/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
WINNIPEG, MB, March 15, 2024 /CNW/ – Marwest Apartment Real Estate Investment Trust (the “REIT”) (TSXV: MAR.UN) reported financial results for the year ended December 31, 2023. This press release should be read in conjunction with the REIT’s Consolidated Financial Statements and Management’s Discussion and Analysis (“2023 Annual MD&A”) for the year ended December 31, 2023, which are available on the REIT’s website at www.marwestreit.com and at www.sedarplus.ca1.
Mr. William Martens, Chief Executive Officer and Trustee commented, “In 2023 we were able to grow our NAV from $1.44 per Unit to $1.90 per Unit. The REIT has benefitted from the current economic pressures which continue to limit the amount of housing supply in the market resulting in lower vacancy rates and higher rental rates. Management expects similar demand and low vacancy rates to continue throughout 2024.”
2023 Annual Highlights
-
Increased distributions by 2% to Unitholders on record at August 31, 2023
-
Reported Net Asset Value per Unit (“NAV“) of $1.90 at December 31, 2023 compared to $1.44 at December 31, 2022
-
Same Property Net Operating Income1 (“Same Property NOI“) increased by 14.71% in 2023 compared to 2022
-
Reported funds from operations (“FFO“) per Unit of $0.0970 for the year ended December 31, 2023, compared to $0.0796 for 2022
-
Reported adjusted funds from operations (“AFFO“) per Unit of $0.0936 for year ended December 31, 2023, compared to $0.0694 for 2022
-
Average Occupancy rate of 99.00% reported for the year ended December 31, 2023
Operations Summary
Year ended |
Year ended |
||
Portfolio Operational Information |
|||
Number of properties |
4 |
4 |
|
Number of suites |
516 |
516 |
|
Average Occupancy Rate |
99.00 % |
97.23 % |
|
Average rental rate |
$1,540 |
$1,511 |
|
Same property Net Operating Income |
$ 4,614,455 |
$ 4,022,639 |
Three months ended |
Year ended |
|||
December 31 |
December 31 |
|||
Reconciliation of Same Property NOI2 to IFRS |
2023 |
2022 |
2023 |
2022 |
Revenue from investment properties |
$1,916,224 |
$ 1,781,187 |
$7,093,994 |
$ 6,698,998 |
Expenses: |
||||
Property operating expenses |
551,655 |
503,809 |
1,878,301 |
2,025,945 |
Realty taxes |
145,066 |
162,967 |
601,238 |
650,414 |
Total property operating expenses |
696,721 |
666,776 |
2,479,539 |
2,676,359 |
Same Property NOI2 |
$1,219,503 |
$ 1,114,411 |
$4,614,455 |
$ 4,022,639 |
1 This news release contains certain non-IFRS and other financial measures. Refer to “Notice with respect to Non-IFRS Measures” in this news release for a complete list of measures and their meaning. |
2 Same Property Portfolio consists of 3 multi-residential properties owned by the REIT for comparable periods in Q4 2023 and Q4 2022 – See “Notice with respect to Non-IFRS Measures” below. |
Reconciliation of Debt-to-Gross Book Value ratio |
|
Total interest–bearing debt |
$100,767,840 |
Total assets on balance sheet |
139,770,463 |
Debt-to-Gross Book Value ratio |
72.10 % |
Reconciliation of Debt Service Coverage ratio |
|
|
$ 6,359,930 |
Mortgage payments for the year ended December 31, 2023 |
4,899,297 |
Debt Service Coverage ratio |
1.30 |
Weighted average term to maturity on fixed rate debt |
67.30 months |
Weighted average interest rate on fixed debt |
3.01 % |
Financial Summary
The REIT generated FFO and AFFO per Unit of $0.0970 and $0.0942, respectively, during the year ended December 31, 2023.
Reconciliation of Net Income (Loss) and |
Three months ended |
Year ended |
||
December 31 |
December 31 |
|||
2023 |
2022 |
2023 |
2022 |
|
Revenue from investment properties |
$2,521,270 |
$ 2,253,104 |
$9,958,861 |
$7,170,916 |
Property operating expenses |
(675,977) |
(620,091) |
(2,695,493) |
(2,144,127) |
Realty taxes |
(225,864) |
(236,430) |
(903,438) |
(721,977) |
Net Operating Income |
1,619,429 |
1,396,583 |
6,359,930 |
4,304,812 |
NOI Margin |
64.23 % |
61.98 % |
63.86 % |
60.03 % |
General and administrative |
(308,952) |
(208,624) |
(887,564) |
(715,467) |
Finance costs |
(932,431) |
(836,569) |
(3,745,064) |
(2,193,845) |
Fair value gain (loss) on: |
||||
Investment properties |
4,337,052 |
(2,561,638) |
7,510,095 |
2,079,396 |
Unit-based compensation |
(49,067) |
(2,170) |
5,944 |
13,575 |
Warrants liability |
– |
– |
– |
21,359 |
Exchangeable Units |
(3,686,033) |
(650,476) |
(542,063) |
(108,412) |
Net income (loss) and |
||||
comprehensive income (loss) |
$ 979,998 |
$(2,862,894) |
$8,701,278 |
$3,401,418 |
Three months ended |
Year ended |
|||
December 31 |
December 31 |
|||
Reconciliation of FFO |
2023 |
2022 |
2023 |
2022 |
Net income (loss) and comprehensive income (loss) |
979,998 |
(2,862,894) |
8,701,278 |
3,401,418 |
Distributions on Exchangeable Units |
41,468 |
40,607 |
163,968 |
162,617 |
Fair value (gain) loss on investment properties |
(4,337,052) |
2,561,638 |
(7,510,095) |
(2,079,396) |
Fair value loss (gain) on unit-based compensation |
49,067 |
2,170 |
(5,944) |
