Canadian Apartment Properties Real Estate Investment Trust
("CAPREIT") (TSX: CAR.UN) announced today strong operating and
financial results for the three and nine months ended September 30,
2023. Management will host a conference call to discuss the
financial results on Thursday, November 9, 2023 at 9:00 a.m. ET.
HIGHLIGHTS
As at |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Total Portfolio Performance and Other
Measures |
|
|
|
Number of suites and sites |
|
64,461 |
|
|
66,586 |
|
|
66,583 |
|
Investment properties fair value(1) (000s) |
$ |
16,482,890 |
|
$ |
17,153,709 |
|
$ |
16,894,551 |
|
Occupied AMR(2) |
|
|
|
Canadian Residential Portfolio(3) |
$ |
1,490 |
|
$ |
1,401 |
|
$ |
1,387 |
|
The Netherlands Portfolio |
€ |
1,053 |
|
€ |
992 |
|
€ |
983 |
|
Occupancy |
|
|
|
Canadian Residential Portfolio(3) |
|
98.9 |
% |
|
98.9 |
% |
|
98.8 |
% |
The Netherlands Portfolio |
|
98.7 |
% |
|
98.4 |
% |
|
97.8 |
% |
Total Portfolio(4) |
|
98.4 |
% |
|
98.3 |
% |
|
98.1 |
% |
(1) |
Investment properties exclude assets held for sale, as
applicable. |
(2) |
Occupied average monthly rent ("Occupied AMR") is defined as actual
residential rents divided by the total number of occupied suites or
sites in the property, and does not include revenues from parking,
laundry or other sources. |
(3) |
Excludes MHC sites. |
(4) |
Includes MHC sites. |
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Financial Performance |
|
|
|
|
Operating revenues (000s) |
$ |
268,377 |
|
$ |
252,032 |
|
$ |
793,122 |
|
$ |
750,353 |
|
Net operating income ("NOI") (000s) |
$ |
178,432 |
|
$ |
166,644 |
|
$ |
516,075 |
|
$ |
485,909 |
|
NOI margin |
|
66.5 |
% |
|
66.1 |
% |
|
65.1 |
% |
|
64.8 |
% |
Same property NOI (000s) |
$ |
170,070 |
|
$ |
157,823 |
|
$ |
493,686 |
|
$ |
460,774 |
|
Same property NOI margin |
|
66.5 |
% |
|
66.5 |
% |
|
65.4 |
% |
|
65.1 |
% |
Net income (loss) (000s) |
$ |
(357,542 |
) |
$ |
63,159 |
|
$ |
(420,786 |
) |
$ |
(141,886 |
) |
FFO per unit – diluted (formerly known as "NFFO per unit –
diluted")(1) |
$ |
0.638 |
|
$ |
0.610 |
|
$ |
1.795 |
|
$ |
1.748 |
|
Distributions per unit |
$ |
0.362 |
|
$ |
0.362 |
|
$ |
1.087 |
|
$ |
1.087 |
|
FFO payout ratio (formerly known as "NFFO payout ratio")(1) |
|
56.8 |
% |
|
59.1 |
% |
|
60.5 |
% |
|
62.0 |
% |
(1) |
These measures are not defined by International Financial Reporting
Standards ("IFRS"), do not have standard meanings and may not be
comparable with other industries or companies. Please refer to the
cautionary statements under the heading "Non-IFRS Measures" and the
reconciliations provided in this press release. |
As at |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Financing Metrics and Liquidity |
|
|
|
Total debt to gross book value(1) |
|
41.4 |
% |
|
39.4 |
% |
|
39.4 |
% |
Weighted average mortgage effective interest rate(2) |
|
2.73 |
% |
|
2.61 |
% |
|
2.59 |
% |
Weighted average mortgage term (years)(2) |
|
5.0 |
|
|
5.4 |
|
|
5.6 |
|
Debt service coverage (times)(1)(3) |
1.8x |
1.9x |
1.9x |
Interest coverage (times)(1)(3) |
3.5x |
3.7x |
3.8x |
Cash and cash equivalents (000s) |
$ |
48,266 |
|
$ |
47,303 |
|
$ |
101,295 |
|
Available liquidity – Acquisition and Operating Facility
(000s) |
$ |
257,875 |
|
$ |
333,416 |
|
$ |
312,578 |
|
Capital |
|
|
|
Unitholders' equity (000s) |
$ |
9,304,029 |
|
$ |
10,003,695 |
|
$ |
9,832,599 |
|
Net asset value(1) (000s) |
$ |
9,228,233 |
|
$ |
9,954,566 |
|
$ |
9,730,535 |
|
Total number of units – diluted (000s) |
|
169,777 |
|
|
171,599 |
|
|
172,393 |
|
Net asset value per unit – diluted(1) |
$ |
54.36 |
|
$ |
58.01 |
|
$ |
56.44 |
|
(1) |
These measures are not defined by IFRS, do not have standard
meanings and may not be comparable with other industries or
companies. Please refer to the cautionary statements under the
heading "Non-IFRS Measures" and the reconciliations provided in
this press release. |
(2) |
Excludes liabilities related to assets held for sale, as
applicable. |
(3) |
Based on the trailing four quarters. |
"We're proud to have achieved another quarter of
robust operational and financial performance," commented Mark
Kenney, President and Chief Executive Officer. "Occupancies
remained stable at our highest levels, with nearly 99% of our
suites occupied at current period end, reflecting the ongoing
tightening we continue to see across all of our Canadian rental
markets. We're simultaneously making steady progress on our
strategy, with a focus on our portfolio modernization program which
has completed the acquisition of over $200 million of newly
constructed buildings located in strong-performing, high-growth
geographies, funded through the disposition of our non-core
Canadian properties. In optimizing our portfolio through downsizing
on suite count and upsizing on quality, we're also having to
optimize our organizational structure to adapt and ensure alignment
with our re-envisioned CAPREIT 2.0 strategy for success now, and in
the future."
