- Q3, 2016 FFO per unit of $0.73
- 9M 2016 FFO per unit of $2.26 and
includes $0.08 per Trust Unit of
one-time, non-recurring items in H1 2016
- Joint Venture with Riocan to co-develop an 11-storey mixed-use
tower in Calgary
- 747 newly constructed apartment units acquired in 2016 in
Calgary and Edmonton
- Lease Up of newly developed Pines Edge ahead of schedule with
over 97% occupancy
- Fort McMurray Portfolio posts 17.5% stabilized sequential
revenue growth
- Purchased 666,000 Trust Units for cancellation during the nine
months of 2016
- Suite Renovation and Upgrade Packages remain key to Resident
value and retention
- Net Asset Value, including cash, decreases to $65.21 per Trust Unit
CALGARY, Nov. 10, 2016 /CNW/ - 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 2016.
Funds From Operations ("FFO") for the third quarter decreased to
$37.2 million, or $0.73 per Trust Unit on a diluted basis, from FFO
of $47.6 million or $0.92 per Trust Unit for the same period last
year, a decrease of 21.9% and 20.7% respectively. Adjusted Funds
from Operations ("AFFO") per Trust Unit decreased 21.7% to
$0.65 for the current quarter, from
$0.83 per Trust Unit during the same
period in 2015.
Included in the computation of FFO for the nine months of 2016
was $0.08 per Trust Unit of one-time,
non-recurring items charged in the first half of 2016 which
included the previously announced cost of retirement of a senior
executive ($0.02/Trust Unit), the
financial impact from the discounted units to evacuees of the
Fort McMurray wildfire in the
months of May and June 2016
($0.03/Trust Unit), and the Trust's
strategic review ($0.03/Trust
Unit).
Stabilized same property revenue decreased 7.6%, while operating
costs increased 5.1%, resulting in an NOI decrease for the third
quarter of 14.6%. Rental revenues decreased through the
summer turnover season as the Trust's Alberta markets showed continued softness with
increasing vacancies and lower rental rates. Operating costs
increased mainly a result of higher property taxes, though
partially offset by a decrease in operating G&A.
We continue to see the impact of a softer economic environment
in Western Canada as a result of
continued lower resource prices and in comparison to record results
in 2015. Boardwalk's proactive use of incentives to maintain
higher occupancy and focus on customer service and providing the
best value in housing has provided the Trust with relative
outperformance in our core markets.
For the nine month period ended September 30, 2016, FFO
decreased to $114.9 million, or
$2.26 per Trust Unit on a diluted
basis, from FFO of $140.6 million, or
$2.70 per Trust Unit, for the same
period a year ago, a decrease of 18.3% and 16.3%,
respectively. AFFO per unit for the nine months of 2016
decreased 18.7% to $2.00 per Trust
Unit from $2.46 in 2015.
Over the long term, history has shown that rents in Alberta increase by 3 to 4% per annum, and
historically reverts back to the mean as housing supply and demand
re-balances. Building permits and starts continue to trend
downwards, which assists in the re-balancing of supply and demand
of the rental market, however, the Trust is utilizing this
exceptional opportunity to accomplish its long term strategic goal
of high-grading its portfolio by developing new assets, investing
in suite renovation and upgrades, as well as acquiring newly built
assets at price levels near build cost.
The impact of the Fort McMurray
fires on the broader economy have tapered, and construction
activity has begun at a moderated pace. When combined with
improving oil prices, the Trust has seen a strong improvement in
its Fort McMurray portfolio with
sequential revenues increasing over 17% versus the second
quarter. The goodwill that Boardwalk has earned during the
fires has provided Boardwalk with exceptional customer loyalty from
both existing and new Residents and have rewarded us by calling
Boardwalk home. Boardwalk's current occupancy in Fort McMurray is over 97% and is an example of
the success of our Customer Friendly approach. Historically,
the Fort McMurray economy has been
a leading indicator for the broader Alberta economy, which is a positive sign for
the rebalancing of housing supply and demand.
RioCan REIT and Boardwalk REIT Joint Venture
We are pleased to announce the formation of a joint venture
arrangement between RioCan REIT and Boardwalk REIT to develop a
mixed use tower consisting of an at-grade retail podium totaling
approximately 10,000 square feet and an 11-storey residential tower
with approximately 120,000 square feet of residential space,
totaling approximately 165 apartment units at RioCan's Brentwood
Village Shopping Centre in Calgary, AB. The development will
include two levels of underground parking and will provide premium
rental housing minutes from downtown Calgary along the Northwest Light Rail Transit
line, while providing close proximity to the University of Calgary, McMahon Stadium, and
Foothills Hospital.
