Mr. Jonathan Li reports

MINTO APARTMENT REIT REPORTS STRONG 2023 THIRD QUARTER FINANCIAL RESULTS AND ANNOUNCES DISTRIBUTION INCREASE

Minto Apartment Real Estate Investment Trust has released its financial results for the third quarter and nine months ended Sept. 30, 2023. The Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis ("MD&A") for Q3 2023 and YTD 2023 are available on the REIT's website and on SEDAR+.

"Minto Apartment REIT delivered strong operational performance in the third quarter. We generated an average gain of 17.0 per cent on new leases, which was the highest quarterly level in the REIT's history, which contributed to solid growth in same-property portfolio revenue and [net operating income]," said Jonathan Li, president and chief executive officer of the REIT. "We continue to focus on improving our balance sheet and making disciplined capital allocation decisions which position us well to deliver [funds from operations] and [adjusted funds from operations] per unit growth, even in the current high-interest-rate environment, as evidenced by the quarter.

"Lastly, we are pleased to announce an increase to our monthly distributions, something we have done every year since the REIT was created. The increase highlights the confidence we have in our business outlook for 2024 while also balancing prudent capital management by further reducing our AFFO payout ratio. We expect that industry fundamentals will continue to support robust demand for rental housing for the foreseeable future, which should benefit our high-quality urban rental portfolio."

Q3 2023 highlights:

• Average monthly rent was $1,837, an increase of 7.2 per cent compared with the third quarter ended Sept. 30, 2022 (Q3 2022). Average monthly rent for the same-property portfolio was $1,819, an increase of 6.7 per cent compared with Q3 2022;
• Closing occupancy of unfurnished suites increased to 97.8 per cent at Sept. 30, 2023, compared with 97.3 per cent at Sept. 30, 2022;
• Average occupancy of unfurnished suites increased to 96.9 per cent, compared with 96.2 per cent in Q3 2022;
• The REIT executed 510 new leases, achieving an average rental rate that was 17.0 per cent higher than the expiring rents, representing the highest quarterly gain on lease in the REIT's history. As rental markets have continued to strengthen, the gain-to-lease potential on sitting rents increased sequentially to 17.7 per cent from 16.1 per cent at the end of the second quarter of 2023 (Q2 2023);
• Annualized turnover for the same-property portfolio was 26.0 per cent, in line with historical seasonal norms;
• Revenue for the same-property portfolio was $37.0-million, an increase of 5.8 per cent compared with Q3 2022; total revenue was $39.8-million, an increase of 5.3 per cent compared with Q3 2022;
• Revenue for the same-property portfolio, excluding furnished suites, was $34.8-million, an increase of 7.8 per cent compared with Q3 2022; total revenue, excluding furnished suites, was $37.6-million, an increase of 7.1 per cent compared with Q3 2022;
• NOI for the same-property portfolio was $24.0-million, an increase of 6.9 per cent compared with Q3 2022; total NOI was $25.8-million, an increase of 6.6 per cent compared with Q3 2022;
• NOI margin for the same-property portfolio increased to 64.8 per cent, an increase of 60 basis points from Q3 2022; total NOI margin was 64.8 per cent, an increase of 80 bps from Q3 2022;
• Normalized funds from operations (normalized FFO) were $15.7-million or 23.9 cents per unit, an increase of 4.4 per cent, compared with $15.1-million, or 22.9 cents per unit, in Q3 2022;
• Normalized adjusted funds from operations (normalized AFFO) were $14.0-million or 21.39 cents per unit, an increase of 5.3 per cent, compared with $13.4-million, or 20.31 cents per unit, in Q3 2022;
• Distributions per unit were 12.25 cents, an increase of 3.2 per cent compared with Q3 2022 and representing an AFFO payout ratio of 57.3 per cent;
• The REIT repositioned 33 suites across its portfolio in Q3 2023, generating an average annual unlevered return of 8.8 per cent;
• The REIT reduced its variable rate debt exposure by upward refinancing term debt of $44.9-million, generating incremental proceeds of $24.1-million that were used to pay down the credit facility. Variable rate debt represented 10 per cent of total debt at quarter-end;
• On Sept. 18, 2023, the REIT announced that the Toronto Stock Exchange accepted its notice to make a normal course issuer bid (NCIB) for a portion of its units. The NCIB is active until Sept. 19, 2024, and enables the REIT to acquire up to 3,282,682 units. The REIT's previous NCIB expired on July 20, 2023. The REIT did not purchase and cancel any units during the quarter.

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.2 same-property portfolio consists of 29 multi-residential properties both wholly and jointly owned by the REIT for comparable periods in 2023 and 2022.

