TORONTO, ONTARIO--(Marketwired - Feb. 16, 2016) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today record portfolio growth and strong operating and financial results for the year ended December 31, 2015.
| Three Months Ended | Year Ended | |||||||
| December 31 | December 31 | |||||||
| 2015 | 2014 | 2015 | 2014 | |||||
| Operating Revenues (000s) | $ | 142,776 | $ | 128,111 | $ | 533,798 | $ | 506,411 |
| Net Operating Income ("NOI") (000s) (1) | $ | 86,427 | $ | 76,806 | $ | 324,614 | $ | 303,885 |
| NOI Margin (1) | 60.5% | 60.0% | 60.8% | 60.0% | ||||
| Normalized Funds From Operations ("NFFO") (000s) (1) | $ | 52,813 | $ | 46,620 | $ | 200,027 | $ | 183,353 |
| NFFO Per Unit - Basic (1) | $ | 0.417 | $ | 0.423 | $ | 1.692 | $ | 1.675 |
| Weighted Average Number of Units - Basic (000s) | 126,515 | 110,193 | 118,220 | 109,456 | ||||
| NFFO Payout Ratio (1) | 74.7% | 71.5% | 73.1% | 71.5% | ||||
| (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. |
2015 Highlights
- Acquired 5,362 residential suites and sites (excluding the IRES transaction) in key geographic markets for total acquisition costs of $823.9 million, further strengthening and diversifying the portfolio
- Subsequent to year-end, CAPREIT purchased 670 residential suites in London, Ontario for $52.0 million (excluding transaction costs)
- Portfolio growth and strong operating performance generates 5.4% increase in revenues
- Average monthly rents for same residential properties up 1.7% as at December 31, 2015 compared to last year
- Portfolio occupancy remains strong at 97.5% at year-end
- NOI rises 6.8% to $324.6 million with strong NOI margin increasing to 60.8% for the year ended December 31, 2015
- NFFO up 9.1% to $200.0 million for the year ended December 31, 2015
- Continued accretive growth as NFFO per Unit for the year ended December 31, 2015 up 1.0% despite reduced leverage and 8% increase in the weighted average number of Units outstanding due to two successful bought-deal equity offerings during the year
- Continuing strong organic growth as same property NOI up 3.3% for the year ended December 31, 2015 due to proven successful property management programs
- NFFO payout ratio remains conservative at 73.1% for the year ended December 31, 2015
- Closed mortgage refinancings for $667.0 million to December 31, 2015, including $143.3 million for renewals of existing mortgages and $523.7 million for additional top up financing and new acquisition financing with a weighted average term to maturity of 8.8 years, and a weighted average interest rate of 2.44%.
"2015 was another year of record portfolio growth as we further strengthened and diversified our asset base and increased our critical mass and operating synergies in rental markets from coast-to-coast. Our proven and successful property management programs also generated very strong operating performance, driven by industry-leading organic growth in all our key geographic markets," commented Thomas Schwartz, President and CEO. "Since our Initial Public Offering in 1997 we have demonstrated our ability to generate solid accretive growth for our Unitholders through both good and bad economic times, and we look for this track record of strong sustainable and accretive growth to continue in the years ahead."
