TORONTO, ONTARIO--(Marketwire - Nov. 7, 2011) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today strong operating and financial results for the three and nine months ended September 30, 2011.
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30 | September 30 | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Operating Revenues (000s) | $ | 92,824 | $ | 85,056 | $ | 267,391 | $ | 253,329 | ||||
| Net Operating Income ("NOI") (000s) (1) | $ | 55,039 | $ | 49,907 | $ | 153,594 | $ | 143,749 | ||||
| NOI Margin (1) | 59.3 | % | 58.7 | % | 57.4 | % | 56.7 | % | ||||
| Normalized Funds From Operations ("NFFO") (000s) (1) | $ | 29,252 | $ | 25,228 | $ | 78,652 | $ | 70,775 | ||||
| NFFO Per Unit – Basic (1) | $ | 0.388 | $ | 0.378 | $ | 1.047 | $ | 1.063 | ||||
| Weighted Average Number of Units - Basic (000s) | 75,397 | 66,762 | 75,130 | 66,591 | ||||||||
| NFFO Payout Ratio (1) | 72.0 | % | 74.2 | % | 80.0 | % | 79.2 | % | ||||
| (1) | 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-IFRS Financial Measures" and the reconciliations provided in this press release. |
- Q3 2011 operating revenues up 9.1% on higher average monthly rents, increased occupancies, and contributions from acquisitions
- Average monthly rents rise 1.4% at September 30, 2011 compared to prior year
- Occupancy strengthened to 98.8% at September 30, 2011 from 98.7% in prior year
- Q3 2011 NOI up 10.3% with NOI margin increasing to 59.3%
- Organic growth continues with Q3 2011 stabilized NOI up 3.7%, the 23rd consecutive quarter of stable or improved year-over-year same property NOI
- Q3 2011 and Q3 YTD 2011 NFFO up 16.0% and 11.1%, respectively
- Q3 2011 NFFO per Unit increased by $ 0.01 compared to last year despite the 12.9% increase in the weighted average number of Units outstanding
- Closed $173 million of mortgage refinancings year to date with an average term to maturity of 7.3 years, and a weighted average interest rate of 3.57%, well below the rate on the maturing mortgages
- During the third quarter of 2011, CAPREIT entered into new natural gas physical delivery contracts fixing a portion of its variable rate natural gas commitments from November 1, 2011 to October 31, 2012 and from November 1, 2011 to March 31, 2012
- Completed the acquisition of an 811-suite portfolio in Laval, Québec and a 229-suite property in Scarborough, Ontario, for total acquisition costs of $ 74.2 million and $ 17.3 million, respectively.
- On October 31, 2011, completed an offering of 7,475,000 Units at $20.30 per Unit (the "2011 Equity Offering") including an over-allotment of 975,000 units for aggregate gross proceeds of $151.7 million. Net proceeds of $144.8 million were used to repay borrowings under the Acquisition and Operating Facility.
"Our strong organic growth continued in the third quarter of 2011, generating solid increases in all of our key operational and performance metrics compared to last year," commented Thomas Schwartz, President and CEO. "Looking ahead, we anticipate this strong performance will continue as we invest the funds raised in our recently-completed equity offering in our proven value-enhancing initiatives."
| PORTFOLIO OPERATING RESULTS | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30 | September 30 | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Overall Portfolio Occupancy (1) | 98.8 | % | 98.7 | % | ||||||||
| Overall Portfolio Average Monthly Rents (1),(2) | $ | 991 | $ | 977 | ||||||||
| Operating Revenues (000s) | $ | 92,824 | $ | 85,056 | $ | 267,391 | $ | 253,329 | ||||
| Net Rental Revenue Run-Rate (000s) (1),(3),(4) | $ | 358,557 | $ | 324,051 | ||||||||
| Operating Expenses (000s) | $ | 37,785 | $ | 35,149 | $ | 113,797 | $ | 109,580 | ||||
| NOI (000s) (4) | $ | 55,039 | $ | 49,907 | $ | 153,594 | $ | 143,749 | ||||
| NOI Margin (4) | 59.3 | % | 58.7 | % | 57.4 | % | 56.7 | % | ||||
| Number of Suites and Sites Acquired | 1,040 | 307 | 2,467 | 682 | ||||||||
| Number of Suites Disposed | – | 716 | 143 | 1,054 | ||||||||
| (1) | As at September 30. |
| (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 three and nine months ended September 30, 2011. |
| (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-IFRS Financial Measures" and the reconciliations provided in this press release. |
Operating Revenues
For the three and nine months ended September 30, 2011, total operating revenues increased by 9.1% and 5.6%, respectively, compared to the same periods last year primarily due to increased average monthly rents, higher occupancies in most regions and the contribution from acquisitions, partially offset by property dispositions. For the three and nine months ended September 30, 2011, ancillary revenues, including parking, laundry and antenna income, rose by 12.7% and 16.3%, respectively, as Management continued its focus on maximizing the revenue potential of its property portfolio.
