/NOT FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
OTTAWA,
ON, Feb. 29, 2024 /CNW/ - InterRent Real
Estate Investment Trust (TSX: IIP.UN) ("InterRent" or the
"REIT") today reported financial results for the fourth
quarter and the year ended December 31,
2023.
Fourth Quarter Highlights:
- Total and same-property portfolio occupancy rate of 97.0% for
December 2023, an improvement of 180
bps from September 2023, and 20 bps
compared to December 2022.
- Average Monthly Rent ("AMR") growth of 7.9% for the total
portfolio and 7.5% for the same property portfolio for December 2023, as compared to December 2022.
- For the three months ended December 31,
2023, same property proportionate Net Operating Income
("NOI") of $39.7 million, an increase
of $3.8 million, or 10.5%
year-over-year ("YoY"). Total portfolio proportionate NOI of
$40.6 million, an increase of
$4.0 million for the three months
ended December 31, 2023, or 11.1%
YoY.
- Same property NOI margin increased by 140 bps from December 2022 to reach 65.6% for the three months
ended December 31, 2023.
- Funds from Operations ("FFO") of $20.8
million for the three months ended December 31, 2023, an increase of 11.2% compared
to the same period last year. FFO per unit (diluted) of
$0.142, an increase of 10.1%
YoY.
- Adjusted Funds from Operations ("AFFO") of $18.1 million, reflecting an improvement of
13.1%. AFFO per unit (diluted) of $0.124, up 12.7% YoY.
- Lease-up at the REIT's first office conversion community, The
Slayte, exceeded 90% by the end of February
2024.
- Announced refreshed brand identity with new logo, brand
message, and new website: irent.com.
- Sold five properties in Côte-Saint-Luc, Quebec totalling 224 suites for
$46.0 million, or approximately
$205,000 per suite, above their IFRS
values. The transaction generated net cash proceeds of
approximately $22 million. Proceeds
have been used to reduce variable rate debt exposure which is
immediately accretive to the REIT.
- Subsequent to the quarter, successfully financed $183.5 million of maturing mortgages at an
average rate of 4.25% (maturing mortgages of $144.9 million at an average rate of 6.06%).
2023 Fiscal Year Highlights:
- Same property proportionate NOI reached $153.4 million for the 12 months ended
December 31, 2023, an increase of
$16.2 million, or 11.8% from
2022.
- For year ended December 31, 2023,
total portfolio proportionate NOI of $156.3
million, an increase of $17.8
million, or 12.9% YoY.
- Total portfolio and same property NOI margin of 65.6% for the
year, an improvement of 160 bps and 170 bps respectively.
- FFO of $80.6 million for the 12
months ended December 31, 2023
($0.551 per Unit – diluted) is up
4.8%, or 3.6% on a per-unit basis compared to 2022.
- AFFO of $70.4 million for the 12
months ended December 31, 2023
($0.482 per Unit – diluted) reflects
a YoY increase of 4.5%, or 3.4% on a per-unit basis.
- The REIT ended the year in a strong financial position, with
$252.2 million of available
liquidity, and Debt-to-Gross Book Value ("GBV") of 38.1%, a 20 bps
improvement compared to December 2022
of 38.3%.
- Achieved building certification for 10,174 suites through the
Certified Rental Building Program (CRBP), representing 73.2% of
total suites as of December
2023.
Brad Cutsey, President & CEO
of InterRent, commented on the results:
"2023 has been a year of building strength for InterRent. We
witnessed four consecutive quarters of double-digit NOI growth and
consistent NOI margin expansion. We ended the year with occupancy
reaching the optimal level at 97%, and annual FFO hitting
$80.6 million, our highest yet.
Progressing with our disposition program, we are further enhancing
our financial flexibility and are strategically positioned to
pursue external growth opportunities that complement our robust
organic growth. The brand refresh that we announced in the fourth
quarter was well-received, setting the stage for the next chapter
of our journey from a position of strength. I want to thank our
dedicated team, and all stakeholders for supporting us throughout
this transformative year. I look forward to the year ahead and am
excited about what we can achieve together."
