MONTREAL, March 20,
2024 /CNW/ - PRO Real Estate Investment Trust
("PROREIT" or the "REIT") (TSX: PRV.UN) today reported its
financial and operating results for the three-month period ("fourth
quarter" or "Q4") and fiscal year ("Fiscal 2023") ended
December 31, 2023.
Fourth Quarter and Fiscal 2023 Highlights
- Property revenue increased by 2.2% in Q4 year-over-year and by
2.8% in Fiscal 2023 compared to the prior year ("Fiscal 2022")
- Net operating income (NOI) was up 2.2% in Q4 year-over-year and
up 0.4% for Fiscal 2023 compared to Fiscal 2022
- Same Property NOI* was up 7.5% in Q4 year-over-year and up 1.7%
in Fiscal 2023 compared to Fiscal 2022
- Sale of seven non-strategic properties for gross proceeds of
$26.6 million in Fiscal 2023 and sale
of three non-core properties for gross proceeds of $26.1 million subsequent to year-end
- 93.0% of 2023 gross leasable area ("GLA") renewed at 45.6%
average spread and 43.7% of GLA maturing in 2024 renewed at average
spread of 32.8%
- Occupancy rate at 98.3% at December 31,
2023 (including committed space and excluding an industrial
property under redevelopment)
- Total debt (current and non-current) of $515.2 million at December
31, 2023, relatively flat compared to $514.3 million at the same date last year
- Total debt to total assets was 49.8% at December 31, 2023, compared to 49.6% at the same
date last year
- Adjusted Debt to Gross Book Value* was 50.2% at December 31, 2023, compared to 49.7% at the same
date last year
- $43.0 million in available credit
facility and $13.2 million in cash at
December 31, 2023
"Throughout 2023, in an uncertain macroeconomic and high
interest rate environment, we pursued our capital recycling
strategy, aimed at rotating capital away from less attractive
assets and towards growing our industrial footprint, and continued
to manage our balance sheet. With a clear focus on our stated
objectives, we ended the year on a strong footing, pleased with our
performance from an operational standpoint," said
Gordon G. Lawlor, President and CEO, PROREIT.
"In 2023, we successfully sold seven non-strategic properties
for gross proceeds of more than $26.6 million, ending the year with
123 properties with over 82% of our GLA in the industrial
sector. Subsequent to year-end, we completed the sale of three
non-core properties for gross proceeds of $26.1 million.
"Thanks to robust rental rates and occupancy, we continue to see
top line revenue growth. We are particularly pleased to have
achieved notable Same Property NOI* growth of 7.5% in the fourth
quarter of 2023, compared to the same quarter last year –
a testament to our capacity to generate organic growth and to the
significant value embedded in our portfolio. On the balance sheet
front, Adjusted Debt to Gross Book Value* held steady at 50.2% at
December 31, 2023 and we continue to
benefit from limited material mortgage maturities until 2026, while
only about 3% of our total debt is at a variable rate.
"I am proud of our strong portfolio, long-standing tenant base
and outstanding team built over the past decade. With this solid
foundation, we are well-positioned to pursue our strategy for
growth in the industrial sector in strong secondary markets, and
anticipate that the market will stabilize and interest rates will
start to come down in the near term. As always, we will continue to
manage our balance sheet diligently and maintain disciplined
capital allocation to generate sustainable value for all our
stakeholders," concluded Mr. Lawlor.
* Measures followed by the suffix "*" in this press release
are non-IFRS measures. See "Non-IFRS Measures".
