Slate Grocery REIT (TSX: SGR.U) (TSX: SGR.UN) (the "REIT"), an owner and operator of U.S. grocery-anchored real estate, today announced its financial results and highlights for the three and nine months ended September 30, 2020.
"We are pleased to report a record breaking third quarter in which the REIT completed over 196,000 square feet of new leasing, our best quarterly new leasing performance since inception by more than 50%," said David Dunn, Chief Executive Officer. "We have continued to prove that our grocery-anchored portfolio comprised of essential tenants is well equipped to weather the challenges brought about by COVID-19. Our new leasing activity more than offset vacancies within the quarter, resulting in both increased occupancy and more resilient tenancies with improved growth prospects. We are entering the fourth quarter with positive momentum and we look forward to finishing the year on a strong note.”
For the CEO's letter to unitholders for the quarter, please follow the link here.
Highlights
COVID-19 Update
In response to the pandemic, Slate Asset Management (Canada) L.P. (the “Manager”), as manager of the REIT, has implemented a COVID-19 response plan, with employee and tenant safety as a top priority. This plan is intended to monitor and mitigate the business and health risks posed to the REIT and its stakeholders.
Appropriate operational planning and cost-control measures are in place to manage operational and financial risk. The REIT has mandated increased sanitation and health and safety measures at its properties. The REIT continues to monitor direction provided by the World Health Organization, public health authorities and federal and state governments in order to control the spread of COVID-19.
Management has assessed 64% of the REIT’s tenant portfolio comprises essential tenants, including grocery-anchored tenants, medical and personal services, financial institutions, and other essential based services. Rent is typically paid within the first 15 business days of each month.
For the third quarter, the REIT has collected 95% of contractual rent in cash. For the month of October the REIT has collected 93% of rent in cash. The REIT expects to substantially collect outstanding billings through immediate cash collection and deferral programs. No new deferral programs were granted by the REIT for the quarter. The REIT continues to assess tenants adversely affected by COVID-19 and will consider deferral programs on a case by case basis. All of the REIT’s centers have remained open throughout the COVID-19 pandemic, with 99% of tenants in operation.
The REIT is well-positioned from a liquidity perspective to endure negative impacts as a result of COVID-19, however, the REIT will continue to evaluate and monitor this as the situation endures.
|
Three months ended September 30, |
|||||||||
(in thousands of U.S. dollars, except per unit amounts) |
2020 |
2019 |
Change % |
|||||||
Rental revenue |
|
$ |
31,961 |
|
$ |
34,545 |
|
(7.5) |
% |
|
NOI (1) |
|
$ |
23,098 |
|
$ |
24,385 |
|
(5.3) |
% |
|
Net income (2) |
|
$ |
7,630 |
|
$ |
4,513 |
|
69.1 |
% |
|
|
|
|
|
|
|
|
||||
Leasing – shop space |
|
151,603 |
|
129,255 |
|
17.3 |
% |
|||
Leasing – anchor / junior anchor |
|
280,175 |
|
615,857 |
|
(54.5) |
% |
|||
Total leasing activity (square feet) (2) |
|
431,778 |
|
745,112 |
|
(42.1) |
% |
|||
|
|
|
|
|
|
|
||||
Weighted average number of units outstanding ("WA units") |
|
42,222 |
|
44,107 |
|
(4.3) |
% |
|||
FFO (1) (2) |
|
$ |
11,487 |
|
$ |
12,936 |
|
(11.2) |
% |
|
FFO per WA units (1) (2) |
|
$ |
0.27 |
|
$ |
0.29 |
|
(6.9) |
% |
|
FFO payout ratio (1) (2) |
|
79.1% |
|
72.7% |
|
6.4 |
% |
|||
AFFO (1) (2) |
|
$ |
8,954 |
|
$ |
11,142 |
|
(19.6) |
% |
|
AFFO per WA units (1) (2) |
|
$ |
0.21 |
|
$ |
0.25 |
|
(16.0) |
% |
|
AFFO payout ratio (1) (2) |
|
101.5% |
|
84.4% |
|
17.1 |
% |
|||
|
|
|
|
|
|
|
||||
(in thousands of U.S. dollars) |
2020 |
2019 |
Change % |
|||||||
Same-property NOI (3 month period, 62 properties) |
|
$ |
19,565 |
|
$ |
19,465 |
|
0.5% |
||
Same-property NOI (12 month period, 61 properties) |
|
$ |
77,694 |
|
$ |
77,914 |
|
(0.3)% |
||
|
|
|
|
|
|
|
||||
|
As at September 30, |
|||||||||
(in thousands of U.S. dollars, except per unit amounts) |
2020 |
2019 |
Change % |
|||||||
Total assets |
|
$ |
1,302,849 |
|
$ |
1,336,836 |
|
(2.5)% |
||
Total debt |
|
$ |
777,526 |
|
$ |
798,147 |
|
(2.6)% |
||
Net asset value per unit |
|
$ |
10.65 |
|
$ |
10.89 |
|
|
(2.2)% |
|
Number of properties (2) |
|
76 |
|
79 |
|
(3.8)% |
||||
Portfolio occupancy (2) |
|
92.5% |
|
94.4% |
|
(1.9)% |
||||
Debt / GBV ratio |
|
59.7% |
|
59.7% |
|
—% |
||||
Interest coverage ratio (1) |
|
2.48x |
|
2.46x |
|
0.8% |
||||
(1) Refer to “Non-IFRS Measures” section below. |
||||||||||
(2) Includes the REIT's share of its equity accounted property investment. |
Conference Call and Webcast
Senior management will host a live conference call at 9:00 am ET on Wednesday, October 28, 2020 to discuss the results and ongoing business initiatives of the REIT.
