CT REIT Announces Fourth Quarter and Year-End 2020 Results

Delivers 3.2% growth in AFFO per unit for the fourth quarter Announces four new investments totalling $65 million 99.4% of…

  • Delivers 3.2% growth in AFFO per unit for the fourth quarter
  • Announces four new investments totalling $65 million
  • 99.4% of January 1st rental obligations fulfilled

TORONTO, Feb. 8, 2021 /CNW/ – CT Real Estate Investment Trust («CT REIT» or «the REIT») (TSX: CRT.UN) today reported its consolidated financial results for the fourth quarter and year-end ending December 31, 2020.

«In 2020, CT REIT delivered solid growth in AFFO per unit, increased occupancy, achieved positive same property NOI growth, and increased its distribution, while effectively managing the risks presented by the pandemic,» said Ken Silver, President and CEO, CT REIT. «We enter 2021 in a strong and resilient financial position. We consider the REIT to be well-positioned to weather the pandemic’s ongoing challenges and are moving forward with the next leg of our growth strategy.»

«Recognizing his key leadership role in advancing and delivering on the REIT’s strategy, I am delighted to announce the promotion of Kevin Salsberg to President and Chief Operating Officer, effective March 1, 2021,» added Silver.

New Investment and Disposition Activity

Today, CT REIT announced four new investments, which will require an estimated $65 million to complete. The investments are, in aggregate, expected to earn a weighted average cap rate of 6.41% when completed and represent approximately 510,000 square feet of incremental gross leasable area («GLA»). CT REIT has, or will be, funding these investments through the issuance of Class B LP Units and/or Class C LP Units to CTC, cash on hand and/or draws on its credit facilities or any combination thereof.

The table below summarizes the new investments and their actual or anticipated completion dates:

Property

Type

GLA (sf.)

Timing

Activity

Quebec City (Vanier), QC

Vend-in

125,000

Q4 2020

Vend-in of an existing

Canadian Tire store and

Canadian Tire Gas+ gas

bar

Lower Sackville, NS

Vend-in

53,000

Q1 2021

Vend-in of an existing

Canadian Tire store

Cochrane, ON

Intensification

11,000

Q3 2021

Expansion of an existing

Canadian Tire store

Coteau-du-Lac, QC

Intensification

322,000

Q1 2023

Expansion of an existing

Canadian Tire distribution

centre

In January 2021, CT REIT sold its Arnprior Mall property in Arnprior, Ontario for $21 million.

Update on Previously Announced Investments

CT REIT invested $139 million in previously disclosed investments that were completed in the fourth quarter. CT REIT completed the acquisition of a portfolio of three Canadian Tire stores from a third party in Drayton Valley and Leduc, Alberta and St. Jean-sur-Richelieu, Quebec, the acquisition of a property consisting of two single-tenant buildings from a third party in Yellowknife, Northwest Territories, the development of a Canadian Tire store and Mark’s in Fort St. John, British Columbia, phase 1 of the redevelopment of the Orillia Square Mall in Orillia, Ontario, and the intensification of an existing Canadian Tire store in Buckingham, Quebec.

The table below provides activity updates on previously announced investments.

Property

Type

GLA (sf.)

Timing

Activity

Drayton Valley, AB

Third party acquisition

54,000

Q4 2020

Third party acquisition of a

Canadian Tire store

Leduc, AB

Third party acquisition

101,000

Q4 2020

Third party acquisition of a

Canadian Tire store

St. Jean-sur-Richelieu, QC

Third party acquisition

104,000

Q4 2020

Third party acquisition of a

Canadian Tire store

Yellowknife, NT

Third party acquisition

15,000

Q4 2020

Third party acquisition of a

property consisting of two

freestanding buildings leased

to Mark’s and Tim Hortons

Fort St. John, BC – Phase 1

Development

146,000

Q4 2020

Development of a Canadian

Tire store and Mark’s

Orillia, ON – Phase 1

Redevelopment

266,000

Q4 2020

Partial de-malling and

redevelopment for a new

Canadian Tire store

Buckingham, QC

Intensification

20,000

Q4 2020

Expansion of an existing

Canadian Tire store

Update on Full Year 2020 Investment Activity

In 2020, CT REIT invested approximately $209 million in completed investments and ongoing developments and grew the portfolio by approximately 800,000 square feet of GLA.

