Summit Industrial Income REIT Announces 2012 Financial Results
HALIFAX, April 4, 2013 /CNW/ - Summit Industrial Income REIT ("Summit II" or the "REIT") (TSXV: SMU.UN) announced today its operating and financial results for the three months and year ended December 31, 2012.
- Acquired five light industrial properties aggregating 646,000 square feet of gross leasable area ("GLA") for total costs of approximately $59.5 million
- Issued 74.9 million units in two equity offerings for total net proceeds of $30.7 million
- Arranged a $32 million revolving credit facility
- Fourth quarter 2012 results show significant growth over third quarter of year
- Trust unit consolidation completed January 28, 2013
- Increased its revolving credit facility to $55 million on February 20, 2013
- Completed offering of 11.1 million units on February 26, 2013 for net proceeds of $70.2 million
- Acquired 15 light industrial properties totaling 2.0 million sq. ft. of GLA for $171.4 million
- Total portfolio now 25 properties aggregating 2.7 million sq. ft. of GLA
- Announced monthly cash distributions of $0.0408 per unit (annualized $0.4896 per unit) resulting in an adjusted funds from operations ("AFFO") payout ratio of between 90% and 95%
- Implemented new distribution reinvestment plan (the "DRIP") at a 5% bonus to market price
- $300 million in acquisitions and property expansions targeted for 2013
"Since getting involved with the REIT last September, the new management team has made significant progress in building a solid platform on which to build value for our unitholders," commented Lou Maroun, Chairman. "Looking ahead, we will continue to aggressively grow our portfolio while generating solid organic growth as we apply our proven property and asset management programs."
"The light industrial sector of the Canadian real estate market continues to offer significant growth and value enhancing opportunities," stated Paul Dykeman, CEO. "Ownership remains highly fragmented, and we will continue to aggressively and accretively expand and strengthen our property portfolio through strategic acquisitions. We have targeted $300 million in property acquisitions and expansions for 2013, and are confident we can achieve this goal. In addition, the sector also generates very strong, stable and sustainable cash flows due to reduced rent volatility, low operating, capital improvement and maintenance costs, and a broad and diverse tenant base with a low risk profile."
Revenue, operating expenses and net operating income for the year ended December 31, 2012 were lower than the prior year due to the sale of 14 non-core properties on January 5, 2012. Results for the year included the contribution from five properties acquired in the third and fourth quarters of 2012.
The reduction in Funds from Operations ("FFO") and AFFO in 2012 is due to the smaller size of the portfolio compared with the prior year.
Net income for the year ended December 31, 2012 was $8.6 million ($0.311 per unit), which included a $7.7 million fair value adjustment to investment properties, compared to $1.4 million in the prior year.
Cash distributions were $13.4 million in 2012 compared to $11.5 million in the prior year. On January 23, 2012 a special distribution was paid using proceeds from the sale of fourteen non-core properties on January 5, 2012.
Total debt as at December 31, 2012 increased to $38.3 million from $19.9 million at the end of the prior year due to debt financing of $32.0 million secured by four properties. As at year end, $26.1 million was drawn on the loan.
At December 31, 2012, the REIT's debt leverage ratio was 47.0%, down from 51.5% at December 31, 2011 due primarily to equity offerings completed during 2012. If the REIT increased its borrowing to the 65% maximum allowed under its Declaration of Trust, it would have the capacity to purchase approximately $42 million in new properties as at December 31, 2012.
On January 28, 2013, the REIT consolidated all of its issued and outstanding units on the basis of one post consolidation unit for every twelve pre-consolidation units. Following the consolidation, the number of outstanding units was reduced from 82,717,645 to 6,893,110 units.
On February 26, 2013, the REIT completed a public offering for gross proceeds of $75.1 million through the issuance of 11,120,000 units at a price of $6.75 per unit. The net proceeds of the offering were approximately $70.2 million.
In various transactions completed in February and March 2013 the REIT acquired 15 light industrial properties in Edmonton Alberta, the Greater Toronto Area and Moncton New Brunswick totalling approximately 2.0 million square feet of GLA for approximately $171.4 million satisfied by the assumption of new mortgage financings of approximately $107.5 million and cash from the abovementioned equity offering. With the completion of these acquisitions, the REIT's total portfolio has grown to 25 properties aggregating 2.7 million square feet of GLA as at March 31, 2013.
On March 15, 2013 the REIT announced that its Board of Trustees had approved a cash distribution policy to pay $0.0408 per unit on a monthly basis to unitholders, aggregating $0.4896 on an annual basis resulting in an AFFO payout ratio of between 90% and 95%. The first cash distribution will be paid on April 15, 2013 to unitholders of record on March 29, 2013.
On March 15, 2012 the REIT also announced that it had implemented the DRIP whereby registered or beneficial holders of units of the REIT who are resident in Canada can cost-effectively acquire additional units by reinvesting all or a portion of their monthly cash distributions without paying brokerage commissions. In addition, unitholders who elect to participate in the DRIP will receive a further distribution of units equal to 5% reinvested.
For the year ended December 31
($,000 except per Unit amounts)
|Number of properties||10||20|
|Revenue from income properties||2,497||3,388|
|Property operating expenses||517||39|
|Net Operating income||1,980||3,349|
|Gain on real estate transactions||157||-|
|Fair value adjustment to investment properties||7,661||20|
|Net income per Unit||$0.311||$0.182|
|FFO / AFFO||906||1,393|
|FFO / AFFO per Unit - Basic||$0.033||$0.179|
|Weighted Average Units Outstanding||27,533||7,769|
About Summit II
Summit Industrial Income REIT is an unincorporated closed-end trust focused on growing and managing a portfolio of light industrial properties across Canada. Summit II's units are listed on the TSX Venture Exchange and trade under the symbol SUM.UN. For more information, please visit our web site at www.summitIIreit.com.
Caution Regarding Forward Looking Information
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "goal" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning the goal to build Summit II's property portfolio. The forward-looking statements and information are based on certain key expectations and assumptions made by Summit II, including general economic conditions. Although Summit II believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Summit II can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, tenant risks, current economic environment, environmental matters, general insured and uninsured risks and Summit II being unable to obtain any required financing and approvals. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward looking information for anything other than its intended purpose. Summit II undertake no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Summit Industrial Income REIT