Q1 2002 Webcast and Conference Call Information
TSE SYMBOL: BEI NYSE SYMBOL: BEI May 9, 2002
BOARDWALK REPORTS 31.8% INCREASE IN FIRST QUARTER 2002 FFO PER SHARE FROM RENTAL OPERATIONS
Company Increases FFO Guidance For The Year Due To Strong First Quarter Results and Impact of Recent Montreal Acquisition
CALGARY, May 9 /CNW/ - Boardwalk Equities Inc. ("BEI" - TSE, NYSE) is
pleased to report strong financial results for the first quarter of 2002,
which exceeded consensus estimates. For the first quarter ended
March 31, 2002, the Company reported Total Revenues of $54.8 million and Funds
From Operations ("FFO"), a key performance measurement for real estate
companies, of $14.3 million. FFO per share for the first quarter was $0.29.
Highlights of the Company's first quarter 2002 financial results include:
- Rental revenues of $54.8 million, an increase of 9.6% compared to
$50.0 million for the three-month period ended March 31, 2001.
- Net operating income of $36.6 million, representing a 13.2% increase
from $32.4 million in the same period last year.
- Funds From Operations (FFO) of $14.3 million, a decline of 23.0%
compared to $18.5 million for the three-month period ended
March 31, 2001. FFO excluding gains of $14.3 million, an increase of
29.2% compared to $11.0 million for the three-month period ended
March 31, 2001.
- FFO per share of $0.29 on a diluted basis, compared to $0.37 for the
three-month period ended March 31, 2001. FFO per share from rental
operations, which excludes gains, was $0.29 on a diluted basis, up
31.8% compared to $0.22 for the three-month period ended
March 31, 2001.
Commenting on the Company's first quarter results, Sam Kolias, President
and C.E.O., said "We are pleased to report strong results from our rental
operations. The fundamentals for the multi-family rental sector in Canada
remain attractive with very limited new supply and record low vacancy rates.
Boardwalk is concentrated in markets that continue to have very strong
economic indicators. We believe these factors, combined with our recently
announced portfolio acquisition in Montreal, will enable us to generate strong
internal and external growth in the current year."
The average vacancy rate across the Company's portfolio for the first
quarter of 2002 was 4.8% down slightly from 4.9% in the first quarter of last
year. The average monthly rent realized in the first quarter of 2002 was $696
per unit, up $46, or 7.1%, from $650 per unit for the same period last year.
Management estimates that market rents for its properties at the end of
March, 2002 averaged $751 per unit per month which compares to an average
in-place rent per occupied unit of $731.
The Company's FFO per share of $0.29 in the first quarter of 2002
exceeded analyst expectations which ranged from $0.19 to $0.25. Contributing
to the financial results in the first quarter was a one-time gas utility
rebate of $3.2 million, the majority of which related to the Company's
Northern Alberta assets. This served to offset the impact of an above-market
gas supply contract which was in place during the first quarter and which
expired on April 30, 2002. Subsequent to the end of the first quarter, the
Company mitigated some of the risk of future utility price increases by
entering into several financial and physical supply contracts with a natural
gas retailer. The contracts in place are designed to fix pricing on 75% of
Boardwalk's forecasted Alberta gas consumption. The two physical contracts
commence on January 1, 2003 with each representing 37.5% of the Company's
forecasted gas requirements in Alberta and expire on September 30, 2003 and
September 30, 2004, respectively. The three financial contracts are for the
periods of October 2002, November 2002 and December 2002.
Same-Property Results
Boardwalk continued to show strong performance in its stabilized
properties (defined as properties owned for over 24 months). The
"same-property" results for the Company's stabilized portfolio for the three
month period ended March 31, 2002 showed NOI growth of 8.04% versus the same
period last year. A total of 24,216 units were classified as stabilized for
the first quarter, representing 93% of Boardwalk's total portfolio as at March
31, 2002.
