/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
WINNIPEG, MB, Aug. 8, 2024
/CNW/ - Marwest Apartment Real Estate Investment Trust (the
"REIT") (TSXV: MAR.UN) reported financial results for the
three and six months ended June 30,
2024. This press release should be read in conjunction with
the REIT's Unaudited Condensed Consolidated Interim Financial
Statements and Management's Discussion and Analysis ("Q2
2024 MD&A") for the three and six months ended June 30, 2024, which are available on the REIT's
website at www.marwestreit.com and
at www.sedarplus.ca.
"The REIT continues to perform strong through 2024, occupancy
rates have remained above 99% with continued rental rate
growth. NAV continues an upward climb due to improved market
conditions.", commented Mr. William
Martens, Chief Executive Officer of the REIT.
Q2 2024 Quarterly Highlights
- Same Property Net Operating Income1 ("Same
Property NOI") increased by 10.72% in the six months ended
June 30, 2024 compared to same period
2023
- Reported funds from operations ("FFO") of $0.0601 per Unit for the six months ended
June 30, 2024, compared to
$0.0457 for 2023
- Reported adjusted funds from operations ("AFFO") of
$0.0467 per Unit for the six months
ended 2024, compared to $0.0435 for
2023
- Reported Net Asset Value per Unit ("NAV") of
$2.03 at June
30, 2024 compared to $1.95 at
December 31, 2023
- Average occupancy rate of 99.25% reported for the six months
ended June 30, 2024 compared to
98.70% in the same period 2023
- Weighted average months to debt maturity of 69.55 months
Operations Summary
|
Three months ended
June 30
|
Six months ended
June 30
|
Portfolio Operation
Information
|
2024
|
2023
|
2024
|
2023
|
Number of
properties
|
4
|
4
|
4
|
4
|
Number of
suites
|
516
|
516
|
516
|
516
|
Average occupancy
ate
|
99.49 %
|
99.11 %
|
99.25 %
|
98.70 %
|
Average rental rate to
date
|
$1,581
|
$1,536
|
$1,573
|
$1,532
|
|
|
|
|
|
|
Three months ended
June 30
|
Six months ended
June 30
|
Reconciliation of
Same Property NOI1 to IFRS
|
2024
|
2023
|
2024
|
2023
|
Revenue from investment
properties
|
$
2,566,572
|
$
2,487,043
|
$
5,107,070
|
$
4,941,448
|
Expenses:
|
|
|
|
|
Property operating
expenses
|
574,288
|
634,174
|
1,227,845
|
1,409,389
|
Realty taxes
|
238,220
|
219,181
|
468,595
|
451,716
|
Total property
operating expenses
|
812,508
|
853,355
|
1,696,440
|
1,861,105
|
Same Property
NOI1
|
$
1,754,064
|
$
1,633,688
|
$
3,410,630
|
$
3,080,343
|
1 Same Property Portfolio consists
of 4 multi-residential properties owned by the REIT for comparable
periods in Q2 2024 and Q2 2023 – See "Notice with respect to
Non-IFRS Measures" below.
|
Reconciliation of
Debt-to-Gross Book Value ratio
|
|
Total interest-bearing
debt
|
$
102,320,082
|
Total assets on balance
sheet
|
143,900,306
|
Debt-to-Gross
Book Value ratio
|
71.10 %
|
|
|
Reconciliation of
Debt Service Coverage ratio
|
|
Net Operating Income for the period ended June 30, 2024
|
$
3,410,630
|
Mortgage payments for
the period ended June 30, 2024
|
2,470,821
|
Debt Service
Coverage ratio
|
1.38
|
Weighted average term
to maturity on fixed rate debt
|
69.55 months
|
Weighted average
interest rate on fixed debt
|
3.09 %
|
Financial Summary
The REIT generated FFO and AFFO per Unit of $0.0329 and $0.0203
during the three months ended June
30, 2024.
FFO and AFFO are defined in "Non-IFRS Measures" in the
June 30, 2024 MD&A and below
under "notice with respect to Non-IFRS Measures".
