TORONTO, ON / ACCESSWIRE / November 15, 2022 / The Forum Real Estate Income and Impact Fund ("REIIF" or the "Fund") announced its results for the month of October.
Initial Series F investors in REIIF have earned a return of 9.6%1 ("Return") to date through October 31, 2022, including a 4.5% distribution yield (3.75 cents/month)1.
The Return is inclusive of:
- Monthly distributions, treated primarily as a return of capital for taxation purposes;
- Value appreciation on certain properties, resulting from rental rate growth offset by modest capitalization rate expansion on non-rent-controlled properties; and
- Attractive in-place mortgage financing at an effective coupon rate of 1.81% versus current market interest rates that are more than 4%.
"Given the highly inflationary conditions globally and volatile economic conditions this year, we are pleased that REIIF has delivered a stable return in line with the Fund's total return objectives," said Aly Damji, Managing Partner, Real Estate at Forum Asset Management ("Forum").
Portfolio Update2
REIIF is focused on the Canadian rental housing market, targeting acquisitions that offer inflation protection through higher tenant turnover, a benefit Forum believes should result in superior risk-adjusted returns.
The Fund benefits from exclusive access to Forum's completed development pipeline under a right of first offer agreement ("ROFO"). REIIF's ROFO with Forum consists of $800M+ of rental housing, including over $400M of newly constructed purpose-built student accommodations ("PBSA"), to be delivered over the next several years.
Recently, REIIF expanded its holdings of PBSA to over 1,500 beds at Canada's third largest post-secondary institution, York University. REIIF's portfolio is now comprised of eight properties, over $380M of assets with an average age of 3 years, and over 1,200 units spanning approximately 625,000 square feet of residential gross leasable area across PBSA, multi-family and co-living communities.
"PBSA should outperform other real asset classes given the sector's transitional tenant base and ability to more frequently mark rents to market, a distinct competitive advantage in this higher rental rate growth environment," said Aly Damji of Forum.
Earlier this year, Forum produced a primer on the PBSA market which is available here.
Distributions
The Fund also announced a distribution for the month of October 2022 as follows:
The November 15, 2022 distribution was paid to unitholders of record as at October 31, 2022 and is the tenth monthly distribution since the launch of REIIF in December 2021.
Balance Sheet Update
As of September 30, 2022, the Fund has a conservative debt to assets ratio of 51% and almost 70% of REIIF's indebtedness is priced at fixed rates, with an effective coupon rate of 1.81% and average term to maturity of almost 7 years.3
In October, the Fund extended its primary revolving credit facility ("RCF"), provided by a Tier I Canadian financial institution until December 31, 2024 and successfully amended various terms to enhance credit availability under the RCF.
"REIIF has over $27M of available liquidity following the RCF extension and amendments, a strong liquidity position that allows us to protect REIIF's balance sheet in these uncertain times, while positioning the Fund to take advantage of market dislocation should compelling opportunities arise," said Rajeev Viswanathan, Managing Partner and CFO at Forum.
Impact Initiatives
REIIF's impact and environmental, social and governance ("ESG") initiatives are focused on reducing its environmental footprint and increasing social engagement.
REIIF has established decarbonization plans for all REIIF properties, targeting near-term energy savings and a multi-year plan to achieve net zero operational greenhouse gas emissions. In the third quarter, REIIF's property located at 1602-1604 Queen St East in Toronto achieved Net Zero status.
REIIF also received its inaugural GRESB results, ranking above average relative to first time submitters.
"Proactively managing our climate change risks and driving NOI growth through meaningful decarbonization efforts future-proofs our assets and improves the resilience of investor returns," said Kathleen Beaumont, Director Impact & ESG for Forum.
1 - The yield and total return is for the December 2021 Series F units and is no guarantee of future results. The distribution rate and total return received by a unit holder will differ based on the series of trust units in which a unit holder invests.
2 - Portfolio metrics disclosed at REIIF share
3 - Weighted average term to maturity (WATM) aggregates each loan's remaining years to maturity, weighted by the loan's principal balance outstanding over total indebtedness.
About REIIF
REIIF invests principally in institutional-quality, multi-family rental apartments, purpose-built student accommodations, and co-living communities located in supply constrained markets in Canada. The Fund also strives to deliver a sector-leading impact and ESG-driven portfolio that will enhance yields and total returns while future-proofing the portfolio to ensure diversity and resiliency of income. For more information, please visit our website at www.forumreiif.ca.
About Forum
Forum, the manager of REIIF, is an investor, developer and asset manager operating across North America for over 25 years. Our core purpose is to deliver Extraordinary Outcomes to our stakeholders. Our adaptable, agile, and dynamic team is committed to sustainability and responsible investing, creating value that benefits the communities in which we invest.
Our investment focus includes real estate, private equity, and infrastructure. The enterprise value of our assets under management currently exceeds C$1.7 billion. Our investments have attracted a number of top investors. We're proud to have delivered in the top tier of alternative asset returns since 2002, while positively impacting over 6,000 lives. For more information about Forum, visit: www.forumam.com.
Contacts
Name: Rajeev Viswanathan, Chief Financial Officer
Phone Number: 416-947-0389
Email: rajeev@forumam.com
Cautionary Statement
The information contained in this news release is for informational purposes only; is not investment, financial or other advice; and is not intended to be used as the basis for making an investment decision. This news release does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities, nor shall any part of this news release form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities of REIIF. The offering of units of REIIF is made pursuant to its confidential offering memorandum only to those "accredited investors" in certain jurisdictions of Canada who meet certain eligibility and cannot be sold in Canada to the general public. This news release does not constitute any form of commitment, recommendation, representation, or warranty on the part of any person. No reliance should be placed on the completeness of the information contained in this news release. This news release is not intended to be a comprehensive review of all matters concerning REIIF. Please visit www.forumreiif.ca for more information.
This news release may contain forward-looking information within the meaning of applicable Canadian securities laws. Often, but not always, forward-looking information can be identified by the use of words such as "expect", "intends", "anticipated", "believes" or variations (including negative variations) of such words and phrases, or states that certain actions, events or results "may", "could", "would" or "will" be taken, occur or be achieved. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to Forum. Readers are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected including, without limitation, risks associated with general economic conditions; adverse factors affecting the real estate market generally or those specific markets in which REIIF holds properties; volatility of real estate prices; inability to access sufficient capital from internal and external sources and/or inability to access capital on favourable terms; currency and interest rate fluctuations and other risks. Although Forum has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. These forward-looking statements are made as of the date hereof and Forum does not assume any obligation to update or revise them to reflect new events or circumstances save as required under applicable securities legislation.
SOURCE: Forum Asset Management
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