CALGARY,
AB, Feb. 22, 2024 /PRNewswire/ - Boardwalk
Real Estate Investment Trust (TSX: BEI.UN)
SUMMARY HIGHLIGHTS FOR THE THREE AND TWELVE-MONTH PERIODS
ENDED DECEMBER 31, 2023
STRONG FINANCIAL PERFORMANCE
FOR THE 3 MONTH PERIOD ENDED DECEMBER 31, 2023
- Funds From Operations ("FFO") of $0.96 per Unit(1)(2); an increase of
20.0% from Q4 2022
- Profit of $173.1 million
- Net Operating Income ("NOI") of $87.9
million; an increase of 17.6% from Q4 2022
- Same Property(3) Net Operating Income ("Same
Property NOI") of $86.6 million; an
increase of 16.8% from Q4 2022
- Operating Margin of 62.0%; 410 basis point (bps) improvement
from Q4 2022
FOR THE 12 MONTH PERIOD ENDED DECEMBER 31, 2023
- FFO per Unit(1)(2) of $3.60 ; an increase of 15.0% from the same period
a year ago
- Profit of $666.1 million
- NOI of $333.0 million; an
increase of 15.4% from the same period a year ago
- Operating Margin of 61.0%; 280 bps improvement from the same
period a year ago
- Same Property NOI of $329.5
million; an increase of 13.7% from the same period a year
ago
SAME PROPERTY RENTAL REVENUE GROWTH IN Q4 2023
- Q4 2023 same property sequential quarterly rental revenue
growth of 2.5% from the prior quarter
- Occupied rent of $1,388 in
December of 2023, a $31 improvement
from September 2023
- Q4 2023 same property rental revenue growth of 9.2% from a year
ago
- Occupancy of 98.9% in Q4 2023; an increase of 92 basis points
from Q4 2022
LEASING STRENGTH CONTINUES INTO 2024
- February 2024 preliminary
occupancy of 98.8%, an increase of 60 bps from February 2023
- New leasing spreads of 12.6% in Alberta in January
2024
- Renewal leasing spreads of 9.5% in Alberta in January
2024
- Rents in Alberta remain some
of the most affordable in Canada,
at well below 30% of median renter household income
STRONG AND FLEXIBLE FINANCIAL POSITION
- Approximately $527.0 million of
total available liquidity at the end of the quarter
- 96% of Boardwalk's mortgages carry CMHC-insurance
- Unitholders' Equity of $4.3
billion
- Fair value capitalization rate of 5.05%, an increase of 13 bps
from Q4 2022
- Net Asset Value increase to $84.41 per Unit(1)(2), primarily a
result of higher market rental rates
SUPPLEMENTING ORGANIC GROWTH
- Completed bought-deal equity offering in December 2023 for net proceeds of $240.0 million
- Completed previously announced acquisition of The Circle during
Q1 2024, a new 295-suite apartment community in Calgary, Alberta at a stabilized cap rate of
5.75% for a purchase price of $77.8
million
- Repaid the Trust's portion of its revolving construction
facility loan at 45 Railroad in the amount of $57.2 million subsequent to year-end
- The Trust remains well positioned to capitalize on future
growth opportunities within its pipeline while remaining proceeds
are earning in excess of 5.0%
INTRODUCTION OF 2024 FINANCIAL GUIDANCE
- FFO range of $3.93 to
$4.18 per Unit(1)(2)
- Same Property NOI growth range of +10.0% to +14.0%
23.1% INCREASE TO REGULAR MONTHLY DISTRIBUTION TO
$1.44 PER TRUST UNIT ON AN ANNUALIZED
BASIS CONFIRMED FOR THE MONTHS OF MARCH, APRIL, AND MAY
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
fourth quarter of 2023.
Sam Kolias; Chairman and Chief
Executive Officer of Boardwalk REIT commented:
"We are pleased to report on a very strong quarter and year with
significant growth in Profit, Net Operating Income and Funds from
Operations per Unit. Our FFO per Unit of $3.60 represents a new high, positioning us well
to continue to invest in our communities, enhancing value for both
our Resident Members and Unitholders. We continue to take strides
in improving our Operating Margin, as our Resident Member focused
approach to sustainable rent adjustments, paired with strong
execution on our cost containment initiatives has translated into
outsized NOI and FFO per Unit growth.