Reconciliation of
Net Income and
Comprehensive Income to FFO and AFFO
|
Three months ended
June 30
|
Six months ended
June 30
|
2024
|
2023
|
2024
|
2023
|
Revenue from investment
properties
|
$ 2,566,572
|
$ 2,487,043
|
$ 5,107,070
|
$ 4,941,448
|
Property operating
expenses
|
(574,288)
|
(634,174)
|
(1,227,845)
|
(1,409,389)
|
Realty taxes
|
(238,220)
|
(219,181)
|
(468,595)
|
(451,716)
|
Net Operating
Income
|
1,754,064
|
1,633,688
|
3,410,630
|
3,080,343
|
NOI
Margin
|
68.34 %
|
65.69 %
|
66.78 %
|
62.34 %
|
General and
administrative
|
(211,840)
|
(184,424)
|
(400,931)
|
(386,056)
|
Finance
costs
|
(941,918)
|
(931,898)
|
(1,920,114)
|
(1,883,982)
|
Fair value gain
on:
|
|
|
|
|
Investment
properties
|
1,334,416
|
2,196,910
|
1,463,046
|
2,477,771
|
Unit-based
compensation
|
8,537
|
16,770
|
8,652
|
58,623
|
Exchangeable
Units
|
561,947
|
108,412
|
561,947
|
2,710,318
|
Net income
and
|
|
|
|
|
comprehensive
income
|
$ 2,505,206
|
$ 2,839,458
|
$ 3,123,230
|
$ 6,057,017
|
|
Three months ended
June 30
|
Six months ended
June 30
|
Reconciliation of
FFO
|
2024
|
2023
|
2024
|
2023
|
Net income and
comprehensive income
|
2,505,206
|
2,839,458
|
3,123,230
|
6,057,017
|
Distributions on
Exchangeable Units
|
41,227
|
40,654
|
82,694
|
81,304
|
Fair value gain on
properties
|
(1,334,416)
|
(2,196,910)
|
(1,463,046)
|
(2,477,771)
|
Fair value gain on
unit-based compensation
|
(8,537)
|
(16,770)
|
(8,652)
|
(58,623)
|
Fair value gain on
Exchangeable Units
|
(561,947)
|
(108,412)
|
(561,947)
|
(2,710,318)
|
FFO
|
641,533
|
558,020
|
1,172,279
|
891,609
|
Weighted average number
of Units
|
19,498,838
|
19,508,707
|
19,498,838
|
19,508,707
|
FFO/unit
|
$
0.0329
|
$
0.0286
|
$
0.0601
|
$
0.0457
|
|
|
|
|
|
Reconciliation of
AFFO
|
|
|
|
|
FFO
|
$
641,533
|
$ 558,020
|
$
1,172,279
|
$ 891,609
|
Capital
expenditures
|
(239,704)
|
(26,935)
|
(254,052)
|
(36,872)
|
Leasing
costs
|
(5,880)
|
(3,675)
|
(7,902)
|
(5,328)
|
AFFO
|
395,949
|
527,410
|
910,325
|
849,409
|
Weighted average number
of Units
|
19,498,838
|
19,508,707
|
19,498,838
|
19,508,707
|
AFFO/unit
|
$
0.0203
|
$
0.0270
|
$
0.0467
|
$
0.0435
|
AFFO payout
ratio
|
18.84 %
|
13.87 %
|
8.19 %
|
8.61 %
|
|
|
|
|
|
NAV and NAV per
Unit Reconciliation
|
At June 30,
2024
|
At December 31,
2023
|
Unitholders'
Equity
|
$30,783,731
|
$27,578,331
|
Exchangeable
Units
|
9,046,070
|
9,757,146
|
NAV
|
39,829,801
|
37,335,477
|
Trust Units
|
8,856,403
|
8,657,564
|
Exchangeable
Units
|
10,642,435
|
10,841,274
|
Deferred
Units
|
168,420
|
167,265
|
Total Units
oustanding
|
19,667,258
|
19,666,103
|
NAV per
unit
|
$2.03
|
$1.95
|
The overall increase in NAV from $1.95 at December 31,
2023 to $2.03 at June 30, 2024, was primarily due to updated
market conditions throughout all properties and net operating
income less finance costs and general and administrative expenses
exceeding distributions.
