- 12M, 2016 FFO per unit of $2.84
and includes $0.09 per trust unit of
one-time, non-recurring items
- Q4, 2016 FFO per unit of $0.58
- Positioning for market recovery
- Suite renovation and upgrade packages remain key to Resident
value and reduction of incentives and vacancy
- Short-term capital availability increases to $482 million
- Countercyclical Acquisitions and Solid Development Pipeline
- 747 newly constructed apartment units acquired in 2016 in
Calgary and Edmonton
- Partnership with Riocan REIT to co-develop a 12-storey
mixed-use tower in Calgary
- Lease Up of newly developed Pines Edge ahead of schedule with
over 97% occupancy
- Internal development opportunity of over 4,600 apartment units
totaling 4.7 million buildable square feet on existing lands
- Purchased 666,000 Trust Units for cancellation during the
twelve months of 2016
- Net Asset Value, including cash of $62.89 per Trust Unit
- Revises its 2017 financial guidance
CALGARY, Feb. 16, 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
fourth quarter of 2016.
In 2016, the Trust continued to feel the effects of a softer
economic environment in Western
Canada as a result of lower resource prices, negative GDP
growth in Alberta, significant new
supply of purpose built rentals and in comparison to record results
in 2015. Boardwalk continues to proactively use incentives to
maintain higher occupancy with a focus on customer service and
quality, while providing the best value in housing.
Funds From Operations ("FFO") for the fourth quarter of 2016
were $29.6 million, or $0.58 per Trust Unit on a diluted basis, compared
to FFO of $44.2 million or
$0.86 per Trust Unit for the same
period last year, a decrease of 33.1% and 32.6% respectively.
Adjusted Funds from Operations ("AFFO") per Trust Unit decreased
35.9% to $0.50 for the current
quarter, from $0.78 per Trust Unit
during the same period in 2015.
For the twelve-month period ended December 31, 2016, FFO
was $144.5 million, or $2.84 per Trust Unit on a diluted basis, compared
to FFO of $184.9 million, or
$3.56 per Trust Unit, for the same
period a year ago, a decrease of 21.8% and 20.2%,
respectively. AFFO per Trust Unit for the twelve months of
2016 decreased 22.6% to $2.50 per
Trust Unit from $3.23 in 2015.
FFO for the twelve months of 2016 decreased by $0.09 per Trust Unit as a result of one-time,
non-recurring items which included the previously announced cost of
retirement of a senior executive ($0.02/Trust Unit), the cost associated with the
retirement of a second executive ($0.01/Trust Unit), the financial impact from the
discounted rental units to evacuees of the Fort McMurray wildfire in the months of May
and June 2016 ($0.03/Trust Unit), and the costs associated with
the Trust's strategic review ($0.03/Trust Unit).
Stabilized same property revenue decreased 6.3%, while operating
costs increased 4.5%, resulting in a Net Operating Income ("NOI")
decrease for the twelve-month period ended December 31, 2016 of 12.5%.
Rental revenues decreased through the summer turnover season and
carried into the second half of 2016 as the onset of new purpose
built rental supply in the Trust's Alberta markets provided renters with
additional choices, which resulted in increased vacancies and lower
rental rates. Operating costs increased mainly as a result of
higher property taxes, though this was partially offset by a
decrease in operating G&A.
Over the long term, Alberta
rents have increased by three to four percent per annum, and
historically revert back to the mean as housing supply and demand
re-balances. Building permits and starts continue to trend
downwards, and is a positive leading indicator for the re-balancing
of supply and demand of the rental market. The construction
of additional purpose-built rental housing in Alberta has also slowed with limited new
construction expected in 2017.
The impact of the Fort McMurray
fires to both the Alberta and
overall Canadian economies have tapered. Signs of macro
economic recovery are beginning to show in Alberta, economic indicators of a downturn are
levelling off and oil prices have stabilized above $50 USD per barrel. The recent pipeline
approvals add to optimism in Alberta and, as a result, the labour market
has seen a similar stabilization. Job layoffs in the province have
slowed, with many companies planning to add staff in 2017.
The Alberta Treasury Board has forecasted GDP growth of 2.3% in
2017, compared to negative GDP in each of the last two
years.
