Automotive Properties REIT Reports 2023 Fourth Quarter and Year-End Results
"We continued to generate strong financial performance with growth in rental revenue, Cash NOI, same property Cash NOI and AFFO per Unit for both the fourth quarter and full year," said
- The REIT generated AFFO per Unit1 of
$0.230 (diluted) and paid total cash distributions of$0.201 per Unit (as defined below) in Q4 2023, representing an AFFO payout ratio1 of approximately 87.4%. For the comparable three-month period endedDecember 31, 2022 ("Q4 2022"), the REIT generated AFFO per Unit of$0.213 (diluted) and paid cash distributions of$0.201 per Unit, representing an AFFO payout ratio of approximately 94.4%. - The REIT had a Debt to Gross Book Value ("Debt to GBV")2 ratio of 45.0% as at
December 31, 2023 , and$57.2 million of undrawn capacity under its revolving credit facilities,$0.3 million of cash on hand, and five unencumbered properties with an aggregate value of approximately$70.6 million . - The REIT's valuation of its investment properties decreased nominally in Q4 2023 compared to the prior quarter to reflect current market conditions, resulting in a fair value loss of
$0.8 million . The capitalization rate applicable to the REIT's entire portfolio increased to 6.59% as atDecember 31, 2023 , compared to 6.56% as atSeptember 30, 2023 and 6.42% as atDecember 31, 2022 .
______________________________ |
1 AFFO per Unit and AFFO payout ratio are non-IFRS measures and non-IFRS ratios, respectively. See "Non-IFRS Financial Measures" at the end of this news release. |
2 Debt to GBV is a supplementary financial measure. See "Non-IFRS Financial Measures" at the end of this news release. |
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Three months ended |
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12 months ended |
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($000s, except per Unit amounts) |
2023 |
2022 |
Change |
2023 |
2022 |
Change |
Rental revenue (1) |
|
|
11.4 % |
|
|
11.6 % |
NOI (2) |
19,741 |
17,629 |
12.0 % |
78,413 |
70,575 |
11.1 % |
Cash NOI (2) |
19,317 |
17,263 |
11.9 % |
76,372 |
68,533 |
11.4 % |
Same Property Cash NOI (1) (2) |
17,279 |
16,866 |
2.4 % |
67,568 |
65,962 |
2.4 % |
Net (Loss) Income (3) |
(15,199) |
13,588 |
N/A |
50,991 |
83,365 |
-38.8 % |
FFO (2) |
11,939 |
11,008 |
8.5 % |
48,010 |
46,748 |
2.7 % |
AFFO (2) |
11,532 |
10,641 |
8.4 % |
45,930 |
44,707 |
2.7 % |
Distributions per Unit |
|
|
- |
|
|
- |
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|
|
|
|
|
|
FFO per Unit - basic (2) (4) |
0.243 |
0.224 |
0.019 |
0.979 |
0.953 |
0.026 |
FFO per Unit - diluted (2) (5) |
0.238 |
0.221 |
0.017 |
0.959 |
0.939 |
0.020 |
|
|
|
|
|
|
|
AFFO per Unit - basic (2) (4) |
0.235 |
0.217 |
0.018 |
0.936 |
0.912 |
0.024 |
AFFO per Unit - diluted (2) (5) |
0.230 |
0.213 |
0.017 |
0.918 |
0.898 |
0.020 |
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Ratios (%) |
|
|
|
|
|
|
FFO payout ratio (2) |
84.5 % |
91.0 % |
6.5 % |
83.8 % |
85.6 % |
1.8 % |
AFFO payout ratio (2) |
87.4 % |
94.4 % |
7.0 % |
87.6 % |
89.5 % |
1.9 % |
Debt to GBV (6) |
45.0 % |
40.0 % |
-5.0 % |
45.0 % |
40.0 % |
-5.0 % |
(1) |
Rental revenue is based on rents from leases entered into with tenants, all of which are triple-net leases and include recoverable realty taxes and straight-line adjustments. Same Property Cash NOI is based on rental revenue for the same asset base having consistent gross leasable area in both periods. |
(2) |
NOI, Cash NOI, Same Property Cash NOI, FFO, AFFO, FFO per Unit, AFFO per Unit, FFO payout ratio and AFFO payout ratio are non-IFRS measures or non-IFRS ratios, as applicable. See "Non-IFRS Financial Measures" at the end of this news release. References to "Same Property" correspond to properties that the REIT owned in Q4 2022, thus removing the impact of acquisitions. |
(3) |
Net income for Q4 2023 includes changes in fair value adjustments of |
(4) |
FFO per Unit and AFFO per Unit – basic is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding trust units of the REIT ("REIT Units" and together with the Class B LP Units, "Units") and Class B LP Units. The total weighted average number of Units outstanding – basic for Q4 2023 was 49,054,833. |
(5) |
