CDPYF - Canadian Apartment Properties Real Estate Investment Trust (CDPYF) Q4 2023 Earnings Call Transcript

2024-02-23 13:08:04 ET

Canadian Apartment Properties Real Estate Investment Trust (CDPYF)

Q4 2023 Earnings Conference Call

February 23, 2024, 9:00 AM ET

Company Participants

Nicole Dolan - Investor Relations

Mark Kenney - President and CEO

Stephen Co - Chief Financial Officer

Julian Schonfeldt - Chief Investment Officer

Conference Call Participants

Frank Liu - BMO Capital Markets

Jonathan Kelcher - TD Cowen

Kyle Stanley - Desjardins

Brad Sturges - Raymond James

Mario Saric - Scotiabank

Jimmy Shan - RBC Capital Markets

Matt Kornack - National Bank Financial

Dean Wilkinson - CIBC

Presentation

Operator

Hello. And welcome to the Canadian Apartment Properties REIT’s Fourth Quarter 2023 Results Conference Call. My name is Alex. I’ll be your coordinator for the call today. [Operator Instructions]

I’ll now hand over to your host, Nicole Dolan, Investor Relations. Please go ahead.

Nicole Dolan

Thank you, Operator, and good morning, everyone. Before we begin, let me remind everyone that during our conference call this morning, we may include forward-looking statements about expected future events and the financial and operating results of CAPREIT, which are subject to certain risks and uncertainties. We direct your attention to slide two and our other regulatory filings for important information about these statements.

I will now turn the call over to Mark Kenney, President and CEO.

Mark Kenney

Thanks, Nicole, and good morning, everyone. Joining me this morning is Stephen Co, our Chief Financial Officer; and Julian Schonfeldt, our Chief Investment Officer.

Let’s start with a quick overview of our operational performance. On slide four, you can see that our occupancies held high all year, with 99% of our suites in Canada occupied on December 31, 2023 and 2022.

Across our Canadian residential portfolio, occupied AMR was $1,516 as of year-end, which represents an increase of 8.2% since 2022. This market-driven growth reflects the increasingly tight rental fundamentals that we’re continuing to experience across Canada. This past year, demand for affordable rental accommodation grew higher again as our population expands further and the housing gap widens. Later, I’ll speak more on the work that CAPREITs have been doing to help turn around the trajectory of this crisis.

Turning to slide five, I’ll take a moment to go through our financial results for the fourth quarter. Our strong rent growth throughout 2023 drove the 5.9% increase in operating revenues, while our NOI was up by 7.4% as compared to Q4 of 2022. This was achieved despite the size of our portfolio, having a net decrease of over 2,000 suites and sites during the year, a result of our repositioning initiatives that Julian will expand on shortly.

Combined with our prudent cost control measures, which remain a top priority for us, we are pleased to report a 90-basis-point increase in our NOI margin to 64.9% for the fourth quarter. I’d like to remind everyone that this includes higher repairs and maintenance costs associated our capital allocation strategy.

This year, we started scaling back on in-suite and common area capital expenditures, and we reallocated a part of that into additional repairs and maintenance work. This was a strategic initiative that we implemented in response to the tight rental market that we’re now operating in....

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