InterRent REIT acquires 50% stake in new downtown Montreal apartment complex

David Sali

November 5, 2024

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InterRent REIT has teamed up with another firm to acquire a newly constructed apartment building in downtown Montreal for $107 million. The Ottawa-based real estate investment trust said this week it purchased a 50 per cent stake in the 20-storey, 244,000-square-foot highrise, which was completed last year, in a joint venture with a “trusted partner.” In a news release late Monday afternoon, InterRent CEO Brad Cutsey said the deal bolsters the REIT’s “already strong and well-located” Montreal portfolio. “We’re confident that this acquisition, once stabilized, will further supplement our solid organic growth as we continue to leverage our operational strengths and position InterRent for long-term growth,” Cutsey added. InterRent did not name the other partner in the transaction. Company officials did not immediately respond to requests for more information on Tuesday. Located just a few blocks from Old Montreal and the Université du Québec à Montréal, the building includes 248 residential suites along with about 7,000 square feet of ground-floor commercial space. InterRent said the commercial space is “in the process of being leased to a financial institution and an established national retail brand.” The REIT said it will fund its portion of the acquisition through a combination of proceeds from its capital recycling program and its operating line of credit. InterRent said it has also applied for long-term financing through the Canada Mortgage and Housing Corp. The transaction comes after a quarter that saw InterRent’s occupancy rates and funds from operations rise year-over-year. The company said its total portfolio and same-property occupancy rates were 96.4 per cent at the end of the three-month period ending Sept. 30, a gain of 1.2 percentage points from the previous year. InterRent’s same-property occupancy rate in the National Capital Region remained steady at 97.2 per cent, while all other regions showed improvements – including the Montreal area, where the rate jumped three percentage points to 96.3 per cent compared with the same quarter in 2023. The REIT’s average rents per suite were also up from the previous year, increasing seven per cent to $1,687. Meanwhile, InterRent’s funds from operations – a key metric for REITs – rose 9.7 per cent from a year earlier to $23.4 million. The REIT executed 1,279 new leases during the quarter, realizing an average gain on lease of 11.4 per cent. InterRent said it expects the federal government’s recent decision to slash the projected number of new permanent residents allowed into the country over the next three years will “moderate the pace of rental growth in certain markets in the near term.” The REIT said it is “closely monitoring market conditions in each region and remains flexible in its strategy.” Cutsey said he was “pleased” with InterRent’s third-quarter results. “Although growth in market rent has moderated from last year's peak, we have seen good leasing activity and increased occupancy across all regions,” he said. “Our focus remains on enhancing operating efficiency and further growing our industry-leading margins.” As of Sept. 30, InterRent had an ownership stake in a total of 12,031 suites, down 5.5 per cent from a year earlier.