Financial Results
Table 1- Financial
Highlights
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Financial
data
|
|
|
|
|
Property
revenue
|
$
25,618
|
$
25,070
|
$
99,893
|
$
97,210
|
Net operating income
(NOI)
|
$
14,897
|
$
14,579
|
$
57,941
|
$
57,737
|
Same Property NOI
(1)
|
$
14,617
|
$
13,603
|
$
47,347
|
$
46,536
|
Net income and
comprehensive income
|
$
(149)
|
$
6,456
|
$
25,906
|
$
84,494
|
Net income and
comprehensive income per Unit - Basic (2)
|
$
(0.0025)
|
$
0.1068
|
$
0.4281
|
$
1.3978
|
Net income and
comprehensive income per Unit - Diluted (2)
|
$
(0.0024)
|
$
0.1048
|
$
0.4281
|
$
1.3643
|
Total assets
|
$
1,034,591
|
$
1,035,928
|
$
1,034,591
|
$
1,035,928
|
Total debt
|
$
515,257
|
$
514,325
|
$
515,257
|
$
514,325
|
Total debt to total
assets as reported in the financial statements
|
49.8 %
|
49.6 %
|
49.8 %
|
49.6 %
|
Adjusted Debt to Gross
Book Value (1)
|
50.2 %
|
49.7 %
|
50.2 %
|
49.7 %
|
Interest Coverage Ratio
(1)
|
2.5x
|
2.7x
|
2.5x
|
2.8x
|
Debt Service Coverage
Ratio (1)
|
1.6x
|
1.6x
|
1.6x
|
1.6x
|
Adjusted Debt to
Annualized Adjusted EBITDA Ratio (1)
|
9.3x
|
9.6x
|
9.6x
|
9.7x
|
Weighted average
interest rate on mortgage debt
|
3.88 %
|
3.70 %
|
3.88 %
|
3.70 %
|
Net cash flows provided
from operating activities
|
$
9,462
|
$
8,331
|
$
31,699
|
$
28,235
|
Funds from Operations
(FFO) (1)
|
$
7,557
|
$
7,485
|
$
26,306
|
$
30,275
|
Basic FFO per unit
(1)(2)
|
$
0.1247
|
$
0.1238
|
$
0.4347
|
$
0.5009
|
Diluted FFO per unit
(1)(2)
|
$
0.1232
|
$
0.1215
|
$
0.4285
|
$
0.4888
|
Adjusted Funds from
Operations (AFFO) (1)
|
$
7,595
|
$
7,687
|
$
29,429
|
$
31,295
|
Basic AFFO per unit
(1)(2)
|
$
0.1253
|
$
0.1272
|
$
0.4863
|
$
0.5177
|
Diluted AFFO per unit
(1)(2)
|
$
0.1239
|
$
0.1247
|
$
0.4794
|
$
0.5053
|
AFFO Payout Ratio –
Basic (1)
|
89.8 %
|
88.5 %
|
92.5 %
|
86.9 %
|
AFFO Payout Ratio –
Diluted (1)
|
90.8 %
|
90.2 %
|
93.9 %
|
89.1 %
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2)
|
Total basic units
consist of trust units of the REIT ("Units") and Class B LP Units
(as defined herein). Total diluted units also includes deferred
trust units and restricted trust units issued under the REIT's
long-term incentive plan.
|
At December 31, 2023, PROREIT owned
123 investment properties (including a 50% ownership interest
in 42 investment properties), compared to 130 investment
properties (including a 50% ownership interest in
42 investment properties) at December 31, 2022. In
Fiscal 2023, the decrease in total properties is a result of
the sale of a 100% interest in seven investment properties. During
Fiscal 2022, PROREIT acquired a 50% interest in
21 investment properties, sold a 50% interest in 21 other
investment properties and sold a 100% interest in nine other
investment properties. At December 31, 2023, total assets
amounted to $1.03 billion,
compared to $1.04 billion as at
December 31, 2022.
For the fourth quarter ended December 31, 2023:
- Property revenue amounted to $25.6
million in Q4 2023, an increase of $0.5 million or 2.2%, compared to $25.1 million for the same prior year period. The
increase was mainly due to contractual increases in rent and higher
rental rates on lease renewals, offset by the decrease in the
number of properties in the portfolio.
- Net operating income (NOI) amounted to $14.9 million for the quarter, compared to
$14.6 million in Q4 2022, an increase
of $0.3 million or 2.2%. The increase
was mainly driven by the same factors impacting property revenue
described above.
- Same Property NOI*, which represented 122 properties out of the
123 properties in the portfolio, reached $14.6 million for the quarter, an increase of
$1.0 million or 7.5%, compared to the
same quarter last year. The increase was largely a result of
contractual increases in rent and higher rental rates on lease
renewals and new leases across all asset classes, along with higher
occupancy rates in the retail and office asset classes, offset by
the slight decrease in occupancy in the industrial asset
class.
- Net cash flows provided from operating activities for the
quarter was $9.5 million, compared to
$8.3 million for Q4 2022.
- AFFO* totaled $7.6 million for
the quarter, down slightly from $7.7
million for Q4 2022.
- AFFO Payout Ratio – Basic* stood at 89.8% for the quarter,
compared to 88.5% for Q4 2022, primarily due to fewer properties
owned, as well as higher interest expense and leasing costs,
partially offset by contractual increases in rent and higher rental
rates on lease renewals.
