/NOT FOR DISTRIBUTION TO
All amounts in this press release are in thousands of
"Despite the continuation of a challenging operating environment created by COVID-19, the Fund continued to demonstrate strong operating results in Q1-2021 with an AFFO payout ratio of approximately 74% and a significant acceleration of its in-suite value-add upgrade program with 36 units completed during Q1-2021 at an average return on investment of approximately 23%," commented
Q1-2021 HIGHLIGHTS
- The Fund recognized a fair value gain on investment properties of
$30,096 during Q1-2021, contributing to the cumulative 10.6% increase over the aggregate purchase price of the Fund's properties. The fair value gain was primarily driven by capitalization rate compression resulting from increasing demand in the investment market for multi-family properties across the Fund's primary markets. - As at
May 10, 2021 , the Fund collected approximately 98.2% of rents for Q1-2021. The Fund also anticipates an increase in collections forApril 2021 with the Fund collecting approximately 98.0% of rents up toMay 10, 2021 and further amounts expected to be collected in future periods. - The Fund achieved economic occupancy of 93.5% during Q1-2021 which has since increased to approximately 96.0% physical occupancy, with all of the Fund's properties having a physical occupancy of approximately 95.0% or greater as at
May 10, 2021 . - Despite the challenging operating conditions presented by the COVID-19 global pandemic ("COVID-19"), the Fund was able to achieve rent growth of 1.9% at the
Initial Properties (as defined below) fromMarch 31, 2020 toMarch 31, 2021 and annualized rent growth of 1.2% during Q1-2021 across all of the Fund's properties. - During Q1-2021, revenue, net operating income ("NOI") and adjusted funds from operations ("AFFO") were significantly above Q1-2020 primarily as a result of Q1-2020 only including 33 days of operating activity as the Fund completed the acquisition of the
Initial Properties onFebruary 28, 2020 . - AFFO for Q1-2021 was
$2,598 (Q1-2020 -$377 ) with the Fund's fully deployed AFFO payout ratio improving to 74.4% (Q4-2020 - 76.7% and Q1 2020 - 79.3%). - The Fund significantly increased the number of value-add upgrades completed during Q1-2021 with 36 suites upgraded and re-leased (Q4-2020 - 16). The Fund will continue to focus on increasing the number of in-suite value-add upgrades throughout the remainder of 2021 while ensuring that the targeted rental premiums and return on investment are achieved.
COVID-19 IMPACT
On
The Fund's operating results for Q1-2021 have continued to be resilient despite the operating conditions created by COVID-19. The Fund continues to actively monitor any continued impact COVID-19 may have on the Fund's operating results in future periods specifically as they relate to rent collections, occupancy, rent growth, ancillary fees and expenses incurred for preventative measures in response to COVID-19.
COVID-19 immunization programs have commenced across the
Certain market data published during March and
COVID-19 has also significantly disrupted active and new construction of comparable product in the markets the Fund operates in which may create a temporary imbalance in supply of comparable, multi-suite residential properties. This imbalance, alongside the continued economic recovery and improving fundamental statistics, could be supportive of favourable supply and demand conditions for the properties and could result in future increases in occupancy and rent growth. The Fund believes it is well positioned to take advantage of these conditions should they transpire given the quality of its properties and the benefit of having a tenant pool employed across a diverse job base. Since the COVID-19 outbreak commenced, based on available investment sales information, capitalization rates in the markets the Fund operates in have compressed on average by approximately 50-75 basis points.
Further disclosure surrounding the impact of COVID-19 are included in the Fund Management's Discussion and Analysis ("MD&A") for Q1-2021 under the Fund's profile, which is available on www.sedar.com.
