CALGARY,
AB, July 30, 2024 /PRNewswire/ - Boardwalk
Real Estate Investment Trust (TSX: BEI.UN)
SUMMARY HIGHLIGHTS FOR THE THREE AND SIX-MONTH PERIODS ENDED
JUNE 30, 2024
- STRONG FINANCIAL PERFORMANCE
FOR THE 3 MONTH
PERIOD ENDED JUNE 30, 2024
-
- Funds From Operations ("FFO") of $1.04 per Unit(1)(2); an increase of
16.9% from Q2 2023
- Profit of $159.2 million
- Net Operating Income ("NOI") of $95.6
million; an increase of 15.7% from Q2 2023
- Same Property(3) Net Operating Income ("Same
Property NOI") of $94.8 million; an
increase of 14.2% from Q2 2023
- Operating Margin of 64.1%; 270 basis point (bps) improvement
from Q2 2023
- FOR THE 6 MONTH PERIOD ENDED JUNE 30,
2024
- Funds From Operations ("FFO") of $1.99 per Unit(1)(2); an increase of
18.5% from the same period a year ago
- Profit of $466.9 million
- Net Operating Income ("NOI") of $183.1
million; an increase of 15.6% from the same period a year
ago
- Same Property(3) Net Operating Income ("Same
Property NOI") of $182.0 million; an
increase of 13.9% from the same period a year ago
- Operating Margin of 62.2%; 250 basis point (bps) improvement
from the same period a year ago
- SAME PROPERTY RENTAL REVENUE GROWTH IN Q2 2024
- Q2 2024 same property sequential quarterly rental revenue
growth of 2.3% from the prior quarter
- Occupied rent of $1,460 in June
of 2024, a $72 improvement from
December 2023
- Q2 2024 same property rental revenue growth of 9.5% from a year
ago
- Occupancy of 98.7% in Q2 2024; an increase of 36 basis points
from Q2 2023
- LEASING STRENGTH CONTINUES IN JULY
- July 2024 preliminary occupancy
of 98.6%, an increase of 30 bps from July
2023
- New leasing spreads of 13.5% in Alberta in June
2024
- Renewal leasing spreads of 9.3% in Alberta in June
2024
- Rents in Alberta remain some
of the most affordable amongst major cities in Canada
- STRONG BALANCE SHEET, MAKING PROGRESS ON ORGANIC
DE-LEVERAGING
- Approximately $315.8 million of
total available liquidity at the end of the quarter
- 96% of Boardwalk's mortgages carry CMHC-insurance
- Unitholders' Equity of $4.8
billion
- Fair value capitalization rate of 5.09%, an increase of 4 bps
from Q4 2023
- Net Asset Value increase to $92.39 per Unit(1)(2), primarily a
result of higher market rental rates in the Trust's non-price
controlled markets
- Debt to EBITDA(1) of 10.75x, compared to 11.02x for
the year ended December 31, 2023
- Debt to Total Assets(1) of 40.8%, compared to 43.2%
for the year-ended December 31,
2023
- UPDATE TO 2024 FINANCIAL GUIDANCE
- Revised FFO range of $4.11 to
$4.23 per Unit(1)(2)
- Revised Same Property NOI growth range of +12.5% to +14.5%
- DISTRIBUTION OF $1.44 PER
TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF
SEPTEMBER, OCTOBER, AND NOVEMBER
2024
|
(1) Please refer to the section
titled "Presentation of Non-GAAP Measures" in this news release for
more information.
|
|
(2)
Boardwalk REIT's units (the "Trust Units") trade on the Toronto
Stock Exchange ("TSX") under the trading symbol 'BEI.UN'.
Additionally, the Trust has 4,475,000 special voting units issued
to holders of "Class B Units" of Boardwalk REIT Limited Partnership
("LP Class B Units" and, together with the Trust Units, the
"Units"), each of which also has a special voting unit in the
REIT.
|
|
(3) Same property figures exclude
un-stabilized properties (properties which have been owned for less
than 24 months) and sold assets.
|
Boardwalk Real Estate Investment Trust ("Boardwalk", the "REIT"
or the "Trust") today announced its financial results for the
second quarter of 2024.
