Melcor REIT announces third quarter 2022 results

EDMONTON, Alberta, Nov. 03, 2022 (GLOBE NEWSWIRE) — Melcor REIT (TSX: MR.UN) right this moment introduced results for the third quarter ended September 30, 2022. Revenue was secure within the quarter and year-to-date. Net working earnings was down 3% within the quarter at $11.61 million as a result of timing of working bills and inflated prices together with utilities like fuel/warmth and energy. Occupancy presently sits at 88%, a 1% enchancment over second quarter and year-end, and we’ve got retained 89% of expiring leases year-to-date.

Andrew Melton, CEO of Melcor REIT commented: “I am pleased to share Melcor REIT’s third quarter results. Our portfolio continues to produce stable results despite being tested by numerous factors, including inflationary pressures, increasing interest rates, and a slower than expected return to office following the lifting of work-from-home restrictions.

Our leasing team is finding success in new leasing and renewals while our property management teams focus on providing a strong tenant experience. To date we have signed 127,914 sf of new leasing and 319,079 sf of renewals. Further, we have commitments on an additional 85,024 sf of upcoming renewals. While our occupancy displays a modest increase, we have experienced a significant increase in committed space that will translate to occupancy in the coming months.

Our 2017 Debenture is set to mature on December 31, 2022. We are in the process of reviewing options for financing and have room on our current credit facility to absorb this debenture if required. We are focused on ensuring that the REIT has the flexibility to enter the market under more stable conditions. The REIT continues to monitor its secured debts, including our mortgages and Class C debt, and we proactively engage with lenders in regards to upcoming maturities.

We held our distributions for July, August, September and October at $0.04 per unit. The Board of Trustees also declared a distribution of $0.04 per unit for both November and December 2022.”

HIGHLIGHTS:
Certain elements contributed considerably to results in 2022 when in comparison with 2021. They are:

• Early Termination occasion: In Q1-2021, we obtained $1.00 million for the early lease termination of a quick meals chain which was included in different income, and impacts year-to-date comparative results.
• Non-cash truthful worth changes: Non-cash truthful worth changes on Class B LP Units and funding properties typically trigger important swings in results. Class B Units are valued at market worth, thus a change in unit value has a counter-intuitive influence on internet earnings, as a rise in unit worth decreases internet earnings. These revaluations have had a cloth influence to internet earnings in each the present and prior durations, making comparability much less significant. Management considers FFO and ACFO higher measures of our efficiency as these non-cash gadgets are faraway from these metrics.
• Distribution enhance: Our month-to-month distribution elevated by 14% to $0.04 per unit in August 2021 and has remained secure at $0.04 per unit all through 2022.

FINANCIAL HIGHLIGHTS
Financial highlights of our efficiency are summarized beneath.

Third quarter:

• Revenue was up 1% at $18.19 million (Q3-2021: $18.09 million)
• NOI was down 3% at $11.61 million (Q3-2021: $11.92 million)
• FFO was down 5% to $6.31 million or $0.22 per unit (Q3-2021: $6.64 million or $0.23 per unit).
• ACFO was down 10% at $4.62 million or $0.16 per unit (Q3-2021: $5.13 million or $0.18 per unit). The third quarter payout ratio was 76% based mostly on ACFO (Q3-2021: 65%).

Year-to-date:

• Revenue was secure at $55.31 million. (2021: $55.55 million) Excluding the Early Termination occasion, year-to-date income was up 1%.
• NOI was down 4% at $34.86 million. (2021: $36.12 million) Excluding the Early Termination occasion, year-to-date NOI was down 1%.
• FFO was down 7% to $18.94 million or $0.65 per unit (2021: $20.31 million or $0.70 per unit). Excluding the Early Termination occasion FFO was down 2%.
• ACFO was down 10% at $14.19 million or $0.49 per unit (2021: $15.84 million or $0.54 per unit ). Excluding the Early Termination occasion ACFO was down 4%. The year-to-date payout ratio was 74% based mostly on ACFO (2021: 60%).
• Fair worth on our funding properties portfolio was up 0.4% to $726.91 million in comparison with $723.73 million at year-end.

As at September 30, 2022 we had $2.71 million in money and $29.92 million in undrawn liquidity below our revolving credit score facility. We have accomplished financing renewals on 5 properties totaling $41.34 million in renewals at rates of interest starting from mounted at 3.70% – 5.00%, and prime plus 1.00%.

