CALGARY,
AB, Nov. 7, 2023 /PRNewswire/ - Boardwalk
Real Estate Investment Trust (TSX: BEI.UN)
SUMMARY HIGHLIGHTS FOR THE THREE AND NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 2023
STRONG FINANCIAL PERFORMANCE
FOR THE 3 MONTH PERIOD ENDED SEPTEMBER 30, 2023
- Profit of $39.4 million
- Funds From Operations ("FFO") of $0.96 per Unit(1)(2); an increase of
12.9% from Q3 2022
- Net Operating Income ("NOI") of $86.6
million; an increase of 13.5% from Q3 2022
- Same Property(3) Net Operating Income ("Same
Property NOI") of $85.7 million; an
increase of 12.1% from Q3 2022
- Operating margin of 62.9%; 210 basis point (bps) improvement
from Q3 2022
FOR THE 9 MONTH PERIOD ENDED SEPTEMBER 30, 2023
- Profit of $493.0 million
- FFO per Unit(1)(2) of $2.64; an increase of 13.3% from the same period
a year ago
- NOI of $245.0 million; an
increase of 14.6% from the same period a year ago
- Operating margin of 60.9%; 250 bps improvement from the same
period a year ago
- Same Property NOI of $242.9
million; an increase of 12.7% from the same period a year
ago
SAME PROPERTY RENTAL REVENUE GROWTH IN Q3 2023
- Q3 2023 same property sequential quarterly rental revenue
growth of 2.6% from the prior quarter
- Occupied rent increased to $1,357
in September of 2023, a $31
improvement from June 2023
- Q3 2023 same property rental revenue growth of 8.9% from a year
ago
- Occupancy of 98.5% in Q3 2023; an increase of 122 basis points
from Q3 2022
CONTINUED LEASING STRENGTH
- November 2023 preliminary
occupancy of 98.9%, an increase of 100 basis points from
November 2022
- New leasing spreads of 12.1% in Alberta in October
2023
- Renewal leasing spreads of 7.8% in Alberta in October
2023
- Rents in Alberta remain some
of the most affordable in Canada,
at well below 30% of median renter household income, and remain
well below inflation adjusted levels since 2014
STRONG AND FLEXIBLE FINANCIAL POSITION
- Approximately $252.7 million of
total available liquidity at the end of the quarter
- 96% of Boardwalk's mortgages carry CMHC-insurance
- Unitholders' Equity of $3.9
billion
- Fair value capitalization rate of 5.05%, an increase of 13 bps
from Q4 2022
- Net Asset Value increase to $82.07 per Unit(1)(2), primarily a
result of higher market rental rates partially offset by increased
cap rates
UPDATE TO 2023 FINANCIAL GUIDANCE
- Tightened and increased FFO per Unit(1)(2) estimate
to revised range of $3.52 to
$3.60
- Tightened and increased Same Property NOI growth range to
+12.5% to +14.0%
DISTRIBUTION OF $1.17 PER TRUST
UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF
DECEMBER 2023, JANUARY 2024, AND FEBRUARY
2024
(1) Please refer to the section
titled "Presentation of Non-GAAP Measures" in this news release for
more information.
|
(2) Boardwalk REIT's units (the
"Trust Units") trade on the Toronto Stock Exchange ("TSX") under
the trading symbol 'BEI.UN'. Additionally, the Trust has 4,475,000
special voting units issued to holders of "Class B Units" of
Boardwalk REIT Limited Partnership ("LP Class B Units" and,
together with the Trust Units, the "Units"), each of which also has
a special voting unit in the REIT.
|
(3) Same
property figures exclude un-stabilized properties (properties which
have been owned for less than 24 months) and sold
assets.
|
Boardwalk Real Estate Investment Trust ("Boardwalk", the "REIT"
or the "Trust") today announced its financial results for the third
quarter of 2023.
Sam Kolias; Chairman and Chief
Executive Officer of Boardwalk REIT commented:
"We are pleased to report on another strong quarter with
continued growth in Net Operating Income and Funds from Operations
per unit. Profit decreased on a year-over-year basis, mainly as a
result of fair value losses in the quarter relative to the same
period in the prior year. Our Operating Margin continues to
improve, as our team takes a flexible, Resident Member focused
approach to rent adjustments within a challenging inflationary
environment, paired with essential strong execution on our cost
containment initiatives to ensure we provide the best rental market
value. Our largest markets of Edmonton and Calgary continue to see large net inflows from
international and interprovincial migration from new Residents
seeking exceptional affordability, lifestyle and economic
opportunities.
As of the beginning of November, same property portfolio
occupancy has reached 98.9%, including 98.4% in Edmonton. Demand fundamentals remain strong
across all of the Trust's markets. Elimination of rental discounts
(incentives) and positive sustainable market rent adjustments
continue to be implemented in all of our communities. We remain
focused on ensuring a win-win outcome with our Resident Members and
for our stakeholders through increased retention, reduced turnover
and costs, increased Associate efficiency, and increased margins
and financial performance. Our ongoing strategic, Resident Member
centric, self-regulation of leasing spreads on both new leases and
lease renewals continues to be a key differentiator for our
Resident Members, preserving essential affordability while
providing a steady, less volatile, long-term revenue growth profile
for our unitholders.
