Other US real estate: profit up significantly

Profit for the period increased significantly to $100.8 million primarily due to the fair value adjustment.

  • Rental income up 21% year over year to approximately $30.9 million ($25.5 million in Q1 2021)
  • Net gain from mark-to-market of $123.8 million ($21.3 million in Q1 2022)
  • Profit for the period increased significantly to $100.8 million ($23.8 million in Q1 2021)
  • Positive portfolio development with higher value, increased average monthly rent and stable average occupancy rate
  • The institutionalization of the portfolio should lead to better ESG performance and a significant reduction in investment requirements (CAPEX).
  • Varia US continues to expect mark-to-market adjustments to stabilize and some normalization in US inflation as interest rates rise

On the operating side, Varia US Properties’ actual gross revenues increased to $35.1 million in the first quarter of 2022 from $28.8 million in the first quarter of 2021. Rental income increased nearly 21% to approximately $30.9 million US$ (25.5 million in Q1 2021) and up 7.5% at constant volume. EBITDA (defined as operating income less unrealized revaluation) increased to $12.1 million in Q1 2021 from $15.0 million in Q1 2022 and the EBITDA margin increased between Q1 2022 and first quarter of 2021 by 0.7%. Profit for the period increased significantly to $100.8 million ($23.8 million in the first quarter), primarily due to the fair value adjustment.

Average monthly rent increased by 2.2% to $952/apartment from $932/apartment at the end of 2021, and average occupancy remained stable at 94.7% (from 94.6% at the end of 2021). Total portfolio value increased 9.1% to $1.54 billion from $1.41 billion at the end of 2021.

Patrick Richard, Varia US Board Member, said, “Today, Varia US released fully consolidated quarterly financial statements for the first time. We believe these efforts are essential to further educate our shareholders about the company’s activities and keep them informed in a rapidly changing market.” He added: “Since the beginning of the year inflation has been continued to rise, interest rates have risen, supply chain issues have not been resolved and a war has begun in Ukraine. While these events were very significant and tragic, they had a limited impact on our Company’s operational and financial performance in the first quarter of the year as Varia US saw significant increases in rental income, EBITDA and net income, adding value to the portfolio.”

Expected rise in interest rates – ongoing portfolio optimization

Regarding its 2022 outlook, reported as of March 30, 2022, the Company continues to expect some normalization in inflation as interest rates rise, as well as some form of flattening in the US multifamily housing market. However, rents are expected to continue rising more than usual, offsetting higher utility costs. Varia US expects cap rates to stabilize, which will limit future mark-to-market adjustments to the portfolio.

Over the next few weeks and months, the company plans to continue its strategy of divesting older, more isolated assets and acquiring newer properties in more desirable areas of major metropolitan areas. This institutionalization of the portfolio aims to support the firm’s efforts to achieve better ESG performance across the portfolio and should significantly reduce CAPEX requirements. As part of this, and as previously announced, the Company is in the process of submitting its portfolio-wide water and electricity consumption data and other key indicators to the Global Real Estate Sustainability Benchmark (GRESB) for the first time and intends to publish the results later this year.

#real #estate #profit #significantly

Leave a Comment

Your email address will not be published.