CAP REIT Announces Strong Fourth Quarter and Year-End 2006 Results
Tue Feb 20, 5:26 PMTORONTO, ONTARIO--(CCNMatthews - Feb. 20, 2007) - Canadian Apartment Properties Real Estate Investment Trust ("CAP REIT") (TSX: CAR-UN.TO) announced today results for the three months and year ended December 31, 2006.
2006 HIGHLIGHTS: - Acquisitions and cost controls generate solid accretive growth - Net Operating Income ("NOI") margin increases to 51.9% - Same property NOI growth of 2.0% - Occupancy remains strong at 97.2% - Tax deferral of distributions at 96.07% - Capital expenditures reduced - Industry fundamentals continue to strengthen in all markets Operating revenues in the fourth quarter of 2006 increased 7.5% to $73.0 million from $67.9 million last year. For the year ended December 31, 2006, operating revenues rose 9.7% to $283.7 million from $258.7 million for 2005. The increased revenues are primarily the result of acquisitions completed over the last twelve months as well as stable occupancies and higher average monthly rents across CAP REIT's total portfolio. Primarily due to the increase in revenues, net operating income for the fourth quarter and year ended December 31, 2006 rose 9.6% to $37.2 million and 10.5% to $147.3 million, respectively, compared to the same periods last year. As a percentage of revenues, NOI was 51.0% in the fourth quarter of 2006 compared to 50.0% last year, and 51.9% through 2006 compared to 51.5% last year. NOI for properties owned at December 31, 2004 increased 2.0% in 2006, the fourth consecutive quarter of positive NOI growth for the stabilized portfolio. The geographic diversification of the portfolio will reduce risks and increase opportunities to grow NOI in the future. Operating expenses were lower as a percentage of operating revenues in 2006 due to lower property taxes and stable energy costs offsetting a modest increase in repairs and maintenance, payroll and advertising costs as compared to the prior year. Average monthly rents increased to $886 compared to $877 last year as CAP REIT's sales and marketing initiatives generated solid growth across all segments of the portfolio. Overall average occupancy at December 31, 2006 remained stable at 97.2% compared to 97.4% last year. "We are pleased with our financial and operating results in 2006, another year of steady accretive growth and solid performance across our portfolio," commented Thomas Schwartz, President and CEO. "We also met our portfolio expansion and geographic diversification objectives during the year, and anticipate further accretive growth in 2007 and going forward." Distributable Income ("DI") increased 10.0% in the fourth quarter to $16.4 million or $0.278 per Unit compared to $14.9 million or $0.268 per Unit in last year's fourth quarter. For the year ended December 31, 2006, DI rose 7.0% to $66.2 million or $1.170 per Unit compared to $61.8 million or $1.161 per Unit for the same period last year. Per Unit amounts in 2006 were impacted by the 6.3% and 6.2% increase in the weighted average number of Units outstanding in the fourth quarter and year ended December 31, 2006, respectively, compared with the same prior year periods. The ratio for total debt (including borrowings on the Acquisition and Operating Facilities) to gross book value was 61.6%, as at December 31, 2006 compared to 62.7% last year. The weighted average interest rate of CAP REIT's total mortgage portfolio, including the effect of interest rate forward contracts, reduced to 5.33% at December 31, 2006 from 5.38% in the previous year, while the weighted average term to maturity was 7.5 years compared to 8.1 years last year. To reduce its interest cost and cost of capital, management will leverage its balance sheet strength and the stability of its property portfolio to implement a financing plan in 2007 to top-up existing mortgages to further reduce its Acquisition and Operating Facilities. Funds from Operations ("FFO") in the fourth quarter of 2006 increased 9.9% to $16.4 million or $0.278 per Unit as compared to $14.9 million or $0.269 per Unit in last year's fourth quarter. For 2006, FFO rose 6.7% to $65.4 million or $1.157 per Unit compared to $61.4 million or $1.152 per Unit for 2005. Per Unit amounts in 2006 were impacted by the increase in the weighted average Units outstanding. Capital expenditures of $36.5 million in 2006 were lower as compared to $41.6 million in the prior year despite the significant increase in the size of the property portfolio and increased overall suite turnovers, as management increasingly sub-contracted its insuite renovation programs to reduce costs. CAP REIT currently estimates it will invest approximately $40 million in capital expenditures in 2007. "Fundamentals continue to strengthen in the majority of our markets. We remain confident in our ability to maintain occupancies in the 97% to 98% range and to generate steady increases in average monthly rents, resulting in sustained same property and cash flow growth for our Unitholders over the long term," Mr. Schwartz concluded.
