TSX SYMBOL: BEI.UN November 14, 2008
Boardwalk REIT Announces Solid Third Quarter 2008 Financial Results; FFO Per Unit Up 11.5% and DI Per Unit up 13.1% YOY; and its November 2008 Distribution
DOWNLOAD a PDF copy (Printer Friendly PDF File)
CALGARY, Nov. 14 /CNW/ - Boardwalk Real Estate Investment Trust ("BEI.UN"
- TSX) - Boardwalk Real Estate Investment Trust ("Boardwalk", "Boardwalk REIT"
or the "Trust") today announced strong financial results for the third quarter
of 2008; FFO per unit up 11.5% and DI per unit up 13.1% YOY; and its November
2008 Distribution. FFO and DI are non-GAAP measures; the reconciliation to Net
Earnings and Total Operating Cash Flows, respectively, can be found in the
Management's Discussion and Analysis (MD&A) for the third quarter ended
September 30, 2008, under the section titled, "Performance Measures".
For the third quarter ended September 30, 2008, the Trust reported Funds
From Operations ("FFO") of $36.8 million and FFO per unit of $0.68 on a
diluted basis, compared to FFO of $34.1 million and FFO per unit of $0.61 for
the same period last year. Distributable income ("DI") for the quarter was
$37.2 million and DI per unit was $0.69 on a diluted basis, compared to $34.3
million and $0.61 per unit for the same period last year.
Change to Quarterly Reporting Format
As mentioned in our last quarter, the Trust has adopted a new reporting
format beginning with the third quarter of 2008. The goal of the new
easier-to-read format is to reduce repetition and provide a high-level
overview of our quarterly results. A more detailed analysis is included in the
Management's Discussion and Analysis and Consolidated Financial Statements,
which have been filed on SEDAR and can be viewed at www.sedar.com or on the
Trust's website at www.boardwalkreit.com.
$ million, except per unit amounts
-------------------------------------------------------------------------
Highlights of the Trust's Third Quarter 2008 Financial Results
-------------------------------------------------------------------------
Three Three Nine Nine
Months Months % Months Months %
Sep 2008 Sep 2007 Change Sep 2008 Sep 2007 Change
Rental Revenue $108.2 $95.7 13.0% $315.9 $276.0 14.4%
Net Operating
Income (NOI) $ 72.1 $64.1 12.4% $199.3 $173.9 14.6%
Funds From
Operations
(FFO) $ 36.8 $34.1 8.2% $ 97.4 $ 86.6 12.6%
FFO Per Unit $ 0.68 $0.61 11.5% $ 1.78 $ 1.55 14.8%
Distributable
Income (DI) $ 37.2 $34.3 8.4% $ 98.7 $ 87.9 12.3%
DI Per Unit $ 0.69 $0.61 13.1% $ 1.80 $ 1.57 14.6%
Distributions
Declared $ 24.3 $22.5 $ 73.9 $ 65.4
Distributions
Declared
Per Unit $ 0.45 $0.40 $ 1.35 $ 1.17
(2008 Target
$1.80 Per Unit
on an annualized
basis)
Payout as a
% DI 65.2% 65.7% 74.9% 74.4%
-------------------------------------------------------------------------
For further detail, please refer to pages 8-9 and 14-15 of the MD&A.
-------------------------------------------------------------------------
Portfolio Highlights for the Third Quarter 2008
-------------------------------------------------------------------------
Sep Jun Sep
2008 2008 2007
Average Vacancy (3 Months) 4.58% 4.74% 3.93%
Average Monthly Rent (3 Months) $ 977 $ 955 $ 879
Average Market Rent (Month Ended) $1,070 $1,068 $1,096
Average Occupied Rent (Month Ended) $1,027 $1,008 $ 907
Loss-to-Lease ($ million) $ 18.2 $ 25.2 $ 78.5
Loss-to-Lease per Unit $ 0.34 $ 0.46 $ 1.39
Debt-to-GBV ("Gross Book Value") 59.6%
% Change
Same Property Results (3 Months) Year-Over-Year
Rental Revenue 9.7%
Operating Costs 9.1%
Net Operating Income (NOI) 9.9%
-------------------------------------------------------------------------
For further details, please refer to pages 15-17 and 19-20 of the MD&A.
