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Canadian Apartment Properties Real Estate Investment Trust Announces an Agreement to Acquire 3,661 Suites in Central Montreal and a Public Unit Financing of $250MM

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TORONTO, ONTARIO--(Marketwired - Sept. 21, 2015) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) of Toronto, Ontario announced today that it, through CAPREIT Limited Partnership, has entered into an agreement to acquire an apartment portfolio, representing 3,661 suites for a purchase price of $490MM, excluding transaction costs (the "Acquisition"). The Acquisition includes 16 properties located in Montreal (the "Montreal Portfolio"). This announcement follows CAPREIT's September 14, 2015 closing of the acquisition of 19 properties with 919 suites in the Greater Vancouver Area for a purchase price of $170MM, excluding transaction costs (the "Vancouver Portfolio" and, together with the Montreal Portfolio, the "Acquisitions"). CAPREIT has also agreed to sell, subject to regulatory approval, 8,720,000 units (the "Public Unit Financing" or the "Offering") at a price of $28.70 per unit for aggregate gross proceeds of approximately $250MM to a syndicate of underwriters led by RBC Capital Markets on a bought-deal basis.

THE ACQUISITIONS

The Montreal Portfolio comprises 16 properties consisting of 3,661 suites and approximately 194,000 square feet of ancillary commercial space in 51 buildings. The Montreal Portfolio, which will expand CAPREIT's existing strong Montreal platform to 8,243 suites, is concentrated in three central multi-residential sub-markets: Montreal's downtown core; Cote-des-Neiges; and Notre-Dame-de-Grace. Over 95% of the suites are located within an 8km radius, and approximately half of the suites are located within a few blocks of each other in Montreal's downtown core. Nearly 90% of the Montreal Portfolio's suites are in high-rise concrete structures and over two-thirds of the suites are in buildings with at least 100 units.

The vendors of the Montreal Portfolio built and have continuously owned the vast majority of the buildings for decades, and have maintained the Montreal Portfolio to institutional standards, with numerous recent improvements having been completed, including upgraded windows and balconies, building envelope repairs, suite improvements, boilers, mechanical systems and life safety security systems. The acquisition of the Montreal Portfolio, which is subject only to customary closing conditions, is expected to close on September 30, 2015.

The Montreal Portfolio is being acquired at an average price per suite of approximately $134,000 and a capitalization rate of approximately 4.5% based on annualized in-place net operating income, before factoring in expected margin improvements and rental increases resulting from CAPREIT's proven hands-on management. CAPREIT believes that a significant number of the suites are currently at rental rates that are below market and that opportunities exist to improve market rates after upgrades and turnovers.

No mortgage debt is being assumed on the Acquisitions. CAPREIT has committed approximately $93MM in CMHC-insured 10-year mortgage with an interest rate of 2.72% on the Vancouver Portfolio, and has drawn on its acquisition and operating facility pending the funding of this CMHC-insured financings on or about September 30, 2015. In addition, CAPREIT is in the process of committing new CMHC insured mortgage financing in respect of the Montreal Portfolio in the range of approximately $260MM to $300MM, with a balanced allocation between 5 and 10 year mortgages. CAPREIT has entered into an arrangement to hedge the Government of Canada 10 year bond at 1.4% for $100MM of this new financing. Based on current mortgage rates, CAPREIT expects that the financings on both Acquisitions will have a weighted average interest rate of approximately 2.2% and a weighted average term to maturity of approximately 8 years. CAPREIT is finalizing the terms of a temporary increase of up to $450MM to its acquisition and operating facility, at a floating interest rate currently estimated to be 2.8% (the "Bridge Increase"). CAPREIT will fund the Montreal Portfolio acquisition from its acquisition and operating facility, including the Bridge Increase (collectively, the "Facility") and any CMHC-insurance financing available upon closing. The Facility will be partially repaid by the CMHC-insured mortgages funded subsequent to closing and proceeds from the public unit financing described below.

The Montreal Portfolio will increase CAPREIT's total portfolio from 42,956 suites and sites to 46,617 suites and sites. Including the Montreal Portfolio and Vancouver Portfolio, CAPREIT's suite and site geographic distribution will become: Greater Toronto Area (15,518), Other Ontario (7,559), Greater Montreal Region (8,243), Other Quebec (2,729), British Columbia (4,372), Alberta (2,734), New Brunswick (2,308), Nova Scotia (1,588), Prince Edward Island (953), and Saskatchewan (613), with the majority being mid-tier or luxury properties.

