InterRent Real Estate Investment Trust

TSX:IIP.UN

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen, and welcome to the InterRent REIT Q4 earnings conference call and webcast [Operator's Instructions]. This call is being recorded on Tuesday, February 25, 2025.



I would now like to turn the conference over to Ms. Renee Wei. Please go ahead.

[Renee Wei, executive]

Good morning, everyone. Thank you for joining InterRent REIT's Q4 and full year 2024 earnings call. My name is Renee Wei, Director of Investor Relations and Sustainability. You can find the presentation to accompany today's call on the Investors section of our website under Investor Presentations.



We're pleased to have Brad Cutsey, President and CEO; Curt Millar, CFO; and Dave Nevins, COO, on the line today. As usual, the team will present some prepared remarks, and then we'll open up to questions. 



Before we begin, we want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially. For more information, please refer to the cautionary statements on forward-looking information in the REIT's news release and MD&A dated February 24, 2025.



During the call, management will also refer to certain non-IFRS measures. Although the REIT believes these measures provide useful supplemental information about its financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see the REIT's MD&A for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures.



Brad, over to you.

[Bradley Cutsey, executive]

Thanks, Renee, and thank you, everyone, for joining us today.



2024 was a year of solid progress for InterRent on many fronts despite a backdrop of many new and evolving challenges and opportunities. The quality of our portfolio and our operating platform and the stability and resilience were clearly demonstrated once again throughout the year. We witnessed steady occupancy rates and consistent rent growth, collectively driving strong year-over-year same-property revenue growth of 5.1% for the quarter and 7.2% for the year. Overall, total portfolio revenue grew by 1.2% to the quarter and 4% for the full year as it was partially offset by lower revenues due to the impact of dispositions created in the first half of the year. 



Leveraging a strong operating platform and with a high-quality portfolio, we effectively translated topline growth into a solid 7.6% increase in same-property NOI for the quarter and 9.4% for the year. Annual NOI margins for the same property and total portfolio reached 67.1% to 67%, respectively, marking the highest level in the REIT's history. Throughout the year, we continued to deliver strong operational performance supported by a more favorable financing environment, achieving a meaningful reduction in financing costs, delivering a strong 11.2% increase in FFO in Q4, despite the impact of dispositions earlier in the year and the resulting lower suite count. 



On a per unit basis, FFO for the quarter was $0.156, an increase of 9.9% from the same period last year and $0.612 for the full year, up 11.1% from 2023. In Q4, we achieved a 13.9% increase in AFFO, reaching $20.6 million, and a 12.1% increase in AFFO per unit to reach 13.9%. For the full year, we delivered $80.5 million in AFFO of $0.543 per unit, an increase of 14.3% and 12.7%, respectively.



Rental market conditions remained robust during the fourth quarter and throughout 2024, as shown by our occupancy rate holding steady year-over-year at 97% to the total portfolio and rising by 10 basis points to 97.1% for the same property portfolio. 



Quarter-over-quarter total portfolio occupancy improved by 60 basis points and the same-property occupancy improving by 70 basis points over the same period. The increase in occupancy rates is accompanied by consistent growth in AMR. Average monthly rents from the total portfolio reached $1,702 in December, showing a year-over-year growth of 6.6%. Dave will share more operational details shortly, but first a quick note on our strong balance sheet.



Slide 7 illustrates total Debt-to-Gross Book Value stood at healthy 40.3% at year-end with a weighted average interest rate of 3.4% with 91% of our mortgages under CMHC insurance. We maintained the extra flexibility and resources to execute our strategy. Upholding the strength and integrity of the balance sheet will continue to be a key priority for us.



Now I'll let Dave take it from here for a look at some operating highlights.

[Dave Nevins, executive]

Thanks, Brad. As Brad highlighted, the rental market conditions remained tight across all of our regions. Same-property occupancy rate in December improved by 70 basis points quarter-over-quarter and 10 basis points year-over-year to reach 97.1%, the highest since 2020. Compared to December 2023, same-property occupancy rate in Ottawa decreased by 120 basis points, but remaining tight at 96.6% and within the normal range. All other regions showed occupancy gains, including 160 basis points year-over-year increase in the Greater Vancouver area to reach 94.9%. Quarter-over-quarter occupancy in Vancouver decreased by 240 basis points, driven by the impact of BC short-term rental regulations that took effect last spring.



