Canadian Apartment Properties Real Estate Investment Trust
("CAPREIT") (TSX: CAR.UN) announced today continued growth and
strong operating and financial results for the three months ended
March 31, 2023. Management will host a conference call to discuss
the financial results on Monday, May 15, 2023 at 9:00 a.m. EST.
HIGHLIGHTS:
As at |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
Total Portfolio Performance and Other
Measures |
|
|
|
Number of suites and sites |
|
65,527 |
|
|
66,586 |
|
|
67,182 |
|
Investment properties fair value (000s) |
$ |
17,121,228 |
|
$ |
17,153,709 |
|
$ |
17,523,587 |
|
Occupied AMR(1) |
|
|
|
Canadian Residential Portfolio(2) |
$ |
1,428 |
|
$ |
1,401 |
|
$ |
1,356 |
|
The Netherlands Portfolio |
€ |
1,002 |
|
€ |
992 |
|
€ |
949 |
|
Change in monthly rent on suite turnovers(3) |
|
|
|
Canadian Residential Portfolio(2) |
|
26.7 |
% |
|
24.3 |
% |
|
10.2 |
% |
The Netherlands Portfolio |
|
19.9 |
% |
|
23.1 |
% |
|
21.1 |
% |
Occupancy |
|
|
|
Canadian Residential Portfolio(2) |
|
98.6 |
% |
|
98.9 |
% |
|
98.6 |
% |
The Netherlands Portfolio |
|
98.7 |
% |
|
98.4 |
% |
|
98.6 |
% |
Total Portfolio(4) |
|
98.1 |
% |
|
98.3 |
% |
|
98.0 |
% |
(1) Occupied average monthly rent
("Occupied AMR") is defined as actual residential rents, excluding
vacant units, divided by the total number of occupied suites or
sites in the property, and does not include revenues from parking,
laundry or other sources.(2) Excludes MHC sites.(3) For
the three months ended.(4) Includes MHC sites.
For the Three Months Ended March 31, |
2023 |
2022 |
Financial Performance |
|
|
Operating revenues (000s) |
$ |
260,947 |
|
$ |
246,628 |
|
Net operating income ("NOI") (000s) |
$ |
163,858 |
|
$ |
153,172 |
|
NOI margin |
|
62.8 |
% |
|
62.1 |
% |
Same property NOI (000s) |
$ |
158,935 |
|
$ |
148,892 |
|
Same property NOI margin |
|
62.9 |
% |
|
62.3 |
% |
Net (loss) income (000s) |
$ |
(103,227 |
) |
$ |
45,309 |
|
FFO per unit – diluted (formerly known as "NFFO per unit -
diluted")(1) |
$ |
0.567 |
|
$ |
0.555 |
|
Distributions per unit |
$ |
0.362 |
|
$ |
0.362 |
|
FFO payout ratio (formerly known as "NFFO payout ratio")(1) |
|
63.6 |
% |
|
65.3 |
% |
(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 |
March 31, 2023 |
December 31,2022 |
March 31, 2022 |
Financing Metrics and Liquidity |
|
|
|
Total debt to gross book value(1) |
|
40.1 |
% |
|
39.4 |
% |
|
37.6 |
% |
Weighted average mortgage effective interest rate |
|
2.61 |
% |
|
2.61 |
% |
|
2.53 |
% |
Weighted average mortgage term (years) |
|
5.2 |
|
|
5.4 |
|
|
5.7 |
|
Debt service coverage (times)(1)(2) |
|
1.9 |
x |
|
1.9 |
x |
|
2.0 |
x |
Interest coverage (times)(1)(2) |
|
3.6 |
x |
|
3.7 |
x |
|
4.0 |
x |
Cash and cash equivalents (000s) |
$ |
24,594 |
|
$ |
47,303 |
|
$ |
63,798 |
|
Available liquidity – Acquisition and Operating Facility
(000s) |
$ |
240,995 |
|
$ |
333,416 |
|
$ |
228,881 |
|
Capital |
|
|
|
Unitholders' equity (000s) |
$ |
9,774,480 |
|
$ |
10,003,695 |
|
$ |
10,361,617 |
|
Net asset value(1)(000s) |
$ |
9,760,956 |
|
$ |
9,954,566 |
|
$ |
10,475,137 |
|
Total number of units - diluted (000s) |
|
169,831 |
|
|
171,599 |
|
|
176,267 |
|
Net asset value per unit - diluted(1) |
$ |
57.47 |
|
$ |
58.01 |
|
$ |
59.43 |
|
(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) Based on the trailing four
quarters.
