Minto Apartment REIT Reports Strong 2023 Second Quarter Financial Results

— Same Property Portfolio revenue and NOI growth of 9.3% and 11.8%, respectively and variable-rate debt reduction initiatives beginning to positively impact FFO per unit —

OTTAWA, ON, Aug. 8, 2023 /CNW/ - Minto Apartment Real Estate Investment Trust (the "REIT") (TSX: MI.UN) today announced its financial results for the second quarter and six months ended June 30, 2023 ("Q2 2023" and "YTD 2023", respectively). The Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis ("MD&A") for Q2 2023 and YTD 2023 are available on the REIT's website at www.mintoapartmentreit.com and at www.sedarplus.ca.¹

"The REIT's operational performance was strong in the second quarter, supported by our high-quality, urban portfolio and strong rental market conditions across all of our markets," said Jonathan Li, President and CEO of the REIT. "We realized gain-on-lease in excess of 16% for the third consecutive quarter, Same Property Portfolio² NOI increased by 11.8%, Same Property Portfolio NOI margin expanded by 140 basis points and we achieved a favourable natural gas variance for the first time in a number of quarters.  Importantly, excluding nonrecurring items, we achieved positive FFO and AFFO per unit growth as our variable-rate debt reduction initiatives are starting to positively impact our results. During the quarter we refinanced seven mortgages with long-term CMHC-insured fixed-rate mortgages which reduced our variable-rate debt exposure from 26% of Total Debt to 11%, a reduction of over $165 million. This also generated over $70 million of incremental proceeds we used to pay down our revolving credit facility  ("Revolver") which is immediately accretive to FFO per unit. These initiatives only partially impacted Q2 2023 results, with the full increase to be realized in Q3 2023 and beyond."

"Looking ahead, we believe the fundamentals driving our business including Canada's robust immigration targets, a housing shortage and a lack of new supply, and affordability challenges of home ownership which drives people to the rental market, will continue to support NOI growth going forward.  The REIT is very focused on translating that NOI growth into cash flow per unit growth. We believe that our recent decisions to terminate the purchase option on the Fifth + Bank property, waive on three attractive development opportunities with Minto Properties Inc. ("MPI"), and delay the construction start of the High Park Village intensification, demonstrate this focus.  Finally, we continue to evaluate additional accretive initiatives including refinancing properties with maturing mortgages in early 2024 and capital recycling opportunities."

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¹  This news release contains certain Non-IFRS and other financial measures. Refer to "Non-IFRS and Other Financial Measures" in this news release for a complete list of these measures and their meaning.

