This is a flash report so we could soon see them raise their current target of $84.00. GLTA
Boardwalk REIT
(BEI.UN-T) C$73.94
Q4/23 Beat; 2024 Guidance for +12% SPNOI; +23% Dist. Increase
Event
Q4/23 Results. Conference call 1:00 PM ET; dial-in: (1-888-664-6383; passcode:
48767747; slides).
Impact: POSITIVE
Our Take: Boardwalk delivered a strong beat in Q4 highlighted by robust
fundamentals and +16.8% SPNOI growth, representing the highest level achieved
since 2007. Boardwalk also introduced favourable 2024 guidance and a larger-than-
expected distribution increase.
FFO/unit (f.d.) of $0.96 was +21% y/y, and +8% versus our $0.89 estimate
(consensus: $0.91). The variance to our estimate was largely on higher NOI. AFFO/
unit (our calculation) of $0.77 was +10% versus our estimate.
2024 Guidance introduced. Management is calling for FFO/unit of $3.93 to $4.18,
with the $4.06 midpoint representing +13% growth and coming in ~3% above current
consensus of $3.94 (range: $3.83-$4.09). SPNOI growth is expected to be 10% to
14% (2023: 13.7%). We believe investors will view Boardwalk's new guidance
positively, and would expect to see upward revisions for 2024/2025 estimates.
The +23.1% increase to its distribution ($1.44/unit annualized commencing
with the March distribution) was ahead of our expectations of an ~10%
increase.
Operating Highlights
Portfolio new lease spread growth on a month-by-month basis held relatively
steady from October (+11.9%) to January (+11.3%) as Boardwalk continued its
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 8.0% in Q4/23 (management targeting 7-9%).
Q4 SPNOIG of +16.8% accelerated from Q3's pace (+12.1%). Gains were
driven by +9.2% revenue growth, while SP expenses decreased 1.6% on lower
insurance costs and utility costs (warmer Q4). By market, Alberta led with +22.3%
(Edmonton: +22.8% and Calgary: +20.8%), followed by Saskatchewan (+15.0%),
Quebec (+6.3%) and Ontario (+4.2%).
Average incentives decreased to $98/month (-4% q/q) and were -26% y/y.
Occupied rents were +2.3% q/q to $1,388, while average market rents were +1.8%
q/q to $1,561. Current mark-to-market rents were $142 (Q3: $141).
Balance Sheet
Recorded a $149mm FV gain owing to higher market rents (cap rate unchanged).
IFRS NAV was +2.9% q/q at $84.41. D/GBV was -70bps q/q to 42.4%. Liquidity
increased to ~$527mm (Q3/23: ~$253mm) following Boardwalk's December
equity raise (link).