Sam Kolias; Chairman and Chief
Executive Officer of Boardwalk REIT commented:
"We are pleased to report on another very strong quarter with
significant growth in Net Operating Income and Funds from
Operations per Unit. Our FFO per Unit of $1.04 during the second quarter represents an
improvement of 16.9% from the prior year. We continue to prioritize
growing our cash flows that can be redeployed and compounded within
our value add capital program and accretive external opportunities,
where appropriate. Our Operating Margin improved once again during
the quarter as our Resident Member focused approach to sustainable
rent adjustments and ongoing commitment to cost improvement
initiatives has delivered solid NOI and FFO per Unit growth. We are
encouraged with the progress we have made toward bringing our
leverage down over the last several years, providing the Trust with
increased flexibility going forward.
As of the beginning of July, same property portfolio occupancy
was at approximately 98.6%. We continue to implement positive
market rent adjustments in many of our communities. Rental market
fundamentals continue to be strong across most of the Trust's
markets, as quality affordable housing remains in high demand. Our
largest markets of Edmonton and
Calgary continue to see large net
inflows from both international and interprovincial migration as
new Residents pursue exceptional relative affordability, lifestyle
and economic opportunities. Population growth continues to
significantly outpace new construction starts in Canada, while construction economics and
labour shortages have presented challenges for new development. Our
partnership and collaborative efforts with all levels of government
and other stakeholders continues as we work toward encouraging and
implementing proven public policy to help rebalance demand and
supply over the longer term.
We remain focused on delivering a win-win outcome for our
Resident Members and our stakeholders through increased retention,
reduced turnover and costs, increased margins and sustained
financial performance. Our ongoing strategic self-moderation of
leasing spreads on both new leases and lease renewals continues to
be a key differentiator for our Resident Members, preserving
essential affordability while allowing us to re-invest in our
communities and to provide a gradual, less volatile, long-term
revenue growth profile for our Unitholders.
Our outlook for the remainder of the year continues to be
positive. We are confident that the strong housing fundamentals
that we are seeing, combined with our Resident-focus and quality of
our communities will translate to strong ongoing performance in
2024. We remain well-positioned to continue de-leveraging our
balance sheet organically, while utilizing our enhanced liquidity
to capitalize on additional growth opportunities when
appropriate."
SECOND QUARTER FINANCIAL HIGHLIGHTS
|
$ millions, except
per Unit amounts
|
|
Highlights of the
Trust's Second Quarter 2024 Financial Results
|
|
3 Months Jun. 30,
2024
|
3 Months Jun. 30,
2023
|
%
Change
|
6 Months Jun. 30,
2024
|
6 Months Jun. 30,
2023
|
%
Change
|
|
Operational
Highlights
|
|
|
|
|
|
|
|
Rental
Revenue
|
$149.1
|
$134.6
|
10.8 %
|
$294.3
|
$265.5
|
10.9 %
|
|
Same Property Rental
Revenue
|
$145.5
|
$132.9
|
9.5 %
|
$287.6
|
$262.8
|
9.4 %
|
|
Net Operating Income
("NOI")
|
$95.6
|
$82.6
|
15.7 %
|
$183.1
|
$158.4
|
15.6 %
|
|
Same Property
NOI
|
$94.8
|
$83.0
|
14.2 %
|
$182.0
|
$159.8
|
13.9 %
|
|
Operating Margin
(1)
|
64.1 %
|
61.4 %
|
|
62.2 %
|
59.7 %
|
|
|
Same Property Operating
Margin
|
65.2 %
|
62.5 %
|
|
63.3 %
|
60.8 %
|
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
|
|
|
Funds From Operations
("FFO") (2)(3)
|
$56.1
|
$44.6
|
25.8 %
|
$107.1
|
$84.2
|
27.2 %
|
|
Adjusted Funds From
Operations ("AFFO") (2)(3)
|
$47.5
|
$36.7
|
29.3 %
|
$89.9
|
$68.5
|
31.3 %
|
|
Profit
|
$159.2
|
$232.2
|
-31.4 %
|
$466.9
|
$453.6
|
2.9 %
|
|
FFO per Unit
(3)
|
$1.04
|
$0.89
|
16.9 %
|
$1.99
|
$1.68
|
18.5 %
|
|
AFFO per Unit
(3)
|
$0.88
|
$0.73
|
20.5 %
|
$1.67
|
$1.36
|
22.8 %
|
|
|
|
|
|
|
|
|
Regular Distributions
Declared (Trust Units & LP Class B Units)
|
$19.4
|
$14.7
|
32.1 %
|
$36.3
|
$28.6
|
27.1 %
|
|
Regular Distributions
Declared Per Unit (Trust Units & LP Class B Units)
|
$0.360
|
$0.293
|
22.9 %
|
$0.675
|
$0.570
|
18.4 %
|
|
FFO Payout Ratio
(3)
|
34.6 %
|
32.9 %
|
|
33.9 %
|
34.0 %
|
|
|
Same Property Apartment
Suites
|
|
|
|
33,564
|
33,264
|
|
|
Non-Same Property
Apartment Suites (4)
|
|
|
|
829
|
582
|
|
|
Total Apartment
Suites
|
|
|
|
34,393
|
33,846
|
|
|
(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.
