TORONTO, March 06, 2019 (GLOBE NEWSWIRE) -- WPT Industrial Real Estate Investment Trust (the “REIT”) (TSX: WIR.U - OTCQX: WPTIF) announced today its results for the three months and year ended December 31, 2018. All dollar amounts are stated in US funds.
Highlights for the three months and year ended December 31, 2018, including events subsequent to the end of the quarter:
- Revenue and net operating income (“NOI”) increased 16.5% and 13.4% for the year
- Funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) increased 9.0% and 9.7% for the year
- Same properties NOI increased 1.1% and 2.4% for the fourth quarter and year, respectively
- Generated approximately $1.7 million in fee revenue through the REIT’s recently acquired private capital business in the three months ended December 31, 2018
- Renewed 99.4%, totaling approximately 2.5 million square feet, of leases expiring in 2018
- Renewed 2.6 million square feet of leases expiring in 2019 and 2020
- Acquired a 536,800 square foot industrial building in the fourth quarter for approximately $26.8 million
- Completed an equity offering in February 2019, raising $135.0 million in gross proceeds
“The REIT continued to produce consistent operating and financial results in its first full quarter following internalization. Our pro-active asset management strategies and focus on the REIT’s new private capital business have provided consistent same property NOI growth and meaningful fee revenues,” commented Scott Frederiksen, Chief Executive Officer. “As we look to 2019, we believe the REIT is well positioned to continue growing through deployment of the proceeds from our recent equity offering and expansion of our private capital platform.”
FINANCIAL AND OPERATIONAL HIGHLIGHTS
(all figures in thousands of US dollars, except per Unit amounts, ratios, percentages, number of investment properties, amounts related to remaining lease term and GLA)
|Three months ended December 31, || Year ended December 31, |
|Investment properties revenue||$||24,494||$||22,409||$||92,454||$||81,786|
|Management fee revenue||$||1,703||$||-||$||2,790||$||-|
|Net income and comprehensive income||$||15,262||$||8,059||$||50,646||$||52,506|
|Net income and comprehensive income per Unit (basic) (2) (3)||$||0.312||$||0.167||$||1.045||$||1.181|
|Net income and comprehensive income per Unit (diluted) (2) (4)||$||0.301||$||0.164||$||1.019||$||1.161|
|FFO per Unit (diluted) (1) (2) (4)||$||0.216||$||0.225||$||0.893||$||0.901|
|AFFO (1) (5)||$||9,023||$||9,413||$||37,803||$||34,465|
|AFFO per Unit (diluted) (1) (2) (4)||$||0.178||$||0.192||$||0.761||$||0.762|
|Cash flows from operations||$||14,817||$||13,863||$||55,505||$||54,665|
|Distributions per Unit (2) (5)||$||0.19||$||0.19||$||0.76||$||0.76|
|Distributions declared (3) (5)||$||9,417||$||9,145||$||37,079||$||34,010|
|ACFO payout ratio (1) (5)||94.3%||89.8%||91.1%||91.3%|
|Weighted average number of Units (basic) (2) (3)||$||48,891||48,158||48,464||44,467|
|Weighted average number of Units (diluted) (2) (4)||$||50,688||48,989||49,707||45,259|
|As at||December 31, 2018||December 31, 2017|
|Number of investment properties||57||53|
|Average remaining lease term (years)||4.7||4.0|
|Fair value of investment properties||$||1,117,672||$||1,009,582|
|Weighted average effective interest rate (6)||3.9%||3.7%|
|Variable interest rate debt as percentage of total debt (7)||9.8%||18.2%|
|Debt-to-gross book value (1)||46.5%||42.1%|
|Interest coverage ratio (1)||3.5x||3.8x|
|Fixed charge coverage ratio (1)||2.9x||3.2x|
|Debt to Adjusted EBITDA (1)||7.6x||7.1x|
|(1)||NOI, FFO, AFFO, ACFO, FFO per Unit (diluted), AFFO per Unit (diluted), ACFO 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 REIT’s MD&A.|
|(2)||Includes trust units of the REIT (“REIT Units” and class B partnership units of WPT Industrial, LP (the “Partnership”) (“Class B Units”) (collectively, the "Units").|
|(3)||Excludes all options, Deferred Trust Units (“DTUs”) and Deferred Limited Partnership Units (“DPUs”) outstanding under the REIT’s equity compensation plans.|
|(4)||Includes all options, DTUs and DPUs outstanding under the REIT’s equity compensation plans.|
|(5)||Includes distributions on Units and DPUs.|
|(6)||Includes mortgages payable, the REIT’s unsecured credit facility and secured credit facility, derivative instrument, mark-to-market adjustments and financing costs.|
|(7)||Includes amounts outstanding under the REIT’s unsecured revolving credit facility and a mortgage payable as at December 31,2018 and its secured revolving facility as at December 31, 2017.|
SOLID OPERATING PERFORMANCE
For the three months and year ended December 31, 2018, investment properties revenue was $24.5 million and $92.5 million, respectively, compared to $22.4 million and $81.8 million, respectively, in the same periods last year. The increase in revenue is primarily due to the contribution from 2017 and 2018 acquisitions, increases in base rent and higher recoveries of operating expenses in existing properties. Net income and comprehensive income for the three months and year ended December 31, 2017 was $15.3 million ($0.301 per trust unit of the REIT and class B partnership unit of WPT Industrial, LP) (trust units of the REIT and class B partnership units of WPT Industrial, LP are each referred to herein as a “Unit” and collectively as, “Units”) and $50.6 million ($1.019 per Unit), respectively, compared to $8.1 million ($0.164 per Unit) and $52.5 million ($1.161 per Unit) in the same period last year.
