CAP REIT Announces 2004 Year-End Results.TORONTO -- Canadian Apartment Properties Real Estate Investment Trust (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CAR.UN)("CAP REIT CAP REIT Canadian Apartment Properties Real Estate Investment Trust ") announced today results for the year ended December 31, 2004. The results include the contribution from the acquisition of Residential Equities Real Estate Investment Trust ("ResREIT") completed on June 1, 2004. HIGHLIGHTS: - ResREIT acquisition boosts 2004 revenues by 60.1% - Distributable income rises 45.1% in 2004 - Residential rental market fundamentals weakened further in fourth quarter - Integration of ResREIT properties and people proceeding successfully. Revenues for the fourth quarter nearly doubled to $65.3 million from $33.3 million last year. For the year ended December 31, 2004, revenues rose 60.1% to $207.7 million from $129.7 million in 2003. The revenue increases in 2004 were mainly due to the acquisition of 10,890 suites acquired from ResREIT on June 1, 2004. As a result of the increase in revenues, net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ("NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ") for the fourth quarter rose 90.4% to $33.7 million compared to $17.7 million last year. For the year ended December 31, 2004, NOI increased 56.3% to $108.7 million compared to $69.5 million in 2003. Demand for rental accommodation has remained stable in 2004, resulting in average occupancy in CAP REIT's portfolio being 96.6% as at December 31, 2004 compared to 97.6% last year. Operating costs operating costs npl → gastos mpl operacionales have risen in 2004 due to the increased size of the portfolio, as well as higher repairs and maintenance and advertising costs incurred to attract and retain tenants. In addition, CAP REIT accelerated its suite renovation program in 2004, completing work on 1,291 suites during the year compared to 485 suites in 2003. These suites were vacant during renovations for varying periods up to 60 days. The acquisition of the ResREIT properties, which included a large number of luxury properties, resulted in an overall increase in average rents for CAP REIT's total portfolio to $889 per suite as at December 31, 2004 from $875 at the prior year-end. Primarily as a result of the cost increases and weak market conditions in 2004, NOI as a percentage of revenues decreased to 51.6% and 52.3% for the three months and year ended December 31, 2004 respectively, compared to 53.0% and 53.6% respectively, last year. On October 6, 2004, CAP REIT completed the sale of two mid-tier townhouse town·house or town house n. 1. A residence in a city. 2. A row house, especially a fashionable one. properties in Kanata, Ontario Kanata is a large suburban area in the western part of Ottawa, Ontario, Canada,it has a population of 90,000 and is growing rapidly. It is located just to the west of the Greenbelt and is one of the largest of several communities that surround central Ottawa. totalling 196 suites. The sale price of $16.75 million generated a gain on the disposition of approximately $2.56 million or $0.061 per Unit in the fourth quarter. Distributable Income ("DI") increased 69.5% in the fourth quarter to $15.0 million or $0.295 per Unit from $8.9 million or $0.307 per Unit last year. For the year ended December 31, 2004, DI rose 45.1% to $52.3 million or $1.250 per Unit from $36.0 million or $1.257 per Unit last year. DI excludes gain on discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $2.56 million ($0.061 per Unit) in 2004 and gain on property disposition of $2.11 million ($0.074 per Unit) in 2003. "While we achieved our 2004 targeted general and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. savings from the ResREIT acquisition and met our mortgage refinancing objectives, revenue erosion from the ongoing weakness in our markets and higher operating costs were incurred. As a result, we did not meet our distributable income target of $1.28 per Unit," commented Thomas Schwartz, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The acquisition of the ResREIT properties will bring considerable benefits to our Unitholders over time. The transaction broadened the geographic diversification of our portfolio, and significantly enhanced its composition and quality. CAP REIT is now one of Canada's largest residential landlords with properties from coast to coast. Looking ahead, we are confident we will achieve the expected economies of scale and cost synergies Cost Synergy In the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. Notes: The savings in operating costs usually come in the form of laying off employees. arising from our increased size over the next two years, and we are more strongly positioned than ever before to grow distributable income as market fundamentals improve." Cash distributions paid to Unitholders were higher in 2004 due to the increase in monthly cash distributions implemented in October 2003 and the issuance of 21.964 million Units related to the ResREIT acquisition. The payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. in the fourth quarter was 91.6% and 86.3% for the year ended December 31, 2004. Not including the cash reinvested from the Distribution Reinvestment Plan reinvestment plan See dividend reinvestment plan (DRIP). (DRIP), the effective payout ratio was 77.4% for 2004. The payout ratio calculation also does not include gains on property