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CAPREIT Reports Continued Growth and Strong Operating Performance in Second Quarter of 2021

TORONTO, Aug. 12, 2021 (GLOBE NEWSWIRE) -- Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX: CAR.UN) announced today continuing strong operating and financial results for the three and six months ended June 30, 2021.

HIGHLIGHTS:

Three Months EndedSix Months Ended
June 30,June 30,
202120202021 2020 (5)
Portfolio Performance
Overall portfolio occupancy (1)97.2%98.0�%
Overall portfolio net Average Monthly Rents (1) (2)$1,118$1,104�
Operating revenues (000s)$228,856$219,925$456,362$435,985
Net rental income ("NOI") (000s)$151,786$143,233$298,438$281,291
NOI Margin66.3%65.1%65.4%64.5%
Financial Performance
Normalized Funds from Operations ("NFFO") (000s) (3)$100,080$94,712$196,022$187,859
NFFO per Unit � basic (3)$0.579$0.555$1.135$1.102
Cash distributions per Unit$0.345$0.345$0.690$0.690
FFO payout ratio (3)61.4%62.8%62.2%63.3%
NFFO payout ratio (3)59.8%62.4%61.0%62.8%
Liquidity and Leverage
Total debt to gross book value (1)36.37%36.02%
Total debt to gross historical cost (1)51.77%48.99%
Weighted average mortgage interest rate (1)2.53%2.76%
Weighted average mortgage term (years) (1)5.774.99
Debt service coverage (times) (4)2.001.99
Interest coverage (times) (4)3.993.91
Available liquidity � Acquisition and Operating Facility (000s) (1)$250,676$124,772
Cash and cash equivalents (000s) (1)$122,542$213,455

(1)��As at June 30.
(2)��Net Average Monthly Rent ("Net AMR") is defined as actual residential rents, excluding vacant units, divided by the total number of suites and sites in the property and does not include revenues from parking, laundry or other sources.
(3)��These measures are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or companies. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release.
(4)� Based on the trailing four quarters.
(5)��Certain 2020 comparative figures have been adjusted to conform with current period presentation.

Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Other Measures
Weighted average number of Units - basic (000s)172,950170,588172,712170,397
Number of residential suites and sites acquired1,6591,6591,724
Number of suites disposed
Closing price of Trust Units on the TSX (1)$58.12$48.59
Market capitalization (millions) (1)$10,095$8,357

(1)� As at June 30.

SUMMARY OF Q2 - 2021 RESULTS OF OPERATIONS

Key Transactions and Events

  • CAPREIT continues to invest in accretive opportunities with total acquisitions for the three months ended June 30, 2021 amounting to $357 million comprised of 1,522 suites located in strong suburban markets within Ontario, British Columbia, and Qu�bec, and $73 million comprised of 137 suites located in the Netherlands.
  • On April 15, 2021, CAPREIT completed the buyout of an existing operating lease for a property located in midtown Toronto, Ontario, converting the ownership to a traditional fee simple property interest. The net buyout price was approximately $4.5 million.

Strong Operating Results

  • CAPREIT has maintained a very high level of rent collection, with over 99% of rents collected year to date.
  • On turnovers, monthly residential rents for the three and six months ended June 30, 2021 increased by 4.9% on 5.1% of the Canadian portfolio and 4.2% on 9.4% of the Canadian portfolio, compared to an increase of 7.9% on 4.0% of the Canadian portfolio and 10.4% on 7.2% of the Canadian portfolio for the three and six months ended June 30, 2020.
  • Net AMR for the stabilized portfolio as at June 30, 2021 increased by 1.4% compared to June 30, 2020.
  • Net operating income ("NOI") increased by 2.9% and 2.7% for the stabilized portfolio for the three and six months ended June 30, 2021, compared to an NOI increase of 2.6% and 4.1% for the stabilized portfolio for the three and six months ended June 30, 2020.
  • NOI margin for the total portfolio increased to 66.3% and 65.4% for the three and six months ended June 30, 2021 compared to 65.1% and 64.5% for the same periods last year.
  • NFFO per unit was up 4.3% and 3.0% for the three and six months ended June 30, 2021 compared to the same periods last year.