|
|
(4)
|
Includes 183 suites
related to the Trust's joint venture in Brampton, Ontario which is
accounted for as an equity accounted investment
|
In Q2 2024, same property operating margin increased compared to
the same period in the prior year, as the Trust's same property
rental revenue growth remained strong. The Trust anticipates
further improvement in its operating margin throughout the
remainder of 2024 as a result of continued strong revenue growth
and execution of various cost containment initiatives.
|
Continued Highlights
of the Trust's Second Quarter 2024 Financial Results
|
|
|
|
|
|
Jun. 30,
2024
|
Dec. 31,
2023
|
|
Equity
|
|
|
|
|
|
|
|
Unitholders'
equity
|
|
|
|
|
$4,754,200
|
$4,320,072
|
|
Net Asset
Value
|
|
|
|
|
|
|
|
Net asset value
(1)(2)
|
|
|
|
|
$4,988,300
|
$4,553,515
|
|
Net asset value (NAV)
per Unit (2)
|
|
|
|
|
$92.39
|
$84.41
|
|
Liquidity, Debt and
Distributions
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
$119,960
|
|
|
Unused committed
revolving credit facility(3)
|
|
|
|
|
$195,800
|
|
|
Total Available
Liquidity
|
|
|
|
|
$315,760
|
|
|
Total mortgage
principal outstanding
|
|
|
|
|
$3,408,130
|
$3,446,801
|
|
Debt to
EBITDA(1)(2)
|
|
|
|
|
10.75
|
11.02
|
|
Debt to Total
Assets(1)(2)
|
|
|
|
|
40.8 %
|
43.2 %
|
|
Interest Coverage Ratio
(Rolling 4 quarters)
|
|
|
|
|
2.86
|
2.83
|
|
(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)
|
Subsequent to June 30,
2024, the Trust added an additional $50 million demand facility to
the credit facility agreement.
|
The Trust's fair value of its investment properties as at
June 30, 2024 increased from year
end, primarily attributable to an increase in market rents driven
by strong market conditions. The Trust's stabilized capitalization
rate ("cap rate") of 5.09% for Q2 2024 remained the same as the
prior quarter. The cap rate ranges utilized continue to be in line
with recently published third party quarterly cap rate reports.
SOLID OPERATIONAL RESULTS
|
Portfolio Highlights
for the Second Quarter of 2024
|
|
|
Jun-24
|
|
Jun-23
|
|
|
Average Occupancy
(Quarter Average) (1)
|
|
98.68
|
%
|
|
98.32
|
%
|
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,439
|
|
$
|
1,305
|
|
|
Average Market Rent
(Period Ended) (2)
|
$
|
1,637
|
|
$
|
1,495
|
|
|
Average Occupied Rent
(Period Ended) (3)
|
$
|
1,460
|
|
$
|
1,326
|
|
|
|
|
|
|
|
Mark-to-Market Revenue
Gain (Period Ended) ($ millions)
|
$
|
70.6
|
|
$
|
66.6
|
|
|
Mark-to-Market Revenue
Gain Per Unit (Period Ended)
|
$
|
1.31
|
|
$
|
1.33
|
|
|
|
|
|
|
|
(1)
|
Average occupancy is
adjusted to be on a same property basis.
