This news release contains forward- looking information that is based upon
assumptions and is subject to risks and uncertainties as indicated in the
cautionary note contained within this press release.
DREAM INDUSTRIAL REIT (TSX:DIR.UN) today announced its financial results for the
three and six months ended June 30, 2014.
HIGHLIGHTS
-- Adjusted Funds From Operations ("AFFO") per unit increased by 6.4% from
Q2 2013 and 1.0% from Q1 2014 - AFFO for the three months ended June 30,
2014 was 19.9 cents compared to 18.7 cents for the three months ended
June 30, 2013 and 19.7 cents for the three months ended March 31, 2014.
-- Strong leasing pipeline maintained - Over 700,000 square feet of new
leasing and renewals commenced in the quarter at rates 11% higher than
rates on expiries. Commitments have been obtained for 1.0 million square
feet of new leasing and renewals commencing in the remainder of 2014
compared to 1.2 million square feet of expiries.
-- Occupancy of 95.6% at June 30, 2014 compared to 96.3% at March 31, 2014
and 95.7% at December 31, 2013. Occupancy at June 30, 2014 includes
245,000 square feet of commitments on vacant space.
-- AFFO payout ratio decreases to 88.6% - The AFFO payout ratio was 88.6%
year-to-date compared to 96.6% in the same period in the prior year,
reflecting the growth in cash flow from the portfolio.
-- Stable capital structure - Leverage remained stable at 52.4% with
interest coverage of 3.0 times and a weighted average term to maturity
on debt of 4.1 years.
-- Continued opportunities for rent growth - Estimated market rents exceed
in-place rents by approximately 5.1%.
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SELECTED FINANCIAL INFORMATION
(unaudited) Three Months Ended
($000's except unit and per unit June 30, March 31, June 30,
amounts) 2014 2014 2013
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Investment properties revenue $ 40,428 $ 40,914 $ 34,703
Net operating income ("NOI")(1) 27,534 27,215 24,754
Funds from operations ("FFO")(1) 17,262 17,044 15,572
Adjusted funds from operations
("AFFO")(1) 14,205 14,006 12,530
Investment properties value 1,544,433 1,532,065 1,532,034
Debt 843,553 836,061 845,652
Per unit data (basic)
AFFO - basic and diluted $ 0.199 $ 0.197 $ 0.187
FFO - basic 0.242 0.239 0.233
FFO - diluted 0.236 0.234 0.229
Distributions 0.175 0.175 0.175
FFO payout ratio (%) 72.3% 73.2% 75.1%
AFFO payout ratio (%) 87.9% 88.8% 93.6%
Units (period-end)
REIT Units 55,181,466 55,063,083 54,289,786
LP Class B Units, Series 1 16,282,096 16,282,096 16,282,096
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Total number of units 71,463,562 71,345,179 70,571,882
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Portfolio gross leasable area (square
feet) 15,613,687 15,599,084 15,659,340
Occupied and committed space 95.6% 96.3% 95.8%
Average occupancy for the period 94.7% 94.9% 95.4%
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See footnotes on page 3.
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SELECTED FINANCIAL INFORMATION
(unaudited) Six Months Ended
($000's except unit and per unit June 30, June 30,
amounts) 2014 2013
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Investment properties revenue $ 81,342 $ 63,953
Net operating income ("NOI")(1) 54,749 44,646
Funds from operations ("FFO")(1) 34,306 27,565
Adjusted funds from operations
("AFFO")(1) 28,211 21,805
Investment properties value 1,544,433 1,532,034
Debt 843,553 845,652
Per unit data (basic)
AFFO - basic and diluted $ 0.395 $ 0.356
FFO - basic 0.481 0.450
FFO - diluted 0.470 0.445
Distributions 0.350 0.344
FFO payout ratio (%) 72.8% 76.4%
AFFO payout ratio (%) 88.6% 96.6%
Units (period-end)
REIT Units 55,181,466 54,289,786
LP Class B Units, Series 1 16,282,096 16,282,096
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Total number of units 71,463,562 70,571,882
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Portfolio gross leasable area (square
feet) 15,613,687 15,659,340
Occupied and committed space 95.6% 95.8%
Average occupancy for the period
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See footnotes on page 3.
