CAPREIT Announces Another Year of Record Performance for 2010

TORONTO, ONTARIO--(Marketwire - Feb. 22, 2011) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today record operating and financial results for the three months and year ended December 31, 2010.

HIGHLIGHTS ⁽¹⁾

		Three Months Ended December 31						Year Ended December 31
		2010			2009			2010			2009
Operating Revenues (000s)		$	85,519		$	81,329		$	333,465		$	321,159
Net Operating Income ("NOI") (000s) (2)		$	46,511		$	43,790		$	187,709		$	174,432
NOI Margin (2)			54.4	%		53.8	%		56.3	%		54.3	%
Normalized Funds From Operations ("NFFO")
	Per Unit – Basic (2),(3)	$	0.307		$	0.305		$	1.364		$	1.263
NFFO Payout Ratio (2),(3)			92.1	%		91.9	%		82.5	%		88.5	%

(1)	Unless otherwise indicated, all figures in this press release, including those figures relating to prior year comparable periods, have been adjusted to exclude the results of discontinued operations.
(2)	NOI, NFFO and NFFO per Unit are measures used by management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-GAAP Financial Measures" and the reconciliations provided in this press release.
(3)	Not adjusted for the effect of discontinued operations.

• Q4 operating revenues up 5.2% compared to prior year period on higher average monthly rents, increased occupancies, and contributions from acquisitions

• Average monthly rents rose 2.8% at December 31, 2010 compared to prior year

• Occupancy improved to 98.4% at December 31, 2010 compared to 98.1% in prior year

• Q4 NOI up 6.2% from last year with NOI margin increasing to 54.4%

• Organic growth continued with Q4 2010 stabilized NOI up 3.2%, the 20^th consecutive quarter of stable or improved year-over-year same property NOI

• Q4 YTD NFFO up a significant 9.8% generating an improved NFFO payout ratio of 82.5%

• Q4 YTD NFFO per Unit up 8.0% to $1.364

• Completed $150 million of mortgage refinancings in Q4 at an average interest rate of 3.78% and an average term to maturity of 8.2 years, generating significant long-term interest rate savings

• Acquired nine additional manufactured home community ("MHC") land lease sites and disposed of a non-core property comprising 56 suites located in Ontario during the fourth quarter

• Sustainable increase in average monthly rents and improvements in the quality of the properties and tenant bases allowed Management to reclassify 2,279 suites up-market in the fourth quarter with six properties reclassified from affordable to mid-tier and two properties from mid-tier to luxury

• Completed the revaluation of its investment properties under International Financial Reporting Standards ("IFRS") as at December 31, 2010, which will result in a fair value-based carrying amount for investment properties of approximately $3,050 million, or approximately $782 million greater than the depreciated cost of $2,268 million as reported at December 31, 2010 under current GAAP

"We generated another year of record operating and financial performance in 2010, the result of our proven value enhancing property management approach, the continued rebalancing of our portfolio, and our strategic capital investment programs," commented Thomas Schwartz, President and CEO. "Importantly, while our successful equity offering in December resulted in a modest dilution of approximately $0.01 per Unit in NFFO in 2010, we have significantly strengthened our balance sheet and provided sufficient liquidity to capitalize on potential future growth opportunities." 

"Looking ahead, we are confident our strong results will continue in 2011. Fundamentals remain solid in the majority of our geographic markets, and we continue to see a steady flow of acquisition opportunities to further strengthen and diversify our property portfolio," Mr. Schwartz concluded.

PORTFOLIO OPERATING RESULTS

	Three Months Ended December 31						Year Ended  December 31
	2010			2009			2010			2009
Overall Portfolio Occupancy (1)								98.4	%		98.1	%
Overall Portfolio Average Monthly Rents (1),(2)							$	979		$	952
Operating Revenues (000s)	$	85,519		$	81,329		$	333,465		$	321,159
Net Rental Revenue Run-Rate (000s) (1),(3),(4)							$	326,216		$	319,109
Operating Expenses (000s)	$	39,008		$	37,539		$	145,756		$	146,727
NOI (000s) (4)	$	46,511		$	43,790		$	187,709		$	174,432
NOI Margin		54.4	%		53.8	%		56.3	%		54.3	%
Number of Suites and Sites Acquired		9			–			691			24
Number of Suites Disposed		56			–			1,110			–

(1)	As at December 31.
(2)	Average monthly rents are defined as actual rents, net of vacancies, divided by the total number of suites and sites in the portfolio and do not include revenues from parking, laundry or other sources.
(3)	For a description of net rental revenue run-rate, see the Results of Operations section in the MD&A for the year ended December 31, 2010.
(4)	Net Rental Revenue Run-Rate and NOI are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-GAAP Financial Measures" and the reconciliations provided in this press release.