The Trust is positioning itself to create value through the
re-balancing of the housing market by utilizing this exceptional
opportunity to accomplish its long term strategic goal of
high-grading its portfolio by developing new assets, investing in
suite renovations and upgrades, and acquiring newly built assets at
price levels near construction cost. As the rental market
moves towards equilibrium, Boardwalk's investments in suite
renovations are positioning the Trust to begin reducing both
incentives and vacancy. These newly renovated suites,
combined with Boardwalk's commitment to quality and service, will
allow the Trust to gain market share, regardless of market
conditions, and reduce its incentives and vacancy.
Positioning for the Market Recovery
The Trust carried higher vacancy into the latter part of 2016,
in part as a result of its commitments associated with the
Fort McMurray fire disaster, and
continues to offer short-term incentives to remain competitive and
to optimize Net Operating Income. Incentives for the 12
months of 2016 totalled $22.3
million, while vacancy was $21.2
million. There is a significant opportunity for the Trust to
re-capture higher revenues through the reduction of incentives and
improving occupancy.
By investing in its suite renovation program, Boardwalk will
have newly renovated homes available for Residents. 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 lower
incentives for our new and existing Residents. These efforts will
further add to Boardwalk's mission of providing the best value in
housing and support sustainable and growing Unitholder value
creation. To date, the Trust has seen some success as a
result of its suite renovation program, and continues to offer
incentives to decrease vacancy. In the first two months of
2017, vacancy has decreased approximately 1% from December of
2016. By decreasing vacancy and the availability of units,
the Trust is well positioned to reduce incentives moving
forward.
The quality of Boardwalk's communities continues to drive
long-term revenue growth and stability. The Trust invested
$102.6 million during the twelve
months of 2016 to maintain and further enhance the curb appeal and
quality of the Trust's assets. In addition, the Trust
invested approximately $6.2 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, effective use of
resources, and overall execution of the Trust's capital improvement
program, leading to better value for our Resident Members and
long-term growth for Unitholders.
The Trust's focus for the first half of 2017 is to continue to
position itself for a market recovery by offering incentives to
maximize occupancy. Boardwalk will continue to provide its 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, will
provide Resident Members with additional value and a superior
product.
Continued Financial Strength and Liquidity to
Capitalize on Opportunities
Since the previous economic downturn, the Trust had taken
measures to further strengthen its balance sheet to maintain
financial strength and flexibility. This action, coupled with
historically low interest rates, has positioned Boardwalk with the
flexibility to act on opportunities to deploy capital in support of
Unitholder value creation. Examples of these opportunities include
value added capital expenditures such as the new suite-renovation
program, acquisitions, development of new assets, joint ventures,
and a continued investment in the Trust's own portfolio through
value-added capital expenditures.
At the end of 2016, the Trust had approximately $482 million in short-term availability that it
could deploy towards accretive opportunities.
Q4 2016
|
|
In
$000's
|
|
Cash Position - Dec
2016
|
$
|
99,000
|
|
|
Subsequent Committed
Financing
|
$
|
34,000
|
|
|
Line of Credit
1
|
$
|
194,000
|
|
|
Total Available
Liquidity
|
$
|
327,000
|
|
|
CMHC Certificates of
Insurance - Uncommitted
|
$
|
155,000
|
|
|
Total Short-Term Availability
|
$
|
482,000
|
|
|
Liquidity as a % of
Current Total Debt
|
13%
|
|
|
Current Debt (net of
cash) as a % of reported asset value
|
43%
|
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
|
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 December 31, 2016, the Trust's total
mortgage principal outstanding totaled $2.52
billion at a weighted average interest rate of 2.78%,
compared to $2.35 billion at a
weighted average interest rate of 3.01% reported for
December 31, 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 43% as of
December 31, 2016.
The Trust successfully completed its 2016 mortgage program with
a reduction of the interest rate on its 2016 mortgages maturities
from 3.92% to 2.14%, 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 2.00% and 2.70%, respectively. The
Trust's interest coverage ratio, excluding gain or loss on sale of
assets, for the most recent completed four quarters ended
December 31, 2016, was 3.14 times, from 3.64 times for the
same period a year ago.
Boardwalk'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,
Boardwalk's suite renovation program, acquisitions, joint ventures,
and the development of new assets to maximize Unitholder value.
Counter-Cyclical Acquisitions and 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 evaluation of
comparable apartments in Western
Canada that have recently sold.
