MONTREAL, May 8, 2024 /CNW/ - PRO Real Estate Investment Trust ("PROREIT" or the "REIT") (TSX:PRV) today reported its financial and operating results for the three months ended March 31, 2024 ("first quarter" or "Q1"). First Quarter of Fiscal 2024 Highlights Property revenue increased by 1.7% in Q1 year-over-year Net operating income (NOI) was up 1.9% in Q1 year-over-year Same property NOI* was up 7.8% in Q1 year-over-year Sale of three non-core properties for gross proceeds of $26.1 million in Q1 Entered into binding agreements in Q1 for the sale of two non-core retail properties, which are expected to close in Q2, for gross proceeds of $7.0 million 55.6% of gross leasable area ("GLA") maturing in 2024 renewed at average spread of 33.5% Occupancy rate at 97.7% at March 31, 2024 (including committed space) Total debt (current and non-current) of $493.6 million at March 31, 2024, a decrease of $25.1 million, compared to $518.7 million at the same date last year Adjusted Debt to Gross Book Value* was 49.5% at March 31, 2024, compared to 50.2% at December 31, 2023 $39.5 million in available credit facility and $11.6 million in cash at March 31, 2024 "PROREIT started the year on solid footing, continuing to reap the benefits of our stated strategy to focus on the industrial sector. In the first quarter of 2024, we delivered 7.8% Same Property NOI* growth year-over-year for our industrial assets, mainly driven by robust lease renewal spreads and rental steps," said Gordon G. Lawlor, President and CEO, PROREIT. "In the quarter, we further optimized our portfolio with the disposition of three non-core properties for gross proceeds of $26.1 million and by entering into binding agreements for the sale of two non-core retail properties for gross proceeds of $7.0 million, scheduled to close in Q2 2024. This will increase our industrial segment exposure to 83.1% of total GLA, on a proforma basis.   "Our successful property sales in the first quarter also allowed us to reduce total debt year-over-year by $25.1 million to $493.6 million, bringing our Adjusted Debt to Gross Book Value* of 49.5% at quarter-end. For the remainder of 2024, mortgage maturities amount to $17.8 million and we expect to renew at market terms. "Leasing activities have been very positive. We have now renewed or replaced 55.6% of GLA maturing in 2024 at a positive average spread of 33.5% for the entire portfolio, including a robust 47.7% positive average spread for the industrial sector. We are also pleased to have signed a 15-year lease with a new quality international tenant starting in February 2025 following the expiry of the current lease for a 128,000-square-foot property with annual rent steps and a base rent that is in excess of 30% over the expiring lease. "While our occupancy rate was strong at 97.7%, it was temporarily impacted by transitional vacancies in a few industrial properties which are experiencing strong leasing momentum. "Finally, we are pleased to have published our third Sustainability Report. As we adapt to evolving stakeholder expectations, we maintained our focus on sustainable business objectives and the implementation of additional best practices. We are proud of our achievements over the past year and are committed to continuing to improve as we move forward on our ESG journey. "With 2024 well underway, we will continue to focus on recycling capital and further increasing our footprint in the attractive industrial sector as the market stabilizes. We will pursue this strategy while managing our balance sheet and allocating capital prudently to the benefit of our unitholders and, ultimately, all our stakeholders," concluded Mr. Lawlor. * Measures followed by the suffix "*" in this press release are non-IFRS measures. See "Non-IFRS Measures". Financial ResultsTable 1- Financial Highlights (CAD $ thousands except unit, per unit amounts and unless otherwise stated) 3 MonthsEndedMarch 312024 3 MonthsEndedMarch 312023 Financial data Property revenue $        25,702 $        25,278 Net operating income (NOI)  $        14,822 $        14,540 Same Property NOI (1) $        14,522 $        13,477 Net income (loss) and comprehensive income (loss) $        (9,452) $        13,048 