Fronsac Real Estate Investment Trust
TSX VENTURE : GAZ.UN

Fronsac Real Estate Investment Trust

November 10, 2015 18:17 ET

Fronsac REITAnnounces Very Strong Results for Q3 2015 and the December 31st, 2015 Regular Quarterly Distribution

MONTREAL, QUEBEC--(Marketwired - Nov. 10, 2015) - (TSX VENTURE:GAZ.UN) Fronsac Real Estate Investment Trust ("Fronsac REIT" or "Fronsac") today announced its results for Q3 2015 and a distribution of 0.3875¢ per unit to unitholders of record as at December 18th, 2015 and payable on December 31st, 2015.

For the nine months ended September 30th, 2015, Fronsac reported funds from operations ("FFO") of $857,537, an increase of 46% ($588,421 in 2014). FFO per unit was 1.85¢ compared to 1.69¢ per unit, which equates to an increase of 10%. During the first 9 months of 2015 the Trust's property rental income was $1,583,469 compared to $1,098,998 in 2014, an increase of 44%. NOI (Net operating Income) was $1,478,696 compared to $1,049,979 in 2014, an increase of 41%. Fronsac recorded a net income attributable to unitholders of $1,216,415 or 2.63¢ per unit compared to a net loss of ($583,741) or (1.68¢) per unit for 2014. The main reason for the fluctuation in reported net income is due to the stabilization capitalizations rates of the Trust's portfolio as well as solid results as demonstrated by the increases noted above.

For the quarter ended September 30th, 2015, Fronsac reported funds from operations ("FFO") of $295,023, an increase of 68% ($175,938 in Q3 2014). A great deal of the increase is attributable to the increase in the Trust's portfolio by 9 properties since Q3 2014. For the Q3 2015, FFO per unit was 0.64¢ compared to 0.50¢ per unit for the quarter ended September 30th, 2014, an increase of 28%. During Q3 2015 the Trust's property rental income was $596,269 compared to $349,327 in Q3 2014, an increase of 71%. NOI (Net operating Income) was $515,450 compared to $342,325 in Q3 2014, an increase of 51%. Fronsac recorded a net income attributable to unitholders of $478,243 or 1.03¢ per unit compared to a net income of $667,041 or 1.88¢ per unit for Q3 2014. The main reason for the fluctuation in reported net income is due to one time deferred tax charges during Q3 2014 as a result of corporate reorganization activities.

Michel Lassonde President and CEO said: "Q3 marked another quarter of solid results for the Trust, which demonstrates the stability of our business model. We have been able to capitalize on funds from newly acquired properties while maintaining an unchanged overhead structure. Our acquisition strategy of purchasing per unit accretive investments is evident in the increases we reported this quarter, all while maintaining a conservative 62% FFO payout ratio."

The tables below represent other financial highlights as well as the reconciliation from net income to FFO for the quarter and period ended September 30th, 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 September 30th, 2015 and September 30th, 2014.

SUMMARY OF SELECTED QUARTERLY INFORMATION
9 months
Periods ended September 30, 2015 2015 2014 Change %
Financial info
Property rental income 1,583,469 1,098,998 484,471 44 %
Total revenue 1,673,469 1,098,998 574,471 52 %
NOI (1) 1,478,696 1,049,979 428,717 41 %
FFO (1) 857,537 588,421 269,116 46 %
AFFO (1) 848,612 488,184 360,428 74 %
EBITDA (1) 1,268,682 927,073 341,609 37 %
Investment properties (2) 31,823,651 20,789,863 11,033,788 53 %
Total assets 32,143,057 21,217,321 10,925,736 51 %
Total mortgage/loans/long term debt (3) 15,974,631 9,759,724 6,214,907 64 %
Total exchangeable preferred units 897,956 874,802 23,154 3 %
Total debentures 251,246 - 251,246 100 %
Total equity 14,275,894 10,254,619 4,021,275 39 %
Weighted average units o/s - basic 46,260,619 34,761,565 11,499,054 33 %
Amounts on a per unit basis
FFO/unit 0.0185 0.0169 0.0016 10 %
AFFO/unit 0.0183 0.0140 0.0043 31 %
Distributions 0.0115 0.0111 0.0004 3 %
(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
3 months
Periods ended September 30, 2015 2015 2014 Change
Net income (loss) attributable to unitholders 478,243 665,548 (187,305 )
Change in value of investment properties (170,660 ) 47,718 (218,378 )
Change in value of investment properties in joint ventures - - -
Unit based compensation (18,699 ) (1,761 ) (16,938 )
Change in liability component of exchangeable preferred units 13,017 3,173 9,844
Change in fair value of derivative financial instruments (6,150 ) (126,800 ) 120,650
Realized/unrealized gain on interest swaps - (680 ) 680
Change in fair value of other financial components (1,165 ) (12,000 ) 10,835
Deferred income taxes 437 (399,260 ) 399,697
FFO(1) - basic 295,023 175,938 68 %
FFO per unit - basic 0.0064 0.0050 28 %
Distributions paid on exchangeable units (if dilutive) 9,982 17,721 (7,739 )
FFO - diluted 305,005 193,659 57 %
FFO per unit - diluted 0.0062 0.0050 24 %
Distributions 179,718 132,915 46,803
Distributions per unit 0.0039 0.0037 5 %
FFO - basic after distributions 0.0025 0.0013 0.0012
Distributions as a % of FFO - basic 61 % 74 % (14 %)
Weighted avg. units o/s
Basic 46,323,316 35,403,181 10,920,135
Diluted 49,411,516 38,998,120 10,413,396
(1) FFO is a Non-IFRS financial measure
9 months
2015 2014 Change
Net income (loss) attributable
to unitholders 1,216,415 (583,741 ) 1,800,156
Change in value of investment properties (368,735 ) 1,556,920 (1,925,655 )
Change in value of investment properties in joint ventures - 58,300 (58,300 )
Unit based compensation (18,699 ) (4,576 ) (14,123 )
Change in liability component of exchangeable preferred units 30,922 36,433 (5,511 )
Change in fair value of derivative financial instruments (3,070 ) (109,300 ) 106,230
Realized/unrealized gain on interest swaps - (4,700 ) 4,700
Change in fair value of other financial components (60 ) (10,500 ) 10,440
Deferred income taxes 764 (350,415 ) 351,179
FFO(1) - basic 857,537 588,421 46 %
FFO per unit - basic 0.0185 0.0169 10 %
Distributions paid on exchangeable units (if dilutive) 40,877 34,075 6,802
FFO - diluted 898,414 622,496 44 %
FFO per unit - diluted 0.0182 0.0160 14 %
Distributions 529,900 387,778 142,122
Distributions per unit 0.0115 0.0111 3 %
FFO - basic after distributions 0.0071 0.0058 0.0013
Distributions as a % of
FFO - basic 62 % 66 % (4 %)
Weighted avg. units o/s
Basic 46,260,619 34,761,565 11,499,054
Diluted 49,348,819 38,903,655 10,445,164
(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 and its Regulatory Services Provide) accepts any responsibility for the adequacy or accuracy of this release.

The September 30th, 2015 financial statements and management discussion & analysis of Fronsac REIT may be viewed on SEDAR at www.sedar.com

Contact Information

  • Jason Parravano
    (450) 536-5328