“Consistent with our track record to date, we're pleased to report that our occupancies remained as high as possible, while our same property NOI margin expanded to 78.6% for 2023. "With growing demand for housing in the Netherlands continuing to outstrip the pace of new supply, we're experiencing increasingly tight rental market fundamentals which keep strengthening ERES's operational performance, as we saw again in 2023 ,” commented Mark Kenney, Chief Executive Officer. The REIT's financial position is additionally supported by its well-staggered mortgage profile, with a weighted average term to maturity of 2.9 years and a weighted average effective interest rate of 2.07%.Debt coverage metrics are within covenant thresholds, with interest and debt service coverage ratios of 2.9x and 2.4x, respectively, and adjusted debt to gross book value ratio currently standing at 57.6%.Overall, liquidity improved from prior year due to the amendment of the Revolving Credit Facility increasing the limit by €25.0 million, with immediately available liquidity of €28.9 million as at December 31, 2023, excluding the €25.0 million accordion feature on the Revolving Credit Facility, acquisition capacity on the Pipeline Agreement and alternative promissory note arrangements with CAPREIT.Adjusted Funds From Operations ("AFFO") per Unit decreased by 2.7% to €0.146 for the year ended December 31, 2023, compared to €0.150 for the year ended December 31, 2022, due to the same reasons mentioned above for FFO per Unit.Funds From Operations ("FFO") per Unit decreased by 4.7% to €0.161 for the year ended December 31, 2023, compared to €0.169 for the year ended December 31, 2022, primarily driven by increases in interest and other financing costs and current income tax expense, partially offset by the positive impact of increased same property NOI.Net Operating Income ("NOI") increased by 8.9% for the year ended Decemcompared to the year ended December 31, 2022, primarily driven by higher monthly rents on the same property portfolio, further supported by the REIT's extensive protection from inflation and strong cost control.Moreover, 50.5% of residential vacancies are attributable to suites undergoing renovation upon turnover, and 27.7% of residential vacancies are due to suites held for potential sale relating to the REIT's ongoing capital recycling initiatives. Occupancy for the residential and commercial properties increased to 98.5% and 100.0%, respectively, as at December 31, 2023, compared to 98.4% and 99.5%, respectively as at December 31, 2022, and is at the high end of the REIT's target range.Turnover was 13.8% for the year ended December 31, 2023, with rental uplift on turnover remaining strong at 20.4%, compared to rental uplift of 22.0% on turnover of 12.4% for the year ended December 31, 2022.Same property portfolio Occupied Average Monthly Rents ("Occupied AMR") increased by 7.2%, from €992 as at December 31, 2022, to €1,063 as at December 31, 2023, demonstrating the REIT's continued achievement of rental growth in excess of its target range. Strong operating results continued into 2023, fuelled by strong rental growth.The new mortgage financing matures on June 26, 2029, and carries a fixed contractual interest rate of 4.66%.
On June 26, 2023, the REIT secured mortgage financing on its acquisition property, combined with refinancing of certain existing properties, in the total principal amount of €76.5 million (excluding financing costs and fees).On December 20, 2023, the REIT announced that the strategic review process has been concluded and the proposed transactions would not be proceeded with. On June 16, 2023, the REIT announced that it was working with CBRE, as financial and real estate advisor, to advise it in connection with a strategic review of ERES.
Kenney is currently also the Chief Executive Officer and President of CAPREIT.