"We are very pleased to be acquiring the Montreal Portfolio. It is a large, landmark multi-residential portfolio in the core of one of Canada's strongest rental markets. We especially look forward to welcoming the residents of these fine Montreal properties to CAPREIT. Our strong existing platform assisted us in acquiring the highly sought Montreal Portfolio in a very competitive process. Offerings of the quality and magnitude of the Montreal and Vancouver Portfolios are rare and provide CAPREIT with the opportunity to leverage our existing scalable regional platforms and strengthen our position in these important markets. We estimate that the Acquisitions will be immediately accretive to CAPREIT's normalized funds from operations ("NFFO") and that we will be able to further enhance the performance of these portfolios through our proven hands-on management," commented Thomas Schwartz, President and CEO. "With CAPREIT's strong debt and payout ratios, CAPREIT will continue to have solid acquisition and investment capacity after completing these acquisitions," Mr. Schwartz concluded.

THE PUBLIC UNIT FINANCING

CAPREIT has agreed to sell, subject to regulatory approval, 8,720,000 units for $28.70 per unit for aggregate gross proceeds of $250MM to a syndicate of underwriters led by RBC Capital Markets on a bought-deal basis. CAPREIT has granted the underwriters an over-allotment option (the "Over-Allotment Option"), exercisable in whole or in part up to 30 days after closing of the Offering, to purchase up to an additional 1,308,000 units to cover over-allotments, if any.

CAPREIT will, within the next few days, file with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada, a preliminary short form prospectus relating to the issuance of the units. Closing of the Offering is expected to take place on or about October 9, 2015.

CAPREIT intends to use the net proceeds from this Offering:



i. to repay the Bridge Increase, which will be utilized by CAPREIT to
partially fund the acquisition of the Montreal Portfolio;

ii. to partially repay CAPREIT's acquisition and operating facility, which
will be utilized by CAPREIT to partially fund the Montreal Portfolio and
was utilized, among other uses, to fund the previously announced and
completed acquisition of the Vancouver Portfolio; and

iii.the remainder, if any, for future acquisitions, capital expenditures and
for general trust purposes.



Upon closing of the Offering, and excluding the effect of the Over-Allotment Option, CAPREIT's total debt to gross book value ratio is not expected to materially change, with the proforma ratio expected to be approximately 46%, after giving effect to subsequent events.

CAPREIT intends to make monthly cash distributions to Unitholders of record on each record date, on or about the 15th day of the month following the record date. CAPREIT's current monthly cash distribution is $0.10167 per unit ($1.22 annually). The first cash distribution to which purchasers of the units under this Offering will be entitled to participate will be for the month of October, with a record date of October 30, 2015 and a payment date of November 16, 2015.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold in the United States absent registration or pursuant to applicable exemption from registration.

ABOUT CAPREIT

As one of Canada's largest residential landlords, CAPREIT is a growth-oriented investment trust owning interests in 42,956 residential units, comprised of 36,671 residential suites and 30 manufactured home communities comprising 6,285 land lease sites, located in and near major urban centres across Canada. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.caprent.com or www.capreit.net and our public disclosure, which can be found under our profile at www.sedar.com.