CAPREIT's annualized net rental revenue run-rate based on the average monthly rents in place on CAPREIT's share of residential suites and sites as at September 30, 2011 increased to $358.6 million, up 10.6% from $324.1 million as of September 30, 2010 due primarily to acquisitions completed within the past twelve months. Net rental revenue for the twelve months ended September 30, 2011 was $334.8 million (2010 – $321.1 million).
Average monthly rents increased in all sectors and most geographic regions of the portfolio resulting in a 1.4% increase in overall average monthly rents as at September 30, 2011 to $991, from $977 as at September 30, 2010. Overall occupancy at September 30, 2011 improved to 98.8% from 98.7% in the prior year. The increases in average monthly rents and occupancy were due to ongoing successful sales and marketing strategies and continued strength in the residential rental sector in the majority of CAPREIT's regional markets.
Suite turnovers in the residential suite portfolio (excluding co-ownerships) during the three months ended September 30, 2011 resulted in average monthly rent increasing by approximately $16 or 1.6% per suite compared to an increase of approximately $10 or 1.0% in the same period last year. For the first nine months of 2011, suite turnovers resulted in average monthly rent increasing by approximately $12 or 1.2% compared to an increase of $6 or 0.6% in the same period last year. Although the change in average monthly rents from suite turnovers improved from the same periods last year, it is partially offset by rent discounting in the Alberta market by approximately $3 or 0.3% per suite for the first nine months of 2011. Improving industry and economic conditions in Alberta resulted in suite turnovers average monthly rent increasing by approximately $9 or 0.8% per suite in the third quarter of 2011. Excluding the impact of the Alberta portfolio, residential suite turnovers would have instead resulted in average monthly rent increases of $13 or 1.3% for the nine months ended September 30, 2011.
Pursuant to Management's focus on increasing overall portfolio rents, for the three months ended September 30, 2011 average monthly rents on lease renewals increased by approximately $15 or 1.5% compared to $22 or 2.3% for the same period last year. For the nine months ended September 30, 2011, average monthly rents increased by $14 or 1.4% compared to $22 or 2.3% for the same period last year. The lower rate of growth in average monthly rents on lease renewals during the current year periods are due primarily to the Ontario guideline increase of 0.7% for 2011, which compares unfavourably to the permitted Ontario guideline increase of 2.1% in 2010. In July 2011, the Ontario Ministry of Municipal Affairs and Housing announced the rent control guideline for 2012 will be 3.1%. Management is actively pursuing applications for above guideline increases to raise average monthly rents on lease renewals.
Operating Expenses
Operating expenses as a percentage of revenues decreased for the three and nine months ended September 30, 2011 to 40.7% and 42.6 % from 41.3% and 43.3% for the same periods last year.
The decrease is primarily due to: (i) the diversification of the portfolio into regions with lower taxation rates, (ii) successful energy-saving initiatives, and a natural gas supply strategy implemented last year due to reduce utility costs, and (iii) enhanced procurement strategies and lower insurance costs.
Net Operating Income
In the third quarter of 2011, NOI improved by $5.1 million or 10.3%, and the NOI margin increased to 59.3% from 58.7% last year. For the first nine months of 2011, overall NOI increased by $9.8 million or 6.8%, and the NOI margin improved to 57.4% from 56.7% for the same period last year. The significant improvements in NOI contribution in specific regions of the portfolio were primarily the result of acquisitions and dispositions completed in the last 12 month period.
