Minto Apartment REIT sells two apartment buildings, reduces debt • RENX

December 11, 2023
1 min read
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The York House and The Lancaster House apartments in Edmonton. (Google Maps)

Minto Apartment REIT has sold its remaining two Edmonton apartment properties for $32.3 million and used the proceeds from the transaction to lower its debt.

“The sale of these properties is consistent with our capital recycling strategy,” Jonathan Li, the REIT’s president and chief executive officer, said in the announcement Monday morning.  “In total, the REIT has completed $42.2 million of dispositions this year and has utilized the proceeds to reduce variable-rate debt, furthering our objective of enhancing cash flow per unit.”

The properties are The York House located at 10030 114 St. NW and The Lancaster House across the street at 10025 115 St. NW. They comprise a total of 190 apartments.

Minto’s (MI-UN-T) release states the sale price is in line with IFRS net asset values.

Minto Apartment REIT realized approximately $7 million in net proceeds after mortgages and commissions, and allocated the funds toward a portion of its variable-rate revolving credit facility.

It did not identify the buyer.

Minto’s debt ratio rose in Q3

Ottawa-based Minto owned 31 properties in four Canadian urban markets – Toronto, Ottawa, Montreal and Calgary – containing 8,227 apartments at the end of Q3 2023.

The REIT’s debt-to-gross-book value had risen to 42.8 per cent at the end of the quarter, up from 40.6 per cent at the end of 2022.

Its debt-to-adjusted-EBITDA ratio was 12.15 times. As with most companies in an atmosphere of elevated rates, its average interest rates had also risen; to 3.38 per cent (from 3.04 at year-end 2022) on term debt, and 7.13 per cent (from 6.87 per cent) on variable rate debt.

Revenues had jumped substantially, however, from $35.008 million in Q3 2022 to $37.047 million at the end of Q3.

It reported net income of $27.815 million for the third quarter.

Terminated acquisition of Ottawa property

Earlier in 2023, the REIT also terminated an agreement to acquire the newly constructed Fifth + Bank apartment building in Ottawa, citing the high-interest-rate environment.

The mixed-use Fifth + Bank property contains retail space and 163 apartment units and was constructed by the REIT’s parent company Minto Properties.

It was fully leased as of June.

At the time, the REIT said the decision would allow it to reduce its variable-rate debt exposure by $30 million, the amount of a convertible development loan it had supplied to Minto Properties for the construction process.

The REIT had held an exclusive right to acquire the site from Minto Properties, which has retained ownership of the building.

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