Investor Presentation Second Quarter 2006
2006 Highlights (Six months to June 30, 2006) Revenues up 10.2% from accretive acquisitions Net Operating Income up 10.9% NOI margin increases Stabilized portfolio NOI up for second consecutive quarter Increased rents on turnover and renewals Per suite renovation costs declining
A Solid Quarter Three Months Ended June 30, 2006 Change Revenues $69.9M 11% Net Operating Income $37.9M 10% Distributable Income $17.5M 5% Funds From Operations $17.5M 5%
Continued Portfolio Growth Acquired 895 suites so far in 2006: Portfolios in Etobicoke, Orangeville, Montreal Approx. $71 million total acquisition costs Available cost synergies 2006 Growth Target: 1,500 2,000 suites
Strong Diversified Portfolio As at June 30, 2006 3% 5% 1% 17% 70% 4% GTA 51% Other Ont 19%
Well Balanced Portfolio As at June 30, 2006 Affordable 16% 32% 52% Mid-tier Luxury Not tied to any demographic segment
Industry-Leading Occupancy 98.9% 99.5% 98.8% 98.3% 97.6% 96.6% 97.4% 97.1% 1999 2000 2001 2002 2003 2004 2005 Q2 06
Solid Financial Base (at June 30, 2006) Weighted Average Interest Rate* Reduced to 5.35% Weighted Average Term to Maturity* Extended to 7.8 years + + Strong balance sheet 63.7% Stable, sustainable cash distributions 75% tax deferral in 2005 *including impact of interest rate forward contracts
Investing in our Properties Suite Improvements Year Ended Dec. 31, 2005 $12.5M Capital Improvements $11.7M $16.6M Building Improvements Suite Improvements: Property & market specific Generally fast turnaround upgrades Increasingly using subcontractors Capital Improvements: Increase life of properties Reduce operating costs Enhance tenant experience Building Improvements: Related to recent acquisitions Estimated at time of purchase Funded over several years
Acquisition Capex Builds Value Example: Acquisition Purchase Price Estimated Capex at Acquisition Total Acquisition Value $20 million 4 million $24 million Capex estimated at acquisition date Accretion calculated including estimated capex Capex funded over ensuing years
Financial Review
2006 Highlights Six months ended June 30, Revenues Net Operating Income Distributable Income 2006 2005 $139.2M $70.5M $30.5M $126.3M $63.6M NOI Margin 50.3% 50.7% $28.6M DI per Unit (basic) $0.555 $0.552 Funds from Operations $29.7M $28.1M FFO per Unit (basic) $0.545 $0.539 Wtd Avg Units O/S 51.5M 55.2M
Q2, 2006 Highlights Quarter ended June 30, Revenues Net Operating Income Distributable Income 2006 2005 $69.9M $37.9M $17.5M $63.0M $34.4M NOI Margin 54.6% 54.3% $16.6M DI per Unit (basic) $0.322 $0.316 Funds from Operations $17.5M $16.7M FFO per Unit (basic) $0.322 $0.316 Wtd Avg Units O/S 51.7M 55.2M
Stabilized Portfolio Performance Six months ended June 30, 2006 2005 Stabilized Suites 22,250 Net Operating Income Margin 50.5% 22,250 50.3% Change in Operating Revenues 1.4% Change in NOI 1.7% Two consecutive quarters of positive NOI growth
Decreasing Tenant Allowances $3,000 $2,500 $2,000 $1,500 Allowances incurred $1,000 Net average rents $500 $0 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Total allowances & vacancy loss ResREIT Purchase Trend: steady tenant allowances incurred steady net average rents
Strong Financial Position June 30, 2006 June 30, 2005 Mortgage Debt to GBV 58.9% 57.9% Total Debt to GBV 64.7% 63.7%* Total Debt to Total Market Cap 59.7% 61.5% Weighted Average Interest Rate 5.35%** 5.48%** Weighted Average Term to Maturity 7.8yrs** 8.5yrs** Debt Coverage 1.2x 1.2x Acquisition Capacity (based on 70% maximum borrowing limit) $454M* $338M *proforma debt to GBV ratio after equity offering dated Aug 22/06 will be 61.3% and acquisition capacity will be $626 million **including impact of interest rate forward contracts
Well Positioned Mortgage Portfolio Total Debt Repayments and Weighted Average Interest Rates (including interest rate forward contracts) $250,000 $200,000 $150,000 $100,000 $50,000 $0 6.3% 5.6% 4.9% 4.2% 3.5% 2.8% 2.1% 1.4 % 0.7% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-2020 Subsequent Total Debt Repayments ($000s) Weighted Avg Interest Rate for Maturing Mortgages
Increasing Rents Portfolio Occupancy and Average Rents (By Asset Type) Total Portfolio Properties Owned Prior to June 30, 2005 Properties Acquired Since June 30, 2005 As at June 30, 2006 2005 2006 2005 2006 Avg. Rent $ Occ. % Avg. Rent $ Occ. % Avg. Rent $ Occ. % Avg. Rent $ Occ. % Avg. Rent $ Occ. % Affordable 773 95.5 793 95.8 773 95.5 793 95.8 - - Mid-Tier 848 97.8 856 96.4 879 97.8 856 96.4 700 97.5 Luxury 986 96.8 968 96.9 988 96.7 968 96.9 902 99.5 Average 882 97.1 886 96.5 899 97.2 888 96.5 716 97.7 1% change in gross rents impacts DI / FFO by $0.026 per Unit
