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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TSX:ERE.UN - Post Discussion

European Residential REIT > TD

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Post by retiredcf on Nov 08, 2022 8:43am

TD

Have a $5.00 target. GLTA

European Residential REIT

(ERE.UN-T) C$3.00

Q3/22 First Look; Results In-Line; +15% AFFO/Unit Growth Event

Q3/22 results. A conference call will be held at 9:00 a.m. ET today (1-833-950-0062; passcode: 050647).

Impact: NEUTRAL

Our take: ERES delivered Q3 results, highlighted by strong rental growth and improving apartment market fundamentals. Stabilized net AMR was +4.5% and SP residential margins (excluding service charge income/expense) increased 230bps to 82.9%. With changes to the landlord levy tax expected to take effect January 1, 2023, management believes that it can maintain this NOI margin improvement. Residential same-property occupancy was -70bps y/y to 97.8%, although the decrease was due to more suites being under renovation.

FFO/unit (f.d.) of €0.044 was +15% versus Q3/21 and in-line with our estimate and consensus. AFFO/unit of €0.039 was +15% y/y and also in line (Exhibit). Acquisitions and strong stabilized NOI growth drove the y/y gains.

YTD acquisitions stand at €85.4mm (unchanged from Q2), as the overall transaction market slowed on broader macro uncertainty, a trend we expect to continue through the balance of 2022. While the REIT has ample dry powder for acquisitions (north of €300mm), management noted that it is "exercising caution with respect to new acquisitions".

Residential Operating Highlights

Q3 Residential Stabilized NOI was +7.5% y/y led by a 6.9% increase in revenues and offset by a 4.8% increase in operating expenses (higher service charges). Stabilized residential NOI margin was +40bps y/y to 78.0% (+230bps excluding service charge pass throughs). Stabilized residential net AMR was +4.5% y/y to €953, led by gains in the Randstad (+4.8%). Commercial SPNOI was +2.1% y/y.
Achieved 17.7% (16.3% in Q3/21) in rent uplifts on turnover, including 16.8% on liberalized suites (2.7% of suites), 2.3% on regulated suites (0.4% of suites), and 50.8% on suites converted to liberalized (0.3% of suites).

Balance Sheet/Other

Q3/22 leverage was 48.7%, -10bps q/q (WAIR: 1.77%; WADM: 3.7 years). As at September 30, ERES had liquidity of ~€29mm (€19mm of cash; €10mm undrawn on credit lines), a modest decline from €34mm in Q2/22. The REIT has no maturities remaining in 2022 and less than 10% of mortgages maturing in each of 2023/24.
IFRS NAV -0.5% versus Q2/22 to €4.26.

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