Highlights
EDMONTON, Alberta, May 03, 2018 (GLOBE NEWSWIRE) -- Melcor REIT (TSX:MR.UN) today announced results for the first quarter ended March 31, 2018. Rental revenue grew 6% over the prior year as a result of portfolio growth over the same period. Net operating income also grew by 3% to $11.08 million. AFFO was down 7% due to the timing and non-cash costs related to the Melcor Acquisition.
Andrew Melton, President & CEO of Melcor REIT commented: "It is my pleasure to report on the first quarter of 2018 as we celebrate our fifth anniversary. With our fourth vend-in from the Melcor Developments pipeline completed early in the quarter, we both grew and strengthened our portfolio, contributing to steady occupancy and growth in average rents in spite of continued challenges in some of our markets. We also continue to find creative ways to overcome challenging markets by adjusting for and capitalizing on market trends across all asset classes.
With a solid financial position, we remain well-positioned to continue to achieve steady results and to capitalize on growth opportunities."
Q1-2018 Highlights:
Our portfolio grew 6% in the first quarter through the closing of the Melcor Acquisition, the fourth acquisition under our right of first offer with Melcor. The Melcor Acquisition was comprised of 172,629 sf (owned GLA) of recently constructed, high-quality retail and industrial properties which improved both the mix and overall quality of our assets. Growth across key indicators was tempered by a decline in same-asset performance in the first quarter; particularly in our Edmonton office assets where market fundamentals remain challenging. Our proactive engagement on renewing existing tenants and pursuing new tenants resulted in a healthy retention rate of 67.1% at quarter end and overall occupancy of 90.5%. The stability and diversity of our portfolio with respect to both tenant profile and asset class enable the REIT to continue navigating through economic cycles. We are focused on the real estate fundamentals of asset enhancement and property management while conservatively managing our debt.
Highlights of our performance in the first quarter include:
| Financial Highlights | ||||||||
| Three months ended March 31 | ||||||||
| ($000s) | 2018 | 2017 | Δ% | |||||
| Non-Standard KPIs | ||||||||
| Net operating income (NOI) | 11,075 | 10,737 | 3 | % | ||||
| Funds from operations (FFO) | 6,702 | 6,815 | (2 | )% | ||||
| Adjusted funds from operations (AFFO)(5) | 4,893 | 5,250 | (7 | )% | ||||
| Adjusted Cash Flow from Operations (ACFO) | 4,837 | 5,193 | (7 | )% | ||||
| Rental revenue | 18,017 | 17,000 | 6 | % | ||||
| Income before fair value adjustments | 3,420 | 3,580 | (4 | )% | ||||
| Fair value adjustment on investment properties(6) | (1 | ) | (16,459 | ) | nm | |||
| Distributions to unitholders | 2,225 | 1,882 | 18 | % | ||||
| Cash flows from operations | 3,697 | 2,827 | 31 | % | ||||
| Same-asset NOI | 9,766 | 10,333 | (5 | )% | ||||
| Per unit metrics | ||||||||
| Income (loss) - diluted | $0.21 | ($1.21 | ) | |||||
| FFO | $0.24 | $0.26 | ||||||
| AFFO(5) | $0.18 | $0.20 | ||||||
| Distributions | $0.17 | $0.17 | ||||||
| Payout ratio | 96 | % | 83 | % | ||||
| 31-Mar-18 | 31-Dec-17 | Δ% | ||||||
| Total assets ($000s) | 723,854 | 676,237 | 7 | % | ||||
| Equity ($000s)(1) | 280,314 | 260,600 | 8 | % | ||||
| Debt ($000s)(2) | 396,680 | 353,340 | 12 | % | ||||
| Weighted average interest rate on debt | 3.69 | % | 3.75 | % | (2 | %) | ||
| Debt to GBV, excluding convertible debentures (maximum threshold - 60%) | 48 | % | 47 | % | 2 | % | ||
| Finance costs coverage ratio(3) | 2.66 | 2.93 | (9 | )% | ||||
| Debt service coverage ratio(4) | 2.38 | 2.60 | (8 | )% | ||||
| Operational Highlights | ||||||||||
| 31-Mar-18 | 31-Dec-17 | Δ% | ||||||||
| Number of properties | 37 | 37 | — | % | ||||||
| Gross leasable area (GLA) (sf) | 2,861,546 | 2,710,862 | 6 | % | ||||||
| Occupancy (weighted by GLA) | 90.5 | % | 91.8 | % | (1 | %) | ||||
| Retention (weighted by GLA) | 67.1 | % | 80.6 | % | (17 | %) | ||||
| Weighted average remaining lease term (years) | 5.06 | 4.66 | 9 | % | ||||||
| Weighted average base rent (per sf) | $ | 16.78 | $ | 15.88 | 6 | % | ||||
MD&A and Financial Statements
Information included in this press release is a summary of results. This press release should be read in conjunction with the REIT's Q1-2018 quarterly report to unitholders. The REIT’s consolidated financial statements and management’s discussion and analysis for the three-months ended March 31, 2018 can be found on the REIT’s website at www.MelcorREIT.ca or on SEDAR (www.sedar.com).
Conference Call & Webcast
Unitholders and interested parties are invited to join management on a conference call to be held Friday, May 4, 2018 at 11:00 AM ET (9:00 AM MT). Call 416-340-8527 in the Toronto area; 1-800-355-4959 toll free.
The call will also be webcast (listen only) at http://www.gowebcasting.com/9243. A replay of the call will be available at the same URL shortly after the call is concluded.
Annual General Meeting & Webcast
Unitholders and interested parties are invited to join us at our Annual General Meeting on Thursday, May 10, 2018 at 10:00 AM MT. The AGM will also be webcast (listen only) at http://www.gowebcasting.com/9248.
About Melcor REIT
Melcor REIT is an unincorporated, open-ended real estate investment trust. Melcor REIT owns, acquires, manages and leases quality retail, office and industrial income-generating properties in western Canadian markets. Its portfolio is currently made up of interests in 36 properties representing approximately 2.83 million square feet of gross leasable area located across Alberta and in Regina, Saskatchewan; and Kelowna, British Columbia. For more information, please visit www.MelcorREIT.ca.
Non-standard Measures
NOI, FFO, AFFO and ACFO 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. These non-IFRS measures are defined and discussed in the REIT’s MD&A for the quarter ended March 31, 2018, which is available on SEDAR at www.sedar.com.
Forward-looking Statements:
This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events. 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 the REIT's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, general and local economic and business conditions; the financial condition of tenants; the REIT’s ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. The REIT’s 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. The 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 the REIT’s filings with securities regulators.
Contact Information: Nicole Forsythe Director, Corporate Communications Tel: 1.855.673.6931