Fronsac Real Estate Investment Trust
TSX VENTURE : GAZ.UN

Fronsac Real Estate Investment Trust

May 29, 2015 14:22 ET

Fronsac REIT Announces Annual Distribution Increase and Results for Q1 2015

MONTREAL, QUEBEC--(Marketwired - May 29, 2015) - (TSX VENTURE:GAZ.UN) Fronsac Real Estate Investment Trust ("Fronsac REIT" or "Fronsac") today announced an increase to its annual distribution from 1.48¢ per unit to 1.55¢ per unit, an increase of 4.7%. The increase equates to a quarterly distribution of 0.3875¢ per unit. This marks the fourth consecutive annual distribution increase since the creation of the REIT in July of 2011.

A distribution in the amount of 0.3875¢ will be paid to unitholders of record as of June 19th, 2015 and payable on June 30th, 2015.

For the quarter ended March 31, 2015, Fronsac reported funds from operations ("FFO") of $226,856 an increase of 4% ($217,315 in Q1 2014). For the Q1 2015, FFO per unit was 0.49¢ compared to 0.63¢ per unit for the quarter ended March 31, 2014, a decrease of 22%. This decrease in FFO per unit is largely attributable to the important increase of units following the October 2014 issuance, which would allow the Trust to acquire the shares of Soginci Inc., and its 5 properties. As a result of delays in the closing of the transaction, the funds obtained from the issuance could not be invested to generate a profit for Q1 2015.

During Q1 2015 the Trust's property rental income was $447,770 compared to $377,154 in Q1 2014, an increase of 19%. NOI (Net operating Income) was $400,770 compared to $359,512 in Q1 2014, an increase of 11%. The increases were due to the contributions to revenue from acquisitions, which took place in the later part of 2014, as well as the 3 acquisitions during Q1 2015 (Levis, Quebec City & Cornwall).

Michel Lassonde President and CEO said: "Q1 marked the beginning of a great year for the Trust, followed by our largest acquisition to date. On May 7th, 2015 the Trust acquired all of the issued and outstanding shares of Soginci Inc., a management company, which holds 5 real estate properties. These properties generated roughly $450,000 of revenues over their last fiscal period, which will in turn positively affect our FFO on a per unit basis in the coming periods."

For Q1 2015, Fronsac recorded a net income attributable to unitholders of $148,275 or 0.32¢ per unit compared to a net loss of ($595,604) or (1.70¢) per unit for Q1 2014. The main reason for the fluctuation in reported net income is due to the stabilization of the portfolios capitalization rates during the quarter.

The tables below represent other financial highlights as well as the reconciliation from net income to FFO for the quarter ended March 31, 2015 and its comparative period. This information should be read in conjunction with the Non-Audited Consolidated Financials Statements and MD&A for the quarter ended March 31, 2015 and March 31, 2014.

SUMMARY OF SELECTED QUARTERLY INFORMATION
Q1 2015 Q1 2014 Change %
Financial info
Property rental income 447,770 377,154 70,616 19 %
Total revenue 447,770 377,154 70,616 19 %
NOI (1) 400,770 359,512 41,258 11 %
FFO (1) 226,856 217,315 9,541 4 %
AFFO (1) 226,856 217,315 9,541 4 %
EBITDA (1) 330,362 310,037 20,325 7 %
Investment properties (2) 23,261,884 18,694,326 4,567,558 24 %
Total assets 24,938,785 22,829,110 2,109,675 9 %
Total mortgage/loans/long term debt (3) 9,672,371 7,552,144 2,120,227 28 %
Total exchangeable preferred units 880,274 871,728 8,546 1 %
Total debentures 250,618 246,552 4,066 100 %
Total equity 13,529,108 13,608,981 (79,873 ) (1 %)
Weighted average units o/s - basic 46,228,751 34,429,853 11,798,898 34 %
(1) Non-IFRS financial measures
(2) Includes value of investment properties owned through joint ventures (530 Barkoff)
(3) Excludes exchangeable debentures and exchangeable preferred units
RECONCILIATION OF NET INCOME TO FFO
Q1 2015 Q1 2014 Change
Net income (loss) attributable to unitholders 148,275 (595,604 ) 743,879
Change in value of investment properties 56,749 730,293 (673,544 )
Change in value of investment properties in joint ventures - 30,316 (30,316 )
Unit based compensation - (2,385 ) 2,385
Change in liability component of exchangeable preferred units 12,612 8,745 3,867
Change in fair value of derivative financial instruments 7,415 20,350 (12,935 )
Realized/unrealized gain on interest swaps - (2,000 ) 2,000
Change in fair value of other financial components 1,805 1,500 305
Deferred income taxes - 26,100 (26,100 )
FFO(1)- basic 226,856 217,315 9,541
FFO per unit - basic 0.0049 0.0063 (0.0014 )
Distributions paid on exchangeable preferred units (if dilutive) 11,427 16,353 (4,926 )
FFO - diluted 238,283 233,668 4,615
FFO per unit - diluted 0.0048 0.0060 (0.0012 )
Distributions 171,046 127,432 43,614
Distributions per unit 0.0037 0.0037 0.0000
FFO - basic after distributions 0.0012 0.0026 (0.0014 )
Distributions as a % of
FFO - basic 75 % 59 % 17 %
Weighted avg. unit o/s
Basic 46,228,751 34,429,853 11,798,898
Diluted 49,316,951 38,850,053 10,466,898
(1)FFO is a Non-IFRS financial measure

About Fronsac - Fronsac Real Estate Investment Trust is an open-ended trust that acquires and owns high quality commercial real estate properties situated along highways or frequently travelled routes, rented to strong tenants under long term, management free and net leases. These properties are occupied by tenants within the following sectors; (1) Fast food chains, (2) Major oil/gas companies and (3) Convenience store chains.

Forward-Looking Statements - This press release contains forward-looking statements and information as defined by applicable securities laws. Fronsac warns the reader that actual events may differ materially from current expectations due to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated in such statements. Among these include the risks related to economic conditions, the risks associated with the local real estate market, the dependence to the financial condition of tenants, the uncertainties related to real estate activities, the changes in interest rates, the availability of financing in the form of debt or equity, the effects related to the adoption of new standards, as well as other risks and factors described from time to time in the documents filed by Fronsac with securities regulators, including the management report. Fronsac does not update or modify its forward- looking statements even if future events occur or for any other reason, unless required by law or any regulatory authority.

Neither the TSX Venture Exchange Inc., nor its Regulatory Services Provider (as that term is defined in the Policy of the TSX Venture Exchange) accepts any responsibility for the adequacy or accuracy of this release.

The March 31, 2015 financial statements and management discussion & analysis of Fronsac REIT may be viewed on SEDAR at www.sedar.com

Contact Information

  • Michel Lassonde
    President
    (450) 536-5328