Strong and Flexible Balance Sheet

  • CAPREIT's financial position remains strong, with $122.5 million of cash and cash equivalents and $250.7 million of available liquidity on CAPREIT's Acquisition and Operating Facility.
  • Management expects to raise between $900 million and $950 million in total mortgage renewals and refinancings for 2021, excluding financings on acquisitions.��
  • CAPREIT closed mortgage refinancing of $344.8 million and $383.1 million for the three and six months ended June 30, 2021, with top-ups net of discharges of $172.5�million, a weighted average term to maturity of 9.7 years and a weighted average interest rate of 2.38%.
  • For the three and six months ended June 30, 2021 the fair value of investment properties increased by $884.5 million and $812.5�million respectively. Excluding the impact of net acquisitions, operating lease buyout and foreign exchange, the fair value of investment properties increased by $512.6�million for the six months ended June 30, 2021.

"We continued to perform well through the second quarter and first six months of 2021 with solid revenue growth and strong operating performance,� commented Mark Kenney, President and CEO. �Looking ahead, as the COVID-19 pandemic eases in our markets, we believe we will see another record year as we benefit from increased immigration, businesses re-opening and a return to in-person learning, and the contribution from the significant increase in the size and scale of our property portfolio over the last few months."

OPERATIONAL AND FINANCIAL RESULTS

Portfolio Net Average Monthly Rents

Total PortfolioProperties Owned Prior to June 30, 2020
As at June 30,2021202020212020
AMR Occ. %AMR Occ. %AMR Occ. %AMR Occ. %
Average�residential suites$1,28397.4$1,27498.6$1,29197.5$1,27598.6
Average�MHC sites$39596.0$38695.8$39695.9$38695.8
Overall portfolio average$1,11897.2$1,10498.0$1,11997.2$1,10498.1

The rate of growth in stabilized Net AMR has been primarily due to (i) rental increases on turnover in the rental markets of Nova Scotia, British Columbia, and Ontario, slightly offset by an increase in vacancy seen in various provinces, and a currently weakening Alberta market, both due to economic impacts related to the COVID-19 pandemic and (ii) rental increases on renewals. Weighted average gross rent per square foot for Canadian residential suites was approximately $1.65 as at June 30, 2021.

Canadian Portfolio

For the Three Months Ended June 30,20212020
Change in
monthly rent
Turnovers and Renewals (1) Change in
monthly rent
Turnovers and Renewals (1)
$%%$%%
Suite turnovers68.24.95.1104.97.94.0
Lease renewals16.11.49.80.00.021.6
Weighted average of turnovers and renewals33.92.616.41.2

For the Six Months Ended June 30,20212020
Change in
monthly rent
Turnovers and
Renewals
(1)
Change in
monthly rent
Turnovers and
Renewals
(1)
$%%$%%
Suite turnovers58.94.29.4137.210.47.2
Lease renewals14.41.217.812.51.039.0
Weighted average of turnovers and renewals29.82.231.92.5

(1)� Percentage of suites turned over or renewed during the period based on the total weighted number of residential suites (excluding co-ownerships) held during period.

The Netherlands Portfolio

For the Three Months Ended June 30,20212020
Change in
monthly rent
Turnovers and
Renewals
(1)
Change in
monthly rent
Turnovers and
Renewals
(1)
%%%%
Suite turnovers143.016.93.692.611.53.4
Lease renewals
Weighted average of turnovers and renewals143.016.992.611.5

For the Six Months Ended June 30,20212020
Change in
monthly rent
Turnovers and
Renewals
(1)
Change in
monthly rent
Turnovers and
Renewals
(1)
%%%%
Suite turnovers130.015.27.477.79.57.5
Lease renewals
Weighted average of turnovers and renewals130.015.277.79.5

(1)� �Percentage of suites turned over or renewed during the period based on the total weighted number of Dutch residential suites held during the period.

Estimated Net Rental Revenue Run-Rate

CAPREIT�s annualized net rental revenue run-rate as at June 30, 2021 grew to $886.8 million, up 5.5% from $840.8 million. Net rental revenue net of dispositions for the 12 months ended June 30, 2021 was $849.4 million (June 30, 2020 � $798.0 million). For further discussion regarding forecasts and guidance as a result of the COVID-19 pandemic, please see Section II of the 2021 Q2 MD&A under The COVID-19 Pandemic for further details.

NOI

Stabilized properties for the three and six months ended June 30, 2021 are defined as all properties owned by CAPREIT continuously since December 31, 2019, and therefore do not take into account the impact on performance of acquisitions or dispositions completed during 2021 and 2020.