Q2 2023 Highlights

• Average monthly rent was $1,801, an increase of 6.6% compared to the second quarter ended June 30, 2022 ("Q2 2022"). Average monthly rent for the Same Property Portfolio²was $1,785, an increase of 6.3% compared to Q2 2022;
• Average occupancy of unfurnished suites increased to 97.0%, compared to 94.7% in Q2 2022;
• The REIT executed 495 new leases, achieving an average rental rate that was 16.2% higher than the expiring rents. As rental markets have continued to strengthen, the gain-to-lease potential on sitting rents increased sequentially to 16.1% from 15.3% at the end of Q1 2023;
• Revenue for the Same Property Portfolio was $36.7 million, an increase of 9.3% compared to Q2 2022; total revenue was $39.4 million, an increase of 11.0% compared to Q2 2022;
• NOI for the Same Property Portfolio was $23.1 million, an increase of 11.8% compared to Q2 2022; NOI was $24.6 million, an increase of 12.5% compared to Q2 2022;
• NOI margin for the Same Property Portfolio increased to 62.8%, compared to 61.4% in Q2 2022; NOI margin increased to 62.4%, compared to 61.5% in Q2 2022;
• Net loss and comprehensive loss was $43.0 million, compared to net income and comprehensive income of $183.5 million for Q2 2022;
• Normalized Funds from Operations ("Normalized FFO") were $13.9 million or $0.2125 per unit, a 1.2% increase over Q2 2022; Funds from Operations ("FFO") were $11.9 million, or $0.1817 per unit, compared to $13.7 million, or $0.2100 per unit, in Q2 2022;
• Normalized Adjusted Funds from Operations ("Normalized AFFO") were $12.2 million or $0.1860 per unit a 1.1% increase over Q2 2022; Adjusted Funds from Operations ("AFFO") were $10.2 million, or $0.1552 per unit, compared to $12.0 million, or $0.1840 per unit, in Q2 2022;
• Distributions per unit were $0.1225, an increase of 3.2% compared to Q2 2022 and representing an AFFO payout ratio of 78.9%; Normalized AFFO payout ratio was 65.9%;
• The REIT repositioned 33 suites across its portfolio in Q2 2023, generating an average annual unlevered return of 9.4%;
• The REIT reduced the amount of variable rate debt to 11% of Total Debt from 26% in Q1 2023, a reduction of $165,921;
• The REIT repaid both of its variable rate mortgages totalling $108.4 million with an average interest rate of 7.55% and replaced them with two CMHC-insured mortgages with fixed stated interest rates between 3.85% and 3.87% that mature in 2033;
• The REIT upward refinanced five maturing mortgages that generated incremental net proceeds of $73.8 million which was used to repay a portion of the REIT's revolving credit facility. The new CMHC-insured fixed rate mortgages bear interest at rates between 3.90% and 4.00% and mature in 2028 and 2033;
• Same Property Portfolio annualized turnover of 20.2% improved sequentially from 13.9% for Q1 2023 as it is a stronger leasing season, but was lower than 25.0% for Q2 2022 as tenants opt to stay in place due to tight rental conditions;
• On June 7, 2023, the REIT announced an agreement with MPI to terminate the REIT's option to purchase the Fifth + Bank property;
• On August 8, 2023, the REIT waived its right of first offer for three purpose-built rental development opportunities, presented by MPI, that would have been attractive assets for the REIT. The developments are located in the Oakridge neighbourhood of Vancouver in close proximity to the Cambie Corridor Planning Program, Mississauga in Toronto, and Danforth Village in Toronto. Additionally, the REIT waived on four other opportunities in Vancouver and Toronto during the previous three quarters; and,
• The REIT's management and its partner have decided to temporarily postpone the construction start of the High Park Village intensification, originally scheduled for the second quarter of 2024.

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²  Same Property Portfolio consists of 29 multi-residential properties both wholly and jointly owned by the REIT for comparable periods in Q2 2023 and Q2 2022.

