(All amounts are expressed in U.S. dollars unless otherwise stated)
Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN) (the "REIT"), an owner of
U.S. grocery-anchored real estate, today announced its financial results
for the three and six months ended June 30, 2016. Senior management will
host a conference call at 9:00 a.m. EST on Thursday, August 11, 2016 to
discuss the results and ongoing business initiatives of the REIT.
During the quarter, the REIT continued to execute on its strategy of
identifying undervalued and overlooked real estate. In addition, the
REIT monetized fully valued assets redeploying that capital into assets
that offer further upside. Remarking on the achievements of the past
quarter Greg Stevenson, the REIT’s Chief Executive Officer, wrote in a
letter to unitholders:
“Our focus on non-discretionary, e-commerce resistant revenue sources
that are diversified by both geography and business type will continue
and our pipeline of opportunities today is as big as it has ever been.”
Read the full letter to unitholders here.
Quarterly Highlights
-
Completed leasing transactions totaling 255,623 square feet,
consisting of 51,968 square feet of new leases, and 203,655 square
feet of renewals. Lease renewals included the early renewal of two
grocery-anchors originally set to expire in 2017, Publix at North
Pointe Shopping Centre and Weis Markets at Mitchellville Plaza, each
for an additional five-year term.
-
Funds from operations (“FFO”) per unit was $0.35, a $0.01 increase
compared to the previous quarter and a $0.04 per unit increase
compared to the second quarter of 2015.
-
Adjusted funds from operations (“AFFO”) per unit was $0.29, a $0.05
increase compared to the previous quarter and a $0.01 per unit
increase compared to the second quarter of 2015.
-
The REIT achieved an occupancy rate of 95.0%.
-
The REIT acquired three properties for a total of $30.5 million,
totaling 306,838 square feet ($99 per square foot) at a weighted
average 7.3% capitalization rate.
-
The REIT disposed of Ocean Plaza, a grocery-anchored shopping centre
in South Carolina, for $6.5 million ($98 per square foot) at an
estimated 6.6% capitalization rate.
-
Subsequent to the end of the quarter, on July 20, 2016, the REIT
completed the disposition of five Food Lion anchored assets totaling
227,529 square feet, for gross proceeds of $21.9 million ($96 per
square foot) at an estimated weighted average capitalization rate of
7.7%. The sales occurred above the REIT's March 31, 2016 IFRS estimate
of fair value.
-
Began work on multi-year redevelopments of North Augusta and Hocking
Valley. Each of these redevelopments provide the opportunity for the
REIT to dramatically change the footprint and appearance of the
assets, with strong anchor tenants operating improved formats under
long term leases and growing cash flows.
Commenting on the REIT’s acquisition and disposition activity, Greg
Stevenson, the REIT’s Chief Executive Officer, said, “These asset sales
exemplify the REIT's strategy to purchase well located properties that
can be enhanced through leasing, extending term and proactive asset
management to increase cash flow and as a result value. We expect to
recycle proceeds from these sales into new asset acquisitions on a tax
deferred basis in the short-term.”
Summary of Q2 2016 Results
|
Three months ended June 30,
|
|
|
|
(Thousands of U.S. dollars except, per unit amounts)
|
2016
|
|
2015
|
|
|
Change %
|
|
Rental revenue
|
|
$
|
24,088
|
|
|
$
|
17,913
|
|
|
34.5%
|
|
Net operating income
|
|
$
|
17,438
|
|
|
$
|
12,902
|
|
|
35.2%
|
|
|
|
|
|
|
|
|
|
|
|
Leasing - shop space
|
|
78,035
|
|
|
100,148
|
|
|
(22.1)%
|
|
Leasing - anchor
|
|
177,588
|
|
|
101,069
|
|
|
75.7%
|
|
Total leasing activity (square feet)
|
|
255,623
|
|
|
201,217
|
|
|
27.0%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of units outstanding ("WA units")
|
|
34,627
|
|
|
27,732
|
|
|
24.9%
|
|
FFO
|
|
$
|
11,998
|
|
|
$
|
8,518
|
|
|
40.9%
|
|
FFO per WA units
|
|
$
|
0.35
|
|
|
$
|
0.31
|
|
|
12.9%
|
|
AFFO
|
|
$
|
10,152
|
|
|
$
|
7,712
|
|
|
31.6%
|
|
AFFO per WA units
|
|
$
|
0.29
|
|
|
$
|
0.28
|
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
(Thousands of U.S. dollars)
|
|
2016
|
|
|
2015
|
|
|
Change %
|
|
Total assets
|
|
$
|
1,072,823
|
|
|
$
|
1,013,481
|
|
|
5.9%
|
|
Total debt
|
|
$
|
586,134
|
|
|
$
|
577,280
|
|
|
1.5%
|
|
Portfolio occupancy
|
|
95.0%
|
|
|
94.7%
|
|
|
0.3%
|
|
FFO payout ratio
|
|
57.5%
|
|
|
57.8%
|
|
|
(0.5)%
|
|
AFFO payout ratio
|
|
67.9%
|
|
|
70.4%
|
|
|
(3.6)%
|
|
Debt / GBV ratio
|
|
55.0%
|
|
|
57.5%
|
|
|
(4.3)%
|
|
Interest coverage ratio
|
|
3.57x
|
|
|
3.19x
|
|
|
11.9%
|
Distributions and Payout Ratio
The REIT's monthly distribution to unitholders is $0.06489 per class U
unit, or $0.77868 per class U unit on an annualized basis. Distributions
were $6.9 million for the three month period ended June 30, 2016.
