MARWEST APARTMENT REAL ESTATE INVESTMENT TRUST ANNOUNCES 2023 Q1 RESULTS

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

WINNIPEG, MB, May 17, 2023 /CNW/ - Marwest Apartment Real Estate Investment Trust (the "REIT") (TSXV: MAR.UN) reported financial results for the three months ended March 31, 2023.  This press release should be read in conjunction with the REIT's Unaudited Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis ("Q1 2023 MD&A") for the three months ended March 31, 2023, which are available on the REIT's website at www.marwestreit.com and at www.sedar.com.

Mr. William Martens, Chief Executive Officer and Trustee commented  "Q1 2023 has exceeded expectations, same property growth in net operating income ("NOI") was over 17%, fueled by higher occupancy rates and achieving rental rate increases year over year amid rising operating costs from the current inflationary period.  The affordability gap of owning a home and renting continues to remain constant and with continued immigration targets set by the Government of Canada we expect to see continued lower vacancy rates for multi-family.  Our fixed rate mortgages with an average term to maturity of over six years has a positive impact on the ability to provide stable returns for our Unitholders."

Q1 2023 Quarterly Highlights

• Reported funds from operations ("FFO") of $0.0171 per Unit for Q1 2023, compared to $0.0167 for Q1 2022
• Reported adjusted funds from operations ("AFFO") of $0.0165 per Unit for Q1 2023, compared to $0.0143 for Q1 2022
• Reported Net Asset Value per Unit ("NAV") of $1.47 at March 31, 2023 compared to $1.44 at December 31, 2022
• Same Property Net Operating Income¹ ("Same Property NOI") increased by 17.03% in 2023 compared to the same quarter 2022
• Average occupancy rate of 98.30% reported for the three months ended March 31, 2023 compared to 94.78% in the same period 2022
• Weighted average months to debt maturity of 76.28 months

Operations Summary

	Three months ended March 31
Portfolio Operation Information	2023	2022
Number of properties	4	3
Number of suites	516	363
Average Occupancy Rate	98.30 %	94.78 %
Average rental rate to date	$1,528	$1,511
	Three months ended March 31
Reconciliation to Same Property NOI	2023	2022
Revenue from investment properties	$                       1,714,823	$                       1,619,027
Expenses:
Property Operating Expenses	497,142	583,530
Realty Taxes	155,454	127,871
Total Operating Expenses	652,596	711,401
Same Property NOI	$                       1,062,227	$                          907,626

Reconciliation of Debt-to-Gross Book Value ratio
Total interest-bearing debt		$                  101,779,923
Total assets on balance sheet		132,121,486
Debt-to-Gross Book Value ratio		77.04 %
Reconciliation of Debt Service Coverage ratio
Net Operating Income for the period ended March 31, 2023		$                       1,446,655
Mortgage payments for the period ended March 31, 2023		1,224,824
Debt Service Coverage ratio		1.18
Weighted average term to maturity on fixed rate debt		76.28 months
Weighted average interest rate on fixed debt		3.01 %

Financial Summary

The REIT generated FFO and AFFO per Unit of $0.0171 and $0.0165 during the three months ended March 31, 2023. 
FFO and AFFO are defined in "Non-IFRS Measures" in the March 31, 2023 MD&A.

Reconciliation of Net Income and Comprehensive Income to FFO and AFFO	Three months ended March 31
	2023	2022
Revenue from investment properties	$                       2,454,405	$                       1,618,740
Property operating expenses	(775,215)	(580,269)
Realty taxes	(232,535)	(127,870)
Net Operating Income ^1	1,446,655	910,601
NOI Margin ^1	58.94 %	56.25 %
General and administrative	(201,632)	(170,112)
Finance costs	(952,084)	(452,630)
Fair value gain (loss) on:
Investment properties	280,861	3,127,296
Unit-based compensation	41,853	(5,839)
Warrants liability	-	(12,815)
Exchangeable Units	2,601,906	(1,517,778)
Net Income  and
Comprehensive Income	$           3,217,559	$           1,878,723

¹ Same Property Portfolio consists of 3 multi-residential properties owned by the REIT for comparable periods in Q1 2023 and Q1 2022

