Several milestones were noted during PROREIT’s March 23 fiscal year-end and Q4 2022 results conference call: the REIT has topped $1 billion in assets as it hits its 10th anniversary; and it was the last call for president and CEO Jim Beckerleg, who is stepping down on April 1 to become vice-chair of the trust’s board of trustees.
Montreal-based PROREIT (PRV-UN-T) is an unincorporated open-ended REIT with whole or partial interests in 130 industrial, retail and office properties encompassing 6.5 million square feet in 10 provinces. It owns a 50 per cent stake in 42 of those properties and also manages an additional 1.5 million square feet.
The $1.04-billion portfolio has a 98.5 per cent occupancy rate and a 4.1-year weighted average lease term.
“I'm very pleased to say we delivered very solid results despite the very challenging macro-economic and high interest rate environment which we all found ourselves in,” Beckerleg said during the call.
“Not only did we surpass a billion dollars in total assets in 2022, but we also successfully refocused our portfolio towards the robust industrial sector and achieved meaningful operational and leasing synergies.”
PROREIT renewed 93.2 per cent of maturing leases last year at an average spread of 60.4 per cent. Half of the leases maturing this year have already been renewed at an average spread of 36.7 per cent.
Revenue and net operating income increases
PROREIT’s property revenue increased by 9.3 per cent in the fourth quarter year-over-year and by 25.2 per cent overall in 2022 compared to 2021.
Net operating income (NOI) rose by 9.1 per cent and 24.8 per cent during those same periods, while industrial same-property NOI rose by five per cent and 4.3 per cent, respectively.
Overall same-property NOI remained relatively flat in the quarter as a result of increased vacancy in two of PROREIT’s eight office properties, which combined to account for 13.3 per cent of total same-property NOI.
PROREIT’s industrial segment accounted for 69 per cent of base rent at the end of 2022, compared to 64 per cent a year earlier.
Through planned capital recycling and other opportunities that may arise, it would like to increase that number to 80 per cent.
The trust reduced its debt-to-gross-book-value last year from 53.1 per cent to 49.7 per cent, achieving its goal of getting below 50 per cent 10 months ahead of its target date.
It had $23 million available on its credit facility on Dec. 31.
“We believe we're well-positioned and view this as a time of opportunity to focus on operational efficiency,” said executive vice-president, chief financial officer and secretary Gordon Lawlor, who will succeed Beckerleg as president and CEO.
Beckerleg and the trust's management have set a near-term goal of PROREIT accumulating $2 billion in assets.
PROREIT's share price on the Toronto Stock Exchange closed at $5.76 on March 23, between its 52-week high of $7.64 and low of $5.34. It had a market cap of $340.12 million.
Notable 2022 transactions
PROREIT completed a joint venture transaction with Crestpoint Real Estate Investments Ltd. and its affiliates on Aug. 4 to own an industrial-focused portfolio of 41 properties in Dartmouth, N.S. and one property in Moncton, N.B. comprised of nearly 3.1 million square feet of gross leasable area.
The REIT completed the sale of nine non-core retail properties in Western Canada, totalling approximately 94,000 square feet, for $18.8 million on Sept. 27.
PROREIT also sold a retail property in Alberta – totalling approximately 11,000 square feet – for $5.4 million on Nov. 3 and a 3,500-square-foot retail property in Quebec for $1.6 million on Dec. 13.