“We have made solid advancements on the
execution of our strategy so far in 2023, and it's still early in
the year," commented Mark Kenney, President and Chief Executive
Officer. "To date, we have purchased $84 million in high-quality
new build assets located in attractive Canadian markets, while
divesting $160 million worth of our non-core portfolio. Our focus
on new construction also extends to our re-envisioned development
program. This past quarter, we finalized our first end-to-end
entitlement and sale of under-utilized land, which monetized the
development value upfront without taking on the development risk
and, importantly, contributes to the supply of new residential
homes needed in a growing community."
“Net proceeds from our asset repositioning
program enabled us to invest heavily in our NCIB program as well,”
added Stephen Co, Chief Financial Officer. “This has delivered
ongoing accretion since its inception approximately one year ago,
with just over $338 million spent to date to re-purchase
approximately 7.4 million Trust Units at steeply discounted
pricing. This supplemented our robust operational performance in
the first quarter of 2023, driven by strong rent growth observed
across the majority of our portfolio."
"Our uplifts on turnover have been entirely
market-driven, and simply demonstrate that the housing crisis
continues to worsen in this country, which by no means lacks
buildable land and yet does severely lack affordable homes,"
continued Mr. Kenney. “Going forward, as one of Canada's largest
providers of residential housing, CAPREIT will continue to
prioritize its active contribution to addressing this crisis, while
we also continue to set the precedent for responsible and
accountable property management."
SUMMARY OF Q1- 2023 RESULTS OF
OPERATIONS
Key Transactions and Events
- CAPREIT continues to invest in
strategic opportunities that are accretive. For the three months
ended March 31, 2023, CAPREIT acquired a building comprised of 143
suites located in Ontario for $56.6 million. Subsequent to March
31, 2023, CAPREIT acquired one property in Alberta for a purchase
price of $27.2 million (excluding transaction costs).
- Dispositions of non-core properties
for the three months ended March 31, 2023 amounted to $132.6
million across 1,196 suites and sites located in Ontario. CAPREIT
also entitled and sold an under-utilized parking lot site to an
experienced developer for $17.3 million, thus monetizing the
majority of the potential development profit upfront and
contributing to the supply of housing in Canada. Subsequent to
March 31, 2023, CAPREIT disposed of an additional property for a
sale price of $27.8 million (excluding transaction costs).
- During the three months ended March
31, 2023, CAPREIT purchased and cancelled approximately
2.0 million Trust Units, under the normal course issuer bid
("NCIB") program, at a weighted average purchase price of $46.43
per Trust Unit, for a total cost of $91.5 million, with
approximately an additional 0.2 million Trust units settled for
cancellation subsequent to March 31, 2023, for total cost of $9.4
million.
- In March 2023, CAPREIT received the
TSX's acceptance of its notice to proceed with an NCIB, following
expiry of the previous NCIB on March 23, 2023.
- On May 9, 2023, CAPREIT renewed its
base shelf prospectus that was set to expire in June 2023.
Operating Results
- On turnovers, monthly residential
rents for the three months ended March 31, 2023 increased by 26.7%
on 2.6% of the Canadian residential portfolio, compared to an
increase of 10.2% on 3.7% of the Canadian residential portfolio for
the three months ended March 31, 2022.
- Same property Occupied AMR for the
Canadian residential portfolio as at March 31, 2023 increased by
4.6% compared to March 31, 2022, while same property occupancy for
the Canadian residential portfolio remained stable at 98.6%.
- NOI for the same property portfolio
increased by 6.7% for the three months ended March 31, 2023
compared to the same period last year. Additionally, NOI margin for
the same property portfolio increased to 62.9%, up 0.6% compared to
the same period last year.
- Net loss for the three months ended
March 31, 2023 was $103.2 million. Included in net loss was a fair
value loss of $185.4 million recorded against investment properties
during the quarter, primarily relating to the European
portfolio.
