Northview Residential REIT Reports Strong Same Door NOI Driven by Western Canada Multi-Residential Growth of 13.8%

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CALGARY, Alberta, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Northview Residential REIT ("Northview” or the "REIT”) (NRR.UN - TSX), today announced financial results for the three and nine months ended September 30, 2024.

Q3 2024 HIGHLIGHTS AS COMPARED TO Q3 2023

• Net operating income ("NOI”) of $42.2 million increased 20.5%
• Same door⁽¹⁾ NOI of $33.4 million resulting in growth of 8.9%
• Western Canada multi-residential led same door NOI growth at 13.8% resulting from average monthly rent ("AMR”) ⁽¹⁾ growth of 8.8% and occupancy gains of 240 bps
• AMR improvements across all regions with growth of 6.9%
• Multi-residential occupancy⁽¹⁾ improved by 130 bps to 96.0%
• Funds from operations ("FFO”)⁽²⁾ per basic Unit of $0.48 increased from $0.46
• Trailing twelve-month basic FFO payout ratio ⁽²⁾ was 62.3% compared to 98.6%
• Debt to gross book value⁽³⁾ decreased to 64.9% compared to 65.1% as at December 31, 2023
• Completed $56.6 million of non-core asset sales in 2024 as of today
• In October, the syndicated credit facility was amended to a $285.0 million revolving facility with an interest rate spread decrease of 95 bps and a two-year maturity extension to December 31, 2026

"We recently completed extensive amendments to our credit facility that significantly improves Northview's financial stability, flexibility, and generates immediate cash savings from lower interest rates. In addition, we've completed over $56 million in non-core asset sales to date, further reducing leverage. We remain committed to our target of $100 to $150 million in dispositions which is expected to be completed through 2026. Northview's solid operating performance and commitment to strengthening the balance sheet will continue to drive value for our Unitholders,” concluded Mr. Cook.

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_{⁽¹⁾    Other Key Performance Indicator. See "Non-GAAP and Other Financial Measures” section of this news release.}

_{⁽²⁾    Non-GAAP financial measure or non-GAAP ratio. See "Non-GAAP and Other Financial Measures” section of this news release.}

_{⁽³⁾    Capital Management Measure. See "Non-GAAP and Other Financial Measures” section of this news release.}

FINANCIAL CONDITIONS AND OPERATING RESULTS

HIGHLIGHTS

NOI

NOI increased by $7.2 million and $29.0 million, or 20.5% and 31.4%, for the three and nine months ended September 30, 2024, compared to the same periods last year. These increases were mainly due to $4.7 million and $22.2 million NOI contributions from the new portfolios acquired in 2023 as part of the recapitalization event (the "Recapitalization Event”) and same door NOI growth.

SAME DOOR NOI

Same door NOI growth was 8.9% and 8.1%, for the three and nine months ended September 30, 2024, respectively, compared to 2023. Same door NOI growth was led by the multi-residential segment, largely driven by Western Canada's enhanced NOI delivery of 13.8% and 19.2%, for the respective periods, driven by strong AMR and occupancy gains. Further driving these results, Northern Canada provided same door NOI growth of 11.8% driven by AMR and occupancy gains and lower comparative period which included rent abatements for tenants evacuated by the Yellowknife wildfires and Atlantic Canada provided same door NOI growth of 9.3% driven by AMR growth in New Brunswick and Nova Scotia.

During the third quarter, multi-residential AMR growth of 6.9% was driven by increases across all regions. Occupancy improved by 130bps to 96.0% when compared to Q3 2023. Western Canada was the most significant contributor to these gains with AMR growth of 8.8% and occupancy gains of 240 bps compared to the prior year.

FFO

FFO of $17.3 million and $48.9 million for the three and nine months ended September 30, 2024, increased 38.3% and 57.6% from the comparative period in 2023. These increases were attributable to same door NOI growth and NOI contributions from acquisitions net of associated incremental financing costs.

FFO per basic Unit was $0.48 and $1.36, for the three and nine months ended September 30, 2024 compared to $0.46 and $1.36 for the comparative period due to higher FFO, partially offset by additional units issued in August 2023 as part of the Recapitalization Event.

FFO per diluted Unit increased to $0.45 for the three months ended September 30, 2024, compared to $0.43 for the comparative period mainly due to FFO growth and fewer additional Trust Units expected to be issued upon the redemption of Redeemable Units driven by the improvement in Northview's Class A Unit market price.

