InterRent Real Estate Investment Trust IIPZF

Primary Symbol: T.IIP.UN

InterRent Real Estate Investment Trust is a real estate investment trust. It is engaged in acquisition, ownership, management and repositioning of strategically located, income-producing, multi-residential properties. Its primary objectives are to grow both funds from operations per Unit and net asset value per Unit through investments in a diversified portfolio of multi-residential properties; to provide Unitholders with sustainable and growing cash distributions, payable monthly, and to maintain a conservative payout ratio and balance sheet. The Company's portfolio of properties is located across various locations, such as Ajax, Brossard, Gatineau, Hamilton, Mississauga, Montreal, Oakville, Ottawa, St. Catharines, Stratford, Toronto, Trenton, and Vancouver. Its properties include 10 - 14 REID DRIVE, 100 MAIN STREET, 1015 ORCHARD, 1170 FENNELL AVENUE, 1276 DORCHESTER AVENUE, and 15 DON STREET. It also owns a 605-suite apartment community at 2 & 4 Hanover Road in Brampton, Ontario.

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InterRent Real Estate Investment Trust

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Post by retiredcfon May 09, 2023 12:16pm

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Post# 35438703

TD

Have a $16.00 target. GLTA

InterRent REIT

(IIP.UN-T) C$13.09

Q1/23 First Look; Results in Line; SPNOI +11.4%

Event

Q1/23 results. Conference call today at 10:00 AM (1-888-396-8049; slides).

Impact: NEUTRAL

Our take: Higher interest costs led to a slight decline in y/y FFO/unit. That said, fundamentals continued to strengthen in Q1, highlighted by a third consecutive quarter of double-digit SPNOI growth. Leasing activity remained strong with incentives also decreasing in the quarter, a trend management expects to continue through 2023. While NOI margins came in below our estimate, we were encouraged to see utility cost increases moderate in the quarter (+3% y/y on a per-suite basis).

Q1/23 FFO/unit of $0.130 was -2% versus Q1/22, slightly below our $0.137 estimate but in line with consensus (Exhibit). AFFO/unit of $0.110 was -6% versus our estimate. The variance to our estimate was driven by higher property operating costs.

Operational Highlights

Q1 SPNOI was +11.4%. SP revenues were +9.8%, driven by a +140bps increase in same-property occupancy to 96.9% and a +6.7% increase in AMR to $1,498. The occupancy increase was led by a strong recovery in Ottawa/Gatineau and Montreal that were +350bps/+300bps y/y. SP expenses were +7.4% y/y with the increase largely attributable to an ~14% y/y increase in property operating costs, which management attributed to inflationary pressures.

Developments

Construction at 473 Albert (The Slayte) is nearing completion (158-suite office to residential conversion in Ottawa), with occupancy approaching 50% and the project transferred from PUD to investment properties.
Expected yields and timelines were unchanged q/q for the three projects in the development pipeline.

Acquisitions

Completed the previously-announced JV acquisition (10% interest) of a 605-suite portfolio in Brampton, Ontario for $185.5mm ($326,146/suite) [link].

Balance Sheet

D/GBV was -30bps q/q to 38.0% while liquidity was ~$180mm. The REIT has ~ $210mm of unencumbered assets.
Variable rate exposure was reduced to under 4% versus 16% y/y, while the weighted average interest rate was 16bps q/q to 3.38%. The REIT has a majority of its remaining 2023 mortgages at various stages of the review/approval process with CMHC.
The REIT recorded a $70mm FV gain on investment properties. Cap rates were unchanged q/q at 4.04% and +22bps y/y.