Firm Capital Apartment REIT Reports Q4/2022 and 2022 Results and Provides Strategic Review Update
25 April 2023 - 8:02AM
Firm Capital Apartment Real Estate Investment Trust (“the
“
Trust”), (TSXV: FCA.U), (TSXV: FCA.UN) is pleased
to report its financial results for the three and twelve months
ended December 31, 2022 as well as provide an update regarding the
previously announced Strategic Review:
EARNINGS
- For the three months ended December
31, 2022, net loss was approximately $2.0 million, in comparison to
the $1.4 million net loss reported for the three months ended
September 30, 2022 and the $3.5 million net income reported for the
three months ended December 31, 2021. For the year ended December
31, 2022, net loss was $14.1 million in comparison to the $3.8
million net income reported for the year ended December 31,
2021;
- Excluding non-cash fair value
adjustments, net income was $0.3 million for the three months ended
December 31, 2022, in comparison to the $0.4 million reported for
the three months ended September 30, 2022 and the $0.5 million
reported for the three months ended December 31, 2021. Excluding
non-cash fair value adjustments, net income was $2.0 million for
the year ended December 31, 2022, in comparison to the $2.2 million
reported for the year ended December 31, 2021;
- For the three months ended December
31, 2022, AFFO was approximately $0.1 million, in comparison to the
$0.5 million reported for the three months ended December 31, 2021.
For the year ended December 31, 2022, AFFO was $2.0 million in
comparison to the $2.2 million reported for the year ended December
31, 2021;
|
Three Months Ended |
|
Year Ended |
|
Dec 31, 2022 |
|
Dec 31, 2021 |
|
Dec 31, 2022 |
Dec 31, 2021 |
Net
Income/(Loss) |
$ |
(2,037,316 |
) |
$ |
3,478,939 |
|
$ |
(14,119,943 |
) |
$ |
3,840,463 |
Net
Income Before Fair Value Adjustments |
$ |
262,641 |
|
$ |
497,949 |
|
$ |
1,986,017 |
|
$ |
2,193,018 |
FFO |
$ |
1,783,066 |
|
$ |
244,667 |
|
$ |
5,192,213 |
|
$ |
(903,503) |
AFFO |
$ |
145,119 |
|
$ |
497,684 |
|
$ |
1,962,639 |
|
$ |
2,230,050 |
Distributions |
$ |
- |
|
$ |
448,658 |
|
$ |
916,327 |
|
$ |
1,811,618 |
NAV AT $8.17 PER TRUST UNIT (CAD
$11.06):
For the three months
ended December 31, 2022, the Trust reported NAV at $8.17 per Trust
Unit (CAD $11.06);
AVERAGE RENT INCREASES ACROSS INVESTMENT
PORTFOLIO:
Wholly-Owned
Real Estate Investments Portfolio: For the three months
ended December 31, 2022, average rents saw a slight increase of
0.1% to $1,189 per unit from the $1,186 per unit reported for the
three months ended September 30, 2022 and 1% from the $1,174
reported for the three months ended December 31, 2021;
Joint Venture
Real Estate Investments Portfolio: For the three months
ended December 31, 2022, average rents increased by 9% to $1,589
per unit from the $1,452 per unit reported for the three months
ended September 30, 2022 and 16% from the $1,248 reported for the
three months ended December 31, 2021;
OPERATIONAL UPDATE As indicated
in the Trust’s August 18, 2022, press release, the Trust was
experiencing operating challenges for a portion of its portfolio
located in certain geographies where rent controls and the eviction
moratorium created significant rental arrears and non-collections.
The Trust is pleased to announce it has made considerable progress
on this front, successfully processing several non-collection
matters with the final tranche of cases to be addressed before the
end of Q2/2023.
STRATEGIC REVIEW On November
15, 2022, the Board of Trustees initiated a strategic review
process to identify, evaluate and pursue a range of strategic
alternatives with the goal of maximizing unitholder value (the
“Strategic Review”).
As outlined in the Trust’s August 18, 2022,
press release, the current macro environment of rapidly increasing
interest rates and persistent inflation is presenting a challenging
investing environment.
