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Cision Canada
29-05-2025
- Business
- Cision Canada
STARLIGHT U.S. RESIDENTIAL FUND ANNOUNCES Q1-2025 OPERATING RESULTS INCLUDING NORMALIZED SAME PROPERTY NOI GROWTH OF 2.5%
Not for distribution to U.S. newswire services or for dissemination in the United States. TORONTO, May 29, 2025 /CNW/ - Starlight U.S. Residential Fund (TSXV: SURF.A) (TSXV: SURF.U) (the "Fund") announced today its results of operations and financial condition for the three months ended March 31, 2025 ("Q1-2025"). Certain comparative figures are included for the Fund's financial and operational performance as at December 31, 2024 and for the three months ended March 31, 2024 ("Q1-2024"). All amounts in this press release are in thousands of United States ("U.S.") dollars except for average monthly rent ("AMR") 1, or unless otherwise stated. All references to "C$" are to Canadian dollars. "The Fund owns a high-quality, well located and diversified portfolio of multi-family communities which reported an increase in normalized same property net operating income of 2.5% from Q1-2024 to Q1-2025," commented Evan Kirsh, the Fund's President. "The Fund continues to focus on increasing net operating income at its properties through active asset management, navigating the current challenging capital markets environment and focusing on managing the Fund's liquidity and loan extensions." Q1-2025 HIGHLIGHTS Revenue from property operations for Q1-2025 was $9,798 (Q1-2024 - $9,932) representing a decrease of 1.3% in revenue due to the Fund completing the disposition of the remaining single-family properties ("SF Properties") during 2024 ("Primary Variance Driver") and a slight decrease in same property revenue of 0.3%. Net operating income ("NOI") 1 for Q1-2025 was $6,052 (Q1-2024 - $6,267), representing a decrease of 3.4% in NOI primarily due to the Primary Variance Driver and reduction in AMR primarily due to competition from new supply at the Fund's Austin property which was partially offset by normalized same property NOI growth for the remaining properties of 2.5%. The Fund reported a net loss and comprehensive loss attributable to unitholders for Q1-2025 of $24,406 (Q1-2024 - $10,440). The Fund reported a fair value loss on investment properties during Q1-2025 primarily due to the expansion of capitalization rates used to value the Fund's investment properties. The Fund completed 55 in-suite light value-add upgrades at the multi-family properties ("MF Properties") during Q1-2025, which generated an average rental premium of $93 and an average return on cost of approximately 25.4%. The Fund achieved economic occupancy 1 of 94.4% during Q1-2025 and as at May 28, 2025, had collected approximately 99.3% of rents for Q1-2025, with further amounts expected to be collected in future periods, demonstrating the Fund's high quality resident base and operating performance. For Emerson at Buda ("Emerson") and Eight at East, certain extension conditions for the applicable loans payable secured by such properties were not achieved as of the initial maturity dates of April 9, 2025 and May 7, 2025, respectively. The Fund also anticipates it will not meet the extension conditions for Bainbridge Sunlake ("Sunlake") loan payable, which matures on June 1, 2025. Notwithstanding the Fund not achieving the extension conditions outlined above, the Fund continues to actively engage in negotiations with the respective lenders to pursue a modification and longer-term extension of these loans (see "Future Outlook"). The Fund completed the disposition of Lyric Apartments ("Lyric") on April 29, 2025 and used the proceeds to repay the outstanding loan payable secured by the property of $86,697 and Fund's credit facility outstanding balance of $13,605. The credit facility was fully repaid and its availability was reduced to $2,395 as a result of the repayment. The remaining net proceeds from the sale are expected to be utilized for working capital and liquidity requirements of the Fund (see "Subsequent Events"). Highlights of the financial and operating performance of the Fund as at March 31, 2025 and for Q1-2025, including a comparison to December 31, 2024 and Q1-2024, as applicable, are provided below: March 31, 2025 December 31, 2024 Key multi-family operational information Number of multi-family properties owned (1) 6 6 Total multi-family suites 1,973 1,973 Economic occupancy (2) 94.4 % 93.3 % Physical occupancy (2)(3) 94.7 % 93.8 % AMR (in actual dollars) (2) $ 1,584 $ 1,591 AMR per square foot (in actual dollars) (2) $ 1.66 $ 1.67 Estimated gap to market versus in-place rents (3) 2.0 % 1.2 % Selected financial information Gross book value (3) $ 493,716 $ 514,416 Indebtedness (3) $ 472,962 $ 470,979 Indebtedness to gross book value (3)(4) 95.8 % 91.6 % Weighted average interest rate - as at period end (5) 6.11 % 6.10 % Weighted average loan term to maturity (5) 1.32 years 1.57 years Q1-2025 Q1-2024 Summarized income statement (excluding non-controlling interest) (6) Revenue from property operations $ 9,798 $ 9,932 Property operating costs (2,561) (2,508) Property taxes (7) (1,185) (1,157) Adjusted Income from Operations / NOI 6,052 6,267 Fund and trust expenses (745) (810) Finance costs (8) (8,531) (9,059) Other income and expense (9) (21,182) (6,838) Net loss and comprehensive loss - attributable to unitholders (6) $ (24,406) $ (10,440) Other selected financial information Funds from operations ("FFO") (3) $ (2,211) $ (1,740) FFO per unit - basic and diluted (0.07) (0.05) Adjusted funds from operations ("AFFO") (3) (965) (1,217) AFFO per unit - basic and diluted (0.03) (0.04) Weighted average interest rate - average during period (5) 6.09 % 5.78 % Interest and indebtedness coverage ratio (3)(10) 0.86x 0.82x Weighted average Units outstanding - basic and diluted (000s) 31,818 31,820 (1) Subsequent to March 31, 2025, the Fund completed the disposition of Lyric (see "Subsequent Events"). (2) Economic occupancy for Q1-2025 and Q1-2024 and physical occupancy as at the end of each applicable reporting period. The decrease in AMR and AMR per square foot from Q1-2024 to Q1-2025 was primarily due to the Fund focusing on occupancy at the MF Properties which increased from 93.7% economic occupancy during Q1-2024 to 94.4% during Q1-2025 as well as the Fund competing with new supply in certain primary markets. (3) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). The increase in AFFO, interest coverage ratio and indebtedness coverage ratio from Q1-2024 to Q1-2025 is primarily as a result of the impact of accrued interest costs added back to AFFO in Q1-2025 with no comparable amounts in Q1-2024, partially offset by increases in interest costs and a decrease in NOI. The AFFO, interest coverage ratio and indebtedness coverage ratio presented herein exclude $743 of interest costs for Q1-2025 or debt service shortfall funding from the applicable lenders which are payable upon maturity of the applicable loan payable. (4) The maximum allowable leverage ratio under the Declaration of Trust restricts the Fund from entering into any additional indebtedness whereby at the time of entering into such indebtedness, the leverage ratio does not exceed 75% (as defined in the Declaration of Trust). As of the date of issuance of this MD&A, the Fund met the maximum leverage condition and continues to focus on managing the Fund's capital structure, including the overall leverage. (5) The weighted average interest rate on loans payable is presented as at March 31, 2025 reflecting the prevailing index rate, 30-day New York Federal Reserve Secured Overnight Financing Rate ("NY SOFR") or one-month term Secured Overnight Financing Rate ("Term SOFR" and together with NY SOFR, "SOFR"), as at that date or based on the average rate for the applicable periods as it relates to quarterly rates. As at May 28, 2025, the Fund had interest rate caps, swaps or fixed rate debt in place in certain instances, which protect the Fund from increases in SOFR above stipulated levels (as at March 31, 2025, the SOFR rate was 4.41%). The weighted average interest rate presented above as at March 31, 2025 includes the maximum interest rate on the unsecured financing of 12.00%. The weighted average term to maturity ("WATM") presented as at March 31, 2025 assumes the Fund has taken advantage of the one-year extension option of certain loans payable which are subject to certain conditions (see "Future Outlook" for risks related to the ability of the Fund to utilize of these extension options and the potential impact on the Fund if it cannot). If the Fund does not utilize extension options available under applicable loans, the WATM would be 0.93 years. (6) The Fund acquired a 90% interest in Ventura on May 25, 2022, with the remaining non-controlling interest owned by an affiliate of the Starlight Investments US AM Group LP or its affiliates (the "Manager"). The summarized income statement figures presented above reflect the net loss attributable to unitholders only, and excludes any amounts attributable to the non-controlling interest. (7) Property taxes include the International Financial Reporting Interpretations Committee Interpretation 21, Levies fair value adjustment and treats property taxes as an expense that is amortized during the fiscal year for the purpose of calculating NOI. (8) Finance costs include interest expense on loans payable, non-cash amortization of deferred financing and fair value changes in derivative financial instruments. (9) Includes dividends to preferred shareholders, unrealized foreign exchange gain (loss), realized foreign exchange gain (loss), fair value adjustment of investment properties, provision for carried interest and deferred income taxes. (10) The Fund's interest coverage ratio and indebtedness coverage ratio were both 0.86x during Q1-2025, with the Fund's operating results offset by increases in the Fund's interest costs as a result of the Fund utilizing a variable rate debt strategy which allows the Fund to maintain maximum flexibility for the potential sale of the Fund's properties at the end of, or during, the Fund's Term. These calculations exclude $743 of interest costs or debt service shortfall funding for Q1-2025 as these amounts are accrued and payable only at maturity of the applicable loan payable. The Fund also had interest rate caps, swaps or fixed rate debt in place as at March 31, 2025 which in certain instances protect the Fund from increases SOFR beyond stipulated levels on its mortgages at the properties. The Fund continues to monitor interest coverage ratio and indebtedness coverage ratio with the goal of preserving liquidity. NON-IFRS FINANCIAL MEASURES AND RECONCILIATIONS The Fund's condensed consolidated interim financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS"). Certain terms that may be used in this press release such as AFFO, AMR, adjusted net income and comprehensive income, cash provided by operating activities including interest costs, economic occupancy, estimated gap in market versus in-place rents, FFO, gross book