Financial Highlights:
Selected
Consolidated Information In $000's, except per Unit
amounts
and other non-financial data
|
3
Months
Ended
December 31,
2023
|
3
Months
Ended
December 31,
2022
|
Change
|
12 Months
Ended
December 31,
2023
|
12 Months
Ended
December 31,
2022
|
Change
|
Total
suites
|
|
|
|
12,756(1)
|
12,610(1)
|
+1.2 %
|
Average rent per suite
(December)
|
|
|
|
$
1,596
|
$
1,479
|
+7.9 %
|
Occupancy rate
(December)
|
|
|
|
97.0 %
|
96.8 %
|
+20
bps
|
Proportionate operating
revenues
|
$
61,881
|
$
56,866
|
+8.8 %
|
$
238,180
|
$
216,454
|
+10.0 %
|
Proportionate net
operating income (NOI)
|
$
40,580
|
$
36,539
|
+11.1 %
|
$
156,260
|
$
138,463
|
+12.9 %
|
NOI %
|
65.6 %
|
64.3 %
|
+130
bps
|
65.6 %
|
64.0 %
|
+160
bps
|
Same Property average
rent per suite
(December)
|
|
|
|
$
1,585
|
$
1,474
|
+7.5 %
|
Same Property occupancy
rate
(December)
|
|
|
|
97.0 %
|
96.8 %
|
+20
bps
|
Same Property
proportionate operating
revenues
|
$
60,608
|
$
56,037
|
+8.2 %
|
$
233,809
|
$
214,576
|
+9.0 %
|
Same Property
proportionate NOI
|
$
39,748
|
$
35,962
|
+10.5 %
|
$
153,399
|
$
137,183
|
+11.8 %
|
Same Property NOI
%
|
65.6 %
|
64.2 %
|
+140
bps
|
65.6 %
|
63.9 %
|
+170
bps
|
Net Income
(Loss)
|
$
27,253
|
$
(100,950)
|
-127.0 %
|
$ 92,240
|
$
103,959
|
-11.3 %
|
Funds from Operations
(FFO)
|
$
20,773
|
$
18,677
|
+11.2 %
|
$ 80,602
|
$
76,933
|
+4.8 %
|
FFO per weighted
average unit - diluted
|
$
0.142
|
$
0.129
|
+10.1 %
|
$
0.551
|
$
0.532
|
+3.6 %
|
Adjusted Funds from
Operations (AFFO)
|
$
18,132
|
$
16,031
|
+13.1 %
|
$ 70,396
|
$
67,366
|
+4.5 %
|
AFFO per weighted
average unit-diluted
|
$
0.124
|
$
0.110
|
+12.7 %
|
$
0.482
|
$
0.466
|
+3.4 %
|
Distributions per
unit
|
$
0.0930
|
$
0.0885
|
+5.1 %
|
$
0.3630
|
$
0.3450
|
+5.2 %
|
Adjusted Cash Flow from
Operations
(ACFO)
|
$
30,617
|
$
24,872
|
+23.1 %
|
$ 76,853
|
$
78,446
|
-2.0 %
|
Debt-to-GBV
|
|
|
|
38.1 %
|
38.3 %
|
-20
bps
|
Interest coverage
(rolling 12 months)
|
|
|
|
2.29x
|
2.70x
|
-0.41x
|
Debt service coverage
(rolling 12 months)
|
|
|
|
1.54x
|
1.65x
|
-0.11x
|
(1)
|
Represents 12,088 (2022
- 12,003) suites fully owned by the REIT, 1,214 (2022 - 1,214)
suites owned 50% by the REIT, and 605 (2022 - nil) suites owned 10%
by the REIT.
|
Robust top-line growth with occupancy at optimal
level
Including properties that the REIT owns in its joint ventures,
InterRent owned or managed 13,907 suites at December 31, 2023.
On a proportionate basis, InterRent had ownership in 12,756 suites,
up 1.2% from 12,610 as of December
2022.
AMR growth across the total portfolio gained further momentum to
reach 7.9% as compared to December
2022, while same property AMR increased by 7.5% for the same
period. Rent growth is robust across all regional markets, with the
most significant increases in GTHA and Other Ontario, each
exceeding 8% in total and same property AMR growth.
December 2023 occupancy rate in
the REIT's same property and total portfolio both increased 20 bps
over December 2022 to 97.0%, in line
with the REIT's strategic target for optimal occupancy levels.
Compared to September 2023, occupancy
increased in all regional markets except the Great Vancouver Area,
which represented 4% of Q4 NOI. The change is primarily
attributable to planned maintenance and upgrades in recently
vacated suites with occupancy trending higher post the quarter.
The strong AMR growth and leasing demand have resulted in an
increase to total portfolio proportionate revenue of 10.0%
year over year and 9.0% for the proportionate same property
portfolio during the year. On an annual basis, NOI margin for the
same property and total portfolio improved by 170 bps and 160 bps
respectively to reach 65.6%. Proportionate Net Operating
Income for fiscal year 2023 reached $156.3
million for the total portfolio and $153.4 million for the same property portfolio,
an increase of 11.8% year over year.
Strong operating results drive bottom-line expansion
InterRent achieved FFO per Unit of $0.142 for the quarter and $0.551 for the fiscal year, an increase of 10.1%
and 3.6% respectively. AFFO per Unit reached $0.124 for Q4 and $0.482 for 2023, reflecting an increase of 12.7%
and 3.4% respectively.