- Diluted FFO per unit (formerly
known as "diluted NFFO per unit") was up 2.2% for the three months
ended March 31, 2023 compared to the same period last year,
primarily due to accretive NCIB purchases, supplemented by same
property organic growth and $1.5 million of non-refundable deposits
received on a property disposition that did not close. This was
partially offset by $1.1 million of required maintenance costs on
CAPREIT's septic systems, primarily at two MHC sites, of which one
was disposed of on March 1, 2023. In addition, there were higher
trust expenses primarily due to inflationary pressures, higher
interest rates on larger debt balances and elevated CMHC
amortization expense of future refinancings that are strategically
beneficial to CAPREIT.
Balance Sheet Highlights
- CAPREIT's financial position
remains strong, with over $265.6 million of available liquidity,
comprising $24.6 million of cash and cash equivalents and $241.0
million of available capacity on CAPREIT's Acquisition and
Operating Facility.
- Based on the current property
portfolio, management expects to raise between $600 million and
$650 million in total mortgage renewals and refinancings in Canada
for 2023, excluding financings on acquisitions.
- To date, CAPREIT completed or
committed consolidated mortgage refinancings of $263.2 million,
with a weighted average term to maturity of 5.6 years and a
weighted average interest rate of 3.79%.
- For the three months ended March
31, 2023, the overall carrying value of investment properties
decreased by $32.5 million primarily due to a fair value loss
of $185.4 million recorded during the quarter, which was partially
offset by net acquisitions of $39.1 million, property capital
investments and direct leasing cost additions of $71.9 million and
gain on foreign currency translation of $41.9 million. $182.8
million of the fair value loss related to the European portfolio
while the remaining $2.6 million fair value loss was attributed to
the Canadian portfolio.
- Unitholders' equity as at March 31,
2023 decreased to $9.8 billion from $10.0 billion as at December
31, 2022 primarily due to a net loss, the purchase and cancellation
of Trust Units under the NCIB and distributions on Trust
Units.
- Diluted NAV per unit as at March
31, 2023 decreased to $57.47 from $58.01 as at December 31, 2022,
reflecting a decrease in investment property values predominantly
in CAPREIT's European portfolio, 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 March 31, |
2023 |
2022 |
2023 |
2022 |
|
Occupied AMR |
Occ. % |
Occupied AMR |
Occ. % |
Occupied AMR |
Occ. % |
Occupied AMR |
Occ. % |
Average Canadian residential suites |
$ |
1,428 |
98.6 |
$ |
1,356 |
98.6 |
$ |
1,422 |
98.6 |
$ |
1,359 |
98.6 |
Average MHC sites |
$ |
433 |
95.8 |
$ |
422 |
95.8 |
$ |
433 |
95.8 |
$ |
422 |
95.7 |
Average Netherlands portfolio |
€ |
1,002 |
98.7 |
€ |
949 |
98.6 |
€ |
1,005 |
98.7 |
€ |
949 |
98.6 |
(1) Same property Occupied AMR and
occupancy include all properties held as at March 31, 2022, but
exclude properties disposed of as at March 31, 2023.
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. Weighted average gross rent per
square foot for Canadian residential suites was approximately $1.75
as at March 31, 2023, increased from $1.65 as at March 31,
2022.
Canadian Portfolio
For the Three Months Ended March 31, |
2023 |
2022 |
|
Change inmonthly rent |
Turnovers and Renewals(1) |
Change inmonthly rent |
Turnovers and Renewals(1) |
|
% |
% |
% |
% |
Suite turnovers |
26.7 |
2.6 |
10.2 |
3.7 |
Lease renewals |
2.4 |
45.4 |
1.3 |
49.6 |
Weighted average of turnovers and renewals |
3.7 |
|
1.9 |
|
(1) Percentage of suites turned over or
renewed during the period based on the total weighted average
number of residential suites (excluding co-ownerships and MHC
sites) held during the period.
The Netherlands Portfolio
For the Three Months Ended March 31, |
2023 |
2022 |
|
Change inmonthly rent |
Turnovers andRenewals(1) |
Change inmonthly rent |
Turnovers andRenewals(1) |
|
% |
% |
% |
% |
Suite turnovers |
19.9 |
3.9 |
21.1 |
2.6 |
Lease renewals |
— |
— |
— |
— |
Weighted average of turnovers and renewals |
19.9 |
|
21.1 |
|
(1) Percentage of suites turned over or
renewed during the period based on the total weighted average
number of Dutch residential suites held during the period.