value, indebtedness, indebtedness coverage ratio, indebtedness to gross book value, interest coverage ratio, same property NOI and NOI (collectively, the "Non-IFRS Measures") as well as other measures discussed elsewhere in this press release, are not measures defined under IFRS as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures as reported by other issuers. The Fund uses these measures to better assess its underlying performance and financial position and provides these additional measures so that investors may do the same. Information on the most directly comparable IFRS measures, composition of the Non-IFRS Measures, a description of how the Fund uses these measures, and an explanation of how these Non-IFRS Measures provide useful information to the investors are set out in the Fund's management's discussion and analysis ("MD&A") in the "Non-IFRS Financial Measures" section for Q1-2025 and are available on the Fund's profile on SEDAR+ at which is incorporated by reference into this press release. A reconciliation of the Fund's interest coverage ratio and indebtedness coverage ratio are provided below: (1) Comprised of unrealized foreign exchange gain (loss), deferred income taxes, amortization of financing costs, fair value adjustment on derivative instruments and fair value adjustment on investment properties. (2) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). (3) Interest coverage ratio is calculated as adjusted net loss and comprehensive loss plus interest expense, divided by interest expense. (4) Indebtedness coverage ratio is calculated as adjusted net loss and comprehensive loss plus interest expense, divided by interest expense and mandatory principal payments on the Fund's loans payable. (5) These calculations exclude $743 of interest costs or debt service shortfall funding for Q1-2025 as these amounts are accrued and payable only at maturity of the applicable loan payable. For Q1-2025, the interest coverage ratio and the indebtedness coverage ratio were both 0.86x (Q1-2024 - 0.82x), as there were no principal payments paid or required to be paid during the period. The principal repayment amount paid under the Lyric loan payable has been excluded from this calculation as a result of it being related to the Fund's evaluation of a refinancing or longer term extension of this loan payable. In the event such amounts were included in the calculations above, Q1-2025 indebtedness coverage ratio would have been 0.58x. Subsequent to Q1-2025, the Fund completed the disposition of Lyric (see "Subsequent Events"). The Fund also utilizes interest rate caps, swaps or fixed rate debt on certain of its mortgages on its properties to limit the potential impact on the Fund's financial performance from any increases in interest rates. As a result of such interest rate caps, swaps or fixed rate debt in place as at March 31, 2025, the Fund's weighted average interest rate was 6.11%. CASH PROVIDED BY OPERATING ACTIVITIES RECONCILIATION TO FFO and AFFO The Fund was formed as a "closed-end" trust with an initial term of three years, a targeted yield of 4.0% and a pre-tax targeted annual total return of 11% across all classes of units of the Fund. Basic and diluted AFFO and AFFO per unit for Q1-2025 were $(965) and $(0.03) (Q1-2024 - $(1,217) and $(0.04)), representing an increase in AFFO of $252 or 20.7% and an increase in AFFO per Unit of $0.01 relative to Q1-2024, primarily as a result of the impact of accrued interest costs added back to AFFO in Q1-2025 with no comparable amounts in Q1-2024 given the Fund completed certain debt amendments to allow the Fund to defer such costs later in 2024, partially offset by increases in the Fund's interest costs and reduction in NOI. The Fund covered any shortfall between cash used by operating activities, including interest costs 1, through either cash from operating activities during such applicable periods, cash on hand, or the Fund's credit facility, including any proceeds from financing activities as applicable. A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for Q1-2025 and Q1-2024 is provided below: (1) These amounts represent interest costs that are deferred and payable only at maturity of the applicable loan payable. SUBSEQUENT EVENTS On April 9, 2025, the Fund amended the terms of the Lyric loan payable, extending its maturity to May 9, 2025 and subsequently completed the disposition of Lyric for $103,500 on April 29, 2025 and used the proceeds to repay the outstanding loan principal balance of $86,697 and the Fund's credit facility outstanding balance of $13,605. The credit facility was fully repaid and its availability was reduced to $2,395 as a result of the repayment. The remaining net proceeds from the sale are expected to be utilized for working capital and liquidity requirements of the Fund. FUTURE OUTLOOK Since early 2022, concerns over elevated levels of inflation have resulted in a significant increase in interest rates with the U.S. Federal Reserve raising the Federal Funds Rate by approximately 525 basis points. During the third quarter of 2024, the U.S. Federal Reserve reduced the Federal Funds Rate by 50 basis points and in November and December 2024, respectively, reduced the rate by a further 25 basis points during each such period leading to a rate of approximately 425 basis points as at the date of this press release. Short-term interest rate increases typically lead to increases in borrowing costs for the Fund, reducing cash flow, given that the Fund primarily employs a variable rate debt strategy due to the Fund's initial three-year term in order to provide maximum flexibility upon the eventual sale of the properties during or at the end of the Fund's term. Similarly, as interest rates drop, the Fund's floating rate debt can benefit from such reductions. Historically, investments in multi-family properties have provided an effective hedge against inflation given the short-term nature of each resident lease which has been somewhat reflected in the rent growth achieved at the properties. Although inflation has reduced significantly from its peak, markets and the Federal Reserve continue to closely monitor inflation and unemployment figures as well as the potential impacts of anticipated changes to legislation and regulation resulting from the current U.S. administration that may impact the future outlook for interest rates. Although operating fundamentals have been favourable as evidenced by the operating results achieved by the Fund since 2023 and although short-term rates began declining in 2024 providing some benefit to the short-term cash flow of the Fund, long-term U.S. treasuries have continued to be volatile, increasing from approximately 3.80% as at September 30, 2024 to 4.57% as at December 31, 2024, before decreasing to 4.23% as at March 31, 2025. Capitalization rates typically correlate over time to changes in long-term interest rates with the noted increase in long-term U.S. treasury yields reducing investment transaction volumes throughout 2024 and into Q1-2025 which negatively impacted the Fund's fourth quarter of 2024 appraised values for the investment properties and also resulted in a reduction in the reported values for the Fund's investment properties for Q1-2025 due to an expansion in capitalization rates. The Fund strives to maintain strong and collaborative relationships with its lenders but the elevated level of interest rates and associated impact on capitalization rates mentioned above had a negative impact on the Fund's overall leverage position and debt service coverage ratios, both of which are typical financial benchmarks required to extend certain loans and as a result, these changes have impacted the Fund's ability to exercise certain extension options available under existing loans payable. As at March 31, 2025, $377,620 of the Fund's loans payable (relating to five of its six properties owned) had contractual maturity dates within twelve months of March 31, 2025 whereby the Fund has the option to extend such loans with the existing lenders subject to such loans achieving certain conditions (including maximum leverage and minimum debt service coverage ratios as noted). For Emerson and Eight at East, certain of these extension conditions were not achieved as of the initial maturity dates of April 9, 2025 and May 7, 2025, respectively. The Fund also anticipates it will not meet the extension conditions for the Sunlake loan payable which matures on June 1, 2025. Notwithstanding the Fund not achieving the extension conditions outlined above, the Fund continues to actively engage in negotiations with the respective lenders to pursue a modification and longer-term extension of these loans. Under the terms of each applicable loan agreement, the Fund has the right to make a principal repayment towards such loan in order to achieve the extension tests that otherwise may not be achieved. Given the Fund was formed as a "closed-end" investment vehicle, the Fund is restricted from raising any additional equity, which may have otherwise assisted in making any principal repayments of the loans payable in order to meet certain extension conditions. In the event the Fund is not able to refinance the loan or if the Fund does not have sufficient liquidity or other sources of capital sufficient to make any such principal repayments required to achieve the applicable loan extension tests and the Fund is not able to otherwise negotiate an extension of such loan, the applicable lender may provide formal notice of an event of default expressing its right to demand repayment of the borrowings relating to such property. Under this scenario, the Fund may be obligated to sell such properties which may not be able to be completed on terms that are acceptable to the Fund or may be required to explore other options in the best economic interests of the Fund in order to discharge its obligations under any of the applicable loan agreements. The Fund's loans payable also do not carry cross-default provisions, other than the Fund's credit facility whereby if one of the Fund's lenders associated with its loans payable declared an event of default that is not remedied by the Fund, the credit facility lender may provide formal notice of an event of default expressing its right to demand repayment of the outstanding borrowings on the credit facility. Subsequent to March 31, 2025, the Fund completed the disposition of Lyric and fully repaid credit facility outstanding balance amounting to $13,605. The credit facility was fully repaid and its availability was reduced to $2,395 as a result of the repayment (see "Subsequent Events"). For three of the Fund's six properties, the fair value reported for such properties as at March 31, 2025 was lower than the principal outstanding underthe loans payable secured by such properties and as a result, the sale of those properties may not be sufficient to repay those loans in full if such sale was required. In certain instances, the lenders also hold restricted cash as part of the security for such loans which in a liquidation event may be