/NOT FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
WINNIPEG, MB, May 17, 2023
/CNW/ - Marwest Apartment Real Estate Investment Trust (the
"REIT") (TSXV: MAR.UN) reported financial results for the
three months ended March 31, 2023.
This press release should be read in conjunction with the
REIT's Unaudited Condensed Consolidated Interim Financial
Statements and Management's Discussion and Analysis ("Q1
2023 MD&A") for the three months ended March 31, 2023, which are available on the REIT's
website at www.marwestreit.com and
at www.sedar.com.
Mr. William Martens, Chief
Executive Officer and Trustee commented "Q1 2023 has exceeded
expectations, same property growth in net operating income ("NOI")
was over 17%, fueled by higher occupancy rates and achieving rental
rate increases year over year amid rising operating costs from the
current inflationary period. The affordability gap of owning
a home and renting continues to remain constant and with continued
immigration targets set by the Government of Canada we expect to see continued lower
vacancy rates for multi-family. Our fixed rate mortgages with
an average term to maturity of over six years has a positive impact
on the ability to provide stable returns for our Unitholders."
Q1 2023 Quarterly Highlights
- Reported funds from operations ("FFO") of $0.0171 per Unit for Q1 2023, compared to
$0.0167 for Q1 2022
- Reported adjusted funds from operations ("AFFO") of
$0.0165 per Unit for Q1 2023,
compared to $0.0143 for Q1 2022
- Reported Net Asset Value per Unit ("NAV") of
$1.47 at March
31, 2023 compared to $1.44 at
December 31, 2022
- Same Property Net Operating Income1 ("Same
Property NOI") increased by 17.03% in 2023 compared to the same
quarter 2022
- Average occupancy rate of 98.30% reported for the three months
ended March 31, 2023 compared to
94.78% in the same period 2022
- Weighted average months to debt maturity of 76.28 months
Operations Summary
|
|
|
|
Three months ended
March 31
|
Portfolio Operation
Information
|
2023
|
2022
|
Number of
properties
|
4
|
3
|
Number of
suites
|
516
|
363
|
Average Occupancy
Rate
|
98.30 %
|
94.78 %
|
Average rental rate to
date
|
$1,528
|
$1,511
|
|
|
|
|
Three months ended
March 31
|
Reconciliation to
Same Property NOI
|
2023
|
2022
|
Revenue from investment
properties
|
$
1,714,823
|
$
1,619,027
|
Expenses:
|
|
|
Property Operating
Expenses
|
497,142
|
583,530
|
Realty Taxes
|
155,454
|
127,871
|
Total Operating
Expenses
|
652,596
|
711,401
|
Same Property
NOI
|
$
1,062,227
|
$
907,626
|
Reconciliation of
Debt-to-Gross Book Value ratio
|
|
|
Total interest-bearing debt
|
|
$
101,779,923
|
Total
assets on balance sheet
|
|
132,121,486
|
Debt-to-Gross Book Value
ratio
|
|
77.04 %
|
|
|
|
Reconciliation of
Debt Service Coverage ratio
|
|
|
Net Operating Income for the period ended March 31,
2023
|
|
$
1,446,655
|
Mortgage payments for
the period ended March 31, 2023
|
|
1,224,824
|
Debt Service
Coverage ratio
|
|
1.18
|
Weighted average term
to maturity on fixed rate debt
|
|
76.28 months
|
Weighted average
interest rate on fixed debt
|
|
3.01 %
|
Financial Summary
The REIT generated FFO and AFFO per Unit of $0.0171 and $0.0165
during the three months ended March
31, 2023.
FFO and AFFO are defined in "Non-IFRS Measures" in the March 31, 2023 MD&A.
