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CAP REIT Announces Strong Year End ResultsAcquisitions and Enhanced Operating Performance Produce 53% Increase in Distributable IncomeCAP REIT (ticker: CAR_u.TO, exchange: Toronto Stock Exchange) News Release - 23-Feb-2000TORONTO, ONTARIO — Canadian Apartment Properties Real Estate Investment Trust ("CAP REIT") announced today results for the year ended December 31, 1999. Revenues for the year rose 41.5% to $60.2 million from $42.5 million in 1998, resulting in a 53.3% increase in distributable income to $15.5 million or $1.06 per Unit compared to $10.1 million or $0.91 per Unit in the previous year. For the three-month period ended December 31, 1999, revenue grew 49.9% to $17.1 million from $11.4 million in last year's fourth quarter. Distributable income rose 42.6% to $4.2 million or $0.26 per Unit from $2.9 million or $0.24 per Unit in 1998. The increase in revenues and distributable income are primarily the result of accretive acquisitions made during the year combined with improved operating efficiencies resulting in a 2% increase in net operating margins compared to the prior year. The book value of income producing properties grew to $412.8 million at December 31, 1999 from $294.6 million the prior year as the number of rental suites rose 33% to 7,509 from 5,637 in 1998. Distributions per Unit rose 13.8% to $0.99 for the year compared to $0.87 per Unit in 1998 and were 100% tax deferred. In addition to increasing its cash distributions to Unitholders, CAP REIT retained close to $1.0 million in distributable income for reinvestment in its portfolio, resulting in a reduced pay-out ratio of 93.8% compared to 97.1% in 1998. "Our growth in 1999 is the result of our focused acquisition program and the active management of our portfolio," commented Thomas Schwartz, President and CEO. "As we enter fiscal 2000, occupancy remains high, average rents are growing, and we have targeted a number of further acquisition opportunities that will enhance value and distributable income going forward." "Our superior performance is indicative of the strong management team we have assembled at CAP REIT and the stability of the rental residential real estate market," continued Michael Stein, Executive Chairman. "We are very proud to have achieved our goals to increase distributions and the size of our portfolio in 1999, and are confident growth will continue in 2000."
Financial Highlights (complete financial statements are attached):
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Period Ended Dec 31, Fiscal Year
1999 1998 % Incr.
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Operating Revenues ($000) 60,187 42,540 41.5%
Net Operating Income($000) 31,307 21,696 44.3%
NOI Margin (%) 52.0 51.0 2.0%
Distributable Income ($000) 15,502 10,111 53.3%
Distributable Income per Unit $1.06 $0.91 16.5%
Distributions per Unit $0.99 $0.87 13.8%
Payout Ratio (%) 93.8 97.1
Weighted Average Number of
Units 14,657 11,156
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CAP REIT is a growth-oriented investment trust owning freehold and co-ownership interests in 43 multi-unit residential complexes comprising 7,648 suites, including apartment buildings and townhouses located in major urban centres across the country. CAP REIT increased the size of its portfolio by 69% in 1998, and by 33% in 1999. Since its Initial Public Offering in May 1997, monthly cash distributions per Unit have grown 43%. 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
Balance Sheets as at December 31, 1999 and 1998 (Audited)
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1999 1998
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Assets
Income properties (note 2) $412,786,655 $294,628,858
Deposits and sundry assets 2,925,869 3,496,366
Deferred financing costs (note 2) 3,234,603 1,440,804
Cash and cash equivalents 135,545 5,222,962
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$419,082,672 $304,788,990
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Liabilities and Unitholders' Equity
Liabilities
Mortgages payable (note 3) $236,983,265 $169,542,309
Loan payable 8,750,000 20,595,000
Accounts payable and other liabilities 7,620,191 5,562,962
Security deposits 4,967,970 3,569,422
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$258,321,426 $199,269,693
Unitholders' Equity (notes 4 and 5)
Issued and outstanding:
Units 18,931,747 (1998 - 12,040,251) 160,761,246 105,519,297
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$419,082,672 $304,788,990
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Statement of Unitholders' Equity (Audited)
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Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998
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Unitholders' equity, beginning of year $105,519,297 $74,426,481
Proceeds of offerings of Units 65,081,000 35,000,140
Issue of Units on internalization (note 4) 5,400,000 -
Distribution Reinvestment and Unit
Option Plans 652,789 151,675
Offering expenses (3,528,645) (2,871,094)
Net income 2,172,529 8,631,471
Distributions to Unitholders (note 6 ) (14,535,724) (9,819,376)
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Unitholders' equity, end of year $160,761,246 $105,519,297
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See accompanying notes to financial statements.
CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST
Statements of Income and Distributable Income
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For the For the For the For the
period period period period
October 1 to October 1 to January 1 to January 1 to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
(Unaudited) (Unaudited) (Audited) (Audited)
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Operating Revenues
Revenue from income
properties $17,073,281 $11,389,463 $60,187,302 $42,539,588
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Operating Expenses
Realty taxes 2,464,234 1,829,509 9,010,185 6,787,903
Property operating costs 5,598,814 3,430,780 18,124,994 12,566,999
Property management fees 236,302 398,632 1,745,293 1,488,886
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Total expenses 8,299,350 5,658,921 28,880,472 20,843,788
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Net Operating Income 8,773,931 5,730,542 31,306,830 21,695,800
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Mortgage interest 3,518,520 2,292,497 12,075,765 8,704,551
Depreciation 885,153 532,818 3,014,360 1,943,875
Amortization of deferred
financing costs 67,041 44,308 203,283 302,050
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4,470,714 2,869,623 15,293,408 10,950,476
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Income from properties 4,303,217 2,860,919 16,013,422 10,745,324
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Trust expenses
Advisory fees 261,734 415,220 1,790,673 1,562,840
General and Administration 441,809 128,759 1,041,085 548,973
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703,543 543,979 2,831,758 2,111,813
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Other
Loan Interest expense (310,697) (10,906) (868,130) (884,633)
Instalment receipt interest
income - - - 597,122
Other interest income 5,429 91,979 173,668 285,471
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(305,268) 81,073 (694,462) (2,040)
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Net Income before
internalization (note 7) 3,294,406 2,398,013 12,487,202 8,631,471
Internalization (note 4)(10,314,673) - (10,314,673) -
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Net Income (note 7) (7,020,267) 2,398,013 2,172,529 8,631,471
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Add
Internalization(note 4) 10,314,673 - 10,314,673 -
Depreciation 885,153 532,818 3,014,360 1,943,875
Amortization of REIT loan deferred
Financing costs - - - 132,523
Instalment receipt interest
income - - - (597,122)
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Distributable Income for
the Period (note 6) $4,179,559 $2,930,831 $15,501,562 $10,110,747
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Distributable Income
per Unit (note 7) $ .26 $ .24 $ 1.06 $ .91
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Weighted Average Number
of Units Outstanding
(note 7) 16,063,104 12,040,162 14,656,708 11,155,826
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See accompanying notes to financial statements.
CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows (Audited)
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Years Ended December 31
1999 1998
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Cash Provided by (Used in):
Operating Activities
Net income $ 2,172,529 $ 8,631,471
Items not affecting cash:
Depreciation 3,014,360 1,943,875
Amortization of deferred financing costs 203,283 302,050
Issue of units on internalization (note 4) 5,400,000 -
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Cash flow from operations 10,790,172 10,877,396
Changes in non-cash operating assets and
liabilities 2,029,192 2,999,745
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Cash flow from operating activities 12,819,364 13,877,141
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Financing Activities
Mortgage financing 76,372,213 3,344,117
Mortgage principal repayments (3,918,086) (2,526,784)
Mortgage discharges (21,492,072) -
Loan payable (11,845,000) (18,667,680)
Proceeds of offerings of units (net)
(note 5) 62,205,144 32,280,721
Distributions to Unitholders (note 6) (14,535,724) (9,819,376)
Instalment receipt receivable - 32,385,558
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86,786,475 36,996,556
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Investing Activities
Acquisition of income properties (98,281,457) (42,602,804)
Capital improvements (6,411,799) (6,271,880)
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(104,693,256) (48,874,684)
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Change in Cash and Cash Equivalents During
the Year (5,087,417) 1,999,013
Cash and Cash Equivalents, Beginning of Year 5,222,962 3,223,949
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Cash and Cash Equivalents, End of Year 135,545 5,222,962
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Supplemental Cash Flow Disclosure
During 1999, CAP REIT acquired properties for total acquisition costs
of $114,760,358 (1998 - $94,644,891) and assumed mortgages of
$16,478,901 (1998 - $52,042,087).