used to repay any indebtedness required to be repaid by the Fund. The Fund's secured loans are non-recourse subject to standard limited recourse provisions and are entered into by the subsidiaries of the Fund that own only the associated secured property. As a result, the liability for any such loan would typically be limited to the value of the associated secured property, including any restricted cash reserves or other amounts held by the applicable lenders, other than in certain instances which may obligate the Fund to incur certain costs or other amounts subject to certain performance conditions. Under the terms of the Fund's credit facility, the net proceeds from the sale of any of the Properties are required to be used towards the repayment of the credit facility, after the repayment of the associated secured loans for such property. Subsequent to March 31, 2025, the credit facility is fully repaid (see "Subsequent Events") The primary markets of the Fund, which include Arizona, California, Colorado, Florida, Georgia, Idaho, Nevada, North Carolina, Oregon, South Carolina, Tennessee, Texas, Utah and Washington ("Primary Markets") have seen an elevated level of new supply delivered during 2023 and 2024 which contributed to the deceleration in rent growth in the Primary Markets during late 2023, relative to levels achieved in 2022 and earlier in 2023. Interest rates also continue to remain elevated which, along with higher levels of inflation and a softening in market conditions in late 2023, has significantly disrupted active and new construction of comparable communities in the Primary Markets that would otherwise have been delivered in the second half of 2025 or 2026. This potential reduction in construction may create a temporary imbalance in the supply of comparable multi-suite residential properties in future periods. This imbalance, alongside the continued economic strength and solid fundamentals may be supportive of favourable supply and demand conditions for the properties in future periods and could result in future increases in occupancy and rent growth. The Fund is actively pursuing negotiations on the extension of each of the Fund's loans payable with the respective lenders and certain modifications noted above as the Fund continues to focus on managing its liquidity position, including having extended the Fund's term to November 2026, in order to provide the Fund the opportunity to capitalize on potential improvements in the investment market that are anticipated in future periods, but may not materialize. Furthermore, the Fund continues to focus on liquidity management as the Fund previously amended several of its loan agreements, deferred the payment of asset management fees and has continued to focus on maximizing NOI at the properties to preserve as much liquidity as possible. There are no assurances that the above aforementioned financing activities and remaining property dispositions will be successfully completed which indicates the existence of a material uncertainty that may cast doubt upon the Fund's ability to realize its assets and discharge its liabilities in the normal course of business and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The Fund's condensed consolidated interim financial statements for the three months ended March 31, 2025 do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that may be necessary if the Fund were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments, if required, may be material. During this period of capital markets uncertainty, the Fund may also enter into additional financing, evaluate potential asset sales to allow the Fund to maintain sufficient liquidity or evaluate other alternatives in the best economic interests of the Unitholders. Further disclosure surrounding the Future Outlook is included in the Fund's MD&A in the "Future Outlook" section for Q1-2025 under the Fund's profile, which is available on FORWARD-LOOKING STATEMENTS Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and the properties, the impact of elevated levels of inflation and interest rates, uncertainty surrounding U.S. tariffs, the ability of the Fund to repay indebtedness when due, the Fund's ability to negotiate further extensions with its lenders, the potential implications of a default under loans payable and the Fund's capital management and liquidity measures. Forward-looking information is provided for the purposes of assisting the reader in understanding the Fund's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, the impact of inflation levels and interest rates, the ability of the Fund to make and the resumption of future distributions, the trading price of the Fund's TSX Venture Exchange listed units being class A units and class U units of the Fund ("Listed Units") and the value of the Fund's unlisted units, which include all units other than the Listed Units (together with Listed Units "Units"), acquisitions, financing, performance, achievements, events, prospects or opportunities for the Fund or the real estate industry and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, occupancy levels, AMR, taxes, and plans and objectives of or involving the Fund. Particularly, matters described in "Future Outlook" are forward-looking information. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities may not be achieved. Those risks and uncertainties include: the extent and sustainability of potential of higher levels of inflation and the potential impact on the Fund's operating costs; the impact of any tariffs and retaliatory tariffs on the economy; the pace at which and degree of any changes in interest rates that impact the Fund's weighted average interest rate may occur; the ability of the Fund to make and the resumption of future distributions; the trading price of the Listed Units; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the Properties or the Fund's legal entities; the impact of elevated interest rates and inflation as well as supply chain issues have on new supply of multi-family communities; the realization of property value appreciation and the timing thereof; the extent to which favourable operating conditions achieved during historical periods may continue in future periods; the applicability of any government regulation concerning the Fund's residents or rents; the Fund's ability to continue as a going concern; and the availability of debt financing or ability of the Fund to extend loans as loans payable become due during the Fund's term including any impact such extensions may have on the Fund's ability to hold such properties until the Manager desires to sell such properties. A variety of factors, many of which are beyond the Fund's control, affect the operations, performance and results of the Fund and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. There are numerous risks and uncertainties which include, but are not limited to, risks related to the Units and risks related to the Fund and its business. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements. Although the Fund believes the expectations reflected in such forward-looking information are reasonable and represent the Fund's projections, expectations and beliefs at this time, such information involves known and unknown risks and uncertainties which may cause the Fund's actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially from the Fund's expectations include, among other things, the availability of suitable properties for purchase by the Fund, the availability of mortgage financing including the ability of the Fund to refinance or extend existing loans payable on favourable terms including any impact such extensions may have on the Fund's ability to hold such properties until the Manager desires to sell such properties, and general economic and market factors, including interest rates, inflation, business competition and changes in government regulations or in tax laws. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information. Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the impact of elevated levels of inflation on the Fund's operating costs; the impact of future interest rates on the Fund's financial performance; the availability of debt financing as loans payable become due during the Fund's term and any resulting impact on the Fund's liquidity; the trading price of the Listed Units, the applicability of any government regulation concerning the Fund's residents or rents; the realization of property value appreciation and the timing thereof; the inventory of residential real estate properties; the availability of residential properties for potential future acquisition, if any, and the price at which such properties may be acquired; the ability of the Fund to benefit from any value add program the Fund conducts at certain properties; the price at which the properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the properties; the extent of competition for residential properties; the impact of interest costs, inflation and supply chain issues have on new supply of multi-family communities; the extent to which favourable operating conditions achieved during historical periods may continue in future periods; the growth in NOI generated from its value-add initiatives; the population of residential real estate market participants; assumptions about the markets in which the Fund operates; expenditures and fees in connection with the maintenance, operation and administration of the properties; the ability of the Manager to manage and operate the properties or achieve similar returns to previous investment funds managed by the Manager; the global and North American economic environment; foreign currency exchange rates; the ability of the Fund to realize the estimated gap in market versus in-place rents through future rental rate increases and governmental regulations or tax laws. Given this period of uncertainty, there can be no assurance regarding: (a) operations and performance or the volatility of the Units; (b) the Fund's ability to mitigate such impacts; (c) credit, market, operational, and liquidity risks generally; (d) the Manager or any of its affiliates, will continue its involvement as asset manager of the Fund in accordance with its current asset management agreement; and (e) other risks inherent to the Fund's business and/or factors beyond its control which could have a material adverse effect on the Fund. The forward-looking information included in this press release relates only to events or information as of the date on which the statements are made in this press release. Except as specifically required by applicable Canadian securities law, the Fund undertakes no obligation to update or revise publicly any forward-looking information, whether because of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. ABOUT STARLIGHT U.S. RESIDENTIAL FUND The Fund is a "close-end" fund formed under and governed by the laws of the Province of Ontario, pursuant to a declaration of trust dated September 23, 2021, as amended and restated. The Fund was established for the primary purpose of directly or indirectly acquiring, owning and operating a portfolio primarily composed of income-producing residential properties in the Fund's target metrics or that can achieve significant increases in rental rates as a result of undertaking high return, value-add capital expenditures and active asset management. As at March 31, 2025, the Fund owned interests in six multi-family properties consisting 1,973 suites. For the Fund's condensed consolidated interim financial statements and MD&A for the three months ended March 31, 2025 and any other information related to the Fund, please visit Further details regarding the Fund's unit performance and distributions, market conditions where the Fund's properties are located, performance by the Fund's properties and a capital investment update are also available in the Fund's May 2025 Newsletter which is available on the Fund's profile at SOURCE Starlight U.S. Residential Fund
