Artis Real Estate Investment Trust (AX-UN) Q2 2024 earnings summary

Executive summary

• Focused on strengthening the balance sheet, enhancing liquidity, and reducing debt to gross book value to 49.8% from 51.3% sequentially amid real estate sector challenges.

• Continued execution of asset sales, refinancing, and new mortgage financing to meet leverage and liquidity targets, with $1.1 billion in asset sales or agreements since the strategic review began.

• Strategic review process ongoing to unlock and maximize unitholder value, with BMO Nesbitt Burns as advisor.

• Value investing strategy drives NAV per unit growth, with a diversified portfolio and a focus on NAV per unit growth.

• Insiders own or control over 35% of outstanding units, aligning interests with unitholders.

Financial highlights

• Sold CAD 651.6 million of real estate in 2024, with additional unconditional sale agreements for CAD 371.2 million scheduled to close.

• Q2 2024 revenue was $84.7 million, up 0.5% year-over-year; net operating income rose 2.2% to $47.9 million.

• Net asset value per unit at June 30 was CAD 14.11, up from $14.06 sequentially.

• Debt to Gross Book Value decreased to 49.8% at June 30, down from 50.9% at December 31.

• FFO per unit (diluted) increased 3.8% year-over-year to $0.27; AFFO per unit (diluted) rose 6.7% to $0.16.

Outlook and guidance

• Proceeds from asset sales will be used to further reduce leverage toward a target below 45%.

• No anticipated difficulty in managing remaining 2024 mortgage maturities.

• Strategic review process updates expected within the next one or two quarters.

• Focus will shift to growth opportunities aligned with maintaining distributions and growing NAV per unit.

• Objectives include enhancing unitholder value and building a best-in-class real estate entity.