This press release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.
TORONTO, Feb. 18, 2020 (GLOBE NEWSWIRE) -- DREAM INDUSTRIAL REIT (DIR.UN-TSX) or (“Dream Industrial REIT”, the “Trust” or “we”) today announced its financial results for the three months and year ended December 31, 2019. Management will host a conference call to discuss the financial results on February 19, 2020 at 11:00 a.m. (ET).
“2019 was an exciting year for Dream Industrial and we made significant progress in growing and upgrading the quality of our portfolio”, said Brian Pauls, Chief Executive Officer of Dream Industrial REIT. “Our recently announced European expansion strategy represents the next step in transforming Dream Industrial into a premier global real estate company. At the same time, we remain focused on active asset management, leading to strong operating results for 2019, including significant rental rate growth in Ontario and Québec, as well as higher occupancy in Western Canada. As we continue to execute on our strategies, we expect enhanced cash flow growth and net asset value growth over the long term.”
FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL INFORMATION | |||||||||
(unaudited) | Three months ended | Year ended | |||||||
(in thousands of dollars except per Unit amounts) | December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||
Operating results | |||||||||
Net income | $ | 106,642 | $ | 66,455 | $ | 179,432 | $ | 157,528 | |
Funds from operations (“FFO”)(1) | 25,809 | 24,060 | 105,036 | 88,166 | |||||
Net rental income | 36,224 | 30,143 | 139,026 | 114,235 | |||||
Comparative properties net operating income (“NOI”)(1) | 26,908 | 26,256 | 107,819 | 103,594 | |||||
Per Unit amounts | |||||||||
Distribution rate | $ | 0.17 | $ | 0.17 | $ | 0.70 | $ | 0.70 | |
FFO – diluted(1)(2) | $ | 0.18 | $ | 0.22 | $ | 0.78 | $ | 0.86 | |
FFO payout ratio – diluted(1) | 97.8% | 80.6% | 89.6% | 81.7% | |||||
See footnotes at end. |
SELECTED BALANCE SHEET & PORTFOLIO INFORMATION | ||||
(unaudited) | As at | |||
(in thousands of dollars except per Unit amounts) | December 31, 2019 | December 31, 2018 | ||
Available liquidity(1) | $ | 591,537 | $ | 103,162 |
Level of debt (net debt-to-assets ratio)(1) | 23.7% | 43.5% | ||
Net asset value (“NAV”) per Unit(1) | $ | 11.76 | $ | 10.54 |
Total portfolio(3) | ||||
Number of properties | 209 | 223 | ||
Investment properties | $ | 2,428,664 | $ | 2,138,411 |
Gross leasable area (“GLA”) (in millions of sq. ft.) | 21.9 | 20.2 | ||
Occupancy rate – in-place and committed (period-end) | 95.8% | 97.1% | ||
Occupancy rate – in-place (period-end) | 94.9% | 95.7% | ||
See footnotes at end. | ||||
QUARTERLY AND ANNUAL FINANCIAL AND OPERATIONAL HIGHLIGHTS
INVESTMENT HIGHLIGHTS
Acquired GLA | Occupancy | WALT | ||||
(thousands of | at acquisition | at acquisition | Purchase | |||
sq. ft.) | (%) | (years) | price(1) | Date acquired | ||
300 Orenda Road, Brampton, Ontario | 97 | 100.0% | 7.0 | $ | 17,420 | December 16, 2019 |
840 Trillium Drive, Kitchener, Ontario | 39 | 100.0% | 11.0 | 5,700 | January 13, 2020 | |
Berkshire Portfolio, Kitchener, Ontario | 566 | 100.0% | 2.9 | 62,500 | January 17, 2020 | |
1995 Markham Road, Scarborough, Ontario | 241 | 100.0% | 7.0 | 33,100 | January 22, 2020 | |
Total | 943 | 100.0% | 4.7 | $ | 118,720 |
(1) | Excludes transaction costs. |
Including these acquisitions, the Trust has completed or is under contract to acquire approximately $170 million of properties comprising 1.3 million square feet of GLA in Ontario and Québec at a weighted average cap rate of 4.6%. The properties are being acquired significantly below replacement cost with in-place rents more than 20% below current market rent and a weighted average lease term of 4.7 years. Subject to satisfactory completion of due diligence, the Trust expects to close on the remainder of the acquisitions in the first quarter of 2020.