Q3 2023 operating results

Revenue in Q3 2023 totalled $39.8-million, an increase of 5.3 per cent from $37.8-million in Q3 2022. The increased revenue in Q3 2023 primarily reflected higher average monthly rents and improved occupancy. Same-property portfolio revenue was $37.0-million, an increase of 5.8 per cent from Q3 2022, reflecting the higher average monthly rent, improved occupancy and reduced promotion amortization. Revenue, excluding furnished suites, was $37.6-million, an increase of 7.1 per cent from $35.1-million in Q3 2022. Same-property portfolio revenue, excluding furnished suites, was $34.8-million, an increase of 7.8 per cent from $32.3-million in Q3 2022.

Average monthly rent at the end of Q3 2023 was $1,837, an increase of 7.2 per cent compared with the end of Q3 2022. Average monthly rent for the same-property portfolio was $1,819 at the end of Q3 2023, representing a year-over-year increase of 6.7 per cent.

Average occupancy increased to 96.9 per cent in Q3 2023, compared with 96.2 per cent in Q3 2022. Closing occupancy finished strong at 97.8 per cent as at Sept. 30, 2023, compared with 97.3 per cent at Sept. 30, 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 2.9 per cent higher (3.8 per cent higher for the same-property portfolio) in Q3 2023 compared with Q3 2022, reflecting growth in salaries, repair and maintenance costs, and property taxes. Management continues to explore strategies to contain controllable expenses through new property technology innovations and other efficiencies.

NOI for Q3 2023 totalled $25.8-million, representing 64.8 per cent of revenue, an increase of 6.6 per cent compared with $24.2-million, or 64.0 per cent of revenue, in Q3 2022. Same-property portfolio NOI for Q3 2023 was $24.0-million, representing 64.8 per cent of revenue, an increase of 6.9 per cent compared with $22.5-million, or 64.2 per cent of revenue, in Q3 2022. The increases in NOI and same-property portfolio NOI in Q3 2023 reflected higher revenue from unfurnished suites, which outpaced increased operating expenses.

Funds from operations (FFO) in Q3 2023 were $15.7-million, or 23.9 cents per unit, compared with $15.7-million, or 23.8 cents per unit, in Q3 2022. Adjusted funds from operations (AFFO) in Q3 2023 were $14.0-million, or 21.39 cents per unit, compared with $14.0-million, or 21.21 cents per unit, in Q3 2022. During Q3 2022, FFO and AFFO were positively impacted by non-recurring insurance recoveries totalling $600,000. Excluding this impact, normalized FFO per unit and normalized AFFO per unit for Q3 2023 increased by 4.4 per cent and 5.3 per cent, respectively, compared with Q3 2022.

The REIT reported net income and comprehensive income of $27.8-million in Q3 2023, compared with $39.7-million in Q3 2022. The variance was primarily attributable to a larger non-cash, fair value loss on investment properties in Q3 2023 compared with Q3 2022, and a smaller non-cash fair value gain on Class B limited partnership units in Q3 2023 compared with Q3 2022. The fair value loss on investment properties of $21.2-million in Q3 2023 reflected higher capitalization rates within certain geographies in the residential portfolio. The fair value gain on Class B LP units of $35.8-million in Q3 2023 reflected the decrease in the REIT's unit price during the quarter.

The REIT paid cash distributions of 12.25 cents per unit for Q3 2023, an annual increase of 3.2 per cent compared with Q3 2022 and representing an AFFO payout ratio of 57.3 per cent. Cash distributions of 11.87 cents per unit were paid in Q3 2022, representing an AFFO payout ratio of 55.9 per cent, or 58.4 per cent on a normalized basis.

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

The REIT signed 510 new leases in Q3 2023, realizing an average gain-on-lease of 17.0 per cent. This was the highest quarterly gain-on-lease in the REIT's history, and the fourth consecutive quarter in which realized gain-on-lease exceeded 16 per cent. It resulted in an annualized incremental revenue gain in the quarter of approximately $1.5-million. By comparison, the REIT realized gains on new leases of 14.5 per cent in Q3 2022 and 16.2 per cent in Q2 2023. The REIT realized significant double-digit gain-on-lease in all markets during Q3 2023, supported by strong Canadian urban rental market conditions.