($ Thousands)Total NOIStabilized NOI
For the Three Months Ended June 30,20212020 % (1)20212020% (1)
Total operating revenues$228,856$219,9254.1$214,511$212,7950.8
Operating expenses
Realty taxes(21,840)(20,724)5.4(20,162)(20,067)0.5
Utilities(15,138)(15,382)(1.6)(13,915)(14,644)(5.0)
Other (2)(40,092)(40,586)(1.2)(37,427)(39,124)(4.3)
Total operating expenses$(77,070)$(76,692)0.5$(71,504)$(73,835)(3.2)
NOI$151,786$143,2336.0$143,007$138,9602.9
NOI margin66.3%65.1%66.7%65.3%

($ Thousands)Total NOIStabilized NOI
For the Six Months Ended June 30,20212020 % (1)20212020% (1)
Total operating revenues$456,362$435,9854.7$429,950$424,3311.3
Operating expenses
Realty taxes(43,650)(40,592)7.5(40,825)(39,391)3.6
Utilities(35,312)(34,125)3.5(33,047)(32,890)0.5
Other (2)(78,962)(79,977)(1.3)(74,318)(77,656)(4.3)
Total operating expenses$(157,924)$(154,694)2.1$(148,190)$(149,937)(1.2)
NOI$298,438$281,2916.1$281,760$274,3942.7
NOI margin65.4%64.5%65.5%64.7%

(1)� Represents the year-over-year percentage change.
(2)� Comprises R&M, wages, insurance, advertising, legal costs and bad debt.

Operating Revenues

For the three and six months ended June 30, 2021, total operating revenues for the total and stabilized portfolios increased compared to the same period last year, due to increases in monthly rents and continuing high occupancies, partially offset by increased tenant allowances. Contributions from acquisitions further contributed to higher operating revenues for the total portfolio.

Operating Expenses

The stabilized other operating expenses for the three months ended June 30, 2021 decreased primarily due to lower utilities, bad debt, and R&M costs, and partially offset by the higher advertising costs and insurance costs. The stabilized other operating expenses for the six months ended June 30, 2021 decreased primarily due to lower R&M costs and lower bad debt, partially offset by higher realty taxes and higher insurance costs driven by overall increases in insurance rates. The decreased R&M costs were partially due to the reduced ability to complete work given restrictions and limitations imposed in connection with the COVID-19 pandemic happening in the earlier part of the year, combined with cost controlling measures throughout the year. The increased advertising costs were also due to the COVID-19 pandemic in an effort to increase occupancies in some weakened markets. The increased realty taxes were primarily due to increased property assessment values in Qu�bec, British Columbia and Alberta.

NOI Margin

For the three months ended June 30, 2021, NOI margin for the total portfolio increased to 66.3% compared to 65.1% for the same period last year. For the six months ended June 30, 2021, NOI margin for the total portfolio increased to 65.4% compared to 64.5% for the same period last year.

NON-IFRS FINANCIAL PERFORMANCE

For the three months ended June 30, 2021, basic NFFO per Unit increased by 4.3% compared to the same period last year, despite an approximate 1.4% increase in the weighted average number of units outstanding. For the six months ended June 30, 2021, basic NFFO per Unit increased by 3.0% compared to the same period last year, despite an approximate 1.4% increase in the weighted average number of units outstanding. Management expects per unit FFO and NFFO and related payout ratios to strengthen further in the medium term as a result of NOI contributions from recent acquisitions.

PROPERTY CAPITAL INVESTMENTS

During the six months ended June 30, 2021, CAPREIT made property capital investments (excluding head office assets) of $123.0 million compared to $77.2 million for the same period last year.

Property capital investments include suite improvements, common areas and equipment, which generally tend to increase NOI more quickly. CAPREIT also continues to invest in environment-friendly and energy-saving initiatives, including energy-efficient boilers and lighting systems.

SUBSEQUENT EVENTS

On July 5, 2021, CAPREIT completed the acquisition of two MHC properties containing 342 sites in the town of Lakeshore close to Windsor, Ontario. CAPREIT paid approximately $20.6 million for the two properties, funded by cash and the assumption of a $8.6 million mortgage maturing in October 2025.

Subsequent to period-end, ERES extended the maturity of both the ERES Credit Facility and the ERES Bridge Facility, each originally maturing on July 8, 2021, for an additional period ending on September 10, 2021, under the same terms and conditions.

On August 6, 2021, IRES served a notice of termination of the investment management agreement ("IMA") and exercised its obligation to acquire IRES Fund Management Limited for �1, effective January 31, 2022 and subject to approval from the Central Bank of Ireland. In the interim, CAPREIT will continue to provide all the services pursuant to the current IMA and services agreement on their existing terms.

