SOURCE: WPT Industrial REIT

WPT Industrial REIT

May 10, 2017 17:16 ET

WPT Industrial REIT Announces First Quarter Results; Approves Renewal of Management Agreements

TORONTO, ON--(Marketwired - May 10, 2017) - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U) (OTCQX: WPTIF) announced today its results for the three months ended March 31, 2017 and that the REIT has approved the renewal of the REIT's Asset Management Agreement and Property Management Agreement with WPT Capital Advisors, LLC ("WPT Capital") for an additional five-year term as such renewal is contemplated by the terms of the agreements. All dollar amounts are stated in US funds.

FIRST QUARTER 2017 HIGHLIGHTS:

  • Revenue, net operating income ("NOI"), funds from operations ("FFO") and adjusted funds from operations ("AFFO") were up 11.0%, 9.7%, 27.6% and 24.7%, respectively, over the same period last year
  • Net income and comprehensive income, excluding all fair value adjustments, was up 32.8% over the same period last year
  • Same properties NOI was up 4.0% over the first quarter in 2016 due to increases in contractual base rent, the expiration of free rent periods, higher recoveries of operating expenses, and a slight increase in occupancy
  • Occupancy remains strong at 98.4% at March 31, 2017
  • 100% of leases expiring in the first quarter of 2017 were renewed, with less than 3.0% of the 2017 lease expirations remaining to be renewed

"Our first quarter results underscore management's continued focus on enhancing unitholder value through proactive asset management and consistent operating performance," commented Scott Frederiksen, Chief Executive Officer. "Looking ahead, we continue to evaluate potential acquisition and development opportunities that can enhance the scale and diversity of the REIT's portfolio."

SOLID OPERATING PERFORMANCE
For the three months ended March 31, 2017, investment properties revenue was $19.5 million compared to $17.6 million in the same period last year. The increase in revenue is primarily due to the contribution from our Minneapolis and Columbus acquisitions completed in November 2016, an increase in base rent in existing properties and higher recoveries of operating expenses, partially offset by the sale of a non-core property in July 2016. Net income and comprehensive income for the three months ended March 31, 2017 was $18.9 million ($0.458 per trust unit and class B partnership unit (collectively, "Unit") compared to $24.2 million ($0.717 per Unit) in the same period last year. The decrease in net income is mainly due to fair value adjustments. Excluding all fair value adjustments, net income was $8.3 million compared to $6.2 million in the same period last year.

NOI for the three months ended March 31, 2017 was $14.3 million compared to $13.0 million in the same period last year. Same property NOI increased 4.0% for the three months ended March 31, 2017 compared to the same period last year, due primarily to increases in contractual base rent, the expiration of free rent periods, higher recoveries of operating expenses, and a slight increase in occupancy.

AFFO for the three months ended March 31, 2017 was $8.5 million ($0.205 per Unit) compared to $6.8 million ($0.202 per Unit) in the same period last year.

Cash flow from operations and adjusted cash flow from operations ("ACFO") were $14.3 million and $9.1 million, respectively, compared to $11.7 million and $7.2 million in the same period last year. The REIT's ACFO payout ratio for the three months ended March 31, 2017 was 86.8% compared to 89.3% in the same period last year.

STRONG FINANCIAL & LIQUIDITY POSITION
As at March 31, 2017, the REIT's debt-to-gross-book-value ratio was 40.8% with an interest coverage ratio of 3.8 times, a debt-to-Adjusted EBITDA ("Adjusted EBITDA" is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) ratio of 7.3 times, and a fixed charge coverage ratio of 3.3 times, all consistent with or improved from last year. The weighted average effective interest rate on outstanding debt was 3.8% at March 31, 2017, consistent with the prior year. The weighted average term to maturity on the REIT's mortgages payable was 4.0 years as at March 31, 2017, with a weighted average remaining lease term of 4.1 years.

