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CAPREIT Announces Another Strong Quarter in Q2 2012 and a 3.7% Increase in Monthly Cash Distributions; to $1.12 on an Annualized Basis

Acquisitions and Strong Operating Performance Contribute to Solid NFFO Growth

Wednesday, August 08, 2012

CAPREIT Announces Another Strong Quarter in Q2 2012 and a 3.7% Increase in Monthly Cash Distributions; to $1.12 on an Annualized Basis17:15 EDT Wednesday, August 08, 2012TORONTO, ONTARIO--(Marketwire - Aug. 8, 2012) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today strong operating and financial results for the three and six months ended June 30, 2012. Three Months EndedSix Months EndedJune 30June 302012201120122011Operating Revenues (000s)$95,932$88,235$191,194$174,567Net Operating Income ("NOI") (000s) (1)$56,714$51,991$109,452$98,555NOI Margin (1)59.1%58.9%57.2%56.5%Normalized Funds From Operations ("NFFO") (000s) (1)$31,329$26,848$59,131$49,400NFFO Per Unit - Basic (1)$0.358$0.357$0.692$0.659Weighted Average Number of Units - Basic (000s)87,50975,14385,45274,994NFFO Payout Ratio (1)78.8%78.1%81.0%84.7%(1)NOI, NFFO and NFFO per Unit are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release.Q2 2012 stabilized operating revenues increased 2.2% due to higher rent guideline increases, higher rents on turnovers, high stable occupancies. Q2 2012 stabilized NOI rose 2.7% with NOI margin increasing to 59.4% from 59.1% last year, the 26th consecutive quarter of stable or improved year-over-year same property NOI Average monthly rents for all residential properties increased by 1.7% as at June 30, 2012 compared to the same period last year while occupancy remained strong at 98.3%. Q2 YTD 2012 NOI up 11.1% compared to the same period last year with NOI margin increasing to 57.2% from 56.5% Q2 2012 suite turnovers in the residential suite portfolio (excluding co-ownerships) resulted in average monthly rent increasing by approximately $23 or 2.2%, compared to an increase of approximately $9 or 0.9% for the same period last year. Q2 2012 and YTD 2012 NFFO up 16.7% and 19.7%, respectively. Q2 2012 and YTD 2012 NFFO per Unit increased 0.3% and 5.0%, respectively, compared to the same period last year despite a 16% and 14% increase, respectively, in the weighted average number of Units outstanding Closed or committed $201.7 million of mortgage refinancings in Q2 2012 at an average interest rate of 2.81% and an average term to maturity of 9.4 years, which is expected to produce significant future interest rate savings Completed $176.3 million equity offering, including overallotment option Completed acquisition of a large and well-established national portfolio of 12 manufactured home communities (MHC) comprised of 2,032 land lease sites located in Ontario, Saskatchewan, Alberta and British Columbia for approximately $76.3 million. Completed the acquisition of 14 apartment and townhouse properties aggregating 3,562 rental suites located in the Ontario, Québec, and Nova Scotia for a total purchase price of approximately $461.4 million. Effective for the August 2012 distribution the monthly cash distributions will increase 3.7% to $0.093 per Unit ($1.120 per Unit annualized)"So far this year we have acquired 5,594 residential suites and land lease sites, significantly outpacing last year's portfolio growth and our target of purchasing between 1,500 and 2,000 suites per year," commented Thomas Schwartz, President and CEO. "The strong and accretive contribution these acquisitions will make to our results, combined with our solid organic growth in same property NOI, should result in another year of record operating and financial performance in 2012." "We are also very pleased to announce that distributions would increase by 3.7% to $0.093 per Unit ($1.120 on an annualized basis) effective for the August 2012 distribution payable on September 17, 2012. This increase is a reflection of our continuing strong growth and operating performance, and our highly positive long-term outlook," Mr. Schwartz added.PORTFOLIO OPERATING RESULTS Three Months EndedSix Months EndedJune 30June 302012201120122011Overall Portfolio Occupancy (1)98.4%98.4%Overall Portfolio Average Monthly Rents (1),(2)$960$982Operating Revenues (000s)$95,932$88,235$191,194$174,567Net Rental Revenue Run-Rate (000s) (1),(3),(4)$411,124$342,759Operating Expenses (000s)$39,218$36,244$81,742$76,012NOI (000s) (4)$56,714$51,991$109,452$98,555NOI Margin (4)59.1%58.9%57.2%56.5%Number of Suites and Sites Acquired5,5941,3445,5941,427Number of Suites Disposed199-335143(1)As at June 30.(2)Average monthly rents are defined as actual rents, net of vacancies, divided by the total number of suites and sites in the portfolio and do not include revenues from parking, laundry or other sources.