Minto Apartment REIT's Q3 revenue up 31 per cent on new properties

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Minto Apartment REIT showed Tuesday why it has been one of the region’s best performing investments.

Minto recorded third-quarter revenues of $27.6 million, representing a year-over-year gain of 31 per cent. Much of this reflected a series of property acquisitions over the past year. Even so, revenues were up 5.1 per cent excluding the impact of the properties that were added.

Equally impressive, the company’s net operating income jumped 34.4 per cent to $17.6 million for all properties. Excluding acquisitions, net operating income increased nearly seven per cent to $14 million.

The value of the REIT’s units has soared 55 per cent since July 2, 2018 —  when Minto Apartment REIT launched its initial public offering on the TSX at $14.50 per unit. Minto Apartment REIT closed Tuesday at $22.44.  Investors also receive cash distributions of 43 cents per unit, or nearly two per cent of the share price.

With a market value of nearly $1.3 billion, Minto is among the top half-dozen real estate investment trusts that specialize in apartment rentals. It’s been improving its worth in two ways.  First, it invests in its own properties to be able to charge higher rents. Second, it acquires apartment complexes it believes can be rehabilitated with the same idea in mind.

Third-quarter results showed its 6,700 plus apartment units were rented at an average $1,478 per month, compared with $1,388 per month a year earlier for the 4,279 apartments Minto owned at the time.  Occupancy in both periods was close to 99 per cent, indicating just how tight the market for rental properties has become, thanks to relatively high levels of immigration and a lack of new supply.

From its inception one of the main goals of Minto Apartment REIT has been diversify its holdings across the country. In this, it has moved more quickly than many expected.

“We are rapidly expanding our portfolio,” REIT chief executive Michael Waters said Tuesday, “The markets in which we operate are generally robust.”

When Minto first listed its units on the TSX, fully 72 per cent of its apartment units were in Ottawa — naturally enough given Minto’s long history here.  But following a series of property acquisitions that ratio this month has slipped to 42 per cent (50 per cent by value). The REIT still operates more than 3,000 Ottawa apartments.

The biggest change has been in Montreal, where Minto has acquired more than 1,500 apartments, up from nil 17 months ago. Montreal is now the base for 21 per cent of the REIT’s apartment portfolio.

Minto Apartment REIT has also been busy collecting new properties in Toronto, which accounts for nearly 2,000 of its apartments, or 27 per cent of the total. That’s up from 824 units at the IPO, some19 per cent at the time.

The remainder of Minto’s apartment units are in Alberta.