For the fiscal year ended December 31, 2023:
- Property revenue was $99.9
million for Fiscal 2023, an increase of $2.7 million or 2.8%, compared to $97.2 million for Fiscal 2022. The increase was
mainly due to the same factors impacting the quarterly results
described above, plus the changes in the related ownership
percentages of the 42 properties purchased and sold in August 2022.
- Net operating income (NOI) for Fiscal 2023 was $57.9 million for the year, an increase of
$0.2 million, compared to
$57.7 million for Fiscal 2022. The
increase was mainly driven by the same factors impacting the
quarterly property revenue results described above.
- Same Property NOI* for Fiscal 2023, which represented 100
properties out of the 123 properties in the portfolio, was
$47.3 million, an increase of
$0.8 million or 1.7% over last year.
The factors impacting the increase were the same as those impacting
the quarterly results described above.
- Net cash flows provided from operating activities for the year
was $31.7 million, compared to
$28.2 million for the previous
year.
- AFFO* for Fiscal 2023 was $29.4
million, compared to $31.3
million for Fiscal 2022, a decrease of $1.9 million or nearly 6.0%, mainly resulting
from a decrease in the number of properties owned, as well as
temporary vacancy in one industrial property and higher interest
expenses for Fiscal 2023.
- AFFO Payout Ratio – Basic* was 92.5% for Fiscal 2023, compared
to 86.9% for Fiscal 2022, primarily due to the same factors
impacting the quarterly results, in addition to the impact of a
temporary vacancy in one industrial property, which returned to
full occupancy in Q4 2023.
TABLE 2- Reconciliation of net operating income to net income
and comprehensive income
(CAD $
thousands)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Net operating
income
|
14,897
|
14,579
|
57,941
|
57,737
|
|
|
|
|
|
General and
administrative expenses
|
1,263
|
1,360
|
7,269
|
5,160
|
Long-term incentive
plan expense
|
1,117
|
1,042
|
1,684
|
691
|
Depreciation of
property and equipment
|
156
|
126
|
477
|
417
|
Amortization of
intangible assets
|
61
|
93
|
309
|
372
|
Interest and financing
costs
|
5,841
|
5,182
|
22,425
|
20,541
|
Distributions - Class B
LP Units
|
153
|
157
|
619
|
634
|
Fair value adjustment -
Class B LP Units
|
664
|
332
|
(1,638)
|
(1,179)
|
Fair value adjustment -
investment properties
|
5,785
|
166
|
2,817
|
(52,541)
|
Fair value adjustment -
derivative financial instrument
|
540
|
–
|
(587)
|
–
|
Other income
|
(1,025)
|
(781)
|
(3,460)
|
(2,302)
|
Other
expenses
|
491
|
439
|
1,795
|
1,169
|
Debt settlement
costs
|
–
|
7
|
126
|
281
|
Transaction
costs
|
–
|
–
|
199
|
–
|
Net income and
comprehensive income
|
$
(149)
|
$
6,456
|
$
25,906
|
$
84,494
|
For the three months ended December 31, 2023, net
income and comprehensive income was negative $0.1 million, compared to $6.5 million during the same prior year
period. The $6.6 million
variance was mainly related to the $5.6 million impact in the non-cash fair
market value adjustment on investment properties.
For the twelve months ended December 31, 2023, net
income and comprehensive income was $25.9 million, compared to $84.5 million during the same prior year
period. The $58.6 million
variance was mainly related to a $55.4 million impact on the non-cash fair
value adjustment on investment properties, as well as some one-time
general and administrative expenses and increased interest and
financing costs in Fiscal 2023.
Sustained Operating Environment
At December 31, 2023, PROREIT's portfolio totaled
123 investment properties aggregating
6.4 million square feet of GLA, with a weighted
average lease term of 4.0 years.
The occupancy rate of the portfolio remains strong at 98.3% as
at December 31, 2023 (including committed space and
excluding an industrial property under redevelopment).
PROREIT continues to benefit from a robust operating
environment, with 93.0% of 2023 GLA renewed at 45.6% average spread
and 43.7% of GLA maturing in 2024 renewed at average spread of
32.8%.
The industrial segment accounted for 82.2% of GLA and 73.0% of
base rent at December 31, 2023.
