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CT REIT Announces First Quarter 2020 Results and COVID-19 Business Update

  • Delivers 3.7% growth in AFFO per unit for the first quarter
  • 96.5% of tenants fulfilled their May 1 st rental obligations
  • $315 million of liquidity available


TORONTO , May 4, 2020  /CNW/ - CT Real Estate Investment Trust ("CT REIT" or "the REIT") (CRT-UN.TO) today reported its consolidated financial results for the first quarter ending March 31, 2020.

"While our focus remains on the health and safety of our employees, our tenants and their customers and employees, CT REIT's solid Q1 results underscore our strong position coming into the COVID-19 pandemic. Our rent collections, conservative balance sheet and financial flexibility demonstrate our resilience in these uncertain times," said Ken Silver , President and CEO, CT REIT. "We are also continuing to work with those of our tenants who need our help to get through this crisis."

Business Update Related to COVID-19

As a result of recommendations by public health officials and restrictions issued by government health authorities due to COVID-19 (coronavirus), tenants representing approximately 6.2% of CT REIT's annual base minimum rent are currently not open to the public. 

Tenants representing 33.4% of CT REIT's annual base minimum rent are now operating on a limited basis. This includes 132 Canadian Tire Retail stores in Ontario located at properties owned by the REIT which are limited to serving customers through Curbside Pick Up or eCommerce home delivery in accordance with current provincial requirements. Canadian Tire auto service centres and Gas+ locations in the province continue to operate. 

Tenants representing approximately 96.5% of annual base minimum rent fulfilled their May 1 financial obligations to the REIT, compared to 97.2% for April 1 . The REIT continues to work with tenants facing financial challenges during this pandemic.

The REIT is in a strong liquidity position with a debt-to-gross book value of 42.7%, and $315 million of undrawn credit facilities and cash on hand. The REIT's assets, with an IFRS value of approximately $6 billion , are 97% unencumbered.

CT REIT is continuing to closely monitor the impact that the rapidly evolving COVID-19 pandemic has on its business, operations and financial position. Absent material changes in our business, we do not anticipate providing business updates on a regular basis outside of our regular continuous disclosure or as required by applicable securities laws.

Update on Previously Announced Investments

CT REIT invested $42.6 million in previously disclosed investments that were completed in the first quarter. CT REIT completed the acquisition of a one-sixth interest in the Canada Square complex located in Toronto, ON , thereby bringing its ownership interest in the property to 50%, the development of a Mark's building in Bradford, ON , and the development of third-party pads at two existing properties.

The table below provides activity updates on the previously announced investments.

Property

Type

GLA (sf.)

Timing

Activity

Toronto (Canada
Square), ON

Third Party Acquisition

140,193

Q1 2020

Acquisition of a one-
sixth interest in the property
(increasing ownership post-
acquisition to 50%)

Bradford, ON

Intensification

10,000

Q1 2020

Development of a
Mark's store

Various

Intensifications

5,295

Q1 2020

Development of third-
party pads at two
existing properties


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,


2020

2019

Change 

Property revenue

$

126,845


$

121,564


4.3%


Net operating income 1

$

95,319


$

89,939


6.0%


Net income

$

43,196


$

71,445


(39.5)%


Net income per unit - basic 2

$

0.189


$

0.324


(41.7)%


Net income per unit - diluted 3

$

0.173


$

0.273


(36.6)%


Funds from operations 1

$

66,885


$

63,435


5.4%


Funds from operations per unit - diluted (non-GAAP) 1,2,4

$

0.293


$

0.288


1.7%


Adjusted funds from operations 1

$

58,174


$

54,024


7.7%


Adjusted funds from operations per unit - diluted (non-GAAP) 1,2,4

$

0.254


$

0.245


3.7%


Distributions per unit - paid 2

$

0.197


$

0.189


4.0%


AFFO payout ratio 1


77.6



77.1%


0.6%


Cash generated from operating activities

$

98,817


$

89,660


10.2%


Adjusted cashflow from operations 1

$

55,118


$

51,719


6.6%


Weighted average number of units outstanding 2





Basic


228,350,645



220,321,203


3.6%


Diluted 3


348,948,514



324,707,957


7.5%


Diluted (non-GAAP) 1,4


228,596,901



220,547,295


3.6%


Indebtedness ratio


42.7%



44.1%


1.4%

Interest coverage (times)


3.43



3.35


2.4%

Gross leasable area (square feet) 5


27,711,965



26,907,132


3.0%


Occupancy rate 5,6


99.4%



99.1%


0.3%

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 Q1 2020 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 Q1 2020 MD&A.

