SUMMARY HIGHLIGHTS FOR THE THREE AND NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 2022
- STRONG FINANCIAL PERFORMANCE
FOR THE 3 MONTH PERIOD ENDED SEPTEMBER 30, 2022
-
- Profit of $47.0 million
- Funds From Operations ("FFO") of $0.85 per Unit(1); an increase of 7.6%
from Q3 2021
FOR THE 9 MONTH PERIOD ENDED SEPTEMBER
30, 2022
- Profit of $269.0 million
- FFO of $2.33 per
Unit(1); an increase of 6.4% from the same period a year
ago
- SOLID OPERATIONAL PERFORMANCE DRIVEN BY IMPROVING SAME
PROPERTY(2) REVENUE GROWTH IN Q3 2022
-
- Sequential revenue growth of 2.3% from the prior quarter
- Rental revenue growth of 4.9% from a year ago
- Net Operating Income ("NOI") of $75.6
million; an increase of 5.2% from a year ago
- Occupancy of 97.2%; an increase of 115 basis points from last
year
- Incentives declined 20.5% and market rents increased by 1.6%
from a year ago
- Occupied rent increased to $1,252
in September of 2022, a $49
improvement from December 2021
- LEASING MOMENTUM CONTINUES
-
- Occupancy strong heading into the winter
-
- November 2022 preliminary
occupancy of 97.9%, an increase of 227 basis points from
January 2022
- New and renewal leasing spreads accelerating to 9.7% and 5.7%
in Alberta, respectively, with
declining incentives and growth in market rental rates
- Despite recent strong leasing spreads, rents in Alberta relative to income levels remain some
of the most affordable in Canada
- STRONG AND FLEXIBLE FINANCIAL POSITION
-
- Approximately $228.8 million of
total available liquidity
- 95% of Boardwalk's mortgages carry CMHC-insurance
- Unitholders' Equity of $3.5
billion
- Fair value capitalization rate of 4.91% on a same property
basis unchanged quarter over quarter, and inline with recently
published third-party capitalization rate reports
- The Trust's current fair value capitalization rate remains at a
positive spread to interest rates and management will continue to
review any necessary adjustments quarterly
- Net Asset Value increase, primarily a result of higher market
rental rates, to $71.09 per
Unit(1)
- ACCRETIVE AND STRATEGIC CAPITAL ALLOCATION
-
- Invested $2.8 million in the
repurchase and cancellation of 62,500 Trust Units in the third
quarter
- Completed acquisition of previously announced 158-suite
apartment community in Calgary,
AB
- UPDATE TO 2022 FINANCIAL GUIDANCE
-
- Increased the bottom end of FFO per Unit estimate to a revised
range of $3.08 to $3.15 per Unit(1)
- Increased the bottom end of the Same Property NOI growth range
to +3.0% to +5.0%
- DISTRIBUTION OF $1.08 PER
TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF
NOVEMBER 2022, DECEMBER 2022, JANUARY
2023, and FEBRUARY
2023.
(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, Nov. 8, 2022 /CNW/ - 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 third
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") and Funds From Operations ("FFO")
through our summer and autumn leasing season.
As we look forward to the remainder of the year, we are
well-positioned with higher portfolio occupancy of 97.9% as of
early November. Leasing spreads on both renewals and new leases
have seen continued improvement. In our largest market of
Alberta, new and renewal lease
spreads increased to 9.7% and 5.7%, respectively, in the month of
October, which reflects a continued improvement in our core
markets. Our Edmonton and Calgary portfolios are seeing limited
incentives on new leases, while our sustainable approach on lease
renewals continues to provide coverage for the inflation in our
expenses. Market rent growth is occurring in markets where
affordability remains high. Rents in Alberta relative to income levels remain some
of the most affordable in Canada.
Higher cost inflation and interest rates have provided a
headwind to community providers to-date in 2022. However, our Team
continues to focus on controlling costs while 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."