Higher interest rates remain a headwind for community providers
so far in 2023. However, demand for affordable housing remains
stronger than ever across the country and we are confident that our
Resident friendly approach and peak performance culture will
continue to deliver strong organic growth and free cash flow to
fund our continued investment in our communities and new
construction to add much needed new supply in our markets."
THIRD QUARTER FINANCIAL HIGHLIGHTS
$ millions, except
per Unit amounts
|
Highlights of the
Trust's Third Quarter 2023 Financial Results
|
|
3 Months
Sep. 30,
2023
|
3 Months
Sep. 30,
2022
|
%
Change
|
9 Months
Sep. 30,
2023
|
9 Months
Sep. 30,
2022
|
%
Change
|
Operational
Highlights
|
|
|
|
|
|
|
Rental
Revenue
|
$137.8
|
$125.5
|
9.9 %
|
$402.5
|
$366.0
|
10.0 %
|
Same Property Rental
Revenue
|
$134.2
|
$123.2
|
8.9 %
|
$392.8
|
$361.6
|
8.6 %
|
Net Operating Income
("NOI")
|
$86.6
|
$76.3
|
13.5 %
|
$245.0
|
$213.9
|
14.6 %
|
Same
Property NOI
|
$85.7
|
$76.4
|
12.1 %
|
$242.9
|
$215.6
|
12.7 %
|
Operating Margin
(1)
|
62.9 %
|
60.8 %
|
|
60.9 %
|
58.4 %
|
|
Same Property Operating
Margin
|
63.9 %
|
62.0 %
|
|
61.8 %
|
59.6 %
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
|
|
Funds From Operations
("FFO") (2)(3)
|
$48.3
|
$42.7
|
13.0 %
|
$132.5
|
$117.5
|
12.8 %
|
Adjusted Funds From
Operations ("AFFO") (2)(3)
|
$40.4
|
$34.6
|
16.8 %
|
$108.9
|
$93.2
|
16.8 %
|
Profit
|
$39.4
|
$47.0
|
-16.2 %
|
$493.0
|
$269.0
|
83.3 %
|
FFO per Unit
(3)
|
$0.96
|
$0.85
|
12.9 %
|
$2.64
|
$2.33
|
13.3 %
|
AFFO per Unit
(3)
|
$0.80
|
$0.69
|
15.9 %
|
$2.17
|
$1.85
|
17.3 %
|
|
|
|
|
|
|
|
Regular Distributions
Declared (Trust Units & LP Class B Units)
|
$14.7
|
$13.6
|
8.3 %
|
$43.3
|
$40.1
|
7.9 %
|
Regular Distributions
Declared Per Unit (Trust Units & LP Class B Units)
|
$0.293
|
$0.270
|
8.3 %
|
$0.863
|
$0.797
|
8.2 %
|
FFO Payout Ratio
(3)
|
30.4 %
|
31.8 %
|
|
32.7 %
|
34.2 %
|
|
Same Property Apartment
Suites
|
|
|
|
33,264
|
33,069
|
|
Non-Same Property
Apartment Suites
|
|
|
|
582
|
653
|
|
Total Apartment
Suites
|
|
|
|
33,846
|
33,722
|
|
(1)
|
Operating margin is
calculated by dividing NOI by rental revenue allowing management to
assess the percentage of rental revenue which generated
profit.
|
(2)
|
This is a non-GAAP
financial measure.
|
(3)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this news
release for more information.
|
In Q3 2023, same property operating margin increased compared to
the same period in the prior year, as the Trust's same property
rental revenue growth remained strong and the Trust's disciplined
approach to cost improvement initiatives resulted in operating
expense growth significantly below inflation. The Trust anticipates
that as same property rental revenue remains strong throughout Q4
2023 and the Trust continues to optimize its operating platform,
operating margins will continue to improve as compared to Q4
2022.
Continued Highlights
of the Trust's Third Quarter 2023 Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep. 30,
2023
|
Dec. 31,
2022
|
Equity
|
|
|
|
|
|
|
Unitholders'
Equity
|
|
|
|
|
$3,920,653
|
$3,466,998
|
|
|
|
|
|
|
|
Net Asset
Value
|
|
|
|
|
|
|
Net asset value
(1)(2)
|
|
|
|
|
$4,126,385
|
$3,583,904
|
Net asset value (NAV)
per Unit (2)
|
|
|
|
|
$82.07
|
$71.35
|
|
|
|
|
|
|
|
Liquidity, Debt and
Distributions
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
$33,668
|
|
Subsequent
committed/funded financing
|
|
|
|
|
$22,685
|
|
Unused committed
revolving credit facility
|
|
|
|
|
$196,362
|
|
Total Available
Liquidity
|
|
|
|
|
$252,715
|
|
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
|
|
|
|
$3,376,784
|
$3,336,026
|
Interest Coverage Ratio
(Rolling 4 quarters)
|
|
|
|
|
2.88
|
2.93
|
(1)
|
This is a non-GAAP
financial measure.
|
(2)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this news
release for more information.
|
The Trust's fair value of its investment properties as at
September 30, 2023 increased from the
previous quarter and year end, primarily attributable to an
increase in market rents driven by strong market conditions, low
occupancy across the portfolio and a reduction in lease incentives.
The Trust's stabilized capitalization rate ("cap rate") increased
to 5.05% for Q3 2023 compared to 4.90% for the prior quarter, which
primarily reflects the prolonged period of rising interest rates
and limited transaction activity to-date in the apartment market.
The cap rate ranges utilized continue to be in-line with recently
published third party quarterly cap rate reports.
SOLID OPERATIONAL RESULTS
Portfolio Highlights
for the Third Quarter of 2023
|
|
|
Sep-23
|
|
Sep-22
|
|
Average Occupancy
(Quarter Average) (1)
|
|
98.45
|
%
|
|
97.23
|
%
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,340
|
|
$
|
1,223
|
|
Average Market Rent
(Period Ended) (2)
|
$
|
1,534
|
|
$
|
1,395
|
|
Average Occupied Rent
(Period Ended) (3)
|
$
|
1,357
|
|
$
|
1,252
|
|
|
|
|
|
|
Mark-to-Market Revenue
Gain (Period Ended) ($ millions)
|
$
|
70.0
|
|
$
|
55.7
|
|
Mark-to-Market Revenue
Gain Per Unit (Period Ended)
|
$
|
1.39
|
|
$
|
1.10
|
|
|
|
|
|
|
(1)Average
occupancy is adjusted to be on a same property basis.
|
(2)Market
rent is a component of rental revenue as calculated in accordance
with International Financial Reporting Standards ("IFRS") and is
calculated as of the first day of each month as the average rental
revenue amount a willing landlord might reasonably expect to
receive, and a willing tenant might reasonably expect to pay, for a
tenancy, before adjustments for other rental revenue items such as
incentives, vacancy loss, fees, specific recoveries, and revenue
from commercial tenants.
|
(3)Occupied
rent is a component of rental revenue as calculated in accordance
with IFRS and is calculated for occupied suites as of the first day
of each month as the average rental revenue, adjusted for other
rental revenue items such as fees, specific recoveries, and revenue
from commercial tenants.
|
|
Oct-22
|
Nov-22
|
Dec-22
|
Jan-23
|
Feb-23
|
Mar-23
|
Apr-23
|
May-23
|
Jun-23
|
Jul-23
|
Aug-23
|
Sep-23
|
Oct-23
|
Nov-23
|
Same
Property
Portfolio
Occupancy
|
98.1 %
|
97.9 %
|
98.0 %
|
98.0 %
|
98.2 %
|
98.1 %
|
98.4 %
|
98.3 %
|
98.3 %
|
98.3 %
|
98.5 %
|
98.6 %
|
98.9 %
|
98.9 %
|
The Trust improved occupancy compared to the same period a year
ago by focusing on gaining market share and retention. Market rents
were adjusted in many communities where rental market fundamentals
continue to improve. Turnover rates continued to decline as
compared to the previous year across the Trust's portfolio. Average
occupied rent increased sequentially, and when compared to the same
period a year ago, as the Trust focuses on reducing or eliminating
incentives on lease renewals, leasing at market rents for new
leases and adjusting market rents in many of our communities.
For the third quarter of 2023, same property rental revenue
increase of 8.9% combined with same property total rental expense
increase of 3.6%, resulted in same property NOI growth of 12.1% in
comparison to the same quarter prior year. Same property rental
expenses increased for most regions due to the current economic
environment leading to higher wages and salaries from inflation,
higher utilities from increased rates, higher repairs and
maintenance, and higher property taxes. The increase was partially
offset by lower insurance premiums upon renewal in the third
quarter of 2023.
During the third quarter of 2023, lower vacancy loss and
incentives, along with positive market rent adjustments supported
Boardwalk's Calgary portfolio
increase in same property NOI of 14.8% in comparison to the same
quarter prior year. The positive revenue growth was partially
offset by increases in utilities and wages on a year-over-year
basis. Calgary's increased
utilities' costs were mainly attributable to increased prices for
electricity as a result of a fixed price contract which expired in
2022 and was renewed at a higher rate.
In Edmonton, lower vacancy loss
and incentives were coupled with slightly higher operating
expenses, as a result of higher repairs and maintenance costs and
higher utilities costs, that were largely offset by lower
advertising and bad debts as a result of the higher occupancy and
lower turnover as well as lower insurance renewal costs, resulting
in positive NOI growth of 16.3% for the third quarter of 2023
compared to the third quarter of 2022.
Saskatchewan's market remains
strong with the Trust's portfolio realizing 12.0% same property NOI
growth in the third quarter of 2023 versus the same period last
year, as a result of strong same property revenue growth due to
lower vacancy loss and incentives, as well as market rent
increases, partially offset by inflationary pressures on wages and
salaries and increased prices for most utilities in the third
quarter.
In Ontario, the mark-to-market
opportunity on turnover contributed to same property NOI growth of
4.8%, in the third quarter of 2023 compared to the third quarter of
2022. Same property rental revenue growth of 5.7% was partially
offset by increases in wages and salaries and increased utilities
costs for the third quarter of 2023, partially as a result of
proceeds from the sale of excess gas that was received in the third
quarter of 2022.
In Quebec, increases to
in-place occupied rents along with higher occupancy rates resulted
in same property revenue increase of 5.4% in comparison to the same
quarter prior year. Revenue increases were partially offset by
increased wages and salaries, and repairs and maintenance costs
which resulted in same property NOI growth of 4.1%.
In British Columbia, a same
property rental revenue increase of 5.1% was partially offset by
total rental expense growth of 14.8%, due largely to increased
security costs which were not incurred in the same quarter of the
prior year, resulting in same property NOI growth of 2.8% in the
third quarter of 2023 compared to the third quarter of 2022.
As shown in our updated guidance further in this release,
Boardwalk remains well positioned for both continued revenue growth
and expense management to deliver strong NOI growth throughout the
remainder of the year.
Same Property Sep. 30
2023 - 3 M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
9.6
|
%
|
|
1.0
|
%
|
|
16.3
|
%
|
|
35.1
|
%
|
Calgary
|
|
5,960
|
|
|
11.8
|
%
|
|
5.7
|
%
|
|
14.8
|
%
|
|
22.9
|
%
|
Other
Alberta
|
|
1,936
|
|
|
9.0
|
%
|
|
(1.2)
|
%
|
|
16.4
|
%
|
|
5.0
|
%
|
Alberta
|
|
20,778
|
|
|
10.3
|
%
|
|
2.0
|
%
|
|
15.8
|
%
|
|
62.9
|
%
|
Quebec
|
|
6,000
|
|
|
5.4
|
%
|
|
8.1
|
%
|
|
4.1
|
%
|
|
18.0
|
%
|
Saskatchewan
|
|
3,505
|
|
|
9.0
|
%
|
|
4.0
|
%
|
|
12.0
|
%
|
|
10.8
|
%
|
Ontario
|
|
2,867
|
|
|
5.7
|
%
|
|
7.2
|
%
|
|
4.8
|
%
|
|
7.6
|
%
|
British
Columbia
|
|
114
|
|
|
5.1
|
%
|
|
14.8
|
%
|
|
2.8
|
%
|
|
0.7
|
%
|
|
|
33,264
|
|
|
8.9
|
%
|
|
3.6
|
%
|
|
12.1
|
%
|
|
100.0
|
%
|
Same Property Sep. 30
2023 - 9 M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
9.3
|
%
|
|
0.2
|
%
|
|
17.0
|
%
|
|
34.7
|
%
|
Calgary
|
|
5,960
|
|
|
11.7
|
%
|
|
5.8
|
%
|
|
14.8
|
%
|
|
22.9
|
%
|
Other
Alberta
|
|
1,936
|
|
|
8.7
|
%
|
|
(1.9)
|
%
|
|
18.0
|
%
|
|
4.8
|
%
|
Alberta
|
|
20,778
|
|
|
10.0
|
%
|
|
1.5
|
%
|
|
16.3
|
%
|
|
62.4
|
%
|
Quebec
|
|
6,000
|
|
|
5.4
|
%
|
|
2.6
|
%
|
|
7.0
|
%
|
|
18.0
|
%
|
Saskatchewan
|
|
3,505
|
|
|
8.6
|
%
|
|
7.3
|
%
|
|
9.4
|
%
|
|
10.9
|
%
|
Ontario
|
|
2,867
|
|
|
5.4
|
%
|
|
6.5
|
%
|
|
4.7
|
%
|
|
8.0
|
%
|
British
Columbia
|
|
114
|
|
|
4.6
|
%
|
|
12.6
|
%
|
|
2.6
|
%
|
|
0.7
|
%
|
|
|
33,264
|
|
|
8.6
|
%
|
|
2.7
|
%
|
|
12.7
|
%
|
|
100.0
|
%
|
STRONG LIQUIDITY POSITION
In the third quarter of 2023, Boardwalk renewed $74.3 million of its maturing mortgages at a
weighted average interest rate of 4.56% while extending the term of
these mortgages by an average of 10.5 years.
Throughout the remainder of 2023, the Trust anticipates
$135.6 million of mortgages payable
maturing with an average in-place interest rate of 2.84% and will
continue to renew these mortgages as they mature. Current market 5
and 10-year CMHC financing rates are estimated to be
approximately 4.70%. To date, the Trust has renewed or
forward-locked the interest rate on $327.2
million or 75% of its maturing mortgages in 2023 at an
average interest rate of 4.50% and an average term of 6.7 years.
While interest rates have increased significantly since the
beginning of March 2022, the Trust
remains positioned with a laddered maturity schedule within its
mortgage program, a disciplined capital allocation program and
continued use of CMHC funding, which decreases the renewal risk on
its existing mortgages.
TIGHTENING AND UPWARD REVISION TO 2023 FINANCIAL
GUIDANCE
With continued strength in leasing into early winter, ongoing
savings from the Trust's platform optimization, lower
non-controllable expenses in Q3 2023 than anticipated and higher
interest earned on cash, the Trust is upwardly revising its 2023
Same Property NOI growth and FFO per Unit guidance as follows:
|
Q3 2023 Revised
Guidance
|
2023 Previous
Guidance
|
2022
Actual
|
|
|
|
(in $ thousands
except
per unit)
|
|
|
|
|
Same Property NOI
Growth
|
12.5% to
14.0%
|
11.5% to
14.0%
|
3.8 %
|
Profit
|
N/A
|
N/A
|
$283,096
|
FFO
(1)(2)
|
N/A
|
N/A
|
$157,444
|
AFFO
(1)(2)(3)
|
N/A
|
N/A
|
$126,181
|
FFO Per Unit
(2)
|
$3.52 to
$3.60
|
$3.42 to
$3.54
|
$3.13
|
AFFO Per Unit
(2)(3)
|
$2.86 to
$2.94
|
$2.76 to
$2.88
|
$2.51
|
(1)
|
This is a Non-GAAP
financial measure.
|
(2)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this news
release for more information.
|
(3)
|
Utilizing a Maintenance
CAPEX expenditure of $982/suite/year in 2023 and $931/suite/year in
2022.
|
THIRD QUARTER REGULAR MONTHLY DISTRIBUTION
ANNOUNCEMENT
The Trust has confirmed its monthly cash distribution for the
months of December 2023, January 2024 and February
2024 as follows:
Month
|
Per
Unit
|
|
Annualized
|
|
Record
Date
|
Distribution
Date
|
December
2023
|
$
|
0.0975
|
|
$
|
1.17
|
|
29-Dec-23
|
15-Jan-24
|
January 2024
|
$
|
0.0975
|
|
$
|
1.17
|
|
31-Jan-24
|
15-Feb-24
|
February
2024
|
$
|
0.0975
|
|
$
|
1.17
|
|
29-Feb-24
|
15-Mar-24
|
In line with Boardwalk's distribution policy of maximum
re-investment, the Trust's payout ratio remains conservative
at 30.4% of Q3 2023 FFO; and 33.0% of the last 12 months
FFO.
Boardwalk's regular monthly distribution provides a stable and
attractive yield for the Trust's Unitholders.
FOURTH ANNUAL ESG REPORT
The Trust is committed to environmental, social and governance
("ESG") objectives and initiatives, including working towards
reducing greenhouse gas emissions and electricity and natural gas
consumption, water conservation, waste minimization, and a
continued focus on governance and oversight. Boardwalk
published its fourth annual ESG report in March. The ESG report,
along with the Trust's Annual report, is available digitally on
Boardwalk's website and under the Trust's profile at
www.sedarplus.ca.
FINANCIAL INFORMATION
Boardwalk produces quarterly financial statements, and
management's discussion and analysis that provides detailed
information regarding the Trust's activities during the quarter.
Financial information is available on Boardwalk's investor website
at www.bwalk.com/investors.
TELECONFERENCE ON THIRD QUARTER 2023 FINANCIAL
RESULTS
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow (November 8, 2023) at 1:00
pm Eastern Time (11:00 am Mountain
Time). Senior management will speak to the period's results
and provide an update. Presentation materials will be made
available on Boardwalk's investor website at
www.bwalk.com/investors prior to the call.
Teleconference: To join the conference call without
operator assistance, you may register and enter your phone number
at https://emportal.ink/3LI31CC to receive an instant automated
call back.
Alternatively, you can also dial direct to be entered into the
call by an operator using the traditional conference call
instructions below.
The telephone numbers for the conference are 416-764-8650
(local/international callers) or toll-free 1-888-664-6383 (within
North America).
Note: Please provide the operator with the below Conference Call
ID or Topic when dialing in to the call.
Conference ID: 79907223
Topic: Boardwalk Real Estate Investment Trust, 2023 Third Quarter
Results
Webcast: Investors will be able to listen to the
call and view Boardwalk's slide presentation by visiting
www.bwalk.com/investors prior to the start of the call.
An information page will be provided for any software needed and
system requirements. The webcast and slide presentation will also
be available at:
Boardwalk REIT Third Quarter Results Webcast Link
Replay: An audio recording of the teleconference will be
available on the Trust's website:
www.bwalk.com/investors
CORPORATE PROFILE
Boardwalk REIT strives to be
Canada's friendliest community
provider and is a leading owner/operator of multi-family rental
communities. Providing homes in more than 200 communities, with
over 33,000 residential suites totaling over 29 million net
rentable square feet, Boardwalk has a proven long-term track record
of building better communities, where love always
lives™. Our three-tiered and distinct brands: Boardwalk
Living, Boardwalk Communities, and Boardwalk Lifestyle, cater to a
large diverse demographic and has evolved to capture the life cycle
of all Resident Members. Boardwalk's disciplined approach to
capital allocation, acquisition, development, purposeful
re-positioning, and management of apartment communities allows the
Trust to provide its brand of community across Canada creating exceptional Resident Member
experiences. Differentiated by its peak performance culture,
Boardwalk is committed to delivering exceptional service, product
quality and experience to our Resident Members who reward us with
high retention and market leading operating results, which in turn,
lead to higher free cash flow and investment returns, stable
monthly distributions, and value creation for all our
stakeholders.
Boardwalk REIT's Trust Units are listed on the Toronto Stock
Exchange, trading under the symbol BEI.UN. Additional information
about Boardwalk REIT can be found on the Trust's website at
www.bwalk.com/investors.
PRESENTATION OF NON-GAAP MEASURES
Non-GAAP Financial Measures
Boardwalk believes
non-GAAP financial measures are meaningful and useful measures of
real estate organizations operating performance, however, are not
measures defined by IFRS. As they do not have standardized meanings
prescribed by IFRS, they therefore may not be comparable to
similar measurements presented by other entities and should not be
construed as an alternative to IFRS defined measures. Below are the
non-GAAP financial measures referred to in this news release.
Funds From Operations
The IFRS measurement most
comparable to FFO is profit. Boardwalk REIT considers FFO to
be an appropriate measurement of the performance of a publicly
listed multi-family residential entity as it is the most widely
used and reported measure of real estate investment trust
performance. Profit includes items such as fair value changes of
investment property that are subject to market conditions and
capitalization rate fluctuations which are not representative of
recurring operating performance. Consistent with REALPAC, we
define FFO as adjustments to profit for fair value gains or losses,
distributions on the LP Class B Units, gains or losses on the sale
of the Trust's investment properties, depreciation, deferred income
tax, and certain other non-cash adjustments, if any, but after
deducting the principal repayment on lease liabilities and adding
the principal repayment on lease receivable. The reconciliation
from profit under IFRS to FFO can be found below. The Trust
uses FFO to assess operating performance and its distribution
paying capacity, determine the level of Associate incentive-based
compensation, and decisions related to investment in capital
assets. To facilitate a clear understanding of the combined
historical operating results of Boardwalk REIT, management of
the Trust believes FFO should be considered in conjunction with
profit as presented in the condensed consolidated interim financial
statements for the three and nine months ended September 30, 2023 and 2022.
FFO
Reconciliation
|
3 Months
|
|
3 Months
|
|
% Change
|
|
9 Months
|
|
9 Months
|
|
% Change
|
|
|
Sep. 30,
2023
|
|
Sep. 30,
2022
|
|
|
|
Sep. 30,
2023
|
|
Sep. 30,
2022
|
|
|
|
(In $000's, except per
Unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
|
$
|
39,417
|
|
$
|
47,043
|
|
|
|
$
|
492,969
|
|
$
|
268,959
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(1)
|
|
-
|
|
|
(444)
|
|
|
|
|
(818)
|
|
|
(2,599)
|
|
|
|
Fair value losses
(gains)
|
|
6,315
|
|
|
(6,254)
|
|
|
|
|
(367,028)
|
|
|
(155,753)
|
|
|
|
LP Class B Unit
distributions
|
|
1,309
|
|
|
1,209
|
|
|
|
|
3,860
|
|
|
3,566
|
|
|
|
Deferred tax expense
(recovery)
|
|
27
|
|
|
(1)
|
|
|
|
|
69
|
|
|
66
|
|
|
|
Depreciation
|
|
1,984
|
|
|
1,976
|
|
|
|
|
5,677
|
|
|
5,713
|
|
|
|
Principal repayments on
lease liabilities
|
|
(786)
|
|
|
(1,010)
|
|
|
|
|
(2,594)
|
|
|
(3,020)
|
|
|
|
Principal repayments on
lease receivable
|
|
-
|
|
|
186
|
|
|
|
|
321
|
|
|
542
|
|
|
|
FFO
|
$
|
48,266
|
|
$
|
42,705
|
|
|
13.0
|
%
|
$
|
132,456
|
|
$
|
117,474
|
|
|
12.8
|
%
|
FFO per Unit
|
$
|
0.96
|
|
$
|
0.85
|
|
|
12.9
|
%
|
$
|
2.64
|
|
$
|
2.33
|
|
|
13.3
|
%
|
(1)
Other income is comprised of capital gains from investment
income.
|
Adjusted Funds From Operations
Similar to FFO, the
IFRS measurement most comparable to AFFO is profit.
Boardwalk REIT considers AFFO to be an appropriate measurement
of a publicly listed multi-family residential entity as it measures
the economic performance after deducting for maintenance capital
expenditures to the existing portfolio of investment properties.
AFFO is determined by taking the amounts reported as FFO and
deducting what is commonly referred to as "Maintenance Capital
Expenditures". Maintenance Capital Expenditures are referred to as
expenditures that, by standard accounting definition, are accounted
for as capital in that the expenditure itself has a useful life in
excess of the current financial year and maintains the value of the
related assets. The reconciliation of AFFO can be found below.
The Trust uses AFFO to assess operating performance and its
distribution paying capacity, and decisions related to investment
in capital assets.
(000's)
|
3 Months
|
|
3 Months
|
|
9 Months
|
|
9 Months
|
|
Sep. 30,
2023
|
|
Sep. 30,
2022
|
|
Sep. 30,
2023
|
|
Sep. 30,
2022
|
FFO
|
$
|
48,266
|
|
$
|
42,705
|
|
$
|
132,456
|
|
$
|
117,474
|
Maintenance Capital
Expenditures
|
|
7,878
|
|
|
8,123
|
|
|
23,604
|
|
|
24,269
|
AFFO
|
$
|
40,388
|
|
$
|
34,582
|
|
$
|
108,852
|
|
$
|
93,205
|
Adjusted Real Estate Assets
The IFRS measurement most
comparable to Adjusted Real Estate Assets is investment properties.
Adjusted Real Estate Assets is comprised of investment properties,
equity accounted investment, and cash and cash equivalents.
Adjusted Real Estate Assets is useful in summarizing the real
estate assets owned by the Trust and it is used in the calculation
of NAV, which management of the Trust believes is a useful
measure in estimating the entity's value. The reconciliation from
Investment Properties under IFRS to Adjusted Real Estate
Assets can be found on the following page, under NAV.
Adjusted Real Estate Debt
The IFRS measurement most
comparable to Adjusted Real Estate Debt is total mortgage principal
outstanding. Adjusted Real Estate Debt is comprised of total
mortgage principal outstanding, total lease liabilities
attributable to land leases, and construction loan payable. It is
useful in summarizing the Trust's debt which is attributable to its
real estate assets and is used in the calculation of NAV, which
management of the Trust believes is a useful measure in estimating
the entity's value. The reconciliation from total mortgage
principal outstanding under IFRS to Adjusted Real Estate Debt
can be found below under NAV.
Net Asset Value
The IFRS measurement most comparable
to NAV is Unitholders' Equity. With real estate entities, NAV
is the total value of the entity's investment properties and cash
minus the total value of the entity's debt. The Trust
determines NAV by taking Adjusted Real Estate Assets and
subtracting Adjusted Real Estate Debt, which management of the
Trust believes is a useful measure in estimating the entity's
value. The reconciliation from Unitholders' Equity under IFRS
to Net Asset Value is below.
|
Sep. 30,
2023
|
|
Dec. 31,
2022
|
|
Investment
properties
|
$
|
7,502,442
|
|
$
|
6,900,745
|
|
Equity accounted
investment
|
|
40,330
|
|
|
40,871
|
|
Cash and cash
equivalents
|
|
33,668
|
|
|
52,816
|
|
Adjusted Real Estate
Assets
|
$
|
7,576,440
|
|
$
|
6,994,432
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
$
|
(3,376,784)
|
|
$
|
(3,336,026)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(73,271)
|
|
|
(74,502)
|
|
Adjusted Real Estate
Debt
|
$
|
(3,450,055)
|
|
$
|
(3,410,528)
|
|
|
|
|
|
|
Net Asset
Value
|
$
|
4,126,385
|
|
$
|
3,583,904
|
|
Net Asset Value per
Unit
|
$
|
82.07
|
|
$
|
71.35
|
|
Reconciliation of
Unitholders' Equity to Net Asset Value
|
Sep. 30,
2023
|
|
Dec. 31,
2022
|
|
Unitholders'
Equity
|
$
|
3,920,653
|
|
$
|
3,466,998
|
|
Total Assets
|
|
(7,646,371)
|
|
|
(7,067,275)
|
|
Investment
properties
|
|
7,502,442
|
|
|
6,900,745
|
|
Equity accounted
investment
|
|
40,330
|
|
|
40,871
|
|
Cash and cash
equivalents
|
|
33,668
|
|
|
52,816
|
|
Total
Liabilities
|
|
3,725,718
|
|
|
3,600,277
|
|
Total mortgage
principal outstanding
|
|
(3,376,784)
|
|
|
(3,336,026)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(73,271)
|
|
|
(74,502)
|
|
Net Asset Value
(1)(2)
|
$
|
4,126,385
|
|
$
|
3,583,904
|
|
(1)
|
Total lease liability
attributable to land leases is a component of lease liabilities as
calculated in accordance with IFRS.
|
Non-GAAP Ratios
The discussion below outlines the non-GAAP ratios used by the
Trust. Each non-GAAP ratio has a non-GAAP financial measure as one
or more of its components, and, as a result, do not have
standardized meanings prescribed by IFRS and therefore may not
be comparable to similar financial measurements presented by other
entities. Non-GAAP financial measures should not be construed as
alternatives to IFRS defined measures.
FFO per Unit, AFFO per Unit, and NAV per Unit
FFO per
Unit includes the non-GAAP financial measure FFO as a component in
the calculation. The Trust uses FFO per Unit to assess
operating performance on a per Unit basis, as well as determining
the level of Associate incentive-based compensation.
AFFO per Unit includes the non-GAAP financial measure AFFO as a
component in the calculation. The Trust uses AFFO per Unit to
assess operating performance on a per Unit basis and its
distribution paying capacity.
NAV per Unit includes the non-GAAP financial measure NAV as a
component in the calculation. Management of the Trust believes it
is a useful measure in estimating the entity's value on a per Unit
basis, which an investor can compare to the entity's Trust Unit
price which is publicly traded to help with investment
decisions.
FFO per Unit and AFFO per Unit, are calculated by taking the
non-GAAP ratio's corresponding non-GAAP financial measure and
dividing by the weighted average Trust Units outstanding for the
period on a fully diluted basis, which assumes conversion of the LP
Class B Units and vested deferred units determined in the
calculation of diluted per Trust Unit amounts in accordance with
IFRS.
NAV per Unit is calculated as NAV divided by the Trust Units
outstanding as at the reporting date on a fully diluted basis which
assumes conversion of the LP Class B Units and vested deferred
units outstanding.
FFO per Unit Future Financial Guidance
FFO per Unit
Future Financial Guidance is calculated as FFO Future Financial
Guidance divided by the estimated weighted average Trust Units and
LP Class B Units outstanding throughout the year.
Boardwalk REIT considers FFO per Unit Future Financial
Guidance to be an appropriate measurement of the estimated future
financial performance based on information currently available to
management of the Trust at the date of this news release.
AFFO per Unit Future Financial Guidance
AFFO per Unit
Future Financial Guidance is calculated as AFFO Future Financial
Guidance divided by the estimated weighted average Trust Units and
LP Class B Units outstanding throughout the year. Boardwalk
REIT considers AFFO per Unit Future Financial Guidance to be an
appropriate measurement of the estimated future profitability based
on information currently available to management of the Trust at
the date of this news release.
FFO Payout Ratio
FFO Payout Ratio represents the
REIT's ability to pay distributions. This non-GAAP ratio is
computed by dividing regular distributions paid on the Trust Units
and LP Class B Units by the non-GAAP financial measure
of FFO.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
STATEMENTS
Information in this news release that is
not current or historical factual information may constitute
forward-looking statements and information (collectively,
"forward-looking statements") within the meaning of securities
laws. The use of any of the words "expect", "anticipate", "may",
"will", "should", "believe", "intend" and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements contained in this press release include Boardwalk's
financial guidance for fiscal 2023, Boardwalk's ability to
accelerate organic growth in 2023, expected distributions for
December 2023, January 2024, and February
2024, expectations regarding mortgages payable maturing and
its intention to renew these mortgages, Boardwalk's commitment to
its capital allocation strategy, timing for completion of the Tower
2 construction at Boardwalk's 45 Railroad development, accretive
capital recycling opportunities, strengthening its long-term
development plan in Victoria, BC,
and Boardwalk's commitment to ESG initiatives. Implicit in
these forward-looking statements, particularly in respect of
Boardwalk's objectives for its current and future periods,
Boardwalk's strategies to achieve those objectives, as well as
statements with respect to management's beliefs, plans, estimates,
assumptions, intentions, and similar statements concerning
anticipated future events, results, circumstances, performance or
expectations are estimates and assumptions subject to risks and
uncertainties, including those described in its Management's
Discussion & Analysis of Boardwalk under the heading "Risks and
Risk Management", which could cause Boardwalk's actual results to
differ materially from the forward-looking statements contained in
this news release. Specifically, Boardwalk has made assumptions
surrounding the impact of economic conditions in Canada and globally, Boardwalk's future growth
potential, prospects and opportunities, interest costs, access to
equity and debt capital markets to fund (at acceptable costs), the
future growth program to enable the Trust to refinance debts as
they mature, the availability of purchase opportunities for growth
in Canada, the impact of
accounting principles under IFRS, general industry conditions and
trends, changes in laws and regulations including, without
limitation, changes in tax laws, increased competition, the
availability of qualified personnel, fluctuations in foreign
exchange or interest rates, and stock market volatility. These
assumptions, although considered reasonable by the Trust at the
time of preparation, may prove to be incorrect.
This news release also contains future-oriented financial
information and financial outlook information (collectively "FOFI")
about Boardwalk's same property NOI growth, FFO per Unit, and AFFO
per Unit guidance for fiscal 2023. Boardwalk has included the FOFI
for the purpose of providing further information about the Trust's
anticipated future business operation.
For more exhaustive information on the risks and
uncertainties in respect of forward-looking statements and FOFI you
should refer to Boardwalk's Management's Discussion & Analysis
and Annual Information Form for the year ended December 31, 2022 under the headings "Risks and
Risk Management" and "Challenges and Risks", respectively, which
are available at www.sedarplus.ca. Forward-looking statements and
FOFI contained in this news release are made as of the date of this
news release and are based on Boardwalk's current estimates,
expectations and projections, which Boardwalk believes are
reasonable as of the current date. You should not place undue
importance on forward-looking statements or FOFI and should
not rely upon forward-looking statements or FOFI as of any other
date. Except as required by applicable law, Boardwalk
undertakes no obligation to publicly update or revise any
forward-looking statement or FOFI, whether a result of new
information, future events, or otherwise.
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SOURCE Boardwalk Real Estate Investment Trust