MARWEST APARTMENT REAL ESTATE INVESTMENT TRUST ANNOUNCES Q2 2023 RESULTS AND INCREASE IN MONTHLY CASH DISTRIBUTION POLICY

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

WINNIPEG, MB, Aug. 10, 2023 /CNW/ - Marwest Apartment Real Estate Investment Trust (the "REIT") (TSXV: MAR.UN) reported financial results for the three and six months ended June 30, 2023. This press release should be read in conjunction with the REIT's Unaudited Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis ("Q2 2023 MD&A") for the three and six months ended June 30, 2023, which are available on the REIT's website at www.marwestreit.com and at www.sedar.com.

"Throughout 2023 our portfolio has provided strong results due to increased occupancy, rental rates and school tax rebates from the Province of Manitoba, resulting in an increase of 19.61% in Same Property NOI for the six months ended June 30, 2023. In addition, the Board has approved an increase of 2% over the current distributions level commencing August 31, 2023", commented Mr. William Martens, Chief Executive Officer of the REIT. "The long-term nature of our debt, with a weighted average term to maturity of over six years, provides stability over the continued rising interest rate environment. Management is currently in the process of obtaining refinancing on the one conventional mortgage of approximately $6 million that matures on January 1, 2024." 

Q2 2023 Quarterly Highlights

• Same Property Net Operating Income¹ ("Same Property NOI") increased by 19.61% in the six months ended June 30, 2023 compared to same period 2022
• Reported funds from operations ("FFO") of $0.0286 per Unit for the six months ended June 30, 2023, compared to $0.0179 for 2022
• Reported adjusted funds from operations ("AFFO") of $0.0270 per Unit for the six months ended 2023, compared to $0.0157 for 2022
• Reported Net Asset Value per Unit ("NAV") of $1.60 at June 30, 2023 compared to $1.44 at December 31, 2022
• Average occupancy rate of 98.70% reported for the six months ended June 30, 2023 compared to 95.47% in the same period 2022
• Weighted average months to debt maturity of 73.29 months

Operations Summary

		Three months ended June 30				Six months ended June 30
Portfolio Operation Information		2023		2022		2023		2022
Number of properties		4		3		4		3
Number of suites		516		363		516		363
Average Occupancy Rate		99.11 %		96.16 %		98.70 %		95.47 %
Average rental rate to date		$1,536		$1,505		$1,532		$1,509
		Three months ended June 30				Six months ended June 30
Reconciliation OF Same Property NOI^1to IFRS		2023		2022		2023		2022
Revenue from investment properties	$	1,728,636	$	1,619,018	$	3,443,459	$	3,238,045
Expenses:
Property operating expenses		427,743		467,452		899,478		1,050,983
Realty taxes		141,575		183,652		300,616		311,523
Total property operating expenses		569,317		651,104		1,200,094		1,362,506
Same Property NOI^1	$	1,159,319	$	967,914	$	2,243,365	$	1,875,539
^1Same Property Portfolio consists of 3 multi-residential properties owned by the REIT for comparable periods in Q2 2023 and Q2 2022 – See "Notice with respect to Non-IFRS Measures" below.
Reconciliation of Debt-to-Gross Book Value ratio
Total interest-bearing debt							$	101,447,075
Total assets on balance sheet								134,564,498
Debt-to-Gross Book Value ratio								75.39 %
Reconciliation of Debt Service Coverage ratio
Net Operating Income for the period ended June 30, 2023							$	3,080,343
Mortgage payments for the period ended June 30, 2023								2,249,649
Debt Service Coverage ratio								1.26
Weighted average term to maturity on fixed rate debt								73.29 months
Weighted average interest rate on fixed debt								3.01 %

Financial Summary

The REIT generated FFO and AFFO per Unit of $0.0286 and $0.0270 during the three months ended June 30, 2023. FFO and AFFO are defined in "Non-IFRS Measures" in the June 30, 2023 MD&A and below under "notice with respect to Non-IFRS Measures".