For the three and nine months ended September 30, 2011, operating revenues for stabilized suites and sites increased 2.6% and 3.1%, respectively, while operating expenses rose by a smaller 0.9% and 2.5%, respectively, compared to the same periods last year. As a result, for the three and nine months ended September 30 2011, stabilized NOI increased by a significant 3.7% and 3.6%, respectively.
| NON-IFRS FINANCIAL MEASURES | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| NFFO (000s) | $ | 29,252 | 25,228 | $ | 78,652 | $ | 70,775 | |||||
| NFFO Per Unit – Basic | $ | 0.388 | $ | 0.378 | $ | 1.047 | $ | 1.063 | ||||
| Cash Distributions Per Unit | $ | 0.270 | $ | 0.270 | $ | 0.810 | $ | 0.810 | ||||
| NFFO Payout Ratio | 72.0 | % | 74.2 | % | 80.0 | % | 79.2 | % | ||||
| NFFO Effective Payout Ratio | 56.6 | % | 62.0 | % | 62.4 | % | 67.3 | % | ||||
Normalized Funds From Operations
NFFO is not a financial measure determined by IFRS, however, it is used by CAPREIT to assess overall operating performance. NFFO, which excludes from Funds From Operations ("FFO") the effect of the change in fair value of hedging instruments originally put in place for interest rate protection, losses incurred on the amendment of natural gas physical delivery contracts and the effect of certain non-recurring items, increased by 16.0% and 11.1%, respectively, for the three and nine months ended September 30, 2011, compared to the same periods last year. The increase was primarily due to the contribution from acquisitions, higher average monthly rents and higher occupancy levels.
For the nine months ended September 30, 2011, basic NFFO per Unit decreased by 1.5% compared to the same period last year due primarily to the approximately 13% increase in the weighted average number of Units outstanding arising from the equity offering completed in December 2010. However, for the three months ended September 30, 2011, basic NFFO per Unit increased by 2.6% compared to the same periods last year resulting from higher NFFO, partially offset by increase in the weighted average number of Units outstanding. Management expects per Unit FFO and NFFO and related payout ratios will be impacted by the October 31, 2011 Equity Offering in the short term.
Comparing distributions declared to NFFO, the NFFO payout ratios for the three months ended September 30, 2011 improved to 72.0% compared to 74.2% for the same period last year. For the nine months ended September 30, 2011, the NFFO payout ratio was 80.0% compared to 79.2% for the same period last year. The effective NFFO payout ratio, which compares NFFO to net distributions paid, improved for the three and nine months ended September 30, 2011, to 56.6% and 62.4%, respectively, from 62.0% and 67.3% for the same periods last year primarily due to higher NFFO during the current year periods and higher participation in distributions reinvested. Management believes NFFO will be sufficient to fund CAPREIT's distributions on an annualized basis.
| LIQUIDITY AND LEVERAGE | ||||
| As at September 30, | 2011 | 2010 | ||
| Total Debt to Gross Book Value | 55.35 | % | 56.64 | % |
| Total Debt to Gross Historical Cost (1) | 62.22 | % | 63.30 | % |
| Total Debt to Total Capitalization | 54.48 | % | 59.82 | % |
| Debt Service Coverage Ratio (times) (2) | 1.36 | – | ||
| Interest Coverage Ratio (times) (2) | 2.17 | – | ||
| Weighted Average Mortgage Interest Rate (%) (3) | 4.63 | 4.91 | ||
| Weighted Average Mortgage Term to Maturity (years) | 5.5 | 4.6 | ||
| (1) | Based on historical cost of investment properties. |
| (2) | Based on the trailing four quarters ended September 30, 2011. Prior year comparative ratios have not be restated under IFRS and are therefore not presented. Ratios calculated under Canadian GAAP are available in the MD&A issued for periods prior to 2011. |
| (3) | Effective weighted average interest rate includes deferred financing costs and fair value adjustments but excludes CMHC premiums. Including the amortization of the realized component of the loss on settlement of $9.9 million included in Accumulated Other Comprehensive Loss ("AOCL"), the effective portfolio weighted average interest rate at September 30, 2011 would be 4.71% (September 30, 2010 - 5.00%). |
Financial Strength
Management believes CAPREIT's strong balance sheet and liquidity position will enable it to continue to take advantage of acquisition and property capital investment opportunities.