Additionally, more detail on our operations will be found in our
conference call presentation to be posted on our web site today at
http://www.boardwalkreit.com/FinancialReports/ The conference call audio for
this presentation can also be found on our web site at
http://www.boardwalkreit.com/FinancialReports/ following the call.
Sequential Revenue Analysis
-------------------------------------------------------------------------
Stabilized No. of Q3 2008 vs. Q2 2008 vs. Q1 2008 vs. Q4 2007 vs.
Revenue Growth Units Q2 2008 Q1 2008 Q4 2007 Q3 2007
-------------------------------------------------------------------------
Calgary 4,973 1.3% 3.0% 3.3% 0.4%
Edmonton 10,649 3.5% 2.6% 5.3% 1.8%
Other Alberta 1,680 0.3% 0.1% 3.2% 1.9%
British Columbia 871 1.2% 1.9% 4.1% -1.9%
Ontario 4,265 -1.2% 0.9% -0.4% 2.1%
Quebec 6,756 2.2% 1.1% 0.0% 0.2%
Saskatchewan 4,660 5.7% 6.6% 2.7% 4.6%
-------------------------------------------------------------------------
33,854 2.4% 2.5% 2.9% 1.5%
-------------------------------------------------------------------------
On a sequential basis, stabilized revenues grew 2.4% from Q2 2008 to Q3
2008, 2.5% from Q1 2008 to Q2 2008, 2.9% from Q4 2007 to Q1 2008 and 1.5% from
Q3 2007 to Q4 2007.
Market Fundamentals From Across Canada:
Unemployment, migration and wages
-------------------------------------------------------------------------
Market Fundamentals
-------------------------------------------------------------------------
BC Alberta Saskatchewan
-- ------- ------------
Sep 2008 Sep 2007 Sep 2008 Sep 2007 Sep 2008 Sep 2007
Unemployment
Rate 4.6% 4.3% 3.8% 3.6% 4.1% 3.8%
Q2 2008 Q2 2007 Q2 2008 Q2 2007 Q2 2008 Q2 2007
Net Inter-
provincial
Migration 1,669 4,337 6,730 4,677 1,107 1,691
Net Inter-
national
Migration 15,178 10,800 13,439 10,634 1,757 1,126
Total Net
Migration 16,847 15,137 20,169 15,311 2,864 2,817
Aug 2007 Aug 2006 Aug 2007 Aug 2006 Aug 2007 Aug 2006
to to to to to to
Aug 2008 Aug 2007 Aug 2008 Aug 2007 Aug 2008 Aug 2007
Average Weekly
Wages Growth 3.1% 3.5% 4.8% 4.1% 4.9% 3.9%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Market Fundamentals
-------------------------------------------------------------------------
Ontario Quebec
------- ------
Sep 2008 Sep 2007 Sep 2008 Sep 2007
Unemployment
Rate 6.4% 6.2% 7.3% 6.9%
Q2 2008 Q2 2007 Q2 2008 Q2 2007
Net Inter-
provincial
Migration -3,942 -3,451 -4,952 -4,665
Net Inter-
national
Migration 38,442 34,689 17,154 14,487
Total Net
Migration 34,500 31,238 12,202 9,822
Aug 2007 Aug 2006 Aug 2007 Aug 2006
to to to to
Aug 2008 Aug 2007 Aug 2008 Aug 2007
Average Weekly
Wages Growth 2.8% 2.8% 0.7% 3.0%
-------------------------------------------------------------------------
Western Canada:
While the market is tempering across Canada, market fundamentals remain
strong in the Western provinces and continued to support our solid rental
demand in the third quarter of 2008.
Alberta and Saskatchewan both demonstrated steady employment and wage
growth over the first three quarters, with 17,000 and 7,700 jobs created in
September, respectively. Growth in natural resources for both provinces
remains strong, and Saskatchewan's economic strength is expected to increase
due to the province's ample supply of commodities such as oil & gas, uranium
and potash. Unemployment in Alberta is still the lowest in the country, at
3.8%, with Saskatchewan and British Columbia following in second and third.
