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14.11.2017 23:47:00

Boardwalk REIT announces third quarter financial results, a long-term strategic plan focused on NAV growth, and change to monthly distribution beginning in 2018


  • Q3, 2017 FFO per unit of $0.53
  • Long-term strategic plan – NAV growth and diversification
  • 1) Portfolio growth of 10,000 to 15,000 apartment units in strategic locations to provide geographic diversification

    2) Continue to be long on Alberta

    • Near-term focus on the recapture of incentive and vacancy loss from a cyclical bottom
    • Long-term focus on brand diversification and suite renewal to expand our resident base and achieve superior organic growth

           3) Maintain financial strength and flexibility

  • Revised distribution for 2018
    • Re-allocate approximately $64 million of distribution towards development, acquisition, strategic partnerships, and renovation program which will accelerate the FFO recovery as well as provide the lowest cost of capital to fund growth
    • Revised distribution policy aligns with strategic plan focus of NAV growth
  • Operational tailwinds
    • Renovation headwinds in the first 9M of 2017 have become tailwinds as they are completed and rented
    • Invested $47 million to renovate nearly 2,000 suites
    • Renovations to date, are averaging an 8% return on rent, and have created $72 million of NAV
    • Sequential month to month increases in occupied rent from Q2
    • Incentive and Vacancy Loss total of $51 million or $1.00 of FFO per Trust Unit in the first nine months of 2017, including $8 million for suites not available to rent during renovation
    • Occupancy decreased in Q3 as units previously under renovation were introduced; however occupancy has increased in October with increased rentals
  • Strong Financial Position
    • Current liquidity of $350 million
    • Net Asset Value, including cash, of $62.71 per Trust Unit or $170,000 per door
    • Current trading value of $40.00 per Trust Unit equates to $141,000 per door
  • Reiterates 2017 financial guidance

CALGARY, Nov. 14, 2017 /PRNewswire/ - Boardwalk Real Estate Investment Trust ("BEI.UN" - TSX)

Boardwalk Real Estate Investment Trust ("Boardwalk", the "REIT" or the "Trust") today announced its financial results for the third quarter of 2017, and provided details of its next chapter of growth.

"The last two years of a very difficult Western Canadian economy and the introduction of a significant number of new luxury apartment rentals have taught us many lessons.  The importance of brand diversification to increase and improve our product and service offering for our existing and new Resident Members is one of those lessons. Our initial small-scale experimentation of newly designed and renovated suites was met with strong positive reception from our new and existing Resident Members.  This success led to a great ambition to deliver even more of our newly designed and exciting product. As we increased the scale of our renovation program in the first half of this year, we learned that, by controlling the following four variables of our renovation program: 1) Efficiency (renovate a scalable amount to minimize transitional vacancy loss and improve costs), 2) Supply (reduce and limit supply of renovated product to maximize demand), 3) Location (pick great locations), and 4) Affordability (continue to maximize the investment of our standard improvements to provide affordability), we can maximize our returns for all of our stakeholders." said Sam Kolias; Chairman and Chief Executive Officer of Boardwalk REIT. 

"As renovations for 2017 are completed, and rented, our occupancy is rising and occupied rents are increasing.  Going forward, an improving economy and a more moderate and balanced approach to our renovation program will continue to help us drive our financial results higher into our new year.  Our stable results in Ontario and Quebec also emphasize the importance of geographic diversification.  The importance of allocating capital to maximize our investment in new and existing Communities has also been a significant source of historic growth, and clearly supports our decision to re-allocate a significant portion of our Funds from Operation to re-invest in our future growth."

"These core lessons, combined with all of our previous lessons over our 33-year history, have allowed us to formulate an improved strategy and long-term plan.  We have heard directly from many of our diverse stakeholder groups over the last year and have used this invaluable feedback, combined with the above noted lessons to help formulate our improved strategy for re-investment and growth.  Our most important lesson remains that our biggest asset is our people.  Our Resident Members, our Associates, our Trades, our Financial Partners, and the greater Communities of which we all live and strive to continue to improve."

Boardwalk long-term strategic plan

Boardwalk's strategic plan has three key pillars, and are each a foundation for the Trust's plan to focus on Net Asset Value ("NAV") creation and growth:

  • Portfolio expansion in strategic locations, providing NAV growth and diversification
  • Re-capture near term vacancy loss and incentives; while positioning brand diversification to expand resident base for long-term superior organic growth
  • Maintain a solid financial foundation
  • Strategic locations: Long on Alberta coupled with portfolio diversification and expansion

    The Trust's core markets in Alberta and Saskatchewan have historically outperformed the broader rental market and, despite the cyclical decline we have experienced in these markets over the past 24 months, the Trust believes that these markets will provide cyclically high returns as the rental market continues to re-balance.  The Trust will continue to undertake a counter-cyclical approach to its portfolio by utilizing the recent cyclical downturn to high-grade its portfolio through its suite renovation program and potential new developments.