THIRD QUARTER FINANCIAL HIGHLIGHTS
$ millions, except
per unit amounts
|
Highlights of the
Trust's Third Quarter 2022 Financial Results
|
|
3 Months
Sep. 30, 2022
|
3 Months
Sep. 30, 2021
|
%
Change
|
9 Months
Sep. 30, 2022
|
9 Months
Sep. 30, 2021
|
%
Change
|
Operational
Highlights
|
|
|
|
|
|
|
Rental
Revenue
|
$
125.5
|
$
118.4
|
5.9 %
|
$
366.0
|
$
351.8
|
4.0 %
|
Same Property Rental
Revenue
|
$
122.1
|
$
116.3
|
4.9 %
|
$
358.0
|
$
345.9
|
3.5 %
|
Net Operating Income
(NOI)
|
$
76.3
|
$
71.8
|
6.4 %
|
$
213.9
|
$
205.3
|
4.2 %
|
Same Property
NOI
|
$
75.6
|
$
71.7
|
5.2 %
|
$
212.9
|
$
206.2
|
3.2 %
|
Operating Margin
(1)
|
60.8 %
|
60.6 %
|
|
58.4 %
|
58.4 %
|
|
Same Property Operating
Margin
|
61.9 %
|
61.7 %
|
|
59.5 %
|
59.6 %
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
|
|
Funds From Operations
(FFO) (2)(3)
|
$
42.7
|
$
40.5
|
5.4 %
|
$
117.5
|
$
111.9
|
5.0 %
|
Adjusted Funds From
Operations (AFFO) (2)(3)
|
$
34.6
|
$
32.2
|
7.5 %
|
$
93.2
|
$
86.7
|
7.5 %
|
Profit
|
$
47.0
|
$
235.5
|
(80.0) %
|
$
269.0
|
$
315.1
|
(14.7) %
|
FFO per Unit
(3)
|
$
0.85
|
$
0.79
|
7.6 %
|
$
2.33
|
$
2.19
|
6.4 %
|
AFFO per Unit
(3)
|
$
0.69
|
$
0.63
|
9.5 %
|
$
1.85
|
$
1.70
|
8.8 %
|
|
|
|
|
|
|
|
Regular Distributions
Declared (Trust Units & LP Class B Units)
|
$
13.6
|
$
12.8
|
6.2 %
|
$
40.1
|
$
38.3
|
4.7 %
|
Regular Distributions
Declared Per Unit (Trust Units & LP Class B Units)
|
$
0.270
|
$
0.250
|
7.9 %
|
$
0.797
|
$
0.751
|
6.2 %
|
FFO Payout Ratio
(3)
|
31.8 %
|
31.5 %
|
|
34.2 %
|
34.2 %
|
|
|
|
|
|
|
|
|
Stabilized Apartment
Suites
|
|
|
|
33,069
|
32,885
|
|
Un-Stabilized
Suites
|
|
|
|
653
|
558
|
|
Total Apartment
Suites
|
|
|
|
33,722
|
33,443
|
|
(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 Third Quarter 2022 Financial Results
|
|
|
|
|
|
Sep. 30,
2022
|
Dec. 31,
2021
|
Equity
|
|
|
|
|
|
|
Unitholders'
Equity
|
|
|
|
|
$
3,465,210
|
$
3,253,178
|
|
|
|
|
|
|
|
Net Asset
Value
|
|
|
|
|
|
|
Net asset value
(1)(2)
|
|
|
|
|
$
3,570,427
|
$
3,412,130
|
Net asset value per
Unit (2)
|
|
|
|
|
$
71.09
|
$
66.87
|
|
|
|
|
|
|
|
Liquidity, Debt and
Distributions
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
$
21,527
|
|
Subsequent
committed/funded financing
|
|
|
|
|
$
11,173
|
|
Unused committed
revolving credit facility
|
|
|
|
|
$
196,134
|
|
|
|
|
|
|
|
|
Total Available
Liquidity
|
|
|
|
|
$
228,834
|
|
Total mortgage
principal outstanding
|
|
|
|
|
$
3,288,744
|
$
3,088,978
|
Interest Coverage Ratio
(Rolling 4 quarters)
|
|
|
|
|
2.98
|
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
September 30, 2022 increased slightly
from the previous quarter and year end, primarily as a result of
increased market rents in some of its markets reflecting improving
rental fundamentals. During the third quarter, the Trust also
increased some of its utilities expense assumptions in its estimate
of fair value to account for the higher costs associated with the
rollover of some of its expiring fixed price contracts. The Trust's
stabilized cap rate was unchanged from the prior quarter, and the
capitalization rate ranges utilized continue to be in-line with
recently published third party quarterly cap rate reports. The
Trust's current fair value capitalization rate remains at a
positive spread to interest rates. Management will continue to
review any necessary adjustments quarterly.
