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Canadian Apartment (TSE:CAR.UN)
TSX:CAR.UN
Top Page
Canadian Apartment
(TSX:CAR.UN)
72Outperform
Positive Factors
Business Strategy
CAP REIT's strategy of increasing focus and improving the quality of its portfolio continues to be executed successfully.
Financial Performance
Management's confidence in long-term FFO growth is reflected in a 3.4% increase in the monthly distribution.
Investment Potential
CAP REIT's units currently trade at a discount to the NAV estimate, suggesting potential for upside.
Negative Factors
Asset Sales
The variance to the forecast was driven by asset sales and increased vacancy, impacting financial results.
Earnings
Q4/24 results were below expectations, with NFFO coming in lower than estimated.
Interest Expense
Greater interest expense from refinancing mortgage debt at higher rates offset a portion of the strong operating performance.
Canadian Apartment (CAR.UN) vs. S&P 500 (SPY)
Market Cap
C$6.92B
Dividend Yield3.43%
Average Volume (3M)728.73K
Price to Earnings (P/E)24.7
Beta (1Y)0.97
Revenue Growth4.45%
EPS GrowthN/A
CountryCA
Employees1,076
SectorReal Estate
Sector Strength63
IndustryREIT - Residential
Share Statistics
EPS (TTM)1.73
Shares Outstanding160,801,450
10 Day Avg. Volume568,650
30 Day Avg. Volume728,730
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)6.47
Price to Cash Flow (P/CF)9.90
P/FCF Ratio4.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$50.60Price Target Upside18.72% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Canadian Apartment Business Overview & Revenue Model
Company DescriptionCAPREIT is one of Canada's largest real estate investment trusts. CAPREIT owns approximately 57,000 suites, including townhomes and manufactured housing sites, in Canada and, indirectly through its investment in ERES, approximately 5,800 suites in the Netherlands. CAPREIT manages approximately 61,200 of its owned suites in Canada and Netherlands, and additionally approximately 3,800 suites in Ireland as at September 30, 2020.
How the Company Makes MoneyCAPREIT generates revenue primarily through rental income from its extensive portfolio of residential properties. The company leases apartments, townhomes, and manufactured home sites to individuals and families, collecting monthly rent payments as its main source of revenue. CAPREIT also benefits from property value appreciation and strategic property acquisitions, which can enhance rental income through increased occupancy rates and rental rate adjustments. Additionally, the company may engage in ancillary services and fees related to property management, parking, and utilities, further contributing to its earnings. CAPREIT's revenue model is supported by its strategic focus on maintaining high occupancy rates, optimizing rental pricing, and efficient property management practices.
Canadian Apartment Financial Statement Overview
Summary
Canadian Apartment demonstrates steady revenue growth and strong cash-generating abilities. However, high leverage and instability in net income present challenges. The stable equity position is a positive, but reducing debt could further improve financial health.Income Statement
The company has shown consistent revenue growth with a revenue increase of 4.5% in the latest year. The gross profit margin has remained strong, averaging around 60% over the years. However, the volatility in net income, particularly the negative net income in 2023, indicates potential profitability challenges. The absence of EBIT in the latest data may suggest operational restructuring.70
Positive
Balance Sheet
The balance sheet reflects a stable equity position, with an equity ratio consistently above 50%. However, the debt-to-equity ratio is relatively high, indicating significant leverage. The company's total debt has decreased slightly over recent years, but the high leverage remains a risk factor.65
Positive
Cash Flow
The cash flow statements reveal a positive trend in free cash flow growth, with a noticeable increase in 2024. Operating cash flow remains robust, showing the company's strong cash-generating capability. However, the free cash flow to net income ratio fluctuates, partly due to variations in net income.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.11B | 1.07B | 1.01B | 933.14M | 882.64M | Gross Profit |
| 672.03M | 630.41M | 592.44M | 609.99M | 578.17M | EBIT |
| 0.00 | 615.95M | 728.11M | 516.13M | 553.58M | EBITDA |
| 552.38M | -274.86M | 697.07M | 541.37M | 587.55M | Net Income Common Stockholders |
| 292.74M | -411.57M | 13.64M | 1.39B | 925.93M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 146.76M | 35.22M | 51.68M | 73.41M | 121.72M | Total Assets |
| 15.58B | 16.97B | 17.74B | 17.71B | 15.50B | Total Debt |
| 6.04B | 7.11B | 7.01B | 6.46B | 5.56B | Net Debt |
| 5.90B | 7.08B | 6.97B | 6.39B | 5.44B | Total Liabilities |
| 6.55B | 7.69B | 7.74B | 7.31B | 6.23B | Stockholders Equity |
| 9.03B | 9.28B | 10.00B | 10.40B | 9.27B |
| Cash Flow | Free Cash Flow | |||
| 399.04M | 308.09M | 261.56M | 252.01M | 236.50M | Operating Cash Flow |
| 648.85M | 615.92M | 598.03M | 551.43M | 481.36M | Investing Cash Flow |
| 1.74B | -138.47M | -502.97M | -1.11B | -1.02B | Financing Cash Flow |
| -2.29B | -495.23M | -132.32M | 512.50M | 185.45M |
Canadian Apartment Technical Analysis
Positive
42.62
Price Trends
40.85
Positive
42.28
Positive
45.43
Negative
Market Momentum
0.57
Negative
57.56
Neutral
72.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CAR.UN, the sentiment is Positive. The current price of 42.62 is above the 20-day moving average (MA) of 41.61, above the 50-day MA of 40.85, and below the 200-day MA of 45.43, indicating a neutral trend. The MACD of 0.57 indicates Negative momentum. The RSI at 57.56 is Neutral, neither overbought nor oversold. The STOCH value of 72.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CAR.UN.
