TORONTO, ONTARIO--(Marketwire - Aug. 9, 2011) - 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, 2011.
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30 | June 30 | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| Operating Revenues (000s) | $ | 88,235 | $ | 84,755 | $ | 174,567 | $ | 168,273 | ||||||
| Net Operating Income ("NOI") (000s) (1) | $ | 51,991 | $ | 50,199 | $ | 98,555 | $ | 93,842 | ||||||
| NOI Margin (1) | 58.9 | % | 59.2 | % | 56.5 | % | 55.8 | % | ||||||
| Normalized Funds From Operations ("NFFO") (1) | $ | 26,848 | $ | 25,488 | $ | 49,400 | $ | 45,547 | ||||||
| NFFO Per Unit – Basic (1) | $ | 0.357 | $ | 0.383 | $ | 0.659 | $ | 0.685 | ||||||
| Weighted Average Number of Units - Basic (000s) | 75,143 | 66,585 | 74,994 | 66,504 | ||||||||||
| NFFO Payout Ratio (1) | 78.1 | % | 73.3 | % | 84.7 | % | 82.0 | % | ||||||
| (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. | |||||||||||||
| - | Q2 2011 operating revenues up 4.1% on higher average monthly rents, increased occupancies, and contributions from acquisitions |
| - | Average monthly rents rise 2.5% at June 30, 2011 compared to prior year |
| - | Occupancy strengthened to 98.4% at June 30, 2011 from 98.0% in prior year |
| - | Q2 2011 NOI up 3.6% and with a strong NOI margin of 58.9% |
| - | Organic growth continued with Q2 2011 stabilized NOI up 2.5%, the 22nd consecutive quarter of stable or improved year-over-year same property NOI |
| - | Q2 YTD 2011 NFFO up 8.5% |
| - | NFFO per Unit and related payout ratios, impacted at present by the 13% increase in the weighted average number of basic Units from the 2010 equity offering, are expected to improve from the contribution of recent acquisitions |
| - | Closed or committed $173 million of mortgage refinancings so far this year with an average term to maturity of 7.3 years, and a weighted average interest rate of 3.59% which is well below the rate on mortgages maturing in 2011 of 5.11% |
| - | Entered into a hedging program intended to secure significantly reduced interest costs on $312 million of mortgage debt maturing over the next two years |
| - | Subsequent to the quarter, entered into a fixed-price natural gas contract covering a 12-month period from November 1, 2011 for approximately 50% of anticipated natural gas delivery requirements |
| - | Completed the acquisition of a total of 495 suites in the Greater Vancouver Region of British Columbia as well as 849 suites in the Greater Toronto Area of Ontario for total acquisition costs of $75 million and $113 million, respectively; and |
| - | Subsequent to the quarter, having completed the acquisition of an 811-suite portfolio in Laval, Québec and agreeing to acquire a 229-suite property in Scarborough, Ontario, Management has exceeded its growth objectives for this year having acquired 2,467 suites, further strengthening and diversifying the portfolio |
"Our proven and highly effective property management programs continue to generate record operating results, while our acquisitions are successfully and accretively deploying the capital raised at the end of 2010," commented Thomas Schwartz, President and CEO. "Looking ahead, we continue to implement a number of programs to enhance operating efficiency and reduce costs, initiatives that we believe will only accelerate our NFFO growth in the quarters ahead."
| PORTFOLIO OPERATING RESULTS | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30 | June 30 | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| Overall Portfolio Occupancy (1) | 98.4 | % | 98.0 | % | ||||||||||
| Overall Portfolio Average Monthly Rents (1),(2) | $ | 982 | $ | 958 | ||||||||||
| Operating Revenues (000s) | $ | 88,235 | $ | 84,755 | $ | 174,567 | $ | 168,273 | ||||||
| Net Rental Revenue Run-Rate (000s) (1),(3),(4) | $ | 342,759 | $ | 324,653 | ||||||||||
| Operating Expenses (000s) | $ | 36,244 | $ | 34,556 | $ | 76,012 | $ | 74,431 | ||||||
| NOI (000s) (4) | $ | 51,991 | $ | 50,199 | $ | 98,555 | $ | 93,842 | ||||||
| NOI Margin (4) | 58.9 | % | 59.2 | % | 56.5 | % | 55.8 | % | ||||||
| Number of Suites and Sites Acquired | 1,344 | 361 | 1,427 | 375 | ||||||||||
| Number of Suites Disposed | – | – | 143 | – | ||||||||||
| (1) | As at June 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 six months ended June 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 six months ended June 30, 2011, total operating revenues increased by 4.1% and 3.7%, respectively, compared to the same periods last year primarily due to increased average monthly rents and higher occupancies in most regions and the contribution from acquisitions, though partially offset by dispositions in the same period. For the three and six months ended June 30, 2011, ancillary revenues, such as parking, laundry and antenna income, rose by 14.7% and 18.2%, respectively, as Management continued its focus on maximizing the revenue potential of its property portfolio, which includes the impact of certain non-recurring settlements totaling $0.7 million for the six months ended June 30, 2011.