Operating Revenues

For the three months and year ended December 31, 2010, total operating revenues increased by 5.2% and 3.8%, respectively, compared to the same periods last year primarily due to acquisitions completed in the year as well as increased average monthly rents and higher occupancy levels. The increase in revenues was partially offset by the impact of the lost contribution from properties sold during the year.

Management's annualized net rental revenue run-rate based on the average monthly rents in place and CAPREIT's share of residential suites and sites as at December 31, 2010 is $326.2 million, or 2.2% higher than $319.1 million as of December 31, 2009. Net rental revenue for the year ended December 31, 2010, including the results of discontinued operations, was $322.8 million (2009 – $315.4 million).

During the fourth quarter of 2010, Management revised the demographic sector classification of eight properties as a result of increases in average monthly rents at the properties stemming primarily from property capital investments completed in 2010 and in prior years. Six properties comprising 1,925 suites located in Ontario were reclassified from affordable to mid-tier and two properties comprising 354 suites located in Québec and Ontario were reclassified from mid-tier to luxury.

Average monthly rents increased in all sectors and geographic regions of the portfolio, with the exception of Alberta, resulting in a 2.8% increase in overall average monthly rents as at December 31, 2010 to $979, compared to $952 as at December 31, 2009. Overall occupancy remained at nearly full levels of 98.4% at December 31, 2010 compared to 98.1% last year. The increases in average monthly rents and occupancy levels were due to a combination of the acquisition of more luxury-oriented properties and the disposition of certain affordable properties in the year, successful sales and marketing strategies and favourable market conditions in the majority of CAPREIT's regional markets.

Suite turnovers in the residential suite portfolio (excluding co-ownerships) during the three months ended December 31, 2010 resulted in average monthly rents increasing by approximately $6 or 0.6% per suite compared to a negligible change during the same period last year. Although the change in average monthly rents from suite turnovers improved from the same period last year, the effect of aggressive rent discounting in the Alberta market of approximately $20 or 2.0% per suite in the fourth quarter continues to have an adverse impact. Excluding the impact of the Alberta portfolio, residential suite turnovers would have resulted in average monthly rents increasing by $9 or 0.8% per suite in the fourth quarter.

Pursuant to Management's focus on increasing overall portfolio rents, average monthly rents on lease renewals increased by approximately $24 or 2.3% for the three months ended December 31, 2010 compared to $19 or 1.9% for the same period last year. For the year ended December 31, 2010, average monthly rents increased by $22 or 2.3%, which is slightly ahead of the same period last year.

Operating Expenses

For the three months and year ended December 31, 2010, operating expenses as a percentage of operating revenues improved to 45.6% and 43.7%, respectively, compared to 46.2% and 45.7% for the same periods last year.

Operating expenses increased for the three months ended December 31, 2010, due to a combination of (i) the impact of property acquisitions in the year, (ii) the introduction of harmonized sales tax ("HST") in Ontario and British Columbia, and (iii) rising electricity rates in Ontario. For the year ended December 31, 2010 operating expenses decreased primarily due to lower overall utility costs, largely the result of CAPREIT's energy-saving initiatives and a revised natural gas supply strategy resulting in lower pricing.

Net Operating Income

In the fourth quarter of 2010, NOI increased by $2.7 million or 6.2% while the NOI margin improved to 54.4% of revenues as compared to 53.8% of revenues last year. For the year ended December 31, 2010, overall NOI increased by $13.3 million or 7.6%, while the NOI margin improved significantly to 56.3% from 54.3% for the same period last year.

