Artis refocusing on industrial
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Hey there, time traveller!
This article was published 08/08/2020 (1866 days ago), so information in it may no longer be current.
In an understatement, Armin Martens said the COVID-19 pandemic was a “serious distraction.”
But the CEO of Winnipeg-based Artis REIT, said he thinks that distraction is mostly behind them.
The real estate company that owns 216 properties in Canada and the U.S. valued at about $5.4 billion, has weathered the storm well and Martens said it feels like they are going downhill now.
In an analysts call on the release of its second-quarter results on Friday, Martens said.
“It was a good quarter and we feel we will end the year well and next year will be even better.”
When the company began, Artis was focused on Alberta properties and that remained the case perhaps a bit too long, but lots of heavy lifting over the last three years has reduced its exposure to the Alberta market from 36 per cent of its total portfolio down to 16 per cent at the end of the second quarter and specifically in Calgary from 15 per cent down to two per cent.
The company is now looking to reset with a focus on industrial properties which is up from 23 per cent to 35 per cent in the past three years and climbing.
The company is targeting by the end of next year to be at 10 per cent retail, 50 per cent industrial and 40 per cent office.
Its current asset class weighting is 47.5 per cent office, 17.2 per cent retail and 35.3 per cent industrial.
Artis has not participated in the Canada Emergency Commercial Rent Assistance but reported solid rent collection in the quarter. At the end of July it had collected 93.1 per cent of rent charges but that includes some rent deferral arrangements. On its retail portfolio it collected about 88.8 per cent of rent charges, excluding deferred rent, for the three months ended June 30, which rose to 93.3 per cent by the end of July.
The pandemic has paused the major real estate asset market for transactions, but Martens said the company is well on pace to dispose of about $400 million worth of properties in the next 12 months including $200 million by the end of this year.
One of the company’s biggest development projects is the $165-million 40-storey mixed-used residential tower at 300 Main St. Work has continued on that project.
Artis reported a two per cent decline in same property net operating income, a key metric for REITs, for the second quarter but that includes retaining $3 million as a bad debt provision.
Not counting that, it would have increased 1.2 per cent for the second quarter of 2020, which represents the eighth consecutive quarter of same property NOI growth.
martin.cash@freepress.mb.ca