SOURCE: Melcor Real Estate Investment Trust

Melcor Real Estate Investment Trust

May 06, 2016 07:00 ET

Melcor REIT Announces First Quarter 2016 Results

EDMONTON, AB--(Marketwired - May 06, 2016) -

Highlights

  • Portfolio performance remained steady in Q1-2016
  • Rental Revenue of $16.63 million for growth of 2% over Q1-2015
  • Adjusted funds from operations (AFFO) grew 6% to $5.48 million or $0.21 per unit.
  • Debt to Gross Book Value (GBV) ratio of 56%, below our maximum threshold of 65%.
  • Distributions of $0.05625 per trust unit were paid in January, February and March for a payout ratio of 80%.

Melcor REIT (TSX: MR.UN) today announced results for the first quarter ended March 31, 2016. Rental revenue grew 2% to $16.63 million compared to $16.26 million in 2015. Adjusted funds from operations (AFFO) grew 6% to $5.48 million ($0.21 per unit) year-to-date.

Darin Rayburn, CEO of Melcor REIT commented: "Our portfolio performance remains steady as a result of our strategy of taking care of the fundamentals of our business -- looking after tenants, executing a solid leasing strategy, improving operating efficiency and making the right investments in our assets. Our 80% payout ratio is a strong indicator of our overall health and our ability to sustain distributions to our unitholders. We are mindful of and making adjustments for the current economic challenges. We will continue to focus on the details to ensure the right mix of properties and clients and to continue to perform for our unitholders."

Q1-2016 Highlights:

Our portfolio performance remained steady throughout Q1-2016. The stability and diversity of our portfolio with respect to both tenant profile and asset class put us in a good position to manage through economic cycles. We are focused on the real estate fundamentals of asset enhancement and property management while conservatively managing our debt. At 80%, our payout ratio is a strong indicator of our overall health and our ability to sustain distributions at current rates.

Highlights of our performance in the first quarter include:

  • Property acquisitions completed via the Melcor proprietary pipeline over the past 12 months coupled with densification activity on an existing property led to revenue growth of 2% and AFFO growth of 6% over Q1-2015.
  • We continue to see leasing activity, with 30,336 sf in new and renewed leasing completed during the quarter. Occupancy increased slightly to 93.9%.
  • We achieved an on-time response rate in our signature care program of 99% in Q1-2016. We view this metric as an important indication of our commitment to ongoing client care, which contributes to tenant satisfaction and ultimately retention.
  • We reduced our weighted average interest rate by 22 basis points over December 31, 2015 as a result of mortgage financings. Reductions to our average borrowing costs translated into improvement in both our finance costs coverage ratio and debt service coverage ratio, a strong indicator of our ability to satisfy our ongoing debt servicing requirements.
  • We paid distributions of $0.05625 per trust unit in January, February and March for a quarterly payout ratio of 80%.
  • As at March 31, 2016 we have $2.89 million in cash, $2.19 million in restricted cash and additional capacity under our revolving credit facility. Our working capital position remains healthy and we continue to collect receivables in a timely manner to ensure near-term liquidity.

Selected Highlights

Financial Highlights

         
  Three months ended      
  March 31      
($000s) 2016   2015   Change %  
Non-Standard KPIs            
Net operating income (NOI) 10,613   10,205   4%  
Funds from operations (FFO) 6,697   6,303   6%  
Adjusted funds from operations (AFFO) 5,477   5,178   6%  
   
Rental revenue 16,626   16,258   2%  
Income before fair value adjustments 3,406   3,115   9%  
Fair value adjustment on investment properties (1,825 ) (1,809 ) 1%  
Distributions to unitholders 1,881   1,903   (1)%  
Cash flows from operations 2,609   2,595   1%  
Same-asset NOI 9,870   9,875   -%  
   
Per unit metrics            
Income (loss) - diluted ($0.89 ) $0.15   nm  
FFO $0.26   $0.24   8%  
AFFO $0.21   $0.20   5%  
Distributions $0.17   $0.17   -%  
Payout ratio 80%   84%   (5)%  
   