|
|
(2)
|
Market rent is a
component of rental revenue 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 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-23
|
Aug-23
|
Sep-23
|
Oct-23
|
Nov-23
|
Dec-23
|
Jan-24
|
Feb-24
|
Mar-24
|
Apr-24
|
May-24
|
Jun-24
|
Jul-24
|
|
Same Property
Portfolio
Occupancy
|
98.3 %
|
98.5 %
|
98.6 %
|
98.9 %
|
98.9 %
|
99.0 %
|
99.0 %
|
98.8 %
|
98.8 %
|
98.8 %
|
98.6 %
|
98.6 %
|
98.6 %
|
The Trust improved occupancy compared to the same period a year
ago by focusing on retention and by leveraging its
vertically-integrated operating platform to limit time to complete
unit turnovers. Positive market rent adjustments were
implemented in many communities where rental market fundamentals
are strong. Turnover rates continued to decline as compared
to the previous year across the Trust's portfolio. Average
occupied rent increased sequentially, and when compared to the same
period a year ago, as the Trust focuses on reducing or eliminating
incentives on lease renewals, leasing at market rents for new
leases and adjusting market rents in many of our communities.
For the second quarter of 2024, same property rental revenue
increased 9.5% while same property total rental expense increased
by 1.6%, resulting in same property NOI growth of 14.2% in
comparison to the same quarter prior year. Same property rental
expenses increased primarily due to higher wages and salaries from
inflation, higher utilities from increased rates, and higher
property taxes.
During the second quarter of 2024, lower incentives along with
positive market rent adjustments supported Boardwalk's Calgary portfolio increase in same property
NOI of 17.4% in comparison to the same quarter prior year. The
positive revenue growth was partially offset by an increase in
wages and salaries.
In Edmonton, NOI growth was
16.4% for the second quarter of 2024 compared to the same period in
the prior year. The overall growth was driven by lower vacancy loss
and incentives, and higher market rents. The overall positive
increase was partially offset by higher wages and salaries,
utilities, building maintenance costs and property taxes.
Saskatchewan's market continues
to be strong with the Trust's portfolio in the region realizing
19.0% same property NOI growth in the second quarter of 2024 versus
the same period last year, as a result of strong same property
revenue growth due to lower incentives as well as market rent
increases, partially offset by higher wages and salaries and
property taxes.
In Ontario, NOI growth was 4.6%
in the second quarter of 2024 compared to the second quarter of
2023. The mark-to-market opportunity on turnover contributed to
same property rental revenue growth of 5.5%, which was partially
offset by increases in wages and salaries, building repairs and
maintenance costs, utilities, and property taxes.
In Quebec, NOI growth was 6.9%
compared to the same quarter in the prior year. The overall
growth was driven by increases in occupied rents along with higher
occupancy rates, as well as lower insurance premiums relative to
the previous year.
In British Columbia, a same
property rental revenue increase of 4.4%, due largely to higher
market rents, and a decrease in total rental expenses of 0.5%,
resulted in same property NOI growth of 5.7% in the second quarter
of 2024 compared to the second quarter of 2023.
As shown in our updated guidance further in this release,
Boardwalk remains well positioned for continued revenue growth and
NOI growth in 2024.
|
Same Property Jun. 30
2024 - 3 M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
|
Edmonton
|
|
12,882
|
|
|
10.6
|
%
|
|
2.4
|
%
|
|
16.4
|
%
|
|
35.0
|
%
|
|
Calgary
|
|
6,108
|
|
|
11.3
|
%
|
|
(0.8)
|
%
|
|
17.4
|
%
|
|
23.8
|
%
|
|
Other
Alberta
|
|
1,936
|
|
|
10.8
|
%
|
|
0.9
|
%
|
|
17.5
|
%
|
|
5.0
|
%
|
|
Alberta
|
|
20,926
|
|
|
10.8
|
%
|
|
1.3
|
%
|
|
16.9
|
%
|
|
63.9
|
%
|
|
Quebec
|
|
6,000
|
|
|
6.0
|
%
|
|
4.2
|
%
|
|
