CAPREIT Trims Older "Non-Strategic" Assets From Portfolio
Canadian apartment REIT unloads 3 multifamily assets in deal at 3% cap rate.
The Canadian Apartment Properties REIT (CAPREIT) continues to executive its strategy of trimming aging “non-strategic” assets from its portfolio.
The Toronto-based apartment REIT this week closed on the sale of its 50% non-managing interest in three jointly owned Ottawa rental properties encompassing 1,150 units for $102M, in addition to its share of the combined balance of about $29M remaining on the mortgage for the assets.
CAPREIT described the three Ottawa multifamily campuses as “off-strategy, value-add assets” that were built between 1969 and 1981 and would require significant ongoing capital expenditures to support their current growth profiles.
“CAPREIT’s disposition of its non-managing share in these three mature properties provides the means to act on more accretive, strategically-aligned opportunities that will maximize value for our Unitholders,” said Mark Kenney, CAPREIT’s CEO, in a statement.
“We are selling at a strong capitalization rate in the mid-3% range, while also progressing on our asset and market repositioning objectives,” Kenney said.
CAPREIT is in the midst of what it is calling a “capital refresh and asset management” initiative comprised of selling non-strategic properties at or above IFRS fair values and redirecting proceeds toward the acquisition of its Trust Units—a.k.a. shares—at significant discounts to fair value, the company said.
“In 2022, we invested $184 million in our NCIB program at an attractive weighted average purchase price of $34 per Trust Unit, crystallizing the meaningful disconnect between our disposition values and our Trust Unit prices, that we will continue to arbitrage for as long as it remains accretive to net asset value,” said Julian Schonfeldt, the REIT’s chief investment officer in a statement.
CAPREIT, Canada’s largest publicly traded apartment REIT, currently owns approximately 65,000 residential apartment suites, townhomes and manufactured housing community sites across Canada and the Netherlands, with approximately $17 billion of assets under management globally.
The average apartment rent in Ottawa is at least 10% lower than Toronto, according to a recent multifamily market report from Marcus & Millichap. The affordability of housing in Canada’s capital is attracting a growing labor pool, the report said.