STARLIGHT U.S. MULTI-FAMILY (NO. 2) CORE PLUS FUND ANNOUNCES Q2-2025 RESULTS
/NOT FOR DISTRIBUTION TO
All amounts in this press release are in thousands of
"The Fund has completed the disposition of its investment properties and has commenced proceedings to dissolve the Fund," commented
Q2-2025 HIGHLIGHTS
- The Fund completed the disposition of Montane Apartments ("Montane") on
June 27, 2025 and used the proceeds to repay the outstanding Montane first mortgage of$96,000 as well as fully repaid the Fund's unsecured loan and promissory note of$9,000 and$2,748 , respectively. Following the disposition of Montane, the Board of Directors of the Fund (the "Board") approved a special distribution ("Special Distribution") of$21,974 , applicable to unitholders of the Fund ("Unitholders") of record as ofJuly 8, 2025 , subject to certain exceptions, and payable onJuly 15, 2025 . - On
August 12, 2025 , the Fund completed the disposition ofHudson at East ("Hudson") for cash proceeds of$68,400 with the Fund utilizing the proceeds to fully repay the outstanding loan payable secured by such property amounting to$67,000 and paid other customary transaction costs with the Fund retaining any remaining proceeds (see "Subsequent Events"). - On
August 12, 2025 , the Fund's first mortgage lender for Summermill atFalls River ("Summermill") took control of the property and as a result of the transfer of ownership, the Fund discharged its obligation to pay the outstanding mortgage loan principal balance on Summermill of$85,639 and discharged all other liabilities of the Fund associated with the Summermill, with no cash proceeds being received by the Fund as a result of the transfer of ownership (see "Subsequent Events"). As a result of the transfer, the Fund expects to recognize a gain on the extinguishment of such debt in third quarter of 2025 amounting to approximately$13,000 (see "Subsequent Events"). - Revenue from property operations and net operating income ("NOI")1 for Q2-2025 was
$5,316 and$3,385 (Q2-2024 -$5,491 and$3,396 ), respectively, representing a decrease of 3.2% and 0.3% relative to Q2-2024 due to a decrease in AMR of 0.5% and reduction in economic occupancy1 between these periods. As atJune 30, 2025 , the Fund had physical occupancy1 of 95.6% for the properties owned at that time. - The Fund reported a net loss and comprehensive loss attributable to unitholders for Q2-2025 of
$32,851 (Q2-2024 -$2,803 ), primarily due to the Special Distribution of$21,974 and higher fair value loss on investment properties during Q2-2025. The fair value loss on investment properties during Q2-2025 was primarily due to the expansion of capitalization rates used to value the Fund's investment properties (see "Future Outlook"). - The Fund achieved economic occupancy of 94.2% during Q2-2025 and as at
August 27, 2025 , had collected approximately 99.2% of rents for Q2-2025, with further amounts expected to be collected in future periods, demonstrating the Fund's high quality resident base and operating performance.
YTD-2025 HIGHLIGHTS
- Revenue from property operations and NOI for YTD-2025 were
$10,751 and$6,799 (YTD-2024 -$10,837 and$6,675 ), respectively, representing a decrease of 0.8% due to a decrease in AMR and an increase of 1.9% due to a decrease in property taxes relative to YTD-2024, respectively. - The Fund reported a net loss and comprehensive loss attributable to Unitholders for YTD-2025 of
$43,773 (YTD-2024 -$6,173 ), primarily resulting from the Special Distribution of$21,974 and YTD-2025 reporting a higher fair value loss on investment properties than YTD-2024. - The Fund completed 5 in-suite light value-add upgrades at Summermill during YTD-2025, which generated an average rental premium of
$212 and an average return on cost of approximately 18.4%.