FFO per Unit and AFFO per Unit – diluted is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding Units, DUs, IDUs, PDUs and RDUs granted to independent trustees and management of the REIT. The total weighted average number of Units outstanding (including Class B LP Units, DUs, IDUs, PDUs and RDUs) on a fully diluted basis for Q4 2023 was 50,082,627. |
(6) |
Debt to GBV is a supplementary financial measure. See "Non-IFRS Financial Measures" at the end of this news release. |
Rental revenue was
The REIT generated total Cash NOI of
The REIT recorded a net loss of
FFO was
AFFO was
Adjusted Cash Flow from Operations ("ACFO")3 for 2023 was
_______________________________ |
3 ACFO is a non-IFRS measure. See "Non-IFRS Financial Measures" at the end of this news release. |
The REIT is currently paying monthly cash distributions of
For 2023, the REIT declared and paid total distributions of
As at
As at
As at
The REIT is subject to risks associated with inflation, interest rates and availability of capital. The REIT anticipates that elevated interest rates and inflation may have an adverse effect on consumer demand and the overall economy. The fluctuation in the interest rate environment, inflation and credit environment impacts rental growth and capitalization rates overall in the real estate industry which, in turn, could provide attractive buying opportunities for the REIT.
The Canadian automotive dealership industry remains highly fragmented, and the REIT expects continued consolidation over the mid to long term due to increased industry sophistication and growing capital requirements for owner operators, which encourages them to pursue increased economies of scale.
The REIT's audited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for the year ended
Management of the REIT will host a conference call for analysts and investors on
To access a replay of the conference call, dial (416) 764-8677 or (888) 390-0541, passcode: 647702 #. The replay will be available until
Automotive Properties REIT is an internally managed, unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT's portfolio currently consists of 77 income-producing commercial properties, representing approximately 2.9 million square feet of gross leasable area, in metropolitan markets across British Columbia,
This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expected". Forward-looking information includes the REIT's expectations with respect to inflation and interest rates, including the impact of each of the foregoing on the REIT and its tenants; and the expected timing of the closing of the Brossard Property acquisition. 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, the factors discussed under "Risks & Uncertainties, Critical Judgments & Estimates" in the REIT's MD&A for the year ended
This news release contains certain financial measures and ratios which are not defined under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other real estate investment trusts or enterprises. FFO, AFFO, FFO payout ratio, AFFO payout ratio, NOI, Cash NOI, Same Property Cash NOI and ACFO are key measures of performance used by the REIT's management and real estate businesses. Debt to GBV, a supplementary financial measure, is a measure of financial position defined by the REIT's declaration of trust. These measures, as well as any associated "per Unit" amounts, are not defined by IFRS and do not have standardized meanings prescribed by IFRS, and therefore should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. The REIT believes that AFFO is an important measure of economic earnings performance and is indicative of the REIT's ability to pay distributions from earnings, while FFO, NOI, Cash NOI and Same Property Cash NOI are important measures of operating performance of real estate businesses and properties. The IFRS measurement most directly comparable to FFO, AFFO, NOI, Cash NOI and Same Property Cash NOI is net income. ACFO is a supplementary measure used by management to improve the understanding of the operating cash flow of the REIT. The IFRS measurement most directly comparable to ACFO is cash flow from operating activities. For reconciliations of NOI, FFO, AFFO and Cash NOI to net income and comprehensive income, and ACFO to cash flow from operating activities, please see the tables below. For further information regarding these non-IFRS measures and supplementary financial measures, please refer to Section 1 "General Information and Cautionary Statements – Non-IFRS Financial Measures" and Section 6 "Non-IFRS Financial Measures" in the REIT's MD&A for the year ended
