Mr. Mark Kenney reports

CAPREIT REPORTS THIRD QUARTER 2023 RESULTS

Canadian Apartment Properties REIT has released its strong operating and financial results for the three and nine months ended Sept. 30, 2023. Management will host a conference call to discuss the financial results on Thursday, Nov. 9, 2023, at 9 a.m. ET.

"We're proud to have achieved another quarter of robust operational and financial performance," commented Mark Kenney, president and chief executive officer. "Occupancies remained stable at our highest levels, with nearly 99 per cent of our suites occupied at current period-end, reflecting the ongoing tightening we continue to see across all of our Canadian rental markets. We're simultaneously making steady progress on our strategy, with a focus on our portfolio modernization program, which has completed the acquisition of over $200-million of newly constructed buildings located in strong-performing, high-growth geographies, funded through the disposition of our non-core Canadian properties. In optimizing our portfolio through downsizing on suite count and upsizing on quality, we're also having to optimize our organizational structure to adapt and ensure alignment with our re-envisioned Canadian Apartment 2.0 strategy for success now and in the future."

"Our same-property NOI margin held strong at 66.5 per cent for the quarter, inclusive of higher operating expenses from inflation, foreign exchange, and repair and maintenance costs," added Stephen Co, chief financial officer. "On the latter, we're strategically scaling back on our discretionary value-enhancing expenditure and are instead intentionally reallocating that capital into R&M projects, in response to the tight rental market in which we're currently operating. That said, we continue to prioritize our environmental and energy initiatives, alongside our active management of debt financing and leverage in order to maintain our solid and conservative balance sheet position. We have ongoing opportunity for accretive use of funds across our various avenues for capital redeployment and we will continue to actively exercise these levers in tandem to ultimately maximize value for our unitholders."

Summary of Q3 -- 2023 results of operations

Strategic initiatives update:

• Canadian Apartment continues to invest in strategic opportunities that are accretive. For the nine months ended Sept. 30, 2023, Canadian Apartment acquired five properties for a total acquisition cost of $208.3-million.
• Canadian Apartment disposed of 388 suites, which comprised five non-core properties and three single residential suites located in Canada and the Netherlands, respectively, for the three months ended Sept. 30, 2023, for $60.8-million (excluding transaction costs and other adjustments). For the nine months ended Sept. 30, 2023, Canadian Apartment disposed of $354.5-million (excluding transaction costs and other adjustments) worth of non-core property dispositions.
• Canadian Apartment did not purchase any trust units for cancellation during the three months ended Sept. 30, 2023. During the nine months ended Sept. 30, 2023, Canadian Apartment purchased and cancelled approximately 2.2 million trust units under the normal course issuer bid (NCIB) program, at a weighted average purchase price of $46.53 per trust unit, for a total cost of $100.9-million.
• Pursuant to Canadian Apartment's strategy of upgrading and diversifying its property portfolio through accretive, on-strategy acquisitions and selected non-core or opportunistic dispositions, Canadian Apartment is currently targeting the disposition of approximately $400-million to $500-million of Canadian properties in 2023.

Operating results:

• Same-property occupied AMR (average monthly rents) for the Canadian residential portfolio as at Sept. 30, 2023, increased by 5.8 per cent compared with Sept. 30, 2022, while same-property occupancy for the Canadian residential portfolio remained relatively stable at 98.9 per cent.
• NOI (net operating income) increased by 7.8 per cent and 7.1 per cent, respectively, for the same-property portfolio for the three and nine months ended Sept. 30, 2023, compared with the same periods last year. Additionally, same-property NOI margin remained consistent at 66.5 per cent for the three months ended Sept. 30, 2023, and increased to 65.4 per cent, up 0.3 per cent, for the nine months ended Sept. 30, 2023, compared with the same periods last year.
• Diluted FFO (funds from operations) per unit (formerly known as diluted NFFO (normalized funds from operations) per unit) increased by 4.6 per cent and 2.7 per cent for the three and nine months ended Sept. 30, 2023, respectively, compared with the same periods last year, primarily due to same-property operational growth and supplemented by accretive NCIB purchases.

