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.
2012 HIGHLIGHTS:
- 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
SUBSEQUENT EVENTS:
- 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."
FINANCIAL RESULTS:
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.
SUBSEQUENT EVENTS:
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
$0.4896 on an annual basis resulting
in an AFFO payout ratio of between 90% and 95%. The first cash
distribution will be paid on April 15,
2013 to unitholders of record on March 29, 2013.
On March 15, 2012
the REIT also announced that it had implemented the DRIP whereby
registered or beneficial holders of units of the REIT who are
resident in Canada can
cost-effectively acquire additional units by reinvesting all or a
portion of their monthly cash distributions without paying
brokerage commissions. In addition, unitholders who elect to
participate in the DRIP will receive a further distribution of
units equal to 5% reinvested.
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FINANCIAL HIGHLIGHTS: |
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For the year ended December 31
($,000 except per Unit amounts) |
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2012 |
2011 |
Number of properties |
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10 |
20 |
Revenue from income properties |
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2,497 |
3,388 |
Property operating expenses |
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517 |
39 |
Net Operating income |
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1,980 |
3,349 |
Interest expense |
|
|
705 |
1,739 |
Gain on real estate transactions |
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157 |
- |
Fair value adjustment to investment
properties |
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7,661 |
20 |
Net income |
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8,567 |
1,413 |
Net income per Unit |
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$0.311 |
$0.182 |
FFO / AFFO |
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906 |
1,393 |
FFO / AFFO per Unit - Basic |
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$0.033 |
$0.179 |
Weighted Average Units Outstanding |
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27,533 |
7,769 |
Leverage |
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47.0% |
51.5% |
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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