Same-property portfolio annualized suite turnover of 26 per cent was more in-line with historical seasonal norms compared with the first two quarters of 2023. This was led by annualized turnover of 41 per cent in Alberta, where availability of affordable homes in the province and tenant departures arising from the loss of promotions granted in the past allowed tenants to consider other housing options. Annualized turnover in Ottawa and Montreal was 29 per cent and 22 per cent, respectively. This was driven by new supply in downtown Ottawa while Montreal was driven by the movement of the student population. Toronto experienced reduced annualized turnover of 16 per cent as tenants opted to stay in place due to rising market rents. Despite higher turnover, the REIT maintained consistent occupancy as move-ins kept pace with move-outs, facilitating gain-on-lease, and resulting in same-property portfolio closing occupancy of 97.8 per cent at September 30, 2023. Despite the robust leasing activity in Q3 2023, Management expects turnover to slow relative to historical seasonal norms in the colder quarters of Q4 2023 and Q1 2024.

Management estimates that the REIT held embedded gain-to-lease potential in its unfurnished suite portfolio of 17.7 per cent as at September 30, 2023, representing future annualized embedded potential revenue of approximately $24.9-million. That compares to embedded gain-to-lease potential of 12.1 per cent and an estimated annualized revenue growth opportunity of $16.0-million as at September 30, 2022, and 16.1 per cent or $22.1-million as at June 30, 2023. Gain-to-lease potential grew by 160 bps over Q2 2023, driven by increased market rents in all geographies, largely led by Toronto. Management expects that the REIT will be able to realize a significant portion of the gain-to-lease potential over a period of four to six years.

The REIT repositioned a total of 33 suites across its portfolio in Q3 2023, generating an average annual unlevered return on investment of 8.8 per cent. The REIT has a total of 1,885 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 in certain markets, Management currently expects to reposition a total of 110 to 120 suites in 2023, a reduction from 259 in 2022.

Balance Sheet and Debt Refinancing Initiatives

During Q3 2023, the REIT continued to execute on its strategy to reduce variable rate debt. In August 2023, the REIT upward financed $44.9-million of Term Debt secured by an Ottawa property, generating $24.1-million of incremental proceeds that were used to further repay the credit facility. As a result of efforts to reduce variable rate debt during YTD 2023, the REIT's variable rate debt exposure as at September 30, 2023 was limited to the credit facility and represented 10 per cent of Total Debt, compared with 26 per cent at the end of Q1 2023.

Management is also continuing to explore upward refinancing for three properties with mortgages maturing in early 2024 that have the potential to generate $55-million to $65-million of incremental proceeds. Management will carefully evaluate the impact that each potential financing has on FFO per unit by considering a variety of factors.

As of September 30, 2023, the REIT had Total Debt outstanding of $1.16 billion, with a weighted average effective interest rate on Term Debt of 3.38 per cent and a weighted average term to maturity on Term Debt of 6.16 years.

The Debt-to-Gross Book Value ("GBV") ratio as at September 30, 2023 was 42.8 per cent.

The REIT's net asset value ("NAV") per unit as at September 30, 2023 was $23.01, a decline from $23.21 as at June 30, 2023, primarily reflecting a fair value loss on investment properties of $21.2-million in Q3 2023. The fair value loss reflected increases in capitalization rates in certain geographies and increased capital expenditure reserve, partially offset by increased forecast NOI.

The REIT continues to maintain a strong financial position. Total liquidity was approximately $138.3-million as at September 30, 2023, with a liquidity ratio (Total liquidity/Total Debt) of 11.9 per cent.

Capital Recycling Update

The REIT continues with the sale of its two remaining Edmonton assets, which remains subject to financing assumption approvals by the Canada Mortgage and Housing Corporation and the lender. Capital recycling is an attractive source of capital for the REIT, and Management continues to opportunistically pursue additional select asset sales, however there can be no assurance that a definitive agreement will be executed.

Increase to monthly distributions

The REIT is pleased to announce that the board of trustees approved a 1.5-cent or 3.1-per-cent increase to the REIT's annual distribution from 49 cents per unit to 50.5 cents per unit. The monthly distribution will be 4.208 cents per unit, up from 4.083 cents per unit. The increase will be effective for the REIT's November, 2023, cash distribution, to be paid on Dec. 15, 2023.

This represents the fifth consecutive year in which the REIT has increased distributions. The increase underscores the positive outlook for the REIT's business that is shared by management and the board of trustees. While steadily increasing distributions is a key element of the REIT's strategy, the REIT expects to continue maintaining a conservative AFFO payout ratio, allowing for the reinvestment of capital to finance growth.

Conference Call

Management will host a conference call for analysts and investors on Wednesday, November 8, 2023 at 10:00 am ET. To join the conference call without operator assistance, participants can register on-line and enter their phone number 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 Q3 2023 Earnings Webcast

A replay of the call will be available until Wednesday, November 15, 2023. To access the replay, dial 416-764-8677 or 888-390-0541 (Passcode: 082182 #). 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 and Calgary.

We seek Safe Harbor.