InterRent Real Estate Investment Trust

InterRent Real Estate Investment Trust

March 26, 2008 06:00 ET

InterRent Real Estate Investment Trust Announces Fourth Quarter and Full Year 2007 Financial Results

TORONTO, ONTARIO--(Marketwire - March 26, 2008) - InterRent Real Estate Investment Trust (TSX:IIP.UN)(TSX:IIP.DB) ("InterRent") today reported its financial results for the fourth quarter and year ended December 31, 2007.



- During 2007 InterRent acquired 2,179 suites for $159 million

- Suites owned increased by 119% to 4,007

- Acquired first properties in northern Ontario

- Income producing assets grew to $270 million as at December 31, 2007 from $110 million at December 31, 2006, an increase of 145%

- Operating Revenues grew to $27 million,

- Net Operating Income (NOI) grew to $13.4 Million, and as a percentage of revenue increased to 49.6%, from 41% at the end of 2006, a 21% increase.

- Net loss of $4.7 million and cash flows of $3.9 million were below management's expectations

- Vacancies declined from 7.66% at December 31, 2006 to 3.4% at December 31, 2007, a 50% decrease

- Subsequent to year end, the REIT entered into conditional purchase agreements to acquire six properties in Ottawa, Kingston and the GTA for $28.9 million

Equity & Debt

- Successfully raised $53 million in equity on a fully marketed basis in February

- Raised an additional $11.7 million in equity throughout the year through private placements and property purchases using REIT units

- Secured a $50 million acquisition facility on favourable terms

- In December, launched a $25 million "bought deal" 7% convertible debenture offering, that closed subsequent to year end


- Successfully listed units on the TSX in April 2007

- Implemented a Dividend Re-Investment Plan (DRIP) in the second half of the year

"Fiscal 2007 was a year of significant growth, combined with complex and extensive structural changes for the REIT," said Michael Newman, Chief Executive Officer. "We tripled the size of our portfolio and raised $65 million in equity. We also arranged a $50 million acquisition facility in a very challenging real estate environment. We built a solid foundation in the multi-family residential asset class in 2007, and going forward, management will focus on stabilizing the newly acquired properties, strengthening our operating financial results, and a greater emphasis on organic growth while reducing operating and G&A expenses, In 2008 we expect to implement a number of "green initiatives" that we believe will result in considerable energy savings in future fiscal periods."

2007 Financial Highlights

Following InterRent's change in legal entity status from a corporation to a trust, management has reviewed the required financial reporting requirements and determined that InterRent REIT is an entirely new reporting entity, and not a continuation of the predecessor company. As a result the only comparative financial results being provided is for the 25 day period from the receipt of court approval for the trust, to the 31st of December 2006.

Rental revenues for the full year 2007 were $27.0 million compared to $1.0 million for the 25 day period ending December 31, 2006, an increase of 85% on an annualized basis. The growth in rental revenues was due to the impact of acquisitions made since the beginning of Fiscal 2007.

InterRent's NOI in fiscal year 2007, as a percentage of revenue, increased to 49.6% as compared with 41% in the 25 day period ending December 31, 2006.

Approximately 70% of the REIT's properties were deemed to be stabilized at year end. Stabilized properties generated an average of 53% NOI compared to 49.6% for the portfolio as a whole.

InterRent's FFO was $2.2 million for the twelve months period ended December 31, 2007.

Distributable income increased to $2.0 million for the full year 2007, equal to 7.2% of revenues compared to (83)or (8.7)% of DI for the 25 day period, ending December 31, 2007.

Results Of Operations For;
Fiscal Year Ending For The 25 Day Period
December 31, 2007 Ending December 31,
Revenues $ 26,992,000 949,000
Operating Expenses 13,614,000 559,000
---------- -------
Net Operating Income (NOI) 13,378,000 390,000
G&A 2,915,000 209,000
Financing costs 8,249,000 266,000
Amortization 6,681,000 231,000
--------- -------
Net (Loss) (4,468,000) (316,000)
Net (Loss) per Unit (0.298) (0.093)
Funds From Operations (FFO) 2,213,000 (86,000)
FFO per Unit 0.148 (0.014)
Distributable Income (DI) 1,950,000 (83,000)
DI per Unit 0.13 (0.014)
Weighted Average Units O/S 14,996,626 6,060,863

2007/Q4 Financial Highlights

Rental revenues for the quarter ending December 31, 2007 were $8.4 million as compared to $1.0 million for the 25 day period ending December 31, 2006, an increase of 133% on an annualized basis. Sequentially, rental revenues grew by 7.9% from the third quarter of 2007, largely attributable to acquisitions made in the third quarter of 2007.

Net Operating Income (NOI) as a percentage of revenues was 48% for the quarter ending December 31, 2007 as compared to 41% for the 25 day period ending December 31, 2006. On a sequential basis, this compares to 53.2% in the third quarter of 2007. The fourth quarter, due mainly to seasonal factors and year end adjustments is traditionally one of the worst performing quarters. This year was no exception, with severe weather in November and December generating higher than historical utility and snow removal expenses. An additional $300,000 was incurred in the quarter, charged to repositioning costs for properties stabilized during the year.

G&A expenses also increased by over $300,000 in the quarter due to annual incentive bonuses paid to management at year end. The bonuses were accounted for as part of the REIT's Deferred Unit Plan (DUP).

Conference Call and Webcast

Management will hold a conference call and live audio webcast on March 26, 2008 at 10:30 a.m. ET to discuss InterRent's fourth quarter and year-end performance. The call may be accessed by dialing 416-644-3417 or 1-800-732-9303. The webcast will be accessible at A replay of the call will be available until midnight on April 2, 2008. It can be accessed by dialing 416-640-1917 or 1-877-289-8525 and entering the passcode 21263317#.

(i)Non-GAAP Measures

InterRent REIT assesses and measures segmented operating results based on performance measures referred to as "Funds From Operations" ("FFO") and Distributable Income ("Dl"). Both FFO and DI are widely accepted supplemental measures on the performance of a Canadian real estate investment trust; however, they are not measures defined by Canadian generally accepted accounting principles ("GAAP"). The GAAP measurement most comparable to FFO and DI is total cash flow from operating activities and net earnings. FFO and DI, however, should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with GAAP as indicators of InterRent REIT's performance. In addition, InterRent REIT's calculation methodology for FFO and Dl may differ from that of other real estate companies and trusts and therefore readers should not place reliance on these measures.

About InterRent

InterRent is a rapidly expanding, growth oriented real estate investment trust engaged in building unitholder value through the accretive acquisition, ownership and operation of strategically located income producing multi-residential real estate, with 4,007 apartment suites under ownership and 264 suites under contract, for a total of 4,271 apartment suites.

Forward Looking Statements

This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "anticipated", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". InterRent is subject to significant risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements contained in this release. A full description of these risk factors can be found in InterRent's publicly filed information which may be located at InterRent cannot assure investors that actual results will be consistent with these forward looking statements and InterRent assumes no obligation to update or revise the forward looking statements contained in this release to reflect actual events or new circumstances.

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

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