| Three Months Ended | Year Ended | |||||||
| December 31 | December 31 | |||||||
| 2015 | 2014 | 2015 | 2014 | |||||
| Overall Portfolio Occupancy (1) | 97.5% | 97.9% | ||||||
| Overall Portfolio Average Monthly Rents (1),(2) | $ | 963 | $ | 964 | ||||
| Operating Revenues (000s) | $ | 142,776 | $ | 128,111 | $ | 533,798 | $ | 506,411 |
| Annualized Net Rental Revenue Run-Rate (000s) (1),(3),(4) | $ | 544,727 | $ | 486,503 | ||||
| Operating Expenses (000s) | $ | 56,349 | $ | 51,305 | $ | 209,184 | $ | 202,526 |
| NOI (000s) (4) | $ | 86,427 | $ | 76,806 | $ | 324,614 | $ | 303,885 |
| NOI Margin (4) | 60.5% | 60.0% | 60.8% | 60.0% | ||||
| Number of Suites and Sites Acquired | 173 | 133 | 5,632 | 474 | ||||
| Number of Suites Disposed | - | - | 530 | 338 | ||||
| (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, 2015. |
| (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 months and year ended December 31, 2015, total operating revenues increased by 11.4% and 5.4%, respectively, compared to the same periods last year primarily due to the contribution from acquisitions, higher same property average monthly rents, and continuing strong occupancies. For the three months and year ended December 31, 2015, ancillary revenues, including parking, laundry and antenna income, rose by 5.3% and 7%, respectively, compared to the same periods last year, due to contributions from acquisitions and Management's continued focus on maximizing the revenue potential of its property portfolio.
CAPREIT's annualized net rental revenue run-rate as at December 31, 2015 increased to $544.7 million, up 12.0% from $486.5 million as at December 31, 2014 primarily due to acquisitions completed within the last twelve months and strong increases in average monthly rents on properties owned prior to December 31, 2014. Net rental revenue run-rate net of dispositions for the twelve months ended December 31, 2015 was $503.7 million (2014 - $478.1 million).
Portfolio Average Monthly Rents ("AMR")
| As at | Properties Owned Prior to | |||||||||||
| December 31, | Total Portfolio | December 31, 2014 | ||||||||||
| 2015 | 2014 | 2015 | 2014 (1) | |||||||||
| AMR | Occ. % | AMR | Occ. % | AMR | Occ. % | AMR | Occ. % | |||||
| Average Residential Suites | $ | 1,059 | 97.4 | $ | 1,076 | 97.9 | $ | 1,094 | 97.3 | $ | 1,076 | 97.9 |
| Average MHC Land Lease Sites | $ | 366 | 98.2 | $ | 356 | 97.5 | $ | 365 | 98.2 | $ | 356 | 97.5 |
| Overall Portfolio Average | $ | 963 | 97.5 | $ | 964 | 97.9 | $ | 980 | 97.4 | $ | 964 | 97.8 |
| (1) | Prior year's comparable AMR and occupancy have been restated for properties disposed of since December 31, 2014. |
Average monthly rents and occupancy for residential suites decreased slightly as at December 31, 2015 due to recent acquisitions in lower rent demographic sectors offset by ongoing successful sales and marketing strategies and continued strength in the residential rental sector in the majority of CAPREIT's regional markets. For the Manufactured Housing Community ("MHC") land lease portfolio, average monthly rents increased to $366 as at December 31, 2015, compared to $356 as at December 31, 2014. Occupancy for the MHC portfolio rose to 98.2% at December 31, 2015 from 97.5% at the same time last year.
Average monthly rents for residential suites owned prior to December 31, 2014 also increased as at December 31, 2015 to $1,094 from $1,076 as at December 31, 2014, an increase of 1.7% from last year with occupancies remaining strong at 97.3%.
