/NOT FOR DISTRIBUTION TO
All amounts in this press release are in thousands of
"We are pleased to announce the Fund's strong operating performance in the Fund's first full quarter of operations, with revenues and net operating income both ahead of forecast," commented
Q1-2022 HIGHLIGHTS
- During Q1-2022, the Fund recorded a fair value gain on Emerson at Buda ("Emerson"), Bainbridge Sunlake ("Sunlake"),
Indigo Apartments ("Indigo") andLyric Apartments ("Lyric") (collectively, the "MF Properties ") of$20,574 , a 6.2% increase over the aggregate purchase price since theMF Properties were acquired by the Fund in late 2021. The fair value gain during Q1-2022 was driven by net operating income ("NOI") growth and capitalization rate compression from strong demand in the investment market for multi-family properties across the primary markets in which the Fund operates ("Primary Markets"). - During Q1-2022, the Fund acquired 38 single-family rental homes in
Atlanta, Georgia for a total of$8,547 and completed capital upgrades on 41 single-family rental homes. - Subsequent to
March 31, 2022 , the Fund entered into a$56,000 loan payable secured by Emerson, which in addition to the cash on hand in the Fund, was used to partly fund the acquisition of Eight at East, a 264-suite multi-family property inOrlando, Florida with the remainder anticipated to be used to partly fund the acquisition of a partial interest in The Ventura ("Ventura"), a 272-suite multi-family property inPhoenix, Arizona which is currently under contract. - Following the anticipated completion of the Ventura acquisition during the three months ended
June 30, 2022 , the Fund will have fully deployed the proceeds from its initial public offering onNovember 15, 2021 (the "Offering"), having assembled a portfolio of 1,973 multi-family suites across six markets and approximately 100 single-family rental homes. - Q1-2022 total portfolio revenue and NOI were
$6,577 and$4,108 , respectively, representing a 109.7% and 107.6% increase relative to the financial forecast included in the Fund's prospectus datedOctober 28, 2021 ("Forecast") primarily as a result of Lyric, Emerson, and the single-family rental homes ("Non-Forecast Properties ") not being included in the Forecast. For Indigo and Sunlake ("Forecast Properties "), Q1-2022 revenue and NOI were$3,240 and$2,116 , ahead of Forecast by 3.3% and 6.9%, respectively, primarily due to higher than forecasted AMR and ancillary income as well as strong cost management. - Significant increases in rent growth were achieved during Q1-2022 with the Fund reporting in-place rents ahead of Forecast by 4.7% for the total portfolio and ahead of Forecast by 1.5% for the
Forecast Properties . - The Fund achieved 11.0% annualized rent growth during Q1-2022, with increases driven by continued growth in demand for multi-family suites due to the economic strength following the downturn created by the outbreak of the coronavirus (SARS – CoV2) and its variants ("COVID-19") in the
U.S. and the Primary Markets. - Q1-2022 net income and comprehensive income was
$10,299 (Forecast - loss of$395 ). The variance relative to the Forecast was primarily driven by the fair value gain on investment properties. - Adjusted funds from operations ("AFFO") for Q1-2022 was
$2,497 , representing an increase of$1,512 or 153.5% relative to the Forecast primarily due toNon-Forecast Properties not being included in the Forecast, partly offset by higher fund and trust expenses and finance costs related to theForecast Properties . - As at
May 9, 2022 , the Fund had collected approximately 98.7% of rents for Q1-2022, with further amounts expected to be collected in future periods, demonstrating the Fund's strong operating performance.