Portfolio Transactions
In 2023, PROREIT sold seven 100%-owned properties for gross
proceeds of more than $26.6 million, as follows:
On April 21, 2023, PROREIT sold a
50,000 square foot non-core office property in
Amherst, Nova Scotia for gross
proceeds of $2.1 million
(excluding closing costs) with proceeds of the sale used for
general business purposes.
On August 31, 2023, PROREIT sold two non-core office
properties in Ottawa, Ontario,
totalling approximately 60,000 square feet for gross
proceeds of $9.1 million
(excluding closing costs). Proceeds of the sale were used to repay
approximately $5.7 million of
related mortgages with the balance used for general business
purposes, including a repayment of approximately $1.0 million under the REIT's credit
facility.
On September 28, 2023, PROREIT sold a
3,000 square foot non-core retail property in
Sherbrooke, Quebec for gross
proceeds of about $2.2 million
(excluding closing costs). Proceeds of the sale were used to repay
approximately $1.5 million of a
related mortgage, with the balance used for general business
purposes.
On November 27, 2023, PROREIT sold two non-core retail
properties located in Halifax, Nova
Scotia and Levis, Quebec
totalling approximately 49,000 square feet for gross
proceeds of approximately $10.9 million (excluding closing costs).
Proceeds of the sale were used to repay approximately $4.4 million of related mortgages, with the
balance used for general business purposes.
On December 28, 2023, PROREIT sold a
19,000 square foot non-core retail property in
Quebec City, Quebec for gross
proceeds of about $2.3 million
(excluding closing costs) with proceeds of the sale used for
general business purposes.
Subsequent to fiscal year end on February 2 and
9, 2024, PROREIT completed the sales of two non-core
properties in Upper Tantallon, Nova
Scotia and Montreal, Quebec
totalling approximately 124,000 square feet for gross
proceeds of $20.7 million (excluding closing
costs). Proceeds of the sales were used to repay approximately
$16.0 million in related
mortgages, with the balance used for general business purposes.
On March 18, 2024, PROREIT sold a
non-core retail property in Courtenay,
British Columbia for gross proceeds of $5.4 million (excluding closing costs). The net
proceeds of the sale were used to partially repay a $9.4 million mortgage secured by additional
retail properties.
Financing Activities
At December 31, 2023, PROREIT had $43.0 million in available credit facility
and $13.2 million in cash.
Total debt (current and non-current) was $515.3 million at December
31, 2023, relatively flat compared to $514.3 million at the same date last year. In
Fiscal 2023, PROREIT reduced indebtedness under its credit facility
by $20.0 million.
Debt to Gross Book Value* was 50.2% at
December 31, 2023, compared to 49.7% at the same date
last year. Weighted average interest rate on mortgage debt was
3.88% at December 31, 2023, compared to 3.70% at the same
date last year.
On May 26, 2023, PROREIT issued $35.0 million of unsecured subordinated
debentures bearing 8.00% interest per annum payable semi-annually
in arrears on June 30 and December 31 (beginning
December 31, 2023) and maturing in June 2028, which
are convertible at the holder's option at any time before
June 2028, at a conversion price of $7.00 per Unit. The proceeds of the
issuance were used to partially repay approximately $33.0 million of the credit facility, with
the balance used for general business purposes.
PROREIT closed on a new mortgage on June 1, 2023 to
refinance six industrial properties located in Winnipeg, Manitoba for $20.5 million. The rate on the new mortgage
was fixed at 5.07% for a term of seven years, with the majority of
the proceeds used to repay approximately $16.6 million of mortgages maturing in
July 2023.
On June 29, 2023, PROREIT received a $10.0 million three-year term loan at a rate
of 6.79%. Approximately $8.0 million of the proceeds was used to
partially repay the credit facility with the balance used for
general business purposes.
CEO Succession
On October 4, 2022, PROREIT announced that
Gordon G. Lawlor would succeed
James W. Beckerleg as President and Chief Executive
Officer of the REIT and would join the REIT's Board of Trustees,
effective April 1, 2023, at which time Mr. Beckerleg
was named Vice Chair of the Board and Co-Founder, as part of the
REIT's CEO succession plan. In June 2023, Mr. Beckerleg
was appointed Chair of the Board. Mr. Beckerleg had been
President and Chief Executive Officer and a Trustee of the REIT
since 2013. Concurrent with these changes, the REIT also
announced that Alison Schafer would
be appointed Chief Financial Officer and Secretary of the REIT.