Balance sheet highlights:

• Canadian Apartment's financial position remains strong with $257.9-million of available capacity on its Canadian 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, Canadian Apartment completed or committed consolidated mortgage financings of $605.8-million. The mortgages refinanced have a weighted average term to maturity of 6.9 years and a weighted average interest rate of 4.40 per cent.
• For the three and nine months ended Sept. 30, 2023, Canadian Apartment recorded a fair value loss on investment properties of $507.0-million and $803.2-million, respectively, primarily driven by capitalization rate (cap rate) expansion in the Greater Toronto Area within the Canadian portfolio and in the Dutch portfolio as a reflection of the market conditions. The overall carrying value of investment properties (excluding assets held for sale) as at Sept. 30, 2023, was $16.5-billion, compared with $17.0-billion as at June 30, 2023, and $17.2-billion as at Dec. 31, 2022.
• Diluted NAV (net asset value) per unit as at Sept. 30, 2023, decreased to $54.36 from $57.08 as at June 30, 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

Portfolio occupied average monthly rents

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 operational 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 Sept. 30, 2023, increased from $1.70 as at Sept. 30, 2022.

Net operating income

Same properties for the three and nine months ended Sept. 30, 2023, are defined as all properties owned by Canadian Apartment continuously since Dec. 31, 2021, and therefore do not take into account the impact on performance of acquisitions or dispositions completed during 2023 and 2022, or properties that are classified as held for sale as at Sept. 30, 2023.

Operating revenues

For the three months ended Sept. 30, 2023, same-property operating revenues increased by $18.7-million, primarily driven by increases in monthly rents on turnovers and renewals. Total operating revenues increased by $16.3-million during the same period, due to $18.8-million of operational growth on the same-property operating portfolio and assets held for sale as at Sept. 30, 2023, and $3.5-million increase from acquisitions, partially offset by $6.0-million lower revenues due to dispositions.

For the nine months ended Sept. 30, 2023, same-property operating revenues increased by $46.8-million, primarily driven by increases in monthly rents on turnovers and renewals. Total operating revenues increased by $42.8-million during the same period, due to $47.1-million of operational growth on the same-property operating portfolio and assets held for sale as at Sept. 30, 2023, and $13.2-million increase from acquisitions, partially offset by $17.5-million lower revenues due to dispositions.

Operating expenses

For the three and nine months ended Sept. 30, 2023, operating costs increased for the same-property portfolio compared with the same periods last year, primarily due to increase in other operating expenses. Other operating expenses increased primarily due to higher R&M (repairs and maintenance) costs. The higher R&M costs in both periods are due to general inflationary pressures, as well as higher maintenance costs that correspond with a reduction in discretionary capital expenditures, reflecting Canadian Apartment's strategic reallocation of capital in response to the tight rental market in Canada.

For the three and nine months ended Sept. 30, 2023, other operating expenses for the total portfolio increased for the same reasons as described above and due to certain required maintenance costs for the operation of Canadian Apartment's septic systems at primarily two MHC (manufactured housing community) properties, one of which was disposed of on March 1, 2023, while the other was disposed of on June 30, 2023.

Additional information

More detailed information and analysis is included in Canadian Apartment's unaudited condensed consolidated interim financial statements and MD&A (management's discussion and analysis) for the three and nine months ended Sept. 30, 2023, which have been filed on SEDAR+ under Canadian Apartment's profile or on Canadian Apartment's website on the investor relations page.

Conference call

A conference call hosted by Mr. Kenney, Mr. Co and Julian Schonfeldt, chief investment officer, will be held on Thursday, Nov. 9, 2023, at 9 a.m. ET. The telephone numbers for the conference call are Canadian toll-free 833-950-0062 and international 1-929-526-1599. The conference call access code is 078065.

The call will also be webcast live and accessible through the Canadian Apartment website. A replay of the webcast will be available for one year after the webcast.

The slide presentation to accompany management's comments during the conference call will be available on the Canadian Apartment website 1.5 hours prior to the conference call.

About Canadian Apartment Properties REIT

Canadian Apartment is Canada's largest publicly traded provider of quality rental housing. As at Sept. 30, 2023, Canadian Apartment owns approximately 64,500 residential apartment suites, townhomes and manufactured home community sites that are well located across Canada and the Netherlands, with approximately $16.5-billion of investment properties in Canada and Europe.

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