As the Netherlands lease renewals occur once a
year in July, there were no changes in lease renewals for the three
months ended March 31, 2023 and March 31, 2022. For rent renewal
increases due to indexation beginning on July 1, 2023, ERES served
tenant notices to 6,659 suites, representing 97% of the residential
portfolio, across which the average rental increase due to
indexation is 4.0%.
Net Operating Income
Same properties for the three months ended March
31, 2023 are defined as all properties owned by CAPREIT
continuously since December 31, 2021, and therefore do not take
into account the impact on performance of acquisitions or
dispositions completed during 2023 and 2022.
($ Thousands) |
Total NOI |
Same Property NOI |
For the Three Months Ended March 31, |
2023 |
2022 |
%(1) |
2023 |
2022 |
%(1) |
Total operating revenues |
$ |
260,947 |
|
$ |
246,628 |
|
5.8 |
$ |
252,864 |
|
$ |
239,051 |
|
5.8 |
Operating expenses |
|
|
|
|
|
|
Realty taxes |
|
(24,037 |
) |
|
(23,447 |
) |
2.5 |
|
(23,040 |
) |
|
(22,629 |
) |
1.8 |
Utilities |
|
(24,159 |
) |
|
(24,159 |
) |
0.0 |
|
(23,689 |
) |
|
(23,146 |
) |
2.3 |
Other(2) |
|
(48,893 |
) |
|
(45,850 |
) |
6.6 |
|
(47,200 |
) |
|
(44,384 |
) |
6.3 |
Total operating expenses |
$ |
(97,089 |
) |
$ |
(93,456 |
) |
3.9 |
$ |
(93,929 |
) |
$ |
(90,159 |
) |
4.2 |
NOI |
$ |
163,858 |
|
$ |
153,172 |
|
7.0 |
$ |
158,935 |
|
$ |
148,892 |
|
6.7 |
NOI margin |
|
62.8 |
% |
|
62.1 |
% |
|
|
62.9 |
% |
|
62.3 |
% |
|
(1) Represents the year-over-year
percentage change. (2) Comprises repairs and maintenance
("R&M"), wages, insurance, advertising, legal costs and
expected credit losses.
Operating Revenues
For the three months ended March 31, 2023, total
operating revenues for the total and same property portfolios both
increased by 5.8% compared to the same periods last year, primarily
due to increases in monthly rents on turnovers and renewals and
decreases in rental vacancies. Furthermore, the impact of
acquisitions, partially offset by dispositions, further contributed
to higher operating revenues for the total portfolio.
Operating Expenses
Operating expenses for the same property
portfolio for the three months ended March 31, 2023 increased
compared to the same period last year, primarily due to increases
in other operating expenses. Increase in other operating expenses
is primarily due to higher R&M costs, partially offset by lower
insurance costs related to claim recoveries. The higher R&M
costs were primarily due to (i) certain required maintenance costs
for the operation of CAPREIT's septic systems at primarily two MHC
sites, one of which was disposed of on March 1, 2023, for which
CAPREIT is proactively working on solutions that would allow for
the full septic bed replacements at the affected sites that would
eliminate these costs; and (ii) general inflationary cost pressures
on expenditures.
PROPERTY CAPITAL
INVESTMENTS
During the three months ended March 31, 2023,
CAPREIT made property capital investments (excluding development
costs) of $63.6 million compared to $58.3 million for the same
period last year.
Property capital investments include suite
improvements, common areas and equipment, which generally tend to
increase NOI more quickly. CAPREIT also continues to invest in
environment-friendly and energy-saving initiatives, including
energy-efficient boilers and lighting systems.
DEVELOPMENT PROGRESS
On March 6, 2023, CAPREIT disposed of a parking
lot site located in Montréal, Québec for $17.3 million (excluding
disposition costs) to a developer. The underutilized land is
located adjacent to an existing multi-residential building owned by
CAPREIT. The site plan was approved by local planning authorities,
the land was severed and building permits were issued following
CAPREIT’s undertaking of the end-to-end entitlement process, which
provided for approximately 0.3 million square feet of buildable
gross floor area.
CAPREIT has partnered with development managers
in undertaking the entitlement and severance or subdivision process
to develop its underutilized land in certain high-growth and major
transit station areas located in the Greater Toronto Area. Several
planning applications have been submitted for the proposed new
residential buildings, which, subject to municipal approval, will
help to address the increased demand for high-rise residential
intensifications in these neighbourhoods.
