Firm Capital Apartment REIT Reports Q3/2022 Results and

All figures in $USD until in any other case famous.
TORONTO, Nov. 15, 2022 (GLOBE NEWSWIRE) — Firm Capital Apartment Real Estate Investment Trust (“the “Trust”), (TSXV: FCA.U), (TSXV: FCA.UN) is happy to report its monetary outcomes for the three months ended September 30, 2022:

EARNINGS

• For the three months ended September 30, 2022, internet loss was roughly $1.4 million, compared to the $10.3 million internet loss reported for the three months ended June 30, 2022 and the $2.6 million internet revenue reported for the three months ended September 30, 2021. For the 9 months ended September 30, 2022, internet loss was $12.1 million compared to the $0.4 million internet revenue reported for the 9 months ended September 30, 2021;

• Excluding non-cash honest worth changes, internet revenue was $0.4 million for the three months ended September 30, 2022, compared to the $0.8 million reported for the three months ended June 30, 2022 and the $0.6 million reported for the three months ended September 30, 2021. Excluding non-cash honest worth changes, internet revenue was $1.7 million compared to the $1.7 million reported for the 9 months ended September 30, 2021;

• For the three months ended September 30, 2022, AFFO was roughly $0.7 million, compared to the $0.7 million reported for the three months ended June 30, 2022 and the $0.6 million reported for the 9 months ended September 30, 2021. For the 9 months ended September 30, 2022, AFFO was $1.8 million compared to the $1.7 million reported for the 9 months ended September 30, 2021;

• NAV AT $8.44 PER TRUST UNIT (CAD $11.56):
  For the three months ended September 30, 2022, the Trust reported NAV at $8.44 per Trust Unit (CAD $11.56);

• AVERAGE RENT INCREASES ACROSS INVESTMENT PORTFOLIO:

Wholly-Owned Real Estate Investments Portfolio: Average rents elevated by 4% to $1,186 per unit over the interval ended June 30, 2022 and 3% over the interval ended September 30, 2021;

Joint Venture Real Estate Investments Portfolio: For the three months ended September 30, 2022, common rents elevated by 1% to $1,452 per unit from the $1,443 per unit reported for the three months ended June 30, 2022 and 18% from the $1,233 reported for the three months ended September 30, 2021; and

• REFINANCING OF FLORIDA PORTFOLIO: On August 31, 2022, the Trust closed the refinancing of a primary mortgage with the Federal National Mortgage Association (“Fannie Mae”) on a multi-residential property situated in Sunrise, Florida for $18.37 million. Terms of the mortgage are at 4.77% mounted rate of interest, interest-only, maturing on September 30, 2032. Net proceeds from the refinancing have been used to partially repay the bridge mortgage and repay the revolving working facility.

STRATEGIC REVIEW: The Trust additionally declares at this time that the Board of Trustees (the “Board”) have initiated a strategic assessment course of to establish, consider and pursue a variety of strategic alternate options with the purpose of maximizing unitholder worth (the “Strategic Review”).

The Strategic Review might be overseen by a particular committee of trustees consisting of Geoffrey Blendin, Eli Dadouch, Valentina Kalyk, Pat DiCapo and Sandy Poklar. There isn’t any definitive timeline of completion and there could be no assurance that the method will lead to any transaction, or as to the timing of any such transaction.

Since its reformation in 2015, the Trust has constantly delivered returns to unitholders within the type of optimistic money flows and distributions. Furthermore, senior administration and the Board have targeted on numerous development initiatives which have seen the true property funding portfolio develop to 1,846 residence items. Despite its finest efforts, the Trust is buying and selling at a fabric 46% low cost to NAV and has been so for a few years. Consequently, we’re unable to boost capital to pursue our business plan with out critically diluting current unitholders or elevating debt capital to unacceptable ranges.

As outlined within the Trust’s August 18, 2022 press launch, the present macro surroundings of quickly rising rates of interest and persistent inflation is presenting a difficult investing surroundings. Particularly, capitalization charges on residence buildings are beneath the price of five-and ten-year mortgage debt, leading to a damaging investing unfold for the primary time in a few years. Specifically, mortgage bond yields have elevated greater than capitalization charges up to now 90 to 120 days. Yields within the multi-residential business are beneath the returns generated from financial institution assured devices, reminiscent of GICs and time period deposits, and as such the present business mannequin can’t work. This in flip has precipitated the Trust items to commerce at a bigger low cost to NAV than earlier than the rate of interest hikes. As such, the Board has decided that it isn’t attainable to have a profitable and rising entity in an surroundings the place investing spreads are damaging. Therefore, the Board has determined to discover numerous choices to maximise unitholder worth, together with liquidation or exiting the business mannequin. The Board will work in direction of maximizing unitholder worth by exploring the next choices:

