World News: 22:00 GMT Friday 10th August 2018. [Canadian Apartment Properties Real Estate Investment Trust via Globe Newswire via SPi World News]
TORONTO, Aug. 10, 2018 (GLOBE NEWSWIRE) -- Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX: CAR.UN) announced today, continuing strong operating and financial results for the three and six months ended June 30, 2018.
“Our strong performance continued in the second quarter, driven by continuing strong fundamentals in our target markets and the successful execution of our proven sales, marketing and operating programs,” commented David Ehrlich, President and CEO. “We have also recently begun a process to realize development opportunities on over eighty properties in which we believe we could add over 10,000 net new apartments to the portfolio that we believe will be highly accretive to Unitholders.”
Overall AMR for the stabilized residential suite portfolio as at June 30, 2018 increased approximately 4.6% (including The Netherlands) and 4.5% (excluding The Netherlands) compared to the same period last year, while occupancy increased to 99.1%. The rate of growth in AMR has been impacted by (i) the strong rental markets of British Columbia and Ontario offset by strategically reduced rents in Alberta and Nova Scotia to increase occupancy, (ii) a higher rental guideline increase in Ontario and British Columbia for 2018 of 1.8% and 4.0% respectively, compared to the permitted guideline increases of 1.5% and 3.7% respectively in 2017, and (iii) increases due to above guideline increases (“AGI”) achieved in Ontario.
Suite turnovers in the residential suite portfolio (excluding co-ownerships and the Netherlands properties) for the three months and six months ended June 30, 2018 resulted in AMR increasing by approximately $123 or 10.5% and $117 or 10.1%, respectively, compared to an increase of approximately $66 or 5.9% and $57 or 5.1% for the same periods last year, primarily due to the strong rental markets of British Columbia and Ontario, offset by strategically reduced rents in the Alberta and Nova Scotia rental market to increase occupancy.
CAPREIT’s annualized net rental revenue run-rate as at June 30, 2018 grew to $653.3 million, up 9.0% from $599.1 million as at June 30, 2017, primarily due to acquisitions completed within the last twelve months and strong increases in AMR on properties owned prior to June 30, 2017. Net rental revenue run-rate net of dispositions for the twelve months ended June 30, 2018 was $623.9 million (June 30, 2017 – $583.6 million). For a detailed description of net rental revenue run-rate, see Results of Operations in Section III of the MD&A.
For the three and six months ended June 30, 2018, total operating revenues increased by 8.6% and 8.3%, respectively, compared to the same periods last year, due to the contribution from acquisitions, increased same property monthly rents, and continuing higher occupancies.
Overall operating expenses as a percentage of operating revenues reduced to 35.0% and 37.0% for the three and six months ended June 30, 2018 compared to 37.2% and 39.1% in the prior year, respectively, mainly as a result of lower utilities due to reduced electricity rates, reduced consumption, positive impacts of energy saving initiatives and sub-metering, and lower operating expenses due to lower wages and R&M as a percentage of operating revenues.
For the three and six months ended June 30, 2018, the NOI margin on the total portfolio were 65.0% and 63.0%, respectively, compared to 62.8% and 60.9% for the same periods last year. The increase in the NOI margin is due to (i) higher monthly rents on stabilized basis, (ii) lower vacancies, (iii) lower utilities cost, and (iv) lower wages.
For the six months ended June 30, 2018, basic NFFO per Unit increased by 11.2% compared to the prior year period despite the approximate 4.2% increase in the weighted average number of Units outstanding, due primarily to strong organic NOI growth and contributions from acquisitions. For the three months ended June 30, 2018, basic NFFO per Unit increased by 14.1% compared to the same period last year despite a 5.9% increase in the weighted average number of Units outstanding due to the equity offering completed in March 2018.
During the six months ended June 30, 2018, CAPREIT made property capital investments (excluding head office assets) of $67.7 million compared to $73.7 million in the same period last year. Management expects CAPREIT to complete property capital investments (excluding development and intensification) of approximately $197 million to $207 million in 2018.
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 energy-saving initiatives, including high-efficiency boilers, energy-efficient lighting systems and water-saving programs, which have permitted CAPREIT to mitigate potential increases in utility and R&M costs and has improved overall portfolio NOI.
