Canadian Apartment Properties Real Estate Investment Trust (CAR-UN) Q4 2024 earnings summary

Executive summary

• Completed CAD 2.6 billion in non-core and ancillary divestments, including $1.37B in European and $385M in Canadian legacy apartment sales, with proceeds used for debt reduction, acquisitions, and buybacks.

• Reinvested CAD 670 million in new Canadian apartment acquisitions and CAD 327 million in NCIB trust unit buybacks at significant discounts to NAV.

• Portfolio repositioned toward higher-quality, recently constructed assets, with 79% core, 15% legacy, and 6% ancillary as of year-end.

• Supported affordable housing by transferring CAD 124 million in assets to nonprofits and selling a 717-suite portfolio to Montreal's Affordable Housing Initiative.

• Increased annualized distributions twice in 2024, with a further increase to CAD 1.55 per unit effective February 2025.

Financial highlights

• Q4 2024 operating revenues rose 1.5% year-over-year to $276.4M; net operating income up 0.7% to $177.9M.

• Diluted FFO per unit grew 5.8% to CAD 2.53 for 2024; Q4 FFO per unit was CAD 0.622, up 3.3%.

• FFO payout ratio improved to 57.9% for 2024 and 59.8% in Q4.

• Same property NOI increased 6.0% for the year and 3.4% for Q4, driven by rent growth despite lower occupancy.

• Reduced total expenditures by 6% year-over-year, saving approximately CAD 20 million.

Outlook and guidance

• Targeting CAD 400 million in additional non-core Canadian property dispositions for 2025, including already closed transactions.

• Entered firm agreement to acquire an additional 102-suite Mondev portfolio building for $40M, closing in H1 2025.

• Expecting same property NOI growth to moderate to long-term average levels in 2025.

• Margins anticipated to remain relatively stable; OpEx inflation expected in mid-single digits.

• Management remains positive on long-term fundamentals of the Canadian multi-residential rental sector.