluted (4)

0.247

0.222

0.025

0.490

0.445

+0.045








Ratios (%)







FFO payout ratio

73.9%

79.8%

-5.9%

74.3%

79.4%

-5.1%

AFFO payout ratio

81.4%

90.7%

-9.3%

82.0%

90.3%

-8.3%

Debt to GBV

49.7%

49.1%

+0.6%

49.7%

49.1%

+0.6%



(1)

Rental revenue is based on rents from leases entered into with tenants, all of which are triple-net leases and include recoverable realty taxes and straight-line
adjustments. Same Property Cash NOI is based on rental revenue for the same asset base having consistent gross leasable area in both periods

(2)

Net Income for Q2 2019 includes changes in fair value adjustments of $4.5 million for Class B limited partnership units of Automotive Properties Limited
Partnership ("Class B LP Units") and $3.8 million for interest rate swaps. Please refer to the consolidated financial statements of the REIT and notes thereto

(3)

FFO per Unit and AFFO per Unit – basic is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding
Units and Class B LP Units. The total weighted average number of Units outstanding (including Class B LP Units) – basic for Q2 2019 was 31,993,541

(4)

FFO per Unit and AFFO per Unit – diluted is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding
Units, Class B LP Units, deferred units ("DUs") and income deferred units ("IDUs") granted to certain independent trustees and management of the REIT. The
total weighted average number of Units outstanding (including Class B LP Units, DUs and IDUs) on a fully diluted basis for Q2 2019 was 32,238,171

 

Rental revenue in Q2 2019 increased 44.4% to $16.4 million , compared to $11.4 million in Q2 2018. The increase in rental revenue reflects growth from properties acquired subsequent to Q2 2018 and contractual annual rent increases across a significant portion of the REIT's portfolio.

Property costs were $2.5 million in Q2 2019, as compared to $1.7 million in Q2 2018. The increase is attributable to higher realty tax payment for properties acquired subsequent to Q2 2018. These costs are recoverable from the applicable tenants pursuant to the terms of the related triple-net leases.

Total Cash NOI generated during Q2 2019 was $13.1 million , representing an increase of 47.2% compared to Q2 2018. The increase was primarily attributable to the properties acquired subsequent to Q2 2018.

Same Property Cash NOI generated during Q2 2019 totaled $9.0 million , representing an increase of 1.5% compared to Q2 2018. This increase is primarily attributable to contractual rent increases and a rent escalation of 10% on three investment properties which occurred in August 2018 .

Net Income was $8.4 million in Q2 2019, compared to $5.3 million in Q2 2018. The positive variance is primarily attributable to growth in NOI and the change in the fair value adjustment for Class B LP Units, netted with the change in the fair value adjustment for interest rate swaps, as well as higher interest expense and other financing charges.

FFO in Q2 2019 was $8.8 million , or $0.272 per Unit (diluted), as compared to $6.6 million , or $0.252 per Unit (diluted), in Q2 2018. The increase was primarily due to the impact of the properties acquired subsequent to Q2 2018.

AFFO in Q2 2019 was $7.9 million , or $0.247 per Unit (diluted), as compared to $5.8 million , or $0.222 per Unit (diluted), in Q2 2018. The increase was primarily due to the impact of the properties acquired subsequent to Q2 2018.

Adjusted Cash Flow from Operations1 ("ACFO") for Q2 2019 was $8.2 million , representing an increase of 32.9% from $6.2 million in Q2 2018. The increase was primarily due to the impact of the properties acquired subsequent to Q2 2018.

Cash Distributions
The REIT is currently paying monthly cash distributions of $0.067 per Unit, representing $0.804 per Unit on an annualized basis. For Q2 2019, the REIT paid total distributions of $6.4 million to unitholders, or $0.201 per Unit, representing an AFFO payout ratio of 81.4%. The lower AFFO payout ratio for Q2 2019 relative to Q2 2018 was primarily attributable to the impact of the properties acquired subsequent to Q2 2018.

Units Outstanding
As at June 30, 2019 , there were 29,796,552 Units and 9,933,253 Class B LP Units outstanding.

Financial Statements
The REIT's unaudited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for Q2 2019 / YTD 2019 are available on the REIT's website at www.automotivepropertiesreit.ca and on SEDAR at www.sedar.com.

Conference Call
Management of the REIT will host a conference call for analysts and investors on Thursday, August 15, 2019 at 9:00 a.m. (ET) . The dial-in numbers for the conference call are (416) 764-8609 or (888) 390-0605. A live and archived webcast of the call will be accessible via the REIT's website www.automotivepropertiesreit.ca.

To access a replay of the conference call, dial (416) 764-8677 or (888) 390-0541, passcode: 129105 #. The replay will be available until August 22, 2019 .

About Automotive Properties REIT
Automotive Properties REIT is an unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT's portfolio currently consists of 60 income-producing commercial properties, representing more than two million square feet of gross leasable area, in metropolitan markets across British Columbia, Alberta , Saskatchewan , Manitoba , Ontario and Québec. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties. For more information, please visit: www.automotivepropertiesreit.ca.

Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expected". Forward-looking information includes the REIT's future acquisition capacity. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risks and Uncertainties" in the REIT's MD&A for the year ended December 31, 2018 and in the REIT's annual information form dated March 21, 2019 , both of which are available on SEDAR (www.sedar.com). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

Non-IFRS Financial Measures
This news release contains certain financial measures which are not defined under IFRS and may not be comparable to similar measures presented by other real estate investment trusts or enterprises. FFO, AFFO, FFO payout ratio, AFFO payout ratio, NOI, Same Property NOI, Cash NOI, and Same Property Cash NOI are key measures of performance used by the REIT's management and real estate businesses. Debt to GBV is a measure of financial position defined by the REIT's declaration of trust. These measures, as well as any associated "per Unit" amounts, are not defined by IFRS and do not have standardized meanings prescribed by IFRS, and therefore should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. The REIT believes that AFFO is an important measure of economic earnings performance and is indicative of the REIT's ability to pay distributions from earnings, while FFO, NOI, Cash NOI and Same Property Cash NOI are important measures of operating performance of real estate businesses and properties. The IFRS measurement most directly comparable to FFO, AFFO, NOI and Cash NOI is net income. ACFO is a supplementary measure used by management to improve the understanding of the operating cash flow of the REIT. The IFRS measurement most directly comparable to ACFO is cash flow from operating activities. See the REIT's Q2 2019 MD&A for further discussion of these non-IFRS financial measures and for a reconciliation of NOI, FFO, AFFO and Cash NOI to net income and comprehensive income and ACFO to cash flow from operating activities.

SOURCE Automotive Properties Real Estate Investment Trust


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