05:28 PM EDT, 05/21/2024 (MT Newswires) -- Canadian Net Real Estate Investment Trust (NET-UN.V) at the close of trade Tuesday reported lower first quarter net income than it did a year earlier, but said it was "well-positioned" to absorb increased interest rate costs due to higher rates on its mortgage renewals.

The REIT also announced distributions for the months of July, August and September 2024.

The REIT said it generated net income of $1.3 million compared to $4.8 million in the first quarter of 2023. The variance is primarily attributable to the change in the fair value of investment properties, it added.

The company reported that funds from operations decreased slightly to $3.1 million, or $0.152 per unit compared to $3.2 million, or $0.157 per unit for the three-month period ended March 31, 2023. It said the change in FFO is due to higher interest charges on mortgage renewals, variable-rate mortgages and credit facilities.

Of other highlights, rental income was $6.5 million in Q1 2024, an increase of 2.0% from Q1 2023. But net operating Income in Q1 2024 was $4.8 million, a decrease of 1.0% from Q1 2023, primarily reflecting the year-over-year increase in rental income and offset by property dispositions.

According to the company, the increase in rental income is due to increases in base rents and recoverable additional rents of certain existing properties, partially offset by property dispositions. It said the decrease in NOI was mainly attributable to the sale of three properties during 2023.

Chief execuitive Kevin Henley in a statement said the Q1 2024 results highlight the strength of its portfolio with a "solid" 100% occupancy rate and a conservative 57% payout ratio. "Our portfolio has performed very well and has mostly offset the increased interest rate cost due to higher rates on our 2023 mortgage renewals, translating into a slight 3% decrease in FFO per unit. Looking forward, our portfolio is well-positioned and will absorb these costs through rent increases, capital paydown, and future acquisitions."

Canadian Net announced that it will make monthly cash distributions of $0.02875 per unit, representing $0.345 per unit on an annualized basis, on July 31, August 30 and September 30, 2024, to unitholders of record on July 15, August 15 and September 13, 2024, respectively.