    The Trust, however, acknowledges that no individual market is immune to cyclicality and, as part of its long-term goal, intends to couple its Alberta and Saskatchewan portfolio with the acquisition and development of assets in high-growth markets outside of Alberta and Saskatchewan to allow the Trust to provide its brand of housing into new markets, which will result in Net Operating Income ("NOI") growth and capital appreciation for its stakeholders.

    Boardwalk's strategic goal is to have a portfolio that is approximately 50% in the high growth markets of Alberta and Saskatchewan ("ABSK") and 50% in other high growth and undersupplied markets including, but not limited to, the Greater Toronto Area, Vancouver, Ottawa, Montreal, Quebec City, Winnipeg, and Halifax.

    To accomplish this, the Trust intends to strategically partner, acquire and/or develop 10,000 to 15,000 apartment units in these high growth, undersupplied markets, while also divesting some of its non-core assets in ABSK.  The Trust's portfolio growth will primarily focus on value creation in major Canadian markets.

    Brand diversification:

    The spectrum of rental housing in Canada has expanded over the last few years with rental demand seen across the price spectrum from affordability to high-end luxury.  As a result, the ability to offer a more diverse product offering will allow Boardwalk to attract a larger demographic to the Boardwalk brand.

    Boardwalk Living – Affordable Value

    Boardwalk Living features classic suites for our Resident's who appreciate flexibility, reliability, and value that comes with a quality home.

    Boardwalk Communities – Enhanced Value

    Boardwalk Communities feature modernized suites and choice amenities for those who value flexibility with all the comforts that come with the perfect place to call home.

    Boardwalk Lifestyle – Affordable Luxury

    Boardwalk Lifestyle features luxury living with modern amenities, designer suites, and a contemporary style for those who value life experiences and prefer the freedom to enjoy them. 

    The majority of the Trust's portfolio will remain in its Living category, as affordability remains the largest demographic in the rental market in Canada.  Boardwalk's offering in this category will feature high value for an affordable price.

    Boardwalk Communities reaches a demographic that the Trust believes may be underserved by the broader market, and will feature an enhanced level of value for an increasing number of renter's who are seeking greater features and amenities without sacrificing flexibility.

    Boardwalk Lifestyle provides luxurious living, rich in features, location and amenities at an affordable price.  The Trust believes that this segment of the market remains the smallest amongst the pricing spectrum, however does present increased margins for the Trust. 

    Brand diversification will provide the Trust with a product and service offering that caters to the needs of a broader range of Residents, while also allowing the Trust the ability to high-grade its portfolio organically. 

    Mr. Kolias concluded: "We are excited with our strategic vision, and what will be the next chapter of growth for Boardwalk. We believe that the Trust's core ABSK portfolio will be well-positioned to outperform in their respective markets through various cycles of growth, and can be balanced with diversification in other geographic locations through the Trust's growth in other major Canadian Cities. The growth we are envisioning is similar to the growth we have experienced over the last 33 years. Our proven track-record of delivering NAV creation through Boardwalk's brand of quality and service has provided organic growth and further enhanced value creation with our accretive acquisitions and developments. We look forward to providing progress reports each quarter as we execute on these goals as we continue to provide the best quality homes for our Residents."

    Q3 regular monthly distribution and revised distribution policy

    Boardwalk's Board of Trustees reviews the Trust's allocation of capital, including its monthly regular distributions, on a quarterly basis. Despite the improving fundamentals in the Trust's core markets of Alberta and Saskatchewan, the Trust's Management and Board of Trustees are confident that the Trust's capital allocation opportunities, which include the current suite renovation/re-positioning program along with its growth opportunities consistent with Boardwalk's long-term strategic plan to focus on NAV growth and creation, provides an opportunity for the Trust to utilize its cashflow, to maximize value for all Unitholders. The use of cashflow towards these initiatives will accelerate the Trust's FFO recovery in the near term, while providing an additional source of capital to fund its ambitious and exciting growth.

    Beginning in 2018, the Trust's distribution policy is consistent with the Trust's long-term focus of NAV growth and will comprise of an annual distribution, paid monthly, at least equal to the taxable portion of the Trust's income. 

    This formal policy will allow the Trust to retain a significant portion of cashflow to re-invest in capital growth opportunities.