Suite Turnovers and Lease Renewals
| For the Three Months Ended December 31, | 2015 | 2014 | ||||
| Change in AMR | % Turnovers | Change in AMR | % Turnovers | |||
| $ | % | & Renewals (1) | $ | % | & Renewals (1) | |
| Suite Turnovers | 28.3 | 2.6 | 5.5 | 32.5 | 3.0 | 6.2 |
| Lease Renewals | 20.5 | 1.9 | 16.3 | 17.5 | 1.6 | 16.6 |
| Weighted Average of Turnovers and Renewals | 22.5 | 2.1 | 21.5 | 2.0 | ||
| For the Year Ended December 31, | 2015 | 2014 | ||||
| Change in AMR | % Turnovers | Change in AMR | % Turnovers | |||
| $ | % | & Renewals (1) | $ | % | & Renewals (1) | |
| Suite Turnovers | 20.7 | 1.9 | 24.8 | 32.6 | 3.0 | 28.1 |
| Lease Renewals | 21.6 | 2.0 | 71.6 | 17.4 | 1.6 | 79.7 |
| Weighted Average of Turnovers and Renewals | 21.4 | 1.9 | 21.4 | 2.0 | ||
| (1) | Percentage of suites turned over or renewed during the period based on the total number of residential suites (excluding co-ownerships) held at the end of the period. |
The higher rate of growth in average monthly rents on lease renewals during 2015 compared to the prior year is primarily due to the higher mandated guideline increases for 2015 (Ontario - 1.6%, British Columbia - 2.5%), compared to the lower guideline increases in 2014 (Ontario - 0.8%, British Columbia - 2.2%) and by increases due to above guideline increases ("AGI") achieved in Ontario in 2015. Management continues to pursue AGI applications where it believes increases are supported by market conditions above the annual guideline to raise average monthly rents on lease renewals. For 2016, the permitted guideline increase in Ontario and British Columbia have been increased to 2.0% and 2.9%, respectively.
| Operating Expenses | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31 | December 31 | ||||||||||||
| ($ Thousands) | 2015 | %(1) | 2014 | %(1) | 2015 | %(1) | 2014 | %(1) | |||||
| Operating Expenses | |||||||||||||
| Realty Taxes | $ | 15,536 | 10.9 | $ | 14,324 | 11.2 | $ | 59,337 | 11.1 | $ | 56,591 | 11.2 | |
| Utilities | 14,815 | 10.4 | 13,512 | 10.5 | 54,241 | 10.2 | 52,210 | 10.3 | |||||
| Other (2) | 25,998 | 18.2 | 23,469 | 18.3 | 95,606 | 17.9 | 93,725 | 18.5 | |||||
| Total Operating Expenses | $ | 56,349 | 39.5 | $ | 51,305 | 40.0 | $ | 209,184 | 39.2 | $ | 202,526 | 40.0 | |
| (1) | As a percentage of total operating revenues. |
| (2) | Comprises R&M, wages, general and administrative, insurance, advertising, and legal costs. |
Operating Expenses
Overall operating expenses as a percentage of operating revenues improved to 39.5% and 39.2%, respectively, for the three months and year ended December 31, 2015 compared to 40.0% and 40.0%, respectively, for the same periods last year, due to lower realty taxes, repairs and maintenance ("R&M") and wages costs as a percentage of operating revenues.
Net Operating Income
For the three months ended December 31, 2015, NOI increased by $9.6 million or 12.5%, and the NOI margin strengthened to 60.5% from 60.0% for last year. For the year ended December 31, 2015, NOI increased by $20.7 million or 6.8%, and the NOI margin rose to 60.8% compared to 60.0% last year. The increase in NOI margin for the three months and year ended December 31, 2015 was primarily the result of higher operating revenues and lower realty taxes, R&M, and wages cost as a percentage of operating revenues.
For the three months and year ended December 31, 2015, operating revenues for stabilized suites and sites increased 1.3% and 1.8% respectively, while operating expenses decreased 0.3% and 0.3%, respectively, compared to the same periods last year. As a result, for the three months and year ended December 31, 2015, stabilized NOI increased by a strong 2.3% and 3.3%, respectively, compared to the same periods last year, showing the positive effects of CAPREIT's geographic diversification across Canada and proven property management programs.
NON-IFRS FINANCIAL MEASURES
| Three Months Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2015 | 2014 | 2015 | 2014 | |||||
| NFFO (000s) | $ | 52,813 | 46,620 | $ | 200,027 | $ | 183,353 | |
| NFFO Per Unit - Basic | $ | 0.417 | $ | 0.423 | $ | 1.692 | $ | 1.675 |
| Cash Distributions Per Unit | $ | 0.305 | $ | 0.295 | $ | 1.207 | $ | 1.168 |
| NFFO Payout Ratio | 74.7% | 71.5% | 73.1% | 71.5% | ||||
| NFFO Effective Payout Ratio | 51.4% | 46.0% | 49.4% | 47.5% | ||||
For the year ended December 31, 2015, basic NFFO per Unit increased by 1.0% compared to the same period last year despite decreased leverage and the approximate 8% increase in the weighted average number of Units outstanding due to the two successful equity offerings completed in March 2015 and October 2015. For the three months ended December 31, 2015, basic NFFO per Unit decreased slightly by 1.4% compared to the same period last year due to the approximate 15% increase in the weighted average number of Units outstanding.