By way of update, the Board is pleased to report
on the following:
- WHOLLY OWNED ASSET DISPOSITIONS: The Trust has
listed for sale all its Wholly Owned Real Estate Investments and is
pleased to report on the following:
- Texas: The Trust has a Purchase and Sales
Agreement (“PSA”) in place for one of its
properties located in Austin, Texas. The disposition price for the
property is approximately $12.6 million. Net of associated mortgage
debt and closing costs, the sale would generate net cash of
approximately $8.8 million. Expected closing of the sale is
anticipated to be prior to the end of Q2/2023. The property
disposition has a sales price in line with its IFRS value. The
Trust has one other property in Austin, Texas which is currently
under negotiations to be sold, and two properties in Houston, Texas
that are actively being marketed.
- New Jersey and Florida: The Trust is in the
process of selling its New Jersey and Florida properties with deals
under various stages of negotiation.
- JOINT VENTURE ASSET DISPOSITIONS: The Trust
has listed for sale its Joint Venture Real Estate Investments
located in Maryland that both the Trust and its partners have
decided it was time to exit the respective investments. As of
today, the Maryland properties are actively being marketed and no
further update can be provided at this point in time. In terms of
the remaining joint venture properties located in New York,
Connecticut and Georgia, the Trust has decided with its partners to
hold these investments until such time that the respective
investment can be adequately monetized.
- PREFERRED CAPITAL INVESTMENTS: As at December
31, 2022, the Trust has two Preferred Capital Investments located
in Texas and South Dakota that aggregate approximately $5.1
million. Both investments are current in terms of their interest
payments. The partner in South Dakota has informed the Trust that
it will be repaid prior to maturity, thus bringing back to the
Trust approximately $3.5 million of capital. The remaining
Preferred Capital Investment in Texas is due September 9, 2025, and
the Trust continues to generate a 10% return on this
investment.
- MERGERS & ACQUISITIONS, CHANGE OF BUSINESS AND
PRIVATIZATION: The Trust is in talks with a number of
parties regarding the possibility of a; (i) Merger &
Acquisition; (ii) Change of Business and (iii) Privatization. The
Trust will report in due course as to the progress of these
discussions.The Board will continue to assess matters on a
quarterly basis and determine if the Trust should: (i) distribute
excess income; (ii) distribute net proceeds from asset sales, after
debt repayment; (iii) reinvest net proceeds into other investments;
(iv) distribute proceeds as a return of capital or special
distribution; and/or (v) use excess proceeds to repurchase Trust
units in the marketplace. It is the Trust’s current intention not
to disclose developments with respect to the Strategic Review
unless and until it is determined that disclosure is necessary or
appropriate, or as required under applicable securities laws.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS:
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "intend" and similar expressions.
Forward-looking statements necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse factors
affecting the U.S. real estate market generally or those specific
markets in which the Trust holds properties; volatility of real
estate prices; inability to access sufficient capital from internal
and external sources, the completion of the Strategic Review;
and/or inability to access sufficient capital on favourable terms;
industry and government regulation; changes in legislation, income
tax and regulatory matters; the ability of the Trust to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks. Additional risk factors that may
impact the Trust or cause actual results and performance to differ
from the forward looking statements contained herein are set forth
in the Trust's Annual Information form under the heading Risk
Factors (a copy of which can be obtained under the Trust's profile
on www.sedar.com).
Readers are cautioned that the foregoing list is
not exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement. Except as
required by applicable law, the Trust undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise
Certain financial information presented in this
press release reflect certain non-International Financial Reporting
Standards (“IFRS”) financial measures, which
include, but not limited to NOI, FFO and AFFO. These measures are
commonly used by real estate investment companies as useful metrics
for measuring performance, however, they do not have standardized
meaning prescribed by IFRS and are not necessarily comparable to
similar measures presented by other real estate investment
companies. These terms are defined in the Trust’s Management
Discussion and Analysis for the three and twelve months ended
December 31, 2022 filed on www.sedar.com.
Neither the Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
For further information, please contact: |
Sandy Poklar |
|
|
Claudia Alvarenga |
President & Chief Executive Officer |
|
|
Chief Financial Officer |
(416) 635-0221 |
|
|
(416) 635-0221 |
|
|
|
|
For Investor Relations information, please
contact: |
Victoria Moayedi |
|
|
|
Director, Investor Relations |
|
|
|
(416) 635-0221 |
|
|
|
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