The addition of newly constructed rental communities is
consistent with the high-grading of Boardwalk's portfolio.
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.
Leasing of these new acquisitions remain on schedule and as they
stabilize, will add to the Trust's overall performance.
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 has commenced construction of Phase 2 of Pines Edge,
and has taken further steps to prepare Phase 3. 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 Q2 of 2017.
Boardwalk's internal development opportunities include
additional projects on existing excess density that the Trust holds
in its portfolio. These developments are in various stages of
planning and approval, and provide a significant pipeline of over
4,600 apartment units totaling 4.7 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 120,000 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 are currently working together
to finalize the submission of plans for a development permit.
Subject to the receipt of both the development permit and the
subdivision of the lands, closing is expected to occur on
May 30, 2017, with construction
beginning as early as Q3 of 2017.
The Trust continues to explore other potential developments to
complement the organic growth opportunities that have arisen from
the volatility in 2016.
Trust Unit Buyback
The significant dislocation between the Trust's Unit Price and
its Net Asset Value represents unique opportunity for the Trust to
execute on its Trust Unit buyback program. On June 29, 2016, Boardwalk REIT announced that it
had received approval from the Toronto Stock Exchange ("TSX") to
implement 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 twelve months of 2016, a total of 666,000 Trust Units
were repurchased for cancellation under the Trust's normal course
issuer bid. 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 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, when balanced with other capital
allocation opportunities, represents an effective use of its
capital.
NCIB
Period
|
Trust
Units
Purchased
for
Cancellation
|
Weighted Average
Cost
Per Trust
Unit
|
Total Investment
(000's)
|
|
|
|
|
12 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
|
Net Asset Value
Same property fair value for the Trust's portfolio decreased
relative to the previous quarter primarily a result of increased
expense assumptions relating to the adoption of 2017 budget
expenses, which seasonally occurs each fourth quarter. The
Trust continues to utilize the higher vacancy assumptions adopted
in the third quarter of 2016 and, as a result same property fair
value when excluding newly acquired assets, decreased approximately
$88 million versus the previous
quarter.
Since the decline in oil prices and the corresponding economic
downturn in Alberta that began in
the second half of 2014, the Trust has adjusted its Fair Value
accordingly with a significant decrease recorded in the third
quarter of 2015 as market rents were adjusted. 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.
![Same Portfolio Fair Value (CNW Group/Boardwalk Real Estate Investment Trust)](https://mma.prnewswire.com/media/469196/Boardwalk_Real_Estate_Investment_Trust_Boardwalk_REIT_Announces.jpg)
