Canadian Apartment Properties Real Estate Investment Trust (CAR-UN) Q1 2025 earnings summary

Executive summary

• Completed CAD 265 million in non-core Canadian dispositions and CAD 135 million in European property sales at or above IFRS fair values, with proceeds reinvested into recently constructed mid-market rental properties below replacement cost.

• Spent CAD 88 million on NCIB share buybacks at a 25% discount to NAV, reinforcing capital allocation discipline.

• Canadian Same Property Residential Occupancy improved to 97.9% as of March 31, 2025, with Occupied AMR up 5.7% year-over-year.

• Portfolio transformation continues, with a focus on high-quality, recently constructed assets and a strategic exit from European holdings.

• Closed $400 million in strategic dispositions in Canada and Europe, with $522 million in additional Netherlands divestments expected in Q3.

Financial highlights

• Same Property NOI margin decreased to 62.3% for Q1 2025 due to higher operating costs.

• Diluted FFO per unit fell 3.9% to CAD 0.585, mainly from lower NOI and net disposition activity, partially offset by lower interest expense and reduced overhead.

• Same Property Operating Revenues rose 4.3% year-over-year, while property operating costs increased 7.2% due to weather, utilities, and bad debt.

• Average monthly rent in Canada reached CAD 1,677, up 8% year-over-year.

• Net income dropped to $8.0 million from $182.1 million year-over-year, reflecting fair value adjustments and disposition impacts.

Outlook and guidance

• Expect OpEx growth to moderate to 5-7% for the remainder of 2025, with carbon tax savings further reducing expenses.

• Same Property NOI growth target for 2025 remains at 4-4.5%, with potential upside.

• Anticipate margin expansion in coming years as revenue growth outpaces OpEx.

• Short-term impact from turnover of post-COVID leases expected to normalize in the next quarter or two, with rent growth resuming.

• Management remains confident in the long-term fundamentals of the Canadian residential rental market.