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WPT Industrial REIT Announces Second Quarter Results

/EINPresswire.com/ -- TORONTO, ON--(Marketwired - August 10, 2017) - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U) (OTCQX: WPTIF) announced today its results for the three and six months ended June 30, 2017. All dollar amounts are stated in US funds.

2017 HIGHLIGHTS:

  • Revenue, net operating income ("NOI"), funds from operations ("FFO") and adjusted funds from operations ("AFFO") were up 10.1%, 8.2%, 19.3% and 17.0% year-to-date, respectively, over the same period last year
  • Net income and comprehensive income, excluding all fair value adjustments, was up 22.1% year-to-date over the same period last year
  • Occupancy increased to 98.9% at June 30, 2017
  • 99.7% of leases set to expire through June 30, 2017, totaling approximately 2.2 million square feet, have been renewed or leased to new tenants
  • Completed successful equity offering in July raising $86.6 million gross proceeds to fund future growth
  • Acquired two investment properties totaling 903,154 sq. ft. in July and August 2017 for $96.3 million

"The REIT has generated solid operating and financial results throughout the year and our management team remains focused on tenant renewals and steady rent growth to build on our positive momentum. On the acquisition front, the REIT recently expanded into two new target markets, acquiring high-quality distribution properties in Portland, Oregon and Houston, Texas. These recent acquisitions underscore the REIT's commitment to enhancing the scale and diversity of our portfolio," commented Scott Frederiksen, Chief Executive Officer, "and the successful completion of our July equity offering, provides the REIT further flexibility and resources for continued growth and expansion."

SOLID OPERATING PERFORMANCE
For the three and six months ended June 30, 2017, investment properties revenue was $19.2 million and $38.7 million, respectively, compared to $17.6 million and $35.1 million, respectively, in the same periods last year. The increase in revenue is primarily due to the contribution from our Minneapolis and Columbus acquisitions completed in November 2016, an increase in base rent in existing properties and higher recoveries of operating expenses, partially offset by the sale of a non-core property in July 2016 and a tenant receivable write-off in the second quarter of 2017. Net income and comprehensive income for the three and six months ended June 30, 2017 was $18.5 million ($0.448 per trust unit of the REIT and class B partnership unit of WPT Industrial, LP) (trust units of the REIT and class B partnership units of WPT Industrial, LP are each referred to herein as a "Unit" and collectively as, "Units") and $37.5 million ($0.906 per Unit), respectively, compared to $4.1 million ($0.122 per Unit) and $28.9 million ($0.839 per Unit) in the same period last year. Excluding all fair value adjustments, net income and comprehensive income for the three and six months ended June 30, 2017 was $7.9 million and $16.1 million, respectively, compared to $7.0 million and $13.2 million, in the same periods last year.

NOI for the three and six months ended June 30, 2017 was $13.9 million and $28.2 million, respectively, compared to $13.0 million and $26.1 million in the same periods last year. Same property NOI, excluding a one-time tenant receivable write-off, was up 2.9% and 2.7% for the three and six months ended June 30, 2017 compared to the same periods last year.

AFFO for the three and six months ended June 30, 2017 was $7.8 million ($0.188 per Unit) and $16.3 million ($0.393 per Unit), respectively, compared to $7.1 million ($0.211 per Unit) and $13.9 million ($0.413 per Unit) in the same periods last year.

For the three months ended June 30, 2017, cash flow from operations and adjusted cash flow from operations ("ACFO") were $12.8 million and $8.5 million, respectively, compared to $12.1 million and $7.6 million in the same period last year. For the six months ended June 30, 2017, cash flow from operations and ACFO were $27.2 million and $17.5 million, respectively, compared to $23.8 million and $14.8 million in the same period last year. The REIT's ACFO payout ratio for the three and six months ended June 30, 2017 was 92.4% and 89.7%, respectively, compared to 84.8% and 86.9% in the same periods last year.