Management believes FFO finest displays our true working efficiency. and ACFO finest displays our money movement and subsequently our capability to pay distributions.

Net earnings within the present and comparative interval is considerably impacted by the non-cash truthful worth changes described above and thus not a significant metric to evaluate monetary efficiency.

OPERATING HIGHLIGHTS
We are proactively renewing present tenants and have produced a robust retention charge of 89% year-to-date. We proceed to pursue new tenant alternatives and have commenced 127,914 sf in new leases. New leasing contains 40,613 sf of non permanent seasonal house that won’t produce long-term money flows.

We are happy with the quantity of latest leasing exercise throughout our portfolio. Year-to-date leasing contains 446,993 sf of latest and renewed leases (together with holdovers) and we’ve got retained 89% of expiring leases year-to-date. Future leasing is promising, with dedication on an extra 85,024 sf in new offers.

Retail properties have seen elevated occupancy and maintained sturdy WABR in comparison with Q3-2021 whereas workplace properties proceed to navigate downward strain on rental charges and a rise in provide in a few of our key geographic areas. As such, we’ve got seen compression on each WABR and occupancy, down 1% and three% respectively within the workplace market. Overall, WABR has remained secure in comparison with Q3-2021 and year-end.

DISTRIBUTIONS
Our month-to-month distributions remained at $0.04 per unit in 2022, secure over year-end after a 14% incresae in August 2021.

The quarterly payout ratio was 76% based mostly on ACFO and 55% based mostly on FFO (Q3-2021: $0.035 per unit; ACFO: 65% and FFO: 50%). The year-to-date payout ratio was 74% based mostly on ACFO and 55% based mostly on FFO (2021: $0.035 per unit; ACFO: 60% and FFO: 47%).

SUBSEQUENT EVENT
Subsequent to the quarter, we declared distributions for November and December and will likely be paying the beforehand declared October distribution as follows:

FINANCIAL HIGHLIGHTS & KEY PERFORMANCE INDICATORS (KPI)

1. Non-GAAP monetary measure. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
2. The abbreviation nm is shorthand for not significant and is used by means of this MD&A the place applicable.
3. Distributions have been paid out at $0.04 per unit monthly from January to September 2022. Distributions within the comparative interval have been paid out at $0.035 per unit monthly from January to July 2021, and elevated to $0.04 in August 2021.

1. For the needs of calculating per unit internet earnings the fundamental weighted common variety of models contains Trust Units and the diluted weighted common variety of models contains Class B LP Units and convertible debentures, to the extent that their influence is dilutive.
2. Non-GAAP ratio. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
3. For the needs of calculating per unit FFO, AFFO and ACFO the fundamental weighted common variety of models contains Trust Units and Class B LP Units.

1. Calculated because the sum of belief models and Class B LP Units at their historic price worth. In accordance with IFRS the Class B LP Units are introduced as a monetary legal responsibility within the consolidated monetary statements. Please confer with web page 11 for calculation of Equity at historic price.
2. Calculated because the sum of complete quantity drawn on revolving credit score facility, mortgages payable, Class C LP Units and convertible debentures, excluding unamortized low cost and transaction prices. Please confer with web page 11 for calculation of Indebtedness.
3. Debt to GBV is a Non-GAAP ratio. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
4. Non-GAAP monetary ratio. Calculated because the sum of FFO and finance prices; divided by finance prices, excluding distributions on Class B LP Units and truthful worth adjustment on spinoff devices. This metric is just not calculated for functions of covenant compliance on any of our debt amenities. Please confer with Non-GAAP and Non-Standard Measures part for additional data.
5. Non-GAAP monetary ratio. Calculated as FFO; divided by sum of contractual principal repayments on mortgages payable and distributions of Class C LP Units, excluding amortization of truthful worth adjustment on Class C LP Units. This metric is just not calculated for functions of covenant compliance on any of our debt amenities. Please confer with Non-GAAP and Non-Standard Measures part for additional data.

MD&A and Financial Statements
Information included on this press launch is a abstract of results. This press launch must be learn along with the REIT’s Q3-2022 quarterly report back to unitholders. The REIT’s consolidated monetary statements and administration’s dialogue and evaluation for the three-months ended September 30, 2022 may be discovered on the REIT’s web site at www.MelcorREIT.ca or on SEDAR (www.sedar.com).

Conference Call & Webcast
Unitholders and events are invited to affix administration on a convention name to be held November 4, 2022 at 11:00 AM ET (9:00 AM MT). Call 416-915-3239 within the Toronto space; 1-800-319-4610 toll free.

