TORONTO, ONTARIO--(Marketwired - May 9, 2017) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today strong operating and financial results for the three months ended March 31, 2017.

For the Three Months Ended March 31, 2017 2016 Operating Revenues (000s) $ 155,610 $ 145,638 Net Rental Income ("NOI") (000s)(1) $ 91,598 $ 84,380 NOI Margin(1) 58.9 % 57.9 % Normalized Funds From Operations ("NFFO") (000s)(1) $ 57,937 $ 52,295 NFFO Per Unit - Basic(1) $ 0.429 $ 0.409 Weighted Average Number of Units - Basic (000s) 135,076 127,816 NFFO Payout Ratio(1) 74.5 % 75.8 %

(1) NOI, NFFO and NFFO per Unit are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release.

Portfolio growth and strong operating performance generates 6.8% increase in revenues

Average monthly rents for same residential properties up 2.5%

Portfolio occupancy remains strong at 98.6%, up from 98.3% last year

NOI rises 8.6% to $91.6 million with NOI margin of 58.9%, up from 57.9% for the same period last year

NFFO up 10.8% to $57.9 million

Continued accretive growth as NFFO per Unit up 4.9% despite reduced leverage and 5.7% increase in the weighted average number of Units outstanding from successful August 2016 equity offering

Continued strong organic growth as same property NOI up 3.7% due to increased revenues and proven property management programs

NFFO payout ratio strengthens to 74.5%.

Closed and committed mortgage refinancings and new financings for $175.7 million, including $103.6 million for renewals of existing mortgages and $72.1 million for additional top up financing and new acquisition financing with a weighted average term to maturity of 10.0 years, and a weighted average interest rate of 2.69%

Celebrating twenty years of growth and strong operating performance since IPO in 1997

"Following another record year in 2016, our growth and strong operating performance continued in the first quarter of 2017," commented Thomas Schwartz, President and CEO. "Looking ahead we expect another solid year as we continue to strengthen and diversify our property portfolio with accretive acquisitions while generating stable and consistent organic growth resulting from our proven and successful property management initiatives."

"In 2017 we are celebrating twenty years of growth and performance since our Initial Public Offering in 1997. We have significantly expanded and diversified our portfolio to reduce risk, strengthened and enhanced the flexibility of our balance sheet and financial position, and delivered two decades of solid, sustainable and growing earnings and cash distributions to our Unitholders with continuing conservative payout ratios. We look for this track record of success to continue for years to come," Mr. Schwartz concluded.

For the Three Months Ended March 31, 2017 2016 Overall Portfolio Occupancy(1) 98.6 % 98.3 % Overall Portfolio Average Monthly Rents(1),(2) $ 1,007 $ 971 Operating Revenues (000s) $ 155,610 $ 145,638 Annualized Net Rental Revenue Run-Rate (000s)(1),(3),(4) $ 592,710 $ 557,404 Operating Expenses (000s) $ 64,012 $ 61,258 NOI (000s)(4) $ 91,598 $ 84,380 NOI Margin(4) 58.9 % 57.9 % Number of Suites and Sites Acquired 32 670 Number of Suites Disposed 31 -

(1) As at March 31. (2) Average monthly rents are defined as actual rents, net of vacancies, divided by the total number of suites and sites in the portfolio and do not include revenues from parking, laundry or other sources. (3) For a description of net rental revenue run-rate, see the Results of Operations section in the MD&A for the three months ended March 31, 2017. (4) Net rental revenue run-rate and NOI are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release.

Operating Revenues

For the three months ended March 31, 2017, total operating revenues increased by 6.8% compared to the same period last year primarily due to the contribution from acquisitions, higher same property average monthly rents, and continuing strong occupancies. For the three months ended March 31, 2017, ancillary revenues, including parking, laundry and antenna income, increased 6.9% to $8.2 million, compared to the same period last year.

CAPREIT's annualized net rental revenue run-rate as at March 31, 2017 improved to $592.7 million, up 6.3% from $557.4 million as at March 31, 2016, primarily due to acquisitions completed within the last twelve months and strong increases in average monthly rents on properties owned prior to March 31, 2016. Net rental revenue run-rate net of dispositions for the twelve months ended March 31, 2017 was $572.6 million (2016 - $521.0 million).

