IIP - TSX.V
TORONTO, Dec. 29 /CNW/ - InterRent International Properties Inc. (the
"Corporation" or "InterRent), an owner, operator and developer of multi-unit
residential income producing properties in the GTA and along Ontario's "HWY
No. 401 Corridor" from Ottawa to London, released its financial results for
the year ended August 31, 2005, showing an increase of 143% in the book value
of its apartment building portfolio compared to 2004.
For the 2005 fiscal year revenues from continuing operations increased by
150% to $3,650,366, from $1,459,464 in 2004. Exit revenue run rate for the
last month of fiscal 2005 was $5.95 million on an annualized basis, an
increase of 146% over 2004. The increase in revenues was attributable to the
addition of 522 suites to InterRent's portfolio during the year, bringing
total ownership to 835 apartment suites at the end of the fiscal year, as
compared to 313 at the beginning. Expenses from continuing operations
increased to $4,624,596 in the current year, from $1,783,027 in the prior
year, a function of greater unit ownership, stabilization costs associated
with the new acquisitions, and higher utility, property and capital tax
expenses. General and administrative expenses increased to $678,485 (18.3% of
total revenues) in 2005, from $286,405 (18.4% of total revenues) due to the
implementation of management, administrative and accounting infrastructure
required to deal with current and future growth in the Company's portfolio.
Net loss from continuing operations increased in 2005 to $915,671
($0.04/share) from a loss of $229,784 ($0.03/per share) in 2004. Of the loss
from continuing operations, $506,142 was attributed to amortization of income
producing properties in 2005 as compared to $192,654 in 2004, a function of
higher unit ownership. Funds From Operations (FFO) a non-GAAP measurement of
operating performance was a negative $217,286 ($0.01 per share), compared to a
negative FFO of $10,773 ($0.00 per share) in the prior year. The book value of
operating real estate assets grew to $42.1 million at the end of fiscal 2005
from $17.3 million at the end of fiscal 2004, while shareholders' equity grew
to $11.6 million ($0.50/share) from $4.3 million ($0.52/share).
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Summary of Fiscal 2005 & 2004 Results
-------------------------------------
2005 2004
---- ----
Revenues $ 3,708,925 1,553,243
Expenses $ 4,624,596 1,783,027
Net Loss From Continuing Operations $ (915,671) (229,784)
Results Of Discontinued Operations $ 118,310 187,562
Net Loss $ (797,361) (42,222)
Net Loss/Share $ (0.03) (0.00)
FFO $ (217,286) (10,773)
FFO/Share $ (0.01) (0.00)
Commenting on the financial results for 2005, Michael Newman, President
and CEO of InterRent stated "The past year was one of tremendous growth for
our Company in a very competitive and challenging environment. Foreign and
domestic investors continued to drive up the value of multi residential real
estate due to its relative safety and predictability when compared to other
investments. Many of the properties acquired by InterRent were through private
transactions, without becoming listed on the market. In 2005, relying on well
established relationships within the industry, management increased the book
value of InterRent's portfolio of apartment buildings by 144% to
$42.1 million, through strategic and accretive acquisitions. The average per
suite purchase price for the 522 suites acquired during the year was $45,375,
well below our target of $50,000, and substantially less than replacement
cost. Based on independent appraisals and publicly available market data, the
market value of InterRent's properties substantially exceeds their book
value."
"From an operational perspective, revenues for the period were up by
150%, to $3.7 million, an all time high, from $1.5 million last year, a
function of the new additions to our portfolio. Operating expenses also rose
to a new high of $2.1 million, compared, to $771,092 in 2004, an increase of
172%, mainly attributable to the larger portfolio and to the extraordinary
expenses required to stabilize the operating performance of newly acquired
buildings. On average, management projects that it takes 12 to 18 months from
the date of acquisition to have a building performing to InterRent's high
standards and management's expectations, after which an increase in the
financial performance of the asset can be assured.. As our newly acquired
assets mature and new purchases begin to represent a lower percentage of the
entire portfolio, management expects operating expenses to decline as a
percentage of revenues, to historical levels or below. Administrative and
general expenses increased in 2005 by 136% over the previous year, due to the
addition of executive, administrative and accounting infrastructure required
to deal with current and future portfolio growth. Management expects these
expenses to decline dramatically as a percentage of revenues, as the size of
InterRent's portfolio grows. To this end, and subsequent to year end,
InterRent closed on the acquisition of an additional 221 suites in Hamilton,
Niagara Falls and Prescott, Ontario, with a book value of $11.1 million, and
gross annual rental revenues in excess of $1.6 million. These acquisitions
will bring InterRent's portfolio to over 1,000 suites with a book value of
approximately $53.2 million. Also in keeping with our strategy of profitably
divesting of smaller GTA assets, the Company sold a 10 unit building in
Toronto for $850,000 subsequent to year end, and entered into a binding
agreement to sell another 5 unit building for $600,000 in the second quarter
of 2006. Binding agreements of purchase were also entered into for the
acquisition of 111 suites in Belleville, Ontario, for a total of $4.9 million,
which is scheduled to close in February of 2006."
InterRent is a rapidly expanding growth oriented real estate company
engaged in building shareholder value through the acquisition, ownership and
operation of strategically located income producing multi residential real
estate within the Greater Toronto Area (GTA), and other major Ontario
population centers.
Certain information in this press release may contain forward looking
statements. This information is based on current expectations that are subject
to significant risks and uncertainties that are difficult to predict. Actual
results might differ materially from results suggested in any forward looking
statements. The Corporation assumes no obligation to update the forward-
looking statements, or to update the reasons why actual results could differ
from those reflected in the forward-looking statements unless and until
required by securities laws applicable to the Corporation. Additional
information identifying risks and uncertainties is contained in the
Corporation's filings with the Canadian securities regulators, which filings
are available at www.sedar.com.
We seek safe harbour.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release
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