Financial Summary

($000's except per unit and per suite amounts)	Three months ended June 30,				Six months ended June 30,
	2023	2022	Variance		2023	2022	Variance
Revenue from investment properties	$      39,401	$      35,510	11.0 %		$      77,804	$      68,036	14.4 %
Property operating costs	8,051	7,260	(10.9) %		15,494	13,740	(12.8) %
Property taxes	3,917	3,709	(5.6) %		7,925	7,374	(7.5) %
Utilities	2,861	2,702	(5.9) %		7,077	6,297	(12.4) %
NOI	$      24,572	$      21,839	12.5 %		$      47,308	$      40,625	16.5 %
NOI margin (%)	62.4 %	61.5 %	90 bps		60.8 %	59.7 %	110 bps
Revenue - Same Property Portfolio	$      36,726	$      33,589	9.3 %		$      72,450	$      65,920	9.9 %
NOI - Same Property Portfolio	23,068	20,628	11.8 %		44,204	39,287	12.5 %
NOI margin (%) - Same Property Portfolio	62.8 %	61.4 %	140 bps		61.0 %	59.6 %	140 bps
Interest costs	$      10,710	$        7,512	(42.6) %		$      21,378	$      13,721	(55.8) %
Net (loss) income and comprehensive (loss) income	$    (43,009)	$    183,537	N/A		$    (67,236)	$    218,177	(130.8) %
FFO	11,925	13,680	(12.8) %		$      23,554	$      25,659	(8.2) %
FFO per unit	0.1817	0.2100	(13.5) %		$      0.3588	$      0.4008	(10.5) %
AFFO	10,188	11,983	(15.0) %		$      20,121	$      22,331	(9.9) %
AFFO per unit	0.1552	0.1840	(15.7) %		$      0.3065	$      0.3489	(12.2) %
Distribution per unit	0.1225	0.1187	3.2 %		$      0.2450	$      0.2375	3.2 %
AFFO payout ratio	78.9 %	65.2 %	(1370) bps		79.9 %	68.4 %	(1150) bps
Normalized FFO	13,946	13,680	1.9 %		25,661	25,659	— %
Normalized FFO per unit	0.2125	0.2100	1.2 %		0.3909	0.4008	(2.5) %
Normalized AFFO	12,209	11,983	1.9 %		22,228	22,331	(0.5) %
Normalized AFFO per unit	0.1860	0.1840	1.1 %		0.3386	0.3489	(3.0) %
Normalized AFFO payout ratio	65.9 %	65.2 %	(70) bps		72.3 %	68.4 %	(390) bps
Average monthly rent	$        1,801	$        1,690	6.6 %		$        1,801	$        1,690	6.6 %
Average monthly rent - Same Property Portfolio	$        1,785	$        1,680	6.3 %		$        1,785	$        1,680	6.3 %
Average occupancy	97.0 %	94.7 %	230 bps		97.1 %	94.4 %	270 bps
Average occupancy - Same Property Portfolio	97.0 %	94.7 %	230 bps		97.1 %	94.5 %	260 bps

Q2 2023 Operating Results

Revenue in Q2 2023 totalled $39.4 million, an increase of 11.0% from $35.5 million in Q2 2022. The increased revenue in Q2 2023 primarily reflected higher average monthly rents, improved occupancy, and additional revenue from the two properties acquired during Q2 2022 (Niagara West and The International).  Same Property Portfolio revenue was $36.7 million, an increase of 9.3% from Q2 2022, reflecting the higher average monthly rent and improved occupancy.

Average monthly rent at the end of Q2 2023 was $1,801, an increase of 6.6% compared to the end of Q2 2022. Average monthly rent for the Same Property Portfolio was $1,785 at the end of Q2 2023, representing a year-over-year increase of 6.3%.

Average occupancy was 97.0% in Q2 2023, compared to 94.7% in Q2 2022.

The year-over-year growth in average monthly rent and occupancy reflected continued strong rental demand in the REIT's markets.

Operating expenses were 8.5% higher (5.4% higher for the Same Property Portfolio) in Q2 2023 compared to Q2 2022, reflecting growth in salaries, repair and maintenance costs, and electricity. Inflationary pressures have moderated from their peak in 2022, and management is confident that its in-place strategies to contain controllable operating expenses will contribute to solid NOI growth.

NOI for Q2 2023 totalled $24.6 million, representing 62.4% of revenue, an increase of 12.5% compared to $21.8 million, or 61.5% of revenue, in Q2 2022. Same Property Portfolio NOI for Q2 2023 was $23.1 million, representing 62.8% of revenue, an increase of 11.8% compared to $20.6 million, or 61.4% of revenue, in Q2 2022. The increases in NOI and Same Property Portfolio NOI in Q2 2023 reflected higher revenue which outpaced increased operating expenses as noted above.

During Q2 2023, the REIT incurred a net $2.0 million of nonrecurring items which negatively impacted FFO and AFFO performance. These costs included debt retirement costs, the write-off of property investigation costs incurred in a previous year and severance costs, partially offset by insurance and property tax recoveries. The impact of these costs on NOI was immaterial. Adjusting for these nonrecurring items during the period, Normalized FFO was $13.9 million or $0.2125 per unit, a 1.2% increase over Q2 2022. Normalized AFFO was $12.2 million or $0.1860 per unit a 1.1% increase over Q2 2022.