The notes form an integral part of the financial statements.
CANADIAN APARTMENT PROPERTIES REAL ESTATE INVESTMENT TRUST
Notes to Financial Statements
For the years ended December 31, 1999 and 1998
1. Organization of the Trust
Canadian Apartment Properties Real Estate Investment Trust ("CAP
REIT") is a closed-end real estate investment trust created for the
benefit of the Unitholders. CAP REIT commenced active operations on
February 4, 1997 when it acquired an initial portfolio of properties
and became a reporting issuer on May 21, 1997 pursuant to an initial
public offering prospectus dated May 12, 1997.
2. Significant Accounting Policies
These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles consistent with
those disclosed in CAP REIT's annual report for the year ended
December 31, 1998.
3. Mortgages Payable
Mortgages payable bear interest at rates ranging between 5.20% and
8.25% with a year-end weighted average rate of 6.28% (1998 - 6.23%)
and mature between 2000 and 2019. The income properties have been
pledged as security. Future principal repayments over the next five
years ending December 31, are as follows:
% of Total
Year Ending Principal Amount Principal
----------- ---------------- ----------
2000 $39,916,471 16.84
2001 39,281,136 16.57
2002 22,032,941 9.30
2003 15,701,681 6.63
2004 21,044,849 8.88
Subsequent to 2004 99,006,187 41.78
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$236,983,265 100.00
4. Internalization
On September 30, 1999, Unitholders approved a resolution to
terminate the advisory and property management agreements with
Canadian Apartment Communities Inc. and Canadian Apartment Management
Inc., respectively. The termination was effective November 11, 1999.
The transaction price was $9.0 million for termination of both
agreements. Of the total transaction price, $5.4 million was paid by
way of the issuance of 483,568 CAP REIT Units (based on an issue price
of $11.167 per Unit) on November 11, 1999 and $3.6 million was paid in
cash on November 30, 1999. Subject to certain exceptions, all Units
issued in connection with the internalization will be held in escrow
for a period of three years. The expenses related to the transaction
aggregated to $1,314,673, comprising goods and services tax of
$630,000 and other costs of $684,673.
5. Unitholders' Equity
On March 24, 1999 CAP REIT issued 3,050,000 Units at $9.85 per Unit
for net proceeds of $28,390,588.
On December 14, 1999 CAP REIT issued 3,290,000 Units at $10.65 per
Unit for net proceeds of $33,161,767.
On January 13, 2000, the underwriters of CAP REIT exercised the over-
allotment option pursuant to the offering on December 14, 1999 and
purchased an additional 350,000 Units at $10.65 for net proceeds of
$3,559,762.
6. Distributable Income and Distributions
The distributable income is calculated in accordance with CAP REIT's
Declaration of Trust. CAP REIT distributes to Unitholders monthly,
on or about the 15th day of each month (other than January 15th) and
December 31st in each calendar year (a "Distribution Date"), not less
than 85% of the distributable income of CAP REIT for the preceeding
calendar month and, in the case of distributions made on December
31st, for the calendar month then ended.
7. Per Unit Amounts and Payout Ratio
Per Unit or per instalment receipt calculations are based on the
weighted average number of Units outstanding during the year.
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Years Ended December 31
1999 1998
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Net income $0.15 $0.79
Net income before internalization 0.85 0.79
Cash flow from operations 0.74 0.98
Cash flow before internalization 1.07 0.98
Distributable income 1.06 0.91
Cash distributions 0.99 0.87
Payout ratio 93.8% 97.1%
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