InterRent REIT Reports Results for the Third Quarter of 2017 and a 11% Increase in the Monthly Distribution
November 14 2017 - 9:14AM
NOT FOR DISTRIBUTION TO UNITED STATES
NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED
STATES
InterRent Real Estate Investment Trust (TSX:IIP.UN)
(“
InterRent” or the “
REIT”) today
reported financial results for the third quarter ended September
30, 2017. With InterRent’s portfolio demonstrating strong
sustainable results and with the REIT applying its disciplined
approach to growing the portfolio, the Board of Trustees has
approved an 11.1% increase to the distribution. The
annualized distribution increases to $0.27 per unit from $0.243 per
unit. The increase will be effective for the November distribution
that is to be paid in December 2017.
Highlights
- Monthly distribution has been increased by 11.1% effective with
the November distribution that is to be paid in December
2017. The monthly distribution increases from $0.02025 to
$0.02250 per unit.
- Gross rental revenue for the quarter increased by $2.9 million,
or 11.5%, over Q3 2016.
- Gross rental revenue for the quarter from the stabilized
portfolio increased by $0.9 million, or 4.6%, over Q3 2016.
- Average monthly rent per suite for the entire portfolio
increased to $1,099 (September 2017) from $1,055 (September 2016),
an increase of 4.2%. The stabilized portfolio increased to
$1,110 (September 2017) from $1,059 (September 2016), an increase
of 4.8%.
- Occupancy for the overall portfolio was 97.3%, an increase of
310 basis points (September 2017 compared to September 2016).
Occupancy for the stabilized portfolio was 97.6%, an increase of
140 basis points (September 2017 compared to September 2016).
- Net Operating Income (NOI) for the quarter was $17.5 million,
an increase of $2.8 million, or 19.4%, over Q3 2016. NOI
margin for the quarter was 63.0%, up 210 basis points over Q3
2016.
- Stabilized NOI for the quarter was $14.0 million, an increase
of $1.4 million, or 11.2%, over Q3 2016. Stabilized NOI
margin for the quarter was 66.1%, up 290 basis points over Q3
2016.
- Fair value gain on investment properties in the quarter of
$101.5 million was driven by property level operating improvements
as well as a reduction in the overall weighted average
capitalization rate to 4.57% from 4.85% at Q2 2017.
- Net income for the quarter was $111.1 million, an increase of
$99.2 million compared to Q3 2016. The increase was driven
primarily by the fair value gain on investment properties as well
as rental growth and occupancy improvements.
- FFO increased by $2.5 million, or 33.8%, for the quarter.
Fully diluted FFO per unit increased by 15.7%, from $0.102 per unit
to $0.118 per unit.
- AFFO increased by $2.3 million, or 34.9%, for the
quarter. Fully diluted AFFO per unit increased by 16.5% from
$0.091 per unit to $0.106 per unit.
- Debt to GBV at quarter end was 48.5%, a decrease of 680 basis
points from December 2016.
- Purchased 323 suites in our key growth markets of Montreal and
Hamilton for a total purchase price of $65 million.
Financial Highlights
|
|
|
|
Selected Consolidated Information In $000’s,
except per Unit amounts and other non-financial data |
3 Months EndedSeptember 30,
2017 |
3 Months EndedSeptember 30,
2016 |
Change |
Total suites |
8,605 |
8,059 |
+6.8% |
Average rent per suite (September) |
$1,099 |
$1,055 |
+4.2% |
Occupancy rate (September) |
97.3% |
94.2% |
+310bps |
Operating revenues |
$27,800 |
$24,099 |
+15.4% |
Net operating income (NOI) |
$17,526 |
$14,677 |
+19.4% |
NOI % |
63.0% |
60.9% |
+210bps |
Stabilized average rent per suite (September) |
$1,110 |
$1,059 |
+4.8% |
Stabilized occupancy rate (September) |
97.6% |
96.2% |
+140bps |
Stabilized NOI |
$14,040 |
$12,629 |
+11.2% |
Stabilized NOI % |
66.1% |
63.2% |
+290bps |
Net Income |
$111,112 |
$11,905 |
833.3% |
Funds from Operations (FFO) |
$9,891 |
$7,393 |
+33.8% |
FFO per weighted average unit - basic |
$0.118 |
$0.103 |
+14.6% |
FFO per weighted average unit - diluted |
$0.118 |
$0.102 |
+15.7% |
Adjusted Funds from Operations (AFFO) |
$8,878 |
$6,582 |
+34.9% |
AFFO per weighted average unit - basic |
$0.106 |
$0.091 |
+16.5% |
AFFO per weighted average unit - diluted |
$0.106 |
$0.091 |
+16.5% |
Cash distributions per unit |
$0.0608 |
$0.0578 |
+5.2% |
AFFO payout ratio |
57.1% |
62.7% |
-560bps |
Debt to GBV |
48.5% |
54.9% |
-640bps |
Interest coverage (rolling 12 months) |
2.71x |
2.52x |
+0.19x |
Debt service coverage (rolling 12 months) |
1.71x |
1.54x |
+0.17x |
|
|
|
|
Gross rental revenue for the quarter was $27.6
million, an increase of $2.9 million, or 11.5%, compared to Q2
2017. Operating revenue for the quarter was up $3.7 million to
$27.8 million, or 15.4% compared to Q2 2017. The average
monthly rent across the portfolio for September 2017 increased to
$1,099 per suite from $1,055 (September 2016), an increase of
4.2%. The September 2017 vacancy rate across the entire
portfolio was 2.7%, a decrease from 5.8% recorded in September
2016. The 2.7% was comprised of 2.4% for stabilized
properties and 3.5% for un-stabilized. “Growing demand in our
key growth markets has allowed us to continue driving rents and
improve occupancy levels, resulting in significant improvements to
operating performance and FFO/AFFO per Unit. These
improvements combined with continued strong demand for multifamily
assets have resulted in further cap rate compression in core
markets across Ontario and Quebec,” said Mike McGahan, CEO.