The conference call can be accessed by dialing (647) 427-2311 or 1 (866) 521-4909. Additionally, the conference call will be available via simultaneous audio found at www.snwebcastcenter.com/webcast/slate/2020/1028. A replay will be accessible until November 11, 2020 via the REIT’s website or by dialing (416) 621-4642 or 1 (800) 585-8367 (access code 3690639) approximately two hours after the live event.
About Slate Grocery REIT (TSX: SGR.U / SGR.UN)
Slate Grocery REIT is an owner and operator of U.S. grocery-anchored real estate. The REIT owns and operates approximately U.S. $1.3 billion of critical real estate infrastructure across major U.S. metro markets that communities rely upon for their everyday needs. The REIT’s resilient grocery-anchored portfolio and strong credit tenants provide unitholders with durable cash flows and the potential for capital appreciation over the longer term. Visit slategroceryreit.com to learn more about the REIT.
About Slate Asset Management
Slate Asset Management is leading real estate focused alternative investment platform with approximately $6.5 billion in assets under management. Slate is a value-oriented manager and a significant sponsor of all of its private and publicly traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long-term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a demonstrated ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more.
Supplemental Information
All interested parties can access Slate Grocery’s Supplemental Information online at slategroceryreit.com in the Investors section. These materials are also available on SEDAR or upon request to the REIT at [email protected] or (416) 644-4264.
Forward Looking Statements
Certain information herein constitutes “forward-looking information” as defined under Canadian securities laws which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words “plans”, “expects”, “does not expect”, “scheduled”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projects”, “believes”, or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “occur”, “be achieved”, or “continue” and similar expressions identify forward-looking statements. Some of the specific forward-looking statements contained herein include, but are not limited to, statements relating to the impact of the COVID-19 pandemic. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.
Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements. Additional information about risks and uncertainties is contained in the filings of the REIT with securities regulators.
Non-IFRS Measures
This news release and accompanying financial statements are based on International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
We disclose a number of financial measures in this news release that are not measures used under IFRS, including NOI, same-property NOI, FFO, FFO payout ratio, AFFO, AFFO payout ratio, adjusted EBITDA and the interest coverage ratio, in addition to certain measures on a per unit basis.
We utilize these measures for a variety of reasons, including measuring performance, managing the business, capital allocation and the assessment of risk. Descriptions of why these non-IFRS measures are useful to investors and how management uses each measure are included in Management’s Discussion and Analysis. We believe that providing these performance measures on a supplemental basis to our IFRS results is helpful to investors in assessing the overall performance of our businesses in a manner similar to management. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with IFRS. We caution readers that these non-IFRS financial measures may differ from the calculations disclosed by other businesses, and as a result, may not be comparable to similar measures presented by others.
SGR-FR
Calculation and Reconciliation of Non-IFRS Measures
The table below summarizes a calculation of non-IFRS measures based on IFRS financial information.
