Boardwalk Real Estate Investment Trust T.BEI.UN

RBC Notes

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January 27, 2023

Canadian Multi-Residential REITs 
CMHC October 2022 data survey

Our view: CMHC released its annual rent and vacancy data yesterday. The data compiled was based on October 2022 surveys. Net net, the rental markets are strong and while it may take longer to capture market rents as turnover rate declines, the upside potential will likely continue to accelerate in coming quarters – something the public market has been willing to pay for in the past.

Key Takeaways

• Markets are tight across the board. Data confirms the strong fundamentals we have been seeing, with national vacancy at 1.9% (vs. 3.1% in 2021) and average monthly rents at $1,258 (+5.6% y/y on a same asset basis), (see Exhibit 1 & 2).

• Regionally, rent growth was strong across most major markets, with the mid-sized cities seeing slightly higher growth: Halifax +9%; KWC & Toronto +7%; Calgary, London & Vancouver +6%; Montreal & Ottawa +5%; Regina & Saskatoon +3%; Edmonton +2%.

• The all-important turnover rental spreads (first time being tracked by CMHC) were even stronger, indeed in certain instances higher than expected (exhibit 4). The turnover spread is a good proxy for sizing up revenue upside for the multi-res REITs, especially those weighted to rent-controlled provinces. Nationally, rent growth on turnover was +18% y/y; Halifax & Toronto +29%; KWC & London +26%; Vancouver +24%; Ottawa & Montreal +15%; Calgary +5%; Regina & Saskatoon +3%; Edmonton +1%.

• While turnover rental growth is high, not surprisingly, turnover rate has declined, and declined the most for the markets experiencing the highest rental growth (exhibit 3). Nationally, the turnover rate declined to 13.6% (-190 bps y/y). Markets with notable y/y declines in turnover rate were: Halifax 11% (-600 bps y/y), Ottawa 17% (-600 bps y/y), Toronto 10% (-460 bps y/y).