2006 Capex (Six months to June 30, 2006) June 30, 2006 By Program June 30, 2006 By Portfolio 28.7% 45.3% Capital Improvements ($6.16M) 48.2% 51.2% ResReit ($6.96M) Suite Improvements ($3.54M) Other New Acquisitions ($0.08M) 26.0% Building Improvements ($3.90M) 0.6% Existing Portfolio ($6.56M) Capital Expenditures June 30, 2006 9.9% Building ($3.90M) 1.2% 7.8% 9.9% 4.1% 28.7% 12.4% Boilers & Elevators ($1.69M) Windows ($0.02M) Suite Improvements ($1.99M) Kitchen/ Bath/ Floors ($1.54M) Appliances ($0.56M) Common Area Upgrades ($1.34M) Equipment ($1.06M) 11.3% 0.1% Signage ($0.16M) 14.6% Other ($1.34M)
Capex Program Adds Value Property Suites Vacancy % Jun 04 Jun 06 Net Rent $ Jun 04 Jun 06 % chg Suites Improved $ Spent on Insuite Total $ Spent 355 St Clair, Toronto 168 6.0 1.8 2,068 2,223 7.5 22 792,699 1,643,677 56-88 Cassandra, Toronto 160 13.1 1.9 1,103 1,231 11.6 82 490,760 1,142,168 10 San Romanoway, Tor. 428 14.5 7.5 850 891 4.8 98 422,567 1,422,231 77 Huntley, Toronto 561 5.3 2.3 832 904 8.7 63 229,980 466,776 411 Duplex, Toronto 455 9.0 1.3 956 1,080 13.0 165 611,197 1,156,348 2076 Sherobee, Mississauga 199 11.6 3.0 1,123 1,221 8.7 53 290,322 1,131,527 Park Royal, Mississauga 601 10.0 3.8 864 943 9.1 211 1,490,031 6,164,609 44 Stubbs, Toronto 84 3.6 1.2 1,297 1,377 6.2 20 474,050 952,907 Traynor Vanier, Kitchener 279 8.2 5.4 692 718 3.8 97 967,369 2,338,582 435 Ste Foy, Quebec 121 5.9 5.8 925 944 2.1 16 150,513 370,302
Leveraging Our Strengths Solid Growth Opportunities
The Fundamentals are Strengthening Rising interest rates less affordable housing Strengthening demand Decline in single family starts Improving youth job market Strong economy
Building One of the Best Managed Companies in the Industry New information technology system Strengthened management team
Another Positive Initiative for Our Business Ontario Government: New Legislation Maintains market rent on vacated suites Modified guideline for rent increases to existing tenants on renewals from 2.1% in 2006 to 2.6% in 2007 Positive Impact on our Business Move rents close to market Generate stable, sustainable increases Increase in demand, due to more certainty
Positioned in Strong Markets Ontario: The heartland of the Canadian economy broad economic base, not tied to cyclical industries Growing immigration 53% of total Canadian immigration settles in Ontario Greater Toronto Area: The financial engine of the Canadian economy Forecast 30% population growth to 2031 42% of total Canadian immigration comes to Toronto
Outlook Market fundamentals improving Strong, flexible balance sheet Repositioned, diversified portfolio Strengthened operating platform Target to acquire 1,500 to 2,000 suites in 2006 Leveraging our real estate experience
An Exciting Future Canada s Landlord of Choice Strong balance sheet High quality portfolio Strengthened platform 63.7% Capitalizing on Improving Fundamentals
Investor Presentation
Cautionary Statement This presentation may contain forward-looking statements with respect to and its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward-looking words such as may, will, expect, estimate, anticipate, intends, believe or continue or the negative thereof or similar variations. The actual results and performance of discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulation and the factors described under Risk Factors in s annual information form and other securities regulatory filings. The cautionary statements qualify all forward-looking statements attributable to and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date to which this presentation refers, and the parties have no obligation to update such statements. Distributable income is not a measure recognized under Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Distributable income is presented in this presentation because management of believes that this non-gaap measure is a relevant measure of its ability to earn and distribute cash returns to Unitholders. Distributable income computed by may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to distributable income reported by such organizations. Distributable income is calculated by by reference to the net income of on a consolidated basis, as determined in accordance with GAAP, subject to certain adjustments set out in the Declaration of Trust.