InterRent International Properties Inc.

InterRent International Properties Inc.

July 31, 2006 09:15 ET

InterRent International Properties Inc., Releases Financial Operating Results for the Third Quarter and First Nine Months of 2006

TORONTO, ONTARIO--(CCNMatthews - July 31, 2006) - InterRent International Properties (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 three and nine months periods ended May 31, 2006.

For the quarter ended May 31, 2006, revenues from continuing operations increased by 131% to $2,103,470 from $1,013,716 in the comparable quarter of 2005. The increase in revenues was mainly attributable to the addition of 834 suites to InterRent's portfolio during the prior twelve months, bringing total ownership to 1,209 apartment suites at the end of the quarter. On a sequential basis, revenues increased by 7.5% from the previous quarter. For the nine months ended May 31, 2006 revenues grew by 167% to $5,877,562 compared to $2,245,661 in the first nine months of 2005. InterRent exited the last month of the third quarter with annualized revenues of approximately $9.25 Million.

Expenses for continuing operations grew to $2,703,000 for the third quarter, from $1,099,588 in the comparable quarter of 2005. On a sequential basis, expenses rose by 16.5% from $2,320,155 in the previous quarter. For the nine month period ending May 31, 2006 expenses were $7,088,847 as compared to $2,601,516 in the comparable nine month period ending May 31, 2005. The increase in expenses for the third quarter and first nine months of 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 the third quarter of 2006, only 714 (59%) suites had been under InterRent's ownership for more than one year. It is expected that once the remaining properties are stabilized, income to expense ratios will increase to the average range of 46% to 52% of gross rental revenues. Utility and operating costs also traditionally rise in the third quarter due to higher heating costs and snow removal expenses during the winter months. Utility costs for the third quarter were 23.2% of revenues as compared to 19.1% in the prior quarter. 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.

For the second quarter, General and Administrative expenses (G&A) increased to $194,211 (9.2% of total revenues), from $145,644 (14.9% of revenues) for the comparable quarter of the previous year, due to the implementation of management, administrative and accounting infrastructure required to deal with current and future growth in the Company's portfolio. However on a percentage of revenue basis G&A expenses declined by 38%. For the nine month period ending may 31, 2006, G&A expenses were $605,662 or 10.4% of total revenues as compared to $452,371 or 20.7%, in the first nine months of the previous year, a year over year decline of 50% 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 from continuing operations increased in the third quarter to $599,679 ($0.02/share) from a loss of $85,872 ($0.00/per share) in the comparable quarter of 2005. Of the loss from continuing operations, $335,947 was attributable to amortization of income producing properties and deferred financing fees, a non-cash item, compared to $152,118 in the same quarter of fiscal 2005, a result of the increase in the company's portfolio value to over $60 million. For the first nine months of 2006, loss from continuing operations was $1,211,285 compared to $355,855 in the comparable period of the prior fiscal year. Of this loss, $914,661 was attributable to amortization in the first nine months of 2006 compared to $353,955 in the comparable nine month period of 2005.

Funds From Operations (FFO) a non-GAAP measurement of operating performance was a negative $205,912 ($0.01 per share), for the third quarter as compared to an FFO of $66,246 ($0.00 per share) in the comparable quarter of the prior year. For the nine month period ended May 31, 2006, FFO was a negative $155,294 ($0.01 per share) as compared to $72,367 ($0.00) in the first nine months of 2005.

The book value of operating real estate assets grew to $60.9 million at the end of the third quarter, compared to $42.1 million at the end of fiscal 2005.

Summary of Fiscal Results For the Three &
Nine Months Ended February 28th.

2006 2005
---- ----
3 Months 9 Months 3 Months 9 Months
-------- -------- -------- --------

Revenues $ 2,103,470 5,877,562 1,013,716 2,245,661
Expenses $ 2,703,149 7,088,847 1,099,588 2,601,516
Net Loss From
Operations $ 599,679 1,211,285 85,872 355,855
Results Of
Operations $ 12,743 403,460 (41,040) 27,810
Net Loss $ 586,936 807,825 126,912 328,045
Net Loss/Share $ (0.02) (0.03) (0.00) (0.01)
FFO $ (205,912) (155,294) 66,246 72,367
FFO/Share $ (0.01) (0.01) 0.00 0.00

Commenting on the financial results for the three and nine months periods ending May 31, 2006, Michael Newman, President and CEO of InterRent stated "Over the first nine months of 2006 we achieved our portfolio size and revenue growth objectives. As we continue to stabilize the buildings within our portfolio, management's commitment is to work on our goal of improving operational performance in order to achieve our profit and cashflow objectives. The pending business combination with Silverstone Equities, should increase our portfolio size by 40% and result in a 50% increase in revenues. Since the Silverstone portfolio is fully stabilized, and certain operating and overhead costs will be rationalized, we expect a significant decline in operating and G&A expenses as a percentage of revenues and a comparable increase in profits and cashflows."

InterRent is a rapidly expanding growth oriented real estate company engaged in building shareholder value through the acquisition, ownership and operation of strategically located income producing multi residential real estate within the Greater Toronto Area (GTA), and other major Ontario population centers, with 1,209 under ownership and 127 under contract.

InterRent International Properties Inc. will hold a conference call on Tuesday, August 1, 2006 at 10:00 am for investors and analysts to review its third quarter financial results. To participate in the conference call, please dial 416-644-3415 in Toronto, or Toll free 1-800-814-4941. Callers should request the InterRent Conference.

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.

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