Forum Real Estate Income and Impact Fund Report Q3 2023 Results

TORONTO, ON / ACCESSWIRE / October 31, 2023 / The Forum Real Estate Income and Impact Fund ("REIIF" or the "Fund") released its results for the third quarter ended September 30, 2023.

Series F investors in REIIF have earned a return of 10.29% year-to-date, including the monthly distribution (3.83 cents/Series F/month or a 4.3% annualized distribution yield¹).

With the execution of our leasing strategy for the Quad Properties this past summer for the upcoming academic year, we have realized expected rental growth and full occupancy, which will drive materially increased cash flow", said Aly Damji, Managing Partner at Forum Asset Management ("Forum") and a trustee of REIIF. "We are witnessing PBSA and other transitional housing typologies outperforming other asset classes in spite of the higher interest rate and inflationary environment - supporting our strategic asset allocation to these rental housing subsectors".

Acquisitions

In July and pursuant to REIIF's right of first offer agreement with Forum, the Fund acquired ALMA Guelph Phase I, a PBSA property consisting of 177 beds, located a short distance from the University of Guelph and 99% leased for the start of the current academic year. The property is an adaptive re-use of an existing hotel property servicing a market suffering from a severe shortfall of student beds. Following the ALMA Guelph Phase I acquisition, the Fund now comprises of eleven properties, with 1,420 units serving over 2,000 residents.

Portfolio Update

The portfolio at the end of the third quarter is substantially stabilized, with portfolio occupancy of 98.2%, with just under 1% or 12 units being repositioned to attract materially higher rents. Comparative property net operating income² growth versus the previous quarter was 10.1%, with an embedded rental rate ‘mark-to-market' on turnover of +10%, based on recent executed leases.

Consistent with the Fund's valuation policies and practices, Forum reviewed values of REIIF's assets in September and proactively expanded capitalization rates resulting in a total portfolio capitalization rate of +4.50%. The expansion of capitalization rates to the conservative end of the valuation ranges was made to reflect the current investment environment that has been negatively impacted by interest rate increases over the last two years. The increase in capitalization rates was largely offset by income growth.

"With the fair value gains recognized in September and monthly distributions, we expect to deliver at the top end of our 8 to 12% target net return for the year", said Greg Spafford, Managing Director, Real Estate Asset Management and REIIF Fund Head.

Balance Sheet Update

During the third quarter, the Fund improved upon its already strong balance sheet and liquidity profile, continuing to maintain over $50M of liquidity and reducing its net debt to asset ratio³ to 40%, below the low end of the Fund's target range.

Forum is underwriting several highly accretive acquisition opportunities to take advantage of market dislocation, arising from less well-capitalized vehicles that have been negatively impacted by the volatile interest rate environment.

"With continued rental growth and a strong balance sheet - supported by CMHC-insured mortgages with an overall coupon under 3% and weighted average term to maturity of approximately seven years, we are well-positioned based on reasonable assumptions to meet the Fund's target return objectives for 2024 as well," said Rajeev Viswanathan, Managing Partner and CFO at Forum.

Distributions

The monthly distribution was paid on October 16, 2023 to unitholders of record as at September 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. "Data integrity, transparency and accountability are equally important, particularly in the face of significant and growing concerns around "greenwashing". This is why good governance remains a key pillar of REIIF's strategy," said Kathleen Beaumont, Director, Impact & ESG. "Data integrity is foundational to measuring and reporting on our progress against environmental targets, which is why we onboarded Measurabl as our primary data collection and reporting platform in the third quarter"; added Mrs. Beaumont. Measurabl is the real estate industry benchmark for data collection and monitoring to support enhanced ESG reporting and accountability.

Sound data is also an integral part of the Global Real Estate Sustainability Benchmark (GRESB) submission. We are proud to announce a 10% year-over-year improvement in REIIF's GRESB performance, ranking 3rd of 12 overall in its peer group.

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 unitholder will differ based on the series of trust units in which a unitholder 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 Net 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 and cash equivalents.

4 Weighted average term to maturity 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 ("PBSA"), 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 is designed to 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 contains 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. Forward-looking information contained in this news release includes, but is not limited to, statements with respect to REIIF's intentions or expectations concerning the investment objectives and strategies of REIIF; statements with respect to the types of opportunities being pursued by REIIF; forecasted annual net operating income growth of the portfolio properties; the ESG objectives and targets of REIIF; statements with respect to REIIF's financing strategies and expectation, timing and payment of distributions, including the target annual distribution and aggregate target total net return of an investor's investment in REIIF; and expectations with respect to Canada's rental growth and housing supply as well as general market outlook.

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