The name may also be webcast (hear solely) at https://www.gowebcasting.com/12025. A replay of the decision will likely be obtainable on the identical URL shortly after the decision is concluded.

About Melcor REIT
Melcor REIT is an unincorporated, open-ended actual property funding belief. Melcor REIT owns, acquires, manages and leases high quality retail, workplace and industrial income-generating properties in western Canadian markets. Its portfolio is presently made up of pursuits in 39 properties representing roughly 3.22 million sq. ft of gross leasable space positioned throughout Alberta and in Regina, Saskatchewan; and Kelowna, British Columbia. For extra data, please go to www.MelcorREIT.ca.

Non-standard Measures
NOI, FFO, AFFO and ACFO are key measures of efficiency utilized by actual property working corporations; nevertheless, they don’t seem to be outlined by International Financial Reporting Standards (IFRS), shouldn’t have customary meanings and might not be comparable with different industries or earnings trusts. These non-IFRS measures are outlined and mentioned within the REIT’s MD&A for the quarter ended September 30, 2022, which is offered on SEDAR at www.sedar.com.

Finance prices protection ratio: Finance prices protection ratio is a non-GAAP ratio and is calculated as FFO plus finance prices for the interval divided by finance prices expensed in the course of the interval excluding distributions on Class B LP Units and truthful worth adjustment on spinoff devices.
Debt service protection ratio: Debt service protection ratio is a non-GAAP ratio and is calculated as FFO for the interval divided by principal repayments on mortgages payable and Class C LP Units made in the course of the interval.

Debt to Gross Book Value: Debt to GBV is a non-GAAP ratio and is calculated because the sum of complete quantity drawn on revolving credit score facility, mortgages payable, Class C LP Units, excluding unamortized truthful worth adjustment on Class C LP Units, legal responsibility held on the market (as relevant) and convertible debenture, excluding unamortized low cost and transaction prices divided by GBV. GBV is calculated as the whole property acquired within the Initial Properties, subsequent asset purchases and improvement prices much less tendencies.

Income earlier than truthful worth adjustment and taxes: Income earlier than truthful worth adjustment and earnings taxes is a non-GAAP monetary measure and is calculated as internet earnings excluding truthful worth changes for Class B LP Units, funding properties and spinoff devices.

Fair worth of funding properties: Fair worth of funding properties within the Property Profile and Regional Analysis sections of the MD&A is a supplementary monetary measure and is calculated because the sum of the steadiness sheet balances for funding properties and different property (TIs and SLR).

1. Non-GAAP monetary measure. Refer to the Non-GAAP and Non-Standard Measures part for additional data.

1. Non-GAAP monetary measure. Refer to the Non-GAAP and Non-Standard Measures part for additional data.

1. Non-GAAP monetary measure. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
2. Non-GAAP ratio. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
3. For the needs of calculating per unit FFO and AFFO, the fundamental weighted common variety of models contains Trust Units and Class B LP Units.

1. Non-GAAP monetary measure. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
2. Non-GAAP ratio. Refer to the Non-GAAP and Non-Standard Measures part for additional data.
3. The diluted weighted common variety of models contains Trust Units, Class B LP Units and convertible debentures.

Forward-looking Statements:

This press launch could include forward-looking data throughout the which means of relevant securities laws, which displays the REIT’s present expectations concerning future occasions. Forward-looking data is predicated on quite a few assumptions and is topic to quite a few dangers and uncertainties, a lot of that are past the REIT’s management, that would trigger precise results and occasions to vary materially from these which can be disclosed in or implied by such forward-looking data. Such dangers and uncertainties embody, however should not restricted to, normal and native financial and business situations; the monetary situation of tenants; the REIT’s capability to refinance maturing debt; leasing dangers, together with these related to the power to lease vacant house; and rate of interest fluctuations. The REIT’s goals and forward-looking statements are based mostly on sure assumptions, together with that the final economy stays secure, rates of interest stay secure, situations inside the true property market stay constant, competitors for acquisitions stays in keeping with the present local weather and that the capital markets proceed to supply prepared entry to fairness and/or debt. All forward-looking data on this press launch speaks as of the date of this press launch. The REIT doesn’t undertake to replace any such forward-looking data whether or not on account of new data, future occasions or in any other case. Additional details about these assumptions and dangers and uncertainties is contained within the REIT’s filings with securities regulators.

Contact Information:
Tel: 1.855.673.6931 x4707 Em: [email protected]