For further information, please visit www.BoardwalkREIT.com or
SEDAR to view the joint press release issued by RioCan and
Boardwalk on November 10, 2016
titled:
RIOCAN REIT AND BOARDWALK REIT TEAM UP TO CREATE A JOINT VENTURE
TO DEVELOP A MIXED USE RETAIL AND RENTAL RESIDENTIAL TOWER AT
RIOCAN'S BRENTWOOD VILLAGE
SHOPPING CENTRE
Net Asset Value
Same property fair value for the Trust's portfolio decreased
relative to the previous quarter as stabilized vacancy assumptions
increased slightly to reflect a softer rental environment.
The stabilized vacancy assumption used for Calgary, Edmonton, and Saskatoon increased from 3% to 4%, reflecting
higher vacancy levels. Red
Deer also saw an increase in stabilized vacancy from 3% to
5%. As a result of these change in assumptions in the Trust's
Alberta and Saskatoon markets, same property fair value,
when excluding newly acquired assets, decreased approximately
$85 million versus the previous
quarter.
Since the decline in oil prices and the subsequent economic
downturn in Alberta began in the
second half of 2014, the Trust has adjusted its Fair Value
accordingly with significant decreases recorded in the third
quarter of 2015 as market rents were adjusted and throughout the
economic downturn. In total, the Trust's Alberta portfolio has seen a decrease in Fair
Value of 7.3% since Q3, 2014. These decreases overall were
moderated by increases seen in the Trust's Eastern Canadian
Communities which have seen balanced to strong rental markets as
evidenced by increasing rental rates and decreasing capitalization
rates. Below is a summary of the impact to fair value since
2014.
Total Fair Value under IFRS for the Trust's portfolio increased
relative to the end of 2015, mainly a result new acquisitions,
partially mitigated by fair value losses resulting from the noted
decreases in market rents and higher vacancy assumptions mainly in
the Trust's Alberta and
Saskatchewan Communities where market vacancy rates have
increased. Below is a summary of the Trust's total per unit
Net Asset Value with further discussion located in the 2016 Third
Quarter MD&A.
|
|
Highlights of the
Trust's Fair Value of Investment Properties
|
|
|
Sep 30,
2016
|
|
Dec 31,
2015
|
|
IFRS Asset Value Per
Diluted Unit (Trust & LP B)
|
$
|
112.27
|
|
$
|
107.95
|
|
Debt Outstanding per
Diluted Unit
|
$
|
(49.22)
|
|
$
|
(45.80)
|
|
Net Asset Value (NAV)
Per Diluted Unit (Trust & LP B)
|
$
|
63.05
|
|
$
|
62.15
|
|
Cash Per Diluted Unit
(Trust & LP B) 1
|
$
|
2.16
|
|
$
|
3.62
|
|
Total Per Diluted
Unit (Trust & LP B)
|
$
|
65.21
|
|
$
|
65.77
|
|
1 ‐ Cash as of
December 31, 2015 is net of the Special Distribution
paid on January 15, 2016 to Unitholders on Record on
December 31, 2015 of $51.3 million, or $1.00 per Trust Unit.
Cash balance as of December 31, 2015 was $237.0 million.
|
Same-Property Weighted Average Capitalization Rate: 5.37% at
September 30, 2016 and 5.38% at December 31, 2015.
Computation of cap rate excludes Sold Properties.
Acquisition Opportunities
The 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 evaluation of comparable apartments in Western Canada that have recently sold.