FFO in Q2 2023 was $11.9 million, or $0.1817 per unit, compared to $13.7 million, or $0.2100 per unit, in Q2 2022. AFFO in Q2 2023 was $10.2 million, or $0.1552 per unit, compared to $12.0 million, or $0.1840 per unit in Q2 2022.

The REIT reported a net loss and comprehensive loss of $43.0 million in Q2 2023, compared to net income and comprehensive income of $183.5 million in Q2 2022. The variance was primarily attributable to non-cash, fair value losses on investment properties and Class B LP Units of $45.7 million and $6.7 million, respectively, in Q2 2023 compared to a non-cash loss of $2.3 million on investment properties and a non-cash gain of $172.8 million on Class B LP Units in Q2 2022. The fair value loss on investment properties in Q2 2023 reflected a slight expansion of capitalization rates across the portfolio, partially offset by growth in forecast NOI for the portfolio at large. The fair value loss on Class B LP Units in Q2 2023 reflected the increase in the REIT's unit price during the quarter.

The REIT paid cash distributions of $0.1225 per unit for Q2 2023, an increase of 3.2% compared to Q2 2022 and representing an AFFO payout ratio of 78.9%. Cash distributions of $0.1187 per unit were paid in Q2 2022, representing an AFFO payout ratio of 65.2%.

Gain-on-Lease, Gain-to-Lease Potential and Repositioning

The REIT signed 495 new leases in Q2 2023, realizing an average gain-on-lease of 16.2%, the third consecutive quarter in which realized gain-on-lease exceeded 16%. This resulted in an annualized incremental revenue gain of approximately $1.4 million. By comparison, the REIT realized gains on new leases of 12.1% in Q2 2022 and 16.9% in Q1 2023. The REIT realized significant double-digit gain-on-lease in all markets during Q2 2023. The Canadian urban rental market maintained its strong performance during the quarter, supported by increased immigration, the unaffordability of home ownership, increased acceptance of renting versus owning and, for the REIT's urban portfolio, a broad return to downtown living. Same Property Portfolio suite turnover was 20% on an annualized basis compared to 25% in Q2 2022.

Management estimates that the REIT held embedded gain-to-lease potential in its unfurnished suite portfolio of 16.1% as at June 30, 2023, representing future annualized embedded potential revenue of approximately $22.1 million. That compares to embedded gain-to-lease potential of 10.9% and an estimated annualized revenue growth opportunity of $14.0 million as at June 30, 2022, and 15.3% or $20.7 million as at March 31, 2023. As market rents continue to increase and turnover remains lower than seasonal norms, embedded gain-to-lease potential will also increase. Management expects that the REIT will be able to realize a significant portion of the gain-to-lease potential over the next number of years.

The REIT repositioned a total of 33 suites across its portfolio in Q2 2023, generating an average annual unlevered return on investment of 9.4%. The REIT has a total of 1,918 suites remaining to be repositioned under its current program. Due to the continued strength in the Canadian rental market, combined with decreasing vacancy and turnover, management currently expects to reposition 80 to 120 suites in 2023, a reduction from 259 in 2022.

Balance Sheet and Debt Refinancing Initiatives

During Q2 2023, the REIT executed on its accretive strategy of reducing variable-rate debt exposure by replacing variable-rate debt with long-term fixed-rate CMHC-insured financing. This reduced the amount of variable-rate debt to 11% of total debt from 26% in Q1 2023, a reduction of $165.9 million.

In April and June 2023, the REIT refinanced two variable rate mortgages totalling $108.4 million with interest rates of 7.44% and 7.70% and secured $113.4 million of CMHC-insured fixed-rate mortgages with interest rates between 3.85% and 3.87%³ that mature in 2033. In May 2023, the REIT refinanced five maturing mortgages totalling $137.4 million with interest rates between 2.98% and 5.34% with $218.6 million of new CMHC-insured fixed-rate mortgages with interest rates between 3.90% and 4.00%³ that mature in 2028 and 2033. The incremental net proceeds of $73.8 million generated from these seven refinancings were used to pay down the Revolver, which currently has an all-in interest cost of over 7.00%.