As of the beginning of February, same property portfolio
occupancy has reached 98.8%, including 98.4% in Edmonton. Demand fundamentals remain strong
across all of the Trust's markets. 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. We anticipate this trend to continue in 2024. New
construction has not kept pace with strong population growth in
markets across Canada, which will
take several years to return to balance. We continue to implement
positive market rent adjustments in the vast majority of our
communities. Lease incentives have largely been eliminated on new
leases while being significantly reduced on lease renewal. We
remain focused on ensuring a win-win outcome with our Resident
Members and for our stakeholders through increased retention,
reduced turnover and costs, increased Associate efficiency, and
increased margins and financial performance. Our ongoing Resident
Member centric, 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 providing a steady, less volatile,
long-term revenue growth profile for our Unitholders.
Our outlook remains bright for the year ahead. We are confident
that the strong housing fundamentals that we are seeing, combined
with the quality of our communities and Resident-focus will
translate to strong organic growth and performance in 2024. With
increased liquidity following our recent equity offering, the Trust
is also well-positioned to capitalize on additional external growth
opportunities during the year."
FOURTH QUARTER FINANCIAL HIGHLIGHTS
$ millions, except
per Unit amounts
|
Highlights of the
Trust's Fourth Quarter 2023 Financial Results
|
|
3 Months
Dec. 31,
2023
|
3 Months
Dec. 31,
2022
|
%
Change
|
12 Months
Dec. 31,
2023
|
12 Months
Dec. 31,
2022
|
%
Change
|
Operational
Highlights
|
|
|
|
|
|
|
Rental
Revenue
|
$141.9
|
$129.2
|
9.9 %
|
$545.7
|
$496.4
|
9.9 %
|
Same Property Rental
Revenue
|
$137.9
|
$126.3
|
9.2 %
|
$532.0
|
$489.0
|
8.8 %
|
Net Operating Income
("NOI")
|
$87.9
|
$74.8
|
17.6 %
|
$333.0
|
$288.7
|
15.4 %
|
Same Property
NOI
|
$86.6
|
$74.2
|
16.8 %
|
$329.5
|
$289.8
|
13.7 %
|
Operating Margin
(1)
|
62.0 %
|
57.9 %
|
|
61.0 %
|
58.2 %
|
|
Same Property Operating
Margin
|
62.8 %
|
58.7 %
|
|
61.9 %
|
59.3 %
|
|
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
|
|
Funds From Operations
("FFO") (2)(3)
|
$48.9
|
$40.0
|
22.3 %
|
$181.4
|
$157.4
|
15.2 %
|
Adjusted Funds From
Operations ("AFFO") (2)(3)
|
$40.2
|
$33.0
|
22.0 %
|
$149.1
|
$126.2
|
18.2 %
|
Profit
|
$173.1
|
$14.1
|
1124.7 %
|
$666.1
|
$283.1
|
135.3 %
|
FFO per Unit
(3)
|
$0.96
|
$0.80
|
20.0 %
|
$3.60
|
$3.13
|
15.0 %
|
AFFO per Unit
(3)
|
$0.79
|
$0.66
|
19.7 %
|
$2.96
|
$2.51
|
17.9 %
|
|
|
|
|
|
|
|
Regular Distributions
Declared (Trust Units & LP Class B Units)
|
$15.0
|
$13.6
|
11.0 %
|
$58.3
|
$53.7
|
8.7 %
|
Regular Distributions
Declared Per Unit (Trust Units & LP Class B Units)
|
$0.293
|
$0.270
|
8.3 %
|
$1.155
|
$1.067
|
8.3 %
|
FFO Payout Ratio
(3)
|
30.8 %
|
33.9 %
|
|
32.2 %
|
34.1 %
|
|
Same Property Apartment
Suites
|
|
|
|
33,264
|
33,069
|
|
Non-Same Property
Apartment Suites (4)
|
|
|
|
765
|
741
|
|
Total Apartment
Suites
|
|
|
|
34,029
|
33,810
|
|
(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 Q4 2023, same property operating margin increased compared to
the same period in the prior year, as the Trust's same property
rental revenue growth remained strong and operating expenses were
lower primarily as a result of milder weather. The Trust
anticipates continued improvement in its operating margin as same
property rental revenue growth remains strong throughout 2024 and
the Trust continues to execute on its platform optimization
initiatives.
