STARLIGHT U.S. RESIDENTIAL FUND ANNOUNCES Q4-2024 RESULTS INCLUDING NORMALIZED SAME PROPERTY NOI GROWTH OF 1.3%
Canada NewsWire
TORONTO, Feb. 14, 2025
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TORONTO, Feb. 14, 2025 /CNW/ - Starlight U.S. Residential Fund (TSXV: SURF.A) (TSXV: SURF.U) (the "Fund") announced today its results of operations and financial condition for the three months ended December 31, 2024 ("Q4-2024") and year ended December 31, 2024 ("YTD-2024"). Certain comparative figures are included for the three months ended December 31, 2023 ("Q4-2023") and year ended December 31, 2023 ("YTD-2023").
All amounts in this press release are in thousands of United States ("U.S.") dollars except for average monthly rent ("AMR")(1) or unless otherwise stated. All references to "C$" are to Canadian dollars.
"The Fund owns a high-quality, well located and diversified portfolio of multi-family communities which reported an increase in normalized same property net operating income of 1.3% from Q4-2023 to Q4-2024," commented Evan Kirsh, the Fund's President. "The Fund continues to focus on increasing net operating income at its properties through active asset management, navigating the current challenging capital markets environment and focusing on managing the Fund's liquidity in order to provide the Fund with an opportunity to capitalize on anticipated improvements in the investment market in future periods."
Q4-2024 HIGHLIGHTS
-- Revenue from property operations for Q4-2024 was $9,740 (Q4-2023 -
$9,808) representing a decrease 0.7% in revenue due to the disposition of
98 single-family properties ("SF Properties") since the second quarter of
2023 ("Primary Variance Driver"), partially offset by same property
revenue growth of 0.6%. Net operating income ("NOI")1 for Q4-2024 was
$6,188 (Q4-2023 - $5,916), representing an increase of 4.6% in NOI
relative to Q4-2023 primarily due to normalized same property NOI1 growth
of 1.3%, partially offset by the Primary Variance Driver.
-- The Fund reported a net loss and comprehensive loss attributable to
unitholders for Q4-2024 of $41,806 (Q4-2023 - $53,592). The Fund reported
a fair value loss on investment properties during Q4-2024 primarily due
to the expansion of capitalization rates used to value the Fund's
investment properties.
-- The Fund completed 30 in-suite light value-add upgrades at the
multi-family properties ("MF Properties") during Q4-2024, which generated
an average rental premium of $87 and an average return on cost of
approximately 27.5%.
-- The Fund achieved physical occupancy of 93.8% during Q4-2024 and as at
February 13, 2025 had collected approximately 99.5% of rents for Q4-2024,
with further amounts expected to be collected in future periods,
demonstrating the Fund's high quality resident base and operating
performance.
-- During Q4-2024, the Fund completed the dispositions of its last SF
Properties for net proceeds of $891 (Q4-2023 - six SF Property
dispositions for net proceeds of $1,605).
-- On December 9, 2024, the Fund entered into an amendment for a short-term
extension of the Fund's Lyric Apartments loan payable as the Fund
continues to negotiate a longer-term extension of the loan.
-- On February 14, 2025, the board of trustees of the Fund (the "Board")
approved the second one-year extension of the Fund's term to November 15,
2026. The Fund continues to focus on liquidity management, which along
with the extension of the Fund's term, is targeted at providing the Fund
with the opportunity to capitalize on anticipated improvements in the
real estate investment market.
__________
(1) The metric is a non-IFRS measure. Non-IFRS financial
measures do not have standardized meanings prescribed
by IFRS (see "non-IFRS financial measures").
YTD-2024 HIGHLIGHTS
-- Revenue from property operations and NOI for YTD-2024 were $39,618 and
$24,990 (YTD-2023 - $39,386 and $24,331), respectively, representing an
increase of 0.6% and 2.7% relative to YTD-2023, respectively, primarily
due to the same property revenue growth of 3.2% and same property NOI
growth of 4.9% from YTD-2023 to YTD-2024, partially offset by the Primary
Variance Driver.