SOLID OPERATIONAL RESULTS
Portfolio Highlights
for the Third Quarter of 2022
|
|
Sep-22
|
Sep-21
|
Average Occupancy
(Quarter Average) (1)
|
97.23 %
|
96.08 %
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
1,223
|
$
1,150
|
Average Market Rent
(Period Ended) (2)
|
$
1,395
|
$
1,339
|
Average Occupied Rent
(Period Ended) (3)
|
$
1,252
|
$
1,195
|
|
|
|
Loss-to-Lease (Period
Ended) ($ millions)
|
$
55.7
|
$
54.9
|
Loss-to-Lease Per Trust
Unit (Period Ended)
|
$
1.10
|
$
1.08
|
(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.
|
|
Oct-21
|
Nov-21
|
Dec-21
|
Jan-22
|
Feb-22
|
Mar-22
|
Apr-22
|
May-22
|
Jun-22
|
Jul-22
|
Aug-22
|
Sep-22
|
Oct-22
|
Nov-22
|
Stabilized
Property
Portfolio
Occupancy
|
96.1 %
|
95.7 %
|
95.7 %
|
95.6 %
|
95.5 %
|
95.4 %
|
95.8 %
|
96.6 %
|
96.9 %
|
97.0 %
|
97.1 %
|
97.6 %
|
98.1 %
|
97.9 %
|
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 communities within some of the Trust's
markets where rental market fundamentals continue to improve.
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, minimizing incentives on new leases
and adjusting market rents where fundamentals are strong.
For the third quarter of 2022, a same property rental revenue
increase of 4.9% combined with same property total rental expense
increase of 4.3%, resulted in same property NOI growth of 5.2%.
During the quarter, lower vacancy loss and incentives, along
with positive market rent adjustments and slightly lower utilities
costs, supported Boardwalk's Calgary portfolio increase in same property
NOI of 8.9%. In Edmonton, lower
vacancy loss and incentives were mostly offset by higher property
taxes and operating expenses resulting in slightly positive NOI
growth for the third quarter of 2022 compared to the third quarter
of 2021. With the increased rental demand in Edmonton during the summer and autumn leasing
season, the Trust incurred slightly higher operating expenses to
meet demand, and higher property taxes in the third quarter
compared to the same period a year ago. The Trust is well
positioned in our Edmonton market
with higher occupancy moving into the fall and early part of
winter. Saskatchewan's market
remains strong with the Trust's portfolio realizing 8.4% same
property NOI growth in the third 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, along with a one-time refund in utilities, contributed to
same property NOI growth of 8.0%, in the third quarter of 2022
compared to the third quarter of 2021. In Quebec, increasing
revenues and decreasing controllable expenses, along with the
lease-up of its L'Astre community which was transitioned from a
seniors' community, resulted in same property NOI increasing by
7.4% in the third quarter of 2022 compared to the third quarter of
2021.
Sep. 30 2022 - 3
M
|
# of
Suites
|
% Rental
Revenue Growth
|
% Total Rental
Expenses Growth
|
% Net Operating
Income Growth
|
% of
NOI
|
Edmonton
|
12,882
|
3.5 %
|
8.2 %
|
0.2 %
|
34.2 %
|
Calgary
|
5,879
|
6.9 %
|
3.2 %
|
8.9 %
|
22.2 %
|
Red Deer
|
939
|
5.5 %
|
0.9 %
|
9.2 %
|
2.4 %
|
Grande
Prairie
|
645
|
3.1 %
|
-0.6 %
|
6.2 %
|
1.4 %
|
Fort
McMurray
|
352
|
4.7 %
|
4.3 %
|
4.9 %
|
1.0 %
|
Alberta
|
20,697
|
4.7 %
|
5.8 %
|
3.7 %
|
61.2 %
|
Quebec
|
6,000
|
5.1 %
|
0.5 %
|
7.4 %
|
19.6 %
|
Saskatchewan
|
3,505
|
5.9 %
|
2.1 %
|
8.4 %
|
10.9 %
|
Ontario
|
2,867
|
4.5 %
|
-0.8 %
|
8.0 %
|
8.3 %
|
|
33,069
|
4.9 %
|
4.3 %
|
5.2 %
|
100.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Sep. 30 2022 - 9
M
|
# of Suites
|
% Rental
Revenue Growth
|
% Total Rental
Expenses Growth
|
% Net Operating
Income Growth
|
% of NOI
|
Edmonton
|
12,882
|
1.8 %
|
4.2 %
|
-0.2 %
|
33.8 %
|