"Our same property NOI margin held strong at
66.5% for the quarter, inclusive of higher operating expenses from
inflation, foreign exchange and repair and maintenance costs,"
added Stephen Co, Chief Financial Officer. "On the latter, we're
strategically scaling back on our discretionary value-enhancing
expenditure, and are instead intentionally reallocating that
capital into R&M projects, in response to the tight rental
market in which we're currently operating. That said, we continue
to prioritize our environmental and energy initiatives, alongside
our active management of debt financing and leverage in order to
maintain our solid and conservative balance sheet position. We have
ongoing opportunity for accretive use of funds across our various
avenues for capital redeployment, and we will continue to actively
exercise these levers in tandem to ultimately maximize value for
our Unitholders."
SUMMARY OF Q3 - 2023 RESULTS OF
OPERATIONS
Strategic Initiatives
Update
- CAPREIT continues to invest in
strategic opportunities that are accretive. For the nine months
ended September 30, 2023, CAPREIT acquired five properties for a
total acquisition cost of $208.3 million.
- CAPREIT disposed of 388 suites
which comprised of five non-core properties and three single
residential suites located in Canada and the Netherlands,
respectively, for the three months ended September 30, 2023 for
$60.8 million (excluding transaction costs and other adjustments).
For the nine months ended September 30, 2023, CAPREIT disposed of
$354.5 million (excluding transaction costs and other adjustments)
worth of non-core property dispositions.
- CAPREIT did not purchase any Trust
Units for cancellation during the three months ended September 30,
2023. During the nine months ended September 30, 2023, CAPREIT
purchased and cancelled approximately 2.2 million Trust Units
under the normal course issuer bid ("NCIB") program, at a weighted
average purchase price of $46.53 per Trust Unit, for a total cost
of $100.9 million.
- Pursuant to CAPREIT's strategy of
upgrading and diversifying its property portfolio through
accretive, on-strategy acquisitions and selected non-core or
opportunistic dispositions, CAPREIT is currently targeting the
disposition of approximately $400 million to $500 million of
Canadian properties in 2023.
Operating Results
- Same property Occupied AMR for the
Canadian residential portfolio as at September 30, 2023 increased
by 5.8% compared to September 30, 2022, while same property
occupancy for the Canadian residential portfolio remained
relatively stable at 98.9%.
- NOI increased by 7.8% and 7.1%,
respectively, for the same property portfolio for the three and
nine months ended September 30, 2023, compared to the same periods
last year. Additionally, same property NOI margin remained
consistent at 66.5%, for the three months ended September 30, 2023
and increased to 65.4%, up 0.3%, for the nine months ended
September 30, 2023, compared to the same periods last year.
- Diluted FFO per unit (formerly
known as "diluted NFFO per unit") increased by 4.6% and 2.7% for
the three and nine months ended September 30, 2023, respectively,
compared to the same periods last year primarily due to same
property operational growth and supplemented by accretive NCIB
purchases.
Balance Sheet Highlights
- CAPREIT's financial position
remains strong with $257.9 million of available capacity on its
Canadian Acquisition and Operating Facility.
- Based on the current property
portfolio and execution of strategic initiatives, management
expects to raise between $600 million and $650 million in mortgages
for the Canadian portfolio for 2023.
- To date, CAPREIT completed or
committed consolidated mortgage financings of $605.8 million. The
mortgages refinanced have a weighted average term to maturity of
6.9 years and a weighted average interest rate of 4.40%.
- For the three and nine months ended
September 30, 2023, CAPREIT recorded a fair value loss on
investment properties of $507.0 million and $803.2 million,
respectively, primarily driven by capitalization rate ("cap rate")
expansion in the Greater Toronto Area within the Canadian portfolio
and in the Netherlands portfolio as a reflection of the market
conditions. The overall carrying value of investment properties
(excluding assets held for sale) as at September 30, 2023 was $16.5
billion compared to $17.0 billion as at June 30, 2023 and $17.2
billion as at December 31, 2022.
