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CAPREIT sells aging apartments, buys new builds for $74 million

Non-core properties sold for $103.3 million

IMAGE: Parque on Park
The Parque on Park in Langley, B.C., which CAPREIT purchased for $53.7 million. (Courtesy Canadian Apartment Real Estate Investment Trust)

Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) has closed on the sale of non-core properties for $103.3 million, and has also acquired two new construction rental properties for $74.1 million.

The properties sold were built between 1971 and 1999 and are located in Quebec and P.E.I.

“We are very pleased with the continued execution on our portfolio high-grading, and the positive impact that it has on helping with the widespread housing supply issues we’re seeing across the country,” CAPREIT’s president and CEO Mark Kenney said in a statement June 8.

“With this repositioning, we reallocated capital into fundamentally strong Canadian markets which are experiencing high population growth and increasing demand for residential accommodation. Our focus on acquiring new purpose-built rental properties in these attractive, expanding regions supports the supply of new construction rental housing where it is needed most.”

CAPREIT (CAR-UN-T) is Canada’s largest publicly traded provider of rental housing. As of the end of March, CAPREIT owns approximately 66,000 residential apartment suites, townhomes and manufactured home community sites located across Canada and the Netherlands, with a portfolio worth approximately $17 billion.

This marks the second major acquisition this week after Starlight Investments acquired two major apartment portfolios over the past several days, totalling 1,529 housing units in the Greater Toronto Area.

CAPREIT’s sales and acquisitions

The first property, in Montreal’s Saint-Laurent neighbourhood, sold for $68.9 million. It is an unencumbered property containing 393 residential suites and two commercial units.

The second was a 60-suite residential portfolio in Charlottetown that sold for $9.4 million. Part of that was used to repay the principal outstanding on the mortgage of $3.3 million.

The last sale was for 162 residential suites in the Montreal suburb of Longueuil for $25 million. The buyer assumed the remaining $6.4 million mortgage outstanding.

The first acquisition was a 93-suite residential building in Langley, B.C., for $53.7 million. The building, constructed in 2022, has an average suite size of over 1,000 square feet.

The building is topped with 250 solar panels and contains suites that are each individually metered for all utilities, leading to lower consumption and costs. The property was acquired absent of any mortgage financing; however, it is expected to be mortgaged for anticipated principal of up to $33 million.

The second acquisition was for 52 residential suites and one commercial unit located in Dartmouth, N.S., for $20.4 million. The average suite size is over 1,100 square feet.

The purchase was funded using cash from net disposition proceeds. However, an estimated $13 million in mortgage financing is expected to be arranged in the near-term.

Gross disposition proceeds to date $281 million

“These latest transactions bring total gross disposition proceeds to $281 million this year to date, of which we’ve reinvested $158 million in on-strategy properties before financing, along with over $100 million in our accretive NCIB (normal course issuer bid) program, all together generating strong value for our unitholders so far in 2023,” Julian Schonfeldt, CAPREIT’s chief investment officer, said. 

“We are excited to continue acting on the expansive pipeline of capital recycling opportunities available to us, while simultaneously furthering our contribution to curbing the housing crisis in Canada.”

In March, CAPREIT expanded its Ottawa portfolio with the $61 million acquisition of the Eagle Pointe apartments.

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