Employment opportunities combined with high wages will continue to allow our
Customers to absorb rental costs going into the fourth quarter. Oil sands
development in Alberta remains positive, totaling over $180 billion as of
October 1, 2008. Imperial Oil recently announced it will move ahead with its
Kearl project in Fort McMurray, with an initial cost estimate of $5 to $8
billion; Suncor is also proceeding with its Voyageur project, although costs
have been scaled back to $6 billion for 2009. While interprovincial migration
into Alberta has slowed from its peak, gains in the second quarter remained
higher than the same time last year, and international migration reached
record levels. British Columbia also enjoyed high international migration
numbers, coming in behind Alberta and slightly ahead of Saskatchewan in terms
of population growth. Interprovincial migration continues to be a strong
component of population growth for Saskatchewan, which once again saw a net
gain in interprovincial migrants from Alberta for the seventh consecutive
quarter. International migration to Saskatchewan also reached record levels in
the second quarter. With a high number of migrants and immigrants arriving in
the Western provinces, we can expect demand for rental housing to remain
strong.
Eastern Canada:
With the economic downturn in the US and the global financial situation,
our markets in Eastern Canada will continue to be impacted negatively;
however, the recent drop in the value of the Canadian dollar may temper the
effect of this somewhat over the coming months. Manufacturing jobs in Ontario
continued to decrease over the third quarter by 16,000. However, both Ontario
and Quebec saw an employment increase of 0.4% in September 2008, gaining
52,000 and 32,000 jobs, respectively. While Ontario and Quebec showed losses
in interprovincial migration over the second quarter of 2008, international
migration levels remain high.
MLS Housing Prices:
-------------------------------------------------------------------------
MLS Housing Prices
-------------------------------------------------------------------------
British Columbia Vancouver CMA Victoria CMA
Sep 2008 Sep 2007 Sep 2008 Sep 2007
Average Single Family $726,331 $737,927 $549,284 $584,193
Average Condo na na $319,562 $343,462
Alberta Calgary CMA Edmonton
Sep 2008 Sep 2007 Sep 2008 Sep 2007
Average Single Family $444,048 $470,888 $362,097 $399,555
Average Condo $287,426 $321,614 $252,234 $270,745
Saskatchewan Saskatoon Regina
Sep 2008 Sep 2007 Sep 2008 Sep 2007
Average Overall $297,836 $242,091 $235,809 $185,653
Ontario London Windsor
Sep 2008 Sep 2007 Sep 2008 Sep 2007
Average Single Family $227,794 $216,275 na na
Average Condo $152,353 $152,189 na na
Average Overall na na $160,280 $170,585
Quebec Montreal (CMA)
Sep 2008 Sep 2007
Average Overall $274,710 $258,780
-------------------------------------------------------------------------
Internally generated, NA = Data not available. Source:
Association of Regina REALTORS(R), Calgary Real Estate Board, Canada
Mortgage and Housing Corporation, Edmonton Real Estate Board, London and
St. Thomas Association of REALTORS(R), Real Estate Board of Greater
Vancouver, Saskatoon Region Association of REALTORS(R), Victoria Real
Estate Board, Windsor-Essex County Real Estate Board
Western Canada:
In Calgary and Edmonton, housing prices are declining as the province
adjusts to large inventories of unsold homes and slowing interprovincial
migration, creating a buyers' market. Average single family sale prices for
Calgary and Edmonton in September 2008 were down 5.7% and 9.4%, and
condominium prices decreased 10.6% and 6.8%, respectively, year-over-year.
While average sale prices in Vancouver and Victoria for September 2008
declined from the same period last year, they remain high. Saskatchewan
continues to show remarkable growth in comparison to the other Western
provinces, supporting a strong rental market as home prices increase. In
September 2008, average residential sale prices for Regina and Saskatoon went
up 27.0% and 23.0%, respectively, year-over-year.
Eastern Canada:
Continuing from the last quarter, housing prices in Ontario and Quebec
remain relatively steady despite current economic difficulties. While the
average residential sale price in Windsor decreased 6.0% over September 2007,
London saw the average price of a single-family home for September increase
5.3% year over year. In Montreal, average sale prices for both single-family
homes and condominiums in September increased approximately 5.0% and 4.0%
respectively, compared to the same period last year. Montreal also saw the
sales volume for condominiums increase 25.0% over September 2007.
Acquisitions and Dispositions
With the gap between public apartment companies and private market cap
rates, there may be a unique opportunity to selectively sell apartment assets
to private buyers and redeploy these proceeds to acquire our trust units as
part of our Normal Course Issuer Bid.
