TORONTO, ON--(Marketwired - August 05, 2016) - Slate Office REIT (TSX:SOT.UN) (the "REIT"), a leading owner of office properties in Canada, today announced its financial results for the three months ended June 30, 2016. Senior management is hosting a conference call at 9:00 a.m. ET Friday, August 5th, 2016 to discuss the results and ongoing business initiatives of the REIT.
The REIT reported strong results in a quarter highlighted by the acquisition of a new office building in the GTA, increased ownership in the Places assets, the sale of a non-core asset and significant leasing activity. Reflecting on the last three months of operations, Scott Antoniak, the REIT's Chief Executive Officer, said in a letter to unitholders:
"We saw continued improvement in a number of key financial metrics and completed a successful equity offering in order to finance a pair of accretive acquisitions. We are pleased with these results and realize that we are still in the early stages of what will be an exciting journey. We remain convinced that our strategy is sound and we are prepared to execute on that basis."
Read the full letter to unitholders here
Quarterly Highlights
-
Same-property NOI was $12.3 million representing a 2.5% increase, Core-FFO was up 8.0% to $0.27 per unit and AFFO was up 9.5% to $0.23, all compared to Q1 2016.
-
The REIT's AFFO payout ratio was 84.4% for the three months ended June 30, 2016, compared to the payout ratio of 90.3% for the previous quarter and 128.3% for the same quarter of the previous year.
-
Completed the acquisition of Gateway Centre in Markham, Ontario for an aggregate purchase price of $57.5 million.
-
Increased the REIT's interest in the Places assets in St. John's, Newfoundland by 19% to 49% for an additional investment of $27.4 million.
-
Completed the issuance of 4,531,137 units for gross proceeds of $35.6 million.
-
Disposed of 125-185 First Street, located in Cochrane, Alberta, a non-core retail property, for a sale price of $4.1 million, realizing proceeds of $2.3 million after repayment of debt and transaction costs.
-
Completed lease transactions for 187,375 square feet during the quarter, highlighted by the 101,170 square foot renewal of the Province of Nova Scotia, a 27,618 square foot renewal of SNC-Lavalin Nuclear Inc., a new 16,000 square foot lease with a technology company and, subsequent to quarter-end, the 82,955 square foot lease extension exercised by the Federal Government.
| Summary of Results | ||||||||||||
| Three months ended | ||||||||||||
| (thousands of dollars, except per unit amounts) | June 30, 2016 | March 31, 2016 | June 30, 2015 | |||||||||
| Revenue | $ | 28,197 | $ | 27,569 | $ | 14,390 | ||||||
| Net operating income | 12,760 | 11,774 | 7,634 | |||||||||
| Net income and comprehensive income | 15,244 | 3,621 | 10,480 | |||||||||
| Funds from operations ("FFO") | 9,078 | 8,173 | 4,719 | |||||||||
| Core FFO | 9,588 | 8,676 | 4,763 | |||||||||
| Adjusted FFO | $ | 8,192 | $ | 7,338 | $ | 3,684 | ||||||
| Weighted average number of trust units (000s) | 35,674 | 35,334 | 20,024 | |||||||||
| FFO per unit | $ | 0.25 | $ | 0.23 | $ | 0.24 | ||||||
| Core FFO per unit | 0.27 | 0.25 | 0.24 | |||||||||
| AFFO per unit | 0.23 | 0.21 | 0.18 | |||||||||
| Distributions per unit | $ | 0.1875 | $ | 0.1875 | $ | 0.1875 | ||||||
| AFFO payout | 84.4 | % | 90.3 | % | 128.3 | % | ||||||
| Occupancy (1) | 89.7 | % | 89.4 | % | 90.0 | % | ||||||
| Occupancy - portfolio | 85.8 | % | 85.0 | % | 90.0 | % | ||||||
| Interest coverage | 3.3x | 3.2x | 2.5x | |||||||||
| Net debt to adjusted EBITDA leverage | 10.2x | 9.7x | 9.8x | |||||||||
| (1) Excluding redevelopment properties. |
Distributions and Fully-Covered Payout Ratio
During the quarter the REIT paid monthly distributions of $0.1875 per unit, or $0.75 per unit on an annualized basis. Distributions paid to unitholders are paid at the same rate to holders of the REIT's Class B LP units and are paid on or about the 15th day of the month following declaration.