(3)For a description of net rental revenue run-rate, see the Results of Operations section in the MD&A for the three and six months ended June 30, 2012.(4)Net rental revenue run-rate and NOI are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release.Operating RevenuesFor the three and six months ended June 30, 2012, total operating revenues increased by 8.7% and 9.5%, respectively, compared to the same periods last year primarily due to the contribution from acquisitions, higher rent guideline increases, increased average monthly rents in the residential suite portfolio, and continuing strong occupancies. For the three and six months ended June 30, 2012, ancillary revenues, including parking, laundry and antenna income, rose by 3.1% and 2.1%, respectively, compared to the same periods last year, as Management continued its focus on maximizing the revenue potential of its property portfolio. CAPREIT's annualized net rental revenue run-rate based on the average monthly rents in place on CAPREIT's share of residential suites and sites as at June 30, 2012 increased to $411.1 million, up 19.9% from $342.8 million as of June 30, 2011 primarily due to acquisitions completed within the past twelve months. Net rental revenue for the twelve months ended June 30, 2012 was $356.0 million (2011 - $327.6 million). Portfolio Average Monthly Rents ("AMR")Total PortfolioProperties Owned Prior to June 30, 2011As at June 30,2012201120122011 (1)AMROcc. %AMROcc. %AMROcc. %AMROcc. %Average Residential Suites$1,01698.3$99998.3$1,02498.2$99898.3Average MHC Land Lease Sites$43299.2$631100.0$62099.7$631100.0Overall Portfolio Average$96098.4$98298.4$1,00598.3$98198.4(1)Prior period's comparable AMR and occupancy have been restated for properties disposed of between July 1, 2011 and June 30, 2012.Average monthly rents decreased slightly by 2.2% as at June 30, 2012 compared to the same period last year due to the acquisition of MHC land lease sites in certain lower rent geographic regions, while occupancy remained at nearly full levels at 98.4% due to ongoing successful sales and marketing strategies and continued strength in the residential rental sector in the majority of CAPREIT's regional markets. Suite Turnovers and Lease RenewalsFor the Three Months Ended June 30,20122011Change in AMR% TurnoversChange in AMR% Turnovers$%& Renewals (1)$%& Renewals (1)Suite Turnovers22.72.27.89.20.98.1Lease Renewals34.83.318.814.31.417.3Weighted Average of Turnovers and Renewals31.23.012.71.2For the Six Months Ended June 30,20122011Change in AMR% TurnoversChange in AMR% Turnovers$%& Renewals (1)$%& Renewals (1)Suite Turnovers21.62.113.18.50.913.8Lease Renewals35.53.434.713.71.329.4Weighted Average of Turnovers and Renewals31.73.012.01.2(1)Percentage of suites turned over or renewed during the period based on the total number of residential suites (excluding co-ownerships) held at the end of the period.The higher rate of growth in average monthly rents on lease renewals during the periods is primarily due to the higher guideline increases for 2012 (Ontario - 3.1%, British Columbia - 4.3%), which compares more favourably to the permitted guideline increases in 2011 (Ontario - 0.7%, British Columbia - 2.3%) and above guideline increases ("AGI") applied. Management continues to pursue applications for AGIs where it believes increases are supported by market conditions above the annual guideline to raise average monthly rents on lease renewals. In July 2011 Ontario announced that the rent control guideline for the Province in 2013 would be 2.5%. Operating Expenses Operating expenses as a percentage of revenues decreased for the three months and six months ended June 30, 2012 to 40.9% from 41.1% and 42.8% from 43.5% respectively, for the same periods last year. The improvement is primarily due to: (i) the diversification of the portfolio into regions with lower taxation rates, (ii) lower utility costs, and (iii) successful energy-saving initiatives and enhanced procurement strategies. Net Operating Income In the second quarter of 2012, NOI improved by $4.7 million or 9.1%, and the NOI margin increased to 59.1% from 58.9% for the same period last year. For the first six months of 2012, NOI increased by $10.9 million or 11.1%, and the NOI margin improved to 57.2% from 56.5% for the same period last year. The significant improvements in NOI were primarily the result of acquisitions completed in the last 12 month period and higher operating revenues. For the three and six months ended June 30, 2012, operating revenues for stabilized suites and sites increased 2.2% and 2.0%, respectively, and operating expenses increased 