Management believes CAPREIT's strong balance sheet and liquidity position will enable it to continue to take advantage of acquisition and property capital investment opportunities over the long term.
CAPREIT is achieving its financing goals as demonstrated by the following key indicators:
-- The ratio of total debt to gross book value as at December 31, 2012 improved to 47.25% compared to 50.27% for last year;-- Debt service and interest coverage ratios for the four quarters ended December 31, 2012 improved to 1.52 times and 2.51 times compared to 1.38 times and 2.20 times, respectively, for last year;-- At December 31, 2012, 92.9% (December 31, 2011 - 96.5%) of CAPREIT's mortgage portfolio was insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's manufactured home communities land lease sites, resulting in improved spreads on mortgages and overall lower interest costs than conventional mortgages. During the current year, on certain acquisitions CAPREIT assumed conventional mortgages, resulting in a decrease of CAPREIT's mortgage portfolio insured by CMHC compared to last year. Management expects to convert these mortgages to CMHC-insured mortgages in due course;-- The effective portfolio weighted average interest rate on mortgages has steadily declined from 4.48% as at December 31, 2011, to 3.87% as at December 31, 2012, which will result in significant interest rate savings in future years;-- Management expects to raise between $575 million and $625 million in total mortgage renewals and refinancings in 2013;-- As at December 31, 2012, the Bridge Loan was fully repaid from the net proceeds of the equity offering completed on December 4, 2012.
Property Capital Investment Plan
During the year ended December 31, 2012, CAPREIT made property capital investments (excluding disposed properties, head office assets, tenant improvements and signage) of $129.8 million as compared to $116.6 million for last year. For the full 2013 year, CAPREIT expects to complete property capital investments of approximately $160 million to $170 million, including approximately $67 million targeted at acquisitions completed over the past 2 years and approximately $13 million in high-efficiency boilers and other energy-saving initiatives.
Property capital investments include suite improvements, common areas and equipment, which generally tend to increase NOI more quickly. CAPREIT continues to invest in energy-saving initiatives, including boilers, energy-efficient lighting systems, and water-saving programs, which permit CAPREIT to mitigate potentially higher increases in utility and R&M costs and significantly improve overall portfolio NOI.
On January 31, 2013, CAPREIT completed the acquisition of a mid-tier apartment complex in Calgary, Alberta consisting of six three-storey buildings totalling 263 residential suites. The purchase price of $47.3 million was satisfied by the assumption of an existing $7.2 million mortgage bearing interest at 6.95% maturing in October 2017, with the remaining balance funded from CAPREIT's Acquisition and Operating Facility.
More detailed information and analysis is included in CAPREIT's audited consolidated annual financial statements and MD&A for the year ended December 31, 2012, 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.capreit.net.