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 June 30, 2011 is $342.8 million, or 5.6% higher than $324.7 million as of June 30, 2010. Net rental revenue for the twelve months ended June 30, 2011 was $327.6 million (2010 – $319.4 million).
Average monthly rents increased in all sectors and most geographic regions of the portfolio resulting in a 2.5% increase in overall average monthly rents as at June 30, 2011 to $982, compared to $958 as at June 30, 2010. Overall occupancy at June 30, 2011 improved to 98.4% from 98.0% 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) resulted in increases in average monthly rents of $9 or 0.9% for both the three months and the six months ended June 30, 2011. Although the pace of increases in average monthly rents from suite turnovers has improved from the same periods last year, these increases were partially offset by the continued, adverse effect of rent discounting in the Alberta market for the three and six months ended June 30, 2011 of approximately $3 or 0.3% per suite and $13 or 1.3% per suite, respectively. Excluding the impact of the Alberta portfolio, residential suite turnovers would have instead resulted in average monthly rent increases of $10 or 1% per suite in the second quarter and increases of $11 or 1.1% for the first six months of 2011.
Pursuant to Management's focus on increasing overall portfolio rents, for the three months ended June 30, 2011 average monthly rents on lease renewals increased by approximately $14 or 1.4% compared to $23 or 2.3% for the same period last year. For the six months ended June 30, 2011, average monthly rents increased by $14 or 1.3% compared to $22 or 2.2% 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, significantly below the guideline increase for 2010 of 2.1%. Management is actively pursuing applications for above guideline increases to raise average monthly rents on lease renewals above the guideline increase. The 2012 Ontario rent control guideline for lease renewals was announced at 3.1%.
Operating Expenses
Operating expenses as a percentage of revenues increased for the three months ended June 30, 2011, to 41.1% from 40.8% last year, but decreased for the six months ended June 30, 2011 to 43.5% from 44.2% last year.
The increase through the second quarter was primarily due to a significant increase in natural gas as a result of considerably higher consumption compared to the same period last year due to cooler weather earlier in the second quarter. However, the impact of the higher consumption was significantly mitigated by Management's successful energy-saving initiatives. The decrease through the first six months of 2011 was primarily due to the decrease in utility costs resulting from the natural gas supply strategy implemented last year, but partially offset by increases in repairs and maintenance ("R&M") costs as a result of a combination of the Harmonized Sales tax ("HST") and the integration of new properties.
Net Operating Income
Overall NOI improved in the current quarter by $1.8 million or 3.6% and the NOI margin decreased slightly to 58.9% compared to 59.2% in the prior year period due to the combination of higher revenues and higher overall operating costs. For the six months ended June 30, 2011, overall NOI increased by $4.7 million or 5.0%, while the NOI margin improved to 56.5% from 55.8% for the same period last year.
As of June 30, 2011, CAPREIT has generated 22 consecutive quarters of stable or improved year-over-year NOI growth for stabilized properties demonstrating Management's strong operating and financing strategies. For the three and six months ended June 30, 2011, operating revenues for stabilized suites and sites increased 3.1% and 3.3%, respectively, while operating costs also increased by 3.9% and 3.1%, respectively, compared to the same periods last year. As a result, for the three and six months ended June 30 2011, stabilized NOI increased by a significant 2.5% and 3.5%, respectively.
