CALGARY,
AB, May 9, 2023 /PRNewswire/
- Boardwalk Real Estate Investment Trust (TSX:
BEI.UN)
SUMMARY HIGHLIGHTS FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2023
- STRONG FINANCIAL PERFORMANCE
-
- Profit of $221.4 million
- Funds From Operations ("FFO") of $0.79 per Unit(1)(2); an increase of
16.2% from Q1 2022
- Net Operating Income ("NOI") of $75.8
million; an increase of 16.8% from Q1 2022
- Same Property(3) Net Operating Income ("Same
Property NOI") of $74.7 million; an
increase of 13.7% from Q1 2022
- SOLID OPERATIONAL RESULTS DRIVEN BY STRONG SAME PROPERTY
RENTAL REVENUE GROWTH IN Q1 2023
-
- Sequential quarterly rental revenue growth of 1.6% from the
prior quarter
- Rental revenue growth of 8.5% from a year ago, a continued
acceleration year-over-year compared to prior quarters
- Occupancy of 98.1%; an increase of 257 basis points from last
year
- Incentives declined 32.6% and market rents increased by 6.0%
from a year ago
- Occupied rent increased to $1,292
in March of 2023, a $75 improvement
from March 2022
- 269 basis point improvement in Operating Margin
year-over-year
- CONTINUED LEASING STRENGTH
-
- Occupancy remains near-full in the latter part of the
spring
-
- May 2023 preliminary occupancy of
98.3%, an increase of 169 basis points from May 2022
- New leasing spreads accelerating to 14.8% in Alberta in April
2023, with growing market rental rates
- Renewal leasing spreads of 8.9% in Alberta in April
2023
- Despite recent strong leasing spreads, rents in Alberta relative to income levels remain some
of the most affordable in Canada
and remain well below inflation adjusted levels since 2014
- STRONG AND FLEXIBLE FINANCIAL POSITION
-
- Approximately $244.0 million of
total available liquidity at the end of the quarter
- 96% of Boardwalk's mortgages carry CMHC-insurance
- Unitholders' Equity of $3.7
billion
- Fair value capitalization rate of 4.92%
- The Trust's current fair value capitalization rate remains at a
positive spread to interest rates
- Net Asset Value increase, primarily a result of higher market
rental rates, to $75.85 per
Unit(1)(2)
- ACCRETIVE AND STRATEGIC CAPITAL ALLOCATION
-
- Strengthened portfolio in Greater Victoria Region with
immediately accretive acquisition of the The Vue, a newly
constructed 124-unit apartment community in Langford, British Columbia
- UPDATE TO 2023 FINANCIAL GUIDANCE
-
- Tightened and increased FFO per Unit(1)(2) estimate
to revised range of $3.30 to
$3.46
- Tightened and increased Same Property NOI growth range to +9.5%
to +13.0%
- DISTRIBUTION OF $1.17 PER
TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF JUNE,
JULY AND AUGUST
(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 first
quarter of 2023.
Sam Kolias; Chairman and Chief
Executive Officer of Boardwalk REIT commented:
"We are pleased to report on another solid quarter, with our
highest same property net operating income growth since 2007. In
our largest markets of Edmonton
and Calgary, we continue to see
large international and interprovincial inflows as individuals
search for economic opportunities, an attractive lifestyle and
affordable places to call home.
As of the beginning of May, same property portfolio occupancy
has reached 98.3%. Positive market rent adjustments are being
implemented in communities reflecting near full occupancy across
our portfolio. All of our regions are seeing strong demand on new
leases, while our measured approach on lease renewals continues to
promote high Resident Member satisfaction and provide coverage for
expense inflation, ensuring financial sustainability for all
stakeholders.
Higher interest rates and expense inflation continue to provide
a challenge for community providers so far in 2023. However, rental
housing fundamentals remain strong in our core markets and we are
confident that our team's Resident focused approach, commitment to
innovation and peak performance culture will deliver strong organic
growth in the quarters and years to come."
