InterRent Real Estate Investment Trust

morning ladies and gentlemen and welcome to the inter-rent q2 2023 earnings conference call at this time all lines are in listen-only mode following the presentation we will conduct a question-and-answer session if at any time during this call you require immediate assistance please press star 0 for the operator this call is being recorded today Wednesday, August the 2nd, 2023. I would now like to turn the conference over to Renee Wei. Please go ahead.

Welcome, everyone, and thank you for joining Intergrant Reef Q2 2023 Earnings Call. My name is Renee Wei, Director of Investor Relations and Sustainability. You can find a presentation to accompany today's call on the Investor Relations section of our website under Events and Presentations. We're pleased to have Brad Cutsey, President and CEO, Kurt Miller, CFO, and Dave Nevins, COO on the line today. As usual, the team will present some prepared remarks and then we'll open it up to questions. Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks and certainties and assumptions that could cause actual results to differ materially. For more information, please refer to the cautionary statements of forward-looking information in the Reads News release and MDNA dated August 2, 2023. During the call, management may also refer to certain non-IFRS measures. Although the REIT believes these measures provide useful supplemental information about its financial performance, they're not recognized measures and do not have standardized meanings under IFRS. Please see the REIT's MD&A for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures. Brad, you're up.

Thanks, Renee. And good morning, everyone. Let's get started by reviewing our Q2 highlights. Same property and total portfolio occupancy came in at 95.4%. 30 basis points increased from June last year. Total occupancy was down 140 basis points, and same property occupancy was down 150 basis points compared to March this year. This decrease is due to the seasonality effect that typically results in a decline of anywhere between 50 and 200 basis points of occupancy from March to June, as is typical for residents' natural turn to occur during this period. When analyzing June occupancy rate for the last six years, it becomes evident that the occupancy has rebounded to pre-pandemic levels and is in line with long-term average. We achieved a 15% same property NOI growth and a 16.8% total portfolio NOI growth. As you can see on the right-hand side of the slide, our organic NOI growth and operating revenue have both returned to pre-pandemic levels. Furthermore, we have also delivered an impressive 300 basis point expansion in the NOI margin for same property and total portfolios. With our ability to contain operating costs paired with reduction of vacancy and rebates, this quarter top line growth flows through directly to improved NOI, demonstrating the efficiency and robustness of our operating platform and our extraordinary teams on the ground who continue to innovate and serve the communities our residents proudly call home. The fundamentals of our portfolio and industry continue to strengthen, as demonstrated by the consistent 6.8% growth in average monthly rent in June relative to a year ago. During the second quarter, rent growth for our non-repositioned portfolio has outpaced that of our repositioned portfolio. This is due to changes in our portfolio composition resulting from our acquisition strategy over the last few years that has focused on core urban markets, such as Toronto and Vancouver. that we believe we will continue to benefit from immigration and population growth. At the regional level, we continue to see a steady average monthly rent across all the core markets, with other Ontario, GTHA, and Vancouver leading the pack. Rental growth in Montreal is also steady, with a 4.6% year-over-year increase, and we believe there's a significant run rate still ahead for that market. FFO increased 3.7% to 19.6 million and on a per unit basis is up 2.3% to 13.4 cents. AFFO increased 3.8% to 16.9 million. We've achieved this growth despite the new normalization of higher financing costs during the quarter. We are focused on enhancing our debt portfolio and managing interest rate risks and have made incremental progress. The results of the team's efforts will become evident in the next few quarters. Kurt will provide further details into our balance sheet later in this call. With our debt to gross book value continuing to be at historically low levels, stable available liquidity of $282 million, we remain in a strong financial position to execute on a strategy amid heightened volatility in the debt markets.