CAPREIT Provides Update on MHC and European Dispositions, Declares Special Distribution and December 2024 Distribution

This news release constitutes a “designated news release” for the purposes of CAPREIT’s prospectus supplement dated February 22, 2024, to its short form base shelf prospectus dated May 9, 2023.

TORONTO, Dec. 16, 2024 (GLOBE NEWSWIRE) -- Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) announced today that is has completed, in part, its previously announced sale of its manufactured home community (“MHC”) portfolio, which now operates as Compass Communities. CAPREIT has completed the disposition of 11,605 residential lots for a gross purchase price of $715.0 million (all amounts disclosed herein exclude transaction costs and other customary adjustments). The purchase price was partially satisfied through an interest-only vendor take-back loan of $140.0 million, bearing interest at a rate of 3.0% per annum for a five-year term, with $575.0 million satisfied in cash. The sale of the remaining 533 lots is expected to be completed in the first quarter of 2025 for a gross purchase price of $25.0 million, to be satisfied in cash.

CAPREIT also announced that certain subsidiaries of European Residential Real Estate Investment Trust (TSX:ERE.UN) (“ERES”) completed its previously announced sale of 3,179 residential suites in the Netherlands for aggregate proceeds, net of certain adjustments, of approximately $1.1 billion (presented in Canadian dollars based on a Euro foreign exchange rate of 1.49 on December 13, 2024, applicable throughout this press release). ERES also declared a special cash distribution of an estimated $1.49 per ERES Unit and ERES Limited Partnership exchangeable Class B LP Unit (together, the “ERES Units”), payable to holders of the ERES Units of record at the close of business on December 23, 2024, with payment on December 31, 2024 (the “ERES Special Distribution”). Based on CAPREIT’s effective interest in ERES of approximately 65%, CAPREIT expects to receive approximately $227 million from the ERES Special Distribution. Further details have been provided by ERES in its press release dated December 16, 2024.

CAPREIT intends to utilize the net proceeds from the sale of its MHC sites and the ERES Special Distribution: (1) to repay certain amounts drawn on its revolving credit facility; (2) to fund future acquisitions of on-strategy rental properties in Canada; and (3) for general business purposes, which may include capital expenditures, debt repayment and the repurchase of CAPREIT’s Trust Units under its normal course issuer bid.

CAPREIT Special Distribution

CAPREIT further announced that it has declared a special non-cash distribution of $1.18 per Unit, payable in Units of CAPREIT (the “Additional Units”) on December 31, 2024 to Unitholders of record at the close of business on December 31, 2024 (the “CAPREIT Special Distribution”). The CAPREIT Special Distribution is principally being made to distribute to Unitholders a portion of the net capital gains of CAPREIT realized during the twelve-month period ending December 31, 2024, and will therefore be in the form of a capital gain to Unitholders for Canadian income tax purposes.

Taxable Canadian-resident Unitholders will generally be required to include their proportionate share of CAPREIT’s income and net taxable capital gain, as allocated and designated by CAPREIT, in computing their respective income for the tax year that includes the year end of CAPREIT (i.e., December 31, 2024).

The non-cash CAPREIT Special Distribution will be paid at the close of business on December 31, 2024 through the issuance of the Additional Units. The number of Additional Units to be issued will be based on the dollar amount of the CAPREIT Special Distribution divided by the closing price of the Units on the Toronto Stock Exchange on December 31, 2024.

Immediately after the payment of the CAPREIT Special Distribution, the issued and outstanding Units of CAPREIT will be consolidated such that the aggregate number of issued and outstanding Units will be the same as immediately before the CAPREIT Special Distribution. For Unitholders who are residents of Canada for Canadian federal income tax purposes, the amount of the CAPREIT Special Distribution will increase the adjusted cost base of Unitholders’ consolidated Units. Unitholders who are not resident in Canada for Canadian federal income tax purposes may be subject to applicable withholding taxes in connection with the payment of the CAPREIT Special Distribution.

CAPREIT cautions that the foregoing comments are not intended to be, and should not be construed as, legal or tax advice to any Unitholder. CAPREIT recommends that Unitholders consult their own tax advisors regarding the income tax consequences to them of this anticipated CAPREIT Special Distribution and related Unit consolidation.

December 2024 Monthly Distribution

CAPREIT announced today its December 2024 monthly distribution in the amount of $0.125 per Unit (or $1.50 on an annualized basis). The December 2024 distribution will be payable on January 15, 2025 to Unitholders of record at the close of business on December 31, 2024.

ABOUT CAPREIT
CAPREIT is Canada’s largest publicly traded provider of quality rental housing. As at September 30, 2024, CAPREIT owns approximately 63,400 residential apartment suites, townhomes and manufactured home community sites, including approximately 15,400 suites and sites classified as assets held for sale, that are well-located across Canada and the Netherlands, with a total fair value of approximately $16.9 billion, including approximately $1.9 billion of assets held for sale. 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, including with regards to the expected completion and timing of the pending transactions, the intended use of proceeds from the transactions, the ERES Special Distribution and timing of payment, and the CAPREIT Special Distribution and timing of payment. 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, many of which are beyond CAPREIT’s control, which could result in actual results differing materially from these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties described under the heading “Risks and Uncertainties” in CAPREIT’s 2023 Annual Report and under the heading “Risk Factors” in CAPREIT’s Annual Information Form for the year ended December 31, 2023, each of which is available under CAPREIT’s profile 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.