On August 12, 2021, the Board of Trustees approved an increase in monthly distributions to $0.1208 per Unit, or $1.45 per Unit on an annualized basis. The increase is effective with the August 2021 distribution payable on September 15, 2021 to Unitholders of record as at August 31, 2021.

ADDITIONAL INFORMATION

More detailed information and analysis is included in CAPREIT's unaudited condensed consolidated interim financial statements and MD&A for the three and six months ended June 30, 2021, which have been filed on SEDAR and can be viewed at www.sedar.com under CAPREIT�s profile or on CAPREIT�s website on the investor relations page at www.caprent.com or www.capreit.net.

Conference Call

A conference call hosted by Mark Kenney, President and Chief Executive Officer and Scott Cryer, Chief Financial Officer will be held Friday, August 13, 2021 at 9:00 am EST. The telephone numbers for the conference call are: Local/International: (778) 560-2627, North American Toll Free: (833) 714-0874. The conference access code is 8869205#.

A slide presentation to accompany Management's comments during the conference call will be available prior to the conference call. To view the slides, access the CAPREIT website at www.caprent.com or www.capreit.net, click on "Investor Relations" and follow the link at the top of the page. Please log on at least 15 minutes before the call commences.

The call and accompanying slides will also be archived on the CAPREIT website at www.caprent.com or www.capreit.net. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.caprent.com or www.capreit.net.

About CAPREIT

CAPREIT is Canada�s largest publicly-traded provider of quality rental housing. CAPREIT currently owns or has interests in, and manages, approximately 69,300 residential apartment suites, townhomes and manufactured housing community sites well-located across Canada, in the Netherlands and Ireland. For more information about CAPREIT, its business and its investment highlights, please visit 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

CAPREIT prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with IFRS, CAPREIT discloses financial measures not recognized under IFRS which do not have standard meanings prescribed by IFRS. These include stabilized net rental income (�Stabilized NOI�), Funds From Operations (�FFO�), Normalized Funds From Operations (�NFFO�), Adjusted Cash Flow from Operations (�ACFO�), FFO and NFFO per Unit amounts and FFO, NFFO and ACFO payout ratios, and Adjusted Cash Generated from Operating Activities (collectively, the �Non-IFRS Measures�). These Non-IFRS Measures are further defined and discussed in the MD&A released on August 12, 2021, which should be read in conjunction with this press release. Since these measures are not recognized under IFRS, they may not be comparable to similar measures reported by other issuers. CAPREIT presents the Non-IFRS measures because Management believes these Non-IFRS measures are relevant measures of the ability of CAPREIT to earn revenue and to evaluate its performance and cash flows. A reconciliation of these Non-IFRS measures is included in this press release below. The Non-IFRS measures should not be construed as alternatives to net income (loss) or cash flows from operating activities determined in accordance with IFRS as indicators of CAPREIT�s performance or the sustainability of our distributions.

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, occupancy rates, rental rates, productivity, projected costs, capital investments, development and development opportunities, 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 strategies 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: that the Canadian, Irish, Dutch, German and Belgian economies will generally experience growth, which, however, may be adversely impacted by the global economy and the ongoing health crisis related to the novel coronavirus ("COVID-19") pandemic and its direct or indirect impacts on the business of CAPREIT. These impacts may include the ability to enforce leases, perform capital expenditure work, increase rents and apply for above guideline increases, and obtain mortgage financings; 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 on renewals will grow at levels similar to the rate of inflation; that rental rates on turnovers will grow; that the difference between in-place and market-based rents will be reduced upon such turnovers and renewals; 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 they are reasonable as of the date hereof; however, 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�s 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: public health crises, disease outbreaks, reporting investment properties at fair value, real property ownership, investment restrictions, operating risk, energy costs, environmental matters, catastrophic events, insurance, capital investments, indebtedness, taxation-related risks, government regulations, controls over financial reporting, other legal and regulatory risks, the nature of units of CAPREIT (�Trust Units�), unitholder liability, liquidity and price fluctuation of Trust Units, dilution, distributions, participation in CAPREIT�s distribution reinvestment plan, potential conflicts of interest, dependence on key personnel, general economic conditions, competition for residents, competition for real property investments, risks related to acquisitions, cyber security risk and foreign operation and currency risks. There can be no assurance that the expectations of CAPREIT�s Management will prove to be correct. These risks and uncertainties are more fully described in regulatory filings, including CAPREIT�s Annual Information Form, which can be obtained on SEDAR at www.sedar.com, under CAPREIT�s profile, as well as under Risks and Uncertainties section of the MD&A released on August 12, 2021. The information in this press release is based on information available to management as of August 12, 2021. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.