Financial Highlights:
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Period Ended December 31,
($ Thousands, except per Three Months Twelve Months
Unit amounts) 2006 2005 2006 2005
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Operating Revenues $ 73,002 $ 67,934 $ 283,704 $ 258,666
Net Operating Income (NOI) $ 37,212 $ 33,949 $ 147,289 $ 133,300
NOI Margin 51.0% 50.0% 51.9% 51.5%
Net (Loss) Income (1) $ (209) $ (983)$ 722 $ 1,339
Net (Loss) Income per Unit -
Basic and Diluted (1) $ (0.004) $ (0.018)$ 0.013 $ 0.025
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Distributable Income (DI) (2) $ 16,378 $ 14,887 $ 66,160 $ 61,827
Distributable Income per
Unit - Basic $ 0.278 $ 0.268 $ 1.170 $ 1.161
Distributions Declared per Unit $ 0.270 $ 0.270 $ 1.080 $ 1.080
Payout Ratio 98.8% 100.6% 94.1% 93.1%
Effective Payout Ratio (3) 81.9% 84.4% 81.4% 78.8%
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Funds from Operations (FFO) (4) $ 16,399 $ 14,927 $ 65,443 $ 61,360
Funds from Operation per
Unit - Basic $ 0.278 $ 0.269 $ 1.157 $ 1.152
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Number of Suites - - 26,498 25,252
Income Properties - - $1,983,072 $1,908,083
Weighted Average Number of
Units (000's) - Basic 59,014 55,517 56,565 53,255
Weighted Average Number of
Units (000's) - Diluted 59,367 55,567 56,816 53,304
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(1) Three and twelve months 2005 exclude income of $10,956 and $11,470,
or $0.197 and $0.215 per Unit respectively, from property dispositions.
(2) DI is defined in CAP REIT's Declaration of Trust dated May 25, 2006.
(3) Excludes cash reinvested through the DRIP.
(4) FFO is calculated in accordance with the recommendations of the Real
Property Association of Canada ("REALPAC").
NOI, DI and FFO are not defined by generally accepted accounting
principles (GAAP), do not have standard meanings and may not be comparable
with other industries or companies. For a reconciliation of DI to net
income, DI to cash from operating activities and FFO to net income,
see pages 13, 14 and 15 of the Management's Discussion and Analysis
dated February 20, 2007.
All statements in this press release that do not relate to historical facts constitute forward-looking statements. These statements represent CAP REIT's intentions, plans, expectations and beliefs and are subject to certain risks and uncertainties that could result in actual results differing materially from these forward-looking statements. These risks and uncertainties are more fully described in regulatory filings that can be obtained on SEDAR at www.sedar.com. CAP REIT's Consolidated Financial Statements for the year ended December 31, 2006, including Management's Discussion and Analysis, can be found on the investor relations page at www.capreit.net. As one of Canada's largest residential landlords, CAP REIT (TSX: CAR-UN.TO) is a growth-oriented investment trust owning interests in 27,105 residential suites located in major urban centres from coast to coast. Since its Initial Public Offering in May 1997, CAP REIT has grown monthly cash distributions per Unit by 51%. For more information about CAP REIT, its business and its investment highlights, please refer to our web site at www.capreit.net. ContactsMr. Michael Stein CAP REIT
Chairman
(416) 861-5788
Mr. Thomas Schwartz
CAP REIT
President & CEO
(416) 861-9404
Mr. Yazdi Bharucha
CAP REIT
CFO & Secretary
(416) 861-5771
Website: www.capreit.net
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