Continued Highlights
of the Trust's Fourth Quarter 2023 Financial Results
|
|
|
|
|
|
Dec. 31,
2023
|
Dec. 31,
2022
|
Equity
|
|
|
|
|
|
|
Unitholders'
Equity
|
|
|
|
|
$4,320,072
|
$3,466,998
|
|
|
|
|
|
|
|
Net Asset
Value
|
|
|
|
|
|
|
Net asset value
(1)(2)
|
|
|
|
|
$4,553,515
|
$3,583,904
|
Net asset value (NAV)
per Unit (2)
|
|
|
|
|
$84.41
|
$71.35
|
|
|
|
|
|
|
|
Liquidity, Debt and
Distributions
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
$331,204
|
|
Subsequent
committed/funded financing
|
|
|
|
|
$-
|
|
Unused committed
revolving credit facility
|
|
|
|
|
$195,800
|
|
Total Available
Liquidity
|
|
|
|
|
$527,004
|
|
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
|
|
|
|
$3,446,801
|
$3,336,026
|
Interest Coverage Ratio
(Rolling 4 quarters)
|
|
|
|
|
2.83
|
2.90
|
(1)
|
This is a non-GAAP
financial measure.
|
(2)
|
Please refer to the
section titled "Presentation of Non-GAAP Measures" in this news
release for more information.
|
The Trust's fair value of its investment properties as at
December 31, 2023 increased from the
previous quarter and year end, primarily attributable to an
increase in market rents driven by strong market conditions, low
occupancy across the portfolio and a reduction in lease incentives.
The Trust's stabilized capitalization rate ("cap rate") remained at
5.05% for Q4 2023 compared to 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 Fourth Quarter of 2023
|
|
|
Dec-23
|
|
Dec-22
|
|
Average Occupancy
(Quarter Average) (1)
|
|
98.91
|
%
|
|
97.99
|
%
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,375
|
|
$
|
1,246
|
|
Average Market Rent
(Period Ended) (2)
|
$
|
1,561
|
|
$
|
1,409
|
|
Average Occupied Rent
(Period Ended) (3)
|
$
|
1,388
|
|
$
|
1,271
|
|
|
|
|
|
|
Mark-to-Market Revenue
Gain (Period Ended) ($ millions)
|
$
|
68.6
|
|
$
|
54.0
|
|
Mark-to-Market Revenue
Gain Per Unit (Period Ended)
|
$
|
1.36
|
|
$
|
1.07
|
|
(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.
|
|
Jan-23
|
Feb-23
|
Mar-23
|
Apr-23
|
May-23
|
Jun-23
|
Jul-23
|
Aug-23
|
Sep-23
|
Oct-23
|
Nov-23
|
Dec-23
|
Jan-24
|
Feb-24
|
Same Property
Portfolio
Occupancy
|
98.0 %
|
98.2 %
|
98.1 %
|
98.4 %
|
98.3 %
|
98.3 %
|
98.3 %
|
98.5 %
|
98.6 %
|
98.9 %
|
98.8 %
|
99.0 %
|
99.0 %
|
98.8 %
|
The Trust improved occupancy compared to the same period a year
ago by focusing on retention. Market rents were adjusted 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 fourth quarter of 2023, same property rental revenue
increased 9.2% while same property total rental expense decreased
by 1.6%, resulting in same property NOI growth of 16.8% in
comparison to the same quarter prior year. Same property rental
expenses decreased primarily due to the milder weather conditions
during the quarter and lower insurance premiums upon renewal in
July 2023.
During the fourth quarter of 2023, lower vacancy loss and
incentives, along with positive market rent adjustments supported
Boardwalk's Calgary portfolio
increase in same property NOI of 20.8% in comparison to the same
quarter prior year. The positive revenue growth was
complimented by a decrease in total rental expenses largely
attributable to lower utilities.
In Edmonton, NOI growth was
22.8% for the fourth quarter of 2023 compared to the same period in
the prior year. The overall growth was driven by lower vacancy loss
and incentives, higher market rents, as well as lower utilities and
wages and salaries resulting from the Trust's platform
optimization. The overall positive increase was partially offset by
higher building repairs and maintenance costs and higher property
taxes.
