Firm Capital Apartment REIT Reports Q3/2023 Results and Provides Strategic Review Update
November 08 2023 - 5:01PM
Firm Capital Apartment Real Estate Investment Trust (“the
“
Trust”), (TSXV: FCA.U), (TSXV: FCA.UN) is pleased
to report its financial results for the three and nine months ended
September 30, 2023 as well as provide an update regarding the
previously announced Strategic Review:
EARNINGS
- For the three months ended September 30, 2023, net loss was
approximately $1.5 million, in comparison to the $1.9 million net
loss reported for the three months ended June 30, 2023 and the $1.4
million net loss reported for the three months ended September 30,
2022;
- Excluding non-cash fair value adjustments, net loss was $0.4
million for the three months ended September 30, 2023, in
comparison to the $0.2 million net loss reported for the three
months ended June 30, 2023 and the $0.4 million net income reported
for the three months ended September 30, 2022. Excluding non cash
fair value adjustments, net loss was $0.5 million for the nine
months ended September 30, 2023 in comparison to the $1.7 million
net income reported for the nine months ended September 30,
2022;
- For the three months ended September 30, 2023, AFFO was
negative $0.3 million, in comparison to the negative $0.2 million
reported for the three months ended June 30, 2023 and the $0.7
million reported for the three months ended September 30, 2022. For
the nine months ended September 30, 2023, AFFO was negative $0.4
million in comparison to the $1.8 million reported for the nine
months ended September 30, 2022.
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
Sep 30, 2023 |
Jun 30, 2023 |
Sep 30, 2022 |
|
Sep 30, 2023 |
Sep 30, 2022 |
|
|
Net Loss |
$ |
(1,483,852 |
) |
$ |
(1,854,814 |
) |
$ |
(1,434,159 |
) |
|
$ |
(8,240,393 |
) |
$ |
(12,082,626 |
) |
|
Net Income (Loss) Before Fair Value
Adjustments |
$ |
(418,741 |
) |
$ |
(221,406 |
) |
$ |
384,679 |
|
|
$ |
(479,587 |
) |
$ |
1,723,377 |
|
|
FFO |
$ |
(662,938 |
) |
$ |
(77,799 |
) |
$ |
2,147,093 |
|
|
$ |
(1,312,319 |
) |
$ |
3,409,147 |
|
|
AFFO |
$ |
(348,782 |
) |
$ |
(166,675 |
) |
$ |
683,208 |
|
|
$ |
(361,013 |
) |
$ |
1,817,520 |
|
|
|
|
|
|
|
|
|
|
NAV AT $6.87 PER TRUST UNIT (CAD
$9.09): Including the face value of the convertible
debentures, the Trust reported NAV of $6.87 per Trust Unit (CAD
$9.09) in comparison to the $7.01 (CAD $9.28) per Trust Unit as at
Q2/2023, also adjusted for the face value of the convertible
debentures.
AVERAGE RENT INCREASES ACROSS INVESTMENT
PORTFOLIO:
Wholly-Owned Real Estate Investments
Portfolio: For the three months ended September 30, 2023,
average rents saw an increase of 1.58% to $1,249 per unit from the
$1,230 per unit reported for the three months ended June 30, 2023
and an increase of 5.35% from the $1,186 reported for the three
months ended September 30, 2022; Joint Venture Real Estate
Investments Portfolio: For the three months ended
September 30, 2023, average rents remained consistent at $1,593 per
unit from the $1,590 per unit reported for the three months ended
June 30, 2023 and an increase of 9.68% from the $1,452 reported for
the three months ended September 30, 2022;
STRATEGIC REVIEW On November 15,
2022, the Board of Trustees initiated a strategic review process to
identify, evaluate and pursue a range of strategic alternatives
with the goal of maximizing unitholder value (the
“Strategic Review”).
By way of update, the Board is pleased to report
on the following:
- WHOLLY OWNED ASSET DISPOSITIONS: The Trust had
listed for sale its entire Wholly Owned Real Estate Investments and
is pleased to report on the following:
- Texas: On June 22, 2023, the Trust announced
the sale of one of its properties located in Austin, Texas for
$12.6 million. Net of associated mortgage debt and closing costs,
the net sale proceeds of approximately $8.8 million were used to
pay off additional debt including, but not limited to, the mortgage
associated with the Trust’s other property located in Austin,
Texas; bank indebtedness and the vast majority of the $5.1 million
(CAD$6.9 million) Bridge Loan. The property sold had a sales price
in line with its IFRS value.On October 2, 2023, the Trust completed
the sale of its unencumbered property located in Austin, Texas for
$9.9 million. Net of closing costs, the net sale proceeds of
approximately $9.6 million were used to pay off loans as they came
due and for working capital purposes. The property had a sales
price in line with its IFRS value.In addition, the Trust has two
properties located in Houston, Texas that are actively being
marketed.