5 Refers to retail, mixed-use commercial and distribution centre 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, 2020 and March 31, 2019.


Financial Highlights

Net Income - Net income was $43.2 million for the quarter, a decrease of 39.5%, compared to the same period in the prior year, primarily due to a decrease in fair value adjustment on investment properties and an increase in net interest and other financing charges, partially offset by an increase in NOI.

Net Operating Income (NOI)* - In the first quarter, NOI was $95.3 million , which was $5.4 million or 6.0% higher compared to the same period in the prior year, primarily due to the acquisition of an additional one-sixth interest in an existing income-producing property and properties under development completed in 2020 and 2019. Same store NOI was $91.3 million and same property NOI was $92.0 million for the quarter, which were $2.2 million (2.4%) and $2.9 million (3.2%), respectively, higher when compared to the prior year, primarily due to contractual rent escalations, developments and intensifications completed in 2020 and 2019, recovery of capital expenditures and interest earned on the unrecovered balance and a reduction in property management expenses pursuant to the Property Management Agreement.

Funds from Operations (FFO)* - FFO for the quarter was $66.9 million or $0.293 per unit - diluted (non-GAAP), which was 1.7% or $0.005 per unit - diluted (non-GAAP), higher than the same period in 2019, primarily due to the impact of NOI variances and decreased general and administrative expenses, partially offset by higher interest expense.

Adjusted Funds from Operations (AFFO)* - AFFO for the quarter was $58.2 million or $0.254 per unit - diluted (non-GAAP), which was 3.7% or $0.009 per unit - diluted (non-GAAP) higher than the same period in 2019, primarily due to the impact of NOI variances and decreased general and administrative expenses, partially offset by higher interest expense.

Distributions - Distributions per unit in the quarter amounted to $0.197 , which was 4.0% higher than the same period in 2019 due to the increase in the annual rate of distributions effective with the first distribution paid in 2020.

*NOI, FFO and AFFO are non-GAAP measures. Refer to Section 11.1 "Non-GAAP Measures" in the Q1 2020 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, 2020, CTC represented 92.3% of total GLA and 91.6% of annualized base minimum rent.

Occupancy - At March 31, 2020, CT REIT's portfolio occupancy rate, on a committed basis, was 99.4%.

Management 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, 2020 ("the Q1 2020 MD&A") and interim condensed consolidated financial statements (unaudited) and notes, which are available on SEDAR at http://www.sedar.com and at www.ctreit.com.

Note: Unless otherwise indicated, all figures in this press release are as of March 31, 2020 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 COVID-19 pandemic on CT REIT's and, the REIT's tenants' businesses and operations, including the operations of Canadian Tire stores in Ontario and other provinces, 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 effects of COVID -19 on the REIT's business under the heading "Business Update Related to COVID-19".

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 rapidly evolving circumstances surrounding COVID-19, 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 Canadian Tire; the benefits expected to result from such investments and property intensifications described under the heading "Update on Previously Announced Investments", including the timing of any such developments; 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 2019, and to Section 11 "Enterprise Risk Management" and all subsections thereunder of our fiscal 2019 Management's Discussion and Analysis.  In addition, for further factors related to COVID-19 impacting the REIT, refer to Section 2 "Factors Affecting the REIT as a Result of COVID-19", Section 12, "Enterprise Risk Management" and Section 14.0 "Forward Looking Information" of our Q1 2020 MDA&A as well as the REIT's other public filings, 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 5, 2020 at 10:00 a.m. (EDT) . Due to the public health impact of COVID-19 pandemic and in consideration of the health and safety of our Unitholders, employees and the broader community, 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.ctreitagm2020.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 5, 2020 . The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2216 or 1-800-377-0758 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 (CRT-UN.TO) 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 totalling approximately 28 million square feet of GLA, consisting primarily of retail properties located across Canada . Canadian Tire Corporation, Limited is CT REIT's most significant tenant. For more information, visit www.ctreit.com.

CT REIT Announces First Quarter 2020 Results and COVID-19 Business Update (CNW Group/CT Real Estate Investment Trust (CT REIT))

SOURCE CT Real Estate Investment Trust (CT REIT)


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