Portfolio Average Monthly Rents ("AMR")

Total Portfolio Properties Owned Prior to March 31, 2016 As at December 31, 2017 2016 2017 2016(1) AMR Occ.

% AMR Occ.

% AMR Occ.

% AMR Occ.

% Average Residential Suites $ 1,105 98.6 $ 1,065 98.2 $ 1,098 98.6 $ 1,071 98.3 Average MHC Land Lease Sites $ 381 98.4 $ 369 98.3 $ 381 98.4 $ 369 98.3 Overall Portfolio Average $ 1,007 98.6 $ 971 98.3 $ 999 98.6 $ 974 98.3

(1) Prior period's comparable AMR and occupancy have been restated for properties disposed of since March 31, 2016.

Overall average monthly rents for the stabilized residential suite portfolio (properties owned prior to March 31, 2016) increased 2.5% to $1,098 at March 31, 2017 from $1,071 at March 31, 2016. The increases were due primarily to a combination of ongoing successful sales and marketing strategies, above guideline rent increases, and continued strength in the residential rental sector in the majority of CAPREIT's regional markets. Occupancy for the stabilized residential suite portfolio increased to 98.6% as at March 31, 2017 compared to 98.3% for the same period last year.

For the stabilized MHC land lease portfolio, average monthly rents increased to $381 as at March 31, 2017, compared to $369 as at March 31, 2016 while occupancy remained strong at 98.4% compared to 98.3% for the same period last year. Management believes MHC land lease sites provide secure and stable cash flows due to long-term tenancies, high occupancies, steady increases in average monthly rents, and significantly lower capital and maintenance costs.

Suite Turnovers and Lease Renewals For the Three Months Ended March 31, 2017 2016 Change in AMR Change in AMR $ % % Turnovers

& Renewals(1) $ % % Turnovers

& Renewals(1) Suite Turnovers 44.7 4.0 4.4 (23.8 ) (2.1 ) 5.8 Lease Renewals 20.6 1.8 16.8 24.2 2.2 14.8 Weighted Average of Turnovers and Renewals 25.6 2.3 10.7 1.0

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

For suite turnovers in the residential suite portfolio (excluding co-ownerships, the Netherlands properties, and the Alberta and Saskatchewan regions where Management has strategically reduced rents to increase occupancy) during the three months ended March 31, 2017, average monthly rents increased strongly by approximately $71 or 6.4% compared to an increase of $34 or 3.2% for the same period last year, primarily due to the strong rental markets of British Columbia and Ontario.

Overall, suite turnovers in the residential suite portfolio (excluding co-ownerships and The Netherlands properties) during the three months ended March 31, 2017, resulted in average monthly rents increasing by approximately $45 or 4.0% compared to a decrease of approximately $24 or 2.1% for the same period last year primarily due to the strong rental markets of British Columbia and Ontario, offset by strategically reduced rents in the Alberta and Saskatchewan rental markets to increase occupancy and higher unit turnover than in previous years.

Pursuant to Management's focus on increasing overall portfolio rents for the three months ended March 31, 2017, average monthly rents on lease renewals increased by approximately $21 or 1.8%, compared to an increase of approximately $24 or 2.2% for the same period last year. Increased portfolio diversification helped mitigate geographical risk in particular areas of Canada. Management continues to pursue applications for AGIs in Ontario, where it believes increases to raise average monthly rents on lease renewals above the annual guideline are supported by market conditions. For 2017, the permitted guideline increases in Ontario and British Columbia have been set at 1.5% and 3.7% respectively.

Operating Expenses For the Three Months Ended March 31,

($ Thousands) 2017 %(1) 2016 %(1) Operating Expenses Realty Taxes $ 17,176 11.0 $ 16,007 11.0 Utilities 18,730 12.0 18,943 13.0 Other(2) 28,106 18.1 26,308 18.1 Total Operating Expenses $ 64,012 41.1 $ 61,258 42.1

(1) As a percentage of total operating revenues. (2) Comprises R&M, wages, general and administrative, insurance, advertising, and legal costs.

Operating Expenses

Overall operating expenses as a percentage of operating revenues improved to 41.1% from 42.1% for the same period last year due primarily to reduced utility expenses in the three months ended March 31, 2017.