Reconciliation of Net Income and Comprehensive Income to FFO and AFFO		Three months ended June 30				Six months ended June 30
		2023		2022		2023		2022
Revenue from investment properties	$	2,487,043	$	1,619,305	$	4,941,448	$	3,238,045
Property operating expenses		(634,174)		(480,713)		(1,409,389)		(1,060,982)
Realty taxes		(219,181)		(183,653)		(451,716)		(311,523)
Net Operating Income		1,633,688		954,939		3,080,343		1,865,540
NOI Margin		65.69 %		58.97 %		62.34 %		57.61 %
General and administrative		(184,424)		(185,365)		(386,056)		(355,477)
Finance costs		(931,898)		(459,757)		(1,883,982)		(912,387)
Fair value gain on:
Investment properties		2,196,910		836,245		2,477,771		3,963,541
Unit-based compensation		16,770		16,351		58,623		10,512
Warrants liability		-		34,174		-		21,359
Exchangeable Units		108,412		1,951,428		2,710,318		433,650
Net income and
comprehensive income	$	2,839,458	$	3,148,015	$	6,057,017	$	5,026,738
		Three months ended June 30				Six months ended June 30
Reconciliation of FFO		2023		2022		2023		2022
Net income and comprehensive income		2,839,458		3,148,015		6,057,017		5,026,738
Distributions on Exchangeable Units		40,654		40,669		81,304		81,340
Fair value gain on properties		(2,196,910)		(836,245)		(2,477,771)		(3,963,541)
Fair value gain on unit-based compensation		(16,770)		(16,351)		(58,623)		(10,512)
Fair value gain on warrant liability		-		(34,174)		-		(21,359)
Fair value gain on Exchangeable Units		(108,412)		(1,951,428)		(2,710,318)		(433,650)
FFO		558,020		50,486		891,609		679,016
Weighted average number of Units		19,498,838		19,572,918		19,503,755		19,622,059
FFO/unit	$	0.0286	$	0.0179	$	0.0457	$	0.0346
Reconciliation of AFFO
FFO	$	558,020	$	350,486	$	891,609	$	679,016
Capital expenditures		(26,935)		(28,636)		(36,872)		(71,921)
Leasing costs		(3,675)		(15,119)		(5,328)		(19,530)
AFFO		527,410		306,731		849,409		587,565
Weighted average number of Units		19,498,838		19,572,918		19,503,755		19,622,059
AFFO/unit	$	0.0270	$	0.0157	$	0.0436	$	0.0299
AFFO payout ratio		13.86 %		23.93 %		8.61 %		12.52 %

NAV and NAV per Unit Reconciliation		At June 30, 2023		At December 31, 2022
Unitholders' Equity		$25,000,083		$19,014,023
Exchangeable Units		6,504,765		9,215,083
NAV		31,504,848		28,229,106
Trust Units		8,657,564		8,667,564
Exchangeable Units		10,841,274		10,841,274
Deferred Units		138,322		110,036
Total Units oustanding		19,637,160		19,618,874
NAV per unit		$1.60		$1.44

The overall increase in NAV from $1.44 at December 31, 2022 to $1.60 at June 30, 2023, was primarily due to positive NOI and repayment of mortgages.

Distributions

On August 10, 2023, the Board approved an increase of two percent over the current distributions payable to $0.001275 monthly per unit, or annualized $0.0153 per unit, commencing to Unitholders of record on August 31, 2023 with payment on or about September 15, 2023.

Outlook

Management is focused on growing the portfolio and Unitholder value through increasing rental rates where the market allows, future acquisition opportunities that will increase the overall size and performance of the REIT, as well as maintaining a manageable debt structure. The majority of the REIT's debt is CMHC insured, the REIT's mortgages are all fixed rates with an average remaining mortgage term of over six years. In the next 12 months, the Element Phase I mortgage matures which accounts for $6,187,291 of the $10,726,600 in mortgage payments due in the next 12 months, it is management's expectation that this mortgage will be renewed at or before the maturity date of January 1, 2024. Management believes the organic growth in NAV due to paydown of debt over the mortgage terms is a positive outcome of the higher leveraged position as well as lowering the REIT's debt to GBV ratio and thereby increasing the NAV per Unit over time.

Management anticipates that demand for rental housing will remain strong in the coming quarters due to immigration and the affordability gap in rental vs. home ownership. 

About Marwest Apartment Real Estate Investment Trust

The REIT is an unincorporated open-ended trust governed by the laws of the Province of Manitoba. The REIT was formed to provide holders of Units with the opportunity to invest in the Canadian multi-family rental sector through the ownership of high-quality income-producing properties, with an initial focus on stable markets throughout Western Canada.

Forward-looking Statements 

The information in this news release includes certain information and statements about management's views of future events, expectations, plans and prospects that constitute forward–looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward–looking statements. A number of factors could cause actual results to differ materially from these forward–looking statements, including the risks described in the REIT's latest annual information form and management's discussion and analysis. The payment of cash distributions, and the amount of such cash distributions, will be dependent upon a number of factors, including but not limited to the financial performance, financial condition and financial requirements of the REIT. Although management of the REIT believes that the expectations reflected in forward–looking statements are reasonable, it can give no assurances that the expectations of any forward–looking statements will prove to be correct. Except as required by law, the REIT disclaims any intention and assumes no obligation to update or revise any forward–looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward–looking statements or otherwise.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

The Units are not registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons, except in certain transactions exempt from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, securities of the REIT in the United States or in any other jurisdiction.