CAPREIT is achieving its financing goals as demonstrated by the following key indicators:
- The ratio of total debt to gross book value as at September 30, 2011 improved to 55.35% compared to 56.64% last year;
- Debt service and interest coverage ratios for the rolling four quarters ended September 30, 2011 remained strong at 1.36 times and 2.17 times, respectively, despite the impact of top up mortgage financings;
- At September 30, 2011, 96.4% (September 30, 2010 – 95.3%) of CAPREIT's mortgage portfolio was insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's manufactured home communities land lease sites;
- The effective portfolio weighted average interest rate on mortgages has steadily declined from 4.91% as at September 30, 2010, to 4.63% as at September 30, 2011, which will result in significant interest rate savings in future years;
- Total financings of $173 million, including $ 141.0 million for renewals of existing mortgages and $32 million for additional top up financing have been closed as of September 30, 2011 with an average term to maturity of 7.3 years, and at a weighted average rate of 3.57%, significantly below the weighted average interest rate of 5.08% on the maturing mortgages. Management expects to raise between $275 million and $300 million in total mortgage renewals and refinancings in 2011;
- In the second quarter of 2011, CAPREIT entered into a forward interest rate hedge on approximately $312 million of mortgages matured or maturing between September 2011 and June 2013, which are expected to be refinanced on ten-year terms and to bear interest rates between 3.00% and 3.62%, before credit spread;
- Effective July 1, 2011, CAPREIT successfully renewed and amended its credit facilities aggregating to $280 million, comprising a revolving three-year acquisition and operating facility of $270 million and a land lease facility of $10 million, which was renewed for a one-year term maturing on June 30, 2012. The available borrowing capacity under the Acquisition and Operating Facility as at September 30, 2011 was $44.0 million in addition to the Land Lease Facility capacity of $9.4 million.
Property Capital Investment Plan
During the first nine months of 2011, CAPREIT made property capital investments of $74.8 million as compared to $48.9 million for the same period last year.
Property capital investments were higher in 2011 compared to the prior year primarily due to the acceleration of building improvement programs and higher investments in suite improvements, common areas and equipment, which generally tend to increase NOI more quickly. The acceleration is in line with the revised capital investment plan announced in the fourth quarter of 2010. CAPREIT continues to invest in energy-saving initiatives, including boilers, energy-efficient lighting systems, and water-saving programs, which permit CAPREIT to mitigate potentially higher increases in utility and R&M costs and significantly improve overall portfolio NOI.
Acquisitions
During the third quarter of 2011, CAPREIT completed the acquisition of an 811-suite portfolio in Laval, Québec. The total acquisition costs of $74.2 million were funded through the assumption of existing CMHC-insured mortgages totalling $47.0 million, at a weighted average stated interest rate of 4.80% and a weighted average term to maturity of 12.5 years, with the balance in cash from the Acquisition and Operating Facility.
In addition, CAPREIT acquired a 229-suite property in Scarborough, Ontario. The total acquisition costs of $17.3 million was funded through new CMHC-insured 10.5 year mortgage financing of approximately $12.9 million at an interest rate of 3.88%, with the balance in cash from the Acquisition and Operating Facility.
Subsequent Event
On October 31, 2011, under the 2011 Equity Offering CAPREIT issued 6,500,000 Units at $20.30 per Unit for aggregate gross proceeds of $131.9 million. Also on October 31, 2011, CAPREIT issued 975,000 Units at $20.30 under an over-allotment option granted in connection with the 2011 Equity Offering, for aggregate gross proceeds of $19.8 million. The net proceeds of both issuances after Underwriters' fees and issue costs were $144.8 million and were used to reduce the REIT's Acquisition and Operating Facility.