Yahoo
29-05-2025
- Business
- Yahoo
STARLIGHT U.S. RESIDENTIAL FUND ANNOUNCES Q1-2025 OPERATING RESULTS INCLUDING NORMALIZED SAME PROPERTY NOI GROWTH OF 2.5%
Not for distribution to U.S. newswire services or for dissemination in the United States. TORONTO, May 29, 2025 /CNW/ - Starlight U.S. Residential Fund (TSXV: SURF.A) (TSXV: SURF.U) (the "Fund") announced today its results of operations and financial condition for the three months ended March 31, 2025 ("Q1-2025"). Certain comparative figures are included for the Fund's financial and operational performance as at December 31, 2024 and for the three months ended March 31, 2024 ("Q1-2024"). All amounts in this press release are in thousands of United States ("U.S.") dollars except for average monthly rent ("AMR")1, or unless otherwise stated. All references to "C$" are to Canadian dollars. "The Fund owns a high-quality, well located and diversified portfolio of multi-family communities which reported an increase in normalized same property net operating income of 2.5% from Q1-2024 to Q1-2025," commented Evan Kirsh, the Fund's President. "The Fund continues to focus on increasing net operating income at its properties through active asset management, navigating the current challenging capital markets environment and focusing on managing the Fund's liquidity and loan extensions." Q1-2025 HIGHLIGHTS Revenue from property operations for Q1-2025 was $9,798 (Q1-2024 - $9,932) representing a decrease of 1.3% in revenue due to the Fund completing the disposition of the remaining single-family properties ("SF Properties") during 2024 ("Primary Variance Driver") and a slight decrease in same property revenue of 0.3%. Net operating income ("NOI")1 for Q1-2025 was $6,052 (Q1-2024 - $6,267), representing a decrease of 3.4% in NOI primarily due to the Primary Variance Driver and reduction in AMR primarily due to competition from new supply at the Fund's Austin property which was partially offset by normalized same property NOI growth for the remaining properties of 2.5%. The Fund reported a net loss and comprehensive loss attributable to unitholders for Q1-2025 of $24,406 (Q1-2024 - $10,440). The Fund reported a fair value loss on investment properties during Q1-2025 primarily due to the expansion of capitalization rates used to value the Fund's investment properties. The Fund completed 55 in-suite light value-add upgrades at the multi-family properties ("MF Properties") during Q1-2025, which generated an average rental premium of $93 and an average return on cost of approximately 25.4%. The Fund achieved economic occupancy1 of 94.4% during Q1-2025 and as at May 28, 2025, had collected approximately 99.3% of rents for Q1-2025, with further amounts expected to be collected in future periods, demonstrating the Fund's high quality resident base and operating performance. For Emerson at Buda ("Emerson") and Eight at East, certain extension conditions for the applicable loans payable secured by such properties were not achieved as of the initial maturity dates of April 9, 2025 and May 7, 2025, respectively. The Fund also anticipates it will not meet the extension conditions for Bainbridge Sunlake ("Sunlake") loan payable, which matures on June 1, 2025. Notwithstanding the Fund not achieving the extension conditions outlined above, the Fund continues to actively engage in negotiations with the respective lenders to pursue a modification and longer-term extension of these loans (see "Future Outlook"). The Fund completed the disposition of Lyric Apartments ("Lyric") on April 29, 2025 and used the proceeds to repay the outstanding loan payable secured by the property of $86,697 and Fund's credit facility outstanding balance of $13,605. The credit facility was fully repaid and its availability was reduced to $2,395 as a result of the repayment. The remaining net proceeds from the sale are expected to be utilized for working capital and liquidity requirements of the Fund (see "Subsequent Events"). 1 The metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). FINANCIAL CONDITION AND OPERATING RESULTS Highlights of the financial and operating performance of the Fund as at March 31, 2025 and for Q1-2025, including a comparison to December 31, 2024 and Q1-2024, as applicable, are provided below: March 31, 2025 December 31, 2024 Key multi-family operational informationNumber of multi-family properties owned(1)6 6 Total multi-family suites1,973 1,973 Economic occupancy(2)94.4 % 93.3 % Physical occupancy(2)(3)94.7 % 93.8 % AMR (in actual dollars)(2)$ 1,584 $ 1,591 AMR per square foot (in actual dollars)(2)$ 1.66 $ 1.67 Estimated gap to market versus in-place rents(3)2.0 % 1.2 % Selected financial informationGross book value(3)$ 493,716 $ 514,416 Indebtedness(3)$ 472,962 $ 470,979 Indebtedness to gross book value(3)(4)95.8 % 91.6 % Weighted average interest rate - as at period end(5)6.11 % 6.10 % Weighted average loan term to maturity(5) 1.32 years 1.57 years Q1-2025 Q1-2024 Summarized income statement (excluding non-controlling interest)(6)Revenue from property operations$ 9,798 $ 9,932 Property operating costs(2,561) (2,508) Property taxes(7)(1,185) (1,157) Adjusted Income from Operations / NOI6,052 6,267 Fund and trust expenses(745) (810) Finance costs(8)(8,531) (9,059) Other income and expense(9)(21,182) (6,838) Net loss and comprehensive loss - attributable to unitholders(6)$ (24,406) $ (10,440) Other selected financial informationFunds from operations ("FFO")(3)$ (2,211) $ (1,740) FFO per unit - basic and diluted(0.07) (0.05) Adjusted funds from operations ("AFFO")(3)(965) (1,217) AFFO per unit - basic and diluted(0.03) (0.04) Weighted average interest rate - average during period(5)6.09 % 5.78 % Interest and indebtedness coverage ratio(3)(10) 0.86x 0.82x Weighted average Units outstanding - basic and diluted (000s)31,818 31,820 (1) Subsequent to March 31, 2025, the Fund completed the disposition of Lyric (see "Subsequent Events"). (2) Economic occupancy for Q1-2025 and Q1-2024 and physical occupancy as at the end of each applicable reporting period. The decrease in AMR and AMR per square foot from Q1-2024 to Q1-2025 was primarily due to the Fund focusing on occupancy at the MF Properties which increased from 93.7% economic occupancy during Q1-2024 to 94.4% during Q1-2025 as well as the Fund competing with new supply in certain primary markets. (3) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). The increase in AFFO, interest coverage ratio and indebtedness coverage ratio from Q1-2024 to Q1-2025 is primarily as a result of the impact of accrued interest costs added back to AFFO in Q1-2025 with no comparable amounts in Q1-2024, partially offset by increases in interest costs and a decrease in NOI. The AFFO, interest coverage ratio and indebtedness coverage ratio presented herein exclude $743 of interest costs for Q1-2025 or debt service shortfall funding from the applicable lenders which are payable upon maturity of the applicable loan payable. (4) The maximum allowable leverage ratio under the Declaration of Trust restricts the Fund from entering into any additional indebtedness whereby at the time of entering into such indebtedness, the leverage ratio does not exceed 75% (as defined in the Declaration of Trust). As of the date of issuance of this MD&A, the Fund met the maximum leverage condition and continues to focus on managing the Fund's capital structure, including the overall leverage. (5) The weighted average interest rate on loans payable is presented as at March 31, 2025 reflecting the prevailing index rate, 30-day New York Federal Reserve Secured Overnight Financing Rate ("NY SOFR") or one-month term Secured Overnight Financing Rate ("Term SOFR" and together with NY SOFR, "SOFR"), as at that date or based on the average rate for the applicable periods as it relates to quarterly rates. As at May 28, 2025, the Fund had interest rate caps, swaps or fixed rate debt in place in certain instances, which protect the Fund from increases in SOFR above stipulated levels (as at March 31, 2025, the SOFR rate was 4.41%). The weighted average interest rate presented above as at March 31, 2025 includes the maximum interest rate on the unsecured financing of 12.00%. The weighted average term to maturity ("WATM") presented as at March 31, 2025 assumes the Fund has taken advantage of the one-year extension option of certain loans payable which are subject to certain conditions (see "Future Outlook" for risks related to the ability of the Fund to utilize of these extension options and the potential impact on the Fund if it cannot). If the Fund does not utilize extension options available under applicable loans, the WATM would be 0.93 years. (6) The Fund acquired a 90% interest in Ventura on May 25, 2022, with the remaining non-controlling interest owned by an affiliate of the Starlight Investments US AM Group LP or its affiliates (the "Manager"). The summarized income statement figures presented above reflect the net loss attributable to unitholders only, and excludes any amounts attributable to the non-controlling interest. (7) Property taxes include the International Financial Reporting Interpretations Committee Interpretation 21, Levies fair value adjustment and treats property taxes as an expense that is amortized during the fiscal year for the purpose of calculating NOI. (8) Finance costs include interest expense on loans payable, non-cash amortization of deferred financing and fair value changes in derivative financial instruments. (9) Includes dividends to preferred shareholders, unrealized foreign exchange gain (loss), realized foreign exchange gain (loss), fair value adjustment of investment properties, provision for carried interest and deferred income taxes. (10) The Fund's interest coverage ratio and indebtedness coverage ratio were both 0.86x during Q1-2025, with the Fund's operating results offset by increases in the Fund's interest costs as a result of the Fund utilizing a variable rate debt strategy which allows the Fund to maintain maximum flexibility for the potential sale of the Fund's properties at the end of, or during, the Fund's Term. These