STRONG FINANCIAL & LIQUIDITY POSITION
As at June 30, 2017, the REIT's debt-to-gross-book-value ratio was 40.3% with an interest coverage ratio of 3.8 times, a debt-to-Adjusted EBITDA ("Adjusted EBITDA" is defined as earnings before fair value adjustments to investment properties, interest (inclusive of finance costs), taxes, depreciation and amortization) ratio of 7.1 times, and a fixed charge coverage ratio of 3.2 times, all consistent with or improved from last year. The weighted average effective interest rate on outstanding debt was 3.8% at June 30, 2017, consistent with the prior year. The weighted average term to maturity on the REIT's mortgages payable was 3.8 years as at June 30, 2017, with a weighted average remaining lease term of 4.0 years. As at June 30, 2017, in addition to cash on hand, the REIT had $70.0 million available to be drawn on its senior secured revolving credit facility (the "Revolving Facility").

RECENT EVENTS
On July 5, 2017, the REIT indirectly acquired from a third party, a 100% occupied investment property located in Portland, Oregon totaling 492,554 square feet for a purchase price of $56.0 million (exclusive of closing and transaction costs), representing a capitalization rate of 4.8%. The purchase price was satisfied with funds from the REIT's Revolving Facility.

On July 18, 2017, the REIT issued 6,735,500 trust units of the REIT (including trust units issued pursuant to the exercise in full of the over-allotment option granted to the underwriters by the REIT) at a price of $12.85 per REIT Unit to a syndicate of underwriters on a bought deal basis for net cash proceeds to the REIT of approximately $83.1 million (the "July 2017 Offering") (inclusive of underwriters' fees of approximately $3.5 million). The REIT used a portion of the funds from the July 2017 Offering to repay the outstanding balance on the Revolving Facility. In connection with the July 2017 Offering, Welsh Property Trust, LLC redeemed 3,110,888 class B partnership units in exchange for 3,110,888 trust units of the REIT and sold 3,115,000 trust units of the REIT as part of a secondary offering (the "Secondary Offering"). The REIT did not receive any funds from the Secondary Offering.

On August 3, 2017, the REIT indirectly acquired from a third party, an 86% occupied investment property located in Houston, Texas totaling 410,600 square feet for a purchase price of $40.3 million (exclusive of closing and transaction costs), representing a stabilized capitalization rate of 5.6%. The purchase price was satisfied with cash on hand and funds from the Revolving Facility.

On August 7, 2017, the REIT sold the investment property located at 8085 Rivers Avenue, North Charleston, South Carolina to a third-party purchaser for net cash proceeds of $14.4 million.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

(all figures in thousands of US dollars, except per Unit amounts, ratios, percentages, number of investment properties, amounts related to remaining lease term and GLA)

  Three months ended June 30,  Six months ended June 30,
  2017   2016   2017   2016
Operating Results:                
  Investment properties revenue $ 19,174 $ 17,550 $ 38,668 $ 35,114
  NOI (1) $ 13,919 $ 13,046 $ 28,216 $ 26,075
  Net income and comprehensive income $ 18,539 $ 4,107 $ 37,474 $ 28,297
  Net income and comprehensive income per Unit (basic) (2) (3) $ 0.448 $ 0.122 $ 0.906 $ 0.839
  Net income and comprehensive income per Unit (diluted) (2) (4) $ 0.439 $ 0.120 $ 0.889 $ 0.830
  FFO (1) (5) $ 9,456 $ 8,470 $ 19,263 $ 16,153
  FFO per Unit (basic) (1) (2) (3) (5) $ 0.228 $ 0.251 $ 0.465 $ 0.479
  FFO per Unit (diluted) (1) (2) (4) (5) $ 0.224 $ 0.248 $ 0.457 $ 0.474
  AFFO (1) (5) $ 7,788 $ 7,109 $ 16,278 $ 13,917
  AFFO per Unit (basic) (1) (2) (3) (5) $ 0.188 $ 0.211 $ 0.393 $ 0.413
  AFFO per Unit (diluted) (1) (2) (4) (5) $ 0.184 $ 0.208 $ 0.386 $ 0.408
  Cash flows from operations $ 12,816 $ 12,075 $ 27,245 $ 23,764
  ACFO (1) $ 8,514 $ 7,563 $ 17,523 $ 14,751
Distributions:                
  Distributions per Unit (2) (6) $ 0.190 $ 0.190 $ 0.380 $ 0.380
  Distributions declared (3) (3) $ 7,864 $ 6,411 $ 15,720 $ 12,820
  ACFO payout ratio (1) (6)   92.4%   84.8%   89.7%   86.9%
  Weighted average number of Units (basic) (2) (3)   41,393   33,756   41,384   33,752
  Weighted average number of Units (diluted) (2) (4)   42,216   34,194   42,137   34,082
         
