Forum Real Estate Income and Impact Fund Report Q2 2023 Results and Student Housing Acquisition

TORONTO, ON / ACCESSWIRE / July 26, 2023 / The Forum Real Estate Income and Impact Fund ("REIIF" or the "Fund") released its results for the second quarter ended June 30, 2023.

Series F investors in REIIF have earned a return of 3.20% year-to-date, including the monthly distribution (3.83 cents/Series F/month or a 4.3% annualized distribution yield ¹ ).

REIIF's Purpose Built Student Accommodation (PBSA) properties, situated on-campus at York University, have shown substantial leasing momentum with over 94% of the units pre-leased for the upcoming school year.

"The PBSA sector in Canada is seeing strong demand driven in part by a 30% year-over-year increase to over 800,000 secondary and post-secondary foreign students receiving study permits last year. In the backdrop of higher inflation and interest rates, these attributes make the sector an appealing and growing allocation target for the Fund", said Aly Damji, Managing Partner at Forum Asset Management ("Forum") and a Trustee of REIIF.

"Canada set a new record for immigration in a single year, a trend that will likely continue in order to meet Canada's labour shortage - a shortage that is exacerbated by the country's aging population and low fertility rate," said Richard Abboud, Founder & CEO of Forum and Chairman of REIIF. "We expect fundamental supply and demand imbalances in the Canadian rental housing market to persist, providing continued growth prospects for REIIF."

Acquisitions

After quarter-end and pursuant to REIIF's right of first offer agreement with Forum, the Fund acquired ALMA Guelph, a comprehensively renovated, non-rent-controlled, PBSA property consisting of 177 beds located a short distance from the University of Guelph, a market suffering from a severe shortfall of student beds.

Further information on the project can be found here: https://thisismyalma.ca/guelph/

Portfolio Update

The portfolio at the end of the second quarter is substantially stabilized, with portfolio occupancy of 98.6%, comparative property net operating income ² growth versus the previous quarter of 3.8% and an embedded rental rate ‘mark-to-market on turnover' of +20%.

The Fund's property located in Winnipeg was independently appraised during the quarter resulting in an increase in value primarily from income growth, contributing positively to second quarter returns.

"Most public multi-family REITs are actively selling older properties to upgrade portfolio quality," said Greg Spafford, Fund Head for REIIF. "REIIF has one of the newest rental housing portfolios in Canada, with an average portfolio age of less than 4 years, providing greater cash flow resiliency versus older portfolios with higher capital requirements to sustain income".

Following the acquisition of ALMA Guelph, the Fund comprises eleven properties and over 2,000 units spanning approximately 710,000 square feet of residential gross leasable area, with almost $450 M of asset value.

Balance Sheet Update

During the second quarter, the Fund improved upon its already strong balance sheet and liquidity profile, continuing to maintain over $50 M of liquidity and reducing its debt to asset ratio ³ to 45%, at the low end of the Fund's target range. With the completion of a CMHC-insured mortgage for 455 Abbott in Vancouver this past May, REIIF's debt structure is substantially fixed rate, with a coupon rate under 3% and a weighted average term to maturity ⁴ of approximately seven years.

"With an active interest rate hedging and financing program, we were able to secure low cost, long duration, fixed-rate financing for the portfolio over the last year during one of the most volatile periods in recent memory - to protect the Fund's cash flow from the higher rate environment," said Rajeev Viswanathan, Managing Partner and CFO at Forum.

Distributions

The monthly distribution was paid on July 17, 2023 to unitholders of record as at June 2023 as follows:

Impact Initiatives

REIIF's impact and environmental, social and governance ("ESG") initiatives are focused on reducing its environmental footprint and increasing social engagement.

In the first half of 2023, REIIF "green" certified 110,000 square feet, with an additional 485,000 square feet currently pending approval. REIIF is on track to achieve 100% "green" certification across its portfolio by the end of this year.

87 Mann Ave, located in Ottawa, was the first privately-owned, multi-residential building to achieve the Canadian Green Building Council (CaGBC) Net Zero Building - Performance certification in Ottawa, with the property selected as a case study for the City of Ottawa's Better Buildings Ottawa program.

REIIF has also embraced technological advancements to enhance the financial well-being of its residents as well as increase operational predictability. In the second quarter, REIIF engaged Zenbase, a technology-based platform that empowers residents by enabling them to build credit with each rent payment and offering the flexibility to split payments into smaller, stress-free installments. REIIF plans to implement this initiative across several properties by the end of the year, fostering a positive and convenient living experience for its residents and reducing the likelihood of tenant default.

"REIIF remains focused on driving value though its impact objectives. Our near- and long-term sustainability-focused capital investments, like the overhaul of end-of-life mechanical equipment at 455 Abbott St (Vancouver), are expected to stabilize NOI and provide downside protection, both particularly important in the uncertain market environment investors are experiencing today," said Kathleen Beaumont, Director Impact & ESG for REIIF.

More information on REIIF's Impact Framework is available at www.forumreiif.ca/impact.

¹ The yield and total return is for the lead 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 Cash rental income less operating expenses from comparative properties after the first three months of ownership, to provide comparable operating results versus prior periods. Rental income includes base rent, parking, ancillary income, other income and services charges; but excludes termination fees and bad debt expense as they are typically non-recurring.

³ Debt to assets ratio is a non-GAAP ratio calculated as the sum of mortgages outstanding and credit facilities drawn less cash divided by total assets less cash.

⁴ 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