Interrent Reit shows Continuous Steady Growth

       Interrent Reit is not a really well known name and it has assets of only $800 million.But it's chart moves up steadily to the right over the last 2 years.It is an actively managed reit;and it is continuously making new real estate purchases.And 2017 was no exception.As it bought 602 rental suites for $99 million.
          The Fourth Quarter and 2017
   Gross rental revenue for Q4 was up 16% over 2016 and up 9% for 2017 to $108 million.Occupancy was up 310 basis points to 98%.Net operating income for Q4 was up 27% to $18 million and up 16% for 2017 to $66 million.Adjusted funds from operations per share was $.114 for a 12% increase for Q4 and fully diluted earmings for 2017 was  up 11% to$.374.Their debt to gross book value (GBV) improved  by 750 basis points to 47.8% from 55.3%.This was largely due to the $76 million equity issue in 2017.
       Repositioning
   Before 2016, Interrent was spread over more markets and generally had more small units.Some of the units were not in good shape which lead to higher occupancy rates and lower rents.But Interrent has decided to refocus and has acquired better units in better markets.Now it is concentrated in the GTA (including Hamilton) and Montreal and Ottawa.And the units have higher rents.This has contributed to their stock price steadily increasing in value since 2015.
             Another Way

This blog has watched Interrent since it traded at $6.00 per share and it has steadily moved up to the $9.50 price range.

Interent makes it's capital gains by the increase in rents and from the gain from the  sale of rental units.Interrent  has an initial capitalization rate at the time of purchase and a larger  exit capitalization rate at the time of sale.The difference between the two "cap rates" is their gain.The "cap rate" is the multiple of income earned to the value of the assets.For example, $100,000 income earned from a $1,000,000 property produces a "cap rate" of 10%.But in mature markets like the GTA and Ottawa the "cap rates"  are high going in although the exit "cap rate" will usually be significantly higher.Buying bigger and better units in mature markets will require incrementally more capital.                                               

                                                  At the same time with a rising interest environment there are a number of small reits in the Interrent market area that are struggling and have little stock market gains to show for.One such reit is BTB reit which is in IIP 's market footprint.And it's price/earnings ratio is similar to an initial"cap rate" of 8.With a price/earnings ratio of about 8 it is not expensive and offers a good dividend yield.Interrent could even buy it in chunks and get a good yield for it's investment.It could sell off some of it's older properties with  substantial built-in gains in order to get the required capital.Interrent may not do this but at least they have the option.      
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