- Diluted NAV per unit as at
September 30, 2023 decreased to $54.36 from $57.08 as at June 30,
2023 and $58.01 as at December 31, 2022, primarily due to fair
value losses recognized in investment properties, partially offset
by the effects of accretive purchases of Trust Units for
cancellation through the NCIB program.
OPERATIONAL AND FINANCIAL
RESULTS
Portfolio Occupied Average Monthly
Rents
|
Total Portfolio |
Same Property Portfolio(1) |
As at September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Occupied AMR |
Occ. % |
Occupied AMR |
Occ. % |
Occupied AMR |
Occ. % |
Occupied AMR |
Occ. % |
Average Canadian residential suites |
$ |
1,490 |
98.9 |
$ |
1,387 |
98.8 |
$ |
1,485 |
98.9 |
$ |
1,403 |
98.8 |
Average MHC sites |
$ |
437 |
96.0 |
$ |
425 |
95.6 |
$ |
437 |
96.0 |
$ |
425 |
95.5 |
Average Netherlands portfolio |
€ |
1,053 |
98.7 |
€ |
983 |
97.8 |
€ |
1,053 |
98.7 |
€ |
983 |
97.8 |
(1) |
Same property Occupied AMR and occupancy include all properties
held as at September 30, 2022, but exclude properties disposed of
or held for sale as at September 30, 2023. |
The rate of growth in total portfolio Occupied
AMR has been primarily driven by (i) new acquisitions completed
over the past 12 months and (ii) same property operational growth.
The rate of growth in same property Occupied AMR has been primarily
due to (i) rental increases on turnover in the rental markets of
most provinces across the Canadian portfolio and (ii) rental
increases on renewals.
The weighted average gross rent per square foot
for total Canadian residential suites was approximately $1.80 as at
September 30, 2023, increased from $1.70 as at September 30,
2022.
Net Operating Income
Same properties for the three and nine months
ended September 30, 2023 are defined as all properties owned by
CAPREIT continuously since December 31, 2021, and therefore do not
take into account the impact on performance of acquisitions or
dispositions completed during 2023 and 2022, or properties that are
classified as held for sale as at September 30, 2023.
($ Thousands) |
Total NOI |
Same Property NOI |
For the Three Months Ended September 30, |
|
2023 |
|
|
2022 |
|
%(1) |
|
2023 |
|
|
2022 |
|
%(1) |
Total operating revenues |
$ |
268,377 |
|
$ |
252,032 |
|
6.5 |
$ |
255,868 |
|
$ |
237,154 |
|
7.9 |
Operating expenses |
|
|
|
|
|
|
Realty taxes |
|
(24,391 |
) |
|
(23,262 |
) |
4.9 |
|
(23,155 |
) |
|
(21,707 |
) |
6.7 |
Utilities |
|
(15,704 |
) |
|
(15,226 |
) |
3.1 |
|
(15,296 |
) |
|
(14,546 |
) |
5.2 |
Other(2) |
|
(49,850 |
) |
|
(46,900 |
) |
6.3 |
|
(47,347 |
) |
|
(43,078 |
) |
9.9 |
Total operating expenses(3) |
$ |
(89,945 |
) |
$ |
(85,388 |
) |
5.3 |
$ |
(85,798 |
) |
$ |
(79,331 |
) |
8.2 |
NOI |
$ |
178,432 |
|
$ |
166,644 |
|
7.1 |
$ |
170,070 |
|
$ |
157,823 |
|
7.8 |
NOI margin |
|
66.5 |
% |
|
66.1 |
% |
|
|
66.5 |
% |
|
66.5 |
% |
|
(1) |
Represents the year-over-year percentage change. |
(2) |
Comprises repairs and maintenance ("R&M"), wages, insurance,
advertising, legal costs and expected credit losses. |
(3) |
Total operating expenses, on a constant currency basis, increased
by approximately 4.6% and 7.3%, respectively, for the total and
same property portfolio compared to the same periods last
year. |
($ Thousands) |
Total NOI |
Same Property NOI |
For the Nine Months Ended September 30, |
|
2023 |
|
|
2022 |
|
%(1) |
|
2023 |
|
|
2022 |
|
%(1) |
Total operating revenues |
$ |
793,122 |
|
$ |
750,353 |
|
5.7 |
$ |
754,347 |
|
$ |
707,503 |
|
6.6 |
Operating expenses |
|
|
|
|
|
|
Realty taxes |
|
(72,475 |
) |
|
(70,515 |
) |
2.8 |
|
(68,503 |
) |
|
(66,240 |
) |
3.4 |
Utilities |
|
(57,796 |
) |
|
(57,210 |
) |
1.0 |
|
(55,584 |
) |
|
(53,645 |
) |
3.6 |
Other(2) |
|
(146,776 |
) |
|
(136,719 |
) |
7.4 |
|
(136,574 |
) |
|
(126,844 |
) |
7.7 |
Total operating expenses(3) |
$ |
(277,047 |
) |
$ |
(264,444 |
) |
4.8 |
$ |
(260,661 |
) |
$ |
(246,729 |
) |
5.6 |
NOI |
$ |
516,075 |
|
$ |
485,909 |
|
6.2 |
$ |
493,686 |
|
$ |
460,774 |
|
7.1 |
NOI margin |
|
65.1 |
% |
|
64.8 |
% |
|
|
65.4 |
% |
|
65.1 |
% |
|
(1) |
Represents the year-over-year percentage change. |
(2) |
Comprises repairs and maintenance ("R&M"), wages, insurance,