<<
Same-Property Results - Stabilized Portfolio
Three Months Ended March 31, 2002 vs. Three Months Ended March 31, 2001
--------------------------------------------------
% of Stabilized
NOI NOI
--------------------------------------------------
Edmonton +12.2% 45%
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Calgary -2.3% 25%
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Other Alberta - 3.8% 7%
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Ontario +29.1% 11%
--------------------------------------------------
Saskatchewan +7.8% 13%
--------------------------------------------------
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Total Stabilized +8.04% 100%
--------------------------------------------------
>>
Acquisition and Disposition Activity
The first quarter 2002 results do not include any operating profits from
dispositions, compared to operating profits of $7.5 million generated on sales
of $18.0 million in the three months ended March 31, 2001. Subsequent to the
end of the first quarter, the Company closed on the sale of a total of
121-units and estimates that it will record an operating profit on the sale of
approximately $1.0 million in the second quarter.
The Company completed the previously announced acquisition of one 60-unit
property in London, Ontario in the first quarter at a cost of $2.8 million.
Subsequent to March 31, 2002, the Company closed on the acquisition of a
3,100-unit portfolio located on Nuns' Island, immediately south of downtown
Montreal, Quebec, at a cost of $180.2 million, including property transfer
costs. The acquisition represented Boardwalk's initial entry into the Montreal
market and the transaction closed effective May 1, 2002.
Continued Balance Sheet Strength
The Company maintained its strong financial position in the quarter.
Boardwalk's total mortgage debt was $1.14 billion as at March 31, 2002, up
marginally from $1.11 billion at December 31, 2001. As of March 31, 2002, the
Company's long-term debt had an average maturity of 5.2 years and a weighted
average interest rate of 6.04%. As of March 31, 2002, the Company's
debt-to-total-market-capitalization ratio was 62.7% and the interest coverage
ratio for the three month period ended March 31, 2002 was 1.86 times. Under
the Company's normal course issuer bid, Boardwalk bought back a total of
88,100 shares in the first quarter of 2002 at an average price of $11.86.
New Board Director Announcement
Boardwalk is pleased to announce that Al W. Mawani was elected to the
Board of Directors of the Company at its annual meeting held on April 30,
2002. Mr. Mawani is Vice-President of IPS Industrial Promotion Services Ltd.,
an investment and venture capital company that is part of the Aga Khan Fund
for Economic Development (AKFED). AKFED is an international development agency
that promotes entrepreneurship in the private sector in specific regions of
the developing world. From 1979 to 2001, Mr. Mawani worked at Oxford
Properties Group Inc. in various senior management positions, including
Executive Vice-President for Business Development and Chief Financial Officer.
Mr. Mawani is a Chartered Accountant and has an MBA from the University of
Toronto. Mr. Mawani also serves on the Board of Trustees of IPC US Income
Commercial Real Estate Investment Trust. Sam Kolias stated "We are delighted
that someone of Al's caliber and reputation has agreed to serve on our Board
and look forward to his contribution and insights."
Outlook and Earnings Guidance
Commenting on the outlook for the Company, Sam Kolias, said "Boardwalk
remains well positioned to show a strong improvement in results in the current
year, driven by both internal and external growth. We continue to demonstrate
strong same-property performance with our core markets continuing to be very
robust. Our recently completed acquisition of the 3,100-unit portfolio on
Nuns' Island just south of the downtown core in Montreal will also make a
strong contribution to improved results."
Rob Geremia, Senior Vice President and CFO, stated "As we previously
disclosed, the recently announced portfolio acquisition in Montreal is
expected to have a material impact on our FFO per share. Taking this
acquisition into account, and also taking into consideration the strong first
quarter results, we are increasing our guidance for 2002 for FFO per share,
excluding gains, to between $1.20 and $1.23, which is up from our previous
guidance of $1.06 to $1.09. At the current time, we are anticipating
approximately a further two cents FFO contribution from property sales and so
would anticipate that total FFO for the year will be between $1.22 and $1.25.
Supplementary Information
Boardwalk produces Quarterly Supplemental Information that provides
detailed information regarding the Company's activities during the quarter.