As of November, 2016, the Trust has acquired 747 recently built,
brand new apartment units. The acquisition of these newly
built assets at a cost similar to the Trust's cost of developing
its own projects 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. Details of the acquisitions are
as follows:
2016 Acquisition
Summary
|
|
Project
Name
|
Address
|
City
|
#
Units
|
Purchase Price
|
|
Price / Door
|
|
Price
Sq
Ft
|
|
Year
2
Cap
Rate
|
|
Closing
Date
|
|
Vita
Estates
|
18120 – 78 Street NW
|
Edmonton
|
162
|
$
|
29,605,500
|
|
$
|
182,750
|
|
$
|
219
|
|
|
5.75%
|
|
07-Jun-16
|
|
Auburn
Landing
|
20 & 30 Auburn Bay Street SE
|
Calgary
|
238
|
$
|
51,170,000
|
|
$
|
215,000
|
|
$
|
244
|
|
|
5.43%
|
|
22-Jun-16
|
|
Axxess
|
908 – 156 Street NW
|
Edmonton
|
165
|
$
|
30,153,750
|
|
$
|
182,750
|
|
$
|
225
|
|
|
5.62%
|
|
09-Aug-16
|
|
The Edge
|
3011 & 3005 James Mowatt Trail SW
|
Edmonton
|
182
|
$
|
33,260,500
|
|
$
|
182,750
|
|
$
|
228
|
|
|
5.56%
|
|
17-Aug-16
|
|
TOTAL
|
|
|
747
|
$
|
144,189,750
|
|
|
|
|
|
|
|
|
|
|
|
|
With its strong liquidity, the Trust is well positioned to
create value when opportunities arise. Boardwalk continues to
monitor the market for accretive acquisitions opportunities,
including a focus on newly constructed Multi-Family
Communities.
Development Opportunities
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, to date; over 97% of the
units have been leased without the use of incentives as demand has
exceeded expectations.
The Trust is now working on the 2nd and
3rd phase of its Pines Edge development in Regina.
Both phases are four storey wood frame buildings with a single
level of underground parking totaling 150 apartment units.
Construction of phase 2, a 79-unit replica of phase 1 with the
addition of 9' ceilings, has commenced and is scheduled to be
completed in July of 2017. The total cost is estimated to be
$13.2 million, with an estimated
stabilized cap rate range of 6.25% and 6.75%. The
finalization of construction drawings and tendering of phase 3 is
underway and subject to economic and market conditions,
construction of phase 3 could begin in Q4 of 2016.
The Trust continues to explore other viable development
opportunities for multi-family apartment buildings on excess land
the Trust currently owns and other potential land opportunities in
the Trust's Alberta and
Saskatchewan markets.
Continued low interest rates, and the potential for labour market
volatility in Alberta and
Saskatchewan may present an
opportunity for the Trust to accelerate its development pipeline to
maximize Unitholder Value in the near term. The sustained
high demand for multi-family investment properties, which has
resulted in continued low capitalization rates, presents a unique
opportunity for the Trust to continue the development of
multi-family rental property in order to improve the Trust's
portfolio and enhance value for Unitholders.
Investing in our Properties – High Grading Our Portfolio With
Suite Renovation Packages
Continued internalization of more maintenance and value-added
capital expenditures has further enhanced curb appeal and the
quality of our property portfolio. The Trust believes the
quality of Boardwalk's communities continues to drive long-term
revenue growth and stability. The Trust invested $67.0 million during the nine months of 2016 to
maintain and further enhance the curb appeal and quality of the
Trust's assets. In addition, the Trust invested approximately
$3.7 million in the development of
its Pines Edge project and to explore other development
opportunities on excess land the Trust currently owns.
Boardwalk's vertically integrated structure allows many repair
and maintenance functions, including landscaping, painting, and
among others, suite renovations, to be internalized. A
continued focus on completing more of these functions in-house has
resulted in improved quality, productivity, effectiveness of
resources, and overall execution of the Trust's capital improvement
program, leading to sustainable value for our Resident Members and
long-term growth for Unitholders.
Boardwalk has introduced a Suite Renovation Package, which
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.
The Trust's focus has been to reduce incentives in this current
economic environment by providing our Resident Members with high
quality housing, which includes value added renovation packages on
new lease terms.
Since 2000, Boardwalk has invested over $1 Billion in its own portfolio in the form of
capital improvements, and by focusing on suite renovations to
provide Resident Members with additional value and a superior
product, the Trust aims to improve the quality of its portfolio
while also reducing incentives in this current environment.
Trust Unit Buyback
The continued significant dislocation between the Trust's Unit
Price and its Net Asset Value has presented a unique opportunity
for the Trust to increase its Trust Unit buyback program. On
June 29, 2016, Boardwalk REIT
announced that it had received approval from the Toronto Stock
Exchange ("TSX") to make a Normal Course Issuer Bid ("NCIB") to
purchase up to a maximum of 3,700,292 trust units representing
approximately 10% of the publicly listed float. The NCIB
commenced on July 3, 2016 and will
terminate on July 2, 2017, or such
earlier date as the Trust may complete repurchases under the
bid.