Business Update Related to COVID-19

Tenants representing approximately 99.4% of annual base minimum rent fulfilled their January 1, 2021 financial obligations to the REIT, consistent with the 99.2% for December 1, 2020, 99.2% for November 1, 2020 and 99.1% for October 1, 2020. From the onset of the pandemic, the REIT has been supporting tenants facing financial hardships including by participating in the Canada Emergency Commercial Rent Assistance («CECRA») program for certain qualified tenants and providing rental abatements or deferrals to other qualifying tenants. The CECRA program provided a 75% rent abatement for qualifying small businesses for the period from April 1, 2020 to September 30, 2020, two-thirds of which was paid for by the Federal and Provincial governments and one-third of which was funded by the landlord.

For the three months ended December 31, 2020, the REIT’s assistance to its tenants totalled $0.6 million, consisting of $0.4 million in abatements of gross rents, which were recognized as bad debt expense, and an additional $0.2 million of expected credit losses related to tenants who had been significantly impacted by the pandemic.

For the year ended December 31, 2020, the REIT’s assistance to its tenants totalled $2.8 million, consisting of $0.6 million related to the CECRA program, $0.7 million in abatements of gross rents which were recognized as bad debt expense, and an additional $1.5 million of expected credit losses related to tenants who had been significantly impacted by the pandemic.

On October 9, 2020, the federal government announced a new rent relief program, the Canada Emergency Rent Subsidy («CERS»), to replace the CECRA program. Similar to CECRA, CERS is available to small and medium-sized businesses significantly impacted by the COVID-19 pandemic. CERS is effective retroactively for periods beginning September 27, 2020 and ending in June 2021. CERS is provided directly to tenants on a sliding scale up to a maximum of 65% of eligible expenses, thereby supporting property owners with payments of rents for CERS subsidized amounts. In addition to the 65% subsidy, a 25% CERS top-up is available to tenants who are temporarily shut down by a mandatory public health order issued by a qualifying public health authority.

Financial and Operational Summary

Summary of Selected Information











(in thousands of Canadian dollars, except unit, per unit and

square footage amounts)


Three Months Ended December 31,




Year Ended December 31,


2020


2019


Change


2020


2019


Change

Property revenue

$

126,833


$

123,692


2.5%


$

502,348


$

489,013


2.7%

Net operating income 1

$

96,873


$

93,444


3.7%


$

381,566


$

368,795


3.5%

Net income

$

14,032


$

76,890


(81.8)%


$

183,305


$

307,193


(40.3)%

Net income per unit – basic 2

$

0.061


$

0.338


(82.0)%


$

0.801


$

1.380


(42.0)%

Net income per unit – diluted 3

$

0.093


$

0.294


(68.4)%


$

0.772


$

1.193


(35.3)%

Funds from operations 1

$

68,149


$

66,797


2.0%


$

270,725


$

261,861


3.4%

Funds from operations per unit – diluted (non-GAAP) 1,2,4

$

0.296


$

0.293


1.0%


$

1.181


$

1.175


0.5%

Adjusted funds from operations 1

$

59,796


$

57,397


4.2%


$

236,457


$

224,300


5.4%

Adjusted funds from operations per unit – diluted (non-

GAAP)1,2,4

$

0.260


$

0.252


3.2%


$

1.032


$

1.007


2.5%

Distributions per unit – paid 2

$

0.201


$

0.189


6.2%


$

0.793


$

0.757


4.8%

AFFO payout ratio 1


77.3%



75.0%


3.1%



76.8%



75.2%


2.1%

Cash generated from operating activities

$

93,526


$

93,986


(0.5)%


$

370,766


$

362,328


2.3%

Adjusted cashflow from operations 1

$

60,105


$

60,422


(0.5)%


$

238,954


$

228,366


4.6%

Weighted average number of units outstanding 2











Basic

229,712,658


227,646,716


0.9%


228,934,001


222,559,681


2.9%

Diluted 3

323,371,257


319,710,728


1.1%


322,574,451


314,615,032


2.5%

Diluted (non-GAAP) 1,4

229,996,707


227,887,268


0.9%


229,199,901


222,791,571


2.9%

Indebtedness ratio







42.9%



42.7%


(0.7)%

Interest coverage (times)