To date in 2008, the Trust's acquisitions and dispositions are as follow:
Excluded from the table is one additional unit acquired in an Edmonton,
Alberta property called, "Morningside", of which Boardwalk REIT already owned
220 units. Dispositions to date for 2008 consisted solely of the sales and
closings of 36 units in a 90-unit property converted into condominiums for
sale.
Closed - 2008
No. of Year 1
Building Name City Units Type Price Cap Rate
-------------------------------------------------------------------------
Varsity Square
Apartments Calgary 297 High Rise $ 48,750,000 5.86%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total
Acquisitions 297 $ 48,750,000 5.86%
-------------------------------------------------------------------------
Year 2
Building Name Cap Rate $/unit $/sq ft Date Closed
-------------------------------------------------------------------------
Varsity Square
Apartments 6.12% 164,141 $ 207 June 12, 2008
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total
Acquisitions 6.12% 164,141 $ 207
-------------------------------------------------------------------------
Excluded from the table is one additional unit acquired in an Edmonton,
Alberta property called, "Morningside", of which Boardwalk REIT already
owned 220 units. Dispositions to date for 2008 consisted solely of the
sales and closings of 36 units in a 90-unit property converted into
condominiums for sale.
For further detail, please refer to pages 21-22 of the MD&A.
Unit Buyback
We continue to believe that one of the best investments we can make is
purchasing our Trust Units at current levels. Under the Normal Course Issuer
Bids, the Trust purchased and cancelled 1,969,200 REIT Trust Units in the
first nine months of 2008, representing a total market value of approximately
$76.3 million, or an average of $38.76 per Trust Unit. Together with the
856,447 Trust Units purchased and cancelled in 2007, the Trust has
cumulatively purchased and cancelled 2,825,647 Trust Units representing a
total market value of approximately $114.9 million at September 30, 2008, or
an average of $40.66 per Trust Unit.
For further detail, please refer to pages 23-24 of the MD&A.
Continued Financial Strength
The Trust continued to build on its solid financial position throughout
the third quarter of 2008. Boardwalk REIT's total principal mortgage and debt
outstanding was $2.14 billion as of September 30, 2008, as compared to $1.95
billion as of December 31, 2007. As of September 30, 2008, the Trust's total
debt had an average term maturity of 3 years with a weighted average interest
rate of 4.91% and the debt-to-total enterprise value ratio was 51.9%.
We currently estimate that by the end of this fiscal year, the Trust
could have access to approximately $350 million of available capital in the
form of cash-on-hand; a secured, undrawn acquisition and operating facility;
and estimated additional mortgage proceeds for the remainder of the year. The
Trust's interest coverage ratio, excluding gains, for the three-month period
ended September 30, 2008 was 2.40 times compared to 2.48 times in the same
period last year.
For further detail, please refer to pages 24-26 of the MD&A.
Outlook and 2008 Financial Guidance
Each quarter, we review our key assumptions in providing our financial
guidance. Based on this review, we have tightened our 2008 financial guidance
range. We estimate that for fiscal 2008, we will report FFO on a per
outstanding Trust Unit between $2.37 - $2.43 (DI between $2.39 - $2.45). We
are not anticipating any new apartment acquisitions for the remainder of the
fiscal year.
The following table summarizes the changes to our 2008 Financial
Guidance:
-------------------------------------------------------------------------
Q2 Revised Q3 Revised
Description Original Guidance Guidance Guidance
-------------------------------------------------------------------------
Acquisitions $130 million to $260 $75 million $50 million
million (1,000 to (500 units) (298 units)
2,000 apartment units)
-------------------------------------------------------------------------
Stabilized
Building
NOI growth 8% to 14% 8% to 10% 8% to 10%
-------------------------------------------------------------------------
FFO per Trust
Unit $2.35 to $2.50 $2.35 to $2.45 $2.37 to $2.43
-------------------------------------------------------------------------
DI per Trust
Unit $2.37 to $2.52 $2.37 to $2.47 $2.39 to $2.45
-------------------------------------------------------------------------
For further detail, please refer to page 26 of the MD&A.
As is customary in its Q3 reporting, Boardwalk is providing its financial
outlook for 2009. The following table details the 2009 Financial Guidance
along with key assumptions.