The First Quarter Supplemental Information is available on the INVESTOR
section of our website (www.bwalk.com).
Teleconference on First Quarter, 2002 Financial Results
We invite you to participate in the teleconference that will be held to
discuss the Company's first quarter 2002 results this morning at 11:15am EST.
Senior management will speak to the first quarter's financial results and
discuss the Company's recent portfolio purchase in Montreal. Presentation
materials will be made available on the INVESTOR section of our website
(www.bwalk.com) prior to the call.
Participation & Registration: For participation and registration for the
conference call please RSVP to Investor Relations at 403-531-9255 or by email
to investor@bwalk.com.
Teleconference Dial-In Numbers: The telephone numbers for the conference
are: 416-640-4127 (within Toronto) or toll-free 1-888-881-4892 (outside
Toronto).
Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting http://investor.bwalk.com 15 min.
prior to the start of the call. An information page will be provided for
software needed and system requirements. The live audiocast will also be
available at http://www.newswire.ca/webcast/pages/BoardwalkEquities20020509/
Replay: An audio recording of the teleconference will be available
approximately one hour after the call until 11:59pm EST on May 16th, 2002. You
can access it by dialing 416-640-1917 and using the following passcode, 185543
followed by the pound key. An audio archive will also be available on our
Investor site (http://investor.bwalk.com) approximately two hours after the
conference call until May 16th, 2002.
Corporate Profile
Boardwalk Equities Inc. is Canada's largest owner/operator of
multi-family rental properties. Boardwalk currently owns in excess of 250
properties with approximately 29,000 units totalling approximately 25 million
net rentable square feet. The company's portfolio is concentrated in the
provinces of Alberta, Saskatchewan, Ontario and Quebec. Boardwalk is
headquartered in Calgary and its shares are listed on both the Toronto Stock
Exchange and the New York Stock Exchange and trade under the symbol BEI. The
Company has a total market capitalization of $1.9 billion.
Additional information is available at Boardwalk's web site at
www.bwalk.com. Recent investor information can be found on the Internet at
http://investor.bwalk.com/.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking
statements are statements that involve risks and uncertainties, including, but
not limited to, changes in the demand for apartment and town home rentals, the
effects of economic conditions, the impact of competition and competitive
pricing, the effects of the Company's accounting policies and other matters
detailed in the Company's filings with Canadian and United States securities
regulators available on SEDAR in Canada and by request through the Securities
and Exchange Commission in the United States, including matters set forth in
the Company's Annual Report to Shareholders under the heading "Management's
Discussion and Analysis". Because of these risks and uncertainties, the
results, expectations, achievements, or performance described in this release
may be different from those currently anticipated by the Company.
<<
Consolidated Balance Sheets
(Cdn.$ Thousands)
As At
March 31, 2002 December 31, 2001
-----------------------------------
(Unaudited) (Audited)
Assets
Revenue producing properties $ 1,382,727 $ 1,381,541
Properties held for resale 6,763 6,630
Mortgages and accounts receivable 15,228 22,325
Other assets 15,152 14,423
Deferred financing costs 34,484 32,957
Technology 5,599 5,743
Cash and short term investments 55,750 25,672
------------------------------------------------------------------------
$ 1,515,703 $ 1,489,291
------------------------------------------------------------------------
------------------------------------------------------------------------
Liabilities
Mortgages payable $ 1,137,385 $ 1,108,406
Accounts payable and accrued liabilities 16,094 19,525
Refundable security deposits and other 10,610 10,418
Capital lease obligations 6,905 7,203
Future income taxes 60,200 58,755
------------------------------------------------------------------------
$ 1,231,194 $ 1,204,307
Shareholders' Equity
Share capital $ 258,853 258,202
Retained earnings 25,656 26,782
------------------------------------------------------------------------
284,509 284,984
------------------------------------------------------------------------
$ 1,515,703 $ 1,489,291
------------------------------------------------------------------------