As we discussed in our Q4 2023 call, the transition of these suites into long-term rental market temporarily shifted leasing cycles away from the typical fall period. We've also seen an increase in conventional supply and some softening in demand due to affordability challenges in the region. While we expect some near-term pressure as leasing activities adjust, our portfolio is well-positioned and the GBA represents less than 5% of our NOI.



Blended average rent per suite growth continued at a healthy pace of 6.6% for the total portfolio and 5% for the same-property portfolio with consistent year-over-year gains across all regions, outperforming CMHC data in each regional market. 



We continue to capture embedded rental upside in our portfolio. During the fourth quarter, we signed 635 new leases and realized positive gain on lease in all our markets with an average gain on lease of 7.4% to top off an already substantial 12.9% year-over-year increase in our outgoing AMR. With market rent growth moderating, we are starting to see a decline in the tenure of residents who move out in the fourth quarter compared to a year ago, resulting in a smaller gain on lease compared to previous periods. However, trailing 12 months turnover rate held steady at 24%. 



New leases signed in the fourth quarter resulted in an annualized incremental revenue gain of approximately $2 million. For the full year, we executed 3,015 new leases with an average gain on lease of 12.7%, which translated into an incremental annualized revenue gain of $8.6 million or 3.5% of 2024 proportionate revenue. Our estimated mark-to-market cap remains at approximately 26%, providing insulation from market rent fluctuations and a foundation for long-term rental income growth. 



Canada's revised population outlook, macroeconomic uncertainties, and affordability challenges have contributed to a moderation in market rent growth. However, we take comfort in our competitive positioning in the multifamily market that remains largely fragmented and dominated by noninstitutional operators. While the volume of rental leads have come in from peak levels of 2021, our lead-to-approval conversion rate has notably increased, reflecting a strong demand for our well-positioned and high-quality communities. Rent-to-income ratios for new leases signed in 2024 remained at a healthy low 30% range.



We continue to closely monitor market conditions in each region and remain flexible in our strategy, including adjusting target occupancy levels as needed to optimize portfolio performance. Our efforts to manage operating cost continue to pay off during Q4 and throughout 2024. We delivered a 5.1% increase in same-property proportionate operating revenue growth during Q4 and a 7.2% for full year of 2024, outpacing the increase in the same-property operating expenses, which were up by 0.4% in the quarter and 2.7% for the year.



On a per suite basis, our operating expenses came in at $1,697 per suite for Q4 and $6,790 per suite for the year, up 1.5% and 5.2%, respectively. Annual operating expenses at a percentage of revenue declined by 140 basis points compared to last year, contributing to a strong NOI margin expansion. For the full year, same-property NOI margin reached 67.1%, while the portfolio NOI margin came in at 67% both marking the highest levels in our operating record.



A key driver of this improvement was utility costs, which for the year declined by 70 basis points as a percentage of revenue year-over-year to 6.9% from 7.6% in 2023. Our energy efficiency upgrade played a role in reducing our natural gas usage by 8%, outpacing the 5% decline in heating degree days. This compounded with a 13% decline in rates drove meaningful savings.



Property taxes as a percentage of revenue came in at 10.5% for the year compared to 10.7% in 2023. On a per suite basis, we saw a 7.1% increase, reflecting the impact of annual rate of adjustments and impact from dispositions and acquisitions completed during the year. Of note, property taxes increases were 4.4% on a same-property basis.



Turning to CapEx. Maintenance spending for repositioned suites came in at below $1,000 per suite in 2024, in line with previous years. Our focus remains on value-enhancing investments, which continue to make up the bulk of our spending.



I'll now turn it over to Curt to provide an update on our balance sheet.

[Curt Millar, executive]

Thanks, Dave. As part of our quarterly review, we assessed our internal cap rates and property valuations in collaboration with both our acquisition team and external appraisers. Based on recent transactions, industry reports available at quarter end and input from our internal team and external appraisers, we've adjusted cap rates in 4 of our regional markets, summarized here on Slide 14.



Due to the adjustments in the GTHA, NCR, Montreal and other Ontario markets, average cap rates for total investment properties increased by 15 basis points quarter-over-quarter, bringing the weighted average cap rate for the entire portfolio to 4.49%. This reflects an expansion of 67 basis points since March of 2022. This adjustment has offset our strong operational performance, resulting in a fair value loss of $143.6 million for the quarter on a proportionate basis. We continue to keep a close eye on the transaction market, taking comfort in our valuation from our recent dispositions.



