/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 with the Fund achieving same property NOI growth of 14.5%," commented
Q2-2022 HIGHLIGHTS
- On
April 27, 2022 , the Fund acquired Summermill atFalls River ("Summermill"), a 320-suite multi-family property located inRaleigh, North Carolina to bring the Fund's portfolio to 995 multi-family suites. The acquisition was financed through cash on hand, new first mortgage at Summermill and net proceeds from the refinancing ofHudson at East ("Hudson"). - Q2-2022 revenue from property operations and net operating income ("NOI") were
$4,565 and$3,029 (Q2-2021 -$3,248 and$2,078 ), respectively, representing an increase of$1,317 and$952 relative to Q2-2021 primarily as a result of the acquisition of Summermil as well as strong same property revenue growth of 11.1% and strong same property NOI growth of 14.5%. - Significant increases in rent growth continued during Q2-2022 with the Fund achieving annualized rent growth for the quarter of 14.7% and year over year rent growth of 12.0%. 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 ("Primary Markets") in which the Fund operates. In addition, the Fund reported an estimated gap in market versus in-place rents of 21.0% as atJune 30, 2022 providing further opportunity for rental increases in future periods. - As at
August 8, 2022 , the Fund had collected 99.0% of rents for Q2-2022, with further amounts expected to be collected in future periods, demonstrating the Fund's strong resident base and operating performance. - Adjusted funds from operations ("AFFO") for Q2-2022 was
$840 or$113 ahead of Q2-2021 and net income for Q2-2022 was$180 (Q2-2021 - loss of$617 ) representing a$797 increase relative to Q2-2021. - On
May 12, 2022 , the Fund entered into a new variable rate collar contract which replaced the previously existing contract to protect against the potential impact of any weakening of theU.S. dollar on the amount required to pay the Fund's monthly Canadian dollar distributions. This new contract allows the Fund to establish a guaranteed monthly exchange rate betweenC$1.2585 andC$1.3400 for the conversion ofU.S. dollar funds to Canadian dollar funds amounting toC$312 per month fromJune 10, 2022 toNovember 10, 2022 .
YTD-2022 Highlights
- Recorded a fair value gain on the properties owned by the Fund ("Properties") of
$12,648 , contributing to the cumulative$62,092 or 21.8% increase over the aggregate purchase price since the Properties were acquired. The fair value gain during YTD-2022 was driven primarily by NOI growth. - Revenue from property operations and NOI were
$8,018 and$5,325 (YTD-2021 -$3,284 and$2,482 ), respectively, representing a$4,735 and$3,226 increase relative to YTD-2021. The significant increases are primarily due to the acquisition of Summermill in Q2-2022 and the difference in the number of operating days between YTD-2022 and YTD-2021. - AFFO was
$1,999 ,$1,036 ahead of Q2-2021 primarily due to the acquisition of Summermill as well as increases in NOI at Montane andHudson partially offset by increases in interest expenses. - Net income for YTD-2022 was
$9,000 (YTD-2021 - loss of$608 ) representing a$9,608 increase relative to YTD-2021, primarily due to the acquisition of Summermill in Q2-2022, the difference in the number of operating days between YTD-2022 and YTD-2021, as well as the fair value gain on the Properties described above.
FUTURE OUTLOOK AND COVID-19 IMPACT
On
Since early 2022, concerns over rising inflation have resulted in a significant increase in interest rates with the
Further disclosure surrounding the Future Outlook is included in the Fund's management's discussion and analysis in the "COVID-19" and "Future Outlook" sections for Q2-2022 under the Fund's profile, which is available on www.sedar.com.