As of December 31, 2010, CAPREIT has generated 20 consecutive quarters of stable or improved year-over-year NOI growth for stabilized properties demonstrating Management's strong operating and financing strategies. For the three months and year ended December 31, 2010, operating revenues for stabilized suites and sites increased 2.3% and 2.2%, respectively, while operating costs increased 1.3% and decreased 1.8%, respectively, compared to the same periods last year. As a result, stabilized NOI increased by 3.2% and 5.5% for the three months and year ended December 31, 2010, respectively. 

NON-GAAP FINANCIAL MEASURES

	Three Months Ended December 31						Year Ended  December 31
	2010			2009			2010			2009
NFFO (000s)	$	21,120			20,178		$	91,592		$	83,380
NFFO Per Unit – Basic	$	0.307		$	0.305		$	1.364		$	1.263
Cash Distributions Per Unit	$	0.270		$	0.270		$	1.080		$	1.080
NFFO Payout Ratio		92.1	%		91.9	%		82.5	%		88.5	%
NFFO Effective Payout Ratio		75.4	%		78.1	%		69.3	%		75.5	%

Normalized Funds From Operations

NFFO is not a financial measure determined by Canadian generally accepted accounting principles ("GAAP"), however, it is used by CAPREIT to assess overall operating performance. NFFO, which excludes from Funds From Operations ("FFO") the effect of changes in the fair value of derivative financial instruments and certain other non-recurring expenses, increased by 4.7% and 9.8%, respectively, for the three months and year ended December 31, 2010, compared to the same periods last year. The increase was primarily due to the strong progress in reducing operating costs including utility and R&M costs, higher average monthly rents and improved occupancy levels resulting from Management's sales and marketing programs, and the contribution from recent acquisitions. These gains were partially offset by the impact of the introduction of the HST in Ontario and British Columbia effective July 1, 2010, and the lost contribution from properties sold during the year. NFFO per Unit increased by 0.7% and 8.0%, respectively, for the three months and year ended December 31, 2010 compared to the same periods last year.

The payout ratio of distributions declared to NFFO for the three months ended December 31, 2010 of 92.1% is largely unchanged from the ratio of 91.9% for the same period last year. For the year ended December 31, 2010, the NFFO payout ratio improved to 82.5% compared to 88.5% last year.

The effective NFFO payout ratio, which compares net distributions paid to Unitholders to NFFO, improved significantly to 75.4% and 69.3%, respectively, for the three months and year ended December 31, 2010, from 78.1% and 75.5% for the same periods last year, primarily due to significant operating cost reductions as well as higher reinvestments of distributions under the Distribution Reinvestment Plan ("DRIP"). The average participation rate in the DRIP increased to 18.2% and 15.9%, respectively, for the three months and year ended December 31, 2010 from 15.0% and 14.7% for the same periods last year.

LIQUIDITY AND LEVERAGE

As at December 31,	2010		2009
Mortgage Debt to Gross Book Value	57.48	%	57.30	%
Total Debt to Gross Book Value	58.87	%	62.75	%
Total Debt to Total Capitalization	55.85	%	63.61	%
Debt Service Coverage Ratio (times) (1)	1.35		1.28
Interest Coverage Ratio (times) (1)	2.12		2.06
Weighted Average Mortgage Interest Rate (%) (2)	4.82		5.07
Weighted Average Mortgage Term to Maturity (years)	4.9		5.1

(1)

For the four quarters ended December 31.

(2)

Effective weighted average interest rate including deferred financing costs and fair value adjustments but excluding CMHC premiums. Additionally, including the amortization of the realized component of the loss on settlement of $9.9 million included in Accumulated Other Comprehensive Loss, the effective portfolio weighted average interest rate at December 31, 2010 would be 0.08% higher (December 31, 2009 - 0.08%).

Financial Strength

Given CAPREIT's strong fundamentals, in the fourth quarter of 2010, CAPREIT successfully completed the issuance of 7,600,000 Units at $17.30 per Unit for aggregate gross proceeds of $131.5 million. The net proceeds of $125.3 million were used to repay borrowings on CAPREIT's Acquisition and Operating Facility.

