Automotive Properties Real Estate Investment Trust (APR-UN) Q2 2024 earnings summary

Executive summary

• Achieved solid Q2 financial performance with growth in rental revenue, cash NOI, and AFFO per unit, driven by contractual rent increases, CPI-linked adjustments, and prior year acquisitions.

• Net income rose 78.5% year-over-year to CAD 37.3 million, mainly due to a CAD 23.8 million fair value gain from the Kennedy Lands sale agreement.

• Entered a strategic agreement to sell Kennedy Lands for CAD 54 million, expected to enhance financial flexibility and reduce leverage.

• Portfolio remains fully occupied with 100% rent collection since inception.

Financial highlights

• Q2 property rental revenue: CAD 23.5 million, up 2.5% year-over-year; cash NOI: CAD 19.5 million, up 3.2%; same-property cash NOI: CAD 19.2 million, up 2.5%.

• AFFO per unit (diluted) increased to CAD 0.233 from CAD 0.23; AFFO payout ratio improved to 86.3% from 87.4%.

• FFO per unit (diluted) was CAD 0.239, slightly down from CAD 0.241 year-over-year.

• Net income: CAD 37.3 million, up from CAD 20.9 million, mainly due to fair value gain on Kennedy Lands sale.

• Distributions per unit remained at CAD 0.201 for the quarter.

Outlook and guidance

• Well-positioned for steady organic growth and continued AFFO per unit growth, with ongoing focus on strategic acquisitions and capital recycling.

• Sale proceeds from Kennedy Lands expected to reduce debt-to-GBV to 41.8% and increase AFFO, assuming no reborrowing.

• Expect to declare a special distribution in December 2024 due to increased taxable income from Kennedy Lands sale.

• Inflation and interest rates are expected to remain elevated, potentially impacting consumer confidence and the economy.

• Anticipates continued industry consolidation and acquisition opportunities in the fragmented Canadian automotive dealership sector.