1.4% and decreased 0.8%, respectively, compared to the same periods last year. For the three and six months ended June 30 2012, stabilized NOI increased by a significant 2.7% and 4.1%, respectively, compared to the same periods last year. NON-IFRS FINANCIAL MEASURESThree Months EndedSix Months EndedJune 30,June 30,2012201120122011NFFO (000s)$31,32926,848$59,131$49,400NFFO Per Unit - Basic$0.358$0.357$0.692$0.659Cash Distributions Per Unit$0.270$0.270$0.540$0.540NFFO Payout Ratio78.8%78.1%81.0%84.7%NFFO Effective Payout Ratio60.5%60.2%61.7%65.8%Normalized Funds From Operations NFFO is not a financial measure determined by IFRS, and is calculated by excluding from FFO the effects of certain non-recurring items, including changes in fair value of hedging instruments, amortization of losses on certain hedging instruments, and losses incurred on the amendment of natural gas contracts. NFFO, increased by 16.7% and 19.7% for the three and six months ended June 30, 2012, respectively, compared to the same periods last year. The increase was primarily due to the contribution from acquisitions, and higher operating revenues, resulting from Management's sales and marketing programs. For the six months ended June 30, 2012, basic NFFO per Unit increased by 5.0% compared to the same period last year despite the approximate 14% increase in the weighted average number of Units outstanding. For the three months ended June 30, 2012, basic NFFO per Unit increased by 0.3% compared to the same period last year due primarily to the increase in NFFO, despite the approximate 16% increase in the weighted average number of Units outstanding. Management expects FFO and NFFO per Unit, and the related payout ratios, to improve in the medium term as a result of the full NOI contribution from recent acquisitions. Comparing distributions declared to NFFO, the NFFO payout ratios for the three months ended June 30, 2012 was 78.8% compared to 78.1% for the same period last year. For the six months ended June 30, 2012, NFFO payout ratio improved to 81.0% compared to 84.7% for the same period last year. The effective NFFO payout ratio, which compares NFFO to net distributions paid, improved for the three and six months ended June 30, 2012, to 60.5% and 61.7%, respectively, from 60.2% and 65.8% for the same periods last year primarily due to higher NFFO during the current year and by higher participation in distributions reinvested. Management believes NFFO will be sufficient to fund CAPREIT's distributions on an annualized basis.LIQUIDITY AND LEVERAGEAs at June 30,20122011Total Debt to Gross Book Value50.83%54.32%Total Debt to Gross Historical Cost (1)59.25%61.32%Total Debt to Total Capitalization50.38%55.33%Debt Service Coverage Ratio (times) (2)1.441.34Interest Coverage Ratio (times) (2)2.342.12Weighted Average Mortgage Interest Rate (3)4.20%4.66%Weighted Average Mortgage Term to Maturity (years)5.05.3(1)Based on historical cost of investment properties.(2)Based on the trailing four quarters ended June 30, 2012.(3)Weighted average mortgage interest rate includes deferred financing costs and fair value adjustments on an effective interest basis. Including the amortization of the realized component of the loss on settlement of $15.8 million included in Accumulated Other Comprehensive Loss ("AOCL"), the effective portfolio weighted average interest rate at June 30, 2012 would be 4.34% (June 30, 2011 - 4.74%).Financial Strength Management believes CAPREIT's strong balance sheet and liquidity position will enable it to continue to take advantage of acquisition and property capital investment opportunities over the long term. CAPREIT is achieving its financing goals as demonstrated by the following key indicators:The ratio of total debt to gross book value as at June 30, 2012 improved to 50.83% compared to 54.32% for the same period last year and 50.27% at the end of 2011; Debt service and interest coverage ratios for the four quarters ended June 30, 2012 improved to 1.44 times and 2.34 times compared to 1.34 times and 2.12 times for the same period last year, respectively; At June 30, 2012, 91.8% (June 30, 2011 - 96.2%) of CAPREIT's mortgage portfolio was insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's manufactured home communities land lease sites, resulting in improved spreads on mortgages and overall lower interest costs than conventional mortgages; The effective portfolio weighted average interest rate on mortgages has steadily declined from 4.66% as at June 30, 2011, to 4.20% as at June 30, 2012, which will result in significant interest rate savings in future years; Total financings of $201.7 million, including $135.7 million for renewals of existing mortgages and $66 