calculations exclude $743 of interest costs or debt service shortfall funding for Q1-2025 as these amounts are accrued and payable only at maturity of the applicable loan payable. The Fund also had interest rate caps, swaps or fixed rate debt in place as at March 31, 2025 which in certain instances protect the Fund from increases SOFR beyond stipulated levels on its mortgages at the properties. The Fund continues to monitor interest coverage ratio and indebtedness coverage ratio with the goal of preserving liquidity. NON-IFRS FINANCIAL MEASURES AND RECONCILIATIONS The Fund's condensed consolidated interim financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS"). Certain terms that may be used in this press release such as AFFO, AMR, adjusted net income and comprehensive income, cash provided by operating activities including interest costs, economic occupancy, estimated gap in market versus in-place rents, FFO, gross book value, indebtedness, indebtedness coverage ratio, indebtedness to gross book value, interest coverage ratio, same property NOI and NOI (collectively, the "Non-IFRS Measures") as well as other measures discussed elsewhere in this press release, are not measures defined under IFRS as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures as reported by other issuers. The Fund uses these measures to better assess its underlying performance and financial position and provides these additional measures so that investors may do the same. Information on the most directly comparable IFRS measures, composition of the Non-IFRS Measures, a description of how the Fund uses these measures, and an explanation of how these Non-IFRS Measures provide useful information to the investors are set out in the Fund's management's discussion and analysis ("MD&A") in the "Non-IFRS Financial Measures" section for Q1-2025 and are available on the Fund's profile on SEDAR+ at which is incorporated by reference into this press release. A reconciliation of the Fund's interest coverage ratio and indebtedness coverage ratio are provided below: Interest and indebtedness coverage ratioQ1-2025 Q1-2024 Net loss and comprehensive loss - attributable to unitholders$ (24,406) $ (10,440) Add / (deduct): non-cash or one-time items and distributions(1)22,786 9,236 Adjusted net loss and comprehensive loss(2)(1,620) (1,204) Interest and indebtedness coverage ratio(3)(4)(5) 0.86x 0.82x (1) Comprised of unrealized foreign exchange gain (loss), deferred income taxes, amortization of financing costs, fair value adjustment on derivative instruments and fair value adjustment on investment properties. (2) This metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). (3) Interest coverage ratio is calculated as adjusted net loss and comprehensive loss plus interest expense, divided by interest expense. (4) Indebtedness coverage ratio is calculated as adjusted net loss and comprehensive loss plus interest expense, divided by interest expense and mandatory principal payments on the Fund's loans payable. (5) These calculations exclude $743 of interest costs or debt service shortfall funding for Q1-2025 as these amounts are accrued and payable only at maturity of the applicable loan payable. For Q1-2025, the interest coverage ratio and the indebtedness coverage ratio were both 0.86x (Q1-2024 - 0.82x), as there were no principal payments paid or required to be paid during the period. The principal repayment amount paid under the Lyric loan payable has been excluded from this calculation as a result of it being related to the Fund's evaluation of a refinancing or longer term extension of this loan payable. In the event such amounts were included in the calculations above, Q1-2025 indebtedness coverage ratio would have been 0.58x. Subsequent to Q1-2025, the Fund completed the disposition of Lyric (see "Subsequent Events"). The Fund also utilizes interest rate caps, swaps or fixed rate debt on certain of its mortgages on its properties to limit the potential impact on the Fund's financial performance from any increases in interest rates. As a result of such interest rate caps, swaps or fixed rate debt in place as at March 31, 2025, the Fund's weighted average interest rate was 6.11%. CASH PROVIDED BY OPERATING ACTIVITIES RECONCILIATION TO FFO and AFFO The Fund was formed as a "closed-end" trust with an initial term of three years, a targeted yield of 4.0% and a pre-tax targeted annual total return of 11% across all classes of units of the Fund. Basic and diluted AFFO and AFFO per unit for Q1-2025 were $(965) and $(0.03) (Q1-2024 - $(1,217) and $(0.04)), representing an increase in AFFO of $252 or 20.7% and an increase in AFFO per Unit of $0.01 relative to Q1-2024, primarily as a result of the impact of accrued interest costs added back to AFFO in Q1-2025 with no comparable amounts in Q1-2024 given the Fund completed certain debt amendments to allow the Fund to defer such costs later in 2024, partially offset by increases in the Fund's interest costs and reduction in NOI. The Fund covered any shortfall between cash used by operating activities, including interest costs1, through either cash from operating activities during such applicable periods, cash on hand, or the Fund's credit facility, including any proceeds from financing activities as applicable. _________________________________________ 1 The metric is a non-IFRS measure. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS (see "Non-IFRS Financial Measures and Reconciliations"). A reconciliation of the Fund's cash provided by operating activities determined in accordance with IFRS to FFO and AFFO for Q1-2025 and Q1-2024 is provided below: Q1-2025 Q1-2024 Cash provided by operating activities$ 5,968 $ 5,099 Less: interest costs(7,091) (6,801) Cash used in operating activities - including interest costs(1,123) (1,702) Add / (deduct):Change in non-cash operating working capital492 588 Transaction costs— 120 Change in restricted cash(1,059) (129) Amortization of financing costs(521) (617) FFO(2,211) (1,740) Add / (deduct):Amortization of financing costs599 664 Vacancy costs associated with the suite upgrade program50 10 Sustaining capital expenditures and suite renovation reserves(146) (151) Accrued interest costs(1)743 — AFFO$ (965) $ (1,217) (1) These amounts represent interest costs that are deferred and payable only at maturity of the applicable loan payable. SUBSEQUENT EVENTS On April 9, 2025, the Fund amended the terms of the Lyric loan payable, extending its maturity to May 9, 2025 and subsequently completed the disposition of Lyric for $103,500 on April 29, 2025 and used the proceeds to repay the outstanding loan principal balance of $86,697 and the Fund's credit facility outstanding balance of $13,605. The credit facility was fully repaid and its availability was reduced to $2,395 as a result of the repayment. The remaining net proceeds from the sale are expected to be utilized for working capital and liquidity requirements of the Fund. FUTURE OUTLOOK Since early 2022, concerns over elevated levels of inflation have resulted in a significant increase in interest rates with the U.S. Federal Reserve raising the Federal Funds Rate by approximately 525 basis points. During the third quarter of 2024, the U.S. Federal Reserve reduced the Federal Funds Rate by 50 basis points and in November and December 2024, respectively, reduced the rate by a further 25 basis points during each such period leading to a rate of approximately 425 basis points as at the date of this press release. Short-term interest rate increases typically lead to increases in borrowing costs for the Fund, reducing cash flow, given that the Fund primarily employs a variable rate debt strategy due to the Fund's initial three-year term in order to provide maximum flexibility upon the eventual sale of the properties during or at the end of the Fund's term. Similarly, as interest rates drop, the Fund's floating rate debt can benefit from such reductions. Historically, investments in multi-family properties have provided an effective hedge against inflation given the short-term nature of each resident lease which has been somewhat reflected in the rent growth achieved at the properties. Although inflation has reduced significantly from its peak, markets and the Federal Reserve continue to closely monitor inflation and unemployment figures as well as the potential impacts of anticipated changes to legislation and regulation resulting from the current U.S. administration that may impact the future outlook for interest rates. Although operating fundamentals have been favourable as evidenced by the operating results achieved by the Fund since 2023 and although short-term rates began declining in 2024 providing some benefit to the short-term cash flow of the Fund, long-term U.S. treasuries have continued to be volatile, increasing from approximately 3.80% as at September 30, 2024 to 4.57% as at December 31, 2024, before decreasing to 4.23% as at March 31, 2025. Capitalization rates typically correlate over time to changes in long-term interest rates with the noted increase in long-term U.S. treasury yields reducing investment transaction volumes throughout 2024 and into Q1-2025 which negatively impacted the Fund's fourth quarter of 2024 appraised values for the investment properties and also resulted in a reduction in the reported values for the Fund's investment properties for Q1-2025 due to an expansion in capitalization rates. The Fund strives to maintain strong and collaborative relationships with its lenders but the elevated level of interest rates and associated impact on capitalization rates mentioned above had a negative impact on the Fund's overall leverage position and debt service coverage ratios, both of which are typical financial benchmarks required to extend certain loans and as a result, these changes have impacted the Fund's ability to exercise certain extension options available under existing loans payable. As at March 31, 2025, $377,620 of the Fund's loans payable (relating to five of its six properties owned) had contractual maturity dates within twelve months of March 31, 2025 whereby the Fund has the option to extend such loans with the existing lenders subject to such loans achieving certain conditions (including maximum leverage and minimum debt service coverage ratios as noted). For Emerson and Eight at East, certain of these extension conditions were not achieved as of the initial maturity dates of April 9, 2025 and May 7, 2025, respectively. The Fund also anticipates it will not meet the extension conditions for the Sunlake loan payable which matures on June 1, 2025. Notwithstanding the Fund not achieving the extension conditions outlined above, the Fund continues to actively engage in negotiations with the respective lenders to pursue a modification and longer-term extension of these loans. Under the terms of each applicable loan agreement, the Fund has the right to make a principal repayment towards such loan in order to achieve the extension tests that otherwise may not be achieved. Given the Fund was formed as a "closed-end" investment vehicle, the Fund is restricted from raising any additional equity, which may have otherwise assisted in making any principal repayments of the loans payable in order to meet certain extension conditions. In the event the Fund is not able to refinance the loan or if the Fund does not have sufficient liquidity or other sources of capital sufficient to make any such principal repayments required to achieve the applicable loan extension tests and the Fund is not able to otherwise negotiate an extension of such loan, the applicable lender may provide formal notice of an event of default expressing its right to demand repayment of the borrowings relating to such property. Under this scenario, the Fund may be obligated to sell such properties which may not be able to be completed on terms that are acceptable to the Fund or may be required to explore other options in the best economic interests of the Fund in order to discharge its obligations under any of the applicable loan agreements. The Fund's loans payable also do not carry cross-default provisions, other than the Fund's credit facility whereby if one of the Fund's lenders associated with its loans payable declared an event of default that is not remedied by the Fund, the credit facility lender may provide formal notice of an event of default expressing its right to demand repayment of the outstanding borrowings on the credit facility. Subsequent to March 31, 2025, the Fund completed the disposition of Lyric and fully repaid credit facility outstanding balance amounting to $13,605. The credit facility was fully repaid and its availability was reduced to $2,395 as a result of the repayment (see "Subsequent Events"). For three of the Fund's six properties, the fair value reported for such properties as at March 31, 2025 was lower than the principal outstanding underthe loans payable secured by such properties and as a result, the sale of those properties may not be sufficient to repay those loans in full if such sale was required. In certain instances, the lenders also hold restricted cash as part of the security for such loans which in a liquidation event may be used to repay any indebtedness required to be repaid by the Fund. The Fund's secured loans are non-recourse subject to standard limited recourse provisions and are entered into by the subsidiaries of the Fund that own only the associated secured property. As a result, the liability for any such loan would typically be limited to the value of the associated secured property, including any restricted cash reserves or other amounts held by the applicable lenders, other than in certain instances which may obligate the Fund to incur certain costs or other amounts subject to certain performance conditions. Under the terms of the Fund's credit facility, the net proceeds from the sale of any of the Properties are required to be used towards the repayment of the credit facility, after the repayment of the associated secured loans for such property. Subsequent to March 31, 2025, the credit facility is fully repaid (see "Subsequent Events") The primary markets of the Fund, which include Arizona, California, Colorado, Florida, Georgia, Idaho, Nevada, North Carolina, Oregon, South Carolina, Tennessee, Texas, Utah and Washington ("Primary Markets") have seen an elevated level of new supply delivered during 2023 and 2024 which contributed to the deceleration in rent growth in the Primary Markets during late 2023, relative to levels achieved in 2022 and earlier in 2023. Interest rates also continue to remain elevated which, along with higher levels of inflation and a softening in market conditions in late 2023, has significantly disrupted active and new construction of comparable communities in the Primary Markets that would otherwise have been delivered in the second half of 2025 or 2026. This potential reduction in construction may create a temporary imbalance in the supply of comparable multi-suite residential properties in future periods. This imbalance, alongside the continued economic strength and solid fundamentals may be supportive of favourable supply and demand conditions for the properties in future periods and could result in future increases in occupancy and rent growth. The Fund is actively pursuing negotiations on the extension of each of the Fund's loans payable with the respective lenders and certain modifications noted above as the Fund continues to focus on managing its liquidity position, including having extended the Fund's term to November 2026, in order to provide the Fund the opportunity to capitalize on potential improvements in the investment market that are anticipated in future periods, but may not materialize. Furthermore, the Fund continues to focus on liquidity management as the Fund previously amended several of its loan agreements, deferred the payment of asset management fees and has continued to focus on maximizing NOI at the properties to preserve as much liquidity as possible. There are no assurances that the above aforementioned financing activities and remaining property dispositions will be successfully completed which indicates the existence of a material uncertainty that may cast doubt upon the Fund's ability to realize its assets and discharge its liabilities in the normal course of business and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The Fund's condensed consolidated interim financial statements for the three months ended March 31, 2025 do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that may be necessary if the Fund were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments, if required, may be material. During this period of capital markets uncertainty, the Fund may also enter into additional financing, evaluate potential asset sales to allow the Fund to maintain sufficient liquidity or evaluate other alternatives in the best economic interests of the Unitholders. Further disclosure surrounding the Future Outlook is included in the Fund's MD&A in the "Future Outlook" section for Q1-2025 under the Fund's profile, which is available on FORWARD-LOOKING STATEMENTS Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws and which reflect the Fund's current expectations regarding future events, including the overall financial performance of the Fund and the properties, the impact of elevated levels of inflation and interest rates, uncertainty surrounding U.S. tariffs, the ability of the Fund to repay indebtedness when due, the Fund's ability to negotiate further extensions with its lenders, the potential implications of a default under loans payable and the Fund's capital management and liquidity measures. Forward-looking information is provided for the purposes of assisting the reader in understanding the Fund's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, the impact of inflation levels and interest rates, the ability of the Fund to make and the resumption of future distributions, the trading price of the Fund's TSX Venture Exchange listed units being class A units and class U units of the Fund ("Listed Units") and the value of the Fund's unlisted units, which include all units other than the Listed Units (together with Listed Units "Units"), acquisitions, financing, performance, achievements, events, prospects or opportunities for the Fund or the real estate industry and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, occupancy levels, AMR, taxes, and plans and objectives of or involving the Fund. Particularly, matters described in "Future Outlook" are forward-looking information. In some cases, forward-looking information can be identified by terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities may not be achieved. Those risks and uncertainties include: the extent and sustainability of potential of higher levels of inflation and the potential impact on the Fund's operating costs; the impact of any tariffs and retaliatory tariffs on the economy; the pace at which and degree of any changes in interest rates that impact the Fund's weighted average interest rate may occur; the ability of the Fund to make and the resumption of future distributions; the trading price of the Listed Units; changes in government legislation or tax laws which would impact any potential income taxes or other taxes rendered or payable with respect to the Properties or the Fund's legal entities; the impact of elevated interest rates and inflation as well as supply chain issues have on new supply of multi-family communities; the realization of property value appreciation and the timing thereof; the extent to which favourable operating conditions achieved during historical periods may continue in future periods; the applicability of any government regulation concerning the Fund's residents or rents; the Fund's ability to continue as a going concern; and the availability of debt financing or ability of the Fund to extend loans as loans payable become due during the Fund's term including any impact such extensions may have on the Fund's ability to hold such properties until the Manager desires to sell such properties. A variety of factors, many of which are beyond the Fund's control, affect the operations, performance and results of the Fund and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. There are numerous risks and uncertainties which include, but are not limited to, risks related to the Units and risks related to the Fund and its business. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements. Although the Fund believes the expectations reflected in such forward-looking information are reasonable and represent the Fund's projections, expectations and beliefs at this time, such information involves known and unknown risks and uncertainties which may cause the Fund's actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially from the Fund's expectations include, among other things, the availability of suitable properties for purchase by the Fund, the availability of mortgage financing including the ability of the Fund to refinance or extend existing loans payable on favourable terms including any impact such extensions may have on the Fund's ability to hold such properties until the Manager desires to sell such properties, and general economic and market factors, including interest rates, inflation, business competition and changes in government regulations or in tax laws. