Fronsac Announces Its Results for the Quarter Ended September 30, 2018, Its 7th Consecutive Annual Distribution Increase and Distributions for the Months of January, February and March 2019

MONTREAL, Nov. 09, 2018 (GLOBE NEWSWIRE) — (TSX-V: FRO.UN) Fronsac Real Estate Investment Trust (“Fronsac REIT” or “Fronsac”) announces its results for the quarter ended September 30st, 2018 and, for a seventh consecutive year, an increase in its annual distribution as well as distributions for the months of January, February and March 2019.

Distributions
Starting in January 2019, the annual distribution will go from 2.016¢ to 2.220¢ per unit, representing an increase of 10%. The monthly distributions will be of 0.185¢ per unit. This represents a 78% total growth since Fronsac’s first distributions in 2012.

Fronsac also announces that it will make monthly cash distributions of 0.185¢ per unit, representing 2.220¢ per unit on an annualized basis, on January 31st, February 28th and March 29th, 2019 to unitholders of record on January 15th, February 15th and March 15th, 2019, respectively.

For the quarter ended September 30th, 2018, Fronsac reported recurring funds from operations (“Recurring FFO”) per unit of 0.95¢ compared to 0.84¢ per unit for the quarter ended September 30th, 2017, an increase of 13%. Recurring FFO was $871,219, an increase of 50% ($581,433 in Q3 2017). During Q3 2018 the Trust’s property rental income was $1,663,373 compared to $1,096,653 in Q3 2017, an increase of 52%. NOI (Net operating Income) was $1,324,647 compared to $882,492 in Q3 2017, an increase of 50%. Fronsac recorded a net income attributable to unitholders of $544,021, or 0.6¢ per unit, compared to a net income of $538,675, or 0.8¢ per unit, in Q3 2017.

For the nine months ended September 30th, 2018, Fronsac reported recurring funds from operations (“Recurring FFO”) per unit of 2.75¢ compared to 2.47¢ per unit for the same period in 2017, an increase of 11%. Recurring FFO was $2,413,136, an increase of 52% ($1,589,175 for the same period in 2017). During the period ended September 30, 2018 the Trust’s property rental income was $4,556,093 compared to $3,042,700 for the same period in 2017, an increase of 50%. NOI (Net operating Income) was $3,623,014 compared to $2,466,520 for the same period in 2017, an increase of 47%. Fronsac recorded a net income attributable to unitholders of $2,196,171, or 2.5¢ per unit, compared to net income of $2,701,756, or 4.2¢ per unit, for the same period in 2017.

Jason Parravano President and CEO said: “We are pleased to share with everyone our results for Q3 2018. Our per unit growth has allowed us to increase once again our distributions for the following year, and this for the 7th year in a row. We continued this quarter to diversify our tenant base as well as diversify our geography with our first Nova Scotia acquisition.”

The tables below represent other financial highlights as well as the reconciliation from net income to FFO for the periods ended September 30th, 2018 and its comparative period. This information should be read in conjunction with the Consolidated Financials Statements and MD&A for the quarters ended September 30th, 2018 and September 30th, 2017.

SUMMARY OF SELECTED ANNUAL INFORMATION
  9 months
       
Periods ended September 30 2018 2017     Δ %
Financial info            
Property rental income 4,556,093 3,042,700     1,513,393 50%
Total revenue 4,571,093 3,052,700     1,518,393 50%
NOI (1) 3,623,014 2,466,520     1,156,494 47%
FFO (1) 2,428,136 1,599,175     828,961 52%
Recurring FFO (1) 2,413,136 1,589,175     823,961 52%
AFFO (1) 2,115,047 1,484,966     630,081 42%
EBITDA (1) 3,372,480 2,185,929     1,186,551 54%
Investment properties (2) 99,264,996 59,266,139     39,998,857 67%
Total assets 96,863,007 59,101,842     37,761,165 64%
Total mortgage/loans/long term debt (3) 47,568,403 29,731,526     17,836,877 60%
Total exchangeable preferred units 977,268     (977,268) (100%)
Total convertible debentures 1,576,413 253,975     1,322,438 521%
Total equity 45,899,465 27,864,885     18,034,580 65%
Weighted average units o/s – basic 87,649,966 64,372,724     23,277,242 36%
Amounts on a per unit basis            
FFO 0.0277 0.0248     0.0029 12%
Recurring FFO 0.0275 0.0247     0.0028 11%
AFFO 0.0241 0.0231     0.0011 4%
Distributions 0.0151 0.0135     0.0016 12%
 