Total Fair Value under IFRS for the Trust's portfolio increased
relative to the end of 2015, mainly as a result new acquisitions,
partially mitigated by fair value losses resulting from the noted
decreases in market rents, higher vacancy assumptions mainly in the
Trust's Alberta and Saskatchewan
Communities where market vacancy rates have increased, and higher
expense assumptions. Below is a summary of the Trust's total
per unit Net Asset Value with further discussion located in the
2016 Fourth Quarter MD&A.
|
Highlights of the
Trust's Fair Value of Investment Properties
|
|
Dec 31,
2016
|
Dec 31,
2015
|
IFRS Asset Value Per
Diluted Unit (Trust & LP B)
|
$
|
110.62
|
$
|
107.95
|
Debt Outstanding per
Diluted Unit
|
$
|
(49.68)
|
$
|
(45.80)
|
Net Asset Value (NAV)
Per Diluted Unit (Trust & LP B)
|
$
|
60.94
|
$
|
62.15
|
Cash Per Diluted Unit
(Trust & LP B) 1
|
$
|
1.95
|
$
|
3.62
|
Total Per Diluted
Unit (Trust & LP B)
|
$
|
62.89
|
$
|
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: 5.38% at
December 31, 2016 and December 31, 2015
2017 Financial Guidance
At the end of the third quarter of 2016, the Trust announced its
financial outlook for the upcoming 2017 year. 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 has revised its 2017 objectives as follows:
|
|
|
|
Description
|
2017 Revised
Objectives
|
2017 Original
Objectives
|
2016
Actual
|
|
|
|
|
Acquisition of
Investment Properties
|
No new apartment
acquisitions
|
No new apartment
acquisitions
|
Acquired 747
Apartment Units
|
|
|
|
|
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 1 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
|
Commencement
of
Phase
2 and the review
of
Phase 3 of Pines
Edge - Regina,
Saskatchewan -
150 Units
|
|
|
|
|
|
Commencement
of
Brentwood Village
joint venture with
RioCan, Calgary, Alberta
~ 164
units
|
Commencement
of
Brentwood Village
joint venture with
RioCan,
Calgary,
Alberta
~ 164
units
|
|
|
|
|
|
Stabilized Building
NOI Growth
|
-15% to
-9%
|
-8% to -3%
|
-12.50%
|
|
|
|
|
FFO Per
Unit
|
$2.30 to
$2.65
|
$2.70 to
$2.90
|
$2.84
|
|
|
|
|
AFFO Per
Unit
|
$1.96 to
$2.31
|
$2.36 to
$2.56
|
$2.50
|
The Trust experienced a much weaker fourth quarter than
anticipated, mainly driven by lower reported revenue, the result of
increased competition in our western Canadian markets. This lower
revenue was the result of higher vacancy loss and rental
incentives. To address this increased competition, the Trust
aggressively approached existing Resident Members with an increased
level of incentives to renew their leases early. In addition, we
increased the level of short term incentives offered to potential
new Resident Members. We believe that these initiatives,
combined with increased capital investment in our properties, will
lower future turnover and increase rental demand. This should
result in increased occupancy levels and lower reported vacancy
loss for future months. However, in the majority of
these early renewals, the existing rental rate has been higher than
the new net rent offered when including the increased incentives.
The result of this has been a short term deterioration of reported
rents during the latter part of 2016, as the rental market
rebalances. By focusing on both retaining existing Resident
Members and attracting new Residents, the Trust will be positioned
to take advantage of future market improvement.
Although we are still in the early stages of this program, we
have noted that overall turnover is substantially lower than the
previous year, while overall rentals are also ahead of prior years,
which has traditionally proven to be a leading indicator for
increased revenue in the future months. Due to current market
volatility, predicting future revenue trends has become more
difficult. As such, we have increased the revenue sensitivity
disclosure of our guidance. The main assumption that we
changed was the base level of rent used in determining the original
2017 guidance. Adjusting base rent has correspondingly
lowered our revenue expectation for 2017.
Since our main adjustment is related to revenue, we have
provided an additional chart showing FFO outcomes using separate
revenue assumptions with the lower end of the reported guidance
based on the most recent financial information annualized with no
provision for improvement throughout the remainder of the
year. For example, if the Trust does not see any revenue
improvement for the remainder of 2017, we estimate reported FFO of
$2.30. The Trust's adjusted FFO
guidance range is between $2.30 and
$2.65 per Trust Unit. In order to reach the higher end
of the guidance, rents will have to increase by 4% above the base
revenue level through 2017.
In deriving these forecasts, we have adjusted for the treatment
of the LP B Units to be treated as equity (versus debt under IFRS)
and their related treatment of the distributions paid (which are
classified as financing charges under IFRS). In addition, we
are assuming no additional acquisition or disposition of
properties.
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
has assumed the following capital will be reinvested in its
existing portfolio for the 2017 fiscal year.
|
|
|
|
|
Capital Budget
($000's)
|
2017
Budget
|
Per
Suite
|
2016
Actual
|
Per
Suite
|
Maintenance
Capital
|
$
|
17,731
|
$
|
525
|
$
|
17,534
|
$
|
525
|
Stabilizing &
Value Added Capital (including Property, Plant &
Equipment)
|
|
80,003
|
|
2,369
|
|
85,052
|
|
2,547
|
Total Operational
Capital
|
$
|
97,734
|
$
|
2,894
|
$
|
102,586
|
$
|
3,072
|
Total Operational
Capital
|
$
|
97,734
|
|
|
$
|
102,586
|
|
|
Repositioning
Capital
|
|
20,000
|
|
|
|
-
|
|
|
Development
|
|
24,071
|
|
|
|
6,167
|
|
|
Total Capital
Investment
|
$
|
141,805
|
|
|
$
|
108,753
|
|
|
In total, we expect to invest $97.7
million (or $2,894 per
apartment unit) on operational capital in 2017 as compared to
$102.6 million (or $3,072 per apartment unit) actually spent in
2016. The Trust has maintained its Maintenance Capital
estimate for 2017 at $525 per
apartment unit per year. Additionally, for the year ended
December 31, 2016, the Trust invested $6.2 million of development and $144.4 million on acquisitions in Alberta.
