A Real Estate Investment Trust (“REIT”) is a publicly traded investment vehicle that invests predominantly in income producing real estate assets. REITs pay out a large percentage of their income to their Unitholders, and very little income is retained. Income is distributed on a regular basis, usually quarterly or monthly. A REIT does not pay tax. The primary source of income for a REIT is the rental income derived from its tenants, while the largest expenses are property operating costs, interest and administrative costs.

CAPREIT’s unique approach to the residential rental property market is focused on providing tenants with comfortable and secure homes. By investing in its properties, the value of CAPREIT’s portfolio is enhanced and occupancy rates remain high.

Information on taxation of Cap Reit's distributions can be found under the "Tax Information" section of this website.

One of CAPREIT’s objectives is to provide long-term, stable and predictable monthly distributions for its Unitholders. To achieve this objective, CAPREIT manages risk in a number of ways. First, it ensures its portfolio is not tied to any one demographic sector by balancing its portfolio between luxury, mid-tier and affordable suites. It also diversifies geographically, and is now well positioned in key growth markets from coast-to-coast across Canada Finally, financial risk is mitigated by ensuring there is a blend of mortgages in terms of maturity date and interest rates.

The multi-family rental residential real estate market is perfectly suited for an investment trust structure due to its reduced risk exposure and consistent ability to produce stable and predictable cash flow. Revenues come from a large and diverse group of tenants, ensuring that income remains unaffected by the loss of any one tenant. Compared to commercial leases, residential terms are typically one year in length, allowing for more frequent and predictable rent increases. In addition, mortgages on multi-unit residential properties are typically CMHC-insured, resulting in lower interest rates and a more stable access to capital.

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Over the past ten years, rental rates for apartment suites have remained quite stable with consistently low vacancy rates, resulting in a highly predictable and growing income stream.

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Demand for rental accommodation is driven primarily by value and is affected by a number of factors, including increased immigration and a growing seniors’ population, as well as the state of consumer credit markets and the Canadian housing industry.

Through its focused program of proactive property management, capital improvements and preventative maintenance, CAPREIT ensures its buildings increase in value. In addition, CAPREIT’s unique approach to the apartment business continues to build its brand as the Landlord of Choice in the Canadian apartment industry. As a result, many of CAPREIT’s properties are worth much more than the CAPREIT’s original acquisition price.

The average purchase price per apartment suite has increased steadily in the majority of CAPREIT’s markets while capitalization rates have remained quite stable. CAPREIT’s freehold ownership of its portfolio offers participation in property value increases. As a result of rising property values and declining capitalization rates, the appraised value of CAPREIT’s portfolio is significantly higher than its book value.

Information on taxation of CAPREIT's distributions can be found under the "Tax Information" section of this website.

As CAPREIT has grown, it has recognized the necessity to retain earnings in order to maintain its superior growth record. Going forward, CAPREIT will maintain a proper balance between growth in distributions and growth in retained Distributable Income, and intends to maintain a pay-out ratio in the range of 60% to 70%.