Canadian Apartment Properties Real Estate Investment Trust T.CAR.UN

Q1-22 earnings call summary - NCIB will likely activate soon

[Mephistopheles3]

Some highlights from the earnings call IMO. I came away from the call feeling that Mark knows what to do for the next year and that management is on top of their game.  They got hit by a bad wave of inflation and interest rate environment, but the day-to-day management of Capreit looks to be going well.

1.   NOI operating expenses
-  Abnormally high with the tough winter we had as well.  They believe Q2 will still hurt from inflation, but Q3-Q4 should start to get better and in line with historical %.  

2.  Share buyback
- Mark confirmed that they did not buyback any shares as they were in blackout  (we had thought they had put in an automatic program, but I believe they didn't get it in place in time for the blackout period).

- They are looking at taking advantage of the NCIB and getting value for shareholders. 

3.  Dispositions
- They really want to dispose of low cap. rate properties like in the 1-2% range and purchase at the 4% range.  This is "arbitrage" according to Mark and they can provide real value here.
  
- Otherwise, they can look at disposing the properties and using the proceeds to fuel the NCIB. 

- Mark does not want to leverage up the company to buy back shares.. but he's fine with disposing properties and buying back stock if he can't find good acquisitions.  He still believes there's good acquisitions out there (like they bought recently) for new developments that are being constructed and where they can just take over the financing at the low interest rates. 

- Mark provided some interesting insight that private real estate investors are paying huge valuations, even now as they take a very long term view and just want assets.  They are even just letting properties sitting vacant.  This is promising in terms of disposals.

4.  Guidline increase for next year
- Announcement for rent increase guidelines to be made in June/July.  

5.  Legislation 
- NDP/Liberals have been blaming REIT's for everything.  Mark is looking at being a firm partner with the provinces and being a responsible partner for affordable housing. He believes that they can be a great asset in Canada's affordable housing issue.

This is an issue that he is very outspoken about and that you see on Twitter - he does not like how REIT's are being categorized. Unknown what the NDP will do here, REIT's make an easy target.