TSX:IIP.UN - Post by User
Post by
retiredcfon Mar 07, 2023 9:11am
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Post# 35323295
RBC
RBC March 7, 2023
InterRent REIT
Q4 in line; better NOI growth offset by higher interest expense
TSX: IIP.UN | CAD 14.69 | Outperform | Price Target CAD 16.50
Sentiment: Neutral
First look: InterRent REIT (“IIP”) reported FFO/unit of $0.13, -5.8% y/y, vs. RBC/consensus of $0.13/$0.13. Results were largely neutral, although the nuanced read of the quarter is that NOI is coming in better than expected with large improvement in MTL occupancy but higher interest expense from debt refinancing activity and lowering of variable debt exposure is offsetting much of the growth. IIP noted strong rental demand in the first few months of 2023 and mild Jan/Feb combined with lower natural gas rates providing tailwind to opex.
Key points:
• SP NOI growth: +8.4% (SP-Rev +8.7%; SP-Exp +9.2%)
• SP-AMR: $1,456, +6% y/y
• SP-Occupancy: 97%, +110bps q/q, 80bps y/y – as noted last quarter, MTL improved materially to 97.1%, +600 q/q, +250bps y/y. • SP-NOI margin: 64.1%, -10bps y/y
• Mark-to-market rent spread estimated at 30%+ (vs. 30% Q3/22, +27% Q2/22)
• Leverage: D/GBV 38.3%, +160 bps y/y. Variable rate exposure <5%; average rate 3.22%, +14 bps q/q, +84bps y/y.
• IFRS BV/unit: $17.49 (-4% q/q) based on portfolio cap rate of 4.04% (+7bps q/q).