Marketwired
Slate Office REIT Reports Second Quarter 2017 Results
Marketwired

TORONTO, ON--(Marketwired - August 03, 2017) - Slate Office REIT (TSX:SOT.UN) (the "REIT"), a leading owner of office properties in Canada, announced today its financial results for the three months ended June 30, 2017. Senior management is hosting a conference call at 9:00 a.m. ET on Friday, August 4, 2017 to discuss the results and ongoing business initiatives of the REIT. The dial-in details can be found below.

"Slate Office REIT was very active in the second quarter of 2017," said Scott Antoniak, the REIT's Chief Executive Officer. "Completing a number of strategic transactions that bolstered the REIT's position as a best in class owner and operator of office properties."

For the CEO's letter to unitholders for the quarter, please follow the link here.

Quarterly Highlights

  • Completed 145,957 square feet of leasing in the quarter, comprised of 53,473 square feet of new leases and 92,484 square feet of lease renewals. Subsequent to quarter end, the REIT completed a new 5-year, 58,178 square foot lease deal with Volta Labs at the Maritime Centre. Volta Labs will occupy a significant portion of the space previously occupied by Bell Aliant.

  • The REIT acquired four office properties in the quarter; West Metro Corporate Centre and 401-405 The West Mall in Etobicoke, ON, and 250 King and 460 Two Nations in Fredericton, NB, for an aggregate purchase price of $260.0 million, before adjustments.

  • The REIT raised $130.0 million of equity to fund the acquisitions, consisting of a $10.0 million private placement and the issuance of 14,820,000 trust units at $8.10 per unit.

  • In connection with the 250 King and 460 Two Nations acquisitions, the REIT completed the renewal of a $105.0 million term loan and increased the principal amount by $15.0 million to $120.0 million extended until June 30, 2019. The loan-to-value ratios on these two assets have exceeded management's underwriting expectations as at acquisition.

  • Subsequent to quarter end, the REIT completed an up-financing and 4 year extension of the recently acquired West Metro Corporate Centre. The new financing provides an additional $20.0 million in financing, the proceeds of which were used to reduce the REIT's credit facilities and increase the REIT's liquidity.

  • The REIT disposed of a vacant industrial building located at 7001 96th Street in Grande Prairie, AB for $4.4 million. The sale demonstrates the REIT's ability to dispose of non-core assets and re-deploy capital to achieve balance sheet optimization.

  • Rental revenue increased by $8.0 million to $36.2 million compared to the second quarter of 2016.

  • Net operating income ("NOI") was $17.1 million, an increase of $4.4 million compared to the same period in 2016.

  • Same property NOI was $14.3 million, representing an increase of $0.1 million over the first quarter of 2017.

  • Funds from operations ("FFO") increased $2.3 million to $11.4 million compared to the same period in the prior year. On a per unit basis, FFO was $0.20 for the second quarter.

  • Adjusted FFO ("AFFO") increased $2.5 million to $10.7 million or $0.19 per unit, compared to the same period in 2016. The increase is attributed to the NOI contribution from acquisitions activity offset by higher interest expense from debt required to finance the acquisitions.

  • AFFO payout ratio was adversely impacted by the equity offering which was completed prior to the closing of the acquisitions. As such, the NOI contributions from the new properties were not fully realized during the quarter. The payout ratio is expected to improve in the third quarter as the full impact of the acquisition will be reflected in operating results.

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