Bay Street News

European Residential REIT Reports First Quarter 2024 Results

TORONTO, May 02, 2024 (GLOBE NEWSWIRE) — European Residential Real Estate Investment Trust (“ERES” or the “REIT”) (TSX: ERE.UN) announced today its results for the three months ended March 31, 2024.

ERES’s unaudited condensed consolidated interim financial statements and management’s discussion and analysis (“MD&A”) for the three months ended March 31, 2024 can be found at www.eresreit.com or under ERES’s profile at SEDAR+ at www.sedarplus.ca.

SIGNIFICANT EVENTS AND HIGHLIGHTS

Operating Metrics

Financial Performance

Financial Position and Liquidity

“Strong operational performance has steadily reinforced the ERES platform since inception and I’m pleased to be reporting another quarter of high occupancy and robust rent growth, in excess of our target range,” commented Mark Kenney, Chief Executive Officer. “This has driven further expansion of our same property NOI margin, which grew by 200 basis points to 78.3% for the first quarter of 2024, as compared to the first three months of 2023. We’re also excited to be accelerating our progress on individual suite sales, having completed the disposition of 24 residential units during Q1 for aggregate gross proceeds of €7.6 million. We’ll continue to ramp up this initiative and explore additional opportunities to generate capital and sturdy our future financial position, in ongoing pursuit of value enhancement for Unitholders.”

“Our solid organic growth continues to mitigate the impact of the higher interest rates that we’re absorbing, and our FFO per Unit of €0.039 was relatively flat versus the comparative period, notwithstanding our mortgage refinancing in the prior year,” added Jenny Chou, Chief Financial Officer. “This past quarter, we refinanced one of our commercial mortgages with €18.7 million in principal outstanding, and at period end, we had only 7% of our mortgage debt maturing during the remainder of 2024. We’ll continue to proactively and prudently manage our liquidity and leverage, and ensure our compliance with covenant restrictions going forward, as we’ve done to date.”

OPERATING RESULTS

Rental Rates

Total Property Portfolio Suite Count Occupied AMR/ABR1 Occupancy %
As at March 31, 2024 2023 2024 2023 AMR 2024 2023
      % Change    
Residential Properties 6,862 6,900 1,068 1,002 6.6   98.5 98.7
Commercial Properties2     17.6 19.2 (8.3 ) 100.0 99.5
1 Average In-Place Base Rent (“ABR”).
2 Represents 450,911 square feet of commercial gross leasable area.
Same Property Portfolio Suite Count1 Occupied AMR/ABR Occupancy %  
As at March 31,   2024 2023 AMR 2024 2023  
    % Change      
Residential Properties 6,862 1,068 1,001 6.7   98.5 98.7  
Commercial Properties2   17.6 19.2 (8.3 ) 100.0 99.5  
1 Same property suite count only includes the suites owned by the REIT as at both March 31, 2024 and March 31, 2023, and therefore excludes thirty-eight suites disposed between the two dates.
2 Represents 450,911 square feet of commercial gross leasable area.

Occupied AMR for the total portfolio increased by 6.6%, while Occupied AMR for the same property portfolio increased by 6.7%, compared to the prior year period. The increases were mainly driven by indexation, turnover and the conversion of regulated suites to liberalized suites. The REIT’s achievement of growth in rental revenues significantly in excess of its target range of 3% to 5% demonstrates its ability to consistently operate in a complex and fluid regulatory regime. The Occupied ABR for the commercial properties for both the total and same property portfolio decreased from €19.2 as at March 31, 2023 to €17.6 as at March 31, 2024 due to a reduction in rent after lease renewal for one of the commercial properties.

Suite Turnovers

For the Three Months Ended March 31, 2024 2023
  Change in
Monthly Rent
Turnovers2 Change in
Monthly Rent
Turnovers2
  % % % %
Regulated suites turnover1 10.7 0.4 4.5 0.3
Liberalized suites turnover1 14.1 2.4 16.7 3.1
Regulated suites converted to liberalized suites1 37.4 0.3 59.5 0.4
Weighted average turnovers1 15.6 3.1 20.7 3.9
Weighted average turnovers excluding service charge income 16.2 3.1 19.9 3.9
1 Represents the percentage increase in monthly rent inclusive of service charge income.
2 Percentage of suites turned over during the period based on the weighted average number of residential suites held during the period.

