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DISSEMINATION IN THE UNITED STATES
InterRent Real Estate Investment Trust (TSX-IIP.UN)
(“InterRent” or the “REIT”) today reported financial
results for the second quarter ended June 30, 2021.
InterRent REIT reports positive same property NOI growth for
Q2 2021 and continues to grow average monthly rent per suite across
all regions
- Same property NOI was $25.4 million for the quarter, an
increase of 2.6% compared to Q2 2020
- Same property NOI margin in Q2 2021 was 64.7%, an improvement
of 70bps relative to Q2 2020
- Same property average monthly rent per suite at $1,339 as of
June 2021; growth of 3.7% over June 2020 ($1,291)
- Same property occupancy of 92.2% as of June 2021; a 10bps
improvement from March 2021 and down 80bps compared to June
2020
- FFO increases to $17.8 million ($0.124 per Unit – diluted) in
Q2 2021; growth of 16.5% overall and 6.0% on a per Unit basis
compared to Q2 2020
- Strong YTD acquisition performance; closed on 358 suites in
Ontario and a 50% interest in 45 suites in Vancouver in Q2 2021 and
acquired a 50% interest in a 94-suite property in Mississauga in
July 2021
Higher suite count and growth in average rent lead to strong
increase in funds from operations (FFO)
As of June 30, 2021, InterRent has 100% ownership in 11,850
suites, up 15.9% from 10,226 as of June 30, 2020. Operating
revenues stood at $45.0 million in Q2 2021, growing at 15.3% from
$39.0 million in Q2 2020 as external growth and improvements in
average rent per suite (+3.7%) helped offset pandemic-related
occupancy pressure in select properties.
At 91.5% in June 2021, the occupancy rate in InterRent’s
portfolio has improved 20bps relative to March 2021 (91.3%), below
the 93% print in June 2020 when COVID-related pressures first
became evident in the portfolio. Encouragingly, occupancy in
several properties situated in urban cores, which had suffered an
outflow of young professionals and students starting in the spring
of 2020, is seeing positive leasing momentum as those renters come
back to city centres. As such, the REIT is reporting an increase in
same property NOI of 2.6% for Q2 2021 relative to Q2 2020, driven
by lower COVID-related costs and a 3.7% increase in same property
average rent per suite over the same period. With a high proportion
of fixed operating costs, these improvements translated into a same
property NOI margin of 64.7% in Q2 2021, an improvement of 70bps
compared to Q2 2020. Management continues to view remaining
occupancy pressure as temporary in nature and is optimistic for
improvements in the back half of 2021, and to a greater degree in
2022, as Canada’s vaccination roll-out reaches critical mass,
borders reopen to fully vaccinated travellers, schools reopen for
in-person learning, and offices welcome back employees.
Net income for the quarter was $61.1 million, an increase of
$38.4 million compared to Q2 2020. This difference was due
primarily to the $59.5 million fair value gain on investment
properties and an increase in operating revenue to $45.0 million
for the quarter from $39.0 million in Q2 2020, representing an
increase of $6.0 million. These gains were offset by the non-cash
fair value losses on unit-based liabilities and Class B unit
liability of $16.0 million that occurred as a result of Unit price
appreciation of 14.0% in the quarter.
The REIT posted a strong FFO result in the quarter. At $17.8
million ($0.124 per Unit – diluted), FFO increased by 16.5%
compared to Q2 2020 ($15.3 million or $0.117 per Unit - diluted),
resulting in 6.0% growth on a per Unit basis. AFFO likewise grew
from $13.8 million ($0.105 per Unit – diluted) in Q2 2020 to $15.7
million ($0.110 per Unit – diluted) in Q2 2021, representing 14.0%
and 4.8% growth on an absolute and per Unit basis,
respectively.
Acquisitions of 1,225 owned or managed suites year to date
fuel repositioning opportunity
From January to July 2021, InterRent has acquired a total of
1,225 owned or managed rental suites at a total purchase price of
$478.3 million(1). In the second quarter, the REIT closed on
previously announced transactions in St. Catharines, Oakville,
Mississauga and Vancouver, while also executing a bolt-on
acquisition of 5 suites plus parking in Ottawa.
Subsequent to the quarter end, the REIT, together with
Crestpoint Real Estate Investments Ltd., increased its footprint in
Mississauga by 94 suites for a combined purchase price of $30.1
million (of which InterRent’s interest is 50%). This latest
addition is just down the road from the REIT’s recently acquired
property at 920 Inverhouse Drive and benefits from close proximity
to a GO station and other daily needs amenities.
