InterRent Real Estate Investment Trust (IIP-UN) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 results with high occupancy at 96.2% and robust rental rate growth, including 8.4% AMR increase to $1,660 year-over-year.

• FFO per unit rose 17.2% and AFFO per unit increased 19.0% year-over-year, reflecting double-digit per-unit performance growth.

• Maintained a strong balance sheet with debt-to-GBV at 37.8% and weighted average interest cost at 3.37%.

• Executed strategic property dispositions totaling $143.5M in proceeds year-to-date, including sales above IFRS values.

• Repurchased 405,300 units for $5 million under NCIB program, supporting capital allocation flexibility.

Financial highlights

• FFO totaled $23.1M (+17.9% YoY); AFFO reached $20.4M (+20.9% YoY) in Q2 2024.

• Same property NOI margin improved by 130 bps to 67.7%; same property NOI rose 9.7% to $40.6M.

• Operating expenses as a percentage of revenue decreased to 32.5% from 33.7% in Q2 2023.

• Proportionate fair value loss of $34.6M recorded in Q2 2024 due to higher cap rates.

• Variable rate debt exposure reduced to below 1% from 8.4% a year ago.

Outlook and guidance

• Management expects continued sustainable rental growth, supported by strong market fundamentals and a persistent housing supply deficit.

• Anticipates AMR growth of 5%-7% and expense growth of 3%-4% going forward, supporting margin expansion.

• Remains confident in high single-digit to low double-digit NOI growth, supported by tight supply-demand fundamentals.

• Disposition program expected to generate an additional $50M in net proceeds over the next 12-18 months.

• Financial flexibility supported by ample liquidity and a disciplined capital allocation strategy.