| NON-IFRS FINANCIAL MEASURES | |||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30, | June 30, | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| NFFO (000s) | $ | 26,848 | 25,488 | $ | 49,400 | $ | 45,547 | ||||||
| NFFO Per Unit – Basic | $ | 0.357 | $ | 0.383 | $ | 0.659 | $ | 0.685 | |||||
| Cash Distributions Per Unit | $ | 0.270 | $ | 0.270 | $ | 0.540 | $ | 0.540 | |||||
| NFFO Payout Ratio | 78.1 | % | 73.3 | % | 84.7 | % | 82.0 | % | |||||
| NFFO Effective Payout Ratio | 60.2 | % | 62.3 | % | 65.8 | % | 70.2 | % | |||||
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 substantially 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 5.3% and 8.5%, respectively, for the three and six months ended June 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, resulting from Management's sales and marketing programs despite the negative effects of higher operating costs and a low permitted guideline increase on lease renewals in Ontario for 2011.
However, for the three and six months ended June 30, 2011, basic NFFO per Unit decreased by 6.8% and 3.8%, respectively, compared to the same periods last year as a result of the approximately 13% increase in the weighted average number of Units outstanding as a result of the 2010 equity offering. Management expects per Unit FFO and NFFO and related payout ratios to improve in the medium term as a result of NOI contribution from the recent acquisitions.
Comparing distributions declared to NFFO, the NFFO payout ratios for the three and six months ended June 30, 2011 increased to 78.1% and 84.7%, respectively, compared to 73.3% and 82.0% for the same periods last year. The effective NFFO payout ratio, which compares net distributions paid to Unitholders to NFFO, improved significantly for the three and six months ended June 30, 2011, to 60.2% and 65.8%, respectively, from 62.3% and 70.2% in the same periods last year, primarily due to the higher reinvestments of distributions under the Distribution Reinvestment Plan ("DRIP"). The average participation rate in the DRIP increased to 22.9% and 22.3%, respectively, for the three months and three and six months ended June 30, 2011 from 15.0% and 14.4% for the same periods last year.
| LIQUIDITY AND LEVERAGE | ||||||
| As at June 30, | 2011 | 2010 | ||||
| Total Debt to Gross Book Value | 54.32 | % | 56.93 | % | ||
| Total Debt to Gross Historical Cost (1) | 61.32 | % | 63.84 | % | ||
| Total Debt to Total Capitalization | 55.33 | % | 62.79 | % | ||
| Debt Service Coverage Ratio (times) (2) | 1.34 | - | ||||
| Interest Coverage Ratio (times) (2) | 2.12 | - | ||||
| Weighted Average Mortgage Interest Rate (%) (3) | 4.66 | 4.97 | ||||
| Weighted Average Mortgage Term to Maturity (years) | 5.3 | 4.7 | ||||
| (1) | Based on historical cost of investment properties. | |||||
| (2) | Based on the trailing four quarters ended June 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&As 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 June 30, 2011 would be 4.74% (June 30, 2010 - 5.06%). | |||||
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 June 30, 2011 improved to 54.32% compared to 56.93% last year; |
| - | Debt service and interest coverage ratios for the rolling four quarters ended June 30, 2011 remained strong at 1.34 times and 2.12 times, respectively, despite the impact of top up mortgage financing obtained in the period on principal and interest payments; |
| - | At June 30, 2011, 96.2% (June 30, 2010 – 94.4%) of CAPREIT's mortgage portfolio is insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's manufactured home community land lease sites; |
| - | The effective portfolio weighted average interest rate on mortgages has steadily declined from 4.97% as at June 30, 2010, to 4.66% as at June 30, 2011, which will result in significant interest rate savings in future years; |
| - | Total financings of $173 million, including $147 million for renewals of existing mortgages and $26 million for additional top up financing have been closed or committed up to August 9, 2011 with an average term to maturity of 7.3 years, and at a weighted average rate of 3.59%, significantly below the weighted average interest rate of mortgages maturing in 2011 of 5.11%. Management expects to raise between $275 million and $300 million in total mortgage renewals and refinancings for 2011; |
| - | As previously announced, CAPREIT has entered into a forward interest rate hedge on approximately $312 million of mortgages 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; and |
| - | Effective June 30, 2011, CAPREIT has also 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 June 30, 2011 was $112.6 million in addition to the land lease facility capacity of $8.9 million. |
Property Capital Investment Plan
During the first six months of 2011, CAPREIT made property capital investments of $36.7 million as compared to $27.4 million for the same period last year.