Distributions
Distributions to unitholders of $0.0375 per trust unit of the REIT
were declared monthly during the three months ended
December 31, 2023, representing distributions of
$0.45 per unit on an annual
basis. Equivalent distributions are paid on the Class B limited
partnership units of PRO REIT Limited Partnership ("Class B LP
Units"), a subsidiary of the REIT.
On March 19, 2024, PROREIT announced a cash distribution of
$0.0375 per trust unit for the month
of March 2024. The distribution is payable on
April 15, 2024, to unitholders of record as at March
28, 2024.
Strategy
With a focus on high-quality light industrial real estate in
Canada, PROREIT's strategy for
growth and value creation is to expand its quality portfolio
organically and through disciplined acquisitions, while optimizing
its balance sheet and capital allocation. In line with this
strategy, PROREIT is focused on achieving its medium-term goals of
reaching $2 billion in assets, 90% industrial base rent and
45% Adjusted Debt to Gross Book Value* in the next three to five
years. These medium-term goals are based on the REIT's current
business plan and strategies and are not intended to be a forecast
of future results. See "Forward-Looking Statements".
Investor Conference Call and Webcast Details
PROREIT will hold a conference call to discuss its fourth
quarter and Fiscal 2023 results on March 21, 2024 at
9:00 a.m. ET. There will be a question period reserved
for financial analysts. To access the conference call, please
dial 888-664-6383 or 416-764-8650. A recording of the call
will be available until March 28, 2024 by
dialing 888-390-0541 or 416-764-8677 and using access
code: 874185#.
The conference call will also be accessible via live webcast on
PROREIT's website at www.proreit.com or at
https://app.webinar.net/BXgvmy7DOKj.
Annual Meeting of Unitholders
PROREIT will host its annual meeting on June 4, 2024
at 11:00am (ET) in Montreal,
Quebec. Additional information regarding the meeting will be
contained in the REIT's information circular, which will be
prepared in connection with the meeting and available on PROREIT's
website in the Investors section under Annual Meeting and at
www.sedarplus.ca.
About PROREIT
PROREIT (TSX:PRV.UN) is an unincorporated open-ended real estate
investment trust established pursuant to a declaration of trust
under the laws of the Province of Ontario. Founded in 2013, PROREIT owns a
portfolio of high-quality commercial real estate properties in
Canada, with a strong industrial
focus in robust secondary markets.
For more information on PROREIT, please visit the website at:
https://proreit.com.
Non-IFRS Measures
PROREIT's consolidated financial statements are prepared in
accordance with International Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board. In addition
to reported IFRS measures, industry practice is to evaluate real
estate entities giving consideration, in part, to certain non-IFRS
financial measures, non-IFRS ratios and other specified financial
measures (collectively, "non-IFRS measures"). Without limitation,
measures followed by the suffix "*" in this press release are
non-IFRS measures.
As a complement to results provided in accordance with IFRS,
PROREIT discloses and discusses in this press release (i) certain
non-IFRS financial measures, including: Adjusted Debt, adjusted
earnings before interest, tax, depreciation and amortization
("Adjusted EBITDA"); adjusted funds from operations ("AFFO");
annualized adjusted earnings before interest, tax, depreciation and
amortization ("Annualized Adjusted EBITDA"); Available Liquidity;
funds from operations ("FFO"); gross book value ("Gross Book
Value"); and Same Property NOI and (ii) certain non-IFRS ratios,
including: Adjusted Debt to Annualized Adjusted EBITDA Ratio;
Adjusted Debt to Gross Book Value; AFFO Payout Ratio – Basic; AFFO
Payout Ratio – Diluted; Basic AFFO per Unit; Diluted AFFO per Unit;
Basic FFO per Unit; Diluted FFO per Unit; Debt Service Coverage
Ratio; and Interest Coverage Ratio. These non-IFRS measures are not
defined by IFRS and do not have a standardized meaning under IFRS.
PROREIT's method of calculating these non-IFRS measures may differ
from other issuers and may not be comparable with similar measures
presented by other income trusts or issuers. PROREIT has presented
such non-IFRS measures and ratios as management believes they are
relevant measures of PROREIT's underlying operating and financial
performance. For information on the most directly comparable
financial measure disclosed in the primary financial statements of
the REIT, composition of the non-IFRS measures, a description of
how PROREIT uses these measures and an explanation of how these
measures provide useful information to investors, refer to the
"Non-IFRS Measures" section of PROREIT's management's discussion
and analysis for the three and twelve months ended
December 31, 2023, dated March 20, 2024,
available on PROREIT's SEDAR+ profile at www.sedarplus.ca, which is
incorporated by reference into this press release. As applicable,
the reconciliations for each non-IFRS measure are outlined below.
