TORONTO, ON--(Marketwired - March 15, 2017) - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX:WIR.U) (WPTIF) announced today its results for the three months and year ended December 31, 2016. All dollar amounts are stated in US funds.
- Revenue, net operating income ("NOI"), net income, funds from operations ("FFO") and adjusted funds from operations ("AFFO") reflect continued growth through acquisition and tenant retention during the year
- Occupancy remains strong at 98.7% at December 31, 2016
- 99.1% of leases expiring in 2016 were renewed or leased to new tenants
- 60% or approximately 2.0 million square feet of 2017 lease expirations have been renewed
- Same properties NOI was up 3.1% for the year on increased average occupancy and higher average rents
- Net income was up 57.6% for the year
- AFFO was up 8.7% for the year on portfolio growth and strong operating performance
- Acquired two investment properties totaling 787,178 sq. ft. in November for $60.1 million
- Began first development project of a new 171,600 sq. ft. building on existing land in Plainfield, Indiana
- Completed successful equity offering in July raising $80.6 million net proceeds to fund growth
"2016 was an active and successful year for the REIT as we expanded our property portfolio, generated strong operating performance, began our first development project and positioned the REIT for further growth," commented Scott Frederiksen, Chief Executive Officer. "Looking ahead, we will continue to seek out high quality, strategic acquisitions that strengthen and further diversify our portfolio, augmenting this growth with increases in our same property NOI resulting from our proven property management and proactive leasing activities."
SOLID OPERATING PERFORMANCE
For the three months and year ended December 31, 2016, investment properties revenue was $18.7 million and $71.1 million, respectively, compared to $15.8 million and $67.4 million in the same periods last year. Net income (loss) and comprehensive income (loss) for the three months and year ended December 31, 2016 was $1.6 million ($0.038 per trust unit and class B partnership unit (collectively, "Unit") and $34.0 million ($0.872 per Unit), respectively, compared to a loss of ($2.6) million ($0.076 per Unit) and income of $21.6 million ($0.861 per Unit), in the same periods last year. The increase in both revenue and net income in 2016 is primarily due to an increase in base rent, higher recoveries of operating expenses, the full year's contribution of the 2015 Memphis portfolio acquisition, and the contribution from the Minneapolis and Columbus acquisitions completed in November 2016, partially offset by the sale of a non-core property in July 2016.
NOI for the three months and year ended December 31, 2016 was $13.6 million and $52.7 million, respectively, compared to $11.4 million and $50.6 million in the same periods last year. Same property NOI increased 3.6% and 3.1% for the three months and year ended December 31, 2016, respectively, compared to the same periods last year due primarily to increases in contractual base rent, the expiration of free rent periods, an increase in average occupancy and higher recoveries of operating expenses.
AFFO for the three months and year ended December 31, 2016 were $8.4 million ($0.203 per Unit) and $31.1 million ($0.838 per Unit), respectively, compared to $7.4 million ($0.220 per Unit) and $28.6 million ($0.857 per Unit) in the same periods last year. The REIT's AFFO payout ratio for the year ended December 31, 2016 was 91.6%, compared to 84.8%, in the same period last year. The AFFO payout ratio and per Unit amounts in 2016 were impacted by the 22.6% and 11.2% increase in the weighted average number of Units outstanding for the three months and year ended December 31, 2016, respectively, due to the successful equity offering completed in July 2016.
STRONG FINANCIAL & LIQUIDITY POSITION
As at December 31, 2016 the REIT's debt-to-gross-book-value ratio was 41.8% with an interest coverage ratio of 3.5 times, a debt-to-Adjusted EBITDA ("Adjusted EBITDA" is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) ratio of 7.5 times, and a fixed charge coverage ratio of 3.0 times, all consistent with or improved from the prior year end. The weighted average effective interest rate on outstanding debt was 3.8% at December 31, 2016, consistent with the prior year. As at December 31, 2016 the REIT had 5.9% of its total debt bearing variable interest rates compared to 12.9% of total debt at December 31, 2015. The weighted average term to maturity on the REIT's mortgages payable was 4.3 years as at December 31, 2016, with a weighted average remaining lease term of 4.1 years.
On November 1, 2016, the REIT indirectly acquired from a third party a 100% occupied investment property located in Columbus, Ohio containing 226,800 square feet for a purchase price of $13.9 million (exclusive of closing and transaction costs), representing a capitalization rate of approximately 6.8%. The purchase price was satisfied with cash on hand.
On November 4, 2016, the REIT repaid a mortgage payable, bearing a fixed interest rate of 5.77% with a remaining principal balance of $21 million, with available cash. On December 30, 2016, four of the five properties previously encumbered by this mortgage as well as two other unencumbered properties were added as borrowing base collateral to the REIT's revolving credit facility (the "Revolving Facility"). With the addition of these properties, availability on the Revolving Facility was approximately $93 million at year end, of which we have drawn $20 million, leaving remaining availability of approximately $73 million.
