APR.UN Automotive Properties Real Estate Investment Trust

TORONTO, May 14, 2024 /CNW/ - Automotive Properties Real Estate Investment Trust (TSX: APR.UN) ("Automotive Properties REIT" or the "REIT") today announced its financial results for the three-month period ended March 31, 2024 ("Q1 2024")

"We generated continued solid financial performance in the quarter, reflecting growth from our contractual rent increases and acquisitions completed last year," said Milton Lamb, CEO of Automotive Properties REIT. "Given the fixed and CPI-linked annual rent increases built into our triple-net leases, we expect ongoing steady organic growth, while we continue to pursue strategic acquisition opportunities."

• The REIT generated AFFO per Unit¹ of $0.234 (diluted) and paid total cash distributions of $0.201 per Unit (as defined below) in Q1 2024, representing an AFFO payout ratio¹ of approximately 85.9%. For the comparable three-month period ended March 31, 2023 ("Q1 2023"), the REIT generated AFFO per Unit of $0.229 (diluted) and paid cash distributions of $0.201 per Unit, representing an AFFO payout ratio of approximately 87.8%.
• The REIT had a Debt to Gross Book Value ("Debt to GBV")² ratio of 44.6% as at March 31, 2024, and $57.7 million of undrawn capacity under its revolving credit facilities, $0.4 million of cash on hand, and four unencumbered properties with an aggregate value of approximately $62.8 million.
• The REIT's valuation of its investment properties increased nominally in Q1 2024 compared to the prior quarter to reflect current market conditions, resulting in a fair value gain of $0.1 million. The capitalization rate applicable to the REIT's entire portfolio increased to 6.63% as at March 31, 2024, compared to 6.59% as at December 31, 2023 and 6.48% as at March 31, 2023.

Rental revenue in Q1 2024 increased by 2.3% to $23.4 million, compared to $22.9 million in Q1 2023. The increase in rental revenue reflects growth from properties acquired during and subsequent to Q1 2023, and contractual annual rent increases.

The REIT generated total Cash NOI of $19.5 million in Q1 2024, representing an increase of 3.5% compared to Q1 2023. The increase was primarily attributable to the properties acquired during and subsequent to Q1 2023 and contractual rent increases. Same Property Cash NOI was $17.6 million in Q1 2024, representing an increase of 2.5% compared to Q1 2023. The increase was primarily attributable to contractual rent increases.

The REIT recorded net income of $20.9 million in Q1 2024, compared to $17.0 million in Q1 2023. The increase was primarily due to higher NOI and favourable changes in non-cash fair value adjustments for interest rate swaps and investment properties, partially offset by a lower increase in fair value adjustment for Class B LP Units and DUs, IDUs, PDUs and RDUs (collectively "Unit-based compensation"). The impact of the movement in the traded value of the REIT Units resulted in an increase in fair value adjustment for Class B LP Units and Unit-based compensation of $5.0 million in Q1 2024, compared to an increase of $14.5 million in Q1 2023.

FFO in Q1 2024 increased 0.3% to $12.1 million, or $0.241 per unit (diluted), compared to $12.0 million, or $0.241 per unit (diluted) in Q1 20233. The slight increase in FFO was primarily attributable to higher rental revenue partially offset by higher interest costs and a reduction in straight-line rent adjustment.

AFFO in Q1 2024 increased 2.7% to $11.7 million, or $0.234 per unit (diluted), compared to $11.4 million, or $0.229 per unit (diluted), in Q1 2023. The increase in AFFO reflects the impact of the properties acquired during and subsequent to Q1 2023 and contractual rent increases, partially offset by higher interest costs. Straight-line rent adjustment is excluded from the calculation of AFFO.

Adjusted Cash Flow from Operations ("ACFO")³ for Q1 2024 was $12.4 million, an increase of 2.7% compared to $12.1 million in Q1 2023. The increase was primarily attributable to the properties acquired during and subsequent to Q1 2023 and contractual rent increases.

The REIT is currently paying monthly cash distributions of $0.067 per Unit, representing $0.804 per Unit on an annualized basis. For Q1 2024, the REIT declared and paid total distributions of $9.86 million, or $0.201 per Unit, representing an AFFO payout ratio of 85.9%. The AFFO payout ratio was lower in Q1 2024 compared to the 87.8% AFFO payout ratio in Q1 2023 primarily due to the positive impact of acquisitions completed during and subsequent to Q1 2023 and contractual rent increases.

