InterRent REIT Reports Results for the Second Quarter of 2018
August 14 2018 - 8:05AM
InterRent Real Estate Investment Trust (TSX-IIP.UN)
(“
InterRent” or the “
REIT”) today
reported financial results for the second quarter ended June 30,
2018.
Highlights
- Gross rental revenue for the quarter increased by $4.5 million,
or 17.1%, over Q2 2017.
- Average monthly rent per suite for the entire portfolio
increased to $1,148 (June 2018) from $1,079 (June 2017), an
increase of 6.4%. The same property portfolio increased to
$1,143 (June 2018) from $1,069 (June 2017), an increase of
6.9%.
- Occupancy for the overall portfolio was 94.0%, a decrease of
170 basis points (June 2018 compared to June 2017). Occupancy
for the same property portfolio was 95.1%, a decrease of 50 basis
points (June 2018 compared to June 2017).
- Net Operating Income (NOI) for the quarter was $20.0 million,
an increase of $4.0 million, or 25.1%, over Q2 2017. NOI
margin for the quarter was 64.7%, up 410 basis points over Q2
2017.
- Same property NOI for the quarter was $16.9 million, an
increase of $2.0 million, or 13.5%, over Q2 2017. Same
property NOI margin for the quarter was 65.5%, up 390 basis points
over Q2 2017.
- Fair value gain on investment properties in the quarter of
$52.0 million was driven by property level operating improvements
as well as a reduction in the overall weighted average
capitalization rate to 4.46% from 4.50% at Q1 2018.
- Net income for the quarter was $56.6 million, compared to $39.2
million for Q2 2017. The increase of $17.4 million was driven
primarily by rental growth as well as the fair value gain on
investment properties.
- Funds from Operations (FFO) increased by $2.6 million, or
30.8%, for the quarter. Fully diluted FFO per unit increased
by 11.0%, from $0.100 per unit to $0.111 per unit.
- Adjusted Funds from Operations (AFFO) increased by $2.0
million, or 27.5%, for the quarter. Fully diluted AFFO per
unit increased by 8.0% from $0.088 per unit to $0.095 per
unit.
- Adjusted Cash Flow from Operations (ACFO) increased by $0.2
million, or 1.9%, to $8.4 million for the quarter.
- Debt to GBV at quarter end was 43.5%, a decrease of 430 basis
points from December 2017.
- Purchased 62 suites in one of our key growth markets of
Hamilton for a purchase price of $10.5 million
- Subsequent to the quarter end, on August 9, 2018, the REIT
completed a public offering of 10,798,500 trust units from
treasury, at a price of $10.65 per Unit for gross proceeds of
$115.0 million.
Financial Highlights
Selected Consolidated Information In $000’s,
except per Unit amounts and other non-financial data |
3 Months EndedJune 30,
2018 |
3 Months EndedJune 30,
2017 |
Change |
Total suites |
|
9,021 |
|
8,282 |
+8.9% |
Average rent per suite (March) |
$1,148 |
$1,079 |
+6.4% |
Occupancy rate (March) |
|
94.0% |
|
95.7% |
-170bps |
Operating revenues |
$30,914 |
$26,361 |
+17.3% |
Net operating income (NOI) |
$19,994 |
$15,978 |
+25.1% |
NOI % |
|
64.7% |
|
60.6% |
+410bps |
Same property average rent per suite (March) |
$1,143 |
$1,069 |
+6.9% |
Same property occupancy rate (March) |
|
95.1% |
|
95.6% |
-50bps |
Same property NOI |
$16,942 |
$14,928 |
+13.5% |
Same property NOI % |
|
65.5% |
|
61.6% |
+390bps |
Net Income/(loss) |
$56,612 |
$39,231 |
+44.3% |
Funds from Operations (FFO) |
$10,917 |
$8,344 |
+30.8% |
FFO per weighted average unit – diluted |
$0.111 |
$0.100 |
+11.0% |
Adjusted Funds from Operations (AFFO) |
$9,406 |
$7,380 |
+27.5% |
AFFO per weighted average unit – diluted |
$0.095 |
$0.088 |
+8.0% |
Distributions per unit |
$0.0675 |
$0.0608 |
+11.0% |
Adjusted Cash Flow from Operations (ACFO) |
$8,396 |
$8,242 |
+1.9% |
Debt to GBV |
|
43.5% |
|
49.5% |
-600bps |
Interest coverage (rolling 12 months) |
2.81x |
2.61x |
+0.20x |
Debt service coverage (rolling 12 months) |
1.80x |
1.64x |
+0.16x |
Gross rental revenue for the quarter was $30.9
million, an increase of $4.5 million, or 17.1%, compared to Q2
2017. Operating revenue for the quarter was up $4.6 million to
$30.9 million, or 17.3% compared to Q2 2017. The average
monthly rent across the portfolio for June 2018 increased to $1,148
per suite from $1,079 (June 2017), an increase of 6.4%. The
June 2018 vacancy rate across the entire portfolio was 6.0%, an
increase from 4.3% recorded in June 2017. “Continued strong
demand in our key growth markets has led to significant rental
growth, NOI improvements and FFO/AFFO per Unit growth. Strong
demand also continued for multifamily assets which has resulted in
further cap rate compression in core markets across Ontario and
Quebec,” said Mike McGahan, CEO.
Overall Vacancy is up from the 4.3% recorded in
June of 2017 and from the 3.3% recorded in March of 2018.
Given the strong demand and growth in market rents, the REIT has
been actively managing asking rents to try and achieve as much of
the upside as possible. With turnover in the coming years
expected to be lower than normal, the REIT believes that we must
capture maximum rent on turnover at this time.
On a same property portfolio basis (same
properties are income properties owned by the REIT throughout the
comparative periods), the average monthly rent per suite increased
from $1,069 (June 2017) to $1,143 (June 2018), an increase of
6.9%.
NOI for the quarter was $20.0 million, or 64.7%
of operating revenue, compared to $16.0 million, or 60.6% of
operating revenue, for the three months ended June 30, 2017.
NOI from the same property portfolio increased to $16.9
million for Q2 2018, an increase of $2.0 million, or 13.5%, over Q2
2017. Same property NOI margin for the quarter was 65.5%.
Net income for the quarter was $56.6 million,
compared to $39.2 million for Q2 2017. The increase of $17.4
million was driven primarily by the fair value gain on investment
properties as well as rental growth.
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, Same
Property results, FFO, AFFO, ACFO and EBITDA. These non-GAAP
measures are further defined and discussed in the MD&A dated
August 14, 2018, which should be read in conjunction with this
press release. Since Gross Rental Revenue, NOI, Same Property
results, FFO, AFFO, ACFO 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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