Distributions
On June 14, 2024, the Board
approved an increase of approximately two percent over the current
distributions payable to $0.0013
monthly per unit, or annualized $0.0156 per unit, commencing to Unitholders of
record on June 30, 2024 with payment
on or about July 15, 2024.
Outlook
Management is focused on growing the portfolio and Unitholder
value through increasing rental rates where the market allows,
future acquisition opportunities that will increase the overall
size and performance of the REIT, as well as maintaining a
manageable debt structure. The current debt structure
of the REIT is all at fixed rates with an average remaining
mortgage term of over five years. The majority of the REIT's
debt is CMHC insured
Management believes the organic growth in NAV due to paydown of
debt over the mortgage terms is a positive outcome of the higher
leveraged position as well as lowering the REIT's debt to GBV ratio
and thereby increasing the NAV per Unit over time.
Management anticipates that demand for rental housing will
remain strong in the coming quarters due to immigration and the
affordability gap in rental vs. home ownership. As interest
rates remain at elevated levels and increased costs of construction
continue, the cost of home ownership maintains the affordability
gap.
The increase in the portfolio's operating costs due to inflation
may be offset by increases in rental rates, where the market
allows, as 56 percent of the portfolio at June 30, 2024 is not under rent control or
restrictive financing agreements.
About Marwest Apartment Real Estate Investment
Trust
The REIT is an unincorporated open-ended trust governed by the
laws of the Province of Manitoba.
The REIT was formed to provide holders of Units with the
opportunity to invest in the Canadian multi-family rental sector
through the ownership of high-quality income-producing properties,
with an initial focus on stable markets throughout Western Canada.
Forward-looking Statements
The information in this news release includes certain
information and statements about management's views of future
events, expectations, plans and prospects that constitute
forward‐looking statements. These statements are based upon
assumptions that are subject to significant risks and
uncertainties. Because of these risks and uncertainties and
as a result of a variety of factors, the actual results,
expectations, achievements or performance may differ materially
from those anticipated and indicated by these forward‐looking
statements. A number of factors could cause actual results to
differ materially from these forward‐looking statements, including
the risks described in the REIT's latest annual information form
and management's discussion and analysis. The payment of cash
distributions, and the amount of such cash distributions, will be
dependent upon a number of factors, including but not limited to
the financial performance, financial condition and financial
requirements of the REIT. Although management of the REIT
believes that the expectations reflected in forward‐looking
statements are reasonable, it can give no assurances that the
expectations of any forward‐looking statements will prove to be
correct. Except as required by law, the REIT disclaims any
intention and assumes no obligation to update or revise any
forward‐looking statements to reflect actual results, whether as a
result of new information, future events, changes in assumptions,
changes in factors affecting such forward‐looking statements or
otherwise.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this news release.
The Units are not registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act") and may not be
offered or sold within the United
States or to or for the account or benefit of U.S. persons,
except in certain transactions exempt from the registration
requirements of the U.S. Securities Act. This press release does
not constitute an offer to sell, or the solicitation of an offer to
buy, securities of the REIT in the United
States or in any other jurisdiction.