In addition to the above acquisitions, the Trust is in negotiations on another $100 million of acquisitions, predominantly in the Greater Toronto Area.
CAPITAL HIGHLIGHTS
Key performance indicators (unaudited) | December 31, 2019 | December 31, 2018 | ||
Level of debt (net debt-to-assets ratio)(1) | 23.7% | 43.5% | ||
Net debt-to-adjusted EBITDAFV (years)(1) | 4.3 | 7.2 | ||
Interest coverage ratio (times)(1)(4) | 3.8 | 3.3 | ||
Weighted average face interest rate on debt (period-end)(5) | 3.59% | 3.65% | ||
Weighted average remaining term to maturity on debt (years) | 5.5 | 4.4 | ||
Unencumbered assets(1)(4) | $ | 96,251 | $ | 190,694 |
Available liquidity(1) | 591,537 | 103,162 | ||
See footnotes at end. | ||||
“Over the past year, we have reduced our average leverage by more than 10% resulting in enhanced safety and financial flexibility”, said Lenis Quan, Chief Financial Officer of Dream Industrial REIT. “Our net asset value per Unit has increased by 12% which reflects the strength of our Ontario and Québec markets. With our recently announced European expansion and debt strategy, we are well positioned to pursue an investment grade credit rating and pursue unsecured financings. We remain focused on driving FFO per Unit and net asset value growth as we continue to improve the overall quality and stability of Dream Industrial’s portfolio.”
APPOINTMENT OF OFFICERS
As previously announced, Mr. Alexander Sannikov and Mr. Bruce Traversy have joined the Trust in dedicated senior operating and investment roles. The Trust is pleased to announce the appointment of Mr. Alexander Sannikov to the position of Chief Operating Officer and Mr. Bruce Traversy to the position of Senior Vice President, Head of Investments, Europe. Mr. Sannikov will have oversight of the operating performance of our properties, our portfolio strategy as well as capital allocation. Mr. Traversy will have oversight of investment strategy and execution with a focus mainly on the European markets.
CONFERENCE CALL
Senior management will host a conference call to discuss the results on Wednesday, February 19, 2020 at 11:00 a.m. (ET). To access the conference call, please dial 1-888-465-5079 in Canada and the U.S. or 416-216-4169 elsewhere and use passcode 5152 623#. To access the conference call via webcast, please go to Dream Industrial REIT’s website at www.dreamindustrialreit.ca and click on the link for News & Events, then click on Calendar of Events. A taped replay of the conference call and the webcast will be available for ninety (90) days following the call.
Other information
Information appearing in this press release is a select summary of results. The consolidated financial statements and management’s discussion and analysis for the Trust will be available at www.dreamindustrialreit.ca and on www.sedar.com.
Dream Industrial REIT is an unincorporated, open-ended real estate investment trust. As at December 31, 2019, Dream Industrial REIT owns and operates a portfolio of 209 geographically diversified light industrial properties comprising approximately 21.9 million square feet of gross leasable area in key markets across North America. Its objective is to grow and upgrade the quality of its portfolio and to provide attractive overall returns to its unitholders. For more information, please visit www.dreamindustrialreit.ca.