Calgary
|
5,879
|
5.7 %
|
2.3 %
|
7.7 %
|
22.3 %
|
Red Deer
|
939
|
4.1 %
|
1.5 %
|
6.4 %
|
2.3 %
|
Grande
Prairie
|
645
|
-1.0 %
|
2.6 %
|
-4.1 %
|
1.4 %
|
Fort
McMurray
|
352
|
2.6 %
|
3.0 %
|
2.2 %
|
1.0 %
|
Alberta
|
20,697
|
3.1 %
|
3.6 %
|
2.8 %
|
60.8 %
|
Quebec
|
6,000
|
3.1 %
|
9.6 %
|
-0.1 %
|
19.1 %
|
Saskatchewan
|
3,505
|
5.2 %
|
-2.2 %
|
10.4 %
|
11.4 %
|
Ontario
|
2,867
|
4.8 %
|
5.0 %
|
4.7 %
|
8.7 %
|
|
33,069
|
3.5 %
|
3.9 %
|
3.2 %
|
100.0 %
|
STRONG LIQUIDITY POSITION
In the third quarter, Boardwalk renewed $86.2 million of its maturing mortgages at a
weighted average interest rate of 4.26% while extending the term of
these mortgages by an average of 7.9 years.
In the fourth quarter of 2022, the Trust anticipates
$161.5 million of mortgages payable
maturing with an average in-place interest rate of 3.19% and will
continue to renew these mortgages as they mature. Current
market 5 and 10-year CMHC financing rates are estimated to be 4.50%
and 4.30%, respectively. 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 its capital allocation strategy
of 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.
During the third quarter, and as previously announced, 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.
The Trust commenced a normal course issuer bid ("NCIB") in
November 2021 which expires on
November 21, 2022. The Trust intends
to apply to the Toronto Stock Exchange ("TSX") to renew its NCIB,
which will be subject to TSX approval. Boardwalk 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 third
quarter, the Trust re-purchased 62,500 Trust Units at a
volume-weighted average price of $44.63 for a total price of approximately
$2.8 million.
Since the inception of the current NCIB, the Trust has invested
approximately $45.7 million to
re-purchase and cancel 878,400 Trust Units at a volume-weighted
average price of $52.05.
UPDATE TO 2022 FINANCIAL GUIDANCE
Leasing activity has remained strong through the third quarter.
With a significant portion of our 2022 mortgage maturities now
completed, the Trust is providing an update to its 2022 financial
guidance as follows:
Description
|
2022 Updated
Guidance
|
2022 Previous
Guidance
|
2021 Actual (in $
thousands
except per unit)
|
Same Property NOI
Growth
|
3.0% -
5.0%
|
2.0% -
5.0%
|
0.1 %
|
Profit
|
N/A
|
N/A
|
$446,267
|
FFO(1)(2)
|
N/A
|
N/A
|
$150,207
|
AFFO(1)(2)(3)
|
N/A
|
N/A
|
$117,920
|
FFO Per
Unit(2)
|
$3.08 to
$3.15
|
$3.00 to
$3.15
|
$2.94
|
AFFO Per
Unit(2)(3)
|
$2.44 to
$2.51
|
$2.36 to
$2.51
|
$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.
|
THIRD QUARTER REGULAR MONTHLY DISTRIBUTION
ANNOUNCEMENT
The Trust has confirmed its regular monthly distributions for
the four months of November 2022,
December 2022, January 2023, and February
2023 as follows:
Month
|
Per
Unit
|
Annualized
|
Record
Date
|
Distribution
Date
|
Nov-22
|
$
0.0900
|
$
1.08
|
30-Nov-22
|
15-Dec-22
|
Dec-22
|
$
0.0900
|
$
1.08
|
30-Dec-22
|
16-Jan-23
|
Jan-23
|
$
0.0900
|
$
1.08
|
31-Jan-23
|
15-Feb-23
|
Feb-23
|
$
0.0900
|
$
1.08
|
28-Feb-23
|
15-Mar-23
|
In line with Boardwalk's distribution policy of maximum
re-investment, the Trust's payout ratio remains conservative at
31.8% of Q3 2022 FFO; and 43.5% 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 THIRD QUARTER 2022 FINANCIAL
RESULTS
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow (November 9, 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: 50233156
Topic: Boardwalk Real Estate Investment Trust, 2022 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 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 nine months ended September 30, 2022 and 2021.