(13,575) |
Fair value gain on warrant liability |
– |
– |
– |
(21,359) |
Fair value loss on Exchangeable Units |
3,686,033 |
650,476 |
542,063 |
108,412 |
FFO |
419,514 |
391,997 |
1,891,270 |
1,558,117 |
Weighted average number of Units |
19,498,838 |
19,508,838 |
19,501,276 |
19,565,490 |
FFO/unit |
$ 0.0215 |
$ 0.0201 |
$ 0.0970 |
$ 0.0796 |
Reconciliation of AFFO |
||||
FFO |
$ 419,514 |
$ 391,997 |
$1,891,270 |
$1,558,117 |
Capital expenditures |
(10,560) |
(65,702) |
(52,729) |
(167,845) |
Leasing costs |
(2,388) |
(368) |
(14,146) |
(32,183) |
AFFO |
406,566 |
325,927 |
1,824,395 |
1,358,089 |
Weighted average number of Units |
19,498,838 |
19,508,838 |
19,501,276 |
19,565,490 |
AFFO/unit |
$ 0.0209 |
$ 0.0167 |
$ 0.0936 |
$ 0.0694 |
AFFO payout ratio |
18.34 % |
22.45 % |
16.17 % |
21.61 % |
NAV and NAV per Unit Reconciliation |
At December 31, 2023 |
At December 31, 2022 |
Unitholders’ Equity |
$ 27,578,331 |
$ 19,014,023 |
Exchangeable Units |
9,757,146 |
9,215,083 |
NAV |
37,335,477 |
28,229,106 |
Trust Units |
8,657,564 |
8,667,564 |
Exchangeable Units |
10,841,274 |
10,841,274 |
Deferred Units |
167,265 |
110,036 |
Total Units oustanding |
19,666,103 |
19,618,874 |
NAV per unit |
$ 1.90 |
$ 1.44 |
The overall increase in NAV from $1.44 at December 31, 2022 to $1.90 at December 31, 2023, was due compression of capitalization rates in the valuation of the portfolio compared to 2022, as well as market conditions throughout all properties and net operating income less finance costs and general and administrative expenses exceeding distributions.
Outlook
Management is focused on growing the portfolio and unitholder value through increasing rental rates where the market allows, future acquisition opportunities that will increase the overall size and performance of the REIT, as well as maintaining a manageable debt structure. The current debt of the REIT is all fixed rates with an average remaining mortgage term of over five years. The majority of the REIT’s debt is CMHC insured.
Subsequent to year end, the Element Phase I debt that matured on January 1, 2024 was refinanced with a CMHC insured mortgage with a term of 10 years, interest rate of 4.3% and amortization of 40 years. The total debt advanced was, including $347,700 of CMHC premiums and fees, $8,387,700.
Management believes the organic growth in NAV due to paydown of debt over the mortgage terms is a positive outcome of the higher leveraged position as well as lowering the REIT’s debt to GBV ratio and thereby increasing the NAV per Unit over time.
Management anticipates the demand for rental housing to continue to grow in the coming quarters due to increasing immigration and the affordability gap in rental vs. home ownership. As interest rates maintain their current levels, the cost of home ownership remains elevated.
The increase in the portfolio’s operating costs due to inflation may be offset by increases in rental rates, where the market allows, as 56 percent of the portfolio at December 31, 2023 is not under rent control or restrictive financing agreements.
About Marwest Apartment Real Estate Investment Trust
The REIT is an unincorporated open-ended trust governed by the laws of the Province of Manitoba. The REIT was formed to provide holders of Units with the opportunity to invest in the Canadian multi-family rental sector through the ownership of high-quality income-producing properties, with an initial focus on stable markets throughout Western Canada.
Forward-looking Statements
The information in this news release includes certain information and statements about management’s views of future events, expectations, plans and prospects that constitute forward‐looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward‐looking statements. A number of factors could cause actual results to differ materially from these forward‐looking statements, including the risks described under the heading “Risk Factors” in the REIT’s latest annual information form and management’s discussion and analysis. The payment of cash distributions will be dependent upon a number of factors, including but not limited to the financial performance, financial condition and financial requirements of the REIT. Although management of the REIT believes that the expectations reflected in forward‐looking statements are reasonable, it can give no assurances that the expectations of any forward‐looking statements will prove to be correct. Except as required by law, the REIT disclaims any intention and assumes no obligation to update or revise any forward‐looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward‐looking statements or otherwise.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.
The Units are not registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons, except in certain transactions exempt from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, securities of the REIT in the United States or in any other jurisdiction.