FIRST QUARTER FINANCIAL HIGHLIGHTS
$ millions, except
per Unit amounts
|
|
Highlights of the
Trust's First Quarter 2023 Financial Results
|
|
|
3 Months
Mar. 31, 2023
|
|
3 Months
Mar. 31, 2022
|
|
%
Change
|
|
Operational
Highlights
|
|
|
|
|
|
|
Rental
Revenue
|
$
|
130.5
|
|
$
|
118.3
|
|
|
10.4
|
%
|
Same Property Rental
Revenue
|
$
|
126.8
|
|
$
|
116.9
|
|
|
8.5
|
%
|
Net Operating Income
(NOI)
|
$
|
75.8
|
|
$
|
64.9
|
|
|
16.8
|
%
|
Same Property
NOI
|
$
|
74.7
|
|
$
|
65.7
|
|
|
13.7
|
%
|
Operating Margin
(1)
|
|
58.1
|
%
|
|
54.9
|
%
|
|
|
Same Property Operating
Margin
|
|
58.9
|
%
|
|
56.2
|
%
|
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
|
|
Funds From Operations
(FFO) (2)(3)
|
$
|
39.6
|
|
$
|
34.5
|
|
|
14.8
|
%
|
Adjusted Funds From
Operations (AFFO) (2)(3)
|
$
|
31.7
|
|
$
|
26.4
|
|
|
20.1
|
%
|
Profit
|
$
|
221.4
|
|
$
|
69.4
|
|
|
218.9
|
%
|
FFO per Unit
(3)
|
$
|
0.79
|
|
$
|
0.68
|
|
|
16.2
|
%
|
AFFO per Unit
(3)
|
$
|
0.63
|
|
$
|
0.52
|
|
|
21.2
|
%
|
|
|
|
|
|
|
|
Regular Distributions
Declared (Trust Units & LP Class B Units)
|
$
|
13.9
|
|
$
|
13.0
|
|
|
7.5
|
%
|
Regular Distributions
Declared Per Unit (Trust Units & LP Class B Units)
|
$
|
0.278
|
|
$
|
0.257
|
|
|
8.1
|
%
|
FFO Payout Ratio
(3)
|
|
35.2
|
%
|
|
37.6
|
%
|
|
|
Stabilized Apartment
Suites
|
|
33,069
|
|
|
32,787
|
|
|
|
Un-Stabilized
Suites
|
|
741
|
|
|
777
|
|
|
|
Total Apartment
Suites
|
|
33,810
|
|
|
33,564
|
|
|
|
(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 Q1 2023, same property operating margin increased compared to
the same period in the prior year, as the Trust's same property
rental revenue continued to accelerate throughout the quarter to
offset increases in operating costs due to higher inflation. The
Trust anticipates that as same property rental revenue remains
strong throughout 2023 and the Trust continues to optimize its
operating platform, operating margins will continue to improve as
compared to the same period in 2022.
Continued Highlights
of the Trust's First Quarter 2023 Financial Results
|
|
|
Mar. 31,
2023
|
Dec. 31,
2022
|
Equity
|
|
|
|
Unitholders'
Equity
|
|
$3,675,771
|
$3,466,998
|
|
|
|
|
Net Asset
Value
|
|
|
|
Net asset value
(1)(2)
|
|
$3,812,153
|
$3,583,904
|
Net asset value (NAV)
per Unit (2)
|
|
$75.85
|
$71.35
|
|
|
|
|
Liquidity, Debt and
Distributions
|
|
|
|
Cash and cash
equivalents
|
|
$44,145
|
|
Subsequent
committed/funded financing
|
|
$3,715
|
|
Unused committed
revolving credit facility
|
|
$196,100
|
|
Total Available
Liquidity (3)
|
|
$243,960
|
|
|
|
|
|
Total mortgage
principal outstanding
|
|
$3,333,049
|
$3,336,026
|
Interest Coverage Ratio
(Rolling 4 quarters)
|
|
2.91
|
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.
|
(3)
Please refer to the section titled "Accretive and Strategic Capital
Allocation" below for discussion on subsequent
acquisition
|
The Trust's fair value of its investment properties as at
March 31, 2023 increased from the previous quarter primarily
as a result of increased market rents in many of its markets
reflecting improving rental fundamentals. During the first quarter,
the Trust also increased some of its expense assumptions in its
estimate of fair value to account for annual increases in wages and
repairs and maintenance. The Trust's stabilized capitalization rate
("cap rate") was unchanged from the prior quarter, and the cap rate
ranges utilized continue to be in-line with recently published
third party quarterly cap rate reports. The Trust's current
fair value cap rate remains at a positive spread to interest
rates.
