RE:RE:Top PickAdditional BNN story.
Boardwalk REIT (BEI.UN TSX)
Boardwalk Real Estate Investment Trust, the second-largest publicly-traded apartment REIT in Canada by market capitalization, owned – as of the end of the first quarter of 2024 – over 34,000 suites across Canada, with nearly two-thirds of these units in the province of Alberta. Vision is constructive on units of the REIT primarily due to two reasons.
First, residential market conditions in its core Alberta market, which generates 63 per cent of its stabilized NOI, remain strong. This is due to the greater level of affordability in the Alberta rental market, relative to other regions in Canada, and has been a contributing factor of demand, stemming from high levels of both international and interprovincial migration to the province.
In fact, Alberta’s population increased 4.4 per cent year-over-year in 2023; the highest annual growth rate of any province or territory, and the highest rate for Alberta since 1981.
Second, Boardwalk benefits from having significant exposure to Alberta and Saskatchewan, both of which do not have rent controls. In fact, 74 per cent of Boardwalk’s stabilized NOI is generated from these two provinces. This advantageous position allows the REIT to increase rents more dynamically, bringing them closer to market rents upon lease expiration.
In contrast, other Canadian provinces with rent controls often face limitations, constraining increases in rents to levels that may be at or below inflationary increases in expenses. Despite this, units of the REIT continue to trade at a compelling 17 per cent discount to its underlying net asset value (NAV).