Additional Information
More detailed information and analysis is included in CAPREIT's unaudited consolidated interim financial statements and MD&A for the three and nine months ended September 30, 2011, 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 Scott Cryer, Chief Financial Officer, will be held Tuesday, November 8, 2011 at 10.00 am EST. 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 5704780#. The Instant Replay will be available until midnight, November 15, 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
CAPREIT owns interests in multi-unit residential rental properties, including apartments, townhomes and manufactured home communities located in and near major urban centres across Canada. At September 30, 2011, CAPREIT had owning interests in 30,821 residential units, comprised of 29,496 residential suites and two Ontario manufactured home communities ("MHC") comprising 1,325 land lease sites. 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-IFRS Financial Measures
CAPREIT prepares and releases unaudited quarterly 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 non-IFRS financial measures, including Net Rental Revenue Run-Rate, NOI, FFO, NFFO and applicable per Unit amounts and payout ratios. These non-IFRS measures are further defined and discussed in the MD&A released on November 7, 2011, which should be read in conjunction with this press release. Since Net Rental Revenue Run-Rate, NOI, FFO and NFFO are not determined by IFRS, they may not be comparable to similar measures reported by other issuers. CAPREIT has presented such non-IFRS measures as Management believes these non-IFRS 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-IFRS measures and Adjusted Funds From Operations ("AFFO") is included in this press release. These non-IFRS measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with IFRS 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 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 the medium term; 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 more 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 and hedging, 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, legal and regulatory concerns, the nature of units of CAPREIT ("Trust Units") and 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 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 section of the MD&A released on November 7, 2011. The information in this press release is based on information available to Management as of November 7, 2011. 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
| SELECTED UNAUDITED FINANCIAL INFORMATION | ||||
| Condensed Balance Sheets | ||||
| As at | September 30, 2011 | December 31, 2010 | ||
| ($ Thousands) | ||||
| Investment Properties | $ | 3,492,228 | $ | 3,106,548 |
| Total Assets | 3,550,990 | 3,161,997 | ||
| Mortgages Payable | 1,772,620 | 1,603,027 | ||
| Bank Indebtedness | 198,832 | 39,358 | ||
| Total Liabilities | 2,164,435 | 1,806,552 | ||
| Unitholders' Equity | 1,386,555 | 1,355,445 | ||
| Condensed Income Statements | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| ($ Thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||
| Net Operating Income | 55,039 | 49,907 | 153,594 | 143,749 | ||||||||
| Trust Expenses | (2,851 | ) | (2,902 | ) | (10,150 | ) | (8,769 | ) | ||||
| Unrealized Gain (Loss) on Remeasurement of Investment Properties |
1,726 | 3,460 | 27,057 | (11,704 | ) | |||||||
| Realized Loss on Disposition of Investment Properties |
– | (1,932 | ) | (95 | ) | (4,421 | ) | |||||
| Remeasurement of Exchangeable Units | (724 | ) | (831 | ) | (1,629 | ) | (1,209 | ) | ||||