Date
Property
City
Region
Ownership Interest
Suites
Price ($m)
Jan 21, 2021
388 Vine St.
St. Catharines
Other Ontario
100%
114
22.0
Jan 28, 2021
Various
Vancouver
GVA
50%
614
292.5
Apr 13, 2021
2054 Comox St/8735 Selkirk St
Vancouver
GVA
50%
45
18.9
Apr 29, 2021
165 Ontario St
St. Catharines
Other Ontario
100%
158
31.4
May 13, 2021
150 Allan St
Oakville
GTHA
100%
55
26.4
May 13, 2021
265 Reynolds St
Oakville
GTHA
100%
45
20.3
Jun 1, 2021
920 Inverhouse Dr
Mississauga
GTHA
100%
95
32.7
Jun 9, 2021
774-778 Gladstone Ave & 174 Bell St
N
Ottawa
NCR
100%
5
4.0
Jul 26, 2021
2150 Roche Ct
Mississauga
GTHA
50%
94
30.1
Total YTD Acquisitions
1,225
478.3(1)
(1) At 100% share; $307.5 million based on
InterRent’s ownership interest.
The YTD acquisition activity provides opportunities to create
operating synergies within the REIT’s portfolio with a focus on
growing exposure in Greater Toronto & Hamilton Area, National
Capital Region, Greater Montréal Area, and Greater Vancouver Area.
As of June 30, 2021, approximately 84% of the REIT’s suites are
located in these core markets. These acquisitions will feed into
InterRent’s repositioning program, which typically spans 3 to 4
years following acquisition, offering future value creation
potential. At June 30, 2021, InterRent’s overall debt level was at
34.4% of Gross Book Value, leaving significant headroom to pursue
accretive external growth opportunities that may arise.
Commenting on the figures for the second quarter of 2021
published today, Mike McGahan, CEO of InterRent, said: "We are
seeing a lot of the things we’ve been discussing over the last few
quarters starting to play out in our portfolio. There is a lot of
positivity out there, and we have seen increased leasing traffic
going into the third quarter as young professionals and domestic
students come back to the city to enjoy social engagement. We do
believe our strategy to hold our rents will prove to be beneficial
for our stakeholders and we are encouraged by the tailwinds we see
for the back half of this year and into early 2022. We are excited
for the future!”
Financial Highlights
Selected Consolidated InformationIn $000’s, except per Unit
amountsand other non-financial data
3 Months Ended June 30,
2021
3 Months Ended June 30,
2020
Change
Total suites
11,850
10,226
+15.9%
Average rent per suite (June)
$1,339
$1,291
+3.7%
Occupancy rate (June)
91.5%
93.0%
-150bps
Operating revenues
$44,966
$39,004
+15.3%
Net operating income (NOI)
$28,765
$24,839
+15.8%
NOI %
64.0%
63.7%
+30bps
Same Property average rent per suite
(June)
$1,339
$1,291
+3.7%
Same Property occupancy rate (June)
92.2%
93.0%
-80bps
Same Property NOI
$25,448
$24,796
+2.6%
Same Property NOI %
64.7%
64.0%
+70bps
Net Income
$61,066
$22,714
+168.8%
Funds from Operations (FFO)
$17,766
$15,250
+16.5%
FFO per weighted average unit -
diluted
$0.124
$0.117
+6.0%
Adjusted Funds from Operations (AFFO)
$15,672
$13,752
+14.0%
AFFO per weighted average unit -
diluted
$0.110
$0.105
+4.8%
Distributions per unit
$0.0814
$0.0775
+5.0%
Adjusted Cash Flow from Operations
(ACFO)
$17,738
$18.157
-2.3%
Debt to GBV
34.4%
28.0%
+640bps
Interest coverage (rolling 12 months)
3.53x
3.28x
+0.25x
Debt service coverage (rolling 12
months)
1.90x
1.93x
-0.03x
Conference Call
Management will host a webcast and conference call to discuss
these results and current business initiatives on Monday, August 9,
2021 at 10:00 AM EDT. The webcast will be accessible at:
https://www.interrentreit.com/2021-q2-results. A replay will be
available for 7 days after the webcast at the same link. The
telephone numbers for the conference call are 1-888-440-6928 (toll
free) and 646-960-0328 (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)
grow both funds from operations per Unit and net asset value per
Unit through investments in a diversified portfolio of
multi-residential properties; (ii) provide Unitholders with
sustainable and growing cash distributions, payable monthly; and
(iii) 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 August 9, 2021, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210809005201/en/
Sandy Rose, CFA Director - Investor Relations &
Sustainability (514) 704-2459 sandy.rose@interrentreit.com
www.interrentreit.com
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