advertising, legal costs and expected credit losses. |
(3) |
Total operating expenses, on a constant currency basis, increased
by approximately 4.2% and 5.1%, respectively, for the total and
same property portfolio compared to the same periods last
year. |
Operating
Revenues
For the three months ended September 30, 2023,
same property operating revenues increased by $18.7 million
primarily driven by increases in monthly rents on turnovers and
renewals. Total operating revenues increased by $16.3 million
during the same period, due to $18.8 million of operational growth
on the same property operating portfolio and assets held for sale
as at September 30, 2023 and $3.5 million increase from
acquisitions, partially offset by $6.0 million lower revenues due
to dispositions.
For the nine months ended September 30, 2023,
same property operating revenues increased by $46.8 million
primarily driven by increases in monthly rents on turnovers and
renewals. Total operating revenues increased by $42.8 million
during the same period, due to $47.1 million of operational growth
on the same property operating portfolio and assets held for sale
as at September 30, 2023 and $13.2 million increase from
acquisitions, partially offset by $17.5 million lower revenues due
to dispositions.
Operating Expenses
For the three and nine months ended September
30, 2023 operating costs increased for the same property portfolio
compared to the same periods last year primarily due to increase in
other operating expenses. Other operating expenses increased
primarily due to higher R&M costs. The higher R&M costs in
both periods are due to general inflationary pressures, as well as
higher maintenance costs that correspond with a reduction in
discretionary capital expenditures, reflecting CAPREIT's strategic
reallocation of capital in response to the tight rental market in
Canada.
For the three and nine months ended September
30, 2023, other operating expenses for the total portfolio
increased for the same reasons as described above and due to
certain required maintenance costs for the operation of CAPREIT's
septic systems at primarily two MHC properties, one of which was
disposed of on March 1, 2023 while the other was disposed of on
June 30, 2023.
ADDITIONAL INFORMATION
More detailed information and analysis is
included in CAPREIT's unaudited condensed consolidated interim
financial statements and MD&A for the three and nine months
ended September 30, 2023, which have been filed on SEDAR+ and can
be viewed at www.sedarplus.ca under CAPREIT's profile or on
CAPREIT's website on the investor relations page at
www.capreit.ca.
Conference Call
A conference call hosted by Mark Kenney,
President and Chief Executive Officer, Stephen Co, Chief Financial
Officer, and Julian Schonfeldt, Chief Investment Officer, will be
held on Thursday, November 9, 2023 at 9:00 am ET. The telephone
numbers for the conference call are: Canadian Toll Free: (833)
950-0062, International: +1 (929) 526-1599. The conference call
access code is 078065.
The call will also be webcast live and
accessible through the CAPREIT website at www.capreit.ca –
click on "For Investors" and follow the link at the top of the
page. A replay of the webcast will be available for one year after
the webcast at the same link.
The slide presentation to accompany management's
comments during the conference call will be available on the
CAPREIT website an hour and a half prior to the conference
call.
About CAPREIT
CAPREIT is Canada's largest publicly traded
provider of quality rental housing. As at September 30, 2023,
CAPREIT owns approximately 64,500 residential apartment suites,
townhomes and manufactured home community sites that are
well-located across Canada and the Netherlands, with approximately
$16.5 billion of investment properties in Canada and Europe. For
more information about CAPREIT, its business and its investment
highlights, please visit our website at www.capreit.ca and our
public disclosures which can be found under our profile at
www.sedarplus.ca.
Non-IFRS Measures
CAPREIT prepares and releases unaudited
condensed consolidated interim financial statements and audited
consolidated annual financial statements in accordance with IFRS.