In the first nine months of 2016, a total of 666,000 Trust Units
were repurchased for cancellation under the Trust's normal course
issuer bid. As noted above, Boardwalk believes that the
current and recent market prices of its Trust Units do not reflect
their underlying value or the REIT's prospects for value creation
over the longer term. Boardwalk's management has historically
and opportunistically utilized this program as it feels that, at
certain market prices; an investment in Boardwalk's own high
quality portfolio will deliver solid returns for Unitholders and
represents an effective use of its capital.
NCIB
Period
|
Trust Units
Purchased
for
Cancellation
|
|
Weighted Average Cost
Per Trust Unit
|
|
Total Investment (000's)
|
|
|
|
|
|
|
|
|
|
|
|
9 M
2016
|
|
666,000
|
|
$
|
49.02
|
|
$
|
32,600
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
740,800
|
|
$
|
50.10
|
|
$
|
37,100
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
472,100
|
|
$
|
67.01
|
|
$
|
31,600
|
|
|
|
|
|
|
|
|
|
|
|
2007 - 2012
|
|
4,542,747
|
|
$
|
37.53
|
|
$
|
170,600
|
|
|
|
|
|
|
|
|
|
|
|
Grand
Total
|
|
6,421,647
|
|
$
|
42.34
|
|
$
|
271,900
|
|
|
|
|
|
|
|
|
|
|
|
Continued Financial Strength and Liquidity to
Capitalize on Opportunities
Including the Trust's current cash position, additional
committed financings, and its undrawn line of credit, the Trust
currently has approximately $344
million of available liquidity with debt (net of cash) to
reported investment properties value of approximately 42%.
The Trust's interest coverage ratio, excluding gain or loss on sale
of assets, for the most recent completed four quarters ended
September 30, 2016, was 3.35 times, from 3.59 times for the
same period a year ago.
Q3 2016
|
|
|
|
In
$000's
|
|
|
|
Cash Position - Sep
2016
|
$
|
109,000
|
|
|
|
|
|
Subsequent Committed
Financing
|
$
|
36,000
|
|
|
|
|
|
Line of Credit
1
|
$
|
199,000
|
|
|
|
|
|
Total Available
Liquidity
|
$
|
344,000
|
|
|
|
|
|
Liquidity as a % of
Current Total Debt
|
|
14%
|
|
|
|
|
|
Current Debt (net of
cash) as a % of reported asset value
|
|
42%
|
|
1 – The Trust's
Undrawn Credit Facility has a Credit Limit of $200mm. The balance
reflects the available balance net of outstanding Letters of
credit
|
|
The Trust estimates that based on current Canada Mortgage and
Housing Corporation ("CMHC") underwriting criteria it may obtain an
additional $386 million of additional
liquidity within the next two years by upfinancing its upcoming
mortgage maturities and utilizing its current unlevered portfolio.
The Trust's financial strength, conservative balance sheet and
historically low interest rates has positioned Boardwalk to
actively explore options to deploy capital in support of unitholder
value creation, including value added capital expenditures,
acquisitions, development of new assets, return of capital to
Unitholders and continued investment in the Trust's own portfolio
through its Trust Unit buyback program to maximize Unitholder
value.
Sustainable Revenue and Net Operating Income
Boardwalk's strategy of managing revenue while lowering turnover
and other operating costs remains key to supporting the REIT's net
operating income ("NOI"). While the REIT is not immune to
short-term impacts as a result of broader economic conditions,
Boardwalk's unique approach has delivered sustainable and long-term
value to unitholders.
One component of Boardwalk's NOI Optimization Strategy is its
rental revenue strategy, which involves the continuous active
management of three key variables: occupancy levels, market rents,
and suite-specific incentives. Despite a softening of the
Alberta and Saskatchewan economies relating to the
decrease in oil prices, this strategy has allowed the Trust to
report relatively high occupancy levels, while only slightly lower
average and occupied rents when compared to its peers and versus
the same period a year ago. In the third quarter of 2016,
average occupancy for Boardwalk's portfolio, excluding new
acquisitions, was 94.58%, a decrease compared to the fourth quarter
of 2015, and the same period last year, though substantially higher
than the estimated and reported CMHC market average. Average
monthly rents decreased to $1,066 in
September of 2016 from $1,160 in
September of 2015, and average occupied rents for the period also
decreased to $1,125 versus
$1,199 for the same period last
year. Average market rents for September of 2016 have
decreased to $1,131 from $1,169 in September of 2015, and sequentially
lower than the beginning of the year as the Trust has proactively
decreased rental rates in Alberta
markets where market vacancy levels had increased; however, the
Trust has seen its loss to lease turn positive as a result of
marginal increases to market rents in certain rental markets.