Property capital investments were higher compared to the prior year period 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 for 2011 announced in the fourth quarter of 2010. CAPREIT continues to invest in environment-friendly and 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 second quarter, CAPREIT completed the acquisition of a total of 495 suites in the Greater Vancouver Region of British Columbia as well as 849 suites in the Greater Toronto Area of Ontario for total acquisition costs of $74.6 million and $113.2 million, respectively.
Subsequent to the quarter, on July 31, 2011, CAPREIT completed the acquisition of an 811-suite portfolio in Laval, Québec. The purchase price was $70.0 million and was funded through the assumption of existing CMHC-insured mortgages totaling $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 from the acquisition and operating facility.
On July 21, 2011, CAPREIT announced that it had agreed to acquire a 229-suite property in Scarborough, Ontario. The purchase price of approximately $16.8 million will be 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 from the acquisition and operating facility. The transaction is expected to close August 10, 2011.
"So far this year we have acquired 16 properties, adding 2,467 suites to the portfolio for total acquisition costs of $284 million," Mr. Schwartz added. "While we have now exceeded our acquisition target for the year, we continue to leverage our strong liquidity position and evaluate additional acquisition opportunities that will further strengthen and diversify our portfolio."
Additional Information
More detailed information and analysis is included in CAPREIT's unaudited consolidated interim financial statements and MD&A for the three and six months ended June 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 Wednesday, August 10, 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 4413380#. The Instant Replay will be available until midnight, August 17, 2011. The call and accompanying slides will also be archived on the CAPREIT website at www.capreit.net. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net.
About CAPREIT
As one of Canada's largest residential landlords, CAPREIT (TSX:CAR.UN) is a growth-oriented investment trust owning interests in 29,496 residential suites (including acquisitions expected to close August 10, 2011) and two manufactured home communities comprising 1,325 land lease sites located in or near major urban centres from coast to coast. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net and our public disclosure which can be found under our profile at www.sedar.com.
Non-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 August 9, 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 August 9, 2011. The information in this press release is based on information available to Management as of August 9, 2011. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.
| SELECTED UNAUDITED FINANCIAL INFORMATION | ||||||
| Condensed Balance Sheets | ||||||
| As at | June 30, 2011 | December 31, 2010 | ||||
| ($ Thousands) | ||||||
| Investment Properties | $ | 3,360,197 | $ | 3,106,548 | ||
| Total Assets | 3,419,956 | 3,161,997 | ||||
| Mortgages Payable | 1,718,259 | 1,603,027 | ||||
| Bank Indebtedness | 145,010 | 39,358 | ||||
| Total Liabilities | 2,024,680 | 1,806,552 | ||||
| Unitholders' Equity | 1,395,276 | 1,355,445 | ||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| ($ Thousands) | 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net Operating Income | 51,991 | 50,199 | 98,555 | 93,842 | |||||||||||||
| Trust Expenses | (3,694 | ) | (3,244 | ) | (7,299 | ) | (5,867 | ) | |||||||||