1 This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). |
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at
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Key multi-family operational information |
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Number of multi-family properties owned(1) |
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2 |
3 |
Total multi-family suites |
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595 |
995 |
Economic occupancy(2) |
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94.2 % |
93.8 % |
Physical occupancy(2)(3) |
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95.6 % |
94.2 % |
AMR (in actual dollars)(3) |
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$ 1,734 |
AMR per square foot (in actual dollars)(3) |
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$ 1.52 |
$ 1.72 |
Estimated gap to market versus in-place rents(4) |
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2.8 % |
(0.2) % |
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Selected financial information |
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Gross book value(4) |
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$ 141,200 |
$ 290,800 |
Indebtedness(4) |
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$ 152,639 |
$ 258,619 |
Indebtedness to gross book value(1)(4) |
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108.1 % |
88.9 % |
Weighted average interest rate - as at period end(5) |
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6.83 % |
6.81 % |
Weighted average loan term to maturity(5) |
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0.12 years |
1.06 years |
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Q2-2025 |
Q2-2024 |
YTD-2025 |
YTD-2024 |
Summarized income statement |
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Revenue from property operations |
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$ 5,316 |
$ 5,491 |
$ 10,751 |
$ 10,837 |
Property operating costs |
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(1,388) |
(1,432) |
(2,832) |
(2,835) |
Property taxes(6) |
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(543) |
(663) |
(1,120) |
(1,327) |
Adjusted Income from Operations / NOI |
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3,385 |
3,396 |
6,799 |
6,675 |
Fund and trust expenses |
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(1,043) |
(393) |
(1,437) |
(781) |
Finance costs(7) |
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(4,743) |
(5,471) |
(9,722) |
(10,862) |
Other income and expense(8) |
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(30,450) |
(335) |
(39,413) |
(1,205) |
Net loss and comprehensive loss - attributable to unitholders |
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$ (32,851) |
$ (2,803) |
$ (43,773) |
$ (6,173) |
Other selected financial information |
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Funds from operations ("FFO")(4) |
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$ (1,582) |
$ (1,768) |
$ (3,302) |
$ (3,568) |
FFO per unit - basic and diluted |
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(0.15) |
(0.16) |
(0.30) |
(0.33) |
Adjusted funds from operations ("AFFO")(4) |
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(1,004) |
(365) |
(1,708) |
(954) |
AFFO per unit - basic and diluted |
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(0.09) |
(0.03) |
(0.16) |
(0.09) |
Weighted average interest rate - average during period(4) |
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6.68 % |
6.59 % |
6.66 % |
6.59 % |
Interest coverage ratio(4)(9) |
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0.76x |
0.90x |
0.79x |
0.87x |
Indebtedness coverage ratio(4)(9) |
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0.03x |
0.90x |
0.05x |
0.87x |
Distributions to unitholders |
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$ 21,974 |
$ — |
$ 21,974 |
$ — |
Weighted average units outstanding - basic and diluted (000s) |
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10,902 |
10,902 |
10,902 |
10,902 |
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(1) On |
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(2) Economic occupancy for Q2-2025 and |
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(3) Given the Fund completed the disposition of Montane on |
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(4) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). The decrease in AFFO, interest coverage ratio and indebtedness coverage ratio from Q2-2024 to Q2-2025 is primarily due to the increases in interest costs and a decrease in accrued interest cost payable upon maturity of the applicable loan relative to Q2-2024, which is excluded from the calculation of AFFO. The increased interest costs noted are primarily due to the higher weighted average interest rate on average indebtedness outstanding during Q2-2025. The AFFO, interest coverage ratio and indebtedness coverage ratio presented herein exclude |
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(5) The weighted average interest rate on loans payable is presented as at |
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(6) Property taxes include the IFRIC 21 fair value adjustment and treats property taxes as an expense that is amortized during the fiscal year for the purpose of calculating NOI. These amounts have been reported under property taxes under the Fund's condensed consolidated interim financial statements for the applicable reporting periods. |
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(7) Finance costs include interest expense on loans payable, non-cash amortization of deferred financing and fair value changes in derivative financial instruments. |
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(8) Includes dividends to preferred shareholders, unrealized foreign exchange gain (loss), realized foreign exchange gain (loss), fair value adjustment of investment properties, provision for carried interest and deferred income taxes. |
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(9) The Fund's interest coverage ratio and indebtedness coverage ratio were both 0.76x and 0.79x during Q2-2025 and YTD-2025, with the Fund's operating results offset by increases in the Fund's interest costs. These calculations exclude |
NON-IFRS FINANCIAL MEASURES AND RECONCILIATIONS
The Fund's condensed consolidated interim financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS"). Certain terms that may be used in this press release such as AFFO, AMR, adjusted net income and comprehensive income, cash provided by operating activities including interest costs, economic occupancy, estimated gap in market versus in-place rents, FFO, gross book value, indebtedness, indebtedness coverage ratio, indebtedness to gross book value, interest coverage ratio and NOI (collectively, the "Non-IFRS Measures") as well as other measures discussed elsewhere in this press release, are not measures defined under IFRS as prescribed by the
A reconciliation of the Fund's interest coverage ratio and indebtedness coverage ratio are provided below:
Interest and indebtedness coverage ratio |
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Q2-2025 |
Q2-2024 |
YTD-2025 |
YTD-2024 |
Net loss and comprehensive loss - attributable to unitholders |
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$ (32,851) |
$ (2,803) |
$ (43,773) |
$ (6,173) |
Add / (deduct): non-cash or one-time items and distributions(1) |
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31,420 |
1,606 |
40,908 |
3,729 |
Adjusted net loss and comprehensive loss(2) |
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(1,431) |
(1,197) |
(2,865) |
(2,444) |
Interest coverage ratio(3)(4) |
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0.76x |
0.90x |
0.79x |
0.87x |
Indebtedness coverage ratio(4)(5) |
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0.03x |
0.90x |
0.05x |
0.87x |
