Message from Management
As AIE REIT reflects on the past year, we continue to see mostly stabilized operations after the uncertainty caused by the COVID-19 pandemic. Interest in residential apartments remains strong, even though there are fewer turnovers than previous years. There has been a noticeable uptick in commercial tenancy enquiries. Management is confident in the processes that were put in place to deal with COVID-19 and remains vigilant as we head into the next phase of the pandemic.
Management is pleased to present our audited financial statements for the year, which are included in this newsletter. AIE REIT grew its net operating income to $2.0M up from $1.6M the year before. Combined with an increase in demand for similar properties in our markets (which has a positive impact on the appraisal metrics), Management and our auditors recognised a revaluation gain of $4M. After $11M in new acquisitions and almost $1M in continued investment in our existing properties, AIE REIT’s Investment Properties increased from $78M to $94M. The new year started strong with the acquisition of two properties in Campbell River, for a total 58 additional units. AIE REIT is also embarking on an infill development project on one of its existing residential properties.
Management continues to believe in the fundamentals of investing in Vancouver Island and is focusing on growing the portfolio by taking advantage of low interest rates and our operational efficiencies in our core markets.
If you are aware of a larger real estate acquisition opportunity in the Duncan to Campbell River region – let us know.
Portfolio Overview – December 31, 2020
- Residential vacancy was effectively 0% for the last three months.
- Commercial vacancy was at 10.8% but dropped to 8.6% in March 2021 due to a new long-term tenancy that commenced March 1st.
Capital and Acquisition Update
- Management closed a $4.3M CMHC financing with National Bank in February at a 10-year fixed rate of 1.95%.
- Our current cash balance is at $2.5M, after completing two acquisitions so far in 2021:
- $7.8M 48-unit multi-family building in Campbell River
- $1.8M 11-unit multi-family building in Campbell River
- Additional cash will be raised through debt and equity markets, allowing for further expansion through accretive purchases.
February Rent Collection
- Less than 1% of residential rents are outstanding due to late payments and/or COVID-19 related deferrals.
- Rent was received for 16 of 17 commercial tenants in February.
Unitholder Distributions
- A quarterly distribution of 9.975 cents per Unit was made in December.
- The next quarterly distribution is expected to be made in April, for unitholders on record on March 31, 2021.
(1) As of December 31, 2020.
(2) AFFO Payout ratio is a non-IFRS measure used to evaluate the Trust’s ability to cover its distributions.
(3) An annualized return based on a single unit investment in the AIE REIT, inclusive of unit price changes and distributions.
Legal Disclaimers
These materials are not to be distributed, reproduced or communicated to a third party without the express written consent of All Island Equity REIT. These materials should be read in conjunction with the Trust’s Offering Memorandum dated March 15, 2021, including the risk factors identified therein. This letter has been provided for general information purposes only and is not intended to be a solicitation to purchase Units of AIE REIT or advice regarding the suitability of the investment for specific investors. This letter contains forward-looking statements. These statements relate to future events or the Trust’s views or predictions of possible future performance, operations, acquisitions and strategy based on assumptions and expectations which may not prove to be accurate. Such forward-looking statements involve risks, uncertainties and other factors, including the impact, severity and duration, of COVID-19, which may cause actual results, performance or achievements of AIE REIT to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For more information on these risks and uncertainties, you should refer to the Trust’s most recent Offering Memorandum. Any opinions expressed herein are effective as at the date of the letter. Management does not undertake to notify the reader of any subsequent change of circumstance or opinion unless required by law. Past results are not indicative of future performance. There is no assurance that the properties acquired by the Trust will perform as expected. NAV and AFFO are not measures recognized under IFRS and does not have standardized meaning prescribed by IFRS. The Trust’s calculation of NAV, AFFO, and Annualize Returns may differ from other REITs.