We closed out the year in a healthy financial position. Throughout most of 2024, we benefited from a reduced weighted average interest rate cost. In Q4, financing costs were reduced by $1.2 million or 7.7% compared to the same period last year. And for the full year, they were reduced by $1.6 million or 2.3%. Both our interest coverage and debt service coverage improved consistently throughout the year, ending the year at 2.5x and 1.7x compared to 2.3 and 1.5x for last year. This reflects the work we've done to optimize our financing structure and improve our cash flow resilience, helping our strong operational performance translate into significant bottom line gains.



Moving on to Slide 17. As we continue to navigate an evolving market, we're being deliberate and strategic with our sustainability initiatives. As Dave mentioned earlier, our investment in energy efficiency upgrades has delivered tangible results in reducing utility costs with year-over-year savings both across the portfolio and on a per suite basis.



Looking ahead, our focus will be on initiatives that enhance our resilience, reduce emissions, lower operating costs and create lasting value for our stakeholders. To ensure we're prioritizing the right initiatives and to meet upcoming sustainability reporting requirements, we're in the process of completing our first formal double materiality assessment, which will guide our next steps. You'll be able to learn more about these key priorities and our progress in our 2024 sustainability report set for release in the coming months.



On that note, I'll turn it over to Brad to discuss our asset allocation strategy and provide closing remarks.

[Bradley Cutsey, executive]

Thanks, Curt.



In 2024, we strategically advanced our capital recycling program, disposing of 3 communities at or above their IFRS values supporting the valuation of our portfolio while generating $93.3 million in net proceeds after accounting for closing costs and mortgage discharges. After year-end, we sold another community in Ottawa and have an agreement in place to sell more closing scheduled for the next month. Our disposition strategy is a very deliberate process, focusing on properties where we have successfully achieved our value-add objectives. These assets had strong performance, but did not have the same growth profiles compared to the rest of the InterRent portfolio.



The next phase of the program will target a portfolio of noncore assets in the range of $200 million to $250 million, which are anticipated to generate net equity proceeds of $125 million to $140 million. Including the dispositions that have closed gone since year-end, approximately $135 million in the next phase of our program is in negotiation or under contract. This would generate net proceeds of approximately $90 million.



Both Canadian and U.S. government policies and interest rate volatility towards the end of this year put pressure on the real estate sector and our units are no exception. We became more active with our NCIB program to capitalize on the significant disconnect between the intrinsic value of our trust units and the trading price.



Over the course of 2024, we acquired and canceled over 1.3 million units for a total investment of $14.1 million, reflecting a weighted average cost per unit of $10.88 compared to our IFRS NAV per unit at year-end of $16.23. In 2025, we continue to purchase and cancel units under our automatic unit purchase plan. As of the end of January, we have bought back close to 2 million units for $19.7 million at an average price of $10.01 per unit. Units repurchased in 2024 and as of January 31, 2025, represent 2.3% of issued and outstanding trust units.



While our second office conversion project continues to progress with construction on site underway, we have decided to pause on breaking ground on any further developments for now. We continue to hold well-located land and we'll continue to monitor market conditions to preserve the optionality for when the market makes sense. Near-term asset allocation priorities will continue to include paying down debt and being active on the NCIB program, all the while balancing this with medium- to long-term growth opportunities.



Over to Slide 22. As we prepare to navigate through a period of increased uncertainty and competition, we couldn't be better positioned with our high-quality portfolio that provides us with a solid run rate for organic growth.



Our conviction of our portfolio is built on 2 key factors. First, we have a well-maintained high-quality assets. As of the start of 2025, 90% of our portfolio has been repositioned with modernized amenities, building systems and in-suite renovations. These communities offer high-quality living experience, attract stronger residents, generally require lower maintenance and generate higher income. Our remaining non-repositioned portfolio is relatively young with a weighted average age of just 23 years.



Second, our portfolio is located in exceptional central urban areas. 87% of our portfolio is classified as urban according to Statistics Canada definition. Our properties have an average Walk Score of 81, which is considered Very Walkable, while 39% of our communities boast a Walk Score of 90 or mark, the highest level achievable, defined as having amenities within a 5-minute walk.



In closing, we look ahead to 2025 with cautious optimism. While we face many evolving uncertainties, we remain confident that the long-standing systemic nature of Canada's housing shortage should always support medium- to long-term demand for our well-located, high-quality communities for our residents.



