InterRent REIT's earnings rebound continues despite quarter-over-quarter dip in occupancy

Westboro InterRent property
West 236, a rental complex at 236 Richmond Rd., is one of InterRent REIT's 21 properties in the National Capital Region. File photo

InterRent REIT continued its 2022 rebound in the second quarter, posting gains in key financial metrics compared with a year earlier even as its same-property occupancy rate fell from the end of the first quarter.

In financial filings for the three-month period ending June 30, the Ottawa-based real estate investment trust said its funds from operations rose 6.3 per cent compared with the second quarter of 2021 to $18.9 million. InterRent’s net income rose 27 per cent year-over-year to $77.6 million.

As usual for a firm that has continued to snap up real estate during the pandemic, some of that growth was fuelled by acquisitions. 

The company closed the quarter with the $109.3-million purchase of a 254-unit apartment building on Montreal’s south shore on June 30 – boosting its total number of suites to 12,573, up 6.1 per cent from a year earlier.

InterRent’s balance sheet was also bolstered by rising rents, which jumped from an average of $1,334 per suite in June 2021 to $1,416 in the same properties this year.

Meanwhile, the firm’s same-property occupancy rate, which had been on a steady slide earlier in the pandemic, rose 3.4 percentage points year-over-year to 95.6 per cent. 

But that was down from 96.4 per cent at the end of March – a drop InterRent attributed mainly to a rise in vacancies in the National Capital Region.

“Encouragingly, this region is seeing strong demand post-quarter, which should support an improved figure in Q3,” the firm said in a news release on Tuesday.

President and CEO Brad Cutsey said InterRent is seeing continued momentum as the housing rental industry rebounds from the pandemic despite “ongoing macro headwinds” such as soaring inflation and rising interest rates that are eating into tenants’ budgets.

“We see encouraging demand trends going into Q3 and look forward to sharing our progress in the coming months,” he said in a statement.

InterRent’s unit price – which has fallen more than 25 per cent over the past 12 months – finished the day at $13.01, down 30 cents, or 2.25 per cent, on the Toronto Stock Exchange.