-- The Fund reported a net loss and comprehensive loss attributable to
unitholders for YTD-2024 of $60,813 (YTD-2023 - $106,299), primarily
resulting from YTD-2023 reporting a higher fair value loss on investment
properties than YTD-2024.
-- The Fund completed 143 in-suite light value-add upgrades at the MF
Properties during YTD-2024, which generated an average rental premium of
$94 and an average return on cost of approximately 30.3%.
-- On May 1, 2024, the Fund amended The Ventura ("Ventura") loan payable to
extend the term to February 9, 2026, discharge its obligation to purchase
a replacement interest rate cap and defer a portion of the debt service
at the property, whereby the Fund can defer certain amounts per month
subject to certain terms.
-- On June 28, 2024, the Fund refinanced the existing Indigo Apartments loan
payable by entering into a new first mortgage for $62,223 with a
five-year term and monthly interest only "IO" payments bearing interest
at a fixed rate of 5.85%. in addition, a subsidiary of the Fund entered
into an unsecured financing amounting to $18,277 for a three-year term,
bearing monthly IO payments at a minimum 4.00% per annum ("Unsecured
Financing"). Upon completion of the Unsecured Financing, a portion of the
proceeds were used to repay $14,700 towards the Fund Credit Facility (as
defined below).
-- On September 9, 2024 the Fund amended the Fund's credit facility to a
$16,000 revolving credit facility with a maturity date of December 31,
2026 ("Fund Credit Facility").
FINANCIAL CONDITION AND OPERATING RESULTS
Highlights of the financial and operating performance of the Fund as at December 31, 2024 and for Q4-2024 and YTD-2024, including a comparison to December 31, 2023 and for Q4-2023 and YTD-2023, as applicable, are provided below:
December 31, December 31,
2024 2023
Key multi-family
operational information
Number of multi-family
properties owned 6 6
Total multi-family suites 1,973 1,973
Economic occupancy(1)(2) 93.3 % 90.5 %
Physical occupancy(1)(2) 93.8 % 92.7 %
AMR (in actual dollars)(1) $ 1,591 $ 1,617
AMR per square foot (in actual
dollars)(1) $ 1.67 $ 1.70
Estimated gap to market versus
in-place rents(2) 1.2 % 1.4 %
Number of single-family rental
homes -- 25
Selected financial
information
Gross book value(2) $ 514,416 $ 563,338
Indebtedness(2) $ 470,979 $ 460,692
Indebtedness to gross book
value(2)(3) 91.6 % 81.8 %
Weighted average interest rate
- as at period end(4) 6.10 % 5.78 %
Weighted average loan term 1.57 years 0.84 years
to maturity(4)
Q4-2024 Q4-2023 YTD-2024 YTD-2023
Summarized income statement
(excluding non-controlling
interest)(5)
Revenue from property
operations $ 9,740 $ 9,808 $ 39,618 $ 39,386
Property operating costs (2,657) (2,681) (10,527) (10,498)
Property taxes(6) (895) (1,211) (4,101) (4,557)
Adjusted income from operations
/ NOI 6,188 5,916 24,990 24,331
Fund and trust expenses (815) (744) (3,278) (3,389)
Finance costs(7) (8,649) (9,773) (37,085) (34,228)
Other income and expense(8) (38,530) (48,991) (45,440) (93,013)
Net loss and comprehensive loss
- attributable to
unitholders(5) $ (41,806) $ (53,592) $ (60,813) $ (106,299)
Other selected financial
information
Funds from operations
("FFO")(2) $ (2,347) $ (1,940) $ (8,285) $ (7,216)
FFO per unit - basic and
diluted (0.07) (0.06) (0.26) (0.23)
Adjusted funds from
operations ("AFFO")(2) (940) (1,418) (3,927) (4,962)
AFFO per unit - basic and
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