| Unrealized Gain (Loss) on Remeasurement of Investment Properties | 30,792 | (6,800 | ) | 25,331 | (15,164 | ) | |||||||||||
| Realized Loss on Disposition of Investment Properties | – | (2,489 | ) | (95 | ) | (2,489 | ) | ||||||||||
| Remeasurement of Exchangeable Units | 49 | (259 | ) | (905 | ) | (378 | ) | ||||||||||
| Unit-based Compensation Expenses | (139 | ) | (1,926 | ) | (5,940 | ) | (2,610 | ) | |||||||||
| Interest on Mortgages Payable | (20,214 | ) | (19,789 | ) | (40,002 | ) | (39,365 | ) | |||||||||
| Interest on Bank Indebtedness | (1,321 | ) | (1,808 | ) | (2,069 | ) | (3,287 | ) | |||||||||
| Interest on Exchangeable Units | (111 | ) | (111 | ) | (222 | ) | (222 | ) | |||||||||
| Other Income | 465 | 463 | 930 | 925 | |||||||||||||
| Net Loss on Natural Gas Contracts | – | – | – | (4,497 | ) | ||||||||||||
| Amortization | (655 | ) | (658 | ) | (1,302 | ) | (1,309 | ) | |||||||||
| Severance and Other Employee Costs | (1,352 | ) | (382 | ) | (1,352 | ) | (532 | ) | |||||||||
| Unrealized Gain (Loss) on Derivative Financial Instruments | 1,362 | 4 | 1,206 | (50 | ) | ||||||||||||
| Recovery of Deferred Income Taxes | – | 10,385 | – | 15,260 | |||||||||||||
| Net Income | 57,173 | 23,585 | 66,836 | 34,257 | |||||||||||||
| Other Comprehensive Income (Loss) | $ | 2,117 | $ | 602 | $ | 3,309 | $ | (161 | ) | ||||||||
| Comprehensive Income | $ | 59,290 | $ | 24,187 | $ | 70,145 | $ | 34,096 | |||||||||
| Condensed Statements of Cash Flows | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||
| ($ Thousands) | ||||||||||||||||||
| Cash Provided By Operating Activities: | ||||||||||||||||||
| Net Income | $ | 57,173 | $ | 23,585 | $ | 66,836 | $ | 34,257 | ||||||||||
| Items in Net Income Not Affecting Cash: | ||||||||||||||||||
| Changes in Non-cash Operating Assets and Liabilities | 816 | (2,077 | ) | (6,669 | ) | (10,982 | ) | |||||||||||
| Realized and Unrealized (Gains) Losses on Remeasurements | (32,203 | ) | 9,503 | (25,547 | ) | 18,042 | ||||||||||||
| Unit-based Compensation Expenses | 139 | 1,926 | 5,940 | 2,610 | ||||||||||||||
| Recovery of Deferred Income Taxes | – | (10,385 | ) | – | (15,260 | ) | ||||||||||||
| Items Related to Financing and Investing Activities | 20,113 | 20,379 | 39,359 | 40,262 | ||||||||||||||
| Other | 880 | 914 | 1,758 | 6,307 | ||||||||||||||
| Cash Provided By Operating Activities | 46,918 | 43,845 | 81,677 | 75,236 | ||||||||||||||
| Cash Used In Investing Activities | ||||||||||||||||||
| Acquisitions | (187,828 | ) | (46,622 | ) | (196,912 | ) | (47,534 | ) | ||||||||||
| Capital Investments | (20,954 | ) | (17,537 | ) | (44,746 | ) | (31,566 | ) | ||||||||||
| Dispositions | – | 13,416 | 3,609 | 13,416 | ||||||||||||||
| Other | 368 | 483 | 870 | 753 | ||||||||||||||
| Cash Used In Investing Activities | (208,414 | ) | (50,260 | ) | (237,179 | ) | (64,931 | ) | ||||||||||
| Cash Provided By (Used In) Financing Activities | ||||||||||||||||||
| Mortgages, Net of Financing Costs | 112,393 | 43,491 | 116,052 | 31,403 | ||||||||||||||
| Bank Indebtedness, Net | 85,648 | (741 | ) | 105,652 | 30,896 | |||||||||||||
| Interest Paid | (20,578 | ) | (20,842 | ) | (40,289 | ) | (41,187 | ) | ||||||||||
| Proceeds on Issuance of Units | 77 | 334 | 2,134 | 400 | ||||||||||||||
| Distributions, Net of DRIP and Other | (16,044 | ) | (15,827 | ) | (32,397 | ) | (31,817 | ) | ||||||||||
| Cash Provided By (Used In) Financing Activities | 161,496 | 6,415 | 151,152 | (10,305 | ) | |||||||||||||
| Changes in Cash and Cash Equivalents During the Period | – | – | (4,350 | ) | – | |||||||||||||
| Cash and Cash Equivalents, Beginning of the Period | – | – | 4,350 | – | ||||||||||||||
