BOARDWALK REIT REPORTS STRONG RESULTS FOR Q3 2024 - DEMAND FOR AFFORDABLE HOUSING REMAINS HIGH

CALGARY, AB, Nov. 5, 2024 /PRNewswire/ - Boardwalk Real Estate Investment Trust (TSX:BEI)

SUMMARY HIGHLIGHTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2024

STRONG FINANCIAL PERFORMANCEFOR THE 3 MONTH PERIOD ENDED SEPTEMBER 30, 2024

Funds From Operations ("FFO") of $1.11 per Unit(1)(2); an increase of 15.6% from Q3 2023

Profit of $55.4 million

Net Operating Income ("NOI") of $100.2 million; an increase of 15.6% from Q3 2023

Same Property(3) Net Operating Income ("Same Property NOI") of $99.2 million; an increase of 13.5% from Q3 2023

Operating Margin of 65.3%; 260 basis point (bps) improvement from Q3 2023

FOR THE 9 MONTH PERIOD ENDED SEPTEMBER 30, 2024

FFO of $3.10 per Unit(1)(2); an increase of 17.4% from the same period a year ago

Profit of $522.3 million

NOI of $283.3 million; an increase of 15.6% from the same period a year ago

Same Property Net Operating Income ("Same Property NOI") of $282.4 million; an increase of 13.7% from the same period in the prior year

Operating Margin of 63.3%; 260 basis point (bps) improvement from the same period in the prior year

SAME PROPERTY RENTAL REVENUE GROWTH IN Q3 2024

Q3 2024 same property sequential quarterly rental revenue growth of 2.6% from the prior quarter

Q3 2024 same property rental revenue growth of 9.5% from a year ago

Occupancy of 98.6% in Q3 2024; an increase of 18 basis points from Q3 2023

AFFORDABLE HOUSING REMAINS IN HIGH DEMAND

Rents in Alberta remain some of the most affordable amongst major cities in Canada

Occupied rent of $1,493 in September of 2024, a $105 improvement from December 2023

November 2024 preliminary occupancy of 98.0%

New leasing spreads of 10.4% in Alberta in September 2024

Renewal leasing spreads of 8.4% in Alberta in September 2024

STRONG AND FLEXIBLE BALANCE SHEET

Approximately $413.7 million of total available liquidity at the end of the quarter

96% of Boardwalk's mortgages carry CMHC-insurance

Unitholders' Equity of $4.8 billion

Fair value capitalization rate of 5.09%, an increase of 4 bps from Q4 2023

Net Asset Value increase to $94.64 per Unit(1)(2), primarily a result of higher market rental rates in the Trust's non-price controlled markets

Debt to EBITDA(1) of 10.31x, compared to 11.02x for the year ended December 31, 2023

Debt to Total Assets(1) of 40.1%, compared to 43.2% for the year-ended December 31, 2023

UPDATE TO 2024 FINANCIAL GUIDANCE 

Revised FFO range of $4.15 to $4.23 per Unit(1)(2)

Same Property NOI growth range of +12.5% to +14.5%

DISTRIBUTION OF $1.44 PER TRUST UNIT ON AN ANNUALIZED BASIS CONFIRMED FOR THE MONTHS OF DECEMBER 2024, JANUARY 2025, AND FEBRUARY 2025 

(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 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 third quarter of 2024.

Sam Kolias; Chairman and Chief Executive Officer of Boardwalk REIT commented:

"We are pleased to report on another very strong quarter with significant growth in Net Operating Income and Funds From Operations per Unit. Our FFO per Unit of $1.11 during the third quarter represents an improvement of 15.6% from the prior year. We continue to make progress on improving our balance sheet as our cash flows improve and we de-lever organically, providing greater flexibility to compound growth further through the Trust's value add capital program and accretive external growth opportunities. Occupied rents in the Trust's largest market of Edmonton remain amongst the most affordable compared to asking rents in major centers in Canada and household incomes.

We remain focused on delivering a sustainable win-win outcome for all members of our Boardwalk Family Forever, which includes our Resident Members, Associates, Investors, external partners and other stakeholders. We are truly better together and we would like to thank all of our stakeholders who are instrumental in creating the best communities where love always lives.

We continue to work collaboratively with our community and policymakers and welcome the opportunity to further advance the best solutions for affordable housing for Canadians. As housing affordability over the last several years has become more challenging, Boardwalk remains committed to the long-term sustainability of our communities through our strategic self-moderation of positive rent adjustments. Recently, the federal government released its 2025-2027 Immigration Levels Plan, aimed to better balance population growth to more sustainable levels when looked at over a longer period of time. Relative to other provinces, Alberta is expected to be less impacted by the new Immigration Levels Plan due to its strong interprovincial migration and lower concentration of non-permanent residents as a percentage of the population.