2009 Financial Guidance
-------------------------------------------------------------------------
Description Guidance
-------------------------------------------------------------------------
Acquisitions No new apartment acquisitions
-------------------------------------------------------------------------
Stabilized Building NOI growth 4% to 6%
-------------------------------------------------------------------------
FFO per Trust Unit $2.45 to $2.55
-------------------------------------------------------------------------
DI per Trust Unit $2.47 to $2.57
-------------------------------------------------------------------------
For further detail, please refer to page 27 of the MD&A.
November 2008 Monthly Distribution
The Trust has declared its November 2008 distribution in the amount of
15.00 cents per Trust Unit ($1.80 on an annualized basis). The November
distribution will be payable on December 15, 2008 to Unitholders of record on
November 28, 2008.
Supplementary Information
Boardwalk produces the Quarterly Supplemental Information that provides
detailed information regarding the Trust's activities during the quarter. The
Third Quarter 2008 Supplemental Information is available on our investor
website at www.boardwalkreit.com.
Teleconference on Third Quarter 2008 Financial Results
We invite you to participate in the teleconference that will be held to
discuss these results this same morning (November 14, 2008) at 11:00 am EST.
Senior management will speak to the third quarter financial results and
provide a corporate update. Presentation materials will be made available on
our investor website at www.boardwalkreit.com prior to the call.
Participation & Registration: Please RSVP to Investor Relations at
403-206-6808 or by email to investor@bwalk.com.
Teleconference: The telephone numbers for the conference are 416-644-3417
(within Toronto) or toll-free 1-800-732-9307 (outside Toronto).
Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting http://www.boardwalkreit.com 15
min. prior to the start of the call. An information page will be provided for
any software needed and system requirements. The live audiocast will also be
available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2414280
Replay: An audio recording of the teleconference will be available from
1:00 pm ET on Friday, November 14, 2008 until 11:59 pm ET on Friday, November
21, 2008. You can access it by dialing 416-640-1917 and using the passcode
21281973 followed by the pound (No.) sign. An audio archive will also be
available on our website (http://www.boardwalkreit.com/) approximately two
hours after the conference call.
Corporate Profile
Boardwalk REIT is an open-ended real estate investment trust formed to
acquire all of the assets and undertakings of Boardwalk Equities Inc.
Boardwalk REIT's principal objectives are to provide its unitholders with
monthly cash distributions, partially on a Canadian income tax-deferred basis,
and to increase the value of its units through the effective management of its
residential multi-family revenue producing properties and the acquisition of
additional properties. Boardwalk REIT currently owns and operates in excess of
260 properties with 36,785 units totalling approximately 40 million net
rentable square feet, and is Canada's largest owner/operator of multi-family
rental communities. Boardwalk REIT's portfolio is concentrated in the
provinces of Alberta, British Columbia, Saskatchewan, Ontario and Quebec.
(1) Funds From Operations ("FFO") is a generally accepted measure of
operating performance of real estate investment trusts and companies;
however, it is a non-GAAP measure. The Trust calculates FFO by taking
net earnings after discontinued operations, adjusting for gains or
losses on disposal of discontinued operation assets and extraordinary
items, and adding non-cash expenses including future income taxes and
amortization. The determination of this amount may differ from that
of other real estate investment trusts and companies. Distributable
Income ("DI") is calculated based on the definition as set out in the
Trust's declaration of trust and is computed by taking FFO and adding
back amortization on any deferred financing charges incurred prior to
May 3, 2004 as well as adjusting for any discounts or premiums
relating to the amortization of mark-to-market debt adjustment
incurred subsequent to the real estate investment trust conversion
date of May 3, 2004.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements relating to our
operations and the environment in which we operate, which are based on our
expectations, estimates, forecast and projections, which we believe are
reasonable as of the current date . These statements are not guarantees of
future performance and involve risks and uncertainties that are difficult to
control or predict. For more exhaustive information on these risks and
uncertainties you should refer to our most recently filed annual information
form which is available at www.sedar.com. Actual outcomes and results may
differ materially from those expressed in these forward-looking statements.
Readers, therefore, should not place undue reliance on any such
forward-looking statements. Further, a forward-looking statement speaks only
as of the date on which such statement is made and should not be relied upon
as of any other date. While we may elect to, we undertake no obligation to
publicly update any such statement to reflect new information or the
occurrence of future events or circumstances at any particular time.
%SEDAR: 00020684E
For further information please contact:
Boardwalk REIT
Sam Kolias, CEO, (403) 531-9255;
Roberto Geremia, President, (403) 531-9255