In this and other earnings releases and investor conference calls,
as a complement to results provided in accordance with IFRS,
CAPREIT discloses measures not recognized under IFRS which do not
have standard meanings prescribed by IFRS. These include Funds From
Operations ("FFO"), Net Asset Value ("NAV"), Total Debt, Gross Book
Value, and Adjusted Earnings Before Interest, Tax, Depreciation,
Amortization and Fair Value ("Adjusted EBITDAFV") (the "Non-IFRS
Financial Measures"), as well as diluted FFO per unit, Ratio of
Total Debt to Gross Book Value, Debt Service Coverage Ratio and
Interest Coverage Ratio (the "Non-IFRS Ratios" and together with
the Non-IFRS Financial Measures, the "Non-IFRS Measures"). These
Non-IFRS Measures are further defined and discussed in the MD&A
released on November 8, 2023, which should be read in conjunction
with this press release. Since these measures and related per unit
amounts are not recognized under IFRS, they may not be comparable
to similar measures reported by other issuers. CAPREIT presents the
Non-IFRS Measures because management believes Non-IFRS Measures are
relevant measures of the ability of CAPREIT to earn revenue and to
evaluate its performance, financial condition and cash flows. These
Non-IFRS Measures have been assessed for compliance with the new
National Instrument 52-112 and a reconciliation of these Non-IFRS
Measures is included in this press release below. The Non-IFRS
Measures should not be construed as alternatives to net income
(loss) or cash flows from operating activities determined in
accordance with IFRS as indicators of CAPREIT's performance or the
sustainability of our distributions.
CAPREIT undertook a comprehensive review of
MD&A disclosures and, starting with the first quarter of 2023,
streamlined disclosures to focus on measures and metrics that
management believes are the most relevant. Accordingly, CAPREIT is
no longer disclosing Ratio of Total Debt to Gross Historical Cost
and Ratio of Total Debt to Total Capitalization, amongst others. In
this press release, CAPREIT relabeled Normalized Funds from
Operations ("NFFO") to FFO (formerly known as "NFFO") and as such,
introduced a modified definition of FFO which is identical to the
prior definition of NFFO. As a result, CAPREIT will no longer refer
to NFFO throughout the press release.
Cautionary Statements Regarding
Forward-Looking Statements
Certain statements contained, or contained in
documents incorporated by reference, in this press release
constitute forward-looking information within the meaning of
securities laws. Forward-looking information may relate to
CAPREIT's future outlook and anticipated events or results and may
include statements regarding the future financial position,
business strategy, growth strategy, budgets, litigation, occupancy
rates, rental rates, productivity, projected costs, acquisitions,
dispositions, capital investments, development and development
opportunities, financial results, taxes, plans and objectives of,
or involving, CAPREIT. Particularly, statements regarding CAPREIT's
future results, performance, achievements, prospects, costs,
opportunities and financial outlook, including those relating to
acquisitions, dispositions and capital investment strategies and
the real estate industry generally, are forward-looking statements.
In some cases, forward-looking information can be identified by
terms such as "may", "will", "would", "should", "could", "likely",
"expect", "plan", "anticipate", "believe", "intend", "estimate",
"forecast", "predict", "potential", "project", "budget", "continue"
or the negative thereof, or other similar expressions concerning
matters that are not historical facts. Forward-looking statements
are based on certain factors and assumptions regarding expected
growth, results of operations, performance, and business prospects
and opportunities. In addition, certain specific assumptions were
made in preparing forward-looking information, including: that the
Canadian and Dutch economies will generally experience growth,
which, however, may be adversely impacted by the global economy,
inflation and increasing interest rates, potential health crises
and their direct or indirect impacts on the business of CAPREIT;
that Canada Mortgage and Housing Corporation ("CMHC") mortgage
insurance will continue to be available and that a sufficient
number of lenders will participate in the CMHC-insured mortgage
program to ensure competitive rates; that the Canadian capital
markets will continue to provide CAPREIT with access to equity