Notice with respect to Non-IFRS Measures Disclosure

The REIT's financial statements are prepared in accordance with IFRS. In addition to IFRS measures, this news release and the REIT's Q2 2023 MD&A disclose certain non-IFRS financial measures that are commonly used by Canadian real estate investment trusts as an indicator of performance. Non-IFRS measures and ratios include the following:

Net Operating Income ("NOI")

The Trust calculates net operating income as revenue less property operating expenses such as utilities, repairs and maintenance and realty taxes. Charges for interest or other expenses not specific to the day–to–day operations of the Trust's properties are not included. The Trust regards NOI as an important measure of the income generated by income-producing properties and is used by management in evaluating the performance of the Trust's properties. NOI is also a key input in determining the value of the Trust's properties. For reconciliation to IFRS measures, refer to "Financial Operations and Results" in the REIT's Q2 2023 MD&A

Funds from Operations ("FFO")

The Trust calculates FFO substantially in accordance with the guidelines set out in the white paper titled "White Paper on Funds from Operations & Adjusted Funds from Operations for IFRS" by the Real Property Association of Canada ("REALpac") as revised in January 2022. FFO is defined as IFRS consolidated net income adjusted for items such as unrealized changes in the fair value of the investment properties, effects of puttable instruments classified as financial liabilities and changes in fair value of financial instruments and derivatives. FFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS. The Trust regards FFO as a key measure of operating performance. For reconciliation to IFRS measures, refer to "Financial Operations and Results" in the REIT's Q2 2023 MD&A

Adjusted Funds from Operations ("AFFO")

The Trust calculates AFFO substantially in accordance with the guidelines set out in the white paper titled "White Paper on Funds from Operations & Adjusted Funds from Operations for IFRS" by REALpac as revised in January 2022. AFFO is defined as FFO adjusted for items such as maintenance capital expenditures and straight–line rental revenue differences. AFFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS. The Trust regards AFFO as a key measure of operating performance. The Trust also uses AFFO in assessing its capacity to make distributions. For reconciliation to IFRS measures, refer to "Financial Operations and Results" in the REIT's Q2 2023 MD&A

The following other non–IFRS measures are defined as follows:

• "FFO per unit" is calculated as FFO divided by the weighted average number of Trust Units and Exchangeable Units of the Partnership outstanding over the period.
• "AFFO per unit" is calculated as AFFO divided by the weighted average number of Trust Units and Exchangeable Units of the Partnership outstanding over the period.
• "AFFO Payout Ratio" is the proportion of the total distributions on Trust Units and Exchangeable Units of the Partnership to AFFO per Unit.
• "Net Asset Value" is calculated as the sum of unitholders' equity and Exchangeable Units
• "Net Asset Value per Unit" or "NAV per Unit" is calculated as the sum of unitholders' equity and Exchangeable Units divided by the sum of Trust Units, Exchangeable Units and Deferred Units outstanding at the end of the period.
• "Debt–to–Gross Book Value ratio" is calculated by dividing total interest–bearing debt consisting of mortgages by total assets and is used as the REIT's primary measure of its leverage.
• "Debt Service Coverage ratio" is the ratio of NOI to total debt service consisting of interest expenses recorded as finance costs and principal payments on mortgages.
• "Stabilized net operating income" is the estimated 12-month net operating income that a property could generate at full occupancy, less a vacancy rate and stable operating expenses.
• "Average occupancy rate" is defined as the ratio of occupied suites to the total suites in the portfolio for the period.
• "Same Property NOI" is defined as Net Operating Income from properties owned by the REIT throughout comparative periods, which removes the impact of situations that result in the comparative period to be less meaningful, such as acquisitions, or properties going through a lease-up period.

Management believes that these measures are helpful to investors because, while not necessarily calculated comparably among issuers, they are widely recognized measures of the REIT's performance and tend to provide a relevant basis for comparison among real estate entities. These non-IFRS financial measures are not defined under IFRS and are not intended to represent financial performance, financial position or cash flows for the period and should not be viewed as an alternative to net income, cash flow from operations or other measures of financial performance calculated in accordance with IFRS.

The above measures are not standardized under the financial reporting framework used to prepare the financial statements of the REIT. Readers should be further cautioned that the above measures as calculated by the REIT may not be comparable to similar measures presented by other issuers. For further information, refer to the sections entitled "Non-IFRS measures" and "Financial Operations and Results" in the REIT's Q2 2023 MD&A, which is incorporated by reference herein, for further information (available on SEDAR at www.sedar.com or the REIT's website www.marwestreit.com).

SOURCE Marwest Apartment Real Estate Investment Trust

REIT Contact: Mr. William Martens, Chief Executive Officer, Telephone: [phone].