TSX:BEI.UN - Post by User
Post by
retiredcfon Nov 09, 2022 9:19am
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Post# 35084826
RBC
RBCNovember 8, 2022
Boardwalk REIT
Q3 better-than-expected; Alberta called, people answered
TSX: BEI.UN | CAD 49.47 | Outperform | Price Target CAD 64.00
Sentiment: Positive
Our view: Boardwalk REIT (“BEI”) reported a better-than-expected quarter with FFO/unit of $0.85, +8% y/y, vs. RBC/consensus of $0.825/$0.83. 2022 midpoint FFO guidance was raised by +1.3%. With the large positive migration seen over the summer, leasing momentum has continued into the seasonally weaker winter quarter with November occupancy at 97.9% (+70bps from Q3), Edmonton being a big driver. We expect a positive market response.
Key points:
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SP NOI growth: +5.2% (SP-Rev +4.9%; SP-Exp +4.3%). Strong performance was observed across the board, even in some of the smaller AB markets like Red Deer. Calgary, SK, QC, ON were +7 to +9%. Edmonton was the lowest at +0.2% with higher opex from increased rental activity, but it appears that the market has turned quite meaningfully to the positive.
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AMR: $1,223, +6.3% y/y; Avg occupancy: 97.2%, +112bps y/y. Edmonton occupancy has improved meaningfully to 97.4% in October, +134 bps from Q3/22 and +300 bps from Q2/22.
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Leasing spreads: New lease spreads +9%, renewal +4.6%. AB new lease spreads +9.7%; renewal +5.7%.
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Loss-to-lease: sitting at $56m. Incentives continue to decline at $7.5M, -21% y/y. Burn off of incentives continues to represent
the largest upside at ~$32M.
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2022 FFO mid-point guidance +1.3%: 2022 FFO range of $3.08 to 3.15 (previously $3.00 to $3.15); SP NOI guidance growth of
+3% to +5% (previously +2% to +5%).
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Capital allocation: BEI remains active on NCIB having acquired $3M in Q3/22, $11m in Q2/22 and $7.6m in Q1/22.
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Reported NAV/unit: $71.09, +1.6% q/q (4.9% stabilized cap rate utilized, unchanged)