Immigration-fuelled population growth and rising interest rates that have driven up the cost of buying a home helped boost Minto Apartment REIT’s bottom line in the second quarter, the Ottawa-based firm said Wednesday.
Minto reported year-over-year gains across all its key financial indicators in the three-month period ending June 30.
The firm generated funds from operations of $13.7 million in the quarter, compared with $11.9 million a year earlier.
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Meanwhile, Minto’s overall revenue rose 18.8 per cent year-over-year to $35.5 million. The increase was driven in part by rising occupancy rates in its unfurnished suites, which ticked up to 94.7 per cent from 91.5 per cent a year earlier.
Average rents in Minto’s same-property portfolio were $1,695, up 3.4 per cent from the second quarter of 2021.
CEO Michael Waters cited a number of “steadily improving market conditions” for the gains.
“As the negative impact of COVID-19 on urban rental markets dissipates, we believe the outlook for our business is very strong,” Waters said in a statement.
“Macro trends like increased immigration and strong interest in Canada from foreign students continue to drive population growth and the demand for housing. Rising interest rates have increased the cost of home ownership and further widened the affordability gap between owning and renting a home, making renting an increasingly attractive option.”
The REIT reported net income of $183.5 million, compared with $8.7 million the previous year. Minto attributed the increase to a fair-value gain on Class B LP Units of Minto Apartment Limited Partnership of $172.8 million, compared with a fair-value loss on the units of $50.8 million in the second quarter a year ago.
Minto signed 667 new leases in the second quarter, realizing an average rent gain of 12.1 per cent – the highest increase since the first quarter of 2020, before the pandemic threw the rental housing industry into a tailspin.
While the REIT’s operating expenses soared more than 25 per cent year-over-year to $7.3 million as a result of rising inflation, acquisition costs and property tax hikes, Waters said Minto is in good position to weather the headwinds.
“While the current capital market environment is challenging, we are continuing our efforts to maximize revenue, optimize occupancy, manage controllable operating expenses and maintain a strong liquidity position,” he said.
Minto REIT owns 32 multi-residential properties in Ottawa, Toronto, Montreal, Calgary and Edmonton that contain a total of nearly 8,300 apartment units. The firm has more than 2,200 additional suites in its construction pipeline at eight projects in Ottawa, Toronto, Vancouver and Victoria.
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