On a same-property basis, the Trust's NOI decreased 14.6% for
the third quarter versus the same period in 2015, driven by a 7.6%
decrease to revenues, and a 5.1% increase in operating expenses in
the third quarter.
The Trust's proactive adjustments in market rents and use of
rental incentives has provided relatively solid results in a soft
economic environment. As a result, the Trust has maintained
high occupancy levels in both Calgary and Edmonton markets. In addition, the now
positive mark-to-market opportunity has well positioned the Trust
to continue its focus on product quality and customer service, key
components to the NOI optimization strategy, and will continue to
drive sustainable financial performance.
|
|
Portfolio
Highlights for the Third Quarter of 2016
|
|
|
Sep-16
|
|
Dec-15
|
|
Sep-15
|
|
Average Occupancy
(Period Average)
|
|
94.58%
|
|
|
97.35%
|
|
|
96.69%
|
|
|
|
|
|
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,066
|
|
$
|
1,150
|
|
$
|
1,160
|
|
|
|
|
|
|
|
|
|
|
|
Average Market Rent
(Period Ended)
|
$
|
1,131
|
|
$
|
1,168
|
|
$
|
1,169
|
|
|
|
|
|
|
|
|
|
|
|
Average Occupied Rent
(Period Ended)
|
$
|
1,125
|
|
$
|
1,179
|
|
$
|
1,199
|
|
|
|
|
|
|
|
|
|
|
|
Loss -to-Lease
(Period Ended) ($ millions )
|
$
|
2.3
|
|
$
|
(4.4)
|
|
$
|
(11.5)
|
|
|
|
|
|
|
|
|
|
|
|
Loss -to-Lease Per
Trust Unit (Period Ended)
|
$
|
0.05
|
|
$
|
(0.08)
|
|
$
|
(0.22)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
Year-
Over-Year -
3
|
|
% Change
Year-
Over-Year -
9
|
|
Same Property
Results
|
|
|
|
Months
Sep-16
|
|
Months
Sep-16
|
|
Rental
Revenue
|
|
|
|
|
-7.6%
|
|
|
-5.1%
|
|
Operating
Costs
|
|
|
|
|
5.1%
|
|
|
3.1%
|
|
Net Operating Income
(NOI)
|
|
|
|
|
-14.6%
|
|
|
-9.8%
|
|
|
|
|
|
|
|
|
|
|
|
Same property Results
Exclude 79-unit Pines Edge of (Pines of Normanview II Development)
completed January 2016, 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.
|
On a sequential basis, stabilized revenues for the third quarter
of 2016 decreased 2.2% when compared to the previous quarter,
mainly the result of higher market vacancy rates. Continued
high occupancy in Boardwalk's portfolio, and solid relative
operational performance reflects positively on the Trust's
vertically integrated operating and NOI optimization
strategies. Of note, Fort
McMurray posted a 17.5% sequential gain in revenue as
occupancies increased to over 97%. Historically, Fort McMurray has been a leading indicator for
the broader Alberta economy.