	Three months ended March 31
Reconciliation to FFO	2023	2022
Net income and comprehensive income	3,217,559	1,878,723
Distributions on Exchangeable Units	40,650	40,671
Fair value gain on properties	(280,861)	(3,127,296)
Fair value (gain) loss on unit-based compensation	(41,853)	5,839
Fair value loss on warrant liability		12,815
Fair value (gain) loss on exchangeable units	(2,601,906)	1,517,778
FFO	333,589	328,530
Weighted average number of Units	19,508,727	19,672,838
FFO/unit	$                            0.0171	$                            0.0167
Reconciliation to AFFO
FFO	$                          333,589	$                          328,530
Capital expenditures	(9,937)	(43,285)
Leasing costs	(1,653)	(4,411)
AFFO	321,999	280,834
Weighted average number of Units	19,508,727	19,672,838
AFFO/unit	$                            0.0165	$                            0.0143
AFFO payout ratio	22.72 %	26.27 %
NAV and NAV per Unit Reconciliation	At March 31, 2023	At December 31, 2022
Unitholders' Equity	$22,193,091	$19,014,023
Exchangeable Units	6,613,177	9,215,083
NAV	28,806,268	28,229,106
Trust Units	8,657,564	8,667,564
Exchangeable Units	10,841,274	10,841,274
Deferred Units	124,077	110,036
Total Units oustanding	19,622,915	19,618,874
NAV per unit	$1.47	$1.44

The overall increase in NAV from $1.44 at December 31, 2022 to $1.47 at March 31, 2023, was due to positive NOI.

Outlook

Management is focused on growing the portfolio and unitholder value through increasing rental rates where the market allows, future acquisition opportunities that will increase the overall size and performance of the REIT, as well as maintaining a manageable debt structure.  The majority of the REIT's debt is CMHC insured, the REIT's mortgages are all fixed rates with an average remaining mortgage term of over six years.  In the next 12 months, the Element Phase I mortgage matures which accounts for $6,277,288 of the $10,816,597 in mortgage payments due in the next 12 months, it is Management's expectation that this mortgage will be renewed at or before the maturity date of January 1, 2024.  Management believes the organic growth in NAV due to paydown of debt over the mortgage terms is a positive outcome of the higher leveraged position as well as lowering the REIT's debt to GBV ratio and thereby increasing the NAV per Unit over time.

Management anticipates that demand for rental housing will remain strong in the coming quarters due to immigration and the affordability gap in rental vs. home ownership. 

About Marwest Apartment Real Estate Investment Trust

The REIT is an unincorporated open-ended trust governed by the laws of the Province of Manitoba. The REIT was formed to provide holders of Units with the opportunity to invest in the Canadian multi-family rental sector through the ownership of high-quality income-producing properties, with an initial focus on stable markets throughout Western Canada.

Forward-looking Statements 

The information in this news release includes certain information and statements about management's views of future events, expectations, plans and prospects that constitute forward–looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties.  Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward–looking statements. A number of factors could cause actual results to differ materially from these forward–looking statements, including the risks described in the REIT's latest annual information form and management's discussion and analysis.  The payment of cash distributions will be dependent upon a number of factors, including but not limited to the financial performance, financial condition and financial requirements of the REIT.  Although management of the REIT believes that the expectations reflected in forward–looking statements are reasonable, it can give no assurances that the expectations of any forward–looking statements will prove to be correct. Except as required by law, the REIT disclaims any intention and assumes no obligation to update or revise any forward–looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward–looking statements or otherwise.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

The Units are not registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons, except in certain transactions exempt from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, securities of the REIT in the United States or in any other jurisdiction.