Notice with respect to Non-IFRS Measures Disclosure
The REIT’s financial statements are prepared in accordance with IFRS. In addition to IFRS measures, this news release and the REIT’s Annual 2023 MD&A disclose certain non-IFRS financial measures that are commonly used by Canadian real estate investment trusts as an indicator of performance. Non-IFRS measures and ratios include the following:
Net Operating Income (“NOI”)
The Trust calculates net operating income as revenue less property operating expenses such as utilities, repairs and maintenance and realty taxes. Charges for interest or other expenses not specific to the day‑to‑day operations of the Trust’s properties are not included. The Trust regards NOI as an important measure of the income generated by income-producing properties and is used by management in evaluating the performance of the Trust’s properties. NOI is also a key input in determining the value of the Trust’s properties. For reconciliation to IFRS measures, refer to “Financial Operations and Results” in the REIT’s Annual 2023 MD&A
Funds from Operations (“FFO”)
The Trust calculates FFO substantially in accordance with the guidelines set out in the white paper titled “White Paper on Funds from Operations & Adjusted Funds from Operations for IFRS” by the Real Property Association of Canada (“REALpac”) as revised in January 2022. FFO is defined as IFRS consolidated net income adjusted for items such as unrealized changes in the fair value of the investment properties, effects of puttable instruments classified as financial liabilities and changes in fair value of financial instruments and derivatives. FFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS. The Trust regards FFO as a key measure of operating performance. For reconciliation to IFRS measures, refer to “Financial Operations and Results” in the REIT’s Annual 2023 MD&A
Adjusted Funds from Operations (“AFFO”)
The Trust calculates AFFO substantially in accordance with the guidelines set out in the white paper titled “White Paper on Funds from Operations & Adjusted Funds from Operations for IFRS” by REALpac as revised in January 2022. AFFO is defined as FFO adjusted for items such as maintenance capital expenditures and straight‑line rental revenue differences. AFFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS. The Trust regards AFFO as a key measure of operating performance. The Trust also uses AFFO in assessing its capacity to make distributions. For reconciliation to IFRS measures, refer to “Financial Operations and Results” in the REIT’s Annual 2023 MD&A
The following other non‑IFRS measures (including non-IFRS ratios) are defined as follows:
-
“FFO per unit” is calculated as FFO divided by the weighted average number of Trust Units and Exchangeable Units of the Partnership outstanding over the period.
-
“AFFO per unit” is calculated as AFFO divided by the weighted average number of Trust Units and Exchangeable Units of the Partnership outstanding over the period.
-
“AFFO Payout Ratio” is the proportion of the total distributions on Trust Units and Exchangeable Units of the Partnership to AFFO per Unit.
-
“Net Asset Value” is calculated as the sum of unitholders’ equity and Exchangeable Units
-
“Net Asset Value per Unit” or “NAV per Unit” is calculated as the sum of unitholders’ equity and Exchangeable Units divided by the sum of Trust Units, Exchangeable Units and Deferred Units outstanding at the end of the period.
-
“Debt‑to‑Gross Book Value ratio” is calculated by dividing total interest‑bearing debt consisting of mortgages by total assets and is used as the REIT’s primary measure of its leverage.
-
“Debt Service Coverage ratio” is the ratio of NOI to total debt service consisting of interest expenses recorded as finance costs and principal payments on mortgages.
-
“Stabilized net operating income” is the estimated 12-month net operating income that a property could generate at full occupancy, less a vacancy rate and stable operating expenses.
-
“Average occupancy rate” is defined as the ratio of occupied suites to the total suites in the portfolio for the period.
-
“Same Property NOI” is defined as Net Operating Income from properties owned by the REIT throughout comparative periods, which removes the impact of situations that result in the comparative period to be less meaningful, such as acquisitions, or properties going through a lease-up period.
Management believes that these measures are helpful to investors because, while not necessarily calculated comparably among issuers, they are widely recognized measures of the REIT’s performance and tend to provide a relevant basis for comparison among real estate entities. These non-IFRS financial measures are not defined under IFRS and are not intended to represent financial performance, financial position or cash flows for the period and should not be viewed as an alternative to net income, cash flow from operations or other measures of financial performance calculated in accordance with IFRS.
The above non-IFRS measures are not standardized under the financial reporting framework used to prepare the financial statements of the REIT. Readers should be further cautioned that the above measures as calculated by the REIT may not be comparable to similar measures presented by other issuers. For further information, refer to the sections entitled “Non-IFRS measures” and “Financial Operations and Results” in the REIT’s Annual 2023 MD&A, which is incorporated by reference herein, for further information (available on SEDAR at www.sedarplus.ca or the REIT’s website www.marwestreit.com).
SOURCE Marwest Apartment Real Estate Investment Trust
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/March2024/15/c0020.html
TORONTO, Feb. 14, 2024 (GLOBE NEWSWIRE) — SmartCentres Real Estate Investment Trust (“SmartCentres”, the “Trust” or the “REIT”) (TSX: SRU.UN) is pleased to report its financial and operating results for the quarter and year ended December 31, 2023.
“In reflecting on the achievements of 2023, I am pleased with our strong financial and operational results,” said Mitchell Goldhar, CEO of SmartCentres. “Our net operating income has shown steady and consistent growth through the year, which also saw the achievement of numerous significant milestones, including successfully closing 1,026 condo units at Transit City 4 & 5, completing and significantly leasing up our purpose-built rental apartment building, The Millway in VMC, and the commencement of siteworks at two key development projects poised to drive future growth, ArtWalk Phase 1 in VMC and the Canadian Tire flagship retail store in Leaside. Our strategy involves both offense and defense to drive business growth while maintaining high occupancies and reliable rental income.”
2023 Fourth Quarter Highlights
Operational
-
Shopping centre leasing activity remained strong with an industry-leading in-place and committed occupancy rate of 98.5% (December 31, 2022 – 98.0%).
-
Executed new leases of 84,227 square feet during the quarter.
-
Average renewal rent growth of 5.3% (excluding anchors).
Development
-
The siteworks for the 224,000 square foot retail project on Laird Drive in Toronto continues, Canadian Tire is expected to take possession of the 200,000 square foot flagship retail store in early 2026.
-
Obtained municipal approvals and commenced construction on two self-storage facilities in Dorval (St-Regis Blvd.), Quebec and in Toronto (Jane St.) during the quarter.