million for additional top up financing have been closed or committed as of August 8, 2012 with an average term to maturity of 9.4 years, and at a weighted average rate of 2.81%. Management expects to raise between $350 million and $375 million in total mortgage renewals and refinancings in 2012. Property Capital Investment Plan During the first six months of 2012 CAPREIT made property capital investments of $40.4 million as compared to $36.8 million for the same period last year. Property capital investments include suite improvements, common areas and equipment, which generally tend to increase NOI more quickly. CAPREIT continues to invest in energy-saving initiatives, including boilers, energy-efficient lighting systems, and water-saving programs, which permit CAPREIT to mitigate potentially higher increases in utility and R&M costs and significantly improve overall portfolio NOI.Monthly Cash Distribution Increase The Board of Trustees also announced today that cash distributions would increase by 3.7% to $0.093 per Unit ($1.120 on an annualized basis) effective for the August distribution payable on September 17, 2012 to Unitholders on record as at August 31, 2012. Additional Information More detailed information and analysis is included in CAPREIT's unaudited condensed consolidated interim financial statements and MD&A for the three and six months ended June 30, 2012, which have been filed on SEDAR and can be viewed at www.sedar.com under CAPREIT's profile or on CAPREIT's website on the investor relations page at www.capreit.net. Conference Call A conference call hosted by Thomas Schwartz, President and CEO and Scott Cryer, Chief Financial Officer, will be held Thursday, August 9, 2012 at 10.00 am EST. The telephone numbers for the conference call are: Local/International: (416) 340-2218, North American Toll Free: (877) 240-9772. A slide presentation to accompany Management's comments during the conference call will be available one hour and a half prior to the conference call. To view the slides, access the CAPREIT website at www.capreit.net, click on "Investor Relations" and follow the link at the top of the page. Please log on at least 15 minutes before the call commences. The telephone numbers to listen to the call after it is completed (Instant Replay) are local/international (905) 694-9451 or North American toll free (800) 408-3053. The Passcode for the Instant Replay is 9025605#. The Instant Replay will be available until midnight, August 16, 2012. The call and accompanying slides will also be archived on the CAPREIT website at www.capreit.net. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net. About CAPREIT CAPREIT owns interests in multi-unit residential rental properties, including apartments, townhomes and manufactured home communities located in and near major urban centres across Canada. At June 30, 2012, CAPREIT had owning interests in 36,273 residential units, comprised of 32,908 residential suites and two Ontario manufactured home communities ("MHC") comprising 3,365 land lease sites. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net and our public disclosure which can be found under our profile at www.sedar.com. Non-IFRS Financial Measures CAPREIT prepares and releases unaudited quarterly and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with IFRS, CAPREIT also discloses and discusses certain non-IFRS financial measures, including Net Rental Revenue Run-Rate, NOI, FFO, NFFO and applicable per Unit amounts and payout ratios. These non-IFRS measures are further defined and discussed in the MD&A released on August 8, 2012, which should be read in conjunction with this press release. Since Net Rental Revenue Run-Rate, NOI, FFO and NFFO are not determined by IFRS, they may not be comparable to similar measures reported by other issuers. CAPREIT has presented such non-IFRS measures as Management believes these non-IFRS measures are relevant measures of the ability of CAPREIT to earn and distribute cash returns to Unitholders and to evaluate CAPREIT's performance. A reconciliation of Net Income and such non-IFRS measures including Adjusted Funds From Operations ("AFFO") is included in this press release. These non-IFRS measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with IFRS as an indicator of CAPREIT's performance. Cautionary Statements Regarding Forward-Looking Statements Certain statements contained, or contained in documents incorporated by reference, in this press release constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to CAPREIT's future outlook and anticipated events or results and may include statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital investments, financial results, taxes, plans and objectives of or involving CAPREIT. Particularly, statements regarding CAPREIT's future results, performance, achievements, prospects, costs, opportunities and financial outlook, including those relating to acquisition and capital investment strategy and the real estate industry generally, are forward-looking statements. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative thereof or other similar expressions concerning matters that are not historical facts. Forward-looking statements are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. In addition, certain specific assumptions were made in preparing forward-looking information, including: that the Canadian economy will generally experience growth, however, may be adversely impacted by the global economy; that inflation will remain low; that interest rates will remain low in the medium term; that Canada Mortgage and Housing Corporation ("CMHC") mortgage insurance will continue to be available and that a sufficient number of lenders will participate in the CMHC-insured mortgage program to ensure competitive rates; that conditions within the real estate market, including competition for acquisitions, will become more favourable; that the Canadian capital markets will continue to provide CAPREIT with access to equity and/or debt at reasonable rates; that vacancy rates for CAPREIT properties will be consistent with historical norms; that rental rates will grow at levels similar to the rate of inflation on renewal; that rental rates on turnovers will remain stable; that CAPREIT will effectively manage price pressures relating to its energy usage; and, with respect to CAPREIT's financial outlook regarding capital investments, assumptions respecting projected costs of construction and materials, availability of trades, the cost and availability of financing, CAPREIT's investment priorities, the properties in which investments will be made, the composition of the property portfolio and the projected return on investment in respect of specific capital investments. Although the forward-looking statements contained in this press release are based on assumptions, Management believes they are reasonable as of the date hereof, there can be no assurance actual results will be consistent with these forward-looking statements; they may prove to be incorrect. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond CAPREIT's control, that may cause CAPREIT or the industry's actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, risks related to: reporting investment properties at fair value, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, taxation, harmonization of federal goods and services tax and provincial sales tax, government regulations, controls over financial accounting, legal and regulatory concerns, the nature of units of CAPREIT ("Trust Units") and of CAPREIT's subsidiary, CAPREIT Limited Partnership ("Exchangeable Units") (collectively, the "Units"), unitholder liability, liquidity and price fluctuation of Units, dilution, distributions, participation in CAPREIT's distribution reinvestment plan, potential conflicts of interest, dependence on key personnel, general economic conditions, competition for residents, competition for real property investments, continued growth and risks related to acquisitions. There can be no assurance the expectations of CAPREIT's Management will prove to be correct. These risks and uncertainties are more fully described in regulatory filings, including CAPREIT's Annual Information Form, which can be obtained on SEDAR at www.sedar.com, under CAPREIT's profile, as well as under Risks and Uncertainties section of the MD&A released on August 8, 2012. The information in this press release is based on information available to Management as of August 8, 2012. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information. SOURCE: Canadian Apartment Properties Real Estate Investment Trust SELECTED FINANCIAL INFORMATIONCondensed Balance SheetsAs atJune 30, 2012December 31, 2011($ Thousands)Investment Properties$4,345,592$3,713,737Total Assets4,449,3393,804,650Mortgages Payable2,039,4861,848,190Bank Indebtedness233,14874,132Total Liabilities2,418,0742,063,987Unitholders' Equity2,031,2651,740,663Condensed Income StatementsThree Months EndedSix Months EndedJune 30,June 30,($ Thousands)2012201120122011Net Operating Income56,71451,991109,45298,555Trust Expenses(3,557)(3,694)(6,806)(7,299)Unrealized Gain on Remeasurement of Investment Properties95,78330,792103,63225,331Realized Loss on Disposition of Investment Properties(350)-(528)(95)Remeasurement of Exchangeable Units(550)49(632)(905)Unit-based Compensation Expenses(5,738)(139)(7,354)(5,940)Interest