Across various cycles, we have seen consistent demand for affordable housing. Our repositioning investments in many of our communities, and Resident Member-focused approach and proven platform positions us well to continue as the community provider of choice for Canadians. As we look forward, we remain confident in continuing our track record of delivering strong results for our Boardwalk Family Forever."

THIRD QUARTER FINANCIAL HIGHLIGHTS

$ millions, except per Unit amounts

Highlights of the Trust's Third Quarter 2024 Financial Results

3 MonthsSep. 30, 2024

3 MonthsSep. 30,2023

% Change

9 Months Sep. 30,2024

9 Months Sep. 30, 2023

% Change

Operational Highlights

Rental Revenue

$153.4

$138.3

11.0 %

$447.7

$403.8

10.9 %

Same Property Rental Revenue

$150.1

$137.1

9.5 %

$439.4

$401.4

9.5 %

Net Operating Income ("NOI")

$100.2

$86.6

15.6 %

$283.3

$245.0

15.6 %

Same Property NOI

$99.2

$87.5

13.5 %

$282.4

$248.4

13.7 %

Operating Margin (1)

65.3 %

62.7 %

63.3 %

60.7 %

Same Property Operating Margin

66.1 %

63.8 %

64.3 %

61.9 %

Financial Highlights

Funds From Operations ("FFO") (2)(3)

$60.2

$48.3

24.7 %

$167.3

$132.5

26.3 %

Adjusted Funds From Operations ("AFFO") (2)(3)

$51.6

$40.4

27.7 %

$141.5

$108.9

30.0 %

Profit

$55.4

$39.4

40.6 %

$522.3

$493.0

5.9 %

FFO per Unit (3)

$1.11

$0.96

15.6 %

$3.10

$2.64

17.4 %

AFFO per Unit (3)

$0.95

$0.80

18.8 %

$2.62

$2.17

20.7 %

Regular Distributions Declared (Trust Units & LP Class BUnits)

$19.4

$14.7

32.1 %

$55.8

$43.3

28.8 %

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

$0.360

$0.293

22.9 %

$1.035

$0.863

19.9 %

FFO Payout Ratio (3)

32.2 %

30.4 %

33.3 %

32.7 %

Same Property Apartment Suites

33,722

33,264

Non-Same Property Apartment Suites (4)

671

582

Total Apartment Suites

34,393

33,846

(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 Q3 2024, 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. The Trust anticipates further improvement in its operating margin throughout the remainder of 2024 as a result of continued strong revenue growth and execution of various cost containment initiatives.

Continued Highlights of the Trust's Third Quarter 2024 Financial Results

Sep. 30,2024

Dec. 31, 2023

Equity

Unitholders' equity

$4,794,944

$4,320,072

Net Asset Value

Net asset value (1)(2)

$5,112,367

$4,553,515

Net asset value ("NAV") per Unit (2)

$94.64

$84.41

Liquidity, Debt and Distributions

Cash and cash equivalents

$107,618

Subsequent committed/funded financing

$60,300

Unused credit facilities

$245,800

Total Available Liquidity

$413,718

Total mortgage principal outstanding

$3,389,969

$3,446,801

Debt to EBITDA(1)(2)

10.31

11.02

Debt to Total Assets(1)(2)

40.1 %

43.2 %

Interest Coverage Ratio (Rolling 4 quarters)

2.91

2.83

(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 September 30, 2024 increased from year end, primarily attributable to an increase in market rents driven by strong market conditions. The Trust's stabilized capitalization rate ("Cap Rate") of 5.09% for Q3 2024 remained the same as 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 Third Quarter of 2024

Sep-24

Sep-23

Average Occupancy (Quarter Average) (1)

98.63

%

98.45

%

Average Monthly Rent (Period Ended)

$

1,472

$

1,340

Average Market Rent (Period Ended) (2)

$

1,644

$

1,534

Average Occupied Rent (Period Ended) (3)

$

1,493

$

1,357

Mark-to-Market Revenue Gain (Period Ended) ($ millions)

$

60.2

$

70.0

Mark-to-Market Revenue Gain Per Unit (Period Ended)

$

1.11

$

1.39

(1)Average occupancy is adjusted to be on a same property basis.

(2)Market rent is a component of rental revenue and is calculated as of the first day of each month as the average rental revenue amount a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay, for a tenancy, before adjustments for other rental revenue items such as incentives, vacancy loss, fees, specific recoveries, and revenue from commercial tenants.

(3)Occupied rent is a component of rental revenue and is calculated for occupied suites as of the first day of each month as the average rental revenue, adjusted for other rental revenue items such as fees, specific recoveries, and revenue from commercial tenants.

 

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