-
All the 106 remaining units within Transit City 4 & 5 were successfully closed during the quarter, generating $2.7 million of FFO(1).
-
The Millway, a 458-rental unit apartments project, became fully opened in the quarter. Leasing activity is on track with 60% of the units leased by year-end and rental rates ahead of expectations.
-
The siteworks at ArtWalk condominium Phase 1 are well underway, with all 320 released units sold out and the remaining units expected to be released for sale this year.
-
The construction of Phase I of the Vaughan NW townhomes is underway, with all 100 released units sold out and closings expected to begin in the first half of 2024.
-
The second phase of the purpose-built residential rental project in Laval, Quebec, comprising 211 units, opened on July 1, 2023, and was 92% leased at the end of the fourth quarter. Demand for the first phase remained strong with 98% occupancy.
Financial
-
Same Property NOI(1) for the three months and year ended December 31, 2023 increased by $2.3 million or 1.7%, and $11.6 million or 2.2%, respectively, compared to the same periods in 2022. The increases were primarily driven by lease-up activity and higher rental renewal rates.
-
FFO per Unit(1) for the three months and year ended December 31, 2023 was $0.59, and $2.23, respectively, compared to $0.57 and $2.07 for the same periods in 2022. The increases were mainly attributable to higher profits from condo closings at Transit City 4 & 5, and higher rental income, partially offset by higher interest expense.
-
Net income and comprehensive income per Unit was $0.08 and $2.83 for the three months and year ended December 31, 2023, respectively (three months ended December 31, 2022 – $0.56 and year ended December 31, 2022 – $3.54). The decreases were primarily due to a decrease in fair value adjustment on investment properties and financial instruments compared to the same periods in 2022.
-
Payout Ratio to AFFO(1) was 89.4% for the three months ended December 31, 2023, and 93.0% for the year, as compared to 95.7% and 98.6% for the same periods in 2022, respectively.
(1) Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release.
Selected Consolidated Operational, Mixed-Use Development and Financial Information
(in thousands of dollars, except per Unit and other non-financial data) |
|
|
|
||||||||
As at |
|
December 31, |
December 31, |
December 31, |
|||||||
Portfolio Information (Number of properties) |
|
|
|
|
|||||||
Retail properties |
|
|
155 |
|
|
155 |
|
|
155 |
|
|
Office properties |
|
|
4 |
|
|
4 |
|
|
4 |
|
|
Self-storage properties |
|
|
8 |
|
|
6 |
|
|
6 |
|
|
Residential properties |
|
|
3 |
|
|
2 |
|
|
1 |
|
|
Industrial properties |
|
|
1 |
|
|
0 |
|
|
0 |
|
|
Properties under development |
|
|
20 |
|
|
19 |
|
|
17 |
|
|
Total number of properties with an ownership interest |
|
|
191 |
|
|
186 |
|
|
183 |
|
|
Leasing and Operational Information(1) |
|
|
|
|
|||||||
Gross leasable retail and office area (in thousands of sq. ft.) |
|
35,045 |
|
|
34,750 |
|
|
34,119 |
|
||
In-place and committed occupancy rate |
|
|
98.5 |
% |
|
98.0 |
% |
|
97.6 |
% |
|
Average lease term to maturity (in years) |
|
|
4.3 |
|
|
4.2 |
|
|
4.4 |
|
|
Net annualized retail rental rate excluding Anchors (per occupied sq. ft.) |
$ |
22.59 |
|
$ |
22.20 |
|
$ |
22.07 |
|
||
Mixed-Use Development Information |
|
|
|
|
|||||||
Trust’s share of future development area (in thousands of sq. ft.) |
|
39,900 |
|
|
41,200 |
|
|
40,600 |
|
||
Financial Information |
|
|
|
|
|||||||
Investment properties(2) |
|
|
10,564,269 |
|
|
10,286,891 |
|
|
9,923,120 |
|
|
Total unencumbered assets(3) |
|
|
9,170,121 |
|
|
8,415,900 |
|
|
6,640,600 |
|
|
Debt to Aggregate Assets(3)(4)(5) |
|
|
43.1 |
% |
|
43.6 |
% |
|
42.9 |
% |
|
Adjusted Debt to Adjusted EBITDA(3)(4)(5) |
|
9.6X |
10.3X |
9.2X |
|||||||
Weighted average interest rate(3)(4) |
|
|
4.15 |
% |
|
3.86 |
% |
|
3.11 |
% |
|
Weighted average term of debt (in years) |
|
|
3.6 |
|
|
4.0 |
|
|
4.8 |
|
|
Interest coverage ratio(3)(4) |
|
2.7X |
3.1X |
3.4X |
|||||||
Weighted average number of units outstanding – diluted(7) |
|
|
180,023,932 |
|
|
179,657,455 |
|
|
173,748,819 |
|
|
|
Three Months Ended December 31 |
Year Ended December 31 |
|||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Financial Information |
|
|
|
|
|||||||
Rentals from investment properties and other(2) |