dispositions. Net income for the three months ended December 31, 2004 was $2.8 million or $0.056 per Unit compared to $6.3 million or $0.218 per Unit last year. For the year ended December 31, 2004, net income was $10.2 million or $0.244 per Unit compared to $28.7 million or $1.001 per Unit last year. Net income in 2004 has been primarily impacted by an increase of $16.9 million in depreciation expense resulting from a required change in accounting policy, increased amortization costs of $5.7 million and higher interest costs of $21.1 million due to the completion of the ResREIT acquisition. The leverage ratios for mortgage indebtedness and overall indebtedness (including borrowings on the operating and acquisition facilities) to gross book value were 59.0% and 63.6% respectively as at December 31, 2004, as compared to 58.0% and 62.6% respectively as at December 31, 2003. As at December 31, 2004, the weighted average interest rate on CAP REIT's total mortgage portfolio was 5.42% compared to 6.04% as at December 31, 2003, and had additional capacity to raise $19.1 million before reaching its maximum 60% indebtedness limit. The weighted average term to maturity was 7.4 years compared to 7.1 years as at December 31, 2003. Undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely amounts on the acquisition and operating credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities were $35.2 million as at December 31, 2004, compared to $40.9 million last year. Funds from Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") for the fourth quarter of 2004 were $14.9 million or $0.292 per Unit compared to $8.9 million or $0.307 per Unit last year. For the year ended December 31, 2004, FFO was $50.2 million or $1.201 per Unit compared to $36.0 million or $1.257 per Unit in 2003. FFO has been calculated in accordance with the recommendations of the Canadian Institute of Public and Private Real Estate Companies ("CIPPREC CIPPREC Canadian Institute of Public and Private Real Estate Companies ") dated November 30, 2004. The reduction in FFO per Unit as compared to 2003 is primarily due to the treatment of one-time deferred financing costs (for underwriting fees Underwriting fee The portion of the gross underwriting spread that compensates the securities firms that underwrite a public offering for their services. and related costs for the bridge facility) of $1.9 million or $0.05 per Unit, which are not added back for the FFO calculation. CAP REIT has engaged the services of a professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. firm to review its overall management structure and information systems. Management recognized that with the acquisition of the ResREIT portfolio, a thorough evaluation of its property management, administrative and financial infrastructure was necessary. Once the evaluation is completed, CAP REIT will be implementing programs to ensure it is able to effectively capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the increase in the size and critical mass of its portfolio while establishing a solid foundation on which further growth can be achieved.
Financial Highlights:
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Period Ended December 31,
($ Thousands, except Three Months Year
per Unit amounts) 2004 2003 2004 2003
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Operating Revenues $ 65,277 $ 33,335 $ 207,675 $ 129,726
Net Operating
Income (NOI) $ 33,673 $ 17,682 $ 108,680 $ 69,526
NOI Margin 51.6% 53.0% 52.3% 53.6%
Net Income $ 2,836 $ 6,315 $ 10,222 $ 28,692
Net Income per Unit $ 0.056 $ 0.218 $ 0.244 $ 1.001
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Distributable
Income(1) (3) $ 15,035 $ 8,872 $ 52,283 $ 36,026
Distributable
Income per Unit(1) $ 0.295 $ 0.307 $ 1.250 $ 1.257
Distributions
Declared per Unit $ 0.270 $ 0.285 $ 1.080 $ 1.073
Payout Ratio
(before property
gain) 91.6% 92.9% 86.3% 85.4%
Effective Payout
Ratio(2) 84.3% 78.5% 77.4% 71.9%
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Funds from
Operations(1) (3) $ 14,866 $ 8,872 $ 50,235 $ 36,026
Funds from
Operation per
Unit(1) $ 0.292 $ 0.307 $ 1.201 $ 1.257
Number of Suites 24,132 13,438
Income Properties $1,822,421 $ 821,814
Weighted Average
Number of Units
(000s) 50,980 28,893 41,816 28,659
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(1) Excludes gain on discontinued operations of $2.56 million or
0.061 per Unit for three months and year ended December 31, 2004
and gain on property disposition of $2.11 million or $0.074 per
Unit for the year ended December 31, 2003.
(2) Excludes cash reinvested from the DRIP and gains on property
dispositions.
(3) Distributable income and funds from operations are not measures
defined by Canadian GAAP.
CAP REIT's Annual 2004 Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge including Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial and Supplemental Information can be found on the investor relations Investor relations The process by which the corporation communicates with its investors. page at www.capreit.net. As one of Canada's largest residential landlords, CAP REIT (TSX - CAR.UN) is a growth-oriented investment trust owning interests in 24,132 residential suites located in major urban centres from coast to coast across the country. 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. CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST (TSX:CAR.UN) |
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