on Mortgages Payable and Other Financing Costs(20,670)(20,228)(41,671)(40,025)Interest on Bank Indebtedness(915)(1,559)(1,993)(2,551)Interest on Exchangeable Units(93)(111)(204)(222)Other Income7354651,215930Amortization(548)(403)(1,066)(797)Severance and Other Employee Costs-(1,352)-(1,352)Unrealized and Realized (Loss) Gain on Derivative Financial Instruments(511)1,362(1,467)1,206Net Income120,30057,173152,57866,836Other Comprehensive (Loss) Income$(4,708)$2,117$2,241$3,309Comprehensive Income$115,592$59,290$154,819$70,145Condensed Statements of Cash FlowsThree Months EndedSix Months EndedJune 30,June 30,2012201120122011($ Thousands) Cash Provided By Operating Activities:Net Income$120,300$57,173$152,578$66,836Items in Net Income Not Affecting Cash:Changes in Non-cash Operating Assets and Liabilities(6,215)(87)(11,528)(8,322)Realized and Unrealized Gain on Remeasurements(94,372)(32,203)(101,005)(25,547)Unit-based Compensation Expenses5,7381397,3545,940Items Related to Financing and Investing Activities19,37620,11339,77939,359Other1,6631,7833,3953,411Cash Provided By Operating Activities46,49046,91890,57381,677Cash Used In Investing ActivitiesAcquisitions(307,886)(187,828)(307,886)(196,912)Capital Investments(23,789)(20,954)(46,007)(44,746)Dispositions17,974-25,7003,609Other6253681,041870Cash Used In Investing Activities(313,076)(208,414)(327,152)(237,179)Cash Provided By Financing ActivitiesMortgages, Net of Financing Costs(11,574)112,393(15,126)116,052Bank Indebtedness, Net147,79585,648159,016105,652Interest Paid(20,111)(20,578)(40,994)(40,289)Proceeds on Issuance of Units168,57977169,3492,134Distributions, Net of DRIP and Other(18,103)(16,044)(35,666)(32,397)Cash Provided By Financing Activities266,586161,496236,579151,152Changes in Cash and Cash Equivalents During the Period---(4,350)Cash and Cash Equivalents, Beginning of Period---4,350Cash and Cash Equivalents, End of Period$-$-$-$-SELECTED NON-IFRS FINANCIAL MEASURESReconciliation of Net Income to FFO and to NFFOThree Months EndedSix Months EndedJune 30,June 30,2012201120122011($ Thousands, except per Unit amounts)Net Income$120,300$57,173$152,578$66,836Adjustments:Unrealized Gain on Remeasurement of Investment Properties(95,783)(30,792)(103,632)(25,331)Realized Loss on Disposition of Investment Properties350-52895Remeasurement of Exchangeable Units550(49)632905Remeasurement of Unit-based Compensation Liabilities4,599(233)5,7935,241Interest on Exchangeable Units93111204222Amortization of Property, Plant and Equipment5483811,066755FFO$30,657$26,591$57,169$48,723Adjustments:Unrealized Loss on Derivative Financial Instruments511(1,362)1,467(1,206)Amortization of Loss on Derivative Financial Instruments Included in Mortgage Interest338267672531Gain on Investment(177)-(177)-Severance and Other Employee Costs-1,352-1,352NFFO$31,329$26,848$59,131$49,400NFFO per Unit - Basic$0.358$0.357$0.692$0.659NFFO per Unit - Diluted$0.352$0.353$0.682$0.652Total Distributions Declared (1)$24,69820,978$47,908$41,863NFFO Payout Ratio (2)78.8%78.1%81.0%84.7%Net Distributions Paid (1)$18,949$16,172$36,487$32,529Excess NFFO Over Net Distributions Paid$12,380$10,676$22,644$16,871Effective NFFO Payout Ratio (3)60.5%60.2%61.7%65.8%(1)For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and six months ended June 30, 2012.(2)The payout ratio compares distributions declared to NFFO.(3)The effective payout ratio compares net distributions paid to NFFO.Reconciliation of NFFO to AFFOThree Months EndedSix Months EndedJune 30June 302012201120122011($ Thousands, except per Unit amounts)NFFO$31,329$26,848$59,131$49,400Adjustments:Provision for Maintenance Property Capital Investments (1)(3,255)(2,981)(6,510)(5,963)Amortization of Fair Value on Grant Date of Unit-based Compensation1,1393651,561685AFFO$29,213$24,232$54,182$44,122AFFO per Unit - Basic$0.334$0.322$0.634$0.588AFFO per Unit - Diluted$0.329$0.319$0.625$0.582Distributions Declared (2)$24,698$20,978$47,908$41,863AFFO Payout Ratio (3)84.5%86.6%88.4%94.9%Net Distributions Paid (2)$18,949$16,172$36,487$32,529Excess AFFO over Net Distributions Paid$10,264$8,060$17,695$11,593Effective AFFO Payout Ratio (4)64.9%66.7%67.3%73.7%(1)An industry based estimate (see the Non-IFRS Measures section in the MD&A for the three and six months ended June 30, 2012).(2)For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and six months ended June 30, 2012.(3)The payout ratio compares distributions declared to AFFO.(4)The effective payout ratio compares net distributions paid to AFFO.FOR FURTHER INFORMATION PLEASE CONTACT: Mr. Michael SteinCAPREITChairman(416) 861-5788ORMr. Thomas SchwartzCAPREITPresident & CEO(416) 861-9404ORMr. Scott CryerCAPREITChief Financial Officer(416) 861-5771