On a stabilized portfolio basis (stabilized
properties are income properties owned by the REIT continuously for
24 months), the average monthly rent per suite increased from
$1,059 (September 2016) to $1,110 (September 2017), an increase of
4.8%. Management expects to continue to grow revenues organically
through moving to market rent on suite turnovers, guideline
increases, continued roll-out of AGIs, as well as continuing to
drive other ancillary revenue streams.
NOI for the quarter was $17.5 million, or 63.0%
of operating revenue, compared to $14.7 million, or 60.9% of
operating revenue, for the three months ended September 30, 2016.
NOI from the stabilized portfolio increased to $14.0 million
for Q3 2017, an increase of $1.4 million, or 11.2%, over Q3
2016. Stabilized NOI margin for the quarter was 66.1%.
Net Income for the quarter was $111.1 million,
compared to $11.9 million for Q3 2016. The increase of $99.1
million was as a result of continued operating performance
improvements as well as a reduction of 28 basis points in the
overall weighted average capitalization rate of the investment
properties.
About InterRent
InterRent REIT is a growth-oriented real
estate investment trust engaged in increasing Unitholder value and
creating a growing and sustainable distribution through the
acquisition and ownership of multi-residential
properties.
InterRent's primary objective is to use the
proven industry experience of the Trustees, Management and
Operational Team to: (i) provide Unitholders with stable and
growing cash distributions from investments in a diversified
portfolio of multi-residential properties; (ii) enhance the
value of the assets and maximize long-term Unit value through
the active management of such assets; and (iii) expand
the asset base and increase Distributable Income through
accretive acquisitions.
*Non-GAAP Measures
InterRent prepares and releases unaudited
quarterly and audited consolidated annual financial statements
prepared in accordance with IFRS (GAAP). In this and other earnings
releases, as a complement to results provided in accordance with
GAAP, InterRent also discloses and discusses certain non-GAAP
financial measures, including Gross Rental Revenue, NOI, Stabilized
properties, FFO, AFFO and EBITDA. These non-GAAP measures are
further defined and discussed in the MD&A dated November 14,
2017, which should be read in conjunction with this press release.
Since Gross Rental Revenue, NOI, Stabilized properties, FFO, AFFO
and EBITDA are not determined by GAAP, they may not be comparable
to similar measures reported by other issuers. InterRent has
presented such non-GAAP measures as Management believes these
measures are relevant measures of the ability of InterRent to earn
and distribute cash returns to Unitholders and to evaluate
InterRent's performance. These non-GAAP measures should not
be construed as alternatives to net income (loss) or cash flow from
operating activities determined in accordance with GAAP as an
indicator of InterRent's performance.
Cautionary Statements
The comments and highlights herein should be
read in conjunction with the most recently filed annual information
form as well as our consolidated financial statements and
management’s discussion and analysis for the same period.
InterRent’s publicly filed information is located at
www.sedar.com.
This news release contains “forward-looking
statements” within the meaning applicable to Canadian securities
legislation. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such as
“plans”, “anticipated”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate”, or “believes”,
or variations of such words and phrases or state that certain
actions, events or results “may”, “could”, “would”, “might” or
“will be taken”, “occur” or “be achieved”. InterRent is subject to
significant risks and uncertainties which may cause the actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward looking statements contained in this
release. A full description of these risk factors can be found in
InterRent’s most recently publicly filed information located at
www.sedar.com. InterRent cannot assure investors that actual
results will be consistent with these forward looking statements
and InterRent assumes no obligation to update or revise the forward
looking statements contained in this release to reflect actual
events or new circumstances.
The Toronto Stock Exchange has not reviewed and
does not accept responsibility for the adequacy or accuracy of this
release.
For further information about InterRent please
contact:
Mike McGahan |
Brad Cutsey, CFA |
Curt Millar, CPA,
CA |
Chief Executive
Officer |
President |
Chief Financial
Officer |
Tel: (613) 569-5699 Ext
244 |
Tel: (613) 569-5699 Ext
226 |
Tel: (613) 569-5699 Ext
233 |
Fax: (613)
569-5698 |
Fax: (613)
569-5698 |
Fax: (613)
569-5698 |
e-mail:
mmcgahan@interrentreit.com |
e-mail:
bcutsey@interrentreit.com |
e-mail:
cmillar@interrentreit.com |
web site: www.interrentreit.com
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