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information, as there can be no assurance that actual results will be consistent with such forward-looking information. Information contained in forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including the following: the impact of elevated levels of inflation on the Fund's operating costs; the impact of future interest rates on the Fund's financial performance; the availability of debt financing as loans payable become due during the Fund's term and any resulting impact on the Fund's liquidity; the trading price of the Listed Units, the applicability of any government regulation concerning the Fund's residents or rents; the realization of property value appreciation and the timing thereof; the inventory of residential real estate properties; the availability of residential properties for potential future acquisition, if any, and the price at which such properties may be acquired; the ability of the Fund to benefit from any value add program the Fund conducts at certain properties; the price at which the properties may be disposed and the timing thereof; closing and other transaction costs in connection with the acquisition and disposition of the properties; the extent of competition for residential properties; the impact of interest costs, inflation and supply chain issues have on new supply of multi-family communities; the extent to which favourable operating conditions achieved during historical periods may continue in future periods; the growth in NOI generated from its value-add initiatives; the population of residential real estate market participants; assumptions about the markets in which the Fund operates; expenditures and fees in connection with the maintenance, operation and administration of the properties; the ability of the Manager to manage and operate the properties or achieve similar returns to previous investment funds managed by the Manager; the global and North American economic environment; foreign currency exchange rates; the ability of the Fund to realize the estimated gap in market versus in-place rents through future rental rate increases and governmental regulations or tax laws. Given this period of uncertainty, there can be no assurance regarding: (a) operations and performance or the volatility of the Units; (b) the Fund's ability to mitigate such impacts; (c) credit, market, operational, and liquidity risks generally; (d) the Manager or any of its affiliates, will continue its involvement as asset manager of the Fund in accordance with its current asset management agreement; and (e) other risks inherent to the Fund's business and/or factors beyond its control which could have a material adverse effect on the Fund. The forward-looking information included in this press release relates only to events or information as of the date on which the statements are made in this press release. Except as specifically required by applicable Canadian securities law, the Fund undertakes no obligation to update or revise publicly any forward-looking information, whether because of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. ABOUT STARLIGHT U.S. RESIDENTIAL FUND The Fund is a "close-end" fund formed under and governed by the laws of the Province of Ontario, pursuant to a declaration of trust dated September 23, 2021, as amended and restated. The Fund was established for the primary purpose of directly or indirectly acquiring, owning and operating a portfolio primarily composed of income-producing residential properties in the Fund's target metrics or that can achieve significant increases in rental rates as a result of undertaking high return, value-add capital expenditures and active asset management. As at March 31, 2025, the Fund owned interests in six multi-family properties consisting 1,973 suites. For the Fund's condensed consolidated interim financial statements and MD&A for the three months ended March 31, 2025 and any other information related to the Fund, please visit Further details regarding the Fund's unit performance and distributions, market conditions where the Fund's properties are located, performance by the Fund's properties and a capital investment update are also available in the Fund's May 2025 Newsletter which is available on the Fund's profile at Please visit us at and connect with us on LinkedIn at Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 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Cision Canada
12-05-2025
- Business
- Cision Canada
True North Commercial REIT Reports Q1-2025 Results
Completed 146,000 square feet of new and renewed leases during Q1-2025 with a weighted average lease term of 5.6 years and 1.6% leasing spread on renewed leases TORONTO, May 12, 2025 /CNW/ - True North Commercial Real Estate Investment Trust (TSX: (the "REIT") today announced its financial results for the three months ended March 31, 2025 ("Q1-2025"). "We are pleased to start the year with strong leasing momentum, completing 146,000 square feet of new or renewed leases, highlighting the REIT's commitment to maintain strong relationships with tenants which translated into reported occupancy within its core portfolio of 92%," stated Daniel Drimmer, the REIT's Chief Executive Officer. "The REIT also substantially completed the refinancing or renewal of its 2025 debt maturities at relatively favourable interest rates, which continued to strengthen the REIT's financial position." Q1-2025 highlights On March 18, 2025, the REIT announced the reinstatement of the monthly distribution ("Distribution Reinstatement") to Unitholders, which commenced with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per trust unit of the REIT ("Unit") per month. The REIT's core portfolio occupancy (1) excluding assets held for sale at the end of Q1-2025 was approximately 92% which remained above the average occupancy for the markets in which the REIT operates. The REIT also had a weighted average lease term ("WALT") (1) of 4.2 years excluding investment properties held for sale. The REIT contractually leased or renewed approximately 146,000 square feet with a WALT of 5.6 years with positive leasing spreads on renewals reported at 1.6% for the quarter. Q1-2025 same property net operating income ("Same Property NOI") (1) increased by approximately 5.1% including certain amounts earned for termination income in both periods. Q1-2025 Same Property NOI normalized to exclude termination income, free rent in both periods and the REIT's Alberta portfolio would have increased by approximately 0.3%. The REIT's Q1-2025 revenue and Net Operating Income ("NOI") (1) decreased relative to the three months ended March 31, 2024 ("Q1-2024") by 4% and 12%, respectively, primarily due to the disposition activity in 2024 (the "Primary Variance Driver") and a decrease in occupancy for the REIT's held for sale properties, partially offset by contractual rent increases and higher termination income received from a tenant in the Greater Toronto Area ("GTA") Ontario portfolio in Q1-2025 relative to the amounts received in Q1-2024. The REIT's Q1-2025 funds from operations ("FFO") (1) and adjusted funds from operations ("AFFO") (1) decreased by $759 and $831, respectively when compared to the same period in 2024 primarily due to the Primary Variance Driver, reduction in occupancy for the REIT's held for sale properties and increase in interest costs, partially offset by normalized Same Property NOI growth outlined above. Q1-2025 FFO and AFFO basic and diluted per Unit (1) remained consistent at $0.56 and $0.57, respectively, compared to the same period in 2024, driven by a reduction in the number of Units as a result of the REIT's normal course issuer bid ("NCIB") program, offset by the reasons noted above for FFO and AFFO. During Q1-2025, the REIT successfully completed $129,600 of refinancing or approximately 52% of the 2025 maturities and $4,500 of new financing at a weighted average interest rate of approximately 4.78% and weighted average term of approximately 3.6 years. Subsequent to March 31, 2025, the REIT successfully completed the refinancing of certain first mortgages totaling approximately $75,900 at an average interest rate of 4.68% representing approximately 30% of the 2025 debt maturities and has substantially finalized terms on an additional approximately $23,200 or 9% of 2025 debt maturities which are expected to be finalized by the second quarter of 2025. As a result, the REIT has substantially completed the renewal or refinancing of its 2025 debt maturities. On April 23, 2025, the REIT renewed the NCIB program as approved by the TSX ("2025 NCIB"). Under the 2025 NCIB, the REIT has the ability to purchase for cancellation up to a maximum of 1,227,090 of its Units, representing 10% of the REIT's public float of 12,270,901 Units as of April 3, 2025 through the facilities of the TSX or through a Canadian alternative trading system and in accordance with applicable regulatory requirements at a price per Unit equal to the market price at the time of acquisition. Key performance indicators Q1-2025 Q1-2024 Number of properties (1) 40 44 Portfolio gross leasable area ("GLA") (1) 4,619,000 sf 4,792,600 sf Occupancy (1)(2) 92 % 90 % WALT (1) 4.2 years 4.4 years Revenue from government and credit rated tenants (1) 74 % 77 % Revenue $ 31,086 $ 32,464 NOI 14,665 16,586 Net income and comprehensive income 563 5,138 Same Property NOI (3) 19,000 19,053 FFO $ 8,082 $ 8,841 FFO per Unit - basic 0.56 0.56 FFO per Unit - diluted 0.56 0.56 AFFO $ 8,229 $ 9,060 AFFO per Unit - basic 0.57 0.57 AFFO per Unit - diluted 0.57 0.57 AFFO payout ratio - diluted (4) 10 % — % Distributions declared $ 828 $ — (1) This is presented as at the end of the applicable reporting period, rather than for the quarter. (2) Represents same property occupancy excluding assets classified as held for sale as at March 31, 2025. The REIT occupancy for all assets owned as at the end of each reporting period (including any held for sale assets) was 86% as at the end of Q1-2025 (Q1-2024 was 88%). (3) Represents Same Property NOI including assets classified as held for sale during Q1-2025 and Q1-2024. Same Property NOI excluding assets classified as held for sale have been presented separately in this press release (see "Same Property NOI"). (4) This is a non-IFRS financial measure, refer to "Non-IFRS measures". Operating results Q1-2025 revenue and NOI decreased relative to the same period in 2024 by 4% and 12%, respectively, primarily due to the Primary Variance Driver and a decrease in occupancy for the REIT's held for sale properties, partially offset by contractual rent increases and higher termination income received from a tenant in the GTA Ontario portfolio in Q1-2025 relative to the amounts received in Q1-2024. Q1-2025 Same Property NOI increased by approximately 5.1% including certain amounts earned for termination income in both periods. Q1-2025 Same Property NOI normalized to exclude termination income, free rent in both periods and the REIT's Alberta portfolio would have increased by approximately 0.3%. Q1-2025 FFO and AFFO decreased by $759 and $831, respectively when compared to the same period in 2024 primarily due to the Primary Variance Driver, reduction in occupancy for the REIT's held for sale properties and increase in interest costs, partially offset by normalized Same Property NOI growth outlined above. Q1-2025 FFO and AFFO basic and diluted per Unit remained consistent at $0.56 and $0.57, respectively, compared to the same period in 2024, driven by reasons noted above for FFO and AFFO, being offset by a reduction in the number of Units as a result of the REIT's NCIB program. On March 18, 2025, the REIT announced the Distribution Reinstatement to Unitholders, which commenced with a