SUBSEQUENT EVENTS
The table below summarizes the acquisition of an
investment property completed subsequent to March 31, 2023:
Acquisition Date |
Suite Count |
|
Region |
Purchase Price(1) |
April 12, 2023 |
89 |
|
Edmonton, AB |
$ |
27.2 million |
(1) Purchase price excludes acquisition
costs and other adjustments.
The table below summarizes the disposition of an
investment property completed subsequent to March 31, 2023:
Disposition Date |
Suite Count |
|
Region |
Sale Price(1) |
May 11, 2023 |
180 |
|
Longueuil, QC |
$ |
27.8 million |
(1) Sale price excludes disposition costs
and other adjustments.
During the month of April 2023, CAPREIT
purchased and cancelled an additional 0.2 million Trust Units under
the NCIB program, at a weighted average purchase price of $47.57
per Trust Unit, for a total cost of $9.4 million.
On May 9, 2023, CAPREIT renewed its base shelf
prospectus that was set to expire in June 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 months ended March
31, 2023, which have been filed on SEDAR and can be viewed at
www.sedar.com 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 Monday, May 15, 2023 at 9:00 am EST. The telephone numbers
for the conference call are: International: +1 (929) 526-1599,
Canadian Toll Free: (833) 950-0062. The conference call access code
is 497373.
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 March 31, 2023, CAPREIT
owns approximately 66,000 residential apartment suites, townhomes
and manufactured home community sites well-located across Canada
and the Netherlands, with approximately $17 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 disclosure which
can be found under our profile at www.sedar.com.
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 May 12, 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 (loss)
income 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, budgets, litigation, occupancy rates, rental
rates, productivity, projected costs, 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”, “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,
including CAPREIT’s ability to enforce leases, perform capital
expenditure work, increase rents and apply for above guideline
increases, obtain financings at favourable interest rates; 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 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. Although the forward-looking statements
contained in this press release are based on assumptions,
management believes they are reasonable as of the date hereof;
however, there can be no assurance actual results 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.sedar.com, under CAPREIT’s
profile, as well as under "Risks and Uncertainties" section of the
MD&A released on May 12, 2023. The information in this press
release is based on information available to management as of May
12, 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
(loss) income to FFO (formerly known as
"NFFO") is as follows:
($ Thousands, except per unit amounts) |
For the Three Months Ended March 31, |
2023 |
2022 |
Net (loss) income |
$ |
(103,227 |
) |
$ |
45,309 |
|
Adjustments: |
|
|
Fair value adjustments of investment properties |
|
185,386 |
|
|
(19,555 |
) |
Fair value adjustments of investments |
|
24,657 |
|
|
44,398 |
|
Fair value adjustments of derivative financial instruments |
|
11,603 |
|
|
(31,577 |
) |
Unit-based compensation remeasurement loss (gain) |
|
1,633 |
|
|
(1,990 |
) |
Fair value adjustments of Exchangeable LP Units |
|
8,003 |
|
|
(10,596 |
) |
Interest expense on Exchangeable LP Units |
|
597 |
|
|
609 |
|
Loss on non-controlling interest |
|
21,110 |
|
|
41,944 |
|
Net FFO impact attributable to ERES units held by non-controlling
unitholders(1) |
|
(4,592 |
) |
|
(4,434 |
) |
Deferred income tax (recovery) expense |
|
(46,952 |
) |
|
16,464 |
|
(Gain) loss on foreign currency translation |
|
(1,327 |
) |
|
12,083 |
|
Net loss on transactions and other activities(2) |
|
1,791 |
|
|
1,913 |
|
Lease principal repayment |
|
(287 |
) |
|
(277 |
) |
Former FFO |
$ |
98,395 |
|
$ |
94,291 |
|
Reorganization, senior management termination, and retirement
costs(3) |
|
2,024 |
|
|
2,243 |
|
Amortization of losses from AOCL to interest and other financing
costs |
|
49 |
|
|
543 |
|
Net gain on derecognition of debt |
|
(3,315 |
) |
|
— |
|
Mortgage prepayment cost |
|
— |
|
|
446 |
|
Costs relating to transactions that were not completed |
|
— |
|
|
99 |
|
FFO (formerly known as "NFFO") |
$ |
97,153 |
|
$ |
97,622 |
|
Weighted average number of units (000s) ‑ diluted |
|
171,266 |
|
|
175,994 |
|
FFO per unit – diluted (formerly known as "NFFO per unit -
diluted") |
$ |
0.567 |
|
$ |
0.555 |
|
|
|
|
Total distributions declared |
$ |
61,828 |
|
$ |
63,746 |
|
FFO payout ratio (formerly known as "NFFO payout ratio")(4) |
|
63.6 |
% |
|
65.3 |
% |
(1) For the three months ended March 31,
2023, the adjustment is based on applying the 35% weighted average
ownership held by ERES non-controlling unitholders (March 31, 2022
- 34%) to ERES's FFO of $13.3 million (€9.2 million) (for the three
months ended March 31, 2022 - $13.7 million or €9.8 million) and
adjusting for $nil of acquisition fees for the three months ended
March 31, 2023 (for the three months ended March 31, 2022 - $0.9
million) charged by CAPREIT to ERES, which are eliminated upon
consolidation.(2) Includes amortization of property, plant,
and equipment and right-of-use asset. (3) For the three months
ended March 31, 2023, includes $0.1 million of accelerated vesting
of previously granted unit-based compensation (three months ended
March 31, 2022 - $0.4 million).(4) The payout ratio compares
distributions declared to FFO (formerly known as "NFFO").
