Mr. Mark Kenney reports

CAPREIT REPORTS FIRST QUARTER 2024 RESULTS

Canadian Apartment Properties Real Estate Investment Trust today released strong operating and financial results for the three months ended March 31, 2024. Management will host a conference call to discuss the financial results on Thursday, May 9, 2024, at 9 a.m. ET.

"We continued momentum on the execution of our strategy in 2024, and we're pleased to see that translate into another quarter of strong results," commented Mark Kenney, president and chief executive officer. "I am especially excited about our recent disposition of two properties in Langley, which we sold to a non-profit organization that was funded by the B.C. Rental Protection Fund. This instrumental transaction will enable those suites to remain affordable in perpetuity, while we were able to free up capital to reinvest in new supply. We're eager to continue participating in productive public-private partnerships such as this, and we hope to see more of our non-core legacy buildings transfer to the hands of non-profit organizations in the future."

"We redeployed capital from our strategic sales into the acquisition of two new-build, concrete rental apartment properties in London, which we purchased at a steep discount to replacement cost, and at a cap rate that exceeds the weighted average cap rate on our first quarter dispositions," said Julian Schonfeldt, chief investment officer. "In addition, so far this year, we've reduced our ownership in Irish Residential Properties REIT PLC from 18.7 per cent to 9.7 per cent through the sale of $70.6-million worth of equity. We used part of the proceeds to accretively repurchase $27-million worth of CAPREIT's units at a discount to NAV, with the remainder of our capital inflow reallocated into paying down higher interest debt. We're excited about the progress we've made with this capital recycling so far in 2024, and we remain increasingly focused on our objective of increasing the quality of our core apartment portfolio in Canada, while simultaneously increasing our earnings per unit."

"Robust rent growth and ongoing high occupancy trends continued throughout the quarter, and we achieved a solid same-property NOI margin of 64.1 per cent for the three months ended March 31, 2024," added Stephen Co, chief financial officer. "This is up by 70 basis points versus the comparative period, largely due to lower utility costs resulting from milder winter weather experienced across the country. Organic growth contributed to the 7.4-per-cent increase in diluted FFO per unit, which we realized on top of elevated interest costs we're incurring on our mortgage portfolio and credit facilities. Our balance sheet in Canada is strong with approximately $369-million in available liquidity, and this will continue to fuel our ability to execute on our capital allocation strategy moving forward."

Summary of Q1 2024 results of operations

Strategic initiatives update

• CAPREIT continues to invest in strategic opportunities that are accretive. For the three months ended March 31, 2024, CAPREIT acquired a property comprised 291 suites located in London, Ont., for a total purchase price of $130-million (excluding transaction costs and other adjustments).
• For the three months ended March 31, 2024, CAPREIT disposed of 380 suites which comprised four non-core properties located in British Columbia and Quebec, and 24 single residential suites located in the Netherlands for $94.7-million (excluding transaction costs and other adjustments).
• In March, 2024, CAPREIT received the Toronto Stock Exchange's acceptance of its notice to proceed with an NCIB, following expiry of the previous NCIB on March 23, 2024. During the three months ended March 31, 2024, CAPREIT purchased and cancelled approximately 600,000 trust units, under the NCIB program, at a weighted average purchase price of $48.19 per trust unit, for a total cost of $27.1-million.
• On Feb. 22, 2024, CAPREIT filed a prospectus supplement to establish an at-the-market program (ATM program) that allows CAPREIT, at its sole discretion, to issue trust units up to an aggregate sale price of $400-million from treasury to the public from time to time, directly on the TSX or on other marketplaces on which the trust units are listed or quoted in Canada or where the trust units are traded in Canada, at prevailing market prices. During the three months ended March 31, 2024, no trust units were issued under the ATM program.
• During the three months ended March 31, 2024, CAPREIT transacted on the sale of Irish Residential Properties REIT PLC (IRES) shares totalling $57.9-million, of which $43.7-million settled during the three months ended March 31, 2024, with the balance settling after March 31, 2024. Subsequent to March 31, 2024, CAPREIT settled on the disposition of additional IRES shares totalling $12.7-million, bringing CAPREIT's ownership interest from 18.7 per cent as at Dec. 31, 2023, to 9.7 per cent as at May 8, 2024.
• CAPREIT's strategy to upgrade the quality and diversification of the property portfolio through repositioning and capital recycling initiatives to grow earnings and cash flow potential continues for 2024. CAPREIT is currently targeting the disposition of over $400-million of non-core Canadian properties during 2024.

Operating results

• On turnovers and renewals, monthly residential rents for the three months ended March 31, 2024, increased by 4.1 per cent for the Canadian residential portfolio, compared with 3.7 per cent for the three months ended March 31, 2023.
• Same property occupied AMR for the Canadian residential portfolio as at March 31, 2024, increased by 6.5 per cent compared with March 31, 2023, while same property occupancy for the Canadian residential portfolio remained relatively stable at 98.5 per cent (March 31, 2023 -- 98.6 per cent).
• NOI (net operating income) for the same property portfolio increased by 7.6 per cent for the three months ended March 31, 2024, compared with the same period last year. Additionally, NOI margin for the same property portfolio increased to 64.1 per cent, up 0.7 per cent compared with the same period last year.
• Diluted FFO (funds from operations) per unit was up 7.4 per cent, including an approximately 0.9-per-cent decrease in the weighted average number of units outstanding, for the three months ended March 31, 2024, compared with the same period last year, primarily due to contributions from acquisitions, higher same property NOI and accretive NCIB purchases, partially offset by lower other income and higher interest expense on credit facilities payable and mortgages payable.

