/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
TORONTO, Aug. 10, 2017 /CNW/ - Starlight U.S.
Multi-Family (No. 5) Core Fund (TSX.V: STUS.A, STUS.U) (the
"Fund") today announced its results of operations and financial
condition for the three months ended June
30, 2017 (the "Second Quarter"). The Fund commenced
operations on October 18, 2016 after
the exchange of limited partnership units of Starlight U.S.
Multi-Family Core Fund, Starlight U.S. Multi-Family (No. 2) Core
Fund, Starlight U.S. Multi-Family (No. 3) Core Fund, and Starlight
U.S. Multi-Family (No. 4) Core Fund (collectively the "Arrangement
Funds") and common shares of Campar Capital Corporation for limited
partnership units ("units") of the Fund and following the closing
of its initial public offering.
All amounts in this press release are in thousands of
United States dollars unless
otherwise stated. All references to "C$" are to Canadian
dollars. The forecast figures below represent the financial
forecast (the "Forecast") as set out in the Fund's final long form
prospectus dated October 12,
2016.
Highlights for the Second Quarter and Six Months Ended
June 30, 2017
- Initiated its program to strategically recycle capital into new
properties that lower the average age of its portfolio and enhance
its geographical diversification.
- Disposed of two assets in Houston,
Texas with an average vintage of 2009 and a small property
in Charlotte, North Carolina and
reinvested the proceeds on a tax deferred basis into properties in
Denver, Colorado (2014 vintage)
and Phoenix, Arizona (2012
vintage). These acquisitions represent the Funds first investments
in the high growth markets of Denver and Phoenix.
- Refinanced mortgages resulting in additional proceeds of
$27,168, a portion of which was
utilized to partly fund the acquisition of Copperfield Apartments
("Copperfield"), in Nashville,
Tennessee that was constructed in 2015 and lowers the
average age of the Fund's portfolio and further enhances the
geographical diversification. See "Subsequent Events".
- Entered into a variable rate collar contract to provide
protection from the impact of any potential weakening of the U.S.
dollar on the Fund's Canadian dollar distributions. The 12-month
contract allows the Fund to exchange U.S. denominated currency each
month within a range of C$1.33 to
C$1.3850 to fund Canadian dollar distributions.
- Recognized an $8,300 fair value
increase on its properties for the Second Quarter. The increase was
partly driven by net operating income ("NOI") increases across the
portfolio.
- Interest Coverage Ratio was strong at 2.16 times for the Second
Quarter.
The following highlights for the Second Quarter and six months
ended June 30, 2017 include the
comparative period in which the properties were owned by the
Arrangement Funds:
- Portfolio average market rent ("AMR") increased by 1.7% to
$1,181 driven by increases of greater
than 4.0% in Dallas, Texas;
Orlando / Tampa, Florida; and Charlotte / Raleigh,
North Carolina. Economic occupancy remained stable at
93.3%.
- Same property AMR increased by 2.0% reflecting strong growth
specifically in Dallas, Texas;
Orlando / Tampa, Florida; and Raleigh, North Carolina.
- NOI at $14,166 was a 25.8%
increase over the corresponding period in 2016 and the NOI margin
at 57.7% represented a 220 basis point improvement.
- Same property NOI at $10,805 was
a 5.9% increase over the corresponding period in 2016 and NOI
margin at 58.2% was a 220 basis point improvement driven by
significant margin increases in the Atlanta, Georgia; Dallas, Texas; Orlando / Tampa,
Florida; and Raleigh, North
Carolina markets due to rental rate growth, stable occupancy
and effective management of property taxes.
- NOI at $27,992 was a 26.2%
increase over the corresponding six month period in 2016 and the
NOI margin at 57.3% was a 150 basis point improvement.
- Same property NOI at $19,995 for
the six months ended June 30, 2017
was a 3.8% increase over the corresponding period in 2016 and the
NOI margin at 57.4% was a 130 basis point improvement.
Operating Results
The Fund's AMR at June 30, 2017
was $1,181, an increase of
$19 or 1.7% from June 30, 2016. Same property AMR growth was
2.0%. Economic occupancy for the Second Quarter was 93.3%,
within the Fund's targeted range. Revenue from property
operations for the Second Quarter at $24,568 was 21.1% higher than the corresponding
period in 2016, due to acquisition and rental rate growth.
For the six months ended June 30,
2017, revenue was $48,879 or
23.1% above the corresponding period in 2016.
NOI for the Second Quarter at $14,166 was 25.8% above the same quarter in the
prior year and the NOI margin was 57.7%, a 220 basis point
increase. For the six months ended June 30, 2017, NOI increased by $5,817 or 26.2% to $27,992 and NOI margin increased by 150 basis
points to 57.3%
AFFO payout ratio was 88.2% (Forecast – 80.2%) during the Second
Quarter and 88.4% (Forecast – 82.3%) for the six months ended
June 30, 2017 predominately due to
increases in finance costs resulting from increases in 30-day LIBOR
and lower NOI partly due to the timing of dispositions and
acquisitions. The Fund considers AFFO to be an important
measure in determining the sustainability of future distributions
to be paid to Unitholders.