and/or debt at reasonable rates; that vacancy rates for CAPREIT
properties will be consistent with historical norms; that rental
rates on renewals will grow; that rental rates on turnovers will
grow; that the difference between in-place and market-based rents
will be reduced upon such turnovers and renewals; that the markets
in which CAPREIT currently operates remain stable, with no material
increase in supply of directly-competitive residential real estate;
that CAPREIT will effectively manage price pressures relating to
its energy usage; and, with respect to CAPREIT's financial outlook
regarding capital investments, assumptions respecting projected
costs of construction and materials, availability of trades, the
cost and availability of financing, CAPREIT's investment
priorities, the properties in which investments will be made, the
composition of the property portfolio and the projected return on
investment in respect of specific capital investments. Management's
estimates, beliefs and assumptions are inherently subject to
significant business, economic, competitive and other uncertainties
and contingencies regarding future events and, as such, are subject
to change. Although the forward-looking statements contained in
this press release are based on assumptions and information that is
currently available to management, including current market
conditions and management's assessment of acquisition, disposition
and other opportunities that are or may become available to
CAPREIT, which are subject to change, management believes these
statements have been prepared on a reasonable basis, reflecting
CAPREIT's best estimates and judgments. However, there can be no
assurance actual results, terms or timing will be consistent with
these forward-looking statements, and they may prove to be
incorrect. Forward-looking statements necessarily involve known and
unknown risks and uncertainties, many of which are beyond CAPREIT's
control, that may cause CAPREIT's or the industry's actual results,
performance, achievements, prospects and opportunities in future
periods to differ materially from those expressed or implied by
such forward-looking statements. These risks and uncertainties
include, among other things, risks related to: rent control and
residential tenancy regulations, general economic conditions,
privacy, cyber security and data governance risks, talent
management and human resources shortages, taxation-related risks,
energy costs, public health crises, environmental matters, vendor
management and third-party service providers, operating risk,
valuation risk, climate change, other regulatory compliance risks,
availability of debt, risks related to acquisitions, dispositions
and property development, catastrophic events, litigation risk,
liquidity and price volatility of Trust Units, CAPREIT's investment
in ERES, potential conflicts of interest, investment restrictions,
lack of diversification of investment assets, geographic
concentration, illiquidity of real property, capital investments,
leasing risk, competition for real property investments, dependence
on key personnel, adequacy of insurance and captive insurance,
competition for residents, controls over financial reporting, the
nature of CAPREIT Trust Units, Unitholder liability, dilution,
distributions, participation in CAPREIT's distribution reinvestment
plan ("DRIP") and foreign operation and currency risks. There can
be no assurance that the expectations of CAPREIT's management will
prove to be correct. These risks and uncertainties are more fully
described in regulatory filings, including CAPREIT's Annual
Information Form, which can be obtained on SEDAR+ at
www.sedarplus.ca, under CAPREIT's profile, as well as under the
"Risks and Uncertainties" section of the MD&A released on
November 8, 2023. The information in this press release is based on
information available to management as of November 8, 2023. Subject
to applicable law, CAPREIT does not undertake any obligation to
publicly update or revise any forward-looking information.
SOURCE: Canadian Apartment Properties Real
Estate Investment Trust
CAPREITMr. Mark KenneyPresident & Chief Executive Officer(416)
861-9404 |
CAPREITMr. Stephen CoChief Financial Officer(416) 306-3009 |
CAPREITMr. Julian SchonfeldtChief Investment Officer(647)
535-2544 |
SELECTED NON-IFRS MEASURES
A reconciliation of net
income (loss) to FFO (formerly known as
"NFFO") is as follows:
($ Thousands, except per unit amounts) |
Three Months Ended |
Nine Months Ended |
|
September 30, |
