SOURCE: Slate Office REIT

Slate Office REIT

March 03, 2016 19:29 ET

Slate Office REIT Reports Strong Fourth Quarter and 2015 Year Results

TORONTO, ON--(Marketwired - March 03, 2016) - Slate Office REIT (TSX: SOT.UN) (the "REIT"), a leading owner of office properties in Canada, today announced its financial results for the three months and year ended December 31, 2015. Senior management will host a conference call at 8:30 a.m. EST on Friday, March 4, 2016 to discuss the results and ongoing business initiatives of the REIT.

The REIT reported strong results as it concluded a year that saw significant transformation consistent with the REIT's stated strategy and focus on commercial office properties across Canada. Remarking on the past year, Scott Antoniak, the REIT's Chief Executive Officer, said in a letter to unitholders:

"Thanks to the transformative changes of the past year, the REIT now has a stable platform with the resources to capitalize on potential acquisition opportunities. Our ability to generate organic growth through embedded rent increases, improved occupancy and creative leasing transactions has significantly improved."

Read the full letter to unitholders here.

Q4 2015 Highlights

  • Completed 107,315 square feet of leasing transactions
  • Distributions as a percentage of Adjusted Funds from Operations were 89.7% for the three months ended December 31, 2015, compared to the payout ratio of 159.2% for the same period in 2014
  • Core-FFO per unit increased by 84.6% to $0.24 compared to the same period in 2014
  • Rental rates for new leases increased 16.8% above in-place rents
  • Rental rates for renewed leases increased 1.2% over expiring rents
  • On December 31, 2015, the REIT increased its interest in three co-owned properties in St John's, Newfoundland from 10% to 30%

2015 Highlights

  • Acquired a 14-asset portfolio comprising many of Atlantic Canada's highest-quality commercial buildings, including ten office buildings, one mixed-use office complex and three retail centres totaling 2.8 million square feet of gross leasable area
  • Completed the disposition of 17 non-strategic retail and industrial assets for proceeds of $85.1 million
  • Completed 798,003 square feet of leasing including the extension of the REIT's lease with SNC-Lavalin Nuclear for approximately 215,000 square feet
  • Rental rates for renewed leases increased 19.1% over expiring rents
  • Increased ownership of MTS Data Centre in Winnipeg, Manitoba to 100% providing rental income to the REIT of approximately $6.1 million annually
  • During the year ended December 31, 2015, 579,973 trust units were purchased and subsequently canceled under the NCIB for a total cost, including transaction costs, of $4.4 million at an average price of $7.35 per unit
  • The REIT now consists of a portfolio with no Alberta office properties and only 3% oil and gas exposure nationally, in markets with limited new supply

Conference Call and Webcast

Senior management will host a live conference call at 8:30 a.m. EST on Friday, March 4, 2016 to discuss the results and ongoing business initiatives of the REIT.

The conference call can be accessed by dialing (647) 788-4919 or toll-free (877) 291-4570. Additionally, the conference call will be available via simultaneous audio webcast on Slate Office's website at www.slateam.com/SOT. A replay will be available on the website or by dialing (416) 621-4642 or toll-free (800) 585-8367, conference ID 33447467, approximately two hours after the event, available until March 18, 2016.

Click here to access the webcast.

Summary of Results

     
    Three months ended December 31,
(thousands of dollars, except per unit amounts)   2015   2014
Revenue   $ 29,939   $ 8,917
Net operating income   12,326   4,687
Net income and comprehensive income   13,201   435
Funds from operations ("FFO")   7,513   1,125
Core FFO   8,528   2,479
Adjusted FFO   7,409   1,971
         
Weighted average number of trust units (000s)   35,519   19,126
FFO per unit   0.21   0.06
Core FFO per unit   0.24   0.13
AFFO per unit   0.21   0.10
Distributions per unit   0.1875   0.1875
AFFO pay-out   89.7 %   159.2 %
         
Occupancy (1)   89.7 %   90.7 %
Occupancy - portfolio   85.4 %   89.2 %
Interest coverage   2.8x   2.6x
Net debt to adjusted EBITDA leverage   10.3x   23.7x
         

(1) Excluding redevelopment properties.

Distributions and Fully-Covered Payout Ratio

During the year, the REIT paid monthly distributions of $0.0625 per unit, or $0.75 per unit on an annualized basis. Distributions paid to unitholders are paid at the same rate to holders of the REIT's Class B LP units and are paid on or about the 15th day of the month following declaration.

For the three months ended December 31, 2015, the AFFO pay-out ratio was 89.7%, compared to the pay-out ratio of 159.2% for the same period in 2014. The AFFO pay-out ratio was 95.9% for the twelve months ended December 31, 2015, compared to an AFFO pay-out ratio of 124.3% for 2014. Management believes that the now current distribution level is more appropriate to meet the REIT's objective to provide a high level of certainty over ongoing distributions. Management expects that in the short-term the REIT's AFFO pay-out ratio will be approximately 90%, while the longer term target AFFO pay-out ratio is approximately 85%.

About Slate Office REIT (TSX: SOT.UN)

Slate Office REIT is an open-ended real estate investment trust. The REIT's portfolio currently comprises 34 strategic and well-located real estate assets located primarily across Canada's major population centres. The REIT is focused on maximizing value through internal organic rental and occupancy growth and strategic acquisitions. Slate Management Corporation, a wholly-owned subsidiary of Slate Asset Management L.P. (collectively "Slate") is the REIT's manager. Visit slateam.com/SOT to learn more about the REIT.

About Slate Asset Management L.P.

Slate is a leading real estate investment platform with over $3.0 billion in assets under management. Slate is a value-oriented company and a significant sponsor of all its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more about Slate.

Supplemental Information

All interested parties can access the REIT's supplemental information online at slateam.com/SOT in the Investors section. Materials are also available on SEDAR at sedar.com or upon request to the REIT at ir@slateam.com or (416) 644-4264.

Forward-Looking Statements

Certain statements herein may be forward-looking statements within the meaning of applicable securities laws. These statements reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities of the REIT including expectations for the current financial year, and include, but are not limited to, statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Statements that contain words such as "could", "should", "would", "anticipate", "expect", "believe", "plan", "intend", "will", "may", "might" and similar expressions or statements relating to matters that are not historical facts constitute forward-looking statements.

These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on the REIT's current estimates and assumptions, which are subject to significant risks and uncertainties. Forward-looking statements contained herein are made as the date hereof and accordingly are subject to change after such date. The REIT does not undertake to update any forward-looking statements that are contained herein except as expressly required by applicable securities laws.

Non-IFRS Financial Measures

We disclose a number of financial measures in this news release that are not measures used under IFRS, including NOI, same property net operating income, FFO, AFFO, AFFO payout ratio, adjusted EBITDA and the interest coverage ratio, in addition to certain measures on a per unit basis. We utilize these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in the management's discussion and analysis for the year ended December 31, 2015 of the REIT. We believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others.

Contact Information

  • For Further Information
    Slate Office REIT
    121 King Street West, Suite 200
    Toronto, ON M5H 3T9
    Tel: +1 416 644 4264
    Fax: +1 416 947 9366
    E-mail: ir@slateam.com