Net income for the fourth quarter was $27.3 million, compared to a net loss of
$101.0 million in Q4 2022. This
improvement is primarily attributable to a modest fair value gain
on investment properties, driven by stabilized cap rates, compared
to a $107.7 million fair value losses
in the same period in 2022.
Fortified financial position with increased financial
flexibility
Financing costs in Q4 amounted to $15.6
million, or 25.1% of operating revenue, compared to
$13.9 million, or 24.5% of operating
revenue for the same quarter in 2022. This increase was driven by
rising interest rates and higher amount of outstanding mortgage
debt, both from growth in the portfolio as well as new mortgages
and successful up-financings. On an annual and proportionate basis,
financing costs amounted to $59.0
million or 24.9% of operating income in 2023, compared to
$46.4 million, or 21.5% of operating
income for 2022.
Weighted average cost of mortgage debt increased marginally from
September 2023 to 3.50%, and variable
rate exposure ended the quarter at 5%, in line with the prior
quarter and an increase from the same period last year at 3%.
Including credit facilities, the REIT's variable rate exposure as
of Q4 was 7%.
Debt-to-GBV ratio decreased 20 bps year over year and 50 bps
quarter over quarter and ended the year at 38.1%. With Debt-to-GBV
remaining at a healthy level and $252.2
million of available liquidity, the REIT remains in a solid
financial position to execute on its growth strategies.
Following the end of FY 2023, the REIT successfully completed
financing activities totalling $183.5
million on $144.9 million of
maturing debt. Net proceeds from mortgage financing and
dispositions further reduced the REIT's variable rate exposure,
including credit facilities, to less than 1%. Following these
transactions, the REIT has a weighted average interest rate of
mortgage debt of 3.37%.
Strategic dispositions of five non-core assets
During Q4 2023, InterRent committed to the sale of five non-core
properties, totalling 224 suites in Côte-Saint-Luc of the
Greater Montreal Area,
Quebec. The sale closed in
February 2024. Total sale price of
$46.0 million, or approximately
$205,000 per suite, is above the
REIT's IFRS values for the assets. Proceeds of the sale, net of
mortgages ($22.8 million at 4.52%),
commissions and closing costs, is approximately $22 million and have been used to reduce the
REIT's exposure to variable rate debt. The impact from the sale on
the REIT's Debt-to-GBV ratio is a reduction of approximately 10
basis points. The transaction is immediately accretive to the
REIT.
Making meaningful progress with Building Certification
Program
InterRent continued to expand its building certification program
during the quarter. Following the successful pilot program, where
six communities were certified with the Certified Rental Building
Program ("CRBP"), the REIT is thrilled to announce the
certification of an additional 140 communities in Ontario and 21 in Vancouver.
The building certification achievement represents a major
milestone for InterRent, with certification now attained for 100%
of its Vancouver portfolio and 99%
of its Ontario portfolio. This
achievement underscores the REIT's dedication to sustainable
practices across its communities, where 73.2% of total suites are
now certified.
As of the end of December 31,
2023, the REIT has completed all requirements to further
certify substantially all the rest of its portfolio with
certification confirmation expected in the next few months.
Explore InterRent's 2023 interactive Annual Report
InterRent released its interactive 2023 Annual Report and
encourages investors to explore it to gain a deeper understanding
of the REIT's operations and financial performance, and commitment
to sustainable growth. The interactive annual report can be
accessed from the REIT's investor relations website.
Conference Call & Webcast
Management will host a
webcast and conference call to discuss these results and current
business initiatives on Thursday, February
29, 2023 at 10:00 am EST. The
webcast will be accessible at:
https://www.irent.com/2023-q4-results. A replay will be available
for 7 days after the webcast at the same link. The telephone
numbers for the conference call are 1-800-717-1738 (toll free) and
(+1) 289-514-5100 (international). No access code required.
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 strategy is to expand its portfolio primarily
within markets that have exhibited stable market
vacancies, sufficient suites available to attain the critical mass
necessary to implement an efficient portfolio management structure,
and offer opportunities for accretive acquisitions.
InterRent's primary objectives are to use the proven industry
experience of the Trustees, Management and Operational Team to:
(i) to grow both funds from operations per Unit and net asset value
per Unit through investments in a diversified portfolio of
multi-residential properties; (ii) to provide Unitholders with
sustainable and growing cash distributions, payable monthly; and
(iii) to maintain a conservative payout ratio and balance
sheet.
*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, Repositioned Property results,
FFO, AFFO, ACFO and EBITDA. These non-GAAP measures are further
defined and discussed in the MD&A dated February 29, 2024, which should be read in
conjunction with this press release. Since Gross Rental Revenue,
NOI, Same Property results, Repositioned 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.
SOURCE InterRent Real Estate Investment Trust