Stabilizing and Value Added capital is subject to continuous
review and will only be invested if the Trust can earn a
significant return on this investment.
Included in the 2017 Budget is $20
million for the Trust's suite upgrade and repositioning
program. This Fund is targeted for specific properties and
will focus on significant upgrades to existing suites, common
areas, as well as internal amenities. This reserve is subject
to continuous review and internally set rates of return and is
consistent with the Trust's Long Term Strategy of upgrading its
existing property portfolio.
Timing of Future Financial Guidance Release
The Trust has previously released its forward guidance each year
with its third quarter results. The Trust continues to be
committed to financial transparency by making this information
public. Recent events have highlighted that additional
information through the final months of each year will allow the
Trust to improve the accuracy of these estimates prior to the
release of its forward financial guidance.
As a result, future financial forecasts for subsequent years
will be issued as part of the Trust's fourth quarter and year end
results. The Trust will continue to review its key
assumptions on a quarterly basis and where warranted make changes
to its financial guidance.
Q4 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
|
Feb-17
|
$
|
0.1875
|
$
|
2.25
|
28-Feb-17
|
15-Mar-17
|
Mar-17
|
$
|
0.1875
|
$
|
2.25
|
31-Mar-17
|
17-Apr-17
|
Apr-17
|
$
|
0.1875
|
$
|
2.25
|
28-Apr-17
|
15-May-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.
Supplementary Information
Boardwalk produces the Quarterly Supplemental Information that
provides detailed information regarding the Trust's activities
during the quarter. The Fourth Quarter 2016 Supplemental
Information is available on Boardwalk's investor website at
www.boardwalkreit.com.
Teleconference on Fourth Quarter 2016 Financial
Results
Boardwalk invites you to participate in the teleconference that
will be held to discuss these results tomorrow morning
(February 17, 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: 44110902
Topic: Boardwalk REIT 2016 Fourth 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=1339063&s=1&k=47F7BD2C84BF232FA4D3651EAD8EE97B
Replay: An audio recording of the teleconference will be
available on the Trust's website: www.boardwalkreit.com
Fourth Quarter 2016 Financial Highlights
|
$ millions, except
per unit amounts
|
Highlights of the
Trust's Fourth Quarter 2016 Financial Results
|
|
3 Months
Dec 31,
2016
|
3 Months
Dec 31,
2015
|
%
Change
|
12 Months
Dec 31,
2016
|
12
Months
Dec 31,
2015
|
%
Change
|
Same Store Total
Rental Revenue
|
$
|
104.4
|
$
|
115.6
|
-9.7%
|
$
|
435.1
|
$
|
464.2
|
-6.3%
|
Total Rental
Revenue
|
$
|
106.1
|
$
|
115.7
|
-8.3%
|
$
|
438.8
|
$
|
476.1
|
-7.8%
|
Same Store Net
Operating Income (NOI)
|
$
|
57.5
|
$
|
72.3
|
-20.5%
|
$
|
257.9
|
$
|
294.6
|
-12.5%
|
Net Operating Income
(NOI)
|
$
|
56.4
|
$
|
70.9
|
-20.4%
|
$
|
253.1
|
$
|
294.7
|