FFO
Reconciliation
|
3 Months
|
3 Months
|
% Change
|
9 Months
|
9 Months
|
% Change
|
|
Sep. 30,
2022
|
Sep. 30,
2021
|
|
Sep. 30,
2022
|
Sep. 30,
2021
|
|
(In $000's, except per
Unit amounts)
|
|
|
|
|
|
|
Profit
|
$47,043
|
$235,539
|
|
$268,959
|
$315,127
|
|
Adjustments
|
|
|
|
|
|
|
Other income
(1)
|
1,106
|
-
|
|
(4,409)
|
-
|
|
Loss on sale of
assets
|
-
|
734
|
|
-
|
837
|
|
Fair value (gains)
losses
|
(7,804)
|
(198,026)
|
|
(153,943)
|
(210,596)
|
|
LP Class B Unit
distributions
|
1,209
|
1,120
|
|
3,566
|
3,360
|
|
Income tax expense
(recovery)
|
(1)
|
(51)
|
|
66
|
(78)
|
|
Depreciation
|
1,976
|
1,999
|
|
5,713
|
5,620
|
|
Principal repayments
on lease liabilities
|
(1,010)
|
(959)
|
|
(3,020)
|
(2,863)
|
|
Principal repayments
on lease receivable
|
186
|
166
|
|
542
|
485
|
|
FFO
|
$42,705
|
$40,522
|
5.4 %
|
$117,474
|
$111,892
|
5.0 %
|
FFO per Unit
|
$0.85
|
$0.79
|
7.6 %
|
$2.33
|
$2.19
|
6.4 %
|
(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
|
9 Months
|
9 Months
|
|
Sep. 30,
2022
|
Sep. 30,
2021
|
Sep. 30,
2022
|
Sep. 30,
2021
|
|
|
|
|
|
FFO
|
$42,705
|
$40,522
|
$117,474
|
$111,892
|
Maintenance Capital
Expenditures
|
8,123
|
8,364
|
24,269
|
25,196
|
AFFO
|
$34,582
|
$32,158
|
$93,205
|
$86,696
|
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.
|
Sep. 30,
2022
|
Dec. 31,
2021
|
Investment
properties
|
$
6,871,424
|
$
6,492,969
|
Equity accounted
investment
|
41,118
|
41,118
|
Cash and cash
equivalents
|
21,527
|
64,300
|
Adjusted Real Estate
Assets
|
$
6,934,069
|
$
6,598,387
|
|
|
|
Total mortgage
principal outstanding
|
$
(3,288,744)
|
$
(3,088,978)
|
Total lease liabilities
attributable to land leases
|
(74,898)
|
(76,092)
|
Construction loan
payable
|
-
|
(21,187)
|
Adjusted Real Estate
Debt
|
$
(3,363,642)
|
$
(3,186,257)
|
|
|
|
Net Asset
Value
|
$
3,570,427
|
$
3,412,130
|
Net Asset Value per
Unit
|
$
71.09
|
$
66.87
|
Reconciliation of
Unitholders' Equity to Net Asset Value
|
Sep. 30,
2022
|
Dec. 31,
2021
|
Unitholders'
Equity
|
$
3,465,210
|
$
3,253,178
|
Total Assets
|
(7,006,375)
|
(6,660,653)
|
Investment
properties
|
6,871,424
|
6,492,969
|
Equity accounted
investment
|
41,118
|
41,118
|
Cash and cash
equivalents
|
21,527
|
64,300
|
Total
Liabilities
|
3,541,165
|
3,407,475
|
Total mortgage
principal outstanding
|
(3,288,744)
|
(3,088,978)
|
Total lease liabilities
attributable to land leases (1)
|
(74,898)
|
(76,092)
|
Construction loan
payable
|
-
|
(21,187)
|
Net Asset
Value
|
$
3,570,427
|
$
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
November 2022, December 2022, January
2023, and February 2023, 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.
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SOURCE Boardwalk Real Estate Investment Trust