    Month

    Per Unit

    Annualized

    Record Date

    Distribution Date

    Nov-17

    $

    0.1875

    $

    2.25

    30-Nov-17

    15-Dec-17

    Dec-17

    $

    0.1875

    $

    2.25

    29-Dec-17

    15-Jan-18

    Jan-18

    $

    0.0834

    $

    1.00

    31-Jan-18

    15-Feb-18

     

    The Board of Trustees will review the taxable portion of the Trust's income on a quarterly basis, and may announce an increase or a special distribution from time to time to ensure that all taxable income is distributed to Unitholders.

    Operational tailwinds

    Rob Geremia, President of Boardwalk REIT, commented: "In 2017, the Trust capitalized on cyclically high vacancy in its core portfolio in Alberta and Saskatchewan by using the opportunity to high-grade its portfolio through an investment in suite renovations and re-positioning.  The Trust continues to complete and lease these newly renovated homes, and will undertake future renovations at a more moderated pace to balance the cost of transitional vacancy with higher rental rates, which will position the Trust to capitalize on the housing market re-balancing in both Alberta and Saskatchewan."

    Boardwalk's Suite Renovation Package offers various levels of suite renovations to new and existing Resident Members.  These renovations may include new flooring, baseboards, kitchen cabinets, countertops, appliances, tiling, lighting, and fixtures in exchange for higher rents and lower incentives for our new and existing Residents.

    Boardwalk's suite renovation program includes four distinct levels: 

    The first is Boardwalk's standard turnovers. These turnover suites typically have had a renovation treatment completed in the last 12-36 months and require only minor repairs and replacements to prepare the suite for immediate rental. The average cost of a standard turnover is approximately $2,700.

    The second is Boardwalk's partial renovation.  Partial renovations may include a combination of new paint, flooring, fixtures, and appliances to provide superior value to its Residents.  The average investment of a partial renovation is approximately $16,000

    The third level of renovation is Boardwalk's full renovation.  These suites undergo a full-scale renovation, which include new flooring, cabinets, appliances, countertops, sinks, paint, lighting, tiling and fixtures to provide a new level of affordable luxury.  The average investment of a full renovation is approximately $29,000

    The fourth level of renovation is Boardwalk's turnkey renovation.  Similar to full renovations, these suites undergo a full-scale renovation, however also include re-modelling of a unit to suit the upscale demographic the home is marketed towards.  These turnkey renovations will be focused primarily on Boardwalk Lifestyle communities.  The average investment of a turnkey renovation is approximately $46,000 not including the cost of upgrading amenity areas. 

    For all levels, each renovation project is completed with a recently enhanced parts and materials specification, which adds to the quality and longevity of Boardwalk's suites.

    The Trust has seen success as a result of its suite renovation program.  Newly-renovated units are renting on completion and at rental rates that are significantly higher than the Trust's un-renovated suites.  The average net, in place rental rate of a renovated unit in the Trust's portfolio as of September 2017 was approximately $1,203 per unit as compared to $1,041 on a net basis for unrenovated units. 

    As the Trust began introducing renovated units on completion between June and September, the Trust's occupied rent, or the average rental rate charged on units that were occupied, increased from $1,070 in June of 2017 to $1,091 in September of 2017 on a stabilized property basis.  


    Stabilized Property Occupied Rent

    Month

    Occupied Rent

    Jan-17

    $

    1,104

    Feb-17

    $

    1,093

    Mar-17

    $

    1,090

    Apr-17

    $

    1,083

    May-17

    $

    1,081

    Jun-17

    $

    1,070

    Jul-17

    $

    1,073

    Aug-17

    $

    1,079

    Sep-17

    $

    1,091

     

    The current return on investment for the Trust's suite renovation program, which is calculated as the renovated net rental rate versus the regular net rental rate on un-renovated units compared to the cost of renovation, has equated to approximately 8%; and inline with the Trust's expectations.  NAV creation as a result of its $47 million invested to date on these rented renovated units has totaled $72 million, or a gain on cost of approximately 55% when utilizing the Trust's same-store weighted average fair value cap rate of 5.36%.










    Renovation Level

    Rentals 9M
    - 2017

    Availability -
    Sep 2017

    Estimated
    Cost/Suite

    Return on
    Investment -
    Rented

    Cap Rate
    Assumption -
    IFRS Weighted
    Average

    Value
    Creation
    based on WA
    Cap rate

    Total Cost of Rented
    Units

    Total NAV
    Creation on
    Rented Units










    Turnkey

    426

    424

    $

    46,000

    6%

    5.36%

    $

    51,000

    $

    19,596,000

    $

    21,726,000










    Full Renovation

    195

    212

    $

    29,000

    11%

    5.36%

    $

    60,000

    $

    5,655,000

    $

    11,700,000










    Partial Renovation

    1,329

    373

    $

    16,000

    10%

    5.36%

    $

    29,000

    $

    21,264,000

    $

    38,541,000


    1,950

    1,009


    23,900 (1)