"We are pleased with our solid financial results and leasing pipeline which
reflect strong Canadian industrial fundamentals," said Randy Cameron, President
and Chief Executive Officer. "Over one-third of our expiries for the year
occurred in this quarter, and with continued progress on leasing, we expect
positive absorption for the balance of the year."
FINANCIAL HIGHLIGHTS
-- AFFO Growth - AFFO for the quarter was $14.2 million or 19.9 cents on a
per unit basis. AFFO per unit for the quarter was 6.4% higher than the
same period in the prior year and 1.0% higher compared to the first
quarter of 2014.
-- Increase in FFO per unit - FFO for the quarter was $17.3 million or 24.2
cents per unit. FFO per unit for the quarter increased 3.9% compared to
the same period in the prior year and was 1.3% higher than the first
quarter of 2014.
-- Total NOI of $27.5 million for the quarter - Total NOI has grown 11.2%
compared to the same period last year, primarily as a result of
acquisitions completed in the second quarter of 2013. Comparative
property NOI compared to the first quarter of 2014 increased by 0.4%, as
a result of an increase in the average rent per square foot in the
portfolio to $7.04 from $6.96 at March 31, 2014, partially offset by a
decrease in average occupancy to 94.7% from 94.9% in the first quarter.
OPERATIONAL HIGHLIGHTS
-- Leasing Profile - Leasing activity during the second quarter included
276,000 square feet of new leases, 426,000 square feet of renewals and a
net increase in committed space for future occupancy of 87,000 square
feet, compared to 736,000 square feet of expiries and 162,000 square
feet of early terminations. Early terminations included a 121,000 square
foot tenant at a multi-tenant property in Toronto, Ontario, that
encountered financial difficulty and defaulted during the quarter.
Replacement tenants for 100% of this space took occupancy during the
quarter at modestly higher rents, resulting in only fifteen days of
total downtime. At period-end, the Trust had 937,000 square feet of
vacant space, of which 245,000 square feet is committed for future
occupancy. The average remaining lease term at June 30, 2014 is 4.5
years.
-- Portfolio occupancy at 95.6% - Overall occupancy (including committed
space) was 95.6% compared to 96.3% at end of the first quarter of 2014.
-- Growth in rents per square foot - In-place rents increased to $7.04 per
square foot at June 30, 2014, compared to $6.96 at March 31, 2014,
primarily as a result of positive leasing spreads. The average rate on
all new and renewal leases commencing in the quarter was $7.01 per
square foot compared to $6.33 on all expiries and terminations. Renewals
were completed at $6.97 per square foot which is $0.20 above expiring
rates for these spaces.
-- Estimated market rents 5.1% above average in-place rents - At quarter-
end, estimated market rents were approximately 5.1% above the Trust's
current average in-place rental rate of $7.04 per square foot (March 31,
2014 - $6.96). The 5.1% difference between in-place and market rent
provides the Trust with opportunities for rental rate growth.
GLA Occupancy Average Average in- Estimated
(million (%) lease term place rent market rent
sq. ft.) (years) (per sq. (per sq.
ft.) ft.)
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Western Canada 4.2 97.6 4.3 $ 8.82 $ 9.79
Ontario 4.9 97.7 4.2 6.15 6.21
Quebec 3.7 93.1 6.0 6.01 6.18
Eastern Canada 2.8 92.1 3.5 7.20 7.38
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Total 15.6 95.6 4.5 $ 7.04 $ 7.40
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CAPITAL STRUCTURE
The Trust's capital structure remained stable during the quarter, with leverage
at a stable 52.4% and interest coverage of 3.0 times.
June 30, March 31,
Key performance indicators(2) 2014 2014
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Level of debt (debt-to-total assets)(3) 52.4% 52.4%
Interest coverage ratio(4) 3.0 times 2.9 times
Weighted average face interest rate on all debt 4.16% 4.17%
Debt - weighted average term to maturity (years) 4.1 4.2
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See footnotes on page 3
The Trust also signed an agreement to increase the demand revolving credit
facility from $50 million to $75 million with amended terms to extend the
maturity date from October 2014 to June 2016 and to reduce the interest rate by
fifteen basis points.