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at
As at | As at December | |||||
Operational Information (1) | ||||||
Number of properties | 7 | 7 | ||||
Total suites | 2,219 | 2,219 | ||||
Economic Occupancy (2) | 93.5% | 94.3% | ||||
AMR (in actual dollars) | $ | 1,323 | $ | 1,319 | ||
AMR per square foot (in actual dollars) | $ | 1.37 | $ | 1.37 | ||
Summary of Financial Information | ||||||
Gross Book Value | $ | 539,561 | $ | 508,403 | ||
Indebtedness | $ | 336,425 | $ | 339,657 | ||
Indebtedness to Gross Book Value | 62.4% | 66.8% | ||||
Weighted average interest rate - as at period end (3) | 2.38% | 2.53% | ||||
Weighted average loan term to maturity | 3.23 years | 3.47 years | ||||
Q1-2021 | Q1-2020 | |||||
Summary of Financial Information | ||||||
Revenue from property operations | $ | 9,043 | $ | 1,354 | ||
Property operating costs | $ | (2,512) | $ | (369) | ||
Property taxes (4) | $ | (1,232) | $ | (175) | ||
Adjusted income from operations / NOI | $ | 5,299 | $ | 810 | ||
Fund and trust expenses | $ | (533) | $ | (100) | ||
Finance costs | $ | (2,325) | $ | (487) | ||
Other income and expenses (5) | $ | 14,605 | $ | (776) | ||
Net income (loss) and comprehensive income (loss) | $ | 17,046 | $ | (552) | ||
FFO | $ | 2,506 | $ | 372 | ||
FFO per Unit - basic and diluted | $ | 0.11 | $ | 0.02 | ||
AFFO | $ | 2,598 | $ | 377 | ||
AFFO per Unit - basic and diluted | $ | 0.12 | $ | 0.02 | ||
Weighted average interest rate - average during period (3) | 2.39% | 2.96% | ||||
Interest coverage ratio | 2.31 x | 2.31 x | ||||
Indebtedness coverage ratio | 2.31 x | 2.31 x | ||||
FFO payout ratio | 77.2% | 157.9% | ||||
AFFO payout ratio | 74.4% | 155.8% | ||||
Weighted Average Units Outstanding (000s) - basic and diluted | 22,181 | 22,181 |
(1) | The Fund commenced operations following the acquisition of | |||||
(2) | Economic occupancy for Q1-2021 and for the three months ended | |||||
(3) | The weighted average interest rates presented as at | |||||
(4) | Property taxes were adjusted to exclude the International Financial Reporting Interpretations Committee interpretation 21, Levies fair value adjustment and treat property taxes as an expense that is amortized during the fiscal year for the purpose of calculating NOI. | |||||
(5) | Includes distributions to Unitholders, dividends to preferred shareholders, unrealized foreign exchange loss, realized foreign exchange gain, fair value adj. of investment properties, provision for carried interest current income taxes and deferred income taxes. |
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES RECONCILIATION TO AFFO
AFFO for Q1-2021 was
A reconciliation of cash provided by (used in) operating activities determined in accordance with International Financial Reporting Standards ("IFRS") to AFFO for Q1-2021 and Q1-2020 are provided below:
Q1-2021 | Q1-2020 | |||
Cash provided by (used in) operating activities | $ | 4,597 | $ | (3,712) |
Less: interest paid | (2,080) | (303) | ||
Cash provided by (used in) operating activities - including interest paid | $ | 2,517 | $ | (4,015) |
Add / (Deduct): | ||||
Change in non-cash operating working capital | 1,133 | 3,216 | ||
Change in restricted cash | (924) | 1,196 | ||
Vacancy costs associated with the suite upgrade program | 36 | 6 | ||
Sustaining capital expenditures and suite renovation reserves | (164) | (26) | ||
AFFO | $ | 2,598 | $ | 377 |
SUBSEQUENT EVENTS
Subsequent to
NON-IFRS FINANCIAL MEASURES
The Fund's audited consolidated financial statements are prepared in accordance with IFRS. Certain terms that may be used in this press release including AFFO, AFFO payout ratio, AMR, economic occupancy, gross book value, indebtedness, indebtedness coverage ratio, indebtedness to gross book value, interest coverage ratio and NOI (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 Q1-2021 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 and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and its properties, including the impact of COVID-19 on the business and operations of the Fund.
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, the impact of COVID-19 on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates, including the Manager's belief of the increased desire to live in less densely populated areas, and the potential for favourable market conditions for multi-family real estate following economic downturns and the trading price of the Fund's listed units, acquisitions, performance, achievements, events, prospects or opportunities for the Fund or the real estate industry and may include statements regarding the financial position, business strategy, acquisitions, budgets, litigation, projected costs, capital expenditures, financial results, occupancy levels, AMR, taxes 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. Those risks and uncertainties include: the impact of COVID-19 on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Fund's listed Units; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the Fund's properties or the Fund's legal entities; and the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise. 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 impact of COVID-19 on the Fund's portfolio as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Fund's listed units; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; 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 loan financing and current interest rates; the ability to complete value-add initiatives; 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 the Manager to manage and operate the properties; the global and North American economic environment; foreign currency exchange rates; and governmental regulations or tax laws.
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.
About Starlight
The Fund is a limited partnership formed under the Limited Partnerships Act (
For the Fund's complete unaudited interim consolidated financial statements for the three months ended
Please visit us at www.starlightus.com and connect with us on LinkedIn at www.linkedin.com/company/starlight-investments-ltd
Neither the
SOURCE
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