|
|
|
|
|
|
|
|
|
|
|
Stabilized
Revenue
Growth
|
# of
Units
|
|
|
Q3
2016
vs
Q2
2016
|
|
Q2
2016
vs
Q1
2016
|
|
Q1
2016
vs
Q4
2015
|
|
Q4
2015
vs
Q3
2015
|
Edmonton
|
|
12,397
|
|
|
-2.9%
|
|
-4.1%
|
|
-2.2%
|
|
-1.0%
|
Calgary
|
|
5,419
|
|
|
-5.0%
|
|
-4.0%
|
|
-2.5%
|
|
-1.7%
|
Red Deer
|
|
939
|
|
|
-7.7%
|
|
-3.9%
|
|
-2.8%
|
|
-0.3%
|
Grande
Prairie
|
|
645
|
|
|
-8.6%
|
|
-6.4%
|
|
-3.2%
|
|
-1.4%
|
Fort
McMurray
|
|
352
|
|
|
17.5%
|
|
-14.6%
|
|
-9.7%
|
|
-2.2%
|
Quebec
|
|
6,000
|
|
|
2.0%
|
|
0.8%
|
|
-0.8%
|
|
1.2%
|
Saskatchewan
|
|
4,610
|
|
|
-2.4%
|
|
-1.8%
|
|
-2.3%
|
|
-0.6%
|
Ontario
|
|
2,585
|
|
|
0.5%
|
|
0.5%
|
|
0.6%
|
|
0.6%
|
|
|
32,947
|
|
|
-2.2%
|
|
-2.9%
|
|
-2.0%
|
|
-0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2016 Financial Highlights
|
$ millions, except
per unit amounts
|
Highlights of the
Trust's Third Quarter 2016 Financial Results
|
|
|
3 Months
Sep
30,
2016
|
|
|
3 Months
Sep
30,
2015
|
|
%
Change
|
|
|
9 Months
Sep
30,
2016
|
|
|
9 Months
Sep
30,
2015
|
|
%
Change
|
Same Store Total
Rental Revenue
|
|
$
|
107.5
|
|
|
$
|
116.3
|
|
|
-7.6%
|
|
|
$
|
330.7
|
|
|
$
|
348.6
|
|
|
-5.1%
|
Total Rental
Revenue
|
|
$
|
109.0
|
|
|
$
|
119.7
|
|
|
-9.0%
|
|
|
$
|
332.7
|
|
|
$
|
360.5
|
|
|
-7.7%
|
Same Store Net
Operating Income (NOI)
|
|
$
|
63.9
|
|
|
$
|
74.9
|
|
|
-14.6%
|
|
|
$
|
200.4
|
|
|
$
|
222.2
|
|
|
-9.8%
|
Net Operating Income
(NOI)
|
|
$
|
63.2
|
|
|
$
|
74.9
|
|
|
-15.7%
|
|
|
$
|
196.7
|
|
|
$
|
223.8
|
|
|
-12.1%
|
(Loss) profit for the
period
|
|
$
|
(35.5)
|
|
|
$
|
(191.6)
|
|
|
-81.5%
|
|
|
$
|
27.2
|
|
|
$
|
(85.6)
|
|
|
-131.8%
|
Funds From Operations
(FFO)
|
|
$
|
37.2
|
|
|
$
|
47.6
|
|
|
-21.9%
|
|
|
$
|
114.9
|
|
|
$
|
140.6
|
|
|
-18.3%
|
Adjusted Funds From
Operations (AFFO)
|
|
$
|
32.8
|
|
|
$
|
43.3
|
|
|
-24.3%
|
|
|
$
|
101.8
|
|
|
$
|
127.7
|
|
|
-20.3%
|
FFO Per
Unit
|
|
$
|
0.73
|
|
|
$
|
0.92
|
|
|
-20.7%
|
|
|
$
|
2.26
|
|
|
$
|
2.70
|
|
|
-16.3%
|
AFFO Per
Unit
|
|
$
|
0.65
|
|
|
$
|
0.83
|
|
|
-21.7%
|
|
|
$
|
2.00
|
|
|
$
|
2.46
|
|
|
-18.7%
|
Regular Distributions
Declared (Trust Units & LP B Units)
|
|
$
|
28.5
|
|
|
$
|
26.5
|
|
|
7.7%
|
|
|
$
|
84.9
|
|
|
$
|
79.5
|
|
|
6.7%
|
Regular Distributions
Declared Per Unit (Trust Units & LP B Units)
|
|
$
|
0.563
|
|
|
$
|
0.510
|
|
|
10.3%
|
|
|
$
|
1.106
|
|
|
$
|
1.020
|
|
|
8.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess of AFFO over
Distributions Per Unit
|
|
$
|
0.088
|
|
|
$
|
0.320
|
|
|
-72.7%
|
|
|
$
|
0.894
|
|
|
$
|
1.440
|
|
|
-37.9%
|
Regular Payout as a %
FFO
|
|
|
76.7%
|
|
|
|
55.7%
|
|
|
|
|
|
|
73.9%
|
|
|
|
56.6%
|
|
|
|
Regular Payout as a %
AFFO
|
|
|
87.0%
|
|
|
|
61.2%
|
|
|
|
|
|
|
83.4%
|
|
|
|
62.3%
|
|
|
|
Excess of AFFO as a %
of AFFO
|
|
|
13.0%
|
|
|
|
38.8%
|
|
|
|
|
|
|
16.6%
|
|
|
|
37.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Coverage
Ratio (Rolling 4 quarters)
|
|
|
3.35
|
|
|
|
3.59
|
|
|
|
|
|
|
3.35
|
|
|
|
3.59
|
|
|
|
Operating
Margin
|
|
|
58.0%
|
|
|
|
62.6%
|
|
|
|
|
|
|
59.1%
|
|
|
|
62.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2016, under the section titled, "Performance
Measures".