As a result of the above refinancings occurring in late Q2 2023, the REIT began to see moderation of interest costs at the tail end of the quarter, and expects to see the full effect of these savings through the second half of 2023 and beyond.

Subsequent to Q2 2023, the REIT refinanced Term Debt secured by an Ottawa property, generating $24.2 million of incremental debt proceeds that were used to further repay the credit facility.

In addition, the REIT is exploring upward refinancing three properties with mortgages maturing in early 2024 that have potential to generate between $55.0 million and $65.0 million dollars of incremental proceeds. We would expect to use these proceeds to repay a portion of the credit facility.

As of June 30, 2023, the REIT had total debt outstanding of $1.15 billion, with a weighted average interest rate on Term Debt of 3.21% and a weighted average term to maturity on Term Debt of 5.87 years.

The Debt-to-Gross Book Value ("GBV") ratio as at June 30, 2023 was 42.2%.

The REIT's net asset value ("NAV") per unit as at June 30, 2023 was $23.21, a decline from $24.00 as at December 31, 2022, primarily reflecting a fair value loss on investment properties of $59.2 million in YTD 2023. The fair value loss reflected a moderate expansion in cap rates across all geographies and increased capital expenditure reserve, offset by increased forecast NOI.

The REIT continues to maintain a strong financial position. Total liquidity was approximately $163.3 million as at June 30, 2023, with a liquidity ratio (total liquidity/total debt) of 14.2%.

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³  These are nominal rates that do not include $1.8 million of interest rate prepayments made on several refinancings.

High Park Village Intensification Deferral

The REIT and its partner have decided to temporarily postpone the construction start of the intensification project at the High Park Village property. The intensification would add two towers and five townhomes comprising a total of 688 new suites and 344 new parking stalls to the existing site. The construction start was originally scheduled for Q2 2024. The rationale for this decision includes: i) Management is exercising prudence and discipline with its capital allocation decisions considering the future capital requirements of its existing development projects and existing convertible development loan commitments; ii) Defers approximately $75 million of future equity requirements related to the REIT's portion of the intensification project, which likely would be funded on its Revolver, which currently has a high cost of interest; and, iii) Retains optionality to restart the intensification project when capital market conditions, access to capital and cost of capital are more favourable. The intensification project remains an attractive investment opportunity and the REIT and its partner will continue to work through the pre-development phase to ensure that construction can commence expediently, if and when it is strategically appropriate.

Conference Call

Management will host a conference call for analysts and investors on Wednesday, August 9, 2023 at 10:00 am ET. To join the conference call without operator assistance, participants can register and enter their phone number at https://emportal.ink/46DyD5f to receive an instant automated call back. Alternatively, they can dial 416-764-8688 or 1-888-390-0546 to reach a live operator who will join them into the call.

In addition, the call will be webcast live at:

Minto Apartment REIT Q2 2023 Earnings Webcast

A replay of the call will be available until Wednesday, August 16, 2023. To access the replay, dial 416-764-8677 or 888-390-0541 (Passcode: 611404 #). A transcript of the call will be archived on the REIT's website.

About Minto Apartment Real Estate Investment Trust

Minto Apartment Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario to own, develop, and operate income-producing multi-residential properties located in urban markets in Canada. The REIT owns a portfolio of high-quality income-producing multi-residential rental properties located in Toronto, Montreal, Ottawa, Calgary and Edmonton. For more information on Minto Apartment REIT, please visit the REIT's website at: www.mintoapartmentreit.com.

Forward-Looking Information

This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the REIT's current expectations regarding future events and in some cases can be identified by such terms as "will" and "expects". Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT's control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in the REIT's Annual Information Form dated March 8, 2023, which is available on SEDAR+ (www.sedarplus.ca). The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.