- New Jersey: On August 31, 2023, the Trust
completed the previously announced sale of its property located in
New Jersey for $19.5 million. Net of associated mortgage debt and
closing costs, the net sale proceeds of approximately $5.4 million
were used to pay off the remainder of the Bridge Loan, other loans
as they came due and for working capital purposes. The property
sold had a sales price in line with its IFRS value.
- Florida: The Trust’s property in Florida is
actively being marketed.
- JOINT VENTURE ASSET DISPOSITIONS: The Trust
has listed for sale its Joint Venture Real Estate Investments
located in Maryland and Connecticut as both the Trust and its
partners have decided it is an appropriate time to exit the
respective investments. As of today, one of the Maryland properties
is under contract and one is being actively marketed, while the
Connecticut property is under negotiations with a third party.The
sale price for 100% of the Maryland property is $16.5 million. Net
of associated mortgage debt and closing costs, the net sale
proceeds will be approximately $4.3 million, of which the Trust
will receive approximately $1.2 million given its 25% ownership in
the property. The property has a sales price in line with its IFRS
value and is anticipated to close during Q4/2023.
- PREFERRED CAPITAL INVESTMENTS: As at September
30, 2023, the Trust has two Preferred Capital Investments located
in Texas and South Dakota that aggregate approximately $5.1
million. The Trust continues to hold these investments and earns
income at 10% and 12%, respectively. Both investments are current
in terms of their interest payments.
- NORMAL COURSE ISSUER BID: As a result of the
Trust’s cash position, on September 20, 2023, the Trust announced
that it received approval from the TSXV to commence a Normal Course
Issuer Bid (the " Bid ") to purchase up to $1.9 million (the
“Allotment”) of the CAD$19.4 million, 6.25% convertible unsecured
subordinated debentures due June 30, 2026 ("Debentures")
(TSXV:FCA.DB). The Bid commenced on September 25, 2023 and will end
no later than September 24, 2024. The Board of Trustees is of the
opinion that it is in the best interest of the Trust and its
security holders to purchase the Debentures at a discount to Par,
through the Bid, while providing liquidity for the security
holders. It is the intent of the Trust to acquire as much of the
Debentures as possible up to the maximum allowable under the rules
of the Exchange in the context of market pricing, thus providing
liquidity for existing holders of the Debentures.As of November 8,
the Trust has acquired $0.37 million or approximately 20% of the
Allotment for a Weighted Average Debenture Price of $94.89. Note
that the Trust is limited to acquiring up to 2% of the Debentures
on a monthly basis. During the month of October, the Trust met this
limit.The Board will continue to assess matters on a quarterly
basis and determine if the Trust should: (i) distribute excess
income; (ii) distribute net proceeds from asset sales, after debt
repayment; (iii) reinvest net proceeds into other investments; (iv)
distribute proceeds as a return of capital or special distribution;
and/or (v) use excess proceeds to repurchase Trust units in the
marketplace. It is the Trust’s current intention not to disclose
developments with respect to the Strategic Review unless and until
it is determined that disclosure is necessary or appropriate, or as
required under applicable securities laws.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS:
Certain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate",
"expect", "intend" and similar expressions.
Forward-looking statements necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse factors
affecting the U.S. real estate market generally or those specific
markets in which the Trust holds properties; volatility of real
estate prices; inability to access sufficient capital from internal
and external sources, the completion of the Strategic Review;
and/or inability to access sufficient capital on favourable terms;
industry and government regulation; changes in legislation, income
tax and regulatory matters; the ability of the Trust to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks. Additional risk factors that may
impact the Trust or cause actual results and performance to differ
from the forward looking statements contained herein are set forth
in the Trust's Annual Information form under the heading Risk
Factors (a copy of which can be obtained under the Trust's profile
on www.sedar.com).
Readers are cautioned that the foregoing list is
not exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement. Except as
required by applicable law, the Trust undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise.
Certain financial information presented in this
press release reflect certain non-International Financial Reporting
Standards (“IFRS”) financial measures, which
include, but not limited to NOI, FFO and AFFO. These measures are
commonly used by real estate investment companies as useful metrics
for measuring performance, however, they do not have standardized
meaning prescribed by IFRS and are not necessarily comparable to
similar measures presented by other real estate investment
companies. These terms are defined in the Trust’s Management
Discussion and Analysis for the three and nine months ended
September 30, 2023 filed on www.sedar.com.
Neither the Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
For further information, please contact: |
Sandy
Poklar |
Claudia
Alvarenga |
President & Chief Executive Officer |
Chief Financial Officer |
(416) 635-0221 |
(416) 635-0221 |
|
|
For Investor
Relations information, please contact: |
Victoria Moayedi |
|
Director,
Investor Relations |
|
(416) 635-0221 |
|
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