COVID-19 IMPACT
On
COVID-19 vaccination programs continue across the
Further disclosure surrounding the impact of COVID-19 are included in the Fund Management's Discussion and Analysis ("MD&A") in the "COVID-19" and "Future Outlook" sections for Q1-2022 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
Key Multi-Family Operational Information(1) | ||||
Number of multi-family properties owned (1) | 4 | 4 | ||
Total multi-family suites | 1,437 | 1,437 | ||
Economic occupancy (2) | 94.6% | 95.6% | ||
AMR (in actual dollars) | $ 1,451 | $ 1,412 | ||
AMR per square foot (in actual dollars) | $ 1.56 | $ 1.49 | ||
Number of | 87 | 49 | ||
Single-Family | Multi-Family | Total | Total | |
Selected Financial Information | ||||
Gross book value | $ 21,866 | $ 457,814 | $ 479,680 | $ 449,539 |
Indebtedness | $ 11,976 | $ 216,719 | $ 228,695 | $ 221,646 |
Indebtedness to gross book value | 54.8% | 47.3% | 47.7% | 49.3% |
Weighted average interest rate - as at period end (3) | 3.20% | 2.30% | 2.35% | 1.97% |
Weighted average loan term to maturity | 0.58 years | 2.64 years | 2.53 years | 2.84 years |
Q1-2022 | Forecast | |||
Summarized Income Statement | ||||
Revenue from property operations | $ 6,577 | $ 3,137 | ||
Property operating costs | (1,524) | (710) | ||
Property taxes (4) | (945) | (448) | ||
Adjusted Income from operations / NOI | $ 4,108 | $ 1,979 | ||
Fund and trust expenses | (542) | (271) | ||
Finance costs (5) | (1,005) | (744) | ||
Distributions to unitholders of the Fund ("Unitholders") | (2,462) | (993) | ||
Distributions to preferred shareholders | (8) | - | ||
Unrealized foreign exchange gain | 6 | - | ||
Realized foreign exchange loss | (14) | - | ||
Fair value adjustment on investment properties | 20,574 | - | ||
Provision for carried interest | (2,995) | - | ||
Income taxes: - current | (22) | - | ||
Income taxes: - deferred | (7,341) | (366) | ||
Net income (loss) and comprehensive income (loss) | $ 10,299 | $ (395) | ||
Other Selected Financial Information | ||||
Funds from operations ("FFO") | $ 2,077 | $ 964 | ||
FFO per Unit - basic and diluted | $ 0.07 | $ 0.08 | ||
AFFO | $ 2,497 | $ 985 | ||
AFFO per Unit - basic and diluted | $ 0.08 | $ 0.08 | ||
Weighted average interest rate - average during period (6) | 2.10% | 2.12% | ||
Interest coverage ratio | 3.00 x | 2.56 x | ||
Indebtedness coverage ratio | 3.00 x | 2.56 x | ||
Distributions to Unitholders | $ 2,461 | $ 993 | ||
Weighted average Units outstanding (000s) - basic/diluted | 31,820 | 12,520 |
(1) | The Fund commenced operations following the acquisition of Sunlake, Indigo, and 28 single-family homes on |
(2) | Economic occupancy for Q1-2022 and the period from |
(3) | The weighted average interest rate on loans payable is presented as at |
(4) | Property taxes were adjusted to exclude the International Financial Reporting Interpretations Committee interpretations 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) | Finance costs include interest expense on loans payable, non-cash amortization of deferred financing costs, as well as fair value changes in derivative financial instruments. |
(6) | The weighted average interest rate on loans payable reflects the average prevailing index rate applicable to each of the loans payable throughout each period presented. The figures presented do not include the impact of the Emerson loan payable or Eight at East loan payable entered into subsequent to |
(7) | Forecast Q1-2022 only includes results related to the |
SUBSEQUENT EVENTS
(a) Emerson financing:
On
(b) Eight at East acquisition:
On
(c) Single-family rental home acquisitions:
Subsequent to
(d) Ventura acquisition:
Subsequent to
NON-IFRS FINANCIAL MEASURES AND RECONCILIATIONS
The Fund's consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Certain terms that may be used in this press release including AFFO, AMR, economic occupancy, FFO, 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. Gross book value is defined as the fair market value of the investment properties as determined in accordance with IFRS. Indebtedness is defined as the principal amount of loans payable outstanding as at a specific reporting date. 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. Further details on Non-IFRS Measures are set out in the Fund's MD&A in the "Non-IFRS Financial Measures" section for Q1-2022 and are available on the Fund's profile on SEDAR at www.sedar.com.
