Canadian Apartment Properties Real Estate Investment Trust

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to a real estate investment trust (REIT) from the requirement to file a business acquisition report under Part 8 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) in respect of the acquisition of a townhome complex -- Acquisition is not significant under the asset and investment test in Part 8 of NI 51-102, but is significant under the income test -- Using income from the continuing operations of the REIT to determine the significance of certain acquisitions leads to anomalous results -- The acquisition would not be significant under the income test when depreciation of income producing properties is excluded from the application of test -- REIT provided the principal regulator with additional measures which further demonstrate the insignificance of the acquisition to the REIT -- Relief granted based on REIT's representations that, as a business and commercial matter, the acquisition should not be considered as a significant acquisition for the REIT.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.3, 13.1

April 18, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE JURISDICTION)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CANADIAN APARTMENT PROPERTIES

REAL ESTATE INVESTMENT TRUST

(THE FILER OR THE REIT)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from the requirement in Part 8 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) to a file a business acquisition report in respect of the January 31, 2011 acquisition of an 83 suite townhome complex in Burlington, Ontario referred to as Glenwood (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 7.4 (1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Northwest Territories, Nunavut and Yukon.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

1. The REIT is an internally managed unincorporated open-ended real estate investment trust owning interests in multi-unit residential properties including apartment buildings and townhouses located in major urban centres across Canada and two manufactured home communities.

2. The REIT was established under the laws of the Province of Ontario by a declaration of trust and its head office is located in Toronto, Ontario.

3. The REIT is a reporting issuer under the securities legislation of each of the provinces and territories of Canada and is not in default of securities legislation in any jurisdiction.

4. The units of the REIT are listed and posted for trading on the Toronto Stock Exchange under the trading symbol CAR.UN.

5. The REIT completed its initial public offering on May 21, 1997 pursuant to its final long form prospectus dated May 12, 1997.

6. As at January 31, 2011, the REIT had ownership interests in 27,255 residential suites well diversified by geographic location and asset class and two manufactured home communities comprising 1,325 land lease sites.

7. As at and for the year ended December 31, 2010 the REIT had assets in excess of $2.3 billion, loss from continuing operations of approximately $57,000 and depreciation of income producing properties of $82.8 million.

8. As at and for the year ended December 31, 2009 the REIT had assets of approximately $2.2 billion, income from continuing operations of approximately $6.2 million and depreciation of income producing properties of $78.6 million.

9. Under Part 8 of NI 51-102, the REIT is required to file a business acquisition report (BAR) for any completed acquisition that is determined to be significant based on the acquisition satisfying any of the three significance tests set out in subsection 8.3 (2) of NI 51-102. The BAR is required to be filed within 75 days after the date of the acquisition. The tests are referred to as the asset test, the investment test and the income test.

10. The Glenwood acquisition is not a significant acquisition under the asset test as the value of Glenwood represented only approximately 0.39% of the consolidated assets of the REIT as of December 31, 2010.

11. The Glenwood acquisition is not a significant acquisition under the investment test as the REIT's acquisition costs represented only approximately 0.39% of the consolidated assets of the REIT as of December 31, 2010.

12. The Glenwood acquisition would be a significant acquisition under the income test (the Income Test) prescribed under section 8.3 of NI 51-102. For the purposes of completing its quantitative analysis of the Income Test, the REIT is required to compare its income from continuing operations against the proportionate share of income from continuing operations of Glenwood. The application of the Income Test produces an anomalous result for the REIT in comparison to the results of the asset test and the investment test.

13. Excluding depreciation of income producing properties when applying the Income Test would not result in the Glenwood acquisition being considered significant, more accurately reflects the significance of the Glenwood acquisition from a business and commercial perspective, and its results are generally consistent with the results of the asset test and the investment test. The application of the Income Test with depreciation of income producing properties excluded results in Glenwood representing only approximately 0.57% of the REIT's income from continuing operations for the fiscal year ended December 31, 2010.

14. The Filer is of the view that the Glenwood acquisition is not a significant transaction to it from a business and commercial perspective.

15. The Filer has provided the principal regulator with additional measures which further demonstrate the insignificance of the Glenwood acquisition to the Filer. These additional measures include measures based on the total number of suites in the Greenwood townhome complex when compared to the total number of residential suites in which the REIT has ownership interests. These measures are generally consistent with the results of the asset test and investment test.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.