    8%




    $

    46,515,000

    $

    71,967,000























    Regular Turnover

    7,902

    1,017

    $

    2,700















    Total

    9,852

    2,026
















    (1) - Weighted Average based on rented units





    NAV Creation on cost

    55%

     

    Boardwalk's partial and full renovation have provided the greatest level of return on investment.  To maximize the Trust's return, it is estimated that Boardwalk's future suite renovations will be allocated to approximately 75% partial renovation, 20% full renovation, and 5% turnkey renovation.  The Trust believes that a reduction in the number of units it places under its renovation program each year to approximately 1,500 to 2,000 units will maximize efficiency and minimize transitional vacancy loss.  This more scalable number of renovations combined with a larger focus on partial and full renovations, will provide an improvement in cost efficiencies resulting in returns potentially exceeding the Trust's 8% expectation, and further enhancing NAV creation.

    In conjunction with Boardwalk's Suite Renovation Program, the Trust has undertaken, and will continue, to upgrade the amenities and common areas of select Communities.  These upgrades include extensive renovations to common areas and hallways as well as improvement of indoor and outdoor areas in select locations.

    Incentives and Vacancy Loss

    Incentive and Vacancy Loss for the first nine months of 2017 totaled $51 million or $1.00 per Trust Unit, an increase from the same period a year ago. It is estimated that approximately $8 million, or 31% of total vacancy loss ($26 million) was a result of transitional vacancy loss due to the number of suites under renovation.

    Occupancy in the Trust's portfolio decreased slightly to 92.68% during the third quarter from 93.32% in Q2, as suites that were previously held for renovation were re-introduced into the market.  Occupancy increased in October of 2017 to 93.50% as the Trust successfully began leasing these units.

    The Trust identified and disclosed in the second quarter of 2017 that it had 663 apartment suites classified as 'on hold and held for renovation', and accurately depicted the Trust's occupancy based on available units for rental. If Boardwalk included the suites on hold and held for renovation, Q2 2017 same-store occupancy would have been 93.32% instead of 95.39%.  For the third quarter, the Trust has eliminated this internal 'on hold' classification for the purpose of calculating occupancy, and is adopting a calculation that presents occupancy as a percentage of total units.  A small portion of its portfolio (approximately 100 suites) is truly 'on hold' and represents apartment suites which remains unavailable due to various factors including suites utilized as rental offices, operational storage and show suites, and will now treat these as vacant for the purpose of presenting its occupancy.

    As portfolio vacancy nears 3-4%, the Trust believes that it will be well-positioned to begin reducing incentives, both of which remain a significant opportunity for the Trust to re-capture and exceed through the macro-economic improvement in Western Canada. 

    Rob Geremia, President of Boardwalk REIT, added: "These newly renovated suites, combined with Boardwalk's investment to enhance quality and service, will allow the Trust to gain market share, regardless of market conditions.  Despite the transitional vacancy loss and its carrying cost, the Trust has seen a positive impact on its completed suite renovations and enhanced level of service, with an increase in rentals seen on a month to month basis, with availability declining after an initial increase in September as the Trust re-introduced newly renovated units to the market.  The demand for Boardwalk's partial and fully renovated turnkey suites has been strong, and is further improving the quality of Boardwalk's brand.  In addition to improving occupancy levels, Boardwalk's renovated suites are positively impacting its in-place occupied rent and accomplishing its targeted returns of approximately 8%, which has led to substantial NAV accretion.  Our operational team is continuing to look for ways to deliver these renovated suites in a more cost effective and timely manner to further increase these returns."

    Strong Financial Position

    The Trust, over the past decade, has strengthened its balance sheet to maintain financial strength and flexibility and has positioned Boardwalk with the flexibility to deploy capital towards value enhancing opportunities such as the Trust's suite renovation program, acquisitions, development of new assets, joint ventures, and a continued investment in the Trust's own portfolio through value-added capital improvements.

    At the end of September 30, 2017, the Trust had approximately $350 million in liquidity that it could deploy towards new investment opportunities.

    In $000's


    Cash Position - Sep 2017

    $

    150,000



    Line of Credit 

    $

    200,000



    Total Available Liquidity

    $

    350,000



    Liquidity as a % of Current Total Debt

    13%



    Debt (net of cash) as a % of reported asset value

    45%

     

    Interest rates remain low and have benefitted the Trust's mortgage program as the Trust has continued to renew existing Canada Mortgage and Housing Corporation (CMHC) insured mortgages at interest rates well below the maturing rates.  As of September 30, 2017, the Trust's total mortgage principal outstanding totaled $2.73 billion at a weighted average interest rate of 2.62%, compared to $2.52 billion at a weighted average interest rate of 2.78% reported for December 31, 2016.

