SOURCE: WPT Industrial REIT

WPT Industrial REIT

August 04, 2016 17:08 ET

WPT Industrial REIT Announces Second Quarter 2016 Results

TORONTO, ON--(Marketwired - August 04, 2016) - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U) (OTCQX: WPTIF) announced today its results for the three and six months ended June 30, 2016. All dollar amounts are stated in US funds.

2016 HIGHLIGHTS:

  • Occupancy remains strong at 98.7% as at June 30, 2016
  • AFFO for the three months ended June 30, 2016 was up 5.8% to $7.6 million and AFFO per Unit was up 5.7% over the prior year period, driven by portfolio growth and strong operating performance
  • AFFO payout ratio at 84.7% and 86.9% for the three and six months ended June 30, 2016, respectively
  • Same property NOI up 2.2% and 1.9% for the three and six months ended June 30, 2016, respectively
  • Gross proceeds of $84 million raised in the July 2016 Offering and Concurrent Private Placement to fund future growth
  • Began development of a new 171,600 sq. ft. industrial building on existing land in Indiana

"Our solid performance to date in 2016 demonstrates the benefits of our strong property management initiatives and the growing contribution from our accretive acquisitions," commented Scott Frederiksen, Chief Executive Officer. "Looking ahead, with the successful completion of our recent equity offering, we now have the resources and the flexibility to generate even more meaningful growth at the REIT."

"We are also very pleased to have begun our first development project on existing land adjacent to one of our REIT properties. Once completed, we are confident the investment will create value for our Unitholders," Mr. Frederiksen concluded.

SOLID OPERATING PERFORMANCE
For the three and six months ended June 30, 2016, investment properties revenue was $17.6 million and $35.1 million, respectively, compared to $17.6 million and $33.9 million, respectively, in the same periods last year. The increase for the six months ended June 30, 2016 is primarily due to the full period's contribution of the Memphis Portfolio acquisition, as well as an increase in base rent and higher recoveries of operating expenses compared to the prior year.

Net Operating Income ("NOI") for the three months ended June 30, 2016 declined slightly to $13.0 million from $13.4 million in the prior year. For the six months ended June 30, 2016 NOI rose to $26.1 million from $25.8 million in the same period last year. Same property NOI increased 2.2% and 1.9% for the three and six months ended June 30, 2016, respectively, compared to the same periods last year due primarily to increases in contractual base rent and higher recoveries of operating expenses.

Adjusted Funds from Operations ("AFFO") for the three and six months ended June 30, 2016 were $7.6 million ($0.224 per Unit) and $14.7 million ($0.437 per Unit), respectively, compared to $7.2 million ($0.212 per Unit) and $13.9 million ($0.419 per Unit) in the same periods last year. The REIT's AFFO payout ratio for the three month ended June 30, 2016 was 84.7% and remained strong at 86.9% for the six months ended June 30, 2016 compared to 85.2% in the same period last year.

STRONG FINANCIAL & LIQUIDITY POSITION
As at June 30, 2016 the REIT's debt-to-gross-book-value ratio was a conservative 48.1% with an interest coverage ratio of 3.3 times, a debt-to-EBITDA ratio of 8.1 times, and a fixed charge coverage ratio of 2.9 times, all consistent with or improved from the prior year end. The weighted average effective interest rate on outstanding debt was 3.8%, consistent with the prior year end. The weighted average term to maturity on its mortgages payable was 4.4 years as at June 30, 2016, with a weighted average remaining lease term of 3.8 years.

On April 21, 2016, the REIT amended and extended its Revolving Facility, increasing availability to $100 million (subject to requisite borrowing base collateral) and extending the term to April 21, 2019. The Revolving Facility continues to include an accordion feature which could increase the facility to $200 million, subject to lender approval. The REIT has the option to extend the Revolving Facility for an additional one-year period. As at June 30, 2016 the Revolving Facility interest rate was 2.46%.

On July 19, 2016, the REIT used a portion of the net proceeds from the July 2016 Offering (see Subsequent Events below) to repay the $46.5 million outstanding balance of the Revolving Facility, resulting in availability of $73.1 million on the Revolving Facility.

SUBSEQUENT EVENTS
On July 19, 2016, the REIT issued 5,429,900 REIT Units at a price of $11.05 per REIT Unit to a syndicate of underwriters on a bought deal basis for net cash proceeds to the REIT of approximately $57.6 million (the "July 2016 Offering"). In addition, the REIT completed a concurrent private placement, issuing 1,357,475 REIT Units to AIMCo on a non-brokered private placement basis at a purchase price of $11.05 per REIT Unit for additional net cash proceeds to the REIT of approximately $15 million (the "Concurrent Private Placement"). The REIT used a portion of the net proceeds from the July 2016 Offering and Concurrent Private Placement to repay the $46,500 outstanding balance of the Revolving Facility. The REIT intends to use the remaining net proceeds as an available source of funding for potential future acquisitions and for the Indianapolis Development property (see below).