| Cash and Cash Equivalents, End of the Period | $ | – | $ | – | $ | – | $ | – | ||||||||||
| Reconciliation of Net Income to FFO and to NFFO | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||||||
| Net Income | $ | 57,173 | $ | 23,585 | $ | 66,836 | $ | 34,257 | |||||||||
| Adjustments: | |||||||||||||||||
| Unrealized Gain (Loss) on Remeasurement of Investment Properties | (30,792 | ) | 6,800 | (25,331 | ) | 15,164 | |||||||||||
| Realized Loss on Sale of Investment Property | – | 2,489 | 95 | 2,489 | |||||||||||||
| Remeasurement of Exchangeable Units | (49 | ) | 259 | 905 | 378 | ||||||||||||
| Remeasurement of Unit-based Compensation Liabilities | (233 | ) | 1,672 | 5,241 | 2,056 | ||||||||||||
| Interest on Exchangeable Units | 111 | 111 | 222 | 222 | |||||||||||||
| Recovery of Deferred Income Taxes | – | (10,385 | ) | – | (15,260 | ) | |||||||||||
| Amortization of Property, Plant and Equipment | 381 | 301 | 755 | 610 | |||||||||||||
| FFO | $ | 26,591 | $ | 24,832 | $ | 48,723 | $ | 39,916 | |||||||||
| Adjustments: | |||||||||||||||||
| Unrealized Gain (Loss) on Derivative Financial Instruments | (1,362 | ) | (4 | ) | (1,206 | ) | 50 | ||||||||||
| Amortization of Loss on Derivative Financial Instruments Included in Mortgage Interest | 267 | 278 | 531 | 552 | |||||||||||||
| Net Loss on Natural Gas Contracts | – | – | – | 4,497 | |||||||||||||
| Severance and Other Employee Costs | 1,352 | 382 | 1,352 | 532 | |||||||||||||
| NFFO | $ | 26,848 | $ | 25,488 | $ | 49,400 | $ | 45,547 | |||||||||
| NFFO per Unit – Basic | $ | 0.357 | $ | 0.383 | $ | 0.659 | $ | 0.685 | |||||||||
| NFFO per Unit – Diluted | $ | 0.353 | $ | 0.381 | $ | 0.652 | $ | 0.682 | |||||||||
| Total Distributions Declared (1) | $ | 20,978 | 18,680 | $ | 41,863 | $ | 37,355 | ||||||||||
| NFFO Payout Ratio (2) | 78.1 | % | 73.3 | % | 84.7 | % | 82.0 | % | |||||||||
| Net Distributions Paid (1) | $ | 16,172 | $ | 15,881 | $ | 32,529 | $ | 31,958 | |||||||||
| Excess NFFO Over Net Distributions Paid | $ | 10,676 | $ | 9,607 | $ | 16,871 | $ | 13,589 | |||||||||
| Effective NFFO Payout Ratio (3) | 60.2 | % | 62.3 | % | 65.8 | % | 70.2 | % | |||||||||
| (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 six months ended June 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 | Six Months Ended | ||||||||||||||||
| June 30 | June 30 | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||||||
| NFFO | $ | 26,848 | $ | 25,488 | $ | 49,400 | $ | 45,547 | |||||||||
| Adjustments: | |||||||||||||||||
| Provision for Maintenance Property Capital Investments (1) | (2,981 | ) | (2,987 | ) | (5,963 | ) | (5,974 | ) | |||||||||
| Amortization of Fair Value on Grant Date of Unit-based Compensation | 365 | 247 | 685 | 542 | |||||||||||||
| AFFO | $ | 24,232 | $ | 22,748 | $ | 44,122 | $ | 40,115 | |||||||||
| AFFO per Unit – Basic | $ | 0.322 | $ | 0.342 | $ | 0.588 | $ | 0.603 | |||||||||
| AFFO per Unit – Diluted | $ | 0.319 | $ | 0.340 | $ | 0.582 | $ | 0.601 | |||||||||
| Distributions Declared (2) | $ | 20,978 | $ | 18,680 | $ | 41,863 | $ | 37,355 | |||||||||
| AFFO Payout Ratio (3) | 86.6 | % | 82.1 | % | 94.9 | % | 93.1 | % | |||||||||
| Net Distributions Paid (2) | $ | 16,172 | $ | 15,881 | $ | 32,529 | $ | 31,958 | |||||||||
| Excess AFFO over Net Distributions Paid | $ | 8,060 | $ | 6,867 | $ | 11,593 | $ | 8,157 | |||||||||
| Effective AFFO Payout Ratio (4) | 66.7 | % | 69.8 | % | 73.7 | % | 79.7 | % | |||||||||
| (1) | An industry based estimate (see the Non-IFRS Measures section in the MD&A for the three and six months ended June 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 six months ended June 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