| Unit-based Compensation Expenses | (6,433 | ) | (4,297 | ) | (12,373 | ) | (6,907 | ) | ||||
| Interest on Mortgages Payable | (21,528 | ) | (20,200 | ) | (61,530 | ) | (59,565 | ) | ||||
| Interest on Bank Indebtedness | (1,674 | ) | (1,766 | ) | (3,743 | ) | (5,053 | ) | ||||
| Interest on Exchangeable Units | (111 | ) | (111 | ) | (333 | ) | (333 | ) | ||||
| Other Income | 465 | 463 | 1,395 | 1,388 | ||||||||
| Net Loss on Natural Gas Contracts | – | – | – | (4,497 | ) | |||||||
| Amortization | (636 | ) | (558 | ) | (1,938 | ) | (1,867 | ) | ||||
| Severance and Other Employee Costs | – | (33 | ) | (1,352 | ) | (565 | ) | |||||
| Unrealized (Loss) Gain on Derivative Financial Instruments |
(293 | ) | (36 | ) | 913 | (86 | ) | |||||
| (Recovery of) Provision for Deferred Income Taxes | – | (3,579 | ) | – | 11,681 | |||||||
| Net Income | 22,980 | 17,585 | 89,816 | 51,842 | ||||||||
| Other Comprehensive (Loss) Income | $ | (17,191 | ) | $ | 4,810 | $ | (13,882 | ) | $ | 4,649 | ||
| Comprehensive Income | $ | 5,789 | $ | 22,395 | $ | 75,934 | $ | 56,491 | ||||
| Condensed Statements of Cash Flows | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||
| ($ Thousands) | |||||||||||||||
| Cash Provided By Operating Activities: | |||||||||||||||
| Net Income | $ | 22,980 | $ | 17,585 | $ | 89,816 | $ | 51,842 | |||||||
| Items in Net Income Not Affecting Cash: | |||||||||||||||
| Changes in Non-cash Operating Assets and | |||||||||||||||
| Liabilities | 6,401 | 4,726 | (268 | ) | (6,256 | ) | |||||||||
| Realized and Unrealized (Gain) Loss on | |||||||||||||||
| Remeasurements | (709 | ) | (645 | ) | (26,256 | ) | 17,397 | ||||||||
| Unit-based Compensation Expenses | 6,433 | 4,297 | 12,373 | 6,907 | |||||||||||
| Recovery of (Provision for) Deferred Income Taxes | – | 3,579 | – | (11,681 | ) | ||||||||||
| Items Related to Financing and Investing Activities | 21,127 | 20,742 | 60,486 | 61,004 | |||||||||||
| Other | 869 | 981 | 2,627 | 7,288 | |||||||||||
| Cash Provided By Operating Activities | 57,101 | 51,265 | 138,778 | 126,501 | |||||||||||
| Cash Used In Investing Activities | |||||||||||||||
| Acquisitions | (40,642 | ) | (46,448 | ) | (237,554 | ) | (93,982 | ) | |||||||
| Capital Investments | (35,966 | ) | (22,311 | ) | (80,712 | ) | (53,877 | ) | |||||||
| Dispositions | – | 49,367 | 3,609 | 62,783 | |||||||||||
| Other | 181 | 346 | 1,051 | 1,099 | |||||||||||
| Cash Used In Investing Activities | (76,427 | ) | (19,046 | ) | (313,606 | ) | (83,977 | ) | |||||||
| Cash Provided By (Used In) Financing Activities | |||||||||||||||
| Mortgages, Net of Financing Costs | 2,888 | 1,317 | 118,940 | 32,720 | |||||||||||
| Bank Indebtedness, Net | 53,822 | 2,607 | 159,474 | 33,503 | |||||||||||
| Interest Paid | (21,592 | ) | (21,205 | ) | (61,881 | ) | (62,392 | ) | |||||||
| Proceeds on Issuance of Units | 476 | 471 | 2,610 | 871 | |||||||||||
| Distributions, Net of DRIP and Other | (16,268 | ) | (15,409 | ) | (48,665 | ) | (47,226 | ) | |||||||
| Cash Provided By (Used In) Financing Activities | 19,326 | (32,219 | ) | 170,478 | (42,524 | ) | |||||||||
| Changes in Cash and Cash Equivalents During the Period | – | – | (4,350 | ) | – | ||||||||||
| Cash and Cash Equivalents, Beginning of Period | – | – | 4,350 | – | |||||||||||
| Cash and Cash Equivalents, End of Period | $ | – | $ | – | $ | – | $ | – | |||||||
| Reconciliation of Net Income to FFO and to NFFO | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||
| Net Income | $ | 22,980 | $ | 17,585 | $ | 89,816 | $ | 51,842 | |||||
| Adjustments: | |||||||||||||
| Unrealized (Gain) Loss on Remeasurement of Investment Properties | (1,726 | ) | (3,460 | ) | (27,057 | ) | 11,704 | ||||||