211,021 |
|
|
206,223 |
|
|
834,581 |
|
|
804,598 |
|
Net income and comprehensive income(2) |
14,165 |
|
|
100,310 |
|
|
510,103 |
|
|
635,965 |
|
FFO(3)(4)(6) |
106,893 |
|
|
102,471 |
|
|
400,965 |
|
|
371,572 |
|
AFFO(3)(4)(6) |
92,187 |
|
|
86,105 |
|
|
354,424 |
|
|
334,335 |
|
Cash flows provided by operating activities(2) |
93,745 |
|
|
134,668 |
|
|
330,853 |
|
|
370,762 |
|
Net rental income and other(2) |
128,451 |
|
|
129,151 |
|
|
513,561 |
|
|
502,604 |
|
NOI(3)(4) |
136,349 |
|
|
133,632 |
|
|
560,756 |
|
|
518,520 |
|
Change in net rental income and other(3) |
(0.5) % |
|
1.7 |
% |
|
2.2 |
% |
|
3.5 |
% |
|
Change in SPNOI(3)(4) |
1.7 |
% |
|
4.7 |
% |
|
2.2 |
% |
|
3.3 |
% |
Net income and comprehensive income per Unit(2) |
$0.08/$0.08 |
$0.56/$0.56 |
$2.86/$2.83 |
$3.57/$3.54 |
|||||||
FFO per Unit(3)(4)(6) |
$0.60/$0.59 |
$0.58/$0.57 |
$2.25/$2.23 |
$2.09/$2.07 |
|||||||
FFO with adjustments per Unit(3)(4) |
$0.51/$0.51 |
$0.58/$0.58 |
$2.11/$2.09 |
$2.15/$2.13 |
|||||||
AFFO per Unit(3)(4)(6) |
$0.52/$0.51 |
$0.48/$0.48 |
$1.99/$1.97 |
$1.88/$1.86 |
|||||||
AFFO with adjustments per Unit(3)(4) |
$0.43/$0.43 |
$0.49/$0.49 |
$1.85/$1.83 |
$1.94/$1.93 |
|||||||
Payout Ratio to AFFO(3)(4)(6) |
89.4 |
% |
|
95.7 |
% |
|
93.0 |
% |
|
98.6 |
% |
Payout Ratio to AFFO with adjustments(3)(4) |
107.5 |
% |
|
93.9 |
% |
|
99.9 |
% |
|
95.2 |
% |
Payout Ratio to cash flows provided by operating activities |
87.9 |
% |
|
61.2 |
% |
|
99.6 |
% |
|
88.9 |
% |
(1) |
Excluding residential and self-storage area. |
(2) |
Represents a Generally Accepted Accounting Principles (“GAAP”) measure. |
(3) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
(4) |
Includes the Trust’s proportionate share of equity accounted investments. |
(5) |
As at December 31, 2023, cash-on-hand of $31.4 million was excluded for the purposes of calculating the applicable ratios (December 31, 2022 – $33.4 million, December 31, 2022 – $80.0 million). |
(6) |
The calculation of the Trust’s FFO and AFFO and related payout ratios, including comparative amounts, are financial metrics that were determined based on the REALpac White Paper on FFO and AFFO issued in January 2022 (“REALpac White Paper”). Comparison with other reporting issuers may not be appropriate. The payout ratio to AFFO is calculated as declared distributions divided by AFFO. |
(7) |
The diluted weighted average includes the vested portion of the deferred units issued pursuant to the deferred unit plan. |
Development and Intensification Summary
The following table provides additional details on the Trust’s 12 development initiatives that are currently under construction or where initial siteworks have begun (in order of estimated initial occupancy/closing date):
Projects under construction |
Type |
Trust’s share |
Actual / estimated |
% of capital |
GFA(1) |
No. |
||
|
|
|
|
|
|
|
||
Mixed-use Developments |
|
|
|
|
|
|
||
Pickering (Seaton Lands) |
Industrial |
100 |
% |
Q2 2023 |
91 |
% |
229,000 |
— |
Whitby Self-Storage |
Self Storage |
50 |
% |
Q1 2024 |
82 |
% |
126,000 |
810 |
Markham East / Boxgrove |
Self Storage |
50 |
% |
Q2 2024 |
79 |
% |
133,000 |
910 |
Vaughan NW |
Townhouse |
50 |
% |
Q2 2024 |
39 |
% |
— |
174 |
Stoney Creek Self-Storage |
Self Storage |
50 |
% |
Q4 2024 |
36 |
% |
138,000 |
973 |
Gilbert Self-Storage |
Self Storage |
50 |
% |
Q1 2025 |
46 |
% |
176,000 |
1,469 |
Dorval (St-Regis Blvd.) Self-Storage |
Self Storage |
50 |
% |
Q2 2025 |
24 |
% |
164,000 |
1,165 |
Toronto (Jane St.) Self-Storage |
Self Storage |
50 |
% |
Q3 2025 |
31 |
% |
143,000 |
1,404 |
Ottawa SW(2) |
Retirement Residence |
50 |
% |
Q2 2026 |
27 |
% |
376,000 |
402 |
Ottawa SW(2) |
Seniors’ Apartments |
|||||||
Vaughan / ArtWalk (40-Storey) |
Condo |
50 |
% |
Q2 2027 |
14 |
% |
320,000 |
373 |
Retail Development |
|
|
|
|
|
|
||
Toronto (Laird) |
Retail |
50 |
% |
Q1 2026 |
20 |
% |
224,000 |
— |
|
|
|
|
|
|
|
(1) GFA represents Gross Floor Area.
(2) Figure represents capital spend of both retirement residence and seniors’ apartments projects.
Reconciliations of Non-GAAP Measures
The following tables reconcile the non-GAAP measures to the most comparable GAAP measures for the quarter and year ended December 31, 2023 and the comparable periods in 2022. Such measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures disclosed by other issuers.