CAPREIT's strengthened balance sheet and financial position will enable Management to take advantage of acquisition and property investment opportunities.

CAPREIT is achieving its financing plan goals as demonstrated by the following key indicators:

• The available borrowing capacity under the Acquisition and Operating Facility as at December 31, 2010 was $223.5 million in addition to the Land Lease Facility capacity of $8.6 million;

• The ratio of total debt to gross book value as at December 31, 2010 improved to 58.87% compared to 62.75% last year;

• Debt service and interest coverage ratios improved significantly for the year ended December 31, 2010, compared to the prior year, despite the impact of top up mortgage financing obtained in the year on principal and interest payments;

• At December 31, 2010, 95.5% (December 31, 2009 – 96.2%) of CAPREIT's mortgage portfolio is insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's manufactured home community land lease sites;

• The effective portfolio weighted average interest rate on mortgages has steadily declined from 5.07% as at December 31, 2009, to 4.82% as at December 31, 2010, which will result in significant interest rate savings in future years; and

• During the year ended December 31, 2010, total financings of $280.3 million, including $182.9 million for renewals of existing mortgages and $97.4 million for additional top up financing were completed for a weighted average term of 6.2 years and at a weighted average interest rate of 3.57%, which is significantly below the weighted average interest rate of mortgages that matured in 2010 of 4.89%.

Management does not anticipate any material difficulties in renewing approximately $229.9 million of maturing mortgages and refinancing a significant portion of the approximately $49.6 million in principal repayments through 2011, which combined have a weighted average effective interest rate of approximately 5.11%. New mortgages are expected to carry lower interest rates, which will benefit CAPREIT over the long term. Management also expects to raise between $250 million and $275 million in total mortgage renewals and refinancings for 2011.

Property Capital Investment Plan

During the year ended December 31, 2010, CAPREIT made property capital investments of $81.6 million as compared to $85.6 million for the same period last year.

Year-over-year property capital investments were lower in 2010 primarily due to the timing of building improvement programs, partially offset by higher investments in suite improvements, common areas and high-efficiency boilers, all of which tend to increase NOI more quickly. In addition, CAPREIT continues to invest heavily in environment-friendly and energy-saving initiatives, including the above-mentioned boilers, energy-efficient lighting systems, water-saving and waste recycling programs, which have permitted CAPREIT to mitigate potentially higher increases in utility and R&M costs and have improved overall portfolio NOI significantly.

The change in the timing of capital investments during 2010 has led CAPREIT to adjust its multi-year capital investment programs to increase the anticipated investment levels for 2011. Management currently expects CAPREIT to complete property capital investments of approximately $100.0 million to $110.0 million during 2011, including approximately $10.5 million in investments in high-efficiency boilers and other energy-saving initiatives.

IFRS

Management has substantially completed the quantification of the impact of International Accounting Standard ("IAS") 40, Investment Property and related differences on its December 31, 2010 balance sheet under IFRS compared to its balance sheet under current GAAP. Management expects the revaluation of its investment properties will result in a fair value-based carrying amount of approximately $3,050 million as at December 31, 2010 ($2,901 million at January 1, 2010), or approximately $782 million greater than the depreciated cost of $2,268 million reported under current GAAP.

The Debt to Gross Book Value leverage ratio calculation as of December 31, 2010 is expected to decrease to below 55% based on these revised fair values compared to CAPREIT's stated leverage ratio of 58.87% at December 31, 2010 based on historical cost under current GAAP.

For additional information, refer to the International Financial Reporting Standards disclosure in Section VI of CAPREIT's Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2010.

Acquisitions and Dispositions

On November 24, 2010, CAPREIT completed the sale of a property comprising 56 suites located in Toronto, Ontario for a sale price of $6.4 million, excluding closing and transaction costs. The net cash proceeds from this sale were used to reduce bank indebtedness. A gain of $0.8 million ($0.012 per Unit) has been recognized in connection with the disposition.

On December 20, 2010, CAPREIT acquired nine MHC land lease sites (seven sites near Bowmanville, Ontario and two sites in Grand Bend, Ontario) for total acquisition costs of $0.5 million, all of which were funded from CAPREIT's land lease facility.

