TSX:BEI.UN - Post by User
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retiredcfon Aug 11, 2023 12:25pm
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Post# 35584059
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TDCurrently have a $77.00 target. GLTA
Boardwalk REIT
(BEI.UN-T) C$64.65
Q2/23 First Look: Results In Line, Guidance Raised Again Event
Q2/23 Results. Conference call 1:00 PM ET; dial-in: 1-888-664-6383; passcode: 07558807 (slides).
Impact: POSITIVE
Our Take: Boardwalk delivered a strong quarter, highlighted by +12.5% SPNOI growth (despite now self-managing both uplifts and renewals) and a +3% bump to FFO/unit guidance. With limited new supply deliveries, elevated occupancies in the 98%-range and robust rental demand, we expect Boardwalk's fundamentals will remain robust going forward.
FFO/unit (f.d.) of $0.89 was +11% y/y, and largely in line with our estimate/ consensus at $0.88. AFFO/unit (our calculation) of $0.69 was +2% versus our estimate.
2023 Guidance update. Management increased both its FFO/unit and SPNOIG guidance (for the second consecutive quarter) on robust revenue growth and improved visibility on non-controllable expenses (property tax and insurance). SPNOI growth was increased to 11.5%-14% from 9.5%-13.0%, while the FFO/ unit range was increased/tightened to $3.42-$3.54 from $3.30-$3.46 (+3% at the mid-point). Given current consensus of $3.43, we expect to see upward estimate revisions for both 2023/24.
Operating Highlights
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Portfolio new lease spread growth on a month-by-month basis slowed from April (+13.8%) to July (+11.6%) as Boardwalk implemented a strategic moderation of new lease uplifts in non-price controlled markets (targeting 10%-to-15%) in an effort to lower turnover and lengthen the runway for growth. Renewals averaged 8.6% in Q2/23 (management targeting 7-9%).
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Q2 SPNOIG moderated slightly from Q1's pace (+13.7%) to a still very strong +12.5%. Gains were driven by +8.6% revenue growth, while SP expenses increased just +2.7%. By market, Alberta led with +16.5% (Edmonton: +18.1% and Calgary: +13.5%), followed by Saskatchewan (+7.5%), Quebec (+6.5%), and Ontario (+4.7%). SP operating margin was +230bps y/y to 62.5%.
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Average incentives decreased to $108/month (-11% q/q) and were -28% y/y. SP occupancy remained elevated in the mid-98% range from April to August.
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Occupied rents were +2.6% q/q to $1,326, while average market rents were +3.5% q/q to $1,495.
Balance Sheet
Recorded a $223mm FV gain (3% of Q1/23 investment properties) on higher market rents and lower cap rates (-2bps q/q to 4.90%). IFRS NAV was +6.7% q/q at $80.98. D/GBV was -100bps q/q to ~44%. Boardwalk has ~$239mm of liquidity (Q1/23: ~$244mm).