6.9
|
%
|
|
16.5
|
%
|
|
Saskatchewan
|
|
3,505
|
|
|
10.3
|
%
|
|
(4.2)
|
%
|
|
19.0
|
%
|
|
11.1
|
%
|
|
Ontario
|
|
3,019
|
|
|
5.5
|
%
|
|
6.9
|
%
|
|
4.6
|
%
|
|
7.9
|
%
|
|
British
Columbia
|
|
114
|
|
|
4.4
|
%
|
|
(0.5)
|
%
|
|
5.7
|
%
|
|
0.6
|
%
|
|
|
33,564
|
|
|
9.5
|
%
|
|
1.6
|
%
|
|
14.2
|
%
|
|
100.0
|
%
|
|
Same Property Jun. 30
2024 - 6 M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
|
Edmonton
|
|
12,882
|
|
|
10.7
|
%
|
|
3.2
|
%
|
|
16.5
|
%
|
|
34.8
|
%
|
|
Calgary
|
|
6,108
|
|
|
11.5
|
%
|
|
3.7
|
%
|
|
15.6
|
%
|
|
23.9
|
%
|
|
Other
Alberta
|
|
1,936
|
|
|
10.8
|
%
|
|
(2.2)
|
%
|
|
21.1
|
%
|
|
5.0
|
%
|
|
Alberta
|
|
20,926
|
|
|
11.0
|
%
|
|
2.9
|
%
|
|
16.5
|
%
|
|
63.6
|
%
|
|
Quebec
|
|
6,000
|
|
|
5.8
|
%
|
|
1.9
|
%
|
|
7.9
|
%
|
|
16.8
|
%
|
|
Saskatchewan
|
|
3,505
|
|
|
9.7
|
%
|
|
(0.9)
|
%
|
|
16.3
|
%
|
|
11.0
|
%
|
|
Ontario
|
|
3,019
|
|
|
5.3
|
%
|
|
6.4
|
%
|
|
4.6
|
%
|
|
8.0
|
%
|
|
British
Columbia
|
|
114
|
|
|
4.7
|
%
|
|
(7.1)
|
%
|
|
7.9
|
%
|
|
0.6
|
%
|
|
|
33,564
|
|
|
9.4
|
%
|
|
2.6
|
%
|
|
13.9
|
%
|
|
100.0
|
%
|
STRONG LIQUIDITY POSITION
In the second quarter of 2024, Boardwalk renewed $183.1 million of its maturing mortgages at a
weighted average interest rate of 4.54% while extending the term of
these mortgages by an average of 7.0 years.
For the remainder of 2024, the Trust anticipates $218.3 million of mortgages payable maturing with
an average in-place interest rate of 3.02% and will continue to
renew these mortgages as they mature. Current market 5 and
10-year CMHC financing rates are estimated to be approximately
3.85% and 4.15%, respectively. To date, the Trust has renewed or
forward-locked the interest rate on $244.6
million or 56.3% of its maturing mortgages in 2024 at an
average interest rate of 4.48% and an average term of 6.5 years.
While interest rates have increased significantly since the
beginning of June 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.
SUPPLEMENTING ORGANIC GROWTH
As previously disclosed, on June 24,
2024, the Trust closed on the purchase of a fully-occupied,
newly built, 63-suite townhome community in Chestermere, Alberta, just east of
Calgary, for $26.3 million, as well as a 6-unit walk-up
community with future re-development opportunity in Calgary, Alberta for $1.9 million. Both properties were purchased
using cash on hand.
The Trust also announced that it has a purchase agreement in
place for a newly built wood frame community in central
Calgary, Alberta for $93.0 million. The transaction is anticipated to
close in Q1 2025.
Further details on both transactions are available in the
Trust's July operational update press release:
www.bwalk.com/media/36319/pr-07-05-2024-q2-timing-final.pdf
TIGHTENING AND UPWARD REVISION TO 2024 FINANCIAL
GUIDANCE
Boardwalk's current outlook is for a continued growth trend
across its portfolio as multi-family fundamentals remain strong
with outsized revenue and NOI growth in its non-price controlled
markets. The Trust's consistent revenue and disciplined operating
cost control performance in the first half of 2024 provides for an
increase to the bottom end and tightening of its guidance range for
the year as follows:
|
Q2 2024 Revised
Guidance
|
Q1 2024 Revised
Guidance
|
2023
Actual
|
|
Same Property NOI
Growth
|
12.5% to
14.5%
|
11.0% to
14.0%
|
13.7 %
|
|
Profit
|
N/A
|
N/A
|
$666,099
|
|
FFO
(1)(2)
|
N/A
|
N/A
|
$181,353
|
|
AFFO
(1)(2)(3)
|
N/A
|
N/A
|
$149,098
|
|
FFO Per Unit
(2)
|
$4.11 to
$4.23
|
$4.00 to
$4.20
|
$3.60
|
|
AFFO Per Unit
(2)(3)
|
$3.48 to
$3.60
|
$3.37 to
$3.57
|
$2.96
|
|
(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 $1,003/suite/year in 2024 and $953/suite/year
in 2023.
|
The reader is cautioned that this information is forward-looking
and actual results may vary from those forecasted. The Trust
reviews the assumptions used to derive its forecast quarterly, and
based on this review, may adjust its outlook accordingly.