Suite Renewals

Lease renewals generally occur on July 1 for residential suites. Other than the household income adjustment, maximum rent indexation from July 1, 2023 to June 30, 2024 for all Regulated Units is set at the annual wage development figure of 3.1%. For the period from July 1, 2024 up to and including June 30, 2025, the indexation for all Regulated Units has been set at the annual wage development figure of 5.8% with a monthly rent of more than €300. Annual rental increases due to indexation for Liberalized Suites are also capped, as per the previously enacted Dutch government legislation, effective for an initial period of three years from May 1, 2021 up to and including April 30, 2024.The indexation for the period from January 1, 2024 to January 1, 2025 has been capped for Liberalized Suites to the annual inflation number (“CPI”) + 1.0%, resulting in a maximum indexation of 5.5% based on CPI of 4.5%.

Accordingly, for rental increases due to indexation beginning on July 1, 2024, the REIT served tenant notices to 6,572 suites, representing 96% of the residential portfolio, across which the average rental increase due to indexation and household income adjustments is 5.3%. In the prior year period, the REIT served tenant notices to 6,659 suites, representing 97% of the residential portfolio, across which the average rental increase due to indexation and household income adjustments was 4.0%.

There was no lease renewal in the REIT’s commercial portfolio during the three months ended March 31, 2024 and March 31, 2023.

Total Portfolio Performance

For the Three Months Ended March 31,   2024     2023  
Operating Revenues (000s) 24,439          23,380  
NOI (000s) 19,113           17,850  
NOI Margin1   78.2 %   76.3 %
Weighted Average Number of Suites   6,874     6,900  
1 Excluding service charge income and expense, the total portfolio NOI margin for the three months ended March 31, 2024 was 83.5% (three months ended March 31, 2023 — 82.0%).

Operating revenues increased by 4.5% for the three months ended March 31, 2024 compared to the prior year period, primarily due to increase in monthly rents on the same property portfolio, as described above.

NOI increased by 7.1% for the three months ended March 31, 2024, versus the same period last year, likewise driven by higher monthly rents on same property portfolio and reduction in property operating costs. For the three months ended March 31, 2024, the NOI margin on the total portfolio, including service charges, increased to 78.2% compared to 76.3% for the same period last year (excluding service charges, total portfolio NOI margin increased to 83.5% from 82.0% for the same period last year). Service charge expenses are fully recoverable from tenants via service charge income and therefore have a nil net impact on NOI.

Same Property Portfolio Performance

For the Three Months Ended March 31,   2024     2023  
Operating Revenues (000s)         24,422   23,258  
NOI (000s)         19,112   17,755  
NOI Margin1   78.3 %   76.3 %
Same Property Number of Suites   6,862     6,862  
1 Excluding service charge income and expense, the same property portfolio NOI margin for the three months ended March 31, 2024 was 83.6% (three months ended March 31, 2023 — 82.0%).

The increase in same property NOI by 7.6% for the three months ended March 31, 2024 compared to the same period last year, was primarily driven by higher operating revenues from increased monthly rents and decrease in same property property operating costs. Same Property NOI margin increased to 78.3% for the three months ended March 31, 2024, compared to 76.3% for the same period last year. Excluding service charges, same property NOI margin increased to 83.6% for the three months ended March 31, 2024, compared to 82.0% in the comparable prior year period.

The REIT is focused on continuing to further improve NOI and NOI margin through a combination of rental growth and cost control, and investment in capital programs to enhance the quality and value of its portfolio. In addition, the REIT notes that its property operating costs are largely insulated from inflation, as tenants are responsible for all of their own energy and other utility costs, the REIT incurs no wage costs, and property management fees are a fixed percentage of operating revenues. This further preserves the REIT’s property operating costs and, combined with its strong growth in rental revenues, improves its NOI margin.