SOURCE: Canadian Apartment Properties Real Estate Investment Trust

CAPREIT
Mr. Michael Stein
Chairman
(416) 861-5788
CAPREIT
Mr. Mark Kenney
President & CEO
(416) 861-9404
CAPREIT
Mr. Scott Cryer
Chief Financial Officer
(416) 861-5771

��������������������������������������������������������

SELECTED FINANCIAL INFORMATION

Condensed Balance Sheets

As at
($ Thousands)June 30, 2021December 31, 2020
Investment properties$15,813,126$15,000,591
Total assets16,341,57015,499,131
Mortgages payable5,521,1985,401,202
Bank indebtedness433,808118,553
Total liabilities6,664,5726,225,429
Unitholders' equity9,676,9989,273,702

Condensed Income Statements

Three Months EndedSix Months Ended
June 30,June 30,
($ Thousands, except per Unit amounts)
2021202020212020
Operating revenues
Revenue from investment properties$228,856$219,925$456,362$435,985
Operating expenses
Realty taxes(21,840)(20,724)(43,650)(40,592)
Property operating costs(55,230)(55,968)(114,274)(114,102)
Total operating expenses(77,070)(76,692)(157,924)(154,694)
Net rental income151,786143,233298,438281,291
Trust expenses(13,120)(10,291)(26,696)(21,655)
Unit-based compensation expense(4,433)(6,045)(8,919)(793)
Fair value adjustments of investment properties364,567(4,053)357,488(35,972)
Realized loss on disposition of investment properties(753)
Amortization of property, plant and equipment(2,069)(1,953)(4,081)(3,724)
Fair value adjustments of Exchangeable LP Units(1,419)(2,706)
(Loss) gain on non-controlling interest(4,038)(34,650)(19,826)35,029
Fair value adjustments of investments3,8273,7836,871(3,087)
Gain (loss) on derivative financial instruments4,203(7,447)34,725(958)
Interest and other financing costs(39,417)(36,911)(76,047)(71,707)
(Loss) gain on foreign currency translation16522,116(769)(31,692)
Other income (loss)8,046(3,204)13,2493,739
Net income before income taxes468,09864,578571,727149,718
Current and deferred income tax expense(14,537)(3,316)(14,104)(8,823)
Net income$453,561$61,262$557,623$140,895
Other comprehensive (loss) income$(4,731)$(23,983)$(81,205)$62,053
Comprehensive income$448,830$37,279$476,418$202,948

SELECTED NON-IFRS FINANCIAL MEASURES

A reconciliation of net income to NFFO is as follows:

($ Thousands, except per Unit amounts)
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Net income$453,561$61,262$557,623�$140,895
Adjustments:
Fair value adjustments of investment properties(364,567)4,053(357,488)35,972
Realized loss on disposition of investment properties753
Remeasurement of Exchangeable LP Units1,4192,706
Remeasurement of investments(3,827)(3,783)(6,871)3,087
Remeasurement of unit-based compensation liabilities2,4904,1775,171(2,762)
Interest on Exchangeable LP Units114229
Deferred income tax expense (1)13,4862,95612,3498,037
Loss (gain) on foreign currency translation(165)(22,116)76931,692
FFO adjustment for income from investment in associate(2,211)7,690(2,211)7,690
Gain (loss) on derivative financial instruments(4,203)7,447(34,725)958
Fair value mark-to-market adjustment on ERES units held by non-controlling unitholders84331,51213,422(41,181)
Distributions on ERES units held by non-controlling unitholders3,1953,1386,4046,152
Net FFO impact attributable to ERES units held by non-controlling unitholders (2)(4,396)(3,774)(8,679)(7,873)
Amortization of property, plant and equipment2,0691,9534,0813,724
Lease principal repayment(305)(459)(593)(575)
FFO$97,503$94,056$192,187$186,569
Adjustments:
Amortization of losses from (AOCL) AOCI to interest and other financing costs6196331,2391,267
Net mortgage prepayment cost1652316523
Other employee costs (6)1,5321,532
Acquisition research costs (3)261899
NFFO$100,080$94,712$196,022$187,859
NFFO per unit � basic$0.579$0.555$1.135$1.102
NFFO per unit � diluted$0.577$0.554$1.131$1.099
Total distributions declared (4)$59,880$59,077$119,618$118,019
NFFO payout ratio (5)59.8%62.4%61.0%62.8%
Net distributions paid (4)$42,118$45,276$83,042$85,175
Excess NFFO over net distributions paid$57,962$49,436$112,980$102,684
Effective NFFO payout ratio (6)42.1%47.8%42.4%45.3%