Financial Position
As at June 30, 2017, the Fund's
indebtedness to gross book value was 67.5%, up from 65.4% as at
December 31, 2016. The Fund had a
strong interest coverage and indebtedness coverage ratios for the
Second Quarter of 2.16 and 1.95 times, respectively. The
weighted average interest rate on the Fund's mortgages payable was
3.27% and the weighted average term to maturity was 3.94 years as
at June 30, 2017. The Fund
currently has C$5 million of unused
capacity on its credit facility. From April 1, 2017 to June 30,
2017 the Fund purchased and cancelled 186,100 class A units
under the normal course issuer bid for C$1,741 or the equivalent of $1,293.
Subsequent Events
On August 1, 2017, the Fund
acquired Copperfield located approximately 30 minutes south-east of
downtown Nashville, Tennessee
further enhancing the geographical diversification of the portfolio
while improving the average age of construction. Copperfield
consists of 288 garden-style suites in 12 three storey
buildings.
About Starlight U.S. Multi-Family (No. 5) Core Fund
The Fund is a limited partnership formed under the Limited
Partnerships Act (Ontario) for
the primary purpose of indirectly acquiring, owning and operating a
portfolio of diversified income producing rental properties in the
U.S. multi-family real estate market. The Fund currently owns 23
properties, consisting of 6,980 suites with an average year of
completion in 2011.
For the Fund's complete condensed consolidated interim financial
statements and management's discussion and analysis ("MD&A")
for the Second Quarter, and any other information relating to the
Fund, please visit www.sedar.com. Further details regarding
the Fund's unit performance and distributions, market conditions
where the Fund's properties are located, performance by the Fund's
properties and a capital investment update are also available in
the Fund's August 2017 Newsletter
which is available on the Fund's profile at
www.starlightus.com.
Non-IFRS Financial Measures
The Fund's condensed consolidated interim financial statements
are prepared in accordance with International Financial Reporting
Standards ("IFRS"). Certain terms used in this press release
including NOI, "same property", AFFO, indebtedness, gross book
value, indebtedness to gross book value, interest coverage ratio
and indebtedness coverage ratio (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. Details on non-IFRS measures
are set out in the Fund's MD&A for the Second Quarter and are
available on the Fund's profile on SEDAR at
www.sedar.com.
Forward-looking Statements
Certain statements contained in this press release constitute
forward-looking information within the meaning of Canadian
securities laws. 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, performance, achievements, events,
prospects or opportunities for the Fund or the real estate industry
and may include statements regarding the financial position,
business strategy, budgets, litigation, projected costs, capital
expenditures, financial results, occupancy levels, AMR, taxes, the
Fund's use of its normal course issuer bid, and plans and
objectives of or involving the Fund. In some cases,
forward-looking information can be identified by terms such as
"may", "might", "will", "could", "should", "would", "occur",
"expect", "plan", "anticipate", "believe", "intend", "seek", "aim",
"estimate", "target", "goal", "project", "predict", "forecast",
"potential", "continue", "likely", "schedule", or the negative
thereof or other similar expressions concerning matters that are
not historical facts.
Forward-looking information necessarily involves 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, assumptions may not be correct and objectives,
strategic goals and priorities may not be achieved. 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 inventory of multi-family real estate
properties; the availability of properties for acquisition and the
price at which such properties may be acquired; the availability of
mortgage financing and current interest rates; the extent of
competition for properties; the population of multi-family real
estate market participants; assumptions about the markets in which
the Fund operates; the ability of Starlight Group Property Holdings
Inc., the manager of the Fund, to manage and operate the
properties; the global and North American economic environment;
foreign currency exchange rates; and governmental regulations or
tax laws.
Although the Fund believes the expectations reflected in such
forward-looking information are reasonable and represent the Fund's
projections, expectations and beliefs at this time, such
information involves known and unknown risks and uncertainties
which may cause the Fund's actual performance and results in future
periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such
forward-looking information.
Important factors that could cause actual results to differ
materially from the Fund's expectations include, among other
things, the availability of suitable properties for purchase by the
Fund, the availability of mortgage financing for such properties,
and general economic and market factors, including interest rates,
business competition and changes in government regulations or in
tax laws. The reader is cautioned to consider these and other
factors, uncertainties and potential events carefully and not to
put undue reliance on forward-looking information as there can be
no assurance that actual results will be consistent with such
forward-looking information.
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 law, the Fund
undertakes no obligation to update or revise publicly any
forward-looking information, whether as a result of new
information, future events or otherwise, after the date on which
the statements are made or to reflect the occurrence of
unanticipated events.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
SOURCE Starlight U.S. Multi-Family (No. 5) Core Fund