WINNIPEG, MB, May 2, 2024   /CNW/ - Artis Real Estate Investment Trust ("Artis" or the "REIT") (TSX:AX, AX.PR.E, AX.PR.I)) announced today its financial results for the three months ended March 31, 2024, and the unconditional sale of a portfolio of industrial properties located in Houston, Texas.  The first quarter results in this press release should be read in conjunction with the REIT's consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2024.  All amounts are in thousands of Canadian dollars, unless otherwise noted. "In the first quarter of 2024, Artis achieved several important objectives, generating positive momentum to build on throughout the remainder of the year," said Samir Manji, President and Chief Executive Officer of Artis.  "Our focus on liquidity continues to drive our disposition strategy. Artis has unlocked $174.3 million through key asset dispositions in 2024, demonstrating there is still demand for quality real estate despite the challenging interest rate environment.  In addition, we have $184.4 million of unconditional Canadian asset sales and US$272.9 million of unconditional US asset sales scheduled to close in the coming months.  These dispositions are vital to accomplishing our primary near-term goal: strengthening the balance sheet by enhancing liquidity and reducing debt.  Today's announcement regarding the upcoming sale of Park 8Ninety represents a significant milestone and addition to our list of unconditional asset sales expected to close in the near term. Collectively, these dispositions will reduce our overall leverage below 45% and will lower our borrowing costs moving forward. At the same time, the fact that we are achieving sale prices in line with IFRS provides compelling validation of our $14.06 net asset value per unit.  Our operational fundamentals continue to demonstrate stability quarter over quarter.  Same property net operating income growth in the first quarter was strong at 4.0%, compared to the same period last year.  We are optimistic about the remainder of 2024 and confident that, with the continued execution of our plan, we will be able to narrow the gap between the intrinsic value and market price of our units." FIRST QUARTER HIGHLIGHTS Portfolio Activity Acquired an additional 5% interest in Park 8Ninety V, an industrial property located in the Greater Houston Area, Texas, for total consideration of US$4.0 million. Disposed of one industrial property, one office property and one retail property located in Canada for an aggregate sale price of $38.4 million. Balance Sheet and Liquidity Utilized the NCIB to purchase 1,132,824 common units at a weighted-average price of $6.11 and 233,912 preferred units at a weighted-average price of $17.26. Reported NAV per Unit (1) of $14.06 at March 31, 2024, improved from $13.96 at December 31, 2023. Reported Total Debt to Adjusted EBITDA (1) of 8.0 at March 31, 2024, compared to 7.7 at December 31, 2023. Extended the maturity date of the $100.0 million non-revolving credit facility for a two-year term maturing February 6, 2026. Financial and Operational Same Property NOI (1) in Canadian dollars for the first quarter of 2024 increased 4.0% compared to the first quarter of 2023. Maintained strong portfolio occupancy of 89.5% at March 31, 2024, compared to 90.1% at December 31, 2023. Renewals totalling 288,517 square feet and new leases totalling 49,789 square feet commenced during the first quarter of 2024. Weighted-average rental rate on renewals that commenced during the first quarter of 2024 increased 2.2%. (1) Represents a non-GAAP measure, ratio or other supplementary financial measure.  Refer to the Notice with Respect to Non-GAAP & Supplementary Financial Measures Disclosure. UNCONDITIONAL DISPOSITION OF PARK 8NINETY On May 2, 2024, Artis entered into an unconditional sale agreement for Park 8Ninety, a portfolio of industrial properties located in the Greater Houston Area, Texas for a sale price of US$234.2 million, representing a price per square foot of US$128. Park 8Ninety was developed in five phases between 2017 and 2022 and comprises 12 buildings that total 1,823,410 square feet of leasable area.  