As at March 31, 2024, the REIT had a Debt to GBV ratio of 44.6%, $57.7 million of undrawn capacity under its revolving credit facilities, $0.4 million of cash on hand, and four unencumbered properties with an aggregate value of approximately $62.8 million. As of the date of this news release, the REIT has approximately $60.4 million of undrawn capacity under its revolving credit facilities and four unencumbered properties with an aggregate value of approximately $62.8 million.

As at March 31, 2024, 95% of the REIT's debt was fixed with a weighted average interest rate of 4.27%, a weighted average interest rate swap term and mortgages remaining of 4.6 years, and a weighted average term to maturity of debt of 2.6 years.

As at March 31, 2024, there were 39,727,346 REIT Units and 9,327,487 Class B LP Units outstanding.

The REIT is subject to risks associated with inflation, interest rates and availability of capital. The REIT anticipates that inflation and interest rates will remain elevated in the near term and may have an adverse effect on consumer confidence and the overall economy. The fluctuation in the interest rate environment, inflation and credit environment impacts rental growth and capitalization rates overall in the real estate industry which, in turn, could provide attractive buying opportunities for the REIT.

The Canadian automotive dealership industry remains highly fragmented, and the REIT expects continued consolidation over the mid to long term due to increased industry sophistication and growing capital requirements for owner operators, which encourages them to pursue increased economies of scale.

The REIT's unaudited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for Q1 2024 are available on the REIT's website at www.automotivepropertiesreit.ca and on SEDAR+ at www.sedarplus.ca.

Management of the REIT will host a conference call for analysts and investors on Wednesday, May 15, 2024 at 9:00 a.m. (ET). To join the conference call without operator assistance, participants can register and enter their phone number at https://emportal.ink/49uGPF9 to receive an instant automated call back. Alternatively, they can dial (416) 764-8688 or (888) 390-0546 to reach a live operator who will join them into the call. A live and archived webcast of the call will be accessible via the REIT's website www.automotivepropertiesreit.ca.

To access a replay of the conference call, dial (416) 764-8677 or (888) 390-0541, passcode: 813188 #. The replay will be available until May 22, 2024.

Automotive Properties REIT is an internally managed, unincorporated, open-ended real estate investment trust focused on owning and acquiring primarily income-producing automotive dealership properties located in Canada. The REIT's portfolio currently consists of 77 income-producing commercial properties, representing approximately 2.9 million square feet of gross leasable area, in metropolitan markets across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Québec. Automotive Properties REIT is the only public vehicle in Canada focused on consolidating automotive dealership real estate properties. For more information, please visit: www.automotivepropertiesreit.ca.

This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expected". Forward-looking information includes the REIT's expectations with respect to inflation and interest rates, including the impact of each of the foregoing on the REIT and its tenants; and the expected timing of the closing of the Brossard Property acquisition. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risks & Uncertainties, Critical Judgments & Estimates" in the REIT's MD&A for the year ended December 31, 2023 and in the REIT's annual information form dated March 7, 2024, which are available on SEDAR+ (www.sedarplus.ca) and the REIT's website (www.automotivepropertiesreit.ca). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

This news release contains certain financial measures and ratios which are not defined under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other real estate investment trusts or enterprises. FFO, AFFO, FFO payout ratio, AFFO payout ratio, NOI, Cash NOI, Same Property Cash NOI and ACFO are key measures of performance used by the REIT's management and real estate businesses. Debt to GBV, a supplementary financial measure, is a measure of financial position defined by the REIT's declaration of trust. These measures, as well as any associated "per Unit" amounts, are not defined by IFRS and do not have standardized meanings prescribed by IFRS, and therefore should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. The REIT believes that AFFO is an important measure of economic earnings performance and is indicative of the REIT's ability to pay distributions from earnings, while FFO, NOI, Cash NOI and Same Property Cash NOI are important measures of operating performance of real estate businesses and properties. The IFRS measurement most directly comparable to FFO, AFFO, NOI, Cash NOI and Same Property Cash NOI is net income. ACFO is a supplementary measure used by management to improve the understanding of the operating cash flow of the REIT. The IFRS measurement most directly comparable to ACFO is cash flow from operating activities. For reconciliations of NOI, FFO, AFFO and Cash NOI to net income and comprehensive income, and ACFO to cash flow from operating activities, please see the tables below. For further information regarding these non-IFRS measures and supplementary financial measures, please refer to Section 1 "General Information and Cautionary Statements – Non-IFRS Financial Measures" and Section 6 "Non-IFRS Financial Measures" in the REIT's Q1 2024 MD&A which is incorporated by reference herein and is available on the REIT's website at www.automotivepropertiesreit.ca and on SEDAR+ at www.sedarplus.ca.

SOURCE Automotive Properties Real Estate Investment Trust