The rate of growth in average monthly rents on lease renewals during the period is lower primarily due to the lower guideline increases for 2013 (Ontario - 2.5%, British Columbia - 3.8%), which compare less favourably to the permitted guideline increases in 2012 (Ontario - 3.1%, British Columbia - 4.3%) offset by above guideline increases ("AGI") applied. Management continues to pursue applications for AGIs where it believes increases are supported by market conditions above the annual guideline to raise average monthly rents on lease renewals.
Operating Expenses
Overall operating expenses as a percentage of operating revenues increased marginally in the three months ended March 31, 2013, compared to the same period last year as a result of higher utility and repair and maintenance ("R&M") costs offset by lower wages costs.
Net Operating Income
Overall NOI improved in the current quarter by $10.8 million or 20.4% and the NOI margin decreased slightly to 55.1% from 55.4% for the same period last year due to higher operating expenses as a percentage of revenues.
As of March 31, 2013, CAPREIT has generated 29 consecutive quarters of stable or improved year-over-year NOI growth for stabilized properties demonstrating Management's strong operating and financing strategies. For the three months ended March 31, 2013, operating revenues for stabilized suites and sites increased 2.8% while operating costs increased 1.6% compared to the same period last year. As a result, stabilized NOI increased by 3.8% for the three months ended March 31, 2013.
NON-IFRS FINANCIAL MEASURES
Three Months Ended March 31, 2013 2012----------------------------------------------------------------------------NFFO (000s) $ 36,186 $ 27,802NFFO Per Unit - Basic $ 0.362 $ 0.333Cash Distributions Per Unit $ 0.280 $ 0.270NFFO Payout Ratio 79.3% 83.5%NFFO Effective Payout Ratio 60.6% 63.1%--------------------------------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY AND LEVERAGE
As at March 31, 2013 2012----------------------------------------------------------------------------Total Debt to Gross Book Value 47.62% 50.11%Total Debt to Gross Historical Cost (1) 57.38% 58.45%Total Debt to Total Capitalization 48.13% 49.77%Debt Service Coverage Ratio (times) (2) 1.53 1.40Interest Coverage Ratio (times) (2) 2.55 2.25Weighted Average Mortgage Interest Rate (3) 3.83% 4.45%Weighted Average Mortgage Term to Maturity (years) 6.0 5.5--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Based on historical cost of investment properties.(2) Based on the trailing four quarters ended March 31, 2013.(3) Weighted average mortgage interest rate includes deferred financing costs and fair value adjustments on an effective interest basis. Including the amortization of the realized component of the loss on settlement of $30.8 million included in Accumulated Other Comprehensive Loss ("AOCL"), the effective portfolio weighted average interest rate at March 31, 2013 would be 4.02% (March 31, 2012 - 4.54%).
