Partners Announces Results for the Third Quarter of 2019
Partners Real Estate Investment Trust (the "REIT," or "Partners") (TSX:PAR-UN.TO) today announced its results for the three month period ended September 30, 2019 (the "third quarter").
THIRD QUARTER 2019 HIGHLIGHTS
-- Comprehensive income of $0.3 million, an increase to income of $1.3 million when compared to the third quarter of 2018. This increase was due to lower fair value losses and financing expenses, partially offset by lower all property NOI.
-- Revenues from income producing properties of $3.3 million, a reduction of $9.3 million when compared to the third quarter of 2018. This reduction in revenue is the result of the sale of twenty-two properties during 2018 and 2019.
-- Same property NOI of $2.2 million, an increase of $0.2 million when compared to the third quarter of 2018, due to new tenant lease-ups and higher minimum rents on renewals.
-- All property NOI of $2.2 million, a reduction of $5.6 million when compared to the third quarter of 2018 as a result of twenty-two properties disposed during 2018 and 2019.
-- Occupancy of 96.3% at September 30, 2019, a slight decrease from 96.9% as at the end of 2018.
-- Debt to gross book value of 60.6%, a decrease from 62.1% at the end of 2018.
-- On October 10, 2019 the REIT and McCowan and Associates Ltd. ("MAA") jointly announced that they have entered into an arrangement agreement (the "Arrangement Agreement") pursuant to which MAA will acquire all of the outstanding units of the REIT (each a "Unit"), except for approximately 9,229,704 Units (representing approximately 20.03% of the outstanding Units) owned by MAA and its affiliates, for a price of Cdn. $0.78 per Unit in cash (the "Transaction").
-- The Transaction will be implemented by way of a statutory plan of arrangement under the Business Corporations Act (Ontario). Completion of the Transaction, which is expected to occur in December of this year, is subject to customary conditions, including court approval and approval of at least 66 2/3% of the votes cast by Unitholders at the Meeting and a simple majority of the votes cast by the REIT's minority Unitholders at the Meeting, being all Unitholders other than MAA and its affiliates. The Unitholder meeting is scheduled for December 5, 2019.
As at and for the three months ended As at and for the nine months ended Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018 Revenues from income producing properties $ 3,258,821 $ 12,523,530 $ 18,175,326 $ 38,322,174 Comprehensive income (loss) 342,326 (977,976) 2,184,478 (1,425,844) Comprehensive income (loss) per unit - basic 0.01 (0.02) 0.05 (0.03) NOI - same properties 2,162,031 2,035,271 6,702,426 6,158,656 NOI - all properties 2,162,031 7,818,980 11,033,209 23,404,401 FFO 418,124 3,834,823 4,097,219 10,564,279 FFO per unit 0.01 0.08 0.09 0.23 AFFO 153,973 2,909,027 2,776,922 7,775,518 AFFO per unit 0.00 0.06 0.06 0.17 ACFO 153,973 3,014,329 2,776,922 8,238,976 Distributions - 2,905,641 2,789,114 8,696,465 Distributions per unit - 0.06 0.06 0.19 ACFO distribution payout ratio - 96.4% 100.4% 105.6% Cash distributions - 2,687,828 3,455,977 7,981,378 Cash distributions per unit - 0.06 0.08 0.17 As at Sep 30, 2019 Dec 31, 2018 Dec 31, 2017 Total assets $ 108,547,065 $ 288,694,169 $ 475,045,178 Total debt 65,973,956 180,009,332 283,331,535 Total equity 39,591,167 99,663,422 183,347,418 Weighted average units outstanding - basic 46,079,673 45,977,087 39,435,646 Weighted average units outstanding - diluted 46,481,186 46,292,330 39,559,729 Debt-to-gross book value including debentures 60.6% 62.1% 59.4% Debt-to-gross book value excluding debentures 60.6% 62.1% 57.8% Interest coverage ratio 2.85 2.52 2.02 Debt service coverage ratio 1.47 1.44 1.25 Mortgages weighted average effective interest rate 3.75% 3.99% 4.10% Portfolio occupancy 96.3% 96.9% 95.3%
-- NOI - same properties and all properties, FFO, AFFO and ACFO are non-IFRS financial measures widely used in the real estate industry.
-- Represents distributions to unitholders on an accrual basis. Distributions are payable as at the end of the period in which they are declared by the Board of Trustees, and are paid on or around the 15 day of the following month. Prior to November 1, 2018, distributions per unit include the 3% bonus units given to participants in the Distribution Reinvestment and the Deferred Unit Plan. On May 8, 2019, the Board of Trustees announced the termination of the regular monthly distribution.
-- ACFO distribution payout ratio is a non-IFRS financial measure that has a standardized meaning under RealPac. It is calculated as total distributions as a percentage of ACFO (a new measure standardized by RealPac). There is no directly comparable IFRS measure.
-- Represents distributions on a cash basis, and as such, excludes the non-cash distributions of units issued under the Distribution Reinvestment and the Deferred Unit Plan.
-- Debt-to-gross book value is a non-IFRS financial measure widely used in the real estate industry. Non-IFRS measures do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other issuers. There is no directly comparable IFRS measure.
-- Interest coverage ratio and debt service coverage ratio are non-IFRS financial measures widely used in the real estate industry, calculated on a rolling four-quarter basis. Management considers the interest coverage and debt service coverage ratios to be valuable metrics in assessing the REIT's ability to make contractual payments on debt. Non-IFRS measures do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other issuers. There are no directly comparable IFRS measures.
-- Represents the weighted average effective interest rate for secured debt excluding debentures and credit facilities.
-- Portfolio occupancy is calculated as economic occupancy, not physical occupancy. A unit is considered occupied once it is committed to a lease with a minimum one-year term.
"The results for the quarter and the year-to-date reflect the property dispositions in the past year and consequential reduction in personnel. As referred elsewhere in this press release in connection with the proposed Transaction, we are working diligently to obtain the necessary Unitholder approval and expect to close the Transaction in December," stated Ian Ross, the REIT's interim CEO.
A more detailed analysis of the REIT's financial results for the third quarter of 2019 are included in the REIT's Management Discussion and Analysis and Condensed Consolidated Financial Statements, which have been filed on SEDAR and can be viewed at www.sedar.com or on the REITs' website at www.partnersreit.com.
About Partners REIT
Partners REIT is a real estate investment trust focused on the management of a portfolio of 12 retail and mixed-use community and neighbourhood shopping centres. These properties are located in both primary and secondary markets across Manitoba and Ontario, and comprise a total of approximately 0.6 million square feet of leasable space.
Certain statements included in this press release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect," "will" and similar expressions to the extent they relate to Partners REIT. The forward- looking statements are not historical facts but reflect Partners REIT's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including access to capital, regulatory approvals, intended acquisitions and general economic and industry conditions. Although Partners REIT believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein.
For further information please contact:
Partners REIT Investor Relations
1 (844) 474-9620 ext. 401
C. Ian Ross
Chairman of the Board and Interim Chief Executive Officer
(416) 855-3313 ext. 501
Derrick West, CPA (CA)
Chief Financial Officer and Corporate Secretary
(416) 855-3313 ext. 503