I would like to thank everyone who supported us throughout the year. And with that, let's open it up to Q&A.

[Operator]

[Operator Instructions] Your first question comes from the line of Frank Liu from BMO Capital Markets.

[Frank Liu, analyst]

Just on the leasing front, I guess the turnover spread continued to moderate, but the MTM holds fairly well. And I guess more leases term recently had the last tenure. Given this dynamic, what's kind of your expectation on the turnover spread for the next 12 years -- sorry, next 12 months?

[Bradley Cutsey, executive]

Yes. I mean we don't provide forward guidance to that level, Frank. The Q4 and Q1 months, as most people know, there's seasonality to leasing. So there's -- they're the lowest from that perspective. So typically, your lift on turns in those months will be large. This is not reflective of maybe the full 12 months. And as you saw, our full 12 months were double digits. I'm not suggesting it's going to be double digits. We have seen lift on turns come in. But from what we've seen in Q4 and so far Q1, we've seen modest improvements on the lift on turn. So we remain encouraged and cautiously optimistic that maybe we've seen the floor on the lift on turns.

[Frank Liu, analyst]

Understood. And that's great color. And just switching to the spread on renewals. Can you kind of give some color on how the renewal spread has been? And what's your kind of like the range you're looking at for 2025, including like AGI adjustments potentially you can get?

[Bradley Cutsey, executive]

So I mean, it varies quite a bit in the different provinces with rent controls in B.C. and Ontario, as you can appreciate. The guidance from the [ AGI ] in Quebec is actually quite elevated for 2025. So I think overall, when you blend it across everywhere, we expect to be in around that 2% to 2.5% with Quebec leading the way given the guidance there.

[Frank Liu, analyst]

I see. That's great. Just turning to the capital recycling front. The 104 suite property in Montreal under contract, you guys commented in the MD&A, I believe that's 6950 Fielding Côte Saint-Luc. And also like I noticed that several properties sold last year were also in this area. Just could you kind of provide some color on what makes this market less appealing to InterRent?

[Bradley Cutsey, executive]

I think when you -- so I think if I just to make sure we understood what you're asking there, Frank, you're just saying that the dispositions that we've had, some of them in last year and then the one we just announced have all been in a similar area in Montreal. And if there's something about the area specifically?

[Frank Liu, analyst]

Yes, that's correct.

[Dave Nevins, executive]

Yes. No. I mean our disposition program, we earmarked different communities within the portfolio looking out to see where the growth profile is relative to our corporate profile. And it's just a coincidence what has actually concluded has been in the Côte Saint-Luc. We are very -- we very much like a core focus area of Montreal and Côte Saint-Luc of that sort. So I think it's more of a coincidence than draw any conclusions from.

[Bradley Cutsey, executive]

And specific more to the property in the area.

[Operator]

And your next question comes from the line of Mark Rothschild from Canaccord.

[Mark Rothschild, analyst]

Brad, in regards to the asset sales, which clearly provides a lot of capital for buying back units, could you just expand a little bit more on your thoughts now as far as how much you ultimately would like to do with this? And how connected is this to having the ability to purchase units well below what you would consider NAV?

[Bradley Cutsey, executive]

Yes. I mean it's a great question, Mark. I think we're very happy with our overall portfolio. But when your units are trading where they are, how attractive the trading are today, and we're quite confident in our overall portfolio, selling communities that don't exceed the overall portfolio growth profile, I think makes a lot of sense. It also provides us with a little bit of liquidity and helps us balance near-term capital allocation, may be NCIB down at these levels, paying down debt or balancing the medium- to longer-term growth -- generational growth opportunities.

[Mark Rothschild, analyst]

Okay. Great. And then you made different comments in regards to shortage of housing and the idea of holding back on putting new money to development, considering it does take quite some time to get projects, whether it's an office to residential or redevelopment to get a project to completion. Is this something that you would actually think about starting because ultimately, there is a shortage and if there's no -- if there's less new development, will it just get worse?

[Bradley Cutsey, executive]

Well, there's no question. It's an astute point. I think while there might be some record supply being delivered in the GTHA, Vancouver and some pockets in Ottawa. What you will see is that's going to follow up is a shortage of starts, and there's quite a long development lead time, which will eventually put pressure back on rents upwards.