Non-IFRS measures should not be considered as alternatives to net
income, cash flows provided by operating activities, cash and cash
equivalents, total assets, total equity, or comparable metrics
determined in accordance with IFRS as indicators of PROREIT's
performance, liquidity, cash flow and profitability.
Table 3 - Reconciliation of Same Property NOI to net
operating income (as reported in the consolidated financial
statements)
(CAD $
thousands)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Property
revenue
|
$
25,618
|
$
25,070
|
$
99,893
|
$
97,210
|
Property operating
expenses
|
10,721
|
10,491
|
41,952
|
39,473
|
Net operating income
("NOI") as reported in the financial statements
|
14,897
|
14,579
|
57,941
|
57,737
|
Straight-line rent
adjustment
|
(116)
|
(151)
|
(468)
|
(394)
|
NOI after straight-line
rent adjustment
|
14,781
|
14,428
|
57,473
|
57,343
|
|
|
|
|
|
NOI sourced
from:
|
|
|
|
|
Acquisitions
|
–
|
(151)
|
(8,417)
|
(3,593)
|
Dispositions
|
(164)
|
(674)
|
(1,709)
|
(7,214)
|
Same Property NOI
(1)
|
$
14,617
|
$
13,603
|
$
47,347
|
$
46,536
|
Number of same
properties
|
122
|
122
|
100 (2)
|
100 (2)
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2)
|
Includes 21 properties
50% owned at December 31, 2023 (50% owned at December 31, 2022 but
100% owned prior to August 4, 2022). The comparative period has
been updated to reflect 50% ownership throughout the
period.
|
Table 4 - Calculation of Available Liquidity
(CAD $
thousands)
|
December
31
2023
|
December 31
2022
|
Cash per consolidated
financial statements
|
$
13,256
|
$
7,531
|
Undrawn revolving
credit facility
|
43,000
|
23,000
|
Available Liquidity
(1)
|
$
56,256
|
$
30,531
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Table 5 - Reconciliation of AFFO and FFO to net income and
comprehensive income
(CAD $ thousands
except unit, per unit amounts and unless otherwise
stated)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Net income and
comprehensive income for the period
|
$
(149)
|
$
6,456
|
$
25,906
|
$
84,494
|
Add:
|
|
|
|
|
Long-term incentive
plan
|
503
|
281
|
(1,120)
|
(1,505)
|
Distributions - Class
B LP Units
|
153
|
157
|
619
|
634
|
Fair value adjustment
- investment properties
|
5,785
|
166
|
2,817
|
(52,541)
|
Fair value adjustment
- Class B LP Units
|
664
|
332
|
(1,638)
|
(1,179)
|
Fair value adjustment
- derivative financial instrument
|
540
|
–
|
(587)
|
–
|
Amortization of
intangible assets
|
61
|
93
|
309
|
372
|
FFO (1)
|
$
7,557
|
$
7,485
|
$
26,306
|
$
30,275
|
Deduct:
|
|
|
|
|
Straight-line rent
adjustment
|
$
(116)
|
$
(151)
|
$
(468)
|
$
(394)
|
Maintenance capital
expenditures
|
(130)
|
(191)
|
(615)
|
(984)
|
Stabilized leasing
costs
|
(801)
|
(425)
|
(2,564)
|
(1,650)
|
Add:
|
|
|
|
|
Long-term incentive
plan
|
614
|
761
|
2,804
|
2,196
|
Amortization of
financing costs
|
378
|
201
|
1,184
|
1,571
|
Accretion expense -
Convertible Debentures
|
93
|
–
|
217
|
–
|
Debt settlement
costs
|
–
|
7
|
126
|
281
|
Transaction
costs
|
–
|
–
|
199
|
–
|
CEO Succession plan
costs
|
–
|
–
|
2,240
|
–
|
AFFO (1)
|
$
7,595
|
$
7,687
|
$
29,429
|
$
31,295
|
Basic FFO per unit
(1)(2)
|
$
0.1247
|
$
0.1238
|
$
0.4347
|
$
0.5009
|
Diluted FFO per unit
(1)(2)
|
$
0.1232
|
$
0.1215
|
$
0.4285
|
$
0.4888
|
Basic AFFO per unit
(1)(2)
|
$
0.1253
|
$
0.1272
|
$
0.4863
|
$
0.5177
|
Diluted AFFO per
unit (1)(2)
|
$
0.1239
|
$
0.1247
|
$
0.4794
|
$
0.5053
|
Distributions
declared per Unit and Class B LP unit
|
$
0.1125
|
$
0.1125
|
$
0.4500
|
$
0.4500
|
AFFO Payout Ratio –
Basic (1)
|
89.8 %
|
88.5 %
|
92.5 %
|
86.9 %
|
AFFO Payout Ratio –
Diluted (1)
|
90.8 %
|
90.2 %
|
93.9 %
|
89.1 %
|
Basic weighted
average number of units (2)(3)
|
60,603,438
|
60,447,230
|
60,510,713
|
60,447,230
|
Diluted weighted
average number of units (2)(3)
|
61,316,451
|
61,625,646
|
61,385,565
|
61,932,299
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2)
|
FFO and AFFO per unit
is calculated as FFO or AFFO, as the case may be, divided by the
total of the weighted average number of basic or diluted units, as
applicable, added to the weighted average number of Class B LP
Units outstanding during the period.
