SOURCE: Slate Retail REIT

Slate Retail REIT

August 10, 2016 18:29 ET

Slate Retail REIT Reports Second Quarter 2016 Results

(All amounts are expressed in U.S. dollars unless otherwise stated)

TORONTO, ON--(Marketwired - August 10, 2016) - Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN) (the "REIT"), an owner of U.S. grocery-anchored real estate, today announced its financial results for the three and six months ended June 30, 2016. Senior management will host a conference call at 9:00 a.m. EST on Thursday, August 11, 2016 to discuss the results and ongoing business initiatives of the REIT.

During the quarter, the REIT continued to execute on its strategy of identifying undervalued and overlooked real estate. In addition, the REIT monetized fully valued assets redeploying that capital into assets that offer further upside. Remarking on the achievements of the past quarter Greg Stevenson, the REIT's Chief Executive Officer, wrote in a letter to unitholders:

"Our focus on non-discretionary, e-commerce resistant revenue sources that are diversified by both geography and business type will continue and our pipeline of opportunities today is as big as it has ever been."

Read the full letter to unitholders here.

Quarterly Highlights

  • Completed leasing transactions totaling 255,623 square feet, consisting of 51,968 square feet of new leases, and 203,655 square feet of renewals. Lease renewals included the early renewal of two grocery-anchors originally set to expire in 2017, Publix at North Pointe Shopping Centre and Weis Markets at Mitchellville Plaza, each for an additional five-year term.
  • Funds from operations ("FFO") per unit was $0.35, a $0.01 increase compared to the previous quarter and a $0.04 per unit increase compared to the second quarter of 2015.
  • Adjusted funds from operations ("AFFO") per unit was $0.29, a $0.05 increase compared to the previous quarter and a $0.01 per unit increase compared to the second quarter of 2015.
  • The REIT achieved an occupancy rate of 95.0%.
  • The REIT acquired three properties for a total of $30.5 million, totaling 306,838 square feet ($99 per square foot) at a weighted average 7.3% capitalization rate.
  • The REIT disposed of Ocean Plaza, a grocery-anchored shopping centre in South Carolina, for $6.5 million ($98 per square foot) at an estimated 6.6% capitalization rate.
  • Subsequent to the end of the quarter, on July 20, 2016, the REIT completed the disposition of five Food Lion anchored assets totaling 227,529 square feet, for gross proceeds of $21.9 million ($96 per square foot) at an estimated weighted average capitalization rate of 7.7%. The sales occurred above the REIT's March 31, 2016 IFRS estimate of fair value.
  • Began work on multi-year redevelopments of North Augusta and Hocking Valley. Each of these redevelopments provide the opportunity for the REIT to dramatically change the footprint and appearance of the assets, with strong anchor tenants operating improved formats under long term leases and growing cash flows.

Commenting on the REIT's acquisition and disposition activity, Greg Stevenson, the REIT's Chief Executive Officer, said, "These asset sales exemplify the REIT's strategy to purchase well located properties that can be enhanced through leasing, extending term and proactive asset management to increase cash flow and as a result value. We expect to recycle proceeds from these sales into new asset acquisitions on a tax deferred basis in the short-term."

Summary of Q2 2016 Results

          
   Three months ended June 30,  
(Thousands of U.S. dollars except, per unit amounts)  2016   2015   Change %  
Rental revenue  $24,088   $17,913   34.5 %
Net operating income  $17,438   $12,902   35.2 %
   
Leasing - shop space   78,035    100,148   (22.1 )%
Leasing - anchor   177,588    101,069   75.7 %
Total leasing activity (square feet)   255,623    201,217   27.0 %
   
Weighted average number of units outstanding ("WA units")   34,627    27,732   24.9 %
FFO  $11,998   $8,518   40.9 %
FFO per WA units  $0.35   $0.31   12.9 %
AFFO  $10,152   $7,712   31.6 %
AFFO per WA units  $0.29   $0.28   3.6 %
   
    June 30,    December 31,      
(Thousands of U.S. dollars)   2016    2015   Change %
Total assets  $1,072,823   $1,013,481   5.9 %
Total debt  $586,134   $577,280   1.5 %
Portfolio occupancy   95.0 %  94.7 % 0.3 %
FFO payout ratio   57.5 %  57.8 % (0.5 )%
AFFO payout ratio   67.9 %  70.4 % (3.6 )%
Debt / GBV ratio   55.0 %  57.5 % (4.3 )%
Interest coverage ratio   3.57 x   3.19  11.9 %

Distributions and Payout Ratio

The REIT's monthly distribution to unitholders is $0.06489 per class U unit, or $0.77868 per class U unit on an annualized basis. Distributions were $6.9 million for the three month period ended June 30, 2016.

The AFFO payout ratio was 67.9% for the three month period ended June 30, 2016, compared to an AFFO payout ratio of 67.8% for the same period in the prior year. Management continues to target a 70% AFFO payout ratio.

Conference Call and Webcast

Senior management will host a live conference call at 9:00 a.m. ET on Thursday, August 11, 2016 to discuss the results and ongoing business initiatives.

The conference call can be accessed by dialing (647) 788-4919 or 1 (877) 291-4570. Additionally, the conference call will be available via simultaneous audio found at http://www.gowebcasting.com/7698. A replay will be accessible until August 25, 2016 via the REIT's website or by dialing (416) 621-4642 or 1 (800) 585-8367 (access code 41601696) approximately two hours after the live event.

About Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN)

Slate Retail REIT is a real estate investment trust focused on U.S. grocery-anchored real estate. The REIT owns and operates over U.S. $1 billion of assets located primarily across the top 50 U.S. metro markets. The REIT is focused on maximizing value through internal organic rental growth and strategic acquisitions. Visit slateam.com/SRT to learn more about the REIT.

About Slate Asset Management L.P.

Slate Asset Management L.P. is a leading real estate investment platform with over $3 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 Asset Management L.P.

Supplemental Information

All interested parties can access Slate Retail's Supplemental Information online at slateam.com/SRT in the Investors section. These materials are also available on SEDAR or upon request to the REIT at info@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 net operating income, same property net operating income, funds from operations, adjusted funds from operations, 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 Management's Discussion and Analysis. 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. Reconciliations of these non-IFRS measures to the most directly comparable financial measures calculated and presented in accordance with IFRS are included within this news release.

Contact Information

  • For Further Information
    Investor Relations
    Slate Asset Management L.P.
    +1 (416) 644-4264
    ir@slateam.com