CAPREIT Announces $216MM in Strategic Transactions

TORONTO, March 28, 2024 (GLOBE NEWSWIRE) -- Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) announced today that it has closed on four non-core Canadian dispositions for combined consideration of $83.5 million, and has entered into an agreement to dispose of an additional parcel of unused land for $2.0 million. CAPREIT has also completed the acquisition of two strategically aligned, newly constructed purpose-built rental properties in Canada for $130.0 million. All amounts disclosed herein exclude transaction costs.

A Media Snippet accompanying this announcement is available by clicking on this link.

This week, CAPREIT closed on the sale of two rental properties located in Langley, British Columbia, to New Vista Society, a local non-profit organization that provides affordable housing to seniors and families. New Vista Society is receiving funding from British Columbia’s Rental Protection Fund (the “BC RPF”). The buildings were both constructed in 1978 and contain 108 residential suites in total. Combined gross proceeds of $35.0 million were used in part to repay $6.5 million in aggregate mortgage principal outstanding.

In addition, earlier in March, CAPREIT completed the disposition of a non-core, 240-suite property built in 1962 in Québec City, Québec, for $36.3 million in gross consideration, with the buyer having assumed the $21.4 million in mortgage principal outstanding. In January, CAPREIT also sold 32 residential suites built in 1969 in Victoria, British Columbia, for $12.3 million, with proceeds used in part to repay the outstanding $2.9 million mortgage.

CAPREIT also announced that it has entered into an agreement to dispose of a 0.3 acre parcel of unused land in Halifax to a neighbouring developer for $2.0 million. CAPREIT has secured a Right of First Offer on the neighbouring site, once the apartment is constructed. The buyer of the land has waived conditions, and closing is anticipated in the second quarter of 2024.

CAPREIT also announced that this month, it acquired two stabilized, concrete, rental apartment properties, one 16-storey and the other 17-storey, primely located in a sought-after community in London, Ontario. The high-quality buildings were constructed in 2019 and 2021, and contain an aggregate 291 spacious residential suites with a large average size of 1,160 square feet. The on-strategy, purpose-built rental apartments were acquired for $130.0 million, representing a significant discount to what it would cost to build today. CAPREIT additionally assumed the two existing below-market mortgages, which have a combined $80.9 million in principal outstanding, a weighted average term to maturity of 2 years, and carry an attractive 2.3% blended interest rate. The residual $49.1 million purchase price was funded by cash sourced from previously announced dispositions.

“We’re very pleased with the progress we’ve made on the execution of our strategy in the first quarter of 2024, including our initiatives surrounding the resolution of the Canadian housing supply and affordability crises,” commented Mark Kenney, President and CEO. “These transactions exemplify all facets of that strategy in action. We are proud to have sold two properties to a non-profit organization that will be able to preserve the long-term affordability of those suites, which are situated in one of Canada’s least affordable markets. We are very happy to have been able to work with the BC RPF on these important transactions. Simultaneously, we are supporting the supply of new housing for Canadians by investing in purpose-built rental apartments, such as the buildings we’ve just acquired in an attractive and growing region in southwestern Ontario. In turn, this is encouraging incremental residential development in key metropolitan areas throughout Canada.”

“Preservation of our existing housing stock is one of the most effective strategies to address the affordability crisis in British Columbia and across Canada,” shared Katie Maslechko, CEO of the Rental Protection Fund. “It is a transformative model that is already delivering results and protecting renters, and this transaction between CAPREIT and New Vista Society is an excellent example with the potential to be replicated across Canada. With the support of the Rental Protection Fund, this acquisition will ensure these homes remain affordable in perpetuity, while growing the capacity of the Community Housing sector, and freeing up capital that can be redeployed into new supply.”

“We were able to purchase these well-located concrete new build properties for only $385 per leasable square foot, representing a steep discount to replacement cost, with favourable in-place debt financing. The mid-4% cap rate for these luxury towers exceeds the weighted average cap rate on our first quarter dispositions, which were sold at a premium to their previously reported IFRS fair values,” continued Julian Schonfeldt, Chief Investment Officer. “Additionally, in Q1, we’ve so far sold $58 million of equity in Irish Residential Properties REIT plc, reducing CAPREIT’s ownership from 18.7% to 11.3%. We’ve used the proceeds to accretively repurchase $27 million of CAPREIT units, at a discount to NAV, with the remainder of the proceeds used to repay debt. We’re excited about the ground we’ve covered on our strategic priorities to start 2024, and going forward, we remain focused on newly constructed Canadian rental apartments and the ongoing creation of value for our Unitholders.”

ABOUT CAPREIT
CAPREIT is Canada’s largest publicly traded provider of quality rental housing. As at December 31, 2023, CAPREIT owns approximately 64,300 residential apartment suites, townhomes and manufactured home community sites well-located across Canada and the Netherlands, with approximately $16.5 billion of investment properties in Canada and Europe. For more information about CAPREIT, its business and its investment highlights, please visit our website at www.capreit.ca and our public disclosure which can be found under our profile at www.sedarplus.ca.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking statements within the meaning of applicable Canadian securities laws which reflect CAPREIT’s current expectations and projections about future results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intent”, “estimate”, “anticipate”, “believe”, “consider”, “should”, “plans”, “predict”, “estimate”, “forward”, “potential”, “could”, “likely”, “approximately”, “scheduled”, “forecast”, “variation” or “continue”, or similar expressions suggesting future outcomes or events. The forward-looking statements made in this press release relate only to events or information as of the date on which the statements are made in this press release. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Any number of factors could cause actual results to differ materially from these forward-looking statements. Although CAPREIT believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Such forward-looking statements are based on a number of assumptions that may prove to be incorrect. Accordingly, readers should not place undue reliance on forward-looking statements.

Forward looking statements in this press release 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.sedarplus.ca.

Except as specifically required by applicable Canadian securities law, CAPREIT does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements should not be relied upon as representing CAPREIT’s views as of any date subsequent to the date of this press release.

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