InterRent REIT’s income rises in Q3 amid increased demand for rental housing

West 236 Residential Building
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’s buildings edged closer to full occupancy in the third quarter amid a rental market rebound as the company posted gains in most major financial metrics.

In financial filings Thursday for the three-month period ending Sept. 30, the Ottawa-based real estate investment trust said its funds from operations rose 5.3 per cent compared with the third quarter of 2021 to $20.3 million.

Meanwhile, InterRent’s same-property operating revenues rose 9.5 per cent to $47.8 million thanks to rising occupancy rates and a reduction in rebates that the REIT had offered to entice tenants earlier in the pandemic.

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Overall operating revenues were up 17 per cent to $54.9 million, buoyed by the addition of nearly 680 new suites to InterRent’s ownership portfolio in the last 12 months. The company now owns 12,573 suites, up from 11,897 at the end of September 2021.

The REIT’s properties had an occupancy rate of 95.6 per cent in the third quarter, up from 94.4 per cent the year before. Average rents also rose to $1,462 per suite from $1,367 in the third quarter of 2021.

But the company’s net operating income dropped dramatically from a year earlier, falling nearly 70 per cent to $32.7 million. InterRent said the decline was due primarily to a more modest fair value gain on investment properties of $5.7 million in the third quarter of this year, compared with $85.5 million in the same period in 2021.

CEO Brad Cutsey called the results “a big step forward on the occupancy front,” adding they demonstrate the firm’s commitment to controlling costs “and highlight the continued strong demand” for rental housing.

“Although we continue to navigate short-term challenges of inflation and interest rate volatility, we remain steadfast in our mission to create communities where people are proud to call home,” Cutsey said in a statement.

InterRent’s unit price was up 96 cents to $12.46 in late-day trading on the Toronto Stock Exchange. The units have fallen more than 30 per cent over the past year.

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