REIT also announces monthly distributions for Q1 2025
MONTRÉAL, Nov. 19, 2024 (GLOBE NEWSWIRE) — Canadian Net Real Estate Investment Trust (“Canadian Net” or the “REIT”) (TSX-V: NET.UN) today reported its results for the quarter ended September 30th, 2024 (“Q3 2024”). The REIT also announced distributions for the months of January, February and March 2025.
“We are very pleased with the progress we made in advancing our capital recycling initiatives during the third quarter,” said Kevin Henley, President and CEO. “We successfully sold four more properties and, shortly after the quarter end, announced the acquisition of a single-tenant grocery store, redeploying our capital into an immediately accretive opportunity on an FFO per unit1 basis and further enhancing our portfolio quality. Normalizing for certain non-recurring items, the quarter was in line for the REIT as we remained 100% occupied and further benefited from lower rates. As we look ahead to an increasingly favourable rate environment and solid industry fundamentals, we remain optimistic about our growing pipeline of opportunities.”
RESULTS FOR Q3 2024
Canadian Net reported that Funds from operations1 (“FFO”) decreased to $2.8 million, or $0.137 per unit compared to $3.2 million, or $0.155 per unit for the quarter ended September 30, 2023 (“Q3 2023”). Normalized FFO1 for the quarter, which adds back certain non-recurring items to better reflect operational performance, was $3.0 million, or $0.147 per unit compared to $3.2 million, or $0.155 per unit for Q3 2023.
Rental income was $6.2 million in Q3 2024, a decrease of 3.0% from Q3 2023. Net Operating Income (“NOI”)1 in Q3 2024 was $4.6 million, a decrease of 5.6% from Q3 2023, primarily reflecting a decrease in rental income due to property dispositions as well as straight-line rent adjustments associated with the dispositions.
The REIT generated a net income attributable to unitholders of $13.0 million in Q3 2024 compared to net income of $3.0 million in Q3 2023.
RESULTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2024
Canadian Net reported that FFO1 decreased to $9.1 million, or $0.443 per unit compared to $9.7 million, or $0.473 per unit for the nine-month period ended September 30, 2023. Normalized FFO1 was $9.3 million, or $0.453 per unit compared to $9.7 million, or $0.473 per unit for the same period in 2023.
Rental income was $19.3 million for the nine-month period ended September 30, 2024, stable from the same period in 2023. NOI1 over the nine-month period ended September 30, 2024 was $14.2 million, a decrease of 2.6% from the same period in 2023, primarily reflecting a decrease in rental income due to property dispositions as well as straight-line rent adjustments associated with the dispositions.
The REIT generated a net income attributable to unitholders of $5.3 million for the nine-month period ended September 30, 2024 compared to net income of $13.9 million for the same period last year.
The decrease in FFO1 and Normalized FFO1 is mainly derived from higher interest charges on mortgage renewals, decreases in rental income due to property dispositions and straight-line rent adjustments associated with the property dispositions. The decrease is partially offset by lower interest charges on credit facilities and mortgages associated with property dispositions. The decrease in NOI1 primarily reflects the sale of properties in 2023 and 2024, partially offset by year-over-year increases in rental income. Finally, the variance in net income attributable to unitholders is primarily attributable to the change in the fair value of investment properties.
DISTRIBUTIONS
Canadian Net announced that it will make monthly cash distributions of $0.02875 per unit, representing $0.345 per unit on an annualized basis, on January 31st, February 28th and March 31st, 2025, to unitholders of record on January 15th, February 14th and March 14th, 2025, respectively.
The tables below represent other financial highlights and the reconciliations of certain non-IFRS measures for Q3 2024 and Q3 2023. This information should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion & Analysis (“MD&A”) for the quarters ended September 30th, 2024 and September 30th, 2023.