NOI

For the three months ended March 31, 2017, NOI increased by $7.2 million or 8.6%, and the NOI margin strengthened to 58.9% compared to 57.9% for the same period last year. For the three months ended March 31, 2017, operating revenues for stabilized suites and sites increased 3.0%, while operating expenses increased 2.0%, compared to the same period last year. As a result, for the three months ended March 31, 2017, stabilized NOI increased by 3.7% compared to the same period last year, showing the positive effects of CAPREIT's geographic diversification across Canada and its proven property management programs.

NON-IFRS FINANCIAL MEASURES

For the Three Months Ended March 31,

2017

2016 NFFO (000s) $ 57,937 $ 52,295 NFFO Per Unit - Basic $ 0.429 $ 0.409 Cash Distributions Per Unit $ 0.315 $ 0.305 NFFO Payout Ratio 74.5 % 75.8 % NFFO Effective Payout Ratio 50.1 % 50.8 %

For the three months ended March 31, 2017, basic NFFO per Unit increased 4.9% compared to the same period last year despite the approximate 5.7% increase in the weighted average number of Units outstanding due to successful equity offerings completed in August 2016.

LIQUIDITY AND LEVERAGE

As at March 31, 2017 2016 Total Debt to Gross Book Value 43.99 % 45.80 % Total Debt to Gross Historical Cost(1) 54.51 % 55.72 % Total Debt to Total Capitalization 43.73 % 47.06 % Debt Service Coverage Ratio (times)(2) 1.63 1.64 Interest Coverage Ratio (times)(2) 3.12 3.00 Weighted Average Mortgage Interest Rate(3) 3.20 % 3.36 % Weighted Average Mortgage Term to Maturity (years) 5.9 6.1

(1) Based on the historical cost of investment properties. (2) Based on the trailing four quarters ended March 31, 2017. (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 $32.5 million included in AOCL, the effective portfolio weighted average interest rate at March 31, 2017 would be 3.3% (March 31, 2016 - 3.49%).

Financial Strength

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:

Total debt to gross book value ratio strengthened to 44.0% as at March 31, 2017 compared to 45.8% for the same period last year;

Debt service and interest coverage ratio improved to 1.63 times and 3.12 times, respectively, compared to 1.64 times and 3.00 times last year;

As at March 31, 2017, 95.9% (March 31, 2016 - 96.8%) of CAPREIT's mortgage portfolio was insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's MHC land lease sites and Euro LIBOR borrowings, resulting in improved spreads on mortgages and lower overall interest costs than conventional mortgages.

The effective portfolio weighted average interest rate on mortgages has steadily declined to 3.20% as at March 31, 2017 from 3.36% as at March 31, 2016, resulting in significant potential interest rate savings in future years;

Management expects to raise between $175 million and $225 million in total mortgage renewals and refinancings in 2017;

The weighted average term to maturity of the mortgage portfolio was 5.9 years as at March 31, 2017 compared to 6.1 years at March 31, 2016;

As at March 31, 2017, CAPREIT has investment properties with a fair value of $242.0 million not encumbered by mortgages and securing only the Acquisition and Operating Facility. CAPREIT intends to maintain unencumbered investment properties with an aggregate fair value in the range of $150 and $180 million over the long term.

Property Capital Investments

During the three months ended March 31, 2017, CAPREIT made property capital investments (excluding head office assets) of $30.8 million as consistent with $30.8 million for the same period last year. In 2017, CAPREIT expects to complete property capital investments (excluding development and intensification) of approximately $155 million to $165 million, including approximately $50 million targeted at acquisitions completed since January 1, 2013, and approximately $14 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 also 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.

Subsequent Event

On May 3, 2017, CAPREIT completed the previously announced acquisition of a luxury 256-suite residential apartment property located in Cote-Saint-Luc neighbourhood in the Greater Montréal Area. The purchase price, to be initially financed in cash from the CAPREIT's Acquisition and Operating credit facility, was $23.5 million.

Additional Information

More detailed information and analysis is included in CAPREIT's unaudited condensed consolidated interim financial statements and MD&A for the three months ended March 31, 2017, 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 Thomas Schwartz, President and CEO and the CAPREIT Management Team, will be held Wednesday, May 10, 2017 at 10:00 am EST. The telephone numbers for the conference call are: Local/International: (416) 340-2216, North American Toll Free: (866) 225-0198.

