CAPREIT Reports Continued Growth and Strong Operating Performance in Second Quarter of 2017
Celebrating Twenty Years of Growth & Performance in 2017
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 08/14/17 -- Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX: CAR.UN) announced today strong operating and financial results for the three and six months ended June 30, 2017.
Our twenty-year track record of strong growth and solid operating performance continued in the second quarter of 2017. Accretive property acquisitions, combined with industry-leading organic growth, continue to generate significant benefits for our Unitholders. Looking ahead, supported by our strong and flexible balance sheet and financial position, we are confident 2017 will be another record year for CAPREIT.
Operating Revenues
For the three and six months ended June 30, 2017, total operating revenues increased by 7.1% and 7.0%, 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 and six months ended June 30, 2017, ancillary revenues, including parking, laundry and antenna income, increased by 5.1% and 6.0% for the three and six months ended June 30, 2017, respectively, compared to the same periods last year. For the stabilized properties, operating revenues for the three and six months ended June 30, 2017 increased by 3.3% and 3.1% respectively.
CAPREIT''s annualized net rental revenue run-rate as at June 30, 2017 improved to $599.1 million, up 4.0% from $576.2 million at the same period last year, primarily due to acquisitions completed over the last twelve months and strong increases in average monthly rents on properties owned prior to June 30, 2016. Net rental revenue run-rate net of dispositions for the twelve months ended June 30, 2017 was $583.6 million (June 30, 2016 - $536.9 million).
Overall average monthly rents for the stabilized residential suite portfolio (properties owned prior to June 30, 2016) increased 3.1% to $1,114 as at June 30, 2017 from $1,081 at June 30, 2016. The increases were due primarily to a combination of ongoing successful sales and marketing strategies, above guideline rent increases, and continued strength in the residential rental sector in the majority of CAPREIT''s markets. Occupancy for the stabilized residential suite portfolio increased to 98.6% as at June 30, 2017 compared to 98.2% for the same period last year.
For the MHC land lease portfolio, average monthly rents increased to $383 as at June 30, 2017, compared to $372 as at June 30, 2016 while occupancy strengthened to 98.4% compared to 98.3% for the same period last year. Management believes MHC land lease sites provide secure and stable cash flows due to long-term tenancies, high occupancies, steady increases in average monthly rents, and significantly lower capital and maintenance costs.
Suite turnovers in the residential suite portfolio (excluding co-ownerships and the Netherland properties) during the three months ended June 30, 2017 resulted in average monthly rent increasing by approximately $66 or 5.9% per suite compared to an increase of approximately $7 or 0.6% for the same period last year. For the six months ended June 30, 2017, suite turnovers resulted in average monthly rent increasing by approximately $57 or 5.1% compared to a decrease of approximately $7 or 0.7% in the same period last year due primarily to continuing strong rental markets in British Columbia and Ontario partially offset by strategically reduced rents in Alberta and Saskatchewan aimed at increasing occupancy and reducing turnover in these regions.
Pursuant to Management''s focus on increasing overall portfolio rents average monthly rents on lease renewals for the three months ended June 30, 2017 increased by approximately $22 or 1.9% per suite compared to an increase of approximately $21 or 1.9% for the same period last year. For the six months ended June 30, 2017, average monthly rents on lease renewals increased by approximately $21 or 1.9%, compared to an increase of approximately $22 or 2.0% for the same period last year. The rate of growth in average monthly rents on lease renewals has been impacted by the strategically reduced rents in Alberta and Saskatchewan, changes to the mandated rental guideline increases in Ontario and British Columbia for 2017 (Ontario - 1.5%, British Columbia - 3.7%) compared to 2016 (Ontario - 2.0%, British Columbia - 2.9%), and by increases due to above guideline increases ("AGI") achieved in Ontario. Management continues to pursue applications in Ontario for AGIs where it believes increases above the annual guideline are supported by market conditions to raise average monthly rents on lease renewals. For 2018, the permitted guideline increase in Ontario has been set at 1.8%.
Operating Expenses
Overall operating expenses as a percentage of operating revenues improved to 37.2% and 39.1%, respectively, for the three and six months ended June 30, 2017 compared to 37.9% and 40.0%, respectively, for the same periods last year, due primarily to lower realty taxes due to tax rebates of $1.4 million in 2017, and utilities as a percentage of total operating revenues.
NOI
For the three months ended June 30, 2017, NOI increased by $7.6 million or 8.4% and the NOI margin increased to 62.8% compared to 62.1% for the same period last year. For the six months ended June 30, 2017, NOI increased by $14.8 million or 8.5%, and the NOI margin increased to 60.9% compared to 60.0% last year, showing the positive effects of CAPREIT''s geographic diversification and its proven property management programs.
For the six months ended June 30, 2017, basic NFFO per Unit increased by 3.9% compared to the same period last year despite the approximate 5.6% increase in the weighted average number of Units outstanding due to the successful equity offering in August 2016. For the three months ended June 30, 2017, basic NFFO per Unit increased by 3.1% compared to the same period last year despite the approximate 5.6% increase in the weighted average number of Units outstanding.
