Message from Management
The positive momentum with which 2021 started has continued through Q2 and beyond. Both in terms of financial results, we are tracking ahead of budget and expect to end the year as such, and our acquisition targets.
In addition to the two purchases in Campbell River totaling $9.6M for 59 additional units in Q1, we also have a robust pipeline of acquisition opportunities that we are either in the process of closing or conducting due diligence on. In addition to the newsletter and financial statements, Management has prepared an Acquisition Update to share more details on these opportunities. After completing its due diligence, Management opted not to release conditions on the potential Nanaimo purchase mentioned in the previous newsletter. One commercial building and two residential buildings were sold in Q2, all above their carrying value. The effect of these sales are not reflected in the financial statements at this time, but more details will be distributed to unitholders in the future.
To raise the capital required for these acquisitions Management is embarking on a roadshow with the help of our exclusive agent, Integral Wealth Securities. The roadshow is scheduled to occur through to October, with two tranches expected to close in mid-October and early November respectively.
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 – June 30, 2021
- Residential vacancy was effectively 0% for the last three months.
- Commercial vacancy was at 8.2% as of June 30,2021.
- AIE REIT completed a $4.8M equity close on August 24, 2021.
- Mortgage financing will be raised for all new property purchases.
- Select mortgage that are coming due in 2022 are being accelerated to take advantage of interest rates, economies of scale, and to generate some additional capital to redeploy into the acquisition pipeline.
May Rent Collection
- Less than 1% of residential rents are outstanding due to late payments and/or COVID-19 related deferrals.
- Rent was received for 13 of 13 commercial tenants in May.
- A quarterly distribution of 10.77 cents per Unit was made in July.
- The next quarterly distribution is expected to be made in October, for unitholders on record on September 30, 2021.
(1) As of June 30, 2021. Excludes property dispositions.
(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.
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 and as amended on August 18, 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.