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Boardwalk REIT Reports Continued Strong Performance With Third Quarter Funds from Operation Per Unit Growth of 18.6% and an Increase to 2019 Financial Guidance

SUMMARY HIGHLIGHTS FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2019

  • CONTINUED STRONG PERFORMANCE
  • INCREASES 2019 FINANCIAL GUIDANCE
  • DELIVERING OPERATIONAL RESULTS
  • STRONG FINANCIAL POSITION
  • DISTRIBUTION OF $1.00 PER TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF NOVEMBER, DECEMBER 2019 AND JANUARY 2020


CALGARY, Nov. 14, 2019 /PRNewswire/ - Boardwalk Real Estate Investment Trust (TSX: BEI.UN)

Boardwalk Real Estate Investment Trust ("Boardwalk", the "REIT" or the "Trust") today announced its financial results for the third quarter and first nine months of 2019.

"We are pleased to report and deliver on another solid quarter and first nine months of 2019 with growth in Funds from Operation ("FFO") per trust unit of 18.6% and 16.2%, respectively.  Boardwalk's Resident -Friendly approach to sustainable incentive reductions and rental rate adjustments continues to produce a positive trend and, for seven consecutive quarters, have delivered a sequential and compounding improvement in revenue.  We believe this approach will best allow the Trust to deliver multi-year organic revenue growth from our core Alberta portfolio." said Sam Kolias; Chairman and Chief Executive Officer of Boardwalk REIT.

Rob Geremia; President of Boardwalk REIT added: "The rental market in Alberta is trending toward a level of balance, and through the seasonally busy summer months, our Team's commitment to providing the best product quality, service and experience has resulted in continued strong operational performance and an increase in market share.  Our sustainable net effective rental rate growth target of 4-8% on our Alberta portfolio is delivering sustainable revenue growth while our focus on controllable expense reduction is resulting in a further improvement to our operating margins, providing significant growth to Net Operating Income."

Mr. Kolias concluded: "Our core Alberta portfolio continues to deliver solid growth with our two largest markets, Edmonton and Calgary, delivering 13.9% and 10.0% same property NOI growth in the third quarter.  In Saskatchewan, the Trust is gaining market share, resulting in 8.5% same property NOI growth in the third quarter.  The Trust's Ontario and Quebec markets, which represent over 25% of the Trust's portfolio, are continuing to deliver strong and stable results with record high occupancy and increasing market rents, contributing NOI growth of 5.3% and 5.2% respectively in the third quarter.  By combining this strong operational performance with a disciplined approach to capital allocation, Boardwalk is well-positioned to continue to deliver growth, which will translate into industry-leading FFO per Unit performance."

INCREASES 2019 FINANCIAL GUIDANCE

The Trust's performance in the first nine months of 2019 has exceeded its original expectations, with revenues forecasted to be near the top end of its original forecast and certain expense lines projected to fall below the original forecast range.  Many of the controllable expense savings can be attributed to our Team's ability to find savings and be more innovative and creative in the ways to deliver the Trust's product, service and experience to our Residents.

As a result, the Trust is revising its forecast for stabilized building NOI growth to 6% - 8%.  Additionally, the Trust is increasing the bottom end of its FFO per unit guidance to $2.50 per Trust Unit and increasing the top end of its FFO per unit guidance to $2.55 per Trust Unit as follows:





Description

2019 Q3 Revised Guidance

2019 Q2 Revised Guidance

2019 Original Guidance





Stabilized Building NOI
Growth

6% to 8%

4% to 9%

4% to 9%

FFO Per Unit

$2.50 to $2.55

$2.45 to $2.52

$2.35 to $2.50

AFFO Per Unit ($717/door
maintenance capital)

$2.03 to $2.08 

$1.98 to $2.05 

$1.88 to $2.03 

 

The reader is cautioned that this information is forward-looking and actual results may vary materially from those reported.  The Trust reviews these key assumptions quarterly and, based on this review, may change its outlook.

THIRD QUARTER & NINE MONTH HIGHLIGHTS


$ millions, except per unit amounts

Highlights of the Trust's Third Quarter 2019 Financial Results


3 Months Sep 30,
2019

3 Months Sep 30,
2018

% Change

9 Months Sep 30,
2019

9 Months Sep 30,
2018

% Change

Operational Highlights







Total Rental Revenue

$

114.7

$

108.8

5.4%

$

339.9

$

324.2

4.8%

Same Property Total Rental Revenue

$

112.5

$

107.6

4.6%

$

333.6

$

320.7

4.0%

Net Operating Income (NOI), as reported

$

67.9

$

58.8

15.5%

$

194.0

$

171.0

13.5%

Comparative NOI *

$

67.0

$

60.1

11.5%

$

190.5

$

174.9

8.9%

Same Property NOI **

$

67.2

$

60.7

10.7%

$

191.4

$

178.7

7.1%

Operating Margin (as reported)