Notice with respect to Non-IFRS Measures Disclosure
The REIT's financial statements are prepared in accordance with
IFRS. In addition to IFRS measures, this news release and the
REIT's Q2 2024 MD&A disclose certain non-IFRS financial
measures that are commonly used by Canadian real estate investment
trusts as an indicator of performance. Non-IFRS measures and
ratios include the following:
Net Operating Income ("NOI")
The Trust calculates net operating income as revenue less
property operating expenses such as utilities, repairs and
maintenance and realty taxes. Charges for interest or other
expenses not specific to the day‑to‑day operations of the Trust's
properties are not included. The Trust regards NOI as an
important measure of the income generated by income-producing
properties and is used by management in evaluating the performance
of the Trust's properties. NOI is also a key input in
determining the value of the Trust's properties. For reconciliation
to IFRS measures, refer to "Financial Operations and Results" in
the REIT's Q2 2024 MD&A
Funds from Operations ("FFO")
The Trust calculates FFO substantially in accordance with the
guidelines set out in the white paper titled "White Paper on Funds
from Operations & Adjusted Funds from Operations for IFRS" by
the Real Property Association of Canada ("REALpac") as revised in January
2022. FFO is defined as IFRS consolidated net income adjusted
for items such as unrealized changes in the fair value of the
investment properties, effects of puttable instruments classified
as financial liabilities and changes in fair value of financial
instruments and derivatives. FFO should not be construed as
an alternative to net income or cash flows provided by or used in
operating activities determined in accordance with IFRS. The
Trust regards FFO as a key measure of operating performance. For
reconciliation to IFRS measures, refer to "Financial Operations and
Results" in the REIT's Q2 2024 MD&A
Adjusted Funds from Operations ("AFFO")
The Trust calculates AFFO substantially in accordance with the
guidelines set out in the white paper titled "White Paper on Funds
from Operations & Adjusted Funds from Operations for IFRS" by
REALpac as revised in January 2022. AFFO is defined as FFO
adjusted for items such as maintenance capital expenditures and
straight‑line rental revenue differences. AFFO should not be
construed as an alternative to net income or cash flows provided by
or used in operating activities determined in accordance with
IFRS. The Trust regards AFFO as a key measure of operating
performance. The Trust also uses AFFO in assessing its
capacity to make distributions. For reconciliation to IFRS
measures, refer to "Financial Operations and Results" in the REIT's
Q2 2024 MD&A
The following other non‑IFRS measures are defined as
follows:
- "FFO per unit" is calculated as FFO divided by the weighted
average number of Trust Units and Exchangeable Units of the
Partnership outstanding over the period.
- "AFFO per unit" is calculated as AFFO divided by the weighted
average number of Trust Units and Exchangeable Units of the
Partnership outstanding over the period.
- "AFFO Payout Ratio" is the proportion of the total
distributions on Trust Units and Exchangeable Units of the
Partnership to AFFO per Unit.
- "Net Asset Value" is calculated as the sum of unitholders'
equity and Exchangeable Units
- "Net Asset Value per Unit" or "NAV per Unit" is calculated as
the sum of unitholders' equity and Exchangeable Units divided by
the sum of Trust Units, Exchangeable Units and Deferred Units
outstanding at the end of the period.
- "Debt‑to‑Gross Book Value ratio" is calculated by dividing
total interest‑bearing debt consisting of mortgages by total assets
and is used as the REIT's primary measure of its leverage.
- "Debt Service Coverage ratio" is the ratio of NOI to total debt
service consisting of interest expenses recorded as finance costs
and principal payments on mortgages.
- "Stabilized net operating income" is the estimated 12-month net
operating income that a property could generate at full occupancy,
less a vacancy rate and stable operating expenses.
- "Average occupancy rate" is defined as the ratio of occupied
suites to the total suites in the portfolio for the period.
- "Same Property NOI" is defined as Net Operating Income from
properties owned by the REIT throughout comparative periods, which
removes the impact of situations that result in the comparative
period to be less meaningful, such as acquisitions, or properties
going through a lease-up period.
Management believes that these measures are helpful to investors
because, while not necessarily calculated comparably among issuers,
they are widely recognized measures of the REIT's performance and
tend to provide a relevant basis for comparison among real estate
entities. These non-IFRS financial measures are not defined
under IFRS and are not intended to represent financial performance,
financial position or cash flows for the period and should not be
viewed as an alternative to net income, cash flow from operations
or other measures of financial performance calculated in accordance
with IFRS.
The above measures are not standardized under the financial
reporting framework used to prepare the financial statements of the
REIT. Readers should be further cautioned that the above
measures as calculated by the REIT may not be comparable to similar
measures presented by other issuers. For further information,
refer to the sections entitled "Non-IFRS measures" and "Financial
Operations and Results" in the REIT's Q2 2024 MD&A, which is
incorporated by reference herein, for further information
(available on SEDAR+ at sedarplus.ca or the REIT's website
www.marwestreit.com).
SOURCE Marwest Apartment Real Estate Investment Trust