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
$ |
(357,542 |
) |
$ |
63,159 |
|
$ |
(420,786 |
) |
$ |
(141,886 |
) |
Adjustments: |
|
|
|
|
Fair value adjustments of investment properties |
|
507,003 |
|
|
95,680 |
|
|
803,204 |
|
|
542,788 |
|
Fair value adjustments of investments |
|
3,272 |
|
|
19,799 |
|
|
24,989 |
|
|
98,000 |
|
Fair value adjustments of derivative financial instruments |
|
(7,350 |
) |
|
(25,248 |
) |
|
2,677 |
|
|
(93,670 |
) |
Unit-based compensation remeasurement gain |
|
(3,318 |
) |
|
(1,468 |
) |
|
(954 |
) |
|
(10,654 |
) |
Fair value adjustments of Exchangeable LP Units |
|
(9,519 |
) |
|
(4,568 |
) |
|
4,167 |
|
|
(29,991 |
) |
Interest expense on Exchangeable LP Units |
|
597 |
|
|
609 |
|
|
1,785 |
|
|
1,826 |
|
Gain on non-controlling interest |
|
(29,542 |
) |
|
(46,232 |
) |
|
(36,250 |
) |
|
(113,804 |
) |
Net FFO impact attributable to ERES units held by non-controlling
unitholders(1) |
|
(4,833 |
) |
|
(4,637 |
) |
|
(14,303 |
) |
|
(13,567 |
) |
Deferred income tax expense (recovery) |
|
(7,084 |
) |
|
1,612 |
|
|
(70,100 |
) |
|
17,187 |
|
Loss (gain) on foreign currency translation |
|
7,533 |
|
|
3,800 |
|
|
(1,816 |
) |
|
20,952 |
|
Loss on transactions and other activities(2) |
|
4,031 |
|
|
3,177 |
|
|
10,102 |
|
|
23,302 |
|
Lease principal repayments |
|
(298 |
) |
|
(275 |
) |
|
(882 |
) |
|
(721 |
) |
Former FFO |
$ |
102,950 |
|
$ |
105,408 |
|
$ |
301,833 |
|
$ |
299,762 |
|
Reorganization, senior management termination, and retirement
costs(3) |
|
4,836 |
|
|
— |
|
|
6,860 |
|
|
6,250 |
|
Amortization of losses from accumulated other comprehensive loss to
interest and other financing costs |
|
— |
|
|
121 |
|
|
68 |
|
|
1,294 |
|
Net loss (gain) on derecognition of debt |
|
439 |
|
|
997 |
|
|
(3,307 |
) |
|
(1,766 |
) |
Mortgage prepayment cost |
|
55 |
|
|
12 |
|
|
55 |
|
|
1,354 |
|
Costs relating to transactions that were not completed |
|
— |
|
|
24 |
|
|
— |
|
|
161 |
|
FFO (formerly known as "NFFO") |
$ |
108,280 |
|
$ |
106,562 |
|
$ |
305,509 |
|
$ |
307,055 |
|
Weighted average number of units (000s) ‑ diluted |
|
169,727 |
|
|
174,588 |
|
|
170,213 |
|
|
175,629 |
|
FFO per unit – diluted (formerly known as "NFFO per unit –
diluted") |
$ |
0.638 |
|
$ |
0.610 |
|
$ |
1.795 |
|
$ |
1.748 |
|
|
|
|
|
|
Total distributions declared |
$ |
61,536 |
|
$ |
63,005 |
|
$ |
184,862 |
|
$ |
190,446 |
|
FFO payout ratio (formerly known as "NFFO payout ratio")(4) |
|
56.8 |
% |
|
59.1 |
% |
|
60.5 |
% |
|
62.0 |
% |
(1) |
The adjustment is based on applying the 35% weighted average
ownership held by ERES non-controlling unitholders (September 30,
2022 – 34%). |
(2) |
Includes amortization of property, plant, and equipment and
right-of-use asset and impairment of goodwill. |
(3) |
For the three and nine months ended September 30, 2023, includes
$679 and $765, respectively, of accelerated vesting of previously
granted unit-based compensation (three and nine months ended
September 30, 2022 – $nil and $976, respectively). |
(4) |
The payout ratio compares distributions declared to FFO (formerly
known as "NFFO"). |
Reconciliation of Unitholders' Equity to
NAV:
($ Thousands, except per unit amounts) |
|
As at |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Unitholders' equity |
$ |
9,304,029 |
|
$ |
10,003,695 |
|
$ |
9,832,599 |
|
Adjustments: |
|
|
|
Exchangeable LP Units |
|
74,257 |
|
|
71,668 |
|
|
70,694 |
|
Unit-based compensation financial liabilities excluding ERES's unit
options plan |
|
20,165 |
|
|
17,455 |
|
|
16,488 |
|
Deferred income tax liability |
|
58,124 |
|
|
120,524 |
|
|
141,179 |
|
Deferred income tax asset |
|
(13,686 |
) |
|
(6,173 |
) |
|
(3,812 |
) |
Derivative assets – non-current |
|
(55,018 |
) |
|
(62,599 |
) |
|
(84,073 |
) |
Derivative assets – current |
|
(7,691 |
) |
|
— |
|
|
(26,568 |
) |
Derivative liabilities – current |
|
7,154 |
|
|
10,625 |
|
|
— |
|
Adjustment to ERES non-controlling interest(1) |
|
(159,101 |
) |
|
(200,629 |
) |
|
(215,972 |
) |
NAV |
$ |
9,228,233 |
|
$ |
9,954,566 |
|
$ |
9,730,535 |
|
Diluted number of units |
|
169,777 |
|
|
171,599 |
|
|
172,393 |
|
NAV per unit – diluted |
$ |
54.36 |
|
$ |
58.01 |
|
$ |
56.44 |
|
(1) |
CAPREIT accounts for the non-controlling interest in ERES as a
liability, measured at the trading value of ERES's units not owned
by CAPREIT. The adjustment is made so that the non-controlling
interest in ERES is measured at ERES's disclosed NAV, rather than
ERES's trading value. The table below summarizes the calculation of