So your comment is well taken, Mark. Our commentary on the pause in development is really about breaking new ground where our cost of capital sits today relative to the opportunity of the NCIB presents us. So it's not if we're going to go ahead again with those developments. We love the location. We love the land -- a lot of the work has been done. So when we do decide it's the right timing to go ahead, we'll be in good stead. But we'd rather right now take any of that development capital and just really look towards NCIB activity.

[Operator]

And your next question comes from the line of Dean Wilkinson from CIBC.

[Dean Wilkinson, analyst]

Brad, I just want to circle back on that NCIB. I think last quarter, you said there's a small window to be able to go buy sort of new assets at a discount to replacement value. I guess, one, has that window closed given that those rents are probably closer to market? Or is it just that the utilization of your capital to buy back your own stock at a mid-5 or better cap rate with that mark-to-market is just that much more attractive?

[Bradley Cutsey, executive]

No, it's just more the latter, Dean. I think that window will continue to close. I think those opportunities exist. But it's not a window of 3 or 4 years. It's likely a window less than 24 months. But where we sit today, that's a really good opportunity. So the challenge with capital allocation is always balancing the near-term opportunity that's a really great opportunity as our NCIB today versus more medium, long-term growth. But I think you're right, it's more of the latter.

[Dean Wilkinson, analyst]

It's more of the latter. So it would be fair to say you're probably a net seller of real estate, net buyer of your own units for 2025 unless something materially changes.

[Bradley Cutsey, executive]

Yes.

[Dean Wilkinson, analyst]

Second question, just on the occupancy. I guess in prior periods of, I want to say upheaval, you've let the occupancy kind of come down to build some growth in there. With it holding steady, is that more a reflection of you think that there's a normalization of these spreads? Or how are you just looking at that 97% level?

[Bradley Cutsey, executive]

Yes. No, I think it's more the macro unknowns and uncertainties that're in the marketplace. I think we kind of highlighted some of that in the Q3 call. We remain cautiously optimistic in Q3. But to be fair, we -- only time will tell to see how the new immigration policy will play out and then unfortunately now how the tariffs will play out. I think we posted a really solid Q4 and all things point to us continuing to be able to, I think, outperform the industry as a whole. But I think Dean it's just remaining cautious that we're taking each 3 months as it comes and recognize that the landscape is changing.

[Dean Wilkinson, analyst]

No, that makes sense. I mean last count, there's more people today than there was at the end of Q3, and I'm sure that continues to go up.

[Operator]

Your next question comes from the line of Jonathan Kelcher from TD Cowen.

[Jonathan Kelcher, analyst]

First question, just going back to some of Dave's comments in the prepared remarks. I think the decline -- you sort of saw a decline in the tenure on Q4 move-outs. Is that seasonal? Or is that more of a near-term trend that you expect to continue?

[Dave Nevins, executive]

Yes, I think that's more of a near-term trend that we're seeing.

[Bradley Cutsey, executive]

And it's not surprising, Jonathan. I mean we've always maintained that we've been pleasant with how our turnover stayed pretty sticky in the mid-20s range. But of the people that are moving out, that is -- we're seeing a lower tenure.

[Jonathan Kelcher, analyst]

No, for sure. That's what I would have expected. Just clarifying. And secondly, just on the operating margins. Obviously, Q1, you're going to have a little bit of a utilities headwind. But how should we think about growth in margins for 2025?

[Curt Millar, executive]

I think to that point, it's going to depend a little bit on that utility line, which always drives a few things, and it's going to depend a little bit on what happens with the carbon tax. So let's see what happens at this point, sort of I think we hit a record NOI margin this quarter this year. I don't see it going backwards on this. I see it staying flat to modestly improving from a margin perspective and on an NOI perspective, considering expecting to see still in that mid-single-digit NOI same-store growth.

[Jonathan Kelcher, analyst]

And then lastly, just it sounds like you've got another $100 million or so under contract for asset sales. Which -- what markets would those be in?

[Bradley Cutsey, executive]

They're across all of our markets… I'll clarify the only one I would say, I said all. The only one I would say that's not would be our market [ of west ].

[Operator]

And your next question comes from the line of Mario Saric from Scotiabank.

[Mario Saric, analyst]

Coming back to the tenant tenure, can you quantify in any way how much that's come down in Q4 relative -- sorry, I'm referring to the 635 new leases, the tenant tenure on the replacement leases. How much is that shifting quarter-to-quarter, year-over-year?

