CALGARY, AB, Feb. 22, 2024 /PRNewswire/ – Boardwalk Real Estate Investment Trust (TSX:BEI)
SUMMARY HIGHLIGHTS FOR THE THREE AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2023
STRONG FINANCIAL PERFORMANCE
FOR THE 3 MONTH PERIOD ENDED DECEMBER 31, 2023
Funds From Operations (“FFO”) of $0.96 per Unit(1)(2); an increase of 20.0% from Q4 2022
Profit of $173.1 million
Net Operating Income (“NOI”) of $87.9 million; an increase of 17.6% from Q4 2022
Same Property(3) Net Operating Income (“Same Property NOI”) of $86.6 million; an increase of 16.8% from Q4 2022
Operating Margin of 62.0%; 410 basis point (bps) improvement from Q4 2022
FOR THE 12 MONTH PERIOD ENDED DECEMBER 31, 2023
FFO per Unit(1)(2) of $3.60 ; an increase of 15.0% from the same period a year ago
Profit of $666.1 million
NOI of $333.0 million; an increase of 15.4% from the same period a year ago
Operating Margin of 61.0%; 280 bps improvement from the same period a year ago
Same Property NOI of $329.5 million; an increase of 13.7% from the same period a year ago
SAME PROPERTY RENTAL REVENUE GROWTH IN Q4 2023
Q4 2023 same property sequential quarterly rental revenue growth of 2.5% from the prior quarter
Occupied rent of $1,388 in December of 2023, a $31 improvement from September 2023
Q4 2023 same property rental revenue growth of 9.2% from a year ago
Occupancy of 98.9% in Q4 2023; an increase of 92 basis points from Q4 2022
LEASING STRENGTH CONTINUES INTO 2024
February 2024 preliminary occupancy of 98.8%, an increase of 60 bps from February 2023
New leasing spreads of 12.6% in Alberta in January 2024
Renewal leasing spreads of 9.5% in Alberta in January 2024
Rents in Alberta remain some of the most affordable in Canada, at well below 30% of median renter household income
STRONG AND FLEXIBLE FINANCIAL POSITION
Approximately $527.0 million of total available liquidity at the end of the quarter
96% of Boardwalk’s mortgages carry CMHC-insurance
Unitholders’ Equity of $4.3 billion
Fair value capitalization rate of 5.05%, an increase of 13 bps from Q4 2022
Net Asset Value increase to $84.41 per Unit(1)(2), primarily a result of higher market rental rates
SUPPLEMENTING ORGANIC GROWTH
Completed bought-deal equity offering in December 2023 for net proceeds of $240.0 million
Completed previously announced acquisition of The Circle during Q1 2024, a new 295-suite apartment community in Calgary, Alberta at a stabilized cap rate of 5.75% for a purchase price of $77.8 million
Repaid the Trust’s portion of its revolving construction facility loan at 45 Railroad in the amount of $57.2 million subsequent to year-end
The Trust remains well positioned to capitalize on future growth opportunities within its pipeline while remaining proceeds are earning in excess of 5.0%
INTRODUCTION OF 2024 FINANCIAL GUIDANCE
FFO range of $3.93 to $4.18 per Unit(1)(2)
Same Property NOI growth range of +10.0% to +14.0%
23.1% INCREASE TO REGULAR MONTHLY DISTRIBUTION TO $1.44 PER TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF MARCH, APRIL, AND MAY 2024
(1) Please refer to the section titled “Presentation of Non-GAAP Measures” in this news release for more information.
(2) Boardwalk REIT’s units (the “Trust Units”) trade on the Toronto Stock Exchange (“TSX”) under the trading symbol ‘BEI.UN’. Additionally, the Trust has 4,475,000 special voting units issued to holders of “Class B Units” of Boardwalk REIT Limited Partnership (“LP Class B Units” and, together with the Trust Units, the “Units”), each of which also has a special voting unit in the REIT.
(3) Same property figures exclude un-stabilized properties (properties which have been owned for less than 24 months) and sold assets.
Boardwalk Real Estate Investment Trust (“Boardwalk”, the “REIT” or the “Trust”) today announced its financial results for the fourth quarter of 2023.
Sam Kolias; Chairman and Chief Executive Officer of Boardwalk REIT commented:
“We are pleased to report on a very strong quarter and year with significant growth in Profit, Net Operating Income and Funds from Operations per Unit. Our FFO per Unit of $3.60 represents a new high, positioning us well to continue to invest in our communities, enhancing value for both our Resident Members and Unitholders. We continue to take strides in improving our Operating Margin, as our Resident Member focused approach to sustainable rent adjustments, paired with strong execution on our cost containment initiatives has translated into outsized NOI and FFO per Unit growth.
As of the beginning of February, same property portfolio occupancy has reached 98.8%, including 98.4% in Edmonton. Demand fundamentals remain strong across all of the Trust’s markets. Our largest markets of Edmonton and Calgary continue to see large net inflows from both international and interprovincial migration as new Residents pursue exceptional relative affordability, lifestyle and economic opportunities. We anticipate this trend to continue in 2024. New construction has not kept pace with strong population growth in markets across Canada, which will take several years to return to balance. We continue to implement positive market rent adjustments in the vast majority of our communities. Lease incentives have largely been eliminated on new leases while being significantly reduced on lease renewal. We remain focused on ensuring a win-win outcome with our Resident Members and for our stakeholders through increased retention, reduced turnover and costs, increased Associate efficiency, and increased margins and financial performance. Our ongoing Resident Member centric, strategic self-moderation of leasing spreads on both new leases and lease renewals continues to be a key differentiator for our Resident Members, preserving essential affordability while providing a steady, less volatile, long-term revenue growth profile for our Unitholders.
