Good afternoon, ladies and gentlemen, and welcome to the first quarter conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, May 2nd, 2024. I would now like to turn the conference over to Paul Miatello. Please go ahead.
Thank you, and welcome, everybody, and thanks for joining us for Morguard North American Residential REIT's first quarter conference call. With me today, I will just do a quick roll call of everybody that's here. So we've got Ruth Grube, Assistant Vice President, Canadian Operations. We've got John Talano, Senior Vice President, U.S. Operations. Beverley Flynn, Senior Vice President, General Counsel. Angela Sahi, Executive Vice President. And so now, with that quick introduction, I will turn it over to Mr. Chris Newman, our Chief Financial Officer, who will provide some comments, and then we'll open up the floor for a Q&A. Chris?
Okay. Thank you, Paul. As is customary, I'll provide comments on the REIT's financial position and performance in terms of our financial position. The REIT completed the first quarter of 2024 with total assets amounting to CAD 4.2 billion, higher compared to CAD 4.1 billion as of December 31st, 2023. This was due to a fair value increase in the REIT's income-producing properties and foreign exchange rate fluctuations. The REIT finished the first quarter with approximately CAD 18 million of cash on hand and CAD 100 million available under the REIT's revolving credit facility with Morguard Corporation. The REIT completed the first quarter with CAD 1.4 billion of long-term debt obligations. And as of March 31st, 2024, the REIT's mortgages payable have an overall weighted average term to maturity of 4.6 years, a decrease from 4.9 years at December 31st, 2023. The weighted average interest rate was 3.72%, unchanged from December 31st, 2023.
The REIT's debt-to-gross book value ratio was 38% as of March 31st, 2024, a decrease compared to 38.7% at December 31st, 2023. During 2024, the REIT continued to be active under its NCIB, repurchasing approximately 145,000 units at an average unit price of CAD 15.73 per unit. The REIT's IFRS net asset value per unit is CAD 39.50, making the NCIB plan an appealing use of capital. Turning to the statement of income, net income was CAD 24.8 million for the first quarter compared to CAD 34.3 million in 2023. The CAD 9.5 million decrease in net income was primarily due to the following non-cash items: a decrease in fair value gain on real estate properties of CAD 14.5 million - sorry, that was an increase - and a - sorry, a decrease in, which was partially offset by a decrease in deferred income taxes of CAD 7.4 million.
IFRS net operating income was CAD 20.6 million for the first quarter of 2024, an increase of CAD 1.3 million or 6.6% compared to 2023. The change in foreign exchange rate decreased NOI by CAD 0.1 million of the overall variance to last year. On the same property proportionate basis, NOI in Canada increased by CAD 1.7 million or 12%, mainly due to AMR growth ahead of higher vacancy and a decrease in operating expenses. NOI in the U.S. increased by CAD 0.4 million or 2%, as AMR growth was mainly offset by higher vacancy and an increase in operating expenses. The change in foreign exchange rate increased same property proportionate NOI by CAD 0.1 million.
Interest expense increased by CAD 1.4 million for the first quarter of 2024 compared to 2023, primarily due to an increase in interest on mortgages of CAD 1.3 million from higher principal and higher interest rates on the completion of the REIT's refinancings. The REIT's first quarter performance translated into basic FFO of CAD 22.5 million, an increase of 0.6 million or 2.6% when compared to 2023. On a per-unit basis, FFO was CAD 0.41 per unit for the three months ended March 31st, 2024, an increase of CAD 0.02 or 5.1% compared to CAD 0.39 per unit in 2023. The increase in FFO per unit was due to the following: on the same property proportionate basis in local currency, an increase in NOI partially offset by an increase in interest expense and trust expenses had a CAD 0.02 per unit positive impact.
The acquisition of Xavier had a CAD 0.01 per unit positive impact.
An increase in current tax expense at the REIT's U.S. subsidiaries had a CAD 0.01 per unit negative impact. A decrease in other income, primarily from a decrease in interest income on the Morguard facility and a decrease in interest earned on restricted cash held as part of a 1031 exchange had a CAD 0.01 per unit negative impact. And the impact from units repurchased under the REIT's NCIB had a CAD 0.01 per unit positive impact. The REIT's FFO payout ratio continued to decline to 45.1% for the three months ended March 31st, 2024, compared to 2023, a very conservative level which allows for significant cash retention. Operationally, the REIT's average monthly rent in Canada increased to CAD 1,703 at March 31st, 2024, a 5.6% increase compared to 2023, reflecting the quality of our Canadian portfolio.
During the first quarter, the Canadian portfolio turned over 1.6% of total suite and achieved AMR growth on suite turnover of 28.1%. While in the U.S., the AMR increased by 3.6% compared to 2023, having an average monthly rent of $1,880 at the end of the first quarter, as the REIT continued its strong performance, benefiting from solid market fundamentals across many regions. The REIT's occupancy in Canada finished the first quarter of 2024 at 98.4% compared to 98.6% at March 31st, 2023. Rental market conditions remain strong and stable as housing demand continues to outdistance supply and as an elevated level of immigration in a high-interest rate environment discourages tenants from home ownership. Occupancy in the U.S. of 94% at March 31st, 2024, was lower compared to 95% at March 31st, 2023.
Management expects occupancies to be stable as we move into the busy spring and summer leasing seasons. During the three months ended March 31st, 2024, the REIT's total capex amounted to CAD 5.4 million that included revenue-enhancing in- suite improvements, exterior building projects, common area, garage renovations, mechanical, plumbing, electrical, as well as energy initiative expenditures. At this time, I'll turn the call back over to the moderator to open the floor for questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Jonathan Kelcher at TD Cowen. Please go ahead.
Thanks. Good afternoon. The first question, Chris, is just on the post-quarter you guys entered into agreements to refinance some of the Canadian mortgages. That's obviously going to give you lots of liquidity. What sort of rate are you expecting to get on that?
Well, we're hoping to rate lock fairly soon. So the current rates, you know, we're seeing anywhere from 4.7-4.8, depends on, you know, which direction they're going. So, I would say 4.7-4.85 range would be the current estimate.
Okay. And then that, that amount of cash is or do you expect to like, are you seeing good acquisition opportunities, or do you think you increased the NCIB? How where do you think that, where do you think you'd direct that?
Yeah. I think it could be a combination of a few things. We are kind of looking at, you know, Canadian properties a little more as the cap rates have kind of, you know, tapered off a little bit. But maybe, you know, Paul, if you wanted to shed some insight on the acquisition front.
Yeah. John, you know, we'll be looking both sides of the border, for sure. We're seeing things be a little more active in the U.S. as well. But as you suggested, the NCIB will likely be a target for some of that capital as well because we still see the buyback as a good use of funds.
Okay. And then while it's sitting on your balance sheet, is that at the Morguard level in Canada? So it's sort of earning Canadian prime?
Well, we haven't funded yet, so that, you know, there is probably going to be a period where MRG will be sitting with extra cash. We'll obviously look to use and maximize, our, you know, our potential more of our line to put money there. But, at the moment, I don't think there's a place for it. But it only is a few months until we, you know, start using up some of that cash on our capital in NCIB.
Okay. That's it from me. I'll, I'll turn it back. Thanks.
Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star 1. There are no further questions. You may proceed with closing comments.
Okay. Well, thanks, everybody, for joining us, and we look forward to speaking to you next quarter. Thank you.
Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.