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

Executive summary

• Achieved strong year-over-year growth in key operating metrics, including AMR up 7% to $1,687 and occupancy at 96.4%, with 1,279 new leases signed and robust leasing activity across the portfolio.

• Revenue, NOI, FFO, and AFFO all posted significant YoY gains, with FFO up 9.7% to $23.4M and AFFO up 10.3% to $20.9M.

• Strategic capital allocation included a $107M acquisition (50% JV) of a 248-suite community in downtown Montréal, and ongoing investments in property repositioning and development.

• Maintained a strong balance sheet with debt-to-GBV at 38.5%, $295M in available liquidity, and low variable rate exposure.

• Achieved 13th consecutive year of 5%+ distribution growth and 100% building certification, with a 21% YoY improvement in GRESB score.

Financial highlights

• Same property revenue increased 7.9% YoY; same property NOI margin rose to 68.2%, up 40 bps YoY.

• FFO reached $23.4M (+9.7% YoY), AFFO at $20.9M (+10.3% YoY), FFO/unit $0.159 (+8.9% YoY), AFFO/unit $0.142 (+9.2% YoY).

• Financing costs reduced to $13.9M (22.7% of revenue), with average interest rate down to 3.37%.

• $93.5M fair value loss on investment properties due to higher cap rates.

• Operating expenses as a percentage of revenue decreased to 31.8% from 32.4% YoY.

Outlook and guidance

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

• OpEx growth for 2025 is expected in the 4-5% range, with property taxes projected to rise by 5%.

• Focus remains on operational efficiency, margin expansion, and leveraging recent acquisitions for long-term growth.

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

• Management remains cautious about forecasting rent growth due to unprecedented negative population growth projections.