Mr. Mark Kenney reports

CAPREIT REPORTS SECOND QUARTER 2023 RESULTS

Canadian Apartment Properties Real Estate Investment Trust has released its operating and financial results for the three and six months ended June 30, 2023. Management will host a conference call to discuss the financial results on Friday, Aug. 4, 2023, at 9 a.m. ET.

"Our operational performance remained robust in the second quarter of 2023, with near 99-per-cent occupancy on the Canadian residential portfolio maintained alongside strong and stable margins," commented Mark Kenney, president and chief executive officer. "We also continue to act on our asset management program, and so far this year have sold $293-million worth of non-strategic buildings, while reinvesting $208-million of net proceeds into newly built rental properties located in thriving regions throughout Canada. These high-quality, modern buildings now represent 10 per cent of our Canadian portfolio value, and we will continue to increase that allocation. Above all else, this serves a greater purpose in supporting the supply of new construction rental housing in Canada's highest-density and fastest-growing cities."

"The CAPREIT 2.0 strategy has been well executed and we have made sound progress to date," added Stephen Co, chief financial officer. "We have accretively allocated $101-million into our NCIB program this year in order to crystallize meaningful value for our unitholders. We also secured $368-million in total mortgage refinancings at a weighted average interest rate of 4.1 per cent. Our diluted FFO per unit increased by 1.2 per cent this quarter compared with the prior-year period, primarily driven by our strong organic growth, supplemented by NCIB repurchases. This was achieved despite elevated interest costs which we're incurring on our credit facilities. However, with $265-million in available capacity on our Canadian credit facility and a strong capital recycling program, we have ample liquidity to support our strategic priorities moving forward."

Summary of Q2 2023 results of operations

Strategic initiatives update

• CAPREIT continues to invest in strategic opportunities that are accretive. For the three months ended June 30, 2023, CAPREIT acquired four properties comprising 326 suites located in Canada for $151.6-million. For the six months ended June 30, 2023, CAPREIT acquired five properties for a total acquisition cost of $208.3-million.
• CAPREIT disposed of six non-core properties, which comprised 1,013 suites and sites located in Canada and the Netherlands for the three months ended June 30, 2023, for $139.9-million (excluding transaction costs and other adjustments). For the six months ended June 30, 2023, CAPREIT disposed of $293.7-million (excluding transaction costs and other adjustments) worth of non-core property dispositions.
• During the three and six months ended June 30, 2023, CAPREIT purchased and cancelled approximately 200,000 and 2.2 million trust units under the normal course issuer bid (NCIB) program, at a weighted average purchase price of $47.59 and $46.53 per trust unit, respectively, for a total cost of $9.4-million and $100.9-million, respectively.
• Pursuant to CAPREIT's strategy of upgrading and diversifying its property portfolio through accretive, on-strategy acquisitions and selected non-core or opportunistic dispositions, CAPREIT is currently targeting the disposition of approximately $400-million to $500-million of Canadian properties in 2023.

Operating results

• On turnovers, monthly residential rents for the three and six months ended June 30, 2023, increased by 26.9 per cent on 3.3 per cent and 26.8 per cent on 5.8 per cent, respectively, of the Canadian portfolio, compared with an increase of 11.0 per cent on 4.2 per cent and 10.6 per cent on 7.9 per cent, respectively, of the Canadian portfolio, for the three and six months ended June 30, 2022.
• Same property occupied AMR for the Canadian residential portfolio as at June 30, 2023, increased by 5.1 per cent compared with June 30, 2022, while same property occupancy for the Canadian residential portfolio remained stable at 98.8 per cent.
• NOI increased by 6.5 per cent and 6.9 per cent, respectively, for the same property portfolio for the three and six months ended June 30, 2023, compared with the same periods last year. Additionally, same property NOI margin increased to 66.4 per cent, up 0.2 per cent, for the three months ended June 30, 2023, and increased to 64.9 per cent, up 0.5 per cent, for the six months ended June 30, 2023, compared with the same periods last year.
• Diluted FFO (funds from operations) per unit (formerly known as diluted NFFO per unit) increased by 1.2 per cent and 1.7 per cent for the three and six months ended June 30, 2023, respectively, compared with the same periods last year primarily due to same property organic growth and supplemented by accretive NCIB purchases.

Balance sheet highlights

• CAPREIT's financial position remains strong with $264.8-million of available capacity on its acquisition and operating facility.
• Based on the current property portfolio and execution of strategic initiatives, management expects to raise between $600-million and $650-million in mortgages for the Canadian portfolio for 2023.
• To date, CAPREIT completed or committed consolidated mortgage refinancings of $368.1-million. The mortgages refinanced have a weighted average term to maturity of 6.0 years and a weighted average interest rate of 4.13 per cent.
• For the three months and six months ended June 30, 2023, the overall carrying value of investment properties (excluding assets held for sale) decreased by $105.6-million and $138.1-million, respectively. The decrease for the three and six months ended June 30, 2023, was primarily attributed to fair value losses and loss on foreign currency translation but was partially mitigated by net acquisitions and property capital investments.
• Diluted NAV per unit as at June 30, 2023, decreased to $57.08 from $57.47 as at March 31, 2023, and $58.01 as at Dec. 31, 2022, primarily due to fair value losses recognized in investment properties, partially offset by the effects of accretive purchases of trust units for cancellation through the NCIB program.

Operational and financial results

The rate of growth in total portfolio occupied AMR has been primarily driven by (i) new acquisitions completed over the past 12 months and (ii) same property organic growth. The rate of growth in same property occupied AMR has been primarily due to (i) rental increases on turnover in the rental markets of most provinces across the Canadian portfolio and (ii) rental increases on renewals.

The weighted average gross rent per square foot for total Canadian residential suites was approximately $1.80 as at June 30, 2023, increased from $1.70 as at June 30, 2022.

Conference call

A conference call hosted by Mark Kenney, president and chief executive officer, Stephen Co, chief financial officer, and Julian Schonfeldt, chief investment officer, will be held on Friday, Aug. 4, 2023, at 9 a.m. ET. The telephone numbers for the conference call are: international: 1-929-526-1599, Canadian toll-free: 833-950-0062. The conference call access code is 960207.

The call will also be webcast live and accessible through the CAPREIT website -- click on "for investors" and follow the link at the top of the page. A replay of the webcast will be available for one year after the webcast at the same link.

The slide presentation to accompany management's comments during the conference call will be available on the CAPREIT website an hour and a half prior to the conference call.

About Canadian Apartment Properties REIT

CAPREIT is Canada's largest publicly traded provider of quality rental housing. As at June 30, 2023, CAPREIT owns approximately 65,000 residential apartment suites, townhomes and manufactured home community sites well located across Canada and the Netherlands, with approximately $17-billion of investment properties in Canada and Europe.

We seek Safe Harbor.