|
(3)
|
Total basic units
consist of Units and Class B LP Units. Total diluted units also
includes deferred trust units and restricted trust units issued
under the REIT's long-term incentive plan.
|
Table 6 - Reconciliation of Adjusted EBITDA to net income and
comprehensive income
(CAD $
thousands)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Net income and
comprehensive income
|
$
(149)
|
$
6,456
|
$
25,906
|
$
84,494
|
Interest and financing
costs
|
5,841
|
5,182
|
22,425
|
20,541
|
Depreciation of
property and equipment
|
156
|
126
|
477
|
417
|
Amortization of
intangible assets
|
61
|
93
|
309
|
372
|
Fair value adjustment -
Class B LP Units
|
664
|
332
|
(1,638)
|
(1,179)
|
Fair value adjustment -
investment properties
|
5,785
|
166
|
2,817
|
(52,541)
|
Fair value adjustment -
derivative financial instrument
|
540
|
–
|
(587)
|
–
|
Distributions - Class B
LP Units
|
153
|
157
|
619
|
634
|
Straight-line
rent
|
(116)
|
(151)
|
(468)
|
(394)
|
Long-term incentive
plan expense
|
1,117
|
1,042
|
1,684
|
691
|
CEO succession plan
costs
|
–
|
–
|
2,240
|
–
|
Transaction
costs
|
–
|
–
|
126
|
–
|
Debt settlement
costs
|
–
|
7
|
199
|
281
|
Adjusted EBITDA
(1)
|
$
14,052
|
$
13,410
|
$
54,109
|
$
53,316
|
Annualized Adjusted
EBITDA (1)
|
$
56,208
|
$
53,640
|
$
54,109
|
$
53,316
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Table 7 - Calculation of Adjusted Debt to Annualized Adjusted
EBITDA Ratio
(CAD $
thousands)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Adjusted Debt
(1)
|
$ 520,735
|
$ 516,704
|
$ 520,735
|
$ 516,704
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
$
14,052
|
$
13,410
|
$
54,109
|
$
53,316
|
Annualized Adjusted
EBITDA (1)
|
$
56,208
|
$
53,640
|
$
54,109
|
$
53,316
|
Adjusted Debt to
Annualized Adjusted EBITDA Ratio (1)
|
9.3x
|
9.6x
|
9.6x
|
9.7x
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Table 8 - Calculation of the Interest Coverage Ratio
(CAD $
thousands)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Adjusted EBITDA
(1)
|
$
14,052
|
$
13,410
|
$
54,109
|
$
53,316
|
Interest
expense
|
$
5,683
|
$
5,045
|
$
21,609
|
$
19,051
|
Interest Coverage
Ratio (1)
|
2.5x
|
2.7x
|
2.5x
|
2.8x
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Table 9 - Calculation of the Debt Service Coverage
Ratio
(CAD $
thousands)
|
3
Months
Ended
December
31
2023
|
3 Months
Ended
December 31
2022
|
Year
Ended
December
31
2023
|
Year Ended
December 31
2022
|
Adjusted EBITDA
(1)
|
$
14,052
|
$ 13,410
|
$
54,109
|
$
53,316
|
Interest expense
|
5,683
|
5,045
|
21,609
|
19,051
|
Principal
repayments
|
3,335
|
3,307
|
13,259
|
13,814
|
Debt Service
Requirements
|
$
9,018
|
$ 8,352
|
$
34,868
|
$
32,865
|
Debt Service
Coverage Ratio (1)
|
1.6x
|
1.6x
|
1.6x
|
1.6x
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Table 10 - Calculation of Adjusted Debt
(CAD $
thousands)
|
December
31
2023
|
December 31
2022
|
Debt (non-current and
current portion) as reported in the financial statements
|
$ 515,257
|
$ 514,325
|
Reconciling
items:
|
|
|
Unamortized financing
costs
|
5,108
|
2,379
|
Accretion expense -
Convertible Debenture (2)
|
(217)
|
–
|
Fair value
adjustment - derivative financial instrument (2)
|
587
|
–
|
Adjusted Debt
(1)
|
$ 520,735
|
$ 516,704
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
(2)
|
For the years ended
December 31, 2023 and 2022.
