TORONTO, May 07, 2019 (GLOBE NEWSWIRE) -- RioCan Real Estate Investment Trust (“RioCan" or the "Trust”) today announced its financial results for the three months ended March 31, 2019.
“RioCan’s industry-leading major market portfolio, leadership team, balance sheet, and development pipeline continued to deliver unitholder value in the first quarter of 2019. Our strategy to increase our presence in highly desirable, fast-growing markets will fuel FFO per unit growth long into the future,” said Edward Sonshine, Chief Executive Officer of RioCan. “We are growing RioCan Living™, our residential portfolio, with 2,300 units at varying stages of development and an additional 2,000 units expected to be underway by 2021. Furthermore, we are very satisfied with the speed of leasing and rental rates at our first rental residential projects, Yonge Eglinton Northeast Corner (eCentral) in Toronto and Gloucester Residential (Frontier) in Ottawa. Construction at The Well, Yonge Sheppard (Pivot) in Toronto, and Brentwood Village (Brio) in Calgary is progressing on track with all projects now out of the ground. We are confident that RioCan’s transit-oriented, mixed use developments will continue to reap sustainable growth and drive the quality of income higher than it has ever been.”
|Three months ended March 31|
|(in millions except percentages, square feet and per unit values)||2019||2018|
|Weighted average units outstanding - diluted (in thousands)||305,046||321,988|
|FFO per unit – diluted (i)||$||0.47||$||0.46|
|Six major markets - % of total annualized revenue (iii)||87.5%||80.0%|
|Greater Toronto Area - % of total annualized revenue (iii)||47.6%||43.7%|
|Occupancy - committed six major markets (iii)||97.5%||97.9%|
|Occupancy - committed (iii)||96.9%||96.6%|
|Blended leasing spread||10.7%||8.3%|
|Renewal leasing spread||8.2%||4.3%|
|Same property NOI growth - six major markets (i) (ii)||1.7%||3.3%|
|Same property NOI growth - overall portfolio (i) (ii)||1.4%||2.6%|
|Development completions - sq ft in thousands||92.0||118.0|
|Development expenditures (iv)||$||92.5||$||102.1|
|Properties held for development and residential inventory as a percentage of consolidated gross book value of assets (maximum permitted: 15%) (iii) (iv)||8.4%||9.6%|
|Balance Sheet Strength Highlights|
|Debt to Adjusted EBITDA (i) (v)||7.94x||7.63x|
|Ratio of total debt to total assets (i) (iii) (v)||42.2%||42.4%|
|Unencumbered assets (i) (iii) (v)||$||8,000||$||8,114|
|Unencumbered assets to unsecured debt (i) (iii) (v)||229%||221%|
(i) A Non-GAAP measurement. For definitions and basis of presentation of RioCan's Non-GAAP measures, refer to the Non-GAAP Measures section in RioCan's Management's Discussion and Analysis (MD&A) for the three months ended March 31, 2019.
(ii) Refers to same property NOI (SPNOI) growth on a year-over-year basis. Prior periods as reported; not restated to reflect current period categories. Q1 2019 SPNOI growth was 2.9% and 2.5% for the Trust's six major markets portfolio and overall portfolio, respectively, if Bombay/Bowring disclaimed leases are excluded and completed properties under development are included. Such completed developments have been owned by the RioCan in the comparative periods and are generating cash rent.
(iii) Information presented as at March 31.
(iv) Includes costs incurred for various properties under development and for residential inventory in respective reporting periods.
(v) At RioCan's proportionate share.
FFO Per Unit Growth and Capital Recycling
RioCan's development program is a significant component of its growth strategy to unlock the intrinsic value of its existing properties and deliver strong net asset value ("NAV") growth to its unitholders. Notable milestones for several large mixed-use projects are included below. The number of residential units and net leasable area (NLA) square footage stated here are at 100% and all estimated value creation and costs are stated at RioCan's interest.
During the First Quarter, the Trust submitted additional zoning applications for 2.1 million square feet including an application for the Trust's iconic property, RioCan Hall in Toronto's entertainment district, bringing the Trust's zoning applications submitted to 7.5 million square feet or 28.5% and zoning approvals to 11.2 million square feet or 42.6%. All of the Trust's development projects are in Canada's six major markets, which include 18.7 million square feet (at RioCan's interest) of residential projects, representing 71.1% of its total development pipeline of 26.3 million square feet as of March 31, 2019.
Balance Sheet Strength
RioCan continued to exercise sound capital management in 2019 and maintained a strong balance sheet. Debt to Adjusted EBITDA at RioCan's proportionate share was at 7.94x as at March 31, 2019, below the Trust's 8.0x target despite substantial secondary market asset dispositions completed and a development balance of $1.2 billion as of March 31, 2019. Debt to total assets at RioCan's proportionate share was 42.2%, as at March 31, 2019, in line with our leverage target. On a proportionate share basis, the Trust continued to maintain a large unencumbered asset pool of $8.0 billion as of March 31, 2019, which provided 229% coverage over its unsecured debt, well above its 200% target.
