REOT-2015 Annual Report_FINAL Digital

Click here to load reader

  • date post

    14-Apr-2017
  • Category

    Documents

  • view

    26
  • download

    0

Embed Size (px)

Transcript of REOT-2015 Annual Report_FINAL Digital

  • Centurion REOT 2015 Annual Report | Page 1

    CENTURION REAL ESTATE OPPORTUNITIES TRUST

    2015 Annual Report | Managements Discussion and Analysis

    For the twelve months ended December 31, 2015

  • Centurion REOT 2015 Annual Report | Page 2

    PROFILE Centurion Real Estate Opportunities Trust (the REOT or Trust) is an income-producing, investment trust made up of a diversified portfolio of mortgage investments and growth oriented real estate investments.

    2015 HIGHLIGHTS

    Increased net assets from $78.3 million to $130.1 million.

    Committed funds of $176.7 million in 42 investments (38 funded).

    Investments include a diverse portfolio of 1st mortgages, 2nd mortgages, joint ventures and participating equity investments across 5 provinces.

    Internalized asset management.

    Class A 7.20% compounded return Class F 8.21% compounded return Class I 10.07% compounded return

    (annualized)*

    *Actual return from October - December 2015 is 1.61%

    OBJECTIVES

    Provide investors with cash distributions, payable monthly with the opportunity for long-term growth and a focus on preservation of capital.

    Maximize Unit value through the active management of the Portfolio.

    Leverage the strategic relationships within Centurion Asset Management Inc.s network to increase investment opportunities and manage risk.

  • Centurion REOT 2015 Annual Report | Page 3

    FINANCIAL HIGHLIGHTS

    Notes

    Page 35Page 35Page 35page 35

    2015

    $131,522,482

    $102,089,729

    $15,121,406

    $9,423,713

    $1,137,612

    85.57% $50,300,000

    $0.83 $0.92 $1.41 $1.53

    10,096,391

    7.20%8.21%

    10.07%

    $10.044

    2014 (1)

    $81,639,042

    $73,947,326

    $3,443,112

    $2,130,411

    $-

    82.78% $37,500,000

    $0.29 See Note 2See Note 2See Note 2

    6,187,027

    7.38%9.21%

    -

    $10.000

    Note:(1) For the period August 14, 2014 to December 31, 2014(2) Comparative figures not provided as the Trust was formed on August 14, 2014. (3) 2014 Returns have been annualized.

    Portfolio Performance

    Total Assets

    Mortgage Investments

    Equity Accounted Investments

    Interest Income

    Income from Equity Accounted Investments

    EBITDA RatioFuture Commitments to Be Funded

    Net Income and Comprehensive Income Per Unit FFO Per Unit (2)

    NFFO Per Unit (2) PFFO Per Unit (2)

    Weighted Average Number of Units

    Total Annual ReturnClass A (3)

    Class F (3)

    Class I

    Closing Price of Units

  • Centurion REOT 2015 Annual Report | Page 4

    PORTFOLIO

    DIVERSIFICATION

    BRITISH COLUMBIA (6) | 16.32%

    ALBERTA (6) | 19.31%

    SASKATCHEWAN (1) | 5.20%

    MANITOBA (1) | 7.59%

    ONTARIO (24) | 51.58%

    *Funded investments as at December 31, 2015.

    38 INVESTMENTS*

  • Centurion REOT 2015 Annual Report | Page 5

    EXECUTIVE MANAGEMENT

    AND BOARD OF TRUSTEESMartin Bernholtz Independent Trustee, Chairman

    Charles Dillingham Independent Trustee

    Ken Miller Independent Trustee, Chairman of the Investment Committee

    Peter Smith Independent Trustee

    Gregory Romundt President, Trustee

    Robert Orr Chief Financial Officer & Chief Compliance Officer, Trustee

    Stephen Stewart Vice President, Mortgage Investments and Joint Ventures, Trustee

    R RespectI IntegrityS SimplicityE Excellence

  • Centurion REOT 2015 Annual Report | Page 6

    LETTER FROM

    THE PRESIDENT2015 was a very active and exciting year for the Trust; its first full year of operation. In just over sixteen months since the launch of the Trust in September 2014, net assets have grown to $130.1 million; a significant achievement.