LIQUIDITY AND LEVERAGE
| As at December 31, | 2015 | 2014 |
| Total Debt to Gross Book Value | 45.71% | 46.49% |
| Total Debt to Gross Historical Cost (1) | 55.41% | 56.73% |
| Total Debt to Total Capitalization | 48.46% | 49.35% |
| Debt Service Coverage Ratio (times) (2) | 1.63 | 1.61 |
| Interest Coverage Ratio (times) (2) | 2.96 | 2.82 |
| Weighted Average Mortgage Interest Rate (3) | 3.39% | 3.66% |
| Weighted Average Mortgage Term to Maturity (years) | 6.3 | 6.3 |
| (1) | Based on historical cost of investment properties. |
| (2) | Based on the trailing four quarters ended December 31, 2015. |
| (3) | Weighted average mortgage interest rate includes deferred financing costs and fair value adjustments on an effective interest basis. |
| Including the amortization of the realized component of the loss on interest rate hedge settlement of $32.5 million included in Accumulated Other Comprehensive Loss (''AOCL''), the effective portfolio weighted average interest rate at December 31, 2015 would be 3.52% (December 31, 2014 - 3.81%). |
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 over the long term.
CAPREIT is achieving its financing goals as demonstrated by the following key indicators:
- Total debt to gross book value ratio strengthened to 45.71% as at December 31, 2015 compared to 46.49% for the same period last year, both well below our target debt ratio;
- Debt service and interest coverage ratios for the year ended December 31, 2015 improved to 1.63 times and 2.96 times, respectively, compared to 1.61 times and 2.82 times last year;
- As at December 31, 2015, 96.5% (December 31, 2014 - 95.7%) of CAPREIT's mortgage portfolio was insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's MHC land lease sites and Euro LIBOR borrowings, resulting in improved spreads on mortgages and lower overall interest costs than conventional mortgages.
- The effective portfolio weighted average interest rate on mortgages has steadily declined to 3.39% as at December 31, 2015 from 3.66% as at December 31, 2014, resulting in significant potential interest rate savings in future years;
- Management expects to raise between $275 million and $325 million in total mortgage renewals and refinancings in 2016;
- The weighted average term to maturity of the mortgage portfolio remained stable at 6.30 years as at December 31, 2015 compared to 6.3 years at December 31, 2014;
- As at December 31, 2015, CAPREIT has investment properties with a fair value of $289.1 million not encumbered by mortgages and secure only the Acquisition and Operating Facility. CAPREIT intends to maintain unencumbered investment properties with an aggregate fair value in the range of $150 and $180 million over the long term.
Property Capital Investments
During the year ended December 31, 2015, CAPREIT made property capital investments (excluding disposed properties, head office assets, tenant improvements and signage) of $161.7 million as compared to $143.6 million in last year. For the full 2016 year, CAPREIT expects to complete property capital investments of approximately $170 million to $180 million, including approximately $87 million targeted at acquisitions completed since January 1, 2011, and approximately $20 million in high-efficiency boilers and other energy-saving initiatives.
Property capital investments include suite improvements, common areas and equipment, which generally tend to increase NOI more quickly. CAPREIT also 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.
Subsequent Event
On January 20, 2016, CAPREIT completed the acquisition of a portfolio of six apartment and townhome properties well located in London, Ontario totaling 670 rental suites. The purchase price (excluding transaction costs) of approximately $52.0 million was funded with cash from CAPREIT's Acquisition and Operating credit 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, 2015, 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.
