Andrew Moffs - BNN - TOP PICK Andrew Moffs' Top Picks
Andrew Moffs, senior vice president and portfolio manager at Vision Capital, discusses his top picks: Boardwalk REIT, First Industrial Realty Trust, Inc., and Chartwell Retirement Residences.
Boardwalk REIT: (BEI.UN TSX)
Boardwalk Real Estate Investment Trust, the second-largest publicly-traded apartment REIT in Canada, owns over 33,800 suites with its largest markets of Edmonton, Calgary and Montreal.
With a large concentration of its exposure in Alberta, Boardwalk has been a beneficiary of strong population growth in this province driven by a significant increase in both international and interprovincial migration. In the second quarter of 2023, Alberta’s population grew by more than 50,000 people, the second largest quarterly increase since the data were tracked beginning in 1971. Interprovincial net migration contributed to approximately 14,000 of that increase, the greatest level of any province or territory in Canada over that timeframe.
In addition, rents remain affordable in Alberta. Boardwalk’s rent-to-income ratios in its largest markets of Edmonton and Calgary at 24 per cent and 28 per cent, respectively, which is significantly below its other regions, which are mostly in the mid- to high-30 per cent range. This has been a contributing factor towards record levels of migration to Alberta. In addition to these positive factors, the REIT benefits from having significant exposure to provinces that have not placed a statutory ceiling on rent increases, with Alberta and Saskatchewan comprising 74 per cent of its same property NOI. This allows the REIT to, on renewals, increase in-place rents closer to market rents, as compared to other regions. Combined, this has translated into strong operational performance for the REIT, with Boardwalk expecting to produce same-property NOI growth of 12.5 per cent to 14 per cent this year. Despite the strong fundamentals and operational results, units of the REIT continue to trade at a compelling 18 per cent discount to its underlying and quickly growing NAV.