3.50



3.44


1.7%



3.51



3.40


3.2%

Gross leasable area (square feet) 5






28,738,736


27,556,341


4.3%

Occupancy rate 5,6







99.3%



99.1%


0.2%

1 Non-GAAP measure. Refer to section 11.0 of the MD&A for further information


2 Total units means Units and Class B LP Units outstanding


3 Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that

all of the Class C LP Units will be settled with Class B LP Units. Refer to section 8.0 of the MD&A


4 Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of

assuming that all of the Class C LP Units will be settled with Class B LP Units. Refer to section 8.0 of the MD&A


5 Refers to retail, mixed-use commercial and Industrial Properties and excludes Properties Under Development


6 Occupancy and other leasing key performance measures have been prepared on a committed basis which includes the impact of existing lease a

greements contracted on or before December 31, 2020 and December 31, 2019

Financial Highlights

Net Income – Net income was $14.0 million for the quarter and $183.3 million for the year, a decrease of 81.8% and 40.3%, respectively, compared to the same period in the prior year, primarily due to a decrease in the fair value adjustment on investment properties, partially offset by an increase in NOI*.

Net Operating Income (NOI)* – In the fourth quarter, NOI was $96.9 million, which was $3.4 million or 3.7% higher compared to the same period in the prior year, primarily due to the acquisition of income-producing properties and properties under development completed in 2020 and 2019, which contributed $1.5 million to NOI growth. Same store NOI was $93.6 million and same property NOI was $94.3 million for the quarter, which were $1.1 million or 1.2% and $1.6 million or 1.8%, respectively, higher when compared to the prior year, primarily due to increased revenue derived from contractual rent escalations, offset by pandemic-related impacts. NOI for the full year amounted to $381.6 million.

Funds from Operations (FFO)* – FFO for the quarter was $68.1 million or $0.296 per unit – diluted (non-GAAP), which was 1.0% or $0.003 per unit – diluted (non-GAAP), higher than the same period in 2019, primarily due to the impact of NOI variances and partially offset by higher interest expense. FFO for the year was $270.7 million or $1.181 per unit – diluted (non-GAAP), 0.5% or $0.006 per unit – diluted (non-GAAP), higher than the same period in 2019, primarily due to the impact of NOI variances and lower interest expense.

Adjusted Funds from Operations (AFFO)* – AFFO for the quarter was $59.8 million or $0.260 per unit – diluted (non-GAAP), 3.2% or $0.008 per unit – diluted (non-GAAP) higher than the same period in 2019, primarily due to the impact of NOI variances, partially offset by higher interest expense. AFFO for the full year was $236.5 million or $1.032 per unit – diluted (non-GAAP), 2.5% or $0.025 per unit – diluted (non-GAAP) higher than the same period in 2019, primarily due to the impact of NOI variances and lower interest expense.

Distributions – Distributions per unit in the quarter amounted to $0.201, 6.2% higher than the same period in 2019 due to two increases in the rate of distributions, the first of which was effective with the distribution paid in January 2020 and the second of which was effective with the distribution paid in September 2020. For the full year, distributions per unit amounted to $0.793, 4.8% higher than the same period in 2019.

*NOI, FFO and AFFO are non-GAAP measures. Refer to Non-GAAP section 11.0 «Non-GAAP Measures» in CT REIT’s Management’s Discussion & Analysis (MD&A) the year ended December 31, 2020, which is available on SEDAR at www.sedar.com and at www.ctreit.com.

Operating Results

Leasing – CTC is CT REIT’s most significant tenant. At December 31, 2020, CTC represented 92.2% of total GLA and 91.6% of annualized base minimum rent.

Occupancy – At December 31, 2020, CT REIT’s portfolio occupancy rate, on a committed basis, was 99.3%.

Management’s Discussion and Analysis (MD&A) and Audited Consolidated Financial Statements and Notes

Information in this press release is a select summary of results. This press release should be read in conjunction with CT REIT’s MD&A for fiscal 2020 and Audited Consolidated Financial Statements and Notes for the years ended December 31, 2020, and December 31, 2019 which are available on SEDAR at http://www.sedar.com and at www.ctreit.com.

Note: Unless otherwise indicated, all figures in this press release are as of December 31, 2020 and are presented in Canadian dollars.