59.2%

54.1%


57.1%

52.7%


Comparative Operating Margin *

58.4%

55.3%


56.0%

53.9%


Same Property Operating Margin **

59.7%

56.4%


57.4%

55.7%









Financial Highlights







Funds From Operations (FFO)

$

35.8

$

29.8

20.0%

$

98.8

$

84.8

16.6%

Adjusted Funds From Operations (AFFO)

$

29.8

$

24.0

24.0%

$

80.8

$

67.4

19.9%

Profit for the Period

$

79.6

$

33.1

140.5%

$

143.4

$

159.1

-9.9%

FFO per Unit

$

0.70

$

0.59

18.6%

$

1.94

$

1.67

16.2%

AFFO per Unit

$

0.58

$

0.47

23.4%

$

1.59

$

1.33

19.5%








Net Asset Value







IFRS Asset Value per Diluted Unit (Trust & LP B), period end




$

122.94

$

116.09


Debt Outstanding per Diluted Unit, period end




$

(57.99)

$

(53.94)


Net Asset Value (NAV) per Diluted Trust Unit (Trust & LP B),
period end




$

64.95

$

62.15


Cash per Diluted Unit (Trust & LP B), period end




$

0.20

$

0.90


Total per Diluted Unit (Trust & LP B), period end




$

65.15

$

63.05









Liquidity, Debt and Distributions







Cash Position, period end




$

10,000



Subsequent Committed Financing




$

24,000



Subsequent VTB Mortgage Received




$

36,000



Line of Credit




$

200,000



Total Available Liquidity




$

270,000



Liquidity as a % of Period Total Debt




9%



Debt (net of cash) as a % of Reported Asset Value




47%










Principal Outstanding, period end

$

2,834,314

$

2,742,534


$

2,834,314

$

2,742,534


Interest Coverage Ratio (Rolling 4 quarters)

2.74

2.68


2.74

2.68









Regular Distributions Declared (Trust Units & LP B Units)

$

12.7

$

12.7

0.1%

$

38.2

$

38.2

0.1%

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

$

0.250

$

0.250

0.0%

$

0.751

$

0.751

0.0%

Regular Payout as a % FFO

35.6%

42.7%


38.7%

45.0%









Stabilized Apartment Units




32,769

33,108


Un-Stabilized Units




494

150


Total Apartment Units




33,263

33,258


 

* Comparative figures adjust for lease payments relating to IFRS 16 and is apples to apples for the Trust's new Asset Management Model

** Same Property figures exclude un-stabilized properties, sold assets, adjust for lease payments relating to IFRS 16 and is apples to apples for the Trust's new Asset Management Model

 

NOI, 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 three and nine months ended September 30, 2019, under the section titled, "Performance Measures".  Same property results exclude 124-units in Edmonton acquired April 2019, 299-units in Calgary acquired November 2018 AND 71-units from Pines Edge 3 completed July 2018.

EXCEPTIONAL VALUE

The Trust believes that its current trading price continues to represent exceptional value.

Recent sales transactions of apartment buildings in Calgary and Edmonton have averaged more than $200,000 per door.

Boardwalk's fair value of its assets utilizing a stabilized cap rate of 5.27% is estimated to be approximately $185,000 per door.

At a unit price of $44/Trust Unit, Boardwalk's implied value is approximately $153,000 per door.

Boardwalk's FFO per unit growth this quarter of 18.6% marks the sixth consecutive quarter of FFO growth and continues to represent the early stages of a growth cycle for the Trust on a foundation of record affordability in rents.  

The Trust remains disciplined on its near-term objectives with our focus remaining on our operational performance, which will continue to drive FFO growth.  This will lead to sustainable distributions, a higher-quality property portfolio, and unit price growth.

PORTFOLIO HIGHLIGHTS





Portfolio Highlights for the Third Quarter of 2019


Sep-19

Dec-18

Sep-18

Average Occupancy (Period Average)

96.62%

96.03%

95.87%





Average Monthly Rent (Period Ended)

$

1,133

$

1,094

$

1,082

Average Market Rent (Period Ended)

$

1,339

$

1,281

$

1,274

Average Market Rent (Period Ended), net of incentives

$

1,240

$

1,171

$

1,168

Average Occupied Rent (Period Ended)

$

1,170

$

1,138

$

1,124





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

$

64.5

$

54.0

$

57.5

Loss -to-Lease (Period Ended) ($ millions ), net of incentives

$

26.5

$

12.3

$

14.8

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

$

1.27

$

1.06

$

1.13

Loss -to-Lease Per Trust Unit (Period Ended), net of incentives

$

0.52

$

0.24

$

0.29

* Average occupancy is adjusted to be on a same-property basis

 