| Realized Loss on Sale of Investment Property | – | 1,932 | 95 | 4,421 | |||||||||
| Remeasurement of Exchangeable Units | 724 | 831 | 1,629 | 1,209 | |||||||||
| Remeasurement of Unit-Based Compensation Liabilities | 6,225 | 3,995 | 11,466 | 6,051 | |||||||||
| Interest on Exchangeable Units | 111 | 111 | 333 | 333 | |||||||||
| Recovery of (Provision for) Deferred Income Taxes | – | 3,579 | – | (11,681 | ) | ||||||||
| Amortization of Property, Plant and Equipment | 375 | 312 | 1,130 | 922 | |||||||||
| FFO | $ | 28,689 | $ | 24,885 | $ | 77,412 | $ | 64,801 | |||||
| Adjustments: | |||||||||||||
| Unrealized Loss (Gain) on Derivative Financial Instruments | 293 | 36 | (913 | ) | 86 | ||||||||
| Amortization of Loss on Derivative Financial Instruments Included in Mortgage Interest | 270 | 274 | 801 | 826 | |||||||||
| Net Loss on Natural Gas Contracts | – | – | – | 4,497 | |||||||||
| Severance and Other Employee Costs | – | 33 | 1,352 | 565 | |||||||||
| NFFO | $ | 29,252 | $ | 25,228 | $ | 78,652 | $ | 70,775 | |||||
| NFFO per Unit – Basic | $ | 0.388 | $ | 0.378 | $ | 1.047 | $ | 1.063 | |||||
| NFFO per Unit – Diluted | $ | 0.383 | $ | 0.375 | $ | 1.035 | $ | 1.057 | |||||
| Total Distributions Declared (1) | $ | 21,052 | 18,723 | $ | 62,915 | $ | 56,078 | ||||||
| NFFO Payout Ratio (2) | 72.0 | % | 74.2 | % | 80.0 | % | 79.2 | % | |||||
| Net Distributions Paid (1) | $ | 16,543 | $ | 15,643 | $ | 49,072 | $ | 47,601 | |||||
| Excess NFFO Over Net Distributions Paid | $ | 12,709 | $ | 9,585 | $ | 29,580 | $ | 23,174 | |||||
| Effective NFFO Payout Ratio (3) | 56.6 | % | 62.0 | % | 62.4 | % | 67.3 | % | |||||
| (1) | For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and nine months ended September 30, 2011. |
| (2) | The payout ratio compares distributions declared to NFFO. |
| (3) | The effective payout ratio compares net distributions paid to NFFO. |
| Reconciliation of NFFO to AFFO | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30 | September 30 | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||
| NFFO | $ | 29,252 | $ | 25,228 | $ | 78,652 | $ | 70,775 | |||||
| Adjustments: | |||||||||||||
| Provision for Maintenance Property Capital Investments (1) | (3,048 | ) | (2,969 | ) | (9,145 | ) | (8,907 | ) | |||||
| Amortization of Fair Value on Grant Date of Unit-Based Compensation | 200 | 294 | 885 | 837 | |||||||||
| AFFO | $ | 26,404 | $ | 22,553 | $ | 70,392 | $ | 62,705 | |||||
| AFFO per Unit – Basic | $ | 0.350 | $ | 0.338 | $ | 0.937 | $ | 0.942 | |||||
| AFFO per Unit – Diluted | $ | 0.346 | $ | 0.335 | $ | 0.926 | $ | 0.936 | |||||
| Distributions Declared (2) | $ | 21,052 | $ | 18,723 | $ | 62,915 | $ | 56,078 | |||||
| AFFO Payout Ratio (3) | 79.7 | % | 83.0 | % | 89.4 | % | 89.4 | % | |||||
| Net Distributions Paid (2) | $ | 16,543 | $ | 15,643 | $ | 49,072 | $ | 47,601 | |||||
| Excess AFFO over Net Distributions Paid | $ | 9,861 | $ | 6,910 | $ | 21,320 | $ | 15,104 | |||||
| Effective AFFO Payout Ratio (4) | 62.7 | % | 69.4 | % | 69.7 | % | 75.9 | % | |||||
| (1) | An industry based estimate, see the Non-IFRS Measures section in the MD&A for the three and nine months ended September 30, 2011. |
| (2) | For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and nine months ended September 30, 2011. |
| (3) | The payout ratio compares distributions declared to AFFO. |
| (4) | The effective payout ratio compares net distributions paid to AFFO. |
Contact Information:
Mr. Michael Stein
Chairman
(416) 861-5788
CAPREIT
Mr. Thomas Schwartz
President & CEO
(416) 861-9404
CAPREIT
Mr. Scott Cryer
Chief Financial Officer
(416) 861-5771