FOOTNOTES
(1) | FFO, comparative properties NOI, diluted FFO per Unit, diluted FFO payout ratio, available liquidity, level of debt (net debt-to-assets ratio), NAV per Unit, net debt-to-adjusted EBITDAFV, interest coverage ratio and unencumbered assets are non-GAAP measures used by Management in evaluating operating and financial performance. Please refer to the cautionary statements under the heading “Non-GAAP Measures” in this press release. |
(2) | A description of the determination of diluted amounts per Unit can be found in our Management’s Discussion and Analysis for the three months and year ended December 31, 2019, in the section “Non-GAAP measures and other disclosures”, under the heading “Weighted average number of Units”. |
(3) | Total portfolio excludes assets held for sale at the end of each period as applicable. |
(4) | Interest coverage ratio and unencumbered assets have been restated in the comparative period to conform to current period presentation. For further details, please refer to our MD&A in the section “Non-GAAP Measures and Other Disclosures” under the headings “Interest coverage ratio” and “Unencumbered assets”. |
(5) | Weighted average face interest rate on debt is calculated as the weighted average face interest rate of all interest bearing debt. |
Non-GAAP Measures
The Trust’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this press release, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-GAAP financial measures, including FFO, comparative properties NOI, diluted FFO per Unit, diluted FFO payout ratio, available liquidity, level of debt (net debt-to-assets ratio), NAV per Unit, net debt-to-adjusted EBITDAFV, interest coverage ratio and unencumbered assets as well as other measures discussed elsewhere in this press release. These non-GAAP measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other income trusts. The Trust has presented such non-GAAP measures as Management believes they are relevant measures of the Trust’s underlying operating and financial performance. Non-GAAP measures should not be considered as alternatives to net income, net rental income, cash flows generated from (utilized in) operating activities, cash and cash equivalents, total assets, non-current debt, total equity, or comparable metrics determined in accordance with IFRS as indicators of the Trust’s performance, liquidity, cash flow, and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the “Non-GAAP measures and other disclosures” in Dream Industrial REIT’s MD&A for the three months and year ended December 31, 2019.
Forward looking information
This press release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans”, or “continue”, or similar expressions suggesting future outcomes or events. Some of the specific forward-looking information in this press release may include, among other things, statements regarding our European expansion strategy; the Trust’s intention to repay approximately $200 million of its Canadian mortgage debt; the expectation that such prepayment will realize immediate interest cost savings; the Trust’s intention to obtain new euro-denominated financing of up to 100% of the value of its European asset base at attractive rates and the estimated interest rates relating to such financing over a five-year term; expectations regarding accretion to FFO and net income; the intended use of proceeds of the Offering; strategies and plans to enhance cash flow growth and NAV per Unit growth; expectations relating to the pace of rental growth in 2020 and the opportunity to realize rental rate growth; the potential acquisition opportunities and the anticipated timing of closing of the acquisitions referred to in this press release and the expected composition of our European portfolio after the completion of the acquisitions. 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 Dream Industrial REIT’s control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, global and local economic and business conditions; changes to laws, including tax laws; the financial condition of tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; interest and currency rate fluctuations; the risk that the Trust may not be able to obtain some or all of the euro-denominated financing it intends to obtain, or that it may take longer than anticipated to obtain such financing, or that the interest rates for such financing may be higher than the estimated range or that the terms of such financing may be less favourable than anticipated; the risk that the actual accretion to FFO and net income as described in this press release may differ from what the Trust has estimated; the risk that there may be unforeseen events that cause the Trust’s actual capital structure, overall cost of debt and results of operations to differ from what the Trust currently anticipates; and with respect to the acquisition pipeline, the risk of failure of completion, the failure to receive any required approvals, the failure to satisfy or waive customary conditions on closing as well as the risk that the acquired properties may not perform as anticipated. Our objectives and forward-looking statements are based on certain assumptions with respect to each of our markets, including the European markets that we are entering, including that the general economy remains stable, interest rates remain stable (including that interest rates in Europe remain below North American rates), there are no unforeseen changes in the legislative and operating framework for our business, including unforeseen changes to tax laws or governmental regulations in Canada, the U.S. or Europe; conditions within the real estate market remain consistent, competition for acquisitions remains consistent with the current climate, the acquisitions referred to in this press release are completed as currently contemplated, our hedging and debt strategies achieve their intended goals and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Dream Industrial REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise except as required by law. Additional information about these assumptions and risks and uncertainties is contained in Dream Industrial REIT’s filings with securities regulators, including its latest annual information form and MD&A. These filings are also available at Dream Industrial REIT’s website at www.dreamindustrialreit.ca.
For further information, please contact:
Dream Industrial REIT
Brian Pauls | Lenis Quan | Alexander Sannikov |
Chief Executive Officer | Chief Financial Officer | Chief Operating Officer |
(416) 365-2365 | (416) 365-2353 | (416) 365-4106 |
bpauls@dream.ca | lquan@dream.ca | asannikov@dream.ca |