Mortgage Financing
Interest rates remain low and have benefitted the Trust's
mortgage program as the Trust has continued to renew existing CMHC
insured mortgages at interest rates well below the maturing
rates. As of September 30, 2016, the Trust's total
mortgage principal outstanding totaled $2.50
billion at a weighted average interest rate of 2.82%,
compared to $2.32 billion at a
weighted average interest rate of 3.08% reported for
September 30, 2015.
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 4.8 years, with a remaining
amortization of 30 years. The Trust's debt (net of cash) to
reported asset value ratio was approximately 42% as of
September 30, 2016.
The Trust has renewed, or forward locked, the interest rate on
100% of its 2016 maturities. The new rate on the 2016
mortgages renewed to date has been reduced to 2.14% from 3.92%,
while also extending the maturity of these mortgages to over 7
years. The estimated annualized interest savings on the
renewed principal is estimated to be $4.4
million. In addition, the Trust has raised
$197.2 million in additional
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 1.70% and 2.30%, respectively. The Trust
reviews each mortgage individually; however, given the current
interest rate environment, the Trust presently has a bias towards
renewing its maturing mortgages for longer terms (7 to 10
years).
Q3 Regular Monthly Distributions
Boardwalk's Board of Trustees reviews the Trust's monthly
regular distributions on a quarterly basis, and has confirmed the
next three months regular distribution as follows:
|
|
|
|
|
|
|
|
Month
|
|
Per Unit
|
|
Annualized
|
|
Record
Date
|
Distribution
Date
|
Nov-16
|
|
$
|
0.1875
|
|
$
|
2.25
|
|
30-Nov-16
|
15-Dec-16
|
Dec-16
|
|
$
|
0.1875
|
|
$
|
2.25
|
|
30-Dec-16
|
16-Jan-17
|
Jan-17
|
|
$
|
0.1875
|
|
$
|
2.25
|
|
31-Jan-17
|
15-Feb-17
|
Boardwalk has distributed over $1
billion in cash distributions since 2004.
The Board of Trustees will continue to review the distributions
made on the Trust Units on a quarterly basis.
Revised 2016 Financial Guidance
As is customary on a quarterly basis, the Trust reviews the key
assumptions used in deriving its public financial guidance.
Based on the Trust's review of its key forecasting assumptions, it
has determined that a reduction in both Stabilized Building NOI
growth as well as its reported FFO and AFFO per Unit range is
warranted. The reduction is the result of a softer than
expected summer turnover season where both market vacancies and
competition for Residents have increased, in part, a result of
increased new supply of apartments entering the Alberta markets.
The impact of these is a reduction to the Trust's 2016
stabilized NOI guidance range to -12% to -10%. When including
the non-recurring one-time items noted in the first half of 2016,
the Trust is revising its FFO guidance range to $2.90 to $3.00 and an AFFO guidance range to
$2.56 to $2.66. In addition,
the Trust has confirmed its acquisition target for 2016 at 747
apartment units.
