Dream Residential REIT (DRR-U) Q2 2024 earnings summary

Executive summary

• Portfolio consists of 15 garden-style properties with 3,300 units in the U.S. Sunbelt and Midwest, targeting mid-market renters and valued at $396.8M as of June 30, 2024.

• Achieved strong comparative properties NOI growth of 6.8% year-over-year in Q2 2024, driven by higher rents and value-add renovations.

• Portfolio occupancy was 94.0% at June 30, 2024, with average monthly rent up 1.0% sequentially and 4.0% year-over-year to $1,167.

• FFO per unit was $0.18 in Q2 2024, up 1.8% year-over-year, with a conservative payout ratio and stable distributions.

• Trading at a significant discount to IFRS value and replacement cost, with a 6.6% distribution yield and strong institutional backing.

Financial highlights

• Q2 2024 net operating income was $6.4 million, up from $6.1 million in Q2 2023, and net rental income was $8.0 million, up from $7.7 million.

• NOI margin improved to 52.6% from 50.8% in Q2 2023.

• NAV per unit was $13.47 at June 30, 2024, slightly down from $13.52 at March 31, 2024.

• Available liquidity at quarter-end was $77 million, including $6.8 million cash and a $70 million undrawn credit facility.

• Net total debt-to-net total assets was 32.8% at June 30, 2024.

Outlook and guidance

• Maintaining comparative property NOI guidance of 3%-5% for 2024, with year-to-date growth at the upper end.

• Targeting completion of approximately 200 unit renovations in 2024, with a five-year opportunity for 2,300 units.

• 2024 FFO per unit expected in the low $0.70 range, excluding acquisitions.

• Focus on organic rent growth, value-add renovations, and potential expansion into Carolinas and Mountain West.

• Cautiously optimistic on interest rate environment and multifamily market outlook.