Minto Apartment Real Estate Investment Trust T.MI.UN

Alternate Symbol(s): MIAPF

Minto Apartment Real Estate Investment Trust (the REIT) is a Canada-based open-ended real estate investment trust. The REIT owns income-producing multi-residential properties located in urban markets in Canada. The REIT owns a portfolio of income-producing multi-residential rental properties located in Toronto, Montreal, Ottawa, and Calgary. Its portfolio includes 28 multi-residential rental properties comprising 7,726 suites strategically located across urban centers in Canada. Its properties include Richgrove, Martin Grove, Minto Yorkville, The ROE, Minto One80five, Parkwood Hills Garden Homes & Townhomes, Aventura, Huron, Seneca, Castleview, Skyline, The Carlisle, Castle Hill, Grenadier, Eleanor, Frontenac, Stratford, Laurier, Kaleidoscope, The Quarters, Rockhill Apartments, Leslie York Mills, High Park Village, Haddon Hall, Le 4300, 39 Niagara, The International, and Le Hill-Park.

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Minto Apartment Real Estate Investment Trust

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Post by retiredcfon May 04, 2022 7:51am

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Post# 34654049

RBC

May 3, 2022

Outperform

TSX: MI.UN; CAD 19.24

Price Target CAD 29.00

All values in CAD unless otherwise noted.
Priced as of prior trading day's market close, EST (unless otherwise noted).

Minto Apartment REIT

Q1 first look: Impacted by higher opex; gain to lease accelerating

First Look:

Minto Apartment REIT (“MI”) reported a weaker-than-expected quarter with FFO/unit of $0.19, +3.3% y/y, vs. RBC/consensus of $0.21/$0.21. On the one hand, higher opex, including a colder winter and higher natural gas prices, impacted margins. On the other hand, gain-to-lease continued to accelerate, now at +10.7% implying future revenue upside should offset expense growth. We believe the market to have somewhat expected a tougher winter quarter, may look through it to a certain extent but this is likely going to be a theme this quarter across the multi-res space in addition to other factors weighing on the space

SP NOI growth: +2.6% (Rev +5.6%; Exp +9.9%); MI still managed to generate positive NOI growth, but opex pressures came from higher insurance costs, labour costs, and higher utilities (+46%) both in terms of natural gas prices and colder winter. This impacted SP NOI margin by 160 bps to 58%.
SP-AMR: $1,677, +2.9% y/y;
Average occupancy: 94.2%, +310 bps y/y, -80 bps sequentially (reflecting seasonality).
Leasing spread realized: +10.8% on turnover vs. +7.2% in Q4/21 and +4.4% in Q3/21. Positive leasing spread was across all markets with Toronto strongest at +13%, Montreal and Ottawa at +10% and Alberta at +9%.
Gain-to-lease on portfolio: +10.7% vs. +6.8% in Q4/21.
Capital allocation: Post quarter, as previously announced, MI will acquire two downtown apartment properties in Toronto and Calgary for an aggregate $201m. We estimate that the going in cap rate is in the low 3% on a combined basis. MI also plans to fund a $52m convertible development loan on a new asset in Victoria.

Leverage: D/GBV 36.8%;
IFRS reported NAV/unit: $24.33 +1.4% sequentially