    Over 99% of the Trust's mortgages are CMHC insured, providing the benefit of lower interest rates and limiting the renewal risk of these mortgage loans for the entire amortization period, which can be up to 40 years.  The Trust's total debt had an average term to maturity of approximately 4.3 years, with a remaining amortization of 31 years.  The Trust's debt (net of cash) to reported asset value ratio was approximately 45% as of September 30, 2017.

    The Trust has successfully completed its 2017 mortgage program.  The Trust has renewed approximately $289.0 million, or 100% of its 2017 mortgage maturities.  The new rate on these renewed mortgages is 2.20% and represents an annualized interest expense reduction of approximately $1.8 million. In addition, the Trust has raised $256.9 million in upfinancing to assist in the execution of the Trust's strategic initiatives.

    The Trust continues to undertake a balanced strategy to its mortgage program.  Current 5 and 10-year CMHC Mortgage Rates are estimated to be 2.50% and 2.90%, respectively.  The Trust's interest coverage ratio, excluding gain or loss on sale of assets, for the most recent completed four quarters ended September 30, 2017, was 2.64 times, from 3.35 times for the same period a year ago.

    Same property fair value for the Trust's portfolio increased slightly relative to the previous quarter, primarily a result of increased market rents relating to the Trust's suite renovation program, and the continued stabilization of recently acquired and developed investment properties; however, these gains were partially offset by an increase in vacancy assumption used in the Trust's Calgary, Edmonton, Red Deer, and Regina markets.  Stabilized vacancy rates increased between 0.5% and 1.0% in each of these four markets to address the short term elevated vacancy and incentives in these markets.  Overall, fair value increased approximately $33.3 million versus the previous quarter.

    Net Asset Value for the Trust's portfolio decreased slightly since the end of 2016.  Below is a summary of the Trust's total per unit Net Asset Value with further discussion located in the 2017 Third Quarter MD&A.



    Highlights of the Trust's Fair Value of Investment Properties



    Sep 30, 2017


    Dec 31, 2016


    IFRS Asset Value Per Diluted Unit (Trust & LP B)

    $

    113.52


    $

    110.62


    Debt Outstanding per Diluted Unit

    $

    (53.77)


    $

    (49.68)


    Net Asset Value (NAV) Per Diluted Unit (Trust & LP B)

    $

    59.75


    $

    60.94


    Cash Per Diluted Unit (Trust & LP B)

    $

    2.96


    $

    1.95


    Total Per Diluted Unit (Trust & LP B)

    $

    62.71


    $

    62.89


    Weighted Average Capitalization Rate: 5.35% at September 30, 2017 and 5.38% at December 31, 2016

    An additional metric utilized in real estate valuation is comparative value per apartment suite/door.  Boardwalk's current trading price of approximately $40 per Trust Unit equates to a per door value of $141,000, a significant discount to Boardwalk's estimated Fair Value of approximately $170,000 per door, and a large discount to recent transactions seen in the real estate investment market for well-located assets and additionally wider discount to replacement value.

    Solid development pipeline

    Demand for Multi-Family Investment Properties in Canada continues to be strong.  As a result, capitalization rates continue to remain low and high prices for Multi-Family assets continue to be the trend.  Recent transactions on existing assets have shown that the appetite for Multi-Family Investment Properties continues to be high, and transaction capitalization rates continue to decrease.  Private and institutional buyers are taking a longer-term approach to evaluations, using higher stabilized rents, normalized vacancy and lower cap rates, reflecting record low Government of Canada 10-year treasury yields and the continued difficulty in finding apartment rental assets.  There continues to be a significant disconnect between the implied value of Boardwalk's apartment assets as represented by the implied value of Boardwalk REIT Trust Units and the valuation of comparable apartments in Western Canada that have recently sold.

    In addition to Boardwalk's suite renovation program, the addition of newly constructed rental communities is consistent with the high-grading of Boardwalk's portfolio.  In 2016, the Trust acquired newly built assets at a cost similar to the Trust's cost of developing its own projects, and provides a unique opportunity for the Trust to continue to decrease the average age and increase the quality of its portfolio, while taking advantage of Boardwalk's operational and leasing expertise to maximize the returns on these assets both in the short and long term.  Leasing of these new acquisitions remain on schedule and are nearing stabilization, which will add to the Trust's overall performance.  Phase 1 of the Trust's Pines Edge development on existing excess land the Trust owns in Regina was substantially completed at the end of January 2016.  The site consists of a 79-unit, four storey wood frame elevatored building with one level of underground parking.  The total cost was $13.4 million, below the original budget of $14.1 million with an estimated stabilized cap rate range of 6.50% to 7.00% excluding land.  Lease up of the project began on February 1, 2016 and has stabilized without the use of any incentives.