Forward-Looking Statements

This press release contains forward-looking statements and information that reflects management’s current expectations related to matters such as future financial performance, operating results and the effect of the COVID-19 pandemic on CT REIT’s business and operations and the REIT’s tenants’ respective businesses and operations, including the operations of Canadian Tire stores, and discussions between the REIT and its tenants with respect to future rent obligations. Forward-looking statements are provided for the purposes of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of our future outlook, anticipated events or results and our operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Certain statements other than statements of historical facts included in this document may constitute forward-looking information, including, but not limited to, statements concerning the REIT’s ability to complete the investments in the acquisitions under the headings «New Investment & Disposition Activity», «Update on Previously Announced Investments», the timing and terms of any such investment and/or agreements and the benefits expected to result from such investment, the effects of COVID-19 on the REIT’s business under the heading «Business Update Related to COVID-19» and statements concerning developments, redevelopments, intensifications, results, performance, achievements, prospects or opportunities for CT REIT. Forward-looking information is based on reasonable assumptions, estimates, analyses, beliefs and opinions of management made in light of its experience and perception of prospects and opportunities, current conditions and expected trends, as well as other factors that management believes to be relevant and reasonable at the date such information is provided.

By its very nature forward-looking information, requires the use of estimates and assumptions and is subject to inherent risks and uncertainties. It is possible that the REIT’s assumptions, estimates, analyses, beliefs and opinions are not correct, and that the REIT’s expectations and plans will not be achieved. Although the forward-looking information contained in this press release is based on information, assumptions and beliefs which are reasonable in the opinion of management and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management’s expectations and plans as set forth in such forward-looking information. Without limiting the generality of the foregoing, given the continued evolving circumstances surrounding the pandemic, including the uncertainty of the present and future waves, it is difficult to predict with certainty the nature, duration and extent of the adverse impact of COVID-19 on, among others: the global and domestic economy; the business, operations and financial position of the REIT’s tenants, including CTC; the expected benefits from the investments described under the heading «New Investment & Disposition Activity» and «Update on Previously Announced Investments», including the timing of the acquisitions; and the business, operations, financial position, results, prospects or opportunities of CT REIT.

For more information on the risks, uncertainties and assumptions that could cause the REIT’s actual results to differ from current expectations, refer to Section 4 «Risk Factors» of our Annual Information Form for fiscal 2020, and to Section 12.0 «Enterprise Risk Management» and section 14.0 «Forward-Looking Information» of CT REIT’s MD&A for fiscal 2020 as well as the REIT’s other public filings available at www.sedar.com and at www.ctreit.com.

In addition, for further factors related to COVID-19 impacting the REIT, refer to Section 2.0 «Factors Affecting the REIT as a Result of the COVID-19 Pandemic», Section 12.0, «Enterprise Risk Management» and Section 14.0 «Forward-looking Information» of our MD&A, available at www.sedar.com and at www.ctreit.com.

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.

Information contained in or otherwise accessible through the websites referenced in this press release does not form part of this press release and is not incorporated by reference into this press release.

Additional information about CT REIT has been filed electronically with various securities regulators in Canada through SEDAR and is available at www.sedar.com and at www.ctreit.com.

Conference Call

CT REIT will conduct a conference call to discuss information included in this news release and related matters at 9:00 a.m. ET on February 9, 2021.  The conference call will be available simultaneously and in its entirety to all interested investors and the news media by dialing 416-340-2217 or 1-800-898-3989 or through a webcast at https://www.ctreit.com/English/news-and-events/events-and-webcasts/default.aspx and will be available through replay for 12 months.

About CT Real Estate Investment Trust

CT Real Estate Investment Trust (TSX:CRT.UN) is an unincorporated, closed-end real estate investment trust formed to own income-producing commercial properties primarily located in Canada. Its portfolio is comprised of over 350 properties totaling approximately 29 million square feet of GLA, consisting primarily of net leased single-tenant retail properties located across Canada. Canadian Tire Corporation, Limited is CT REIT’s most significant tenant. For more information, visit www.ctreit.com.

CT REIT 2020 Q4 and Year End MD&A and Financial Statements (CNW Group/CT Real Estate Investment Trust (CT REIT))

SOURCE CT Real Estate Investment Trust (CT REIT)