CAP REIT Announces Third Quarter 2004 Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Apartment Properties Real Estate Investment Trust ("CAP REIT CAP REIT 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) announced today results for the three and nine months ended September September: see month. 30, 2004. The results include the contribution from the acquisition of Residential Equities Real Estate Investment Trust ("ResREIT") completed on June June: see month. 1, 2004. THIRD QUARTER HIGHLIGHTS: - Contributions from acquisitions more than doubles third quarter operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. . - Distributable income rises 73%. - $200 million bridge loan fully repaid subsequent to quarter-end. - Integration of ResREIT properties and people proceeding. Revenues for the three months ended September 30, 2004 more than doubled to $65.4 million from $32.3 million last year. For the first nine months of 2004, revenues rose 48.0% to $142.7 million from $96.4 million in 2003. The revenue increases in 2004 were due to the acquisition of 11,162 suites over the prior twelve months, including the 10,890 suites acquired from ResREIT on June 1, 2004. Primarily due to 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 three months ended September 30, 2004 rose 91.4% to $35.4 million compared to $18.5 million last year. For the first nine months of 2004, NOI increased 44.7% compared to the same period in 2003. Operating costs operating costs npl → gastos mpl operacionales have risen in 2004 due to the increased size of the portfolio, including the ResREIT acquisition completed on June 1, 2004, as well as repairs and maintenance and advertising costs as management initiated a number of new programs to attract and retain tenants. Primarily as a result of these cost increases in 2004, NOI as a percentage of revenues decreased marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. to 54.1% and 52.6% for the three and nine months ended September 30, 2004 respectively, compared to 57.4% and 53.8% respectively last year. Management expects to achieve its target 52% NOI margin for the full 2004 year. For the total portfolio at September 30, 2004, total occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy declined slightly to 96.7% from 97.7% last year while average monthly rents increased to $890 per suite compared to $884 last year. Occupancies have been impacted by weaker market conditions in a small number of properties, including some acquired in the ResREIT transaction, that are experiencing higher than average vacancies. Through the third quarter, efforts were successfully directed at introducing new marketing strategies and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. initiatives to increase occupancy in these properties. As a result, occupancy in the ResREIT portfolio has improved to 96.4% as at September 30, 2004 from 94.4% at June 30, 2004, while average rents have increased to $911 at the end of the third quarter from $894 at June 30, 2004. CAP REIT believes further improvements will be achieved in the fourth quarter. To attract and retain tenants, management intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: the suite renovation program in 2004 and renovated a total of 821 suites (including the new ResREIT properties) as at September 2004. Included as vacancies were 136 suites under renovation as at September 30, 2004, and 50 suites as at September 30, 2003. "We are encouraged by the stable performance of our portfolio and the solid improvement in our recently acquired properties," commented Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Schwartz Schwartz is a Canadian spices brand. It is also a common surname and may refer to:
On October October: see month. 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. totaling 196 suites. The sale price of $16.75 million generated a gain on the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.5 million or $0.05 per Unit. Distributable Income ("DI") increased 72.9% in the third quarter to $17.8 million or $0.351 per Unit from $10.3 million or $0.358 per Unit last year. For the nine months ended September 30, 2004 DI rose 37.2% to $37.2 million or $0.962 per Unit from $27.2 million or $0.950 per Unit without gain last year. 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 third quarter was 77.0% compared to 73.4% in last year's third quarter. Including cash reinvested from the Distribution Reinvestment Plan reinvestment plan See dividend reinvestment plan (DRIP). (DRIP), the effective payout ratio was 74.6% for the first nine months of 2004. Management believes it is on track to achieve its 85% target payout ratio Target payout ratio A firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a certain percentage of earnings, but it pays a stated dollar dividend and adjusts it to the target as base line increases in earnings occur. for the full 2004 year. Net income for the three months ended September 30, 2004 was $3.1 million or $0.061 per Unit compared to $7.8 million or $0.273 per Unit last year. For the nine months ended September 30, 2004, net income was $7.4 million or $0.191 per Unit compared to $22.4 million or $0.783 per Unit last year. Net income in 2004 has been primarily impacted by an increase of $11.9 million in depreciation expense resulting from a required change in accounting policy, increased amortization costs of $1.8 million and higher interest costs of $11.1 million due to refinancings of $277.8 million completed in 2004. Since the completion of the ResREIT acquisition on June 1, 2004, management has made considerable progress in integrating the new properties and people. Head office operational and financial staff are in the process of being merged together in CAP REIT's offices and management believes it is on track to achieve its 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 of $0.5 million in 2004. In addition, on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. property management has been combined and steps have been taken to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. policies, procedures, marketing programs and operating controls in order to achieve further operating 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. over the next two years. The leverage ratios for mortgage indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. and overall indebtedness (including borrowings on the operating and acquisition facilities) to GBV GBV Guided By Voices GBV Gemeinsamer Bibliotheksverbund (Library Service Northern Germany) GBV Gender Based Violence GBV Gross Book Value (accounting) were 58.6% and 64.1% respectively as at September 30, 2004, as compared to 58.0% and 62.1% respectively as at September 30, 2003. As at September 30, 2004 the weighted average interest rate on CAP REIT's total mortgage portfolio was 5.45% compared to 6.04% as at December December: see month. 