A reconciliation of the Fund's interest coverage ratio and indebtedness coverage ratio are provided below:
Interest and indebtedness coverage ratios | Q1-2022 | Forecast Q1-2022 (1) | |
Net income (loss) and comprehensive income (loss) | $ 10,299 | $ (395) | |
Add: non-cash or one-time items and distributions (2) | (7,950) | 1,437 | |
Adjusted net income and comprehensive income | $ 2,349 | $ 1,042 | |
Interest coverage ratio (3) | 3.00 x | 2.56 x | |
Indebtedness coverage ratio (4) | 3.00 x | 2.56 x |
(1) | Forecast Q1-2022 only includes results related to the |
(2) | Non-cash or one-time items consist of deferred taxes, amortization of financing costs and loan premiums, fair value adjustments on derivative instruments, provisions for carried interest, and unrealized foreign exchange losses. |
(3) | Interest coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by interest expense. |
(4) | Indebtedness coverage ratio is calculated as adjusted net income and comprehensive income plus interest expense divided by interest expense and mandatory principal payments on the Fund's loans payable. |
CASH PROVIDED BY OPERATING ACTIVITIES RECONCILIATION TO AFFO
The Fund was formed as a "closed-end" fund with an initial term of three years, a targeted yield of 4.0% and a targeted minimum 11% pre-tax investor internal rate of return across all classes of units ("Units") of the Fund.
AFFO and AFFO per Unit for Q1-2022 were
A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for Q1-2022 is provided below:
Q1-2022 | ||
Cash provided by operating activities | $ 22 | |
Less: interest costs | (1,171) | |
Cash used in operating activities - including interest costs | $ (1,149) | |
Add / (Deduct): | ||
Change in non-cash operating working capital | 3,250 | |
Change in restricted cash | 257 | |
Amortization of financing costs | (281) | |
FFO | $ 2,077 | |
Add / (Deduct): | ||
Amortization of financing costs | 281 | |
Vacancy costs associated with the single-family rental home upgrade program | 253 | |
Sustaining capital expenditures and suite or home renovation reserves | (114) | |
AFFO | $ 2,497 |
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 properties as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Fund's
Forward-looking statements involve 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, that assumptions may not be correct and that objectives, strategic goals and priorities may not be achieved. Those risks and uncertainties include: the impact of COVID-19 on the Fund's properties as well as the impact of COVID-19 on the markets in which the Fund operates and the trading price of the Units and unlisted 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; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; the realization of property value appreciation and timing thereof, and the availability of residential properties (including single-family rental homes) for acquisition; the extent and pace at which any changes in interest rates that impact the Fund's weighted average interest rate may occur; the availability of debt financing; and availability and the price at which properties may be acquired including Ventura. 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; the applicability of any government regulation concerning the Fund's tenants or rents as a result of COVID-19 or otherwise; the realization of property value appreciation and timing thereof; the inventory of residential real estate properties (including single-family rental homes); the availability of residential properties for acquisition and the price at which such properties may be acquired including Ventura; the ability of the Fund to benefit from any value-add program the Fund conducts at certain properties; the price at which the Fund's properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the Fund's properties; the availability of mortgage financing and current interest rates; the capital structure of the Fund; the extent of competition for residential properties; the growth in NOI generated from value-add initiatives; the population of residential real estate market participants; assumptions about the markets in which the Fund operates; expenditures and fees in connection with the maintenance, operation and administration of the Fund's properties; the ability of
About
The Fund is a "closed-end" fund formed under and governed by the laws of the Province of
For the Fund's complete unaudited condensed consolidated interim financial statements and MD&A 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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