Conference Call
A conference call hosted by Thomas Schwartz, President and CEO and the CAPREIT Management Team, will be held Wednesday, February 17, 2016 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 1628046#. The Instant Replay will be available until midnight, February 24, 2016. 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.
About CAPREIT
CAPREIT owns interests in multi-unit residential rental properties, including apartments, townhomes and manufactured home communities primarily located in and near major urban centres across Canada. As at December 31, 2015, CAPREIT had owning interests in 46,790 residential units, comprised of 40,501 residential suites and 30 manufactured home communities ("MHC") comprising 6,289 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.
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 February 16, 2016, 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 including 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 and Irish 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, 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: reporting investment properties at fair value, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, foreign operation and currency risks, taxation, harmonization of federal goods and services tax and provincial sales tax, government regulations, controls over financial accounting, 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 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 February 16, 2016. The information in this press release is based on information available to Management as of February 16, 2016. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.
SELECTED FINANCIAL INFORMATION
| Condensed Balance Sheets | ||||
| As at | December 31, 2015 |
December 31, 2014 |
||
| ($ Thousands) | ||||
| Investment Properties | $ | 6,863,140 | $ | 5,749,640 |
| Total Assets | 7,102,828 | 5,926,161 | ||
| Mortgages Payable | 3,097,773 | 2,658,454 | ||
| Bank Indebtedness | 168,211 | 113,167 | ||
| Total Liabilities | 3,442,875 | 2,943,056 | ||
| Unitholders' Equity | 3,659,953 | 2,983,105 | ||
| Condensed Income Statements | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| ($ Thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||
| Net Operating Income | 86,427 | 76,806 | 324,614 | 303,885 | |||||||||
| Trust Expenses | (5,369 | ) | (4,973 | ) | (22,707 | ) | (20,944 | ) | |||||
| Unrealized Gain on Remeasurement of Investment Properties | 81,030 | 42,023 | 173,242 | 150,897 | |||||||||
| Realized Loss on Disposition of Investment Properties | - | - | (639 | ) | - | ||||||||
| Remeasurement of Exchangeable Units | (4 | ) | (249 | ) | (276 | ) | (626 | ) | |||||
| Unit-based Compensation Expenses | 2,075 | (5,618 | ) | (13,417 | ) | (16,478 | ) | ||||||
| Interest on Mortgages Payable and Other Financing Costs | (27,026 | ) | (25,333 | ) | (103,795 | ) | (99,931 | ) | |||||
| Interest on Bank Indebtedness | (1,991 | ) | (976 | ) | (3,988 | ) | (5,326 | ) | |||||
| Interest on Exchangeable Units | (49 | ) | (49 | ) | (194 | ) | (188 | ) | |||||
| Other Income | 4,122 | 1,355 | 12,340 | 6,942 | |||||||||
| Amortization | (763 | ) | (612 | ) | (2,799 | ) | (2,400 | ) | |||||
| Severance and Other Employee Costs | (395 | ) | - | (5,237 | ) | - | |||||||
| Unrealized and Realized (Loss) Gain on Derivative Financial Instruments | (155 | ) | (47 | ) | 282 | (2,810 | ) | ||||||