Reconciliation of
Net Income and Comprehensive
Income to FFO and AFFO
|
Three months ended
March 31
|
2023
|
2022
|
Revenue from investment
properties
|
$
2,454,405
|
$
1,618,740
|
Property operating
expenses
|
(775,215)
|
(580,269)
|
Realty taxes
|
(232,535)
|
(127,870)
|
Net Operating Income
1
|
1,446,655
|
910,601
|
NOI Margin
1
|
58.94 %
|
56.25 %
|
General and
administrative
|
(201,632)
|
(170,112)
|
Finance
costs
|
(952,084)
|
(452,630)
|
Fair value gain (loss)
on:
|
|
|
Investment
properties
|
280,861
|
3,127,296
|
Unit-based
compensation
|
41,853
|
(5,839)
|
Warrants
liability
|
-
|
(12,815)
|
Exchangeable
Units
|
2,601,906
|
(1,517,778)
|
Net Income
and
|
|
|
Comprehensive
Income
|
$
3,217,559
|
$
1,878,723
|
1 Same
Property Portfolio consists of 3 multi-residential properties owned
by the REIT for comparable periods in Q1 2023 and Q1
2022
|
|
Three months ended
March 31
|
Reconciliation to
FFO
|
2023
|
2022
|
Net income and
comprehensive income
|
3,217,559
|
1,878,723
|
Distributions on
Exchangeable Units
|
40,650
|
40,671
|
Fair value gain on
properties
|
(280,861)
|
(3,127,296)
|
Fair value (gain) loss
on unit-based compensation
|
(41,853)
|
5,839
|
Fair value loss on
warrant liability
|
|
12,815
|
Fair value (gain) loss
on exchangeable units
|
(2,601,906)
|
1,517,778
|
FFO
|
333,589
|
328,530
|
Weighted average number
of Units
|
19,508,727
|
19,672,838
|
FFO/unit
|
$
0.0171
|
$
0.0167
|
|
|
|
Reconciliation to
AFFO
|
|
|
FFO
|
$
333,589
|
$
328,530
|
Capital
expenditures
|
(9,937)
|
(43,285)
|
Leasing
costs
|
(1,653)
|
(4,411)
|
AFFO
|
321,999
|
280,834
|
Weighted average number
of Units
|
19,508,727
|
19,672,838
|
AFFO/unit
|
$
0.0165
|
$
0.0143
|
AFFO payout
ratio
|
22.72 %
|
26.27 %
|
|
|
|
NAV and NAV per
Unit Reconciliation
|
At March 31,
2023
|
At December 31,
2022
|
Unitholders'
Equity
|
$22,193,091
|
$19,014,023
|
Exchangeable
Units
|
6,613,177
|
9,215,083
|
NAV
|
28,806,268
|
28,229,106
|
Trust Units
|
8,657,564
|
8,667,564
|
Exchangeable
Units
|
10,841,274
|
10,841,274
|
Deferred
Units
|
124,077
|
110,036
|
Total Units
oustanding
|
19,622,915
|
19,618,874
|
NAV per
unit
|
$1.47
|
$1.44
|
The overall increase in NAV from $1.44 at December 31,
2022 to $1.47 at March 31, 2023, was due to positive NOI.
Outlook
Management is focused on growing the portfolio and unitholder
value through increasing rental rates where the market allows,
future acquisition opportunities that will increase the overall
size and performance of the REIT, as well as maintaining a
manageable debt structure. The majority of the REIT's debt is
CMHC insured, the REIT's mortgages are all fixed rates with an
average remaining mortgage term of over six years. In the
next 12 months, the Element Phase I mortgage matures which accounts
for $6,277,288 of the $10,816,597 in mortgage payments due in the next
12 months, it is Management's expectation that this mortgage will
be renewed at or before the maturity date of January 1, 2024. Management believes the
organic growth in NAV due to paydown of debt over the mortgage
terms is a positive outcome of the higher leveraged position as
well as lowering the REIT's debt to GBV ratio and thereby
increasing the NAV per Unit over time.
Management anticipates that demand for rental housing will
remain strong in the coming quarters due to immigration and the
affordability gap in rental vs. home ownership.
About Marwest Apartment Real Estate Investment Trust
The REIT is an unincorporated open-ended trust governed by the
laws of the Province of Manitoba.
The REIT was formed to provide holders of Units with the
opportunity to invest in the Canadian multi-family rental sector
through the ownership of high-quality income-producing properties,
with an initial focus on stable markets throughout Western Canada.
Forward-looking Statements
The information in this news release includes certain
information and statements about management's views of future
events, expectations, plans and prospects that constitute
forward–looking statements. These statements are based upon
assumptions that are subject to significant risks and
uncertainties. Because of these risks and uncertainties and
as a result of a variety of factors, the actual results,
expectations, achievements or performance may differ materially
from those anticipated and indicated by these forward–looking
statements. A number of factors could cause actual results to
differ materially from these forward–looking statements, including
the risks described in the REIT's latest annual information form
and management's discussion and analysis. The payment of cash
distributions will be dependent upon a number of factors, including
but not limited to the financial performance, financial condition
and financial requirements of the REIT. Although management
of the REIT believes that the expectations reflected in
forward–looking statements are reasonable, it can give no
assurances that the expectations of any forward–looking statements
will prove to be correct. Except as required by law, the REIT
disclaims any intention and assumes no obligation to update or
revise any forward–looking statements to reflect actual results,
whether as a result of new information, future events, changes in
assumptions, changes in factors affecting such forward–looking
statements or otherwise.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this news release.
The Units are not registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act") and may not be
offered or sold within the United
States or to or for the account or benefit of U.S. persons,
except in certain transactions exempt from the registration
requirements of the U.S. Securities Act. This press release does
not constitute an offer to sell, or the solicitation of an offer to
buy, securities of the REIT in the United
States or in any other jurisdiction.