During the quarter, the Trust completed the acquisition of our partner's 50%
interest in a 26,000 square foot property in Edmonton for $2.4 million, the only
property in which we had a co-ownership interest.
RETIREMENT OF CEO
Mr. Randy Cameron advised the Board of Trustees that he will be retiring as
President and Chief Executive Officer of Dream Industrial REIT. "We appreciate
Randy's contribution to our business since he joined us in 1998. He has been
responsible for creating Dream Industrial's very strong management team. We had
hoped that he would have continued as the CEO for longer, but due to family
reasons, Randy has decided to retire at the end of October" said Michael Cooper,
Chair of the Executive Committee.
CONFERENCE CALL
Senior management will host a conference call to discuss the results tomorrow,
August 6, 2014 at 2:00 p.m. (ET). To access the conference call, please dial
1-866-229-4144 in Canada and the United States or 416-216-4169 elsewhere and use
passcode 9411 711#. To access the conference call via webcast, please go to
Dream Industrial REIT's website at www.dreamindustrialreit.ca and click on the
link for News & Events, then click on Calendar of Events. A taped replay of the
conference call and the webcast will be available 90 days.
Other information
Information appearing in this news release is a select summary of results. The
condensed consolidated financial statements and management's discussion and
analysis for the Trust will be available at www.dreamindustrialreit.ca and on
www.sedar.com.
Dream Industrial REIT is an unincorporated, open-ended real estate investment
trust. Dream Industrial REIT owns a portfolio of 205 primarily light industrial
properties comprising approximately 15.6 million square feet of gross leasable
area in key industrial markets across Canada. Its objective is to build upon and
grow its portfolio and to provide stable, sustainable and growing cash
distributions to its unitholders. For more information, please visit
www.dreamindustrialreit.ca.
FOOTNOTE
(1) NOI, FFO and AFFO - are key measures of performance used by real estate
operating companies; however, they are not defined by International Financial
Reporting Standards ("IFRS"), do not have standard meanings and may not be
comparable with other industries or income trusts.
(2) The key performance indicators include the results of operations for the
three months ended June 30, 2014 and March 31, 2014.
(3) Level of debt is determined as total debt before deferred financing costs
and mark-to-market adjustments, divided by total assets.
(4) The interest coverage ratio for the three months ended June 30, 2014 and
March 31, 2014 is calculated as net rental income plus interest and fee income,
less general and administrative expenses, plus deferred unit compensation
expense, all divided by interest expense on debt, excluding deferred financing
and mark-to-market adjustments.
Forward looking information
This press release may contain forward-looking information within the meaning of
applicable securities legislation. Forward-looking information is based on a
number of assumptions and is subject to a number of risks and uncertainties,
many of which are beyond Dream Industrial REIT's control, which could cause
actual results to differ materially from those that are disclosed in or implied
by such forward-looking information. These risks and uncertainties include, but
are not limited to, general and local economic and business conditions; the
financial condition of tenants; our ability to refinance maturing debt; leasing
risks, including those associated with the ability to lease vacant space; and
interest and currency rate functions. Our objectives and forward-looking
statements are based on certain assumptions, including that the general economy
remains stable, interest rates remain stable, conditions within the real estate
market remain consistent, competition for acquisitions remains consistent with
the current climate and that the capital markets continue to provide ready
access to equity and/or debt. All forward-looking information in this press
release speaks as of the date of this press release. Dream Industrial REIT does
not undertake to update any such forward-looking information whether as a result
of new information, future events or otherwise. Additional information about
these assumptions and risks and uncertainties is contained in Dream Industrial
REIT's filings with securities regulators, including its latest annual
information form and MD&A. These filings are also available at Dream Industrial
REIT's website at www.dreamindustrialreit.ca.
FOR FURTHER INFORMATION PLEASE CONTACT:
Dream Industrial REIT
Michael Cooper
Chairman, Executive Committee
(416) 365-5145
mcooper@dream.ca
Dream Industrial REIT
Randy Cameron
President & Chief Executive Officer
(403) 270-2480
rcameron@dream.ca
Dream Industrial REIT
John Todd
Chief Financial Officer
(416) 365-8963
jtodd@dream.ca
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