-14.1%
|
(Loss) profit for the
period
|
$
|
(84.7)
|
$
|
114.4
|
-174.0%
|
$
|
(57.4)
|
$
|
28.8
|
-299.1%
|
Funds From Operations
(FFO)
|
$
|
29.6
|
$
|
44.2
|
-33.1%
|
$
|
144.5
|
$
|
184.9
|
-21.8%
|
Adjusted Funds From
Operations (AFFO)
|
$
|
25.2
|
$
|
40.1
|
-37.2%
|
$
|
126.9
|
$
|
167.8
|
-24.4%
|
FFO Per
Unit
|
$
|
0.58
|
$
|
0.86
|
-32.6%
|
$
|
2.84
|
$
|
3.56
|
-20.2%
|
AFFO Per
Unit
|
$
|
0.50
|
$
|
0.78
|
-35.9%
|
$
|
2.50
|
$
|
3.23
|
-22.6%
|
Regular Distributions
Declared (Trust Units & LP B Units)
|
$
|
28.5
|
$
|
26.3
|
8.5%
|
$
|
113.4
|
$
|
105.8
|
7.1%
|
Regular Distributions
Declared Per Unit (Trust Units & LP B Units)
|
$
|
0.563
|
$
|
0.510
|
10.3%
|
$
|
2.233
|
$
|
2.039
|
9.5%
|
|
|
|
|
|
|
|
|
|
|
|
Excess of AFFO over
Distributions Per Unit
|
$
|
(0.063)
|
$
|
0.270
|
-123.1%
|
$
|
0.267
|
$
|
1.191
|
-77.6%
|
Regular Payout as a %
FFO
|
|
96.4%
|
|
59.5%
|
|
|
78.5%
|
|
57.3%
|
|
Regular Payout as a %
AFFO
|
|
113.4%
|
|
65.6%
|
|
|
89.3%
|
|
63.1%
|
|
Excess of AFFO as a %
of AFFO
|
|
-13.4%
|
|
34.4%
|
|
|
10.7%
|
|
36.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Coverage
Ratio (Rolling 4 quarters)
|
|
3.14
|
|
3.64
|
|
|
3.14
|
|
3.64
|
|
Operating
Margin
|
|
53.1%
|
|
61.3%
|
|
|
57.7%
|
|
61.9%
|
|
|
Portfolio
Highlights for the Fourth Quarter of 2016
|
|
Dec-16
|
Dec-15
|
Average Occupancy
(Period Average)
|
|
94.24%
|
|
97.34%
|
|
|
|
|
|
Average Monthly Rent
(Period Ended)
|
$
|
1,019
|
$
|
1,150
|
|
|
|
|
|
Average Market Rent
(Period Ended)
|
$
|
1,103
|
$
|
1,168
|
|
|
|
|
|
Average Occupied Rent
(Period Ended)
|
$
|
1,086
|
$
|
1,179
|
|
|
|
|
|
Loss -to-Lease
(Period Ended) ($ millions )
|
$
|
6.0
|
$
|
(4.4)
|
|
|
|
|
|
Loss -to-Lease Per
Trust Unit (Period Ended)
|
$
|
0.08
|
$
|
(0.08)
|
|
|
|
|
|
|
|
|
|
|
|
% Change
Year-
Over-Year-3
|
% Change
Year-
Over-Year-12
|
Same Property
Results
|
Months
Dec-16
|
Months
Dec-16
|
Rental
Revenue
|
|
-9.7%
|
|
-6.3%
|
Operating
Costs
|
|
8.4%
|
|
4.5%
|
Net Operating Income
(NOI)
|
|
-20.5%
|
|
-12.5%
|
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.
|
All rental rates
noted are net of incentives
|
|
|
|
|
|
|
Stabilized
Revenue
Growth
|
# of
Units
|
Q4 2016 vs
Q3 2016
|
Q3 2016 vs
Q2 2016
|
Q2 2016 vs
Q1 2016
|
Q1 2016 vs
Q4 2015
|
Edmonton
|
12,397
|
-3.8%
|
-2.9%
|
-4.1%
|
-2.2%
|
Calgary
|
5,419
|
-4.1%
|
-5.0%
|
-4.0%
|
-2.5%
|
Red Deer
|
939
|
-6.5%
|
-7.7%
|
-3.9%
|
-2.8%
|
Grande
Prairie
|
645
|
-10.2%
|
-8.6%
|
-6.4%
|
-3.2%
|
Fort
McMurray
|
352
|
-0.8%
|
17.5%
|
-14.6%
|
-9.7%
|
Quebec
|
6,000
|
-0.9%
|
2.0%
|
0.8%
|
-0.8%
|
Saskatchewan
|
4,610
|
1.9%
|
-2.4%
|
-1.8%
|
-2.3%
|
Ontario
|
2,585
|
0.9%
|
0.5%
|
0.5%
|
0.6%
|
|
32,947
|
-2.9%
|
-2.2%
|
-2.9%
|
-2.0%
|
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 fourth quarter ended
December 31, 2016, under the section titled, "Performance
Measures".
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 1,500 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 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