SOLID OPERATIONAL RESULTS
Portfolio Highlights
for the First Quarter of 2023
|
|
|
Mar-23
|
|
Mar-22
|
|
Average Occupancy
(Quarter Average) (1)
|
|
98.10
|
%
|
|
95.53
|
%
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,267
|
|
$
|
1,163
|
|
Average Market Rent
(Period Ended) (2)
|
$
|
1,444
|
|
$
|
1,362
|
|
Average Occupied Rent
(Period Ended) (3)
|
$
|
1,292
|
|
$
|
1,217
|
|
|
|
|
|
|
Loss-to-Lease (Period
Ended) ($ millions)
|
$
|
59.5
|
|
$
|
55.0
|
|
Loss-to-Lease Per Unit
(Period Ended)
|
$
|
1.18
|
|
$
|
1.09
|
|
|
|
|
|
|
(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.
|
|
Apr-22
|
May-22
|
Jun-22
|
Jul-22
|
Aug-22
|
Sep-22
|
Oct-22
|
Nov-22
|
Dec-22
|
Jan-23
|
Feb-23
|
Mar-23
|
Apr-23
|
May-23
|
Stabilized
Property
Portfolio
Occupancy
|
95.8 %
|
96.6 %
|
96.9 %
|
97.0 %
|
97.1 %
|
97.6 %
|
98.1 %
|
97.9 %
|
98.0 %
|
98.0 %
|
98.2 %
|
98.1 %
|
98.4 %
|
98.3 %
|
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 where
fundamentals are strong.
For the first quarter of 2023, a same property rental revenue
increase of 8.5% combined with same property total rental expense
increase of 1.8%, resulted in same property NOI growth of
13.7%.
During the quarter, lower vacancy loss and incentives, along
with positive market rent adjustments supported Boardwalk's
Calgary portfolio increase in same
property NOI of 16.5%. The positive revenue growth was
partially offset by increases in utilities and wages on a
year-over-year basis. In Edmonton, lower vacancy loss and
incentives were partially offset by higher property taxes and
operating expenses resulting in positive NOI growth of 16.8% for
the first quarter of 2023 compared to the first quarter of 2022.
The Trust is well positioned in our Edmonton market with occupancy above 97.5%
with accelerating revenue growth heading into the end of the spring
season.
Saskatchewan's market remains
strong with the Trust's portfolio realizing 8.7% same property NOI
growth in the first quarter of 2023 versus the same period last
year, as a result of strong same property revenue growth.
In Ontario, the mark-to-market
opportunity on turnover contributed to same property NOI growth of
4.7%, in the first quarter of 2023 compared to the first quarter of
2022. In Quebec, increasing revenues along with the lease-up
of its L'Astre community which was transitioned from a seniors'
community, resulted in same property NOI increasing by 11.1% in the
first quarter of 2023 compared to the first quarter of 2022.
As we look forward to 2023, and as shown in our updated guidance
further in this release, Boardwalk is well positioned with its
strong revenue trajectory and expense management to deliver strong
NOI growth throughout the remainder of the year.
Mar. 31 2023 - 3
M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
8.8
|
%
|
|
0.6
|
%
|
|
16.8
|
%
|
|
34.5
|
%
|
Calgary
|
|
5,879
|
|
|
11.4
|
%
|
|
3.0
|
%
|
|
16.5
|
%
|
|
23.1
|
%
|
Other
Alberta
|
|
1,936
|
|
|
8.0
|
%
|
|
(1.3)
|
%
|
|
18.4
|
%
|
|
4.5
|
%
|
Alberta
|
|
20,697
|
|
|
9.6
|
%
|
|
1.0
|
%
|
|
16.8
|
%
|
|
62.1
|
%
|
Quebec
|
|
6,000
|
|
|
6.2
|
%
|
|
(0.9)
|
%
|
|
11.1
|
%
|
|
18.2
|
%
|
Saskatchewan
|
|
3,505
|
|
|
8.3
|
%
|
|
7.5
|
%
|
|
8.7
|
%
|
|
11.3
|
%
|
Ontario
|
|
2,867
|
|
|
5.4
|
%
|
|
6.4
|
%
|
|
4.7
|
%
|
|
8.4
|
%
|
|
|
33,069
|
|
|
8.5
|
%
|
|
1.8
|
%
|
|
13.7
|
%
|
|
100.0
|
%
|
STRONG LIQUIDITY POSITION
In the first quarter, Boardwalk renewed $49.5 million of its maturing mortgages at a
weighted average interest rate of 4.37% while extending the term of
these mortgages by an average of 3.6 years.
