News Column

Slate Retail REIT Reports Second Quarter 2014 Results

August 13, 2014

TORONTO, Aug. 13, 2014 /CNW/ - Slate Retail REIT ("Slate Retail" or the "REIT") (TSX: SRT.U / SRT.UN) today announced its financial results for the quarter ended June 30, 2014. All amounts are expressed in U.S. dollars unless otherwise stated.

"I am very pleased to report the close of Slate Retail REIT's first quarter of operations. We began the quarter with the completion of the unitholder approved combination transaction (the "Combination Transaction") of SUSO 1, SUSO 2 and GAR which was followed by the subsequent listing on the Toronto Stock Exchange," said Blair Welch, Chief Executive Officer. "The initial portfolio consisted of 29 grocery anchored retail properties, located throughout the United States. Our U.S. grocery retailers operate in a defensive, consumer staple industry and our anchor tenants are among the largest supermarket chains in the U.S. with a proven operational history. As a result, we had a strong quarter and closed on solid footing with financial and operating results in-line with our forecast."


Second Quarter 2014 Highlights

•FFO(1) per unit was $0.27, in-line with the Adjusted Forecast(2)•AFFO(1) per unit was $0.25, up compared with the Adjusted Forecast(2) per unit AFFO(1) of $0.23•Balance sheet remains strong with debt to gross book value ratio of 49.8% and 3.0 times interest coverage ratio •Significant growth through leasing activity totalling 89,772 square feet including 66,597 square feet of renewal transactions, representing a 9.5% spread over rental rates of expiring leases •Subsequent to the quarter, Slate Retail acquired, or entered into a commitment to acquire, four additional properties totalling 538,080 square feet for an aggregate gross purchase price of $68.5 million ($127 per square foot) and a blended all-in going-in cap rate of 7.3%.

"It's important to note that our growth to date has been achieved using our internal resources and that we have the capital to execute on more opportunities," added Brady Welch, Chief Financial Officer. "We have a robust pipeline and it is our objective to expand our asset base while maintaining financial flexibility and balance sheet strength."

Key Performance Indicators








Three months ended June 30, 2014

US$ thousands, excluding ratios, per unit values

Actual

Adjusted

Forecast(2)

Rental revenue

$9,885

$10,044

Net operating income ("NOI")(1)

$6,890

$6,946

Number of units outstanding

15,975

16,000

Funds from operations ("FFO")(1)

$4,335

$4,385

FFO per unit(1)

$0.27

$0.27







Adjusted funds from operations ("AFFO")(1)

$4,059

$3,743

AFFO per unit(1)

$0.25

$0.23







Total assets

$463,208



Total debt

$230,626



AFFO payout ratio(1)

60%



Debt / GBV ratio

49.8%



Interest coverage ratio

3.00x





(1)

See Non-IFRS Measures.

(2)

The forecast of the REIT's financial results presented in the Management Information

Circular covered the period beginning April 1, 2014 to June 30, 2014 for the combination

of SUSO 1, SUSO 2 and GAR (the "Forecast"). The Combination Transaction was however

completed on April 15, 2014. To increase comparability between the Forecast for the quarter

and the actual results for the quarter, the Forecast  has been adjusted (the "Adjusted Forecast").




 

Distributions

Slate Retail paid distributions of $0.03 from completion of the Combination Transaction on April 15 to April 30, 2014 and declared/paid distributions of $0.06 per unit for both May and June. Distributions are in-line with the Adjusted Forecast(2).


Outlook

Slate Retail REIT will continue to focus on identifying and acquiring undervalued grocery-anchored retail properties in the U.S. while maintaining a conservative financial structure. These results demonstrate our commitment to those goals and to continuing to create value for our unitholders.


Conference Call and Supplemental Information

Senior management will host a live conference call at 9:00 a.m. ET on Thursday, August 14, 2014 to discuss the results and ongoing business initiatives of the REIT. The conference call can be accessed by dialing (647) 427-7450 or 1 (888) 231-8191. Additionally, the conference call will be available via simultaneous audio webcast on the REIT's website at www.slateretailreit.com. A replay will be available on the REIT's website or by dialing (416) 849-0833 or 1 (855) 859-2056, access code 74215385, approximately two hours after the event.

All interested parties can access Slate Retail's Supplemental Information online at www.slateretailreit.com under the Investors section.  These materials are also available on SEDAR or upon request to the REIT at info@slateretailreit.com or (416) 644-4264.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning the REIT's objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Readers should not place undue reliance on any such forward-looking statements.

Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the REIT to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained herein.

Such forward-looking statements are based on a number of assumptions that may prove to be incorrect, including, but not limited to, the continued availability of mortgage financing and current interest rates; the extent of competition for properties; assumptions about the markets in which the REIT and its subsidiaries operate; the global and North American economic environment; and changes in governmental regulations or tax laws.

Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this news release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this news release. Except as required by applicable law, the REIT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.



Non-IFRS Measures

This news release contains financial measures that do not have a standardized meaning under International Financial Reporting Standards ("IFRS") as prescribed by the International Accounting Standards Board. Slate Retail uses the following non-IFRS financial measures: Funds from Operations ("FFO"), Adjusted Funds from Operations ("AFFO"), Net Operating Income ("NOI"), and Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"). Management believes that in addition to conventional measures prepared in accordance with IFRS, investors in the real estate industry use these non-IFRS financial measures to evaluate the REIT's performance and financial condition. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS. In addition, they do not have standardized meanings and may not be comparable to measures used by other issuers in the real estate industry or other industries.


Use of Estimates

The preparation of the REIT financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management's estimates are based on historical experience and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions.

About Slate Retail REIT

Slate Retail REIT is an open-ended real estate investment trust focused on U.S. grocery-anchored real estate. The REIT's portfolio includes 30 properties located primarily across the top 50 U.S. metro markets. The REIT is focused on maximizing value through internal organic rental growth and strategic acquisitions. For more information, please visit www.slateretailreit.com.

SOURCE Slate Retail REIT


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