Interrent starts to develop
Interrent released it's fourth quarter and annual results.The annual results were on par with the last two years.Gross revenues were up 28% or by $13 million.Operating revenues were up 30% again.Funds from operations(FFO) was up 40% and adjusted funds from operations(AFFO) was up 40%.While average monthly rent increased to $931 per month from $887(a 5% increase).
The fourth quarter
Operating revenues was up 27%to $60 million.Operating costs were only 58% of revenues from 60% which helped to increase NOI(net operating in come).Interrent warns that they need to have access to mortgaging at the right cost.Then they tell us that they reduced their cost of debt by 29 basis points;their average interest rate is now 3.31% which is almost the 5 year residential mortgage rate.Interrent also tells readers that they have acquired 2341suites over the last two years increasing their portfolio by 60%.This quarter they bought a slightly different kind of property,namely the Bell Street apartments which need redevelopment.This could be a new trend.
Financials
Interrent has a fairly conservative balance sheet but it must be prudent.Their debt to gross book value(GBV) went from 46.8% to 47.4%.Their interest coverage (net income's multiple of interest expenses) moved up to 2.71x from 2.57x.Thier payout ratio went from 63% for the year to 75% for the last quarter.This usually means convertible debentures have been issued if there has not been any new equity.
Growth for the year
Interrent is a growth stock;it will certainly acquire new properties as it did in 2012 and 2013.But it's payout ratio has increased so it probably made a new issuance of convertible debentures.Meanwhile it's debt ratios are solid;it can make another secured debenture issue or redeem it's probable convertible debenture issue for a bigger one.However in order to keep it's costs down it may continue to buy properties like it's Bell Street property where the price is close to or below book value.If this is the new trend then Interrent may start to become more of a developer.This creates the possibility of making more on each new property.This is a new avenue for growth and may allow them to sell one of their fair-valued apartment buildings and buy another one below book value.This is a cheap way of financing and more profitable if done right.
The fourth quarter
Operating revenues was up 27%to $60 million.Operating costs were only 58% of revenues from 60% which helped to increase NOI(net operating in come).Interrent warns that they need to have access to mortgaging at the right cost.Then they tell us that they reduced their cost of debt by 29 basis points;their average interest rate is now 3.31% which is almost the 5 year residential mortgage rate.Interrent also tells readers that they have acquired 2341suites over the last two years increasing their portfolio by 60%.This quarter they bought a slightly different kind of property,namely the Bell Street apartments which need redevelopment.This could be a new trend.
Financials
Interrent has a fairly conservative balance sheet but it must be prudent.Their debt to gross book value(GBV) went from 46.8% to 47.4%.Their interest coverage (net income's multiple of interest expenses) moved up to 2.71x from 2.57x.Thier payout ratio went from 63% for the year to 75% for the last quarter.This usually means convertible debentures have been issued if there has not been any new equity.
Growth for the year
Interrent is a growth stock;it will certainly acquire new properties as it did in 2012 and 2013.But it's payout ratio has increased so it probably made a new issuance of convertible debentures.Meanwhile it's debt ratios are solid;it can make another secured debenture issue or redeem it's probable convertible debenture issue for a bigger one.However in order to keep it's costs down it may continue to buy properties like it's Bell Street property where the price is close to or below book value.If this is the new trend then Interrent may start to become more of a developer.This creates the possibility of making more on each new property.This is a new avenue for growth and may allow them to sell one of their fair-valued apartment buildings and buy another one below book value.This is a cheap way of financing and more profitable if done right.
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