Subsequent to the year end, on January 31, 2011, CAPREIT completed the acquisition of a mid-tier townhome complex comprising 83 suites, located in Burlington, Ontario. The purchase price of $8.9 million, excluding closing and transaction costs, was funded with a new CMHC-insured mortgage of $6.8 million at an interest rate of 4.26%, maturing on March 1, 2021, and the balance from CAPREIT's Acquisition and Operating facility.

Additional Information

More detailed information and analysis is included in CAPREIT's audited consolidated annual financial statements and MD&A for the year ended December 31, 2010, 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.net.

Conference Call

A conference call hosted by Thomas Schwartz, President and CEO and Richard J. Smith, Chief Financial Officer, will be held Wednesday, February 23, 2011 at 10.00 am ET. The telephone numbers for the conference call are: Local: (416) 340-2218, North American Toll Free: (877) 240-9772.

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.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 (905) 694-9451 or toll free (800) 408-3053. The Passcode for the Instant Replay is 4111832#. The Instant Replay will be available until midnight, March 2, 2011. The call and accompanying slides will also be archived on the CAPREIT website at www.capreit.net. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net.

About CAPREIT

As one of Canada's largest residential landlords, CAPREIT (TSX:CAR.UN) is a growth-oriented investment trust owning interests in 27,255 residential suites and two manufactured home communities comprising 1,325 land lease sites located in or near major urban centres from coast to coast. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net and our public disclosure which can be found under our profile at www.sedar.com.

Non-GAAP Financial Measures

CAPREIT prepares and releases unaudited quarterly and audited consolidated annual financial statements prepared in accordance with GAAP. In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with GAAP, CAPREIT also discloses and discusses certain non-GAAP financial measures, including Net Rental Revenue Run-Rate, NOI, FFO, NFFO and applicable per Unit amounts and payout ratios. These non-GAAP measures are further defined and discussed in the February 22, 2010 MD&A, which should be read in conjunction with this press release. Since Net Rental Revenue Run-Rate, NOI, FFO and NFFO are not determined by GAAP, they may not be comparable to similar measures reported by other issuers. CAPREIT has presented such non-GAAP measures as Management believes these non-GAAP measures are relevant measures of the ability of CAPREIT to earn and distribute cash returns to Unitholders and to evaluate CAPREIT's performance. A reconciliation of Net Income and such non-GAAP measures and Adjusted Funds From Operations ("AFFO") is included in this press release. These non-GAAP measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with GAAP as an indicator of CAPREIT's performance.

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, 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 capital investments, 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 economy will generally experience growth, however, with specific geographic areas of weakness including Alberta; that inflation will remain low; that interest rates will rise modestly in 2011; that 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 conditions within the real estate market, including competition for acquisitions, will become favourable; 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 are reasonable as of the date hereof, there can be no assurance actual results will be consistent with these forward-looking statements; 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:
real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, taxation, harmonization of federal goods and services tax and provincial sales tax, government regulations, controls over financial accounting, International Financial Reporting Standards ("IFRS"), legal and regulatory concerns, the nature of units of CAPREIT ("Trust Units") and of CAPREIT's subsidiary, CAPREIT Limited Partnership ("CAPLP 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 and risks related to acquisitions. 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 in Section VII of CAPREIT's MD&A for the year ended December 31, 2010 and other SEDAR filings made by CAPREIT. The information in this press release is based on information available to Management as of February 22, 2011. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.

SELECTED UNAUDITED FINANCIAL INFORMATION

Condensed Balance Sheets
As at	December 31, 2010		December 31, 2009
($ Thousands)
Income Properties	$	2,267,859	$	2,148,761
Total Assets		2,353,420		2,279,779
Mortgages Payable		1,633,861		1,512,715
Bank Indebtedness		39,358		146,891
Total Liabilities		1,757,572		1,822,595
Unitholders' Equity		595,848		457,184

