UPDATE 1-Capreit Q2 FFO rises 29 pct

* Q2 FFO/unit C$0.43 vs C$0.34 yr ago

* Q2 adjusted FFO/unit C$0.31

Aug 11 (Reuters) - Canadian Apartment Properties Real Estate Investment Trust (Capreit) (CAR_u.TO) posted a 29 percent increase in its quarterly funds from operations (FFO), helped by higher average monthly rents and occupancies.

For the second quarter, the company reported FFO of C$28.6 million, or 43 Canadian cents per unit, compared with, C$22.2 million, or 34 Canadian cents per unit, a year earlier.

The company's normalized FFO, which excludes the effect of decline in fair value of hedging instruments, rose 4.5 percent to C$23.2 million, or 35 Canadian cents per unit. Adjusted FFO was 31 Canadian cents per unit.

Analysts on average were expecting FFO of 34 Canadian cents per unit, according to Reuters Estimates.

FFO is a key performance measure for REITs, because it excludes the profit-reducing effect of depreciation.

Overall average monthly rents increased to $929 at June 30 compared with $919 last year and portfolio occupancy was 97.5 percent, the company said in a statement.

Units of the trust closed at C$13.05 Tuesday on the Toronto Stock Exchange. (Reporting by Koustav Samanta in Bangalore; Editing by Pradeep Kurup)