------------------------------------------------------------------------
Consolidated Statements of Earnings
(Cdn. $ Thousands, except per share amounts)
3 Months 3 Months
March 31, March 31,
2002 2001
-----------------------------------
Revenue
Rental income $ 54,762 $ 49,970
Sales - properties held for
resale - 18,009
------------------------------------------------------------------------
$ 54,762 $ 67,979
------------------------------------------------------------------------
Expenses
Revenue producing properties:
Operating expenses 5,869 5,967
Utilities 10,296 10,092
Utility rebate (3,236) (3,265)
Property taxes 5,206 4,810
Cost of sales - properties
held for resale - 10,525
Administration 4,389 3,883
Financing costs 17,316 16,687
Amortization 10,906 12,454
------------------------------------------------------------------------
$ 50,746 $ 61,153
------------------------------------------------------------------------
Operating earnings before
income taxes $ 4,016 6,826
Large corporations taxes 661 754
Income taxes 1,421 1,194
------------------------------------------------------------------------
Net earnings for the period $ 1,934 $ 4,878
------------------------------------------------------------------------
------------------------------------------------------------------------
Net earnings per share
- Basic $ 0.04 $ 0.10
- Diluted $ 0.04 $ 0.10
------------------------------------------------------------------------
------------------------------------------------------------------------
Consolidated Statement of Retained Earnings - As at
(Thousands of dollars, except per share amounts)
3 months ended 3 months ended
March March
2002 2001
(unaudited) (unaudited)
Retained earnings, beginning of period $ 26,782 $ 47,788
Net earnings (loss) $ 1,934 $ 4,878
Dividends paid (2,477) (2,496)
Premium on share repurchases (583) (2)
--------- ---------
Retained earnings, end of period $ 25,656 $ 50,168
--------- ---------
--------- ---------
Consolidated Statements of Cash Flows
(Cdn. $ Thousands)
3 Months ended 3 Months ended
March 31, 2002 December 31, 2001
-----------------------------------
Cash obtained from (applied to):
Operating activities
Net earnings $ 1,934 $ 4,878
Income taxes 1,421 1,194
Amortization 10,906 12,454
------------------------------------------------------------------------
Funds from operations 14,261 18,526
Net change in operating working capital 3,112 (6,815)
Net change in properties held for resale (133) 9,694
------------------------------------------------------------------------
Total operating cash flows $ 17,240 $ 21,405
------------------------------------------------------------------------
Financing activities
Issue of common shares for
cash (net of issue costs) $ 1,112 $ 39
Stock repurchase program (1,045) (5)
Dividends paid (2,477) (2,496)
Financing of revenue
producing properties 85,181 32,638
Repayment of debt on revenue
producing properties (58,202) (24,754)
Deferred financing costs (1,815) (1,063)
------------------------------------------------------------------------
$ 22,754 $ 4,359
------------------------------------------------------------------------
Investing activities
Purchases of revenue
producing properties $ (2,826) $ (6,738)
Project improvements to
revenue producing properties (6,536) (15,763)
Technology (554) (5,533)
------------------------------------------------------------------------
$ (9,916) $ (28,034)
------------------------------------------------------------------------
Increase (Decrease) in cash
and cash equivalents
balance during period $ 30,078 $ (2,270)
Cash and cash equivalents,
beginning of period $ 25,672 $ 21,055
------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 55,750 $ 18,785
------------------------------------------------------------------------
------------------------------------------------------------------------
Funds from operations per share
- Basic $ 0.29 $ 0.37
- Diluted $ 0.29 $ 0.37
Taxes paid $ 753 $ 609
------------------------------------------------------------------------
------------------------------------------------------------------------
Interest paid $ 16,797 $ 16,393
------------------------------------------------------------------------
------------------------------------------------------------------------
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%SEDAR: 00004201E
For further information: Boardwalk Equities Inc., Sam Kolias, President and CEO, (403) 531-9255; Roberto Geremia, Senior Vice-President, Finance and Chief Financial Officer, (403) 531-9255; Mike Hough, Senior Vice President, (416) 364-0849; Paul Moon, Director of Corporate Communications, (403) 531-9255
