Boardwalk Real Estate Investment Trust T.BEI.UN

TD

[retiredcf]

Currently have a 460.00 target. GLTA

Boardwalk REIT

(BEI.UN-T) C$49.47

Q3/22 First Look: Results Ahead; SPNOIG of +5.2% Event

Q3/22 results. Conference call 1:00 PM ET; dial-in: 1-888-664-6383; passcode: 50233156. (slides).

Impact: SLIGHTLY POSITIVE

FFO/unit (f.d.) of $0.85 was +7% versus Q3/21, and slightly ahead of our estimate and consensus of $0.83. AFFO/unit (our calculation) of $0.67 was +3% ahead of our estimate.

Guidance Update. Management raised the bottom end of its 2022 FFO/unit guidance to $3.08 from $3.00. The new range is $3.08-$3.15, +1.3% at the midpoint. Consensus is $3.10. SPNOI guidance increased to +3.0%-5.0% from +2.0%-5.0%.

Operating Highlights

• Spreads on new leases averaged +7.6% in Q3 and accelerated further to +9.0% in October. Renewals were also strong at +3.9% (+4.6% in October). Alberta saw further momentum post Q3 with new lease spreads reaching +9.7% in October, while renewals were +5.7%.

• Q3 SPNOI growth increased to +5.2% from +2.8% in Q2/22 (+3.2% YTD). Alberta posted solid growth at +3.7% driven by strong growth in Calgary (+8.9%) and offset partially by more modest growth in Edmonton (+0.2%). Saskatchewan was +8.4%, Ontario +8.0%, and Quebec increased +7.4% due to lower controllable expenses and the lease-up of its L'Astre community (transitioned from a Seniors' home). Same-property revenue growth was +4.9% y/y and +2.3% q/q. Operating costs were +4.3%, largely driven by Edmonton (higher property taxes), while SPNOI margins were +20bps y/y to 61.9%.

• Average incentives were 18% lower y/y (-6% q/q) to $141/month. Stabilized portfolio occupancy was +90bps q/q to 97.2% and increased further to 97.9% in November (thus far). We believe Boardwalk is well positioned heading into the winter leasing months.

• Occupied rents were +1.9% q/q to $1,252, while the mark-to-market spread (including incentives) jumped to $71 (Q2/22: $62).

  Balance Sheet

• Boardwalk recorded a ~$7mm IFRS fair value gain on investment properties on higher rents (overall cap rate was was largely unchanged at 4.91%). IFRS NAV was +1.5% q/q at $71.09. Repurchased 262,500 units for $2.8mm (average price: $44.63).

• D/GBV was unchanged q/q at 46%. Boardwalk has ~$229mm of total liquidity (Q2: ~$264mm). During Q3, Boardwalk renewed $86.2mm of mortgages at a weighted average rate of 4.26% and expects to renew $161.5mm in Q4 (average in-place rate of 3.19%).