Net Operating Income (including the Trust’s Interests in Equity Accounted Investments)
Quarterly Comparison to Prior Year
(in thousands of dollars) |
Three Months Ended December 31, 2023 |
Three Months Ended December 31, 2022 |
||||||||||||||||
|
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
||||||||||||
Net rental income and other |
|
|
|
|
|
|
||||||||||||
Rentals from investment properties and other |
$ |
211,021 |
|
$ |
10,439 |
|
$ |
221,460 |
|
$ |
206,223 |
|
$ |
8,441 |
|
$ |
214,664 |
|
Property operating costs and other |
|
(82,073 |
) |
|
(5,681 |
) |
|
(87,754 |
) |
|
(77,062 |
) |
|
(3,779 |
) |
|
(80,841 |
) |
|
$ |
128,948 |
|
$ |
4,758 |
|
$ |
133,706 |
|
$ |
129,161 |
|
$ |
4,662 |
|
$ |
133,823 |
|
Residential sales revenue and other(2) |
|
— |
|
|
13,789 |
|
|
13,789 |
|
|
— |
|
|
— |
|
|
— |
|
Residential cost of sales and other |
|
(497 |
) |
|
(10,649 |
) |
|
(11,146 |
) |
|
(10 |
) |
|
(181 |
) |
|
(191 |
) |
|
$ |
(497 |
) |
$ |
3,140 |
|
$ |
2,643 |
|
$ |
(10 |
) |
$ |
(181 |
) |
$ |
(191 |
) |
NOI |
$ |
128,451 |
|
$ |
7,898 |
|
$ |
136,349 |
|
$ |
129,151 |
|
$ |
4,481 |
|
$ |
133,632 |
|
(1) |
This column contains non-GAAP measures because it includes figures that are recorded in equity accounted investments. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
(2) |
Includes additional partnership profit and other revenues. |
Year-to-Date Comparison to Prior Year
(in thousands of dollars) |
Year Ended December 31, 2023 |
Year Ended December 31, 2022 |
||||||||||||||||
|
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
GAAP Basis |
Proportionate Share Reconciliation |
Total Proportionate Share(1) |
||||||||||||
Net rental income and other |
|
|
|
|
|
|
||||||||||||
Rentals from investment properties and other |
$ |
834,581 |
|
$ |
36,544 |
|
$ |
871,125 |
|
$ |
804,598 |
|
$ |
28,643 |
|
$ |
833,241 |
|
Property operating costs and other |
|
(317,147 |
) |
|
(18,361 |
) |
|
(335,508 |
) |
|
(301,559 |
) |
|
(13,467 |
) |
|
(315,026 |
) |
|
$ |
517,434 |
|
$ |
18,183 |
|
$ |
535,617 |
|
$ |
503,039 |
|
$ |
15,176 |
|
$ |
518,215 |
|
Residential sales revenue and other(2) |
|
— |
|
|
139,190 |
|
|
139,190 |
|
|
— |
|
|
4,524 |
|
|
4,524 |
|
Residential cost of sales and other |
|
(3,873 |
) |
|
(110,178 |
) |
|
(114,051 |
) |
|
(435 |
) |
|
(3,784 |
) |
|
(4,219 |
) |
|
$ |
(3,873 |
) |
$ |
29,012 |
|
$ |
25,139 |
|
$ |
(435 |
) |
$ |
740 |
|
$ |
305 |
|
NOI |
$ |
513,561 |
|
$ |
47,195 |
|
$ |
560,756 |
|
$ |
502,604 |
|
$ |
15,916 |
|
$ |
518,520 |
|
(1) |
This column contains non-GAAP measures because it includes figures that are recorded in equity accounted investments. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
(2) |
Includes additional partnership profit and other revenues. |
Same Properties NOI
|
Three Months Ended December 31 |
Year Ended December 31 |
||||||||||
(in thousands of dollars) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net rental income and other |
$ |
128,451 |
|
$ |
129,151 |
|
$ |
513,561 |
|
$ |
502,604 |
|
NOI from equity accounted investments(1) |
|
7,898 |
|
|
4,481 |
|
|
47,195 |
|
|
15,916 |
|
Total portfolio NOI before adjustments(1) |
$ |
136,349 |
|
$ |
133,632 |
|
$ |
560,756 |
|
$ |
518,520 |
|
|
|
|
|
|
||||||||
Adjustments: |
|
|
|
|
||||||||
Lease termination |
|
(984 |
) |
|
(82 |
) |
|
(1,675 |
) |
|
(214 |
) |
Net profit on condo and townhome closings |
|
(2,643 |
) |
|
191 |
|
|
(25,139 |
) |
|
(305 |
) |
Non-recurring items and other adjustments(2) |
|
4,112 |
|
|
(567 |
) |
|
7,906 |
|
|
5,820 |
|
Total portfolio NOI after adjustments(1) |
$ |
136,834 |
|
$ |
133,174 |
|
$ |
541,848 |
|
$ |
523,821 |
|
|
|
|
|
|
||||||||
NOI sourced from: |
|
|
|
|
||||||||
Acquisitions |
|
(363 |
) |
|
— |
|
|
(8,014 |
) |
|
(5,468 |
) |
Dispositions |
|
1 |
|
|
3 |
|
|
2 |
|
|
(9 |
) |
Earnouts and Developments |
|
(1,427 |
) |
|
(413 |
) |
|
(5,139 |
) |
|
(1,266 |
) |
Same Properties NOI(1) |
$ |
135,045 |
|
$ |
132,764 |
|
$ |
528,697 |
|
$ |
517,078 |
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
(2) |
Includes non-recurring items such as one-time adjustments relating to vaccination centre costs, royalties, straight-line rent and amortization of tenant incentives. |
Reconciliation of FFO
|
Three Months Ended December 31 |
Year Ended December 31 |
||||||||||
(in thousands of dollars) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income and comprehensive income |
$ |
14,165 |
|
$ |
100,310 |
|
$ |
510,103 |
|
$ |
635,965 |
|
Add (deduct): |
|
|
|
|
||||||||
Fair value adjustment on investment properties and financial instruments(1) |
|
56,197 |
|
|
(13,377 |
) |
|
(101,792 |
) |
|
(293,080 |
) |
Gain (loss) on derivative – TRS |
|
13,314 |
|
|
6,221 |
|
|
(205 |
) |
|
(4,918 |
) |
Gain on sale of investment properties |
|
(67 |
) |
|
(531 |
) |
|
(44 |
) |
|
(315 |
) |
Amortization of intangible assets and tenant improvement allowance |
|
2,469 |
|
|
2,338 |
|
|
9,199 |
|
|
8,535 |
|
Distributions on Units classified as liabilities and vested deferred units |
|
2,157 |
|
|
1,807 |
|
|
8,478 |
|
|
7,140 |
|
Adjustment on debt modification |
|
— |
|
|
— |
|
|
— |
|
|
(1,960 |
) |
