CAPREIT Announces Strategic Dispositions and Special Distribution

Significant Updates from Canadian Apartment Properties REIT

Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) has recently shared crucial information regarding strategic moves that could impact their operations and investor returns significantly. The sale of a major portion of their manufactured home community (MHC) portfolio represents a notable advancement as CAPREIT continues to refine its focus on quality rental housing.

Completion of MHC Portfolio Sale

As of a recent announcement, CAPREIT has finalized the sale of its manufactured home community portfolio, which operates under the name Compass Communities. This part of the portfolio includes 11,605 residential lots, which were sold for a gross purchase price of $715.0 million. This transaction exemplifies CAPREIT's commitment to optimizing its asset portfolio and strategically realigning its focus. Out of the full purchase price, $140.0 million was secured through an interest-only vendor take-back loan at an attractive rate, while the majority, amounting to $575.0 million, was settled in cash.

Future Asset Expectation

Looking ahead, CAPREIT expects to complete the sale of an additional 533 lots by early 2025, with a projected gross purchase price of $25.0 million. This streamlined approach to asset management not only bolsters the company's liquidity but also enhances its operational flexibility for future investments.

CAPREIT’s Connection to ERES Transactions

CAPREIT has also reported developments related to the European Residential Real Estate Investment Trust (TSX:ERE.UN). Through its subsidiaries, ERES concluded a significant transaction involving the sale of 3,179 residential suites in the Netherlands, generating net proceeds of approximately $1.1 billion. This strategic move further underscores CAPREIT’s diversified approach to property investments and continues to integrate successful elements from both Canadian and European markets.

Special Distribution Insights

With the sale yields expected, CAPREIT foresees receiving around $227 million from the ERES special cash distribution of $1.49 per unit. This anticipated distribution is set to provide CATPREIT with additional funds, which will be utilized to pay down outstanding debts and to strategically reinvest into future rental property acquisitions across Canada.

Announcing the CAPREIT Special Distribution

In addition to the developments outlined above, CAPREIT has declared a special non-cash distribution of $1.18 per Unit, which will take the form of Additional Units issued on December 31, 2024. This allocation is primarily designed to distribute a portion of CAPREIT's net capital gains realized over the preceding twelve months. Hence, investors should anticipate a change in their adjusted cost base regarding the issued Units after this distribution.

Financial Implications for Unitholders

The dynamics regarding taxes associated with this special distribution are fundamental for Canadian-resident Unitholders, as they will need to incorporate their share of CAPREIT's income in order to accurately reflect their income for tax purposes. Consistent with sound tax practices, CAPREIT strongly advises holders to consult with their financial advisors to fully understand the implications ahead of the payment date and investment decisions.

Regular Monthly Distribution for December

CAPREIT announced its regular monthly distribution of $0.125 per Unit, amounting to an annual rate of $1.50. This distribution will be payable on January 15, 2025, to all Unitholders recorded by the close of business on December 31, 2024. This consistency in monthly distributions speaks volumes about CAPREIT’s commitment to delivering returns on investments.

About CAPREIT

As Canada’s foremost provider of quality rental housing, CAPREIT continues to set a sturdy foundation for its investments. With ownership of approximately 63,400 residential apartment suites and MHC sites, including a fair value of around $16.9 billion, the company continues to strengthen its presence not only in Canada but also expanding its footprint internationally in the Netherlands. For further updates on CAPREIT’s initiatives and insights, interested parties are encouraged to visit their official website.

Frequently Asked Questions

1. What is CAPREIT’s recent major transaction?

CAPREIT has completed the sale of part of its manufactured home community portfolio, realizing a gross purchase price of $715 million.

2. How much can CAPREIT expect from ERES special distribution?

CAPREIT anticipates receiving about $227 million from the special distribution declared by ERES.

3. When will the special distribution to Unitholders occur?

The special distribution of Additional Units will be issued on December 31, 2024.

4. What should Unitholders know about tax implications?

Unitholders should consult with tax advisors to address how the special distribution affects their taxable income.

5. What is the regular monthly distribution CAPREIT declared?

CAPREIT declared a December 2024 monthly distribution of $0.125 per Unit, payable on January 15, 2025.

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