Our outlook remains bright for the year ahead. We are confident that the strong housing fundamentals that we are seeing, combined with the quality of our communities and Resident-focus will translate to strong organic growth and performance in 2024. With increased liquidity following our recent equity offering, the Trust is also well-positioned to capitalize on additional external growth opportunities during the year.”
FOURTH QUARTER FINANCIAL HIGHLIGHTS
$ millions, except per Unit amounts
Highlights of the Trust’s Fourth Quarter 2023 Financial Results
3 Months
Dec. 31,
2023
3 Months
Dec. 31,
2022
% Change
12 Months
Dec. 31,
2023
12 Months
Dec. 31,
2022
% Change
Operational Highlights
Rental Revenue
$141.9
$129.2
9.9 %
$545.7
$496.4
9.9 %
Same Property Rental Revenue
$137.9
$126.3
9.2 %
$532.0
$489.0
8.8 %
Net Operating Income (“NOI”)
$87.9
$74.8
17.6 %
$333.0
$288.7
15.4 %
Same Property NOI
$86.6
$74.2
16.8 %
$329.5
$289.8
13.7 %
Operating Margin (1)
62.0 %
57.9 %
61.0 %
58.2 %
Same Property Operating Margin
62.8 %
58.7 %
61.9 %
59.3 %
Financial Highlights
Funds From Operations (“FFO”) (2)(3)
$48.9
$40.0
22.3 %
$181.4
$157.4
15.2 %
Adjusted Funds From Operations (“AFFO”) (2)(3)
$40.2
$33.0
22.0 %
$149.1
$126.2
18.2 %
Profit
$173.1
$14.1
1124.7 %
$666.1
$283.1
135.3 %
FFO per Unit (3)
$0.96
$0.80
20.0 %
$3.60
$3.13
15.0 %
AFFO per Unit (3)
$0.79
$0.66
19.7 %
$2.96
$2.51
17.9 %
Regular Distributions Declared (Trust Units & LP Class B Units)
$15.0
$13.6
11.0 %
$58.3
$53.7
8.7 %
Regular Distributions Declared Per Unit (Trust Units & LP Class B Units)
$0.293
$0.270
8.3 %
$1.155
$1.067
8.3 %
FFO Payout Ratio (3)
30.8 %
33.9 %
32.2 %
34.1 %
Same Property Apartment Suites
33,264
33,069
Non-Same Property Apartment Suites (4)
765
741
Total Apartment Suites
34,029
33,810
(1)
Operating margin is calculated by dividing NOI by rental revenue allowing management to assess the percentage of rental revenue which generated profit.
(2)
This is a non-GAAP financial measure.
(3)
Please refer to the section titled “Presentation of Non-GAAP Measures” in this news release for more information.
(4)
Includes 183 suites related to the Trust’s joint venture in Brampton, Ontario which is accounted for as an equity accounted investment
In Q4 2023, same property operating margin increased compared to the same period in the prior year, as the Trust’s same property rental revenue growth remained strong and operating expenses were lower primarily as a result of milder weather. The Trust anticipates continued improvement in its operating margin as same property rental revenue growth remains strong throughout 2024 and the Trust continues to execute on its platform optimization initiatives.
Continued Highlights of the Trust’s Fourth Quarter 2023 Financial Results
Dec. 31,
2023
Dec. 31,
2022
Equity
Unitholders’ Equity
$4,320,072
$3,466,998
Net Asset Value
Net asset value (1)(2)
$4,553,515
$3,583,904
Net asset value (NAV) per Unit (2)
$84.41
$71.35
Liquidity, Debt and Distributions
Cash and cash equivalents
$331,204
Subsequent committed/funded financing
$-
Unused committed revolving credit facility
$195,800
Total Available Liquidity
$527,004
Total mortgage principal outstanding
$3,446,801
$3,336,026
Interest Coverage Ratio (Rolling 4 quarters)
2.83
2.90
(1)
This is a non-GAAP financial measure.
(2)
Please refer to the section titled “Presentation of Non-GAAP Measures” in this news release for more information.
The Trust’s fair value of its investment properties as at December 31, 2023 increased from the previous quarter and year end, primarily attributable to an increase in market rents driven by strong market conditions, low occupancy across the portfolio and a reduction in lease incentives. The Trust’s stabilized capitalization rate (“cap rate”) remained at 5.05% for Q4 2023 compared to the prior quarter. The cap rate ranges utilized continue to be in-line with recently published third party quarterly cap rate reports.
SOLID OPERATIONAL RESULTS
Portfolio Highlights for the Fourth Quarter of 2023
Dec-23
Dec-22
Average Occupancy (Quarter Average) (1)
98.91
%
97.99
%
Average Monthly Rent (Period Ended)
$
1,375
$
1,246
Average Market Rent (Period Ended) (2)
$
1,561
$
1,409
Average Occupied Rent (Period Ended) (3)
$
1,388
$
1,271
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