SECOND QUARTER REGULAR MONTHLY DISTRIBUTION
ANNOUNCEMENT
The Trust has confirmed its monthly cash distribution for the
months of September, October, and November
2024 as follows:
|
Month
|
Per
Unit
|
|
Annualized
|
|
Record
Date
|
Distribution
Date
|
|
September
2024
|
$
|
0.1200
|
|
$
|
1.44
|
|
30-Sep-24
|
15-Oct-24
|
|
October 2024
|
$
|
0.1200
|
|
$
|
1.44
|
|
31-Oct-24
|
15-Nov-24
|
|
November
2024
|
$
|
0.1200
|
|
$
|
1.44
|
|
29-Nov-24
|
16-Dec-24
|
In line with Boardwalk's distribution policy of maximum
re-investment, the Trust's payout ratio remains conservative at
34.6% of Q2 2024 FFO; and 32.4% of the last 12 months
FFO.
Boardwalk's regular monthly distribution provides a stable and
attractive yield for the Trust's Unitholders.
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 fifth annual ESG report in April. The ESG
report is available digitally on the Trust's website.
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 SECOND QUARTER 2024 FINANCIAL
RESULTS
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow (July 31, 2024) at 1:00 pm
Eastern Time (11:00 am Mountain
Time). Senior management will speak to the period's results
and provide an update. Presentation materials will be made
available on Boardwalk's investor website at
www.bwalk.com/investors prior to the call.
Teleconference: To join the conference call without
operator assistance, you may register and enter your phone number
at https://emportal.ink/3XFEsNQ 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: 12521459
Topic: Boardwalk Real Estate Investment Trust, 2024 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 34,000
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 and six
months ended June 30, 2024 and
2023.
|
FFO
Reconciliation
|
3 Months
|
3 Months
|
% Change
|
6 Months
|
6 Months
|
% Change
|
|
Jun. 30,
2024
|
Jun. 30,
2023
|
|
Jun. 30,
2024
|
Jun. 30,
2023
|
|
|
(In $000's, except per
Unit amounts)
|
|
|
|
|
|
|
|
Profit
|
$159,154
|
$232,163
|
|
$466,875
|
$453,552
|
|
|
Adjustments
|
|
|
|
|
|
|
|
Other income
(1)
|
-
|
-
|
|
-
|
(818)
|
|
|
Fair value gains,
net
|
(105,878)
|
(189,981)
|
|
(365,083)
|
(373,343)
|
|
|
LP Class B Unit
distributions
|
1,611
|
1,309
|
|
3,021
|
2,551
|
|
|
Deferred tax
(recovery) expense
|
(1)
|
(15)
|
|
67
|
42
|
|
|
Depreciation
|
2,002
|
1,893
|
|
3,867
|
3,693
|
|
|
Principal repayments
on lease liabilities
|
(803)
|
(902)
|
|
(1,627)
|
(1,808)
|
|
|
Principal repayments
on lease receivable
|
-
|
128
|
|
-
|
321
|
|
|
FFO
|
$56,085
|
$44,595
|
25.8 %
|
$107,120
|
$84,190
|
27.2 %
|
|
FFO per Unit
|
$1.04
|
$0.89
|
16.9 %
|
$1.99
|
$1.68
|
18.5 %
|
|
(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
|
|
6 Months
|
|
6 Months
|
|
|
Jun. 30,
2024
|
|
Jun. 30,
2023
|
|
Jun. 30,
2024
|
|
Jun. 30,
2023
|
|
|
FFO
|
$
|
56,085
|
|
$
|
44,595
|
|
$
|
107,120
|
|
$
|
84,190
|
|
|
Maintenance Capital
Expenditures
|
|
8,612
|
|
|
7,878
|
|
|
17,219
|
|
|
15,726
|
|
|
AFFO
|
$
|
47,473
|
|
$
|
36,717
|
|
$
|
89,901
|
|
$
|
68,464
|
|
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,
loan receivable, 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.
