Canadian Apartment Properties Real Estate Investment Trust
TSX : CAR.UN

Canadian Apartment Properties Real Estate Investment Trust

May 12, 2009 17:42 ET

CAPREIT Announces First Quarter 2009 Results

TORONTO, ONTARIO--(Marketwire - May 12, 2009) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today its operating and financial results for the three months ended March 31, 2009.

Q1 2009 HIGHLIGHTS:

- Revenues up 5.2% on acquisitions and higher average monthly rents

- Net Operating Income increases 3.4%

- Same property NOI up for thirteenth consecutive quarter

- Distributable Income rises 2.5%

- Normalized Funds from Operations increase 1.9%

- DI per Unit and NFFO per Unit increase 1.6% and 0.8%, respectively

- $100 million of mortgage renewals completed or committed to date

- $71 million of new top-up financings completed or committed to date

- Improved debt and interest coverage ratios

For the three months ended March 31, 2009, operating revenues increased 5.2% to $82.2 million compared to $78.1 million last year. The growth in revenues is primarily due to acquisitions completed over the last year and increased average monthly rents across CAPREIT's portfolio compared to the prior year.

Overall average monthly rents increased to $926 at March 31, 2009 compared to $913 last year. Average monthly rents for the residential suites owned prior to March 31, 2008 also increased to $940 at March 31, 2009 from $929 at March 31, 2008. The increases were due to successful sales and marketing strategies and, despite the recent economic slowdown, continued strength in the rental residential sector in the majority of CAPREIT's regional markets. Increases of $11 or 1.2% were achieved on suite turnovers, and $23 or 2.3% on lease renewals. Overall portfolio occupancy at March 31, 2009 was 97.3% compared to 98.3% in the prior year period, with the residential suite portfolio at 97.1% compared to 98.2% in the prior year. The modest decrease in occupancies in the residential suite portfolio was due primarily to a continuing focus on improved tenant quality combined with weaker overall market conditions in Alberta, London and Whitby, Ontario and certain short-term operational issues in Victoria, British Columbia. Average monthly rents for the land lease portfolio rose in the first quarter of 2009 to $598 compared to $592 the prior year, while occupancy increased slightly to 99.8% from 99.6% last year.

For the three months ended March 31, 2009, operating expenses increased to 51.7% as a percentage of operating revenues compared to 50.8% in the same period in 2008. The increase in the first quarter of 2009 was primarily due to increased repairs and maintenance costs relating to a new garbage levy introduced in the Greater Toronto Area in late 2008 and implementation costs for waste recycling programs. These increases were partially offset by lower realty taxes and utility costs, as a percentage of revenues, compared to the prior year's first quarter.

With the increase in operating costs in the period, net operating income ("NOI") for the quarter ended March 31, 2009 was $39.7 million or 48.3% of revenues compared to $38.4 million or 49.2% of revenues in the same period last year.

CAPREIT generated its thirteenth consecutive quarter of stabilized portfolio growth for the three months ended March 31, 2009 as NOI for properties owned at December 31, 2007 increased 0.1%.

"Our properties continue to perform well in the majority of our markets," commented Thomas Schwartz, President and CEO. "We are also making solid progress enhancing the performance at those properties where we encountered operational issues during the quarter, and expect to maintain our track record of strong overall average occupancy in the range of 98% once again this year."

For the three months ended March 31, 2009, Distributable Income ("DI") increased to $17.0 million or $0.259 per Unit compared to $16.6 million or $0.255 per Unit for the same period last year. The 1.6% increase in DI per Unit in the first quarter of 2009 was despite the 0.8% increase in the weighted average number of Units outstanding compared with the prior year period. For the first quarter of 2009, CAPREIT's DI payout ratio improved to 107.6% compared to 109.0% in the first quarter of 2008. The first quarter of the year is traditionally negatively impacted by higher energy costs incurred during the winter months. The effective DI payout ratio, which compares net distributions paid to DI, was 94.6% in the first quarter of 2009 compared to 88.1% for the same period last year. During the first quarter of 2009, participation in CAPREIT's DRIP declined, and management believes it will stabilize in the range of 9% going forward.

Normalized Funds From Operations ("NFFO"), which excludes the effect of the decline in the fair value of hedging instruments, which were originally put in place for interest rate protection, rose 1.9% to $16.5 million or $0.250 per Unit compared to $16.2 million or $0.248 per Unit in last year's first quarter. The NFFO payout ratio for the first three months of 2009 was 111.3% compared to 112.1% in the first quarter of 2008. The effective NFFO payout ratio, which compares net distributions paid to NFFO, was 97.8% in the first three months of 2009 compared to 90.5% for the same period last year. Management is confident that net NFFO retained on an annual basis will be more than sufficient to fund its ongoing maintenance capital expenditures. Funds From Operations ("FFO"), including the unrealized loss on derivative financial instruments, were $15.6 million or $0.238 per Unit in the first quarter of 2009 compared to $16.2 million or $0.248 per Unit for the same period in 2008.

Adjusted Funds From Operations ("AFFO") which deducts from NFFO the provision for maintenance capital expenditures increased 1.6% in the first quarter of 2009 to $13.5 million or $0.205 per Unit from $13.3 million or $0.204 per Unit for the same period in 2008. The AFFO payout ratio, was 119.4% compared to 110.2% in the same prior year period.

For the three months ended March 31, 2009, CAPREIT incurred a net loss of $4.5 million or $(0.068) per Unit compared to net income of $14.4 million or $0.220 per Unit for the same period last year. The net loss for the first quarter of 2009 includes $0.8 million in unrealized losses on derivative financial instruments. The net income in the first quarter of 2008 includes income from discontinued operations of $17.2 million related to non-core assets sold in the period.