31, 2003. The weighted average term to maturity was 7.5 years compared to 7.1 years as at December 31, 2003. Subsequent to the end of the quarter, CAP REIT refinanced five mortgages for an additional $19.2 million for eleven-year terms at interest rates in the range of 5.1%. Proceeds from these refinancings and the sale of the Kanata properties completed on October 6, 2004, were used to complete the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of the $200 million bridge loan utilized for the ResREIT acquisition and to reduce the acquisition facility to $72.6 million. 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 $39.7 million as at November November: see month. 1, 2004 which can be used for future growth opportunities. Financial Highlights: --------------------------------------------------------------------- Period Ended September 30, Three Months Nine Months ($ Thousands, except per Unit amounts) 2004 2003 2004 2003 --------------------------------------------------------------------- Operating Revenues 65,420 32,261 142,712 96,426 Net Operating Income 35,423 18,502 75,006 51,844 NOI Margin 54.1% 57.4% 52.6% 53.8% Net Income from Continuing Operations (1) 2,954 7,649 7,074 19,788 Net Income per Unit from Continuing Operations- Basic (1) $0.058 $0.266 $0.183 $0.766 --------------------------------------------------------------------- Distributable Income 17,811 10,298 37,248 27,154 Distributable Income per Unit (2) $0.351 $0.358 $0.962 $0.950 Distributions Declared per Unit $0.270 $0.263 $0.810 $0.788 Payout Ratio (before property gain) 77.0% 73.4% 84.2% 83.0% --------------------------------------------------------------------- Funds from Operations 17,036 10,298 35,442 29,264 Funds from Operation per Unit 0.335 0.354 0.91 1.02 Number of Suites 24,328 13,166 Income Properties 1,837,193 807,734 Weighted Average Number of Units (000's) 50,797 28,775 38,739 28,581 --------------------------------------------------------------------- --------------------------------------------------------------------- (1) Includes negative impact of change in accounting policy for depreciation effective January January: see month. 2004 and amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and deferred financing costs related to ResREIT transaction. (2) Includes 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 $0.003 and $0.007 per Unit for three months ended September 30, 2004 and 2003 and $0.008 and $0.017 per Unit for the nine months ended September 30, 2004 and 2003. CAP REIT's complete Third Quarter 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 and Report to Unitholders, 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
Consolidated Balance Sheets as at September 30, 2004 and
December 31, 2003
(Unaudited - $ thousands)
---------------------------------------------------------------------
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September 30 December 31
2004 2003
---------------------------------------------------------------------
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Assets
Income properties
- continuing operations (note 4) $ 1,823,433 $ 821,814
- discontinued operations (note 15) 13,760 -
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Net book value 1,837,193 821,814
Deposits and sundry assets (note 5) 16,634 8,359
Deferred financing costs (note 6) 15,350 8,351
Intangible assets (note 7) 12,323 -
Cash and cash equivalents 393 737
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$ 1,881,893 $ 839,261
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Liabilities and Unitholders' Equity
Liabilities
Mortgages payable
- continuing operations (note 8) $ 1,128,114 $ 504,964
- discontinued operations (note 15) 7,568 -
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1,135,682 504,964
Bank indebtedness (note 9) 108,284 40,527
Accounts payable and other liabilities 29,328 12,039
Security deposits 18,293 8,514
Distributions payable 4,577 3,038
Intangible liabilities (note 7) 751 -
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1,296,915 569,082
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Unitholders' Equity 584,978 270,179
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$ 1,881,893 $ 839,261
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The notes form an integral part of the consolidated financial
statements.
CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST
Consolidated Statements of Income
(Unaudited - $ thousands, except Unit and per Unit amounts)
---------------------------------------------------------------------
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Three Months Ended Nine Months Ended
September 30 September 30
2004 2003 2004 2003
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Operating Revenues
Revenues from income
Properties $ 65,420 $ 32,261 $ 142,712 $ 96,426
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Operating Expenses
Realty taxes 9,684 4,296 20,565 13,216
Property operating
Costs 20,313 9,463 47,141 31,366
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Total expenses 29,997 13,759 67,706 44,582
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Net Operating Income 35,423 18,502 75,006 51,844
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Depreciation
(note 13) 12,435 2,396 25,864 6,722
Amortization
(note 14) 2,483 168 4,323 471
Trust expenses 1,357 872 3,370 3,034
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16,275 3,436 33,557 10,227
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Income Before
Interest Expense 19,148 15,066 41,449 41,617
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Mortgage interest 14,851 6,947 31,427 20,341
Loan interest 1,405 525 3,106 1,631
Interest income (62) (55) (158) (143)
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16,194 7,417 34,375 21,829
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Income from Continuing
Operations 2,954 7,649 7,074 19,788
Discontinued operations
(note 15)
Income from
discontinued
operations 149 193 312 479
Gain on property
disposition
(note 16(f)) - - - 2,110
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Net Income $ 3,103 $ 7,842 $ 7,386 $ 22,377
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---------------------------------------------------------------------
Basic Net Income
per Unit from:
Continuing
operations $ 0.058 $ 0.266 $ 0.183 $ 0.766
Discontinued
operations 0.003 0.007 0.008 0.017
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Basic Net Income
per Unit $ 0.061 $ 0.273 $ 0.191 $ 0.783
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Diluted Net Income
per Unit from:
Continuing
operations $ 0.058 $ 0.265 $ 0.182 $ 0.764
Discontinued
operations 0.003 0.007 0.008 0.017
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Diluted Net Income
per Unit $ 0.061 $ 0.272 $ 0.190 $ 0.781
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Weighted average Number
of Units (note 11)
Basic 50,797,435 28,775,456 38,738,793 28,580,805
Diluted 50,826,560 28,872,916 38,791,236 28,656,095
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See accompanying notes to consolidated financial statements.
CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST
Consolidated Statement of Unitholders' Equity
For the Nine Months Ended September 30, 2004
(Unaudited - $ thousands)
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---------------------------------------------------------------------
Cumulative Cumulative Cumulative
Note Capital Net Income Distributions Total
---------------------------------------------------------------------
---------------------------------------------------------------------
Unitholders' Equity,
January 1, 2004 $292,564 $111,906 $(134,291) $270,179
Net income - 7,386 - 7,386
Distributions
declared and paid - - (26,788) (26,788)
Distributions
payable - - (4,577) (4,577)
New Units issued 3 339,147 - - 339,147
Distribution
Reinvestment
Plan 12 (a) 3,652 - - 3,652
Unit Option
Plan 12 (b) 576 - - 576
Employee Unit
Purchase Plan 12 (d) 86 - - 86
Units cancelled 12 (f) (4,511) - (172) (4,683)
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Unitholders' Equity,
September 30, 2004 $631,514 $119,292 $(165,828) $584,978
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Consolidated Statement of Unitholders' Equity
For the Nine Months Ended September 30, 2003
(Unaudited - $ thousands)
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---------------------------------------------------------------------
Cumulative Cumulative Cumulative
Note Capital Net Income Distributions Total
---------------------------------------------------------------------
---------------------------------------------------------------------
Unitholders' Equity,
January 1, 2003 $284,006 $83,214 $(103,520) $263,700
Net income - 22,377 - 22,377
Distributions
declared
and paid - - (20,009) (20,009)
Distributions
payable - - (2,523) (2,523)
Distribution
Reinvestment
Plan 12 (a) 3,206 - - 3,206
Unit Option
Plan 12 (b) 1,998 - - 1,998
Unit Purchase
Plan 12(c),
16(b) 1,865 - - 1,865
Employee Unit
Purchase Plan 12(d) 67 - - 67
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Unitholders' Equity,
September 30, 2003 $291,142 $105,591 $(126,052) $270,681
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See accompanying notes to consolidated financial statements.
CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST
Consolidated Statements of Cash Flow
(Unaudited - $ thousands)
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Three Months Ended Nine Months Ended
September 30 September 30
2004 2003 2004 2003
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Cash Provided By (Used In):
Operating Activities
Net income $ 3,103 $ 7,842 $ 7,386 $ 22,377
Items not affecting cash:
Depreciation 12,542 2,456 26,210 6,887
Amortization 2,487 172 4,335 483
Straight-line rent
adjustment (73) - (73) -
Gain on property
disposition - - - (2,110)
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Cash from Operations 18,059 10,470 37,858 27,637
Changes in non-cash
operating assets and
liabilities (note 16(a)) (129) 1,556 3,042 (337)
---------------------------------------------------------------------
Cash from Operating
Activities 17,930 12,026 40,900 27,300
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Financing Activities
Mortgage financings 141,188 48,327 277,764 66,425
Mortgage principal
repayments (8,037) (2,752) (15,296) (8,056)
Mortgage repaid
on maturity (46,653) (14,523) (62,478) (28,889)
Bank indebtedness (76,502) (17,982) 4,640 (9,313)
Proceeds of issuance
of Units 84 1,009 662 2,065
Net cash distributions
to Unitholders
(note 16(c)) (12,471) (6,380) (26,174) (16,803)
Deferred financing costs
incurred (3,310) (1,612) (8,895) (1,695)
Purchase of Units (99) - (4,683) -
---------------------------------------------------------------------
Cash (used in) from
Financing Activities (5,800) 6,087 165,540 3,734
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Investing Activities
Acquisition of income
properties (note 16(d)) (1,724) (11,203) (186,965) (18,014)
Disposition of income
properties (note 16(f)) - - - 4,289
Capital improvements (9,960) (7,286) (19,705) (17,020)
Restricted cash (53) (100) (114) (289)
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Cash used in Investing
Activities (11,737) (18,589) (206,784) (31,034)
---------------------------------------------------------------------
Changes in Cash and
Cash Equivalents
During the Period 393 (476) (344) -
Cash and Cash Equivalents,
Beginning of Period - 476 737 -
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Cash and Cash Equivalents,
End of Period $ 393 $ - $ 393 $ -
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See accompanying notes to consolidated financial statements.
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