Adjusted Real Estate Debt, net of Cash
Adjusted Real Estate Debt, net of Cash, is most directly
comparable to the IFRS measure of total mortgage principal
outstanding. Adjusted Real Estate Debt, net of Cash is
comprised of the sum of total mortgage principal outstanding, total
lease liabilities attributable to land leases, and construction
loan payable, then reduced by cash and cash equivalents. It
is useful in summarizing the Trust's debt which is attributable to
its real estate assets and is used in the calculation of Debt to
EBITDA.
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,
2024
|
|
Dec. 31,
2023
|
|
|
Investment
properties
|
$
|
8,253,454
|
|
$
|
7,702,214
|
|
|
Equity accounted
investment
|
|
38,860
|
|
|
39,758
|
|
|
Loan
receivable
|
|
57,654
|
|
|
-
|
|
|
Cash and cash
equivalents
|
|
119,960
|
|
|
331,204
|
|
|
Adjusted Real Estate
Assets
|
$
|
8,469,928
|
|
$
|
8,073,176
|
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
$
|
(3,408,130)
|
|
$
|
(3,446,801)
|
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(72,020)
|
|
|
(72,860)
|
|
|
Construction loan
payable
|
|
(1,478)
|
|
|
-
|
|
|
Adjusted Real Estate
Debt
|
$
|
(3,481,628)
|
|
$
|
(3,519,661)
|
|
|
|
|
|
|
|
Net Asset
Value
|
$
|
4,988,300
|
|
$
|
4,553,515
|
|
|
Net Asset Value per
Unit
|
$
|
92.39
|
|
$
|
84.41
|
|
|
(1)
|
Total lease liability
attributable to land leases is a component of lease liabilities as
calculated in accordance with IFRS
|
|
Reconciliation of
Unitholders' Equity to Net Asset Value
|
Jun. 30,
2024
|
|
Dec. 31,
2023
|
|
|
Unitholders'
equity
|
$
|
4,754,200
|
|
$
|
4,320,072
|
|
|
Total Assets
|
|
(8,539,798)
|
|
|
(8,141,876)
|
|
|
Investment
properties
|
|
8,253,454
|
|
|
7,702,214
|
|
|
Equity accounted
investment
|
|
38,860
|
|
|
39,758
|
|
|
Loan
receivable
|
|
57,654
|
|
|
-
|
|
|
Cash and cash
equivalents
|
|
119,960
|
|
|
331,204
|
|
|
Total
Liabilities
|
|
3,785,598
|
|
|
3,821,804
|
|
|
Total mortgage
principal outstanding
|
|
(3,408,130)
|
|
|
(3,446,801)
|
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(72,020)
|
|
|
(72,860)
|
|
|
Construction loan
payable
|
|
(1,478)
|
|
|
-
|
|
|
Net Asset Value
(1)
|
$
|
4,988,300
|
|
$
|
4,553,515
|
|
|
(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.
Debt to EBITDA
Debt to EBITDA is calculated by dividing Adjusted Real Estate
Debt, net of Cash by consolidated EBITDA. The Trust uses Debt
to EBITDA to understand its capacity to pay off its debt.
Debt to Total Assets
Debt to Total Assets is calculated by dividing Adjusted Real
Estate Debt by Total Assets. The Trust uses Debt to Total
Assets to determine the proportion of assets which are financed by
debt.
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 2024, Boardwalk's ability to
accelerate organic growth in 2024, expected distributions for
September 2024, October 2024, and November
2024, expectations regarding mortgages payable maturing and
its intention to renew these mortgages, Boardwalk's commitment to
its capital allocation strategy, 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 2024. 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, 2023 under the headings "Risks and
Risk Management" and "Challenges and Risks", respectively, which
are available at www.sedarplus.ca. Forward-looking statements and
FOFI contained in this news release are made as of the date of this
news release and are based on Boardwalk's current estimates,
expectations and projections, which Boardwalk believes are
reasonable as of the current date. You should not place undue
importance on forward-looking statements or FOFI and should not
rely upon forward-looking statements or FOFI as of any other
date. Except as required by applicable law, Boardwalk
undertakes no obligation to publicly update or revise any
forward-looking statement or FOFI, whether a result of new
information, future events, or otherwise.
View original
content:https://www.prnewswire.com/news-releases/boardwalk-reit-reports-strong-results-for-q2-2024-302210338.html
SOURCE Boardwalk Real Estate Investment Trust