Financial Performance

FFO is a measure of operating performance based on the funds generated by the business before reinvestment or provision for other capital needs. AFFO is a supplemental measure which adjusts FFO for costs associated with certain capital expenditures, leasing costs and tenant improvements. FFO and AFFO as presented are in accordance with the most recent recommendations of the Real Property Association of Canada (“REALpac”), with the exception of certain adjustments made to the REALpac defined FFO, which relate to (i) senior management termination and retirement costs and (ii) gain from Unit Options forfeited on senior management termination. FFO and AFFO may not, however, be comparable to similar measures presented by other real estate investment trusts or companies in similar or different industries. Management considers FFO and AFFO to be important measures of the REIT’s operating performance. Please refer to “Basis of Presentation and Non-IFRS Measures” within this press release for further information.

A reconciliation of net income (loss) and comprehensive income (loss) to FFO is as follows:

(€ Thousands, except per Unit amounts)  
For the Three Months Ended March 31,   2024     2023  
Net income (loss) and comprehensive income (loss) for the period         22,821   (106,348)  
Adjustments:    
Net movement in fair value of investment properties   2,310     124,726  
Net movement in fair value of Class B LP Units   (19,265 )   16,786  
Fair value adjustments of Unit-based compensation liabilities   1,178     (141 )
Interest expense on Class B LP Units   4,261     4,261  
Deferred income taxes   (670 )   (31,927 )
Foreign exchange loss (gain)1   214     (1,215 )
Net (gain) loss on derivative financial instruments   (638 )   3,028  
Other activities and loss on transactions2   125      
Tax on suite dispositions3   389      
Gain from Unit Options forfeited on senior management termination4   (1,552 )    
Senior management termination and retirement costs5       74  
FFO         9,173   9,244  
FFO per Unit – diluted6         0.039   0.040  
     
Total distributions declared         7,012   6,974  
FFO payout ratio   76.4 %   75.4 %
1 Relates to foreign exchange movements recognized on remeasurement of Unit-based compensation liabilities as well as on remeasurement of the REIT’s US$ draw on the Revolving Credit Facility as part of effective hedging.
2 Represents loss on suite dispositions relating to transaction costs.
3 Included in current income tax expense in the consolidated interim statements of net income (loss) and comprehensive income (loss).
4 Represents Unit-based compensation financial liabilities written off during the three months ended March 31, 2024 due to 3,000,000 Unit Options forfeited as a result of senior management termination.
5 Relates to €59 of accelerated vesting of previously granted Unit Options and €15 in associated legal fees for the three months ended March 31, 2023.
6 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.

 

The table below illustrates a reconciliation of the REIT’s FFO and AFFO:
     
(€ Thousands, except per Unit amounts)  
For the Three Months Ended March 31,   2024   2023¹
FFO         9,173   9,244  
Adjustments:    
Actual non-discretionary capital investments   (372 )   (286 )
Leasing cost reserve2   (127 )   (139 )
AFFO         8,674   8,819  
AFFO per Unit – diluted3         0.037   0.038  
     
Total distributions declared         7,012   6,974  
AFFO payout ratio   80.8 %   79.1 %
1 Certain 2023 comparative figures have been restated to conform with current period presentation.
2 Leasing cost reserve is based on annualized 10-year forecast of external leasing costs on the commercial properties.
3 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.

FFO per Unit and AFFO per Unit for the three months ended March 31, 2024 decreased from the same periods last year primarily due to increases in interest and other financing costs, partially offset by the positive impact of increase in same property NOI.

Net Asset Value

NAV represents total Unitholders’ equity per the REIT’s consolidated balance sheets, adjusted to include or exclude certain amounts in order to provide what management considers to be a key measure of the residual value of the REIT to its Unitholders as at the reporting date. NAV is therefore used by management on both an aggregate and per Unit basis to evaluate the net asset value attributable to Unitholders, and changes thereon based on the execution of the REIT’s strategy. While NAV is calculated based on items included in the consolidated annual financial statements or supporting notes, NAV itself is not a standardized financial measure under IFRS and may not be comparable to similarly termed financial measures disclosed by other real estate investment trusts or companies in similar or different industries. Please refer to the “Basis of Presentation and Non-IFRS Measures” section within this press release for further information.