    Though the economy was weak in 2015, we

    saw a significant demand from developers and other borrowers looking for various financing alternatives. We actively managed the risk profile of the portfolio which remained focused on the overall investment objectives.

    The Trusts current investment portfolio represents a diverse mix of first mortgages, second mortgages, joint ventures and participating debt and equity investments with committed funds of $176.7 million as at December 31, 2015 in five Canadian provinces. Our exposure in Alberta represents 19.31% of the funded investments and we are pleased that to date we have not incurred any impairment on these investments.

    The investment portfolio has weighted average interest rate of 10.13% and a weighted average contractual term of maturity of 1.10 years as at December 31, 2015 which is line with our investment objectives.

    Several of the mortgage investments in the portfolio have participating features, which provide the Trust with the potential for significant upside. 32.02% of the investments have participating features and we expect some of the first exits on participating investments to occur in 2016.

    We made, and continue to make, a focused effort to expand our distribution network and investment

    channels. This will ensure that we are able to continue to raise capital for lending opportunities. During the year we raised $49.13 million, net of issuance costs, which we see as excellent progress.

    Centurion Apartment Real Estate Investment Trust is the holder of the Class R units and its ownership decreased from 90.72% as at December 31, 2014 to 62.04% during the year ended December 31, 2015 but increased from $71,537,925 to $81,123,259 in absolute terms. We expect the REITs ownership to continue to decline to approximately 50% in the coming year.

    The distributions declared to investors were $7.5 million. The majority of the Trusts investors have chosen the distribution reinvestment option.

    From an administrative perspective we grew the team during the year by adding a number of qualified individuals to our roster. This growth will allow us to enter into different market segments, expand our reach and broaden the portfolio. In addition, the asset and property management functions were internalized in 2015 which we believe will provide significant benefits to the Trust in the years to come with lower administrative expenses. The Trust achieved an operating margin of 85.57% which we are very pleased with.

    The outlook for 2016 continues to look positive even considering the outlook for continued economic instability particularly in the oil producing provinces.

    Our deal pipeline is robust with over $60 million of prospective deals in the pipeline.

    Greg RomundtPresident and Trustee

  • Centurion REOT 2015 Annual Report | Page 7

    2015: MANAGEMENTS

    DISCUSSON AND ANALYSIS

    TABLE OF CONTENTSForward-Looking Statements ............................................................................................. 8Centurion Real Estate Opportunities Trust ....................................................................... 10Declaration of Trust ......................................................................................................... 10Investment Guidelines .................................................................................................... 11Operating Policies ........................................................................................................... 14Investment Committee ................................................................................................... 16Accounting Policies ......................................................................................................... 18Non-IFRS Measures ......................................................................................................... 19History of Centurion Real Estate Opportunities Trust ...................................................... 21Founding Transaction Acquisition of Initial Portfolio ..................................................... 22Investment Strategy ........................................................................................................ 23Targeted Investments ....................................................................................................... 24Warehouse Agreement ................................................................................................... 27Outlook & Business Strategy ............................................................................................ 29Centurion Real Estate Opportunities Trust Organizational Structure .............................. 312015 Operating Results ................................................................................................... 32Key Portfolio Metrics ....................................................................................................... 33FFO, NFFO & PFFO .................................................................................................. 35Portfolio Summary .......................................................................................................... 36Issued and Outstanding Number of Units ........................................................................ 37Distributions .................................................................................................................... 37Tax Treatment of Distributions ...................................................................................... 38Operating Facilities & Liquidity Management .................................................................. 38Capital Raising Activity .................................................................................................... 38Use of Proceeds ..........................................................................................................