On August 7, 2018, CAPREIT completed the acquisition of a brand new luxury property consisting of 90 suites located in Langley, BC. The purchase price (excluding transaction costs) of approximately $33.0 million was financed with the assumption of an existing $21.1 million mortgage with a remaining term of approximately 8.8 years bearing an interest rate of 2.56% and the remaining with CAPREIT’s Acquisition and Operating credit facility.
More detailed information and analysis is included in CAPREIT's unaudited condensed consolidated interim financial statements and MD&A for the three and six months ended June 30, 2018, 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.caprent.com or www.capreit.net.
A conference call hosted by David Ehrlich, President and CEO and the CAPREIT Management Team, will be held Monday, August 13, 2018 at 10:00 am EST. The telephone numbers for the conference call are: Local/International: (416) 340-2216, North American Toll Free: (866) 225-0198.
A slide presentation to accompany Management's comments during the conference call will be available one hour and a half prior to the conference call. To view the slides, access the CAPREIT website at www.caprent.com or www.capreit.net, click on "Investor Relations" and follow the link at the top of the page. Please log on at least 15 minutes before the call commences.
The telephone numbers to listen to the call after it is completed (Instant Replay) are local/international (905) 694-9451 or North American toll free (800) 408-3053. The Passcode for the Instant Replay is 7682967#. The Instant Replay will be available until midnight, September 12, 2018. The call and accompanying slides will also be archived on the CAPREIT website at www.caprent.com or www.capreit.net. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.caprent.com or www.capreit.net.
CAPREIT owns interests in multi-unit residential rental properties, including apartments, townhomes and manufactured home communities (“MHC”) primarily located in and near major urban centres across Canada. As at June 30, 2018, CAPREIT had owning interests in 50,772 residential units, comprised of 44,180 residential suites and 32 MHC comprising 6,592 land lease sites. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.caprent.com or www.capreit.net and our public disclosure which can be found under our profile at www.sedar.com.
CAPREIT prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared 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 also discloses and discusses certain financial measures not recognized under IFRS and that do not have standard meanings prescribed by IFRS. These include stabilized net rental income (“Stabilized NOI”), Net Rental Revenue Run-Rate, Funds From Operations (“FFO”), Normalized Funds From Operations (“NFFO”), and Adjusted Cash Flow from Operations (“ACFO”), and applicable per Unit amounts and payout ratios (collectively, the “Non-IFRS Measures”). These Non-IFRS Measures are further defined and discussed in the MD&A released on August 10, 2018, which should be read in conjunction with this press release. Since Stabilized NOI, Net Rental Revenue Run-Rate, FFO, NFFO, and ACFO are not measures recognized under IFRS, they may not be comparable to similarly titled measures reported by other issuers. CAPREIT has presented the Non-IFRS measures because Management believes these Non-IFRS measures are relevant measures of the ability of CAPREIT to earn revenue and to evaluate CAPREIT’s performance and cash flows. A reconciliation of Net Income and 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 sustainability of our distributions.
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, projected costs, capital investments, 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 acquisition and capital investment strategy 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”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “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, Irish and Dutch economies will generally experience growth, however, may be adversely impacted by the global economy; that inflation will remain low; that interest rates will remain low in the medium term; 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 will grow at levels similar to the rate of inflation on renewal; that rental rates on turnovers will remain stable; 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 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: reporting investment properties at fair value, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, catastrophic events, insurance, capital investments, indebtedness, interest rate hedging, foreign operation and currency risks, taxation, harmonization of federal goods and services tax and provincial sales tax, land transfer tax, foreign tax, government regulations, controls over financial accounting, legal and regulatory concerns, the nature of units of CAPREIT (“Trust Units”), Preferred Units, and units of CAPREIT’s subsidiary, CAPREIT Limited Partnership (“Exchangeable Units”) (collectively, the “Units”), unitholder liability, liquidity and price fluctuation of Units, dilution, distributions, participation in CAPREIT’s distribution reinvestment plan, potential conflicts of interest, dependence on key personnel, general economic conditions, competition for residents, competition for real property investments, continued growth, risks related to acquisitions, and cybersecurity. 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 August 10, 2018. The information in this press release is based on information available to Management as of August 10, 2018. 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
Globe Newswire: 22:00 GMT Friday 10th August 2018
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