Condensed Statements of Income and Comprehensive Income

		Three Months Ended						Year Ended
		December 31						December 31
($ Thousands, except per Unit amounts)		2010			2009			2010			2009
Net Operating Income		$	46,511		$	43,790		$	187,709			174,432
Less (Plus):
	Trust Expenses		4,132			3,664			14,012			16,834
	Mortgage Interest		19,665			19,020			77,211			74,772
	Interest on Bank Indebtedness		1,245			1,542			6,102			3,838
	Net Loss on Natural Gas Contracts		–			–			4,497			–
	Other Income		(466	)		(462	)		(1,854	)		(1,853	)
	Depreciation		21,513			19,747			82,765			76,252
	Amortization		1,435			910			4,123			3,503
	Severance and Other Employee Termination Costs		171			–			736			–
(Loss) Income from Continuing Operations Before Gains (Losses) and Income Taxes			(1,184	)		(631	)		117			1,086
Unrealized (Loss) Gain on Derivative Financial Instruments			(88	)		742			(174	)		742
Realized Gain on Derivative Financial Instruments			–			–			–			4,063
Recovery of Future Income Taxes			49,970			9,958			50,429			9,120
Income From Continuing Operations			48,698			10,069			50,372			15,011
Income From Discontinued Operations			1,177			123			12,949			705
Net Income		$	49,875		$	10,192		$	63,321		$	15,716
Other Comprehensive Income		$	6,469		$	6,143		$	11,269		$	16,046
Comprehensive Income		$	56,344		$	16,335		$	74,590		$	31,762
Basic Net Income Per Unit
	Continuing Operations	$	0.709		$	0.152		$	0.750		$	0.227
	Discontinued Operations	$	0.017		$	0.002		$	0.193		$	0.011
Basic Net Income Per Unit		$	0.726		$	0.154		$	0.943		$	0.238
Diluted Net Income Per Unit
	Continuing Operations	$	0.702		$	0.152		$	0.745		$	0.227
	Discontinued Operations	$	0.017		$	0.001		$	0.192		$	0.011
Diluted Net Income Per Unit		$	0.719		$	0.153		$	0.937		$	0.238
Weighted Average Number of Units (000s) – Basic			68,729			66,262			67,130			66,016
Weighted Average Number of Units (000s) – Diluted			69,380			66,416			67,570			66,122

Condensed Statements of Cash Flows

		Three Months Ended						Year Ended
		December 31,						December 31,
		2010			2009			2010			2009
($ Thousands)
Cash Provided By Operating Activities:
	Net Income	$	49,875		$	10,192		$	63,321		$	15,716
	Items in Net Income Not Affecting Cash:
	Changes in Non-cash Operating Assets and Liabilities		3,614			7,734			(5,850	)		(9,866	)
	Depreciation and Amortization		23,029			21,577			89,150			82,648
	Recovery of Future Income Taxes		(50,252	)		(10,174	)		(51,355	)		(9,568	)
	Other		(177	)		(448	)		(5,461	)		(2,882	)
Cash Provided By Operating Activities			26,089			28,881			89,805			76,048
Cash Used In Investing Activities			(19,008	)		(26,407	)		(104,373	)		(87,693	)
Cash (Used In) Provided By Financing Activities
	Mortgages and Other Liabilities		28,369			19,432			63,212			71,490
	Bank Indebtedness, Net		(141,036	)		(6,361	)		(107,533	)		25,862
	Settlement of Derivative Financial Instruments		–			–			–			(23,472	)
	Proceeds on Issuance of Units		125,642			58			126,513			229
	Distributions, Net of DRIP and Other		(15,706	)		(15,603	)		(63,274	)		(62,464	)
Cash (Used In) Provided By Financing Activities			(2,731	)		(2,474	)		18,918			11,645
Changes in Cash and Cash Equivalents During the Year			4,350			–			4,350			–
Cash and Cash Equivalents, Beginning of Year			–			–			–			–
Cash and Cash Equivalents, End of Year		$	4,350		$	–		$	4,350		$	–