A reconciliation of Unitholders’ equity to NAV is as follows:
       
(€ Thousands, except per Unit amounts)  
As at March 31, 2024 December 31, 2023 March 31, 2023
Unitholders’ equity 447,774   427,247   441,643  
Class B LP Units   231,289     250,554     313,639  
Unit-based compensation financial liabilities   53     187     730  
Net deferred income tax liability1   14,201     14,869     42,620  
Net derivative financial asset2   (16,539 )   (15,901 )   (22,117 )
NAV         676,778   676,956   776,515  
NAV per Unit – diluted3         2.89   2.90   3.34  
NAV per Unit – diluted (in C$)3,4 C$ 4.23   C$ 4.24   C$ 4.91  
1 Represents deferred income tax liabilities of €28,457 net of deferred income tax assets of €14,256 as at March 31, 2024 (December 31, 2023 — deferred income tax liabilities of €28,217 net of deferred income tax assets of €13,348, March 31, 2023 — deferred income tax liabilities of €48,975 net of deferred income tax assets of €6,355).
2 Represents non-current derivative financial assets of €16,021 and current derivative financial assets of €518 as at March 31, 2024 (December 31, 2023 — non-current derivative financial assets of €15,901, March 31, 2023 — non-current derivative financial assets of €22,117).
3 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.
4 Based on the foreign exchange rate of 1.4616 on March 31, 2024 (foreign exchange rate of 1.4626 on December 31, 2023 and 1.4719 on March 31, 2023).

Other Financial Highlights

For the Three Months Ended March 31, 2024 2023
Weighted Average Number of Units – Diluted (000s)1 233,754 232,438

        

As at   March 31, 2024   December 31, 2023   March 31, 2023
Closing Price of REIT Units3 1.63 1.76 2.21
Closing Price of REIT Units (in C$) C$ 2.38 C$ 2.58 C$ 3.25
Market Capitalization (millions)2,3 381 412 513
Market Capitalization (millions in C$)2 C$ 556 C$ 602 C$ 756
1 Includes Class B LP Units and the dilutive impact of unexercised Unit Options and RURs.
2 Includes Class B LP Units.
3 Based on the foreign exchange rate of 1.4616 on March 31, 2024 (foreign exchange rate of 1.4626 on December 31, 2023 and 1.4719 on March 31, 2023).

FINANCIAL POSITION

As at March 31, 2024 December 31, 2023 March 31, 2023
Ratio of Adjusted Debt to Gross Book Value1   57.3 %   57.6 %   54.3 %
Weighted Average Mortgage Effective Interest Rate4   2.22 %   2.07 %   1.77 %
Weighted Average Mortgage Term (years)   2.7     2.9     3.2  
Debt Service Coverage Ratio (times)1,2   2.4x     2.4x     2.9x  
Interest Coverage Ratio (times)1,2   2.9x     3.0x     3.5x  
Available Liquidity (000s)3         36,531   28,893   43,101  
1 Please refer to the “Basis of Presentation and Non-IFRS Measures” section of this press release for further information.
2 Based on trailing four quarters.
3 Includes cash and cash equivalents of €9.5 million and unused credit facility capacity of €27.0 million as at March 31, 2024 (cash and cash equivalents of €6.9 million and unused credit facility capacity of €22.0 million as at December 31, 2023, cash and cash equivalents of €7.2 million and unused credit facility of 36.0 million as at March 31, 2023).
4 Includes impact of deferred financing costs, fair value adjustment and interest rate swaps.