During the First Quarter, the Trust extended the maturity date of its $150.0 million non-revolving unsecured credit facility from December 27, 2019 to June 27, 2024 and fixed the all-in annual interest rate at 3.43% through an interest rate swap. The Trust also fixed the annual all-in interest rate for $125.0 million of its other non-revolving unsecured credit facility maturing on January 31, 2023 at 3.38% through an interest rate swap.
Further, during the First Quarter, the Trust entered into a $350.0 million five-year non-revolving unsecured credit facility with three financial institutions and has fully drawn on the credit facility to repay certain debt and for general Trust purposes. This credit facility matures on February 7, 2024 and, through an interest rate swap, bears an annual all-in fixed interest rate of 3.34%. These transactions demonstrate the Trust's credit worthiness and access to multiple sources of capital, extend the average term to maturity of the Trust's total debt, and reduced the Trust's floating interest rate debt exposure to under 10%.
Subsequent to quarter end, the Trust exercised its option to extend the maturity date on its operating line of credit to May 31, 2024. All other terms and conditions remained the same.
RioCan launched its inaugural sustainability report on May 6, 2019. Publishing its first sustainability report is a major milestone in RioCan’s journey to embed sustainability across all aspects of its business. Please visit our web site www.riocan.com under Sustainability to review the full report and supplement.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Tuesday May 7, 2019 at 10:00 a.m. (ET). You will be required to identify yourself and the organization on whose behalf you are participating.
In order to participate, please dial 647-427-3230 or 1-877-486-4304. If you cannot participate in the live mode, a replay will be available. To access the replay, please dial 1-855-859-2056 and enter passcode 9135829#.
For a copy of the slides to be used for the conference call or, to access the simultaneous webcast, visit RioCan’s website at http://investor.riocan.com/investor-relations/events-and-presentations/ and click on the link for the webcast.
RioCan is one of Canada’s largest real estate investment trusts with a total enterprise value of approximately $14.1 billion as at March 31, 2019. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high- density transit-oriented areas where Canadians want to shop, live and work. Our portfolio is comprised of 230 properties, including 14 development properties, with an aggregate net leasable area of approximately 38.3 million square feet including residential rental properties. To learn more about us, please visit www.riocan.com.
Basis of Presentation and Non-GAAP measures
All figures included in this News Release are expressed in Canadian dollars unless otherwise noted. RioCan’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS). Financial information included within this News Release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the Trust's unaudited interim condensed consolidated financial statements ("Consolidated Financial Statements") and MD&A for the three months ended March 31, 2019, which is available on RioCan's website at www.riocan.com and on SEDAR at www.sedar.com.
Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not in accordance with generally accepted accounting principles (GAAP) under IFRS. The following measures Funds From Operations (“FFO”), Same Property NOI, Debt to Adjusted EBITDA, RioCan's Proportionate Share, Unencumbered Assets to Unsecured Debt and Total Enterprise Value, as well as other measures that may be discussed elsewhere in this News 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. RioCan supplements its IFRS measures with these Non- GAAP measures to aid in assessing the Trust’s underlying performance and reports these additional measures so that investors may do the same. Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flow, and profitability. For full definitions of these measures, please refer to the “Non-GAAP Measures” section in RioCan’s MD&A for the three months ended March 31, 2019.
This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the “Risks and Uncertainties” section in RioCan's MD&A for the three months ended March 31, 2019 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release. General economic conditions, including interest rate fluctuations, may also have an effect on RioCan’s results of operations. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward- looking information may include, but are not limited to: a stable retail environment; relatively historically low interest costs; a continuing trend toward land use intensification, including residential development in urban markets; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; the availability of investment opportunities for growth in Canada; and the timing and ability for RioCan to sell certain properties, the valuations to be realized on property sales relative to current IFRS values, and the Trust's ability to utilize the capital gain refund mechanism. 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 this forward-looking information.
Our U.S. subsidiary qualified as a REIT for U.S. income tax purposes up to May 25, 2016, subsequent to the closing date of the sale of our U.S. property portfolio. For U.S. income tax purposes, the subsidiary distributed all of its U.S. taxable income and is entitled to deduct such distributions against its taxable income. The subsidiary’s qualification as a REIT depends on the REIT’s satisfaction of certain asset, income, organizational, distribution, unitholder ownership and other requirements up until May 25, 2016. Our U.S. subsidiary was subject to a 30% or 35% withholding tax on distributions of its U.S. taxable income to Canada. We did not distribute any withholding taxes paid or payable to our unitholders related to the disposition. Should RioCan’s U.S. subsidiary no longer qualify as a U.S. REIT for U.S. tax purposes prior to May 25, 2016, certain statements contained in this News Release or the MD&A for the three months ended March 31, 2019 may need to be modified.
The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
RioCan Real Estate Investment Trust
Senior Vice President and Chief Financial Officer
416-866-3033 | www.riocan.com
Source: RioCan Real Estate Investment Trust