STABILIZED OPERATING PERFORMANCE







Sep 30 2019 - 3 M

# of Units

% Revenue
Growth

% Operating
Expense
Growth

% Net
Operating
Income
Growth

% of NOI

Edmonton

12,906

4.3%

-5.9%

13.9%

37.8%

Calgary

5,657

5.4%

-2.0%

10.0%

21.3%

Red Deer

939

11.0%

-12.1%

38.7%

2.5%

Grande Prairie

645

10.8%

-9.7%

33.3%

1.7%

Fort McMurray

352

-0.8%

4.8%

-4.5%

1.1%

Alberta

20,499

5.0%

-5.5%

16.2%

64.3%

Quebec

6,000

3.8%

1.3%

5.2%

19.0%

Saskatchewan

3,685

2.9%

-3.4%

8.5%

10.1%

Ontario

2,585

5.5%

5.7%

5.3%

6.5%


32,769

4.6%

-3.3%

10.7%

100.0%







Sep 30 2019 - 9 M

# of Units

% Revenue
Growth

% Operating
Expense
Growth

% Net
Operating
Income
Growth

% of NOI

Edmonton

12,906

3.4%

-0.8%

7.4%

37.3%

Calgary

5,657

5.7%

0.3%

9.1%

21.5%

Red Deer

939

11.1%

-3.1%

26.1%

2.5%

Grande Prairie

645

12.4%

-3.8%

30.0%

1.7%

Fort McMurray

352

-3.8%

-5.5%

-2.4%

1.1%

Alberta

20,499

4.5%

-0.8%

9.0%

64.0%

Quebec

6,000

3.5%

1.2%

4.9%

19.1%

Saskatchewan

3,685

1.9%

3.4%

0.7%

10.0%

Ontario

2,585

4.6%

2.5%

6.1%

6.8%


32,769

4.0%

0.2%

7.1%

100.0%







Stabilized as a % of Total Portfolio

98.5%






 

QUARTERLY SEQUENTIAL REVENUE GROWTH







Stabilized Revenue Growth

# of Units

Q3 2019 vs Q2
2019

Q2 2019 vs Q1
2019

Q1 2019 vs Q4
2018

Q4 2018 vs Q3
2018

Edmonton

12,906

1.3%

1.8%

0.2%

1.1%

Calgary

5,657

1.0%

1.4%

2.2%

0.7%

Red Deer

939

0.2%

2.2%

5.5%

2.8%

Grande Prairie

645

2.4%

2.3%

2.2%

3.5%

Fort McMurray

352

1.3%

0.7%

-0.7%

-2.0%

Quebec

6,000

1.0%

0.2%

1.2%

1.4%

Saskatchewan

3,685

1.2%

0.9%

0.1%

0.8%

Ontario

2,585

1.2%

1.9%

1.2%

1.1%


32,769

1.1%

1.3%

1.0%

1.1%


 

Q3 REGULAR MONTHLY DISTRIBUTION ANNOUNCEMENT







Month


Per Unit

Annualized

Record Date

Distribution Date

Nov-19


$ 0.0834

$

1.00

29-Nov-19

16-Dec-19

Dec-19


$ 0.0834

$

1.00

31-Dec-19

15-Jan-20

Jan-20


$ 0.0834

$

1.00

31-Jan-20

17-Feb-20


 

FINANCIAL AND SUPPLEMENTARY INFORMATION

Boardwalk produces quarterly financial statements, management discussion and analysis, and a supplemental information package that provides detailed information regarding the Trust's activities during the quarter.  Financial and supplementary information is available on Boardwalk's investor website at www.bwalk.com/investors

TELECONFERENCE ON THIRD QUARTER 2019 FINANCIAL RESULTS
Boardwalk invites you to participate in the teleconference that will be held to discuss these results tomorrow morning (November 15, 2019) 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.bwalk.com/investors prior to the call.

Teleconference: The telephone numbers for the conference are 416-764-8688 (local/international callers) or toll-free 1-888-390-0546 (within North America).

Note: Please provide the operator with the below Conference Call ID or Topic when dialing in to the call.
Conference ID: 17195214
Topic: Boardwalk REIT Third Quarter Results

Webcast: Investors will be able to listen to the call and view Boardwalk's slide presentation by visiting www.bwalk.com/investors prior to the start of the call. 

An information page will be provided for any software needed and system requirements.  The webcast and slide presentation will also be available at:

Boardwalk REIT Third Quarter Results Conference Call 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 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 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.bwalk.com/investors 

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 2019 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 year-end Management's Discussion & Analysis of Boardwalk REIT 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.

Cision

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SOURCE Boardwalk Real Estate Investment Trust