Throughout the remainder of 2023, the Trust anticipates
$388.7 million of mortgages payable
maturing with an average in-place interest rate of 2.94% and will
continue to renew these mortgages as they mature. Current
market 5 and 10-year CMHC financing rates are estimated to be 3.90%
and 3.75%, respectively. To date, the Trust has renewed or
forward-locked the interest rate on $197.6
million or 45% of its maturing mortgages in 2023 at an
average interest rate of 4.44% and an average term of 4.3 years. Of
the $197.6 million, $106.1 million are conventional mortgages,
representing most of the Trust's non-CMHC mortgages within its
portfolio. 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.
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 Net Asset Value ("NAV") per Unit of the Trust over the
intermediate term.
The Trust is pleased to announce the acquisition of a 124-unit
newly built community in Langford, British Columbia for a purchase price of
$60 million. The new community, The
Vue, is located in one of British
Columbia's fastest growing municipalities and was
approximately 94% leased up on closing. The acquisition closed on
April 25, 2023 at a forward cap rate
of approximately 5.1% and was funded with a combination of existing
liquidity and a $46.5 million
CMHC-insured mortgage with an interest rate of 3.89% and 7 year
term. The opportunistic acquisition provides unitholders with
immediate accretion to FFO per Unit and NAV per Unit, while
strengthening The Trust's operational presence in the Greater
Victoria Region. The Vue is a 12-storey tower, mass timber
community, that has large suites with condo quality finishes and
excellent views. Located in the heart of Langford and in close
proximity to the University of
Victoria's West Shore Campus, residents will enjoy
convenient access to both Victoria
and the year-round recreational activities in the surrounding
area.
During the fourth quarter of 2022, the Trust received approval
from the Toronto Stock Exchange to renew its normal course issuer
bid ("NCIB") for an additional one-year period, ending on
November 21, 2023. During Q1 2023,
the Trust did not purchase any Units under the NCIB. Since the
inception of the NCIB in late 2021, the Trust has invested
approximately $45.7 million to
purchase for cancellation 878,400 Trust Units at a volume-weighted
average price of $52.05 per Trust
Unit.
Boardwalk continues to view its own portfolio as offering
un-paralleled value and future growth within the multi-family
sector and will continue to evaluate capital recycling
opportunities as a source for potential future Unit re-purchases,
taking into account the magnitude of the existing discount in the
trading price of its units at any given time relative to NAV per
Unit.
TIGHTENING AND UPWARD REVISION TO 2023 FINANCIAL
GUIDANCE
Boardwalk's first quarter operating performance was at the
high-end of its original forecast range for the period. This
allows the Trust to provide an update to its 2023 guidance that
takes into account its strong performance to date, while also
incorporating the positive accretion from its acquisition of The
Vue subsequent to the end of the quarter. As a result, the
Trust is updating its 2023 Same Property NOI growth and FFO per
Unit guidance as follows:
Description
|
2023 Revised
Guidance
|
2023 Original
Guidance
|
2022 Actual (in $
thousands
except per unit)
|
Same Property NOI
Growth
|
+9.5% to
+13.0%
|
+8.5% to
+12.5%
|
+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)
|
$3.30 to
$3.46
|
$3.25 to
$3.45
|
$3.13
|
AFFO Per Unit
(2)(3)
|
$2.64 to
$2.80
|
$2.59 to
$2.79
|
$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.
|
FIRST QUARTER REGULAR MONTHLY DISTRIBUTION
ANNOUNCEMENT
The Trust has confirmed its monthly cash distribution for the
months of June 2023, July 2023 and August
2023 as follows:
Month
|
Per
Unit
|
|
Annualized
|
|
Record
Date
|
Distribution
Date
|
June 2023
|
$
|
0.0975
|
|
$
|
1.17
|
|
30-Jun-23
|
17-Jul-23
|
July 2023
|
$
|
0.0975
|
|
$
|
1.17
|
|
31-Jul-23
|
15-Aug-23
|
August 2023
|
$
|
0.0975
|
|
$
|
1.17
|
|
31-Aug-23
|
15-Sep-23
|
In line with Boardwalk's distribution policy of maximum
re-investment, the Trust's payout ratio remains conservative at
35.2% of Q1 2023 FFO; and 33.6% 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.sedar.com.