Saskatchewan's market remains
strong with the Trust's portfolio realizing 15.0% same property NOI
growth in the fourth quarter of 2023 versus the same period last
year, as a result of strong same property revenue growth due to
lower vacancy loss and incentives, as well as market rent increases
and a decrease in total rental expenses primarily due to lower
wages and salaries and insurance premiums.
In Ontario, NOI growth was 4.2%
in the fourth quarter of 2023 compared to the fourth quarter of
2022. 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, increases to
in-place occupied rents along with higher occupancy rates resulted
in a same property revenue increase of 5.7% in comparison to the
same quarter prior year. Revenue increases were partially offset by
increased building repairs and maintenance costs and property taxes
which resulted in same property NOI growth of 6.3%.
In British Columbia, a same
property rental revenue increase of 4.7% was partially offset by
total rental expense growth of 13.4%, due largely to higher water
and sewer costs and increased cleaning costs which were not
incurred in the same quarter of the prior year. Same property NOI
growth was 3.0% in the fourth quarter of 2023 compared to the
fourth quarter of 2022.
As shown in our guidance further in this release, Boardwalk
remains well positioned for continued revenue growth and to deliver
strong NOI growth in 2024.
Same Property Dec. 31
2023 - 3 M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
10.2
|
%
|
|
(3.9)
|
%
|
|
22.8
|
%
|
|
35.1
|
%
|
Calgary
|
|
5,960
|
|
|
12.0
|
%
|
|
(3.2)
|
%
|
|
20.8
|
%
|
|
23.3
|
%
|
Other
Alberta
|
|
1,936
|
|
|
10.3
|
%
|
|
(7.6)
|
%
|
|
26.2
|
%
|
|
5.0
|
%
|
Alberta
|
|
20,778
|
|
|
10.8
|
%
|
|
(4.2)
|
%
|
|
22.3
|
%
|
|
63.4
|
%
|
Quebec
|
|
6,000
|
|
|
5.7
|
%
|
|
4.7
|
%
|
|
6.3
|
%
|
|
17.0
|
%
|
Saskatchewan
|
|
3,505
|
|
|
8.6
|
%
|
|
(1.8)
|
%
|
|
15.0
|
%
|
|
11.3
|
%
|
Ontario
|
|
2,867
|
|
|
5.5
|
%
|
|
7.6
|
%
|
|
4.2
|
%
|
|
7.6
|
%
|
British
Columbia
|
|
114
|
|
|
4.7
|
%
|
|
13.4
|
%
|
|
3.0
|
%
|
|
0.7
|
%
|
|
|
33,264
|
|
|
9.2
|
%
|
|
(1.6)
|
%
|
|
16.8
|
%
|
|
100.0
|
%
|
Same Property Dec. 31
2023 - 12 M
|
# of Suites
|
|
% Rental
Revenue Growth
|
|
% Total Rental
Expenses Growth
|
|
% Net Operating
Income Growth
|
|
% of NOI
|
|
Edmonton
|
|
12,882
|
|
|
9.4
|
%
|
|
(1.0)
|
%
|
|
18.5
|
%
|
|
34.8
|
%
|
Calgary
|
|
5,960
|
|
|
11.8
|
%
|
|
3.6
|
%
|
|
16.4
|
%
|
|
23.0
|
%
|
Other
Alberta
|
|
1,936
|
|
|
9.1
|
%
|
|
(3.4)
|
%
|
|
20.1
|
%
|
|
4.9
|
%
|
Alberta
|
|
20,778
|
|
|
10.2
|
%
|
|
0.1
|
%
|
|
17.8
|
%
|
|
62.7
|
%
|
Quebec
|
|
6,000
|
|
|
5.5
|
%
|
|
3.1
|
%
|
|
6.8
|
%
|
|
17.7
|
%
|
Saskatchewan
|
|
3,505
|
|
|
8.6
|
%
|
|
4.9
|
%
|
|
10.9
|
%
|
|
11.0
|
%
|
Ontario
|
|
2,867
|
|
|
5.4
|
%
|
|
6.8
|
%
|
|
4.6
|
%
|
|
7.9
|
%
|
British
Columbia
|
|
114
|
|
|
4.6
|
%
|
|
12.8
|
%
|
|
2.7
|
%
|
|
0.7
|
%
|
|
|
33,264
|
|
|
8.8
|
%
|
|
1.6
|
%
|
|
13.7
|
%
|
|
100.0
|
%
|
STRONG LIQUIDITY POSITION
In the fourth quarter of 2023, Boardwalk renewed $50.5 million of its maturing mortgages at a
weighted average interest rate of 4.58% while extending the term of
these mortgages by an average of 6.1 years.