On July 25, 2016, the REIT issued 814,485 REIT Units at a price of $11.05 per REIT Unit to a syndicate of underwriters of the July 2016 Offering, pursuant to their exercise in full of the over-allotment option, for net cash proceeds of approximately $8.6 million.

During the second quarter of 2016, the REIT began the development of an industrial property on a vacant land parcel located at the REIT's 3003 Reeves Road property in Indianapolis, IN (the "Indianapolis Development"). When complete, the building will comprise approximately 171,600 square feet of leasable space. Total estimated project costs are approximately $10.3 million. The development of the industrial property is being financed by the July 2016 Offering and Concurrent Private Placement. Construction is expected to be completed in May 2017. The REIT is actively marketing the Indianapolis Development to prospective tenants.

On July 26, 2016, the REIT sold the real estate investment property located 224 North Hoover Road, Durham, North Carolina to a third party purchaser for net cash proceeds of $7.1 million.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

   Three months ended June 30, Six months ended June 30,
(In thousands of USD, except where noted)  2016 2015 2016 2015
Operating Results:                  
 Investment properties revenue (1)  $17,550  $17,563  $35,114  $33,949  
 NOI (1) (2)   13,046   13,358   26,075   25,810  
 Net income (loss) and comprehensive income (loss)   4,107   3,860   28,297   (9,879 )
 FFO (1) (2) (3)   8,276   8,143   15,787   16,133  
 AFFO (2) (4)   7,569   7,156   14,749   13,853  
 FFO per Unit (1) (2) (5) (6) (7)   0.245   0.241   0.468   0.488  
 AFFO per Unit (2) (5) (6)   0.224   0.212   0.437   0.419  
Distributions:                  
 Distributions per Unit (5) (6) (8)   0.190   0.175   0.380   0.350  
 Distributions declared (6) (8)   6,411   5,903   12,820   11,806  
 AFFO payout ratio (2) (8)   84.7 % 82.5 % 86.9 % 85.2 %
 Weighted average number of Units (5) (6)   33,755,830   33,748,433   33,752,132   33,081,306  
              
As at June 30, 2016 December 31, 2015
Operational Information:         
 Number of investment properties  48   48  
 GLA  15,097,471   15,097,471  
 Occupancy  98.7 % 98.6 %
 Average remaining lease term (years)  3.8   3.9  
 Fair value of investment properties $747,772  $742,592  
Ratios:         
 Weighted average effective interest rate (9)  3.8 % 3.8 %
 Variable interest rate debt as percentage of total debt (10)  12.9 % 12.9 %
 Debt-to-gross book value (2)  48.1 % 48.6 %
 Interest coverage ratio (2)  3.3x   3.2x  
 Fixed charge coverage ratio (2)  2.9x   2.8x  
 Debt to EBITDA (2)  8.1x   8.1x  
        
(1)The three months ended December 31, 2015 includes a cumulative non-recurring adjustment of $1,652 due to the overstatement of straight-line rent. Refer to the REIT's MD&A for the year ended December 31, 2015 for further details.
(2)
NOI, FFO, AFFO, FFO per Unit, AFFO per Unit, AFFO payout ratio, EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to 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.
(3)Reconciliations of FFO to net income (loss) can be found on page 16 of the REIT's MD&A for the three and six months ended June 30, 2016 and 2015. Refer to the REIT's respective annual or interim MD&As issued for a reconciliation of FFO to net income (loss) relating to all other periods.
(4)Reconciliations of AFFO to FFO can be found on page 16 of the REIT's MD&A for the three and six months ended June 30, 2016 and 2015. Refer to the REIT's respective annual or interim MD&As issued for a reconciliation of AFFO to FFO relating to all other periods.
(5)Includes REIT Units and Class B Units (collectively, the "Units").
(6)
Excludes options and DTUs outstanding under the REIT's equity compensation plans.
(7)Excluding strategic process expenses and the cumulative non-recurring adjustment to straight-line rent (see footnote 1 above), FFO per Unit (basic) would have been $0.241, $0.248, $0.263 and $0.255 for the three months ended March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.
(8)Includes distributions on REIT Units and Class B Units.
(9)Includes mortgages payable, the Revolving Facility, mark-to-market adjustments and financing costs.
(10)Includes amounts outstanding under the Revolving Facility.
  

INVESTOR CONFERENCE CALL
A conference call will be hosted by the REIT's management team on Friday, August 5, 2016 at 9:00 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the "Investors" page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10088069#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.

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 15.1 million square feet of gross leasable area, comprised of 46 industrial properties and two office properties located in 13 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, 2015, 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