For the three months ended March 31, 2024, ERES’s liquidity improved, as compared to the prior year, primarily due to pay-down of its Revolving Credit Facility with the proceeds of suite dispositions, with immediately available liquidity of €36.5 million as at March 31, 2024, excluding the €25.0 million accordion feature on the Revolving Credit Facility, acquisition capacity on the Pipeline Agreement and alternative promissory note arrangements with CAPREIT. The REIT’s financial position is additionally strengthened by its well-staggered mortgage profile, with a weighted average term to maturity of 2.7 years and fixed interest payment terms for 100% of its mortgages at a low weighted average effective interest rate of 2.22%. This is further reinforced by compliant debt coverage metrics, with interest and debt service coverage ratios of 2.9x and 2.4x, respectively, and adjusted debt to gross book value ratio within its target range at 57.3%.

Management aims to maintain an optimal degree of debt to gross book value of the REIT’s assets, depending on a number of factors at any given time. Capital adequacy is monitored against investment and debt restrictions contained in the REIT’s fourth amended and restated declaration of trust dated April 28, 2020 (the “Declaration of Trust”) and the amended and renewed credit agreement dated January 24, 2023, between the REIT and three Canadian chartered banks, providing access to up to €125.0 million with an accordion feature to increase the limit a further €25.0 million upon satisfaction of conditions set out in the agreement and the consent of applicable lenders (the “Revolving Credit Facility”).

The REIT manages its overall liquidity risk by maintaining sufficient available credit facility and available cash on hand to fund its ongoing operational and capital commitments and distributions to Unitholders, and to provide for future growth in its business.

DISTRIBUTIONS

During the three months ended March 31, 2024, the REIT declared monthly distributions of €0.01 per Unit (being equivalent to €0.12 per Unit annualized). Such distributions are paid to Unitholders of record on each record date, on or about the 15th day of the month following the record date. The REIT intends to continue to make regular monthly distributions, subject to the discretion of its Board of Trustees.

CONFERENCE CALL

A conference call hosted by Mark Kenney, Chief Executive Officer and Jenny Chou, Chief Financial Officer, will be held on Friday, May 3, 2024 at 9:00 am EST. The telephone numbers for the conference call are: Canadian Toll Free: +1 (833) 950-0062 / International Toll: +1 (929) 526-1599. The conference call access code is 016020.

The call will also be webcast live and accessible through the ERES website at www.eresreit.com — click on “Investor Info” and follow the link at the top of the page. A replay of the webcast will be available for one year after the webcast at the same link.

The slide presentation to accompany management’s comments during the conference call will be available on the ERES website an hour and a half prior to the conference call.

About European Residential Real Estate Investment Trust

ERES is an unincorporated, open-ended real estate investment trust. ERES’s REIT Units are listed on the TSX under the symbol ERE.UN. ERES is Canada’s only European-focused multi-residential REIT, with a current portfolio of high-quality, multi-residential real estate properties in the Netherlands. As at March 31, 2024, ERES owned 158 multi-residential properties, comprised of approximately 6,900 residential suites and ancillary retail space located in the Netherlands, and owned one commercial property in Germany and one commercial property in Belgium.

ERES’s registered and principal business office is located at 11 Church Street, Suite 401, Toronto, Ontario M5E 1W1.

For more information please visit our website at www.eresreit.com.


Basis of Presentation and Non-IFRS Measures

Unless otherwise stated, all amounts included in this press release are in thousands of Euros (“€”), the functional currency of the REIT. The REIT’s unaudited condensed consolidated interim financial statements and the notes thereto for the three months ended March 31, 2024, are prepared in accordance with International Financial Reporting Standards (“IFRS”). Financial information included within this press release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the REIT’s unaudited condensed consolidated interim financial statements and MD&A for the three months ended March 31, 2024, which are available on the REIT’s website at www.eresreit.com and on SEDAR+ at www.sedarplus.ca.

Consistent with the REIT’s management framework, management uses certain financial measures to assess the REIT’s financial performance, which are not in accordance with IFRS (“Non-IFRS Measures”). Since these Non-IFRS Measures are not recognized under IFRS, they may not be comparable to similar measures reported by other issuers. The REIT presents Non-IFRS Measures because management believes Non-IFRS Measures are relevant measures of the ability of the REIT to earn revenue, generate sustainable economic earnings, and to evaluate its performance and financial condition. The Non-IFRS Measures should not be construed as alternatives to the REIT’s financial position, net income or cash flows from operating activities determined in accordance with IFRS as indicators of the REIT’s performance or the sustainability of distributions. For full definitions of these measures, please refer to “Non-IFRS Measures” in Section I and Section IV of the REIT’s MD&A for the three months ended March 31, 2024.

