Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Minto Apartment REIT (MIAPF, Financial) reported a 5.9% growth in average monthly rent for the same property portfolio, with a strong closing occupancy rate of 97.4%.
- Same property portfolio NOI increased by 8.2% year over year, with a margin increase of 130 basis points to a quarterly record of 66.2%.
- Normalized FFO and AFFO per unit increased by 8.3% and 9.6% respectively, reflecting effective capital allocation and reduced interest costs.
- The REIT's board of trustees approved a 3.0% increase in distribution, marking consistent annual increases since its IPO in 2018.
- Minto Apartment REIT (MIAPF) has committed to upward financing of properties, enhancing its balance sheet and financial flexibility with net proceeds of approximately $91 million.
Negative Points
- Revenue from commercial leases decreased by 35.1% from Q3 last year due to temporary retail vacancy.
- Total same property portfolio operating expenses increased by 2.1%, with property operating costs rising 3.2% due to higher digital advertising expenses and repairs.
- Property taxes rose 2.8% due to increased assessed values and rates in various locations.
- The REIT faces competition from new supply in Toronto, impacting occupancy and requiring tactical promotions.
- The Calgary market is experiencing competition from new home supply, affecting resident retention as some opt to purchase homes.
Q & A Highlights
Q: Can you provide some insights into the occupancy trends in downtown Toronto and the incentives being used?
A: Paul Baron, SVP of Operations, explained that Toronto is experiencing new supply from condo deliveries and purpose-built rentals. Minto has focused on one-bedroom units, which has been successful. Promotions are tactical, such as free parking or storage, to minimize financial impact while attracting residents.
Q: What are the expectations for property operating cost growth in 2025?
A: Edward Fu, CFO, mentioned they expect mid-single-digit growth in operating costs, consistent with previous outlooks. Jonathan Li, CEO, added that weather impacts and filling vacant positions could influence costs, with potential growth between 5% and 6.5%.
Q: What are the refinancing rates for the post-quarter financing, and how do they compare to existing rates?
A: Edward Fu stated that the top-up financing is at a 3.62% rate for five years with CMHC, compared to the current 3.8% for five-year terms. This financing will help pay down the revolver, which is at 5.8%.
Q: How is the transaction market in Vancouver, and what are the plans for Lonsdale Square?
A: Jonathan Li noted that Vancouver transactions are occurring at cap rates in the mid to high 3% range. Lonsdale Square is 92% leased, and Minto is considering various options, with a decision expected by year-end. They aim to avoid dilution and maintain cash flow growth.
Q: What is the outlook for revenue growth in 2025?
A: Jonathan Li explained that revenue growth is expected to be mid-single digits, assuming stable occupancy and low double-digit gains on lease turnover. If gains reduce to 7-8%, growth might be around 4%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