|
|
|
|
Description
|
Q3 2016 Revised
Objectives
|
Q2 2016 Revised
Objectives
|
Original 2016
Objectives
|
Dispositions of
Investment
Properties
|
No
dispositions
|
No
dispositions
|
No
dispositions
|
Acquisition of
Investment
Properties
|
747 Apartment
Units
|
800 - 1,000 Apartment
Units
|
No new
apartment
acquisitions
|
Development
|
Phase 1 of Pines
Edge,
Regina, Saskatchewan -
79 Units
|
Phase 1 of Pines
Edge,
Regina, Saskatchewan -
79 Units
|
Pines Edge;
Regina,
Saskatchewan - 79 Units
|
|
Commencement of
Phase
2 & review of Phase 3 of Pines Edge
-
Regina,
Saskatchewan - 150 Units
|
Commencement of
Phase
2 & 3 of Pines Edge -
Regina,
Saskatchewan - 150 Units
|
|
Stabilized Building
NOI Growth
|
-12% to
-10%
|
-10% to
-5%
|
-2% to 2%
|
FFO Per
Unit
|
$2.90 to
$3.00
|
$3.05 to
$3.20
|
$3.40 to
$3.60
|
AFFO Per
Unit
|
$2.56 to
$2.66
|
$2.71 to
$2.86
|
$3.06 to
$3.26
|
In addition to the above financial guidance for 2016, the Trust
provides its original and revised guidance (revised in the previous
quarter) relating to its capital expenditure program, and is
confirmed as follows:
|
|
|
|
|
|
Capital Budget -
in thousands $ except per Unit amount
|
Revised
Budget
|
2016
Budget
|
Per
Unit
|
Nine Months Ended
Sep 30,
2016
Actual
|
Per
Unit
|
|
|
|
|
|
|
Maintenance
Capital(1)
|
$
|
17,193
|
$
|
17,193
|
$
|
525
|
$
|
13,101
|
$
|
394
|
Stabilizing &
Value Added Capital (2)
|
$
|
85,136
|
$
|
73,136
|
$
|
2,463
|
$
|
53,916
|
$
|
1,620
|
Total Operational
Capital
|
$
|
102,329
|
$
|
90,329
|
$
|
2,988
|
$
|
67,017
|
$
|
2,014
|
|
|
|
|
|
|
Total Operational
Capital
|
$
|
102,329
|
$
|
90,329
|
|
$
|
67,017
|
|
Development
|
$
|
9,400
|
$
|
12,444
|
|
$
|
3,651
|
|
Total Capital
Investment
|
$
|
111,729
|
$
|
102,773
|
|
$
|
70,668
|
|
(1) Assumes Annual
Maintanence Capital Expenditure of $525 per unit
|
|
|
|
|
(2) Including
Property, Plant, and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
2017 Financial Guidance
As is customary with Boardwalk REIT's third quarter report, the
Trust is introducing its financial guidance and capital budget for
the upcoming 2017 fiscal year as follows:
Description
|
2017
Objectives
|
Acquisition,
Dispositions and Development
|
Phase 2 of Pines
Edge,
Regina, Saskatchewan -
79 Units
|
|
Continue with Phase 3
of Pines Edge,
Regina, Saskatchewan -
71 Units
|
|
Commencement of
Brentwood Village joint venture with RioCan,
Calgary, Alberta
~ 165 units
|
Stabilized Building
NOI Growth
|
-8% to -3%
|
FFO Per
Unit
|
$2.70 to
$2.90
|
AFFO Per
Unit
|
$2.36 to
$2.56
|
|
|
|
Capital Budget -
in thousands $ except per Unit amount
|
2017
Budget
|
Per
Unit
|
|
|
|
Maintenance
Capital(1)
|
$
|
17,731
|
$
|
525
|
Stabilizing &
Value Added Capital (2)
|
$
|
80,003
|
$
|
2,369
|
Total Operational
Capital
|
$
|
97,734
|
$
|
2,894
|
|
|
|
|
Total Operational
Capital
|
$
|
117,734
|
|
Repositioning
Capital
|
$
|
20,000
|
|
Development
|
$
|
24,071
|
|
Total Capital
Investment
|
$
|
141,805
|
|
(1) Assumes Annual
Maintanence Capital Expenditure of $525 per unit
|
|
|
(2) Including
Property, Plant, and Equipment
|
|
|
|
|
|
Management will continue to update the Financial Guidance on a
quarterly basis. The reader is cautioned this information is
forward-looking and actual results may vary materially from those
reported.
Supplementary Information
Boardwalk produces the Quarterly Supplemental Information that
provides detailed information regarding the Trust's activities
during the quarter. The Third Quarter 2016 Supplemental
Information as well as the Trust's Management Discussion and
Analysis and Financial Statements are available on Boardwalk's
investor website at www.boardwalkreit.com.
Teleconference on Third Quarter 2016 Financial
Results
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow morning
(November 11, 2016) 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: 89597676
Topic: Boardwalk REIT 2016 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=1276375&s=1&k=1EEB9039600BA72A713D309C19432526
Replay: An audio recording of the teleconference will be
available on the Trust's website: www.boardwalkreit.com
Corporate Profile
Boardwalk REIT strives to be Canada's friendliest landlord 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 1,400 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 2016 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 2015 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