On November 18, 2016, the REIT indirectly acquired from a third party an 86% occupied investment property located in Minneapolis, Minnesota totaling 560,378 square feet for a purchase price of $46.2 million (exclusive of closing and transaction costs), representing a going-in capitalization rate of approximately 6.9%. The purchase price was satisfied with a combination of cash on hand, funds from the Revolving Facility, and the assumption of a $25.9 million mortgage bearing a fixed interest rate of 3.62% maturing on October 1, 2021.
In 2016, the REIT began development of an industrial property on a vacant land parcel located at 2825 Reeves Road, Plainfield, IN. When complete, the building will comprise approximately 171,600 square feet of leasable space. Total estimated project costs are approximately $10.3 million, of which the REIT has incurred $6.3 million through December 31, 2016. Construction is expected to be completed in May 2017 and the property is being actively marketed to prospective tenants.
As of December 31, 2016, the REIT had renewed approximately 60% of its 2017 lease renewals totaling 2.0 million square feet. With these renewals,the REIT has only 8.4% of the total portfolio remaining to be renewed in 2017.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
|(In thousands of US dollars, except per Unit amounts, number of investment properties, and GLA)||Three months ended December 31,||Year ended December 31,|
|Investment properties revenue (1)||$||18,662||$||15,769||$||71,110||$||67,423|
|NOI (1) (2)||$||13,620||$||11,372||$||52,660||$||50,602|
|Net income (loss) and comprehensive income (loss) (1)||$||1,559||$||(2,560)||$||33,984||$||21,560|
|Net income (loss) and comprehensive income (loss) per Unit (basic) (1)||$||0.038||$||(0.076)||$||0.872||$||0.861|
|FFO (1) (2) (3)||$||9,022||$||6,121||$||33,394||$||30,871|
|FFO per Unit (basic) (1) (2) (5) (6)||$||0.218||$||0.181||$||0.898||$||0.924|
|AFFO (2) (4)||$||8,380||$||7,423||$||31,141||$||28,637|
|AFFO per Unit (basic) (2) (5) (6)||$||0.203||$||0.220||$||0.838||$||0.857|
|Distributions per Unit (5) (6) (7)||$||0.190||$||0.190||$||0.760||$||0.720|
|Distributions declared (6) (7)||$||7,856||$||6,408||$||28,533||$||24,285|
|AFFO payout ratio (2)||93.7%||86.3%||91.6%||84.8%|
|Weighted average number of Units (5) (6)||41,375||33,748||37,176||33,429|
|As at||December 31, 2016||December 31, 2015|
|Number of investment properties||49||48|
|Average remaining lease term (years)||4.1||3.9|
|Fair value of investment properties||$||806,431||$||742,592|
|Weighted average effective interest rate (8)||3.8%||3.8%|
|Variable interest rate debt as percentage of total debt (9)||5.9%||12.9%|
|Debt-to-gross book value (2)||41.8%||48.6%|
|Interest coverage ratio (2)||3.5x||3.2x|
|Fixed charge coverage ratio (2)||3.0x||2.8x|
|Debt to Adjusted EBITDA (2)||7.5x||8.1x|
|(1) The three months ended December 31, 2015 includes a cumulative non-recurring adjustment of $1,652 due to the overstatement of straight-line rent. Refer to the REIT's MD&A for the year ended December 31, 2015 for further details.|
|(2) NOI, FFO, AFFO, FFO per Unit (basic), AFFO per Unit (basic), AFFO payout ratio, Adjusted EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to Adjusted EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the "Non-IFRS Measures" section of the annual MD&A.|
|(3) Reconciliations of FFO to net income (loss) and comprehensive income (loss) can be found in the MD&A for the three months and years ended December 31, 2016 and 2015. Refer to the REIT's respective annual or interim MD&As issued for a reconciliation of FFO to net income (loss) and comprehensive income (loss) relating to all other periods.|
|(4) A table providing adjustments from FFO to AFFO can be found in the MD&A for the three months and years ended December 31, 2016 and 2015. Refer to the REIT's respective annual or interim MD&As issued for adjustments from FFO to AFFO relating to all other periods.|
|(5) Includes trust units and class B partnership units.|
|(6) Excludes all options and deferred trust units outstanding under the REIT's equity compensation plans.|
|(7) Includes distributions on trust units and class B partnership units.|
|(8) Includes mortgages payable, the Revolving Facility, mark-to-market adjustments and financing costs.|
|(9) Includes amounts outstanding under the Revolving Facility.|
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Thursday, March 16, 2017 at 9:00 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the "Investors" page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10098839#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.
About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT was formed for the purpose of acquiring and owning primarily industrial investment properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 15.6 million square feet of gross leasable area, comprised of 47 industrial properties and two office properties located in 12 states in the United States. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.
This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "projects", "believes" or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include the various assumptions set forth herein, including, but not limited to, the REIT's and the property's future growth potential, anticipated amounts of expenses, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed or referenced under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2015, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.