Notice with respect to Non-IFRS Measures Disclosure

The REIT's financial statements are prepared in accordance with IFRS.  In addition to IFRS measures, this news release and the REIT's Q1 2023 MD&A disclose certain non-IFRS financial measures that are commonly used by Canadian real estate investment trusts as an indicator of performance.  Non-IFRS measures and ratios include the following:

Net Operating Income ("NOI")

The Trust calculates net operating income as revenue less property operating expenses such as utilities, repairs and maintenance and realty taxes.  Charges for interest or other expenses not specific to the day–to–day operations of the Trust's properties are not included.  The Trust regards NOI as an important measure of the income generated by income-producing properties and is used by management in evaluating the performance of the Trust's properties.  NOI is also a key input in determining the value of the Trust's properties. For reconciliation to IFRS measures, refer to "Financial Operations and Results" in the REIT's Q1 2023 MD&A

Funds from Operations ("FFO")

The Trust calculates FFO substantially in accordance with the guidelines set out in the white paper titled "White Paper on Funds from Operations & Adjusted Funds from Operations for IFRS" by the Real Property Association of Canada ("REALpac") as revised in January 2022.  FFO is defined as IFRS consolidated net income adjusted for items such as unrealized changes in the fair value of the investment properties, effects of puttable instruments classified as financial liabilities and changes in fair value of financial instruments and derivatives.  FFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS.  The Trust regards FFO as a key measure of operating performance. For reconciliation to IFRS measures, refer to "Financial Operations and Results" in the REIT's Q1 2023 MD&A

Adjusted Funds from Operations ("AFFO")

The Trust calculates AFFO substantially in accordance with the guidelines set out in the white paper titled "White Paper on Funds from Operations & Adjusted Funds from Operations for IFRS" by REALpac as revised in January 2022.  AFFO is defined as FFO adjusted for items such as maintenance capital expenditures and straight–line rental revenue differences.  AFFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS.  The Trust regards AFFO as a key measure of operating performance.  The Trust also uses AFFO in assessing its capacity to make distributions. For reconciliation to IFRS measures, refer to "Financial Operations and Results" in the REIT's Q1 2023 MD&A

The following other non–IFRS measures are defined as follows:

• "FFO per unit" is calculated as FFO divided by the weighted average number of Trust Units and Exchangeable Units of the Partnership outstanding over the period.
• "AFFO per unit" is calculated as AFFO divided by the weighted average number of Trust Units and Exchangeable Units of the Partnership outstanding over the period.
• "AFFO Payout Ratio" is the proportion of the total distributions on Trust Units and Exchangeable Units of the Partnership to AFFO per Unit.
• "Net Asset Value" is calculated as the sum of Unitholders' Equity and Exchangeable Units
• "Net Asset Value per Unit" or "NAV per Unit" is calculated as the sum of Unitholders' Equity and Exchangeable Units divided by the sum of Trust Units, Exchangeable Units and Deferred Units outstanding at the end of the period.
• "Debt–to–Gross Book Value ratio" is calculated by dividing total interest–bearing debt consisting of mortgages by total assets and is used as the REIT's primary measure of its leverage.
• "Debt Service Coverage ratio" is the ratio of NOI to total debt service consisting of interest expenses recorded as finance costs and principal payments on mortgages.
• "Stabilized net operating income" is the estimated 12-month net operating income that a property could generate at full occupancy, less a vacancy rate and stable operating expenses.
• "Average occupancy rate" is defined as the ratio of occupied suites to the total suites in the portfolio for the period.

Management believes that these measures are helpful to investors because they are widely recognized measures of the REIT's performance and provide a relevant basis for comparison among real estate entities.  These non-IFRS financial measures are not defined under IFRS and are not intended to represent financial performance, financial position or cash flows for the period and should not be viewed as an alternative to net income, cash flow from operations or other measures of financial performance calculated in accordance with IFRS.

The above measures are not standardized under the financial reporting framework used to prepare the financial statements of the REIT.  Readers should be further cautioned that the above measures as calculated by the REIT may not be comparable to similar measures presented by other issuers.  For further information, refer to the sections entitled "Non-IFRS measures" and "Financial Operations and Results" in the REIT's Q1 2023 MD&A, which is incorporated by reference herein, for further information (available on SEDAR at www.sedar.com or the REIT's website www.marwestreit.com).

SOURCE Marwest Apartment Real Estate Investment Trust

REIT Contact: For further information, please contact Mr. William Martens, Chief Executive Officer, Telephone: [phone].