Balance sheet highlights

• CAPREIT's financial position remains strong, with approximately $369.3-million of available Canadian liquidity, comprising $44.6-million of Canadian cash and cash equivalents, $254.7-million of available capacity on its Canadian acquisition and operating facility, and $70.0-million on its GHG reduction facility.
• To date, CAPREIT completed or committed mortgage financings totalling $143.2-million, with a weighted average term to maturity of 8.7 years and a weighted average interest rate of 4.64 per cent.
• For the three months ended March 31, 2024, the overall carrying value of investment properties (excluding assets held for sale) increased by $163.5-million primarily due to net acquisitions of $83.2-million, fair value gains of $71.7-million, property capital investments of $42.4-million, which were partially offset by transfers to assets held for sale of $33.0-million.
• Diluted NAV (net asset value) per unit as at March 31, 2024, increased to $54.79 from $54.23 as at Dec. 31, 2023, reflecting an increase in investment property values in CAPREIT's Canadian portfolio, supplemented by the effects of accretive purchases of trust units for cancellation through the NCIB program.

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 $1.85 as at March 31, 2024, increased from $1.75 as at March 31, 2023.

As the Netherlands lease renewals occur once a year in July, there were no changes in lease renewals for the three months ended March 31, 2024, and March 31, 2023. For rent renewal increases due to indexation beginning on July 1, 2024, ERES served tenant notices to 6,572 suites, representing 96 per cent of the residential portfolio, across which the average rental increase due to indexation and household income adjustment is 5.3 per cent.

Net operating income

Same properties for the three months ended March 31, 2024, are defined as all properties owned by CAPREIT continuously since Dec. 31, 2022, and therefore do not take into account the impact on performance of acquisitions or dispositions completed during 2024 and 2023, or properties that are classified as held for sale as at March 31, 2024.

The attached table reconciles same property NOI and NOI from acquisitions, dispositions and assets held for sale to total NOI, for the three months ended March 31, 2024, and March 31, 2023.

Operating revenues

For the three months ended March 31, 2024, same property operating revenues increased by $16.5-million, primarily driven by increases in monthly rents on turnovers and renewals. Total operating revenues increased by $14.9-million during the same period, due to $16.6-million of operational growth, primarily on the same property operating portfolio and to a lesser extent on assets held for sale as at March 31, 2024, and a $4.4-million increase from acquisitions, partially offset by $6.1-million lower revenues due to dispositions.

Operating expenses

Operating expenses for the same property portfolio for the three months ended March 31, 2024, increased compared with the same period last year, primarily due to increases in other operating expenses. Increase in other operating expenses is primarily due to higher R&M costs and higher insurance costs. Higher R&M costs are due to general inflationary pressures, as well as higher maintenance costs that correspond with a reduction in suite and common area capital improvements, reflecting CAPREIT's strategic reallocation of capital in response to the tight rental market in Canada.

Normal course issuer bid

For the three months ended March 31, 2024, CAPREIT purchased and cancelled approximately 600,000 trust units under the NCIB program, at a weighted average purchase price of $48.19 per trust unit for a total cost of $27.7-million.

ATM program

On Feb. 22, 2024, CAPREIT filed a prospectus supplement to establish an ATM program that allows CAPREIT, at its sole discretion to issue trust units up to an aggregate sale price of $400-million from treasury to the public from time to time, directly on the TSX or on other marketplaces on which the trust units are listed or quoted in Canada or where the trust units are traded in Canada, at prevailing market prices.

In connection with the establishment of the ATM program, CAPREIT has entered into an equity distribution agreement dated Feb. 22, 2024, with a major financial institution. Any trust units sold in the ATM program will be distributed through the TSX or any other permitted marketplace at the market prices prevailing at the time of sale. The volume and timing of distributions under the ATM program, if any, will be determined at CAPREIT's sole discretion. There is no certainty that any trust units will be offered or sold under the ATM program. The ATM program will be effective until June 9, 2025, unless terminated prior to such date by CAPREIT or otherwise in accordance with the terms of the equity distribution agreement.

During the three months ended March 31, 2024, no trust units were issued under the ATM program.

Additional information

More detailed information and analysis is included in CAPREIT's condensed consolidated interim financial statements and MD&A (management's discussion and analysis) for the three months ended March 31, 2024, which have been filed on SEDAR+ under CAPREIT's profile or on CAPREIT's website on the investor relations page.

Conference call

A conference call, hosted by CAPREIT's senior management team, will be held on Thursday, May 9, 2024, at 9 a.m. ET. The telephone numbers for the conference call are: Canadian toll-free: 833-950-0062, international: 1-929-526-1599. The conference call access code is 576092. The call will also be webcast live and accessible through the CAPREIT website and follow the link at the top of the page. 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 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 March 31, 2024, CAPREIT owns approximately 64,200 residential apartment suites, townhomes and manufactured home community sites that are well located across Canada and the Netherlands, with approximately $16.7-billion of investment properties in Canada and Europe.

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