| Dilution Loss on Equity Accounted Investments | - | - | (4,346 | ) | - | ||||||||
| (Loss) Gain on Foreign Currency Translation | (527 | ) | 432 | (7,447 | ) | 4,954 | |||||||
| Net Income | 137,375 | 82,759 | 345,633 | 317,975 | |||||||||
| Other Comprehensive Income (Loss) | $ | 2,724 | $ | (1,846 | ) | $ | 12,754 | $ | (6,090 | ) | |||
| Comprehensive Income | $ | 140,099 | $ | 80,913 | $ | 358,387 | $ | 311,885 | |||||
| Condensed Statements of Cash Flows | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| ($ Thousands) | |||||||||||||
| Cash Provided By Operating Activities: | |||||||||||||
| Net Income | $ | 137,375 | $ | 82,759 | $ | 345,633 | $ | 317,975 | |||||
| Items in Net Income Not Affecting Cash: | |||||||||||||
| Changes in Non-cash Operating Assets and | |||||||||||||
| Liabilities | (9,403 | ) | (1,161 | ) | (12,921 | ) | (19 | ) | |||||
| Realized and Unrealized Gain on | |||||||||||||
| Remeasurements | (80,871 | ) | (41,727 | ) | (172,609 | ) | (147,461 | ) | |||||
| Gain on Sale of Investments | - | - | - | (717 | ) | ||||||||
| Unit-based Compensation Expenses | (2,075 | ) | 5,618 | 13,417 | 16,478 | ||||||||
| Items Related to Financing and Investing | |||||||||||||
| Activities | 26,007 | 23,891 | 97,667 | 94,338 | |||||||||
| Other | 3,484 | 1,636 | 21,637 | 3,388 | |||||||||
| Cash Provided By Operating Activities | 74,517 | 71,016 | 292,824 | 283,982 | |||||||||
| Cash Used In Investing Activities | |||||||||||||
| Acquisitions | (26,442 | ) | (9,303 | ) | (933,386 | ) | (34,964 | ) | |||||
| Capital Investments | (58,652 | ) | (46,826 | ) | (174,027 | ) | (164,898 | ) | |||||
| Acquisition of investments | - | - | (32,305 | ) | - | ||||||||
| Disposition of Investments | - | - | - | 7,599 | |||||||||
| Dispositions | - | - | 24,004 | - | |||||||||
| Other | (32 | ) | 914 | 1,018 | 3,102 | ||||||||
| Cash Used In Investing Activities | (85,126 | ) | (55,215 | ) | (1,114,696 | ) | (189,161 | ) | |||||
| Cash Provided (Used) By Financing Activities | |||||||||||||
| Mortgages, Net of Financing Costs | 325,844 | (3,002 | ) | 563,280 | 165,904 | ||||||||
| Bank Indebtedness | (502,611 | ) | 32,830 | 54,644 | (76,712 | ) | |||||||
| Interest Paid | (26,334 | ) | (24,828 | ) | (100,467 | ) | (98,124 | ) | |||||
| Proceeds on Issuance of Units | 239,973 | 336 | 401,154 | 1,031 | |||||||||
| Distributions, Net of DRIP and Other | (26,263 | ) | (21,137 | ) | (96,739 | ) | (86,920 | ) | |||||
| Cash Provided (Used) By Financing Activities | 10,609 | (15,801 | ) | 821,872 | (94,821 | ) | |||||||
| Changes in Cash and Cash Equivalents During the Period | - | - | - | - | |||||||||
| Cash and Cash Equivalents, Beginning of Period | - | - | - | - | |||||||||
| Cash and Cash Equivalents, End of Period | $ | - | $ | - | $ | - | $ | - | |||||
| SELECTED NON-IFRS FINANCIAL MEASURES | |||||||||||||
| Reconciliation of Net Income to FFO and to NFFO | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||
| Net (Loss) Income | $ | 137,375 | $ | 82,759 | $ | 345,633 | $ | 317,975 | |||||
| Adjustments: | |||||||||||||
| Unrealized Gain on Remeasurement of Investment Properties | (81,030 | ) | (42,023 | ) | (173,242 | ) | (150,897 | ) | |||||
| Realized Loss on Disposition of Investment Properties | - | - | 639 | - | |||||||||
| Remeasurement of Exchangeable Units | 4 | 249 | 276 | 626 | |||||||||