LIQUIDITY AND LEVERAGE
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:
Property Capital Investments
During the six months ended June 30, 2017, CAPREIT made property capital investments (excluding head office assets) of $73.7 million compared to $71.3 million in the same period last year. For the full 2017 year, CAPREIT expects to complete property capital investments (excluding development and intensification) of approximately $170 million to $180 million, including approximately $60 million targeted at acquisitions completed since January 1, 2013, and approximately $25 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 Events
On July 12, 2017, CAPREIT completed the previously announced acquisition of 19 properties totaling 849 residential suites located in eight cities and towns in the Netherlands. The purchase price of EUR170.4 million will be financed with new mortgage financing of approximately EUR100.8 million with a weighted average term of approximately 7.5 years bearing a weighted average interest rate of approximately 1.9% and the remaining with a euro-based loan under CAPREIT''s Acquisition and Operating credit facility.
On August 8, 2017, CAPREIT completed the acquisition of a 56 unit rental apartment located in Enschede, Netherlands at a purchase price of EUR8.4 million financed with CAPREIT''s Acquisition and Operating credit facility.
With the completion of these transactions, CAPREIT''s Netherlands portfolio has grown to 1,473 residential suites well-located in major city centres in the country.
Additional Information
More detailed information and analysis is included in CAPREIT''s unaudited condensed consolidated interim financial statements and MD&A for the three and six months ended June 30, 2017, which have been filed on SEDAR and can be viewed at under CAPREIT''s profile or on CAPREIT''s website on the investor relations page at or .
Conference Call
A conference call hosted by the CAPREIT Management Team, will be held Tuesday, August 15, 2017 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 or , 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 3399651#. The Instant Replay will be available until midnight, August 22, 2017. The call and accompanying slides will also be archived on the CAPREIT website at or . For more information about CAPREIT, its business and its investment highlights, please refer to our website at or .
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 June 30, 2017, CAPREIT had owning interests in 49,075 residential units, comprised of 42,623 residential suites and 31 manufactured home communities ("MHC") comprising 6,452 land lease sites. For more information about CAPREIT, its business and its investment highlights, please refer to our website at or and our public disclosure which can be found under our profile at .
Non-IFRS Financial Measures
CAPREIT prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with IFRS, CAPREIT also discloses and discusses certain financial measures not recognized under IFRS and that do not have standard meanings prescribed by IFRS. These include stabilized net rental income ("Stabilized NOI"), Net Rental Revenue Run-Rate, Funds From Operations ("FFO"), Normalized Funds From Operations ("NFFO"), and Adjusted Cash Flow from Operations ("ACFO"), and applicable per Unit amounts and payout ratios (collectively, the "Non-IFRS Measures"). These Non-IFRS Measures are further defined and discussed in the MD&A released on August 14, 2017, which should be read in conjunction with this press release. Since Stabilized NOI, Net Rental Revenue Run-Rate, FFO, NFFO, and ACFO are not measures recognized under IFRS, they may not be comparable to similarly titled measures reported by other issuers. CAPREIT has presented the Non-IFRS measures because Management believes these Non-IFRS measures are relevant measures of the ability of CAPREIT to earn revenue and to evaluate CAPREIT''s performance. A reconciliation of Net Income and these Non-IFRS measures is included in this press release. The Non-IFRS measures should not be construed as alternatives to net income (loss) or cash flows from operating activities determined in accordance with IFRS as indicators of CAPREIT''s performance or sustainability of our distributions.
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, Irish and Dutch economies will generally experience growth, however, may be adversely impacted by the global economy; that inflation will remain low; that interest rates will remain low in the medium term; that Canada Mortgage and Housing Corporation ("CMHC") mortgage insurance will continue to be available and that a sufficient number of lenders will participate in the CMHC-insured mortgage program to ensure competitive rates; that the Canadian capital markets will continue to provide CAPREIT with access to equity and/or debt at reasonable rates; that vacancy rates for CAPREIT properties will be consistent with historical norms; that rental rates will grow at levels similar to the rate of inflation on renewal; that rental rates on turnovers will remain stable; that CAPREIT will effectively manage price pressures relating to its energy usage; and, with respect to CAPREIT''s financial outlook regarding capital investments, assumptions respecting projected costs of construction and materials, availability of trades, the cost and availability of financing, CAPREIT''s investment priorities, the properties in which investments will be made, the composition of the property portfolio and the projected return on investment in respect of specific capital investments.
Although the forward-looking statements contained in this press release are based on assumptions, Management believes they are reasonable as of the date hereof; however there can be no assurance actual results will be consistent with these forward-looking statements, and they may prove to be incorrect. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond CAPREIT''s control, that may cause CAPREIT or the industry''s actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, risks related to: reporting investment properties at fair value, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, foreign operation and currency risks, taxation, harmonization of federal goods and services tax and provincial sales tax, land transfer tax, government regulations, controls over financial accounting, legal and regulatory concerns, the nature of units of CAPREIT ("Trust Units"), Preferred Units, and units of CAPREIT''s subsidiary, CAPREIT Limited Partnership ("Exchangeable Units") (collectively, the "Units"), unitholder liability, liquidity and price fluctuation of Units, dilution, distributions, participation in CAPREIT''s distribution reinvestment plan, potential conflicts of interest, dependence on key personnel, general economic conditions, competition for residents, competition for real property investments, continued growth 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 , under CAPREIT''s profile, as well as under Risks and Uncertainties section of the MD&A released on August 14, 2017. The information in this press release is based on information available to Management as of August 14, 2017. 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
Contacts:
CAPREIT
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
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Datum: 14.08.2017 - 15:19 Uhr
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