Net income (loss) and comprehensive income (loss) per Unit - Basic (2) $      (0.1560) $        0.2057 Net income (loss) and comprehensive income (loss) per Unit - Diluted (2) $      (0.1549) $        0.2028 Total assets $   1,001,575 $   1,054,881 Total debt $      493,624 $      518,668 Total debt to total assets 49.3 % 49.2 % Adjusted Debt to Gross Book Value (1) 49.5 % 49.2 % Interest Coverage Ratio (1) 2.5x 2.7x Debt Service Coverage Ratio (1) 1.6x 1.6x Adjusted Debt to Annualized Adjusted EBITDA Ratio (1) 9.0x 9.6x Weighted average interest rate on mortgage debt 3.89 % 3.70 % Net cash flows provided from operating activities $          9,743 $        10,582 Funds from Operations (FFO) (1) $          7,722 $          4,948 Basic FFO per unit (1)(2) $        0.1274 $        0.0819 Diluted FFO per unit (1)(2) $        0.1266 $        0.0805 Adjusted Funds from Operations (AFFO) (1) $          7,441 $          7,814 Basic AFFO per unit (1)(2) $        0.1228 $        0.1293 Diluted AFFO per unit (1)(2) $        0.1220 $        0.1271 AFFO Payout Ratio – Basic (1) 91.6 % 87.0 % AFFO Payout Ratio – Diluted (1) 92.2 % 88.5 % (1) Represents a non-IFRS measure. See "Non-IFRS Measures". (2) Total basic units consist of trust units of the REIT and Class B LP Units (as defined herein). Total diluted units also includes deferred trust units and restricted trust units issued under the REIT's long-term incentive plan. At March 31, 2024, PROREIT owned 120 investment properties (including a 50% ownership interest in 42 investment properties), compared to 130 investment properties (including a 50% ownership interest in 42 investment properties) at March 31, 2023. The decrease in total properties is a result of the sale of a 100% interest in ten investment properties during the twelve months ended March 31, 2024. At March 31, 2024, total assets amounted to $1.00 billion, compared to $1.05 billion as at March 31, 2023. For the first quarter ended March 31, 2024: Property revenue amounted to $25.7 million in Q1 2024, an increase of $0.4 million or 1.7%, compared to $25.3 million for the same prior year period. The increase was mainly due to contractual increases in rent and higher rental rates on lease renewals and new leases, offset by the decrease in the number of properties in the portfolio. Net operating income (NOI) amounted to $14.8 million for the quarter, compared to $14.5 million in Q1 2023, an increase of $0.3 million or 1.9%, which was mainly driven by the same factors impacting property revenue described above. Same Property NOI*, which represented all 120 properties in the portfolio, reached $14.5 million for the quarter, an increase of $1.0 million or 7.8%, compared to the same quarter last year. The increase was largely a result of contractual increases in rent and higher rental rates on lease renewals and new leases across all asset classes, along with higher occupancy rates in the office asset class, offset by the slight decrease in occupancy in the industrial asset class. Net cash flows provided from operating activities for the quarter was $9.7 million, compared to $10.6 million for Q1 2023. AFFO* totaled $7.4 million for the quarter, down slightly from $7.8 million for Q1 2023. AFFO Payout Ratio – Basic* stood at 91.6% for the quarter, compared to 87.0% for Q1 2023, the increase was primarily driven by the reduction in the number of properties owned and higher interest expense and leasing costs, partially offset by contractual increases in rent and higher rental rates on lease renewals. TABLE 2- Reconciliation of net operating income to net income and comprehensive income (CAD $ thousands) 3 Months Ended March 31 2024 3 Months Ended March 31 2023 Net operating income 14,822 14,540 General and administrative expenses 1,385 3,518 Long-term incentive plan expense 1,358 581 Depreciation of property and equipment 148 105 Amortization of intangible assets 61 93 Interest and financing costs 5,793 5,131 Distributions - Class B LP Units 152 157 Fair value adjustment - Class B LP Units 975 (28) Fair value adjustment - investment properties 13,275 (7,651) Fair value adjustment - derivative financial instrument 1,505 – Other income (1,034) (835) Other expenses 478