| Remeasurement of Unit-based Compensation Liabilities | (4,309 | ) | 4,650 | 7,511 | 12,131 | ||||||||
| Interest on Exchangeable Units | 49 | 49 | 194 | 188 | |||||||||
| Corporate taxes expense | 31 | - | 59 | 1,405 | |||||||||
| Loss (Gain) on Foreign Currency Translation | 527 | (432 | ) | 7,447 | (4,954 | ) | |||||||
| FFO Adjustment for Income from Equity Accounted Investments | (1,925 | ) | (137 | ) | (4,024 | ) | (1,710 | ) | |||||
| Unrealized and Realized (Gain) Loss on Derivative Financial Instruments | 155 | 47 | (282 | ) | 2,810 | ||||||||
| Dilution Loss on Equity Accounted Investments | - | - | 4,346 | - | |||||||||
| Amortization of Property, Plant and Equipment | 763 | 612 | 2,799 | 2,400 | |||||||||
| FFO | $ | 51,640 | $ | 45,774 | $ | 191,356 | $ | 179,974 | |||||
| Adjustments: | |||||||||||||
| Amortization of Loss from AOCL to Interest and Other Financing Costs | 778 | 846 | 3,311 | 3,333 | |||||||||
| Net Mortgage Prepayment Cost | - | - | 123 | 763 | |||||||||
| Realized Gain on Sale of Investments | - | - | - | (717 | ) | ||||||||
| Severance and Other Employee Costs | 395 | - | 5,237 | - | |||||||||
| NFFO | $ | 52,813 | $ | 46,620 | $ | 200,027 | $ | 183,353 | |||||
| NFFO per Unit - Basic | $ | 0.417 | $ | 0.423 | $ | 1.692 | $ | 1.675 | |||||
| NFFO per Unit - Diluted | $ | 0.412 | $ | 0.416 | $ | 1.668 | $ | 1.651 | |||||
| Total Distributions Declared (1) | $ | 39,469 | 33,338 | $ | 146,198 | $ | 131,044 | ||||||
| NFFO Payout Ratio (2) | 74.7% | 71.5% | 73.1% | 71.5% | |||||||||
| Net Distributions Paid (1) | $ | 27,133 | $ | 21,464 | $ | 98,795 | $ | 87,051 | |||||
| Excess NFFO Over Net Distributions Paid | $ | 25,680 | $ | 25,156 | $ | 101,232 | $ | 96,302 | |||||
| Effective NFFO Payout Ratio (3) | 51.4% | 46.0% | 49.4% | 47.5% | |||||||||
| (1) | For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the year ended December 31, 2015. |
| (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 | Year Ended | ||||||||||||
| December 31 | December 31 | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||
| NFFO | $ | 52,813 | $ | 46,620 | $ | 200,027 | $ | 183,353 | |||||
| Adjustments: | |||||||||||||
| Provision for Maintenance Property Capital Investments (1) | (4,417 | ) | (3,889 | ) | (16,343 | ) | (15,466 | ) | |||||
| Amortization of Fair Value on Grant Date of Unit-based Compensation | 2,234 | 968 | 5,906 | 4,347 | |||||||||
| AFFO | $ | 50,630 | $ | 43,699 | $ | 189,590 | $ | 172,234 | |||||
| AFFO per Unit - Basic | $ | 0.400 | $ | 0.397 | $ | 1.604 | $ | 1.574 | |||||
| AFFO per Unit - Diluted | $ | 0.395 | $ | 0.390 | $ | 1.581 | $ | 1.551 | |||||
| Distributions Declared (2) | $ | 39,469 | $ | 33,338 | $ | 146,198 | $ | 131,044 | |||||
| AFFO Payout Ratio (3) | 78.0% | 76.3% | 77.1% | 76.1% | |||||||||
| Net Distributions Paid (2) | $ | 27,133 | $ | 21,464 | $ | 98,795 | $ | 87,051 | |||||
| Excess AFFO over Net Distributions Paid | $ | 23,497 | $ | 22,235 | $ | 90,795 | $ | 85,183 | |||||
| Effective AFFO Payout Ratio (4) | 53.6% | 49.1% | 52.1% | 50.5% | |||||||||
| (1) | An industry based estimate (see the Non-IFRS Measures section in the MD&A for the year ended December 31, 2015). |
| (2) | For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the year ended December 31, 2015. |
| (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