Bullboard - Stock Discussion Forum European Residential REIT T.ERE.UN

Alternate Symbol(s): EREUF

European Residential REIT is a Canada-based open-ended real estate investment trust (REIT). The Company owns a portfolio of 157 multi-residential properties, comprised of approximately 6,750 suites and ancillary retail space located in the Netherlands, and owned one commercial property in Germany and one commercial property in Belgium. Its Commercial properties are located in Belgium and... see more

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European Residential REIT > TD

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Post by retiredcf on May 05, 2021 12:06pm

TD

Currently have a $5.50 target. GLTA

European Residential REIT

(ERE.UN-V) C$4.30

Q1/21 First Look: Results In Line; ~13% Rent Uplifts on Turnover

Event

Q1/21 results.

Impact: NEUTRAL

FFO/unit (f.d.) of €0.036 was +9% versus Q1/20, and largely in line with our €0.035 estimate. AFFO/unit of €0.032 compares with our €0.031 estimate.

A conference call will be held at 9:00 a.m. ET today (1-800-898-3989; passcode: 5247379#).

Residential Operating Highlights

Q1 Stabilized NOI was +4.0% y/y on a 4.2% increase in revenues. We note that 93% of suites are now in the stabilized NOI calculation versus only 35% q/q. Stabilized residential net AMR was +3.9% y/y to €890, led by gains in in Randstad (+4.8%) and Netherlands North (+4.5%). Occupancy was stable y/y at 98.3%. Stabilized NOI margin was 10bps lower y/y to 75.3% while total portfolio NOI margin was stable y/y at 75.4%.
Achieved 13.3% (7.9% in Q1/20) in rent uplifts on turnover, including 11.6% on liberalized suites (2.8% of suites), 4.1% on regulated suites (0.5% of suites), and 33.4% on suites converted into liberalized (0.5% of suites).
Looking ahead, renewal increases will be 0% in 2021 on regulated suites (41.5% of total portfolio). For liberalized suites, the government has implemented a rental cap on renewals at CPI + 1% for the next three years. For 2021, the REIT has served notices on 94% of liberalized suites at a weighted average increase of 2.3% beginning July 1. There is no limit on increases on turnover for liberalized suites. With turnover of ~15%, we believe the REIT can still generate 3.0%-3.5% annual revenue growth.

Balance Sheet/Other

While there were no acquisitions in Q1, we do expect the REIT to be active over the balance of 2021.
On March 10, 2021, ERES extended its Pipeline Agreement with CAPREIT for an additional two-years ending March 29, 2023. The agreement gives ERES access to an additional €165mm to acquire properties that meets its investment mandate, but is unable to acquire with its own resources.
Q1/21 leverage was 47.3%, +10bps q/q (WAIR: 1.61%; WADM: 4.2 years). The REIT has no maturities until December 2022. As at March 31, ERES had liquidity of €101mm (€11mm of cash; €90mm undrawn on credit lines), essentially unchanged from Q4/20.

May 5, 2021

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