record date of March 31, 2025, payable on April 15, 2025, amounting to $0.0575 per Unit per month. Assuming distributions were paid for each month during Q1-2025, the AFFO payout ratio would have been approximately 30%. Same Property NOI Q1-2025 Same Property NOI excluding assets held for sale increased by approximately 5% compared to the same period in 2024. Same Property NOI included termination income of approximately $1,327 (Q1-2024 - $nil) and free rent credits of $186 (Q1-2024 - $72). Q1-2025 Alberta Same Property NOI decreased by 10% primarily attributable to the downsizing of a tenant in the Calgary portfolio. Q1-2025 British Columbia Same Property NOI decreased by 26% primarily as a result of an expiring lease not renewed at the beginning of 2025. Occupancy and Same Property NOI on the remaining properties in British Columbia remained consistent. Q1-2025 New Brunswick Same Property NOI increased by 3% compared to Q1-2024 due to a new lease with a government tenant that started in February 2025. Q1-2025 Nova Scotia Same Property NOI increased by 21% as a result of the increase in occupancy between the two periods driven by strong leasing activity. Q1-2025 Ontario Same Property NOI increased by 10% relative to Q1-2024 primarily due to termination income received from a tenant in the GTA Ontario portfolio. Q1-2025 Ontario Same Property NOI excluding the impact of termination income and free rent would have been relatively consistent with the same period in the prior year. Debt and liquidity At the end of Q1-2025, the REIT had access to available funds ("Available Funds") (1) of approximately $56,612, and a weighted average term to maturity of 2.58 years in its mortgage portfolio with a weighted average fixed interest rate of 4.23%. Subsequent to March 31, 2025, the REIT successfully completed refinancing of certain first mortgages totaling approximately $75,900 at an average interest rate of 4.68%. About the REIT The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT currently owns and operates a portfolio of 40 commercial properties consisting of approximately 4.6 million square feet in urban and select strategic secondary markets across Canada focusing on long term leases with government and credit rated tenants. The REIT is focused on growing its portfolio principally through acquisitions across Canada and such other jurisdictions where opportunities exist. Additional information concerning the REIT is available at or the REIT's website at Non-IFRS measures Certain terms used in this press release such as FFO, AFFO, FFO and AFFO payout ratios, NOI, Same Property NOI, indebtedness ("Indebtedness"), gross book value ("GBV"), Indebtedness to GBV ratio, net earnings before interest, tax, depreciation and amortization and fair value gain (loss) on financial instruments and investment properties ("Adjusted EBITDA"), interest coverage ratio, net asset value ("NAV") per Unit, Available Funds, occupancy and WALT are not measures defined by IFRS Accounting Standards ("IFRS") as prescribed by the International Accounting Standards Board, do not have standardized meanings prescribed by IFRS and should not be compared to or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. FFO, AFFO, FFO and AFFO payout ratios, NOI, Same Property NOI, Indebtedness, GBV, Indebtedness to GBV ratio, Adjusted EBITDA, interest coverage ratio, adjusted cash provided by operating activities, NAV per Unit, Available Funds, occupancy and WALT as computed by the REIT may not be comparable to similar measures presented by other issuers. The REIT uses these measures to better assess the REIT's underlying performance and provides these additional measures so that investors may do the same. Details on non-IFRS measures are set out in the REIT's Management's Discussion and Analysis for Q1-2025 and the Annual Information Form are available on the REIT's profile at The following tables reconcile the non-IFRS financial measures to the comparable IFRS measures for Q1-2025 and Q1-2024. These non-IFRS financial measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other issuers. Same Property NOI Same Property NOI is measured as the NOI for the properties owned and operated by the REIT for the current and comparative period. The following table reconciles the REIT's Same Property NOI to NOI: The following table reconciles the REIT's FFO and AFFO to net income and comprehensive income, for Q1-2025 and Q1-2024: Q1-2025 Q1-2024 Net income and comprehensive income $ 563 $ 5,138 Add (deduct): Fair value adjustment of Unit-based compensation (66) (46) Fair value adjustment of investment properties and investment properties held for sale 3,832 1,898 Fair value adjustment of Class B LP Units (306) (337) Distributions on Class B LP Units 24 — Unrealized loss (gain) on change in fair value of derivative instruments 525 (253) Amortization of leasing costs and tenant inducements 3,510 2,441 FFO $ 8,082 $ 8,841 Add (deduct): Unit-based compensation expense 122 81 Amortization of financing costs 330 363 Amortization of mortgage discounts (3) (8) Instalment note receipts 11 12 Straight-line rent 826 966 Capital reserve (1,139) (1,195) AFFO $ 8,229 $ 9,060 FFO per Unit: Basic $ 0.56 $ 0.56 Diluted 0.56 0.56 AFFO per Unit: Basic $ 0.57 $ 0.57 Diluted 0.57 0.57 AFFO payout ratio: Basic 10 % — % Diluted 10 % — % Distributions declared $ 828 $ — Weighted average Units outstanding (000s): Basic 14,458 15,861 Add: Unit options and incentive Units 78 10 Diluted 14,536 15,871 Indebtedness to GBV ratio The table below calculates the REIT's Indebtedness to GBV ratio as at March 31, 2025 and December 31, 2024. The Indebtedness to GBV ratio is calculated by dividing the Indebtedness by GBV: Adjusted EBITDA The table below reconciles the REIT's Adjusted EBITDA to net loss and comprehensive loss for the twelve months period ended March 31, 2025 and 2024: Interest coverage ratio The table below calculates the REIT's interest coverage ratio for the twelve months period ended March 31, 2025 and 2024. The interest coverage ratio is calculated by dividing Adjusted EBITDA by interest expense. Available Funds The table below calculates the REIT's Available Funds as at March 31, 2025 and December 31, 2024: Forward-looking statements Certain statements contained in this press release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking statements are provided for the purposes of assisting the reader in understanding the REIT's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may relate to future results, performance, debt financing, achievements, events, prospects or opportunities for the REIT or the real estate industry and may include statements regarding the financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes, distributions, plans, the benefits and renewal of the NCIB, or through other capital programs, the impact of the consolidation (the "Unit Consolidation") and objectives of or involving the REIT. In some cases, forward-looking information can be identified by such terms as "may", "might", "will", "could", "should", "would", "expect", "plan", "anticipate", "believe", "intend", "seek", "aim", "estimate", "target", "goal", "project", "predict", "forecast", "potential", "continue", "likely", or the negative thereof or other similar expressions suggesting future outcomes or events. Forward-looking statements involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the REIT's control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: risks and uncertainties related to the Units and trading value of the Units; risks related to the REIT and its business; fluctuating interest rates and general economic conditions, including potential higher levels of inflation; the impact of any tariffs and retaliatory tariffs on the economy, credit, market, operational and liquidity risks generally; occupancy levels and defaults, including the failure to fulfill contractual obligations by tenants; lease renewals and rental increases; the ability to re-lease and secure new tenants for vacant space; the timing and ability of the REIT to acquire or sell certain properties; work-from-home flexibility initiatives on the business, operations and financial condition of the REIT and its tenants, as well as on consumer behavior and the economy in general; the ability to enforce leases, perform capital expenditure work, increase rents, raise capital through the issuance of Units or other securities of the REIT; the benefits of the NCIB, or through other capital programs; the impact of the Unit Consolidation; the ability of the REIT to continue to pay distributions in future periods; and obtain mortgage financing on the REIT's properties and for potential acquisitions or to refinance debt at maturity on similar terms. The foregoing is not an exhaustive list of factors that may affect the REIT's forward-looking statements. Other risks and uncertainties not presently known to the REIT could also cause actual results or events to differ materially from those expressed in its forward-looking statements. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements as there can be no assurance actual results will be consistent with such forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions applied in drawing a conclusion or making a forecast or projection, including management's perception of historical trends, current conditions and expected future developments, as well as other considerations believed to be appropriate in the circumstances. There can be no assurance regarding: (a) work-from-home initiatives on the REIT's business, operations and performance, including the performance of its Units; (b) the REIT's ability to mitigate any impacts related to fluctuating interest rates, potential higher levels of inflation; the impact of any current or future tariffs and the shift to hybrid working; (c) the factors, risks and uncertainties expressed above in regards to the hybrid work environment on the commercial real estate industry and property occupancy levels; (d) credit, market, operational, and liquidity risks generally; (e) the availability of investment opportunities for growth in Canada and the timing and ability of the REIT to acquire or sell certain properties; (f) repurchasing Units under the NCIB; (g) Starlight Group Property Holdings Inc., or any of its affiliates, continuing as asset manager of the REIT in accordance with its current asset management agreement; (h) the benefits of the NCIB, or through other capital programs; (i) the impact of the Unit Consolidation; (j) the availability of debt financing for potential acquisitions or refinancing loans at maturity on similar terms; (k) the ability of the REIT to continue to pay distributions in future periods; and (l) other risks inherent to the REIT's business and/or factors beyond its control which could have a material adverse effect on the REIT. The forward-looking statements made relate only to events or information as of the date on which the statements are made. Except as specifically required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
