InterRent Real Estate Investment Trust

InterRent Real Estate Investment Trust

November 14, 2007 07:30 ET

InterRent Real Estate Investment Trust Releases Financial Operating Results for the Three and Nine Month Periods, Ending September 30, 2007

TORONTO, ONTARIO--(Marketwire - Nov. 14, 2007) - InterRent Real Estate Investment Trust (TSX:IIP.UN) ("InterRent") today released its financial operating results for the three and nine month periods ending September 30, 2007.


- Revenues increased by 18.6% to $7.8 million from $6.6 million in the second quarter of 2007.

- NOI as a percentage of revenue, excluding a one time writedown of receivables, remained stable at 54% compared to the second quarter.

- Completed the acquisition of thirteen apartment buildings with 684 apartment suites, for $39.4 million, ($57,621 per suite) increasing the size of the portfolio by 17.4%.

- Entered the growing northern Ontario market with the purchase of seven buildings with 272 suites in Sault Ste. Marie and Timmins.

- Occupancies in the REIT's portfolio increased to 96.9% from 96.2% at the end of the second quarter of 2007.

- Operating costs on a per suite basis declined to $316 per suite from $332 in the second quarter of 2007.

- For the nine month period ending September 30, 2007 the size of the portfolio grew by 2,102 units or 150%, to a total of 3,930 suites.

"The third quarter of 2007 saw strong growth in the size of our property portfolio, combined with our entry into the northern Ontario market" said Michael Newman, Chief Executive Officer. "We expect that some of the higher costs associated with the management of newly acquired buildings will moderate as these properties mature under our management, and will provide increased NOI's in future periods."

In addition to completing thirteen acquisitions in the third quarter, and expanding its footprint into new Ontario markets, InterRent also contracted to acquire an additional three buildings with 84 suites, all of which closed in the fourth quarter of 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 there are no comparative numbers from previous periods.

Rental revenues for the three months ended September 30, 2007, were $7.8 million, an increase of 18.6% from the second quarter of 2007. The increase was primarily due to the impact of acquisitions made since the beginning of Fiscal 2007. Rental revenues for the nine months ended September 30, 2007 were $18.6 million. For the nine months, rental revenues were $18.6 million. Third quarter annualized exit revenues were $35.3 million.

Operating expenses, including a writedown of receivables, amounted to $1.46 million or 18.8% of revenues, compared to $998,000 or 15.2% of revenues in the prior quarter. The increase in quarter over quarter operating expenses as a percentage of revenue, is also attributable to the higher costs associated with the stabilization of newly acquired buildings over the first two years of ownership. For the nine month period, operating expenses amounted to $3.27 million, or 17.6% of revenues.

Utilities at $922,000 for the third quarter, represented 11.8% of revenues, compared to $913,000, or 13.9% in the second quarter. For the nine months, utility expenses of $2.9 million were 15.6% of nine month revenues.

Property taxes of $1.26 million in the third quarter of 2007 were 16.1% of revenues, as compared to $1.05 million, or 16.1% of revenues in the second quarter. Property taxes for the nine months were $3.07 million or 16.5% of revenues.

InterRent's NOI for the third quarter was $4.1 million compared to $3.6 million in the second quarter. The increase was due to the REIT's acquisitions made during the first nine months of the fiscal year as well as seasonal factors. NOI as a percentage of revenue, excluding a $113,000 writedown of receivables, was stable at 54%, the same as in the second quarter. For the nine months NOI was $9.3 million.

Financing costs for the quarter were $2.48 million, or 32% of revenues compared to $1.84 or 27.4% of revenues for the prior quarter. The increase in financing costs on a percentage of revenue basis is attributable to InterRent's utilization of its higher interest rate, short term, acquisition facility. For the nine months, financing costs totaled $5.37 million, or 28.9% of revenues.

General and Administrative costs (G&A), including a $157,000 non-cash charge for option grants was $728,658 or 9.4% of revenues for the third quarter, as compared to $532,356, or 7.2% of revenues for the previous quarter. For the nine months, G&A expenses totalled $1.74 million, or 9.4% of revenues. Management continues to work on bringing G&A costs down to the 7% range on a run rate basis for the entire fiscal year.

InterRent's Funds From Operations (FFO) was $925,000 compared to $1.3 million in the second quarter of 2007. The REIT's FFO per unit was $0.057 per unit compared to $0.081 in the second quarter of 2007. For the nine months, FFO was $2.24 million, equating to $0.156 per unit.

Distributable income (AFFO) was $925,000 compared to $1.1 Million in the second quarter 2007. The REIT's distributable income per basic unit was $0.057 compared to $0.07 in the second quarter of 2007. For the nine month period distributable income was $2.02 million, or $0.141 per basic unit.

Financial Statement Chart

For The Periods Ended September 30, 2007

3 Months 9 Months
-------- --------

Revenues $ 7,777,691 18,600,660
Expenses 3,639,774 9,251,354
--------- ---------
Net Operating Income 4,137,917 9,349,306
Financing costs 2,484,114 5,370,721
G&A 728,658 1,741,628
Amortization 1,971,320 4,489,584
--------- ---------
Net Loss (1,088,994) (2,328,647)
Net loss/unit (basic & diluted) $ (0.068) (0.162)
Funds From Operations (FFO) 925,000 2,237,000
FFO/unit $ 0.057 0.156
Adjusted Funds From Operations (AFFO) 925,000 2,024,000
AFFO/unit $ 0.057 0.141

Conference Call and Webcast

InterRent will host a conference call and live audio webcast on Wednesday, November 14, 2007 at 10:30 a.m. ET. Michael Newman, President and Chief Executive Officer and Gary Traer, Chief Financial Officer, will discuss results for the third quarter ended September 30, 2007.

The call can be accessed by dialing 416-644-3417 or 1-800-732-9307. The webcast will be accessible at

A replay of the call will be available until midnight on November 21, 2007. It can be accessed by dialing 416-640-1917 or 1-877-289-8525 and entering the passcode 21250400#.

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 162 suites under contract, for a total of 4,169 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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