In 2024, the Trust anticipates $439.6
million of mortgages payable maturing with an average
in-place interest rate of 2.92% and will continue to renew these
mortgages as they mature. Current market 5 and 10-year CMHC
financing rates are estimated to be approximately 4.45%. To date,
the Trust has renewed or forward-locked the interest rate on
$26.9 million or 6.1% of its maturing
mortgages in 2024 at an average interest rate of 4.36% and an
average term of 4.8 years. While interest rates have increased
significantly since the beginning of March
2022, the Trust remains positioned with a laddered
maturity schedule within its mortgage program, a disciplined
capital allocation program and continued use of CMHC funding, which
decreases the renewal risk on its existing mortgages.
SUPPLEMENTING ORGANIC GROWTH
On December 22, 2023, the Trust
closed its previously announced bought-deal equity offering whereby
the Trust issued 3,662,750 Trust Units at a price of $68.50 per Trust Unit for total gross proceeds of
$250.9 million. Transaction costs for
the offering totaled $10.9 million
resulting in net proceeds to the Trust of $240.0 million. Post year-end, the Trust has used
a portion of the proceeds to finance the $77.8 million purchase price for The Circle, a
295-suite newly built construction apartment complex in
Calgary, Alberta, and to repay its
portion of a floating rate construction loan facility on its joint
venture in Brampton, Ontario in
the amount of $57.2 million. With
increased liquidity, the Trust remains well-positioned to fund
future acquisition and development opportunities in its existing
pipeline.
2024 FINANCIAL GUIDANCE
As is customary with its fourth quarter disclosure, The Trust is
introducing its 2024 outlook and financial guidance.
The Trust's current outlook is for a strong growth trend across
its portfolio as multi-family fundamentals remain strong with
outsized revenue and NOI growth in its non-price controlled
markets.
Overall, the Trust is providing its 2024 financial guidance as
follows:
|
2024
Guidance
|
2023
Actual
|
|
|
|
|
|
Same Property NOI
Growth
|
10.0% to
14.0%
|
13.7 %
|
|
Profit
|
N/A
|
666,099
|
|
FFO
(1)(2)
|
N/A
|
181,353
|
|
AFFO
(1)(2)(3)
|
N/A
|
149,098
|
|
FFO Per Unit
(2)
|
$3.93 to
$4.18
|
$3.60
|
|
AFFO Per Unit
(2)(3)
|
$3.30 to
$3.55
|
$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.
FOURTH QUARTER REGULAR MONTHLY DISTRIBUTION
ANNOUNCEMENT
Consistent with our FFO growth in 2023 and, as forecasted in
2024, The Trust has confirmed an increase to its monthly cash
distribution for the months of March, April, and May 2024 to $0.1200
monthly ($1.44 on an annualized
basis), an increase of 23.1%:
Month
|
Per
Unit
|
Annualized
|
Record
Date
|
Distribution
Date
|
March 2024
|
$
|
0.1200
|
$
|
1.44
|
29-Mar-24
|
15-Apr-24
|
April 2024
|
$
|
0.1200
|
$
|
1.44
|
30-Apr-24
|
15-May-24
|
May 2024
|
$
|
0.1200
|
$
|
1.44
|
31-May-24
|
17-Jun-24
|
In line with Boardwalk's distribution policy of maximum
re-investment, the Trust's payout ratio remains conservative at
30.8% of Q4 2023 FFO; and 32.2% 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. The Trust looks
forward to publishing its fifth annual ESG report in April. The
Trust's latest ESG report, along with the Annual report, is
available digitally on Boardwalk'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 FOURTH QUARTER 2023 FINANCIAL
RESULTS
Boardwalk invites you to participate in the
teleconference that will be held to discuss these results tomorrow
(February 23, 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/3S3K8h4 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: 48767747
Topic: Boardwalk Real Estate Investment Trust, 2023 Fourth
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 Fourth 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
livesâ„¢. 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 twelve months ended December 31, 2023 and 2022.