A slide presentation to accompany Management's comments during the conference call will be available one hour and a half 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 telephone numbers to listen to the call after it is completed (Instant Replay) are local/international (905) 694-9451 or North American toll free (800) 408-3053. The Passcode for the Instant Replay is 7427654#. The Instant Replay will be available until midnight, June 10, 2017. 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 owns interests in multi-unit residential rental properties, including apartments, townhomes and manufactured home communities primarily located in and near major urban centres across Canada. As at March 31, 2017, CAPREIT had owning interests in 48,773 residential units, comprised of 42,322 residential suites and 31 manufactured home communities ("MHC") comprising 6,451 land lease sites. For more information about CAPREIT, its business and its investment highlights, please refer to 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 also discloses and discusses certain financial measures not recognized under IFRS and that do not have standard meanings prescribed by IFRS. These include stabilized net rental income ("Stabilized NOI"), Net Rental Revenue Run-Rate, Funds From Operations ("FFO"), Normalized Funds From Operations ("NFFO"), and Adjusted Cash Flow from Operations ("ACFO"), and applicable per Unit amounts and payout ratios (collectively, the "Non-IFRS Measures"). These Non-IFRS Measures are further defined and discussed in the MD&A released on May 9, 2017, which should be read in conjunction with this press release. Since Stabilized NOI, Net Rental Revenue Run-Rate, FFO, NFFO, and ACFO are not measures recognized under IFRS, they may not be comparable to similarly titled measures reported by other issuers. CAPREIT has presented 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 CAPREIT's performance. A reconciliation of Net Income and these Non-IFRS measures is included in this press release. 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 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, projected costs, capital investments, 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 strategy 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 and Dutch economies will generally experience growth, however, may be adversely impacted by the global economy; 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 will grow at levels similar to the rate of inflation on renewal; that rental rates on turnovers will remain stable; 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 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: reporting investment properties at fair value, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, foreign operation and currency risks, taxation, harmonization of federal goods and services tax and provincial sales tax, land transfer tax, government regulations, controls over financial accounting, legal and regulatory concerns, the nature of units of CAPREIT ("Trust Units"), Preferred Units, and units of CAPREIT's subsidiary, CAPREIT Limited Partnership ("Exchangeable Units") (collectively, the "Units"), unitholder liability, liquidity and price fluctuation of 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, continued growth and risks related to acquisitions. There can be no assurance 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 May 9, 2017. The information in this press release is based on information available to Management as of May 9, 2017. 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

SELECTED FINANCIAL INFORMATION

Condensed Balance Sheets

As at March 31,

2017 December 31,

2016 ($ Thousands) Investment properties $ 7,767,514 $ 7,642,017 Total Assets 8,030,124 7,892,994 Mortgages payable 3,478,703 3,492,923 Bank indebtedness 76,471 26,408 Total Liabilities 3,753,965 3,734,062 Unitholders' Equity 4,276,159 4,158,932

Condensed Income Statements

For the Three Months Ended March 31, 2017 2016 ($ Thousands) NOI 91,598 84,380 Trust expenses (6,415 ) (11,080 ) Unrealized Gain on Remeasurement of Investment properties 91,511 45,842 Realized loss on disposition of investment properties (80 ) - Remeasurement of Exchangeable Units (311 ) (329 ) Unit-based compensation expenses (7,120 ) (7,250 ) Interest on mortgages payable and other financing costs (29,153 ) (27,261 ) Interest on bank indebtedness (714 ) (1,414 ) Interest on Exchangeable Units (51 ) (49 ) Other income 3,041 2,653 Amortization (964 ) (818 ) Gain (loss) on derivative financial instruments 186 (147 ) Foreign currency translation (359 ) 1,571 Net Income 141,169 86,098 Other Comprehensive Income $ 3,044 $ 76 Comprehensive Income $ 144,213 $ 86,174

