InterRent International Properties Inc.

InterRent International Properties Inc.

December 29, 2006 09:00 ET

InterRent International Properties Inc., Releases Audited Financial Operating Results For The Fiscal Year Ending August 31, 2006

TORONTO, ONTARIO--(CCNMatthews - Dec. 29, 2006) - InterRent International Properties Inc. (the "Corporation" or "InterRent") (TSX VENTURE:IIP)(FRANKFURT:I4N), an owner and operator of multi-unit residential income producing properties in the GTA and along Ontario's "HWY#401 Corridor" from Ottawa to London, released its financial operating results for the fiscal year ending August 31, 2006.


For the year ended August 31, 2006, revenues from continuing operations increased by 134.2% to $ $7,867,854 from $3,359,970 in fiscal 2005. The increase in revenues was mainly attributable to the addition of eight buildings with 407 suites (net of the sale of three buildings with 20 suites in the GTA during 2006) to InterRent's portfolio during the prior twelve months, bringing total ownership to 1,242 apartment suites at the end of fiscal 2006, as compared to 835 suites at the end of the previous fiscal year. InterRent exited the last month of the fiscal year with annualized run-rate revenues of approximately $9.76 Million.

Operating Expenses

Expenses for continuing operations grew to $9,698,151 for 2006, from $4,327,603 in fiscal 2005, an increase of 124.1%. The increased expenses in 2006 were mainly a function of greater unit ownership, stabilization costs associated with the new acquisitions, and higher utility costs. Experience shows, and industry statistics confirm, that it takes between six and eighteen months after the acquisition of a property to stabilize its operation to a level where it is delivering optimum financial performance from an occupancy and cost perspective. At the end of fiscal 2006, only 52.6% of InterRent's portfolio was considered stabilized. The main factor responsible for increased expenses in the year were due to rising utility costs as a result of higher energy prices. Utility costs for the year were 19.5% of revenues as compared to 15.7% in the prior year. The Company has entered into contracts to lock in its natural gas pricing for a period of five years and its electricity pricing for three, at, or below current market rates. Property taxes declined to 16.2% of revenues in 2006, compared to 18.1% in 2005.

General & Administrative (G&A)

General and Administrative expenses (G&A) increased to $880,113 (11.2% of total revenues), from $606,115 (18.0% of revenues) in the previous year, a reduction of 38% on a percentage of revenue basis. InteRent's management aims to further decrease its G&A expenses on a percentage of revenue basis as its portfolio grows and G&A expenses can be amortized over a greater number of properties.

Net Loss

Net loss from continuing operations increased for the year to $1,830,297 ($0.06/share) from a loss of $967,333 ($0.04/per share) in 2005. Of the loss from continuing operations, $1,334,506 or 73% of the total loss, was attributable to amortization of income producing properties and deferred financing fees, a non-cash item, compared to $580,292 (60.0%) for fiscal 2005, a result of the increase in the company's portfolio book value to over $60 million.

Funds From Operations (FFO)

Funds From Operations (FFO) a non-GAAP measurement of operating performance was a negative -$327,106 (-$0.01 per share), for fiscal 2006, as compared to a negative FFO of -$318,394 (-$0.01 per share) in the prior year.

Balance Sheet

The book value of operating real estate assets grew to $62,318,020 at the end of 2006, compared to $42,163,839 at the end of fiscal 2005., an increase of 47.8% Long term debt, including convertible debentures was $47,028,523 (75.5%) compared to $29,820,917 (70.7%) at the end of fiscal 2005. Shareholders' equity at the end of 2006 was $13,474,488 as compared to $11,605,691 at the end of fiscal 2005.

Summary Of Fiscal Results For The
Years Ended, August 31

2006 2005
---- ----

Revenues $ 7,867,854 3,359,970
Expenses $ 9,698,151 4,327,603
Net Loss From Continuing Operations $ (1,830,297) (967,633)
Results Of Discontinued Operations $ 540,019 170,272
Net Loss $ (1,290,278) (797,361)
Net Loss/Share $ (0.042) (0.035)
FFO $ (327,106) (318,394)
FFO/Share $ (0.01) (0.01)

Fourth Quarter

For the fourth quarter of fiscal 2006 InterRent had revenues of $1,990,292 compared to $$1,298,321 in the fourth quarter of 2005. Net operating income (NOI) was 46.7% of revenues compared to 42.2% for the same quarter of the prior year. Net loss for the 2006 fourth quarter was ($482,453) compared to ($469,316) in the same quarter of 2005.

REIT Conversion And Plan Of Arrangement

On December 7, 2006 InterRent, through a Plan of Arrangement, changed its corporate structure to a real estate investment trust (REIT), and acquired all of the general and limited partnership interest in Silverstone Equities, the owner of 479 multi residential suites in Ontario. The foregoing 2006 annual, audited financial statement refer only to the financial operations of InterRent International Properties Inc. prior to the conversion to a REIT structure and excludes the business combination with Silverstone Equities.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Corporation assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Corporation. Additional information identifying risks and uncertainties is contained in the Corporation's filings with the Canadian securities regulators, which filings are available at

We seek safe harbour.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information