InterRent Real Estate Investment Trust
TSX : IIP.UN
TSX : IIP.DB

InterRent Real Estate Investment Trust

August 14, 2009 08:00 ET

InterRent REIT Reports Strong Revenues for Second Quarter 2009

TORONTO, ONTARIO--(Marketwire - Aug. 14, 2009) - InterRent Real Estate Investment Trust (TSX:IIP.UN)(TSX:IIP.DB) ("InterRent") today reported sustained growth in Operating revenues and Net Operating Income (NOI) for the three months ended June 30, 2009 over the three months ended June 30, 2008. The results were reported in conjunction with the REIT's financial and operating results for the three and six months ended June 30, 2009.

Highlights for the Three Months Ended June 30, 2009

- Operating revenues grew to $8.8 million, a 4.8% increase over the three months ended June 30, 2008.

- Net Operating Income (NOI) increased by 3.7% to $4.6 million over the three months ended June 30, 2008.

- Funds From Operations (FFO) was $0.6 million, down from $1.4 million over the three months ended June 30, 2008. This decrease was as the result of a $901,000 charge incurred in the strategic review process and one-time re-organization costs.

- Distributable Income (DI) was $0.09 million, or $0.01 per REIT unit compared to $1.0 million, or $0.05 per REIT unit over the three months ended June 30, 2008. This decrease was the result of a $901,000 charge incurred in the strategic review process and one-time re-organization costs. Excluding this charge, DI per REIT unit was $0.05 for the three months ended June 30, 2009.

- Subsequent to quarter-end, the TSX conditionally approved the listing of up to 9,333,333 trust Units at a price of $1.50 per Unit.

- Also subsequent to quarter-end, InterRent was advised that the maximum amount of the $14 million private placement has been placed in trust pending completion of the transaction.

"Despite the ongoing challenges of the economy and higher costs associated with the REIT's strategic review process and one-time re-organization costs, InterRent continued to see sustained growth in our Operating revenues and Net Operating Income in the second quarter of 2009," said Michael Newman, Chief Executive Officer. "The REIT's continued investment in our properties ensures the proper maintenance of our assets, as well as high quality living standards for tenants. Subsequent to quarter-end, we were pleased to get TSX conditional approval for the private placement portion of the CLV transaction, which will significantly improve our balance sheet and make capital available for future accretive acquisitions."



Financial Results

Results from Continuing Operations for:
----------------------------------------------------------------------------
Quarter Ending Quarter Ending
June 30, 2009 June 30, 2008
----------------------------------------------------------------------------
Operating Revenues $ 8,791,000 $ 8,386,000
----------------------------------------------------------------------------
Operating Expenses 4,228,000 3,986,000
----------- ------------
----------------------------------------------------------------------------
Net Operating Income (NOI) 4,563,000 4,400,000
----------------------------------------------------------------------------
Financing Costs 2,993,000 3,239,000
----------------------------------------------------------------------------
General and Administrative
Costs (G&A) 1,624,000 668,000
----------------------------------------------------------------------------
Amortization 1,895,000 2,249,000
----------------------------------------------------------------------------
Net (Loss) (1,949,000) (1,755,000)
----------------------------------------------------------------------------
Funds From Operations (FFO) 583,000 1,410,000
----------------------------------------------------------------------------
FFO per Unit 0.03 0.08
----------------------------------------------------------------------------
FFO, excluding costs associated
with the strategic review process
and one-time re-organization costs 1,484,000 n/a
----------------------------------------------------------------------------
FFO per Unit, excluding costs
associated with the strategic
review process and one-time
re-organization costs 0.08 n/a
----------------------------------------------------------------------------
Distributable Income (DI) 92,000 976,000
----------------------------------------------------------------------------
DI, per Unit 0.01 0.05
----------------------------------------------------------------------------
DI, excluding costs associated with
the strategic review process and
one-time re-organization costs 993,000 n/a
----------------------------------------------------------------------------
DI per Unit, excluding costs associated
with the strategic review process and
one-time re-organization costs 0.05 n/a
----------------------------------------------------------------------------
Weighted Average Units O/S 18,286,719 18,115,951
----------------------------------------------------------------------------


Results for the Three Months Ended June 30, 2009

Operating revenues for the three months ended June 30, 2009 were $8.8 million compared to $8.4 million over the three months ended June 30, 2008, representing an increase of 4.8%. The increase was due primarily to the acquisition of income-producing properties made during 2009 as well as increased monthly rents over the previous year.

Operating costs were $1.6 million or 18.3% of revenue for the three months ended June 30 2009, compared to $1.5 million or 18.1%, for the three months ended June 30, 2008.

Property taxes were $1.4 million or 16.1%, of revenue for the three months ended June 30, 2009, compared to $1.3 million, or 16.1% of revenue over the three months ended June 30, 2008.

Utility costs were $1.2 million or 13.7% of revenue for the three months ended June 30, 2009, compared to $1.1 million or 13.4% of revenue over the three months ended June 30, 2008.