Non-IFRS and Other Financial Measures

This news release contains certain non-IFRS and other financial measures which are measures commonly used by publicly traded entities in the real estate industry. Management believes that these metrics are useful for measuring different aspects of performance and assessing the underlying operating and financial performance on a consistent basis. However, these measures do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and are not necessarily comparable to similar measures presented by other publicly traded entities. These measures should strictly be considered supplemental in nature and not a substitute for financial information prepared in accordance with IFRS. The REIT has adopted the guidance under NI 52-112 Non-GAAP and Other Financial Measures Disclosure for the purpose of this news release. These non-IFRS and other financial measures and ratios are defined below:

• "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 REIT's method of calculating AFFO may differ from other issuers' methods and, accordingly, may not be comparable to AFFO reported by other issuers. The REIT also uses AFFO in assessing its capacity to make distributions.
• "AFFO per unit" is calculated as AFFO divided by the weighted average number of Units of the REIT and Class B LP Units of the Partnership outstanding over the period. The REIT regards AFFO per unit as a key measure of operating performance.
• "AFFO payout ratio" is the proportion of the total distributions on Units of the REIT and Class B LP Units of the Partnership to AFFO. The REIT uses AFFO payout ratio in assessing its capacity to make distributions.
• "average annual unlevered return" refers to the return on repositioning activities, and is calculated by dividing the average annual rental increase per suite after repositioning by the average repositioning cost per suite, excluding the impact of financing costs.
• "average monthly rent" represents the average monthly rent per suite for occupied unfurnished suites at the end of the period.
• "average occupancy" is defined as the ratio of occupied unfurnished suites to the total unfurnished suites in the portfolio for the period.
• "Debt-to-GBV" is calculated by dividing total interest-bearing debt consisting of fixed and variable rate mortgages, credit facilities, construction loans and Class C LP Units of the Partnership by Gross Book Value and is used as the REIT's primary measure of its leverage.
• "FFO" is defined as IFRS consolidated net income adjusted for items such as unrealized changes in the fair value of 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 REIT's method of calculating FFO may differ from other issuers' methods and, accordingly, may not be comparable to FFO reported by other issuers.
• "FFO per unit" is calculated as FFO divided by the weighted average number of Units of the REIT and Class B LP Units of Minto Apartment Limited Partnership (the "Partnership") outstanding over the period. The REIT regards FFO per unit as a key measure of operating performance.
• "gain-on-lease" refers to the gap between rents achieved on new leases of unfurnished suites as compared to the expiring leases.
• "gain-to-lease potential" refers to the gap between Management's estimate of monthly market rent and average monthly in-place rent per occupied unfurnished suite.
• "Gross Book Value" is defined as the total assets of the REIT as at the balance sheet date.
• "interest costs" are calculated as the sum of costs incurred on mortgages, credit facility, and Class C LP Units and excludes debt retirement costs.
• "NAV" is calculated as the sum of the value of REIT Unitholders' equity and Class B LP Units of the Partnership as at the balance sheet date.
• "NAV per unit" is calculated by dividing NAV by the number of Units of the REIT and Class B LP Units of the Partnership outstanding as at the balance sheet date.
• "NOI" is defined as revenue from investment properties less property operating costs, property taxes and utilities (collectively referred to as "property operating expenses") prepared in accordance with IFRS. NOI should not be construed as an alternative to net income determined in accordance with IFRS. The REIT's method of calculating NOI may differ from other issuers' methods and, accordingly, may not be comparable to NOI reported by other issuers. It is a key input in determining the value of the REIT's properties.
• "NOI margin" is defined as NOI divided by revenue from investment properties.
• "Normalized FFO" is calculated as FFO net of nonrecurring items that occurred during the period which are not indicative of the REIT's typical operating results.
• "Normalized FFO per unit" is calculated as Normalized FFO divided by the weighted average number of Units of the REIT and Class B LP Units of the Partnership outstanding over the period.
• "Normalized AFFO" is calculated as AFFO net of nonrecurring items that occurred during the period which are not indicative of the REIT's typical operating results.
• "Normalized AFFO per unit" is calculated as Normalized AFFO divided by the weighted average number of Units of the REIT and Class B LP Units of the Partnership outstanding over the period.
• "Normalized AFFO payout ratio" is the proportion of the total distributions on Units of the REIT and Class B LP Units of the Partnership to Normalized AFFO.
• "Term Debt" is calculated as the sum of value of fixed rate mortgages, a variable rate mortgage fixed through an interest rate swap and Class C LP Units of the Partnership.
• "Total Debt" is calculated as the sum of value of interest-bearing debt consisting of mortgages, credit facilities, construction loans and Class C LP Units of the Partnership.
• "Total liquidity" is calculated as the sum of the undrawn balance under the revolving credit facility and cash.
• "Weighted average term to maturity on Term Debt" is calculated as the weighted average of the term to maturity on the outstanding fixed rate mortgages, a variable rate mortgage fixed through an interest rate swap and Class C LP Units of the Partnership.
• "Weighted average interest rate on Term Debt" is calculated as the weighted average of the stated interest rates on the outstanding balances of fixed rate mortgages, a variable rate mortgage fixed through an interest rate swap and Class C LP Units of the Partnership.