Notice with respect to Non-IFRS Measures Disclosure
The REIT's financial statements are prepared in accordance with
IFRS. In addition to IFRS measures, this news release and the
REIT's Q1 2023 MD&A disclose certain non-IFRS financial
measures that are commonly used by Canadian real estate investment
trusts as an indicator of performance. Non-IFRS measures and
ratios include the following:
Net Operating Income ("NOI")
The Trust calculates net operating income as revenue less
property operating expenses such as utilities, repairs and
maintenance and realty taxes. Charges for interest or other
expenses not specific to the day–to–day operations of the Trust's
properties are not included. The Trust regards NOI as an
important measure of the income generated by income-producing
properties and is used by management in evaluating the performance
of the Trust's properties. NOI is also a key input in
determining the value of the Trust's properties. For reconciliation
to IFRS measures, refer to "Financial Operations and Results" in
the REIT's Q1 2023 MD&A
Funds from Operations ("FFO")
The Trust calculates FFO substantially in accordance with the
guidelines set out in the white paper titled "White Paper on Funds
from Operations & Adjusted Funds from Operations for IFRS" by
the Real Property Association of Canada ("REALpac") as revised in January
2022. FFO is defined as IFRS consolidated net income adjusted
for items such as unrealized changes in the fair value of the
investment properties, effects of puttable instruments classified
as financial liabilities and changes in fair value of financial
instruments and derivatives. FFO should not be construed as
an alternative to net income or cash flows provided by or used in
operating activities determined in accordance with IFRS. The
Trust regards FFO as a key measure of operating performance. For
reconciliation to IFRS measures, refer to "Financial Operations and
Results" in the REIT's Q1 2023 MD&A
Adjusted Funds from Operations ("AFFO")
The Trust calculates AFFO substantially in accordance with the
guidelines set out in the white paper titled "White Paper on Funds
from Operations & Adjusted Funds from Operations for IFRS" by
REALpac as revised in January 2022. AFFO is defined as FFO
adjusted for items such as maintenance capital expenditures and
straight–line rental revenue differences. AFFO should not be
construed as an alternative to net income or cash flows provided by
or used in operating activities determined in accordance with
IFRS. The Trust regards AFFO as a key measure of operating
performance. The Trust also uses AFFO in assessing its
capacity to make distributions. For reconciliation to IFRS
measures, refer to "Financial Operations and Results" in the REIT's
Q1 2023 MD&A
The following other non–IFRS measures are defined as
follows:
- "FFO per unit" is calculated as FFO divided by the weighted
average number of Trust Units and Exchangeable Units of the
Partnership outstanding over the period.
- "AFFO per unit" is calculated as AFFO divided by the weighted
average number of Trust Units and Exchangeable Units of the
Partnership outstanding over the period.
- "AFFO Payout Ratio" is the proportion of the total
distributions on Trust Units and Exchangeable Units of the
Partnership to AFFO per Unit.
- "Net Asset Value" is calculated as the sum of Unitholders'
Equity and Exchangeable Units
- "Net Asset Value per Unit" or "NAV per Unit" is calculated as
the sum of Unitholders' Equity and Exchangeable Units divided by
the sum of Trust Units, Exchangeable Units and Deferred Units
outstanding at the end of the period.
- "Debt–to–Gross Book Value ratio" is calculated by dividing
total interest–bearing debt consisting of mortgages by total assets
and is used as the REIT's primary measure of its leverage.
- "Debt Service Coverage ratio" is the ratio of NOI to total debt
service consisting of interest expenses recorded as finance costs
and principal payments on mortgages.
- "Stabilized net operating income" is the estimated 12-month net
operating income that a property could generate at full occupancy,
less a vacancy rate and stable operating expenses.
- "Average occupancy rate" is defined as the ratio of occupied
suites to the total suites in the portfolio for the period.
Management believes that these measures are helpful to investors
because they are widely recognized measures of the REIT's
performance and provide a relevant basis for comparison among real
estate entities. These non-IFRS financial measures are not
defined under IFRS and are not intended to represent financial
performance, financial position or cash flows for the period and
should not be viewed as an alternative to net income, cash flow
from operations or other measures of financial performance
calculated in accordance with IFRS.
The above measures are not standardized under the financial
reporting framework used to prepare the financial statements of the
REIT. Readers should be further cautioned that the above
measures as calculated by the REIT may not be comparable to similar
measures presented by other issuers. For further information,
refer to the sections entitled "Non-IFRS measures" and "Financial
Operations and Results" in the REIT's Q1 2023 MD&A, which is
incorporated by reference herein, for further information
(available on SEDAR at www.sedar.com or the REIT's website
www.marwestreit.com).
SOURCE Marwest Apartment Real Estate Investment Trust