FFO per diluted Unit decreased to $1.26, for the nine months ended September 30, 2024, compared to $1.34, for the comparative period. Redeemable units were issued in August 2023 as part of the Recapitalization Event, as a result there was limited dilutive impact in the nine months comparative period.

NET AND COMPREHENSIVE INCOME

Net and comprehensive income of $2.3 million for the third quarter was lower than $155.5 million from 2023. For the nine months ended September 30, 2024, net and comprehensive loss was $1.0 million, compared to income of $143.0 million for the prior year. These decreases were mainly due to the $161.3 million fair value gain on investment properties recognized in 2023 related to the Recapitalization Event.

DISTRIBUTIONS

The FFO payout ratio for the trailing twelve months ended September 30, 2024 improved to 62.3% compared to 98.6% for the same period in 2023 due to the distribution reduction in June 2023 and the completion of the Recapitalization Event.

FINANCING COSTS AND DEBT OPTIMIZATION

During the three and nine months ended September 30, 2024, Northview completed $54.4 million and $181.9 million of mortgage financing at a weighted average interest rate of 4.77% and 4.70%, respectively. The net proceeds were used to repay $17.5 million and $49.0 million of borrowings on the credit facilities for which the floating rate was 8.26% and 8.32% for the three and nine months ended September 30, 2024 respectively, reflecting increase rate savings of approximately 350 bps.

On October 24, 2024, Northview executed extensive amendments to the syndicated credit facility which is expected to improve Northview's access to liquidity, reduce financing costs, and provide stability. The credit limit increased to $285.0 million and the facility was restructured into a revolving facility, in which repayments increase credit availability, providing ongoing liquidity support. This facility will bear interest at the Canadian Overnight Repo Rate Average ("CORRA”) rate plus 3.00%, decreasing the interest rate spread by 95 bps which is expected to result in credit facility interest savings. The maturity date was extended for two years to December 31, 2026 further providing stability. 

On October 30, 2024, Northview also extended the maturity date of the term facility for two years to December 31, 2026 with the other terms unchanged.

As of September 30, 2024, debt to gross book value was 64.9%, a reduction of 20 bps compared to 65.1% as at December 31, 2023, mainly due to non-core asset sales and the use of proceeds to reduce credit facility debt.

ASSET DISPOSITIONS

During the third quarter of 2024, Northview completed non-core asset sales of 226 multi-residential suites and 2,556 commercial sq. ft. for gross proceeds of $24.7 million in Shediac, NB, Moncton, NB, and Iqaluit, NU.

Subsequent to September 30, 2024, Northview completed non-core asset sales of 377 multi-residential suites for gross proceeds of $31.3 million in Gander, NL, Sept Iles, QC, and Iqaluit, NU.

Asset sale prices have been consistent with, or above, Northview's IFRS fair value of investment properties.

NON-GAAP AND OTHER FINANCIAL MEASURES

Certain measures in this earnings release do not have any standardized meaning as prescribed by generally accepted accounting principles ("GAAP”) and may, therefore, be considered non-GAAP financial measures, non-GAAP ratios, or other measures and may not be comparable to similar measures presented by other issuers. These measures are provided to enhance the readers' overall understanding of Northview's current financial condition and financial performance. They are included to provide investors and management with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between periods. These measures include widely accepted measures of performance for Canadian real estate investment trusts; however, the measures are not defined by GAAP. In addition, these measures are subject to the interpretation of definitions by the preparers of financial statements and may not be applied consistently between real estate entities. These measures include:

• Non-GAAP Financial Measures: Adjusted funds from operations ("AFFO”) and funds from operations ("FFO”)
• Non-GAAP Ratios: AFFO payout ratio; AFFO per Unit; FFO payout ratio; and FFO per Unit
• Capital Management Measures: Distributions declared to Unitholders and debt to gross book value
• Other Key Performance Indicators: AMR; NOI margin; occupancy; same door revenue, expenses, net operating income, occupancy, and AMR; weighted average number of Units - basic; and weighted average number of Units - diluted

NON-GAAP RECONCILIATION

The following table reconciles FFO and AFFO from net and comprehensive income (loss), the most directly comparable GAAP measure as presented in the unaudited condensed consolidated interim financial statements: