SUMMARY HIGHLIGHTS FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2022
- STRONG FINANCIAL PERFORMANCE
FOR THE 3 MONTH PERIOD ENDED JUNE 30, 2022
- Profit of $152.5 million
- Funds From Operations ("FFO") of $0.80 per Unit(1); an increase of 6.7%
from Q2 2021
FOR THE 6 MONTH PERIOD ENDED
JUNE 30, 2022
-
- Profit of $221.9 million
- FFO of $1.48 per
Unit(1); an increase of 5.7% from the same period a year
ago
- SOLID OPERATIONAL PERFORMANCE DRIVEN BY IMPROVING REVENUE
GROWTH
-
- Q2 2022 same property(2) sequential revenue growth
of 2.2% from the prior quarter, the highest since 2008
- Q2 2022 same property(2) rental revenue growth of
3.4% from a year ago
- Q2 2022 same property Net Operating Income ("NOI") of
$70.9 million; an increase of 2.8%
from a year ago
- Q2 2022 same property occupancy of 96.44%; an increase of 54
basis points from last year
- Occupied rent increased to $1,228
in June of 2022, a $25 improvement
from December 2021
- Continued reduction of incentives
- LEASING CONTINUES TO STRENGTHEN
-
- July 2022 occupancy of 97.0%
- August 2022 preliminary occupancy
of 97.1%, an increase of 150 basis points from January 2022
- Post-quarter occupancy growth
- New and renewal leasing spreads accelerating to 6.8% and 5.0%,
respectively, in Alberta market
with declining incentives
- STRONG AND FLEXIBLE FINANCIAL POSITION
-
- Approximately $264.0 million of
total available liquidity
- 96% of Boardwalk's mortgages carry CMHC-insurance
- Unitholders' Equity of $3.4
billion
- Net Asset Value increase, due to higher market rental rates, to
$70.03 per Unit(1)
- ACCRETIVE AND STRATEGIC CAPITAL ALLOCATION
-
- Invested $11.3 million in the
repurchase and cancellation of 240,000 Trust Units in the second
quarter
- Accretive acquisition of a recently constructed 158-suite
apartment community in Calgary,
AB
- Completed acquisition of previously announced third development
site in Victoria, BC
- UPDATE TO 2022 FINANCIAL GUIDANCE
-
- Increased the bottom end of FFO per Unit estimate to a revised
range of $3.00 to $3.15 per Unit(1)
- Same property NOI growth of +2.0% to +5.0%
- DISTRIBUTION OF $1.08 PER
TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF
AUGUST, SEPTEMBER, AND OCTOBER
2022
(1)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this Earnings
Release for more information.
|
(2)
|
Same property figures
exclude un-stabilized properties (properties which have been owned
for less than 24 months) and sold assets.
|
|
|
|
|
CALGARY,
AB, Aug. 9, 2022 /PRNewswire/ - Boardwalk
Real Estate Investment Trust (TSX: BEI.UN)
Boardwalk Real Estate Investment Trust ("Boardwalk", the "REIT"
or the "Trust") today announced its financial results for the
second quarter of 2022.
Sam Kolias; Chairman and Chief
Executive Officer of Boardwalk REIT commented:
"We are pleased to report on another solid quarter, with growth
in Net Operating Income ("NOI"), Funds From Operations ("FFO"), and
Profit through our spring and early summer leasing
season.
As we look forward to the remainder of the summer, we have seen
significant leasing gains with our August occupancy increasing to
97.1%. Leasing spreads on both renewals and new leases have seen
strong improvement. In our largest market of Alberta, renewal and new lease spreads
increased to 5.0% and 6.8%, respectively, in the month of
July. New lease spreads continue to accelerate across our
portfolio with rental housing fundamentals improving in each of our
markets allowing for incentive reductions and positive rental rate
growth.
Higher cost inflation and interest rates have provided a
headwind to community providers to-date in 2022, however, our
portfolio of affordable, non-price controlled, and high-quality
apartment communities remains positioned to produce sustainable
rental rate adjustments that allow Boardwalk to further build on
our strong financial foundation. Financial sustainability is
essential to provide our Resident Members with the best product
quality, service and experience."
SECOND QUARTER FINANCIAL
HIGHLIGHTS
$ millions, except
per unit amounts
|
|
Highlights of the
Trust's Second Quarter 2022 Financial Results
|
|
|
3 Months
Jun. 30,
2022
|
|
3 Months
Jun. 30, 2021
|
|
%
Change
|
|
6
Months
Jun. 30,
2022
|
|
|
6 Months
Jun. 30, 2021
|
|
%
Change
|
|
Operational
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
Revenue
|
$
|
122.3
|
|
$
|
117.6
|
|
|
4.0
|
%
|
$
|
240.6
|
|
|
$
|
233.4
|
|
|
3.1
|
%
|
Same Property Rental
Revenue
|
$
|
118.1
|
|
$
|
114.3
|
|
|
3.4
|
%
|
$
|
233.8
|
|
|
$
|
227.6
|
|
|
2.7
|
%
|
Net Operating Income
(NOI)
|
$
|
72.6
|
|
$
|
69.6
|
|
|
4.2
|
%
|
$
|
137.5
|
|
|
$
|
133.5
|
|
|
3.0
|
%
|
Same Property
NOI
|
$
|
70.9
|
|
$
|
69.0
|
|
|
2.8
|
%
|
$
|
135.8
|
|
|
$
|
133.1
|
|
|
2.1
|
%
|
Operating Margin
(1)
|
|
59.4
|
%
|
|
59.2
|
%
|
|
|
|
57.2
|
%
|
|
|
57.2
|
%
|
|
|
Same Property Operating
Margin
|
|
60.0
|
%
|
|
60.4
|
%
|
|
|
|
58.1
|
%
|
|
|
58.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations
(FFO) (2)(3)
|
$
|
40.3
|
|
$
|
38.2
|
|
|
5.6
|
%
|
$
|
74.8
|
|
|
$
|
71.4
|
|
|
4.8
|
%
|
Adjusted Funds From
Operations (AFFO) (2)(3)
|
$
|
32.2
|
|
$
|
29.8
|
|
|
8.1
|
%
|
$
|
58.6
|
|
|
$
|
54.5
|
|
|
7.5
|
%
|
Profit
|
$
|
152.5
|
|
$
|
50.6
|
|
|
201.3
|
%
|
$
|
221.9
|
|
|
$
|
79.6
|
|
|
178.8
|
%
|
FFO per Unit
(3)
|
$
|
0.80
|
|
$
|
0.75
|
|
|
6.7
|
%
|
$
|
1.48
|
|
|
$
|
1.40
|
|
|
5.7
|
%
|
AFFO per Unit
(3)
|
$
|
0.64
|
|
$
|
0.58
|
|
|
10.3
|
%
|
$
|
1.16
|
|
|
$
|
1.07
|
|
|
8.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Distributions
Declared (Trust Units & LP Class B
Units)
|
$
|
13.6
|
|
$
|
12.8
|
|
|
6.5
|
%
|
$
|
26.6
|
|
|
$
|
25.5
|
|
|
4.2
|
%
|
Regular Distributions
Declared Per Unit (Trust Units &
LP Class B Units)
|
$
|
0.270
|
|
$
|
0.250
|
|
|
7.9
|
%
|
$
|
0.527
|
|
|
$
|
0.500
|
|
|
5.3
|
%
|
FFO Payout Ratio
(3)
|
|
33.8
|
%
|
|
33.5
|
%
|
|
|
|
35.6
|
%
|
|
|
35.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stabilized Apartment
Suites
|
|
|
|
|
|
|
|
32,787
|
|
|
|
33,033
|
|
|
|
Un-Stabilized
Suites
|
|
|
|
|
|
|
|
777
|
|
|
|
480
|
|
|
|
Total Apartment
Suites
|
|
|
|
|
|
|
|
33,564
|
|
|
|
33,513
|
|
|
|
(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 Earnings
Release for more information.
|
Continued Highlights
of the Trust's Second Quarter 2022 Financial Results
|
|
|
Jun. 30,
2022
|
|
|
Dec. 31,
2021
|
|
Equity
|
|
|
|
|
|
Unitholders'
Equity
|
$
|
3,433,306
|
|
|
$
|
3,253,178
|
|
|
|
|
|
|
|
Net Asset
Value
|
|
|
|
|
|
Net asset value
(1)(2)
|
$
|
3,521,659
|
|
|
$
|
3,412,130
|
|
Net asset value per
Unit (2)
|
$
|
70.03
|
|
|
$
|
66.87
|
|
|
|
|
|
|
|
Liquidity, Debt and
Distributions
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
32,125
|
|
|
|
|
Subsequent
committed/funded financing
|
$
|
32,100
|
|
|
|
|
Unused committed
revolving credit facility
|
$
|
199,750
|
|
|
|
|
Total Available
Liquidity
|
$
|
263,975
|
|
|
|
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
$
|
3,239,088
|
|
|
$
|
3,088,978
|
|
Interest Coverage Ratio
(Rolling 4 quarters)
|
|
3.00
|
|
|
|
2.97
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure.
|
(2)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this Earnings
Release for more information.
|
The Trust's IFRS fair value of its investment properties as at
June 30, 2022 increased from the
previous quarter and year end, primarily as a result of increased
market rents and a decrease in the vacancy rates in some of its
markets reflecting improving rental fundamentals. During the second
quarter, the Trust also increased some of its operating expense
assumptions in its fair value model to account for recent
inflation.
SOLID OPERATIONAL
RESULTS
Portfolio Highlights
for the Second Quarter of 2022
|
|
|
Jun-22
|
|
Jun-21
|
|
Average Occupancy
(Quarter Average) (1)
|
|
96.44
|
%
|
|
95.90
|
%
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,192
|
|
$
|
1,144
|
|
Average Market Rent
(Period Ended) (2)
|
$
|
1,373
|
|
$
|
1,334
|
|
Average Occupied Rent
(Period Ended) (3)
|
$
|
1,228
|
|
$
|
1,191
|
|
|
|
|
|
|
Loss-to-Lease (Period
Ended) ($ millions)
|
$
|
55.3
|
|
$
|
54.9
|
|
Loss-to-Lease Per Trust
Unit (Period Ended)
|
$
|
1.10
|
|
$
|
1.07
|
|
|
|
|
|
|
(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 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.
|
|
Jul-21
|
Aug-21
|
Sep-21
|
Oct-21
|
Nov-21
|
Dec-21
|
Jan-22
|
Feb-22
|
Mar-22
|
Apr-22
|
May-22
|
Jun-22
|
Jul-22
|
Aug-22
|
Stabilized
Property
Portfolio
Occupancy
|
95.9 %
|
96.1 %
|
96.2 %
|
96.1 %
|
95.7 %
|
95.7 %
|
95.6 %
|
95.5 %
|
95.5 %
|
95.8 %
|
96.6 %
|
96.9 %
|
97.0 %
|
97.1 %
|
The Trust maintained high occupancy compared to the same period
a year ago by focusing on gaining market share and retention.
Market rents were adjusted in communities within some of the
Trust's markets where rental market fundamentals continue to
tighten. Average occupied rent increased sequentially and when
compared to the same period a year ago as the Trust focuses on
reducing incentives on lease renewals and minimizing incentives on
new leases in its stronger markets.
For the second quarter of 2022, a same property rental revenue
increase of 3.4% combined with same property total rental expense
increase of 4.2%, resulted in same property NOI growth of 2.8%.
During the quarter, lower vacancy loss and incentives supported
Boardwalk's Calgary portfolio
increase in same property NOI of 7.2%, while in Edmonton, cost savings from lower property
taxes were offset by higher operating expenses and utilities
expense resulting in slightly negative NOI growth for the second
quarter of 2022 compared to the second quarter of 2021. With
the increased rental demand in Edmonton during the spring and summer leasing
season, the Trust incurred higher operating expenses to meet
demand, positioning the Trust with higher occupancy heading into
the fall. Saskatchewan's market
continues to improve with the Trust's portfolio realizing 9.1% same
property NOI growth in the second quarter of 2022 versus the same
period last year, as a result of strong same property revenue
growth and a reduction in expenses related to TV and internet
services provided to Boardwalk's Resident Members in the
province. In Ontario, the mark-to-market opportunity on
turnover, offset by growth in non-controllable and controllable
expenses, contributed to same property NOI growth of 5.4%, in the
second quarter of 2022 compared to the second quarter of
2021. In Quebec, increases in non-controllable expenses such
as property taxes, utilities and insurance and certain controllable
expense categories offset positive same property revenue growth
resulting in same property NOI remaining flat for the second
quarter of 2022 compared to the second quarter of
2021.
Jun. 30 2022 - 3
M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
1.6
|
%
|
|
4.3
|
%
|
|
(0.6)
|
%
|
|
34.0
|
%
|
Calgary
|
|
5,879
|
|
|
5.5
|
%
|
|
2.4
|
%
|
|
7.2
|
%
|
|
22.6
|
%
|
Red Deer
|
|
939
|
|
|
3.7
|
%
|
|
1.4
|
%
|
|
5.7
|
%
|
|
2.3
|
%
|
Grande
Prairie
|
|
645
|
|
|
(1.9)
|
%
|
|
3.9
|
%
|
|
(6.8)
|
%
|
|
1.4
|
%
|
Fort
McMurray
|
|
352
|
|
|
3.2
|
%
|
|
0.8
|
%
|
|
5.0
|
%
|
|
1.0
|
%
|
Alberta
|
|
20,697
|
|
|
2.8
|
%
|
|
3.5
|
%
|
|
2.3
|
%
|
|
61.3
|
%
|
Quebec
|
|
6,000
|
|
|
3.7
|
%
|
|
11.2
|
%
|
|
—
|
|
|
19.4
|
%
|
Saskatchewan
|
|
3,505
|
|
|
4.8
|
%
|
|
(1.9)
|
%
|
|
9.1
|
%
|
|
11.6
|
%
|
Ontario
|
|
2,585
|
|
|
4.9
|
%
|
|
4.1
|
%
|
|
5.4
|
%
|
|
7.7
|
%
|
|
|
32,787
|
|
|
3.4
|
%
|
|
4.2
|
%
|
|
2.8
|
%
|
|
100.0
|
%
|
Jun. 30 2022 - 6
M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
0.9
|
%
|
|
2.4
|
%
|
|
(0.3)
|
%
|
|
34.0
|
%
|
Calgary
|
|
5,879
|
|
|
5.1
|
%
|
|
1.8
|
%
|
|
7.1
|
%
|
|
22.7
|
%
|
Red Deer
|
|
939
|
|
|
3.3
|
%
|
|
1.8
|
%
|
|
4.8
|
%
|
|
2.2
|
%
|
Grande
Prairie
|
|
645
|
|
|
(3.0)
|
%
|
|
4.0
|
%
|
|
(9.3)
|
%
|
|
1.4
|
%
|
Fort
McMurray
|
|
352
|
|
|
1.6
|
%
|
|
2.5
|
%
|
|
0.7
|
%
|
|
1.0
|
%
|
Alberta
|
|
20,697
|
|
|
2.3
|
%
|
|
2.3
|
%
|
|
2.3
|
%
|
|
61.3
|
%
|
Quebec
|
|
6,000
|
|
|
2.1
|
%
|
|
14.0
|
%
|
|
(4.0)
|
%
|
|
19.1
|
%
|
Saskatchewan
|
|
3,505
|
|
|
4.9
|
%
|
|
(4.2)
|
%
|
|
11.5
|
%
|
|
11.8
|
%
|
Ontario
|
|
2,585
|
|
|
5.0
|
%
|
|
7.6
|
%
|
|
3.3
|
%
|
|
7.8
|
%
|
|
|
32,787
|
|
|
2.7
|
%
|
|
3.6
|
%
|
|
2.1
|
%
|
|
100.0
|
%
|
STRONG LIQUIDITY
POSITION
In the second quarter, Boardwalk renewed its maturing mortgages
at a weighted average interest rate of 3.71% while extending the
term of these mortgages by an average of 5 years.
For the remainder of 2022, the Trust anticipates $299.0 million of mortgages payable maturing with
an average in-place interest rate of 2.81% and will continue to
renew these mortgages as they mature. Current market 5 and
10-year CMHC financing rates are estimated to be 3.70%. While
interest rates have increased significantly since the beginning of
March, the Trust remains positioned with a balanced 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.
ACCRETIVE AND STRATEGIC CAPITAL ALLOCATION
The Trust remains committed to re-investing retained cashflow
and the net proceeds from the sale of non-core assets toward
opportunities that are both accretive to FFO per Unit in the
near-term and significantly enhance the NAV per Unit of the Trust
over the intermediate term.
Subsequent to the end of the second quarter, on August 8, 2022, the Trust acquired a property in
Calgary, Alberta comprised of 158
suites. The purchase price was $41.9
million (excluding transaction costs) representing an
approximate 4.75% cap rate and was financed with cash on hand and
the assumption of a mortgage for $29.2
million at an interest rate of 3.18%. The acquisition
provides immediate FFO per Unit accretion and strengthens the
Trust's presence in the rapidly growingly neighbourhood of Seton.
The Level is an A-class community that was completed in 2020
featuring modern finishes, stainless steel appliances and in-suite
washer and dryer. The Level is fully occupied and is located
in close proximity to the Trust's existing Auburn Landing
community, providing operational efficiencies for the portfolio in
the region.
As previously announced, on June 1,
2022, the Trust acquired a development site in View Royal
(Victoria) at 339 – 345 Island
Highway. The purchase price was $12.0
million (excluding transaction costs). The site strengthens
the Trust's long-term development pipeline in the Victoria area and is located a short drive
from the Trust's two other development sites, Aspire in View
Royal and The Marin in Esquimalt.
During the fourth quarter of 2021, the Trust announced that it
received approval from the Toronto Stock Exchange (the "TSX") to
commence a normal course issuer bid ("NCIB"). The Trust continues
to view its own portfolio as offering un-paralleled value in the
multi-family sector and believes its current unit price represents
an attractive opportunity for re-investment. During the second
quarter, the Trust re-purchased 240,000 Trust Units at a
volume-weighted average price of $47.02 for a total price of approximately
$11.3 million.
UPDATE TO 2022 FINANCIAL
GUIDANCE
In May, the Trust revised its financial guidance for 2022 in
consideration of increased volatility of interest costs and utility
expenses. While volatility remains in these two categories, the
Trust is positioned strongly heading into the second half of the
year and is providing an update to its 2022 financial guidance.
Description
|
2022 Updated
Guidance
(Revised
Q2)
|
2022 Updated
Guidance
(Revised
Q1)
|
2022 Original
Guidance
|
2021 Actual (in
$
thousands except per
unit)
|
Same Property NOI
Growth
|
2.0% - 5.0%
|
2.0% - 5.0%
|
3.0% - 7.0%
|
0.1 %
|
Profit
|
N/A
|
N/A
|
N/A
|
$446,267
|
FFO(1)(2)
|
N/A
|
N/A
|
N/A
|
$150,207
|
AFFO(1)(2)(3)
|
N/A
|
N/A
|
N/A
|
$117,920
|
FFO Per
Unit(2)
|
$3.00 to
$3.15
|
$2.95 to
$3.15
|
$3.03 to
$3.18
|
$2.94
|
AFFO Per
Unit(2)(3)
|
$2.36 to
$2.51
|
$2.31 to
$2.51
|
$2.39 to
$2.54
|
$2.31
|
|
|
|
|
|
(1)
|
This is a non-GAAP
financial measure.
|
(2)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this Earnings
Release for more information.
|
(3)
|
Utilizing a Maintenance
CAPEX of $965/suite/year.
|
SECOND QUARTER REGULAR MONTHLY
DISTRIBUTION ANNOUNCEMENT
The Trust has confirmed its regular monthly distributions for
the months of August 2022,
September 2022, and October 2022 as follows:
Month
|
|
Per Unit
|
|
Annualized
|
|
Record Date
|
Distribution
Date
|
Aug-22
|
|
$
|
0.0900
|
|
$
|
1.08
|
|
31-Aug-22
|
15-Sep-22
|
Sep-22
|
|
$
|
0.0900
|
|
$
|
1.08
|
|
30-Sep-22
|
17-Oct-22
|
Oct-22
|
|
$
|
0.0900
|
|
$
|
1.08
|
|
31-Oct-22
|
15-Nov-22
|
In line with Boardwalk's distribution policy of maximum
re-investment, the Trust's payout ratio remains conservative at
33.8% of Q2 2022 FFO; and 43.7% of the last 12 months
FFO.
Boardwalk's regular monthly distribution was increased by 8% in
March of 2022 and provides a stable and attractive yield for the
Trust's Unitholders.
THIRD 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, maintaining or
increasing Resident Member satisfaction and a continued focus on
governance and oversight. In March, Boardwalk published its
third annual ESG report. The ESG report, along with the
Trust's Annual report, are available digitally on Boardwalk's
website and under the Trust's profile at www.sedar.com.
FINANCIAL AND SUPPLEMENTARY
INFORMATION
Boardwalk produces quarterly financial statements, management's
discussion and analysis, and a supplemental information package
that provides detailed information regarding the Trust's activities
during the quarter. Financial and supplementary information
is available on Boardwalk's investor website at
www.bwalk.com/investors.
TELECONFERENCE ON SECOND QUARTER
2022 FINANCIAL RESULTS
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow (August 10, 2022) at 1:00
pm Eastern Time (11:00 am
Mountain). 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: 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: 45545020
Topic: Boardwalk Real Estate Investment Trust, 2022 Second 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 Second 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 28 million net rentable square
feet, Boardwalk has a proven long-term track record of building
better communities, where love always livestm. 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 Earnings 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. 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 six months ended June 30, 2022 and 2021.
FFO
Reconciliation
|
3 Months
|
|
3 Months
|
|
% Change
|
|
6 Months
|
|
6 Months
|
|
% Change
|
|
|
Jun. 30,
2022
|
|
Jun. 30,
2021
|
|
|
|
Jun. 30,
2022
|
|
Jun. 30,
2021
|
|
|
|
(In $000's, except per
Unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
|
$
|
152,488
|
|
$
|
50,611
|
|
|
|
$
|
221,916
|
|
$
|
79,588
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(1)
|
|
(63)
|
|
|
-
|
|
|
|
|
(5,515)
|
|
|
-
|
|
|
|
Loss on sale of
asset
|
|
-
|
|
|
103
|
|
|
|
|
-
|
|
|
103
|
|
|
|
Fair value
gains
|
|
(114,420)
|
|
|
(14,780)
|
|
|
|
|
(146,139)
|
|
|
(12,570)
|
|
|
|
LP Class B Unit
distributions
|
|
1,208
|
|
|
1,120
|
|
|
|
|
2,357
|
|
|
2,240
|
|
|
|
Income tax (recovery)
expense
|
|
(26)
|
|
|
(37)
|
|
|
|
|
67
|
|
|
(27)
|
|
|
|
Depreciation
|
|
1,911
|
|
|
1,927
|
|
|
|
|
3,737
|
|
|
3,621
|
|
|
|
Principal repayments on
lease liabilities
|
|
(997)
|
|
|
(945)
|
|
|
|
|
(2,010)
|
|
|
(1,904)
|
|
|
|
Principal repayments on
lease receivable
|
|
180
|
|
|
161
|
|
|
|
|
356
|
|
|
319
|
|
|
|
FFO
|
$
|
40,281
|
|
$
|
38,160
|
|
|
5.6
|
%
|
$
|
74,769
|
|
$
|
71,370
|
|
|
4.8
|
%
|
FFO per Unit
|
$
|
0.80
|
|
$
|
0.75
|
|
|
6.7
|
%
|
$
|
1.48
|
|
$
|
1.40
|
|
|
5.7
|
%
|
(1)
|
Other income is
comprised of capital gains from investment income and an unrealized
gain on the investment in private technology venture
fund.
|
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
|
|
6 Months
|
|
6 Months
|
|
|
Jun. 30,
2022
|
|
Jun. 30,
2021
|
|
Jun. 30,
2022
|
|
Jun. 30,
2021
|
|
|
|
|
|
|
|
|
|
|
FFO
|
$
|
40,281
|
|
$
|
38,160
|
|
$
|
74,769
|
|
$
|
71,370
|
|
Maintenance Capital
Expenditures
|
|
8,097
|
|
|
8,383
|
|
|
16,146
|
|
|
16,832
|
|
AFFO
|
$
|
32,184
|
|
$
|
29,777
|
|
$
|
58,623
|
|
$
|
54,538
|
|
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 Net Asset Value.
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 Net Asset
Value.
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.
|
Jun. 30,
2022
|
|
Dec. 31,
2021
|
|
Investment
properties
|
$
|
6,762,796
|
|
$
|
6,492,969
|
|
Equity accounted
investment
|
|
41,118
|
|
|
41,118
|
|
Cash and cash
equivalents
|
|
32,125
|
|
|
64,300
|
|
Adjusted Real Estate
Assets
|
$
|
6,836,039
|
|
$
|
6,598,387
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
$
|
(3,239,088)
|
|
$
|
(3,088,978)
|
|
Total lease liabilities
attributable to land leases
|
|
(75,292)
|
|
|
(76,092)
|
|
Construction loan
payable
|
|
-
|
|
|
(21,187)
|
|
Adjusted Real Estate
Debt
|
$
|
(3,314,380)
|
|
$
|
(3,186,257)
|
|
|
|
|
|
|
Net Asset
Value
|
$
|
3,521,659
|
|
$
|
3,412,130
|
|
Net Asset Value per
Unit
|
$
|
70.03
|
|
$
|
66.87
|
|
Reconciliation of
Unitholders' Equity to Net Asset Value
|
Jun. 30,
2022
|
|
Dec. 31,
2021
|
|
Unitholders'
Equity
|
$
|
3,433,306
|
|
$
|
3,253,178
|
|
Total Assets
|
|
(6,900,633)
|
|
|
(6,660,653)
|
|
Investment
properties
|
|
6,762,796
|
|
|
6,492,969
|
|
Equity accounted
investment
|
|
41,118
|
|
|
41,118
|
|
Cash and cash
equivalents
|
|
32,125
|
|
|
64,300
|
|
Total
Liabilities
|
|
3,467,327
|
|
|
3,407,475
|
|
Total mortgage
principal outstanding
|
|
(3,239,088)
|
|
|
(3,088,978)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(75,292)
|
|
|
(76,092)
|
|
Construction loan
payable
|
|
-
|
|
|
(21,187)
|
|
Net Asset
Value
|
$
|
3,521,659
|
|
$
|
3,412,130
|
|
(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
Earnings 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 Earnings 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 2022, expected distributions for
August, September, and October 2022,
and accretive capital recycling opportunities. 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 "Risk 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 including as a result of
the COVID-19 pandemic, Boardwalk's future growth potential,
prospects and opportunities, the rental environment compared to
several years ago, relatively stable 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, general industry
conditions and trends, changes in laws and regulations including,
without limitation, changes in tax laws, mortgage rules and other
temporary legislative changes in light of the COVID-19 pandemic,
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 2022. 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, 2021 under the headings "Risk and
Risk Management" and "Challenges and Risks", respectively, which
are available at www.sedar.com. 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.
View original
content:https://www.prnewswire.com/news-releases/boardwalk-reit-reports-solid-second-quarter-results-with-strong-quarterly-sequential-revenue-growth-301602954.html
SOURCE Boardwalk Real Estate Investment Trust