Reconciliation of Net Income to FFO and to NFFO

		Three Months Ended						Year Ended
		December 31						December 31
		2010			2009			2010			2009
($ Thousands, except per Unit amounts)
Net Income		$	49,875		$	10,192		$	63,321		$	15,716
Adjustments:
	Recovery of Future Income Taxes		(50,252	)		(10,174	)		(51,355	)		(9,568	)
	Depreciation		21,527			20,380			83,999			78,648
	Amortization of Tenant Improvements		61			69			261			294
	Amortization of Intangible Assets		266			190			633			981
	Amortization of Above and Below Market Leases		(55	)		(18	)		(82	)		(120	)
	Gain on Sale of Assets		(831	)		–			(11,688	)		–
FFO		$	20,591		$	20,639		$	85,089		$	85,951
Adjustments:
	Severance and Other Employee Termination Costs		171			–			736			–
	Retiring Allowance (1)		–			–			–			1,642
	Loss on Natural Gas Contracts		–			–			4,497			–
	Unrealized Loss on Derivative Financial Instruments		88			(742	)		174			(742	)
	Realized Gain on Derivative Financial Instruments		–			–			–			(4,063	)
	Amortization of Loss on Derivative Financial Instruments included in Mortgage Interest		270			281			1,096			592
NFFO		$	21,120		$	20,178		$	91,592		$	83,380
	NFFO – Continuing Operations	$	21,042		$	19,628		$	89,997		$	80,707
	NFFO – Discontinued Operations	$	78		$	550		$	1,595		$	2,673
	NFFO per Unit – Basic	$	0.307		$	0.305		$	1.364		$	1.263
	NFFO per Unit – Diluted	$	0.304		$	0.304		$	1.356		$	1.261
	Distributions Declared (2)	$	19,448			18,547		$	75,526		$	73,805
	NFFO Payout Ratio (3)		92.1	%		91.9	%		82.5	%		88.5	%
	Net Distributions Paid (4)	$	15,916		$	15,768		$	63,517		$	62,962
	Excess NFFO over Net Distributions Paid	$	5,204		$	4,410		$	28,075		$	20,418
Effective NFFO Payout Ratio (5)			75.4	%		78.1	%		69.3	%		75.5	%

(1)	See Trust Expenses under the Net Income section in the MD&A for the year ended December 31, 2010. Amount includes $122 of non-cash compensation costs related to the accelerated vesting of LTIP and SELTIP Units previously awarded.
(2)	For a description of distributions declared, see the Non-GAAP Financial Measures section in the MD&A for the year ended December 31, 2010.
(3)	The payout ratio compares distributions declared to NFFO.
(4)	For a description of net distributions paid, see the Non-GAAP Financial Measures section in the MD&A for the year ended December 31, 2010.
(5)	The effective payout ratio compares net distributions paid to NFFO.

Reconciliation of NFFO to AFFO 

		Three Months Ended						Year Ended
		December 31						December 31
		2010			2009			2010			2009
($ Thousands, except per Unit amounts)
NFFO		$	21,120		$	20,178		$	91,592		$	83,380
Adjustments:
	Maintenance Capital Investment Provision (1)		(2,959	)		(2,977	)		(11,835	)		(11,907	)
	Non-Cash Compensation for Incentive Plans		604			339			1,696			1,709
AFFO		$	18,765		$	17,540		$	81,453		$	73,182
	AFFO per Unit – Basic	$	0.273		$	0.265		$	1.213		$	1.109
	AFFO per Unit – Diluted	$	0.270		$	0.264		$	1.205		$	1.107
	Distributions Declared (2)	$	19,448		$	18,547		$	75,526		$	73,805
	AFFO Payout Ratio (3)		103.6	%		105.7	%		92.7	%		100.9	%
	Net Distributions Paid (4)	$	15,916		$	15,768		$	63,517		$	62,962
	Excess AFFO over Net Distributions Paid	$	2,849		$	1,772		$	17,936		$	10,220
	Effective AFFO Payout Ratio (5)		84.8	%		89.9	%		78.0	%		86.0	%

(1)	An industry based estimate (see the Non-GAAP Measures section in the MD&A for the year ended December 31, 2010).
(2)	For a description of distributions declared, see the Non-GAAP Financial Measures section in the MD&A for the year ended December 31, 2010.
(3)	The payout ratio compares distributions declared to AFFO.
(4)	For a description of net distributions paid, see the Non-GAAP Financial Measures section in the MD&A for the year ended December 31, 2010.
(5)	The effective payout ratio compares net distributions paid to AFFO.