Adventus Realty Trust Provides Leasing and COVID-19 Business Update

February 14, 2022

Adventus Realty Trust by its Trustee, Adventus Realty Services Inc. (the “Trust” or the “Company”) announces an update on the impact of the novel coronavirus (COVID-19) pandemic on its business.

Leasing Update

Leasing efforts throughout COVID-19 have been challenging. Leasing activity in late 2019 and early 2020 was strong with most, if not all, new leasing activity (meaning New Tenants) coming to a complete halt once COVID-19 began. New leasing for the first twelve months of COVID-19, starting in 2020, was down by 65%–75%. Renewal tenant leasing during this timeframe increased as tenants decided to stay in existing premises; however most renewals were for one to three year terms as opposed to the more traditional five to seven year terms. Larger tenants have been taking longer to assess space needs and are only now starting to establish going forward space requirements, resulting in lower leasing volume during COVID-19.

The Trust took advantage of the slowdown in the market during COVID-19 to ensure that our buildings were updated to maximize leasing activity once the market improved. During COVID-19 we upgraded the following:

  • 4 building lobbies;
  • 2 fitness centers;
  • 2 conference centers; and
  • 3 food amenities.

These upgrades were completed in buildings with our most significant leasing exposure. We have already received positive feedback from prospective tenants. As a result of our efforts, we are well positioned in our markets.

The Trust is pleased to report the completion of 42 leases for a total of 399,345 square feet of leasing in 2021, with most of this activity occurring in the last half of the year. Although 399,345 square feet of leasing is approximately 8% below our 2021 budget of 433,000 square feet, we consider this to be a very successful year, as our 2021 budget was based on non-COVID-19 leasing expectations. This is a great result in the midst of the COVID-19 pandemic. Twenty-seven of these 2021 transactions were new tenant leases totaling 127,000 square feet, which demonstrates the success of our Rent Ready Suite leasing strategy which utilizes smaller vacancies that are improved to a ‘rent ready’ state where a tenant can occupy space with no waiting period for build out.

In addition to our successful 2021 leasing campaign, we have the following leasing activity as at February 2022 to report:

  • 1 lease that is currently under negotiation for approximately 11,000 square feet;
  • 36 proposals that have been presented for approximately 356,000 square feet; and
  • 26 property tours for approximately 555,000 square feet.

COVID-19 in general and most recently the Omicron variant have had a distinct negative impact on our leasing efforts throughout the past two years. Leasing activity however, increased significantly during the last half of 2021 and the start of 2022 with higher-than-average proposals and tours as well. The Trust is anticipating a strong year of leasing in 2022 due to our capital improvements, the Rent Ready Suite program, and increased market activity.

Rent Collections

Rent Collections have remained strong (99% average) throughout the portfolio during COVID and are currently at 99%.

US Unemployment Rates During COVID-19

The following table reflects the impact of COVID-19 on US employment in selected months, with February 2020 being used as a base rate before COVID‑19, April 2020 as the high point of US monthly unemployment rates to date during COVID-19, and August 2020 reflecting the first significant downward monthly movement in unemployment rates as US businesses have re-opened.

During COVID-19, and commencing August 2020, US job growth has been driven by re-hiring in sectors that had been hit hard by the pandemic such as: leisure and hospitality; restaurants, bars and other food and drink services; retail; and, gambling and recreation. The job improvements correlate with surveys showing consumer confidence, manufacturing and services industries stabilizing. Businesses have been reopening after shuttering in mid-March 2020 to slow the spread of COVID-19.

The significant employment gains reflected in Q3 2021 have continued to improve at a slower pace since August 2020; Atlanta’s unemployment rates continue to improve on a monthly basis at a much quicker rate than the U.S. or Chicago’s rates. It is important to note that Chicago’s unemployment rate has been above the U.S. rate for each month since April 2020. By December 2021, US unemployment rates have almost recovered to pre-pandemic levels on average, with Chicago lagging behind and Atlanta moving below pre-pandemic unemployment levels.

We will continue to monitor these monthly US unemployment rates and will provide additional communication as significant changes occur.

February

2020

April

2020

August

2020

August

2021

December

2021

Unemployment rate - UNITED STATES

3.5%

14.7%

8.4%

5.2%

3.9%

Unemployment rate - ILLINOIS
(mainly Chicago)

3.5%

17.2%

11.0%

7.0%

5.3%

Unemployment rate - GEORGIA
(mainly Atlanta)

3.1%

12.6%

5.6%

3.5%

2.6%

 

Source:  United States Department of Labor

We are also providing the Canadian unemployment rates for Canada and its 4 largest provinces for selected months. You will note that the trend of Canadian unemployment rates has been very comparable to the US throughout the COVID-19 pandemic.

 

February

2020

April

2020

August

2020

August

2021

December

2021

Unemployment rate – CANADA

5.7%

13.1%

10.2%

7.1%

5.9%

Unemployment rate – ONTARIO

5.5%

11.3%

10.6%

7.6%

6.0%

Unemployment rate – QUEBEC

4.5%

17.6%

8.8%

5.8%

4.6%

Unemployment rate – BRITISH COLUMBIA

5.1%

11.5%

10.7%

6.2%

5.3%

Unemployment rate – ALBERTA

7.5%

13.4%

12.2%

7.9%

7.3%

 

Source:  Statistics Canada

About Adventus

Adventus is a Canadian based private Real Estate Investment Trust (REIT) and is focused on US income producing commercial real estate, in the suburban office markets of Chicago, Illinois and Atlanta, Georgia. For more information on Adventus, including our team, corporate strategy, photo gallery, details of our portfolio and press releases, we invite you to visit our website at www.adventusrealty.com.

Cautionary Statements Regarding Forward-Looking Statements

This press release may contain forward-looking statements with respect to the REIT and its operations, strategy, financial performance and financial condition, as well as with respect to the previously disclosed acquisitions and future acquisitions of properties. These statements generally can be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “plan”, “forecast”, “expect”, “intend”, “would”, “could”, “if”, “may” and similar expressions. The actual results and performance of the REIT and the acquisitions discussed herein could differ materially from those expressed or implied by such statements. Accordingly, readers should not place undue reliance on forward-looking statements. These cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, changes in interest rates, competition and changes in securities or other laws or regulations or the application thereof. The cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf.

Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. Except as required by applicable law, the REIT specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

 

ADVENTUS REALTY TRUST          
By its Trustee: ADVENTUS REALTY SERVICES INC.

Per: Rodney B. Johnston, FCPA, FCA           
President and Chief Executive Officer

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