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at
Operational Information (1) | ||||
Number of properties | 3 | 2 | ||
Total suites | 995 | 675 | ||
Economic occupancy (2) | 94.5 % | 93.6 % | ||
Same property AMR (in actual dollars) (3) | $ 1,713 | $ 1,617 | ||
Same property AMR per square foot (in actual dollars) | $ 1.76 | $ 1.67 | ||
Estimated gap in market versus in-place rents | 21.1 % | n/a | ||
Summary of Financial Information | ||||
Gross book value | $ 375,895 | $ 255,200 | ||
Indebtedness | $ 240,500 | $ 131,063 | ||
Indebtedness to gross book value | 64.0 % | 51.4 % | ||
Weighted average interest rate - as at period end (4) | 4.28 % | 2.49 % | ||
Weighted average loan term to maturity | 4.15 years | 4.86 years | ||
Q2-2022 | Q2-2021 | YTD-2022 | YTD-2021 (1) | |
Summarized Income Statement | ||||
Revenue from property operations | $ 4,565 | $ 3,248 | $ 8,018 | $ 3,284 |
Property operating costs | (1,087) | (792) | (1,878) | (802) |
Property taxes (5) | (449) | (378) | (816) | (382) |
Adjusted income from operations / NOI | $ 3,029 | $ 2,078 | $ 5,325 | $ 2,100 |
Fund and trust expenses | (326) | (280) | (590) | (283) |
Finance costs (including non-cash items) (6) | (1,332) | (1,025) | (777) | (1,036) |
Other income and expenses (7) | (1,191) | (1,390) | 5,042 | (1,389) |
Net income and comprehensive income | $ 180 | $ (617) | $ 9,000 | $ (608) |
Other Selected Financial Information | ||||
Funds from operations ("FFO") | $ 742 | $ 881 | $ 1,875 | $ 889 |
FFO per unit of the Fund ("Unit") - basic and diluted | $ 0.07 | $ 0.08 | $ 0.17 | $ 0.08 |
AFFO | $ 840 | $ 953 | $ 1,999 | $ 963 |
AFFO per Unit - basic and diluted | $ 0.08 | $ 0.09 | $ 0.18 | $ 0.09 |
Weighted average interest rate - average during period (8) | 3.43 % | 2.44 % | 3.02 % | 2.44 % |
Interest coverage ratio | 1.51 x | 2.28 x | 1.81 x | 2.27 x |
Indebtedness coverage ratio | 1.51 x | 2.28 x | 1.81 x | 2.27 x |
Distributions to Unitholders | $ 837 | $ 869 | $ 1,681 | $ 869 |
Weighted Average Units Outstanding (000s) - basic/diluted | 10,902 | 10,902 | 10,902 | 10,902 |
(1) | The Fund commenced operations following the acquisition of Montane and | |||||
(2) | Economic occupancy for Q2-2022 and the three months ended | |||||
(3) | Same property AMR and same property AMR per square foot as at | |||||
(4) | The weighted average interest rate on loans payable is presented as at | |||||
(5) | Property taxes were adjusted to exclude the International Financial Reporting Interpretations Committee Interpretation 21, Levies fair value adjustment | |||||
(6) | Finance costs include interest expense on loans payable, non-cash amortization of deferred financing costs, as well as fair value changes in derivative | |||||
(7) | Includes distributions to Unitholders, dividends to preferred shareholders, unrealized foreign exchange gain, realized foreign exchange loss, fair value | |||||
(8) | The weighted average interest rate on loans payable presented reflects the average prevailing index rate, |
NON-IFRS FINANCIAL MEASURES AND RECONCILIATIONS
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, estimated gap in market versus in-place rents, 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. 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 Q2-2022 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 | Q2-2022 | Q2-2021 | YTD-2022 | YTD-2021 (2) | |
Net income and comprehensive income | $ 8,820 | $ 9 | $ 8,820 | $ 9 | |
(Deduct) / Add: non-cash or one-time items and distributions (1) | (7,616) | 1 | (7,616) | 1 | |
Adjusted net income and comprehensive income | $ 1,204 | $ 10 | $ 1,204 | $ 10 | |
Interest coverage ratio (3) | 2.47 x | 2.08 x | 2.47 x | 2.08 x | |
Indebtedness coverage ratio (4) | 2.47 x | 2.08 x | 2.47 x | 2.08 x |
(1) | Comprised of unreailzed foreign exchange gain, deferred income taxes, amortization of financing costs, fair value adjustment on | ||||
(2) | Figures represent 92 days 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 | ||||
(4) | Indebtedness coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by |
CASH PROVIDED BY OPERATING ACTIVITIES RECONCILIATION TO FFO and AFFO
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.
Basic and diluted AFFO and AFFO per Unit for Q2-2022 were
A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for Q2-2022, YTD-2022, Q2-2021 and YTD-2021 are provided below:
Q2-2022 | Q2-2021 | YTD-2022 | YTD-2021 | ||
Cash provided by (used in) operating activities | $ 3,981 | $ 2,237 | $ 4,249 | $ 1,912 | |
Less: interest costs | (1,792) | (787) | (2,612) | (796) | |
Cash used in operating activities - including interest costs | $ 2,189 | $ 1,450 | $ 1,637 | $ 1,116 | |
Add / (Deduct): | |||||
Change in non-cash operating working capital | (1,851) | (665) | (236) | (654) | |
Change in restricted cash | 576 | 218 | 722 | 551 | |
Amortization of financing costs | (172) | (122) | (248) | (124) | |
FFO | $ 742 | $ 881 | $ 1,875 | $ 889 | |
Add / (Deduct): | |||||
Amortization of financing costs | 172 | 122 | 248 | 124 | |
Sustaining capital expenditures and suite renovation reserves | (74) | (50) | (124) | (50) | |
AFFO | $ 840 | $ 953 | $ 1,999 | $ 963 |
FORWARD-LOOKING STATEMENTS
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, inflation and interest rates 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 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 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; inflation; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the 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; 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 Properties 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 availability of properties for potential future acquisition, if any, and the price at which such properties may be acquired; the price at which the Properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the Properties; inflation; 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 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.
About
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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