Reconciliation of Unitholders' Equity to
NAV:
($ Thousands, except per unit amounts) |
|
As at |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
Unitholders' equity |
$ |
9,774,480 |
|
$ |
10,003,695 |
|
$ |
10,361,617 |
|
Adjustments: |
|
|
|
Exchangeable LP Units |
|
78,093 |
|
|
71,668 |
|
|
90,087 |
|
Unit-based compensation financial liabilities excluding ERES’s unit
options plan |
|
19,634 |
|
|
17,455 |
|
|
29,626 |
|
Deferred income tax liability |
|
80,391 |
|
|
120,524 |
|
|
144,719 |
|
Deferred income tax asset |
|
(11,469 |
) |
|
(6,173 |
) |
|
(4,095 |
) |
Derivative assets |
|
(56,655 |
) |
|
(62,599 |
) |
|
(56,405 |
) |
Derivative liabilities |
|
15,484 |
|
|
10,625 |
|
|
226 |
|
Goodwill |
|
— |
|
|
— |
|
|
(14,573 |
) |
Adjustment to ERES non-controlling interest(1) |
|
(139,002 |
) |
|
(200,629 |
) |
|
(76,065 |
) |
NAV |
$ |
9,760,956 |
|
$ |
9,954,566 |
|
$ |
10,475,137 |
|
Diluted number of units |
|
169,831 |
|
|
171,600 |
|
|
176,267 |
|
NAV per unit - diluted |
$ |
57.47 |
|
$ |
58.01 |
|
$ |
59.43 |
|
(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 March 31, 2023, December 31, 2022
and March 31, 2022:
($ Thousands) |
|
As at |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
ERES’s NAV |
€ |
776,515 |
|
€ |
899,166 |
|
€ |
999,729 |
|
Ownership by ERES non-controlling interest |
|
35 |
% |
|
34 |
% |
|
34 |
% |
Closing foreign exchange rate |
|
1.4719 |
|
|
1.4498 |
|
|
1.3900 |
|
Impact to NAV due to ERES’s non-controlling unitholders |
$ |
400,022 |
|
$ |
443,228 |
|
$ |
472,472 |
|
Less: ERES units held by non-controlling unitholders |
$ |
261,020 |
|
$ |
242,599 |
|
$ |
396,407 |
|
Adjustment to ERES non-controlling interest |
$ |
139,002 |
|
$ |
200,629 |
|
$ |
76,065 |
|
Reconciliation for Total Debt and Total
Debt Ratios:
($ Thousands) |
|
As at |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
Mortgages payable - non-current |
$ |
5,936,555 |
|
$ |
5,963,820 |
|
$ |
5,864,017 |
|
Mortgages payable - current |
|
636,999 |
|
|
613,277 |
|
|
494,647 |
|
Liabilities related to assets held for sale |
|
— |
|
|
38,116 |
|
|
— |
|
Mortgage debt |
|
6,573,554 |
|
|
6,615,213 |
|
|
6,358,664 |
|
Bank Indebtedness - non-current |
|
484,063 |
|
|
388,975 |
|
|
474,441 |
|
Total Debt |
$ |
7,057,617 |
|
$ |
7,004,188 |
|
$ |
6,833,105 |
|
|
|
|
|
Total Assets |
$ |
17,542,136 |
|
$ |
17,741,888 |
|
$ |
18,121,622 |
|
Add: Total accumulated amortization and depreciation |
|
41,073 |
|
|
42,100 |
|
|
36,637 |
|
Gross Book Value(1) |
$ |
17,583,209 |
|
$ |
17,783,988 |
|
$ |
18,158,259 |
|
Ratio of Total Debt to Gross Book Value |
|
40.1 |
% |
|
39.4 |
% |
|
37.6 |
% |
Ratio of Mortgage debt to Gross Book Value |
|
37.4 |
% |
|
37.2 |
% |
|
35.0 |
% |
(1) Gross Book Value ("GBV") is defined by
CAPREIT's Declaration of Trust.