As at   June 30, 2017   December 31, 2016
Operational Information:        
  Number of investment properties   49   49
  GLA   15,632,184   15,632,184
  Occupancy   98.9%   98.7%
  Average remaining lease term (years)   4.0   4.1
  Fair value of investment properties $ 844,436 $ 806,431
Ratios:        
  Weighted average effective interest rate (7)   3.8%   3.8%
  Variable interest rate debt as percentage of total debt (8)   7.3%   5.9%
  Debt-to-gross book value (1)   40.3%   41.8%
  Interest coverage ratio(1)   3.8x   3.5x
  Fixed charge coverage ratio(1)   3.2x   3.0x
  Debt to Adjusted EBITDA (1)   7.1x   7.5x
(1)  NOI, FFO, AFFO, ACFO, FFO per Unit (basic and diluted), AFFO per Unit (basic and diluted), ACFO payout ratio, Adjusted EBITDA, debt-to-gross book value, interest coverage ratio, fixed charge coverage ratio and debt to Adjusted EBITDA are key measures of performance used by real estate operating companies, however, they are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or issuers. This data should be read in conjunction with the "Non-IFRS Measures" section of the REIT's MD&A.
(2)  Includes REIT Units and Class B Units (collectively, the "Units").
(3)  Excludes all options and DTUs outstanding under the REIT's equity compensation plans.
(4)  Includes all options and DTUs outstanding under the REIT's equity compensation plans.
(5)  FFO, AFFO, FFO per Unit (basic and diluted) and AFFO per Unit (basic and diluted) for all periods presented has been adjusted to align with the definition presented by REALPAC. Refer to page 1 of the REIT's interim MD&A for the period ending March 31, 2017 for a description of the changes.
(6)  Includes distributions on Units.
(7)  Includes mortgages payable, a construction loan, the Revolving Facility, mark-to-market adjustments and financing costs.
(8)  Includes amounts outstanding under the Revolving Facility and a construction loan.

INVESTOR CONFERENCE CALL

A conference call will be hosted by the REIT's management team on Friday, August 11, 2017 at 8:30 am ET. The telephone numbers to participate in the conference call are Canada Toll Free: (855) 669-9657, U.S. Toll Free (888) 249-8268 and International: (412) 902-4153. The live audio conference call will also be available as a webcast. To access the live audio webcast please access the link on the "Investors" page on our web site at www.wptreit.com. The telephone numbers to listen to the call after it is completed (Instant Replay) are Canada Toll Free (855) 669-9658, U.S. Toll Free (877) 344-7529 and International (412) 317-0088. The Passcode for the Instant Replay is 10109654#. A recording of the call will also be archived on the REIT's web site at www.wptreit.com.

About WPT Industrial Real Estate Investment Trust

WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT was formed for the purpose of acquiring and owning primarily industrial investment properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 16.4 million square feet of gross leasable area, comprised of 49 industrial properties and one office properties located in 13 states in the United States. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.

Forward-Looking Statements

This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "projects", "believes" or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include the various assumptions set forth herein, including, but not limited to, the REIT's and the property's future growth potential, anticipated amounts of expenses, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.

When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed or referenced under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2016, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

For more information, please contact:
Scott Frederiksen
Chief Executive Officer

WPT Industrial Real Estate Investment Trust
Tel: (612) 800-8501
Fax: (612) 800-8535

Distribution channels: Real Estate & Property Management