    Construction of Phase 2, a 79-unit replica of Phase 1 with the addition of 9' ceilings, was substantially completed at the end of June 2017, on time and on budget.  The total cost was $13.3 million, with an estimated stabilized cap rate range of 6.25% and 6.75%.  Leasing of Phase 2 also has met expectations with 30% of the units leased to date. 

    Construction of Phase 3, a 71-unit four storey building, similar to the previous 2 phases, has commenced.  The estimated cost of construction is $13.2 million, with an estimated stabilized cap rate range of 6.25% to 7.00%.

    Boardwalk's internal development opportunities include additional projects on existing excess land density that the Trust holds in its portfolio.  These developments are in various stages of planning and approval, and provide a significant pipeline of approximately 4,600 apartment units totaling 4.6 million buildable square feet of potential new assets that could be added to the Trust's portfolio.

    Boardwalk was pleased to announce the formation of a joint venture with RioCan REIT in November of 2016, to build a mixed-use retail and residential tower at RioCan's Brentwood Village Shopping Centre.  The project will include a twelve-storey tower with approximately 130,000 square feet of premium residential rental housing and 10,000 square feet of retail space. The tower will be located at a desirable location adjacent to the Calgary Light Rail Transit Line, in close proximity to The University of Calgary, Foothills Hospital, and McMahon Stadium.  Both partners have worked together to finalize the submission of plans for a development and building permit.  Subject to the receipt of both the development permit and the subdivision of the lands, closing is expected to occur in 2017.

    2017 Financial guidance

    As is customary, the Trust reviews its base level assumptions and strategy on a quarterly basis to determine if any material change is warranted in the reported guidance.  Based on this review, the Trust is reiterating its 2017 objectives as follows:





    Description

    2017 2nd Revised Objectives

    2017 Revised Objectives

    2017 Original Objectives


    (Reiterated Nov, 2017; Aug, 2017)

    (Feb, 2017)

    (Nov, 2016)

    Acquisition of Investment Properties

    No new apartment acquisitions

    No new apartment acquisitions

    No new apartment acquisitions





    Disposition of Investment Properties

    No dispositions

    No dispositions

    No dispositions





    Development

    Phase 2 of Pines Edge,
    Regina, Saskatchewan -
    79 Units

    Phase 2 of Pines Edge,
    Regina, Saskatchewan -
    79 Units

    Phase 2 of Pines Edge,
    Regina, Saskatchewan -
    79 Units






    Continue with Phase 3 of Pines Edge,
    Regina, Saskatchewan -
    71 Units

    Continue with Phase 3 of Pines Edge,
    Regina, Saskatchewan -
    71 Units

    Continue with Phase 3 of Pines Edge,
    Regina, Saskatchewan -
    71 Units






    Commencement of Brentwood Village joint venture with RioCan,
    Calgary, Alberta
    162 units

    Commencement of Brentwood Village joint venture with RioCan,
    Calgary, Alberta
    162 units

    Commencement of Brentwood Village joint venture with RioCan,
    Calgary, Alberta
    162 units





    Stabilized Building NOI Growth

    -19% to -17%

    -15% to -9%

    -8% to -3%





    FFO Per Unit

    $2.10 to $2.20

    $2.30 to $2.65

    $2.70 to $2.90





    AFFO Per Unit

    $1.68 to $1.78

    $1.96 to $2.31

    $2.36 to $2.56

     

    The reader is cautioned that this information is forward-looking and actual results may vary materially from those reported.  One of the key estimates is the performance of the Trust's stabilized properties.  Any significant change in assumptions deriving 'Stabilized Building NOI performance' would have a material effect on the final reported amount.  The Trust reviews these key assumptions quarterly and based on this review may change its outlook.

    In addition to the above financial guidance for 2017, the Trust is also reiterating its 2017 capital budget for the 2017 fiscal year.