[Curt Millar, executive]

Yes. I mean it's -- so there's -- like Brad mentioned earlier, and I think Dave mentioned too, is the tenure tends to change a little bit quarter-over-quarter. You tend to see in Q4 and Q1, people with a little shorter -- or sorry, a little longer tenure than you do in Q2 and Q3. But overall, compared to quarter, we've seen that tenure come in a little bit. It's not like it jumped from 2 years or 4 years to 2 years, but it's a decline that is noticeable that has continued over the last 1.5 years, 2 years as you see more people just that are earlier in their lease cycle moving.

[Mario Saric, analyst]

And then just on the same-store revenue growth was 5.1% in Q4 -- and given the start to the year, is that -- I think, Curt, you mentioned mid-single-digit same-store NOI growth is achievable or reasonable in '25. Is mid-single-digit kind of same-store revenue growth similarly achievable this year?

[Curt Millar, executive]

Yes. I mean it's early in the year to tell for sure, and we don't provide guidance. But I think given what we're seeing in the market, somewhere between 4% and 6%. So landing on the middle point of that puts you right there.

[Mario Saric, analyst]

Perfect. Okay. And then my last question, just on the $144 million fair value loss this quarter. How much of that roughly would be attributable to the $200 million to $250 million of assets that you've noted that are planned for disposition in the next 12 months?

[Curt Millar, executive]

Not more than the average overall. Like when I look at the dispose versus the overall portfolio, the cap rate change on those versus the other ones is roughly equivalent. I think it's like 1 basis point. So it's pretty even across the whole portfolio. Last -- in Q3, the CBRE report and some other data came out pretty late, like we were already reporting as a service card to come out and just saw that roll through. There wasn't much changes in Q4 report, but it's reflecting sort of that activity late Q3, early Q4.

[Operator]

And your next question comes from the line of Matt Kornack from National Bank Financial.

[Matt Kornack, analyst]

We're approaching the spring leasing season at this point. Can you give us a sense of the kind of how things are shaping up? And I think your peers have generally said there's good depth to the rental market. It's a question of a little bit more price sensitivity. But is that what you're seeing? And it sounds like you're also seeing a bit of a firming on your spreads. But any sense like early indication as to how spring is shaping up?

[Bradley Cutsey, executive]

Yes. I think that's fair. I think -- and I'll give Dave a chance to speak. But I do think the traffic is relative to, call it, a pre-COVID norm is down for this time of the year where it would be and I don't think that would be surprising. So we're hopeful that our operating costs, to Curt's point, that will be kind of saved by the margins here. I see modest improvement. But the one area I wouldn't say you're going to see an increase in the line item and that would be on advertising. And I think we're going to have to spend a little more to generate more traffic, and we're going to have to continue to see better conversion.



And we have -- we have been, so we're thankful on that, but we're going to continue to work extremely hard at bettering our conversion ratio because the reality is the traffic is down a little, and there's less rental demand flow and as we go forward, it's going to become less. I don't know if that helps to answer, but -- so we are a little lower than where normal we would be, Matt. But from a conversion basis, it seems to be stepping up.

[Matt Kornack, analyst]

Fair enough. And then on Quebec, I mean, I think we were generally surprised with what the [indiscernible] came out with last year and then this year its higher. Do you anticipate being able to push that through to tenants this year? Or will it be a mix of some where you're pushing above and somewhere maybe you push at a lesser rate than what's allowed?

[Bradley Cutsey, executive]

No, I think it's fair, Matt. And we're hopeful that we'll continue to be able to see the success that we're having on the renewal rates in Montreal. I'll leave it at that.

[Matt Kornack, analyst]

Fair enough. Lastly for me, on the CapEx front, I mean, it's pretty noticeable, Q4 in particular, but for all of 2024, you've really been able to dial back the CapEx and you're still getting pretty good rent growth. Is that something you'd anticipate that we continue to see? I mean there's some question as to whether you kind of go back and start doing suite renovations to get at bigger lifts? Or should we kind of expect the CapEx profile to remain pretty muted?