SUBSEQUENT EVENTS
The independent trustees of the REIT have approved the renewal of the REIT's Asset Management Agreement and Property Management Agreement with WPT Capital for an additional five-year term as such renewal is contemplated by the terms of the agreements. The agreements will now continue until April 26, 2023 unless terminated in accordance with the provisions thereof. Each agreement continues to provide for termination, including during the renewal period, at such time as the REIT has achieved a fully-diluted market capitalization of $750 million based on the volume-weighted average price of trust units (assuming all class B partnership units of WPT Industrial, LP have been redeemed for trust units) on a recognized stock exchange over a 20-trading day period.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

(all figures in '000s, except per Unit amounts, number of investment properties and GLA)

       
As at and for the quarter ended March 31,  2017  2016
Operating Results:      
 Investment properties revenue  $19,494  $17,564
 NOI (1)  $14,297  $13,029
 Net income and comprehensive income  $18,935  $24,190
 Net income and comprehensive income per Unit (basic) (2) (3)  $0.458  $0.717
 Net income and comprehensive income per Unit (diluted) (2) (4)  $0.450  $0.712
 FFO (1) (5)  $9,807  $7,683
 FFO per Unit (basic) (1) (2) (3) (5)  $0.237  $0.228
 FFO per Unit (diluted) (1) (2) (4) (5)  $0.233  $0.226
 AFFO (1) (5)  $8,490  $6,808
 AFFO per Unit (basic) (1) (2) (3) (5)  $0.205  $0.202
 AFFO per Unit (diluted) (1) (2) (4) (5)  $0.202  $0.200
 Cash flows from operations  $14,250  $11,689
 ACFO (1)  $9,009  $7,188
Distributions:      
 Distributions per Unit (2) (6)  $0.190  $0.190
 Distributions declared (3) (6)  $7,856  $6,409
 ACFO payout ratio (1) (6)  87.2%  89.2%
 Weighted average number of Units (basic) (2) (3)  41,375  33,748
 Weighted average number of Units (diluted) (2) (4)  42,076  34,051
      
       
As at  March 31, 2017  December 31, 2016
Operational Information:        
 Number of investment properties   49   49
 GLA   15,632,184   15,632,184
 Occupancy   98.4%   98.7%
 Average remaining lease term (years)   4.1   4.1
 Fair value of investment properties  $827,242  $806,431
Ratios:        
 Weighted average effective interest rate (7)   3.8%   3.8%
 Variable interest rate debt as percentage of total debt (8)   6.2%   5.9%
 Debt-to-gross book value (1)   40.8%   41.8%
 Interest coverage ratio(1)   3.8x   3.5x
 Fixed charge coverage ratio(1)   3.3x   3.0x
 Debt to Adjusted EBITDA (1)   7.3x   7.5x
        
(1) NOI, FFO, AFFO, ACFO, FFO per Unit (basic and diluted), AFFO per Unit (basic and diluted), ACFO payout ratio, Adjusted EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to Adjusted EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the "Non-IFRS Measures" section of this MD&A.
(2) Includes REIT Units and Class B Units (collectively, the "Units").
(3) Excludes all options and DTUs outstanding under the REIT's equity compensation plans.
(4) Includes all options and DTUs outstanding under the REIT's equity compensation plans.
(5) FFO, AFFO, FFO per Unit (basic and diluted) and AFFO per Unit (basic and diluted) for all periods presented has been adjusted to align with the definition presented by REALPAC. Refer to page 1 of the REIT's interim MD&A for the period ending March 31, 2017 for a description of the changes.
(6) Includes distributions on REIT Units and Class B Units.
(7) Includes mortgages payable, the construction loan, the Revolving Facility, mark-to-market adjustments and financing costs.
(8) Includes amounts outstanding under the Revolving Facility and the construction loan.
   

ANNUAL UNITHOLDERS' MEETING
The REIT will hold its Annual Meeting of the REIT's Unitholders on Thursday, May 11, 2017 at 1:00 pm Eastern Time, at 199 Bay Street, Suite 4000, Toronto, Ontario M5L 1A9.

About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT was formed for the purpose of acquiring and owning primarily industrial investment properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 15.6 million square feet of gross leasable area, comprised of 47 industrial properties and two office properties located in 12 states in the United States. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.

Forward-Looking Statements
This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "projects", "believes" or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include the various assumptions set forth herein, including, but not limited to, the REIT's and the property's future growth potential, anticipated amounts of expenses, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.

When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed or referenced under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2016, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact Information

  • For more information, please contact:
    Scott Frederiksen
    Chief Executive Officer

    WPT Industrial Real Estate Investment Trust
    Tel: (952) 897-7737
    Fax: (952) 842-7737