/NOT FOR DISTRIBUTION TO
All amounts in this press release are in thousands of
"We are pleased to announce another quarter of strong operating results for Q1-2022 with the Fund achieving annualized rent growth of 8.8% and strong occupancy of 94.5%," commented
- During Q1-2022, the Fund recorded a fair value gain on its properties of
$12,648 , contributing to the cumulative$62,092 or 32.3% increase over the aggregate purchase price since the properties were acquired by the Fund onMarch 31, 2021 . The fair value gain during Q1-2022 was driven by net operating income ("NOI") growth and capitalization rate compression from strong demand in the investment market for multi-family properties across the primary markets in which the Fund operates. - Subsequent to
March 31, 2022 , the Fund completed the refinancing of the loan payable secured byHudson at East ("Hudson") which generated net proceeds of$26,623 reflecting the significant increase in the fair value ofHudson , which along with cash on hand in the Fund was used to acquire Summermill atFalls River ("Summermill"), a 320-suite multi-family property located inRaleigh, North Carolina (see "Subsequent Events"). - Revenue from property operations and NOI for Q1-2022 were
$3,453 and$2,295 (Q1-2021 -$35 and$22 ), respectively, representing a$3,418 and$2,273 increase relative to Q1-2021. The significant increases are primarily due to the difference in the Fund's days of operation between Q1-2022 and Q1-2021, with Q1-2021 only having one day of operations given its initial public offering was completed onMarch 31, 2021 (Q1-2022 - 90 days). - Significant increases in rent growth continued during Q1-2022 with the Fund achieving annualized rent growth of 8.8% and year over year rent growth of 8.1%. These increases were driven by continued growth in demand for multi-family suites due to the economic strength shown in the
U.S. and the primary markets in which the Fund operates following the downturn created by coronavirus (SARS – CoV2) and its variants ("COVID-19"). - The Fund achieved occupancy of 94.5% for Q1-2022, ahead of Q1-2021 and the three months ended
December 31, 2021 by 120 and 90 basis points, respectively, positioning the Fund well to take advantage of favorable market conditions as the economic recovery in theU.S. continues. - As at
May 9, 2022 , the Fund had collected 98.9% of rents for Q1-2022, with further amounts expected to be collected in future periods, demonstrating the Fund's strong tenant profile. - Net income for Q1-2022 was
$8,820 (Q1-2021 -$9 ) representing a$8,811 increase relative to Q1-2021, primarily due to the difference in days of operating activity between Q1-2022 and Q1-2021 as well as the fair value gain on investment properties described above. - Adjusted funds from operations ("AFFO") for Q1-2022 was
$1,158 or$1,148 ahead of Q1-2021, primarily due to the difference in days of operating activity between Q1-2022 and Q1-2021.
On
COVID-19 vaccination programs continue across the
Highlights of the financial and operating performance of the Fund as at
Operational Information (1) | ||||||
Number of properties | 2 | 2 | ||||
Total suites | 675 | 675 | ||||
Economic occupancy (2) | 94.5% | 93.6% | ||||
AMR (in actual dollars) | $ | 1,652 | $ | 1,617 | ||
AMR per square foot (in actual dollars) | $ | 1.70 | $ | 1.67 | ||
Summary of Financial Information | ||||||
Gross book value | $ | 268,084 | $ | 255,200 | ||
Indebtedness | $ | 131,063 | $ | 131,063 | ||
Indebtedness to gross book value | 48.9% | 51.4% | ||||
Weighted average interest rate - as at period end (3) | 2.74% | 2.49% | ||||
Weighted average loan term to maturity | 4.65 years | 4.86 years | ||||
Q1-2022 | Q1-2021 (7) | |||||
Summarized Income Statement | ||||||
Revenue from property operations | $ | 3,453 | $ | 35 | ||
Property operating costs | (791) | (9) | ||||
Property taxes (4) | (367) | (4) | ||||
Adjusted income from operations / NOI | $ | 2,295 | $ | 22 | ||
Fund and trust expenses | (265) | (3) | ||||
Finance costs (including non-cash items) (5) | 556 | (11) | ||||
Distributions to unitholders of the Fund ("Unitholders") | (844) | - | ||||
Distributions to preferred shareholders | (4) | - | ||||
Unrealized foreign exchange gain | 1 | 5 | ||||
Realized foreign exchange loss | (2) | - | ||||
Fair value adjustment on investment properties | 12,648 | - | ||||
Provision for carried interest | (3,102) | - | ||||
Deferred income taxes | (2,463) | (4) | ||||
Net income and comprehensive income | $ | 8,820 | $ | 9 | ||
Other Selected Financial Information | ||||||
Funds from operations ("FFO") | $ | 1,133 | $ | 8 | ||
FFO per unit of the Fund ("Unit") - basic and diluted | $ | 0.10 | $ | - | ||
AFFO | $ | 1,158 | $ | 10 | ||
AFFO per Unit - basic and diluted | $ | 0.11 | $ | - | ||
Weighted average interest rate - average during period (6) | 2.54% | 2.44% | ||||
Interest coverage ratio | 2.47 x | 2.08 x | ||||
Indebtedness coverage ratio | 2.47 x | 2.08 x | ||||
Distributions to Unitholders | $ | 844 | $ | - | ||
Weighted Average Units Outstanding (000s) - basic/diluted | 10,902 | 10,902 |
(1) | The Fund commenced operations following the acquisition of the Fund's properties on | |||
(2) | Economic occupancy for Q1-2022 and the three months ended | |||
(3) | The weighted average interest rate on loans payable is presented as at | |||
(4) | Property taxes were adjusted to exclude the International Financial Reporting Interpretations Committee Interpretation 21, Levies ("IFRIC 21") fair value adjustment and treat property taxes as an expense that is amortized during the fiscal year for the purpose of calculating NOI. These amounts have been reported under fair value adjustment IFRIC 21 under the Fund's condensed consolidated interim financial statements for Q1-2022 and Q1-2021. | |||
(5) | Finance costs include interest expense on loans payable, non-cash amortization of deferred financing costs, as well as fair value changes in derivative financial instruments. | |||
(6) | The weighted average interest rate on loans payable presented reflects the average prevailing index rate, LIBOR or | |||
(7) | Figures represent one day of operating activity for the Fund on |
(a)
On
(b) Unsecured loan:
On
(c) Acquisition of Summermill property:
On
The Fund's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Certain terms that may be used in this press release including AFFO, AMR, economic occupancy, FFO, gross book value, indebtedness, indebtedness coverage ratio, indebtedness to gross book value, interest coverage ratio and NOI (collectively, the "Non-IFRS Measures") as well as other measures discussed elsewhere in this press release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. Gross book value is defined as the fair market value of the investment properties as determined in accordance with IFRS. Indebtedness is defined as the principal amount of loans payable outstanding as at a specific reporting date. The Fund uses these measures to better assess the Fund's underlying performance and financial position and provides these additional measures so that investors may do the same. Further details on Non-IFRS Measures are set out in the Fund's MD&A in the "Non-IFRS Financial Measures" section for Q1-2022 and are available on the Fund's profile on SEDAR at www.sedar.com.