Reconciliation of Net
(Loss) Income to Adjusted EBITDAFV:
($ Thousands) |
|
|
|
For the trailing 12 months ended |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
Net (loss) income |
$ |
(134,899 |
) |
$ |
13,637 |
|
$ |
1,334,042 |
|
Adjustments: |
|
|
|
Interest on Exchangeable LP Units |
|
2,423 |
|
|
2,435 |
|
|
1,613 |
|
Interest and other financing costs |
|
187,582 |
|
|
180,434 |
|
|
166,074 |
|
Current and deferred income tax (recovery) expense |
|
(72,619 |
) |
|
(10,034 |
) |
|
99,018 |
|
Amortization of property, plant and equipment |
|
7,145 |
|
|
7,462 |
|
|
8,151 |
|
Unit-based compensation amortization expense |
|
6,944 |
|
|
7,256 |
|
|
7,580 |
|
EUPP unit-based compensation expense |
|
(520 |
) |
|
(514 |
) |
|
(504 |
) |
Fair value adjustments of investment properties |
|
673,268 |
|
|
468,327 |
|
|
(1,075,376 |
) |
Fair value adjustments of financial instruments |
|
55,400 |
|
|
7,440 |
|
|
(25,958 |
) |
Net gain on derecognition of debt |
|
(5,081 |
) |
|
(1,766 |
) |
|
— |
|
(Gain) loss on non-controlling interest |
|
(125,656 |
) |
|
(104,822 |
) |
|
64,807 |
|
Loss on dispositions |
|
3,421 |
|
|
3,318 |
|
|
333 |
|
Loss on foreign currency translation |
|
5,077 |
|
|
21,000 |
|
|
17,244 |
|
FFO adjustment for income from investment in associate(1) |
|
— |
|
|
— |
|
|
(9,271 |
) |
Goodwill impairment loss |
|
14,278 |
|
|
14,278 |
|
|
— |
|
Adjusted EBITDAFV |
$ |
616,763 |
|
$ |
608,451 |
|
$ |
587,753 |
|
(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 |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
Interest on mortgages payable and liabilities related to assets
held for sale |
$ |
157,641 |
|
$ |
154,467 |
|
$ |
141,636 |
|
Interest on bank indebtedness |
|
11,987 |
|
|
8,292 |
|
|
6,536 |
|
Mortgage principal repayments |
|
162,458 |
|
|
162,048 |
|
|
153,269 |
|
Debt service payments |
$ |
332,086 |
|
$ |
324,807 |
|
$ |
301,441 |
|
Adjusted EBITDAFV |
$ |
616,763 |
|
$ |
608,451 |
|
$ |
587,753 |
|
Debt Service Coverage Ratio (times) |
1.9 |
x |
1.9 |
x |
2.0 |
x |
Interest Coverage Ratio
($ Thousands) |
For the trailing 12 months ended |
March 31, 2023 |
December 31, 2022 |
March 31, 2022 |
Interest on mortgages payable and liabilities related to assets
held for sale |
$ |
157,641 |
|
$ |
154,467 |
|
$ |
141,636 |
|
Interest on bank indebtedness |
|
11,987 |
|
|
8,292 |
|
|
6,536 |
|
Interest Expense |
$ |
169,628 |
|
$ |
162,759 |
|
$ |
148,172 |
|
Adjusted EBITDAFV |
$ |
616,763 |
|
$ |
608,451 |
|
$ |
587,753 |
|
Interest coverage ratio (times) |
3.6 |
x |
3.7 |
x |
4.0 |
x |
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