Condensed Statements of Cash Flows

For the Three Months Ended, March 31, 2017 2016 ($ Thousands) Cash Provided By Operating Activities: Net Income $ 141,169 $ 86,098 Items in Net Income Not Affecting Cash: Changes in Non-cash Operating Assets and Liabilities (25,327 ) (6,540 ) Realized and Unrealized (Gain) Loss on Remeasurements (91,306 ) (45,366 ) Unit-based Compensation (Recoveries) Expenses 7,120 7,250 Items Related to Financing and Investing Activities 23,326 23,460 Other 1,967 (210 ) Cash Provided By Operating Activities 56,949 64,692 Cash Used In Investing Activities Acquisitions (4,934 ) (55,011 ) Capital Investments (36,281 ) (33,278 ) Dispositions 575 - Other 3,969 3,480 Cash Used In Investing Activities (36,671 ) (84,809 ) Cash (Used) Provided By Financing Activities Mortgages, Net of Financing Costs (14,803 ) 25,021 Bank Indebtedness 50,063 46,378 Interest Paid (27,370 ) (26,903 ) Hedge Settlement - - Proceeds on Issuance of Units 579 2,623 Distributions, Net of DRIP and Other (28,747 ) (27,002 ) Cash (Used) Provided By Financing Activities (20,278 ) 20,117 Changes in Cash and Cash Equivalents During the Period - - Cash and Cash Equivalents, Beginning of Period - - Cash and Cash Equivalents, End of Period $ - $ -

SELECTED NON-IFRS FINANCIAL MEASURES

A reconciliation of net income to FFO is as follows:

For the Three Months Ended March 31, 2017 2016 ($ Thousands, except per Unit amounts) Net Income $ 141,169 $ 86,098 Adjustments Unrealized Gain on Remeasurement of Investment Properties (91,511 ) (45,842 ) Realized Loss on Disposition of Investment Properties 80 - Remeasurement of Exchangeable Units 311 329 Remeasurement of Unit-based Compensation Liabilities 5,800 6,022 Interest on Exchangeable Units 51 49 Corporate Income Taxes (23 ) - (Gain) Loss on Foreign Currency Translation 359 (1,571 ) Unrealized and Realized Loss (Gain) on Derivative Financial Instruments (186 ) 147 Net Income Attributable from Non-Controlling Interest (36 ) - Net FFO Impact Attributable from Non-Controlling Interest 24 - Amortization of Property, Plant and Equipment 964 818 FFO $ 57,002 $ 46,050 Adjustments: Amortization of Loss from AOCL to Interest and Other Financing Costs 771 771 Acquisition Research Costs(4) - 5,474 Net Mortgage Prepayment Cost 164 - NFFO 57,937 52,295 NFFO per Unit - Basic 0.429 0.409 NFFO per Unit - Diluted 0.423 0.404 Total Distributions Declared(1) 43,182 39,630 NFFO Payout Ratio(2) 74.5 % 75.8 % Net Distributions Paid(1) $ 29,029 $ 26,567 Excess NFFO over Net Distributions Paid $ 28,908 $ 25,728 Effective NFFO Payout Ratio(3) 50.1 % 50.8 %

(1) For the description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three months ended March 31, 2017. (2) The payout ratio compares distributions declared to NFFO. (3) The effective payout ratio compares net distributions paid to NFFO. (4) Expenses incurred relates to transactions that were not completed included in trust expenses.

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

For the Three Months Ended March 31,

($ Thousands, except per Unit amounts) 2017

2016(4)

Annual

2016(4) Cash Generated From Operating Activities $ 56,949 $ 64,692 $ 361,358 Adjustments Changes in Non-Cash Operating Assets and Liabilities 25,327 6,540 (24,738 ) Interest expense included in cash flow from financing activities (27,370 ) (26,903 ) (109,097 ) Non-Discretionary Property Capital Investments(1) (9,843 ) (14,436 ) (58,501 ) Capitalized Leasing Costs(2) (395 ) (792 ) (3,679 ) Tenant improvements (77 ) (116 ) (559 ) Amortization of Other Financing Costs(3) (1,358 ) (1,028 ) (4,674 ) Non-controlling Interest (12 ) - (1 ) Investment income 4,044 3,443 4,519 ACFO $ 47,265 $ 31,400 $ 164,628 Total Distributions Declared $ 43,182 $ 39,630 $ 164,413 Excess (Deficit) ACFO Over Distributions Declared $ 4,083 $ (8,230 ) $ 215 ACFO Payout Ratio 91.4 % 126.2 % 99.9 %