The disposition is anticipated to close in the second quarter of 2024. STRATEGIC REVIEW On August 2, 2023, Artis's Board of Trustees (the "Board") established a Special Committee to initiate a strategic review process to consider and evaluate alternatives that may be available to the REIT to unlock and maximize value for unitholders. On September 11, 2023, the Board announced that the Special Committee retained BMO Nesbitt Burns Inc. to provide financial advisory services to the REIT and Special Committee in connection with the strategic review process. Since the announcement of the strategic review, Artis has completed or entered into unconditional agreements for $164.8 million of office assets, $218.6 million of retail assets and $377.3 million of industrial assets at values and on terms that were acceptable to the REIT.  This equates to approximately $760.7 million of asset sales (in line with the REIT's IFRS values), including unconditional transactions, since August 2, 2023. The REIT is continuing to evaluate opportunities relating to the sale of additional retail, office, and industrial assets, with a focus on the industrial portfolio, in its efforts to further deleverage and strengthen the balance sheet, grow NAV per unit, and enhance liquidity. A portion of this liquidity may be directed towards the NCIB, which was renewed on December 19, 2023. The Board remains committed to pursuing strategic alternatives that may be available to the REIT to unlock and maximize value for unitholders, including pursuing near-term opportunities available to Artis to enhance and grow NAV per unit. The work undertaken over the past several months has enabled Artis to properly assess the current environment and options available to the REIT in an effort to create and maximize value for unitholders. There can be no assurance that the strategic review process will result in the REIT pursuing any transaction. The REIT has not set a timetable for completion of this process and does not intend to disclose further developments unless it determines that disclosure is appropriate or necessary.  BALANCE SHEET AND LIQUIDITY The REIT's balance sheet metrics are as follows: March 31, December 31, 2024 2023 Total investment properties $    3,178,513 $        3,066,841 Unencumbered assets 1,671,541 1,567,001 NAV per unit (1) 14.06 13.96 Total Debt to GBV (1) 51.3 % 50.9 % Total Debt to Adjusted EBITDA (1) 8.0 7.7 Adjusted EBITDA interest coverage ratio (1) 1.92 1.93 Unencumbered assets to unsecured debt (1) 1.68 1.62 (1) Represents a non-GAAP measure, ratio  or other supplementary financial measure.  Refer to the Notice with Respect to Non-GAAP & Supplementary Financial Measures Disclosure. At March 31, 2024, Artis had $30.6 million of cash on hand and $107.6 million available on its revolving credit facilities.  Liquidity and capital resources may be impacted by financing activities, portfolio acquisition, disposition and development activities or debt repayments occurring subsequent to March 31, 2024. FINANCIAL AND OPERATIONAL RESULTS Three months ended March 31, $000's, except per unit amounts 2024 2023 % Change Revenue $          80,420 $          90,255 (10.9) % Net operating income 43,557 48,061 (9.4) % Net loss (7,121) (22,761) (68.7) % Total comprehensive income (loss) 21,942 (23,671) (192.7) % Distributions per common unit 0.15 0.15 — % FFO (1) (2) $          26,233 $          33,817 (22.4) % FFO per unit - diluted (1) (2) 0.24 0.29 (17.2) % FFO payout ratio (1)  62.5 % 51.7 % 10.8 % AFFO (1) (2) $          14,344 $          20,861 (31.2) % AFFO per unit - diluted (1) (2) 0.13 0.18 (27.8) % AFFO payout ratio (1) 115.4 % 83.3 % 32.1 % (1) Represents a non-GAAP measure, ratio or other supplementary financial measure.  Refer to the Notice with Respect to Non-GAAP & Supplementary Financial Measures Disclosure. (2) The REIT also calculates FFO and AFFO, adjusted for the impact of the realized gain (loss) on equity securities. Refer to FFO and AFFO section of Artis's Q1-24 MD&A. Artis reported portfolio occupancy of 89.5% at March 31, 2024, compared to 90.1% at December 31, 2023.  Weighted-average rental rate on renewals that commenced during the first quarter of 2024 increased 2.2%. Artis's portfolio has a stable lease expiry profile with 48.8% of gross leasable area expiring in 2028 or later.  Information about Artis's lease expiry profile is as follows: Current vacancy Monthly tenants 2024 2025 2026 2027 2028 & later Total portfolio Expiring square footage 10.5 % 0.4 % 6.8 % 9.3 % 11.9 % 12.3 % 48.8 % 100.0 % In-place rents N/A N/A $ 16.30 $ 17.05 $ 16.86 $ 12.65 $ 14.20