|
Three months ended September 30, |
|||||||
(in thousands of U.S. dollars, except per unit amounts) |
|
2020 |
|
2019 |
||||
Rental revenue |
|
$ |
31,961 |
|
|
$ |
34,545 |
|
Straight-line rent revenue |
|
(530) |
|
|
(323) |
|
||
Property operating expenses |
|
(4,649) |
|
|
(5,287) |
|
||
IFRIC 21 property tax adjustment |
|
(4,115) |
|
|
(4,675) |
|
||
Adjustments for equity investment |
|
431 |
|
|
125 |
|
||
NOI (1) (2) |
|
$ |
23,098 |
|
|
$ |
24,385 |
|
|
|
|
|
|
||||
Cash flow from operations |
|
$ |
10,657 |
|
|
$ |
9,420 |
|
Changes in non-cash working capital items |
|
(466) |
|
|
1,076 |
|
||
Disposition costs |
|
16 |
|
|
2,423 |
|
||
Finance charge and mark-to-market adjustments |
|
(395) |
|
|
(405) |
|
||
Interest, net and TIF note adjustments |
|
34 |
|
|
45 |
|
||
Adjustments for equity investment |
|
364 |
|
|
54 |
|
||
Taxes on dispositions |
|
747 |
|
|
— |
|
||
Capital |
|
(852) |
|
|
(277) |
|
||
Leasing costs |
|
(412) |
|
|
(357) |
|
||
Tenant improvements |
|
(739) |
|
|
(837) |
|
||
AFFO (1) (2) |
|
$ |
8,954 |
|
|
$ |
11,142 |
|
|
|
|
|
|
||||
Net income (1) (2) |
|
$ |
7,630 |
|
|
$ |
4,513 |
|
Change in fair value of financial instruments |
|
— |
|
|
3,671 |
|
||
Disposition costs |
|
16 |
|
|
2,423 |
|
||
Change in fair value of properties |
|
2,829 |
|
|
5,441 |
|
||
Deferred income tax expense |
|
2,077 |
|
|
1,238 |
|
||
Adjustments for equity investment |
|
1,088 |
|
|
(72) |
|
||
Unit expense |
|
1,215 |
|
|
397 |
|
||
Taxes on dispositions |
|
747 |
|
|
— |
|
||
IFRIC 21 property tax adjustment |
|
(4,115) |
|
|
(4,675) |
|
||
FFO (1) (2) |
|
$ |
11,487 |
|
|
$ |
12,936 |
|
Straight-line rental revenue |
|
(530) |
|
|
(323) |
|
||
Capital |
|
(852) |
|
|
(277) |
|
||
Leasing costs |
|
(412) |
|
|
(357) |
|
||
Tenant improvements |
|
(739) |
|
|
(837) |
|
||
AFFO (1) (2) |
|
$ |
8,954 |
|
|
$ |
11,142 |
|
|
|
|
|
|
||||
NOI (1) (2) |
|
$ |
23,098 |
|
|
$ |
24,385 |
|
Other expenses |
|
(3,293) |
|
|
(2,707) |
|
||
Cash interest, net |
|
(7,954) |
|
|
(8,776) |
|
||
Finance charge and mark-to-market adjustments |
|
(395) |
|
|
(405) |
|
||
Adjustments for equity investment |
|
(67) |
|
|
(71) |
|
||
Current income tax (expense) recovery |
|
(432) |
|
|
187 |
|
||
Capital |
|
(852) |
|
|
(277) |
|
||
Leasing costs |
|
(412) |
|
|
(357) |
|
||
Tenant improvements |
|
(739) |
|
|
(837) |
|
||
AFFO (1) (2) |
|
$ |
8,954 |
|
|
$ |
11,142 |
|
(1) Refer to “Non-IFRS Measures” section above. |
||||||||
(2) Includes the REIT's share of its equity accounted property investment. |
|
Three months ended September 30, |
|||||
(in thousands of U.S. dollars, except per unit amounts) |
|
2020 |
|
2019 |
||
Net income (2) |
|
$ |
7,630 |
|
$ |
4,513 |
Interest expense and other financing costs, net |
|
8,349 |
|
9,181 |
||
Change in fair value of financial instruments |
|
— |
|
3,671 |
||
Disposition costs |
|
16 |
|
2,423 |
||
Change in fair value of properties |
|
2,829 |
|
5,441 |
||
Deferred income tax expense |
|
2,077 |
|
1,238 |
||
Current income tax expense (recovery) |
|
1,179 |
|
(187) |
||
Unit expense |
|
1,215 |
|
397 |
||
Adjustments for equity investment |
|
1,155 |
|
(1) |
||
Straight-line rent revenue |
|
(530) |
|
(323) |
||
IFRIC 21 property tax adjustment |
|
(4,115) |
|
(4,675) |
||
Adjusted EBITDA (1) (2) |
|
$ |
19,805 |
|
$ |
21,678 |
|
|
|
|
|
||
NOI (1) (2) |
|
$ |
23,098 |
|
$ |
24,385 |
Other expenses |
|
(3,293) |
|
(2,707) |
||
Adjusted EBITDA (1) (2) |
|
$ |
19,805 |
|
$ |
21,678 |
Cash interest paid |
|
(7,988) |
|
(8,821) |
||
Interest coverage ratio (1) (2) |
|
2.48x |
|
2.46x |
||
|
|
|
|
|
||
WA units |
|
42,222 |
|
44,107 |
||
FFO per WA unit (1) (2) |
|
$ |
0.27 |
|
$ |
0.29 |
FFO payout ratio (1) (2) |
|
79.1% |
|
72.7% |
||
AFFO per WA unit (1) (2) |
|
$ |
0.21 |
|
$ |
0.25 |
AFFO payout ratio (1) (2) |
|
101.5% |
|
84.4% |
||
(1) Refer to “Non-IFRS Measures” section above. |
||||||
(2) Includes the REIT's share of its equity accounted property investment. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20201027006272/en/
Investor Relations
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E-mail: [email protected]