NOI increased by 3.7%, to $4.6 million, during the second quarter of 2009, from $4.4 million over the three months ended June 30, 2008.

Financing costs were $3.0 million or 34% of revenue for the three months ended June 30, 2009, compared to $3.2 million or 38.6% of revenue over the three months ended June 30, 2008.

G&A costs increased to $1.6 million from $0.67 million over the three months ended June 30, 2008. Included in G&A costs was a charge of $901,000 incurred as a result of the strategic review process and one-time re-organization costs.

Net same property revenues grew by 1.3% to $8.4 million, from $8.3 million over the three months ended June 30, 2008. Same building NOI decreased by 0.3% to $4.32 million, from $4.34 million over the three months ended June 30, 2008.

FFO decreased to $0.6 million from $1.4 million over the three months ended June 30, 2008. FFO per unit declined to $0.03 per unit from $0.08 per unit over the three months ended June 30, 2008. Excluding the $901,000 charge for costs associated with InterRent's strategic review process and one-time re-organization costs, InterRent's FFO was $1.5 million and $0.08 per unit for the three months ended June 30, 2009.

DI was $92,000 compared to $1.0 million in the second quarter of 2008. Distributable income per unit was $0.01 per unit compared to $0.05 per unit in the second quarter of 2008. Excluding the $901,000 charge for costs associated with InterRent's strategic review process and one-time re-organization costs, InterRent's DI was $1.0 million and $0.05 per unit for the three months ended June 30, 2009.

Results for the Six Months Ended June 30, 2009

Operating revenues increased 5.5% to $17.5 million, from $16.6 million for the six months ended June 30, 2008. The increase was due to the purchase of a property made in 2009 and higher monthly rental rates.

Total operating expenses increased to $9.4 million from $8.7 million over the six months ended June 30, 2008.

NOI was $8.2 million, representing an increase of $0.27 million or 3.5% from $7.9 million over the six months ended June 30, 2008.

FFO decreased to $1.1 million during the six months ended June 30, 2009 from $1.8 million for the period ended June 30, 2008. FFO per unit was $0.06 for the six months ended June 30, 2009, compared to FFO per unit of $0.10 for the six months ended June 30, 2008. Excluding the charge of 901,000 for costs associated with InterRent's strategic review process and one time re-organization costs, InterRent's FFO was $2.1 million and $0.11 per unit for the six months ended June 30, 2009.

DI was ($0.024) million compared to $0.9 million during the six months ended June 30, 2008. DI per unit was $0.00 compared to $0.05 per unit for the six months ended June 30, 2008. Excluding the charge of $0.9 million for costs associated with InterRent's strategic process and one time re-organization costs, InterRent's DI was $1.0 million and $0.05 per unit for the six months ended June 30, 2009.

Strategic Review Update

On July 28, 2009, the Trust announced that it had agreed to complete a best-efforts, non-brokered private placement of a minimum of 5,333,333 Units and a maximum of 9,333,333 Units, at a price of $1.50 per Unit, to institutional and high net worth investors (the "Offering"). InterRent has since been advised that the maximum amount of the $14 million private placement has been placed in trust pending completion of the transaction.

The Trust also announced that it intended to enter into a property management agreement (the "Management Agreement") with CLV Group Inc. concurrent with the closing of the Offering and proposed a new slate of trustees for election at the upcoming annual and special meeting (the "Meeting") of unitholders of the Trust.

On August 5, 2009, the Trust announced that the Toronto Stock Exchange had accepted notice and conditionally approved the listing of up to 9,333,333 Units (the "TSX Decision") to be issued in connection with the Offering. The TSX Decision required that the Trust only enter into the proposed Management Agreement following unitholder approval at the Meeting with all unitholders of the Trust being entitled to vote thereon other than CLV, Mike McGahan, CLV's principal, and their related parties. Approval of the Management Agreement and nomination of InterRent's proposed slate of trustees are among the items to be considered at the Meeting.

The above-noted transactions were the product of the Trust's process to maximize unitholder value originally announced on March 11, 2009.

The special committee of the Trust considered various proposals and the board of trustees concluded that a significant financing on attractive terms, combined with changes to the existing board of trustees and the introduction of a proven, experienced management group for the Trust's entire property portfolio was the best alternative to position the business for profitable growth in the future.

The Trust also received a Notice of Application from NorthWest Value Partners Inc. ("NorthWest") on August 5, 2009 seeking, amongst other things, an order restraining the Trust from completing the Offering and the Management Agreement. InterRent is of the view that the allegations set out in such Notice of Application are completely without merit and will be vigorously defended. In addition, NorthWest has sought review of the TSX Decision in a Request for Hearing and Review that was submitted to the Ontario Securities Commission on August 6, 2009, and subsequently delivered a Fresh as Amended Request for Hearing and Review dated August 11, 2009. Such matters are still ongoing and the Trust is unable to estimate the timing or results thereof. Accordingly, there can be no assurance that the Offering and the transactions described above will be completed on the terms described, or at all.

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 ("DI"). 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 DI 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 4,033 apartment suites under ownership.

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 www.sedar.com. 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.

Contact Information