InterRent Real Estate Investment Trust (IIP-UN) Q3 2024 earnings summary

Executive summary

• Achieved strong year-over-year growth in occupancy (up 120 bps to 96.4%) and average monthly rent (AMR) up 7% to $1,687 in September 2024, with robust leasing activity and operating efficiency.

• Signed 1,279 new leases, nearly matching last year's record, with an average gain-on-lease of 11.4% and suite turnover of 23.8% for the trailing 12 months.

• Strategic capital allocation included a $107 million acquisition (50% JV) of a newly built, centrally located Montreal community with 248 suites and 70,000 sq ft commercial space, leveraging capital recycling.

• Maintained a healthy balance sheet with debt-to-gross book value at 38.5%, weighted average interest rate at 3.37%, and $295 million in available liquidity.

Financial highlights

• Same property revenue increased 7.9% year-over-year in Q3; same property NOI margin reached 68.2%, up 40 bps year-over-year.

• Proportionate NOI for the same portfolio rose 8.7% to $41.5 million.

• FFO increased 9.7% to $23.4 million; FFO per unit up 8.9% to $0.159; AFFO grew 10.3% to $20.9 million; AFFO per unit up 9.2% to $0.142.

• Operating expenses as a percentage of revenue decreased to 31.8% from 32.4% in Q3 2023.

• Recorded a $93.5 million fair value loss in Q3 2024 due to higher cap rates.

Outlook and guidance

• Management expects more moderate rental growth due to recent immigration policy changes and new supply in some markets, but sees embedded value in the rental gap supporting long-term income growth.

• Top-line growth anticipated to continue at a steady but slower pace than previous years.

• OpEx growth for 2025 projected at 4-5%, reflecting potential wage pressures and property tax increases.

• Prudent approach to value-enhancing growth opportunities and operational efficiency remains a focus.