Heraldo de Madrid - Forum Real Estate Income and Impact Fund Reports Q3 2024 Results

Investor Returns

Series F investors in REIIF have earned a time-weighted return of 10.32%, inclusive of the monthly distribution of 3.97 cents per unit, or an annualized projection of 4.2%. Over a trailing 12-month period, REIIF has delivered a time-weighted return of 10.9%, underscoring the Fund's steady performance.

The Canadian housing market continues to grapple with a critical supply-demand imbalance, with an estimated 5 million¹ homes needed in the next six years to restore affordability, including over 400,000² student beds. This shortage is particularly acute in Canada's 20 largest university markets, where approximately 1.5 million post-secondary students compete for 170,000 available purpose-built student accommodation (PBSA) beds³. As a result, most students are left vying for limited, costly rental options, adding further pressure to an already constrained housing market.

PBSA assets, specifically designed to cater to students' unique needs, offer a viable solution by providing safe, attainable, and community-oriented living environments. With a significant allocation to PBSA, REIIF is well-positioned to capitalize on this demand, presenting an opportunity for capital appreciation and consistent, long-term returns for unitholders.

"As the demand for attainable housing options intensifies, especially in university hubs, REIIF's investment in PBSA is more relevant than ever. Our commitment to meeting this critical need not only supports students and their academic experiences, but also strategically positions our fund to deliver sustainable, long-term returns." said Aly Damji, Managing Partner at Forum Asset Management ("Forum"), Fund Head and a Trustee of REIIF.

Strategic Milestone: Alignvest Student Housing REIT Acquisition

A key milestone for REIIF this quarter was the October 16, 2024, announcement of our agreement to acquire the Alignvest Student Housing ("ASH") REIT portfolio for $1.686 billion, facilitated primarily through a unit exchange. This transformative acquisition will bring the Fund's portfolio to nearly 10,500 beds, expanding our reach into major Canadian university markets and urban centres coast-to-coast. The transaction marks significant growth for the Fund, providing unitholders with enhanced exposure to a scaled and diversified portfolio of institutional-quality assets. On November 20, 2024 the transaction was overwhelmingly approved by ASH REIT unitholders, with over 99% of the unitholders present in person and represented by proxy at the meeting voting in favour of the acquisition. Upon closing (expected to occur by year-end), REIIF will become the leading owner of PBSA in Canada.

A link to the press release of the transaction can be found here.

Acquisitions

On July 1, 2024, pursuant to REIIF's right of first offer agreement (ROFO) with Forum, the Fund strategically expanded its portfolio with the acquisition of the remaining 50% interest in a fully furnished rental community in Ottawa, Ontario, now controlling the entire property that includes 111 furnished rentals. This property encompasses 180,000 square feet and provides 460 beds, conveniently located near a future LRT station and close to key employment centers and Algonquin College, one of Canada's largest public colleges. The property benefits from CMHC financing at a 4.2% coupon for a 10-year term. With Ottawa's Nepean market facing a rental density of just 4.5 apartments per 100 people⁴ and limited new construction, the 1.6% market vacancy rate signals strong demand for future rent growth.

Following the acquisitions of Woodroffe Place, the Fund now comprises 14 properties, with 2,105 units serving over 3,000 residents, Gross Asset Value ("GAV") over $700M, and an over 70% strategic allocation to PBSA.

Portfolio Update

For the 2024/2025 academic year, stabilized properties achieved a 97.2%⁵ occupancy rate, reflecting the strong demand dynamics in the sector. Comparative Property Net Operating Income (NOI) growth for our PBSA assets increased 13.2% from the same quarter last year.

The Fund's performance this quarter was supported by fair value gains on recently appraised PBSA properties in the Greater Toronto Area (GTA) and GGH. The Fund achieved a 7.8% rental gain on turnover over the past twelve months including the impacts of new leases and renewals. Additionally, disciplined expense management by REIIF's management and property managers ensured that a substantial portion of this rental growth converted into Adjusted Funds from Operations.

Balance Sheet Update

The Fund has maintained a conservative net debt to net assets ratio of 43.8% and over $70M of liquidity. The Fund's balance sheet is supported by CMHC-insured fixed-rate mortgages, representing 99% of total indebtedness, with an overall coupon of 3.34% and a weighted average term of 7.7 years.