Canadian Apartment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Performance Comparison
TSE:CAR.UN
Canadian Apartment
42.62
-2.48
-5.50%
MRCBF
Morguard (OTC)
83.76
-3.58
-4.10%
Canadian Apartment Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 3.42% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call reflects strong operational and financial performance, characterized by high occupancy rates, rent growth, and effective capital recycling strategies. Despite increased interest expenses and maintenance costs, the company demonstrated robust financial strength and a strategic focus on optimizing their portfolio. Overall, the sentiment is positive with a clear emphasis on growth and stability.Highlights
High Occupancy and Rent Growth
Occupancy remained high at 98%, with average rent at $1,617 per month. Rent growth drove a 5.2% increase in total portfolio operating revenues.
Strong Financial Performance
NOI increased by 6.1%, with a 60 basis point margin expansion to 67.1%. Diluted FFO per unit increased by 3.3% to $0.659 for the quarter.
Successful Capital Recycling Strategy
Nearly $1 billion in Canadian rental properties transacted in 2024, $219 million in European property sales completed, and over $1 billion in additional property dispositions in the Netherlands announced.
Debt Reduction and Financial Strength
Total debt to gross book value ratio decreased to 40.9% from 41.6%. Mortgages carry a low weighted average effective interest rate of just over 3%.
Lowlights
Higher Interest Expenses
Higher interest expenses partially offset the healthy organic growth achieved in the quarter.
Increased Repairs and Maintenance Costs
Higher repairs and maintenance costs incurred, impacting margins despite scaling back on certain discretionary capital expenditures.
Company Guidance
During the Canadian Apartment Properties REIT (CAPREIT) Q3 2024 earnings call, a robust set of metrics highlighted significant operational and strategic achievements. CAPREIT reported a high occupancy rate of 98% with an average rent of $1,617 per month. Rent growth led to a 5.2% increase in total portfolio operating revenues, with a 6.1% rise in NOI, expanding the margin by 60 basis points to 67.1%. Despite higher repairs and maintenance costs, diluted FFO per unit increased by 3.3% to $0.659 for the quarter. Over the first nine months, rent growth was 6.4%, and diluted FFO per unit rose by 6.5%, maintaining a conservative payout ratio of 57.3%. CAPREIT's strategic repositioning involved $1 billion in Canadian rental property transactions and $219 million in European property sales, with further dispositions planned, including a $740 million MHC portfolio sale set for closing in Q4 2024. The company's total debt to gross book value ratio improved to 40.9%, and a strategic CapEx program reduced capital spend by 7% year-over-year, enhancing cash flow generation.Canadian Apartment Corporate Events
Dividends
CAPREIT Announces March 2025 Distribution
Positive
Mar 17, 2025
CAPREIT announced its March 2025 monthly distribution of $0.12917 per Unit, payable on April 15, 2025, to Unitholders of record as of March 31, 2025. This announcement reflects CAPREIT’s ongoing commitment to providing consistent returns to its investors, highlighting its strong position in the rental housing market and its significant growth in cash distributions since its IPO.
Dividends
CAPREIT Announces Increased February 2025 Distribution
Positive
Feb 18, 2025
CAPREIT has announced an increase in its February 2025 monthly distribution to $0.12916 per Unit, marking an annualized distribution of $1.55. This decision reflects CAPREIT’s ongoing commitment to enhancing shareholder value and maintaining its strong market presence in the real estate sector, as evidenced by its substantial portfolio and sustained growth in distributions.
Business Operations and StrategyFinancial Disclosures
CAPREIT Reports Robust 2024 Financial Results Amid Market Adjustments
Positive
Feb 13, 2025
CAPREIT announced strong financial and operating results for the fourth quarter and full year of 2024. Despite a decrease in the number of suites and sites and a slight decline in overall occupancy, the company reported increased operating revenues and net operating income compared to the previous year. The results underscore CAPREIT’s solid performance in adjusting to market conditions, with improved rental rates in both its Canadian and Dutch portfolios. The company’s financial health is reflected in its net income for the year, signaling a recovery from a loss recorded in the previous year, and a stable distribution per unit.
M&A TransactionsBusiness Operations and Strategy
CAPREIT Enhances Portfolio with $194 Million in Strategic Transactions
Positive
Feb 10, 2025
CAPREIT has announced a strategic shift in its portfolio with the completion of key acquisitions and dispositions totaling $194 million. The company sold non-core assets in Brampton and Charlottetown while acquiring newly constructed rental properties in Vancouver and Edmonton. These transactions bolster CAPREIT’s presence in Western Canada, aligning with its strategy of upgrading its portfolio with properties that offer both value and growth potential. The moves are part of a broader capital reallocation plan aimed at enhancing the company’s core platform and supporting the Canadian housing market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.