The AFFO payout ratio was 67.9% for the three month period ended June
30, 2016, compared to an AFFO payout ratio of 67.8% for the same period
in the prior year. Management continues to target a 70% AFFO payout
ratio.
Conference Call and Webcast
Senior management will host a live conference call at 9:00 a.m. ET on
Thursday, August 11, 2016 to discuss the results and ongoing business
initiatives.
The conference call can be accessed by dialing (647) 788-4919 or 1 (877)
291-4570. Additionally, the conference call will be available via
simultaneous audio found at http://www.gowebcasting.com/7698.
A replay will be accessible until August 25, 2016 via the REIT's website
or by dialing (416) 621-4642 or 1 (800) 585-8367 (access code 41601696)
approximately two hours after the live event.
About Slate Retail REIT (TSX: SRT.U) (TSX: SRT.UN)
Slate Retail REIT is a real estate investment trust focused on U.S.
grocery-anchored real estate. The REIT owns and operates over U.S. $1
billion of assets located primarily across the top 50 U.S. metro
markets. The REIT is focused on maximizing value through internal
organic rental growth and strategic acquisitions. Visit slateam.com/SRT
to learn more about the REIT.
About Slate Asset Management L.P.
Slate Asset Management L.P. is a leading real estate investment platform
with over $3 billion in assets under management. Slate is a
value-oriented company and a significant sponsor of all its private and
publicly-traded investment vehicles, which are tailored to the unique
goals and objectives of its investors. The firm's careful and selective
investment approach creates long term value with an emphasis on capital
preservation and outsized returns. Slate is supported by exceptional
people, flexible capital and a proven ability to originate and execute
on a wide range of compelling investment opportunities. Visit
slateam.com to learn more about Slate Asset Management L.P.
Supplemental Information
All interested parties can access Slate Retail’s Supplemental
Information online at slateam.com/SRT in the Investors section. These
materials are also available on SEDAR or upon request to the REIT at info@slateam.com or
(416) 644-4264.
Forward-Looking Statements
Certain statements herein may be forward-looking statements within the
meaning of applicable securities laws. These statements reflect
management’s expectations regarding objectives, plans, goals,
strategies, future growth, results of operations, performance and
business prospects and opportunities of the REIT including expectations
for the current financial year, and include, but are not limited to,
statements with respect to management’s beliefs, plans, estimates and
intentions, and similar statements concerning anticipated future events,
results, circumstances, performance or expectations that are not
historical facts. Statements that contain words such as “could”,
“should”, “would”, “anticipate”, “expect”, “believe”, “plan”, “intend”,
“will”, “may”, “might” and similar expressions or statements relating to
matters that are not historical facts constitute forward-looking
statements.
These forward-looking statements are not guarantees of future events or
performance and, by their nature, are based on the REIT’s current
estimates and assumptions, which are subject to significant risks and
uncertainties. Forward-looking statements contained herein are made as
the date hereof and accordingly are subject to change after such date.
The REIT does not undertake to update any forward-looking statements
that are contained herein except as expressly required by applicable
securities laws.
Non-IFRS Financial Measures
We disclose a number of financial measures in this news release that are
not measures used under IFRS, including net operating income, same
property net operating income, funds from operations, adjusted funds
from operations, AFFO payout ratio, adjusted EBITDA and the interest
coverage ratio, in addition to certain measures on a per unit basis. We
utilize these measures for a variety of reasons, including measuring
performance, managing the business, capital allocation and the
assessment of risk. Descriptions of why these non-IFRS measures are
useful to investors and how management uses each measure are included in
Management’s Discussion and Analysis. We believe that providing these
performance measures on a supplemental basis to our IFRS results is
helpful to investors in assessing the overall performance of our
businesses in a manner similar to management. These financial measures
should not be considered as a substitute for similar financial measures
calculated in accordance with IFRS. We caution readers that these
non-IFRS financial measures may differ from the calculations disclosed
by other businesses, and as a result, may not be comparable to similar
measures presented by others. Reconciliations of these non-IFRS measures
to the most directly comparable financial measures calculated and
presented in accordance with IFRS are included within this news release.
For Further Information
Investor Relations
Slate Asset Management L.P.
+1 (416) 644-4264
ir@slateam.com