Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Minto Apartment REIT (MIAPF, Financial) achieved strong operating performance with a 5.1% year-over-year growth in revenue and a 7.9% increase in NOI.
- Normalized FFO and AFFO per unit reached record highs in 2024, increasing by 12.9% and 15% respectively compared to the prior year.
- The REIT significantly reduced its variable rate debt, ending the year with more favorable debt metrics and stronger liquidity.
- Minto Apartment REIT increased its annual distribution by 3%, marking the sixth consecutive year of distribution increases.
- The REIT successfully entered the Metro Vancouver market through the acquisition of a 50% managing ownership interest in the Lonsdale Square property without diluting cash flow per unit or issuing equity.
Negative Points
- Occupancy rates dipped in Q4, with some softness in the Toronto and Calgary markets.
- Revenue from commercial leases decreased by 48.6% from Q4 last year due to temporary retail vacancy at Minto Yorkville.
- Furnished suite revenue decreased by 10.7% from Q4 last year due to lower average occupancy.
- The REIT experienced higher property operating expenses, which partially offset revenue growth.
- There is uncertainty in the market due to factors such as incoming supply, tariffs, and political uncertainty, which could impact future performance.
Q & A Highlights
Q: Your occupancy dipped in Q4. What are you seeing now, and what do you expect for the spring leasing season?
A: We saw some softness in December and January, particularly in Toronto and Calgary. However, demand has picked up as we moved into February and March, showing positive signs as we approach the spring leasing market. - Paul Baron, SVP of Operations
Q: Regarding the decision to waive the purchase option on Highland, will the proceeds be used for the NCIB?
A: Yes, the property is not yet stabilized, and occupancy is below 50%. We decided to waive the option to access the CDL proceeds at the end of April, intending to use most of those proceeds to buy back units. - Jonathan Li, CEO
Q: Can you provide insights on the leasing side, particularly in Toronto, where market rents are flattening?
A: In Toronto, we are seeing pressure from new condo supply. Asking rents are somewhat flat, with adjustments mainly on the unregulated side. We are leveraging promotions in the rent-controlled portfolio and have seen lead traffic pick up as we move into March. - Paul Baron, SVP of Operations
Q: How do you foresee Minto's asset acquisition or sale strategy in 2025?
A: We expect to be relatively flat, with no active asset sales at the moment. We will be opportunistic with asset sales and consider potential acquisitions, but it will depend on capital market conditions. - Jonathan Li, CEO
Q: What impact do you anticipate from tariffs on new construction costs?
A: The direct impact is more on balance sheet construction. For Richgrove, most major components are already in place, minimizing impact. For Leslie York Mills, phase two may see some cost increases, but we remain within our disclosed yield range. Tariffs could increase per unit costs for future construction. - Jonathan Li, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