  31-Mar-16   31-Dec-15   Change %  
Total assets ($000s) 669,190   666,458   -%  
Equity ($000s)(1) 260,600   260,600   -%  
Debt ($000s)(2) 357,064   353,521   1%  
Weighted average interest rate on debt 3.58%   3.80%   (6% )
Debt to GBV ratio(3) 56%   56%   -%  
Finance costs coverage ratio(4) 2.90   2.87   1%  
Debt service coverage ratio(5) 2.86   2.76   4%  
   
Operational Highlights            
  31-Mar-16   31-Dec-15   Change %  
Number of properties 38   38   -%  
Gross leasable area (GLA) (sf) 2,768,750   2,768,750   -%  
Occupancy (weighted by GLA) 93.9%   93.6%   -%  
Retention (weighted by GLA) 29.1%   73.0%   (60)%  
Weighted average remaining lease term (years) 5.03   5.27   (5)%  
Weighted average base rent (per sf) $15.67   $15.49   1%  
             
  1. Calculated as the sum of trust units and Class B LP Units at their book value. Class B LP Units are presented as a financial liability in the condensed interim consolidated financial statements.
  2. Calculated as the sum of total amount drawn on revolving credit facility, mortgages payable, Class C LP Units, excluding unamortized fair value adjustment on Class C LP Units and convertible debenture, excluding unamortized discount and transaction costs.
  3. Excluding convertible debentures, Debt to GBV ratio is 51% (December 31, 2015 - 50%).
  4. Calculated as the sum of FFO and finance costs; divided by finance costs, excluding distributions on Class B LP Units.
  5. Calculated as FFO divided by sum of contractual principal repayments on mortgages payable and distributions of Class C LP Units, excluding amortization of fair value adjustment on Class C LP Units.

MD&A and Financial Statements

Information included in this press release is a summary of results. This press release should be read in conjunction with the REIT's Q1-2016 quarterly report to unitholders. The REIT's consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2016 can be found on the REIT's website at www.MelcorREIT.ca or on SEDAR (www.sedar.com).

Conference Call & Webcast

Unitholders and interested parties are invited to join CEO Darin Rayburn and CFO Jonathan Chia on a conference call to be held Friday, May 6, 2016 at 11:00 AM ET (9:00 AM MT). Call 416-340-8527 in the Toronto area; 877-677-0837 toll free.

The call will also be webcast (listen only) at http://www.gowebcasting.com/7484. A replay of the call will be available at the same URL shortly after the call is concluded.

About Melcor REIT

Melcor REIT is an unincorporated, open-ended real estate investment trust. Melcor REIT owns, acquires, manages and leases quality retail, office and industrial income-generating properties with exposure to high growth western Canadian markets. Its portfolio is currently made up of interests in 38 properties representing approximately 2.77 million square feet of gross leasable area located across Alberta and in Regina, Saskatchewan; and Kelowna, British Columbia. For more information, please visit www.MelcorREIT.ca.

Non-standard Measures

NOI, FFO and AFFO are key measures of performance used by real estate operating companies; however, they are not defined by International Financial Reporting Standards (IFRS), do not have standard meanings and may not be comparable with other industries or income trusts. These non-IFRS measures are defined and discussed in the REIT's MD&A for the quarter ended March 31, 2016, which is available on SEDAR at www.sedar.com.

Forward-looking Statements:

This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; the REIT's ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. The REIT's objectives and forward- looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. The REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise. Additional information about these assumptions and risks and uncertainties is contained in the REIT's filings with securities regulators.

Contact Information

  • Contact Information:  
     
    Business Contact
    Darin Rayburn
    Chief Executive Officer
    Tel: 780.423.6931
    Email contact


    Investor Relations
    Jonathan Chia, CA 
    Chief Financial Officer
    Tel: 1.855.673.6931
    Email contact