A reconciliation of the Fund's interest coverage ratio and indebtedness coverage ratio are provided below:
Interest and indebtedness coverage ratios | Q1-2022 | Q1-2021 (2) | |||
Net income and comprehensive income | $ | 8,820 | $ | 9 | |
(Deduct) / Add: non-cash or one-time items and distributions (1) | (7,616) | 1 | |||
Adjusted net income and comprehensive income | $ | 1,204 | $ | 10 | |
Interest coverage ratio (3) | 2.47 x | 2.08 x | |||
Indebtedness coverage ratio (4) | 2.47 x | 2.08 x |
(1) | Comprised of unreailzed foreign exchange gain, deferred income taxes, amortization of financing costs, fair value adjustment on derivative instruments, fair value adjustment on investment properties, and provision for carried interest. | ||
(2) | Figures represent one day of operating activity for the Fund on | ||
(3) | Interest coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by interest expense. | ||
(4) | Indebtedness coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by interest expense and mandatory principal payments on the Fund's loans payable. |
The Fund was formed as a "closed-end" limited partnership with an initial term of three years, a targeted yield of 4.0% and a targeted minimum 11% pre-tax investor internal rate of return across all classes of Units.
AFFO and AFFO per Unit for Q1-2022 were
A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for Q1-2022 and Q1-2021 are provided below:
Q1-2022 | Q1-2021 | ||||
Cash provided by (used in) operating activities | $ | 267 | $ | (325) | |
Less: interest costs | (820) | (9) | |||
Cash used in operating activities - including interest costs | $ | (553) | $ | (334) | |
Add / (Deduct): | |||||
Change in non-cash operating working capital | 1,616 | 11 | |||
Change in restricted cash | 145 | 333 | |||
Amortization of financing costs | (75) | (2) | |||
FFO | $ | 1,133 | $ | 8 | |
Add / (Deduct): | |||||
Amortization of financing costs | 75 | 2 | |||
Sustaining capital expenditures and suite renovation reserves | (50) | - | |||
AFFO | $ | 1,158 | $ | 10 |
Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and its properties, including the impact of the COVID-19 global pandemic on the business and operations of the Fund.
Forward-looking information is provided for the purposes of assisting the reader in understanding the Fund's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, the impact of COVID-19 on the Fund's properties as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Fund's
Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities may not be achieved. Those risks and uncertainties include: the impact of COVID-19 on the Fund's properties as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Units and unlisted Units; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the Fund's properties or the Fund's legal entities; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; the extent and pace at which any changes in interest rates that impact the Fund's weighted average interest rate may occur; the use of the proceeds of the Unsecured Loan; and the availability of debt financing for any future financing requirements of the Fund. A variety of factors, many of which are beyond the Fund's control, affect the operations, performance and results of the Fund and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results.
Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the impact of COVID-19 on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Units; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; the realization of property value appreciation and timing thereof; the inventory of multi-family real estate properties; the use of the proceeds of the Unsecured Loan; the availability of properties for potential future acquisition, if any, and the price at which such properties may be acquired; the price at which the Fund's properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the Fund's properties; the availability of mortgage financing and current interest rates; the extent of competition for properties; the growth in NOI and the ability of the Fund to benefit from its light value-add initiatives; the population of multi-family real estate market participants; assumptions about the markets in which the Fund operates; expenditures and fees in connection with the maintenance, operation and administration of the Fund's properties; the ability of
The forward-looking information included in this press release relate only to events or information as of the date on which the statements are made in this press release. Except as specifically required by applicable Canadian securities law, the Fund undertakes no obligation to update or revise publicly any forward-looking information, whether because of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
The Fund is a limited partnership formed under the Limited Partnerships Act (
For the Fund's complete unaudited condensed consolidated interim financial statements and MD&A for the three months ended
Please visit us at www.starlightus.com and connect with us on LinkedIn at www.linkedin.com/company/starlight-investments-ltd-
Neither the
SOURCE
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