CAPREIT Reports Second Quarter 2025 Results

Executive Summary

• Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) reported operating and financial results for the three and six months ended June 30, 2025, highlighting a strategic shift toward a pure-play Canadian apartment REIT through significant European dispositions and Canadian acquisitions.
• The company reported diluted Funds From Operations (FFO) per unit of $0.661 for Q2 2025, a 2.6% increase year-over-year, driven by accretive Trust Unit repurchases and lower interest expenses, partially offset by lost NOI from disposed properties.
• CAPREIT continues to execute its "high grading" strategy, having sold $274 million of non-core Canadian assets and $743 million in European dispositions year-to-date, while reinvesting $165 million into high-performing Canadian properties and $187 million into Trust Unit buybacks.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Operating Revenues: $254.4 million (down from $278.1 million).
  • Net Operating Income (NOI): $169.8 million (down from $186.3 million).
  • Same Property NOI: $154.1 million (up 4.9% from $146.9 million).
  • Same Property NOI Margin: 66.3% (up 40 basis points).
  • Net Income: $74.5 million (down from $112.1 million).
  • Diluted FFO per Unit: $0.661 (up 2.6% from $0.644).
  • Distributions per Unit: $0.388 (up from $0.363).
  • FFO Payout Ratio: 58.5%.
• Financial Performance (Six Months Ended June 30, 2025 vs 2024):
  • Operating Revenues: $507.7 million (down from $553.9 million).
  • Same Property NOI: $297.0 million (up 3.8% from $286.1 million).
  • Diluted FFO per Unit: $1.246 (down 0.6% from $1.253).
• Portfolio Metrics (As of June 30, 2025):
  • Total Portfolio Occupancy: 97.9% (up from 97.7% in June 2024).
  • Canadian Residential Portfolio Occupancy: 98.3% (up from 98.2%).
  • Netherlands Residential Portfolio Occupancy: 91.0% (down from 97.7%, largely due to suites held vacant for disposition).
  • Canadian Residential Same Property Occupied AMR: $1,674 (up 5.2% YoY).
  • Total Investment Properties Fair Value: $14.48 billion.
  • Assets Held for Sale: $586.7 million.
• Capital Allocation & Transactions:
  • Acquisitions (6 Months): Acquired 4 properties with 420 suites in Canada for $152.1 million.
  • Dispositions (6 Months): Disposed of 2,196 suites/sites for $411.0 million ($274.3M Canada, $136.7M Europe).
  • NCIB (Buybacks): Purchased and cancelled ~4.0 million Trust Units for $171.9 million (6 months); weighted average price $42.49/unit.
  • Reinvestment: Reinvested $165 million from net proceeds into Canadian acquisitions.
• Balance Sheet & Liquidity:
  • Total Debt to Gross Book Value: 38.5% (down from 41.5% in June 2024).
  • Weighted Average Mortgage Effective Interest Rate: 3.17%.
  • Cash and Cash Equivalents: $28.6 million.
  • Available Borrowing Capacity: $61.9 million (excluding $400M accordion option).
  • Diluted NAV per Unit: $56.14 (up from $55.05 in June 2024).
• Strategic Updates & Subsequent Events:
  • ERES Dispositions: Agreed to sell 1,446 residential suites in the Netherlands for ~$522 million (expected close Sept 15, 2025) and German/Netherlands commercial properties for ~$45.4 million.
  • ERES Distributions: ERES intends to declare a special distribution of €0.90 per unit in Sept 2025 and cease regular monthly distributions.
  • ATM Program: Renewed base shelf prospectus for up to $300 million in Trust Units; valid until June 15, 2027. No units issued in Q2 or H1 2025.
  • Subsequent Acquisitions: Acquired 30 suites in Vancouver, BC for $13.0 million on July 10, 2025.
  • Subsequent Dispositions: Sold a Belgian commercial property for $38.8 million on July 31, 2025.
  • Facility Amendment: Temporarily increased borrowing capacity on Acquisition and Operating Facility from $200 million to $400 million until Sept 30, 2025, to fund acquisitions and anticipate ERES proceeds.

Notable Quotes

• "I'm proud of CAPREIT's performance during the second quarter of 2025, as we've made good progress across each of our organizational objectives... We're continuing to execute on our strategy of high grading the quality of our Canadian portfolio... and all while remaining focused on free cash flow, and this has resulted in strong growth in earnings for our Unitholders." — Mark Kenney, President and CEO
• "So far this year, we've sold $274 million of non-core, under-performing Canadian assets... and we've completed or committed to $743 million in European dispositions, bringing us much closer to our vision of returning to a pure play Canadian apartment REIT." — Mark Kenney, President and CEO
• "As a result of having recalibrated our rent optimization and vacancy mitigation strategies... we're pleased to report that for our same property residential portfolio in Canada, occupancies are up to 98.3% as of June 30, 2025, and Occupied AMR grew by 5.2% since the comparative period." — Stephen Co, CFO