SUMMARY OF SELECTED FINANCIAL INFORMATION
9 months
Periods ended September 302024
2023
Δ
%
Financial info Property rental income19,337,096 19,301,189 35,907 – Net income (loss) and comprehensive income (loss)5,315,339 13,877,829 (8,562,490)(62%)NOI (1)14,166,312 14,542,784 (376,472)(3%)FFO (1)9,102,645 9,723,879 (621,234)(6%)Normalized FFO (1)(2)9,310,559 9,723,879 (413,320)(4%)AFFO (1)8,658,851 8,605,534 53,317 1%EBITDA (1)10,670,478 19,321,643 (8,651,165)(45%)Adjusted EBITDA (1)13,739,618 14,735,879 (996,261)(7%)Investment properties267,378,220 279,046,583 (11,668,363)(4%)Adjusted investment properties (1)317,006,824 330,887,338 (13,880,514)(4%)Total assets293,510,295 307,161,232 (13,650,937)(4%)Mortgages126,895,706 134,038,836 (7,143,130)(5%)Long-term debt- 30,000 (30,000)(100%)Current portion of mortgages, long term-debt and convertible debentures16,136,371 15,003,476 1,132,895 8%Mortgages on investment properties held for sale- 2,797,546 (2,797,546)(100%)Credit facilities11,170,000 17,470,362 (6,300,362)(36%)Total convertible debentures5,753,739 7,264,514 (1,510,775)(21%)Total equity129,426,184 126,914,012 2,512,172 2%Weighted average units o/s – basic20,551,554 20,579,058 (27,504)- Amounts on a per unit basis FFO(1)0.443 0.473 (0.030)(6%)Normalized FFO(1)(2)0.453 0.473 (0.020)(4%)AFFO(1)0.421 0.418 0.003 1%Distributions0.259 0.259 – – (1) This is a non-IFRS financial measure with no standardized IFRS meaning and may not be comparable to other issuers. Refer to the sections “Non-IFRS financial measures”.
(2) Normalized FFO adds back one-time sales tax expense related to input tax credits previously claimed on certain payments as well as related interest and penalties and mortgage early repayment fees. Refer to sections “Non-IFRS financial measures” and “Risks related to certain tax matters section” in the Trust’s MD&A.
NON-IFRS FINANCIAL MEASURES
The Trust’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this press release, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-IFRS financial measures: FFO, Normalized FFO, FFO per unit, Normalized FFO per unit, AFFO, AFFO per unit, NOI, and Adjusted Investment Properties. These non-IFRS measures are not defined by IFRS, do not have a standardized meaning, and may not be comparable with similar measures presented by other issuers. Canadian Net has presented such non-IFRS measures as management of the Trust believes they are relevant measures of Canadian Net’s underlying operating performance and debt management. Non-IFRS measures should not be considered as alternatives to net income, cash generated from (utilized in) operating activities, or comparable metrics determined in accordance with IFRS as indicators of the Trust’s performance, liquidity, cash flow, and profitability. Information appearing in this news release is a select summary of results. This news release should be read in conjunction with the condensed consolidated financial statements and MD&A for the Trust. Please refer to the “Non IFRS Financial Measures” section in Canadian Net’s management’s discussion and analysis for the period ended September 30, 2024, available under Canadian Net’s profile on SEDAR+ at www.sedarplus.ca for a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS. Such explanation is incorporated by reference herein.
In addition, below are the reconciling tables for the non-IFRS measures used in this press release.
Reconciliation of Investment Properties to Adjusted Investment Properties
As at September 302024
2023
ΔInvestment Properties Developed properties267,378,220 279,046,583 (4%)Investment properties held for sale- 4,825,309 (100%)Joint Venture Ownership(1) Developed properties47,075,565 44,997,909 5%Properties under development2,553,039 2,017,537 27%Adjusted Investment Properties(2)317,006,824 330,887,338 (4%)(1) Represents Canadian Net’s proportionate share(2) This is a non-IFRS financial measure with no standardized IFRS meaning and may not be comparable to other issuers. Refer to the section “Non-IFRS financial measures”
Results of Operations
3 months
9 months Periods ended September 3020242023Δ 20242023ΔRental Income6,203,561 6,398,506 (194,945) 19,337,096 19,301,189 35,907 Operating expenses(1,650,928)(1,577,084)(73,844) (5,170,784)(4,758,405)(412,379)Net Operating Income(1)4,552,633 4,821,422 (268,789) 14,166,312 14,542,784 (376,472)Share of net income (loss) from investments in joint ventures1,866,458 491,824 1,374,634 1,577,879 1,889,515 (311,636)Increase/(decrease) in fair values of investment properties9,045,962 (99,885)9,145,847 (3,413,037)3,881,780 (7,294,817)Unit-based compensation(312,572)(97,327)(215,245) (715,537)(427,375)(288,162)Administrative expenses(424,847)(232,944)(191,903) (960,487)(761,767)(198,720)Financial expenses(1,756,825)(1,846,142)89,317 (5,339,791)(5,247,108)(92,683)Net income (loss) attributable to unitholders12,970,809 3,036,948 9,933,861 5,315,339 13,877,829 (8,562,490)FFO(1)2,808,963 3,181,261 (12%) 9,102,645 9,723,879 (6%)FFO per unit(1)0.137 0.155 (12%) 0.443 0.473 (6%)Normalized FFO(1)(2)3,016,877 3,181,261 (5%) 9,310,559 9,723,879 (4%)Normalized FFO per unit(1)(2)0.147 0.155 (5%) 0.453
