Minto Apartment Real Estate Investment Trust took an earnings hit in the first quarter as demand for rental suites dipped in the wake of stricter measures aimed at curbing the spread of the novel coronavirus, the company said.
The REIT said it generated funds from operations of $10.9 million for the three-month period ending March 31, down from $12.1 million a year earlier. The average occupancy rate of unfurnished apartments in Minto’s buildings fell to 91.1 per cent compared with nearly 97 per cent a year earlier, a drop the company blamed on the economic fallout from the pandemic.
As a result, the average monthly rent across the REIT’s portfolio rose just 1.9 per cent year-over-year to $1,630.
“While suite turnover is typically low in the winter months, it was unusually high in Q1 2021 due to the impact of COVID-19, which altered the REIT’s typical suite turnover pattern,” Minto said in financial filings.
While 295 tenants vacated its properties in the first three months of 2020, the number of move-outs rose to 427 in the first quarter of this year, the REIT said. At the same time, while nearly all of last year’s vacancies – 290 – were filled, the most recent quarter saw 65 newly vacated apartments remain empty.
Rents on new leases were 7.6 per cent higher than expiring leases, well below average gains of 13.6 per cent leading up to the pandemic, the company said.
But as in the previous quarter, Minto said it has no plans to cut its rents. CEO Michael Waters said the company remains “extremely confident” the rental market will bounce back in the second half of 2021 as more vaccines are rolled out, immigration levels rise, workers start to return to the office and students head back to in-person classes.
“The favourable supply-demand fundamentals of multi-residential real estate have not changed in the past year, and the affordability gap between rental housing and home ownership has expanded in most Canadian cities,” Waters said in a news release.
“Population growth is expected to resume post-pandemic, and the appeals of urban living should also return as cities open more fully for business and leisure activities.”
Minto REIT owns 29 multi-residential properties in Ottawa, Toronto, Montreal, Calgary and Edmonton with more than 7,200 apartment units. The company is currently planning six new developments that would add nearly 1,600 suites to its portfolio.