TSX.V - IIP
TORONTO, April 27 /CNW/ - InterRent International Properties Inc. (the
"Corporation" or "InterRent), an owner and operator 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 operating results for
the three and six months periods ended February 28, 2006.
For the quarter ended February 28, 2006, revenues from continuing
operations increased by 205% to $1,954,965, from $639,371 in the comparable
quarter of 2005. The increase in revenues was attributable to the addition of
771 suites to InterRent's portfolio during the prior twelve months, bringing
total ownership to 1,141 apartment suites at the end of the quarter. On a
sequential basis, revenues increased by 9.7% from the previous quarter. For
the six months ended February 28, 2006 revenues grew by 202% to $3,737,554
compared to $1,235,226 to the first half of 2005. InterRent exited the last
month of the second quarter with annualized revenues of approximately
$8.5 Million.
Expenses for continuing operations grew to $2,320,000 for the second
quarter, from $734,955 in the comparable quarter of 2005, representing an
increase of 215%. On a sequential basis, expenses rose by 12% from $2,065,543
in the previous quarter. For the six month period ending February 28, 2006
expenses were $4,385,698 as compared to $1,527,457 in the six month period
ending February 28, 2005. The increase in expenses for the second quarter and
first half of 2006 were mainly a function of greater unit ownership,
stabilization costs associated with the new acquisitions, and higher utility
costs. Experience shows, and industry statistics confirm, that it takes
between six and eighteen months after the acquisition of a property to
stabilize its operation to a level where it is delivering optimum financial
performance from an occupancy and cost perspective. At the end of the second
quarter of 2006, only 25 % (458) suites had been under InterRent ownership for
more than one year. Revenues from stabilized buildings represented 46% of
revenues, but 57% of Net Operating Income (NOI), and 88.80% of net income
after mortgage interest. For the first half of 2006, stabilized buildings
operated with an average NOI of 48% while unstabilized buildings were at 36%.
It is expected that once the remaining properties are stabilized, income to
expense ratios will increase to the average range of 46% to 50% of gross
rental revenues. Utility and operating costs also traditionally rise in the
second quarter due to higher heating costs and snow removal expenses during
the winter months. Utility costs for the second quarter were 19.1% of revenues
as compared to 13.7% in the prior quarter. The Company has entered into
contracts to lock in its natural gas pricing for a period of five years and
its electricity pricing for three, at below current market rates.
For the second quarter, General and Administrative expenses (G&A)
increased to $234,032 (11.8% of total revenues), from 140,807 ($286,405 (21.3%
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. However on a percentage of revenue basis G&A expenses
declined by nearly 50%. For the six month period ending February 28, 2006, G&A
expenses were $411,451 or 10.9% of total revenues as compared to $306,727 or
24.4%, a year over year decline of more than 50% on a percentage of revenue
basis. InterRent's management aims to further decrease its G&A expenses on a
percentage of revenue basis as its portfolio grows and G&A expenses can be
amortized over a greater number of properties.
Net loss from continuing operations increased in the second quarter to
$338,566 ($0.01/share) from a loss of $73,833 ($0.00/per share) in the
comparable quarter of 2005. Of the loss from continuing operations, $305,546
was attributable to amortization of income producing properties and deferred
financing fees, as compared to $105,173 in same quarter of fiscal 2005, a
result of the increase in the company's portfolio value to $57.4 million. For
the first six months of 2006, loss from continuing operations was $611,606
compared to $270,409 in the comparable period of the prior fiscal year. Of
this loss $578,714 was attributable to amortization in the first six months of
2006 compared to $210,968 in the comparable six month period of 2005.
Funds From Operations (FFO) a non-GAAP measurement of operating
performance was $27,695 ($0.00 per share), for the second quarter as compared
to an FFO of $54,892 ($0.00 per share) in the comparable quarter of the prior
year. For the six month period ended February 28, 2006 FFO was $50,618 ($0.00
per share) as compared to $14,826 ($0.00) in the first six months of 2005.
The book value of operating real estate assets grew to $57.4 million at
the end of the second quarter, compared to $42.1 million at the end of fiscal
2005.
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Summary of Fiscal Results For the Three & Six
Months Ended February 28th.
2006 2005
---- ----
3 Months 6 Months 3 Months 6 Months
-------- -------- -------- --------
Revenues $ 1,981,589 3,774,092 661,122 1,257,048
Expenses $ 2,320,155 4,385,698 734,955 1,527,457
Net Loss From Continuing
Operations $ 338,566 611,606 73,833 270,409
Results Of Discontinued
Operations $ 148,746 390,717 58,383 69,276
Net Loss $ 189,820 220,899 15,450 201,433
Net Loss/Share $ (0.011) (0.021) (.003) (.012)
FFO $ 27,695 50,618 54,892 14,826
FFO/Share $ 0.00 0.00 0.00 0.00
Commenting on the financial results for the three and six months periods
ending February 28, 2006, Michael Newman, President and CEO of InterRent
stated "Over the first six months of 2006 we achieved our portfolio and
revenue growth objectives. As we continue to stabilize the buildings within
our portfolio, management's commitment is to work on our goal of improving
operational performance in order to achieve our profit and cashflow
objectives. The pending business combination with Silverstone Equities, should
increase our portfolio size by 50% and result in a 60% increase in revenues.
Since the Silverstone portfolio is fully stabilized, and certain
operating and overhead costs will be rationalized, we expect a significant
decline in operating and G&A expenses over as a percentage of revenues and a
comparable increase in profits and cashflows."
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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%SEDAR: 00010579E
