TD's Notes Q1/21 First Look: Results Ahead; Move-Ins Outpacing Move-outs
Event
Q1/21 results.
Impact: SLIGHTLY POSITIVE
FFO/unit (f.d.) was $0.65, +5% versus Q1/20, and ahead of our $0.62 estimate and
consensus of $0.63. AFFO/unit (our calculation) of $0.48 was also ahead of our
$0.44 estimate. The positive variance versus our estimate was due to lower G&A
and interest expense. We note that this marks the 8th consecutive quarter that
BEI has beat consensus.
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(slides).
Operating Highlights
SPNOI was -2.5% with the AB market (60% NOI) weighing on results.
Edmonton was -9.4% as some new supply in the market has led to more
competitive market conditions. Calgary was -6.0%. Outside of Alberta, the REIT
did well with Quebec +7.8%, Ontario +9.6%, and Saskatchewan +3.4%. SPNOI
margin fell 90bps y/y to 56.5%. Q1 occupancy averaged 94.9%, 90bps lower q/
q and 120bps lower y/y. That said, we note that stabilized portfolio occupancy
increased from the 94.7% low in February to 95.7% in April. Additionally we
highlight that new rentals have exceeded move-outs from January to April, leading
to lower availability and occupancies trending higher. Incentives increased 1.7%
y/y to $9.5mm as management continues to balance incentive use to maintain
occupancy levels.
Occupied rents were essentially unchanged at $1,186 (Q4/20: $1,189). The markto-market spread between occupied and market rents (including the impact of
incentives) increased to $48 from $44.
Leasing spreads on new leases were negative throughout Q1 (average -2.8%)
and April (-4.7%), while renewal leases increased on average +1.7% in Q1 and
+2.1% in April. Rent collections remain in line with historical levels (>98%).
Acquisitions
Post-Q1 BEI acquired an 81-unit townhome and walk up community in Banff,
Alberta for $24mm (~$296,000/unit) at a 5.0% cap rate. Additionally BEI acquired
two apartment buildings ("Aurora") aggregating 114-units in Victoria, BC for
$48mm (~421,000/unit) at a 4.25% cap rate. Both acquisitions closed in mid-April.
Balance Sheet
IFRS NAV was essentially unchanged q/q at $57.22 (Q4/20: $57.49/unit), while
cap rates edged 4bps lower to 5.23%.
D/GBV (net of cash) under IFRS is 48.4%, +60bps q/q. Boardwalk has ~$294mm
of total liquidity (Q4: ~$269mm).