    Capital Budget ($000's)

    Q3 Reiterated, Q2
    2017 Revised Budget

    Per Suite

    Q1 2017
    Revised Budget

    2017 Original
    Budget

    Nine Months
    Ended, Sept
    2017 Actual

    Per Suite

    Maintenance Capital

    $21,245

    $629

    $17,731

    $17,731

    $15,945

    $472

    Value Added Capital (including Suite
    Upgrades)

    141,489

    4,189

    105,003

    80,003

    120,750

    3,572

    Total Operational Capital

    $162,734

    $4,818

    $122,734

    $97,734

    $136,695

    $4,044

    Total Operational Capital

    $162,734


    $122,734

    $97,734

    $136,695


    Repositioning Capital

    20,000


    20,000

    20,000

    11,712


    Development

    24,071


    24,071

    24,071

    9,858


    Total Capital Investment

    $206,805


    $166,805

    $141,805

    $158,265


     

    In total, we expect to invest $162.7 million (or $4,818 per apartment unit) on operational capital in 2017.  For the nine months ended September 30, 2017, the Trust invested $136.7 million (or $4,044 per apartment unit) on operational capital.  The majority of the increase is earmarked for suite capital expenditures, with a targeted 8% return on investment.  The Trust has also increased its Maintenance Capital estimate for 2017 to $629 per apartment unit per year.  For the nine months ended September 30, 2017, the Trust incurred $9.9 million of development capital.

    Value Added Capital is subject to continuous review and will only be invested if the Trust can earn a significant return on this investment.

    Additional information relating to the Trust's computation of Maintenance Capital can be found in its Third Quarter Management Discussion and Analysis.

    Supplementary information

    Boardwalk produces the Quarterly Supplemental Information that provides detailed information regarding the Trust's activities during the quarter.  Supplemental Information is available on Boardwalk's investor website at www.boardwalkreit.com.

    Teleconference on Third Quarter 2017 Financial Results

    Boardwalk invites you to participate in the teleconference that will be held to discuss these results tomorrow morning (November 15, 2017) at 11:00 am Eastern 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.boardwalkreit.com prior to the call.

    Teleconference: The telephone numbers for the conference are 647-427-7450 (local/international callers) or toll-free 1-888-231-8191 (within North America).

    Note: Please provide the operator with the below Conference Call ID or Topic when dialing in to the call.
    Conference ID: 90066425
    Topic: Boardwalk REIT 2017 Third Quarter Results

    Webcast: Investors will be able to listen to the call and view Boardwalk's slide presentation over the Internet by visiting http://www.boardwalkreit.com 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:

    http://event.on24.com/r.htm?e=1513730&s=1&k=603EB608371919E4E5548D9EC2509D18

    Replay: An audio recording of the teleconference will be available on the Trust's website:

    www.boardwalkreit.com

    Third Quarter 2017 Financial Highlights


    $ millions, except per unit amounts

    Highlights of the Trust's Third Quarter 2017 Financial Results



    3 Months Sep
    30, 2017



    3 Months Sep
    30, 2016


    % Change



    9 Months Sep
    30, 2017



    9 Months Sep
    30, 2016


    % Change

    Same Store Total Rental Revenue


    $

    102.4



    $

    107.6



    -4.8%



    $

    308.7



    $

    330.9



    -6.7%

    Total Rental Revenue


    $

    105.5



    $

    109.0



    -3.1%



    $

    316.6



    $

    332.7



    -4.8%

    Same Store Net Operating Income (NOI)


    $

    54.7



    $

    63.9



    -14.4%



    $

    163.0



    $

    200.4



    -18.7%

    Net Operating Income (NOI)


    $

    54.3



    $

    63.2



    -13.9%



    $

    161.4



    $

    196.7



    -17.9%

    Profit (loss) for the period


    $

    44.4



    $

    (35.5)



    225.0%



    $

    125.0



    $

    27.2



    358.9%

    Funds From Operations (FFO)


    $

    27.0



    $

    37.2



    -27.4%



    $

    80.2



    $

    114.9



    -30.1%

    Adjusted Funds From Operations (AFFO)


    $

    21.7



    $

    32.8



    -33.8%



    $

    64.3



    $

    101.8



    -36.8%

    FFO Per Unit


    $

    0.53



    $

    0.73



    -27.4%



    $

    1.58



    $

    2.26



    -30.1%

    AFFO Per Unit


    $

    0.43



    $

    0.65



    -33.8%



    $

    1.27



    $

    2.00



    -36.5%

    Regular Distributions Declared (Trust Units & LP
    B Units)


    $

    28.6



    $

    28.5



    0.1%



    $

    85.7



    $

    84.9



    1.0%

    Regular Distributions Declared Per Unit (Trust
    Units & LP B Units)


    $

    0.563



    $

    0.563



    0.0%



    $

    1.688



    $

    1.653



    2.1%























    Regular Payout as a % FFO (1)



    105.7%




    76.7%







    106.8%




    73.9%


























    Interest Coverage Ratio (Rolling 4 quarters)



    2.64




    3.35







    2.64




    3.35




    Operating Margin



    51.5%




    58.0%







    51.0%




    59.1%


























     

    (1 – Distributions as a percentage of FFO, as of September 30, 2017, on a rolling four quarter basis was 104.0%)