The ratio of total debt to gross book value remained stable at 61.84% at March 31, 2009 compared to 61.82% at the year end. The weighted average interest rate of CAPREIT's total mortgage portfolio was 5.27% at March 31, 2009, while the weighted average term to maturity was 4.9 years. Approximately 95.1% of CAPREIT's mortgages are CMHC-insured. CAPREIT's interest coverage and debt coverage ratios at March 31, 2009 improved to 2.07 and 1.29 times, respectively from 1.98 and 1.28 times, respectively for the same period last year. Availability under CAPREIT's Acquisition and Operating Facilities was $86.7 million at March 31, 2009.

"Our mortgage renewals program for the year is continuing as planned, and we expect to complete the renewals of the remaining $175.8 million of maturing mortgages at significantly lower interest rates," Mr. Schwartz added. "In addition, with $71 million of completed or committed additional financings, we are well on our way to meet our goal of raising an additional $100 million in CMHC-insured top-up financing to implement our capital investment programs."

Capital expenditures were $9.2 million in the first quarter of 2009 compared to $6.5 million for the same period last year. The increase was in line with CAPREIT's stated objective to accelerate investment in its property portfolio during 2009, including energy savings initiatives and building improvements to capitalize on the availability and competitive pricing from construction trades.

"Looking ahead, we are confident that fundamentals in the majority of our markets will remain favourable. We also expect to benefit from improved performance in regions where we experienced operating issues in the quarter, as well as significant savings in interest costs as we renew our maturing mortgages at lower rates," Mr. Schwartz concluded. "Most importantly, we continue to generate more than sufficient cash flow to maintain our current level of monthly cash distributions while investing in our proven value-enhancing strategies and capital investment programs."



Financial Highlights:

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Period Ended March 31, Three Months
($ Thousands, except per Unit amounts) 2009 2008
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Operating Revenues $ 82,198 $ 78,104
Net Operating Income (NOI) $ 39,728 $ 38,421
NOI Margin 48.3% 49.2%
Loss from Continuing Operations before Other
Costs and Income Taxes $ (2,851) $ (1,749)
Reorganization Costs - $ (1,205)
Unrealized Loss on Derivative Financial
Instruments $ (845) -
(Provision for) Recovery of Future Income
Taxes $ (803) $ 103
Income from Discontinued Operations - $ 17,214
Net (Loss) Income $ (4,499) $ 14,363
Net (Loss) Income per Unit - Basic $ (0.068) $ 0.220
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Distributable Income (DI)(1)(2) $ 17,032 $ 16,617
Distributable Income per Unit - Basic(1) $ 0.259 $ 0.255
Distributions Declared per Unit $ 0.270 $ 0.270
Payout Ratio(1) 107.6% 109.0%
Effective Payout Ratio(1)(3) 94.6% 88.1%
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Funds from Operations (FFO)(1)(4) $ 15,623 $ 16,160
Funds from Operation per Unit - Basic(1) $ 0.238 $ 0.248
Normalized Funds from Operations (NFFO)(1) $ 16,468 $ 16,160
Normalized Funds from Operations per Unit -
Basic(1) $ 0.250 $ 0.248
NFFO Payout Ratio 111.3% 112.1%
Effective NFFO Payout Ratio(3) 97.8% 90.5%
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Adjusted Funds from Operations (AFFO)(1) $ 13,491 $ 13,280
Adjusted Funds from Operations per Unit -
Basic(1) $ 0.205 $ 0.204
AFFO Payout Ratio 119.4% 110.2%
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Number of Suites & Sites 28,902 27,624
Income Properties $ 2,184,358 $2,192,945(5)
Weighted Average Number of Units (000's) -
Basic 65,770 65,243
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(1) 2008 excludes gain on sale of assets of $17.1 million or $0.262 per
Unit.
(2) DI is defined in CAP REIT's Declaration of Trust dated July 11, 2008.
(3) Excludes from distributions cash reinvested by Unitholders through the
DRIP.
(4) FFO is calculated in accordance with the recommendations of the Real
Property Association of Canada ("REALpac").
(5) As at December 31, 2008.

NOI, DI, FFO, NFFO and AFFO are not defined by generally accepted accounting
principles ("GAAP"), do not have standard meanings and may not be comparable
with other industries or companies.


CAPREIT's Consolidated Financial Statements for the first quarter ended March 31, 2009, including Management's Discussion and Analysis, can be found on the investor relations page at www.capreit.net.

As one of Canada's largest residential landlords, CAPREIT (TSX:CAR.UN) is a growth-oriented investment trust owning interests in 27,614 residential suites and two land lease communities comprising 1,288 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 web site at www.capreit.net.

All statements in this press release that do not relate to historical facts constitute forward-looking statements. These statements represent CAPREIT's intentions, plans, expectations and beliefs and are subject to certain risks and uncertainties that could result in actual results differing materially from these forward-looking statements. These statements are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. Although the forward-looking statements contained herein are based upon assumptions that management believes are reasonable, there can be no assurance that actual results will be consistent with these forward-looking statements. 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 are more fully described in regulatory filings, including CAPREIT's Annual Information Form, which can be obtained on SEDAR at www.sedar.com. Investors should not place undue reliance on any such forward-looking statements. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.

Contact Information

  • CAPREIT
    Mr. Michael Stein
    Chairman
    (416) 861-5788
    or
    CAPREIT
    Mr. Thomas Schwartz
    President & CEO
    (416) 861-9404
    or
    CAPREIT
    Mr. Yazdi Bharucha
    CFO & Secretary
    (416) 861-5771