• MERGERS & ACQUISITIONS: Pursue the opportunity of merging the Trust by both a take-over, reverse take-over, and many others. with one other actual property proprietor/operator, REIT or REOC to achieve important mass, dimension and scale. The Trust has had casual conversations with sure third events to discover this feature;

• ASSET DISPOSITIONS: As a results of the damaging investing unfold surroundings, the Board takes the view that it might be within the Trust’s finest pursuits to get rid of sure actual property properties. The Board has commenced the method to opportunistically get rid of sure wholly-owned and a few of our three way partnership companions have began the method to comprehend worth on a few of our three way partnership actual property investments with a purpose to crystalizing valuations and realizing unitholder worth, after the compensation of related debt. Furthermore, we have been suggested not too long ago one among our most popular investments might be repaid previous to maturity, thus bringing again to the Trust roughly $3.5 million of capital by 12 months finish;

• CHANGE OF BUSINESS: With the choice to opportunistically get rid of sure actual property property, the Trust might finally change the operation of the business and turn out to be both: (i) an actual property service provider financial institution, or (ii) an entity targeted on value-added fairness and development; and

• PRIVATIZATION: With a $35 million market capitalization, the Trust is just too small to justify staying public, notably in gentle of accelerating public firm prices. Taking the Trust non-public and monetizing the property over time is perhaps in one of the best curiosity for Unitholders and as such the Board may even assessment this feature.

In the interim and as a part of the Strategic Review, the Board will proceed to evaluate issues on a quarterly foundation and decide if the Trust ought to: (i) distribute extra revenue; (ii) distribute internet proceeds from asset gross sales, after debt compensation; (iii) reinvest internet proceeds into different investments; (iv) distribute proceeds as a return of capital or particular distribution; and/or (v) use extra proceeds to repurchase Trust items within the market. To maximize its monetary flexibility and unitholder worth, the Trust has paused distributions till the Board has thought-about the end result of its Strategic Review and decided its path ahead.

It is the Trust’s present intention to not disclose developments with respect to the Strategic Review until and till it’s decided that disclosure is important or acceptable, or as required below relevant securities legal guidelines.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

Certain data on this information launch constitutes forward-looking statements below relevant securities legislation. Any statements which might be contained on this information launch that aren’t statements of historic truth could also be deemed to be forward-looking statements. Forward-looking statements are sometimes recognized by phrases reminiscent of “may”, “should”, “anticipate”, “expect”, “intend” and comparable expressions.

Forward-looking statements essentially contain recognized and unknown dangers, together with, with out limitation, dangers related to normal financial circumstances; hostile components affecting the U.S. actual property market usually or these particular markets by which the Trust holds properties; volatility of actual property costs; lack of ability to entry enough capital from inner and exterior sources, the completion of the Strategic Review; and/or lack of ability to entry enough capital on beneficial phrases; business and authorities regulation; modifications in laws, revenue tax and regulatory issues; the flexibility of the Trust to implement its business methods; competitors; forex and rate of interest fluctuations and different dangers. Additional threat components which will affect the Trust or trigger precise outcomes and efficiency to vary from the ahead wanting statements contained herein are set forth within the Trust’s Annual Information kind below the heading Risk Factors (a duplicate of which could be obtained below the Trust’s profile on www.sedar.com).

Readers are cautioned that the foregoing record isn’t exhaustive. Readers are additional cautioned to not place undue reliance on forward-looking statements as there could be no assurance that the plans, intentions or expectations upon which they’re positioned will happen. Such data, though thought-about cheap by administration on the time of preparation, might show to be incorrect and precise outcomes might differ materially from these anticipated. Forward-looking statements contained on this information launch are expressly certified by this cautionary assertion. Except as required by relevant legislation, the Trust undertakes no obligation to publicly replace or revise any forward-looking assertion, whether or not on account of new data, future occasions or in any other case

Certain monetary data offered on this press launch replicate sure non-International Financial Reporting Standards (“IFRS”) monetary measures, which embrace, however not restricted to NOI, FFO and AFFO. These measures are generally utilized by actual property funding corporations as helpful metrics for measuring efficiency, nonetheless, they don’t have standardized which means prescribed by IFRS and aren’t essentially similar to comparable measures offered by different actual property funding corporations. These phrases are outlined within the Trust’s Management Discussion and Analysis for the three months ended September 30, 2022 filed on www.sedar.com.

Neither the Exchange nor its Regulation Services Provider (as that time period is outlined within the insurance policies of the TSX Venture Exchange) accepts accountability for the adequacy or accuracy of this launch.