adjustment to ERES non-controlling interest as at September 30,
2023, December 31, 2022 and September 30, 2022: |
($ Thousands) |
|
As at |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
ERES's NAV |
€ |
711,062
|
|
€ |
899,166 |
|
€ |
987,803 |
|
Ownership by ERES non-controlling interest |
|
35 |
% |
|
34 |
% |
|
34 |
% |
Closing foreign exchange rate |
|
1.4360 |
|
|
1.4498 |
|
|
1.3463 |
|
Impact to NAV due to ERES's non-controlling unitholders |
$ |
357,385 |
|
$ |
443,228 |
|
$ |
452,159 |
|
Less: ERES units held by non-controlling unitholders |
$ |
198,284 |
|
$ |
242,599 |
|
$ |
236,187 |
|
Adjustment to ERES non-controlling interest |
$ |
159,101 |
|
$ |
200,629 |
|
$ |
215,972 |
|
Reconciliation for Total Debt and Total
Debt Ratios:
($ Thousands) |
|
As at |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Mortgages payable – non-current |
$ |
5,797,931 |
|
$ |
5,963,820 |
|
$ |
5,874,897 |
|
Mortgages payable – current |
|
741,706 |
|
|
613,277 |
|
|
623,385 |
|
Liabilities related to assets held for sale |
|
— |
|
|
38,116 |
|
|
— |
|
Mortgage debt |
|
6,539,637 |
|
|
6,615,213 |
|
|
6,498,282 |
|
Bank Indebtedness – non-current |
|
489,024 |
|
|
388,975 |
|
|
402,112 |
|
Total Debt |
$ |
7,028,661 |
|
$ |
7,004,188 |
|
$ |
6,900,394 |
|
|
|
|
|
Total Assets |
$ |
16,946,089 |
|
$ |
17,741,888 |
|
$ |
17,456,012 |
|
Add: Total accumulated amortization and depreciation |
|
43,865 |
|
|
42,100 |
|
|
40,468 |
|
Gross Book Value(1) |
$ |
16,989,954 |
|
$ |
17,783,988 |
|
$ |
17,496,480 |
|
Ratio of Total Debt to Gross Book Value |
|
41.4 |
% |
|
39.4 |
% |
|
39.4 |
% |
Ratio of Mortgage debt to Gross Book Value |
|
38.5 |
% |
|
37.2 |
% |
|
37.1 |
% |
(1) |
Gross Book Value ("GBV") is defined by CAPREIT's Declaration of
Trust. |
Reconciliation of Net
Income (Loss) to Adjusted EBITDAFV:
($ Thousands) |
|
|
|
For the Trailing 12 Months Ended |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Net income (loss) |
$ |
(265,263 |
) |
$ |
13,637 |
|
$ |
503,073 |
|
Adjustments: |
|
|
|
Interest and other financing costs |
|
201,950 |
|
|
180,434 |
|
|
177,600 |
|
Interest on Exchangeable LP Units |
|
2,394 |
|
|
2,435 |
|
|
2,434 |
|
Current and deferred income tax expense (recovery) |
|
(95,053 |
) |
|
(10,034 |
) |
|
57,629 |
|
Amortization of property, plant and equipment and right-of-use
asset |
|
6,448 |
|
|
7,462 |
|
|
7,819 |
|
Unit-based compensation amortization expense |
|
7,943 |
|
|
7,256 |
|
|
7,301 |
|
EUPP unit-based compensation expense |
|
(545 |
) |
|
(514 |
) |
|
(511 |
) |
Fair value adjustments of investment properties |
|
728,743 |
|
|
468,327 |
|
|
(25,492 |
) |
Fair value adjustments of financial instruments |
|
75,313 |
|
|
7,440 |
|
|
(55,202 |
) |
Net gain on derecognition of debt |
|
(3,307 |
) |
|
(1,766 |
) |
|
(1,766 |
) |
Gain on non-controlling interest |
|
(27,268 |
) |
|
(104,822 |
) |
|
(102,919 |
) |
Loss (gain) on foreign currency translation |
|
(2,539 |
) |
|
21,000 |
|
|
21,917 |
|
Loss on dispositions and other |
|
5,318 |
|
|
3,318 |
|
|
3,624 |
|
Adjusted EBITDAFV adjustment for income from investment in
associate(1) |
|
— |
|
|
— |
|
|
(7,060 |
) |
Goodwill impairment loss |
|
— |
|
|
14,278 |
|
|
14,278 |
|
Adjusted EBITDAFV |
$ |
634,134 |
|
$ |
608,451 |
|
$ |
602,725 |
|
(1) |
Relates to CAPREIT's share of Irish Residential Properties REIT plc
investment property fair value gain. |
Debt Service Coverage Ratio
($ Thousands) |
|
For the Trailing 12 Months Ended |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Interest on mortgages payable and liabilities related to assets
held for sale |
$ |
161,855 |
|
$ |
154,467 |
|
$ |
151,588 |
|
Interest on bank indebtedness |
|
21,808 |
|
|
8,292 |
|
|
8,278 |
|
Mortgage principal repayments |
|
161,102 |
|
|
162,048 |
|
|
160,438 |
|
Debt service payments |
$ |
344,765 |
|
$ |
324,807 |
|
$ |
320,304 |
|
Adjusted EBITDAFV |
$ |
634,134 |
|
$ |
608,451 |
|
$ |
602,725 |
|
Debt Service Coverage Ratio (times) |
1.8x |
1.9x |
1.9x |
Interest Coverage Ratio
($ Thousands) |
|
For the Trailing 12 Months Ended |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
Interest on mortgages payable and liabilities related to assets
held for sale |
$ |
161,855 |
|
$ |
154,467 |
|
$ |
151,588 |
|
Interest on bank indebtedness |
|
21,808 |
|
|
8,292 |
|
|
8,278 |
|
Interest Expense |
$ |
183,663 |
|
$ |
162,759 |
|
$ |
159,866 |
|
Adjusted EBITDAFV |
$ |
634,134 |
|
$ |
608,451 |
|
$ |
602,725 |
|
Interest coverage ratio (times) |
3.5x |
3.7x |
3.8x |
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