     



    Portfolio Highlights for the Third Quarter of 2017



    Sep-17


    Dec-16


    Sep-16


    Average Occupancy (Period Average)(Same Store)


    92.68%



    94.24%



    94.58%












    Average Monthly Rent (Period Ended)

    $

    1,023


    $

    1,019


    $

    1,066












    Average Market Rent (Period Ended)

    $

    1,124


    $

    1,103


    $

    1,131












    Average Occupied Rent (Period Ended)

    $

    1,091


    $

    1,086


    $

    1,125












    Loss -to-Lease (Period Ended) ($ millions )

    $

    12.3


    $

    6.0


    $

    2.3












    Loss -to-Lease Per Trust Unit (Period Ended)

    $

    0.24


    $

    0.12


    $

    0.05




























    % Change Year-

    Over-Year


    Same Property Results




    3 Months Sep-17


    9 Months Sep-17


    Rental  Revenue





    -4.8%



    -6.7%


    Operating Costs





    9.3%



    11.7%


    Net Operating Income (NOI)





    -14.4%



    -18.7%


     

    Same property results exclude 79-units from both Pines Edge 1 completed January 2016, Pines Edge 2 completed June 2017, 162-unit Vita Estates acquired June 2016, 238-unit Auburn Landing acquired June 2016, 165-unit Axxess acquired August 2016 and 182-unit The Edge acquired in August 2016.

    All rental rates noted are net of incentives.

    FFO and AFFO are widely accepted supplemental measures of the performance of a Canadian Real Estate entity; however, they are not measures defined by International Financial Reporting Standards ("IFRS").  The reconciliation of FFO and other financial performance measures can be found in the Management Discussion and Analysis ("MD&A") for the third quarter ended September 30, 2017, under the section titled, "Performance Measures".

    Sequential Stabilized Revenue

    Stabilized Revenue

    Growth


    # of Units

    Q3 2017
    vs Q2
    2017

    Q2 2017
    vs Q1
    2017

    Q1 2017
    vs Q4
    2016

    Q4 2016
    vs Q3
    2016

    Edmonton



    12,397


    -0.9%


    -1.1%


    -1.7%


    -3.8%

    Calgary



    5,419


    -1.4%


    -0.3%


    -1.6%


    -4.1%

    Red Deer



    939


    -2.7%


    -1.4%


    -1.7%


    -6.5%

    Grande Prairie



    645


    2.6%


    2.9%


    -0.4%


    -10.2%

    Fort McMurray



    352


    2.3%


    -4.5%


    1.3%


    -0.8%

    Quebec



    6,000


    0.9%


    0.5%


    0.5%


    -0.9%

    Saskatchewan



    4,610


    -0.9%


    -0.5%


    -1.1%


    1.9%

    Ontario



    2,585


    1.9%


    -0.2%


    1.2%


    0.9%




    32,947


    -0.4%


    -0.5%


    -1.0%


    -2.9%

     

    Corporate Profile

    Boardwalk REIT strives to be Canada's friendliest communities and currently owns and operates more than 200 communities with over 33,000 residential units totaling over 28 million net rentable square feet.  Boardwalk's principal objectives are to provide its Residents with the best quality communities and superior customer service, while providing Unitholders with sustainable monthly cash distributions, and increase the value of its trust units through selective acquisitions, dispositions, development, and effective management of its residential multi-family communities.  Boardwalk REIT is vertically integrated and is Canada's leading owner/operator of multi-family communities with 1,800 Associates bringing Residents home to properties located in Alberta, Saskatchewan, Ontario, and Quebec.

    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.BoardwalkREIT.com.

    CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

    Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws.  Implicit in this information, particularly in respect of Boardwalk's objectives for 2017 and future periods, Boardwalk's strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates and 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 the Management's Discussion & Analysis of Boardwalk REIT's 2016 Annual Report under the heading "Risks and Risk Management", which could cause Boardwalk's actual results to differ materially from the forward-looking information contained in this news release.  Specifically, Boardwalk has assumed that the general economy remains stable, interest rates are relatively stable, acquisition capitalization rates are stable, competition for acquisition of residential apartments remains intense, and equity and debt markets continue to provide access to capital.  These assumptions, although considered reasonable by the Trust at the time of preparation, may prove to be incorrect.  For more exhaustive information on these risks and uncertainties you should refer to Boardwalk's most recently filed annual information form, which is available at www.sedar.com.  Forward-looking information contained in this news release is 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 information and should not rely upon this information as of any other date.  While the Trust may elect to, Boardwalk is under no obligation and does not undertake to update this information at any particular time.

    SOURCE Boardwalk Real Estate Investment Trust

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