FFO
Reconciliation
|
3 Months
|
3 Months
|
% Change
|
12 Months
|
12 Months
|
% Change
|
|
Dec. 31,
2023
|
Dec. 31,
2022
|
|
Dec. 31,
2023
|
Dec. 31,
2022
|
|
(In $000's, except per
Unit amounts)
|
|
|
|
|
|
|
Profit
|
$173,130
|
$14,137
|
|
$666,099
|
$283,096
|
|
Adjustments
|
|
|
|
|
|
|
Other income
(1)
|
(68)
|
(189)
|
|
(886)
|
(2,788)
|
|
Loss on sale of
asset
|
928
|
-
|
|
928
|
-
|
|
Fair value (gains)
losses
|
(127,849)
|
23,497
|
|
(494,877)
|
(132,256)
|
|
LP Class B Unit
distributions
|
1,309
|
1,208
|
|
5,169
|
4,774
|
|
Deferred tax
expense
|
6
|
10
|
|
75
|
76
|
|
Depreciation
|
2,244
|
2,069
|
|
7,921
|
7,782
|
|
Principal repayments
on lease liabilities
|
(803)
|
(945)
|
|
(3,397)
|
(3,965)
|
|
Principal repayments
on lease receivable
|
-
|
186
|
|
321
|
725
|
|
FFO
|
$48,897
|
$39,973
|
22.3 %
|
$181,353
|
$157,444
|
15.2 %
|
FFO per Unit
|
$0.96
|
$0.80
|
20.0 %
|
$3.60
|
$3.13
|
15.0 %
|
(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
|
|
12 Months
|
|
12 Months
|
|
|
Dec. 31,
2023
|
|
Dec. 31,
2022
|
|
Dec. 31,
2023
|
|
Dec. 31,
2022
|
|
FFO
|
$
|
48,897
|
|
$
|
39,973
|
|
$
|
181,353
|
|
$
|
157,444
|
|
Maintenance Capital
Expenditures
|
|
8,651
|
|
|
6,994
|
|
|
32,255
|
|
|
31,263
|
|
AFFO
|
$
|
40,246
|
|
$
|
32,979
|
|
$
|
149,098
|
|
$
|
126,181
|
|
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.
|
Dec. 31,
2023
|
|
Dec. 31,
2022
|
|
Investment
properties
|
$
|
7,702,214
|
|
$
|
6,900,745
|
|
Equity accounted
investment
|
|
39,758
|
|
|
40,871
|
|
Cash and cash
equivalents
|
|
331,204
|
|
|
52,816
|
|
Adjusted Real Estate
Assets
|
$
|
8,073,176
|
|
$
|
6,994,432
|
|
|
|
|
|
|
Total mortgage
principal outstanding
|
$
|
(3,446,801)
|
|
$
|
(3,336,026)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(72,860)
|
|
|
(74,502)
|
|
Adjusted Real Estate
Debt
|
$
|
(3,519,661)
|
|
$
|
(3,410,528)
|
|
|
|
|
|
|
Net Asset
Value
|
$
|
4,553,515
|
|
$
|
3,583,904
|
|
Net Asset Value per
Unit
|
$
|
84.41
|
|
$
|
71.35
|
|
Reconciliation of
Unitholders' Equity to Net Asset Value
|
Dec. 31,
2023
|
|
Dec. 31,
2022
|
|
Unitholders'
Equity
|
$
|
4,320,072
|
|
$
|
3,466,998
|
|
Total Assets
|
|
(8,141,876)
|
|
|
(7,067,275)
|
|
Investment
properties
|
|
7,702,214
|
|
|
6,900,745
|
|
Equity accounted
investment
|
|
39,758
|
|
|
40,871
|
|
Cash and cash
equivalents
|
|
331,204
|
|
|
52,816
|
|
Total
Liabilities
|
|
3,821,804
|
|
|
3,600,277
|
|
Total mortgage
principal outstanding
|
|
(3,446,801)
|
|
|
(3,336,026)
|
|
Total lease liabilities
attributable to land leases (1)
|
|
(72,860)
|
|
|
(74,502)
|
|
Net Asset Value
(1)(2)
|
$
|
4,553,515
|
|
$
|
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 2024, Boardwalk's
ability to accelerate organic growth in 2024, expected
distributions for March 2024,
April 2024, and May 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.
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SOURCE Boardwalk Real Estate Investment Trust