Salaries and related costs attributed to leasing activities(2) |
|
2,709 |
|
|
1,514 |
|
|
8,519 |
|
|
7,508 |
|
Acquisition-related costs |
|
— |
|
|
— |
|
|
— |
|
|
298 |
|
Adjustments relating to equity accounted investments(3) |
|
15,949 |
|
|
4,189 |
|
|
(33,293 |
) |
|
12,399 |
|
FFO(4) |
$ |
106,893 |
|
$ |
102,471 |
|
$ |
400,965 |
|
$ |
371,572 |
|
Add (deduct) non-recurring adjustments: |
|
|
|
|
||||||||
(Gain) loss on derivative – TRS |
|
(13,314 |
) |
|
(6,221 |
) |
|
205 |
|
|
4,918 |
|
FFO sourced from condominium and townhome closings |
|
(2,657 |
) |
|
180 |
|
|
(24,010 |
) |
|
(680 |
) |
Transactional FFO – gain (loss) on sale of land to co-owner |
|
440 |
|
|
7,662 |
|
|
(568 |
) |
|
7,662 |
|
FFO with adjustments(4) |
$ |
91,362 |
|
$ |
104,092 |
|
$ |
376,592 |
|
$ |
383,472 |
|
(1) |
Includes fair value adjustments on investment properties and financial instruments. Fair value adjustment on investment properties is described in “Investment Properties” in the Trust’s MD&A. Fair value adjustment on financial instruments comprises the following financial instruments: units classified as liabilities, Deferred Unit Plan (“DUP”), Equity Incentive Plan (“EIP”), TRS, interest rate swap agreements, and LTIP recorded in the same period in 2022. The significant assumptions made in determining the fair value are more thoroughly described in the Trust’s consolidated financial statements for the year ended December 31, 2023. For details, please see discussion in “Results of Operations” in the Trust’s MD&A. |
(2) |
Salaries and related costs attributed to leasing activities of $8.5 million were incurred in the year ended December 31, 2023 (year ended December 31, 2022 – $7.5 million) and were eligible to be added back to FFO based on the definition of FFO, in the REALpac White Paper, which provided for an adjustment to incremental leasing expenses for the cost of salaried staff. This adjustment to FFO results in more comparability between Canadian publicly traded real estate entities that expensed their internal leasing departments and those that capitalized external leasing expenses. |
(3) |
Includes tenant improvement amortization, indirect interest with respect to the development portion, fair value adjustment on investment properties, loss (gain) on sale of investment properties, and adjustment for supplemental costs. |
(4) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
Reconciliation of AFFO
|
Three Months Ended December 31 |
Year Ended December 31 |
||||||||||
(in thousands of dollars) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
FFO(1) |
$ |
106,893 |
|
$ |
102,471 |
|
$ |
400,965 |
|
$ |
371,572 |
|
Add (Deduct): |
|
|
|
|
||||||||
Straight-line of rents |
|
(479 |
) |
|
(31 |
) |
|
(690 |
) |
|
(433 |
) |
Adjusted salaries and related costs attributed to leasing |
|
(2,709 |
) |
|
(1,514 |
) |
|
(8,519 |
) |
|
(7,508 |
) |
Actual sustaining capital expenditures, leasing commissions, and tenant improvements |
|
(11,518 |
) |
|
(14,821 |
) |
|
(37,332 |
) |
|
(29,296 |
) |
AFFO(1) |
$ |
92,187 |
|
$ |
86,105 |
|
$ |
354,424 |
|
$ |
334,335 |
|
Add (deduct) non-recurring adjustments: |
|
|
|
|
||||||||
(Gain) loss on derivative – TRS |
|
(13,314 |
) |
|
(6,221 |
) |
|
205 |
|
|
4,918 |
|
FFO sourced from condominium and townhome closings |
|
(2,657 |
) |
|
216 |
|
|
(24,010 |
) |
|
(680 |
) |
Transactional FFO – gain (loss) on sale of land to co-owner |
|
440 |
|
|
7,662 |
|
|
(568 |
) |
|
7,662 |
|
AFFO with adjustments(1) |
$ |
76,656 |
|
$ |
87,762 |
|
$ |
330,051 |
|
$ |
346,235 |
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
Adjusted EBITDA
The following table presents a reconciliation of net income and comprehensive income to Adjusted EBITDA:
|
12 Months Ended |
12 Months Ended |
||||
(in thousands of dollars) |
December 31, 2023 |
December 31, 2022 |
||||
Net income and comprehensive income |
$ |
510,103 |
|
$ |
635,965 |
|
Add (deduct) the following items: |
|
|
||||
Net interest expense |
|
157,990 |
|
|
138,464 |
|
Amortization of equipment, intangible assets and tenant improvements |
|
11,619 |
|
|
11,078 |
|
Fair value adjustments on investment properties and financial instruments |
|
(147,688 |
) |
|
(293,704 |
) |
Fair value adjustment on TRS |
|
(205 |
) |
|
(4,918 |
) |
Adjustment for supplemental costs |
|
5,709 |
|
|
4,648 |
|
Gain on sale of investment properties |
|
(44 |
) |
|
(74 |
) |
Acquisition-related costs |
|
— |
|
|
298 |
|
Adjusted EBITDA(1) |
$ |
537,484 |
|
$ |
491,757 |
|
(1) |
Represents a non-GAAP measure. The Trust’s method of calculating non-GAAP measures may differ from other reporting issuers’ methods and, accordingly, may not be comparable. For additional information, please see “Non-GAAP Measures” in this Press Release. |
Non-GAAP Measures
