Canadian Apartment Properties Real Estate Investment Trust (CAR-UN) Q3 2024 earnings summary

Executive summary

• Achieved high occupancy of 98% and average rent of CAD 1,617 per month in Q3 2024, with strong rent growth driving a 5.2% increase in total portfolio operating revenues year-over-year.

• NOI rose 6.1% and margin expanded by 60 bps to 67.1% despite higher repairs and maintenance costs, while diluted FFO per unit increased 3.3% to CAD 0.659 for the quarter.

• For the nine months ended September 30, rent growth was 6.4%, occupancy 98.1%, and diluted FFO per unit up 6.5%, with a conservative payout ratio of 56.2%.

• Nearly CAD 1 billion in Canadian rental property transactions completed in 2024, with significant progress on repositioning toward high-quality, recently constructed assets.

• Increased monthly distributions to $0.125 per unit, effective August 2024.

Financial highlights

• Q3 2024 operating revenues reached $282.4M, up 5.2% year-over-year; NOI increased to $189.4M, up 6.1% YoY, and NOI margin improved to 67.1%.

• Diluted FFO per unit rose 3.3% in Q3 and 6.5% for the nine months; payout ratio at 56.2%.

• Net asset value per unit (diluted) reported at $55.78 as of September 30, 2024.

• Distribution rate increased 3.4% to CAD 1.50 per unit annualized, effective August 2024.

• Net income for Q3 was $47.4M, compared to a net loss of $357.5M in Q3 2023.

Outlook and guidance

• Expect continued moderation in R&M expense growth into Q4 and 2025, with mid-single-digit increases anticipated.

• Renewal spreads above 4% but expected to normalize; full-year averages and regional differences (e.g., BC) to be considered for 2025.

• Top-line same property revenue growth of around 5% is possible if occupancy remains high and churn increases.

• Focus remains on growing earnings per share and cash flow, with ongoing capital recycling and portfolio high-grading.

• Management expects to meet or exceed the 2024 target of over $400M in non-core Canadian property dispositions.