(1)��The figures for the three and six months ended June 30, 2020 consists of $3.0 million and $6.9 million, respectively, of deferred income tax expenses, as well as $nil and $1.2 million, respectively, of current income taxes on the disposition of a German investment property.
(2)� This calculation is based on the weighted average ownership held by ERES non-controlling unitholders.
(3)��Expenses included in trust expenses and related to transactions that were not completed.
(4)� For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and six months ended June 30, 2021.
(5)� The payout ratio compares distributions declared to NFFO.
(6)� The effective payout ratio compares net distributions paid to NFFO.

Reconciliation of cash generated from operating activities to Adjusted Cash Flows from Operations:

($ Thousands, except per unit amounts)Annual
2021 2020 (9)2021 2020 (9) 2020 (9)
Cash generated from operating activities$122,298$150,144�$245,275253,491�$480,729�
Adjustments:
Working capital adjustment (1)������18,116�
Interest expense included in cash flow from financing activities (2)(32,955)(31,030)(65,278)(64,243)(130,398)
Forecasted non-discretionary property capital investments (3)(21,395)(17,640)(42,632)(35,280)(70,545)
Capitalized leasing costs (4)(1,781)(431)(4,253)(640)(3,909)
Amortization of other financing costs (5)(4,509)(2,422)(6,774)(4,640)(23,725)
Investment income (6)3,978184�4,372�6,404�11,670�
Net ACFO impact attributed to ERES units held by non-controlling unitholders (7)(3,655)(1,465)(7,963)(5,353)(13,346)
Lease principal and interest repayments(1,565)(2,023)(2,969)(2,829)(5,664)
Tax on disposition (8)��1,155�1,155�
ACFO$60,416$95,317�$119,778$148,065�$264,083�
Total distributions declared$59,880$59,077�$119,618$118,019�$237,103�
Excess ACFO over distributions declared$536$36,240�$160$30,046�$26,980�
ACFO payout ratio99.1%62.0�%99.9%79.7�%89.8�%

(1)��On a quarterly basis, a review of working capital is performed to determine whether changes in prepaids, receivables, deposits, accounts payable and other liabilities, security deposits and other non-cash operating assets and liabilities were attributed to items which were not indicative of sustainable cash flows available for distribution in line with the ACFO guidance provided by REALpac. As a result, the one-time current income tax payment of $18.1 million relating to current income tax expense triggered on the acquisition of ECREIT on March 29, 2019 was added back for the year ended December 31, 2020.
(2)��Excludes interest with respect to leases, distributions to ERES non-controlling unitholders, and holders of Exchangeable LP Units.
(3) Non-discretionary property capital investments for the three and six months ended June 30, 2021 and 2020 has been calculated as follows: Non-Discretionary Property Capital Investments per suite and site are based on the annual 2021 and 2020 forecasts respectively, divided by four for the quarter, and multiplied by the weighted average number of residential suites and sites during the period. The forecasted Non-Discretionary Property Capital Investments per suite and site for 2021 and 2020 on an annual basis is $1,364 and $1,220 respectively. The estimated full year weighted average number of residential suites and sites for the six months ended June 30, 2021 and 2020 is 63,249 and 60,528, respectively. For a reconciliation of actual non-discretionary property capital investments incurred during the period to forecast, see the Adjusted Cash Flows From Operations and Distributions Declared section of the MD&A.
(4)��Comprises tenant inducements and direct leasing costs.
(5)� Includes amortization of deferred financing costs, CMHC premiums, deferred loan costs and fair value adjustments.
(6)��The investment income for the six months ended June 30, 2021 includes $3.6 million dividend paid by IRES.
(7)� This calculation is based on the weighted average ownership held by ERES non-controlling unitholders.
(8)��Represents $1.2 million of income tax expenses on the disposition of a German investment property for the six months ended June 30, 2020.
(9)� Certain 2020 comparative figures have been adjusted to conform with current period presentation.

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