The non-GAAP measures used in this Press Release, including but not limited to, AFFO, AFFO with adjustments, AFFO per Unit, AFFO with adjustments per Unit, Payout Ratio to AFFO, Payout Ratio to AFFO with adjustments, Unencumbered Assets, NOI, Debt to Aggregate Assets, Interest Coverage Ratio, Adjusted Debt to Adjusted EBITDA, Unsecured/Secured Debt Ratio, FFO, FFO with adjustments, FFO per Unit, FFO with adjustments per Unit, Same Properties NOI, Debt to Gross Book Value, Weighted Average Interest Rate, Transactional FFO, and Total Proportionate Share, do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and are therefore unlikely to be comparable to similar measures presented by other issuers. Additional information regarding these non-GAAP measures is available in the Management’s Discussion and Analysis of the Trust for the year ended December 31, 2023, dated February 14, 2024 (the “MD&A), and is incorporated by reference. The information is found in the “Presentation of Certain Terms Including Non-GAAP Measures” and “Non-GAAP Measures” sections of the MD&A, which is available on SEDAR+ at www.sedarplus.ca. Reconciliations of non-GAAP financial measures to the most directly comparable IFRS measures are found in “Reconciliations of Non-GAAP Measures” of this Press Release.
Full reports of the financial results of the Trust for the year ended December 31, 2023 are outlined in the consolidated financial statements and the related MD&A of the Trust for the year ended December 31, 2023, which are available on SEDAR+ at www.sedarplus.ca.
Conference Call
Management will hold a conference call on Thursday, February 15, 2024 at 3:00 p.m. (ET).
Interested parties are invited to access the call by dialing 1-855-353-9183 and then keying in the participant access code 97190#.
A recording of this call will be made available Thursday, February 15, 2024 through to Thursday, February 22, 2024. To access the recording, please call 1-855-201-2300, enter the conference access code 97190# and then key in the playback access code 0114192#.
About SmartCentres
SmartCentres is one of Canada’s largest fully integrated REITs, with a best-in-class and growing mixed-use portfolio featuring 191 strategically located properties in communities across the country. SmartCentres has approximately $11.9 billion in assets and owns 35.0 million square feet of income producing value-oriented retail and first-class office properties with 98.5% in place and committed occupancy, on 3,500 acres of owned land across Canada.
Cautionary Statements Regarding Forward-looking Statements
Certain statements in this Press Release are “forward-looking statements” that reflect management’s expectations regarding the Trust’s future growth, results of operations, performance and business prospects and opportunities. More specifically, certain statements including, but not limited to, statements related to SmartCentres’ expectations relating to cash collections, SmartCentres’ expected or planned development plans and joint venture projects, including the described type, scope, costs and other financial metrics and the expected timing of construction and condominium closings and statements that contain words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may” and similar expressions and statements relating to matters that are not historical facts, constitute “forward-looking statements”. These forward-looking statements are presented for the purpose of assisting the Trust’s Unitholders and financial analysts in understanding the Trust’s operating environment and may not be appropriate for other purposes. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management.
However, such forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including risks associated with potential acquisitions not being completed or not being completed on the contemplated terms, public health crises, real property ownership and development, debt and equity financing for development, interest and financing costs, construction and development risks, and the ability to obtain commercial and municipal consents for development. These risks and others are more fully discussed under the heading “Risks and Uncertainties” and elsewhere in SmartCentres’ most recent Management’s Discussion and Analysis, as well as under the heading “Risk Factors” in SmartCentres’ most recent annual information form. Although the forward-looking statements contained in this Press Release are based on what management believes to be reasonable assumptions, SmartCentres cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-looking statements are made as at the date of this Press Release and SmartCentres assumes no obligation to update or revise them to reflect new events or circumstances unless otherwise required by applicable securities legislation.
Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; a continuing trend toward land use intensification, including residential development in urban markets and continued growth along transportation nodes; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; that requisite consents for development will be obtained in the ordinary course, construction and permitting costs consistent with the past year and recent inflation trends.
Contact
For information, visit www.smartcentres.com or please contact:
Mitchell Goldhar
Executive Chairman and CEO
SmartCentres
(905) 326-6400 ext. 7674
mgoldhar@smartcentres.com
Peter Slan
Chief Financial Officer
SmartCentres
(905) 326-6400 ext. 7571
pslan@smartcentres.com