Boardwalk REIT (BEI-U TSX) Boardwalk REIT, the second largest publicly-traded apartment REIT in Canada, owns over 33,000 suites across 200 properties. With a focus on Alberta and Saskatchewan, the REIT owns assets ranging from Class A high-rise to garden-style Class B apartments concentrated in Edmonton (37 per cent of suites), Calgary (17 per cent) and Montreal (14 per cent).
Alberta’s continuing economic recovery has led to an increased demand for Boardwalk’s apartments, pushing vacancy rates in its portfolio from approximately 4.4 per cent at the height of the pandemic to approaching 3 per cent currently. Boardwalk’s management believes that tenant concessions can be reduced at these levels, which will meaningfully impact the REIT’s FFO and, once entirely eliminated, increase its NAV to over $75.00 per unit and representing over 35 per cent upside to its current unit price.
Boardwalk screens cheaply to both the private market, where two recent sizeable apartment portfolios in Calgary and Edmonton transacted at cap rates that suggest Boardwalk is undervalued to its estimated current IFRS value, and publicly-traded peers trading at an average FFO multiple 6.1x higher than its units.