NOI for the three months and year ended December 31, 2018 was $17.6 million and $67.8 million, respectively, compared to $16.5 million and $59.8 million in the same periods last year. Same properties NOI was up 1.1% and 2.4% for the three months and year ended December 31, 2018 compared to the same periods last year. Excluding a temporary vacancy at the REIT’s 100 West Thomas P. Echols Lane in the fourth quarter, same properties NOI would have increased 2.0% and 2.6%. for the three months and year ended December 31, 2018.
AFFO for the three months and year ended December 31, 2018 was $9.0 million ($0.178 per Unit) and $37.8 million ($0.761 per Unit), respectively, compared to $9.4 million ($0.192 per Unit) and $34.5 million ($0.762 per Unit) in the same periods last year.
For the three months ended December 31, 2018, cash flow from operations and adjusted cash flow from operations (“ACFO”) were $14.8 million and $10.0 million, respectively, compared to $13.9 million and $10.2 million in the same period last year. For the year ended December 31, 2018, cash flow from operations and ACFO were $55.5 million and $40.7 million, respectively, compared to $54.7 million and $37.2 million in the same period last year. The REIT’s ACFO payout ratio for the three months and year ended December 31, 2018 was 94.3% and 91.1%, respectively, compared to 89.8% and 91.3% in the same periods last year.
STRONG FINANCIAL & LIQUIDITY POSITION
As at December 31, 2018, the REIT’s debt-to-gross-book-value ratio was 46.5% with an interest coverage ratio of 3.5 times, a debt-to-Adjusted EBITDA ratio of 7.6 times, and a fixed charge coverage ratio of 2.9 times. The weighted average effective interest rate on outstanding debt was 3.9% at December 31, 2018. The weighted average term to maturity on the REIT’s mortgages payable was 3.0 years as at December 31, 2018.
As at December 31, 2018, the REIT had approximately $57.8 million available to be drawn on the Revolving Facility, in addition to cash on hand.
As at December 31, 2018, the REIT had renewed or leased to new or existing tenants 99.4% of the approximately 2.5 million square feet set to expire in 2018. The REIT also leased 219,101 square feet of previously vacant space with five new leases commencing between October 1, 2018 and January 1, 2019. This leasing activity has resulted in an overall portfolio occupancy of 99.3% and a weighted average remaining lease term of 4.7 years as compared to 4.0 years as at December 31, 2017.
During 2018, the REIT also renewed approximately 2.6 million square feet of leases set to expire in 2019 and 2020. For further details on 2018 leasing activity, please reference the REIT’s press release issued on February 4, 2019.
On November 6, 2018, the REIT acquired a 100% occupied investment property located in Franklin Park, Illinois totaling 536,800 square feet for a purchase price $26.8 million (exclusive of closing and transaction costs), representing a capitalization rate of approximately 7.5%. The purchase price was satisfied with funds from the REIT’s unsecured revolving credit facility and the acquisition was immediately accretive to the REIT’s AFFO per unit.
The REIT generated $1.7 million of fee revenue from the REIT’s recently acquired asset and property management contracts during the quarter. This was made up of $0.3 million of ongoing fees and $1.5 million of one-time, transaction related fees.
On February 25, 2019, the REIT issued 10,000,000 REIT Units at a price of $13.50 per REIT Unit to a syndicate of underwriters on a bought deal basis for net cash proceeds to the REIT of approximately $129.6 million (the “February 2019 Offering”) (inclusive of underwriters’ fees of $5.4 million and exclusive of other issuance costs). The REIT used a portion of the funds from the February 2019 Offering to repay the outstanding balance on the unsecured revolving credit facility of $105.0 million.
INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT’s management team on Thursday, March 7, 2019 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 10127547#. 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 has been formed for the purpose of acquiring, developing, managing 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 18.9 million square feet of gross leasable area, comprised of 56 industrial properties and one office property located in 15 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.
For more information, please contact:
Scott Frederiksen, Chief Executive Officer
WPT Industrial Real Estate Investment Trust
Tel: (612) 800-8501
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, 2017, 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.