[Bradley Cutsey, executive]

Well, it's a tale of two cities, right? It's a good news, bad news. It's great that our portfolio has come subsequent to the year-end, we're less than 5% non-repositioned. And the reason why I say it's a tale of two cities is, as we know, when we're active in the acquisition front and with the cost of capital there, we've done a pretty good job over history of repositioning assets and really driving growth. Unfortunately, our cost of capital hasn't been there. So we've taken a different approach to the capital allocation. With that, with our non-repositioning coming in, obviously it comes less dollars needed to be spent. That said, when you look at 2024, we will be up a little on CapEx over 2024 because there are a couple of projects that we have identified that are a little larger in scope than normally would entail.

[Matt Kornack, analyst]

And would that be in sort of common area or mechanical?

[Bradley Cutsey, executive]

No, it's more infrastructure. It's actually outside infrastructure to be fair. One project -- its a significant project in Stone Creek that entails parking and garage. Another one entails a slope stabilization in one of our total properties. And we have another property in London that's another parking/garage job. And it's just where it is in the life cycle.

[Matt Kornack, analyst]

Fair enough. Sorry, one last one in terms of the purchase that you made in Montreal. Can you give us a sense as to how the leasing is performing and relative to your expectations?

[Bradley Cutsey, executive]

Yes. So relative to expectations, it's been pretty good. We've made some good strides relative to what you're looking at in the quarter, and we're happy with where it is. And I think we underwrote it pretty considerably and gave ourselves some buffer to make sure that we gave ourselves some time to get the programming, get the change of ownership and reputation out within the local marketplace. But early days, Matt, but so far, we're happy.

[Operator]

And your next question comes from the line of Jimmy Shan from RBC Capital Markets.

[Jimmy Shan, analyst]

So you're in the market looking to sell assets. I wondered if you could talk a little bit about the transaction market in terms of buyer appetite, buyer debt and that sort of thing?

[Bradley Cutsey, executive]

Yes. I mean it still tends to be at this point, I mean, it looks like there's more velocity pre the kind of Trump/tariff trade and uncertainty that's kind of created. It was – what it looked like it was broadening to institutional and private. It appears now that institutional is back trends up again. So there's been a lot of stops and starts from the institutional community on the asset class. But what has not gone away, which is really encouraging, and as you know, Jimmy, makes up the majority of the overall apartment market in Canada, the private buyer is still there. Now the private buyer doesn't have the same appetite for deal size of, call it, $50 million plus. $50 million, I would say, the ticket size is probably a [ sealer ]. I think there's a lot more of an audience down around a $25 million ticket. But there's still a lot of activity and desire from that private.

[Jimmy Shan, analyst]

And pricing-wise, I mean, you did bump your capital a bit. Is that consistent with what you're seeing to the -- the cap rates have moved up a little bit since?

[Curt Millar, executive]

I think we've seen cap rates move up through the course of the year, and we've sort of brought them up the last couple of quarters to try and reflect what we're seeing both from transactions on the street and from different reports from different -- whether it's Altus or Cushman or whoever. And it's just -- it's a reflection of what's going on with the overall macro interest rate environment.

[Jimmy Shan, analyst]

Okay. So the sales that you're targeting, you mentioned the assets have a lower growth profile. I mean -- am I to assume too that the mark-to-market rent spread on those assets are also smaller relative to the portfolio?

[Bradley Cutsey, executive]

Yes. Jimmy, I wouldn't make those assumptions. They're all been identified for various reasons, sometimes just growth profile, sometimes to do with operating synergies and whatnot. And we've got to be somewhat careful as we're tied up in some of these currently, and we don't want to deal against ourselves. So we just ask you guys to kind of respect that this is -- it's a fluid process and respect the process.

[Jimmy Shan, analyst]

Sure. Fair enough. Last clarification on the NCIB. You purchased 1.97 million in January. In the subsequent event note, you noted 3.2 million. Is that just an additional purchase in February?

[Curt Millar, executive]

Yes. So we -- as we're in blackout, we have to sort of give guidance to the brokers that are doing the activity for us before going into blackout. So we set parameters and then they buy through the whole cycle. Well, until we come out of blackout, we can't really speak to. So we reported the January number in there. And then up to date in February, there was another 3 -- sorry, January and February combined, we're at about 3.2 million units. So that's sort of the activity to date. And as we come out of blackout, then we'll be able to sort of speak to the broker again.

[Operator]

There are no further questions at this time. I will now hand the call back to Ms. Renee Wei for any closing remarks.

[Renee Wei, executive]

Thank you again, everyone, for joining the call. If you have any questions, please feel free to reach out. Have a great day.

[Operator]

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.