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 FIRST QUARTER 2023 FINANCIAL
RESULTS
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow (May 10, 2023) 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: To join the conference call without
operator assistance, you may register and enter your phone number
at https://emportal.ink/42ZkGgm 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: 82822944
Topic: Boardwalk Real Estate Investment Trust, 2023 First
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 First 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 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 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 months
ended March 31, 2023 and 2022.
FFO
Reconciliation
|
3 Months
|
|
3 Months
|
|
% Change
|
|
|
Mar. 31,
2023
|
|
Mar. 31,
2022
|
|
|
|
(In $000's, except per
Unit amounts)
|
|
|
|
|
|
|
Profit
|
$
|
221,389
|
|
$
|
69,428
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Other income
(1)
|
|
(818)
|
|
|
(1,321)
|
|
|
|
Fair value
gains
|
|
(183,362)
|
|
|
(35,850)
|
|
|
|
LP Class B Unit
distributions
|
|
1,242
|
|
|
1,149
|
|
|
|
Deferred tax
expense
|
|
57
|
|
|
93
|
|
|
|
Depreciation
|
|
1,800
|
|
|
1,826
|
|
|
|
Principal repayments on
lease liabilities
|
|
(906)
|
|
|
(1,013)
|
|
|
|
Principal repayments on
lease receivable
|
|
193
|
|
|
176
|
|
|
|
FFO
|
$
|
39,595
|
|
$
|
34,488
|
|
|
14.8
|
%
|
FFO per Unit
|
$
|
0.79
|
|
$
|
0.68
|
|
|
16.2
|
%
|
(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
|
|
|
Mar. 31,
2023
|
|
Mar. 31,
2022
|
|
FFO
|
$
|
39,595
|
|
$
|
34,488
|
|
Maintenance Capital
Expenditures
|
|
7,849
|
|
|
8,049
|
|
AFFO
|
$
|
31,746
|
|
$
|
26,439
|
|
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.
|
Mar. 31,
2023
|
|
Dec. 31,
2022
|
|
Investment
properties
|
$
|
7,134,589
|
|
$
|
6,900,745
|
|
Equity accounted
investment
|
|
40,556
|
|
|
40,871
|
|
Cash and cash
equivalents
|
|
44,145
|
|
|
52,816
|
|
Adjusted Real Estate
Assets
|
$
|
7,219,290
|
|
$
|
6,994,432
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
$
|
(3,333,049)
|
|
$
|
(3,336,026)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(74,088)
|
|
|
(74,502)
|
|
Adjusted Real Estate
Debt
|
$
|
(3,407,137)
|
|
$
|
(3,410,528)
|
|
|
|
|
|
|
Net Asset
Value
|
$
|
3,812,153
|
|
$
|
3,583,904
|
|
Net Asset Value per
Unit
|
$
|
75.85
|
|
$
|
71.35
|
|
Reconciliation of
Unitholders' Equity to Net Asset Value
|
Mar. 31,
2023
|
|
Dec. 31,
2022
|
|
Unitholders'
Equity
|
$
|
3,675,771
|
|
$
|
3,466,998
|
|
Total Assets
|
|
(7,293,750)
|
|
|
(7,067,275)
|
|
Investment
properties
|
|
7,134,589
|
|
|
6,900,745
|
|
Equity accounted
investment
|
|
40,556
|
|
|
40,871
|
|
Cash and cash
equivalents
|
|
44,145
|
|
|
52,816
|
|
Total
Liabilities
|
|
3,617,979
|
|
|
3,600,277
|
|
Total mortgage
principal outstanding
|
|
(3,333,049)
|
|
|
(3,336,026)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(74,088)
|
|
|
(74,502)
|
|
Net Asset Value
(1)(2)
|
$
|
3,812,153
|
|
$
|
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
June 2023, July 2023, and August
2023, 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.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