Reconciliation of NOI, Cash NOI, FFO and AFFO to Net (Loss) Income and Comprehensive Income
|
Three Months Ended |
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12 Months Ended |
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($000s, except per Unit amounts) |
2023 |
2022 |
Variance |
2023 |
2022 |
Variance |
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Calculation of NOI |
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Property revenue |
|
|
|
|
|
|
||
Property costs |
(3550) |
(3,272) |
(278) |
(14,071) |
(12,286) |
(1,785) |
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NOI (including straight–line adjustments) |
|
|
|
|
|
|
||
Adjustments: |
|
|
|
|
|
|
||
Land lease payments |
(115) |
(86) |
(29) |
(345) |
(345) |
- |
||
Straight–line adjustment |
(309) |
(280) |
(29) |
(1,696) |
(1,697) |
1 |
||
Cash NOI |
|
|
|
|
|
|
||
Reconciliation of net income to FFO and AFFO |
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|
|
|
|
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Net (loss) income and comprehensive income |
( |
|
( |
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Adjustments: |
|
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|
|
|
|
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Change in fair value — Interest rate swaps |
20,972 |
180 |
20,792 |
7,739 |
(25,999) |
33,738 |
||
Distributions on Class B LP Units |
1,875 |
1,875 |
- |
7,499 |
7,621 |
(122) |
||
Change in fair value – Class B LP Units and Unit-based |
3,565 |
(2,804) |
6,369 |
(22,163) |
(20,215) |
(1,948) |
||
Change in fair value — investment properties |
768 |
(1,791) |
2,559 |
4,113 |
2,285 |
1,828 |
||
ROU asset net balance of depreciation/interest and lease |
(42) |
(40) |
(2) |
(169) |
(309) |
140 |
||
FFO |
|
|
|
|
|
|
||
Adjustments: |
|
|
|
|
|
|
||
Straight–line adjustment |
(309) |
(280) |
(29) |
(1,696) |
(1,697) |
1 |
||
Capital expenditure reserve |
(98) |
(87) |
(11) |
(384) |
(344) |
(40) |
||
AFFO |
|
|
|
|
|
|
||
Number of Units outstanding (including Class B LP Units) |
49,054,833 |
49,054,833 |
- |
49,054,833 |
49,054,833 |
- |
||
Weighted average Units Outstanding — basic |
49,054,833 |
49,054,833 |
- |
49,054,833 |
49,035,475 |
19,358 |
||
Weighted average Units Outstanding — diluted |
50,082,627 |
49,847,669 |
234,958 |
50,049,275 |
49,802,602 |
246,673 |
||
FFO per Unit – basic(2) |
|
|
|
|
|
|
||
FFO per Unit – diluted(3) |
|
|
|
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|
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||
AFFO per Unit – basic(2) |
|
|
|
|
|
|
||
AFFO per Unit – diluted(3) |
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|
|
|
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Distributions per Unit |
|
|
— |
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|
— |
||
FFO payout ratio |
84.5 % |
91.0 % |
6.5 % |
83.8 % |
85.6 % |
1.8 % |
||
AFFO payout ratio |
87.4 % |
94.4 % |
7.0 % |
87.6 % |
89.5 % |
1.9 % |
Same Property Cash Net Operating Income
|
Three Months Ended |
|
12 Months Ended
|
|
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($000s) |
2023 |
2022 |
Variance |
2023 |
2022 |
Variance |
||
Same property base rental revenue |
|
|
|
|
|
|
||
Land lease payments |
(86) |
(86) |
— |
(345) |
(345) |
— |
||
Same Property Cash NOI |
|
|
|
|
|
|
Reconciliation of Cash Flow from Operating Activities to ACFO
|
12 Months Ended |
|
|
($000s) |
2023 |
2022 |
Variance |
Cash flow from operating activities |
|
|
|
Change in non-cash working capital |
129 |
618 |
(489) |
Interest paid |
(23,569) |
(16,919) |
(6,650) |
Amortization of financing fees |
(932) |
(784) |
(148) |
Amortization of indemnification fees |
(262) |
(696) |
434 |
Net interest expense and other financing charges |
25 |
(254) |
279 |
Capital expenditure reserve |
(384) |
(344) |
(40) |
ACFO |
|
|
|
ACFO payout ratio |
80.04 % |
85.4 % |
(5.35 %) |
SOURCE