 
(1) Non-IFRS financial measures
(2) Includes value of investment properties owned through joint ventures
(3) Excludes convertible debentures and exchangeable preferred units

 

RECONCILIATION OF NET INCOME TO FFO
  3 months
        9 months
     
Periods ended September 30 2018 2017     Δ   2018 2017     Δ
Net income attributable to unitholders 544,021 538,675     5,346   2,196,171 2,701,756     (505,585)
Debenture issuance costs 53,171     53,171   53,171     53,171
Δ in value of investment properties 24,924 37,050     (12,126)   (145,781) (1,386,873)     1,241,092
Δ in value of investment properties in joint ventures 124,712     124,712   156,423 (141,641)     298,064
Unit based compensation 17,600 (200)     17,800   80,510 67,825     12,685
Δ in liability component of exch. preferred units & debentures 10,130 14,838     (4,708)   10,882 36,264     (25,382)
Δ in fair value of derivative financial instruments 94,260 (8,930)     103,190   71,720 321,844     (250,124)
Income taxes 2,401     2,401   5,040     5,040
FFO(1) – basic 871,219 581,433     50%   2,428,136 1,599,175     52%
FFO per unit – basic 0.0095 0.0084     13%   0.0277 0.0248     12%
Distributions paid on exchangeable preferred units and convertible debentures (if dilutive) 13,896     (13,896)   41,690     (41,690)
FFO – diluted 871,219 595,329     46%   2,428,136 1,640,865     48%
FFO per unit – diluted 0.0093 0.0081     15%   0.0269 0.0241     12%
Recurring FFO – basic 871,219 581,433     50%   2,413,136 1,589,175     52%
Recurring FFO per unit – basic 0.0095 0.0084     13%   0.0275 0.0247     11%
Distributions 458,528 312,765     145,763   1,322,097 892,377     429,720
Distributions per unit 0.0050 0.0045     11%   0.0151 0.0135     12%
FFO – basic after distributions 0.0045 0.0039     0.0006   0.0126 0.0113     0.0012
Recurring FFO – basic after distributions 0.0045 0.0039     0.0006   0.0124 0.0112     0.0012
Distributions as a % of                      
FFO – basic 53% 54%     (1%)   55% 54%     1%
Distributions as a % of                      
Recurring FFO – basic 53% 54%     (1%)   55% 55%     0%
Weighted avg. units o/s                      
Basic 91,554,473 69,503,343     22,051,130   87,649,966 64,372,724     23,277,242
Diluted 94,059,156 73,172,938     20,886,218   90,154,649 68,042,319     22,112,330
 
(1) FFO is a Non-IFRS financial measure

About Fronsac – Fronsac Real Estate Investment Trust is an open-ended trust that acquires and owns high quality triple net and management-free commercial real estate properties.

Forward-Looking Statements – This press release contains forward-looking statements and information as defined by applicable securities laws. Fronsac warns the reader that actual events may differ materially from current expectations due to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated in such statements. Among these include the risks related to economic conditions, the risks associated with the local real estate market, the dependence to the financial condition of tenants, the uncertainties related to real estate activities, the changes in interest rates, the availability of financing in the form of debt or equity, the effects related to the adoption of new IFRS standards, as well as other risks and factors described from time to time in the documents filed by Fronsac with securities regulators, including the management report. Fronsac does not update or modify its forward-looking statements even if future events occur or for any other reason, unless required by law or any regulatory authority.

Neither the TSX Venture Exchange Inc., nor its Regulatory Services Provider (as that term is defined in the Policy of the TSX Venture Exchange and its Regulatory Services Provide) accepts any responsibility for the adequacy or accuracy of this release.

The September 30th, 2018 financial statements and management discussion & analysis of Fronsac REIT may be viewed on SEDAR at www.sedar.com

For further information please contact Jason Parravano at (450) 536-5328.

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