Where not otherwise disclosed, reconciliations for certain Non-IFRS Measures included within this press release are provided below.

Adjusted Debt and Adjusted Debt Ratio

The REIT’s Declaration of Trust and Revolving Credit Facility require compliance with certain financial covenants, including the Ratio of Adjusted Debt to Gross Book Value. Management uses Total Debt Adjusted for Declaration of Trust and the Ratio of Adjusted Debt to Gross Book Value as indicators in assessing if the debt level maintained is sufficient to provide adequate cash flows for distributions.

A reconciliation from total debt is as follows:

(€ Thousands)  
As at March 31, 2024 December 31, 2023 March 31, 2023
Mortgages payable1         889,270   889,749   875,042  
Credit facility   97,785     102,741     88,676  
Promissory note           25,650  
Total Debt         987,055   992,490   989,368  
       
Fair value adjustment on mortgages payable   (716 )   (816 )   (1,115 )
Total Debt Adjusted for Declaration of Trust         986,339   991,674   988,253  
Ratio of Adjusted Debt to Gross Book Value2   57.3 %   57.6 %   54.3 %
1 Represents non-current and current mortgages payable of €698,107 and €191,163, respectively, as at March 31, 2024 (December 31, 2023 — €809,215 and €80,534, respectively, March 31, 2023 — €779,241 and €95,801, respectively).
2 Gross book value is defined by the REIT’s Declaration of Trust as the gross book value of the REIT’s assets as per the REIT’s financial statements, determined on a fair value basis for investment properties.

Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value

Earnings Before Interest, Tax, Depreciation, Amortization and Fair Value (“EBITDAFV”) is calculated as prescribed in the REIT’s Revolving Credit Facility for the purpose of determining the REIT’s Debt Service Coverage Ratio and Interest Coverage Ratio, and is defined as net income (loss) attributable to Unitholders, reversing, where applicable, income taxes, interest expense, amortization expense, depreciation expense, impairment, adjustments to fair value and other adjustments as permitted in the REIT’s Revolving Credit Facility. Management believes EBITDAFV is useful in assessing the REIT’s ability to service its debt, finance capital expenditures and provide for distributions to its Unitholders.

A reconciliation of net income (loss) and comprehensive income (loss) to EBITDAFV is as follows:

(€ Thousands)                
For the Three Months Ended, Q1 24 Q4 23 Q3 23 Q2 23 Q1 23 Q4 22 Q3 22 Q2 22
Net income (loss) and comprehensive income (loss)         22,821           (35,917)           24,784           3,252   (106,348)   (48,790)   70,000   126,935  
Adjustments:                
Net movement in fair value of investment properties   2,310     35,337     24,768     45,398     124,726     93,599     8,099     9,790  
Net movement in fair value of Class B LP Units   (19,265 )   8,218     (39,339 )   (31,964 )   16,786     (15,443 )   (65,136 )   (133,499 )
Fair value adjustments of Unit-based compensation liabilities   1,178     (194 )   (463 )   (513 )   (141 )   (1 )   (682 )   (2,258 )
Net (gain) loss on derivative financial instruments   (638 )   6,304     640     (728 )   3,028     (2,496 )   (10,385 )   (10,649 )
Foreign exchange loss (gain)   214     224     213     210     (1,215 )   1,148     2,696     5,003  
Interest expense on Class B LP Units   4,261     4,261     4,261     4,261     4,261     4,261     4,261     4,262  
Interest on mortgages payable   4,558     4,608     4,607     3,843     3,777     3,832     3,862     3,186  
Interest on credit facility   1,335     1,422     1,336     1,237     797     576     262     167  
Interest on promissory notes               70     234     197     97     256  
Amortization   144     246     150     202     173     130     149     207  
Loss on suite dispositions   125     58     19                      
Impairment of goodwill                               10,541  
Income tax expense (recovery)   1,308     (8,143 )   (5,081 )   (9,647 )   (30,718 )   (21,926 )   2,371     540  
EBITDAFV         18,351           16,424           15,895           15,621   15,360   15,087   15,594   14,481  
Cash taxes   1,978     2,395     1,251     1,235     1,209     1,018     983     875  
Tax on suite dispositions   (389 )   (234 )   (80 )                    
EBITDAFV less cash taxes         16,762           14,263           14,724           14,386   14,151   14,069   14,611   13,606  
                 