|
Table 11 - Calculation of Gross Book Value and Adjusted Debt
to Gross Book Value
(CAD $ thousands
unless otherwise stated)
|
December
31
2023
|
December 31
2022
|
Total assets, including
investment properties stated at fair value
|
$
1,034,591
|
$ 1,035,928
|
Accumulated
depreciation on property and equipment and intangible
assets
|
3,201
|
3,054
|
Gross Book Value
(1)
|
1,037,792
|
1,038,982
|
|
|
|
Adjusted Debt
(1)
|
$
520,735
|
$
516,704
|
Adjusted Debt to
Gross Book Value (1)
|
50.2 %
|
49.7 %
|
(1)
|
Represents a non-IFRS
measure. See "Non-IFRS Measures".
|
Forward-Looking Statements
This press release contains forward-looking statements and
forward-looking information (collectively, "forward-looking
statements") within the meaning of applicable securities
legislation, including statements relating to certain expectations,
projections, growth plans and other information related to REIT's
business strategy and future plans. Forward-looking statements are
based on a number of assumptions and are subject to a number of
risks and uncertainties, many of which are beyond PROREIT's
control, that could cause actual results and events to differ
materially from those that are disclosed in or implied by such
forward-looking statements.
Forward-looking statements contained in this press release
include, without limitation, statements pertaining to the execution
by PROREIT of its growth strategy, the future financial and
operating performance of PROREIT, the medium-term goals of the
REIT, the expected stabilization of the market and the anticipated
reduction of interest rates. PROREIT's objectives and
forward-looking statements are based on certain assumptions,
including that (i) PROREIT will receive financing on
favourable terms; (ii) the future level of indebtedness of
PROREIT and its future growth potential will remain consistent with
the REIT's current expectations; (iii) there will be no
changes to tax laws adversely affecting PROREIT's financing
capacity or operations; (iv) the impact of the current
economic climate and the current global financial conditions on
PROREIT's operations, including its financing capacity and asset
value, will remain consistent with PROREIT's current expectations;
(v) the performance of PROREIT's investments in Canada will proceed on a basis consistent with
PROREIT's current expectations; and (vi) capital markets will
provide PROREIT with readily available access to equity and/or
debt.
The medium-term goals of the REIT disclosed under "Strategy" are
based on the REIT's current business plan and strategies and are
not intended to be a forecast of future results. The medium-term
goals contemplate the REIT's historical growth and certain
assumptions including but not limited to (i) current global
capital market conditions, (ii) access to capital,
(iii) interest rate exposure, (iv) availability of
high-quality industrial properties for acquisitions,
(v) dispositions of retail and office properties, and
(vi) capacity to finance acquisitions on an accretive
basis.
The forward-looking statements contained in this news release
are expressly qualified in their entirety by this cautionary
statement. All forward-looking statements in this press release are
made as of the date of this press release. PROREIT does not
undertake to update any such forward-looking information whether as
a result of new information, future events or otherwise, except as
required by law.
Additional information about these assumptions and risks and
uncertainties is contained under "Risk Factors" in PROREIT's latest
annual information form and "Risk and Uncertainties" in PROREIT's
management's discussion and analysis for the three and twelve month
periods ended December 31, 2023, which are available
under PROREIT's profile on SEDAR+ at www.sedarplus.ca.
SOURCE PROREIT