Message from the CEO
Management was focused on stabilizing the portfolio and mitigating interest rate risk for the first half of 2022. Management is pleased with the progress made on both fronts and the advancements made have put AIE REIT in a strong position to acquire new assets on AIE REIT’s terms. That is, given the strength of the portfolio and the strong re-rent values achieved, AIE REIT is well positioned and can patiently wait for the most accretive opportunities/acquisitions.
As outlined in the Offering Memorandum on pages 16 – 18 under Property Debt Summary, Management pursued an aggressive financing strategy to stabilize our debt obligations. AIE REIT’s current Loan to Value ratio is 52%, with approximately 27% of mortgages reaching maturity after 2026 (2026 – 2027) and approximately 70% of mortgages reaching maturity after 2028 (2028 – 2032). AIE REIT is well positioned to successfully manage the uncertain interest rate market.
Given the significant growth of our portfolio in 2021, it was crucial to strengthen corporate systems to ensure effective oversight of the assets under management. AIE REIT now manages assets in six different communities and is continuing to improve systems to efficiently accommodate the added scale.
In addition to Management’s efforts, the Board of Directors have further strengthened the Board’s knowledge and skill set by welcoming two new board members as of September 1st – Judy Rogers and Shelley Legin. Judy and Shelley bring a tremendous amount of business and corporate governance experience to the AIE REIT Board and Management is excited for them to join the AIE REIT team. Further biographical information on Judy and Shelley will be circulated to unitholders in the coming weeks.
Management continues to believe in the fundamentals of investing in our core markets and will continue to grow the portfolio in an accretive manner. Management is taking a more conservative approach in the short-term, considering the recent movement in interest rates. While our acquisition pipeline is still robust with value-add opportunities, we believe that capitalization rates will soon stabilize and possibly increase in the medium-term. Although such movements could adversely affect property values, they present an opportunity to increase yields for those buyers who know their markets well. If you are aware of a larger real estate acquisition opportunity in the Vancouver Island or Okanagan regions – let us know.
(1) As of June 30, 2022.
(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 July 27, 2022, 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.