Principal repayments1         444           550           550           549   549   548   548   547  
1 For use in the Debt Service Coverage Ratio calculation.

Debt Service Coverage Ratio

The Debt Service Coverage Ratio is defined as EBITDAFV less cash taxes, divided by the sum of interest expense (including on mortgages payable, credit facility and promissory notes) and all regularly scheduled principal payments made with respect to indebtedness during the period (other than any balloon, bullet or similar principal payable at maturity or which repays such indebtedness in full). The Debt Service Coverage Ratio is calculated as prescribed in the REIT’s Revolving Credit Facility, and is based on the trailing four quarters. Management believes the Debt Service Coverage Ratio is useful in determining the ability of the REIT to service the principal and interest requirements of its outstanding debt.

(€ Thousands)    
As at   March 31, 2024   December 31, 2023   March 31, 2023
EBITDAFV less cash taxes1 60,135 57,524 56,437
Debt service payments1,2 25,109 24,129 19,435
Debt Service Coverage Ratio (times)   2.4x   2.4x   2.9x
1 For the trailing 12 months ended.
2 Include principal repayments as well as interest on mortgages payable, credit facility and promissory notes, and exclude interest expense on Class B LP Units.

Interest Coverage Ratio

The Interest Coverage Ratio is defined as EBITDAFV divided by interest expense (including on mortgages payable, credit facility and promissory notes). The Interest Coverage Ratio is calculated as prescribed in the REIT’s Revolving Credit Facility, and is based on the trailing four quarters. Management believes the Interest Coverage Ratio is useful in determining the REIT’s ability to service the interest requirements of its outstanding debt.

(€ Thousands)    
As at   March 31, 2024   December 31, 2023   March 31, 2023
EBITDAFV1 66,291 63,300 60,522
Interest expense1,2 23,016 21,931 17,243
Interest Coverage Ratio (times)   2.9x   2.9x   3.5x
1 For the trailing 12 months ended.
2 Includes interest on mortgages payable, credit facility and promissory notes, and excludes interest expense on Class B LP Units.

Forward-Looking Disclaimer

Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect the REIT’s current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plan”, “predict”, “forward”, “potential”, “could”, “would”, “should”, “might”, “likely”, “approximately”, “scheduled”, “forecast”, “variation”, “project”, “budget” or “continue”, or similar expressions suggesting future outcomes or events. Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. Although the forward-looking statements contained in this press release are based on assumptions and information that are available to management as of the date on which the statements are made in this press release, including current market conditions and management’s assessment of disposition and other opportunities that are or may become available to the REIT, which are subject to change, management believes these statements have been prepared on a reasonable basis, reflecting the REIT’s best estimates and judgement. However, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in this press release. Accordingly, readers should not place undue reliance on forward-looking statements. For a detailed discussion of risks and uncertainties affecting the REIT, refer to the Risks and Uncertainties section in the MD&A contained in the REIT’s 2023 Annual Report.

Except as specifically required by applicable Canadian securities law, the REIT does not undertake any obligation to update or revise publicly any forward-looking statements, 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. These forward-looking statements should not be relied upon as representing the REIT’s views as of any date subsequent to the date of this press release.

For further information:
   
Mark Kenney Jenny Chou
Chief Executive Officer Chief Financial Officer
Email: m.kenney@capreit.net Email: j.chou@capreit.net

Category: Earnings

 


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