¹ CIBC World Markets economist Benjamin Tal, April 2024.
² Forum estimates using data from Bonard, Student Housing Market Canada (November 2023) and Statistics Canada.
³ Bonard, Student Housing Market Canada (November 2023).
⁴ Internal calculation based on using population data from Statistics Canada and rental universe data from CMHC.
⁵ Occupancy includes lease-up that occurred post quarter end.

Distributions

The monthly distribution was paid on October 15^th, 2024 to unitholders of record as at September 30, 2024 as follows:

¹ Includes REIIF Trust A Lead, A Oct 2023, A Nov 2023, and A Dec 2023 Series.
² Includes REIIF Trust F Lead, F Oct 2023, F Nov 2023, and F Dec 2023 Series, and REII LP July 2023 F Series.
³ Includes REIIF Trust H Lead, H Nov 2023, and H Dec 2023 Series.
⁴ Includes REIIF Trust I Lead Series, and REII LP July 2023 I Series.
⁵ Represents the annual distribution per Unit divided by 12, rounded to four decimal places.

Impact Update

REIIF received its annual GRESB scorecard and ranked #1 of 11 participants in its peer group (Canadian, Non-listed, Residential) for 2024. REIIF achieved a GRESB score of 82 and a 4-Star rating, underlining our commitment to delivering strong investment returns while setting the bar in performance across all three ESG categories.

GRESB is a global industry-leading organization that provides validated ESG performance data and peer benchmarks, empowering investors and managers to enhance business intelligence, industry engagement, and decision-making.

REIIF also achieved BOMA Best certification on its 399 Stan Bailie property underlining Forum's commitment to owning and operating sustainable buildings on behalf of investors.

About REIIF

REIIF invests principally in institutional-quality, multi-family rental apartments, purpose-built student accommodations, and furnished rentals 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 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 material investors. We're proud to have delivered top-tier alternative asset returns since 2002, while positively impacting over 10,600 lives.

Contacts

Name: Lara Iannucci, Chief Financial Officer, Real Estate
Phone Number: 416-947-0389
Email: [email protected]

Cautionary Statement

This news release is for informational purposes only and is not intended as investment, financial or other advice or a recommendation to invest in the Fund. It is also not an offer, solicitation, or basis for any investment decision regarding REIIF securities, which are available only to "accredited investors" within certain jurisdictions of Canada and not for sale to the general public.

The information in this news release regarding the Fund's portfolio, including the number of properties, units, residents served, and Gross Asset Value (GAV) as well as Fund performance and returns are based on current estimates developed from Forum's unaudited financial information, and are subject to change. Series F returns as expressed herein, are net of REIIF expenses like administrative costs, management fees, and unit class specific fees. The targeted distribution rate and total return received by a unitholder will differ based on the series of REIIF units in which a unitholder invests and the distribution reinvestment plan strategy that such unitholder elects to pursue. Past performance is historical and not a guarantee of future results. Investors should not place undue reliance on these figures and are encouraged to perform their own due diligence or consult with a professional advisor before making any investment decisions.

Forward Looking Statements

This news release includes forward-looking statements under Canadian securities laws, identifiable by terms like "expect," "intends," and "anticipates," or variations of these, and those which imply forward looking statements such as those statements relating to the Fund, strategy, objectives and plans, outlining REIIF's investment objectives, strategies, opportunity pursuits, expected annual net operating income growth, GAV growth, acquisition completions including the transaction with Alignvest, expectations of the yield and returns on units within the Fund, ESG targets, financing strategies, distribution expectations, rental housing demand and supply expectations, rental housing shortfall estimates, and general market outlook. However, these statements are based on current management beliefs and available information, and they are not guarantees of future performance. These forward looking statements are subject to risks and uncertainties that could cause actual outcomes to vary significantly, including economic conditions, real estate market volatility, funding access challenges, timing issues, and currency or interest rate changes. Additionally, the Alignvest transaction has been entered into with the expectation that its successful completion will result in long-term strategic benefits, economies of scale and synergies. It is possible that this may not occur as planned, or that the financial and other benefits may be less than anticipated. Unforeseen factors may lead to material differences in actual outcomes.

For more information on these factors, risks and uncertainties as well as the assumptions underlying management's forecasts, please refer to REIIF's confidential offering memorandum as amended or supplemented from time to time, which may be accessed here. These forward-looking statements reflect our position as of this release, with no obligation for updates unless required by law.

SOURCE: Forum Asset Management Inc.

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