Summit Industrial Income REIT Announces Continued Strong Growth in Second Quarter 2013
TORONTO, Aug. 20, 2013 /CNW/ - Summit Industrial Income REIT ("Summit II" or the "REIT") (TSXV: SMU.UN) announced today its operating and financial results for the three and six months ended June 30, 2013.
SUMMARY OF QUARTERLY RESULTS:
"Our acquisitions are generating significant growth in our key performance benchmarks and we look to build on this progress in the quarters ahead," stated Paul Dykeman, CEO. "We were particularly pleased that our actual FFO and AFFO payout ratios in the second quarter were well ahead of the forecast in our February equity offering prospectus."
"As the REIT's manager, we continue to elect to take the majority of the fees owing under our Management Agreement in the form of Trust Units, and have participated in all the REIT's equity offerings," added Lou Maroun, Chairman. "Today our ownership interest in the REIT is approximately 10.2%, and we will continue to maintain and grow this participation going forward, fully aligning our interests with all Unitholders."
STRONG PORTFOLIO GROWTH
Subsequent to the end of the second quarter the REIT waived conditions and will be acquiring an additional six light industrial properties totaling 653,000 square feet of GLA in Brampton Ontario, Barrie Ontario and the Greater Montreal Region, as well as one fully occupied office building in Montreal, for a total purchase price of approximately $52.7 million satisfied by the assumption of an existing $5.4 million mortgage, new mortgages totaling $26.3 million, with the balance in cash from the REIT's revolving credit facility.
With the completion of the above-mentioned acquisitions and the disposition of non-core properties, the REIT's total property portfolio will consist of 29 properties totaling approximately 3.3 million square feet of GLA with occupancy of 99.5% generating current annualized NOI of approximately $21.0 million.
STRONG FINANCIAL RESULTS
Net Operating Income (NOI) rose to $4.4 million in the second quarter of 2013 compared to $2.1 million in the first quarter of the year and $0.2 million in the second quarter of 2012. For the first six months of 2013 NOI was $6.5 million compared to $0.4 million last year.
Funds from Operations (FFO) for the three months ended June 30, 2013 were $2.7 million ($0.151 per Unit) compared to $1.2 million ($0.111 per Unit) for the quarter ended March 31, 2013 and $18,000 ($0.028 per Unit) in the second quarter of 2012. The increase in 2013 is due to the contribution from acquisitions completed over the last ten months, improved occupancies and strong leasing activities. For the six months ended June 30, 2013 FFO was $3.9 million ($0.271 per Unit) compared to $95,000 ($0.145 per Unit) in the same period last year.
Adjusted Funds from Operations (AFFO) in the second quarter of 2013 rose to $2.5 million ($0.139 per Unit) from $1.2 million ($0.111 per Unit) in the first quarter of the year and $18,000 ($0.028 per Unit) in the second quarter of 2012. For the six months ended June 30, 2013 AFFO was $3.7 million ($0.251 per Unit) compared to $95,000 ($0.145 per Unit) in the same period last year. The REIT's AFFO payout ratio was 88.2% through the second quarter of 2013, well ahead of the 95% forecast in its February 2013 offering prospectus. Including the benefit of the REIT's DRIP program, the effective payout ratio was a conservative 76.5% in the quarter. As of June 30, 2013, the DRIP participation rate was approximately 13.2%. The REIT established its monthly distribution policy of $0.0408 per Unit, or $0.4896 on an annual basis, on March 15, 2013.
The REIT's growth has been highly accretive as, despite the 62.5% increase in the weighted average number of Units outstanding in the second quarter of 2013 compared to the first quarter of the year, FFO per Unit and AFFO per Unit have increased 36.0% and 32.4 %, respectively.
ACTIVE LEASING PROGRAM
Overall, leases representing only 1.4% of the total property portfolio, or 39,000 square feet, renew in 2013 with 312,000 square feet, or 11.7% of the total portfolio, up for renewal in 2014. The weighted average term to maturity for the lease portfolio is approximately 5.9 years.
SOLID BALANCE SHEET AND LIQUIDITY POSITION
On March 11, 2013 the REIT increased its credit facility to $55 million, of which $40.6 million was drawn on the loan as at June 30, 2013. Subsequent to the end of the quarter the facility was increased to $68 million. If the REIT increased its borrowing to the 65% maximum allowed under its Declaration of Trust, it would have the capacity to purchase approximately $80 million in new properties as at August 20, 2013.
Under the terms of the REIT's Management Agreement with Sigma Asset Management Limited (the Manager), the Manager can elect to take the fees payable to it in the form of Trust Units rather than in cash. In the first six months of 2013 the Manager used its acquisition fee proceeds of approximately $1.6 million to acquire 240,444 Units, from the February 26, 2013 offering of 11,120,000 Units, further aligning the interests of the Manager with all Unitholders. As well, certain members of the Manager acquired 239,235 Units during the February offering. In addition, through the six months ended June 30, 2013 certain members of the Manager acquired an additional 223,000 Units on the TSX Venture Exchange, resulting in the Manager owning directly and indirectly a retained interest of approximately 10.2%.
INVESTOR CONFERENCE CALL
FINANCIAL AND OPERATING HIGHLIGHTS
About Summit II
Caution Regarding Forward Looking Information
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
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