Reconciliations of Non-IFRS Financial Measures and Ratios

FFO and AFFO

($000's except unit and per unit amounts)	Three months ended June 30,			Six months ended June 30,
	2023	2022		2023	2022
Net (loss) income and comprehensive (loss) income	$              (43,009)	$              183,537		$              (67,236)	$              218,177
Distributions on Class B LP Units	3,154	3,058		6,309	5,762
Issuance costs on Class B LP Units	—	175		—	175
Disposition costs on investment property	—	—		348	—
Fair value loss (gain) on:
Investment properties	45,700	2,325		59,203	(12,070)
Class B LP Units	6,696	(172,772)		24,982	(182,335)
Interest rate swap	(656)	(776)		(246)	(2,083)
Unit-based compensation	40	(1,867)		194	(1,967)
Funds from operations (FFO)	11,925	13,680		23,554	25,659
Maintenance capital expenditure reserve	(1,510)	(1,506)		(3,030)	(2,942)
Amortization of mark-to-market adjustments	(227)	(191)		(403)	(386)
Adjusted funds from operations (AFFO)	10,188	11,983		20,121	22,331
Distributions on Class B LP Units	3,154	3,058		6,309	5,762
Distributions on Units	4,886	4,758		9,772	9,516
	$                 8,040	$                 7,816		$               16,081	$               15,278
AFFO payout ratio	78.9 %	65.2 %		79.9 %	68.4 %
Weighted average number of Units and Class B LP Units issued and outstanding	65,642,641	65,135,801		65,642,641	64,013,164
FFO per unit	$               0.1817	$               0.2100		$               0.3588	$               0.4008
AFFO per unit	$               0.1552	$               0.1840		$               0.3065	$               0.3489

Normalized FFO and Normalized AFFO

($000's except unit and per unit amounts)	Three months ended June 30,			Six months ended June 30,
	2023	2022		2023	2022
FFO	$               11,925	$               13,680		$               23,554	$               25,659
AFFO	10,188	11,983		20,121	22,331
Normalizing items	2,021	—		2,107	—
Normalized FFO	$               13,946	$               13,680		$               25,661	$               25,659
Normalized FFO per unit	$               0.2125	$               0.2100		$               0.3909	$               0.4008
Normalized AFFO	12,209	11,983		22,228	22,331
Normalized AFFO per unit	$               0.1860	$               0.1840		$               0.3386	$               0.3489
Normalized AFFO payout ratio	65.9 %	65.2 %		72.3 %	68.4 %

NAV and NAV per unit

($000's except unit and per unit amounts)	As at
	June 30, 2023	December 31, 2022
Net assets (Unitholders' equity)	$                        1,136,529	$                        1,213,537
Add: Class B LP Units	386,840	361,858
NAV	$                        1,523,369	$                        1,575,395
Number of Units and Class B LP Units	65,642,641	65,642,641
NAV per unit	$                               23.21	$                               24.00

SOURCE Minto Apartment Real Estate Investment Trust

Edward Fu, Chief Financial Officer, Minto Apartment Real Estate Investment Trust, Tel: [phone]