NON-IFRS FINANCIAL MEASURES

In this and other releases and investor conference calls, as a complement to financial information provided in accordance with IFRS, CAPREIT also discloses and discusses certain non-IFRS financial measures, including Net Rental Revenue Run-Rate, NOI, FFO, NFFO and applicable per Unit amounts and payout ratios. These non-IFRS measures are further defined and discussed in the MD&A released on August 10, 2015. Since Net Rental Revenue Run-Rate, NOI, FFO and NFFO are not determined by IFRS, they may not be comparable to similar measures reported by other issuers. CAPREIT has presented such non-IFRS measures as Management believes these non-IFRS measures are relevant measures of the ability of CAPREIT to earn and distribute cash returns to Unitholders and to evaluate CAPREIT's performance. Non-IFRS measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with IFRS as an indicator of CAPREIT's performance.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained, or contained in documents incorporated by reference, in this press release constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to CAPREIT's future outlook and anticipated events or results and may include statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital investments, financial results, taxes, plans and objectives of or involving CAPREIT. Particularly, statements regarding CAPREIT's future results, performance, achievements, prospects, costs, opportunities and financial outlook, including those relating to acquisition and capital investment strategy and the real estate industry generally, are forward-looking statements. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative thereof or other similar expressions concerning matters that are not historical facts. Forward-looking statements are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. In addition, certain specific assumptions were made in preparing forward-looking information, including: the expected completion of the acquisition of the Montreal Portfolio; the expected return to be realized by CAPREIT as a result of the acquisition of the Montreal Portfolio; the effect of the acquisition of the Montreal Portfolio and Vancouver Portfolio on the financial performance of CAPREIT; that the Canadian and Irish economies will generally experience growth, however, it may be adversely impacted by the global economy; that inflation will remain low; that interest rates will remain low in the medium term; that Canada Mortgage and Housing Corporation ("CMHC") mortgage insurance will continue to be available and that a sufficient number of lenders will participate in the CMHC-insured mortgage program to ensure competitive rates; that the Canadian capital markets will continue to provide CAPREIT with access to equity and/or debt at reasonable rates; that vacancy rates for CAPREIT properties will be consistent with historical norms; that rental rates will grow at levels similar to the rate of inflation on renewal; that rental rates on turnovers will remain stable; that CAPREIT will effectively manage price pressures relating to its energy usage; and, with respect to CAPREIT's financial outlook regarding capital investments, assumptions respecting projected costs of construction and materials, availability of trades, the cost and availability of financing, CAPREIT's investment priorities, the properties in which investments will be made, the composition of the property portfolio and the projected return on investment in respect of specific capital investments.
Although the forward-looking statements contained in this press release are based on assumptions, management believes are reasonable as of the date hereof, there can be no assurance actual results will be consistent with these forward-looking statements; and they may prove to be incorrect. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond CAPREIT's control, that may cause CAPREIT or the industry's actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, risks related to: the status of CAPREIT, the acquisition of the Montreal Portfolio, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, taxation, harmonization of federal goods and services taxes and provincial sales taxes, government regulations, controls over financial accounting, legal and regulatory risks, reporting investment properties at fair value, the nature of units of CAPREIT and CAPREIT's subsidiaries, CAPREIT Limited Partnership, CAPREIT 2 Limited Partnership and CAPREIT 3 Limited Partnership, Unitholder liability, liquidity and price fluctuation of Units, dilution, distributions, participation in CAPREIT's distribution reinvestment plan, potential conflicts of interest, dependence on key personnel, general economic conditions and competition for residents, competition for real property investments, continued growth, risks related to acquisitions, and foreign operation and currency risks. There can be no assurance that the expectations of CAPREIT's management will prove to be correct. Certain of these risks and uncertainties are more fully described in regulatory filings including CAPREIT's annual information for the year ended December 31, 2014, which can be obtained on SEDAR at www.sedar.com, under CAPREIT's profile, as well as under "Risks and Uncertainties" in Section VII of the MD&A for the year ended December 31, 2014 contained in the Annual Report and under "Risks and Uncertainties" in Section VII of the MD&A for the three and six months ended June 30, 2015, and other SEDAR filings made by CAPREIT. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.

The Montreal Portfolio




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Address Property Suite Count Commercial
# Description (Square Feet)
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165 Sherbrooke Street E Luxury 325 6,629
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2135 Sherbrooke Street E Luxury 219 2,107
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31350 Du Fort Street Luxury 160 -
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4315 Rene-Levesque Boulevard Mid-tier 221 1,980
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5150 St-Norbert Street Luxury 136 -
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63440 Durocher Street Mid-tier 257 1,435
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73580 Lorne Avenue Mid-tier 116 -
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82250 Guy Street Luxury 239 1,280
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96465 Sherbrooke Street E Mid-tier 78 16,304
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1030 Montarville Boulevard Mid-tier 74 -
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112400, 2420, 2444, 2460, 2480, Mid-tier 610 -
and 2500 Benny Crescent
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122500 and 2525 Cavendish Luxury 509 38,997
Boulevard
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132775, 2785, 2800, 2805, 2810, Affordable 127 -
2815, 2825, 2845, 2855, 2940
and 2950 Barclay Avenue
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142665, 2685, 2800, 2810, 2830, Affordable 347 -
2835, 2940, 2950, 3055, 3170,
3390 Goyer Street
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153135, 3165 and 3175 Bedford Affordable 243 43,318
Road; 6510, 6580, 6650, 6675
and 6725 Darlington Avenue; and
6690 Hudson Road
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163600 Barclay Street and 6555 Commercial - 81,905
Cote-des-Neiges Road
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Total 3,661 193,955
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FOR FURTHER INFORMATION PLEASE CONTACT:
Canadian Apartment Properties Real Estate Investment Trust
Mr. Thomas Schwartz
President & CEO
(416) 861-9404


Canadian Apartment Properties Real Estate Investment Trust
Mr. Michael Stein
Chairman
(416) 861-5788


Canadian Apartment Properties Real Estate Investment Trust
Mr. Scott Cryer
Chief Financial Officer
(416) 861-5771

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