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(1) Comprised of unrealized foreign exchange gain (loss), deferred income taxes, amortization of financing costs, fair value adjustment on derivative instruments, transaction costs and fair value adjustment on investment properties. |
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(2) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). |
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(3) Interest coverage ratio is calculated as adjusted net loss and comprehensive loss plus interest expense, divided by interest expense. |
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(4) These calculations exclude |
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(5) Indebtedness coverage ratio is calculated as adjusted net loss and comprehensive loss plus interest expense, divided by interest expense and mandatory principal payments on the Fund's loans payable. |
For Q2-2025 and YTD-2025, the interest coverage ratio and the indebtedness coverage ratio were both 0.76x and 0.79x (Q2-2024 and YTD-2024 - 0.90x and 0.87x) respectively. Subsequent to
The Fund also utilized interest rate caps, swaps or fixed rate debt in certain instances to limit the potential impact on the Fund's financial performance from any increases in Term SOFR beyond stipulated levels. As at
CASH PROVIDED BY OPERATING ACTIVITIES RECONCILIATION TO FFO and AFFO
Basic and diluted AFFO and AFFO per unit for Q2-2025 were
A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for Q2-2025, Q2-2024, YTD-2025 and YTD-2024 is provided below:
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Q2-2025 |
Q2-2024 |
YTD-2025 |
YTD-2024 |
Cash provided by operating activities |
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$ 926 |
$ 3,256 |
$ 3,845 |
$ 6,569 |
Less: interest costs |
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(4,430) |
(4,190) |
(8,872) |
(8,318) |
Cash used in operating activities - including interest costs (1) |
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(3,504) |
(934) |
(5,027) |
(1,749) |
Add / (deduct): |
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Change in non-cash operating working capital |
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2,087 |
(525) |
2,118 |
(1,010) |
Transaction costs |
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668 |
— |
668 |
— |
Change in restricted cash |
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(678) |
266 |
(616) |
323 |
Amortization of financing costs |
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(155) |
(575) |
(445) |
(1,132) |
FFO |
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(1,582) |
(1,768) |
(3,302) |
(3,568) |
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Add / (deduct): |
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Amortization of financing costs |
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155 |
575 |
445 |
1,132 |
Vacancy costs associated with the suite upgrade program |
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— |
33 |
7 |
52 |
Sustaining capital expenditures and suite renovation reserves |
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(73) |
(75) |
(147) |
(150) |
Accrued interest costs(2) |
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496 |
870 |
1,289 |
1,580 |
AFFO |
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$ (1,004) |
$ (365) |
$ (1,708) |
$ (954) |
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(1) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). |
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(2) These amounts represent interest costs that are deferred and payable only at maturity of the applicable loan payable. |
SUBSEQUENT EVENTS AND FUTURE OUTLOOK
On
On
As a result of the above noted transactions, the Fund has completed the liquidation of all of its investment properties and will be commencing the commencing the final wind-up and liquidation process (the "Dissolution"), which includes using cash on hand, including the net proceeds from the sale of
Based on the transactions subsequent to
Further disclosure surrounding the Future Outlook is included in the Fund's MD&A in the "Future Outlook" section for Q2-2025 under the Fund's profile, which is available on www.sedarplus.ca.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and its properties, the impact of elevated levels of inflation and interest rates, uncertainty surrounding
Forward-looking information may relate to future results, the impact of inflation levels and interest rates, the ability of the Fund to make and the resumption of future distributions, the trading price of the Fund's
Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities may not be achieved. Those risks and uncertainties include; the ability of the Fund to make the future distributions; the trading price of the Listed Units, changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the properties or the Fund's legal entities; the timing of any final or liquidating distribution made by the Fund and the Fund's ability to continue as a going concern. A variety of factors, many of which are beyond the Fund's control, affect the operations, performance and results of the Fund and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results.
There are numerous risks and uncertainties which include, but are not limited to, risks related to the units and risks related to the Fund and its business. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements. Although the Fund believes the expectations reflected in such forward-looking information are reasonable and represent the Fund's projections, expectations and beliefs at this time, such information involves known and unknown risks and uncertainties which may cause the Fund's actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially from the Fund's expectations include, among other things, the general economic and market factors, including interest rates, inflation, business competition, the thing of any final or liquidating distribution made by the Fund and changes in government regulations or in tax laws. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information.
Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the trading price of the Listed Units, the price at which the Fund's properties may be disposed and the timing thereof; closing and other transaction costs in connection with the disposition of the properties; the ability of the Manager to manage and operate the properties or achieve similar returns to previous investment funds managed by the Manager; the global and North American economic environment; foreign currency exchange rates; and governmental regulations or tax laws. Given this period of uncertainty, there can be no assurance regarding: (a) operations and performance or the volatility of the units; (b) the Fund's ability to mitigate such impacts; (c) credit, market, operational, and liquidity risks generally; (d) the Manager or any of its affiliates, will continue its involvement as asset manager of the Fund in accordance with its current asset management agreement; and (e) other risks inherent to the Fund's business and/or factors beyond its control which could have a material adverse effect on the Fund.
The forward-looking information included in this press release relates only to events or information as of the date on which the statements are made in this press release. Except as specifically required by applicable Canadian securities law, the Fund undertakes no obligation to update or revise publicly any forward-looking information, whether because of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
ABOUT
The Fund is a limited partnership formed under the Limited Partnerships Act (
For the Fund's condensed consolidated interim financial statements and MD&A for the three and six months ended
Please visit us at www.starlightinvest.com and connect with us on LinkedIn at www.linkedin.com/company/starlight-investments-ltd-.
Neither the
SOURCE